Having worked in helping startups find venture capital funding, today’s guest now finds himself on the other side of the coin.
He took his experience of networking to fund and grow businesses to fund and grow his own startup, 4 degrees, applying machine intelligence to help companies maximize relationships.
He’s here to help you better understand the advantages and disadvantages of venture capital funding and the world of startups. Please welcome Ablorde Ashibgi.
Learn more about this guest:
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
thanks so much for jumping on learning from others. How are you doing great. How are you so good. Um, all right, so you got it kind of, um, a final of a conversation we’re gonna have here. So you, um, are behind the company, four degrees, which we’ll talk about. And you’ve also been in venture capital, which we’ll talk about, but for the listeners, they know, I like to start with two questions and question number one is what’s your background and what are we gonna learn from you today?
Yeah. Uh, so I think what you learn from me is, you know, how to think about relationship management in a professional context. Um, that’s been, my entire career has been in relationship driven industries. And so it’s a world they understand quite well. And that’s importantly a theme of our company. All right.
And question number two, what do you suck out of our day? I actually really suck at drawing. Um, if anything, if there’s anything more complex than a stick figure, uh, you got the wrong guy even way better off. Yeah. You know, my kid was drying last night. He’s um, he gets in these, these little cycles where he’ll draw for a while and then he won’t and they’ll drop her off.
And he was, he was doing some little YouTube sketches last night and, um, it’s pretty cool to see him jump on there and. And, and just roll with it. And he’s nine and sounds cool to, you know, it’s in dad mode and I really get kind of fascinated with what he ends up drying. So I guess that’s kind of a ramble, but it is what it is.
I promise you, he draws better than I do. Mostly you look at mine and he would say, you would think I was imitating like a very, very bad.
All right. Okay. So I want to talk about, um, Uh, venture capital, probably not so much. So I want to talk about your area of expertise, which is relationship management, but let’s kind of touch on venture capital and startups, just because, uh, give our listeners a bit of a background on you and better context as to why they should care about what you have to say about this topic.
So you give us a rundown on your world. And so your event Capitol before you got to your current business, four degrees, is that right? Yep. That’s exactly right. And what kind of, I mean, what kind of startups where you were, or what, what were you involved in with the venture capital? What was the, what were the funds primarily raised for?
Yeah, so the funds were primarily raised to invest in early stage technology companies. Uh, so think everything from seed. So. Companies that were, you know, a couple people and usually an initial product, but not too much more than that, uh, all the way to what we would describe as like series B and series C companies, the primary areas of focus for us.
So I would describe as like a series a or a series B. And so that’s typically a business that at least in the enterprise was doing, you know, a million dollars a year annually of revenue and fast growing. Um, and at the series B stage, oftentimes like multiples of that. So within five, $10 million of annual recurring revenue, uh, and so we were that period of time, I got a chance to be involved in like the sourcing and evaluation of thousands of different companies.
And so, uh, yeah, I learned a lot about a lot of different kinds of, at a relatively each forms of business that was really fun to learn about. A couple of things come to mind that I have currently fairly regularly about, um, you know, I do a lot of podcasts, myself and discussions and groups on, uh, startups and entrepreneurial life and the grind and all that.
And it seems like a lot of people nowadays, a lot of. Early entrepreneurs are first time entrepreneurs. They feel like the only way to find success is through VC money. And I was the total opposite. I’ve never taken a dollar. And in fact, I’ve never really even spent a dollar on advertising, which is ironic for a marketing company.
And so what’s your take and you might be a little, I don’t want to say bias, but leaning towards a VC just because that’s kind of your background, but do you feel like VC money is. The only way to really grow something funny enough. I’m probably biased in the other direction having been adventure. Right.
I think venture is built for a very specific kind of business. So I think a company that either is racing after what is like a very large market opportunity and has a short window to capture it. We’re one where like, there are benefits to growing really fast. Like you have a business as a for instance, this has what we describe as network effects, meaning every incremental like user or a company that uses your product, it makes it more valuable for everybody else.
And so in those worlds that make sense to, you know, raise some additional capital and maybe give away some equity in order to be able to grow and get to that scale very quickly. Um, by and large, I think one, most businesses. Don’t necessarily operate at a scale or a gunning for a scale to where venture makes sense.
