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About The Guest
Charlie Feng is the co-founder of Clearco. The work he does behind the scenes has helped his fintech company scale from three founders to almost 1,000 employees, and raise over $300M at a $2B+ valuation.
Clearco is one of the top startups in Canada, a fintech company that uses AI to democratize access to capital. Charlie’s job is to build up teams and products, make them shine, and then move on to the next. He did this with nearly every team in the company, and he has had 7 titles in 5 years: he was Clearco’s first Head of Product, Head of Marketing, Head of Growth, of Finance, of Strategy, of Business Operations, and of New Ventures.
His strategy has been earning dividends: the company’s headcount has more than doubled since the start of the year and is still growing. Clearco was just named #2 on LinkedIn’s Top Startups Canada, which looks at the ability to attract top talent–it’s the company’s third year in a row in the top three. Earlier this year, Clearco raised $215 million from SoftBank Vision Fund II, just weeks after a $100 million Series C round that quintupled its valuation to $2 billion.
- 00:00 – Intro
- 03:41 – Charlie Feng’s origin story.
- 05:30 – The mindset required to grow your own business.
- 08:08 – What is the traditional process to raise money for a startup?
- 12:28 – Risks you have to take on when fund-raising.
- 15:46 – What was the vision or mission of Clearco?
- 18:06 – How Clearco redefines term sheets.
- 20:30 – Going from 0 to 1.
- 21:13 – Startup growth strategies.
- 23:08 – Finding product-market fit.
- 27:36 – How do you know when you’ve found a proper product-market fit?
- 31:32 – What is the difference between product-market fit and founder-market fit?
- 33:57 – How to find the right team?
- 36:32 – When is the right time to hire a team?
- 38:26 – Lessons learned early in Charlie Feng’s career.
- 44:45 – What are some things Charlie Feng encountered in his business?
- 48:17 – Lessons for people who want to start their own business.
- 50:00 – Where do people connect with Charlie Feng?
- 50:25 – What was the biggest challenge of Charlie Feng’s career?
- 51:57 – Who is the mentor of Charlie Feng?
- 52:57 – A podcast or a book recommended by Charlie Feng.
- 53:42 – What would Charlie Feng tell his 20-year-old self?
- 54:40 – What does success mean to Charlie Feng?
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What is the Success Story Podcast?
On this podcast, you’ll find interviews, Q&A, keynote presentations & conversations on sales, marketing, business, startups, and entrepreneurship.
The podcast is hosted by entrepreneur, business executive, author, educator & speaker, Scott D. Clary.
Scott will discuss some of the lessons he’s learned over his own career, as well as have candid interviews with execs, celebrities, notable figures, and politicians. All who have achieved success through both wins and losses, to learn more about their life, their ideas, and insights.
He sits down with leaders and mentors and unpacks their stories to help pass those lessons onto others through both experiences and tactical strategy for business professionals, entrepreneurs, and everyone in between.
Newsletter : https://newsletter.scottdclary.com/
Machine Generated Transcript
business, founder, people, work, customers, hiring, product market fit, company, build, clear, find, helping, years, money, startups, pay, learnings, channels, founding team, run
Charlie Feng, Scott D Clary
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Scott D Clary 00:37
Welcome to success story, the most useful podcast in the world. I’m your host, Scott D. Clary. The success story podcast is part of the blue wire podcast network as well as the HubSpot Podcast Network. Now, the HubSpot Podcast Network has incredible shows like The Hustle daily, it’s hosted by Zachary Crockett Jacob Cohen, Rob literalist, and Juliette Bennett RYLA. Now the hustle daily brings you a healthy dose of irreverent, offbeat and informative takes on business, tech and news. And it happens daily. So if you want to stay up to date on the latest and greatest, and some of these topics that are interesting to you, then you’re going to love the hustle daily topics like Amazon’s grocery strategy. The rise of the ugly shoe economy is AI the secret to love and America’s sleep deficit problem. So these are topics you want to get into and you love hearing up to date content whenever you wake up in the morning. Go listen to the hustle daily wherever you listen to your podcast. today. My guest is Charlie Fang. Charlie is the co founder of clear Co. He has worked behind the scenes as the company has scaled from three founders to almost 1000 employees, and he’s raised over $300 million at a $2 billion. Valuation clear CO is one of the top startups in Canada. It’s a fin tech company that uses AI to democratize access to capital. Charlie’s job is to build up teams and products, make them shine and move on to the next while he was working as an operator an active and clear who now he’s taken a step back and he works in Angel VC PE investing board seats advisory but when he was still working in clear co he was clear COEs first head of product Head of Marketing head of growth finance strategy Biz Ops new ventures that work meant put an ego aside, focusing on supporting new hires constantly training his own replacement and spending his time ensuring that the quickly growing company ran smoothly. He’s a jack of all trades whose job is to share the glory bow out and step into the next vital role. The strategy has paid off the company’s headcount has more than doubled since the start of this year, it’s still growing clear Ko was named number two on Lincoln’s top startups Canada, which looks at the ability to attract top talent. It’s a company’s third year in a row in the top three. Earlier this year clear code raised $250 million from Softbank Vision Fund two, just two weeks after $100 million Series C round that quintupled its valuation to $2 billion. So we spoke about clear cut, we spoke about the vision for clear co democratizing access to capital we spoke with the vision $1 billion invested in how they did it, we spoke about their model for investing in companies that 20 minute term sheets, that data driven decisions, how clear co helps companies grow, and why they chose to have no equity or seat at the table for companies. And then we focused on what he’s doing now, which is clear CO is really focused on the one to 10 for a company for a startup, he’s focused on the zero to one. So he’s focused on building companies from the ground up. So we spoke about founder market fit, we spoke about product market fit how to find both of these these things and what they actually mean. We spoke about hiring and scaling, we spoke about feedback loops from customers. And then we also spoke about growth channels and mediums that work the best and how to decide as a founder, when to double down on one medium to actually scale and grow your business and potentially when to abandon something that isn’t working out so well. So let’s jump right into it. This is Charlie Feng. He is the co founder of clearco
Charlie Feng 04:19
Oh, interesting. Okay, well, hey, Scott, thanks for thanks for having me here. So my story goes very practical, conventional, or, at the very least, when I was a kid, I had no idea I want to do anything related to entrepreneurship. I didn’t know if that was a career path or something you could do, like, make a career out of doing your own business. And the first generation immigrants, parents worked with some governments in Ottawa and Canada here for over 20 years very much growing up. I always thought it was kind of like go with kind of the steady route that that path is always paid for me. And it wasn’t until kind of college where I recognized that there is an alternate The past where you could, there’s a lot of interesting problems out there in the world. And if you kind of just work on what you want to work on, and keep focusing on it, you could build a career out of it. That’s kind of what I stumbled from my early days as a professional gamer to finance, realizing that wasn’t the thing, and then going into startups. I focus most of my time now.
Scott D Clary 05:23
So you were you at what you were at one point of professional gamer? Was that the first did you get paid to game was that like the first version of entrepreneurship for you, like not working for not working for a company working for yourself?
Charlie Feng 05:34
Funny enough, I’d say the first version of entrepreneurship was actually just myself teaching myself how to code and trying to play video games when my parents wouldn’t let me play video games. So I would code up these kind of bots that would play games while I’m at school, and leave the computer on, I turn the monitor off, my parents wouldn’t find out and got a lot of in game items and start selling that. So that was actually my first I guess, I didn’t know that was like a thing now. Yeah, I was just doing that, because I want to play the game. But I think that’s probably my first taste of it.
Scott D Clary 06:08
Okay, so you’re, you’re, you’re selling video game items. You said you went to finance for a bit, I guess that was more of like a traditional, you worked for somebody before, because I’m just trying to get a timeframe of because obviously the most, I want to say the most notable thing. But something that as you created has tons of access and is well known is clear code. So after you did the video games, he moved into finance. I always like to understand the mindset of what drove you to build something from the ground up and the problem you were solving and why you decided to build clearbank Clear co what was the what was the process cannot because you didn’t come from clear co focuses on E commerce and helping ecommerce scale that was sort of the initial iteration of of Clico. But you didn’t come from E commerce. I’m trying to understand how you identified this as a potential solution for E commerce entrepreneurs. Where was your head?
Charlie Feng 07:03
Yeah, that’s right. And I think the interesting part about the clear co founding team is that we were all none of us kind of came from the traditional guest, banking FinTech space. And that kind of offered us both a fresh perspective and kind of a, our naivete was almost like an advantage to a certain extent. So myself, personally, I had a bit of work in corporate finance a bit and kind of credit and bond rating for a little bit, realized that not the corporate life wasn’t quite for me. But started a couple of startups after that. And I started clear CO and all the all the founders we were kind of we had we repeat founders, well, we had some are more successful than others in terms of our previous companies, but we all kind of been through or had experienced the startup journey in different shapes and forms. And one thing we kind of all came to realize is that nobody really starts a company to raise money, nobody starts a business, you started an idea because you want to solve a problem, or you have something that you’re like, Oh, I’m very excited about building something new. But no one starts it because they want to fundraise, or they want to go on the road and meet investors, yet, every CEO or every founder find themselves spending quarter to half of the year fundraising, and trying to get the funds to run their business. And because I think that’s kind of commonality that we found in all of our journeys that made us want to build critical, something that could help us help the next generation of entrepreneurs, not necessarily dilute themselves, not necessarily have an alternative source of getting getting funding, if needed.
Scott D Clary 08:46
That makes sense. And that is probably the biggest pain, like when it comes to keeping your business going. But the model you took is very different. And I think the model he took is very novel. And I think Glico has a pretty good name, and a lot of people know it. But for people that don’t explain what a traditional for people that have never raised money before explain what the traditional processes for a founder who’s looking to go get money, and then explain why clear CO is different, and maybe why you chose to do it differently.
