Lee Smallwood // Makers Podcast 001

We discuss Lee's experiences with entrepreneurship, including the early days at the fast-growing startup Tough Mudder, the origin story of Gradible - the student loan startup that Lee and Grant co-founded along with Peter Wylie, and the ultimate acquisition of Gradible by CommonBond.

The Makers List


The Makers List


January 28, 2022

Lee Smallwood // Makers Podcast 001

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Video Transcript

Grant All right, well, so just a quick intro for those of you joining us where I'm here with one of my best friends and former business partner, Lee. And we're going to be talking about a bunch of different stuff primarily around entrepreneurship and our experiences as part of a co-founding team, for our company, Gradible that we worked on together and was ultimately acquired by CommonBond. But this is the first conversation I'm doing as a podcast for my newest venture makers, incubator makers, Inc. And basically, what I'm trying to accomplish is to create a community and a product experience that helps people in the beginning phases of entrepreneurship, challenge learning, product design and entrepreneurship skills. So if you have an idea, or a problem that you want to solve an idea you want to bring to life. Hopefully, I can help with some of the sort of frame frames of mind ways of thinking tools and resources that, you know, we've picked up along the way and helped us in our journey. And hopefully, we can make your path a little bit more smooth. But to kick it off, maybe Lee if you want to do a quick intro of who you are, and an overview of your past experiences.

Lee  1:28
Yeah, for sure. Thanks for having me as well, very excited and honored to be the first guest on this series. So as you can probably tell, I'm from the UK, I grew up there in school, I went to university there. And that is where I first started dabbling in entrepreneurship, and two or three different businesses which are gloriously failed. And then I spent the sort of first portion of my career in financial markets. So I was trading, specifically fixed income securities, did that for about five years, but that entrepreneurial fire still burns strong. And so eventually, I left that industry, I walked away from that role in business, move to the US and joined, fast growing non tech startup called Tough Mudder out here in the US, and that was my first sort of taste of real company growth experience. And then obviously, we came together and co-founded Gradible. And that was the next sort of major chapter of the career. And then since, you know, the acquisitions, Commonbond, you know, going back into financial markets, but more in a strategic role, the CFO of financial markets business as an investment banker in the US. So have you talked about any or all of those experiences?

Grant  2:35
Yeah, so I'm particularly interested in, you mentioned that you had a number of different endeavors that gloriously failed. I'm curious to hear more about those, in part, because I think a lot of times people think about entrepreneurship, and they just think about the success stories. And I think part of what I'm interested in is bringing to life and making it more clear to people that failure is such a big part of the process. So I'd love to hear about some of the things that you tried, that didn't work.

Lee  3:07
Absolutely. And I'm laughing as I'm thinking about this, I think we may have never even spoken about this. So you know, I get to university, I'm hungry to meet like other people who are interested in business and startups. And we end up having a conversation about this company that became quite popular in the UK called r&b ring tones.com. And so back with the old Nokia phone, someone had coded in r&b songs in ringtone format, that you could download to your phone, and they'd made like a million pounds. And that was, that was amazing to us. And so a couple of my friends who were interested in that weekend, that we're here in London, you know, at university, we should start a business. And so the first business that we started was called the student directory.co.uk. And what we observe looking back now, the problem we observed was that, you know, people come to a university, or to a town like, type like London, from all parts of the country of the world, and they don't know what he or where to go drink, or where to get their school supplies from, or whatever it might be. And so part of this was to build awareness for people coming to London for the first time to university. And on the other hand, we felt like all of these businesses, surely they would want to promote to the students, they've just got student loans, they've got disposable income, they're not encumbered by their parents for the first time. And so we tried to try to bring them together. And so we built our first website in front page, I remember vividly learning that and trying to figure out how to get that work and get that live. I remember actually putting affiliate ads on the website to make it look more legitimate, which seems crazy now. But without ads, it didn't seem like a real business website. So we had an apple banner ad on the website. And then we went door to door and we literally walked door to door in London, and went into restaurants and bars and asked them if they'd like to be on this new website and offer a discount. And the first time someone gave us a crisp 10 pound note to be on the website. It was you know, literally one of the best business successes.

Grant  4:55
So funny. Do you remember when people turned you down and said no To your offer, do you remember what the reason was?

Lee  5:03
I think back then it was people didn't even really know what the internet was or what a website was to be, to be perfectly honest, you know, who were these? Who are these kids? Who are these chances walking around trying to take, you know, 10-20 pounds out of my account? So I think that was the main reason. But you know, back then we weren't thinking about problem validation and how to go back and prove our offer. We were really going on instinct and enthusiasm and excitement. And you know, getting told no wasn't a big deal, because there were 10 more restaurants down the same block. So off we went.

Grant  5:30
super interesting. And so you ultimately, you studied math and economics? Yep. And got into trading. And then so you mentioned, you ended up working a Tough Mudder? I'm curious. How did you make that transition from a sort of large company, like finance background to getting into like breaking through and getting into a startup?

