10. Ian Sheridan on the importance of the board in the very earliest stage of a company

August 31, 2020

Ian Sheridan has been innovating in the financial world, in a variety of roles, for many years.  He has brought that innovative mindset to the venture fund where he is a managing partner, Vestigo Ventures.  In this episode of On Boards we discuss the fascinating approach in the use of data they employ in making investment decisions and to how they work with the entrepreneurs that lead the companies in which they invest, and their boards.

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Links

https://www.vestigoventures.com/

https://www.linkedin.com/in/iansheridan1/

Ian Sheridan Bio

Ian Sheridan Biography

Quotes

“The boards are small, they’re, intimate – business conversations dealing with every aspect of business.”

“The best entrepreneurs are driving the company and their teams … the board is there in this early stage to be a coach, to help them navigate, maybe it could be networking within the industry, whether that’s growing the business on the distribution side or working with the regulatory compliance side of things – whatever it takes.”

“We use data to source, underwrite and empower our portfolio companies.”

“What’s different about this crisis?  Well, I think the first piece is working from our home. Right? So, how do you stay connected?  How do you keep that relationship at the right level and make sure you’re really understanding where is that person today and what are they facing and how can I move through that issue?  ……I would say as challenging as these times are, and the real pain that’s happening across the planet and our country, I do see an unbelievable spirit of innovation and drive from these entrepreneurs that hasn’t been shaken through this process.”

 

Ideas/Comments

FinTech is about two things: reducing costs and providing an delightful experience to the customer. This is what all the innovation and improvements in FinTech revolves around. Now we live in a world very if you can think it, we can probably create it and that is what investing now means.

The opportunity that Cogo Labs affords us is the ability through big data to predict with a tremendous amount of accuracy which is the next IP address in North America that has the potential to go viral.  What are the big ideas that consumers are thinking about? And then we train our machines to go through that data and say, Vestigo, these are the companies you should look at, these are financial services or FinTech companies to consider and do it very early in the day.  If you know what the early adopters are doing on one side, and then you can see what everyone else is doing, you can run some really cool math to understand and predict the next thing.

When Vestigo invests in a company and becomes part of the board the company gets the benefit of the collective expertise of all partners at Vestigo regardless of who actually is on the board. All partners at Vestigo have been operators, serial entrepreneurs and that is really an excellent value-add for the company.

Boards at this early stage are very intimate and although there are various committees and other governance practices and there are a lot of hats to wear and as a board member one is thinking across the business model. The role as a fiduciary does not change but there is a lot more of a bigger white board to work with.

The CEO or the founders of these companies, these are passionate people who are going to run their companies. and, and the best know how to, how to use their board for counsel and advice, and, and potentially, networking.  So, whether as an investor a board member or a board observer, we’re here for the people we’ve invested in and that’s kind of a 24/7, whenever they need us, we’re there for them.

Transcript

[00:00:00] Joe: [00:00:00] Hello, and welcome to On Boards: a Deep Look at Driving Business Success. Hi, I’m Joe Ayoub and I’m here with my co-host Raza Shaikh.

Raza, how are you doing today?

Raza: [00:00:11] I’m doing well, Joe. Good to see you, virtually that is.

Joe: [00:00:15] Good to be with you virtually. I’m looking forward to seeing you in person someday.

First to our listeners. For those of you listening during the time that COVID-19 is casting a shadow over much of what we do in the United States, we hope you’re all taking precautions and staying safe.

On Boards Podcast is about boards of directors and advisors and all aspects of board governance. Twice a month this is the place to learn about one of the most critically important aspects of any company or organization – it’s board of directors or advisors.

Raza: [00:00:51] Joe and I speak with guests about a wide range of topics about boards, what makes them successful or unsuccessful and how to [00:01:00] make your board one of the most valuable assets of your company.

Joe: [00:01:05] Today’s episode is focused on the boards, governance and operation of venture backed companies, the earliest stage of governance in the private industry world, with a close look at a FinTech venture fund, headquartered in Cambridge, Massachusetts.

Our guest today is the co-founder and managing director of Vestigo Ventures, an early stage venture capital firm that invests in technology companies focused on financial services. He previously served as CEO and Chairman of National Trust Company and as Chief Marketing Officer and Chief Strategist for two Fortune 100 companies, and is widely considered a thought leader and catalyst for innovation in the retirement and wealth management industry.

