Episode 2: with Ben Yoskovitz. Why some products dont scale?
foreign [Music] Busy World no problem no problem at all awesome so you're dialing in from Toronto today right we had guests from the Middle East from the US from the UK first time we're you know talking to somebody in in Canada what's Canada feel like tell us a little bit about that because all I get now is it's ice hockey it's ice hockey it's ice hockey that's all I get to know uh Canada more than ice hockey for sure but hockey is certainly a big a big sport here but there's more to the country than that you know on the sports side basketball I think is probably the fastest growing sport from a popularity perspective it's very cold for much of the year but it's also very warm for good chunks of the year so overall it's a pretty nice place to live yeah I'm sure that it is why don't you just start us with your earliest you know memory that you have of your life who you were and and how you kind of become the entrepreneur and landed into the VC world so if you can you know take us from the earliest maybe that you have uh and where you are today sure well you know I I'll go I'll go back as far as starting my first company maybe which was in 1996. so 26 ish years I guess 20 yeah 26 26 years or so so it's been a while um and at the time I was at McGill which is in Montreal going I was at University doing a degree in Psychology and met a couple of guys so this is an early web right so Netscape is the browser you know there's e-commerce doesn't really exist yet so you have to really sort of go back and appreciate what the internet looked like back then but met a couple of guys that were you know very into building on the internet websites web applications and they were looking to start a company and I thought well that sounds interesting and I could probably help these guys I'd always been interested in technology so we started a company we knew nothing didn't know what we were doing didn't know how to sell weren't even sure what we were going to build but we managed to build a small business doing that and that was how I fell into and fell in love with entrepreneurship that was like really really while ago and the internet that we know today like you know the people that we're connecting and all the things that used that's like pretty non-existent at that point right so so I can tell you that building an e-commerce website in 1999 or so cost hundreds of thousands of dollars today you can launch a Shopify site that would be infinitely better for you know 20 a month 30 a month whatever it is so yeah times have changed a lot you know we I guess we have Internet Explorer Netscape as browsers Google didn't exist yet Alta Vista was the search engine very little existed it was it was crazy yeah so what was the first company you know what what did you guys build what would you sell in yeah so we we we were it was a Services business so we were we at the time we were building websites for customers businesses mostly small businesses but then we we realized very quickly that we could Outsource our time basically to companies in the United States and at the time the exchange rate was you know a dollar U.S to a dollar fifty Canadian the.com boom was coming and there were assembly there were not enough developers in the U.S to build all the things that people wanted to build so they were
Outsourcing it to other markets in the Canadian Market you know we think of that as near Shoring I guess it was very attractive so we started you know selling our time basically doing projects for companies in the US and then very quickly we ended up being I'm going to describe it as Aqua hired so we were acquired by a bigger agent agency that was doing similar work to ours but just more of it for bigger companies in the United States and so we were acquired by them and we continued to grow that agency and then and then we actually shifted the model quite quickly to building a SAS product so we ended up building project management software so we were of course running projects because we had an agency and project management at the time was complicated you had Microsoft Project as a desktop application and we thought well sure couldn't we build a web-based project management tool so so this is before Basecamp emerged we launched a web-based project management software and started selling that in the market and so we shifted from being a service business to a product business and then we you know changed the name of the company and ran that company from I guess 1998 because I started in 96 although in 1998 1999 for almost for about eight years or so we we ran that project management software company wow wow amazing uh what happened to that just curious to know yeah it you know what we could never we could never scale it and so I mean we grew it to a certain size but it kind of plateaued and we could never really figure out how to scale that business and So eventually I left start another company and then that business kept operating after that so so I don't know if that business still exists anymore but a couple of the people that were running that company continue to run it after I left I I chose to leave and do something else because it had been quite a long time doing basically the same thing and I I realized that was sort of a Road to Nowhere a lot of the time and then so I kind of you know get into this entrepreneurship world like early on but not as early as you were but but I had like Fair failures just to you know start a company nobody was willing to buy that to build a product nobody wants to use that kind of a stuff that you know and I think not many people out there are like willing to admit like they build a product they spend so much amount of money that nobody wants to use so we're like crafting a problem and then hoping somebody would use for it so but the scaling problem is like existing since you know since like way back why do you think it like you know your your SAS company did not scale it's a great question I you know I think it was it's a com it's always a combination of things I think for us it was in part the stage of Technology at the time so not a lot of stuff had moved to the Cloud yet we were pretty early you know now most companies have are have bought stuff that's on the cloud or completely on the cloud but it was early days for the cloud so I think that's one we found some very early adopters but we couldn't get to the later adopters and then project management softwares is a tricky space because we had customers that were very big companies and we had customers that were very little companies and we didn't pick anything so we didn't specialize or verticalize into a market so it was a horizontal play but the result of that is that you were always a little bit weak in something for some customer and so we could never figure out really who the ideal client was and then repeatedly sell to that client so we had clients different verticals different