Peter Wylie // Makers Podcast 003

Peter, CFO at CommonBond and former co-founder of Gradible, discusses early mentors in entrepreneurship, how his Journalism degree influenced his approach to business, the effort required during the early stages of a project, the importance of scaling your systems during hyper growth, and how you need to be thoughtful about selecting a business model that aligns with how money is flowing in your Market.

The Makers List


The Makers List


January 28, 2022

Peter Wylie // Makers Podcast 003

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Video Transcript

Grant  00:01All right, welcome, everyone. Today, I had the good fortune of chatting with my best friend and former business partner, Pete Wiley. He's currently the CFO at CommonBond, which is the company that acquired our startup Gradible. So I'm super excited to chat with him today. He's one of the big reasons I got into the startup world and entrepreneurship generally, and excited to hear what he's got to say, Pete, you wanna introduce yourself? Yeah,

Peter  00:27
Thanks, Grant, really appreciate you having me on today. excited to talk to the community about early stage business building, definitely one of the things I'm most passionate about have kind of my direct experience with Gradible, specifically as a founder, and then as a very early stage employee at several other firms. And I continue to mentor and work with other early stage ventures today, really enjoy some of those challenges that entrepreneurs have. Even if it's a business or nonprofit, or, or an entity that you know, is doing something in their community, they tend to have a lot of common questions, as they're getting started around which opportunities to focus on how to make the things they're doing it more predictable, sustainable. Obviously, if it's in a business context, you're gonna have all the questions around getting to that sustainability through profitability, ultimately, and if it's an entity that's getting its funding elsewhere, how to continue to attract that funding and do well with those investments. So, you can continue to sustain whatever it is that the mission is of the firm or entity you're working on. And that's something that I've gained a lot of perspective myself and that adage that you don't really know anything until you try to teach it to somebody and you realize all the things that you yourself are still learning, I find to be really true. And so, part of the reason I love to continue to work in this space and continue to speak with people who are doing interesting things trying to get something started is that it's constantly changing. It has commonalities such that you have to start from zero and starting from zero is is often confusing, painful, requires a ton of effort for somewhat limited return at times. And also, it's just really, really fun when you break through and you find something that works. So excited to talk today.

Grant  02:25
Awesome. So, I'm super interested in digging into advice you have for people super early on talking about, you know, sort of business and financing. But before we go there, I'm curious if you'd share a little bit about like what you remember as your introduction to entrepreneurship.

Peter  02:45
Yeah, absolutely happy to. So, I'm fortunate that I've got family members who started their own companies, and I'll be it on kind of a different scale, and certainly not what one would think of as a traditional venture backed play. But my aunt and uncle are both small business owners. And I got a chance to see up close and personal how they thought about the core fundamentals in their business, how they were going to attract customers, what they were offering and why they were offering it, why they were excited about doing it, and most importantly, the flexibility and excitement of building something yourself and really owning it. And the fact that you are responsible for putting something out into the market or whatever scale it was, that was something that a customer would pay you for, and something that they would get excited about. And so, you know, my uncle ran a series of soccer camps and a soccer league. And my I opened a Montessori school. So, two very different entities, but definitely got a sense of what it took very early on to be a small business owner and some of the trials and tribulations, obviously, that you encounter as a small business owner and entrepreneur. And I think the next stepping stone for me was in college, and it wasn't a direct experience so much as simply really good timing. I was, you know, in the first 25 colleges that Facebook opened up to Google News was a beta product, as fascinated by the opportunity to create new digital products that just created new experiences that weren't part of your everyday life, but then quickly became a big part of your everyday life and had that capability to scale really rapidly and that were developed over time where new features were added. And so certainly just seeing those things take off and gain steam and realizing in my own naive way at the time that there were real businesses to be built behind those entities. Got me really interested in business Is your space overall, I then had the really good fortune of having an internship with a company called rust communications that owns a wide swath of small daily newspapers throughout the Midwest and their owners. Again, we're very digital forward for that space, which tended to be at that time pretty sleepy and, and definitely offline or analog. And just seeing what it took to actually start and run a company and build it was another kind of key learning for me. But I would say the closest thing to what I've ended up doing in my career in terms of building a venture oriented or venture funded startup really was my good fortune to work with FierceMarkets, a company founded by a phenomenal entrepreneur named Jeff Giesea, who ultimately saw an opportunity to disrupt trade publications, in in early kind of 2001, I believe was when that business was founded. And I joined the firm right after they had exited to a private end private equity firm. And I had the opportunity to learn a lot from Jeff, because Jeff was at the end of his earn out. And about to transition day to day leadership of the company to the den COO, Shawn Griffey, who's another fantastic entrepreneur who I've gotten to learn a lot from, but Jeff really primed me and gave me examples of his process where he identified the market opportunity, began to do some scale tests that were low cost to understand if there was demand and potential to build a business, and then a lot about how he identified the real building blocks within the company to scale it. And also, that decision point that he reached, he was considering going to business or law school and had this idea that he kind of couldn't put down and really how he thought through the decision just to take the leap, and go ahead and found something was really inspiring to me, and something that I leaned on a lot. So, I've had the good fortune of many different exposures and experiences with entrepreneurship that have built on each other over time. But my time with Jeff, and also the good fortune to see what the company had become. And here are some of the DNA and building blocks that he had used to get the company to that point where it was profitable, valuable enterprise that could exit and sell what was really the jumping off point for me. And then from there, I just tried to learn as much as much as possible and get as close to the founding event as possible, realizing that that that was a critical piece of learning that I needed to have to ultimately start my own company.