Raza: [00:01:55] He currently serves on the boards of four privately held companies and several [00:02:00] advisory boards. He focuses on finding innovation and disruptive technologies where consumer behavior, technology and asset management intersect.

Joe: [00:02:11] We’re very excited to have Ian Sheridan is our guest today. Welcome Ian, thanks so much for being with us today as a guest on Onboards.

Ian: [00:02:20] Joe, Raza, it’s a pleasure to be with you both today and I thank you for that wonderful introduction.

Joe: [00:02:26] So Ian, before we discuss your fund, and the companies in which you’ve invested and their boards, I have to ask you about an item I saw in your bio which kind of caught my eye, that you invented the retirement industry’s first mobile enrollment technology.

I knew you were a man of many talents, but I did not know this. So just tell us a little bit about it.

Ian: [00:02:49] Well, thank you for asking. This was at a time before the Apple iPhone and the App Store existed. It was at a time where, financial services was beginning to [00:03:00] understand the impacts of behavioral science.

There was the theory and then there was a disconnect between the technologies and the execution of that.  Being a curious person looking at the business problem back in the day, which was how do you engage employees and bring them into a 401k plan, it was done by expensive booklets and enrollment meetings.

People would fly all over the country with pounds of boxes that were sent in advance and deliver this message. Employees would go home with a booklet to speak to their spouse and about 1% or less would actually enroll in the plan during those meetings. It became this terrible cycle of following up and trying to engage people.

Simply taking concepts from behavioral science at the time, the best available technology and since you asked, this is a dinosaur, this is the pocket PC platform at the time Mass Mutual has since evolved that product  that is now an application, a simple application but even then we went to the, iOS [00:04:00] system when it became available.

But back in the day, the idea was that you, instead of doing a standup presentation with a PowerPoint and booklets in front of employees, simply to go through that presentation integrated and linked across the classroom through these devices, and as human decisions were being made real time, aggregate those decisions, use that information, not only to empower the instructor, but the people in the room.

Instead of using traditional paper enrollment books, we used. customer pathways that were designed to encourage smart decisions.  As you make good decisions, we used the concept of people like me and we presented that information of  X percent in the room just made a really good decision to enroll or save at this amount and present facts along the way of what was working and what wasn’t.

It actually changed the, the enrollment process dramatically at the time before we had pre-enrollment, automatic enrollment and 401k. We went from less than 1% signup in booklets to a 98% and change, [00:05:00] success rate in the classroom by simply integrating technology. But that was at a time when we were just beginning to understand that each of us was ultimately going to use this brick.

That’s I shouldn’t say that, but, but this wonderful device, which is a good segue into why venture today.  Is that in financial services two biggest issues that we face is that we have a cost issue always. We’re always trying to reduce the cost of services. And then the other side is how do we delight customers and improve the outcome?

And that has been the forever challenge that I’ve had as an operator for 35 years in financial services. The invention of the, what we called the E4 at the time, was just an example of using technology, using behavioral economics and bringing that together to improve an outcome.

Today we’re in a much different place. Technology is fluid. We live at a time now, if you think it, we can create it. In my early career, we could think about a lot of stuff, but some of [00:06:00] my earlier challenges, 30 years ago, it wasn’t going to get my new fund listed in the Wall Street Journal so that people can see it. Today it’s I can, I can develop an app, I can put it in your hand. I can delight you as a customer and I can improve your outcome in amazing ways.

Joe: [00:06:15] So in your primary role now, as the Managing Director of Vestigo you must be in a great place because everything you’ve been doing, what you just described, leading you to where you are now, you must be just feeling great about being in this space right now.

Ian: [00:06:34] It’s absolutely wonderful. My founders and I all have a common DNA, we’ve been operators. Some have been serial entrepreneurs, very successful, but we have this common DNA of curiosity and to embrace technology and the mission of improving the outcome as it relates to our financial systems and personal wealth.

Joe: [00:06:53] Before we go any further, let folks know what’s the core focus of the fund.

Ian: [00:06:59] Vestigo [00:07:00] Ventures is a North American, venture capital firm focused on financial services or FinTech. We focus specifically on the early stage ecosystem across North America looking for entrepreneurs, who are re-thinking the way financial services is being delivered.