Lee  5:58
Yeah, it was quite fortuitous. Actually, you know, one thing that attracted me to trading was it was very much like running your own business, you have your own p&l, you're kind of in control of your destiny. So that really attracted me to the role. But what I think I found over time was working in that organization, particularly with this sort of youthful enthusiasm. It could feel quite restrictive, you know, bureaucratic at times. Um, and I just find myself more interested in evenings and weekends. You know, I mentioned, there's a few different businesses that we tried to build. And I'm still working on another one, a career advice app, you know, after spending a day at, you know, what had been my dream job growing up and being a university, getting more excited to go and talk to students, you know, about career opportunities, and things like that. So I realized for my own passion, something was off. There was a website called escape to the city dog that specialized in content and job opportunities for people who were lawyers, bankers, management consultants, who wanted to kind of leave that work and apply those skills to, to startups. And yeah, I remember one day that the email came in with a top 10 opportunities it was to do build new business, new business development and strategy at this company called Tough Mudder. You know, I love running. I love the idea of the event, it was a really small company, I think 10-20 people at the time, and it was in New York. And for someone who grew up in a small town in the north of England, that seemed like a dream opportunity. And so. So yeah, that's where it came from. I then did my usual thing of trying to do some diligence and trying to find out who the founders were. And it turned out, we had some mutual connections, I spoke to them and managed to get an interview. And yet the rest is history. The next thing I was on a plane moving to the US. It's crazy if you joined it. Well, if I remember correctly, it was like under 50 employees, when you joined, it was right around 30, that when I finally was able to join those, there was something of a gap due to the timing with getting visas and things like that. But I think it was right around the 30 people which one I joined.

Grant  7:49
Which is crazy, because your first startup experience was part of like people talk about with startups, like a rocket ship experience, in a lot of ways. So part of the reason I know a lot about this sort of lore of Tough Mudder is Lee worth the Tough Mudder. But he met my best friend from growing up who ultimately founded Gradible with us, Pete Wiley, and both of them were working at Tough Mudder. At the same time, that's how they came to know each other, become friends and built a working relationship. But it truly was sort of a unique company experience in that well, you know, that maybe there are multiple companies that have that kind of growth and success. But Tough Mudder seems to be unique, because it wasn't a purely digital startup that was scaling really, really quickly. It was an events company. Maybe if you could share a little bit about like, what were the components of that business that allowed it to grow so rapidly?

Lee  8:53
That's a great question. And there's so many things I want to hit on here. So just firstly, to address Pete, our co-founder, we I believe we actually started the same week. So we definitely became fast friends. And that was kind of the start of us talking about what Tough Mudder could be doing differently and building new businesses and ultimately deciding, you know, along with a huge grant to go off and do something on our own. The other thing I think is worth mentioning is this was a, as you say, really fast growing startup. I think we quadrupled in size over the year that I was there. But it wasn't based in Silicon Valley. And not everyone was a developer. And so actually, I felt like I came in as one of the most technical people in the business. So I was able to do things like build things you would never imagine building a model of people running through a course to make sure that we were building the obstacles big enough to not have backups in lines or working on a pricing model to optimize how much revenue we would make. So that was a really interesting way to bring that kind of skill set into, as you say what was otherwise a very, very non technical company in terms of the delivery. I think the reason for the success and the growth was a few themes that were really interesting. One, it was very, very timely as it relates to social media for a couple of reasons. One is the advertising model, I think Facebook ads were just starting to really take off and credit to the founders, they found a huge arbitrage opportunity here, where cost per clicks and getting people to the website and signing up was so low because the platform was so nascent. And I think, you know, Pete was the big driver of that, and I believe they actually wrote a case study on us at Facebook. So I think it's always good to think about what are your marketing channels and be on top of what new channels are as well as a way to attract eyeballs and attention to the business that you're building. But to me, it was innately social. Anyway, you know, these were real grandstand-like life accomplishment moments for people. So people love to post and share photos and videos, and then doing and finishing a Tough Mudder is naturally quite, quite a viral content producing business. So that was really interesting. And I think this trend towards experiences over goods, there was a, there's a lot of talk about that at the time, and new people starting to allocate capital to, to things that really brought them joy, and that they could do as a team. So, you know, you think about Tough Mudder is actually usually you go with a group of 910 people, back to that ad advertising model, if you can get one person to sign up through Facebook, they're probably going to tell, you know, five to 10 of their friends. So it had lots of sort of what I would call like viral loops to massively increase the number of people and the number of eyeballs on the business, I think they were some of the key drivers of how it grew so quickly in such a short amount of time.

Grant  11:27
Yeah, it's, it's so interesting, the more time I've spent working in startups, and thinking about business, which I'm not sort of traditionally trained in, the more distribution and marketing is such an important piece of the puzzle. And if as someone who's sort of a product designer by trade, and, you know, maybe spends the lion's share of my time thinking about the product experience, and how to make it as good as possible, which obviously is incredibly important. It's always very humbling to remember, you know, you could create the best possible widget, the best possible thing, and if no one's using it, obviously, depending on what your goals are. But if no one's using it, if your goal is to create a business out of it, then you're you're you're failing.