Grant  07:57
Yeah, super, super interesting sort of sequence of experiences and influences in your entrepreneurial journey. I'm interested in taking a step back. And so you mentioned you had an aunt and uncle who both started small businesses quite different, and not digital analog in the way you had described. You know, a lot of businesses that time. Are there any lessons you sort of absorbed through their experiences running? Just small businesses that have been applicable to digital businesses? You've been a part of?

Peter  08:28
Oh, for sure. I think the first and foremost one is ownership. Yeah, the books gonna stop with you. And you're responsible, if something goes well, and most importantly, if something doesn't go right, and so that commitment on both sides of the coin and follow through when something wasn't working, or when something needed to be fixed. What was really important to understand that it is true dedication and hard work that leads to success in in that you have to be enterprising. There's a reason that that's the adjective used here. And committed is another key. And you know, that I think also just how you react to problems, because problems are inevitable, you are in a competitive market, no matter what you do, if you're if people are paying you money for something, there's somebody else who wants to get that same dollar, in some other way, shape or form. But you know, there's obviously levels of intensity of that competition. But you're competing and when you're competing, things are changing. And you need to earn that customer’s dollar every day. And just what you've done in the past won't necessarily be sufficient going forward. All those forces on you are going to create problems and challenges. And you really have two options. When you're faced with those types of challenges. You can let them build up you can let them drag you down. Or you can just focus on solving them and really working through them. That's easier said than Done. But I think that that really formed a recognition for me that the unit of business tends to be problem solving tends to be, hey, this isn't working as well as it could what could I change? I've got five customers, but I need 15. How do I get the next 10? This this customer segment is dissatisfied or stopping purchasing Why? And so that that fundamental process of then solving that problem, trying things to make it work really stuck with me. Cool.

Grant  10:33
So you mentioned that you had an internship that was very influential. You mentioned a couple digital products that were sort of coming of age while you're in college, but you actually studied journalism in school. How did that influence your career path?

Peter  10:49
Yeah, absolutely. I think that I was really fortunate to go to a really high quality journalism school that had a big focus on the elemental process of news gathering, or reporting, regardless of what your use case was, and I trended towards digital media, others in my cohort went into television or into radio, but at the core of the training at the J school is the art of gathering news. And that requires a couple things, one, an ability to ask good questions, and to be curious enough to understand what questions could and should be asked about a situation that again, in the problem-solving unit is the core of the core skill set. And I've never done improving at that. But that's something that I just I honed there and have never stopped working on, which is what is the proximate question to answer right now. And if it's phrased well, and framed well, then you can gather the right information to assess and answer that question. And that piece was another big break breakthrough for me, because, you know, some of the assignments and things you would be working on were just go talk to three people, like find a source that can tell you something relevant about the topic, or can answer some of the open questions you have. And there's no expectation that that person should give you their time, you just need to find a way to get their time. And that skill, especially will serve anyone on the sales side of business well, because as anybody who's had, you know, a day or week of sales, training and experience knows, you have to be willing to pick up the phone to reach out your hand at a conference, make a connection with somebody who doesn't know you before and is frankly not like thrilled or excited to meet you at first. And that ability to break through that initial discomfort with talking to people you don't know asking them potentially questions that seem uncouth or seem like way too much to be asking someone you don't know, can serve you really, really well in business. And I think one of the great examples and pieces of feedback I got from a professor was, what's the worst that that person can tell you? Like, no, I can't talk to you or no, I'm busy or just hang up the phone. You're not hurt, right? You're fine. That's the worst that can happen if you if you reach out and ask somebody a question. And one of the things I work with anybody I'm on training in a sales capacity is ask the question, if it's if it's on your mind, and you have an inkling that you need to know that ask it, the person will gladly tell you if you've stepped over a line. But our internal kind of filter is like 10 times more sensitive than it actually is by the recipient. And I just owe overtime in so many different environments. Asking the uncomfortable question, picking up the phone and talking to somebody or asking for a bit of their time if they're more experienced, or at a potential target that you need to work with in a partnership or sales context will go a long way. And you'll be surprised on the upside about how much people will be responsive and positive in those interactions rather than the fear that you have, that they're going to somehow be really angry or dismissive to you.

Grant  14:09
That's so interesting. So, your brain takes that experience that skill set to the sales side of thing mine went completely straight to user research. And I see so many parallels between that sort of, sort of fundamental framework on problem solving, but the sort of openness required to having a topic or a theme or something that you want to learn more about, and just having the courage because if you're not used to it, it takes a little bit of courage to go talk to a stranger sometimes but being willing to go and not lead the person. Take your assumptions and put them aside and have a conversation with them that can really end up revealing something incredibly unique or valuable or insightful about that person and the problems that they have and potential outcomes. communities to help solve those problems, which I think is like the core of creating great products and fundamentally creating businesses. Of course, in journalism, the output is a little bit different. But the skills must translate very, very well.

Yep, for sure.

Grant  15:16
So I'm curious. So, you were you're in school, in the journalism school, while Facebook is rolling out, you mentioned one of the first 25 colleges and universities to have access, what was the conversation about social media at that time and the J school.