The most important thing behind the name of Vestigo is, is its Latin origin and definition, which is to seek the truth and as founders, we really thought that was important is to be curious to search, explore and find the truth.

Raza: [00:07:29] Ian, one factor that makes Vestigo different from other funds I learned is its relationship with Cogo Labs. I found fascinating. What is Cogo Labs and what does it do for Vestigo?

Ian: [00:07:41] Yeah, so that’s at its core starts at this relationship of its partners, but, we like to call Dave Blunden who owns Cogo Labs the “cool one” cause not only Cogo Labs but he is also on the X-Prize committee.

David had a vision years ago as an entrepreneur that data essentially was the new oil is the most important thing that was going to happen and building [00:08:00] businesses that could effectively make the changes that people needed. Cogo was founded on the belief that by bringing in consumer data, they could run an ad tech business, very successful, and grow that data asset. As an example, when we started Vestigo Cogo had six petabytes of data, about six years ago, which is incredible today it’s over 15 and growing.

Joe: [00:08:24] Talk about what 15 petabytes of data means so it doesn’t get lost in this conversation?

Ian: [00:08:31] What is 15 petabytes of data? I’ve heard so many different examples. Alice Fraser, who’s our data scientists has, has compared it to, I don’t. I forget how many different novels of War and Peace. From here to the moon, but it’s really multiple times the size of the library of Congress. Dave understood big data was going to matter in the creation formation and delivery of services in a meaningful way.

If you’re going to design and delight systems for consumers, that ultimately data is the [00:09:00] pathway. And so Cogo has enjoyed, for a number of years, the ability to use this data, create a very meaningful business in its advertising and an incubator that has successfully created commercial internet companies.

The last IPO that came out of Cogo, as an example, is EverQuote on the NASDAQ and that was developed before Vestigo’s time period. But my two General Partners, Mark Cassidy who’s really well known in financial services as a successful business leader, President, Chairman of LPL and David go back 25 plus years and working together on the human capital side of business. It was really Mark’s vision that Vestigo be formed in Boston as an early stage venture capital firm.

To come back to the Cogo opportunity is they have the ability through that big data to predict with tremendous amount of accuracy, which is the next IP address in North America that [00:10:00] has the potential to go viral. What are the big ideas that consumers are thinking about. And they’ve been successful with that and through the relationship we ultimately came in with the idea of, could we build a FinTech analytic stack on top of all that information and create a unique, distinct advantage not only to identify early stage FinTech companies, but to underwrite them in a very unique way.

Every VC has a quant and qualitative approach in which they get to know entrepreneurs, the business and the opportunity in the marketplace. We certainly bring that to the table, but with this extra capability that allows us to look not only at the data, that specific company, but how it interacts and relates within the marketplace. We use data to source underwrite and empower our portfolio company

Raza: [00:10:49] it that, that data informs deal flow or validates deal flow that comes in, which one have you found it to be more important and useful [00:11:00] for?

Ian: [00:11:00] Really both for us, that’s a great question.

When we first started, we built our first algorithms on top of tech stack and analytic digital stack that Cogo had created with high performance and high accuracy. We had to train our machine learning language algorithms. We call XPLR. It’s really five mathematical models that we’ve trained against that data, so that the machines learn what is FinTech and what’s non FinTech and specifically to the Vestigo thesis how does that fit in?

It has evolved and as you think about artificial intelligence and machine learning language, I can tell you firsthand living with it these last four years, it is incredible how fast these machines are. They’re in some ways I think of them as indie cars . We run them on the track of data. We take them off track. We adjust the humans, come in and my team will look very closely at that output to make decisions of, is this a company we should reach out to? Is it truly FinTech? Does it fit into our [00:12:00] thesis? To give you an example of the evolution the data at Cogo, I mentioned 6 petabytes to 15 petabytes of consumer, essentially clickstream data, you would think our algos would only pick up consumer FinTech companies, but what has happened is as the humans, the Vestigo team interacts with that output, we retrain that algo every time to go back and say “This is FinTech”. What was early consumer FinTech? High, high, signal rate on that.

We’re now picking up the broad spectrum that reflects our operations backgrounds.