Lee  12:15
I think that you should jump in there. That's a really good point, though. So yes, I agree with that. And though I think the other thing that someone did really well, to Pete, the piece of the puzzle, and maybe missing, there is a lot of really, really good gathering of data and constant improvements after every event that was a post event survey that we come through in detail. You know, we spent a lot of time looking at what is the optimal number of obstacles on a course? And what are people's favorite obstacles? And how far away from town and the people are happy to travel and things like that? So, absolutely, yes, you need to get eyeballs and find the way of doing that most effectively. But then I think if the experience hadn't been great, you know, he might have had a good one or two events, but ultimately, it would have died out. But I think what the company did really well was constantly look for ways to improve the offering and think about how do you retain people? And how do you get them to come back for something that for many people is, you know, maybe a one and done? And how do you expand? You know, I think they expanded really quickly and found new markets and new geographies and in quite a prudent fashion.

Grant  13:12
So that's super interesting, you bring up something that I've been thinking about recently, that idea of getting feedback, and obviously a bunch of different ways of doing that having like a post event surveys, like one great way to get a ton of feedback really quickly. But like thinking about, okay, how can I get feedback from users? And how can I iterate quickly to continue to improve? I'm curious, how did Tough Mudder? How did they think about managing sort of incremental improvements, while at the same time thinking and balancing investments and being innovative and doing, you know, entirely net new things that could make big jumps forward?

Lee  13:56
Very interesting. I would say they really did focus on the core product and the core offering. And yeah, if I speak freely here, I think that was absolutely amazing, and a massive competitive advantage for the early parts of the company. I'm probably created some barriers to growth later down the line, I think the efforts on improving the core product was so laser focused, that it created a really market leading product that had again, natural virality in terms of awareness. So that was great. I think, you know, looking back, being critical of myself, even as you know, probably should have pushed harder for truly net new innovations. As you mentioned it, you know, we did do something that within the confines of the core event with new obstacles and working with consultants on that kind of thing. But in terms of realizing this, what what Tough Mudder really had was an operating model for putting on large scale events that people loved and love to share and talk about and so how could you copy and paste that to other event opportunities, you know, we had an amazing team of event staff were able to handle it. You know, events have 20 30,000 people in a single day, which is crazy, you know, think of just a small team, you know, the whole team was less than 100, even at the end of that year, and I think that was kind of the steady state. And again, when I joined, it was 30 people. So to think that such a small group of folks were able to handle such a large logistical effort with parking and start times and dealing with people at the end of the race and stuff like that, is such a fantastic job. And I think, yeah, I think, you know, I think the innovation was really, really well done on the core product, but there was probably more opportunity to think broad, broader for big net new opportunities.

Grant  15:36
So I'm curious if someone is listening, who is thinking about doing their own event business, any advice you would give to them about something, you learned that you didn't expect to have something surprising around some of the challenges or opportunities of running a specifically an events business?

Lee  15:57
No, it wasn’t a surprise. But when the penny dropped for me that this is a business, where if you do it right, you start receiving money for the product before you actually have to put the product together, which is unlike pretty much anything else that one sells. And especially the way we did it with the pricing model where the further out you booked it, the cheaper it was, we were able to encourage a lot of revenue prior to the event and then use that. And so it's one of the reasons that that company never had the need to raise venture capital, which I think is very appealing to a lot of, you know, entrepreneurs and people starting out, particularly in that kind of world and that events business. So I think that was like really, really, really interesting. And I hadn't really seen or thought of the business in that way before. But it was really cool. So I think taking advantage of that, as you're looking at events, specific business, how can you create a ton of buzz? How can you even with low ticket prices, you know, get people to stop signing up ahead of time to let you figure out what you have to work with, and how big you should build it and those kinds of things, is really cool and really interesting.

Grant  16:59
So you mentioned that you almost immediately started thinking about how part of your job was thinking about the business and how to innovate within the business and opportunities to do things differently. You're sort of set up to kind of partner up and start thinking about net new business opportunities, which clearly influenced the two of you to, to set out and do your own things. I'd love to hear from your in your own words. What was the conversation between you and Pete when you both were like you went from Okay, we're having beers and talking about one day doing this thing? And then ultimately, you made the leap to do your own startup?