Peter  15:37
It was not existing. It frankly, didn't exist. And that was really due to the nature of how closed the Facebook ecosystem was, at that time, it wasn't even thought of as something that would be used as a source or that somebody would share information that could potentially be used in in a news fashion, which is just incredible, because it's not that long ago, it's 2006 2007. And today, the thought that something on social media could cause a new story is like, of course, it's like it's half the time, or our former president would lead new cycles due to social media activity right alone. And so it just exploded, and it grew so quickly. And I frankly, think like, you know, most products, obviously, there's vision on the on the part of the founders. But there's also just evolution that happens as users and millions and billions of users, in this case, get a hold of the product and start using it and changing it and asking for different variations of it. And so I don't think that's necessarily a fault. It just was so nascent, and it had not become anywhere close to what it is today. So it just wasn't part of the conversation. And maybe by the by senior year, it it started to be something that people were thinking about, but at that point, a business couldn't even have a Facebook page. And so there were some real limitations that would quickly change in terms of the ability for kind of non-individuals to publish and for that information to then be public, that would represent more of that mass media form that the school trained you on how to use an interface with. And so that that, again, was an interesting experience, but it was much more from a consumer lens. Obviously, in any kind of social group or any kind of user setting. It was fundamental and something that everybody was plugged into it, you know, increasingly an exceedingly as the time at school progressed.

Grant  17:37
Yes. So you mentioned you had an internship, a couple of really formative mentors at FierceMarkets. And then what came after that?

Peter  17:49
Yeah, so I think good fortune to join a team at really early stage that was building a digital marketing company focused on the nascent social platforms, and helping businesses use those to acquire customers, and it's called 3Ships media still operating today, in Raleigh, North Carolina. And that was a fantastic experience joined a small group as a fourth employee was six weeks after the company was started. It truly was the proverbial four people in a room with whiteboards. Thinking about the concept, not a business yet, but a concept that we hoped to turn into a business and how we were going to do that and tremendous amount of hard work and energy. Zack Clayton was the founder of that business, tenacious, really focused and great networker finding ways to take this concept and validate it by actually performing these services for various entities. And we focused initially on on small to medium sized businesses. And that gave us a really interesting perspective across numerous industries about how we might apply things like Facebook, blogging, and video to ultimately build awareness and drive customer acquisition on the part of the firms we serve. And so there are two things happening there that were formative for me, there was one that the technical hard skill development of operating in a digital environment, how to interoperate products, how to know about web analytics and distribution online, because all of the things we were doing for companies were around driving customer growth marketing for them. But then at the same time, these platforms were changing by the month in the quarter, the ways you could use them in combinations were changing. So there was both the kind of hard skill development of using those digital platforms but also the skills of how to think about growth on the customer side, key questions to ask and answer as a business around who your customers are today. What other segments you might attract and how you can credibly and and productively get their attention. And get them to consider doing business with you. And so that was really great at the same time getting that extremely early stage business building experience, about how to think about culture, how to think about retention, hiring and firing. And then obviously, the general management and financial management of a firm and some great, great examples and individuals who did a lot of training with me kind of on the job there, who were further along in their career and had experiences that I could glean from. So it was really fortunate to work with that firm, for the first two and a half years of its existence, and kind of build that foundation. And it's always exciting to see an entity that you work with, have that success and sustain over time, but tremendous amount of learning. Again, I think one thing I would I took away from that experience, especially that would be relevant to the community that you're building grant is in your first year of operation, especially if this is your first business that you're building, I think you have to be comfortable, that time is your scarcest resource. And also that you need to be using it as much as possible, because your competitors likely have much more money, but think about their time in different ways than you. So be prepared to outwork and out hustle the people that you're competing with, because there is no, there is no alternative to that. And the other thing fundamental that's underlying That is, if it's the first business you're working on, and you're working in a new space, potentially, you're doing things wrong or ineffective that you just couldn't possibly understand or know. And you have to offset that with things that are working. And so it's kind of like that old adage that, you know, 50% of my advertising works, but I don't know which half, so I got to keep doing all of it, you need to be putting in a lot of extra hours and extra effort. And it's okay, but I'm just telling you clearly that there's things you're working on that won't be valuable or useful. You have to try a lot of things at that early stage. And that's ultimately something that I've just reflected on there. And we were willing and able to put in that type of energy and effort at that stage and needed it. You know, because certainly, in hindsight, many of the things that we were doing, were ultimately part of the model long term or weren't, you know, directly applicable or trackable to something that had business outcomes. But some of the things we did work to, and I don't think we had the ability to divine at that time, what was what was what we had to be putting in cycles and energy and then just being very, very objective about the results we were getting so that we could hone our energies and efforts in the future to be more scalable, and then more effective.

Grant  22:44
Any so it's that's an interesting idea of Look, you're early on your time is the most valuable thing you have and you are in complete control of how you spend it. Obviously, there are variety of different things that can pull on your time, but just saying, look, there's a certain expectation you should have about the amount of focus and energy it's going to take to start something new and build it from scratch. I'm curious, when you look back on that, thinking, hey, look, just accepting the fact that there's a, potentially a large portion of things that you're doing that are not valuable, that would be better if you either weren't doing or spending your time in another way. When you look back on that, are there? Are there things you could have you done to learn faster? To save yourself that time and energy?

