In this episode, you will learn:
- What its like to grow from Zero to $300 Million of revenues in 4 years.
- Why surrounding yourself with the right mentors is crucial to success.
- Why most startups are a series of failures until they’re not.
- How the Heartland culture gets s##t done without unrealistic expectations.
- Why people and culture are critical to success in innovation.
This episode of the SmartMoney Ventures Podcast features Sue Tyler who is a C-level executive, board member and investor who has a unique combination of experience with billion-dollar Fortune 500 companies along with hands-on work in the trenches of rapid growth startups.
Sue encountered rapid growth early in her career at Progressive Insurance where she served in Finance and Product Management, introducing new products and technologies and generating significant revenue growth for the company.
She went on to serve as SVP-Marketing & Division President for a startup insurer formerly known as Reliant Insurance that grew from $0 to $300 M in revenues in less than 4 years and was ultimately acquired by Farmers Insurance.
Sue went on to serve in multiple C-level roles at Medical Mutual, a multi-billion-dollar insurance company for 15 years. During her tenure, the company grew and diversified through new product introductions, expansion into new markets and acquisition.
Sue currently serves as a Venture Partner with Caduceus Capital Partners and is a member of North Coast Ventures, investing in early stage digital health companies and software-as-a-service companies. She is a member of the Board of Directors of several digital health & insurtech companies including Beam Benefits, ForMotiv, ScriptDrop and HealthPlan Data Solutions. She is committed to value added board governance, serving as a founding member of the Cleveland chapter of Private Directors Association.
Sue serves on the Cleveland Clinic Innovations External Advisory Council and is an alumni Advisor to the student led venture fund and a venture mentor to the medical school at Case Western Reserve University where she holds both an MBA and an undergraduate degree.
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Transcript
Episode Transcript
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Speaker 3 (00:08):
Welcome to the Smart Money Ventures podcast, where we
highlight active leaders in theglobal ecosystem of venture
capital, entrepreneurship andinnovation.
We give you access to insightsfrom successful investors and
entrepreneurs that most peoplejust can't get access to, and
the only reason they take ourcalls is because we've been in
the trenches with them fordecades.
My name is JD David and I'myour host for this episode of
(00:29):
the Smart Money Ventures podcast, and today we have a very
special guest who I have greatrespect for.
Sue Tyler is a C-levelexecutive board member and
investor who has a uniquecombination of experience with
billion dollar Fortune 100companies, along with hands on
work in the trenches of rapidgrowth startups.
Sue encountered rapid growthearly in her career progressive
insurance, where she served infinance and product management,
(00:52):
introducing new products andgenerating significant revenue
growth for the company.
She went on to serve asdivision president and senior
vice president of marketing forReliant Insurance that grew from
zero to 300 million in revenuesin less than four years.
The company was ultimatelyacquired by farmers insurance.
Sue then went on to serve inmultiple C-level roles at
(01:12):
Medical Mutual, a multi-billiondollar insurance company, for 15
years, and then she startedserving on boards and investing
in startups as well.
Sue currently serves as aventure partner with Caduceus
Capital Partners and is a memberof the board of directors of
several digital health andinsure check companies,
including bean benefits,formative script, drop and
(01:32):
health plan data solutions.
Sue serves on the ClevelandClinic External Innovation
Advisory Group and is an alumniadvisor to the student led
venture fund and a venturementor to the medical school at
Case Western Reserve University,where she holds both an MBA and
an undergraduate degree.
Welcome, sue, and thank you forjoining us today.
Speaker 2 (01:51):
Thanks, jd.
Speaker 3 (01:52):
So to kick off the program, let's really start with
where you first encounteredrapid growth at Progressive
Insurance.
Speaker 2 (01:59):
So I think I was really lucky to be able to join
Progressive at the time that Idid, because it was a time of
really incredible growth andinnovation and it was a pretty
big company at that time but ithad the culture of a small
company and it was taking aninnovative new approach to a
very mature industry.
(02:20):
So I was able to serve inproduct management and finance
roles across three differentdivisions within the
organization.
So I got exposed to a lot ofreally smart people and a
culture that was really ahead ofits time in terms of, you know,
(02:41):
looking at the business as adata business, not a traditional
insurance business.
It was very much a fail fastenvironment.
You know it was like we'regoing to measure things, we're
going to do experiments, we aregoing to hold people very
accountable, but failure isacceptable.
(03:03):
If you learn from your mistakes, move forward.
So it really was an incredibleplace to start my professional
career and I laugh sometimeswhen I talk to people and people
talk about digitaltransformation in the insurance
industry and I laugh because wedid that in the 1990s at
Progressive.
(03:23):
Like we literally wentpaperless with our agent voting
and application and bindingprocess.
So you know it was the early1990s I was under, you know,
desks in agents offices plug inthe phone line, you know, into
the wall and you know, with thedial of modem connection that we
(03:44):
were able to transform what wasa, you know, a big paper
process into an automatedprocess.
And again, to have thatexperience early in my career
was priceless.
Speaker 3 (03:55):
That's awesome.
It's one thing to go into acompany and understand how all
of the nuts and bolts work.
It's another to say, all right,we're going to press some
levers and try to go as fast aswe can and really transform the
way we do business.
That's fascinating.
Speaker 2 (04:12):
Yeah, it was an incredible environment where,
you know, there was a belief inhiring a lot of smart people
from outside the industry andallowing them to view the
industry differently, instead ofhiring industry insiders that
thought they knew how it shouldbe done, to take that industry
(04:32):
knowledge and marry it withpeople who knew nothing about
insurance but were really smart,had some great skills and
weren't afraid to try somethingnew.
Speaker 3 (04:45):
I think that's what's exciting about innovation,
because the actual definition,if you look it up, says it's
bringing new thinking to theequation.
And what I like about what'shappening in many industries
today is that they may or maynot necessarily be innovating
the product itself, but the waythat we're processing customers,
delivering it and doing it moreefficiently with a better
(05:05):
customer experience.
Speaker 2 (05:06):
Absolutely.
Speaker 3 (05:10):
I think progressive was definitely ahead of itself
in its time and I think that'sexciting that you had that
experience.
So, from progressive, aftergoing through that experience,
then you had an opportunity tojoin Reliant Insurance.
So how did that opportunitycome about and how did that
story unfold?
Speaker 2 (05:27):
So the success at progressive created that
opportunity and actually therewas a core group of progressive
alum that were the initialleadership team of that
organization.
And it was really quiteincredible because we set out to
do a business that we knew wewere also in the auto insurance
(05:48):
business, but doing it withoutthe resources doing it, I think.
So two of us started.
We were sitting in a Chichi'srestaurant, if you remember
those with the cell phone, kindof like, holy crap, we've got to
find an office to work out of,we got to hire some employees,
we got to get some computers, wegot to figure out what our
(06:10):
product is.
Oh, we probably need a systemon the back end to process all
these things.
I mean just the enormity of allthe things that you need to
pull together in a very shorttime to be up and in business.
And it's really quite amazingbecause those Chichi
conversations, restaurantconversations, were in February
and we were live selling productin July of that year in
(06:32):
multiple states.
So, in the same, you know, a fewmonths later.
So it was kind of the original.
I laughed about digitaltransformation experience that
progressed the way back whenthis was kind of the original
agile programming experiencebecause literally we had the
(06:53):
business owner and the IT person, you know, seeing side by side
with a computer in front of them, going what should this be in
this data field and let's youknow we're building our data
dictionary on the fly and whatour screens are going to look
like and what our customerexperience is.
It was really the originalagile, you know, and we were
very much, you know, buildingthe plane while we were flying
(07:14):
it.
I look back and think about wedidn't know what we didn't know.
We had confidence, we hadenergy, we had intelligence, we
had the right people pulledtogether.
But where were we going?
Fast, you know, and that kindof pace?
You do have a few things gobump in the night and I'm also
(07:38):
very proud of how we recognizedwhen we had those hiccups and
what we did about them toresolve them, make it right to
anyone who was adverselyimpacted by it.
But yeah, we didn't know whatwe didn't know and sometimes
that's a good thing.
Speaker 3 (07:56):
Right, exactly.
Well, I think that's what Iwant to touch on, because I
think a lot of people doromanticize entrepreneurship and
venture capital.
And, yes, it is exciting, it'sa lot of fun, you want to go as
fast as you can without thewheels falling off, but, to your
point, sometimes the wheels dofall off.
So what did you learn along theway?
I mean, you learn some valuablelessons when you're going that
(08:17):
fast.
Speaker 2 (08:19):
Yeah, I guess.
So the power, the power of theright people, right, because
that was an incredible team thatrolled up their sleeves and did
what they need to do outside oftheir functional lines.
You just got it done theimportance of open communication
and I know we'll probably talkabout advice to folks, but one
(08:44):
of the things is it's easy tocommunicate when things are
going right, but the importanceof communicating when things are
going wrong Because if there isa problem, sweeping it under
the rug or turning up the radioon the car so you don't hear the
knocks in the engine, it mightfeel good momentarily, but if
(09:05):
you share your problem andinvite other people in to help
solve the problem with you, youget to a far, far better outcome
.
So that was certainly one ofthe learnings, one of the it
just reinforced the importanceof the right people and I want
(09:28):
to say the integrity to do theright thing when you do hit
hiccups is there was thatunwavering we're going to do the
right thing by all stakeholderswas also something that was
really positive about thatexperience.
But it's stressful and for allthe founders.
(09:49):
If anybody is listening, theone thing we didn't have is the
stress that most founders arejust bearing the burden of today
, and that was we did not haveto raise capital.
We had funding from a parent.
So we had to set up the company, scale the company, do all the
(10:12):
things to build a business, butwe did not have to
simultaneously be constantlyfundraising and I've gotten a
real appreciation for what aburden that is on organizations
today when you're trying not tobe distracted from building the
business or running theoperation, but you're constantly
(10:32):
meeting with past investor,current investors, cultivating
future investors.
So that was one challenge wedid not have.
So I have to be honest aboutthat.
Speaker 3 (10:43):
Well, it is nice that you were able to develop your
skills and understand how tobuild that type of culture and
team, because the threadthroughout that is that the
culture and team.