Charlie Feng 09:14
Yeah, so I’ll talk a bit about kind of the landscape maybe before clear choanal, this new generation of alternative capital, that we’re pretty excited that this new class of assets, asset class has kind of more risen up over the last couple years. But traditionally, as a business owner, you have two choices, you can either go to the bank and get debt. So you put you know, it’s usually personally guaranteed unfortunately, you put some kind of collateral on the line, whether you have a factory or no a property, put that on the line and you get debt. So essentially your liquidity with fixed assets. And then the other way is you get access to capital by raising equity, which is what you see on TechCrunch and kind of all the traditional raising capital people call it And that is by trading away a portion of your company. So let’s say you give away 20% of your company to a venture capitalist, and they give you X amount of money to hopefully build your business. Right? And they’re hoping that you’ll make it big. So are you. One thing we realize is that two interesting factors, what is for a lot of the new generation of businesses, these kind of online digital businesses, they are almost by definition, asset light, right, like an E commerce or they don’t have a factory, they don’t have these physical assets or an oven or something to kind of collateralize against. So going to the bank is oftentimes not an option, or kind of what we see as kind of a an advantage being asset light is actually seen as a disadvantage in the, in the face of kind of getting money from the bank. And for a lot of these businesses that are ecommerce, for example, these digital businesses, they are already generating revenue. These are businesses we’re talking about that or not. So a lot of the businesses that we’re finding are these revenue generating online businesses, they, they already kind of done done the r&d, or they already have the product. And they kind of know that for every dollar they put into Facebook, where every dollar they put into marketing, advertising, buy, they get you dollars out on the other side, right? So then, to give away equity every time you’re running a Facebook ad is not the best trade. So that’s kind of what we started to figure out like, is there a different way to fund these businesses, that’s been more efficient? And I think our belief is always that about around the idea of what is the most efficient way to capitalize or fund your business. So if you are an r&d heavy business for doing AI and you technology, pharma, you probably should raise equity. We even partner up with a lot of VCs and we think equity is great. It’s it’s truly risk capital. It’s for things that are in that zero to one phase, but once you kind of go from that one to 10 years scaling. Sometimes that doesn’t make as much sensitive. And that’s why we feel critical.
Scott D Clary 11:59
I just want to take a second and thank the sponsor of today’s episode HubSpot. Now, the new year might have you thinking ahead to what you want out of your career. So when you think about your success story, what do you actually picture? Is it retiring early with a beautiful view of the skyline? Is it leaving a legacy with your name on it? Or maybe it’s helping influence and change some of the world’s most pressing issues? Whatever it is writing your success story starts by working smart because when you work smart, your success story writes itself. A HubSpot CRM platform helps your marketing campaigns work harder and smarter. With intuitive visual workflows and bot builders, you can create scalable, automated campaigns across email, social media, web and chat. So your customers hear your messages loud and clear. Are you tired of your content not adapting to mobile, making it difficult for your customers to absorb your message a HubSpot CRM platform optimizes your content for multiple devices so that you can reach your customers, wherever they are, which is just smart. Learn more about how you can transform your customer experience with a HubSpot firstname.lastname@example.org. And I’m curious, because the traditional model, even from like the one to 10 phase, when somebody invests in a business, they have a little bit of equity, sometimes they have a seat at the table. But your model, you don’t have anything at all like you have you. Like there’s a payback, and there’s a percentage. So you do make you like it’s a benefit to financial benefit to clear co when the company does well. And it’s obviously a benefit to the company as well. But you can’t influence decisions, you can’t have a seat at the board. You can’t do all these things that traditionally somebody putting money into a company would want to have. And I’m curious if that was risky or unnerving, or obviously not. Because clear CO has worked. But I mean, as founders, you’re going against the model where you have less influence over the decisions of the company. Yeah,
Charlie Feng 14:01
I think you’re absolutely right, Scott, at the at the early days was definitely unnerving. Or we kind of first proposed it, we’re like, ah, it was very much against the grain of sand. And a lot of people told us that this is kind of not the way things are done. It’s a little bit crazy. And I think kind of going back to because the fact that none of us came from this background of credit. It kind of that naivety almost kind of gave us a bit of an advantage. And I find that happened a lot of times in entrepreneurship were coming kind of from a fresh perspective allows you to solve the problem or tackle the problem from a different angle. And for us, it was very much you know, the traditional idea of if the founder is the one you need to secure against the founder of something that’s usually personally guarantee it or you do some form where your again, it goes back to it might not be the businesses because the business might not have a physical asset but it goes to the personal guarantee of the founders that physical assets right there’s some kind of goes back traditional way of underwriting. And for us, too, because we got very good data from the businesses themselves. These were all digital and online businesses. As a result, we plug into stripe, we plug into Shopify, Amazon, Google. And we get a pretty good sense of kind of the economics or how the business works. And based on that, it kind of made us a lot more comfortable. It was similar to reading your financial statements. But instead of kind of seeing the yearly report we see per transaction on the day on the minutes, and I think that helped us a lot, at least push through for the first part. And I guess, as we develop the algorithm, and as we got better, we realized that the default rate for the quality of the capital we’re giving up was actually quite high. And we’re actually a lot better than industry standards. So one more time,
Scott D Clary 15:57
we’re not just thinking that seems like the it seems like at the beginning, but like any any any entrepreneurial venture is like risky, right? It is risky. It’s just Yeah. I love that. I love that, that that statement, like the Navy going into this is probably what allowed you to be successful, because anybody who came from a VC or PE world would just like, I feel like they grow too many gray hairs, they get too stressed out like they wouldn’t do it, because it’s not what people are used to. When you first started clearbank Now clear, co you wanted to invest $1 billion. What does that mean? And how did you achieve that was that the vision or the mission of the company?
