January 27, 2023 • 39 mins
Mary is Managing Partner of Bread and Butter Ventures. She began her career working on the Google IPO, and went on to lead new business development partnerships, negotiating early-stage product and technology deals worldwide. Mary served as the founding director of Google for Startups, leading the company’s global efforts to support entrepreneurs in over 100 countries. After her 15-year career at Google, Mary worked as an investment partner at Revolution’s Rise of the Rest Seed Fund, where she led dozens of investments in a range of sectors, including healthcare, enterprise software, and fintech.
In our conversation, we dig deep into the learnings from thousands of startups, explore how corporates can better partner and work with entrepreneurs and their companies, and discuss common pitfalls to avoid.
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Episode Transcript
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(00:02):
Welcome to disrupt disruption. A series of intimate interviews
with global thought leaders and practitioners operating at the
intersection of business leadership and Technology, we
discussing all things, Innovation and disruption and
how to not only survive. But thrive in these times of
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(00:23):
Take on business models methods,culture and Leadership.
We cut to the chase debunk, the hype and get real.
You're in great company. I'm your host, plus coffee net,
co-founder of be radical. Hey everybody this is Pascal.
We are back with another episodeof disrupt disruption today.
With Marygrove marries a dear friend of mine.
(00:46):
You will hear a little bit aboutthis story.
Our backstory in a second. She today is the managing
partner of bread-and-butter Ventures where she brings nearly
two decades of leadership experience in technology, early
stage investment and startup ecosystem growth together.
She began her career working on the Google IPO and went on to
lead new business development Partnerships, negotiating
(01:07):
early-stage product and Technology deals worldwide.
This is where we met Mary. Then served as the founding
director of Google for startups,leading, the company's Global
efforts to support entrepreneursin over 100 countries.
This was the place where I wish I would have worked when I was
at Google, but didn't after 15 years at Google, Mary
(01:27):
shockingly. Quit mother.
The ship and worked as an investment partner at
revolutions, rise of the rest seed fund.
Where she started investing in the dozens of companies in a
range of sectors including Healthcare, enterprise software,
fintech she built a funds portfolio, support platform and
build, a network of over 150 members and partners to guide
startup growth. She then left this and
(01:49):
co-founded and became the managing partner of
bread-and-butter. Ventures will talk about this in
a little bit. But she's also the co-founder
and executive director of an organization which is also very
dear and close to my Silicon North Stars a nonprofit that she
founded with her husband in 2013, to help Young minnesotans
from underserved communities. Pursue careers in Tech.
(02:11):
It's an incredible program, do check it out.
We'll put the link in the show notes, silicon North Stars,
truly, truly incredible. I had the great pleasure of
seeing the participants in this program, a couple times Mary.
I'm excited to have you on this podcast.
Pascal. That was so generous and so
kind, thank you for having me. And I'm just so grateful for all
(02:31):
of our years of friendship and working together and can't wait
for this conversation, let me start off.
I mentioned, we didn't have all that many people on the podcast
who are in the startup Communitymostly because I to day work
mostly in the corporate space. I'm curious as a person who's
got such incredible experience and startup Community Building,
ecosystems working with Founders.
(02:53):
How do you look at disruption? How do you would like, what's
your take on it? How do you conceptually think
about it? That's a great question.
You know, there's disruption this concept is at its epicenter
so courts, who the process of building a start-up, right?
What would motivate a Founder totackle an audacious
(03:14):
world-changing game-changing problem?
And it does all center around this concept of disruption when
you think about it from a startups perspective and truly
as you alluded to it, I've been really fortunate to work with
Hundreds of thousands at this point of entrepreneurs, all
around the world and the common theme comes back to.
This founder is fundamentally solving a problem that she he
(03:39):
and millions, if not billions ofother people on the planet also
have. And so that personal story that
personal narrative and connection we see in almost
every team that we certainly that we invest in and most teams
that we meet and work with and some capacity with this,
disruption comes from and its core stepping back.
And I'm looking at the macro ecosystem around that space of.
(04:02):
For example, I invest really actively in healthcare and
digital health and if you examine the entirety of the
healthcare ecosystem and it may be specifically when it within
that Women's Health, it may be within that specifically, pelvic
conditions, just looking at all of the different layers of the
ecosystem. What are those barriers?
And having worked at a large corporation having worked at
(04:24):
Google for 15 years, right? I really I believe that so much
of that change that massive opportunity from disruption has
to come from the outside. It's incubated it's born through
a process where you can have rapid iteration you can have
testing, you can have failure might not work.
You can move super, super rapidly.
And it's not to say that disruption, of course can exist
(04:46):
in a big company, but it's just much the barriers to entry are
so much lower when you're starting it in the startup
Paradigm. Curious, you mentioned something
around this idea that this Disruption often has to be
initiated outside of the contextof an established organization
incumbent for various points. And we talked about, I had many
(05:07):
guest on the podcast, who talkedabout the specific point from
your perspective for start-up. Do you think that the more
common way for start-up is to dothe disruption and then get
integrated into an incumbent join an incumbent or is the the
wrecks to riches story The Let'sbuild the next Amazon, the more
(05:29):
common one, that's a great question.
I think that the reason that I often make sense to disrupt an
innovate quickly as a start-up. The reason is easier.
I'll give you an age-old. Example is social media and it's
early days when you had all these really viral new Services
apps technologies. That got introduced.
It rarely rarely did it come topdown from a big company, right?
(05:53):
There was something sort of fundamentally, maybe it didn't
embrace the notion that that platform like Google could
create a social network AKA, youknow, call it Buzz, call it open
social, call it think it was called Google talk at the time.
Of course, Google Plus right versus these viral, these tick,
tock tick, tock WhatsApp, Instagram, of course, they all
became part of larger platforms,eventually.
(06:13):
Hence, the question around the exit.
They were something so Scrappy and enticing about the novelty
of this emerging brand-new technology.
And that Paradigm, I think applies in a lot of cases today,
even The vertical or the sector might be very different.
And the reasons for lack of adoption might be very different
(06:33):
and so we see just as a pure percentage and numbers basis a
lot more companies going down from the early stage.
We know that the survival rate for seed startups is less than
50 percent of seats each company's go on to survive.
Those who do you? You have a lot more in the exit
bucket, right? Meaning God acquired, whether
(06:55):
that's a smaller Talent acquisition a tech tuck in or a
large scale, you know, em a deal.
Then you have who go become the Billion Dollar Plus public
companies and that's just a numbers game to.
I think both paths are very viable, but I do believe that
both outcomes are equally exciting and are equally viable
(07:16):
when you're starting out on day one, and that context in the
Venture scene, there's the old adage, we invest into people,
not the idea because the idea will change the proverbial.
Etc. As the UI rolling a little bit.
I'm curious from your experienceas an investor - having built
incredible organizations, like Google for entrepreneurs.
(07:36):
How much is that true? How much do you actually believe
investing into the people versusthe idea?
Because I think there's an interesting coralie to the
corporate world where clearly weinvest into the idea, right?
Rarely have, I seen a corporate saying, oh, we've got this
incredible team. Let them just do a thing and let
them pivot 15 times. But rather a know we have got
(07:59):
this idea. We need to build this thing.
Absolutely. Especially in an economic
environment where you know, you are seeing layoffs and right.
And there is a that constant trade-off of resources and
what's the ROI on those resources from a normal startup
perspective, 100%. We always say the biggest
determinant and we truly mean it.
(08:21):
The biggest determinant in our decision is absolutely the
founding team and I prefer to invest in multi founder team.
Not to say that we would never and I certainly have invested in
Solo founding teams. But having that diversity of
perspective backgrounds, the true team sport that is building
a company especially from 0 to 1or 0 to 10.
It's really, really helpful and we think that's a great recipe
(08:44):
and the founder profiles and backgrounds can be wildly
different, there's no box. You have to check in terms of
technical founder design founder, right?
That can really vary but team team, team is absolutely
fundamental to that decision. So there is a lot of Truth to
the old adage, but I'm going to say it's both and because the
(09:04):
product almost certainly will change.
The go-to-market strategy. Almost certainly will beat at
least tweaked if not changed dramatically maybe how you
monetize, right? All of the the other slides and
that initial Vision deck, but fundamentally we are
underwriting. A lot of risk at this stage it
especially in a macroeconomic environment.