To take a rapid growth companyand you said it went from zero
to 300 million in four yearsright, the culture that you
build for that company is verydifferent than the culture that
(11:04):
you have and need for a billiondollar company that's grown
three to 5% a year.
Speaker 2 (11:10):
Yeah, and even from even within that period of
growth, the skills that you need, the processes you need, the
formality, the way that youcommunicate, you know have to
change as business of scales andthat's one of the challenges I
see, you know, with a lot of thebusinesses that I work with,
that you know styles need tochange communication styles, the
(11:31):
formality, the process.
You know it's different whenyou're an eight person
organization versus when you'rea 50 person organization versus
500 person organization.
You know the formality aroundprocesses and the intentionality
of communication has got to bevery different.
Speaker 3 (11:51):
Absolutely, absolutely, and I think there
needs to be a culture where it'sokay to bring that information
to the table and figure outtogether how to solve it.
That's very different than sortof I don't know.
In my experience in largecorporations there's almost this
more protectionist thinking.
Speaker 2 (12:09):
Absolutely.
You have people that eitherthey don't want to share the
problem because either they'reconfident they're going to fix
it you know they want to be ableto make it right, get it right,
so they don't want to shareprematurely because they're so
(12:29):
determined that they can do this, they can fix this or it's the
fear of, you know, the messengerbeing shot.
You know, like I don't want togo tell somebody about this.
Or, worse, you know the toxicculture that actually penalizes
someone professing up to amistake.
You know so that culture thatallows people to bring honest
(12:53):
mistakes or poor judgments.
I mean, most businesses are aseries of failures until they're
not right.
Speaker 3 (12:59):
Right.
Speaker 2 (13:00):
They're just a field experiment.
So if you can't make a culturewhere you can do that experiment
in a reasonable experimentwithin a safe environment, you
really are not gonna succeed.
So that culture to me again,I'm hearing a pattern in my own
words here, but people inculture are critical.
Speaker 3 (13:23):
Absolutely, absolutely.
And I heard a message one timeabout the theology of baseball
and the idea is that evenbaseball players at the top of
their game making millions ofdollars a year when they get
into the batter box, if you'rebatting 300 or 400, you're a
hero, which means that everytime you step into the batter's
box, you're failing 60 to 70% ofthe time.
The difference is they keepgetting in the batter's box, and
(13:46):
I think that's the differencefor entrepreneurs.
Yes, you're gonna fail, yes,it's gonna hurt, and you gotta
get back in the batter's box ifyou wanna continue to do it.
Speaker 2 (13:55):
You know that is so.
On point, I saw A-Rod speakrecently and he talked about
leading the league in strikeoutsand having the confidence to
get back in after being thestrikeout leader.
So 100% is how you learn fromthe mistakes but how you're not
crushed by them.
Speaker 3 (14:15):
Exactly exactly.
And that brings up the topic ofresiliency.
I was in the Marine Corps andone of the things that we talk a
lot now with veterans about isthat before you go into the
battlefield, you need to have acertain level of base resiliency
and solidify and beingcomfortable in your own skin
right.
And when you go into battle andyou endure the trauma that you
(14:37):
endure and you're come back,they find a direct correlation
between the amount of resiliencethat you go into the
battlefield with will have a bigimpact on your ability to
bounce back from those traumaticevents.
And I think that people need togo into entrepreneurship and
rapid growth with a mindset that, yes, we're going to fail, but
we're gonna keep getting back upand it's okay and that's the
resiliency that we have to have.
(14:59):
Otherwise, we would just giveup and go home.
And it's important to interviewfor that too, and I think for
people that are consideringentrepreneurship, which is a
large part of our audience, it'simportant to know yourself
really, really well whichcultures are you going to thrive
in and which cultures are notgonna work for you.
Can you talk a little bit aboutthe hiring process?
(15:19):
When you're hiring for peoplefor the first five to 10
employees of a startup companyversus employee number 500 of a
company.
How do you interview and filterfor those qualities?
Speaker 2 (15:31):
I guess people that are comfortable in poorly
defined roles and rapidlychanging roles because in a
small company, the chief HRofficer might also be the chief
legal officer might also be thechief customer officer in
mopping the floor in the evening, right.
(15:52):
So part of it is people thatare comfortable in those roles,
people that are comfortable withchange, confident enough to
believe this can be done, butcoachable.
And that's one of the things.
Honestly, when, if we talkabout when you look to invest in
(16:14):
a business and you're lookingfor that team, you are looking
for those team players that areutility players that can do a
lot of different things.
Obviously you need some coreexpertise and some core
functions, whatever yourbusiness is.
But those utility playersthat'll say, put me in, coach,
and what do you need me to dotoday, or aren't uncomfortable
(16:40):
that what they were working onyesterday just got canceled and
something new is in front ofthem for tomorrow, because
there's an awful lot of zigs andzags in the startup.
It's a roller coaster ride withsome very high highs and some
very low lows.
So, looking for folks that findthe traditional corporate
(17:04):
functional job sort of stale andboring, that thrive in some
uncertainty, that are willing towork with others and seek help,
whether that's from their peersin the organization or people
outside of it.
I do think it takes a veryspecial person to work in that
(17:24):
environment and what youunfortunately find is sometimes
those people, as the company issuccessful and gets larger,
those aren't the same peoplethat they may not be as
satisfied in their role becausethey're hooked now on the
adrenaline of creating andgrowing and moving quickly that
(17:47):
once it becomes more of amaintenance operational, let's
just do what we're doing at aslightly larger scale.
It doesn't feed the same urgesthat the folks that thrive in
those smaller companies have.
Speaker 3 (18:04):
It's funny that you say that because I just had
Chris Hively on the podcast acouple of weeks ago and he was
talking about his book Build theFort, and he's talking about
channeling your inner10-year-old, that everybody
loves to build a fort of somekind, whether it's indoors or
outdoors.
Get some pillows and a blanket,some sheets and some chairs
right and make a fort and inviteyour friends.
But to your point, when itbecomes a skyscraper, the inner
(18:27):
10-year-old is gonna get boredand say let's go build another
fort and see what we can dodifferent this time.
Speaker 2 (18:32):
Exactly.
Speaker 3 (18:33):
So let's pivot a little bit to medical mutual.
So after being at Reliant, youjoined medical mutual.
You were there for a long time,but what intrigued me there was
that not only were you thechief financial officer and the
chief experience officer, butyou did a lot of strategy and
acquisitions.
So share a little bit with theentrepreneurs what it looks like
from that side doing strategyand acquisitions and looking at
(18:56):
startups.
Speaker 2 (18:57):
Yeah.
So medical mutual is a moretraditional, mature organization
than anything I had been in atthat point and when I got there
it was performing well butgrowth was slow.
We really looked to where canwe grow and diversify?
So we set out on a strategy ofthere's a couple ways.
You either expand you'reavailable market or you try and
(19:20):
get a bigger wallet share of thecustomers that you already have
.
And we looked to do both.
We looked to say in thatbusiness it was how do we expand
geographically?
And then how do we add someproducts that are natural fits
with the core insurance, healthinsurance product that we had?
And we did both through acombination of acquisitions.
(19:43):
We didn't have the checkbook tobe able to do really large ones,
so they were by definitionsmaller acquisitions but we did
them in the distribution space,we did them in the ancillary
product lines and we did them toget a beach head into some
other states and markets.
And at the same time we alsobuilt some products internally,
(20:04):
started marketing to individualcustomers for the first time,
added life and dental and someother products that would
complement the core product.
So it was a combination ofinternal development, some
smaller acquisitions, but therewas absolutely a strategy around
.
We wanna go out and make someacquisitions and we wanna grow,
(20:28):
but we're a health insurancecompany.
What assets do we have?
What core capabilities do wehave that we can leverage in new
areas?
We weren't gonna go out andacquire a car wash or make an
investment in something else.
We really were looking atthings that would either give us
a competitive advantage in ourcore business or just expand our
(20:49):
available market.
Speaker 3 (20:51):
I think it's really good to have that experience on
that side of the equation.
I ran mergers and acquisitionsfor public company as well and I
think that greatly informs whenwe're sitting on boards and
helping startups guide themthrough that process, because
very few of them have actuallynavigated it and it sounds like
you've been on both sides of it.
Speaker 2 (21:10):
Yeah, and you start to realize that the actual
integration of an acquisition isresource intensive and
critically important as theactual transaction.
It's not the transaction, it isthe whole process that, once
(21:32):
you now have this new asset, howdo you leverage it?
So one plus one equals three,and it's not one plus one equals
one or half, because now yougot people distracted.
I mean there's absolutely someimportant things to do to make
those acquisitions successful.
Now, the unfortunate thing forus, as we were going down that
(21:55):
road of expanding our productsin our markets, is that's when
healthcare reform and theAffordable Care Act came
hurtling at the industry.
It came at light speed andactually proud proud.
But it was also painful as westrategically had to make the
decision to back away from someof what we were doing and
(22:17):
expanding in new markets andproducts, because we had to
focus on getting the corebusiness right.
You know there was just a lotof changes happening, a lot of
things that needed to beimplemented.
You know very, very short timeframe and we needed all hands on
deck focusing on the corebusiness.
So we actually gained someground and lost some ground, but
(22:41):
it was it was a hundred percentthe right decision.
Right.
You have to do what's right forthe business under shifting
Market conditions.
Speaker 3 (22:51):
Sure.
So rapid growth at progressiverapid growth at reliant and then
even more Larger companyexperience of medical mutual
where you're making acquisitions.
So then you dropped intoServing and advising
earlier-stage companies, drawingon your experience.
So you currently sit on theboard of script drop for motive
and beam benefits.
(23:11):
Tell us a little bit about howyou first got into mentoring and
advising and joining boards ofdirectors.
How did those doors open andwhat about that was exciting to
you.
Speaker 2 (23:22):
Yeah.
So when I concluded my careerat medical mutual, I refused to
say retired.
I never say retired, I say Igraduated from having an
everyday job because I, becauseI wasn't ready to be retired.
But I also, you know, as Iexplored your, people would
approach me about other, youknow, full-time, traditional
(23:43):
jobs.
It's just not what I wanted todo.
I still had that bug or thatneed to, to build that need to,
I don't know, try new things,learn new things.