Raza: [00:12:35] That’s an incredible story. It’s a data flywheel that gets better over time and provides you with such a edge and a competitive advantage for identifying and underwriting companies

Joe: [00:12:47] Let me ask a follow up on that because I’ve seen the power of this database demonstrated and there were a couple of things that really struck me.

One was the number of [00:13:00] consumers for whom you have very detailed information and I forget what the number is, and I forget how much information, but just, can you tell us a little about that? Because it blew me away to see the demonstration. And it’s one of the only things about a podcast is it’s hard to see that since we’re only listening, but maybe you could just expand a little bit on that.

Ian: [00:13:22] Okay. That’s  great.

How do you take 15 petabytes of data and turn it into something that’s useful is a really good question to think about. What Cogo has created is, through a permission based approach, has reached out to early adopters across North America, we call this a competitive database and essentially through permission-based approaches, they’ve invited 2 million plus people into two big panels.

One is an email panel that allows us to observe the commercial email sends and reactions that people have with those emails, not personally email, but think of  the, advertising email that comes into your [00:14:00] inbox. These folks have said, Hey, through the offer of Cogo, we’re willing to give you a line of sight on how we interact that, that and Cogo maintains its data scientists maintain that panel to be the true early adopters across North America.

They also do the same approach with web browsing. That’s 2 million people across North America who said, with permission, you can see how I travel through the internet and you can see how I interact with commercial email. That becomes really interesting, but let’s put that off to the side. Through ad tech, Cogo places it’s pixels on 15 to 20 million websites on any given period of time.

As all of us travel the internet, we pick up these pixels.  It used to be cookies and you can block cookies and you can block pixels too, but there takes a little more effort. These pixels ultimately build the profile of who we are, the heuristics, et cetera, that allow companies like Google and others to present to you the next thing you’re [00:15:00] really interested in. We all benefit from that experience. Following privacy regulations, GDPR, California compliance, et cetera, they’re able to build the next profile of everyone else to the tune of over 860 million digital profiles.

Now there aren’t that many people right between us and Canada, but what that is, is a reflection of: well, as I sit here in my office I have the PC, I’m talking to a laptop and another screen that’s connected to the internet, my watch, and another device. I’m kicking off a lot of signal as I talk to you.

As I use those devices, how do you figure out this is Ian at Vestigo? Or is this Ian at Gmail or is this Ian at outlook? Or is this Ian on his Mac or PC or his device? Cogo has figured a way to do that and to take that 860 and bring it down to really who are the working North Americans engaged in the internet. Now you have this, Joe , to the heart of the question: What’s really interesting with this data?

Well, if you know what the early adopters are doing on one side, [00:16:00] and then you can see what everyone else is doing, you can run some really cool math to understand and predict the next thing. As an example, Cogo looked at a white paper from Harvard on Harvard epidemiology and the study of flu and looked at how flu spreads across essentially the extroverted students and the introverted students.

Let’s call the extroverts our early adopters and the introverted students, everyone else. With a high degree of accuracy you can predict how flu will spread across those notes. Cogo with its own special sauce on top of that white paper was able to run its own math and predict the propensity of an IP address going viral.

They’ve been very successful, that helps them in their ad business has helped to think about what are the new ideas that people in North America are considering. What’s the next commercial internet company that Cogo could launch? We came in, saw that and said, okay, that’s great. But just seeing viral websites across North [00:17:00] America, doesn’t really allow you to pick. “Well, is that FinTech?” I mean, think of the names of companies, without mentioning specific names, you wouldn’t know, just on the surface, is that FinTech or is it consumer something ?

Raza: [00:17:11] Lemonade?

Ian: [00:17:12] Yeah, exactly lemonade or floor polish?

That’s where our team came in at Vestigo and developed very unique algorithms, five basic, machine learning models. That are trained to look at the best of the outputs. We’re already looking at the best companies in North America that are showing the signal to go viral. And then we train our machines to go through that data and say, Vestigo these are the companies you should look at that are financial services or FinTech companies and early in the day, very commercial orientated type signals today it’s across our thesis. Because the operators work with the machines and train them.

Raza: [00:17:52] And so would that approach, how many companies did the first fund ended up investing in? [00:18:00]

Ian: [00:18:00] We are currently at 19 investments, we are on a target of 20. When we first set this meeting up last week, we were in the process of making investment number 19.  The wheels of innovation and entrepreneurs do not stop because of a pandemic and , we’re seeing just amazing people continue to innovate.