I think venture is really only interested in businesses that they believe can be a billion dollar outcome. And I think that leads to a bunch of oftentimes suboptimal decisions in favor of find a gun for that. Um, until you end up eating, they give away like a lot of your company and the process. And I mean, not only in terms of like financial, like giving away, like stakes in the company, but also like.
Ownership of decision-making and the way you would like to ultimately run your business. I think taking a venture comes with an explicit and tacit agreement to gun for that kind of incredibly large exit to the exclusion of all the others. And so I typically say like, unless you feel like you absolutely need venture money and that venture money is aligned with what it is you were trying to do with your company.
I think you’re better off not taking it. There’s a way I think you’ll enjoy your life more. You will enjoy kind of the company you are building more. You will have more ownership over the long-term outcome. And so smaller exits make a lot more sense to you. If that’s what you want to do, where if you never want to exit and run your business forever, those are all options in a non venture kind of funded universe that go away.
As soon as you take that money. Yeah. You know, you bring up one of the, one of the main points. Why I. Uh, you know, I’m not for, or against VC, like a completely blanket statement, but one of the main hesitations I have when people ask my opinion is, is exactly what you talked about, about giving me ownership and decision rights.
I mean, I know, um, a couple of good friends have been fortunate enough to be involved in a lot of successful startups and exits, but they’re fucking miserable. Like when they’re, when they’re in the startup of a new business and they, they’re all excited and it’s sexy. Cause it’s a new thing and they’re like next week we’re going into fundraising.
And then I’m talking to a couple weeks later, like the life is. Already sucked out of them that fast, like just within weeks and, and that’s them knowing what they’re getting into and knowing that it comes with the territory. So I can’t imagine, and the shock, the, a lot of people first time, people that, you know, people take on VC money for the first time.
Being blindsided by that. And just, what is this? Is it just not talked about, do you think, or I don’t know why people don’t realize that until it’s too late. Yeah. It’s glamorized, right? Like we all see, you know, the Facebooks and the Twitters and Snapchats and, you know, uh, the Cloudflare’s of life’s of the world where people go from this thing, that was an idea to being incredibly wealthy and employing thousands of people and, you know, Being public figures in a way that, you know, they weren’t, they were before like seen as like very ordinary people.
Uh, and so that becomes very cool. Um, but there is a lot of trade-offs along the way. And the vast, vast majority of the companies never reached that outcome and give up a lot in the process. I mean, you think about it like the, what you were signing up for when you raise venture money is, Hey, I’m willing to try to grow this business, call it.
10% a month or more every month for call it the next like five to seven years. And with all of the kind of challenges of hiring people at that scale and get rid of the ones that don’t work out and needing to go talk to investors and dealing with hundreds of nos on that and trying to like get in front of customers.
There’s just a whole lot that comes with that process. And, um, in some cases it can be absolutely magical and great, but, uh, the vast majority of cases don’t work out that way. Yeah. And I guess one thing now that I kind of think about this out loud, is that part of the reason why it’s probably not talked about or recognized as much as it is because you know, the people, like you said on social media or wherever it’s clarified, they see the exciting launch.
And, and then at the end they see the exciting exit, but they don’t see in between because it doesn’t exactly say it’s probably not exactly a smart move for the, uh, founder. To talk crap on the process of the, the ownership and decision rights they’ve given up because then that’s going to destroy the exit.
Yeah, no, absolutely. Right. I mean, in some sense, when a company is like, you’re almost like willing something into existence. And so the perception of momentum is important. And so like even when you are having difficult times and difficult days, like. That’s not the thing you go broadcast on Twitter or Facebook or wherever else you have out of your friend circles and other entrepreneurs who get it, where you go have that sort of conversation.
And then public facing. You’re trying to build the movement of like what this company is. And so, um, yeah, there’s very much an intentional bias towards positive news and celebration and glorification of that journey. Um, and there’s also like a little bit of availability by sort of, for them to figure things out.
I think that there has to be bias where yeah. You’re going to hear about the success stories precisely because they’re successful. And you’re going to not hear about the ones that didn’t turn out successful because they didn’t end up being successful. And so they way quietly faded away. Yeah. All right.
Well, I want to start talking about some of, some of these other things, but I got one or two more questions on the VC world. Um, you talked about. The exiting and most don’t end up in a successful exit. Is there kind of like a ballpark, uh, rate on how many VC funded businesses actually have a successful exit versus which ones get shut down?