Peter  23:41
Yes, to that really good clarification, I don't think they're not valuable. And what I really mean is they're not going to be things you're doing a year from now, from that point, right? They're not things that ultimately end up as part of the successful operating model of the company. But they could be very worthwhile tests and data that get you to that operating model. And so I think it's really about how fast can I get to something that's workable, scalable product, market fit, etc, that usually requires a ton of extra energy at first, because you're not certain how many iterations will be necessary to hit on what's working, and you're likely to need to try multiple experiments, you're likely to need to try 510 perspective clients to get one or 100 to get one. And so it's not like the time spent with the 99 that don't buy is not valuable. It's just ultimately probably not successful. And you're likely not to talk to that profile of customer as frequently in the future as you learn why they're not interested in what you're offering. So glad you clarified on that. I think they're as valuable as they are at getting you towards something long term sustainable and scalable. And so I think there's just a really good rigorous objective assessment of Am I better this week and better this month than I was the preceding week or month if I learn something concrete that I'm doing and changing, going forward, that's the type of energy and the really early stage that I've seen, yield really good long term results. And that usually requires going well beyond a nine to five mindset. Because think about your established competitors, they've figured out how to make profit and scale, usually, right, and now they're on a nine to five cadence to end, maintaining it and sustaining it doing things that they know, have worked. because things change, though, they won't necessarily work forever, especially if you can innovate and do something better, cheaper, faster than that entity. But it requires innovation and iteration to get to that point where you're able to do that. And, and that's where you tend to have to go to be willing to go harder and faster than then that competitor, what

Grant  25:48
So you mentioned, okay, so you're you joined, there's like four of you, in a room with whiteboards with an idea, trying to build a business, learning hard skills, getting to experience the very difficult part of going from zero to one, is there a way for someone to replicate that without doing it?

Peter  26:09
I don't personally think so. But the exact way that you gain that type of experience will be different for everyone. I think that one thing I advise on people coming out of school that are interested in entrepreneurship. You know, I speak to many students at my alma mater at in their junior senior year, and they're like, I've got a product I'd like want to go build it and launch it. And in this often, but a very honest way, I let them know that you the chances of that being successful based on their experience that are lower than if they keep that idea and energy, and then go learn from a company that's in operation by joining an early stage company to see the type of questions and problems that those founders are facing. But not to have the same risk and onus on them to figure it all out themselves upfront, is not the right advice for everyone, I just seen it more often than not be productive. And so I don't think that there's any substitute for real hard experience, especially in a business and early stage business, they tend to be certain things that aren't kind of taught in a classroom and certain things that you have to be out in the live market working on like trying to get an actual customer to pay for something that I think the 1,000th time you're doing that you're better than the first time you've you're doing it no matter who you are just getting just based on experience and learning where you should be. And so I think there's a little bit of that of if you've joined an early stage company for a couple years, you've learned a little bit about the various functional areas within a company, who are the type of individuals that tend to thrive in various stages and various functional areas. How do you spot talent as, as an operator, both either an external firm or somebody that you might hire as a contractor as a full time employee, that that comes from actually observing people with tasks and objectives, and seeing who is successful at them. And then who's not successful. And again, the element there is just there's no substitute for actually being in the room with a colleague. Over the course of six months, knowing what you were both working on knowing what their goals were, and then seeing objectively did they hit their goals or not? And why? And so the more times you've seen that cycle, the better you can think about, well, what goals should I have set? Or how might I have tried to accomplish those differently? Or when I have to set goals for somebody? How can I make them both achievable, but stretch to the point that we get better results than even we could have anticipated? So I just think there's elements of business building that have layers and multitudes underneath them, and really requires experience to sharpen up on those. And I think some of the most successful, you know, really early in their career founders showed maturation as well as they ran their businesses over time. And certainly, again, would say that they could have never stopped learning. And they're always trying to soak up information from other people who have been there or who were actively in the market in various capacities. So I hope that helps and frames that part.

Grant  29:19
Yeah, for sure. So you were you were at 3Ships. And then you ultimately ended up transitioning to Tough Mudder, which is where you met Lee, who co-founded Gradible with us. Could you tell us a little bit about that experience?

Peter  29:32
Yeah, absolutely. So again, had the good fortune of joining immensely talented team at Tough Mudder at truly an inflection point for that business when it was going through a period of hyper growth. Which again, is another thing I try to tell people that are early on in their career. If there's any opportunity you have to get exposure to a truly rapidly growing company and I define that by at least doubling year over year but tripling or quadrupling or five axing is really hyper growth. You should do it because that's again, experience that's invaluable. So I was fortunate joined as about the 30th employee, a year and a half later, when we found it grabbed a ball, it was 150 employees, just to give a sense of how quickly it grew and what timeframe it was. And it had a really strong product market fit at the time I joined the company. And I hadn't had the fortune of working with them for a year prior at 3Ships. And so at that point, it was really about how do we scale it, we've got something repeatable, we're still we're still fine tuning exactly what's repeatable about it both in our own business operations. And on the consumer side, on the demand side, how we reach those customers, and how we get them interested in the event and then participating in the event, which is where I focused, personally, a lot of my energies. And ultimately, again, things I took away from that experience, again, very technical in the use of Facebook, Google and YouTube, to drive customer awareness and activation, I get a great email marketing team as well, to continue to hone our chops there, a lot of success in that team. And then also just about the growing pains that will happen when a business is going through a period of hyper scale like that. And I think one thing that I took away was just how quickly systems can break or need to change when the volume that's put on them changes quickly. It's very applicable in technology development as well, but certainly in in any operational capacity in a company, whether that's in your finance team, or your operations team. And you're to just quick salient examples. As we were scaling from kind of 12 to 30, to 70 events. Each of those events was done at a local level, and required participation with 50 to 100 different small businesses that were providing services to that event. So you multiply that by the number of events we had, we all of a sudden had an absolutely crazy scale in our accounts payable system, that was very difficult to anticipate, with the success the company had. And I ultimately helped work on the system that needed to replace the existing system, which was just a lot of people doing yeomen heroic efforts to process 100 invoices a day to make sure that the events went off as expected. Ultimately, we needed something much more scalable and technically driven to accomplish that level of scale. And it changed in a matter of three to six months that that became the critical path and most important part. And then on separately on logistics, as the number of people attending the events doubled and tripled with the success we were having. We had to rethink all sorts of elements of the event delivery, such as parking and ingress and egress to the events as the scale of individuals that were moving through those same points went from three to 10 to 20,000 people. And so those are all fascinating challenges that I got exposure to a lot of really, really bright, talented people thinking about creative solutions to and I think they're another just thing I've always taken away is we had a really diverse set of backgrounds and thinkers on the team because it combined to be successful elements as diverse as construction and strategy and consumer marketing and operations. And so it was very interesting and exciting to get a new challenge which were happening by the week and month, given the growth rate with a bunch of people with different backgrounds, to think about it. And just to hear the different approaches that people had, you know, I was coming from the really, really early stage startup with a marketing and customer acquisition lens. But others who had come from a construction or process or large scale event operation mindset had very different problem solving styles. And often, their approaches were more effective than mine. And so that really taught me as you're scaling an enterprise, the best thing you can do is try to get diverse backgrounds and points of view into the company and really think about all the layers and different planes of diversity, right? You know, all sorts of different people from different walks of life who have different training and experience will come in and add value to your company in very interesting ways. It's 100 times over if you're a consumer-focused business, because you're out there talking to people of every walk of life, with every different background, age, sex, religion, you know, gender, race, you just name it, you're going to need to connect with people and meet people where they are. And so you should have that behind your walls in terms of what you're putting out there into the market if you can, if you can get it and that was certainly a huge lesson I took away from the time there.