That is probably the best part of this job is I get to work with data. I understand what true North is and I get to work with some of the smartest people who are thinking through really big problems using technology.

Joe: [00:18:32] So does Vestigo take a seat on the boards of the companies in which it invests?

Ian: [00:18:38] We think it’s really important to come in as an investor with capital is  one thing and there’s plenty of capital out there, but we like to invest with entrepreneurs who see the strategic value of our operations experience and our data. And for that, we ask for general information rights, it’s a line of sight into how the company is doing. We ask for a board seat. [00:19:00] And sometimes in the early stage of where we are investing, it’s a board observer seat because of where the company is and its life cycle.

Joe: [00:19:09] Right.  The boards for these companies in which you’ve invested, just give us an idea of who sits on them, how many board members and to what extent are they different from typical VC-backed company boards?

Ian: [00:19:24] Certainly very intimate and I don’t miss the board books that I had to read prior. It’s usually a more concise set of information as you move into these meetings, but the configuration is usually the founders who start and as they bring in either advisors who have invested with them, maybe in the early stages, angels, and or venture capital firms like Vestigo, we’ll have a seat at that table. We’ll have a seat, at that board. they’re small they’re, intimate business conversations dealing with every aspect of business.

While boards have committees and we have compensation committees, even at [00:20:00] that early stage, generally, you’re wearing a lot of hats. and as a board member, you’re thinking across the business model with an entrepreneur And your role there as a fiduciary doesn’t change because of the size of the company in fact, it’s just, you have a bigger whiteboard in which you’re working with

Raza: [00:20:19] Ian, just as you mentioned, I think that’s also my impression that at that early stage, the board is a lot about problem-solving or hands on about the business and much less procedural.  Has that been your experience as well?

Ian: [00:20:33] It is, but it is also about preparing them for those procedures down the road. As operators and corporate executives we like belts and suspenders. We’d like to have compliance and regulatory things thought out, but companies have to evolve to that process.

Even in the early stage of thinking about data security and compliance and beginning to build towards that, and as operators we have this unique advantage having worked with [00:21:00] regulators, our entire career, in some cases, very intimately, we try to convey to the early entrepreneur through that board seat, your regulators are your partners and your friends. These are people that you can engage with early on, learn from and build your business to be sustainable, in the markets that you’re going to serve. Because one day you’re going to be a really big company or you’re going to be partnered with really big companies and they’re going to expect that that compliance is in good order.

Joe: [00:21:27] On the boards do you, at the early stage, usually include a so-called independent that is a non-investor in that group. Or does that come later?

Ian: [00:21:38] It comes later, Joe, generally, I haven’t seen it yet that there’s an independent. There may be an early stage angel investor, advisor, but not independent.

Raza: [00:21:48] Along the same lines as you invest in these companies that are pretty early, do you also experience or expect that as the company raises more funds, grows that the [00:22:00] board actually changes as well?

Ian: [00:22:02] Absolutely. These are dynamic companies. They’re very fluid. They’re going to pivot whatever the starting idea is, we know as investors and even the entrepreneur understands that they’re going to evolve to the marketplace. Multiple pivots will occur and different expertise is going to be needed along that journey. Boards have to be dynamic and investors change. We’re an early stage. What we’d call a seed, A round investor. Other investors will come in later stage and may take a board seat and we may step down though we’ll keep our information rights going. Whatever is to the best advantage to that set of founders, the entrepreneur and their team to have the best expertise around them to help them build the market share, that allows them to win.

Raza: [00:22:48] What have you seen in terms of the direction of the dynamics of board? Is the board driving the company or is the company hopefully taking [00:23:00] the best use and best advantage of their board. Where is the pull or have you seen it more as a push?

Ian: [00:23:07] The best entrepreneurs are driving the company and their teams without question and the board is there in this early stage to be a coach to help them navigate, maybe it could be networking within the industry, whether that’s  growing the business on the distribution side or working with, the regulatory compliance side of things. And so the board there is really to act in that fiduciary manner to introduce the company to all the right things, that and experiences that ican to help them grow. The CEO or the founders of these companies, these are passionate people who are going to run their companies and the best know how to, how to use their board for counsel and advice, and, and potentially, networking.

