The Payments Experts Podcast
Expert payments attorneys discuss the electronic payments industry from a legal perspective.
The Payments Experts Podcast
Decoding Startup Jargon: Ken Valledy & Eamonn Carey Authors of The Startup Lexicon | PEP034
Unlock the secrets of startup jargon with our esteemed guests, Ken Valledy and Eamonn Carey, co-authors of The Startup Lexicon. We promise you'll walk away with a deep understanding of the language that can make or break your entrepreneurial journey. Listen as Ken recounts his transition from corporate marketing to the startup world, where intricate terminology initially felt like a foreign dialect. Together with Eamonn, they share their mission to demystify this complex language, making the startup landscape more accessible and encouraging for budding entrepreneurs.
Our conversation, lead by Sr Associate Attorney Olesya Trusova, and Global's Director of Operations Jeremy Stock, navigates the challenging intersection of finance, legal, technology, and strategy consulting, focusing on the power of clear communication in pitches — an essential skill for founders aiming to secure investment. With insights drawn from experiences with companies like Stripe, we discuss the importance of founders having a unique perspective or personal pain point driving their innovation. Ken and Eamonn highlight the necessity of simplicity in pitching, particularly when engaging with resistant industries such as fintech and payments, ensuring the startup's value proposition is conveyed effectively to potential stakeholders.
Explore the evolving startup terminology landscape, as we break down significant terms like liquidation preference, convertible notes, and KYC — essential for those seeking investment. The discussion also touches on the rapid evolution of tech language, with the emergence of SaaS, generative AI, and quantum computing, urging founders to keep pace with these changes. Ken and Eamon share insights into updating their book to include new terms, providing a consolidated resource that offers clear definitions crucial for navigating the startup ecosystem. This episode is a valuable guide for anyone looking to understand the language that underpins successful startup ventures.
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Please visit our guests, authors of The Startup Lexicon:
Ken Valledy
https://www.linkedin.com/in/kenvalledy/
Eamonn Carey
https://www.linkedin.com/in/ecarey/
http://www.thestartuplexicon.com/
Purchase a copy today: https://tinyurl.com/yrsan2ys
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Visit Global Legal Law Firm
https://www.globallegallawfirm.com/
A payments podcast of Global Legal Law Firm
I can't think of a word that I wouldn't have in the book. I still struggle to pronounce one word and I've forgotten what it actually is Eamon, when we did the podcast. I forget which one it was now, but there's a word that I still can't. I'm going to have to look through.
Speaker 2:This is not a blatant ad, but it's in here.
Speaker 1:I'm giving you different answers to the answers here Anthropomorphism, anthropomorphism.
Speaker 2:Good, different answers to the answers here.
Speaker 3:Anthropomorphism Good word, good word.
Speaker 1:So there's a word that if you want to catch me out in any interviews.
Speaker 3:ask me what that means. Welcome to the Payments Experts Podcast, a podcast of global legal law firm. We hope you enjoy this episode. As well as our special guests, we have the co-authors of the Startup Lexicon, which is now in its second edition, available everywhere that books are available. We have co-authors Ken Valady, as well as Eamon Carey. Gentlemen, thank you very much for joining us on the Payments Experts podcast today. We're looking forward to a great conversation with you and, if you wouldn't mind, Ken, and then maybe Eamon, would you guys mind introducing yourselves to our audience?
Speaker 1:Yeah, pleasure and great to be asked onto the show. My name is Ken Valady. My background is marketing and brand marketing. 10 or so years ago I was a brand marketeer. I worked for Einhauser Busch InBev, so I spent a lot of time in Europe and over in New York and and I started my own business 10 years ago and since then I've been immersed in the world of startups and I started on my own and I formed a small agency. We were acquired very recently by a company called Anthesis, who are a global sustainability consultancy. So now I work connecting large corporations to startups in the world of sustainability. But my love and my passion is really helping startups get new business and scale through working with corporates, so I spend a lot of my time chatting to startups and people who represent large companies.
Speaker 2:That's me and I'm Eamon Carey, so I'm a general partner at a VC fund called Terra Ventures. We're investing early stage in companies across the Nordics, baltics and Central and Eastern Europe. Before that, I ran an accelerator program called Techstars, which is a global network of accelerators that invest in companies, support them through a three-month program of mentorship and growth and continue to follow on. Support them through a three-month program of mentorship and growth and then continue to follow on and support them throughout their lifetime. So I was with them really from 2015 through 2021.
Speaker 2:And prior to that, I was a founder myself. So, somewhat depressingly, I started my first company 20 years ago back home in Ireland and have had a couple of successful companies and a couple of failures along the way now, so I'm probably still a little bit more on the founder side of the equation than investor. But, similar to Ken, I think people who start companies take such a huge risk and do such amazing things, and so being able to support them in any way that we can through mentoring, help books, et cetera has been an absolute privilege.
