Latest / Unstuck Pod / Sell Before You Fundraise (Scott Kelly and Jamie Schneiderman)
Transcript
- Jamie Schneiderman: Hi everyone, welcome to the Unstuck Pod. glad to have you here today. really excited to have Scott Kelly on. and I will pass it over to Scott, let him tell you all about his background and what he's what he's doing right now. So welcome, Scott. Scott Kelly: Okay. Thanks to having me, Jamie. Appreciate it. Yeah. Background on me. I've I've been a deal guy for thirty-five plus years. I started my work on the floor of the New York Stock Exchange in the early eighties, moved to San Francisco, worked as an investment banker taking technology companies public. did that to ninety-three. 93 I became a founder for the first time during the internet boom and subsequent bust. and I successfully launched and exited three companies between ninety-three and two thousand. I retired briefly, moved from California to Arizona. After a brief retirement, I set up another business in sports and entertainment and ran that for a few years and sold that business. And in the early two thousand I was making a a handful of angel investments in technology companies and a lot of the later stage venture capital firms in California and around the country began to send me the companies that were too early for them. So that launched that that motivated me to launch Black Dog Venture Partners as our accelerator. So we worked with companies to Fund, scale, and exit their businesses. and since our launch, we've helped entrepreneurs raise approximately five billion dollars, facilitate about thirty exits. and because I've been doing this quite a while, I've built a network of about sixteen thousand investors. and through our newsletter and emails and webinars and events, we've built a network of businesses and partners of about fifty thousand. fast forward about four years ago, I moved to Florida, St. Petersburg, Florida. when I tell people that's my second unsuccessful retirement and I continue to work with entrepreneurs, helping them raise and scale and host events around the country. Jamie Schneiderman: Nice. That's awesome. I love it. what did they say? You they I I I just heard someone say something about you can't the first retirement's not the real one. Apparently for you, the second retirement's not the real one either. So Scott Kelly: Yeah, yeah, I I can't golf I can't golf to save my life, so I decided what else should I do? Jamie Schneiderman: Okay. understandable. All right. So let's I so I wanna understand. So you're talking about, you know, early stage. So so are you you guys are you know, describe a business to me. Where are they at? What do they have? What do they not have yet that would make it make sense to come to to you? Scott Kelly: Well well typically we work with companies, some in in the idea stage, but the the vast majority are building a a technology product, you know, an app or a platform, or a med tech or helltech pro product or service. And we get to them just as they're beginning to sell because we find there's two things we can help them with. one, solve a problem and two create opportunity. And sometimes that solution is capital. But sometimes that solution is helping them go to market. So we look at these early stage companies to see what the real core issue is. Because obviously sometimes companies need to raise money to grow, but in some cases, companies just need to sell some products and services to grow. So we look at each each company independently and then make an assessment where the best way we can help. Jamie Schneiderman: And so you mentioned you've helped companies raise about five million. So like are are the five Scott Kelly: Five billion with a B. Jamie Schneiderman: billion billion. Sorry. thank you. you know, it's like one million dollars. Sorry, the the Scott Kelly: Yeah. Jamie Schneiderman: so five billion. So when you're out helping guys raise, is there a typical I know you're not necessarily writing a check, but I'm saying are is there a typical check size? Is there anything like that that you're looking at? Scott Kelly: Well well we we from time to time will make make investments directly through what we call special purpose vehicles where we will put a group of investors together to make an investment. But a lot of the work that we do with entrepreneurs is get them ready to get in front of investors. We help them create their pitch deck, their presentation, make sure their data room is cro properly put together, and then we use our resources to connect them with the most appropriate investor. And sometimes that's done through one-on-one calls. Sometimes that's through events that we host, like our VC fast pitch event. and then sometimes it's really just making sure they're in the right room around the country. Jamie Schneiderman: And okay, and so when first of all, when is your next event? This might Scott Kelly: our next V C fast pitch is actually gonna be next Thursday. we have an online event on August Jamie Schneiderman: Date, date, date. Sorry, Scott, you got you gotta share dates cause this a podcast, so not everybody will hear it at the same Scott Kelly: Not a problem. Jamie Schneiderman: time, right? Scott Kelly: Sure. Our our next event is gonna be actually August twentieth, Jamie Schneiderman: Okay. Scott Kelly: online via Zoom. we also have events going on around the country and we actually do our VC Fast Pitch online event every month. So if you go to VCFastPitch dot com, you can find all the list of our upcoming events. Jamie Schneiderman: Amazing. All right. Well, we'll make sure also later on that I we we