So I got Very quickly Kind ofpulled into the, the early-stage
business community, some of itformally through no North Coast
(24:07):
ventures or caduceus capital,some of it less formally through
angel investor groups, and youknow, some of it formally as a
as a board member with fiduciaryresponsibility and some, you
know, very informal Advisor.
Hey, can I call you for someadvice?
You know conversations with aright wide range of
(24:28):
organizations and what I foundis it's it's really rewarding,
not necessarily financially,because you know my compensation
is generally equity and, as youknow, while some of the
companies, you know everybodyshoots for the moon, some of
them will hit it, some of themwill crash and burn you know, so
some.
Sometimes it's not necessarilygoing to be financially
(24:52):
rewarding, but it is sostrategic, it is so fast-moving.
I'm learning so much Becausemost my companies are in, are in
the technology space.
I'm working with really coolpeople, you know, so I I really
enjoy it, but it is it'sstressful by proxy, you know,
(25:13):
especially with how the capitalmarkets are today.
You know you think back to theweekend that Silicon Valley Bank
imploded, you know, and andother other other things that
have happened, you know, at atthe companies.
And again, the roller coasterhas very high highs and very low
(25:35):
lows, and None of the companiesthat I work with are
consistently on top or on thebottom, you know, like even the
ones that Are really reallydoing well.
You know it takes some dips too.
So Absolutely it's, it's great.
Yeah, no, it's, it's, it's been, it's been a very fun ride.
Speaker 3 (25:56):
It's the most rewarding thing I've ever done
is to help young entrepreneursand particularly to help them
avoid some of the Blind cornersand blind spots that they're not
aware of because they to yourpoint until you actually dive in
and an Experience that youdon't actually know what's
coming around the corner.
Talk a little bit about how youadvise CEOs and teams as
(26:21):
they're going through that,especially when it relates to
the roller coaster and I mean Ifound for me personally
sometimes it's that call at 2amthat sounds more like therapy
than business coaching.
Speaker 2 (26:34):
Yes, it's so true.
You know, while I'm oftenrecruited to a board for either
Industry expertise, functionalexpertise or contacts, where I
sometimes feel like I'm addingthe most value is just drawing
on the various business and lifeexperiences that an old person
(26:58):
has.
You know, I've got a lot ofdifferent career experiences
through the years and and aswell as life experiences, so
Sometimes I think it's it's mostimpactful.
One of the things I livedthrough at Medical Mutual was
the sudden passing of a CEO.
You know, and all the thingsthat that happened with that.
So you know, one of myCompanies had the unfortunate
(27:22):
loss of a young employee, asudden death over a weekend, and
you know, sunday night wasspent with the CEO around what.
What does Monday morning looklike?
Talking about the need forgrief counseling, because the
the loss, whether people wereclose to that individual or not
may trigger Things of their ownmortality or things in their own
(27:43):
life, you know.
So, the need to make resourcesavailable, you know, talk about
like, what do I do at this desk,you know, and it was like, well
, let's not build a shrine andlet's not have it emptied in the
morning, you know, and let'slook for ways to allow employees
to Feel like they're doingsomething, whether it's, you
know, setting up a fund orvolunteering and and making sure
(28:06):
people have an opportunity toattend the service.
It was, it was things thatreally you don't think of in a
in a company context.
They were.
They were probably a littlecombination of professional
experience and life experience,but sometimes those
conversations or theconversations around when a
(28:26):
reduction in force needs tohappen, or a specific Person
that did a good job getting thecompany to a certain level, but
isn't the talent that is neededat the next level of how to Deal
with that with with dignity andin the right way for the
business, for the shareholdersand for the individual involved,
(28:48):
as well as for the otheremployees who are gonna, you
know, have emotions and feelingsabout that.
So sometimes I think I spend asmuch time on those kind of
things as I do on specificbusiness issues.
Or or it may be things like Igot a new pitch deck for this
group of customers.
(29:08):
Can I run it by you?
And it's like, yeah, you know,let's friendly fire is is good.
You know, like let's allow itto be pressure tested by someone
internally before before youyou take your shot At an
audience where you might haveone shot on goal.
So I think there's a lot ofthose ways that you find
yourself getting a valve thataren't exactly what you expected
(29:31):
.
When you say I'm gonna take thisboard seat or this advisory
seat, but it's been veryrewarding to me to be able to
mentor in in those ways.
Speaker 3 (29:41):
Is it fair to say that a startup team,
particularly in the early days,it's more like a.
It's very much like a family,because you spend so much time
together and you go through somethings in business In a startup
that are not the norm in aworkplace.
Speaker 2 (29:56):
I think You're you're right on.
I mean, part of it is thatthere are not clear functional
lines, there aren't clear lanesthat people are working in.
The dependency on one anotherIs huge.
So I 100% and I think that'syou know that that family
environment of thoseOrganizations are some of the
(30:18):
most incredible people, but partof it yeah, they were
incredible people, but it wasalso this circumstances under
which we were brought togetherin the way we needed to interact
and work that really did makeit a family.
That's why, you know, whenthere's things that disrupt the
family Whether it's an illness,of death or a reduction in force
(30:39):
or loss of a key employee it isso much more acute in these
small Organizations you feel itmore.
Mm-hmm yeah absolutely.
Speaker 3 (30:50):
Well, let's talk a little bit about sort of the
wave of innovation, bothgeographically and industry wise
.
It used to be that innovationwas concentrated on the coasts
and was focused on a fewspecific industries but the Ohio
, the Heartland region,industries that traditionally
used to be not very innovative.
(31:11):
Talk a little bit about both ofthose trends as you've seen
them unfold over the last fiveor so years.
Speaker 2 (31:18):
Yeah, I think what's really great Maybe under the
radar is is the number ofincredible businesses being
birthed in Ohio.
You know, I'm up in NortheastOhio but I actually several of
my companies are in the Columbusarea, so I'm pretty familiar
with with these organizations.
Because of my background, Itend to get more involved in
(31:40):
healthcare tech, digital health,insure tech businesses and, you
know, because this is such ahuge healthcare Is such a huge
industry in Ohio and we have somany industry leaders nationwide
, worldwide leaders inhealthcare, it's a natural for
(32:00):
us.
Insurance, you know, is also ahuge industry within, within the
state and you know there's alot of things that especially
I'm not.
I'm not a clinical person, so Itend to get involved on the
software side of things or thepatient or Provider experience
or the administrative side.
(32:21):
There are things that aren'tterribly sexy Sometimes, but man
, there's a lot there.
There's a lot of value to becreated, there's a lot of
opportunity to bring newtechnologies to old problems and
Really really do someincredible things.
And I think you know the folkshere know how to put their head
(32:42):
down, get the, get shit done andthey don't have unrealistic
expectations or well, maybe somedo right, but but you know the,
the evaluation, expectations orthe personal rewards and the
work ethic.
I mean it's incredible.
So I think we have a realopportunity here.
I think what we don't have, whatthe coast have, that we don't
(33:05):
have, is, you know, a wholeinfrastructure of people that
have done this before, becauseyou know success, beget success.
You know it was somebody.
Somebody does well once andthey got the bug.
They want to do it again.
So you have you have peoplethat are, you know they're
fourth, fifth, sixth business.
You have people that have madesome incredible money and had
(33:27):
some incredible exits, that arewilling to reinvest.
And there's, there's money inOhio, but a lot of it was built
in other businesses Then theones that the startups are in
today.
So there might not be as muchcomfort investing.
You know, if I, if I made mymoney in manufacturing Not that
there's not innovationopportunities at manufacturing
or, you know, at startups but amI, am I as likely to invest in,
(33:51):
you know, a tech company that Idon't maybe Understand, that
serves a totally differentindustry.
So I think we have a few thingsthat I put as advantages over
the coast, but we but we do lackthat.
You know, robust ecosystemaround our founders.
So we're getting there.
Speaker 3 (34:09):
Yeah, no, I agree it's.
It's a really good pointbecause it touches on how
important I think it is thatyoung entrepreneurs Understand
that they need advisors andexperienced people around the
table.
Can you talk a little bit aboutyou know?
How early should startupentrepreneurs begin asking for
advice and starting to Thinkabout who the advisors are that
(34:32):
they want to surround themselveswith and how should they go
about doing that?
Speaker 2 (34:37):
Boy as early as possible, but also be careful
who the people around the tableare.
It's one of those.
It's a really tough balance of.
You do want to surroundyourself with the right people,
whether it's formal in in aboard or in an investor, or
informal in just sort of amentor or a peer group.
(34:59):
But I know you know when you'redesperate for money you want to
take any money.
But there's different qualityof investors that you can bring
to your organization.
Some can bring customers andcontacts and board members and
other money and Will work hardon your behalf after they put
the money in.
Others it's just money thatthey put in and it's just gonna
(35:22):
sit there and its value is money, which sometimes is a good
thing.
Because there's another group ofinvestors that you know can
come with some strings attachedor some, or be royal pains in
the asses.
You know that, like you lookback with retrospecting things,
do you really need that money?
That bad that you brought thatperson in right?
(35:43):
You know because they'redisruptive to the business or
they or they or they have anagenda, you know Around an exit
or something else.
So it's surrounding yourselfwith the right people is
critically important as early aspossible.
You know, knowing who the rightpeople is.
Maybe it's always obvious, butyou do have to look for folks
(36:04):
that you know are putting theneeds of the business and the
founders and the shareholdersfirst, that have skills and
expertise and, honestly, thatplay nice.
Yeah, you know there's not alot of room in the startup board
meetings.
You want people that cancontribute to the success of the
organization.
There's not a lot of room foregos and people that want to put
(36:28):
Pontificate in the boardmeeting and then leave and do
nothing.
Right there there's.
It's just not productive.
So you start lining thosepeople up as early as you
possibly can and you know thatnetworking is critical and the
who do.
You know that can help me andyou know.
Speaker 3 (36:46):
I completely agree.
I always I always tellentrepreneurs that if you want
to go to the Super Bowl, youhave to surround yourselves with
people that have been to theSuper Bowl before, because, to
your point, not all advice iscreated equally.
There's plenty of people withbusiness experience in Ohio that
could give business advice, butthere's a limited number that
have rapid growth, hyper growthexperience and venture capital
(37:10):
experience, and so you have tolook at the background from
which it's coming and consider,you know, the source of the
experience.