You know, it’s actually a hard question that they answer. And I think part of it’s related to this whole availability bias, like problem of like, Yeah, the nominator or like the full set of companies, aren’t always as public as they should be. The other challenge is what is a successful exit is in large part determined by firstly what it took to get there.
So I’ll give you two examples. Let’s say there were two companies that were sold for $10 million. One of whom raised a hundred million dollars. Um, the other of which raise, you know, to $250,000, right? Maybe they did a $250,000, but oftentimes it’s going to be a phenomenal exit for everyone involved. Right.
Like the early investors may get three, four times their money in that case, um, the founders are probably walking away with life-changing money. And so most people would look at that and see that as like a phenomenal success. The other company that raised a hundred million, I think everyone will walk away from that belief that that was a failure.
Most of the investors who put their money in would have gotten, you know, Cents on the dollar and the founders would not probably walk away with nothing and the team members walk away with nothing. And so that’s part of what makes it difficult to kind of answer the question from the outside end, because unless, you know, the exact terms on which those investments were made and everything, it becomes tricky to evaluate what success and failure is.
Um, That said, I would argue that that number of success and venture successes usually multiples of your money is usually going to be on the order of like, you know, 10% of your investments or like 15, 20% of your investments. So it’s not that high. Yeah. Yeah. All right. So. You’ve done. Um, I guess the last question on this kind of VC topic is, do you have a moment in the VC projects you were involved in that just really stands out as a, as a home run or something really exciting that you look back and it was kind of like a pinnacle of a moment.
Yeah. Um, looking back on it. The success in venture that I almost always, where I think back on are usually going to be related to the portfolio companies that we worked with. And I think that’s kind of the nature of that business, right? Where it is a less about the work that you do per se. I mean, when you do the work you’re doing is choosing to make an investment and then sometimes trying to help the companies.
Um, but the choice of making the investments itself can be exciting. But the thing that validates that choice in that work is when the portfolio companies perform okay. And the way that, or even better than what you expected. Um, and so for me, probably the case that represents that most clearly to me is there’s a company in Chicago called G2 crowd more now called G2, um, which, uh, think of it as like a Yelp for business software and services.
Um, and so just watching the trajectory and growth of that business over time, which I was lucky enough to be involved in the investment decision and investment team for, um, has been. You know, one of the really cool moments I look back on fondly. Um, and so there have been multiple milestones there where they crossed over a million reviews to, you know, when the, one of that, some of, some of the top venture funds and really the world came on as additional like Apple provider.
So the business, um, that I saw as being really prideful moments that I kind of looked back on, and I think one of the tricky parts about venture is you can look at that and say, Oh, you know, I clearly did something right. That was a lot of skill, but, um, really that work was know the work of the founding team and the, their brilliance.
And so, uh, maybe seeing that in part was like made me what made me want to take the leap myself? Yeah. And, and that’s a good segue right there. So you did take the leap and now you have a company called four degrees. Why don’t you tell us about four degrees and the background on how you started it? Yeah.
So the quick backdrop, so I mentioned worked in venture and actually before venture, I worked in consulting. Uh, the things that were kind of true about both businesses are that they are incredibly relationship driven businesses. So. And venture our ability to find interesting companies to invest in, to decide if we wanted to make those investments or not.
And then once we made an investment to help them find customers and talents and additional investors, and in the long run, ultimately get to an exit. And the way we’ve been describing are usually functions of the relationship network of the firm and how well we could essentially use them and collectively manage them to accomplish those goals.
Um, and then in consulting, I remember watching like the managing partners of our firm have these like multimillion dollar, like. Potential clients of theirs, um, and the relationships they were trying to manage with those fortune 500 executives were typically sitting in a combination of sales based CRMs.
And when those kind of work for a long-term relationship management, they ended up happening in Excel spreadsheets and whiteboards and sticky notes on desks and all of these other tools that. We use to fill the gaps, uh, for products that don’t really work. Uh, and so that led myself co-founder to a realization that, you know, in these heavily relationship oriented businesses, now that paradigms we had for software they’re these like sales based CRM, these transactional products, weren’t really kind of really good at capturing this sort of work.
And so we saw an opportunity to build the product we wished we had. And so that was. Well, that’s what led myself and my co-founder to leave about three years ago and ago, build what four degrees is become. So the way to think of our product is essentially an intelligent relationship management and deal management product.