That is challenging meaning. We know that it's going to be
(09:27):
difficult. For companies to raise.
After this round unless they clear certain milestones and
hurdles, and de-risk the opportunity because I invest
primarily at the seed stage, which means company has a live
early version of the product andMarket with a little bit of
utilization data under belt, maybe no Revenue yet.
So there's a lot to prove out before that next round.
So I had this very existential question this morning Pascal
(09:50):
because I met with a company that I've been getting to know
and digging into for a while. And that's what I was thinking
of in this market, right? We Have phenomenal team on paper
and in practice Stellar co-founding.
Team just really, really strong.Technical business, just fits
all the criteria, you would hopefor the science and the
(10:12):
technology seem very solid, verypromising, very exciting.
I have this big question right now around the go to market and
it's beginning to pre launch product.
Are they, is it that the right approach?
How do we know how do we Test their assumptions.
Is that customer going to buy it?
And I have some serious questions about that.
(10:32):
And so this is the very questionthat you asked, right?
If it's the right team, an excellent product.
The other thing is, you know, isthis the right?
Is this the right Market approach and is this the right
time in the market? I think that we don't talk
enough and Venture about Market timing and how much that can
make or break a specific company.
So to me it is a both and especially in this market where
(10:56):
capital is not easy to come by and we know that great teams
aren't just going to go up in under a year and raised again
without making significant progress.
So we've been a lot more disciplined about making sure
that yes, the And he was there, but the idea has to be good to
voice. Wonder how much do you find?
The, the radical pivot actually,to be the norm versus the
(11:18):
outlier. So the classic example, you
know, slack originally invented as a chat platform for game and
then the game took basically disappeared and slack, became
whatever it is. And now it's Salesforce how much
of that story which is being perpetuated, throughout Silicon
Valley, right? Like the pivot and you want to
build a self-driving car and youend up like, you know, building
whatever, like it video. And platform, you're good.
(11:39):
How much of that is actually real, a fair bit of it is.
And usually they're not that dramatic of pivots.
Although I would say that I you know, our prep friends.
My preference is certainly to invest in situations to
underwrite teams that we think are have completely binary
outcomes. Meaning this is such a huge bet
(12:00):
and a huge swing that it's either going to go to zero and
fail or become a multi-billion dollar home, run opportunity.
It's the Recreator or it expandsthe size of the market and we're
completely okay with that. Because again in Venture you're
building a portfolio, right? And in our case it's 25 to 30
companies per fund this portfolio approach where the
(12:20):
math of it is typically in that situation, You're Expecting
maybe three to four companies and that portfolio to return
your fund hopefully multiple times over and some will not
make it and some will maybe be a1x or 2x 3x return so you're
thinking of it that way. But that said every single
Moment, we make. Has to be in one that we think
(12:41):
can be that that three to four company outlier.
And so we're comfortable with that.
But because of that, as you might guess there are a lot of
pivots of, hey, we went to Market, we tried it for six
months and the timelines for pivoting.
By the way, an early stage startups are much shorter.
Because, in many cases you have a year of Runway.
If you're lucky, you have 18 months.
(13:02):
If you're really lucky, maybe a little more, maybe less than a
year. And so, we really can't afford
to say, Let's test this for three quarters.
Come back and analyze the data. Right?
It's like boom it's not working.And after 3 months, unless it's
inherently something like you'reselling into a payer you know,
insurance company that's an 18-month sale cycle and you know
that but for the most part, if you're building software and
(13:25):
selling quickly, the cell cycle is shorter, you have to Pivot
pretty pretty dramatically. So yes, there are.
There have been a couple companies.
I'm not going to lie in the timesince we committed to making the
investment in the time. It took them to close out the
Found that I later realized thatI actually invested in a
different company than what I thought I did.
(13:45):
And again, it does come back to that belief that this is the
right team. This is the right problem, and
there's going to be tweaks in the product and they go to
market. It's so interesting.
I wonder how much we can learn from that approach in the
corporate world, right. Like the shift away from the
very specific product idea. We are having, but rather saying
there's an opportunity, a vague Market opportunity.
(14:08):
And then, you know, finding the right teams, which brings me to
another question about teams. I'm curious.
How do you assess the team? What do you look for in terms of
the leadership qualities? I mean, clearly, they need to
have expertise in the thing, they're doing.
But what are the leadership qualities you look for in
figuring out? Is this a team?
You want it back? Absolutely.
(14:28):
So definitely the sector Acumen expertise and that can be
achieved in many ways to write. We have some Founders who, for
example, in our Healthcare portfolio.
I'd say it's about half and halfwhether the founder is a
clinical has a clinical background or has brought that
on board to compliment, you know, her, his skill set.
(14:49):
So certainly that's there. We primarily look for, you know,
at this stage, its Founders who are truly, I would say,
magnanimous is the word that comes to mind.
In terms of being able to have huge Vision attract, great
talent, inspire people to work for you for way less than market
rate at the seed stage, right? Because they Leave in the vision
(15:10):
and they believe in the leadership so that sort of
magnetic die-hard belief in yourself and the vision and the
startup for sure we look for Founders who are very coachable
and receptive to feedback, not that that bite means by any
chance means that you need to take our feedback all the time.
But if there's any layer of defensiveness, we're not going
(15:31):
to have an open communication partnership to a early on, you
know, we won't move forward withthat relationship because we
want the same in both directions, where there's Great.
Trust in Candor from you to us as well.
For sure we look for Founders who are immediately able to
identify recognize their the gaps and skill set on the
(15:52):
management team in the business,they're building and be
authentic and vulnerable about that.
It's a zero percent - it's really positive, right?
If you are the strongest clinical leader and looking at
autoimmune disorders and the world, but you don't have a deep
Business, Financial modeling, CFO type hat.
Totally Fine, let's not hide behind that for two years while
(16:14):
instead of bringing on a good resource early on.
And so those are some of the intangible qualities.
But I would say, if I had to pick one thing that sets truly
exceptional Founders apart, it is very simple and achievable by
anyone, but is such a denominator changer is just
exceptional communication and I have in terms of regular
(16:35):
investor updates transparency with your team, how you
communicate with the I was tiredto the c-suite of your
organization just steady consistent transparent, reliable
communication. And we, for example, ask all of
our companies when we invest that, they commit to sending a
simple monthly, written investorupdate.
That's an addition to all of theoffline, one-on-one working
(16:58):
sessions, brainstorming sessionsthat we might do.
Just a simple written that tracks.
This consistent kpis month-over-month quick email, it
should take you no more than 15 minutes.
It's the consistency. And on the first of every month,
as a flood of these come in, we as a team, pour over them, we
spend time on every single one, trying to come up proactively
with. Hey, these are three customer
(17:19):
intros, we can make how they metthis investor.
I know this PR firm who would bea good fit and I know that the
ones where those updates don't come in, or if a company goes
silent, you immediately assume something's wrong, something's
going wrong. So it's a simple thing, Pascal
and yet It's actually very rare to have that level of
exceptional communication. So I share that because the good
(17:41):
news is that is something that anybody can implement, the
anybody can Implement brings me to another question.
Do you think good Founders are born or can they learn?
Can you learn to be a good founder is unlike is an
exceptional entrepreneur someonewho's get something in there.
Whatever DNA social upbringing you whatever nature-nurture
debate or is is literally something which you can foster
(18:04):
in people. And again I think it's
interesting question for Nobody Rides, like do I need to look
for this type of people and bring them in?
Or can I take people who are promising?
Other areas and actually educatethem.
I'm a big believer and possibly that's fueled by my hope.
That this is the case that it's both.
It's both nature and nurture andcan be nurtured, because I
(18:25):
fundamentally believe, as long as people possess that voracious
curiosity and desire to learn. And I myself am a product of
that, right? I didn't grow up, anything near
Near proximal to the scene of venture capital.
My parents are entrepreneurs as but just that simple desire and
tenacity and willingness to continue continue.
(18:47):
Continue relentlessly, trying tolearn and working hard.
And I believe that can be applied certain link to
anything. And these founder stories, it
Bears out, right? I mean, one of the companies
that I'm really close with in very excited about in our
portfolio is a maternal Health company named delphina and
they're abusing. Building an AI model for
(19:07):
Maternal. Fetal.
