Category: Ideas to Invoices Podcast (Page 9 of 10)

The general partners of True Wealth Ventures want to see more female led companies get venture capital investment.

And they want to see more female venture capitalists making investments in the industry.

The $20 million True Wealth Ventures fund invests in women led companies in the sustainable consumer and consumer health industries.

Sara Brand and Kerry Rupp, general partners of True Wealth Ventures, founded the VC firm after identifying problems in the VC industry. They recently sat down with Silicon Hills for an interview for its Ideas to Invoices podcast.

Brand, who has three degrees in mechanical engineering, spent 20 years in the semiconductor industry and owns a brewery, (512) Brewing Company with her husband. She spent time in venture capital, in technical roles, operational roles and management consulting.

“Looking back, I was pretty much the only woman,” Brand said. “Mechanical engineering, beer, semiconductors, VC at my last role at Advanced Micro Devices I was asked to be the executive sponsor of the global woman’s forum. It was at that point that I realized that I was the only vice president that was a woman that had any technical or operational background and I had not realized that and was very surprised to find that out because I had been so used to being pretty much the only woman. But I couldn’t believe that that was the case.”

That’s when Brand began considering the numbers behind what it means to have more women in leadership positions. She documents an extremely high correlation between women in leadership positions and outstanding financial performance, Brand said.

“So, I started getting really interested in what companies could do to improve or increase the number of women in leadership positions,” Brand said. “And then knowing I wanted to get back into venture capital already, I started looking at the venture capital space and saw that it was a humongous gap in the venture capital space.”

Because of the state of where things were and the opportunity, Brand co-founded True Wealth Ventures with Rupp.

“At the time, I had been the CEO of DreamIt Ventures, a startup accelerator operating in multiple cities with a $20 million fund,” Rupp said. “They had done a program specifically focused on woman entrepreneurs because there was an underrepresentation of women, compared to men in all the accelerators.“

“I had some really strong woman entrepreneurs that had gone through my Dream It programs, but had struggled to get funding,” Rupp said. “And I know it was explicitly in some cases because they were female because they had instances where they met with venture capitalists who told them we don’t invest in women.”

Overall, True Wealth Ventures will invest in 12 companies during the next four years with initial investments ranging from $250,000 to $500,000.

So far, True Wealth Ventures has looked at hundreds of companies and has invested in two: UnaliWear and BrainCheck. UnaliWear is a smart watch for seniors created by Jean Anne Booth, a serial entrepreneur, in Austin. BrainCheck is a mobile brain health tracking solution that was the result of 20 years of research at Baylor College of Medicine and later spun out of the TMCx Innovation accelerator in Houston. Yael Katz is the CEO of BrainCheck.

“One of the things that is pretty fascinating about our investors is that 80 percent of them to date are women and that is really pretty unexpected and unheard of in the venture capital industry,” Rupp said.
Somewhere between four to six percent of venture capital partners today are women, but if you look at who is making investment decisions is might be closer to one percent of the venture capital investors, Rupp said.

“We are bringing a different audience to VC investing,” Rupp said.

A lot of the investors are women in a couple or family office or foundation that made the investment decision, Brand said. Today, women are said to hold 40 percent of the U.S.’s investable assets, but that is projected to go up to two-thirds of all U.S. investable assets by 2030, Brand said.

“Women haven’t been investing very much in venture capital or even as angel investors – having those numbers increase is really exciting on making sure we’re sustaining the innovation economy in this country,” Brand said.

True Wealth Ventures’ isn’t promoting a feminist manifesto, but its investing strategy is rooted in a deep statistical analysis that shows businesses and startups with women in leadership positions outperform ones that don’t have women.

A McKinsey & Co. study called “Women Matter” showed that in their database of Fortune 500 publicly traded companies, the top quartile of companies in that database with women in leadership positions saw 41 percent higher return on equity and 56 percent higher return on earnings, Brand said.

Looking at the venture capital industry, Brand saw there was a massive disconnect even more than the corporate world, she said.

“If you look at who is getting the money in venture capital, less than 3 percent of all VC backed companies are women led and women CEOs and about two percent of overall VC dollars are going to companies with women CEOs,” Brand said. “Yet there are similar studies that show similar outperformance for women led companies.”