Charlie Feng 16:38
Yeah, that was kind of the that’s kind of the big milestone goal, that our mission is really around empowering founders. And we thought that capital, at least, to start was the best way to empower founders. And I think we always have this philosophy. And part of the reason why we don’t take board seats, or we don’t kind of take control in any ways, because we believe that the founders kind of know how to solve the problem the best. Like they’re the, they’re the ones that are closest to the metal that are closest to the problem that in the customers that they’re solving for. And kind of like Who are we to tell them how to run their business, you will. And I think when it comes to the the reason you want to sit on the board, or the reason you want to advise or help a founder or empower founders, there’s two ways to do it. One is, it comes in the form of kind of support. So whether that be so a lot of kind of VC, if you think about the board, a board aren’t your seat. A lot of the help comes in two forms. One is the help from a referral, they tell you
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Charlie Feng 18:47
they give you connections help you hire people. And those are things that clinical is now starting to build out. A lot of we have a lot of these partnerships with other the right vendors connecting people with the right how to spend their capital, that’s one of the problems we always get the question of, and I think the other form, which no board actually has is also control, right? You have the ability to fire the founder or the ability to fire the CEO, if need be. And we think that’s probably not necessary for a lot of what we’re doing. And for a lot of the the companies that we’re helping out, they they need the help of introductions, the right network, the right people. But as far as we don’t, I don’t want to sit on hundreds of board seats and be it doesn’t really help us if we in any way fire the founder for exam because then who’s gonna run the company? Right? So because we decided to go kind of our quantity routes of seeing if we could fund a lot of these businesses algorithmically. It doesn’t make any sense for us to sit on boards, for example,
Scott D Clary 19:53
understood. And another another thing that clear CO has sort of championed and that innovated on are the terms that they give, they actually give the founder, so speak to me about a 20, a 20 minute term sheet. And what that actually means because if anybody’s raised money, and they don’t know, clear code, that probably doesn’t make any sense to them. That’s not normal. So what’s a 20 minute term sheet? And how is that part of the algorithm, that’s what allows you to do this, correct.
Charlie Feng 20:21
That’s right. And now it’s probably a lot faster. But we’re essentially through the algorithm able to buy after we taken all the data in 20 minutes, kind of provide people a a term sheet with the terms of how much capital you were able to give them at what terms what, what costs, and the way the terms work. It’s pretty, it’s pretty simple. So for example, if we give a business $100,000, we would, the fee that clinical makes is a flat fee. So it would charge $100,000 Plus, let’s say 6%, like a $66,000 fee, so clinical, whatever, only ever made $6,000. Now how that $6,000, or $106,000, needs to be repaid is as a percentage of revenue. So as clinical right, kind of, we’re hoping that these businesses grow quickly, and we get paid back faster than we expected. Right, then it’s kind of a win win. In the down case where the businesses are going through a rough patch. And we had a lot of that actually, at the start of 2020 When COVID first hit. And a lot of these businesses were in trouble. It actually kind of worked out. Right? Not, I mean, essentially, sorry, didn’t work out for anyone in the sense that we’re all right. But it was actually a point in time where it was very beneficial. Because as the business revenues are down, we’re not asking for more money, we’re not asking for a fixed money, we’re proportionately we also get less money back, right. So it live very much aligned to the center of the business, as well as clinical. And we found that to be very helpful, even when it comes comes to kind of power thinking about building new products, or how we’re thinking about helping the founders, because the incentives are so well aligned. A lot of times, it’s like, whatever helps the founder grow their business helps clear cut at the end of the day. Understand,
Scott D Clary 22:15
- So that is that is a great sort of summary of clear CO and this is something that you have to be very proud of. But I want to really speak about what you’re passionate about now, which clicker was was more on the on the one to 10 side. So after they figured out a process clearcoats helping them scale. So I want to figure out one of the most complex and complicated and misunderstood things in startup land, which is going from zero to one. And that’s what you’re focused on right now with with new companies, correct? That’s right.
Charlie Feng 22:43
That’s right. And I think even at clerical, a lot of my job was taking something whether that’s a team or new product, 01 and then hiring someone smarter than me to replace myself. And yeah, did you know we clearcoats gone to a place where we’re well past the one stage and
Scott D Clary 23:00
yes, so let’s, let’s talk about that. Let’s talk about some strategies for going from zero to one. So first of all, when you say your, your you’re working from zero to one, provide some context, are you talking about going in as a as a consultant to our as like a mentor or an advisor to a founder? Because Zero to One is very early on? So is that pre revenue? Is that pre product market fit? When do you get involved? And and what does an entrepreneur look like when you start working with them?
Charlie Feng 23:33
Oh, so yeah, so I do some Vaizey, angel investing and kind of mentoring, when it comes to helping companies. And the areas that when it comes to from an advising perspective, it’s that usually they are before product market fit. They’re kind of the early stages. Sometimes they have a little bit of revenue, but maybe one or two customers and trying to figure out how do I get my first 10 customers. And I think certain one looks different for every business, it looks different, even depending on what the problem you’re trying to solve. It’s really that early stage of trying to figure out what is the right solution for a given problem before you start to scale it and then you run into scaling problems, which is a different set of problems from one to 10. So for clerical, for example, or any any business in the early days, there’s two types of things that I spent a lot of time doing. One is finding product market fit or a new market or a new product. And that 01 involves a lot of experimentation. And then there’s the other type of zero to one of building a team. So saying we don’t have a marketing team or we don’t have a growth team. We don’t have a biz ops team. And how do we do it? Well, there’s no right or wrong answer per se, but you can’t just kick it off, get it going and eventually hire a team and tie yourself out of a job.