Monitoring to predict complications in pregnancy and
then therefore I care plan as well as a delivery plan, really
to improve outcomes for mothers and babies and the founder, dr.
Sinanan Ibrahim, he was actuallyin medical school and trained in
Neuroscience trained. Medical doctor, when he
(19:28):
Witnesses, stillborn stillbirth,when he was doing the, OB
rotation had the aha moment of we're working with all these
Data sets. This is preventable potentially,
this doesn't have to be the caseand totally pivoting from that,
right? Having not been a health Tech
founder per se, and it's just a great example.
I, he's just absolutely crushingit with a clinical expertise to
(19:51):
his business Acumen, his partnership Acumen, his
leadership, it's really impressive to watch, but there
are so many of those stories I could give you fifty nine,
others in a portfolio of 60 companies where the path that
led someone there was never. This was my destiny in.
It was generally, something something happened in my life
that made me really analyzed this issue and take everything
(20:13):
I've got. And usually scrap, and learn and
Claw together. The resources to just to get
started bread. And butter is a Minnesota.
You have how many Fortune 500 headquartered in your direct
proximity like dozens, right? Yes.
So Minnesota is home to 16 Fortune 500 companies which is
(20:34):
the highest number of Fortune. Under companies per capita in
the nation and beyond that, we have approximately 60 or so
companies, who are headquarteredin Minnesota who do north of a
billion dollars of annual revenue, meaning the scale of
big Enterprise is large here andthat to me moving from Silicon
Valley where I had lived for almost two decades, right?
That feels like the quote-unquote center of the
(20:57):
universe is really, really fascinating to come to a place
where you have such a diverse economy in terms of the types of
Corporations and companies that are here.
Here. And what's been interesting to
me is that Talent has flowed, pretty, pretty fluently amongst
those companies meaning, you could go for my long-term career
in food to suddenly being an executive at a Healthcare
(21:20):
company or Finance to energy andsort of that transfer of
transferability. You'll have a lot of the
knowledge and skill set in that context must see the maybe
eternal struggle of startups working with corporates and It's
working with startups. Curious from your perspective,
what are the do's and the don'ts, we have a lot of
(21:42):
corporate people listening to this podcast, how can they make
their own life better and the lives of the startups that want
to work with better? I have so much empathy for both
sides of the equation here from corporate to start up because a
part of my time at Google, I worked in a wonderful team
called new business development.And we did product Partnerships
and Partnerships ranging from the tiniest contract to
(22:04):
negotiating with the Fortune 500and the largest tech companies
in the world. And I Now understand firsthand
because I was on the other side of the internal conversation is
always I'm sorry. Google can't partner at our
scale. We can't partner with a such a
small company because the I cannot support the scale at
which we do everything. That's a very unfulfilling
answer to here and I was the ones were producing that answer
(22:27):
multiple times over. And now, on the other side of
hi, I'm representing this amazing cutting-edge company in
this sector knocking, on the door of the Giant, and saying,
but here's a great opportunity. And so it's fascinating.
We spent so much time, learning.So, as context for everybody, we
have something called the bread and butter Innovation Circle,
(22:47):
which is our way of Operationalizing, and trying to
realize that the corporation's actually are voracious to work
more of the startups. There's just in startups,
obviously, vice versa, but nobody has easily built here in
Minnesota, certainly that, that connective connective tissue to
make that. Easy to accomplish.
And so our Innovation Circle, wehave 17 corporations who Our
(23:10):
member organizations ranging from Ecolab to Cargill Mayo.
Clinic Blue, Cross Blue Shield, 3M US Bank a whole host of
phenomenal partners and our commitment is, you know,
anything from some of them are investors in our fund, some help
with due diligence, when we lookat the market and getting
smarter about where the industryis headed at the major areas are
(23:32):
customer introductions for commercial opportunities.
Is investment opportunities for the corporation and then
long-term, we hope a path to MMAas we start to understand what
their priorities are and what they're looking for whether or
not, it's a company in the bread-and-butter portfolio or
touching a lot of startups were seeing a wide aperture at our on
our lens. So that's the basis of the
(23:53):
Innovation circle from that the do's and don'ts.
So my, my teammate Stephanie riches are head of platform and
she spent a lot of time studyingthis issue talking with hundreds
of corporate leaders. And startup Founders and she
actually published its publicly available.
I can share it's called the Enterprise Playbook and in it
she has a numerous case studies but specifically outlined
(24:17):
tangible buckets if you will of how Enterprises can think about
working with startups and it is everything from so to speak to
the corporate side for a moment.Anything from on the tiny dip
your toe in the water, right? Get involved in sponsoring and
showing up. Started because the system
events almost every city has a startup week or similar type of
(24:39):
event. That be the easiest smallest
way. Another bucket is thinking about
who are the suppliers that you work with and what is your
process like? Is there some bucket of
experimentation you can carve out within that to work with
newer smaller companies? Because remember back to the
disruption that could rapidly accelerate some of your goals.
But usually the criteria to qualify for working with such a
(25:02):
large company is much later stage.
Age. So there's that supplier,
commercial partnership opportunity.
Bucket there are certainly, the bucket of the Corp Dev rate,
conversations around. Can we partner can we acquire,
can we Aqua higher? And that's something that we've
been spending a lot of time on as well?
And there's the investment piece.
Can you invest it directly in startups or investing in funds
(25:25):
in your sector has been really popular in terms of just getting
onto the being a strategic, on the cap, table of companies, who
might be the next big thing in your category without Out
acquiring them yet, right? So there's a range of ways but I
think having dedicated, I also lead on this and whether it
makes sense to have dedicated team dedicated to working with
(25:46):
startups, right? And who can sort of be a
concierge to help route through the organization.
That's that's very helpful. And so is empowering within your
business units, your Leaders with the ability to make some
entrepreneurial carve-outs, I'llcall them right where?
Yes, my purview is Sourcing XYZ for a comfy, but I am blessed
(26:08):
with the approval to say spend, 20% of the budget at my
discretion, to pursue these goals.
That might be in the disruptor category.
So that's on the Enterprise sideon the startup side that's
really dependent on the sector, right?
But it's, can you go in with a pilot that is time-bound That is
(26:29):
short enough rights. It's did not impact your
business. Too much of it doesn't work out
but long enough to prove out whatever Roi that you are going
to prove out. So a good example of one of our
companies and the portfolio is called kapila.
They're based in Sun Valley Idaho, they are a platform as a
scale software platform for female leadership development
and Corporate America think of it.
As, you know, traditional Solutions today are for them
(26:51):
senior, most women, they are extremely costly, doesn't scale.
That's it doesn't reach a great number of people.
This case. There are some corporations who
have rolled it out to their entire female Workforce because
the price point is within reach,the scale is there and then
you're able to connect with a wide community.
And so, but for that, right? It's how do we get in and pilot
(27:14):
and then what's the direct Roi that we're going to produce.
So it's around, retention rate, promotion rate, employee
happiness, surveys utilization engagement of people actually
using and loving my product. What are they saying about the
company? And if you can prove that Roi,
As a start-up. Great Bland Atlanta and expand,
right? Lana.
And expand getting quickly. Do a small pilot.
(27:37):
I hesitate to give things away for free, but that strategy can
work in certain cases, right of free.
And so there are a lot of ways. But I'm, I'm curious for your
thoughts, Pascal. I mean, there's we're always
looking for ways to coach our startups on that.
I think it's in fascinating question.
And I know from the companies wework with a lot of them
struggle, and I think a lot of them struggled for very
(27:57):
bureaucratic reasons to be honest, like anything from but
it has to go through a legal department and then the legal
department produces a 400-page legal document.
And this data of just sits in islike, listen, if I, if I were to
pay my lawyer to go through this, like I just burned through
half my Capital, right? And then the second one, I
really loved your point about the entrepreneurial car route.
(28:20):
And I like I even love the the way you phrase it because I
think that's the other part which is a there's a just a very
real fear for leader to say, well, if I do this and it goes
south, like, how does it look onme, right?
And the notion that You can try things out.