add a bunch of links into the description so that we're we're getting all that out. All right. So okay, so let's talk a little bit about you're in there, you're working with these companies. you know, presumably there's a lot of really great stuff out there. So so let's talk about where the challenges are. What are the challenges that you're seeing? Where are the what are the things that are holding these founders, these businesses back when you when you start to see them. Scott Kelly: I think some of the biggest challenges with these founders is I come across a lot of technical founders. So they're very good programmers or developers, but they haven't built the rest of the team. They haven't brought in their salespeople, their legal, their organization people. So that sent tends to be the challenge more often than not, because especially when you're dealing with early stage companies, you don't have a lot of track record to go on. So you're really making your bets on the team. And that's that's typically the biggest challenge, the one we try to overcome first. Jamie Schneiderman: Okay. And and all right. So let's but let's talk a little bit about this. So it's I'm a technical founder. I know what I'm doing. I've built something really interesting. I haven't surrounded myself with the right people necessarily to go to take that and do something with it. Where's the place that you're finding that you're starting mo to begin? Like what is that? I would say what are that role or roles that you think are the biggest gap for those folks? Scott Kelly: Well, I what I have found historically is, you know, I I tell entrepreneurs they have to understand two things. one, what they're good at, but more importantly, what they're not good at. And it really comes down to making sure you have someone who can you can build a great product or a great service, but you don't know it if it's a marketable product or or marketable service until you go market and sell it. And I think a lot of times entrepreneurs love to talk about having a long wait list or having people tell them how wonderful. their idea is. the real validation is if someone pays for it. and that's really what we try to work with these entrepreneurs is, okay, build a great product, but make sure you have a great audience of people to sell that product to. Jamie Schneiderman: okay. And so how many of them are running into situations where they know they have something good, they think people will like it, but they're all over the place and they can't sort through the who exactly should I go to, not so Scott Kelly: Mm-hmm. Jamie Schneiderman: I've hear a lot of this would be great for everybody, or everybody could use this. It's like that's not a great answer, even if it is a great seems like a great answer. So Tell me about this experiences that you're hearing that are like that. Scott Kelly: Well, it's interesting she made that comment because one of the biggest mistakes that entrepreneurs make is telling investors that everyone can buy their product. And they haven't done any research. You know, there's there's all kinds of acronyms like TAM and SOM and and to talk about how big your market is, but you really have to boil it down to who are the easiest, fastest go-to-market opportunities you can take advantage first. I'm a big believer in, you know, take advantage of the low-hanging fruit first. And I think a lot of entrepreneurs get too caught up in you you have to ha you have to have the philosophy of the end in mind when you're an entrepreneur, but you have to understand the steps between the beginning and the end that you have to take. And I think a lot of entrepreneurs lose sight of the little things when they're looking at the big picture. Jamie Schneiderman: And and so, you know, so you're talking about accelerator and helping folks grow and and kind of I say it sounds like a rolling up your sleeves and really trying to do that. Walk me through what does that look like? How how exactly are you doing that? where are you Scott Kelly: Mm-hmm. Jamie Schneiderman: taking people? And and let me if I can add on it, so I I've you know, as a former founder myself, I I was in accelerator programs, a lot of good things to learn and be exposed to. What I always wanted was sort of more access to channels and busin business development opportunities. So so maybe help me with that a little. Scott Kelly: No, and I'm glad you you made that point because I mean I I will qualify or classify us as an accelerator, but at the end of the day, we're our we're a roll-up-the-sleeve firm. So our job is to make those phone calls, to establish those relationships, whether they're direct sellers of a product a purchase of a product or service, or they're distribution channels or strategic partnerships. You know, we we had one of our companies that we just recently set up a relationship with one of the largest HR organizations of the country. So it to really create that one-to-many approach for them. And it is a lot about relationships. I have I have made a career out of of I'm telling people I'm a collector of people. And I've been collecting people for nearly forty years. And and to use another tired acronym, I'm I'm like the six degrees of Kevin Bacon, if you people remember that college game. I know somebody who knows somebody. And that's that's the real value we try to bring in. Because you're right, you can teach entrepreneurs to do some things. You can provide great coaching sessions and good webinars and good content. But at the end of the day, they need action. They need activity. They need traction. and a lot of times that's