Kaufmann Foundation did a study that showed women-led VC backed companies saw 35 percent higher returns and 12 percent higher revenues using a third less capital, Brand said. Yet if you look across the entire country, there are very few funds that have women general partners that have any kind of gender diversity strategy, Brand said.

“There are about a half dozen,” she said. “And they are generally in New York and California so we’re the whole strategy for the central part of the country.”

Unconscious bias exists in the venture capital world in the pitch process, Brand said.

There are crowdfunding platforms like Kickstarter in which 35 percent of the successful deals are led by women, compared to 2.7 percent of venture backed VC companies are led by women, Brand said.
There’s been a bro culture in the technology industry for a long, long time and it still exists, but the reactions to it are changing, Brand said.

“A year ago, the Ellen Pao trial to now where firms are taking investors out of leadership positions within 24 hours of alleged harassment accusations becoming public,” Brand said. “That is unprecedented.”

Pao, a female venture capitalist, filed a gender discrimination lawsuit against her former employer Kleiner Perkins Caufield & Byers. She lost the lawsuit but the case did draw massive attention to the lack of women in the venture capital industry. Earlier this year, a former Uber Engineer, Susan Fowler, wrote a blog post outlining alleged sexual harassment at Uber during her time there. Recently, Uber’s board fired its CEO Travis Kalanick stemming from allegations of a workplace hostile to women. And an Uber board member also resigned in June after making a sexist comment during a board meeting.

“We need more women in VC firms,” Rupp said.

“There are so many all men VC firms, why can’t there be some more all women VC firms?” Rupp asked.

The lack of female VCs and the lack of female led companies getting funding is a systemic problem that we need to think about more broadly, she said.

For more listen to the Ideas to Invoices podcast and please rate and review us on iTunes.

In 2005, John Berkowitz was getting ready to graduate from George Washington Unviersity and was exploring what to do with his life.

His childhood friends, Ben Rubenstein and Nathaniel Stevens, convinced him to join them in building Yodle, a provider of online advertising and marketing services to small businesses.

Eventually, they grew Yodle into a company with more than 1,500 employees and $200 million in revenue and in 2016, Web.com bought Yodle for $342 million.

At Yodle, Berkowitz served many roles including launching and managing its $50 million enterprise division and most recently managing all strategic relationships for Yodle as vice president of business development.

Today, Berkowitz is CEO and Co-Founder of OJO Labs, based at WeWork on Congress.

Berkowitz recently discussed his entrepreneurial endeavors on the Ideas to Invoices podcast.

In 2005, moving small businesses from print media to the online world was fairly novel, he said. With Yodle, they were in the right place, at the right time with the right idea and they had the background to understand the problem they were trying to solve.

Berkowitz is the son of a CEO and founder of a small construction company in New Haven, Connecticut. Rubenstein is the son of a lawyer and Stevens is the son of a car dealer.

“So we deeply understood the pains of small business owners,” Berkowitz said. “The idea resonated. We did some research and found there was a large market of these small businesses that had huge needs. Jumped off the cliff and started building the company.”

They walked right in through the front doors of small businesses to pitch their idea.

“People were spending so much money in a place that people were going to less and less,” Berkowitz said. “The idea of I’m going to move you from the print Yellow Pages to Google was novel enough that we got their attention.”

They faced a lot of challenges in the early days. In 2005, there was a lot less documentation and best practices for starting companies like how to incorporate, Berkowitz said.

“Frankly I think It was as hard then as it is now to figure out the right business model, get the right people and get the resources,” Berkowitz said.

They tried different go to market strategies like knocking on doors, dialing for dollars and going to trade shows.

It was pretty early on when they realized that they had an immediate product and market fit.

“We knew we had a problem that needed to be solved and that customers readily identified with that problem,” Berkowitz said.

Next, they had to figure out how to effectively scale the business before other competitors. Some huge Yellow Pages companies and large publicly traded companies were entering the market.

“It was very much a David vs. Goliath kind of market grab scenario that we had to adjust to,” Berkowitz said.

They raised a $3.5 million Series A round of venture capital after a year in business from Bessemer Ventures to scale Yodle.

The company faced a lot of rejection from venture capitalists, customers, and others in building the business. Berkowitz still doesn’t like rejection but he learned to accept it and draw strength from it.