There's always a risk involved, and we need to be okay with that
(28:41):
risk, and it's fine. You know, like, keep the risk
manageable and we can move on. If it doesn't work out, at least
we learned something or hopefully, we'll learn something
that's exactly. And you and I you and I met a
Google that early days Paradigm of that 70-20-10 framework for
anybody not familiar that the framework was 70%, should be
spent on the core, which at the time of the core of the business
(29:04):
was search and ads. 20% on the More experimental may or may not
work male. He's a revenue generation down
the road and that the time thoseare things like Google Maps and
Gmail and what ended up becomingthe rest of the Google Suite of
products in that 10% really important was the Blue Sky shoot
for the moon probably going to fail but if it hits, it could be
(29:27):
extraordinary and game changing.And I think having that right,
if you're doing a project in the10% it's like, wow!
That is that is so cool and lucky that you get to work on
that and then if it fails it, Of.
Okay. That was that was an acceptable
outcome so that's the same framework.
I think applies to so much of life but in the corporate
environments, absolutely helpfulto have that predetermined
guardrail and it's not going to be punitive in the same context
(29:50):
of there's a framework from Billpasmo.
Whom we had on the show because it's the 10th and five where he
says the top 10% of rulership Team should spend 10% of their
time thinking five years out. And I think it's really
important because we see so manycompanies recently did a
non-representative study But we did a survey with one of the
largest consulting firms where we asked a subset of their
(30:12):
consultants and said, what do you think that percentage?
The 10, 10, 5 actually looks like for your clients and I
think 56 percent of them. Said, my client doesn't even
think more than a year out. It is crazy to your point.
I love this, combine. This with your 70-20-10
framework, the Goon framework asinbred, you allocate your
(30:33):
resources, not only your time, but also your financial
resources. I think becomes really
interesting. I love that in 10 5.
I'm gonna go think about that. All yours is bill pass my words,
not mine. So I'll give I keep on giving
the gift of other people. We will make sure by the way to
link to your playbook in our show notes, because I'm sure a
lot of the readers would love tolike peek into this because I do
(30:56):
know that there's a huge desire for corporate people to actually
do more with this. That I think that the important
thing and you and I talked aboutthis quite a bit is Really
seeing it as an ecosystem, right?
It's not just a, like, he are weand there's these like the
startup people and maybe we acquire them, but that's about
it. But really thinking much more
(31:17):
holistically at this, right? It's true.
It's true. And here in our community in
Minnesota, for example I can be of two great examples in
healthcare one is a line of Health, one of the largest
Health Systems in our state and the other is Blue.
Cross Blue Shield Minnesota, oneof the largest payers insurance
companies in the state and both large.
Asians have done tremendous workto partner with early-stage
(31:40):
companies to the point of early where I, you know, I have often
myself been surprised that they've partnered with some of
that early and so happy to see it right before these pilots in
our backyard. That these are affecting issues
that are affecting population Health.
Some of the true on the ground issues that are so urgent in our
community. And these are not yet startups
(32:03):
who are necessarily going to be able to serve, you know, billion
people. But to see that kind of
collaboration is so heartwarmingand I love just use those
examples where these are pilots.They may become a core part of
the entire health system and maybe one time pilot.
Let's see. But just having that, it's so
rare to see large logo with suchan early stage company, and so
(32:24):
more and more of that I were seeing more and more of that.
And I feel really encouraged. Let me end with one question.
So you're based out of Minnesotabread and butter.
Your fund is based out of Minnesota, you were part of Of
Rise of the rest where the wholeidea was that this enormous
amount of innovation, disruptionstartup activity happening,
(32:45):
outside of the typical startup, hubs, which really is Silicon
Valley and New York at the time,and it may be the Boston
Corridor. I'm curious.
How do you think about geographythese days?
When it comes to Innovation disruption, the startup
ecosystem, clearly, you made your bet on.
The fact, that is Silicon Valleyis not the center of the
universe anymore. Maybe, but I'm curious, how do
(33:06):
You look at this, it's been sucha fascinating Journey.
The last little last two decades, but in particular last
five to six years, for me, personally, I grew up in Silicon
Valley, in many ways. Certainly professionally writing
works at Google for the first 15years there in New York and some
time in Emerging Markets, but really at the epicenter of
Silicon Valley and I loved it. I truly loved it.
(33:28):
I didn't leave because I was running away from something that
it really was that running towards something.
And this belief, that if you look at the Future of the
Innovation economy. But the big the big big
challenges that are facing us from food supply chain to the
Healthcare Systems to climate toso many more.
I mean a lot of the solutions lie in sectors like traditional
(33:52):
the heart of American manufacturing.
For example. Therefore it makes sense that
the on-the-ground Innovation will be happening in these
markets is one point but a second point is also just the
capital efficiency that you can achieve in these markets.
When building startups, it's a no-brainer right?
In terms of hiring Talent hiringteams and then affording them to
(34:13):
have great quality of life and be able to support their lives.
Their families, their communities moving to a market
like this has been really eye-opening and I have personal
reasons to have a huge family inthe midwest on my husband's
side. And he's from Minnesota.
And so it was a nuanced decisionfor me, not purely driven on the
feature of investing. But I on that alone, I have been
(34:34):
since decided based on that to double down, right?
And sort of to go from my role at Google, where we were working
in over 100 countries, then to rise at the rest, which were
working from coast to coast outside of the coast to right
now, we don't only invest in Minnesota, we invest all across
the country. However, as Really focused on a
(34:56):
place based strategy of how we can leverage the resources here.
So I have made my bet Pascal andI feel like the lines of
geography are I try to ask myself as constantly is this
just because this is where I am physically and what I'm immersed
in, but the points to me that validate, that know the lines
are more fluid than ever. If you were to draw a map today,
(35:19):
I truly believe that for a few reasons I think that the covid
pandemic has accelerated. So much of this virtual just
investing decision-making investors for the first time
realizing. Oh my goodness, there is amazing
talent and opportunities for Investments all across the
country. I'm missing them.
And guess what? Because of the capital
efficiencies, the valuations of those companies are often much
(35:42):
lower and that's a trend that ishere to stay.
The Paradigm has completely shifted.
And I'll tell you that we more and more co-investors in the
coast are peeing, us on a monthly Weekly daily basis,
right? Looking at companies that they
never would have looked at, or the number of at this moment.
At the end of the year, I met the eight different Health Tech
(36:06):
funds, who I had talked with over email over the years, all
in person, in Minneapolis purely.
Coincidentally there wasn't a conference or a convening.
It was I'm passing through town.I'm passing through town there
and meet some companies and so that really is a big moment.
I think just to see that shift in the lines are blurred The
Future Has Completely changed, Silicon, Valley isn't continues
(36:28):
to be a very unique and special place and there are a lot of
very special places and so I'm excited.
I am I think that's, that's, I feature is a completely
different map than it ever has been on this note.
And I love the positivity of there's not and really fits
well, into also a corporate context because the vast amount
(36:50):
of corporate organizations are not in Silicon Valley, clearly
not headquartered in Silicon Valley for Reasons.
Hey so it is beautiful to see that you know Innovation truly
starts to spread out more. It becomes much more
democratized and I really adoredour conversation.
I love the insights. Are you brought to the table?
I love this. There's nuanced view of looking
(37:11):
at Innovation and disruption through the lens of a start-up.
Really thinking, also, what doesthis mean in the context of a
corporate? How can I as a corporate, what
can I learn from this? How can I engage in this
ecosystem, will make sure that all the the links we talked
about in the show notes to your fund as well as the The
Playbook. I would love to link to that of,
for sure and the Mary. Thank you so much.
(37:32):
I wish you all the very best forbread and butter.
I know it's doing phenomenally well, and I know that you're
raising another fund, so it willdo even better and I know that
you're having a massive impact on your local community.
I've seen it in person when I was in Minnesota with.
You just about a year ago, I less than a year ago.
So, please keep doing what you're doing.
It's incredible. This, thank you so much for the
conversation or Pascal. Thank you for having me upset.
(37:55):
Such a tremendous fan of all of your work and everything that
you're involved in. So really delighted to get to be
here today and, you know, to thecorporate leaders out there
listening. I think they're truly is just
such an exciting opportunity to continue to bring that
entrepreneurial spirit in from the outside, from the inside,
from the bottoms up from the tops down and we're all lucky to
(38:15):
be working with Pascal. So thank you for all that you
do. And thank you for for having me
today. Thank you.
Hey, it's Pascal. Thanks for tuning in on this
episode of disrupt disruption. If you want more, check out the
other episodes we have on this podcast.
And if you liked it, do us a favor.