So it plugs into email. It plugs into the calendar. We can plug into existing CRM systems because oftentimes serve as one and two across all of those. What we’re doing is getting an understanding of what the team is connecting to and communicating with. We’re trying to enrich a lot of that information with third party data for you.
So you don’t have to spend a lot of time doing a bunch of manual data entry of people’s current and prior roles and jobs and the like, and then we apply a bunch of technology on top of that to do things like score, how strong those relationships are. So, you know, your best path into a given company or person to categorize those relationships.
So you can slice them by a bunch of different dimensions. So for instance, find me all the graphic designers. I know that live in New York and that work at kind of e-commerce companies. Um, we also go and search the world for information about those people and those companies. So if they’ve shown up in the news or published content or change jobs, we’re sending you like these intelligent notifications of how best to engage with them, they move your business forward.
So that’s both the history of kind of where four degrees comes from as well as at a high level, how the product works. Yeah. It’s cool. And interesting that you take in, you. Took and built something on top of your experience. And like you said, it’s a product that you wish you had. I like to think of, it sounds like a digitized, an AI, a fide Rolodex.
Yeah. Oftentimes I’ll describe that first piece of like this view of who your team are connected to and communicating with. It’s like a digital Rolodex that’s right? Yeah. So when are you going to have Kevin bacon do a commercial. Yeah. I feel like as soon as someone hears the name of the company, they almost always like talk about Kevin bacon, right?
Yeah. I kind of felt guilty about saying that cause I’m sure I figured it was beat up nothing wrong with it. I get it to you. So with. Four degrees. Do you bring your experience and did you also personally fund some of this, uh, like how much, how much did you bring to the table on this project? So it’s primarily experience and time.
Um, so, um, myself and my co-founder are the two kind of leaders of the company on a day-to-day basis. And so certainly over the past three years, we’ve poured in many, many days and many nights. Uh, trying to make this kind of company and product work. And it’s been, uh, uh, definitely a thrill of a journey so far.
Uh I’ve personally, they don’t have the capital to throw into this all that much. And so I was lucky enough to find some great investors to join us along the path. And so a combination of customer revenue and the actual growth of the business mixed with in the early days, some of venture capital funding has made it possible for us to kind of make this journey come, come to life.
Is this. It’s kind of a two-part question or conditional question. So is this your, your first, uh, jump into the entrepreneurial world and if so, is it interesting change of perspective being on this other side, having been on the former side? Uh, yes. And yes. So. First like real kind of technology company for sure.
And definitely a big change in perspective. Uh, definitely before this company I had hair, I currently do not. So that’s at least a starting point. Uh, but no, but more generally, right. I mean, I think there’s, it’s one thing to kind of intellectually understand how difficult it is to build a company, you know, all the ups and downs that come with that.
And, uh, all of the challenges that. Uh, around constructing a team and figuring out your first viable, like customer acquisition strategies and, uh, dealing with customer support issues. Like you intellectually understand how hard that is, or at least I did before. Um, but this certainly feeling that on a day in and day out basis just gives you a very different level of empathy for people who are.
Building companies who are doing that work on day in, day out and just how hard it is, uh, and guess not to kind of, you know, build up my own kind of path or anything, but I definitely would say, you know, I understand now why a lot of entrepreneurs who go out and go talk to investors and the like tend to prefer talking to folks who’ve also built companies or companies from the earliest days.
And I think the biggest reason is that the level of empathy for what it takes is just. There and in a very different fashion. Yeah. And I was kind of going to ask about that. Is, is there a skill set from your VC experience that kind of stands out the most? Uh what’s the, what’s the most strong skill set that you learned in VC land that you’re now applying in entrepreneurial land?
Yeah. Um, I I’ll try not to make it too self-serving but I really do believe that, um, One of the things that venture gives you a lot of exposure to is like how valuable like relationships and getting to know folks who have depths of expertise in different areas can be. And so for me in this role, I would say relative to the average entrepreneur and I probably lean on my professional network a little bit more than most, and not only for things like getting in front of prospective customers and having great conversations with them, but also for things like.
Yup. Hey, we’re starting to dig into this new customer acquisition channel. Maybe we’re spinning up Facebook ads for the first time. Who do I know whose business runs heavily on Facebook ads? Then I could spend half an hour or an hour with, and like deconstruct what their funnel looks like. So that way I’m very, at least I’m not coming into this like totally blind.