In 2011, New York-based Yodle entered the Austin market with its acquisition of Profit Fuel, a company that specialized in search engine optimization for small businesses founded by David Rubin, who is Berkowitz’s co-founder at OJO Labs today.

“They fit perfectly with Yodle’s culture,” Berkowitz said.

Austin became Yodle’s biggest office, growing from 200 employees in 2011 to more than 900 employees.

Berkowitz came to Austin in 2011 for six months but he fell in love with a woman, who became his wife. And he fell in love with Austin. He decided to launch his next venture here because Austin is a great place to launch a startup with lots of talented and experienced executives.

OJO Labs builds an AI technology that automates conversations and creates data driven personalized experiences to help consumers make better decisions and can be used by companies to create deeper engagement with consumers and provide more value to them. It is focused on the real estate market right now. Its personal assistant is based on true artificial intelligence.

Real estate agents and consumers are using its product in a limited way today. They plan to scale nationwide in the fall.

OJO Labs raised a $5.8 million Series A round led by two Austin venture capital funds: LiveOak Venture Partners and Silverton Partners. The company also made the Austin Chamber of Commerce’s A-List of the Hottest Startups in 2016.

Berkowitz said OJO is the biggest opportunity he has seen in his career.

“The incredible team working on OJO has built a truly revolutionary product,” he said.

For more on Berkowitz’s interview, listen to the full Ideas to Invoices Podcast.

Editor’s note: Ideas to Invoices would like to thank WeWork on Congress for hosting us this week.

By LAURA LOREK
Publisher and Reporter with Silicon Hills News

As a kid growing up in rural West Virginia, Chris Taylor launched his first entrepreneurial venture, ranching turtles.

In the summertime, he would capture turtles from the woods and create a “Turtle Ranch” that people would pay $1 to visit. At the end of the summer, he would let the turtles go. And do it all again the next year.

Today, Taylor is one of Austin’s most successful bootstrapped entrepreneurs. He founded Square Root, which ranked number two on Fortune Magazine’s list from Great Places to Work of the 25 Best Small Workplaces in the country.

Before launching Square Root in 2006, Chris held operational and strategic roles in several Internet and software companies, including TrueCar, US Digital Gaming, Pricelock, CarOrder, Wayfare Interactive, Brighthouse and Trilogy Software. He graduated Phi Beta Kappa from Carnegie Mellon University with degrees in Computer Science, Mathematics and Psychology.

“I started Square Root in 2006 and at that time I was an entrepreneur looking for an idea,” Taylor said.

He was 10 years into his career and he had some money in the bank. He had a lot of experience. But he didn’t have that big idea.

Initially, Taylor went to Nissan and they agreed to hire him to solve a problem for them in order management.

“The first idea ended up not to be a very good idea,” Taylor said.

But it did provide cash flow to build his team. And in 2009, the company started working on solving a problem for the electric car market, Taylor said.

But in 2010, four years after he started the company, Taylor hit on the big idea: Square Root makes store relationship management software for Nissan and other customers. Its software helps automotive sales managers run their dealerships. And the company has recently entered other markets in the retail industry.

Square Root not only pivoted a few times on its way to find the right product with the big idea, but it also changed its name from Oceanus to Square Root around 2009.

“Everyone thought we were an oceanography company,” Taylor said.

Square Root emotes math, data science and all the right things, Taylor said.

Today, Square Root has 55 employees and $12 million in revenue.

To date, Square Root has not needed outside capital, it’s been completely bootstrapped, Taylor said. Now it’s exploring options around raising growth equity money to really increase the size of the company, he said.

Austin is known for its scrappy, bootstrapped culture.

Taylor gives a talk on the three terrors of bootstrapping. The first one is coming up with the idea, Taylor said. The second is learning how to spend money to hire great talent and making the right investments, he said. And focus is the most important one.
Focus is one of the hardest things for a young entrepreneur to figure out, Taylor said.

It’s something he has struggled with too, Taylor said. Square Root had a product aimed at the electric vehicle industry, which is a personal passion of Taylor’s. When the new line of business, store relationship management software, started to take off, he made the decision to shut down that line of business. He fired 80 customers. He had to shift the company’s full attention to its flagship product. That’s when he first began to feel like a real CEO, he said.