Go on your podcasting platform of choice, iTunes, Google play,
(38:36):
whatever it is, and leave a quick review, it helps
tremendously with getting the insights from our guests out
into the world. If you have any questions, send
me an email, you can reach me atPascal at fee net.com.
Thank you so much for listening and I will hear you here.
Here soon.
Welcome to disrupt disruption. A series of intimate interviews
with global thought leaders and practitioners operating at the
intersection of business leadership and Technology, we
discussing all things, Innovation and disruption and
how to not only survive. But thrive in these times of
exponentially accelerating change, trusted by Seals,
Founders and leaders globally for the latest.
(00:23):
Take on business models methods,culture and Leadership.
We cut to the chase debunk, the hype and get real.
You're in great company. I'm your host, plus coffee net,
co-founder of be radical. Hey everybody this is Pascal.
We are back with another episodeof disrupt disruption today.
With Marygrove marries a dear friend of mine.
(00:46):
You will hear a little bit aboutthis story.
Our backstory in a second. She today is the managing
partner of bread-and-butter Ventures where she brings nearly
two decades of leadership experience in technology, early
stage investment and startup ecosystem growth together.
She began her career working on the Google IPO and went on to
lead new business development Partnerships, negotiating
(01:07):
early-stage product and Technology deals worldwide.
This is where we met Mary. Then served as the founding
director of Google for startups,leading, the company's Global
efforts to support entrepreneursin over 100 countries.
This was the place where I wish I would have worked when I was
at Google, but didn't after 15 years at Google, Mary
(01:27):
shockingly. Quit mother.
The ship and worked as an investment partner at
revolutions, rise of the rest seed fund.
Where she started investing in the dozens of companies in a
range of sectors including Healthcare, enterprise software,
fintech she built a funds portfolio, support platform and
build, a network of over 150 members and partners to guide
startup growth. She then left this and
(01:49):
co-founded and became the managing partner of
bread-and-butter. Ventures will talk about this in
a little bit. But she's also the co-founder
and executive director of an organization which is also very
dear and close to my Silicon North Stars a nonprofit that she
founded with her husband in 2013, to help Young minnesotans
from underserved communities. Pursue careers in Tech.
(02:11):
It's an incredible program, do check it out.
We'll put the link in the show notes, silicon North Stars,
truly, truly incredible. I had the great pleasure of
seeing the participants in this program, a couple times Mary.
I'm excited to have you on this podcast.
Pascal. That was so generous and so
kind, thank you for having me. And I'm just so grateful for all
(02:31):
of our years of friendship and working together and can't wait
for this conversation, let me start off.
I mentioned, we didn't have all that many people on the podcast
who are in the startup Communitymostly because I to day work
mostly in the corporate space. I'm curious as a person who's
got such incredible experience and startup Community Building,
ecosystems working with Founders.
(02:53):
How do you look at disruption? How do you would like, what's
your take on it? How do you conceptually think
about it? That's a great question.
You know, there's disruption this concept is at its epicenter
so courts, who the process of building a start-up, right?
What would motivate a Founder totackle an audacious
(03:14):
world-changing game-changing problem?
And it does all center around this concept of disruption when
you think about it from a startups perspective and truly
as you alluded to it, I've been really fortunate to work with
Hundreds of thousands at this point of entrepreneurs, all
around the world and the common theme comes back to.
This founder is fundamentally solving a problem that she he
(03:39):
and millions, if not billions ofother people on the planet also
have. And so that personal story that
personal narrative and connection we see in almost
every team that we certainly that we invest in and most teams
that we meet and work with and some capacity with this,
disruption comes from and its core stepping back.
And I'm looking at the macro ecosystem around that space of.
(04:02):
For example, I invest really actively in healthcare and
digital health and if you examine the entirety of the
healthcare ecosystem and it may be specifically when it within
that Women's Health, it may be within that specifically, pelvic
conditions, just looking at all of the different layers of the
ecosystem. What are those barriers?
And having worked at a large corporation having worked at
(04:24):
Google for 15 years, right? I really I believe that so much
of that change that massive opportunity from disruption has
to come from the outside. It's incubated it's born through
a process where you can have rapid iteration you can have
testing, you can have failure might not work.
You can move super, super rapidly.
And it's not to say that disruption, of course can exist
(04:46):
in a big company, but it's just much the barriers to entry are
so much lower when you're starting it in the startup
Paradigm. Curious, you mentioned something
around this idea that this Disruption often has to be
initiated outside of the contextof an established organization
incumbent for various points. And we talked about, I had many
(05:07):
guest on the podcast, who talkedabout the specific point from
your perspective for start-up. Do you think that the more
common way for start-up is to dothe disruption and then get
integrated into an incumbent join an incumbent or is the the
wrecks to riches story The Let'sbuild the next Amazon, the more
(05:29):
common one, that's a great question.
I think that the reason that I often make sense to disrupt an
innovate quickly as a start-up. The reason is easier.
I'll give you an age-old. Example is social media and it's
early days when you had all these really viral new Services
apps technologies. That got introduced.
It rarely rarely did it come topdown from a big company, right?
(05:53):
There was something sort of fundamentally, maybe it didn't
embrace the notion that that platform like Google could
create a social network AKA, youknow, call it Buzz, call it open
social, call it think it was called Google talk at the time.
Of course, Google Plus right versus these viral, these tick,
tock tick, tock WhatsApp, Instagram, of course, they all
became part of larger platforms,eventually.
(06:13):
Hence, the question around the exit.
They were something so Scrappy and enticing about the novelty
of this emerging brand-new technology.
And that Paradigm, I think applies in a lot of cases today,
even The vertical or the sector might be very different.
And the reasons for lack of adoption might be very different
(06:33):
and so we see just as a pure percentage and numbers basis a
lot more companies going down from the early stage.
We know that the survival rate for seed startups is less than
50 percent of seats each company's go on to survive.
Those who do you? You have a lot more in the exit
bucket, right? Meaning God acquired, whether
(06:55):
that's a smaller Talent acquisition a tech tuck in or a
large scale, you know, em a deal.
Then you have who go become the Billion Dollar Plus public
companies and that's just a numbers game to.
I think both paths are very viable, but I do believe that
both outcomes are equally exciting and are equally viable
(07:16):
when you're starting out on day one, and that context in the
Venture scene, there's the old adage, we invest into people,
not the idea because the idea will change the proverbial.
Etc. As the UI rolling a little bit.
I'm curious from your experienceas an investor - having built
incredible organizations, like Google for entrepreneurs.
(07:36):
How much is that true? How much do you actually believe
investing into the people versusthe idea?
Because I think there's an interesting coralie to the
corporate world where clearly weinvest into the idea, right?
Rarely have, I seen a corporate saying, oh, we've got this
incredible team. Let them just do a thing and let
them pivot 15 times. But rather a know we have got
(07:59):
this idea. We need to build this thing.
Absolutely. Especially in an economic
environment where you know, you are seeing layoffs and right.
And there is a that constant trade-off of resources and
what's the ROI on those resources from a normal startup
perspective, 100%. We always say the biggest
determinant and we truly mean it.
(08:21):
The biggest determinant in our decision is absolutely the
founding team and I prefer to invest in multi founder team.
Not to say that we would never and I certainly have invested in
Solo founding teams. But having that diversity of
perspective backgrounds, the true team sport that is building
a company especially from 0 to 1or 0 to 10.
It's really, really helpful and we think that's a great recipe
(08:44):
and the founder profiles and backgrounds can be wildly
different, there's no box. You have to check in terms of
technical founder design founder, right?
That can really vary but team team, team is absolutely
fundamental to that decision. So there is a lot of Truth to
the old adage, but I'm going to say it's both and because the
(09:04):
product almost certainly will change.
The go-to-market strategy. Almost certainly will beat at
least tweaked if not changed dramatically maybe how you
monetize, right? All of the the other slides and
that initial Vision deck, but fundamentally we are
underwriting. A lot of risk at this stage it
especially in a macroeconomic environment.
That is challenging meaning. We know that it's going to be
(09:27):
difficult. For companies to raise.
After this round unless they clear certain milestones and
hurdles, and de-risk the opportunity because I invest
primarily at the seed stage, which means company has a live
early version of the product andMarket with a little bit of
utilization data under belt, maybe no Revenue yet.