Scott D Clary 24:57
So when you when you work with companies, they can be productive market fit. So what are some of the the experiments that you run? Or what is the? How do you? What’s the definition of product market fit? How do you know when you found product market fit? That’s probably a better way of saying it. And then how do you once you know when you found product market fit? How do you work backwards and experiments so that you’re you can actually get there. And I know that there’s a million different industries. It’s like, we only have we only have a podcast worth of time to do this, but high level stuff that could be applicable to anybody.
Charlie Feng 25:28
That’s right. That’s right. I think there’s a few lessons I’ve learned and mistakes, a lot of mistakes I’ve made over the years, I think the elusive product market fit like, like, maybe what you’re alluding to Scott, it’s like, there’s a lot of different definitions out there. And it’s, I think, a couple things I’ve learned over the years. One thing I’ll clarify a little bit are my belief around product market fit is that it’s not a static, it’s not a static thing. It’s not something that you find product market fit, and you can just, you’re done, the job’s done, I see it very much as a kind of a, like, no, no dance is the right kind of analogy for it. But the sense that the market is constantly moving, and your product needs to fit with the market needs. So there’s been a lot of cases where companies would have product market fit for a period of time, but then they lose it right over the years as the market changes and what the needs of their customer changes. So I think that’s one thing to remember for product market fit is that it’s not something you’ve kind of done for yet. But rather, it’s something that you need to keep kind of working with the customers on, then for the most part, I believe that a business compensates, you know, there’s part of market fit, got to feel it, we have it. Usually people mean that because the for you to acquire a customer or for the economics to kind of run the business or get a new customer is so efficient or so low, because you build something that people want that it just feels like all the customers are coming in. And I feel that usually a pretty decent definition depending on what kind of business you’re in. So if you’re in a kind of more SMB or b2b business, once you kind of get your first 10 customers that are non, that are not your friends and family, you kind of know that you’re onto something, you might not have full product market fit, you’re onto something. For consumers, that number might be more like 100, or 1000, depending on what kind of consumers we’re targeting. And that’s how I look at it.
Scott D Clary 27:32
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Charlie Feng 30:38
That’s right, I think of economics, or economics of a business to be quite important to product market fit. So let’s use that analogy, right, like spending a million dollars or a crazy amount of money to get $30,000 worth of revenue, he will look at that and say, you probably haven’t done something, you’re just paying people, you’re paying people $1 To earn no three cents on the dollar. And that’s probably not going to be sustainable. The only case where that might be sustainable is that if you have some kind of crazy long retention, where then that customers coming back repeatedly, for a long period of time, then you’ll need to prove out that all if you’re only making 30,000, that’s number of years before you ever make back your million dollars, right. So one of the lessons I did learn, kind of building both clinical and my previous business is at an early stage. LTV treat the repeatability of business of customers more like almost like a pair of gravy is the right word. But yeah, like treat that as a bonus, don’t rely too much on the revenue, or the repeat revenue past a year, two years is really stretching, mostly because you don’t the business would be so different two years from now, right. And for you to rely on the revenue on year three, or even year to have a customer will, that I’m not there’s definitely exceptions to the rule. But it’s going to make you as an entrepreneur running the business much harder. So a lot of times I focus on kind of that gear one profitability. And it doesn’t mean that you have to run a profitable business as a whole, it just means that the math for every customer that you’re buying, should be profitable, or should not be should be paid when unless you have a hypothesis around. There are six steps exceptions to this rule. So for example, if you’re in a marketplace business, where like, a lot of businesses like Uber or the kind of the heavy marketplace businesses was famous for doing this for a while where they were acquiring customers at a loss because they said that were the hypothesis was that once they hit this critical mass, then every kind of the flip switched by one of the also the funny enough that the lessons we learned from the Uber in kind of the realm of delivery businesses is that a lot of them a lot of the one bankrupt in two, you know, for Uber, it took many, many years, I’m not even sure. Today, there’s two profitable on a huge economic basis. But it’s you need to raise a lot of money to run a business like that.
Scott D Clary 33:12
So it’s it’s stressful. So obviously, that is not the majority of people out there trying to build companies. Okay, that’s good. That’s good. That’s good insight, though. And then Okay, so we’re talking about product market fit. One thing that I’ve seen you speak about often is founder market fit. So what’s the difference between product market fit founder market fit? And who cares about founder market fit as an investor advisor, Angel? Or is it someone? Is it? Is it the team? Like what does that founder market fit?