At Square Root, Taylor has also focused on building a great company culture which has gotten the company national recognition.

Square Root’s campus is unique. It consists of five 1920s Craftsman-style houses, about a mile from downtown Austin. It’s dog friendly and the workplace has a “home away from home work” and family environment, Taylor said.

Maintaining its great company culture as it grows is extremely important, Taylor said. The big way to do that is to communicate regularly with everyone and empower the team to take over the culture and participate in it, he said. Square Root also writes down its values and its mission statement.
He also recommends entrepreneurs read Scaling Up and Traction. Those books are about how to get everything written down about mission and goals and how to put a framework in place to manage that, he said.

And Taylor is president of the Entrepreneurs Organization of Austin. As a sole founder, the organization has helped him to network and learn from other CEOs and founders in Austin.

“Surround yourself with people you can talk to,” Taylor said.

For more about how Taylor built Square Root into a profitable bootstrapped company in Austin, listen to the podcast.

By LAURA LOREK
Publisher and Reporter with Silicon Hills News

At a funding pitch to a venture capitalist, Ben Rubenstein, co-founder of Yodle sketched out a business plan on a napkin.

He showed the potential investor how Yodle was going to raise millions to capture the small to medium sized business market as customers for its marketing software.

At one point, he ordered a drink and the waitress requested to see his I.D. She didn’t believe the 21-year-old Rubenstein was old enough to drink.

“Here I am asking for millions of dollars and I can’t even order a drink,” Rubenstein said.

In 2005, Rubenstein launched Yodle out of the University of Pennsylvania with his childhood friend Nathaniel Stevens. They initially targeted the automotive industry. They also brought on John Berkowitz as a co-founder. For two years, they bootstrapped the company. Rubenstein slept on a AeroBed Air Mattress in his friend’s house.

In the beginning, they went door to door pitching their product to small businesses. It took them two years to get to one million dollars in recurring revenue. And at that point, they raised their first round of investment and moved the company from Philadelphia to New York.

They created the term Yodle because they wanted to create a Yodel or shout out for small businesses. They couldn’t buy the Yodel domain name but they could buy Yodle.com.

Rubenstein and his co-founders pitched more than 50 VC firms before they landed their investment. They were able to deal with the rejection because they had faced so much of it making cold calls on small businesses, Rubenstein said.

“With cold calls, if you make 100 phone calls and make one sale, you’re a hero, you’ve had a good day,” Rubenstein said.

To get customers, Rubenstein and his co-founders spent the weekend at trade shows demoing their software and pitching to customers. They eventually spent more time on the phone and hired a large inside sales team to cold call small businesses. With the advent of WebEx and GotoMeeting, they were able to effectively demonstrate the software online.

Sales were integral to the success of Yodle.

And Yodle recruiters would ask people when they hired them to talk about the first time they sold something, Rubenstein said.

Rubenstein launched his first business venture in fifth grade. He would buy Airheads candy and sell them for 25 cents a piece to his classmates. He only had 25 people in his class so soon he enlisted his friends to sell the candy in their classes and bring him the proceeds. At one point, a kid decided to launch his own candy business selling his product for 15 cents. But Rubenstein resisted dropping his prices. He sold out every day so he kept selling his candy at 25 cents despite the new competition.

“I learned at an early age how to sell things,” Rubenstein said.

Throughout scaling Yodle, Rubenstein learned a lot about how to hire great sales people and how best to sell the product.

Today, Rubenstein is putting all the lessons learned from Yodle to work at Opcity, a real estate technology platform that provides real estate leads to vetted brokers. He is using data, analytics and pattern identification to make the best matches that will lead to brokers closing deals.

Recently, Opcity raised $27 million to roll out the company nationwide. It is hiring. It plans to go from 100 employees to 300 employees by the end of the year.

For more on how Opcity is going to create an even bigger company than Yodle, which Web.com bought in 2016 for $342 million, listen to the podcast.

Editor’s note: Silicon Hills News recently launched on Patreon. Please visit the site to pledge just $1 a month to support the Ideas to Invoices podcast and other work we do at SiliconHillsNews.com. Thank you in advance for your support!