Industries different sizes and you're kind of selling to anybody but then you know one client wants this another client wants something else and you're kind of trying to support and serve all of them and so as a result you had to sort of not really achieving the goal for anybody and so I don't think we were opinionated enough about what we were building and I don't think we we focused on vertical a vertical or a few verticals quickly do you think Founders are making the same mistake today as well yeah of course Founders always I mean you know as much as much information as there is out there you know this is also an age this is pre-blogging so blogging started about 2005 2006 or so so there's not a lot of content online best practices how to learn these things Lean Startup didn't exist yet as a methodology nobody had written about it the book hadn't come out so so a lot of mistakes to be made without a lot of reference material but people of course still make the same mistakes despite all the material that exists I you know I think I've come to the realization that despite all the information that's out there Founders are going to make the mistakes they're going to make and the best chance we have is that they just learn quickly from them and then and then get better after that because I have a follow-up question to that like how old were you when you uh started the first couple next uh I was 21. 21. the thing that I had in mind was uh if if you looked at in especially if you look at Twitter or LinkedIn because these are like two medium that I think people are using mostly for business purposes to a good extent uh this like everybody is an expert in everything right is this like uh like dependence of knowledge in the thing is there but there's like somebody uh may be scared this business to like five figure early five figure like 10 10K a month or something like that and then he is willing to give advice to companies who are doing like a several several million in Revenue every month right so um so look at this particular Spectrum like back then nobody had written about anything and now it's just like everybody's like writing about every single thing it's like everybody an expert on every single thing um then you look at the founders because I'm going to ask you a lot of questions about Highline beta and then you work with so many Founders these days so uh and they're making this mistake so why do you think that you know even having that much knowledge out there is not helping people to avoid making the same mistakes or do you think that's imminently that's gonna happen like regardless of anything I I think it's just the nature I think it's the nature of things I mean I do think it mitigates the mistakes I think people do of course people can read things they can learn from things they can try to avoid making the mistakes but but some of them are I I think that just inherent in how Founders think about things they you know often believe that you know there's a little bit of that hubris of I'm I'm certain I'm right if I build it they will come you know as a classic sort of you know saying so so I think it's it's and I think generally most people you know you learn from doing learning from reading it you can of course learn from reading stuff but it's only when you experience it and you see things in action where you say oh yeah I remember reading about you know how not to do X wire or Z and then I did those things and now I'm connecting those dots more effectively so you know experience teaches a lot of a lot of things so things have gotten better you know if you just think about how people do early validation today back then we've been really think that much about you know a methodology for early validation we just built something because we thought it would be interesting and put it out in the world and other people thought it was interesting so we just kept going but that's not that's not a systematic maybe as it could be you know now there's methodologies and approaches that you know provide founders with a bit more of a Playbook but but the but the flip side to that is that you know if you try to follow a framework or a methodology religiously you know to the T you're probably also going to fail from that because you're just checking things off a list and and that's also not a a way of being successful yeah yeah I think so you mentioned reading and then I was like going through that YouTube Wormhole like whatever you know there's like everybody's talking about something and I came across a video of Alex hermosi and then he was talking about like every people especially who are not doing anything they should stop reading today because they're reading irrelevant book especially you know so somebody is like reading start with why I mean you you're working at like Microsoft you're probably not gonna find the answer why why they're doing whatever they're doing so so yeah it's exactly the same thing like you know just reading alone is probably not not the right solution to to all your problems yeah yeah I think I think practice you know so so you have the advantage Now by all means don't don't make that you know if you can avoid the obvious mistakes that hundreds if not well definitely thousands of people have made before you you should avoid them by by learning the lessons of those that have shared before you but but at the end of the day you've got to put these things into practice and figure out what makes sense for you you can't just you know learn theory without applying the theory and and figuring out how to use the theory in the way that's going to be successful for you okay let's jump into a couple of things that you're doing today what are you doing today and like what are you doing today like whatever you're doing today yeah so I mean I started Highline beta seven years ago and Highline beta is a venture studio and Venture Capital fund so in our model we have sort of two businesses which I can speak to quickly you know one is an innovation Consulting agency it's a it's a business that works with large companies to help them identify areas of opportunity and growth and and realize those opportunities through building new businesses either internally or or externally and then we have a venture studio and Venture Capital fund that's building startups and investing in startups from zero from scratch and we the models are are you know there's sort of one business is a revenue generating business one business is an equity generating business because we earn equity in the startups that we build and fund but they're but they're also connected you know we're working with corporate Partners to validate new opportunities for them some of those things lead to spin outs where we find an opportunity we see the potential of creating a new company around that opportunity bringing a Founder spin the company out and then sometimes we're working with our corporate Partners on opportunities and we're we find startups