Grant  34:51
I'm curious, since the company went through this incredible scale and you mentioned the pressure that puts on system Which makes me think of I think, as Reid Hoffman, who said, I'm not 100% sure, but you should do unscalable things before you try to make them scalable.

Peter  35:09
Yeah. Paul Graham from Y Combinator. Yeah, absolutely.

Grant  35:12
How do you think about? When do you know that you've got to stop doing unscalable things and start automating things?

Peter  35:20
Yeah, that's a great point. I think one thing that's so core too, is often in entrepreneurship, we can get caught up in the novelty of what we're working on and building and it necessarily has to be that to resonate and get to that type of growth. But you also remember something very fundamental, you're in a business, you're trying to make a profit, that means that you have to have your revenues exceed your expenses, right, and you have to manage the amount of cash you have, because that is the lifeblood of a business, you have to pay for things, put them together in some way, shape, or form, whether that's people's time, or actual raw materials and deliver a product to somebody that they pay for, and have those dollars that you're getting back be more than the input costs. And you need to measure that. And so that fundamental thing, you cannot manage something that you cannot measure. It just it's something I stress over and over again. And so I think it is first and foremost have a really good system of gathering data about your project, enterprise, whatever it is period, you should be thirsty for any source of information that you can track measure and observe changes in over time. And so that gets me to the answer to your question of how do you start doing you know more automation and stop doing things that are, quote unquote, unscalable, or probably too costly to do every time to get either a transaction or an outcome you want as a business. And that to me is when you can measure and start to see that those transactions, those customers are coming to you in a way that you can measure and show is growing. And therefore you can think about what's causing them to grow, to try to do more of those activities and focus your energy there and away from things that aren't adding to the growth. But you can't get there if you're not measuring your growth and being very rigorous and thoughtful about the data that indicates to you that they are in fact, coming to you and making those decisions in a way that's much more inbound than you having to do something that isn't repeatable or scalable.

Grant  37:30
When you think back on 3Ships, or excuse me, not 3Ships on Tough Mudder. Or maybe even, like abstracting away from Tough Mudder. Specifically, when you think about growth and scale. When should a business pull back on the reins and slow down? purposefully?

Peter  37:49
Yeah, that's a great question. I actually had a very similar situation with a company that I'm working with and helping think through their growth strategy. And they had a holiday based campaign where they were thinking about when, when is too much. And one concept that's always struck me is the concept of the tragedy of the commons, which isn't perfectly applicable, but you broadly goes that there's a point at which a public good, the 1,000th, and one person that's it consuming, it dramatically degrades the experience for all who are enjoying it. And you know, ultimately, it's using lots of different concepts. But that's one that I tend to ask and play back to companies that are growing quickly and concerned with, are we growing too quickly? Should we actually moderate the growth in some way, shape or form? That's again, how are you measuring the satisfaction or success of the company or the customers that you serve? Because ultimately, if that's starting to really fall off, and you're getting low satisfaction, or you're not getting repeat purchase activity, ultimately, you need to focus more on enhancing the experience for those customers so that they will in fact return and potentially take away some of the resources from getting net new growth or net new customer acquisition.

Grant  39:05
Yep. So through your time at Tough Mudder, you were sort of an employee somewhere, you were getting paid by someone but participating in in these sort of startup and entrepreneurial pursuits. And then you transition to do your own thing. Tell me about that.