Not that it's bad advice, it'sjust is it relevant or not?
Speaker 2 (37:20):
Mm-hmm and it is.
It's something that's anappropriate for a company that's
, you know, ten years moremature and has a Legal
department, a compliancedepartment, and of this and of
that and of that you know it's.
You need folks that understandwhat's going to be needed at the
, at the company, down the roadas they approach an exit or an
(37:41):
IPO, or they public prepared,but also understand that you
don't have the luxury of beingable to do all those things.
You know, when you're a10-person or a 15-person or a
50-person organization is peoplethat understand the different
needs at the different stagesand sizes.
Speaker 3 (38:01):
You brought up a really good point there that
it's really important for us tocoach the entrepreneurs to
stretch their thinking to whatis the organization and board
need to look like three or fouryears from now, because
sometimes they'll get inparticular, scientific or life
science leaders.
Well gosh, why do we need aboard of directors?
We're just a little startupcompany and it's like, okay,
(38:22):
well, fair enough for today,right, but we're building for
you know, six to nine monthsfrom now, we're going to start a
series A round and they'regoing to look at who our
advisors are.
Right To your point.
Some of it is networking andidentifying who your candidates
would be, long before you'reactually ready to extend an
invitation to join your advisoryboard.
I think it's really importantfor us to stretch entrepreneurs'
(38:45):
thinking on what that structureof the board and the advisors
around them needs to look like afew years from now and begin
building toward.
Speaker 2 (38:55):
It's like you're always recruiting, right 100%
and it's, you know, in the bigpublic companies they do.
You know the formal skillsmatrix that you see in the proxy
that you know I want to havesomebody that has financial
expertise, that has industryexpertise, compliance,
governance.
Well, it's really the samething on a small scale, except
you aren't going to have as bigof a board, you aren't going to
(39:17):
have that many people.
So how many of those skills canyou get wrapped up in one right
?
Speaker 3 (39:23):
Exactly, and I think it's also important to have
entrepreneurs understand thereis a big difference between a
voting board member and anadvisory board.
You can have a pretty goodsized advisory board without
giving up any control or power,even necessarily equity.
Speaker 2 (39:38):
Yeah, and understanding the roles of the
board.
You know, I think sometimesit's a wake up to founders when
they accept their firstinstitutional money and they
need a more formal board processand accountability at the board
level.
I mean it brings some veryimportant discipline to the
(40:02):
organization and with thatfiduciary responsibility of
making sure there's, you know,appropriate funding and big
decisions are appropriatelyvetted.
You know it brings a lot ofimportant positives to the
business, but it may not feelgreat to somebody that's used to
making all the decisions ontheir own and having free reign
(40:23):
over the business and not havingsomeone looking over their
shoulder.
It's definitely a transitionwhen you go from being you know,
I've maybe got a little bit offriends and family money and a
family friend is my other, myonly board member.
That doesn't work here.
Versus when you have, you know,institutional investment, you
have an investor rep, you maybehave an independent board member
(40:44):
.
It just it just looks and feelsdifferent.
Speaker 3 (40:47):
Absolutely so.
Let's talk a little bit aboutthe current fundraising
environment.
Obviously, there's some seriousheadwinds and we've seen some
some hiccups and a lot of downrounds for some later stage
companies in this environment.
Tell us a little bit about yourview of what the landscape
looks like today for early stagefundraising, as well as how you
(41:08):
think it's going to evolve inthe next 18 months.
Speaker 2 (41:10):
I don't have a lot of crystal ball on the go forward.
I will say you know, todayversus two years ago, it's a
more sober environment, you know, the valuations are more
reasonable.
There is a focus on pathprofitability instead of just
top line growth that therewasn't a couple of years back.
(41:33):
There's still money out thereand great businesses are getting
funded, but it is.
It's tough and the venture debtterms are tougher than they've
been in the past.
You know a lot of investors arehaving to fund their current
portfolio companies beyond wherethey may be expected to
(41:56):
originally because of theenvironment.
So it's definitely a tougherenvironment than it was two
years ago.
I don't think it's impossibleand I actually think reasonable
valuations actually help in alot of ways.
When you had some of thesereally inflated valuations and
(42:18):
then you're stuck with a downround or an organization that
got more money in a round thanthey can, and then you're able
to productively deploy, you knowthings got a little sloppy.
So I actually the discipline intoday's market is kind of good,
but it's tough and it's hard tosee founders that you'd like to
see them focusing on buildingthe business.
(42:40):
It's hard to see how much timeand effort and emotion gets
wrapped up into, you know,seeking capital and that's quite
the roller coaster too, wherethey think they've got money
locked in from a source, they'resure of it, and then the check
doesn't get written, forwhatever reason.
(43:01):
You know it's very emotionallychallenging, especially for
folks that aren't accustomed tothat rejection or take it as a
rejection of their business orthem personally instead of just
move on.
You know.
Speaker 3 (43:15):
Yep, yeah, I completely agree.
It really is just business, andI think I often tell
entrepreneurs that it's not somuch.
Is this a good deal or not, oris this a good company or not?
The relevant question iscompared to what?
Because what entrepreneursoften don't understand is what
are the other 12 deals sittingon that person's desk that
they're thinking about doing,and how does my deal stack up
(43:37):
relative to those?
And so I think that helps a lotfor people to understand that
that there's a finite amount ofmoney that's going around.
People have to make moneymanagement decisions and
allocation of capital based on arisk profile of typically a
bunch of deals that theentrepreneur doesn't have any
information about.
Speaker 2 (43:54):
Yeah, plus funds have investment focus areas for a
reason, and sometimes I feellike people think that, oh,
you're just blowing them off andyou're saying you know, I'm
really sorry, I like thebusiness, but it's outside the
sweet spot.
But there's a reason that youhave an investment focus area
and part of it's your ability toevaluate the company.
But another big part of it iswhat can you do for them after
(44:18):
they are in your portfolio?
Do you have the contacts andthe expertise and the skills to
help grow this business?
And if you don't, you know theyshould go get their money
elsewhere.
So saying sorry, it doesn'tmatch our criteria or our
portfolio shouldn't be viewed asa no, I don't like your
business.
It really genuinely in mostcases is a lot of cases is I
(44:41):
really do like the business, butI'm not sure I'm the right
person to help you, so I'drather you've got your you know
funding elsewhere.
Speaker 3 (44:49):
I completely agree because that alignment between
the entrepreneur and theinvestor group is really
critical.
Because if it's misaligned I'vebeen in those board meetings
and it's not fun and you can'tjust unplug it.
It's easy to.
It's difficult to unwind thosethings.
But back to your point aboutculture.
At the beginning, right whenyou take a check from a largest
investor leading your round,that's just like interviewing an
(45:11):
employee.
That's going to have a bigimpact on your culture.
So I also encourageentrepreneurs to interview
investors with that same lens ofculture and alignment as they
would any employee.
Speaker 2 (45:23):
That's great advice.
Speaker 3 (45:24):
Yeah, I think that's really true.
Well, you know, on the positiveside, we met at the VC Fest up
in Cleveland not long ago andone of the things that we
touched on there was gettingthat alignment between investor
and entrepreneur.
And I understand that therewere over 1200 speed dating
meetings that took place upthere between investors and
(45:44):
entrepreneurs and I think that'sa fantastic number one, not
just great volume, but alsoexcellent practice for everybody
to get to know one another andto really open up those
conversations and dialogues toidentify that that culture fit,
that alignment.
And you talk a little bit aboutyour experience with those
speed dating sessions in the VCFest.
Speaker 2 (46:03):
So I hate to say, but I actually did not participate
in those.
But I do go to a number ofnetworking events in industry
events there's an insure techgroup in Ohio and other other
organizations and I actuallythink they're incredibly
valuable to your point of youknow, practicing your pitch and
maybe there'll be a relationshipthat comes out of it.
(46:25):
But also the peer to peernetworking I mean, being a CEO
of an early stage company islonely and heavy and to have
somebody else that has walked inyour shoes and if it's moral
support, advice, connections, Ithink those networking events
(46:47):
are something I would encouragethem to attend for just any
number of reasons.
Speaker 3 (46:53):
Absolutely, it's important to be plugged into the
to the ecosystem and becauseyou just you never know where
the right introduction is goingto come from.
Speaker 2 (47:02):
Exactly.
Speaker 3 (47:03):
Well, Sue, as we approach the end of our time
together today, we also like toshare a couple of takeaways that
are helpful for our audience ofpeople that are either
entrepreneurs or aspiringentrepreneurs, particularly
first and second time CEOs thatare relatively new to early
stage.
What are a couple of pieces ofparting wisdom that you might
share with that group of people?
Speaker 2 (47:22):
You know, I think it's the things that it's funny
how the conversation keepscoming back to the right things,
I think.
Surround yourself with theright people, be coachable.
You know, have that resilience,know that you are going to fail
, right Like it's certainelements that the business
doesn't need to fail, butcertain elements and be able to
(47:46):
take those learnings, moveforward, whether it's from a
customer, whether it's from themarketplace, you know, listen to
what the market is telling youand adapt.
And the other thing that mayseem in conflict with that is,
you know, focus.
It's really hard sometimes todecide when you're not sure what
(48:08):
, which product is going to bethe winner, which customer base,
which market segment.
Sometimes it's really hard andyou're working on 10 things at
once and doing none of them.
Well is, you know, get somefocus, pick a path and commit to
it until you decide to changeyour path, because you will,
right, but but you can't, youcan't be going.
(48:30):
I had a rowing coach that whenhe was trying to teach his
skills development, he'd saypick your rabbit.
And he was talking about that,the, the, the fox that sees a
field full of rabbits anddoesn't focus in on one and goes
home hungry.
So he'd say pick your rabbit,you know, go after it because
you can.
You can get one.
Yeah, can't get all of them,you know.
(48:52):
So that figuring out what'smost critically important to the
business right now, what themost likely to succeed product
or market is, and and goingafter it until you find out that
it's not, and then quicklypivoting right because, because
you know most companies, theirultimate product isn't the one
(49:13):
they started in, or the marketthey were pursuing isn't
necessarily the one they end upbeing the most profitable and
successful in.