that are a good fit uh to solve problems that that corporates have so living at this intersection of big companies and little companies is what we do and we started the company because we wanted to combine all the things that we enjoy doing so there's no there's no sort of bigger reason than that my co-founder Marcus and I love investing in early stage companies but we didn't want to be only investors because we also like building things and we like getting our hands dirty and so the Venture Studio model was a great fit for we will invest in pre-seed startups but we will also incubate them through our Venture Studio model but we also you know through our our past experience saw when there were inflection points in some of our portfolio companies was often when they found their first big customer first big partner so then we brought in that corporate component to the model and we're trying to connect all of those dots to invest in pre-seed startups help build pre-seed startups and then help them connect to corporate Partners as well okay now that's a very different different model compared to most VCS out there because they tend to you know have a fund and then just you know stick to on the investment probably so but it's good to have that Builder identity there as well as like you know you guys want you to build something so that everything else do you think you know every venture capitalist that you know usually talk to I asked in this this particular question do you think you all kind of have the same idea like you know we're competing with another VC firm so suppose there's a very hard chart Tech start about there and like you know 10 VCS would want to invest in them right so in that we see what is exactly like the same like you know you guys are going after businesses or not yeah so in our model less so because we're creating the companies you know so in our in our model the startups that we're investing in don't exist we're working with a founder or Founders we're validating the opportunity and then we're incorporating the company and funding it so in in that sense we compete perhaps with people deciding they want to do it on their own as opposed to doing it with the help of event of Adventure Studio so so a little bit different there but but yes I mean generally speaking you know VCS are I suppose competing with each other to get into certain deals and that that definitely you know the the flip side to that is that there are so many startups and and you know so there is competition for deals and deal flow but but oftentimes there's probably less competition than you might realize you know so because most VCS VCS are saying no much more than they're saying yes agree right so they're investing in you know a percentage of the deals that they see and so you know perhaps for that one percentage that they're excited about of course there will be other VCS and and often it it can be competitive but also it's collaborative right so not all VCS are saying oh we won't invest with others in fact most investors want to co-invest with other investors and so it's it's not quite you know oh competition for every hot deal it's a little bit different from that what's the the criteria you guys have when you pick any startup because I'm sure you you know you must be like your inbox like everywhere Twitter LinkedIn or like your email or whatever must be getting bombarded every day with like hey I have a cool startup idea building something in the AI so invest in US invest in us so what's the criteria that you guys are yes yes I have so much to talk about AI later on but yeah I just kind of holding that back yeah so again for us we're only investing pre-seed and right now we're only investing through the Venture Studio model so for us what that means is we're investing you know really at foundation of the company so most of the companies that reach out to us and we do have of course you know a lot of companies that we you know startups that reach out to us they're already too late stage for us because we're investing first check in the founder or Founders before they've actually even Incorporated the company so in our model we're helping them validate the opportunity validate the problem figure out what we think the solution could be who the early adopter user or customer will be so we're starting at the creation stage a company's already Incorporated they already have a product in market and they're and they're you know they've launched they're already too late stage for most of the Investments that we make yeah do you think that you know this particular model has like a lot more risk compared to the other one like if somebody has launched a product they're doing something it's kind of validated you know viable solution out there yeah the earlier the earlier yeah so the earlier you go the higher the risk the you know because if you're investing in a series D company you have enormous amounts of you that in history and everything else to look at the counter to that is in our in our model when we incorporate a company with a founder and invest we're spending typically about nine months working with them on it so now we are we are in effect temporary co-founders so we're going to work with that founder that the the founders help them build the product go to market raise more Capital recruit a team and and sort of support the process very actively from zero to one and that helps de-risk the opportunity for us because we're so close to it but yes the day we incorporate a company and invest is I guess I suppose about the highest risk point in time where you should be in better yeah yeah how many you know companies do you have on the portfolio today 15. yeah 15 okay and and most of them are like all of them are pretty much the same right you know like you met the founders and you did the whole yeah yeah so about half of them are follow that model and then about half of them are we did sort of pre-seater I'm going to say seat stage investing so we we did both and have done both yeah we're more so focused now on the Venture studio type of deals but we have done you know investments in existing company existing product so you know a little bit later stage call that presever or seed stage we've done you know a number of Investments that fit that model okay so if so you know because most of the the listeners that we have so we kind of fall into two three categories it's like early stage Founders people who are interested in entrepreneurship maybe somebody who wants to be a VC someday or investor or something like that uh if somebody needs to get in touch with Highline beta how should they do that and yeah what what sort of a mindset a Founder needs to have before they shoot out an email and not getting rejected on the planet so if you can even remotely spell my last name you're gonna find me and so and I'm easy to find on Twitter I'm easy to find on LinkedIn my email address is pretty easy to guess it's I'll just tell you