Zeynep Young is a serial entrepreneur who just became a venture capital partner with Next Coast Ventures.

In this Ideas to Invoices podcast, Young discusses what it takes to succeed as an entrepreneur and what she looks for when making an investment.

Previously, Young founded and served as CEO of Double Line Partners, an educational technology startup in Austin. And before that, she was portfolio director at the Michael & Susan Dell Foundation and an associate principal at McKinsey & Company.

Young is currently the CEO of milk + honey, a wellness and beauty company with a portfolio of day spas, salons and products in the organic, luxury market.

Alissa and Shon Bayer founded milk + honey in 2006 in Austin. The spa business has grown to five locations in Austin and Houston. Milk + honey is launching nationally, Young said. They also sell organic products like a natural deodorant online and through their stores, Young said.

After selling Double Line Partners to a private equity company, Young took a year off to spend more time with her kids and family. But she didn’t stay away for long.

“I think if you enjoy what you do it gets boring to be away from it,” Young said. “I love tech and I love spas and I love startups and I missed that. And it’s really fun to get back into business and starting talk about ideas that you’re really passionate about and working with people you really like.”

In the partner role at Next Coast Ventures, Young is looking for ideas where she can add a lot of value. The firm is built for entrepreneurs by entrepreneurs, Young said. Tom Ball and Mike Smerklo, founding partners of Next Coast Ventures, are both entrepreneurs who have built companies and taken them to an exit. Next Coast Ventures recently closed on a $85 million fund and is looking to invest in early stage entrepreneurs in the Austin area and similar tech markets.

“We look to invest in things that we really understand and have expertise in where we think we can add a lot of value beyond just the capital,” Young said.

At Double Line Partners, Young launched the company from zero dollars and grew it to $20 million in revenue from her dining room table. She spent six years as a bootstrapped entrepreneur building up the educational technology company before selling it.

Young will be looking at software, educational technology and retail startups.
Under 10 percent of venture funded companies are founded and led by women, Young said. There is opportunity there for VCs to reach untapped markets, she said.
“I think we should definitely have more women in venture capital and more women should get involved in,” she said.

That’s one thing that differentiates Next Coast Ventures. It is intentional around building diversity of experience, Young said.

Entrepreneurs pitching Young should have a customer focus. That’s the number one thing she looks for when making an investment.

“I think part of the thing I see missing in the space right now is that people who are first time entrepreneurs get very focused on raising the capital,” Young said. “And then the second thing they think about is how do I build a minimum viable product and then they start to think about the customers.”

As a bootstrapped entrepreneur, Young had to think about the customer every minute of ever single day.

“I think if that is sort of your third or fourth priority, it’s going to be very difficult to be successful,” Young said.

She doesn’t want to hear a pitch targeted to capital or how they are going to get the product done. She wants to hear about how they are going to reach customers.

What doesn’t play well with her is an entrepreneur talking about getting one percentage of a huge market. She wants to hear about specific customers.

It’s also important for an entrepreneur to understand the industry they are working in, Young said. They must have industry experience on their team, she said.

“I love innovative ideas that disrupt industries, but I think you have to know a little bit about the domain and the industry before you disrupt it,” she said.

Young also recommends that entrepreneurs work their network to find customers for their products and services as extensively as they work their network looking for capital.

And in the process, entrepreneurs will have to deal with a lot of rejection. But they should be open to the feedback from customers as well as investors.

“When you hear no, it doesn’t mean that the idea is bad,” Young said. “It’s just not for that person. Not every concept is right for every person.”

The sales process also is easier if an entrepreneur is passionate about what they are creating, Young said. But if an entrepreneur isn’t comfortable with that part of the business they need to add a team members who is, Young said.

“There’s no success without sales,” she said.

Editor’s note: To hear more tips on how to success as an entrepreneur, listen to the full Ideas to Invoices podcast interview with Zeynep Young, serial entrepreneur, partner with Next Coast Ventures and CEO of milk + honey on iTunes. And please rate and review the podcast. And thanks for reading and listening! Also, if you like the work we do at Silicon Hills News, please consider supporting us on Patreon. For just $1 a month, you can ensure that Silicon Hills News continues to produce quality local tech news. Thank you for your consideration.