Speaker 3 (49:21):
So Excellent, that's great advice.
I love the pick your rapidanalogy that's awesome.
Well, this has been great, so Ireally appreciate you taking
the time today.
I know our audience is going toenjoy this episode and I hope
people learn and become betterequipped to harness the
opportunities that exist in ourecosystem as a result.
Thank you for joining us.
Speaker 2 (49:38):
Thank you and appreciate you're all you're
doing to build up the ecosystemto support success in this
region.
Speaker 3 (49:44):
Excellent.
Well, that's it for thisepisode of the smart money
ventures podcast.
Thank you for joining us.
Our guest today has been SueTyler, venture partner at
Caduceus Capital Partners and aboard member of beam benefits
for motive, script drop andhealth plan data set.
Thank you for joining us and wehope to see you again on the
next episode of the smart moneyventures podcast.
Welcome to the Smart Money Ventures podcast, where we
highlight active leaders in theglobal ecosystem of venture
capital, entrepreneurship andinnovation.
We give you access to insightsfrom successful investors and
entrepreneurs that most peoplejust can't get access to, and
the only reason they take ourcalls is because we've been in
the trenches with them fordecades.
My name is JD David and I'myour host for this episode of
(00:29):
the Smart Money Ventures podcast, and today we have a very
special guest who I have greatrespect for.
Sue Tyler is a C-levelexecutive board member and
investor who has a uniquecombination of experience with
billion dollar Fortune 100companies, along with hands on
work in the trenches of rapidgrowth startups.
Sue encountered rapid growthearly in her career progressive
insurance, where she served infinance and product management,
(00:52):
introducing new products andgenerating significant revenue
growth for the company.
She went on to serve asdivision president and senior
vice president of marketing forReliant Insurance that grew from
zero to 300 million in revenuesin less than four years.
The company was ultimatelyacquired by farmers insurance.
Sue then went on to serve inmultiple C-level roles at
(01:12):
Medical Mutual, a multi-billiondollar insurance company, for 15
years, and then she startedserving on boards and investing
in startups as well.
Sue currently serves as aventure partner with Caduceus
Capital Partners and is a memberof the board of directors of
several digital health andinsure check companies,
including bean benefits,formative script, drop and
(01:32):
health plan data solutions.
Sue serves on the ClevelandClinic External Innovation
Advisory Group and is an alumniadvisor to the student led
venture fund and a venturementor to the medical school at
Case Western Reserve University,where she holds both an MBA and
an undergraduate degree.
Welcome, sue, and thank you forjoining us today.
Speaker 2 (01:51):
Thanks, jd.
Speaker 3 (01:52):
So to kick off the program, let's really start with
where you first encounteredrapid growth at Progressive
Insurance.
Speaker 2 (01:59):
So I think I was really lucky to be able to join
Progressive at the time that Idid, because it was a time of
really incredible growth andinnovation and it was a pretty
big company at that time but ithad the culture of a small
company and it was taking aninnovative new approach to a
very mature industry.
(02:20):
So I was able to serve inproduct management and finance
roles across three differentdivisions within the
organization.
So I got exposed to a lot ofreally smart people and a
culture that was really ahead ofits time in terms of, you know,
(02:41):
looking at the business as adata business, not a traditional
insurance business.
It was very much a fail fastenvironment.
You know it was like we'regoing to measure things, we're
going to do experiments, we aregoing to hold people very
accountable, but failure isacceptable.
(03:03):
If you learn from your mistakes, move forward.
So it really was an incredibleplace to start my professional
career and I laugh sometimeswhen I talk to people and people
talk about digitaltransformation in the insurance
industry and I laugh because wedid that in the 1990s at
Progressive.
(03:23):
Like we literally wentpaperless with our agent voting
and application and bindingprocess.
So you know it was the early1990s I was under, you know,
desks in agents offices plug inthe phone line, you know, into
the wall and you know, with thedial of modem connection that we
(03:44):
were able to transform what wasa, you know, a big paper
process into an automatedprocess.
And again, to have thatexperience early in my career
was priceless.
Speaker 3 (03:55):
That's awesome.
It's one thing to go into acompany and understand how all
of the nuts and bolts work.
It's another to say, all right,we're going to press some
levers and try to go as fast aswe can and really transform the
way we do business.
That's fascinating.
Speaker 2 (04:12):
Yeah, it was an incredible environment where,
you know, there was a belief inhiring a lot of smart people
from outside the industry andallowing them to view the
industry differently, instead ofhiring industry insiders that
thought they knew how it shouldbe done, to take that industry
(04:32):
knowledge and marry it withpeople who knew nothing about
insurance but were really smart,had some great skills and
weren't afraid to try somethingnew.
Speaker 3 (04:45):
I think that's what's exciting about innovation,
because the actual definition,if you look it up, says it's
bringing new thinking to theequation.
And what I like about what'shappening in many industries
today is that they may or maynot necessarily be innovating
the product itself, but the waythat we're processing customers,
delivering it and doing it moreefficiently with a better
(05:05):
customer experience.
Speaker 2 (05:06):
Absolutely.
Speaker 3 (05:10):
I think progressive was definitely ahead of itself
in its time and I think that'sexciting that you had that
experience.
So, from progressive, aftergoing through that experience,
then you had an opportunity tojoin Reliant Insurance.
So how did that opportunitycome about and how did that
story unfold?
Speaker 2 (05:27):
So the success at progressive created that
opportunity and actually therewas a core group of progressive
alum that were the initialleadership team of that
organization.
And it was really quiteincredible because we set out to
do a business that we knew wewere also in the auto insurance
(05:48):
business, but doing it withoutthe resources doing it, I think.
So two of us started.
We were sitting in a Chichi'srestaurant, if you remember
those with the cell phone, kindof like, holy crap, we've got to
find an office to work out of,we got to hire some employees,
we got to get some computers, wegot to figure out what our
(06:10):
product is.
Oh, we probably need a systemon the back end to process all
these things.
I mean just the enormity of allthe things that you need to
pull together in a very shorttime to be up and in business.
And it's really quite amazingbecause those Chichi
conversations, restaurantconversations, were in February
and we were live selling productin July of that year in
(06:32):
multiple states.
So, in the same, you know, a fewmonths later.
So it was kind of the original.
I laughed about digitaltransformation experience that
progressed the way back whenthis was kind of the original
agile programming experiencebecause literally we had the
(06:53):
business owner and the IT person, you know, seeing side by side
with a computer in front of them, going what should this be in
this data field and let's youknow we're building our data
dictionary on the fly and whatour screens are going to look
like and what our customerexperience is.
It was really the originalagile, you know, and we were
very much, you know, buildingthe plane while we were flying
(07:14):
it.
I look back and think about wedidn't know what we didn't know.
We had confidence, we hadenergy, we had intelligence, we
had the right people pulledtogether.
But where were we going?
Fast, you know, and that kindof pace?
You do have a few things gobump in the night and I'm also
(07:38):
very proud of how we recognizedwhen we had those hiccups and
what we did about them toresolve them, make it right to
anyone who was adverselyimpacted by it.
But yeah, we didn't know whatwe didn't know and sometimes
that's a good thing.
Speaker 3 (07:56):
Right, exactly.
Well, I think that's what Iwant to touch on, because I
think a lot of people doromanticize entrepreneurship and
venture capital.
And, yes, it is exciting, it'sa lot of fun, you want to go as
fast as you can without thewheels falling off, but, to your
point, sometimes the wheels dofall off.
So what did you learn along theway?
I mean, you learn some valuablelessons when you're going that
(08:17):
fast.
Speaker 2 (08:19):
Yeah, I guess.
So the power, the power of theright people, right, because
that was an incredible team thatrolled up their sleeves and did
what they need to do outside oftheir functional lines.
You just got it done theimportance of open communication
and I know we'll probably talkabout advice to folks, but one
(08:44):
of the things is it's easy tocommunicate when things are
going right, but the importanceof communicating when things are
going wrong Because if there isa problem, sweeping it under
the rug or turning up the radioon the car so you don't hear the
knocks in the engine, it mightfeel good momentarily, but if
(09:05):
you share your problem andinvite other people in to help
solve the problem with you, youget to a far, far better outcome
.
So that was certainly one ofthe learnings, one of the it
just reinforced the importanceof the right people and I want
(09:28):
to say the integrity to do theright thing when you do hit
hiccups is there was thatunwavering we're going to do the
right thing by all stakeholderswas also something that was
really positive about thatexperience.
But it's stressful and for allthe founders.
(09:49):
If anybody is listening, theone thing we didn't have is the
stress that most founders arejust bearing the burden of today
, and that was we did not haveto raise capital.
We had funding from a parent.
So we had to set up the company, scale the company, do all the
(10:12):
things to build a business, butwe did not have to
simultaneously be constantlyfundraising and I've gotten a
real appreciation for what aburden that is on organizations
today when you're trying not tobe distracted from building the
business or running theoperation, but you're constantly
(10:32):
meeting with past investor,current investors, cultivating
future investors.
So that was one challenge wedid not have.
So I have to be honest aboutthat.
Speaker 3 (10:43):
Well, it is nice that you were able to develop your
skills and understand how tobuild that type of culture and
team, because the threadthroughout that is that the
culture and team.
To take a rapid growth companyand you said it went from zero
to 300 million in four yearsright, the culture that you
build for that company is verydifferent than the culture that
(11:04):
you have and need for a billiondollar company that's grown
three to 5% a year.
Speaker 2 (11:10):
Yeah, and even from even within that period of
growth, the skills that you need, the processes you need, the
formality, the way that youcommunicate, you know have to
change as business of scales andthat's one of the challenges I
see, you know, with a lot of thebusinesses that I work with,
that you know styles need tochange communication styles, the
(11:31):
formality, the process.
You know it's different whenyou're an eight person
organization versus when you'rea 50 person organization versus
500 person organization.
You know the formality aroundprocesses and the intentionality
of communication has got to bevery different.
Speaker 3 (11:51):
Absolutely, absolutely, and I think there
needs to be a culture where it'sokay to bring that information
to the table and figure outtogether how to solve it.
That's very different than sortof I don't know.