it's Ben at highlinebeta.com so it's there you go so so easy to reach out to I think for us we're always interested in meeting Founders even if they're you know have a company later stage in general I I like helping Founders as much as I can of course I can't help everybody that reaches out so like all VCS we say no a lot and we say no more than we say yes but you know what anybody can reach out connect I'm always willing to try to help if I can point people to other investors Point people to other resources that might help them because it's just just the right thing to do yeah absolutely um so I want to you know turn it a little bit upside down because we're talking about the good things so we're going through like you know financially through some some tough times like testing time all the time you hear buzzwords like you know there's a recession probably at the Horizon inflation is through the roof uh uncertainty obviously is one of those so pretty much like everywhere you go you ask let's see is it like really really that bad because like you are in in the center of all this action you know so is it like really that bad and then the VC one is this like kind of drying up now you know it's it's not good I would say but here's the way I think about it it's good deals still get done hard to Define good deal I suppose but you know deals are still getting done less deals are getting done less money is being deployed I still think valuations are going to continue to drop a little bit which means you're gonna probably have to either raise less money and and and go leaner or raise the same amount of money you wanted to but give up more of your company so it's it's not great but but I I also think that you know when things are booming and capital is Flowing like crazy and valuations are getting too high that feels good but it's actually not great there are many many startups that have raised significant amounts of capital at very high valuations and they have no chance of growing into those valuations and those companies are are really in serious trouble so it's not even the companies that are trying to raise now where you say oh VC is drying up or it's slowing down I think the worst problem is the companies that have raised need to raise more money and and they're not going to get it at the valuations that they're looking for yeah yeah so I was talking to another founder a couple a couple of days ago I think it was in the few few podcasts away and he was saying um in 2021 probably sometime in 2022 as well so anybody who has an idea like just an idea and he can go to somebody and say yeah okay you know you take a million dollars just go just do something and now it's just like you know you have a great product is it profitable is it this is that so you you get asked questions that normally see a series a you know a startup get get asked for and then you know the valuation is like very very low you know maybe pre-seed was like a 10 to 12 million now I just dropped like five five ish or something so yeah and then I asked him like did you guys raise anybody here was like no uh but they kind of regret not raising enough money and not that they have to kind of bootstrap it like all the way there's no there's no perfect answer to any of it I would say the bar definitely has risen and it makes sense because VCS aren't necessarily seeing less deals than before but now they're being a little bit more you know sensitive to the risk and so they're just they're increasing the expectations they want and they can and they can do that because they don't have to write the checks and you know back to the earlier points about competition when the market cools there's less rushing into things and there's less of that feeling of fomo you know that fear of missing out that that everybody like all humans feel it and VCS are not immune to it so there's lots of that sort of crazy frothy Behavior so they can set the bar a little bit higher set the expectations a little bit higher put less money in ask for a bigger chunk of the company and that's just the reality the power Dynamic is always a little bit messed up between VC Founders and I think it shifted into the into the founders hands quite favorably now it's shifted back to the seats yeah it's exactly the same thing and I think you know as soon as the economic situation kind of gets better and you know the deals are happening again at probably the same rate as before so it's probably going to get back to the the Founder's hand yeah we'll see we'll see how that goes but the other thing is that I think it's important to recognize that you know venture capital is not for everybody uh as there are a lot of startups you know bootstrap startups or startups that you know have no intention of trying to scale very quickly and exit for a return that can be amazing companies cash generating you know profitable businesses yeah you know I don't think we should we should keep under the belief that well this is just simply not true the only way to make money and be successful is not venture capital and Venture Capital funded startups that's not the only way to be successful in life so I think Founders can look at that and think about you know should I get to profitability and scrape by should I give myself more options than raising Capital because the minute you raise capital that you're on a bit of a hamster wheel you sort of yeah it's inevitable that you're gonna you're gonna use the money to grow unprofitably and that's going to result in you having to go raise more capital and more and more capital and more Capital so I'm not that that model is just not a necessity for all companies yeah exactly it's it's not for everybody and I think more and more people start today's voice about like hey you know just going after VC is not the only way to build a great company I mean there's like so many examples of fulfilling the same big companies I just want to ask you know a question for like purely selfish reasons what's the startup ecosystem looks like in Canada compared to the US yeah so so it's well I mean Canada is roughly a tenth the size of the United States right from a population perspective pretty much almost everything it's about 10 percent I think our population is growing faster because we we're we're a more immigrant friendly in the United States so I think we're closing in on 40 million people but you know generally speaking I always think 350 million or so in the US 35 million in Canada so it's about 10 about 10 like 110. so I would say it's not dissimilar when it comes to the startup ecosystem