Peter  39:22
Yeah, sure. So, again, the words from Jeff Giesea were in my head about sometimes you just need to make the leap. And I felt like I had the hard skills developed and the team to make that leap. You know, and ultimately, again, it's invigorating, it's exhilarating. It's also terrifying, all at the same time. And, again, I think that if it were if it were straightforward, more people would do it. It's in fact, very difficult to start an enterprise and have it succeed and requires both great fortune and great fortitude. To get to that point, and again, I think that even in the first three to six months, the kind of mode of operation that that I had, I wasn't going to be sufficient for the ultimate success, we had to increase the pace and increase the focus. And really be relentless about that, that kind of self-assessment and, and focus on the outcomes that we were trying to drive. You know, again, one of the things that we focused on and, you know, you know, because we all read it and focused on it quite closely was the book, getting to plan B, which talks about business dashboarding, setting objectives that are time bound in very short increments, and asking yourself how you're going to learn if your hypotheses that are embedded in your business model are, in fact correct. And being very direct when they're not and adroit and changing things, substantially, such that you can get to something that's a successful operating model. So I think those were things that I wasn't quite prepared for. But you know, again, at the at the time, there's always going to be I think things that you're going to need to learn and get better at, once you take the step and start your own enterprise, especially if you're going into it 100%, you're not drawing a salary or any other form of compensation, then the clock really is ticking for you to make it work such to the point that you can begin to sustain yourself through some sort of, of salary or profit from from the enterprise. And when that clock starts ticking, it's real, and you feel it. And again, you know, hopefully, that that again, inspires and drives the push that you have, when you start to really understand what runway is personally and as a business to figure it out and get to something that's workable.

Grant  41:55
So I think one of the things that so when I joined you and Lee had sort of developed a working relationship with each other, really respected each other and liked each other and wanted to set out and do your own thing. I had no experience with entrepreneurship and startups at that point, had some design skills that I brought to the table. And so I just learned a ton in some ways. I had the experience through Gradible that you had had, at previous experiences like 3Ships in Tough Mudder. One of the things when I think back on it, that I reflect on today is that when you're starting your own business, you really get to choose all the pieces, everything about what kind of product or service you're going to offer, what space you're going to offer it in, how you're going to price it, who you're going to, you're going to embark on that journey with, you know, when you're at a company, you can always point to someone else, you're an employee and complain about, oh, well, this is wrong. And that's wrong. This is out of my control. But there's, you can't hide from the fact that you're completely in control. When you start your own thing. And every bad decision, every bad thing that happens to company, to some extent is your fault. Like it's hard to get past that. I'm curious, we you know, we ended up spending some time exploring the events space, and searching for product market fit in in that maybe in like comparable area to sort of what Tough Mudder was doing. We ultimately ended up identifying that student loans were a really big problem and that there was a big opportunity to create a business to address that problem. When you think back on the beginning stages of Gradible, are there any like fundamental decisions you would have made differently about the market or the model or the business? Now that you've had some time to think about it?

Peter  43:59
Yeah, I think two critical ones that I certainly would have thought about differently or done differently, given the experience I have now. And the first is understanding of the business model and where revenue is generated in any kind of market you're thinking about going into. And we didn't have as rigorous an assessment of who was actually paying. And the customers who had the greatest demand for services we tried to offer usually had no ability to pay for those services. And there wasn't an entity that was generating revenue in the system, such as student loan servicers that had any economic incentive to bring in new vendors that could enhance the experience of their end customers, because their customers, the people receiving services, were paying them, the government was paying them and paying them on really large contracts and at a portfolio basis. And so if we had known that and really scrutinized and understand, understood, sorry, where cash was flowing in the industry from which entity to which entity under what circumstances, the business model considerations I think would have been different or at least different faster. And we could have saved some time potentially had more runway to put against some of the technology that we ultimately developed. I think the second one is the timing of taking venture capital. Once you take venture capital, there are three options for your business acquisition, IPO and failure. There are different outcomes for a business that has not taken venture capital. And I think there was the potential that the best possible product and an answer that we could have developed based on the skill sets of the team. And the market opportunity we developed and identified was actually a different type of business that could have thrived without venture capital, and would have had something more akin to a professional services structure, where ultimately it was producing dividends or profits back to its owners, rather than ultimate return to private equity or venture capital. And so you know, any first time founder, there's a lot of great writing out there about when to take it and how to think about taking it. Obviously, if you're the first time and certainly it felt like this for us viewing taking the capital, getting someone to say yes, to write you a check felt like the objective. And it is a core one, if you're running a business, you are responsible for its ongoing operations, the cash that it has, that's a core number one responsibility to make sure it has enough cash to fund its operations. However, just taking venture capital is not an objective, right? That's a source of capital to meet the operating needs of the firm. And ultimately, it comes with stipulations, it comes with the necessity to seek a return for those participants for the risk they've taken for participating with you. And so I think that that was just something I didn't fully understand at the depth necessary on what type of decisions it would constrain in the future. And that, again, was my responsibility to understand and so again, take full responsibility for doing it and had an outcome that we're all really proud of. But ultimately, again, I would say that I didn't understand it at the level, certainly that I do now. And certainly the understanding that I try to impart on individuals who are considering doing that where it's not a very straightforward decision. And, you know, on that kind of when is it a straightforward decision? It is a straightforward decision connected to a question, you just you just asked, When the dollars necessary to fund the operations of the business are being constrained by serving existing customers and cannot go get a large pool of potential customers that can be predictably acquired less than the cost to serve. And that hits a lot of businesses. And they're, you know, looking at six months left of runway, because they are growing so quickly that their service costs are scaling really, really quickly. That is a classic, excellent opportunity to take venture capital to fuel growth. And ultimately, if you're finding yourself having to tamp down growth, because you can't afford it, that's a great recipe to go get capital. And there's capital that's seeking that type of growth at all times. If you're much earlier on and your revenues not predictable. And your model is not really predictably scaling. And you are not converting customers at a predictable level, then that capital can be problematic for you, because the expectation is you have figured out a scalable way to grow. So those are just some considerations that I certainly with the lens of additional experiences I've had, would make different decisions on now.