In my experience in largecorporations there's almost this
more protectionist thinking.
Speaker 2 (12:09):
Absolutely.
You have people that eitherthey don't want to share the
problem because either they'reconfident they're going to fix
it you know they want to be ableto make it right, get it right,
so they don't want to shareprematurely because they're so
(12:29):
determined that they can do this, they can fix this or it's the
fear of, you know, the messengerbeing shot.
You know, like I don't want togo tell somebody about this.
Or, worse, you know the toxicculture that actually penalizes
someone professing up to amistake.
You know so that culture thatallows people to bring honest
(12:53):
mistakes or poor judgments.
I mean, most businesses are aseries of failures until they're
not right.
Speaker 3 (12:59):
Right.
Speaker 2 (13:00):
They're just a field experiment.
So if you can't make a culturewhere you can do that experiment
in a reasonable experimentwithin a safe environment, you
really are not gonna succeed.
So that culture to me again,I'm hearing a pattern in my own
words here, but people inculture are critical.
Speaker 3 (13:23):
Absolutely, absolutely.
And I heard a message one timeabout the theology of baseball
and the idea is that evenbaseball players at the top of
their game making millions ofdollars a year when they get
into the batter box, if you'rebatting 300 or 400, you're a
hero, which means that everytime you step into the batter's
box, you're failing 60 to 70% ofthe time.
The difference is they keepgetting in the batter's box, and
(13:46):
I think that's the differencefor entrepreneurs.
Yes, you're gonna fail, yes,it's gonna hurt, and you gotta
get back in the batter's box ifyou wanna continue to do it.
Speaker 2 (13:55):
You know that is so.
On point, I saw A-Rod speakrecently and he talked about
leading the league in strikeoutsand having the confidence to
get back in after being thestrikeout leader.
So 100% is how you learn fromthe mistakes but how you're not
crushed by them.
Speaker 3 (14:15):
Exactly exactly.
And that brings up the topic ofresiliency.
I was in the Marine Corps andone of the things that we talk a
lot now with veterans about isthat before you go into the
battlefield, you need to have acertain level of base resiliency
and solidify and beingcomfortable in your own skin
right.
And when you go into battle andyou endure the trauma that you
(14:37):
endure and you're come back,they find a direct correlation
between the amount of resiliencethat you go into the
battlefield with will have a bigimpact on your ability to
bounce back from those traumaticevents.
And I think that people need togo into entrepreneurship and
rapid growth with a mindset that, yes, we're going to fail, but
we're gonna keep getting back upand it's okay and that's the
resiliency that we have to have.
(14:59):
Otherwise, we would just giveup and go home.
And it's important to interviewfor that too, and I think for
people that are consideringentrepreneurship, which is a
large part of our audience, it'simportant to know yourself
really, really well whichcultures are you going to thrive
in and which cultures are notgonna work for you.
Can you talk a little bit aboutthe hiring process?
(15:19):
When you're hiring for peoplefor the first five to 10
employees of a startup companyversus employee number 500 of a
company.
How do you interview and filterfor those qualities?
Speaker 2 (15:31):
I guess people that are comfortable in poorly
defined roles and rapidlychanging roles because in a
small company, the chief HRofficer might also be the chief
legal officer might also be thechief customer officer in
mopping the floor in the evening, right.
(15:52):
So part of it is people thatare comfortable in those roles,
people that are comfortable withchange, confident enough to
believe this can be done, butcoachable.
And that's one of the things.
Honestly, when, if we talkabout when you look to invest in
(16:14):
a business and you're lookingfor that team, you are looking
for those team players that areutility players that can do a
lot of different things.
Obviously you need some coreexpertise and some core
functions, whatever yourbusiness is.
But those utility playersthat'll say, put me in, coach,
and what do you need me to dotoday, or aren't uncomfortable
(16:40):
that what they were working onyesterday just got canceled and
something new is in front ofthem for tomorrow, because
there's an awful lot of zigs andzags in the startup.
It's a roller coaster ride withsome very high highs and some
very low lows.
So, looking for folks that findthe traditional corporate
(17:04):
functional job sort of stale andboring, that thrive in some
uncertainty, that are willing towork with others and seek help,
whether that's from their peersin the organization or people
outside of it.
I do think it takes a veryspecial person to work in that
(17:24):
environment and what youunfortunately find is sometimes
those people, as the company issuccessful and gets larger,
those aren't the same peoplethat they may not be as
satisfied in their role becausethey're hooked now on the
adrenaline of creating andgrowing and moving quickly that
(17:47):
once it becomes more of amaintenance operational, let's
just do what we're doing at aslightly larger scale.
It doesn't feed the same urgesthat the folks that thrive in
those smaller companies have.
Speaker 3 (18:04):
It's funny that you say that because I just had
Chris Hively on the podcast acouple of weeks ago and he was
talking about his book Build theFort, and he's talking about
channeling your inner10-year-old, that everybody
loves to build a fort of somekind, whether it's indoors or
outdoors.
Get some pillows and a blanket,some sheets and some chairs
right and make a fort and inviteyour friends.
But to your point, when itbecomes a skyscraper, the inner
(18:27):
10-year-old is gonna get boredand say let's go build another
fort and see what we can dodifferent this time.
Speaker 2 (18:32):
Exactly.
Speaker 3 (18:33):
So let's pivot a little bit to medical mutual.
So after being at Reliant, youjoined medical mutual.
You were there for a long time,but what intrigued me there was
that not only were you thechief financial officer and the
chief experience officer, butyou did a lot of strategy and
acquisitions.
So share a little bit with theentrepreneurs what it looks like
from that side doing strategyand acquisitions and looking at
(18:56):
startups.
Speaker 2 (18:57):
Yeah.
So medical mutual is a moretraditional, mature organization
than anything I had been in atthat point and when I got there
it was performing well butgrowth was slow.
We really looked to where canwe grow and diversify?
So we set out on a strategy ofthere's a couple ways.
You either expand you'reavailable market or you try and
(19:20):
get a bigger wallet share of thecustomers that you already have
.
And we looked to do both.
We looked to say in thatbusiness it was how do we expand
geographically?
And then how do we add someproducts that are natural fits
with the core insurance, healthinsurance product that we had?
And we did both through acombination of acquisitions.
(19:43):
We didn't have the checkbook tobe able to do really large ones,
so they were by definitionsmaller acquisitions but we did
them in the distribution space,we did them in the ancillary
product lines and we did them toget a beach head into some
other states and markets.
And at the same time we alsobuilt some products internally,
(20:04):
started marketing to individualcustomers for the first time,
added life and dental and someother products that would
complement the core product.
So it was a combination ofinternal development, some
smaller acquisitions, but therewas absolutely a strategy around
.
We wanna go out and make someacquisitions and we wanna grow,
(20:28):
but we're a health insurancecompany.
What assets do we have?
What core capabilities do wehave that we can leverage in new
areas?
We weren't gonna go out andacquire a car wash or make an
investment in something else.
We really were looking atthings that would either give us
a competitive advantage in ourcore business or just expand our
(20:49):
available market.
Speaker 3 (20:51):
I think it's really good to have that experience on
that side of the equation.
I ran mergers and acquisitionsfor public company as well and I
think that greatly informs whenwe're sitting on boards and
helping startups guide themthrough that process, because
very few of them have actuallynavigated it and it sounds like
you've been on both sides of it.
Speaker 2 (21:10):
Yeah, and you start to realize that the actual
integration of an acquisition isresource intensive and
critically important as theactual transaction.
It's not the transaction, it isthe whole process that, once
(21:32):
you now have this new asset, howdo you leverage it?
So one plus one equals three,and it's not one plus one equals
one or half, because now yougot people distracted.
I mean there's absolutely someimportant things to do to make
those acquisitions successful.
Now, the unfortunate thing forus, as we were going down that
(21:55):
road of expanding our productsin our markets, is that's when
healthcare reform and theAffordable Care Act came
hurtling at the industry.
It came at light speed andactually proud proud.
But it was also painful as westrategically had to make the
decision to back away from someof what we were doing and
(22:17):
expanding in new markets andproducts, because we had to
focus on getting the corebusiness right.
You know there was just a lotof changes happening, a lot of
things that needed to beimplemented.
You know very, very short timeframe and we needed all hands on
deck focusing on the corebusiness.
So we actually gained someground and lost some ground, but
(22:41):
it was it was a hundred percentthe right decision.
Right.
You have to do what's right forthe business under shifting
Market conditions.
Speaker 3 (22:51):
Sure.
So rapid growth at progressiverapid growth at reliant and then
even more Larger companyexperience of medical mutual
where you're making acquisitions.
So then you dropped intoServing and advising
earlier-stage companies, drawingon your experience.
So you currently sit on theboard of script drop for motive
and beam benefits.
(23:11):
Tell us a little bit about howyou first got into mentoring and
advising and joining boards ofdirectors.
How did those doors open andwhat about that was exciting to
you.
Speaker 2 (23:22):
Yeah.
So when I concluded my careerat medical mutual, I refused to
say retired.
I never say retired, I say Igraduated from having an
everyday job because I, becauseI wasn't ready to be retired.
But I also, you know, as Iexplored your, people would
approach me about other, youknow, full-time, traditional
(23:43):
jobs.
It's just not what I wanted todo.
I still had that bug or thatneed to, to build that need to,
I don't know, try new things,learn new things.
So I got Very quickly Kind ofpulled into the, the early-stage
business community, some of itformally through no North Coast
(24:07):
ventures or caduceus capital,some of it less formally through
angel investor groups, and youknow, some of it formally as a
as a board member with fiduciaryresponsibility and some, you
know, very informal Advisor.
Hey, can I call you for someadvice?
You know conversations with aright wide range of
(24:28):
organizations and what I foundis it's it's really rewarding,
not necessarily financially,because you know my compensation
is generally equity and, as youknow, while some of the
companies, you know everybodyshoots for the moon, some of
them will hit it, some of themwill crash and burn you know, so
some.
Sometimes it's not necessarilygoing to be financially
(24:52):
rewarding, but it is sostrategic, it is so fast-moving.
I'm learning so much Becausemost my companies are in, are in
the technology space.
I'm working with really coolpeople, you know, so I I really
enjoy it, but it is it'sstressful by proxy, you know,
(25:13):
especially with how the capitalmarkets are today.