Charlie Feng 33:35
Yeah, I think both. So as as an investor, I look a lot more for founder market nowadays. So there, there’s something people talk about about, you know, first time founders, you look a lot about you think a lot of product. Second time founders, you think a lot more distribution of how to get the product out to your customers. One thing I’d add to that is like almost like third time founders, you think a lot about the people who’s actually involved in the business, because it’s the people that’s based on their skill set, they will have access to different distribution channels, as well as they’ll have different ways of thinking about building a product. It’s kind of like that analogy of, you know, to a hammer, everything’s a nail, right. And depending on my skill set, as a founder, the way I would solve a problem is very different from you, or someone else, solving a problem. And that’s something that kind of very much made me realize about businesses was that, like, show me the team, and I’ll show you the products that they’ll build almost, and it’s essentially a reflection of who the team was. And the, to me the founder market fit just means that do you have the right team? Or do you have the right founders or founding team in place to tackle this right market or this right problem set? And I think a lot of this is the hash skill set but also half interest based, right like, for example, like I’d say my skill set is perhaps not as heavy or not as good in the, either the pure consumer space like the, I’m probably not going to build the next tick tock or Facebook, because I don’t use Instagram, I don’t really use tick tock that much. So it’s just not something you might not even have a skill set just that like interest. It’s not there for me, parents, and I think this is different for every founder and every team. And I think this is why it’s also just as important for me as an investor. But it’s also as important for myself when I’m operating or from a from a team perspective, because then it’s kind of like the question of what are you really your strengths, essentially? And what are you really doubling down on? And I think it’s very important to to understand that you don’t you don’t write.
Scott D Clary 35:45
And when you you speak about finding that right team. So let’s tie that into one of the first things you said, which was I want to make myself redundant, I want to basically hire myself out of a job. So how does somebody do that? How does somebody find people? What is your strategy for when you’re starting a company? This is obviously something you probably teach over to founders. But what’s your strategy? When you’re starting a company? How do you make yourself redundant?
Charlie Feng 36:13
Yeah, I think about the redundancy programs, past 01 stage, I think, the zero to one stage, I’ve prayed a lot, this is kind of why I look for a lot for a founder market fit, because I think the it’s going to be the founders or it’s going to be the founding team, that’s going to be critical from getting them from pretty much nothing, right? Just an idea to something that’s actually working product market fit makes money. And then in terms of kind of redundancy, I think the I think there’s two ways to hire. One is hiring people who kind of compliment you. And then there’s the hiring people who are kind of like similar to right. And I think it’s I think they’re they’re not two separate concepts, but the same concept. So what I mean by that is, I think when it comes to hiring, it’s important that to hire people who complement your skill set, but are actually the same as you were similar to you from a kind of worldview perspective. And this is where it kind of like the question of diversity kind of comes kicks in a little bit of you kind of want diverse skill set or diverse perspectives. But you actually don’t want to like, you don’t want people are having conflicting like missions, conflicting goals as you because we’re, as you’re always be arguing on the fundamentals, and that’s what I look for in the founding team, as well is, as well as, as well as co founders that I look for myself for myself, my next business is very much they’re aligned very much with me in terms of the mission, the way we kind of see the world what we want to accomplish. If it’s something kind of data on a fundamental level basis, would we agree? And then above that, you actually do want the diversity of thought, diversity of opinions of how would you tackle this problem? Hopefully, their perspective is not the same as me, Ross, I’d have a bunch of travel equipments. That’s not very helpful. So that’s what I think a lot about when it comes to hiring. And I very much try to hire people who are kind of more experienced, or people that I would want to almost work for, right? Or people I would work want to work for it if the circumstances are different. And they’re the perfect people to essentially replaceable. Right?
Scott D Clary 38:21
And at what point, do you feel like the founding team should start to hire those experts to scale? At what point? Do you feel like the business has progressed enough? So that you can hire a team of people that can that can take it and scale it? Because Are you ever concerned about? Are you ever concerned about that sort of that second tranche of hires after the founding team? Not and this is very normal, not having the same convictions or passions for the business that that founding team has?
Charlie Feng 38:51
Yeah, it’s, it’s tough. You know, I’ve seen it done. Well, I’ve seen it done poorly. I actually believe that from a kind of, I don’t want to see it as kind of like tranche one or tranche two of hiring I think about it very much as who can you influence when you’re making those hires? And I think, you know, Google was very famous for, I believe, they’re patient. And Sergei, they were, they were interviewing people up to like the 200 people or something like that. They’re very much very hands on with the curators, essentially, who’ve had a choice Google early days. And I think the importance of that is, your again, as exactly you said, Scott, like looking for that kind of conviction and looking for those people who share the same kind of, yes, desire for that conviction for the mission you’re trying to go after. And over time, that’s going to dilute right over time. People have, it’s harder to keep that and as a result, I think it’s even makes it even more important that your first 10 hires because those are probably the people that you’ll be spending the most time with. And you’ll have to at some point rely on that those 10 people behind the next 100 people, right? So I think a lot about how do you build a good culture for the first 1020 people and almost cross your fingers and hope things go well?
Scott D Clary 40:14
Are there any other? Are there any other lessons or learnings, things that you’ve succeeded? Or failed that and then learn from from that zero to one phase? So we’ve sort of spoken about founder Market Fit product market fit, first hires, what about scaling from zero to one? What is what does that process look like? What’s the testing process? The experimenting process? channels that you should try when you should give up on channels, if you should, at all? Like, what’s that whole mindset of scaling? Because that’s tough, too.