where we come in. Because honestly, when we're out there talking to investors, investors want to see traction. And and the entrepreneurs sometimes can generate enough traction on their own. But if they can generate more through our efforts, it's it's a win for everybody. Jamie Schneiderman: It's it's great for everybody. and and so for you, it's a and I'm just trying to make sure I'm understanding because I'm also thinking about the entrepreneurs who are listening, thinking, wow, it sounds good. Is it do you have to apply to be part of it or how does it work? How do you structure this? Scott Kelly: Yeah, we we we structure it primarily. We we come in in either short term or long term, you know, advisory roles or we come in as an investor in in some cases, as I mentioned. We really trick try to look at each situation independent of the other. We don't have a standard fair in how we work. what I do is myself and my team, we look at the company and then we examine what they have and what they need versus what we have and what we can make available to them. And so based on that, we will make a an assessment of how we can help them and then we structure the the scope of work to to accommodate that. Jamie Schneiderman: So and how I'm curious from your perspective, how often is it that you're talking to a company, they come in saying, we need XYZ, and you look and go, Yeah, no, you it's not at all what you need. You actually need the following things. You you think you do, but it's actually this. I'm curious. Scott Kelly: Well, I absolutely. And you know, the the irony in my business is that you know, we've helped companies raise a lot of a lot of capital over the years. But the vast majority of companies shouldn't even attempt to raise capital. They shouldn't even pursue venture capital. They should just grind, bootstrap, and build a business. Because two things happen. one, when you bring in someone else's money, you bring in their opinion. And you may not want that opinion. The second thing too is that especially in this day of AI, a lot of things can be developed with little capital and less time than they were just a couple of years ago. And so, you know, I look at things from you know more pragmatic. What what What are the things that have to get done to be successful? You know, there are all kinds of companies and and and that have been very successful without raising a single dollar of capital. And there's been many companies who've raised millions or billions of dollars of capital and completely failed. You know, In fact, you know, 75% plus of companies that raise capital go under. So be about building the business. you don't you don't shy away from raising capital, but do it strategically and do it at the right time. Jamie Schneiderman: Makes sense. it makes all the sense in the world. and are you guys focused in is it across the US, across North America, beyond that or part of it? W where where are the places that you're drawing from? Scott Kelly: Yeah, the the the vast majority of our business in North America and a little bit of South America. We've done we've done projects in Europe and Asia, but I would tell you the vast majority, eighty percent plus is in the US and Canada. Jamie Schneiderman: Okay. All right. And I guess people don't have to be certainly anymore, they don't have to be right around you, right? It's not as nice as it is to come to Florida. certainly at times Scott Kelly: No. Yeah. Jamie Schneiderman: of the year, I'm I'm in Toronto, so yes, it's definitely nice. Scott Kelly: Yeah, there are pro we we do projects all over the country and in fact, you know, between now and the end of this year, I'll be in nine different cities hosting events for entrepreneurs. Jamie Schneiderman: that's great. I love it. okay. So, so let's do this. So I want to I want you, you've talked a lot about the things that you're offering people and what you do and how you're helping. but you see a ton of companies and you see a ton of companies doing things really well and doing things really not well. I think you I think you've already essentially given some advice around fundraising and whether whether one should jump to the venture, certainly the venture route. w what's another key piece of advice that you wanna you'd want to pass over? And I also think about it as you've you're you're an entrepreneur, a founder, you've you've you see a million, we see tons and tons of companies. It's like w what are the things sort of I wish I had done differently and maybe others can do differently. That you can impart as valuable feedback now. Scott Kelly: Well, I I think the things I would tell everybody, and it's a lesson I had to learn the hard way, is to be able to give up control. You can't scale a company until you begin to contrast others with parts of your company. And you know, a lot of entrepreneurs hold on to the reins too long, do the tasks that they're not qualified to do, and that tends to keep them in a a holding pattern in terms of growth. So I think the thing that entrepreneurs have to do is really get comfortable giving up parts of the business to others. 