You know you think back to theweekend that Silicon Valley Bank
imploded, you know, and andother other other things that
have happened, you know, at atthe companies.
And again, the roller coasterhas very high highs and very low
(25:35):
lows, and None of the companiesthat I work with are
consistently on top or on thebottom, you know, like even the
ones that Are really reallydoing well.
You know it takes some dips too.
So Absolutely it's, it's great.
Yeah, no, it's, it's, it's been, it's been a very fun ride.
Speaker 3 (25:56):
It's the most rewarding thing I've ever done
is to help young entrepreneursand particularly to help them
avoid some of the Blind cornersand blind spots that they're not
aware of because they to yourpoint until you actually dive in
and an Experience that youdon't actually know what's
coming around the corner.
Talk a little bit about how youadvise CEOs and teams as
(26:21):
they're going through that,especially when it relates to
the roller coaster and I mean Ifound for me personally
sometimes it's that call at 2amthat sounds more like therapy
than business coaching.
Speaker 2 (26:34):
Yes, it's so true.
You know, while I'm oftenrecruited to a board for either
Industry expertise, functionalexpertise or contacts, where I
sometimes feel like I'm addingthe most value is just drawing
on the various business and lifeexperiences that an old person
(26:58):
has.
You know, I've got a lot ofdifferent career experiences
through the years and and aswell as life experiences, so
Sometimes I think it's it's mostimpactful.
One of the things I livedthrough at Medical Mutual was
the sudden passing of a CEO.
You know, and all the thingsthat that happened with that.
So you know, one of myCompanies had the unfortunate
(27:22):
loss of a young employee, asudden death over a weekend, and
you know, sunday night wasspent with the CEO around what.
What does Monday morning looklike?
Talking about the need forgrief counseling, because the
the loss, whether people wereclose to that individual or not
may trigger Things of their ownmortality or things in their own
(27:43):
life, you know.
So, the need to make resourcesavailable, you know, talk about
like, what do I do at this desk,you know, and it was like, well
, let's not build a shrine andlet's not have it emptied in the
morning, you know, and let'slook for ways to allow employees
to Feel like they're doingsomething, whether it's, you
know, setting up a fund orvolunteering and and making sure
(28:06):
people have an opportunity toattend the service.
It was, it was things thatreally you don't think of in a
in a company context.
They were.
They were probably a littlecombination of professional
experience and life experience,but sometimes those
conversations or theconversations around when a
(28:26):
reduction in force needs tohappen, or a specific Person
that did a good job getting thecompany to a certain level, but
isn't the talent that is neededat the next level of how to Deal
with that with with dignity andin the right way for the
business, for the shareholdersand for the individual involved,
(28:48):
as well as for the otheremployees who are gonna, you
know, have emotions and feelingsabout that.
So sometimes I think I spend asmuch time on those kind of
things as I do on specificbusiness issues.
Or or it may be things like Igot a new pitch deck for this
group of customers.
(29:08):
Can I run it by you?
And it's like, yeah, you know,let's friendly fire is is good.
You know, like let's allow itto be pressure tested by someone
internally before before youyou take your shot At an
audience where you might haveone shot on goal.
So I think there's a lot ofthose ways that you find
yourself getting a valve thataren't exactly what you expected
(29:31):
.
When you say I'm gonna take thisboard seat or this advisory
seat, but it's been veryrewarding to me to be able to
mentor in in those ways.
Speaker 3 (29:41):
Is it fair to say that a startup team,
particularly in the early days,it's more like a.
It's very much like a family,because you spend so much time
together and you go through somethings in business In a startup
that are not the norm in aworkplace.
Speaker 2 (29:56):
I think You're you're right on.
I mean, part of it is thatthere are not clear functional
lines, there aren't clear lanesthat people are working in.
The dependency on one anotherIs huge.
So I 100% and I think that'syou know that that family
environment of thoseOrganizations are some of the
(30:18):
most incredible people, but partof it yeah, they were
incredible people, but it wasalso this circumstances under
which we were brought togetherin the way we needed to interact
and work that really did makeit a family.
That's why, you know, whenthere's things that disrupt the
family Whether it's an illness,of death or a reduction in force
(30:39):
or loss of a key employee it isso much more acute in these
small Organizations you feel itmore.
Mm-hmm yeah absolutely.
Speaker 3 (30:50):
Well, let's talk a little bit about sort of the
wave of innovation, bothgeographically and industry wise
.
It used to be that innovationwas concentrated on the coasts
and was focused on a fewspecific industries but the Ohio
, the Heartland region,industries that traditionally
used to be not very innovative.
(31:11):
Talk a little bit about both ofthose trends as you've seen
them unfold over the last fiveor so years.
Speaker 2 (31:18):
Yeah, I think what's really great Maybe under the
radar is is the number ofincredible businesses being
birthed in Ohio.
You know, I'm up in NortheastOhio but I actually several of
my companies are in the Columbusarea, so I'm pretty familiar
with with these organizations.
Because of my background, Itend to get more involved in
(31:40):
healthcare tech, digital health,insure tech businesses and, you
know, because this is such ahuge healthcare Is such a huge
industry in Ohio and we have somany industry leaders nationwide
, worldwide leaders inhealthcare, it's a natural for
(32:00):
us.
Insurance, you know, is also ahuge industry within, within the
state and you know there's alot of things that especially
I'm not.
I'm not a clinical person, so Itend to get involved on the
software side of things or thepatient or Provider experience
or the administrative side.
(32:21):
There are things that aren'tterribly sexy Sometimes, but man
, there's a lot there.
There's a lot of value to becreated, there's a lot of
opportunity to bring newtechnologies to old problems and
Really really do someincredible things.
And I think you know the folkshere know how to put their head
(32:42):
down, get the, get shit done andthey don't have unrealistic
expectations or well, maybe somedo right, but but you know the,
the evaluation, expectations orthe personal rewards and the
work ethic.
I mean it's incredible.
So I think we have a realopportunity here.
I think what we don't have, whatthe coast have, that we don't
(33:05):
have, is, you know, a wholeinfrastructure of people that
have done this before, becauseyou know success, beget success.
You know it was somebody.
Somebody does well once andthey got the bug.
They want to do it again.
So you have you have peoplethat are, you know they're
fourth, fifth, sixth business.
You have people that have madesome incredible money and had
(33:27):
some incredible exits, that arewilling to reinvest.
And there's, there's money inOhio, but a lot of it was built
in other businesses Then theones that the startups are in
today.
So there might not be as muchcomfort investing.
You know, if I, if I made mymoney in manufacturing Not that
there's not innovationopportunities at manufacturing
or, you know, at startups but amI, am I as likely to invest in,
(33:51):
you know, a tech company that Idon't maybe Understand, that
serves a totally differentindustry.
So I think we have a few thingsthat I put as advantages over
the coast, but we but we do lackthat.
You know, robust ecosystemaround our founders.
So we're getting there.
Speaker 3 (34:09):
Yeah, no, I agree it's.
It's a really good pointbecause it touches on how
important I think it is thatyoung entrepreneurs Understand
that they need advisors andexperienced people around the
table.
Can you talk a little bit aboutyou know?
How early should startupentrepreneurs begin asking for
advice and starting to Thinkabout who the advisors are that
(34:32):
they want to surround themselveswith and how should they go
about doing that?
Speaker 2 (34:37):
Boy as early as possible, but also be careful
who the people around the tableare.
It's one of those.
It's a really tough balance of.
You do want to surroundyourself with the right people,
whether it's formal in in aboard or in an investor, or
informal in just sort of amentor or a peer group.
(34:59):
But I know you know when you'redesperate for money you want to
take any money.
But there's different qualityof investors that you can bring
to your organization.
Some can bring customers andcontacts and board members and
other money and Will work hardon your behalf after they put
the money in.
Others it's just money thatthey put in and it's just gonna
(35:22):
sit there and its value is money, which sometimes is a good
thing.
Because there's another group ofinvestors that you know can
come with some strings attachedor some, or be royal pains in
the asses.
You know that, like you lookback with retrospecting things,
do you really need that money?
That bad that you brought thatperson in right?
(35:43):
You know because they'redisruptive to the business or
they or they or they have anagenda, you know Around an exit
or something else.
So it's surrounding yourselfwith the right people is
critically important as early aspossible.
You know, knowing who the rightpeople is.
Maybe it's always obvious, butyou do have to look for folks
(36:04):
that you know are putting theneeds of the business and the
founders and the shareholdersfirst, that have skills and
expertise and, honestly, thatplay nice.
Yeah, you know there's not alot of room in the startup board
meetings.
You want people that cancontribute to the success of the
organization.
There's not a lot of room foregos and people that want to put
(36:28):
Pontificate in the boardmeeting and then leave and do
nothing.
Right there there's.
It's just not productive.
So you start lining thosepeople up as early as you
possibly can and you know thatnetworking is critical and the
who do.
You know that can help me andyou know.
Speaker 3 (36:46):
I completely agree.
I always I always tellentrepreneurs that if you want
to go to the Super Bowl, youhave to surround yourselves with
people that have been to theSuper Bowl before, because, to
your point, not all advice iscreated equally.
There's plenty of people withbusiness experience in Ohio that
could give business advice, butthere's a limited number that
have rapid growth, hyper growthexperience and venture capital
(37:10):
experience, and so you have tolook at the background from
which it's coming and consider,you know, the source of the
experience.
Not that it's bad advice, it'sjust is it relevant or not?
Speaker 2 (37:20):
Mm-hmm and it is.
It's something that's anappropriate for a company that's
, you know, ten years moremature and has a Legal
department, a compliancedepartment, and of this and of
that and of that you know it's.
You need folks that understandwhat's going to be needed at the
, at the company, down the roadas they approach an exit or an
(37:41):
IPO, or they public prepared,but also understand that you
don't have the luxury of beingable to do all those things.
You know, when you're a10-person or a 15-person or a
50-person organization is peoplethat understand the different
needs at the different stagesand sizes.
Speaker 3 (38:01):
You brought up a really good point there that
it's really important for us tocoach the entrepreneurs to
stretch their thinking to whatis the organization and board
need to look like three or fouryears from now, because
sometimes they'll get inparticular, scientific or life
science leaders.