it's a it's a it's a good Market because we're close to tons of customers or users and capital in the US so we're right next door so that that's a benefit but it's still a relatively small Market you know we have investors of course from the pre-seed all the way up to you know private equity and big but but not tons of investors we have lots of you know we have lots we have quite a few big big companies but not necessarily a lot of big companies that Acquire startups right there aren't you know we have Shopify big tech company but a lot of our big companies are more traditional businesses Banks or insurance companies and so you know it's a it's a it's a it's a good Market to build a company in but you know a difficult Market to raise capital in generally speaking I would say from a investment perspective I always think it's never going to be as frothy as the US but it's yeah absolutely but it will cool down faster right it's sort of it's it's like that's how right it's just the it's just more of that less risk averse mentality generally is is how you would I think describe the Canadian environment okay so yeah been I'm like big fan of analytics big fan of books uh so yeah like what's the methodology behind that why did you write what did you write in that sir yeah it's you know it's funny when we were speaking earlier and saying oh you know you can't wear everything from a book so then I I just went ahead and well that's the best plan and so you know what I I wrote lean analytics with a good friend of mine his name is Alan Circle 10 years ago which is pretty incredible I can't I sort of can't believe it was 10 it was 10 years ago but we had the opportunity to write the book with O'Reilly the publisher for for two reasons uh one is Alistair had already written a book for them on the web analytics so they knew him as an author which helped and then this is after a lead startup the book Lean Startup came up by Eric Reese and that that methodology was sort of exploding and people were very engaged in in that approach and O'Reilly was looking to write a series of books on the lean methodology with different perspectives and Alistair and I at the time with two other co-founders were running an accelerator called year one labs in Montreal and year one Labs was a very very early stage not just similar to highlight beta actually where we were incubating brand new companies from zero recruiting Founders sometimes putting Founders together throwing ideas in and we invested in five startups they all happen to be consumer companies but we put them through the Lean Startup methodology so we took sort of the learnings from Lean Startup and then we had all I had also read Steve blank's book four steps to the Epiphany and so we were taking these methodologies yeah and we were saying okay let's apply let's run a one-year Lean Startup incubator or accelerator and build companies from scratch and see what comes out the other side and what we learned was that lead startup can work as a methodology of course but it was still fairly theoretical at the time because not a lot of people had applied the methodology and so you know between alistair's experience with data my experience running companies and being in product running this you know five basically running five companies through lead startup we saw an opportunity to take lean methodology and make it more practical through data well you can say that the feedback the reviewers and every single thing that that game changer for many many entrepreneurs uh do you think you know because you wrote the book like 10 years ago the methodology or all the principles that you explain in the book how do you think they have evolved today notice later and do you think that there has to be an updated edition of that somewhere on the horizon yeah we we talked okay we talked for years and we still do outside I talk about it all the time we should write the second edition you know we we never got around to doing it and I I don't know that we ever will alistair's writing a new book now called just yeah enough so we'll just plug we'll plug alistair's book because he's an incredible writer but but I think so here's what I think about the book 10 years later is that the basic principles in my opinion anyway still hold true the basic methodologies and Frameworks and and approaches we were trying to get people to think about still very much hold true some of the stuff that's outdated will be things like the the the benchmarks that we publish you know so oh you're you're you know your turn should look like this at this stage or you know a lot of that was based on whatever data we could gather in 2013 since then a lot more information has been published by startups or Founders or even VCS or other books have been written so I think the benchmarks in many cases will be outdated I think some of the the concepts we talked about in the book around business models because ultimately the goal of the book was to help you figure out what data to track at what stage and so one of the things you have to figure out is well what business am I in if I know what business I'm in and how my business operates and I know what stage I'm at I can combine those and find you know the singular metric that I should be tracking or the small number of metrics that I should be focusing on at that point in time so our section on business models the principles hold true but business models are complicated and have evolved so I'll give you a very simple example at the time with year one Labs we invested in a games company a mobile game company so this is 2011. we invest in a mobile game company and one of the business models in the book is mobile apps which isn't really a business model right but it's it's a but at the time it wasn't as if there were billions of apps yet or billions of mobile games right so again you know we presented this business model and talked about Mobile in the context mostly of mobile gaming well now you know now I mean what does that even mean now mobile is just a it's like a delivery mechanism right it's not a business model necessarily so those are some of the things that that you would have to redo and rethink you know there's nothing in the book about AI as an example right like so there's been like you know there's nothing in the book about web3 there's nothing in the book about crypto so you know again thinking about low if I run a crypto business what metrics should I be tracking it's like well shoot we got to think about the implications of that and your business model and so so there's things like that that don't age that well but the basic principles I I genuinely believe have aged well speaking of everybody's favorite AI I have already you know uh different question than most people are asking these days so um in in like my recent memories when I started working with startup and they were in socials and particularly for presidential campaigns and stuff like that at that point I was the first time that this whole crypto thing just like came out of like nowhere everybody was talking about crypto uh I remember you know we had uh we had a team member on the team and he was half subscriptions in crypto and you know people are asking to do this you know pay you a couple of dollars just to access the content or whatever so everybody was talking about crypto and uh there was a file bar