Speaker 4:Ken Eamon, thank you very much for this introduction and for joining us today. And of course, the language of startup is very complex and it's full of jargon and of course, it abstracts the progress rather than facilitates it. And when I think about it, it really reminds me of the curse of the Tower of Babel. You know, when people once were united by a single language. They had this great ambition to build a tower that reaches the heavens, and they were punished for that. God confused their language, it scattered the language into many different ones, so people were unable to understand each other and, of course, they could not build the tower they wanted to.
Speaker 4:And in the same way, in the world of entrepreneurship, this complex language really abstracts the way how people can understand each other, how they can communicate, so it's a very complex ecosystem to penetrate. So, and what I really like about your book, it helps break this curse of the Tower of Babel, it makes this language accessible and it helps really domesticate this complex terminology, this complex terminology. So it would be great to hear, based on your personal experience, how complexity of this language actually makes the life of entrepreneurs really difficult.
Speaker 1:Yeah, I mean I love the example of the Tower of Babel. I would say for me personally, I experienced these barriers from the word go. So when I left the world of beer, the corporate world, I started to work with startups and I was very excited. I thought I'm going to work with these very dynamic, forward-thinking, positive people and I think after two or three meetings it felt like I was listening to another language Burn rate, roadmaps, convertible notes, series A, series B and I just thought what is all this about? I mean, there's enough jargon in the corporate world, to be honest. And I went over into the startup world and there was even more jargon there. Now, how would I word this? I was quite confident and maybe a little bit egotistical, so I kind of winged it a bit and thought I can get through and I will find out what these words mean. But that was me.
Speaker 1:And since that I've spoken to a lot of founders who had some fantastic ideas, who went into similar meetings and got bamboozled by the language that was being spoken around them and I think in some cases it led to those people deciding it wasn't for them, and I think that's a real shame, because there's some fantastic business people out there, founders who have got great ideas that may never come around again, and the thing that stopped them wasn't that they tried it and it didn't work and they had a bad luck or bad run in the market.
Speaker 1:It was because the language just knocked their confidence and they never made that big step, that first step forward. So, from a personal experience, I I saw it and and thankfully I I kind of pushed through. But other people, um, didn't see it the same way and and saw it as a way to kind of confirm that they weren't good enough to be an entrepreneur. And that's the thing I think, that spurred myself and Eamon on to help these people carry on with that bravery, that courage, and push through with their idea and and and start to get into the startup world and build a business. So for me I think it's crucial. But I experienced it firsthand and luckily I kind of pushed on through. But, eamon, I'm sure you've got other experiences as well.
Speaker 2:Yeah, I think that was a big and credit where credit is due, I should say. The idea for the book is Ken's. He came to me when we were all sitting in separate spaces, outdoors, uh, during covid times, to tell me the idea and it resonated so much because what we did at techstars which is which is where I was working at the time was we invested in, in founders, really at the idea stage. They might not have a team, they might not have a product, they might not have even incorporated a business in in many cases, but they had some passion or some idea or some opinion that they wanted to go after and build something.
Speaker 2:And in many cases, you know, those founders didn't come from a technology background, they didn't come from an MBA background, they didn't come from a strategy background. And so they would come in and, as Ken said on day one of our accelerator program, they would meet a VC who goes hey, what's your LTV to CAC ratio? Or what's the time Samsung, what's the salmon in this market? And they would kind of nod politely and in many cases get dismissed by investors because they just didn't know this jargon that we've created in the industry. And in many cases they would come to me and say I've been asked this and I feel like an idiot because I don't know the answer.
Speaker 2:And it's a challenge because I think the startup world and the tech world is kind of at the intersection of finance, legal and technology and strategy consulting to a certain extent, all of which are industries that are well known for their love of an acronym or a complex way of describing actually a very simple concept. So we saw lots and lots of marketplace businesses, lots of direct-to-consumer businesses that they would come in and be dismissed by investors on day one. But on day 10, when they knew all of these words, they knew these phrases, they knew how to kind of transmute them in their head from the complex to the simple, all of a sudden they were nailing these meetings and people were getting excited about the business instead of thinking about the fact that this person didn't know one phrase. So I think it's transformative for founders coming to the market to be able to pull the curtain back and understand what these words really mean.
Speaker 3:Excellent. I can see that it would be. I know just even preparing for this podcast, going through a number of these terms. And you know here myself and Alessio, you know we're in this industry. We hear many, many of our clients the vast majority of them actually are businesses and entrepreneurs themselves and so you would think we come into contact with a lot of this stuff.