Lee  17:43
That is a good question. I think we, I think we enjoyed working together. And we enjoyed the prospect of building businesses together. And I think for what we were looking to accomplish, we were probably at a different stage in our careers, wife cycles mindsets, relative to where the company was. So the company was growing like a weed on its core events. And that is really what the company was being built around. And I have no no criticism of the company for doing that and or the way that that business was handled, I think it was just a little bit orthogonal to what it turned out. He and I had a similar vision towards building something from the ground up. So I think that's kind of where the shared interest in conversation started. I believe the final decision was in an establishment called the blind Tiger over a couple of beers, you know, we just reached breaking or at least I reached breaking point I, I could have been I could be misremembering this. I mean, this is 10 years ago now, but I think I just reached a point of, you know, not really knowing where I wanted to take this, this current role that I had, and seeing just massive opportunity and all the learnings that I've had and thinking, you know, what, it's time and if I don't do this now, then then maybe I never will. It felt like a good time in terms of market opportunity in terms of, you know, my current life situation. And, yeah, I mean, we can definitely get into advice and things like that. But that definitely, I wouldn't do that. Again, I know that that's like a stage of life situation, or, you know, I think there's broader lessons around by doing diligence before pulling the plug. It's not necessarily prudent, but I think for me, I felt like, I can't have my mind on anything else. It needs to be a clean slate, and now is the time so that's the way I remember it, but I'd be curious if he remembers it the same.

Grant  19:31
So yeah, it's super interesting. You're, you're bringing up a little bit of the, the early stages of gravel, which were not grabbable for quite a period of time. It sort of touches back a little bit on the theme that you brought up at the beginning around glorious failures. You know, you know, you hear, you know, the metaphor of jumping out of the plane and you know, assembling your parachute on the way down or whatever metaphor you want to use is like, pretty is a pretty apt description of what the two of you did. And then ultimately, you know, once I joined, we hadn't quite nailed down exactly what it was we were going to be doing. And we're spending a lot of time thinking about at least in the early days of event-like businesses that, you know, were following a similar model to what we what you guys had seen at Tough Mudder. And could potentially have heard some of the advantages that that business was leveraging. What point do you remember? Sort of, like, I'm trying to think about it, but I can't think about this specific point where we transitioned away from, like, hey, maybe maybe an event business isn't? What this has to be, it can be something else.

Lee  20:53
Yeah, yeah. I feel like I remember that vividly. And again, a long time ago, but, you know, my recollection is this, I think we'd had some moderate success with new music events that were mostly local. And so I think the realization that one thing that large events businesses do really well is just the economies of scale, you know, it's hard to get to the to 3000 people, but once you get the attendee four, or five, and six, and 7000, that is all revenue, you know, that is all in your back pocket. And so I think, from what I remember, I think it was a realization that, hey, this product market fit here in the sense that, you know, musicians enjoy this and guests enjoy this. But the path, the scale is so incredibly difficult with this kind of infrequent small event model. I think at that point, we build good relationships with some of the performers, and we're thinking about, hey, what are the problems? Could we solve them? Maybe this could be an add on to, you know, to the events. And I think that's where we got into this. At least from from what from I remember this this world of, you know, crowdsource, whether it's, you know, crowdfunded albums, or, you know, other ways to support artists, and then that got us into a world of, hey, there's a lot of opportunity with crowdfunding problems. And I think at the time student loans have crossed a trillion dollars outstanding. And I think that that was the transition, you know, it was like, Hey, could we help crowdfund people, student loans, and that led to a speak to a bunch of people had student loans and realizing, actually, their problem is more around understanding their loans and figuring out how to optimize their repayment. So that's how I remember that transition. But it certainly wasn't a clean one. And it certainly isn't one that I would want to go through again.

Grant  22:29
So that's a really good point to like, impart me Not exactly, even remembering how it happened. And you bring up the point that it wasn't, it wasn't really a clean transition, I think actually resonates a lot with me, because I think that's another sort of misconception, people think that there's like, a light bulb goes off. And then you have the idea, which is the big, fully formed idea of like, what the business needs to be and what direction you need to head. And that really wasn't our experience at all, it was much more of trying a bunch of things, and continuing to incrementally refine the direction we were heading based on the feedback that we were getting from the people we were talking to.

Lee  23:08
Exactly. And I think that's, you know, the I think there's a lot we did wrong, and a lot we would do differently again, but I think one thing that we did, right, that I would that I would encourage all entrepreneurs to do is follow the data, like follow the customers that you have, and really trying to understand their problems and build solutions to those problems. And, you know, probably took us longer than it should have done. But I think we ultimately got to a place where we were really solving people's problems. And that is ultimately what businesses built around.

Grant  23:34
Yeah, so we finally got to a place where it didn't feel like such a grind. So like the music business felt like a tremendous grind. And in a lot of times people talk about product market fit. And one of the ways they describe it is like when things start flying off the shelf. You it's like you know it when you see it, you sort of feel it. And we started to have that experience when we started to narrow in and identify that student loans, student loans were a problem. And we had no problem finding people with student loans who were looking for some way to solve that particular problem. Could you share a little bit more about how that felt and sort of when you knew we were on to something? Yeah,