exactly that you're gonna miss out so a lot of people a lot of people get wrecked a lot of people become million like you know there's like both another Spectrum uh I think up until 2021 that was we first started terms maybe 2020. uh the terms called nfts were pretty cool everybody was talking about nfts every influencer probably on the planet is talking about nfts and then web 3.0 blockchain metaverse and Boom come to 23 and now everybody's talking about AI it seems like people have forgot about the whole Fiasco there from an investor point of view or from somebody who's been working with founder you know running incubators these Trends comes and go right uh but how do you guys figure out like okay because the technology is going to stay I mean uh even the it's like AI on the trend now not the blockchain not picking about that but Bitcoin is still gonna be prevalent like you know that's gonna happen eventually how do you guys find startups or companies regardless of the trends that you think is going to do good I think what are the essence of of such companies yeah so so I think I try so for the most part I tend to not be somebody that gets too enamored with trends I'm more interested in use cases because I I'm a product person at heart and and products for them to work they have to be useful and solve a problem and you should be able to explain the use case to me I'm not the smartest person out there so you should be able to explain it to me like I'm a 10 year old and if you can't I'm pretty skeptical again if you peel away the hype and so that that's always like you know things like blockchain I I understand the technology and I understand the argument people make for it you know we're still sort of looking for that killer use case or use case you know so that's an example yeah metaverse is a is maybe an even more obvious one I mean I remember the days of Second Life which you know many of your listeners depending on how old they are will have to look up what second life is or was it actually might still exist as far as I'm concerned it was basically the metaphor you had an avatar you were wandering around these kind of places so so now that somebody just it got popular but I nobody was clear on what the use case was but every company out there was was rushing to figure out their metaverse strategy but nobody could articulate a use case that actually mattered to humans so I think it's use cases and and problems the interesting thing about you know solving problems that matter is that you could also get very narrowly focused on that problem and it's a today problem maybe not a tomorrow problem and so there's a balance here that you have to achieve between solving a real problem with an actual use case that a normal person can understand and a big vision and if you can blend the two then I think you have a shot because you still have to have a big vision of what the future might look like and you need to be sort of navigating your way towards that big Vision but if you don't solve a problem today that's useful you'll never get traction and the big Vision just becomes nonsense so there's a there's a story around both of those things and then I think very much about incrementally solving problems and sort of marching is the wrong way of thinking about it because it's it's a much white like more windy road but it's like a maze that you're working your way through to get to and achieve the ultimate Vision that you have for your company so big 20 000 foot View and also you know two foot view of like well what are you going to do today to make someone's life better uh you mentioned something that uh problems worth solving and I get to see that I'm like most people not not most like a lot of people actually are building products or um Solutions they're actually solving something they're like in many cases they're just nice to have I mean yeah okay they're like not solving a pain point so uh what's your opinion on on such products or companies yeah I think I think most companies are solving problems that just don't matter enough to enough people I think that's just generally true because there are lots of problems uh but but people prioritize them in their own lives and people this is true in a consumer context or a business context because a business is just a group of people anyway so you know it's like if you're not solving one of the top three four or five problems that somebody has it's a nice to have and you might get some traction because you know there's enough people on the Internet or enough people on the planet to find somebody that wants your thing but it's never really gonna scale unless you're really creating significant value so that that's how I sort of think about now it's it's sometimes hard to figure that out for a while because sometimes that problem looks like it matters enough but it in fact doesn't sometimes you know it doesn't matter enough but you can still navigate or pivot your way into something that does matter so it's hard to really know if you're solving a problem that matters until you actually get out there and start solving and see what happens uh but but that's how I think about that and then the other thing I'll say on that front is one of the questions I often ask Founders that I'm talking to whether they're pitching me or I'm just I'm just meeting them is you know of all the things you could do in life why are you doing this thing and the answers the answer to that okay is usually not awesome it's like well I don't know I want to make some money or I know it seems cool or and I'm like I to me so after after wasting years of my life doing things that just didn't really make a difference really really look at the opportunity cost of of doing things and so and by the way I'm not saying like everybody should be out there trying to cure cancer or save the planet although we probably need more people do both of those things it's not that it's just of all the things you could do in life why are you doing this thing uh because Founders don't have to start companies right this is not an obligation so you saw that company and you made a a choice to start a company that does X and I I look at a lot of companies and I wonder I don't know why you're doing x x just like who cares even if you win even if you skip that thing what have you accomplished it's not to say oh every company has to save the planet that's not what I'm saying but if you can't really tell me why winning matters I just it's just hard to get excited if you were to ask the same question to yourself to your earliest self how would you answer that so I think I think the I think when the first company I started was why not it was interesting it was different and I knew that school I didn't know what the path looked like for me at school so I'm like what the heck let me do this thing by the way I finished my degree anyway and even years even years after I finished that degree my parents were still suggesting I get an MBA