So there's a lot to prove out before that next round.
So I had this very existential question this morning Pascal
(09:50):
because I met with a company that I've been getting to know
and digging into for a while. And that's what I was thinking
of in this market, right? We Have phenomenal team on paper
and in practice Stellar co-founding.
Team just really, really strong.Technical business, just fits
all the criteria, you would hopefor the science and the
(10:12):
technology seem very solid, verypromising, very exciting.
I have this big question right now around the go to market and
it's beginning to pre launch product.
Are they, is it that the right approach?
How do we know how do we Test their assumptions.
Is that customer going to buy it?
And I have some serious questions about that.
(10:32):
And so this is the very questionthat you asked, right?
If it's the right team, an excellent product.
The other thing is, you know, isthis the right?
Is this the right Market approach and is this the right
time in the market? I think that we don't talk
enough and Venture about Market timing and how much that can
make or break a specific company.
So to me it is a both and especially in this market where
(10:56):
capital is not easy to come by and we know that great teams
aren't just going to go up in under a year and raised again
without making significant progress.
So we've been a lot more disciplined about making sure
that yes, the And he was there, but the idea has to be good to
voice. Wonder how much do you find?
The, the radical pivot actually,to be the norm versus the
(11:18):
outlier. So the classic example, you
know, slack originally invented as a chat platform for game and
then the game took basically disappeared and slack, became
whatever it is. And now it's Salesforce how much
of that story which is being perpetuated, throughout Silicon
Valley, right? Like the pivot and you want to
build a self-driving car and youend up like, you know, building
whatever, like it video. And platform, you're good.
(11:39):
How much of that is actually real, a fair bit of it is.
And usually they're not that dramatic of pivots.
Although I would say that I you know, our prep friends.
My preference is certainly to invest in situations to
underwrite teams that we think are have completely binary
outcomes. Meaning this is such a huge bet
(12:00):
and a huge swing that it's either going to go to zero and
fail or become a multi-billion dollar home, run opportunity.
It's the Recreator or it expandsthe size of the market and we're
completely okay with that. Because again in Venture you're
building a portfolio, right? And in our case it's 25 to 30
companies per fund this portfolio approach where the
(12:20):
math of it is typically in that situation, You're Expecting
maybe three to four companies and that portfolio to return
your fund hopefully multiple times over and some will not
make it and some will maybe be a1x or 2x 3x return so you're
thinking of it that way. But that said every single
Moment, we make. Has to be in one that we think
(12:41):
can be that that three to four company outlier.
And so we're comfortable with that.
But because of that, as you might guess there are a lot of
pivots of, hey, we went to Market, we tried it for six
months and the timelines for pivoting.
By the way, an early stage startups are much shorter.
Because, in many cases you have a year of Runway.
If you're lucky, you have 18 months.
(13:02):
If you're really lucky, maybe a little more, maybe less than a
year. And so, we really can't afford
to say, Let's test this for three quarters.
Come back and analyze the data. Right?
It's like boom it's not working.And after 3 months, unless it's
inherently something like you'reselling into a payer you know,
insurance company that's an 18-month sale cycle and you know
that but for the most part, if you're building software and
(13:25):
selling quickly, the cell cycle is shorter, you have to Pivot
pretty pretty dramatically. So yes, there are.
There have been a couple companies.
I'm not going to lie in the timesince we committed to making the
investment in the time. It took them to close out the
Found that I later realized thatI actually invested in a
different company than what I thought I did.
(13:45):
And again, it does come back to that belief that this is the
right team. This is the right problem, and
there's going to be tweaks in the product and they go to
market. It's so interesting.
I wonder how much we can learn from that approach in the
corporate world, right. Like the shift away from the
very specific product idea. We are having, but rather saying
there's an opportunity, a vague Market opportunity.
(14:08):
And then, you know, finding the right teams, which brings me to
another question about teams. I'm curious.
How do you assess the team? What do you look for in terms of
the leadership qualities? I mean, clearly, they need to
have expertise in the thing, they're doing.
But what are the leadership qualities you look for in
figuring out? Is this a team?
You want it back? Absolutely.
(14:28):
So definitely the sector Acumen expertise and that can be
achieved in many ways to write. We have some Founders who, for
example, in our Healthcare portfolio.
I'd say it's about half and halfwhether the founder is a
clinical has a clinical background or has brought that
on board to compliment, you know, her, his skill set.
(14:49):
So certainly that's there. We primarily look for, you know,
at this stage, its Founders who are truly, I would say,
magnanimous is the word that comes to mind.
In terms of being able to have huge Vision attract, great
talent, inspire people to work for you for way less than market
rate at the seed stage, right? Because they Leave in the vision
(15:10):
and they believe in the leadership so that sort of
magnetic die-hard belief in yourself and the vision and the
startup for sure we look for Founders who are very coachable
and receptive to feedback, not that that bite means by any
chance means that you need to take our feedback all the time.
But if there's any layer of defensiveness, we're not going
(15:31):
to have an open communication partnership to a early on, you
know, we won't move forward withthat relationship because we
want the same in both directions, where there's Great.
Trust in Candor from you to us as well.
For sure we look for Founders who are immediately able to
identify recognize their the gaps and skill set on the
(15:52):
management team in the business,they're building and be
authentic and vulnerable about that.
It's a zero percent - it's really positive, right?
If you are the strongest clinical leader and looking at
autoimmune disorders and the world, but you don't have a deep
Business, Financial modeling, CFO type hat.
Totally Fine, let's not hide behind that for two years while
(16:14):
instead of bringing on a good resource early on.
And so those are some of the intangible qualities.
But I would say, if I had to pick one thing that sets truly
exceptional Founders apart, it is very simple and achievable by
anyone, but is such a denominator changer is just
exceptional communication and I have in terms of regular
(16:35):
investor updates transparency with your team, how you
communicate with the I was tiredto the c-suite of your
organization just steady consistent transparent, reliable
communication. And we, for example, ask all of
our companies when we invest that, they commit to sending a
simple monthly, written investorupdate.
That's an addition to all of theoffline, one-on-one working
(16:58):
sessions, brainstorming sessionsthat we might do.
Just a simple written that tracks.
This consistent kpis month-over-month quick email, it
should take you no more than 15 minutes.
It's the consistency. And on the first of every month,
as a flood of these come in, we as a team, pour over them, we
spend time on every single one, trying to come up proactively
with. Hey, these are three customer
(17:19):
intros, we can make how they metthis investor.
I know this PR firm who would bea good fit and I know that the
ones where those updates don't come in, or if a company goes
silent, you immediately assume something's wrong, something's
going wrong. So it's a simple thing, Pascal
and yet It's actually very rare to have that level of
exceptional communication. So I share that because the good
(17:41):
news is that is something that anybody can implement, the
anybody can Implement brings me to another question.
Do you think good Founders are born or can they learn?
Can you learn to be a good founder is unlike is an
exceptional entrepreneur someonewho's get something in there.
Whatever DNA social upbringing you whatever nature-nurture
debate or is is literally something which you can foster
(18:04):
in people. And again I think it's
interesting question for Nobody Rides, like do I need to look
for this type of people and bring them in?
Or can I take people who are promising?
Other areas and actually educatethem.
I'm a big believer and possibly that's fueled by my hope.
That this is the case that it's both.
It's both nature and nurture andcan be nurtured, because I
(18:25):
fundamentally believe, as long as people possess that voracious
curiosity and desire to learn. And I myself am a product of
that, right? I didn't grow up, anything near
Near proximal to the scene of venture capital.
My parents are entrepreneurs as but just that simple desire and
tenacity and willingness to continue continue.
(18:47):
Continue relentlessly, trying tolearn and working hard.
And I believe that can be applied certain link to
anything. And these founder stories, it
Bears out, right? I mean, one of the companies
that I'm really close with in very excited about in our
portfolio is a maternal Health company named delphina and
they're abusing. Building an AI model for
(19:07):
Maternal. Fetal.
Monitoring to predict complications in pregnancy and
then therefore I care plan as well as a delivery plan, really
to improve outcomes for mothers and babies and the founder, dr.
Sinanan Ibrahim, he was actuallyin medical school and trained in
Neuroscience trained. Medical doctor, when he
(19:28):
Witnesses, stillborn stillbirth,when he was doing the, OB
rotation had the aha moment of we're working with all these
Data sets. This is preventable potentially,
this doesn't have to be the caseand totally pivoting from that,
right? Having not been a health Tech
founder per se, and it's just a great example.