Charlie Feng 40:45
Yeah. I’ll first talk about, I’ll talk a little bit about experimentation, because I think I spend a lot of time doing that. But first, I’ll talk about a story where a mistake I made quite early on, that I’ve taken with every other business I’ve built, which is kind of not charging your customers early enough. And kind of going back to the idea of, you know, you measure, you measure a person’s kind of intentions by the actions they make, rather than the words they say. And I think that’s very true when it comes to, you know, this marvelous product that you’ve built. And the question is, well, does anyone ever want it? Right? And I think, my first company first product, I remember, kind of doing a lot of customer development interviews, talk to 100 people, I got a lot of people on waitlists. I got a lot of people who said, No, I like that, I think which ability is great. All these kind of strong positive words of encouragement. And then what it hit me is that, no, I didn’t ask them for their credit card, I didn’t ask them for to pay for anything. And then when I did, when we finally spent money to build a product, it turns out that a lot of the positive words were they were caveat it with kind of other reasons why they couldn’t pay, or why they were still missing this one feature, or why I was still missing this something in kind of made me realize that the the, in the early days we really care about is deserts, you’re trying to maximize the quality of earnings, and kind of the quality of earnings, quality feedback, and charging, because, you know, when I was kind of starting my first company, it was, I always thought that, you know, I want to I don’t want to charge people money, because they’re my early supporters, they’re oftentimes friends or people I know. And as a result, I don’t want to not take money from them, right. And it’s not so much about charging people for the sake of making $1 and making money. But it’s really about how you maximize your earnings. And charging people is one way to increase pay, increase the learnings, right? And it’s really about how do I maximize the efficiency of my feedback, I have a certain period of time, companies don’t die because of companies usually died because founders give up puppies died, because you run out of time, time is your most valuable assets, building a business and as your one phase. And the important thing is how do I maximize the efficiency of every day or month I spend doing that. And sometimes, for example, if you’re working the more enterprise section of businesses, but if you’re working on a six figure potential six figure deal in the future, you might not want to charge your first customer, your inaugural first customer, no six figures, but even charging them a $0 invoice is actually quite good. Because what it does is that for that large enterprise, if you’re charging, if you’re making an enterprise of over 100, or a few 100, people sign and do a $0 invoice, it actually makes their legal team to review the invoice and makes the finance team they have to do all the procedures, right? And it makes them actually have to commit you know, the pain and the monetarily. It’s a much higher commitment than just kind of a pilot with literally no strings attached. And I think what you’re trying to do is, again, maximize your ROI. So this can be done via charging people asking them for the credit card, and you’ll see people’s real reasons and excuses come out. Or you could you know, do another way for consumer apps as you really measure how they use it. So you don’t care so much about the number of signups be cared about the daily usage or time they spend on the app, and things like that. So yeah, very much asking people for their credit card.
Scott D Clary 44:40
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Charlie Feng 47:29
Yeah, I think I think the I’ve tried a lot of different channels over the years, and most of them fail, and a few of them succeed. And I think that’s one of the things people should remember is that the 8020 rule applies very well, when it comes to marketing with distribution is that probably 80% of your customers will come from, like 20. By 20%. Usually, it’s like for startups, like, it’s one channel. It could be Facebook, could be Google could be yes, it would matter. A lot of what it is, is usually probably one to two, maybe two channels for a startup is where most of your customers will come from. And I think one of the things, both for our channel experimentation, we’re just experimentation in general, that I stress a lot to two founders I work with, or my team is to kind of draw a line to the set. And what I mean by that is to write down your hypothesis or write down when you will kill that experiment. Right. And it doesn’t mean that once you cross that line, you have to kill your experiment could choose not to, you have a new set of information at that point in time. But I think as humans, we have a lot of revisionist, for like, or very good revisionist historians, right? We, we, we were very good at rationalizing and looking back and painting a new story was Tapcon. So and maybe it’s just my memory short. But I’ve always find myself when I don’t kind of think through what are the criterias as I call them for a certain experiment or certain channel, that you’re two months later, I’ll find myself finding myself excuses to keep that channel or keep going just one more and to spend another no recap money on it. And every time I’ve done that it hasn’t done me well. It’s so yeah, as a result, one of the things I focused a lot about, especially when it comes to kind of experimenting, the distribution side is very much what are my kill criterias? What am I expecting? So let’s say I launch a new Facebook campaign or ad for a new audience. What am I expecting for rollouts? And how long do I expect to see that? And that sets a date in my calendar, in which case I’ll revisit and I could choose to push through and say, hey, you know, even though it didn’t work out, as I expected, I want to try this experiment again for another week. Right? But it kind of creates that forcing function for you to revisit. And if you don’t, especially when it comes to ads or distribution Yeah, Facebook Okay. You might very quickly,
Scott D Clary 50:02
easily, very, very easily. Um, I want to, I want to ask a couple rapid fire questions to pull from your career. But is there any other last learnings or insights that you wanted to go into for that zero to one environment for a startup
Charlie Feng 50:16
that we didn’t cover? I think we’ve covered a good deal amount, it’s, the kill criteria is something I think a lot about. And I think, lastly is, but when it comes to 01, it’s important to stay close to the metal, as they call it. So like, if you’re the founder, or if you’re the person that’s kind of responsible for it, I think this gets harder as you are. A. It’s, by harder, I mean, more. So it’s, it’s kind of against the grain. As you mentioned, a larger team, or, you know, in the early days, when you’re building your company, you’re naturally talking to the customers every day. And then as a company gets bigger, you have manager does that. You have a manager that manages someone that does that. And you soon realize yourself that while you’re making all the decisions, you’re not the one that’s actually speaking to the customers, and you have this kind of broken telephone have a feedback loop of what the customers really want. And oftentimes, as a founder, what got you to where you are, is because you have pretty good instincts, right? For that, use your instincts for round one, but you kind of went from zero to one worked out. And I think founders usually have pretty good instincts was, you know, most people actually have pretty good instincts in their domain. Trust that instinct, try to figure out where to get closer to the customer, or closer to the ground where you get that raw guess information that to you. It’ll help make you you make 01 decisions a lot better, is what I found. Great.