because they weren't sure that the entrepreneurship thing would stick so that was like just a that was that was practically a whim you know I would say the first time that I got more intentional about it was year one Labs you know which was 2010 2011 time frame and and that's the first time sort of got really intentional about it because I had spent years before you know building project management software and I just didn't care like it was like you know I'm glad we helped people manage projects better but like there was no purpose to it and so year one Labs was very much about helping Founders build companies and and I think that stayed consistent through you know year one labs and the Angel Investing that I ended up doing and then Highline beta I would say is also you know part of the purpose and the value I get out of it is is helping people build their the companies that they're dreaming of building so so I've gotten more intentional with age around doing things because there is a literal opportunity cost to the time by the way as you age gets more expensive because you know like the older you get the less years you have and so you're like well I probably do something that matters so so I I really to me that's that's now if you care about something deeply and I don't care about it that's totally fine right it's not that we have to agree on the things that matter necessarily but you better have an answer other than I want to get rich or I think it's cool to start a company or I'm bored or like there's God there's got to be something or you know or you care deeply about the customer that you're helping you know I'm passionate about helping small businesses with their taxes okay like I'm not passionate about that but if you are I can see the value at scale of helping small businesses with their time that's boring but it matters to people so you know that that's what I mean it's like just have some purpose to what you're doing and and it's going to make your life better yeah what's the worst response that you ever got to this pretty good question because I I love the moment you would ask me the same question I was thinking okay if you were to ask me the same question what would I say but I'm not going to tell you that but okay I'm not going to ask you I'm not going to ask you because it's you know it's we'll record it so you know I think I think the answer I get you know is often the worst answer is not I don't know or nobody would ever say well building startups is cool and I want to get rich and I want to you know sell my company to Google nobody says that really but usually it's some sort of long-winded answer you know whenever anybody answers a question and the answer is very long it's because they don't really know the answer so they're just trying to make things up yeah and that that I think is what you use what you'll sometimes get like well I'm sort of interest you know I think the market is ripe for disruption I'm like okay I mean why then why are you the right person to disrupt the market well I saw an opportunity in the space and I'm like oh you know so it's usually this sort of like generic-ish look good answer where where I don't really believe that founder when things get hard and they always get difficult that that founder is going to fight through that with the with the necessary grit and tenacity to fight through the crowd and that's where you sort of lose belief in that person's ability to deliver previous company we were like raising shaking 1.5 at that point in time the VCS who ended up investing in them they asked a very good question it's powerful they're like you know most of the times in precede you're investing in Founders I mean you don't care about the product you don't care about the early traction I mean you could be making 10K 20K like whatever nobody cares about that it's it's much of a bet on on the founders so you're saying exactly the same thing like it's much of the best better than Founders but uh speaking of founders what are the must-have in your opinion a Founder needs to have like regardless of the industry they are regardless of the product they're building they just need to have that otherwise there's like no point in doing anything yeah I think it's it's all the same you know it's it's the stuff that you would imagine I think the the the grit and tenacity part of it is important you know Founders are anybody can start a company I suppose but but the ones that win you know have this element of belief in themselves not not beyond the point of reason you know there's this combination of I I believe in myself but I'm also I have the humility to know that I I know very little and I need lots of help at the same time so there's an ego component to it there's a grit and a perseverance component to it I think you know ultimately good Founders and CEOs have to you might not know this early on but they do have to become great leaders because they're they're they're gonna the only way to grow a company is is hiring great people so you need you know who's a leader that people will will join or follow into the trenches so I think those are all you know that that that's important and I think it is a balance it's hard to really understand but this balance between conviction and ego but also humility and and humbleness and and so because if you're if you're one of the other extreme you know on the the humility sort of I don't know what I'm doing side you're gonna you're gonna overly rely on mentors and support infrastructure but we can't build the company investors but we can't build the company for you you have to build it on the other side you get people who just no matter what they believe they're right and and of course sometimes those people are successful that's not surprising I guess but they also tend to be those people who Crash and Burn you know majestically right because they're just so they believe so much in what they're doing or themselves and they don't take in the input or the feedback or other points of view from others and they just sort of drive themselves to Oblivion and so you've got to find some kind of balance I think good I think Sportsman could make good Founders that's what I think what do you think about that absolutely I think that's a good point I think it's it's a high performance competitive game that you're playing especially if you've been playing a team sport uh I think you know that's an interest you know like solo sport versus T but there's always a team right like even if you play a tennis player as an example you have a team you have a coaches you have support staff you have infrastructure around you that you rely on so no I I think that that's I think that's a good I think that's a good point I think it's you know the the tenacity you need to be an elite athlete is insane I mean there are you know I'm a hockey fan what are their 600 maybe 700 nhlers so that's the 700 best few players on the planet how I mean how many people play hockey