Well gosh, why do we need aboard of directors?
We're just a little startupcompany and it's like, okay,
(38:22):
well, fair enough for today,right, but we're building for
you know, six to nine monthsfrom now, we're going to start a
series A round and they'regoing to look at who our
advisors are.
Right To your point.
Some of it is networking andidentifying who your candidates
would be, long before you'reactually ready to extend an
invitation to join your advisoryboard.
I think it's really importantfor us to stretch entrepreneurs'
(38:45):
thinking on what that structureof the board and the advisors
around them needs to look like afew years from now and begin
building toward.
Speaker 2 (38:55):
It's like you're always recruiting, right 100%
and it's, you know, in the bigpublic companies they do.
You know the formal skillsmatrix that you see in the proxy
that you know I want to havesomebody that has financial
expertise, that has industryexpertise, compliance,
governance.
Well, it's really the samething on a small scale, except
you aren't going to have as bigof a board, you aren't going to
(39:17):
have that many people.
So how many of those skills canyou get wrapped up in one right
?
Speaker 3 (39:23):
Exactly, and I think it's also important to have
entrepreneurs understand thereis a big difference between a
voting board member and anadvisory board.
You can have a pretty goodsized advisory board without
giving up any control or power,even necessarily equity.
Speaker 2 (39:38):
Yeah, and understanding the roles of the
board.
You know, I think sometimesit's a wake up to founders when
they accept their firstinstitutional money and they
need a more formal board processand accountability at the board
level.
I mean it brings some veryimportant discipline to the
(40:02):
organization and with thatfiduciary responsibility of
making sure there's, you know,appropriate funding and big
decisions are appropriatelyvetted.
You know it brings a lot ofimportant positives to the
business, but it may not feelgreat to somebody that's used to
making all the decisions ontheir own and having free reign
(40:23):
over the business and not havingsomeone looking over their
shoulder.
It's definitely a transitionwhen you go from being you know,
I've maybe got a little bit offriends and family money and a
family friend is my other, myonly board member.
That doesn't work here.
Versus when you have, you know,institutional investment, you
have an investor rep, you maybehave an independent board member
(40:44):
.
It just it just looks and feelsdifferent.
Speaker 3 (40:47):
Absolutely so.
Let's talk a little bit aboutthe current fundraising
environment.
Obviously, there's some seriousheadwinds and we've seen some
some hiccups and a lot of downrounds for some later stage
companies in this environment.
Tell us a little bit about yourview of what the landscape
looks like today for early stagefundraising, as well as how you
(41:08):
think it's going to evolve inthe next 18 months.
Speaker 2 (41:10):
I don't have a lot of crystal ball on the go forward.
I will say you know, todayversus two years ago, it's a
more sober environment, you know, the valuations are more
reasonable.
There is a focus on pathprofitability instead of just
top line growth that therewasn't a couple of years back.
(41:33):
There's still money out thereand great businesses are getting
funded, but it is.
It's tough and the venture debtterms are tougher than they've
been in the past.
You know a lot of investors arehaving to fund their current
portfolio companies beyond wherethey may be expected to
(41:56):
originally because of theenvironment.
So it's definitely a tougherenvironment than it was two
years ago.
I don't think it's impossibleand I actually think reasonable
valuations actually help in alot of ways.
When you had some of thesereally inflated valuations and
(42:18):
then you're stuck with a downround or an organization that
got more money in a round thanthey can, and then you're able
to productively deploy, you knowthings got a little sloppy.
So I actually the discipline intoday's market is kind of good,
but it's tough and it's hard tosee founders that you'd like to
see them focusing on buildingthe business.
(42:40):
It's hard to see how much timeand effort and emotion gets
wrapped up into, you know,seeking capital and that's quite
the roller coaster too, wherethey think they've got money
locked in from a source, they'resure of it, and then the check
doesn't get written, forwhatever reason.
(43:01):
You know it's very emotionallychallenging, especially for
folks that aren't accustomed tothat rejection or take it as a
rejection of their business orthem personally instead of just
move on.
You know.
Speaker 3 (43:15):
Yep, yeah, I completely agree.
It really is just business, andI think I often tell
entrepreneurs that it's not somuch.
Is this a good deal or not, oris this a good company or not?
The relevant question iscompared to what?
Because what entrepreneursoften don't understand is what
are the other 12 deals sittingon that person's desk that
they're thinking about doing,and how does my deal stack up
(43:37):
relative to those?
And so I think that helps a lotfor people to understand that
that there's a finite amount ofmoney that's going around.
People have to make moneymanagement decisions and
allocation of capital based on arisk profile of typically a
bunch of deals that theentrepreneur doesn't have any
information about.
Speaker 2 (43:54):
Yeah, plus funds have investment focus areas for a
reason, and sometimes I feellike people think that, oh,
you're just blowing them off andyou're saying you know, I'm
really sorry, I like thebusiness, but it's outside the
sweet spot.
But there's a reason that youhave an investment focus area
and part of it's your ability toevaluate the company.
But another big part of it iswhat can you do for them after
(44:18):
they are in your portfolio?
Do you have the contacts andthe expertise and the skills to
help grow this business?
And if you don't, you know theyshould go get their money
elsewhere.
So saying sorry, it doesn'tmatch our criteria or our
portfolio shouldn't be viewed asa no, I don't like your
business.
It really genuinely in mostcases is a lot of cases is I
(44:41):
really do like the business, butI'm not sure I'm the right
person to help you, so I'drather you've got your you know
funding elsewhere.
Speaker 3 (44:49):
I completely agree because that alignment between
the entrepreneur and theinvestor group is really
critical.
Because if it's misaligned I'vebeen in those board meetings
and it's not fun and you can'tjust unplug it.
It's easy to.
It's difficult to unwind thosethings.
But back to your point aboutculture.
At the beginning, right whenyou take a check from a largest
investor leading your round,that's just like interviewing an
(45:11):
employee.
That's going to have a bigimpact on your culture.
So I also encourageentrepreneurs to interview
investors with that same lens ofculture and alignment as they
would any employee.
Speaker 2 (45:23):
That's great advice.
Speaker 3 (45:24):
Yeah, I think that's really true.
Well, you know, on the positiveside, we met at the VC Fest up
in Cleveland not long ago andone of the things that we
touched on there was gettingthat alignment between investor
and entrepreneur.
And I understand that therewere over 1200 speed dating
meetings that took place upthere between investors and
(45:44):
entrepreneurs and I think that'sa fantastic number one, not
just great volume, but alsoexcellent practice for everybody
to get to know one another andto really open up those
conversations and dialogues toidentify that that culture fit,
that alignment.
And you talk a little bit aboutyour experience with those
speed dating sessions in the VCFest.
Speaker 2 (46:03):
So I hate to say, but I actually did not participate
in those.
But I do go to a number ofnetworking events in industry
events there's an insure techgroup in Ohio and other other
organizations and I actuallythink they're incredibly
valuable to your point of youknow, practicing your pitch and
maybe there'll be a relationshipthat comes out of it.
(46:25):
But also the peer to peernetworking I mean, being a CEO
of an early stage company islonely and heavy and to have
somebody else that has walked inyour shoes and if it's moral
support, advice, connections, Ithink those networking events
(46:47):
are something I would encouragethem to attend for just any
number of reasons.
Speaker 3 (46:53):
Absolutely, it's important to be plugged into the
to the ecosystem and becauseyou just you never know where
the right introduction is goingto come from.
Speaker 2 (47:02):
Exactly.
Speaker 3 (47:03):
Well, Sue, as we approach the end of our time
together today, we also like toshare a couple of takeaways that
are helpful for our audience ofpeople that are either
entrepreneurs or aspiringentrepreneurs, particularly
first and second time CEOs thatare relatively new to early
stage.
What are a couple of pieces ofparting wisdom that you might
share with that group of people?
Speaker 2 (47:22):
You know, I think it's the things that it's funny
how the conversation keepscoming back to the right things,
I think.
Surround yourself with theright people, be coachable.
You know, have that resilience,know that you are going to fail
, right Like it's certainelements that the business
doesn't need to fail, butcertain elements and be able to
(47:46):
take those learnings, moveforward, whether it's from a
customer, whether it's from themarketplace, you know, listen to
what the market is telling youand adapt.
And the other thing that mayseem in conflict with that is,
you know, focus.
It's really hard sometimes todecide when you're not sure what
(48:08):
, which product is going to bethe winner, which customer base,
which market segment.
Sometimes it's really hard andyou're working on 10 things at
once and doing none of them.
Well is, you know, get somefocus, pick a path and commit to
it until you decide to changeyour path, because you will,
right, but but you can't, youcan't be going.
(48:30):
I had a rowing coach that whenhe was trying to teach his
skills development, he'd saypick your rabbit.
And he was talking about that,the, the, the fox that sees a
field full of rabbits anddoesn't focus in on one and goes
home hungry.
So he'd say pick your rabbit,you know, go after it because
you can.
You can get one.
Yeah, can't get all of them,you know.
(48:52):
So that figuring out what'smost critically important to the
business right now, what themost likely to succeed product
or market is, and and goingafter it until you find out that
it's not, and then quicklypivoting right because, because
you know most companies, theirultimate product isn't the one
(49:13):
they started in, or the marketthey were pursuing isn't
necessarily the one they end upbeing the most profitable and
successful in.
Speaker 3 (49:21):
So Excellent, that's great advice.
I love the pick your rapidanalogy that's awesome.
Well, this has been great, so Ireally appreciate you taking
the time today.
I know our audience is going toenjoy this episode and I hope
people learn and become betterequipped to harness the
opportunities that exist in ourecosystem as a result.
Thank you for joining us.
Speaker 2 (49:38):
Thank you and appreciate you're all you're
doing to build up the ecosystemto support success in this
region.
Speaker 3 (49:44):
Excellent.
Well, that's it for thisepisode of the smart money
ventures podcast.
Thank you for joining us.
Our guest today has been SueTyler, venture partner at
Caduceus Capital Partners and aboard member of beam benefits
for motive, script drop andhealth plan data set.
Thank you for joining us and wehope to see you again on the
next episode of the smart moneyventures podcast.
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