Lee  24:21
so I think my experience is probably a little bit different than your guys here. But it came from the nuances of student loans. You know, for context in the UK college is much cheaper. Student loans are all issued by the government, there's a fixed amount that everyone gets, and it after graduation. There's no interest real interest rate. I think the interest rate is fixed to inflation. And it comes out of your gross salary which is taken care of by your employer, you still pay for it. You just get a tax basically on your income until you've paid off the amount of your student loan. And you also don't pay that tax if you end the lower center So it's all kind of taken care of, you definitely need it for most cases to go to university in the UK, and you definitely pay it back. But the way that it's handled almost makes it feel it's just kind of like, Hey, this is just like a rite of passage to be able to attend university. And like some point that will be taken care of. When I saw that, you know, numbers, like a trillion dollars outstanding, the interest rates on student loans here, that the delinquency rate was the highest form of consumer debt, it took me a couple days to actually digest that information. I mean, to me, it's like, it was crazy. It was like, this is a, this is a for profit business. It's actually highly detrimental. And I can see now why people are so frustrated and challenged by it. And that doesn't seem like the right answer. So that was the first thing. It was like, wow, this is a big deal. This isn't how it is in a lot of places. And there has to be a better way of doing this. I don't know what it is at this point. But there has to be a better way. And we were hearing people shouting loudly that hey, you know, as you said, we didn't have any difficulty finding people, student loans he wanted, he wanted to sort of solve that problem in some way, shape, or form. So I think that was when I felt like, hey, student loans is where the business is going to be. I think it took a little bit of time to figure out exactly how we were going to add the most value to that problem, though.

Grant  26:14
Yes, I think one of the things I'm particularly interested in is, so we were transitioning away from an event based business to what ultimately became a technology based business. And you were, like, each of us had sort of varying degrees of technical ability at the time. but none of us could honestly call ourselves a technical founder. So in, you know, you sort of managed a lot of the product development in the early days. Could you share a little bit about sort of how we tackled that, what and what your experience was like doing that?

Lee  26:54
Yeah, it's hard to remember exactly. But I remember, you know, being somewhat technical, but I've never done any formal computer science training or coding, you know, I mentioned even earlier, like building a v1 of a website on front page. And I think I've done some Dreamweaver in school, you know, like some of these old school platforms to build websites. So I guess the only advantage that I had really was that I just knew it was possible. And I've done it before. And so when I found stuff like WordPress, to me, it was like, Oh, this is way easier than front page or Dreamweaver, whereas I think in many, many cases, it's still quite inaccessible. Yeah, I remember thinking like, Oh, this should work. And then just, you know, through Google and YouTube and templates, being able to get to something close enough for what we wanted to test, because at the time, it was just, hey, this needs to pass the sniff test. Someone who's never seen or heard of this business needs to go to a, you know, a URL that sounds real on a website that doesn't look like it's a scam, and be able to do the basic functions and interactions that we need to see whether there's appetite and interest in what it is that we're offering. So with that kind of Nastar it like it was hard work, but it wasn't, it was actually really fun. It was some of the more gratifying moments was taking something it was just an idea and actually making it live and putting it out into the world. So I look back fondly on the experience or the albeit, you know, probably being in the weeds was not as fun as I now remember to be. And also always knowing that, you know, this was never a long term sustainable solution for what we probably wanted to build on. But nonetheless, taking it from idea to something that was live on the internet was pretty exciting.

Grant  28:31
Yeah, I guess the thing that that is so interesting to me now is that when I look back, and I think of Okay, you know, 6,7,8 years ago, if the sort of no code or low code movement had was where it is today, you know, we could have, we would have been in a position to do so much ourselves. That, you know, we were able to create the sort of facade of a product experience of an application through WordPress, and then ultimately had to get pretty in the weeds with outsource development to build something that was a bit more dynamic. And that sort of met our needs to measure product market fit and see if, if our solution was working. And the reality is today, you know, there are just dozens of companies and tools that are pushing forward on creating very usable product experiences that help people build quite complex applications. And it's, it's just a very exciting time if you're an entrepreneur, because there's really no good excuse for not trying something, building something and putting it out in the market and seeing if people engage with it and seeing what kind of feedback you get back.

Lee  29:53
It's such a good point. And so I think that you know, as I reflect on our experience, one is you know, it took us a while to get to this point. a long piece and I think we probably speak myself here could have done more research and identified that market and the opportunity much more clearly, we like on the side and the evenings and weekends before leaving a job and really refined the idea and understood the problem that we were trying to solve. So that's number one. Number two, though, is another reason that I felt like I had to leave is building something from scratch with minimal coding skills on the new platform back in stock a lot of time, you know, I mean, so I couldn't really be doing that to the speed that we needed to on evenings and weekends. And so, you know, so well, and good for me to say, Now, that was kind of cool that we built this stuff, but like the map, as you say, the amount of hours that was spent, and then having to outsource and find out what your limit is, and then start pulling in different help to build ultimately basic functionality to test whether this actually is a long term viable solution was very time consuming. So if you fast forward to today, what would I say? I'd say spend more time understanding, really understanding the market that you want to attack. But then the v1 is so much quicker and easier to build with the tools that are available today. I mean, I would be curious to hear your view on this, I'm sure something that looks better, works better, and just is better would have been, you know, creatable in a much, much shorter amount of time. And then we're having conversations around how people are interacting with the platform, as opposed to spending that time building the platform.