Joe: [00:23:51] So in addition to the board, just to get folks to a bigger picture, you have a small fiduciary board, but you also, as I understand it, [00:24:00] have a larger board of advisors that serve a slightly different function. Let us know a little bit about that.

Ian: [00:24:06] You could very much have that type of model where the founders have brought in advisors around them, who are named, in the company, and may receive some type of advisory shares, in the cap table, they may have invested, they may not have, they may simply be given, you know, part of the, the options based on time service and how they help and then as the company matures and brings in investors like a venture capital firm, you’re gonna expect board seats.

Now I will say, as I’ve talked to entrepreneurs, Venture Capital is sometimes looked at as a double edged sword on the board. There are those venture firms that are there just to simply focus “how do I get the most out of my investment?” which basically as an investor, we’re all interested in that, but then there are, I think firms like Vestigo that are a little bit different. Certainly we are seeking the best return for our limited partners and investors in the fund. But we’re also there to help these [00:25:00] entrepreneurs because we’ve been there.

Each of us have 30, 40 years of experience of, of trial and error in small, medium and large companies. And so we come at it with a spirit of. we’re going to ask the tough questions, we’re going to create some challenging conversations, but it’s always in the spirit of how do we help you as an entrepreneur win your fair share in the market.

There can be the dynamics in these boards as they start to mature, and you have maybe two venture capital firms or three, and the dynamic of those firms, everybody’s interested in the success of the company, but how they push or pull may vary, based on their own kind of, backgrounds and the way they’ve created their fonts.

I think Vestigo as I think about our portfolio and the entrepreneurs that we’ve been engaged with now for several years, and those that go through the process with us most recently, it’s a dance that we both go through a due diligence process where we’re building a relationship with that [00:26:00] entrepreneur. They’re getting to know us. We’re getting to know them. you know, the quality of the way we think about asking questions, the quality of information we’re able to provide to them is ultimately what set you apart when you’re competing for to be part of these great companies. The best are not easy to walk into and they don’t just take money. You gotta earn your right to be at that table.

Joe: [00:26:25] Sure., now I think one of the things I’m getting are at least in prior conversations, I understood that your relationship with the founder slash CEO extends well beyond board meetings. I mean, often there are calls, there is interaction on a regular basis. And in addition, a number of your CEOs have non-board coaches, is that right?

Ian: [00:26:51] Yeah, so two, different things. So one as an investor and as a board member or a board observer, we’re here for the people we’ve invested in [00:27:00] and that’s kind of a 24/7, opportunity. so there are conversations on the weekend.

These folks are challenged all the time with the external forces of the world. Throw in a pandemic, we’ve had some really engaging conversations, both individually with our founders that we’ve invested in, but collectively as a group to bring people together so best practices can be shared even across the portfolio.

So, yeah, this is, you know, when I was a corporate person, I had the opportunity to have disciplined departments in each area. So whether it was a Sarbanes Oxley issue or an SEC issue or a FINRA issue, there were armies of people to address that.

When you’re the CEO, it can be a very lonely position and so to be able to have people you can call it seven, eight, nine o’clock at night. I tried not to do it too late, but I’ll take a call from entrepreneur that I’ve invested in many time. And so to be able to engage in that, and it’s not just the Vestigo it’s partnership. So, while one person sits on the [00:28:00] board any information that comes into us as shared as a team and we’ve collectively bring our best experiences, whether it’s through the entrepreneurial lens or through the corporate lens or through the analytic lens, we want to bring that back. So that person gets the best of our firm every time.

Raza: [00:28:16] That’s a great value, Ian, to be able to get  a three for one deal and bring it to the whole experience.

Ian: [00:28:23] And it’s fun, right? I mean, we have fun as a team. We are a diverse group in our thinking in our experiences, and there’s always a set of contentions as it relates to how we think about the world, but you bring that together, you mash it together and then you deliver it, to the companies that you’ve invested in and then we think we’re giving them something very special

Joe: [00:28:43] Ian talk about why it is sometimes beneficial for the CEOs to have their own coaches separate and distinct from the board. Cause I think that’s a good thing for folks to think about.