hundreds of millions I guess I'm not sure basketball would be the same thing about 650 I think NBA players so it's an elite profession and I think CEO is is a similar business school yeah yeah because because you know all the trades that you mentioned like you know they need to have great they need to have tenacity they need to be humble but they also need to be you know there needs to be a right balance and so exactly the same that you you would want to have in any top high performance athlete yeah the the difference actually I think that's interesting is that sports teams don't like sports don't evolve at the pace that startups evolve uh and so you know when you start a company with three of you let's say then there's 10 of you then there's 50 of you and there's you know and so a CEO that's incredibly good at that early stage isn't always the CEO that's packaging a bigger company so the the the the frequency of change in the startup is much different from the frequency of change in a sport and so the the adaptation I mean the game does change any game changes evolves you have to you have to keep practicing even if you're the world's greatest at something you're practicing like great so there is something to that I'm constantly learning and adapting but I think the pace of change in startups is greater than it is in sports I want to ask you about um from your own personal experiences like what's the obsesses that you have seen the lowest of the failures that you've seen and how both those events kind of transformed your life sure so so you know one of the successes that I've had was I joined a company called The Go instant so this was right after year one lab so I joined in 2012 if I'm not mistaken and I I joined to run product at this company I actually moved to Halifax Nova Scotia which is an Eastern end of Canada not a big Tech scene there but we were very quickly acquired by Salesforce and and that was a really interesting experience because you know then I spent two years working at Salesforce and that was quite interesting you know to sort of work within this large company very successful tech company so that was that was pretty wild wide and ended very positively you know on the on the failure side there have been plenty you know one of my one of my worst failures was so after the project management software company I went and started a company called standout jobs in the recruitment space and this is 2007. we raised 1.8 million dollars for the company and then 2008 we had the mortgage crisis in
the U.S it didn't impact Honduras much but of course everything went into recession and fell apart so it was pretty lousy time to be running a company in the recruitment space so the timing was off but aside and then we ended up selling the assets of the company in 2010 so we sort of banged our head against the wall for a couple of years and then sold the assets and that was a really unpleasant experience I was the CEO of the company and after that point in time I said I I could never be the CEO again it's just it's just too difficult and it's true like I'm not the CEO of Highline data I don't think I'll ever be the CEO again so that was a pretty colossal failure that was a pretty colossal failure and then and and there have been others but that one was that one was bad and then and but the you know go incident was was was a success and I've had other successes as well I think Highline beta I I think of Highline beta as a successful thing although we're seven years in so I think frankly surviving seven years or something chalk that up as a win you know but we've we've made some good we've made some good Investments we're growing a very strong team so you know trajectory wise I'm very excited about where we're going but of course the full story hasn't been written you know I've made some Angel Investments that have panned out nicely and and I consider those wins you know year one Labs if I go back to that one quickly talk about some positive stuff so we made five Investments one of the companies actually still exists today which is a long time but one of the companies was local mind and local mind was acquired by Airbnb oh yeah I've heard about that yeah I've heard about that so is that the same company or say the guy Lenny yeah yeah I think yeah oh so you know him okay yep yeah I do yeah so so Lenny and there was another there was another co-founder and uh his name was Bo and then another guy joined basically was a Founder his name was Nelson and we convinced these guys to come to Canada build this company local mind and you know again that was a success story because it was acquired and so you know and then we got to watch the inner workings of Airbnb and and Lenny and and Beau and Nelson and the team were you know obviously they've gone on and done other great things and been very successful so you know there's some really cool Amazing Stories often these things are somewhat random somebody knows somebody we convinced this person to come do this like just these random things that you just have to be open to but standout jobs as a failure big big big one and then you know before that we talked about this already the idea that I spent roughly 1996 to 2006. roughly with the same people not doing exactly the same thing but sort of plateauing and not growing the company but not growing myself much either that was 10 years you know you don't get those 10 years back so I I that's why I always think about opportunity costs when I think about wasting time you you think a lot of Founders uh are wasting their time working on their own products or not pivoting quickly enough so the short answer is yes but but the caveat to that is if you are if you are a founder and you really want to build companies then to me you you you recognize that you're going to have to go through this process multiple times and some are going to win and some are going to fail the most successful Founders that exist out there today you know have failed a bunch of times so to me it's about it's about it's a volume game to a certain extent not create 500 companies but iterating through this process building multiple things I think shutting things down when they're not working you know and not becoming sort of a zombie company that can survive but is never going to grow or again it doesn't have to grow to be a gigantic company but it's never going to achieve what you want to achieve and you you sort of hold on for dear life that is a waste of time but failing is is part of this process so failure is not a waste of time as long as you as long as it's happening relatively quickly and you're learning from that experience it hurts and it's it's it sucks nobody should ever diminish how lousy failure like celebrating failure is the wrong approach but accepting it and and getting through it fast is what you have to do I uh I was hated that um now you know this kind of become fashionable it's just like you know there was a time when everybody want