Grant  31:17
Yeah, no, it's a great point. So there are a number of tremendous advantages to what's going on with the no code movement. And speed of delivery is one of the biggest one. That's one of the, you know, fundamental advantages of a startup, a small early stage startup is speed, and agility. The other thing is that it's so cheap, like you can, you know, you don't, you know, the traditional model of, you know, paying someone to build something to you, if you're a non technical person, like traditionally technical, you don't have a computer science degree will say, or have experience. With coding, like you either you have one of two options, either you find someone else who's going to be a technical co-founder, and sort of sign up to be a part of this journey with you. Which is, it's hard to do, just candidly, there are, my hypothesis is there are way more people who have ideas of businesses that they want to start, then there are competent and interested technical co founders to start the startups with them. And Your other option is to pay someone to build a site for you. Or at least that's what it used to be. And now, as you said, you can you can get out your v1, you can build an MVP, and you can test the market and identify if your hypothesis if your potential solution has some legs, and then it's maybe a good transition into, I'd love to hear your thoughts on fundraising, because I think that's kind of like the elephant in the room. That you know that of course, there are two schools of thought there today, too, if you're if you're going to do your due diligence, while you're you've got another job, and you're doing in, in your nights and weekends, you're building something out, you know, it is it is much more possible these days to build a profitable business that you can scale and ultimately turn into your primary, you know, job, and then ultimately scale it up as big a business as you want it to be without having to fundraise. But it's obviously Another possibility is to, and there are certain businesses which should fundraise certain businesses that can only get off the ground by fundraising. So I'm curious to hear how you think about your experiences with the challenges of fundraising.

Lee  33:49
Well, fundraising isn't fun, regardless of what anyone would tell you. I also take issue just with the environment, I feel like we're in where we, where we sell, I feel like we overly celebrate fundraising and valuations relative to business success. I mean, again, having been through it, there's definitely a feeling of relief once money has been raised. And, you know, we tend to see the stories of people for whom it was easy, and there's very large valuations, and it didn't take long, but for the vast majority of entrepreneurs, you know, this is a multi month if not a multi year process, and dozens, if not hundreds of meetings. And, you know, we were warned about this by other entrepreneurs and founders, and I think everyone who's, you know, irrational enough to want to start a company, a venture backed company doesn't believe it will affect them. But you know, after 50 people telling, you know, your idea sucks, you should go back and get a full time job like, it starts to get to the best of us. And so, one is, I would say it's not easy, and I think that's really important for people to know, before they embark on doing it, and really, really know that as well and have that expectation that if they want to go down that path, so long, hard road. So that's the first thing. The second thing is it really depends on the type of business And that's why I kind of have a little bit on the site, we shouldn't glorify fundraising for fundraising sake. Now, if you have a business that is, is, one is able to grow very quickly based purely on financial inputs. And by that I mean, you found a marketing channel, whereby if you, you know, you spend $1 you can make to, then absolutely the more money you can get, and to continue to scale that profitably probably makes sense, especially Part two is if there's other competition, so if there is a market share to be won, then probably it makes sense to spend the time and invest the time trying to raise outside capital to build them win that business. But that being said, you know, it really depends on on the founders goals and the founding team's goals. And I think that is the default. Whereas I think more conversations need to happen about what are we actually building this for, you know, is this to build $100 million, or a billion dollar company or take a company public? Or actually, do we want to do this because it's fun and interesting, and it solves a cool problem. And, you know, as long as we make enough to be happy, then then that's cool, as well. And I think I don't advocate for one or the other. I would encourage entrepreneurs to have that discussion, though. And think about it more, more than probably people are and certainly more than than I think we probably did.

Grant  36:17
Yeah, and to build off of that, I think fundraising is hard. Period. And then it's even harder when you have to. And so I think that was like one of the biggest takeaways for me is that the approach of Hey, jump out of the plane and build the parachute on the way down, just exacerbates the stress and the challenges of doing a startup like building a business is difficult no matter what. But if you, if you aren't quite sure what kind of business you're going to build, you're not 100% confident that you have a solution that people are either signing up for, you know, in droves or paying for your product, hand over fist. Like, if you're not super confident that you already have a solution to a problem, trying to fundraise is not going to work. Because people aren't going to give you money to figure it out. Yep. And I think that was one of the challenges for us is that the early days, for us were super stressful, because we were trying to figure it out and fundraise at the same time, and you learn that lesson the hard way, which is people will happily talk to you about your ideas, build that relationship, and tell you and pat you on the button, say come back when you've got it. Yep. Because they're, they're always gonna be sitting there waiting to invest once you do have it, and you need it now, but it's just it becomes just a tremendously taxing thing to be spending your time on, that isn't actually pushing the business forward. And so you end up splitting your time, and it is incredibly stressful. And and as you mentioned, and it can be demoralizing. So yeah, my biggest piece of advice here is Yeah, make sure that you know, at the beginning, when you when you, you have a clean slate, you get to make all the decisions about what kind of business you're going to start. What are the requirements? You don't need office space, you don't need to hire a bunch of people to figure it out. It's like figure it out, when you know, you're completely in control. And you can talk to customers, you can rapidly change direction, if you need to, you know, try something, build something, figure out the real minimum viable product, what is it way to truly test demand. And if building something seems completely outside of your skill set, there, there are lots of different ways to validate a concept without having to build a technology product, even if eventually you're going to want to build a technology product to support that business. And if you do that stuff ahead of time, and then go out and fundraise and can point to these are the this is the customer problem. These are what customers are doing. This is the amount of money people are paying me right now to solve their problem. That's what is worth, you know, its weight in gold when you're trying to get someone to give you money.