Ian: [00:28:54] Yeah, so this is personal for me. I’ve had coaches my entire life, whether it was in sports [00:29:00] or in business, 25 years ago, it was Tony Robbins. I think I walked on coals, along the way, you know, just amazing executive coaches who have been, you know, you need a sound, you need a sounding board, all of us do, right. so coaching is really important. And in many cases, entrepreneurs aren’t aware that that avenue exists.

Right? So having gone through corporate training, I’ve gone through training with the blue angels group, Navy seals. You can bring that kind of where they bring their military experience into the business environment and you would share that with people and then you expose them to executive coaching.

it’s great, many are in YPO, many of them are in speakers groups, but when you realize you can get to that level where you can get an individual coach, it becomes very powerful. And we do have entrepreneurs who are doing that today.

Raza: [00:29:51] And I think sometimes it helps that, the conversation that you may not be able to have with your board member, because they have fiduciary responsibilities [00:30:00] and you need a separate non board coach that, you could probably share everything.

Ian: [00:30:05] Absolutely, we all benefit from the outside perspective, right. Sometimes we can get so caught up in the myopic of the issue and we miss the, you know, the opportunities around us. So, I think we bring that as a firm, but, anytime you can add that to the formula, it’s, it’s a good thing.

Joe: [00:30:25] So you referred to the pandemic. It’s hard not to talk about that these days. How has that impacted your companies? Are they thriving? Are they hanging in or are they sometimes challenged? What does the mix look like in the, I know it’s really early, but 19 companies. How are they doing in this particularly challenging time?

Ian: [00:30:46] Yeah. So this has been a massive dislocation right across the planet and so we’re 10, almost 11 weeks, working distributed, as a team. And so you start with, you know, the, [00:31:00] your families, right. And the mindset of the people, the, the entrepreneurs that we invest in. Now we engage with and really understanding – are they okay?

And what I’ve learned through this really 10 week cycle is you need to meet people where they are, and people are in all different stages. And so it’s really important to try to, to get to that relationship level, to really understand how they’re thinking. but you get through the family. Heart health and then the network and then the business.

And so we’ve watched people move through that cycle. and as a firm, this is not our first, crisis. Each of us have got through from, you know, I was on the floor of the stock exchange in 1987 as a kid working my way through college and saw that was running a bank through the last financial crisis, actually acquired it before the crisis.

And then. my boss said, guess what? You’re now the chairman and CEO of a bank trust company, that little $5 billion company that overnight lost half its assets. so that’s when teams come together. we successfully [00:32:00] navigated that, but so not our first crisis for any one of us on the Vestigo team.

And in many cases, the entrepreneurs we’re investing in some are seasoned and have been through what we’ve been through. So again, they, they, they work through this and a pandemic is new for all of us. And so how you think through that, is real time learning and sharing of information. And for others they’re really new at this.

This is their first company they’re building. And so they’ve had all kinds of little crises. We wouldn’t think about that. They’re navigating like how to make payroll this week, you know, or, or how to, how to acquire the next big client. Hopefully when we invest them, they’re not worried about Pharaoh. but you know what I mean, they’re dealing with, with crisis is on a whole different level.

And so through this cycle, what we’ve learned is communication is, is really important. Doing what we’re doing today on a daily basis matters. and we’ve engaged with our, CEOs and founders intimately this way, individually, but also brought them together collectively to talk through what the big issues are and let [00:33:00] them share experiences across, their lens.

Joe: [00:33:04] So it’s great that they have experienced folks who have been through crises before, but I’m curious how this crisis has been different. What has it brought to the table for these companies that maybe you haven’t quite seen before?

Ian: [00:33:20] Well, I think the first piece is working from our home.

Right. So how do you stay connected? How do you keep that relationship? at the right level and, and making sure you’re getting really understanding where is that person today and what are they facing and how can I move through that issue? and then there’s also all of these models, right? It’s, it’s growing the business, acquiring customers, interacting and networking with other firms that, and that become clients.

And so where are all of those opportunities within their cycle, of, of the changes that are occurring and helping them navigate that? so it’s, it’s really different in that regard. I mean, after nine 11, none of us were [00:34:00] flying, but we had plans in place. I mean, I was fortunate. I was part of ADP at the time and, and one of the best disaster recovery programs I’ve ever been involved in, we were able to like clockwork.