I, he's just absolutely crushingit with a clinical expertise to
(19:51):
his business Acumen, his partnership Acumen, his
leadership, it's really impressive to watch, but there
are so many of those stories I could give you fifty nine,
others in a portfolio of 60 companies where the path that
led someone there was never. This was my destiny in.
It was generally, something something happened in my life
that made me really analyzed this issue and take everything
(20:13):
I've got. And usually scrap, and learn and
Claw together. The resources to just to get
started bread. And butter is a Minnesota.
You have how many Fortune 500 headquartered in your direct
proximity like dozens, right? Yes.
So Minnesota is home to 16 Fortune 500 companies which is
(20:34):
the highest number of Fortune. Under companies per capita in
the nation and beyond that, we have approximately 60 or so
companies, who are headquarteredin Minnesota who do north of a
billion dollars of annual revenue, meaning the scale of
big Enterprise is large here andthat to me moving from Silicon
Valley where I had lived for almost two decades, right?
That feels like the quote-unquote center of the
(20:57):
universe is really, really fascinating to come to a place
where you have such a diverse economy in terms of the types of
Corporations and companies that are here.
Here. And what's been interesting to
me is that Talent has flowed, pretty, pretty fluently amongst
those companies meaning, you could go for my long-term career
in food to suddenly being an executive at a Healthcare
(21:20):
company or Finance to energy andsort of that transfer of
transferability. You'll have a lot of the
knowledge and skill set in that context must see the maybe
eternal struggle of startups working with corporates and It's
working with startups. Curious from your perspective,
what are the do's and the don'ts, we have a lot of
(21:42):
corporate people listening to this podcast, how can they make
their own life better and the lives of the startups that want
to work with better? I have so much empathy for both
sides of the equation here from corporate to start up because a
part of my time at Google, I worked in a wonderful team
called new business development.And we did product Partnerships
and Partnerships ranging from the tiniest contract to
(22:04):
negotiating with the Fortune 500and the largest tech companies
in the world. And I Now understand firsthand
because I was on the other side of the internal conversation is
always I'm sorry. Google can't partner at our
scale. We can't partner with a such a
small company because the I cannot support the scale at
which we do everything. That's a very unfulfilling
answer to here and I was the ones were producing that answer
(22:27):
multiple times over. And now, on the other side of
hi, I'm representing this amazing cutting-edge company in
this sector knocking, on the door of the Giant, and saying,
but here's a great opportunity. And so it's fascinating.
We spent so much time, learning.So, as context for everybody, we
have something called the bread and butter Innovation Circle,
(22:47):
which is our way of Operationalizing, and trying to
realize that the corporation's actually are voracious to work
more of the startups. There's just in startups,
obviously, vice versa, but nobody has easily built here in
Minnesota, certainly that, that connective connective tissue to
make that. Easy to accomplish.
And so our Innovation Circle, wehave 17 corporations who Our
(23:10):
member organizations ranging from Ecolab to Cargill Mayo.
Clinic Blue, Cross Blue Shield, 3M US Bank a whole host of
phenomenal partners and our commitment is, you know,
anything from some of them are investors in our fund, some help
with due diligence, when we lookat the market and getting
smarter about where the industryis headed at the major areas are
(23:32):
customer introductions for commercial opportunities.
Is investment opportunities for the corporation and then
long-term, we hope a path to MMAas we start to understand what
their priorities are and what they're looking for whether or
not, it's a company in the bread-and-butter portfolio or
touching a lot of startups were seeing a wide aperture at our on
our lens. So that's the basis of the
(23:53):
Innovation circle from that the do's and don'ts.
So my, my teammate Stephanie riches are head of platform and
she spent a lot of time studyingthis issue talking with hundreds
of corporate leaders. And startup Founders and she
actually published its publicly available.
I can share it's called the Enterprise Playbook and in it
she has a numerous case studies but specifically outlined
(24:17):
tangible buckets if you will of how Enterprises can think about
working with startups and it is everything from so to speak to
the corporate side for a moment.Anything from on the tiny dip
your toe in the water, right? Get involved in sponsoring and
showing up. Started because the system
events almost every city has a startup week or similar type of
(24:39):
event. That be the easiest smallest
way. Another bucket is thinking about
who are the suppliers that you work with and what is your
process like? Is there some bucket of
experimentation you can carve out within that to work with
newer smaller companies? Because remember back to the
disruption that could rapidly accelerate some of your goals.
But usually the criteria to qualify for working with such a
(25:02):
large company is much later stage.
Age. So there's that supplier,
commercial partnership opportunity.
Bucket there are certainly, the bucket of the Corp Dev rate,
conversations around. Can we partner can we acquire,
can we Aqua higher? And that's something that we've
been spending a lot of time on as well?
And there's the investment piece.
Can you invest it directly in startups or investing in funds
(25:25):
in your sector has been really popular in terms of just getting
onto the being a strategic, on the cap, table of companies, who
might be the next big thing in your category without Out
acquiring them yet, right? So there's a range of ways but I
think having dedicated, I also lead on this and whether it
makes sense to have dedicated team dedicated to working with
(25:46):
startups, right? And who can sort of be a
concierge to help route through the organization.
That's that's very helpful. And so is empowering within your
business units, your Leaders with the ability to make some
entrepreneurial carve-outs, I'llcall them right where?
Yes, my purview is Sourcing XYZ for a comfy, but I am blessed
(26:08):
with the approval to say spend, 20% of the budget at my
discretion, to pursue these goals.
That might be in the disruptor category.
So that's on the Enterprise sideon the startup side that's
really dependent on the sector, right?
But it's, can you go in with a pilot that is time-bound That is
(26:29):
short enough rights. It's did not impact your
business. Too much of it doesn't work out
but long enough to prove out whatever Roi that you are going
to prove out. So a good example of one of our
companies and the portfolio is called kapila.
They're based in Sun Valley Idaho, they are a platform as a
scale software platform for female leadership development
and Corporate America think of it.
As, you know, traditional Solutions today are for them
(26:51):
senior, most women, they are extremely costly, doesn't scale.
That's it doesn't reach a great number of people.
This case. There are some corporations who
have rolled it out to their entire female Workforce because
the price point is within reach,the scale is there and then
you're able to connect with a wide community.
And so, but for that, right? It's how do we get in and pilot
(27:14):
and then what's the direct Roi that we're going to produce.
So it's around, retention rate, promotion rate, employee
happiness, surveys utilization engagement of people actually
using and loving my product. What are they saying about the
company? And if you can prove that Roi,
As a start-up. Great Bland Atlanta and expand,
right? Lana.
And expand getting quickly. Do a small pilot.
(27:37):
I hesitate to give things away for free, but that strategy can
work in certain cases, right of free.
And so there are a lot of ways. But I'm, I'm curious for your
thoughts, Pascal. I mean, there's we're always
looking for ways to coach our startups on that.
I think it's in fascinating question.
And I know from the companies wework with a lot of them
struggle, and I think a lot of them struggled for very
(27:57):
bureaucratic reasons to be honest, like anything from but
it has to go through a legal department and then the legal
department produces a 400-page legal document.
And this data of just sits in islike, listen, if I, if I were to
pay my lawyer to go through this, like I just burned through
half my Capital, right? And then the second one, I
really loved your point about the entrepreneurial car route.
(28:20):
And I like I even love the the way you phrase it because I
think that's the other part which is a there's a just a very
real fear for leader to say, well, if I do this and it goes
south, like, how does it look onme, right?
And the notion that You can try things out.
There's always a risk involved, and we need to be okay with that
(28:41):
risk, and it's fine. You know, like, keep the risk
manageable and we can move on. If it doesn't work out, at least
we learned something or hopefully, we'll learn something
that's exactly. And you and I you and I met a
Google that early days Paradigm of that 70-20-10 framework for
anybody not familiar that the framework was 70%, should be
spent on the core, which at the time of the core of the business
(29:04):
was search and ads. 20% on the More experimental may or may not
work male. He's a revenue generation down
the road and that the time thoseare things like Google Maps and
Gmail and what ended up becomingthe rest of the Google Suite of
products in that 10% really important was the Blue Sky shoot
for the moon probably going to fail but if it hits, it could be
(29:27):
extraordinary and game changing.And I think having that right,
if you're doing a project in the10% it's like, wow!