Grant  48:43
So I'm going to play this back to you let me know if I've summarized it appropriately, it is probably not a good idea to go and raise money. If you don't deeply understand who your customer is. You haven't built a product or service, put it out into the market and validated that people either will sign up and use it in in hoards or will pay you for it. And your primary reason for the challenges that you're facing or that you're struggling to scale because of money not because of anything else. You don't want to skip over those two and try and fundraise. And I think it's a good thing to reiterate because not only will it be way, way harder to actually get money, like if you haven't met those, those sorts of fundamental criteria. It's going to be very cheap. No one's gonna want to give you money.

Peter  49:41
Yeah, I'm not writing you a check. Yeah, this day and age it's low cost enough to build something to validate your thesis right and to ultimately find a way to show a predictable unit that you can do repeatedly. If you have capital to fund marketing And the scale on cost to serve and all of the technical needs that you'll have as the product grows in complexity. And again, I think that there's certainly I held this view at one point. So I know it's out there is that you need to raise money to go build something, and you quickly are disabused of that notion. So it doesn't last very long once you try to go raise money to build something. because no one's interested in funding a schematic, right, they're interested in pouring money on something that that is that as is smoking as embers and can really pop if it's funded appropriately, but you have to demonstrate that you can, you can build that small fire first, and you know how to get a spark and you know how to sustain it, and it doesn't go out immediately. And so ultimately, that's the time where I am in favor of someone raising institutional money now, your friends and family, your own personal investment, that's very different. Again, you have to get everyone's risk tolerance appropriate, and you know, calibrate expectations appropriately. But at that early stage, that true seed financing usually is necessary. Your own personal capital, and those of your co-founders is, is by far the best way. Because the accountability starts and ends with you. And the expectations starting with you. Sometimes you'll need more than that, again, friends and families is the next place to go with its own set of baggage and needs. But you know, gonna be different in the mentality than the venture capital. And ultimately, if you've just taken friends and family money, again, you have more paths to your business over time paths to return the capital to them and in different expectations. So you can build a sustainable business that's smaller but profitable, and gradually pay that that investment back with the dividend. You can't really do that with institutional capital.

Grant  51:57
You mentioned something earlier thinking about, I asked the question, How can someone get that experience of four people in a room with a whiteboard, in the sort of like early stage of a startup and I think, now reflecting on this conversation about fundraising, there absolutely is a way to get that experiences, go find three people find a room with whiteboards, and in your free time, try to start a business. And I think the big, it's important to emphasize in your free time, because, you know, you know, if you're in college, that's great, you may have a lot more free time you don't need it don't necessarily need to have a job. But if you're working full time, you don't necessarily need to quit your job to start a business, you can continue to work full time, and spend nights and weekends working on a project. And that is a great way to build skills that you don't have already. Because you're going to be forced to do things that you don't do in your day job where you do just one sliver of what the rest of the business does. So that's you're going to learn a ton. And you de-risk, the fact that you're not quitting your job, you're not losing all of your income. And then putting all this pressure on this new project, do it in your nights and weekends build something. And if you can't build something yourself, find someone who can because there are enough people who can build things these days, and the software tools that are available for creating things without being a traditional software engineer have just become more and more available. And you know, didn't make something and put it out in the market, have people interact with it, see if it works and see if it doesn't and then pivot.

Peter  53:37
it's very true. And the other one would be if you're willing to give your time to an early stage entity, they usually will take it if you're persistent enough. And you show those same building blocks that you're willing to pick up the phone or email someone get a bit of their time, and then find a way to add value to them. Whether it's answering phones or customer support emails, call it an internship, do it for free, and you'll get exposure. Now they're thinking about and doing things. That's another way that you can get access to the energy and the thought processes of a startup. But you know, saying hey, do you have a job for me is almost never gonna work if you don't have skills that match something that they need at that point in time. And many of these early stage companies are going to have one or two job openings a year. So if someone's like, how do I get in? How do I get started learning about early stage companies and participating in early stage companies. To your point, it's just that simple. You can participate in your own or you can find a way in to participate in another just have your expectations correct about what you can add to them because that's the lens that the entrepreneur is likely going to be thinking through.

Grant  54:36
Yeah, and the skills that you're going to acquire during that process are, are better than pay at that time. If you don't have them, they will serve you through your career, regardless of what you decide to do afterwards. Yep. You mentioned you know, we got into student loans. And you know, there's this challenge that the student loan market in the United States The biggest entity is the government is the federal government. I'm curious, as you think about, you know, having now operated in the student loan space for guys coming up on a decade, what are your thoughts on any advice you have for people operating a business when the government is a big player in the space.

Peter  55:25
Don't go into that space. Again, besides that, you got to know who the decision makers are, you got to know the parameters under which they make these decisions and don't have any assumptions about those decisions being made in a kind of commercial way. And they shouldn't be it's a different set of entities with different objectives. Government agencies or, or entities are not profit seeking, the individuals within them aren't going to be operating like your counterparts in a for profit enterprise that you might be trying to compete with, or, or or partner with. And just know that observe how they're operating, observe how things get done. And think about how you can align your business's objectives with those. Again, there's lots of really successful entrepreneurs who have worked in regulated spaces or worked directly. in government contracting, it's just as a different mode of operation, your timeframes, your expectation of what you can just go do or hack into, is going to be very different if you're if you're in a really regulated space, or in a space where the government controls aspects of the market. And ultimately, you need to understand very closely and deeply what those elements of control are. And if they change, how will your business need to react or respond to those changes?