Make things run. When I talked to our institutional investors, they are well prepared for this. And they’ve learned, I mean, you’re probably seeing this as well, you know, there’s a 30, 40% of the workforce. It’s been proven can work from home and be productive. in the startup world, the advantage was they were already distributed in many cases, right.

So they were, they’re using the best technology. They’ve been communicating through online, through the process, but the sales process changes now. Right. So how do you talk to, a bulge bank of wall street firm? When you’re a small company, they don’t know you. And so that is where we’ve been able to lean in with our network and with our data to begin to create new insights on what’s working and what’s [00:35:00] not working and empower those, those entrepreneurs, with that information and with that network.

And so, if anything, I would say as challenging as these times are. And the real pain that’s happening across the planet and our country, I do see an unbelievable spirit of innovation and drive from these entrepreneurs that hasn’t been shaken through this process.

Joe: [00:35:26] That is fantastic. That is really great to hear. I’m sure folks are going to love hearing that. I do want to just ask one follow up, which is so what kind of impediment has it been that you can’t actually get face to face with folks? Cause there are some things you can do, you know, on these, on these virtual platforms that works fine.

At least that’s what I found, but there gotta be some things where people think, you know, I’m not making the connection that I normally would. This isn’t what I’m used to. And I’m curious how [00:36:00] that may have impacted. Some of the things you’re doing, particular sales are trying to bring in new folks.

Ian: [00:36:06] Yeah, so we made an investment last week. we have a pipeline of companies where we’ve gotten to know them through the cycle. We’ve been working on a new investment right now where we did not meet this team in person. we are getting to know them through this avenue. We are getting to know them through our analytics.

We are through our data. We’re getting to know them through our, qualitative approaches, talking to the marketplace and leaders in the space within a particular area. and while I don’t want to get ahead of my skis, we’re about to make a recommendation as early as next week to invest in a company that has come through this whole cycle.

And so how do you do it? You know, Joe, Raza, you know, this, you are masters of personal relationships. And so you have to figure out a way to make that work through the screen now and through the technology. And I’ve always called it crucial conversations. If you can’t get to the crucial [00:37:00] conversation through the process then maybe you shouldn’t do business. If you can’t get that line of sight of understanding how someone is really good to react to situations. And I would tell you on this particular investment and, and the conversations we’ve had with entrepreneurs, you really get to see the grit that we all talk about in venture investing.

You’re looking for entrepreneurs that have the grit to make it through the ups and downs of building a company. Well, if this pandemic doesn’t make a great shine, then I don’t know what else could. And so I’m seeing that coming through the screen.

Raza: [00:37:39] Ian, one thing I want to go back to the role of boards, with these companies is to get your perspective of, within your portfolio. As companies vary, what various and in the board role, have you seen with one company versus the other, just to get a flavor or is there a flavor?

[00:38:00] Ian: [00:37:59] Just think of it as the, the maturing of a business, the evolution of a business and so you get to wear all the hats. I mean it’s across the disciplines of sales, marketing, operations, regulatory, compliance, treasury, all of those elements are, and they’re all at different cycles of it. Right? And so some companies don’t even know they have to do these, these, you know, a SOC1 or a SOC2 compliance and get ready for that.

And so there’s a whole spectrum of where they are and. Again, you meet, you meet these companies where they are and you bring the experience that helps get them to the next level. and it’s really important that we modulate where they are with their, and their needs, with what we can bring to the table.

Right. We don’t want to distract entrepreneurs from the vision we’re so excited about investing. If you want to help them on that journey and not burden them with, with stuff that you know, can wait.

Joe: [00:38:58] Yup. Makes [00:39:00] sense. It’s a great perspective, Ian.

I wanted to just say, it’s been great speaking with you.

Thanks for joining us today. I hope you and your family will continue to be well and stay safe.

And for all listeners, thank you all for listening today to On Boards with our special guest Ian Sheridan. Please stay safe. Take care of yourself, your families, and your communities as best you can.

Raza, you too – please take care. I hope you and your family continue to be well and stay safe.

Raza: [00:39:32] We’re all staying safe. Thank you.

Ian: [00:39:34] Thanks. Well said, thanks.

Joe: [00:39:37] Take care, guys.

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