Lee  39:27
Yeah, absolutely. I think like growth solves most problems. You know, like that's gonna, if you have a revenue generating business, that's going to bring you in the funds, you need to not necessarily need to raise or not need to raise as quickly. But similarly, like, if you're looking to attract VC attention, you know, a lot of these VCs, if you think about it, the SAT looking for the next gem right, so a lot of them are crawling through crunchbase and TechCrunch and VentureBeat and looking for fast growing companies. You know, they're there, especially some of the more junior folks I think that's what they're staking their career on. So actually if you're able to grow and really solving problems, you, there's a decent chance you're gonna get inbound anyway. And I think one of the challenges is you end up in this situation of the hungry, don't get fed, you know, if you're going around and having to ask and having to ask, Well, as you said, like, maybe you've over hired or your plans are too capital intensive for where you are. And then and then there's additional pressure to actually need the money as opposed to, hey, we're growing like crazy. If you guys want to invest, that's gonna let it grow quickly, and you'll have a good chance to get on the, you know, on the horse early, but if not, that's cool, because we're growing anyway. And so, yeah, build something that people want. And that will keep you in the right direction.

Grant  40:36
Yeah, so in carrying along that thread, So ultimately, we were able to find a real problem space, start building out a solution for people that was resonating, and had the opportunity to participate in an Angelpad, the seventh class for that incubator. Do you want to share a little bit about that experience?

Lee  41:01
Yeah, for sure. So for people who don't know, Angelpad, as you said, as a startup accelerator or incubator follows a very similar model to Y Combinator, or TechCrunch, probably a little bit better known, say, Angel pad was a little bit more selective, you know, smaller classes, less frequent classes, typically 10 to 12 companies. And so, you know, you join, I think it was for 12 weeks, and in exchange for some capital and a portion of the company ownership. And, you know, before going in, I was most excited about learning around all the different facets of building a company and, you know, maybe getting classes on digital marketing and product development and managing a team and stuff like that. And actually, none of that happened. But what ended up being really useful was meeting other founders and to be able to talk through problems with them, and commiserate with failures and share successes, and also the alumni, other people who've been through the program and, and also on hand to be to be helpful, you know, the network was truly the most most valuable piece. And so functionally, how it works, you know, you go into this co working space, and you sit there and try and build your business, and you have office hours with other entrepreneurs, once or twice a week, and maybe some events, maybe some previous class members who are founders come in and talk to the group. And then a combination with Demo Day. So one of the benefits is the accelerator itself, Angel pad has relationships with a bunch of investors. And so one of the good things is you get an audience, you know, a captive audience with 100 200 VCs, and so you get to pitch at the end. And so that's kind of how it worked. I think it has a mythical aura from the outside. But when you get in, you're just building the company, like you were on the inside. But I think some of the benefits I probably didn't appreciate as well. So as I say, really, the network of current and former and more successful founders, and also the VCs, that's probably my two cents on an Angelpad.

Grant  42:54
It's a really good point on the sort of relationships in the community. Like one thing, you know, you sort of hear this a lot. But, you know, we were fortunate enough to have three of us starting the company together and going through that process together. So we at least had, you know, the support that came with working on the project with multiple other people. A lot of founders Don't, don't have that support, it can be really, really lonely, when you're out struggling by yourself, and you don't have someone else to share that with you. So, you know, we graduated from Angelpad, ran the business for a period of time, and then ultimately, were acquired by Commonbond. Maybe share what you can about the acquisition process.

Lee  43:47
All this stuff is hard is mainly what I would say all this stuff is hard and takes longer than you think whether it's starting a company, raising outside capital going through an acquisition, I mean, I will say we were lucky that that we had interest from multiple firms, and they just came at a similar time, which was really fortunate. So whilst it was opportunistic, we were able to run something of a process, which I think is always helpful, obviously, the whatever you're doing is the same with raising investment. If there's multiple investors interested, then you're probably, you know, it's probably going to be a little bit easier. So that I think that was fortunate, I think, you know, learning experience for all of us, the level of diligence is quite significant. And learning about data rooms and the kind of documents that we have to share. That was a new and interesting experience. But it's tough. Like, this is similar with investors, you know, when you get to a point where that's something that you want to do, and you're in a conversation, like, you can't, you can't fabricate leverage. And so at the end of the day, we were sat and waiting at the whim of potential suitors. And so I think that was really tough, especially for people who really want to move a business forward and you're trying to manage a team as well and you're trying to figure out what that looks like in terms of how much you communicate and just trying to ensure a good outcome for everyone across the board investors and employees and, and founders as well. So I mean, unlike anything else I've ever been through, but fascinating experience on the west. And it was, it was really nice how it came together in the end. And we were able to get it done that mean, yeah, it took longer than I thought. And this was more involved in the night probably even expected. But yeah, that's probably about as much as I can share. Cool.