Grant  56:53
So I'm curious, what, what do you say you're currently operating at CommonBond is the CFO, what gets you excited about startups these days?

Peter  57:03
You know, I'll always be really excited about the passion that a small team or one person has for a concept or product that they think can make consumers lives better, or a business's operations more effective. And ultimately, the lives of people spending their entire working days in those businesses. You know, always amazed at some of these products that have created such great surpluses for their users. You know, that problem, I described that Tough Mudder would have been a heck of a lot easier if we had built calm, which we leverage in a huge proponent of excellent, excellent software for accounts payable, there's other great competitors out there, that's just one that I have a lot of exposure and experience with. And so I am a big believer in the power and potential of free enterprise and of entities and businesses to make real positive impact. And so that combination of a passionate team, who has an idea that they're certain can make things better, and even demonstrating that they can make things better for people is something that I get really excited about, I think, you know, if it's more on the question of like trends, or things that I think are really interesting, you know, I certainly having been exposed to the technology industry for over a decade, the democratization or the no code movement are fascinating. Obviously, you're always going to need extremely talented engineers, if you're going to build a product or service that's technology dependent. It's really a matter of to what degree is your business going to be technology dependent, rather than Is it a technology business these days, is certainly you have 100% technology plays, and then every other gradient there where your company is going to have core technology, it's going to need bespoke systems. So that ability to use no code platforms to deliver that is starting to be very interesting in terms of the speed and efficiency, and also just the empowerment of business professionals who can add that to their skill set. It really helps them scale themselves personally and professionally. And I'm fascinated by that, to see how that continues to play out. I think we remain, you know, in the Bezos nomenclature at day one of online and the internet may be day two at best. The acceleration of Digital Trends here in the last year, given the pandemic is just is just showing just how quickly things can continue to move to an all-digital experience or direction. I think that's an ongoing trend that's nowhere near run its course and so I'm watching and thinking about ways that things we've taken for granted either happened in an offline capacity or mostly offline capacity quickly get digitally augmented or delivered entirely in digital ways they tremendous opportunities still there, given the inherent cost advantage and the inherent geographical advantage of both your market as well as your talent that could work on something given those trends.

Grant  59:59
So If you are going to, you know, put some of your money to work, you're going to make an angel investment in a in an early stage startup, what are like two or three of the most important things you're looking for?

Peter  1:00:12
Yeah, so it starts with the founders, it starts with why they're doing it, and then what they're doing. And so that's got to be compelling. They've got to be high integrity, they've got to have that, that run through a wall factor. And you know, when you see it, and I've just had the great fortune of working with, with lots of entrepreneurs in various capacities that have that. And I really have not encountered a successful entrepreneur that doesn't have that capacity, even if they are introverted and soft spoken. The tenacity that it takes to be successful in entrepreneurship is a common thread. So I'm looking forward to trying to understand aspects or examples of that tenacity, then it's, you know, why me? How can I be helpful? And I'm certainly looking for those opportunities where, where I might have a skill set or background that matches with their needs at that stage. And ultimately, given that I've seen a couple specific things, there's going to be a range of different companies that's going to be particularly relevant on the challenges that they have. I'm looking for how can I personally add value because I don't want to participate in a company that I'm not actively helping, that's just not my personal goal with investing, it's to make an investment and be active in constructive ways. So that's another NET Core one in any of the blocking and tackling it's, you know, materials that convey the business in a smart succinct way. And then an operating model that's plausible that I can really digest and think through with with the founders.

Grant  1:01:46
Any resources you would recommend to early stage, like, you know, either startup founders or people are just interested in in starting a small business or a side hustle, like blogs or books or resources that have been

Peter  1:02:00
Yeah, definitely everything Paul Graham's written on the Y Combinator, ecosystem is fantastic. Getting to plan B is my favorite book about early stage business building and data collection and hypothesis, kind of collection and, and testing. And then you know, Paul Graham's wife, Jessica Livingston, wrote a fascinating book called conversations with founders, I'm probably butchering that title. But if you look up her name, it's a fantastic book, she wrote, having similar type of conversations with Y Combinator founders and other successful founders in Silicon Valley that is just replete with interesting anecdotes and perspectives. And more than anything, just go find information from entrepreneurs, they tend to publish, they tend to participate in podcasts. And there's a lot of information you can glean and just apply to your own perspective, take what you like, take what works for you.

Grant  1:02:53
Any advice you have for me and my sort of budding new project makers? Yeah,

Peter  1:02:59
I mean, it's consistent and specific, because you're at an early stage, just like many others, like I've been before. And it's, the more you can get your hypotheses on paper, and think about the data that will tell you if you're right or wrong. The commitment to review that and to try to make as the progress concrete as fast as possible, is really the core unit and then thinking about who are the right people to help you. And in, in, in what capacity because you cannot possibly build something interesting in scale by yourself. It's going to require input and effort from a range of people. So the sooner you understand who they are, what their skill sets are, how they complement yours, the faster you'll grow and get towards what you're ultimately desiring to build.

Grant  1:03:45
Awesome, Peter, while I appreciate it, man,

Peter  1:03:47
my pleasure Grant anytime

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