Scott D Clary 51:48
Before I pivot into some of these rapid fire, if people want to connect with you, what’s the best social channels that LinkedIn, Twitter, where do you want people to go?
Charlie Feng 51:58
Yeah, probably Twitter or LinkedIn. I am not damaged on social media. But Twitter, LinkedIn is perhaps the best places to find us. Let’s Charlie. Charlie, C fan. Okay, perfect.
Scott D Clary 52:11
And that’ll be in the show notes, too. Okay, so a couple rapid fire questions to close this out. Biggest challenge that you’ve overcome in your life? What was it? How did you overcome it?
Charlie Feng 52:18
Well, I’d say the biggest challenge that kind of comes to mind is building my first startup, where I had nothing, no network, no idea what to do even. And a lot of great information, even like, awesome podcasts like yours didn’t exist. So I didn’t really know what I supposed to do. And what, what kept me hopeful, or what kept me what was what, you know, for me, what helped us make Balester is a combination of just having a lot of conversations with customers, a lot of times customers kind of know what they want. Like, there’s the same kind of like, No, you asked the 14 of like, you know, you ask your customers what they want to tell you a faster horse. But a lot of times, depending on what field you are, the customer was actually just tell you what they want to get built. And you might not build them exactly what they tell you. But they’ll give you a lot of information, and find those champions and customers and keep talking to them. The other one is finding good co founders, I think that’s something that’s very underestimated. You’ll have ups and downs, startups is a definitely a roller coaster of a journey. And very much hopefully, when you’re down, your co founder can kind of pick you up and and vice versa. So I think that’s also one of the most critical decisions that you’ll be making.
Scott D Clary 53:46
If you had to choose one person, there’s obviously been many, but one person has had a major impact on your life. Who was that person? And what did
Charlie Feng 53:52
they teach you? A lot of folks, so much impact, I think one of the most recent ones that really stuck with me, or the or the pandemic is, is a is a coworker and a friend, Davis Kent. And one of the quotes that he left with me was kind of everyone is the hero of their own story. And it just kind of goes back to me, he realized that everyone’s kind of fighting a battle that you don’t know about, and everyone is from their perspective. And from, from my perspective, I’m the hero of my story, right. And from everyone’s perspective, they’re a hero of their own story. And it’s easy to forget that especially the chaos of especially how much the world has changed in the last few years. And that that quote has stuck with me, but humbling and productive realize, kind of look from the other people’s lens a little bit to go into
Scott D Clary 54:45
your favorite source to learn or grow a podcast book, something that you’ve picked up recently or not that you’d suggest somebody else go check out.
Charlie Feng 54:53
She’s fun. So there’s a lot of podcasts. There’s a lot of books I like recently been reading some Ray Dalio, Navarro has some great content. But I think one thing that I’ve actually done more of over the last few months that I want to do more of in 2022 is rereading. There’s always that book that you know, you really enjoyed reading, or you thought it was a great book that you recommend to others all the time. But what I found is that not once you reread it, you realize that there’s like things that you didn’t pick up the first time really yet. And that’s okay. I’d recommend tomorrow.
Scott D Clary 55:30
If you could tell your 20 year old self one thing, what would it be?
Charlie Feng 55:37
values as cheesy as it sounds, value, friendship and value those. I think all good things in life comes from compounding. The typical Warren Buffett thing of like compounding is the eighth wonder. When it comes to money, financial compounding is the greatest asset. But I think that also flows to other things in life, like relationships, I think the best relationships are those ones that just as great of a anyone’s network that you are, you can you can make a friend over, you know, a cocktail or in one evening. But the best friendships, the ones who will have your back during the rainy days are going to be those old friends of yours. And I think I wish I invest more time in those relationships. And it’s I think, all good things are really all good things in life company compounded, including relationships, and I would recommend my 20 year old self to do more of that.
Scott D Clary 56:27
And then last question, what does success mean to you?
Charlie Feng 56:33
Screen question, I’ve been thinking a lot about that. I think Success to me is really about happiness. And I think probably is for many people, like what makes myself most happy. And I think what that means for me is really just working on cool projects. We’re working on cool things with people you’d like. And guess that’s actually one of the reasons I really like startups so much is because you choose your team, you could choose who you want to work with. And that’s again, that’s who you surround yourself with, will oftentimes define your happiness more than anything. So that’s, that’s one of these.
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