Grant  45:29
Yeah. And so I think one of the things that I'm most interested in, so Pete and I ultimately ended up taking positions at CommonBond and working there for a period of time, Pete still works at CommonBond. And you ultimately transitioned back into a role in a larger financial institution. I'm curious how the entrepreneurship experience has impacted your work within a much bigger company.

Lee  45:58
It's really interesting, and I think it was a step in between that might shed some light on this as well. You know, part of my reason for not wanting to, you know, join CommonBond was, I think, I realized that as much as I learned about student loans, that was something that I didn't want to be my expertise narrowing of focus for the next portion of my career. And actually, I'd spent five years trading fixed income products earlier in my career, at the same time, seeing that that world had had very little innovation and disruption. So actually, my goal was to start another company, or join an early stage company within the financial market space, specifically, there were a few green shoots of a couple companies trying to do some stuff, but there wasn't much. And so how it happened was I found mutual contacts, someone who you know, who I'd worked with previously, you seem to be connected to a lot of the early stage companies in the financial market space specifically. So we went for breakfast, and I talked to him about some of the ideas I had, and I said, We'd make some intros. And at the end, he was like, Hey, you should, you should just go back to a major bank. Because, you know, ultimately, there are many people with that combination of experience from both trading and then entrepreneurship. And so it wasn't something that was necessarily premeditated, or that I was actively looking to do. But, you know, when the opportunity was laid out, in that way, I thought, you know, maybe this is worthy of a conversation. So that's how I ended up back, seeing the potential to apply a startup mindset within a large organization, having had experience in a large organization, and so being able to prepare a little bit more for some of the bureaucracy and the challenges and the slow moving pneus of those kinds of companies. But then realizing if I was able to impart just a portion of the bias for action, and like, introducing technologies and new perspectives, and design thinking and different tools and ideas that I am, we had experienced over the past several years, that actually using that, in addition to large brand name, large balance sheet, you know, a lot of resources, actually, there was maybe it may be a big opportunity to have an even larger impact. So, um, so that's kind of what I brought here. That's how I ended up back there. And I think, you know, I, I didn't think I'd still be here, like five years later. And I think the reason I am is because slowly, large institutions have caught up and realized this is an important need for this. And so being able to drive a lot of those changes. And, you know, maybe just to spend a couple minutes on what to actually do, you know, a lot of that is running a lab that spins up new products and ideas very much in a startup like fashion. And so we're looking where the opportunities are, and doing that sort of research within the financial market space and spinning up proofs of concept. That's the old company term for minimum viable product. And then also just thinking about how we can take our business into the future. Historically, trading has been a voice and spreadsheet based business. So working on building direct API connections with our clients and capturing the data and using that to provide even better service. So all of that to tie a bow in it and say what, it wasn't what I was looking to do, but it worked out as well as I could have hoped. And I think there's a lot of potential going forward.

Grant  49:02
Very cool. So I've got one one last question for you. So I'm at the beginning of this journey, again, starting a company founding a new product in makers Inc. I'm curious what advice you have for me.

Lee  49:24
advice in terms of building makers Inc.?

Grant  49:28
Let's keep it on the business. Nothing personal. haha

Lee  49:31
Opposed, as opposed to as sub projects, I guess is what I meant. amazing overall, Mmm

Lee  49:43
The first thing I would say is consistency. I really hope to come back for Episode 100 of this and see that it's just carried on going because I think consistency is the single hardest thing in business. With ideas and showing up and moving things forward, and it's really the mundane tasks or the schleps, as we call them that I actually believe differentiates people. So continuing to do the hard thing, and it's not even always hard, maybe it's just boring or annoying, or like a stone issue, but I'd say, if you believe this is the opportunity, then then double down on consistency and keep doing it. And I think you and I both know, sometimes it takes a long time for the, for the fruit to bear. But as long as the roots are growing, like ultimately it will get there. So that's the main thing I would say is, you know, be consistent, I would say, what else everything else you already know. You know, we had the same education in startups. You know, I think be iterative and seek feedback and act on that and keep building and keep going. But yeah, consistency.

Grant  50:52
Awesome. I love it. I will commit if this gets to Episode 100 you are definitely guest 100.

Lee  51:01
I would love to.

Grant  51:03
It's been a pleasure.

Lee  51:05
Thanks for having me. This was awesome.

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