Um, and so I feel like that is certainly something that I’ve taken from my venture days and applied pretty heavily into what I do here. And then the second, which is less of a pure skill and maybe more of a mindset. Is I think maybe it’s partially because we raised money as a company. I think I recognize more than most like the, essentially the goal that your venture investors have for you or that have for us.
Right. Um, what they are economics look like and what the people who they’ve raised money from expect of them. Um, and thereby UN the opportunity that I need to be able to paint and see in this business in order for kind of that to continue to be a Bible path loss. And so those are probably the two things that call out.
You feel like you have cheat codes? I don’t know that I have cheat codes. I do think there are some pieces of it. This that are slightly easier for me. So for instance, one of the hardest things for an early stage entrepreneur, it can be like, how do I get in front of prospective investors? And how do I build up that relationship ahead of time?
And like, I think as a result of my prior job, like, I had a lot of those preexisting relationships coming in. And so that piece was probably slightly easier for me. Um, that being said, there are plenty of pieces that are probably harder, right? So as a result of spending my time, investing in companies, one thing, our product to our company didn’t have a massive amount of at the very beginning was like a deep like network of engineering talent that we already knew and had preexisting relationships with that we could use to start running and getting the company off the ground.
And so we’ve been lucky enough to build a really great team over time, but, uh, I think relative to. I don’t know, like a product manager who was leaving a company to go build a software business. We probably had more work to do to be able to recruit that team, then that person would have, for instance. And so I think every position you kind of land in has some inherent trade-offs yeah.
Kind of the opposite to that. Is there something that now being an entrepreneur, you look back and you think, Holy crap, did I totally miss relating and understanding that before in my, in my former position. Yeah. I mean, I think the biggest, probably the most important is just again, like how hard it is to do this.
I’m so like the level of empathy goes up materially. Um, I think the second is, and again, this is one of the things I kind of realized was true, but I think probably about more of a recognition of recognition for how true is just how important it is. To like really get to know the entrepreneur and understand them.
I think in the earliest stage of a company like the market’s going to change their product itself is going to change the customer acquisition channels are going to change. And so in some sense, when you are kind of choosing to believe in as this person is going to be able to figure this out, um, And so I think particularly coming from a background where we spend a lot of time, like analyzing competitive landscapes and analyzing, kind of go to market and analyzing kind of financials, it can become really easy to anchor yourself in the data.
When I think fundamentally early stage investing is a, a bet on a person and a team to essentially kind of construct the data. That makes sense. Um, and so those are probably the two things I’ve come up. Yeah, it makes a lot of sense. Well, this is called that, uh, here, you know, you go from one position to another and be able to marry the experiences.
Uh what’s what’s next for four degrees. What’s the next big play or what’s the next big feature? What’s the next big, whatever. Yeah. So today as a company, we focus really heavily on helping a team kind of manage its own kind of network of relationships. Right? So thank, um, if you and I were working together, you’d be able to share at least portions of your network with me and vice versa and like a way that felt comfortable and good.
Um, that said, and usually for most organizations there are. You might describe as like fellow travelers, right? So people who are advisors to the company or a close service providers or something similar who would be really open to sharing, like again, like pieces of their network provided it was done like a permission and smart way.
And so we’re actually going to start making that possible where people can start sharing views of their network with each other in ways that make it easier for you to find connections to companies and understand who you can ask for introductions and the like, and so we get really excited about some of the possibilities with that.
That does sound cool. This, uh, remind you may have somebody make this comparison before, but it sounds like a business ancestry.com. No, there’s probably something to that. I actually hadn’t thought of that analogy before, but, uh, there’s definitely, you know, I can kind of think of like the family trees and like the routes they’re in and, uh, at least that visual metaphor does make some sense to me.
Yeah. Yeah. Cool. Well, this is exciting. Um, no abort, I appreciate your time. I want to say thanks for jumping on learning from others and give you the last few moments to tell our listeners how they can find out more about you and four degrees. Yeah. So first feel free to head to our website. So we’re the number four.
So four degrees that AI, um, also we’re fairly active on social media, particularly Twitter. Uh, so four degrees at AI on Twitter. And then I, myself am at a, he says on Twitter where you can reach out to me directly at a blur day at four degrees that AI. And so yeah. Excited to be here. Yeah. Thanks for that.
I’ll put the links in the show notes. Thanks so much of what I should be. Appreciate it. Thank you. Take care.