That is that is so cool and lucky that you get to work on
that and then if it fails it, Of.
Okay. That was that was an acceptable
outcome so that's the same framework.
I think applies to so much of life but in the corporate
environments, absolutely helpfulto have that predetermined
guardrail and it's not going to be punitive in the same context
(29:50):
of there's a framework from Billpasmo.
Whom we had on the show because it's the 10th and five where he
says the top 10% of rulership Team should spend 10% of their
time thinking five years out. And I think it's really
important because we see so manycompanies recently did a
non-representative study But we did a survey with one of the
largest consulting firms where we asked a subset of their
(30:12):
consultants and said, what do you think that percentage?
The 10, 10, 5 actually looks like for your clients and I
think 56 percent of them. Said, my client doesn't even
think more than a year out. It is crazy to your point.
I love this, combine. This with your 70-20-10
framework, the Goon framework asinbred, you allocate your
(30:33):
resources, not only your time, but also your financial
resources. I think becomes really
interesting. I love that in 10 5.
I'm gonna go think about that. All yours is bill pass my words,
not mine. So I'll give I keep on giving
the gift of other people. We will make sure by the way to
link to your playbook in our show notes, because I'm sure a
lot of the readers would love tolike peek into this because I do
(30:56):
know that there's a huge desire for corporate people to actually
do more with this. That I think that the important
thing and you and I talked aboutthis quite a bit is Really
seeing it as an ecosystem, right?
It's not just a, like, he are weand there's these like the
startup people and maybe we acquire them, but that's about
it. But really thinking much more
(31:17):
holistically at this, right? It's true.
It's true. And here in our community in
Minnesota, for example I can be of two great examples in
healthcare one is a line of Health, one of the largest
Health Systems in our state and the other is Blue.
Cross Blue Shield Minnesota, oneof the largest payers insurance
companies in the state and both large.
Asians have done tremendous workto partner with early-stage
(31:40):
companies to the point of early where I, you know, I have often
myself been surprised that they've partnered with some of
that early and so happy to see it right before these pilots in
our backyard. That these are affecting issues
that are affecting population Health.
Some of the true on the ground issues that are so urgent in our
community. And these are not yet startups
(32:03):
who are necessarily going to be able to serve, you know, billion
people. But to see that kind of
collaboration is so heartwarmingand I love just use those
examples where these are pilots.They may become a core part of
the entire health system and maybe one time pilot.
Let's see. But just having that, it's so
rare to see large logo with suchan early stage company, and so
(32:24):
more and more of that I were seeing more and more of that.
And I feel really encouraged. Let me end with one question.
So you're based out of Minnesotabread and butter.
Your fund is based out of Minnesota, you were part of Of
Rise of the rest where the wholeidea was that this enormous
amount of innovation, disruptionstartup activity happening,
(32:45):
outside of the typical startup, hubs, which really is Silicon
Valley and New York at the time,and it may be the Boston
Corridor. I'm curious.
How do you think about geographythese days?
When it comes to Innovation disruption, the startup
ecosystem, clearly, you made your bet on.
The fact, that is Silicon Valleyis not the center of the
universe anymore. Maybe, but I'm curious, how do
(33:06):
You look at this, it's been sucha fascinating Journey.
The last little last two decades, but in particular last
five to six years, for me, personally, I grew up in Silicon
Valley, in many ways. Certainly professionally writing
works at Google for the first 15years there in New York and some
time in Emerging Markets, but really at the epicenter of
Silicon Valley and I loved it. I truly loved it.
(33:28):
I didn't leave because I was running away from something that
it really was that running towards something.
And this belief, that if you look at the Future of the
Innovation economy. But the big the big big
challenges that are facing us from food supply chain to the
Healthcare Systems to climate toso many more.
I mean a lot of the solutions lie in sectors like traditional
(33:52):
the heart of American manufacturing.
For example. Therefore it makes sense that
the on-the-ground Innovation will be happening in these
markets is one point but a second point is also just the
capital efficiency that you can achieve in these markets.
When building startups, it's a no-brainer right?
In terms of hiring Talent hiringteams and then affording them to
(34:13):
have great quality of life and be able to support their lives.
Their families, their communities moving to a market
like this has been really eye-opening and I have personal
reasons to have a huge family inthe midwest on my husband's
side. And he's from Minnesota.
And so it was a nuanced decisionfor me, not purely driven on the
feature of investing. But I on that alone, I have been
(34:34):
since decided based on that to double down, right?
And sort of to go from my role at Google, where we were working
in over 100 countries, then to rise at the rest, which were
working from coast to coast outside of the coast to right
now, we don't only invest in Minnesota, we invest all across
the country. However, as Really focused on a
(34:56):
place based strategy of how we can leverage the resources here.
So I have made my bet Pascal andI feel like the lines of
geography are I try to ask myself as constantly is this
just because this is where I am physically and what I'm immersed
in, but the points to me that validate, that know the lines
are more fluid than ever. If you were to draw a map today,
(35:19):
I truly believe that for a few reasons I think that the covid
pandemic has accelerated. So much of this virtual just
investing decision-making investors for the first time
realizing. Oh my goodness, there is amazing
talent and opportunities for Investments all across the
country. I'm missing them.
And guess what? Because of the capital
efficiencies, the valuations of those companies are often much
(35:42):
lower and that's a trend that ishere to stay.
The Paradigm has completely shifted.
And I'll tell you that we more and more co-investors in the
coast are peeing, us on a monthly Weekly daily basis,
right? Looking at companies that they
never would have looked at, or the number of at this moment.
At the end of the year, I met the eight different Health Tech
(36:06):
funds, who I had talked with over email over the years, all
in person, in Minneapolis purely.
Coincidentally there wasn't a conference or a convening.
It was I'm passing through town.I'm passing through town there
and meet some companies and so that really is a big moment.
I think just to see that shift in the lines are blurred The
Future Has Completely changed, Silicon, Valley isn't continues
(36:28):
to be a very unique and special place and there are a lot of
very special places and so I'm excited.
I am I think that's, that's, I feature is a completely
different map than it ever has been on this note.
And I love the positivity of there's not and really fits
well, into also a corporate context because the vast amount
(36:50):
of corporate organizations are not in Silicon Valley, clearly
not headquartered in Silicon Valley for Reasons.
Hey so it is beautiful to see that you know Innovation truly
starts to spread out more. It becomes much more
democratized and I really adoredour conversation.
I love the insights. Are you brought to the table?
I love this. There's nuanced view of looking
(37:11):
at Innovation and disruption through the lens of a start-up.
Really thinking, also, what doesthis mean in the context of a
corporate? How can I as a corporate, what
can I learn from this? How can I engage in this
ecosystem, will make sure that all the the links we talked
about in the show notes to your fund as well as the The
Playbook. I would love to link to that of,
for sure and the Mary. Thank you so much.
(37:32):
I wish you all the very best forbread and butter.
I know it's doing phenomenally well, and I know that you're
raising another fund, so it willdo even better and I know that
you're having a massive impact on your local community.
I've seen it in person when I was in Minnesota with.
You just about a year ago, I less than a year ago.
So, please keep doing what you're doing.
It's incredible. This, thank you so much for the
conversation or Pascal. Thank you for having me upset.
(37:55):
Such a tremendous fan of all of your work and everything that
you're involved in. So really delighted to get to be
here today and, you know, to thecorporate leaders out there
listening. I think they're truly is just
such an exciting opportunity to continue to bring that
entrepreneurial spirit in from the outside, from the inside,
from the bottoms up from the tops down and we're all lucky to
(38:15):
be working with Pascal. So thank you for all that you
do. And thank you for for having me
today. Thank you.
Hey, it's Pascal. Thanks for tuning in on this
episode of disrupt disruption. If you want more, check out the
other episodes we have on this podcast.
And if you liked it, do us a favor.
Go on your podcasting platform of choice, iTunes, Google play,
(38:36):
whatever it is, and leave a quick review, it helps
tremendously with getting the insights from our guests out
into the world. If you have any questions, send
me an email, you can reach me atPascal at fee net.com.
Thank you so much for listening and I will hear you here.
Here soon.
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