'Cause that's how you truly build the business. Because like I said before, no one's an expert at everything and no one should do everything i in a successful business. Jamie Schneiderman: No, that makes that makes yeah, That makes a ton of sense. And especially I think if you're a technical founder and you know, you it's like you don't know, you know the you may know the technical side of the product or even some of the use cases, but there's a how do you market, how do you sell, how do you do customer success, and any other thing. Maybe even how do you build certain parts of the technical product. what are you finding? So you mentioned AI before. How are you finding you know, where that's working and not working for folks. because it's such a big Scott Kelly: Well, I Jamie Schneiderman: topic today. Scott Kelly: I it it it's it's a great tool. but again, it still doesn't replace the communication and the relationship part. And I think, you know, much like you know, my time during the internet boom in the nineties, you know, everyone relied on the technology and they began forgot about the relationships. And I think there is a lot of lost, a lot of art of of entrepreneurship that being lost in the process, you know, mainly Making those relationships, building connections, finding that network of people and that that tribe to help you succeed. And that that's probably one of the negative sides of it. I mean, I am I'll be I'll be frank with ya. AI does have some real good value. I can tell you for myself, in my almost forty years in business, I never gave up my calendar. until two months ago, I gave up my calendar to AI. And it was a thing I had to learn. I had to learn to give up something in order to talk to more people and be more efficient. so it's a great tool, but like any tool, I tell people, you know, a hammer is an excellent tool until it hits your thumb. Jamie Schneiderman: It's fair. Yes. definitely that could be a problem. okay. so okay, and and in terms of so so I wanna just shift, I wanna look around that piece for a second. So as you're talking to a lot of investors, you know, there's a lot of a lot of the companies that I've worked with have been SaaS businesses, right? And so, you know, there's conversation, SaaS is dead. No one needs it anymore. It's AI. What's your thoughts about that? when given the world that you're looking at? Scott Kelly: yeah, I don't necessarily think that SaaS is dead, but like everything any other business, they have to be able to conform and transform. there's a lot of industries now that you know haven't been affected by technology in decades, you know, use healthcare, construction, you know, they're now being able to use AI to be more efficient and more cash cash conscious of their businesses. so I think from that standpoint it's really important to, you know, understand, like I said before, AI is a tool. certain industries are are gonna have to transform or be left behind. there's gonna there is going to be people that are gonna be misplaced, you know, and but it's happened throughout the history. You know, there are people that, you know, a couple of hundred years ago or putting horseshoes on horses and they had to conform to another business. you know, there is there are all those kind of industries that had to conform. but it but again, it comes down to be able to adapt and transform what business you do or how you do your current business. Jamie Schneiderman: Right. Okay. So let me ask the so question: how do folks find you? So where do they find you? How do they reach you? The business. Scott Kelly: Sure. Yeah, they can obviously they can reach me a few different places. my website, you can go to blackdogceo.com. That has links to all our other affiliates things that we do. if you want to pitch or one of our upcoming events, you can go to vcfastpitch.com. and you can find me on all social media channels at Black Dog CEO. Jamie Schneiderman: Amazing. Okay. Now, like I said, we will add the links in to the description. Anything else you want to share, provide, like say to people who are listening out there, because I'm I just open it up. What what w anything you want to talk about? Scott Kelly: Sure. Well, I I will tell to yeah, all the entrepreneurs listening here is, you know, be resilient. Get comfortable hearing no. I think a lot of times somebody decides to become an entrepreneur and they read all the press flippings about who's been successful, you know, who's raised a lot of money. and I tell people, you know, venture capital raising capital is much like baseball. If you can bat above 300. You know, you're in the all you're an all-star. You're a hall of famer. so I would tell the entrepreneurs you've got to be diligent and you've got to be willing to pivot. I find many times entrepreneurs get stuck in an idea. And if the market, if the market tells them it's not a good idea, they keep going. Sometimes that works, but most times that's a signal to Jamie Schneiderman: Right. Scott Kelly: change the idea. You know, I tell people all the time, you know, Jeff Bezos, all he did was sell books for years. got really good at selling books and then figured out how to sell everything else. Jamie Schneiderman: Yeah, that kind of worked out pretty well, I think, over time as he did Scott Kelly: It sure did. Jamie Schneiderman: that. Yeah. So no, that's I think it's great advice. And I think it's important and it speaks to, you know, it's an interesting thing. It's the balance between the resilience and stubbornness that is required on one end, but not being too stubborn and being flexible enough. Finding that combination to your point about resiliency and flexibility, or adaptability, I think is a word that you used. very, very important. All right. Well, this has been great. So thank you very much, Scott. That was fantastic. I love it. and I'm sure there's a ton of folks out there who will benefit from going further with you, learning more, and and then getting a lot more of your advice and thoughts as you go forward. So thanks so much. Thank you to everybody who's watching and listening. and until next time.