Speaker 3:But I found myself even this morning Elisa and I were talking about quantum We'll get into that later I had no idea what it is and I'm still. I'll be looking forward to you guys to explain that to us later. But, yeah, so the kind of the utility of this I think is, you know, can't be overstated. With your extensive experience, you know helping startups and you know talking about these terms and the terms that are crucial for these transformative breakthroughs, as you were discussing Eamon. Can you guys talk about maybe some of the core principles that you think would be important for a startup, maybe kind of particularly in the payments space, given the fact that Global Legal Law Firm is a payments litigation firm?
Speaker 2:I think, um, I think one of the key things, certainly, that we looked at from a tech stars perspective when we were investing in these companies and even if you look at, maybe one of the canonical big examples of a company in the payments space is the folks from Stripe is that in many cases, they are founders who have a real pain point, an itch that they want to scratch right, or a perspective on the industry that they want to take forward. And so I think you need to find those people because, first of all, as I said before, starting a business is kind of a crazy thing to do, right, like, especially if you're starting a business from a perspective of having worked somewhere that is stable, maybe publicly traded, with a good salary and a pension plan to somebody going well, I'm going to, you know, take all of going to take all of the risk. You have to find very driven people, very passionate people who can not only create an idea from a technical standpoint, can will an idea into existence, but also build the underlying technology behind it, but then also explain that to potential customers, partners, hires, et cetera, et cetera. So you look for people that have very high EQ, you look for people who have. You know, founder market fit was how we always used to think about it in terms of the people that you would bring in, but you needed that ability to dream up an idea, be passionate about it in terms of the way you explain it, and then also be mindful of the audiences that you're talking to, whether it's partnering with corporates, which, in the case of most payments companies, you have to then build relationships with Visa, mastercard, banks, a lot of industries and corporations you know, let's just say, wouldn't be the fastest moving in the world, and in many cases, when we were investing in fintech and payments companies in the early 2010s, you know we're pretty resistant to change.
Speaker 2:So I think you have to have a combination of factors in there to facilitate that not only ideation of a business, but also kind of the build out and the communication that you need to help it scale. And so, if you look at a lot of the big, successful payments companies that are out there, they're either founded by people who've come from industry and have some very relevant experience and connections and network, or they're founded by people who go. This is a pain point that I cannot abide, and so, therefore, I'm going to create a buy now, pay later system, or I'm going to create a new payments gateway that is going to eliminate a lot of the challenges that we see with the incumbents. So it's a tough one At that pre-seed stage. It's really a people business that you're looking for, but you then have to be confident that those founders can build a people business that will scale to be worth billions of dollars, hopefully.
Speaker 3:Ken, to kind of piggyback on that if you wanted to maybe add in your thoughts in terms of what factors, what strategies, what perspectives are you seeing in new startups where you're seeing a likelihood of success? What are some of those kind of key elements that you have found that, if you're seeing those being put into place, you're maybe more on the optimistic side in terms of the turnout.
Speaker 1:I mean I have everything Eamon said. I think it applies to any company that wants to sell or to to pitch a business to a potential customer. I think from the startup and the corporate relationship I always say to startups, if there's two or three things you should always do, um one is keep things simple. I think there's a danger that a startup will go. We'll get a meeting in front of a corporate and we'll think this is it, this is the meeting, this is the one that I'm not going to sleep up to, this is the one that's going to change my life.
Speaker 1:And they put too much pressure on themselves. So when they're there, they they almost lose a little bit of discipline and and over present they make their rather than, like amon said, explaining the problem, the itch, and going through their product and what the usp is and why they are better than the competition. Keeping it simple, they almost oversell, pitch and they get too excited. So what you end up with is lots and lots of words and at the end of it, the recipient, the corporate, might think well, I think I get what you've got, but it seems a lot bigger than what I thought it was. I'm not sure if I really understand what you're saying. So maybe not, and I think the advice I give is just keep it simple and when you pitch to a corporate or anyone, especially a corporate, I always say your aim isn't to get that big ticket or that big deal signed off there, and then that won't happen. Your aim is to, at the very least is, at the end of your pitch, to let them know, or for them to understand, what your product is, what the problem is it's solving and why you're the best option out there for it to work with or to buy or to invest as a corporate. If you do that, that's all you can do, and then leave time for good discussion and question and answers.
Speaker 1:Don't go over the top pitching. Don't waste all the time pitching. So my big bugbear and amen and I always go on this is of all the hundreds of pitches I've seen where startups have pitched to corporates. One of the main reasons why a certain startup which should win the business doesn't win it is because they overpitch. So if they've got 15 minutes to pitch and 30 minutes for chat or Q&A, they will pitch for half an hour 30 minutes and leave hardly any time for questions.
Speaker 1:And people are very polite, especially in Britain. They will say, very good, great pitch. And as that person leaves the room, if they can't keep to time, now what are they going to be like when we work with them? So just keep to time. And it's a simple thing Obviously, pitch well, but keep to time. So just keep it simple, because my point point is you're not going to get it all in that one meeting. Your goal is to get your products across and to secure another meeting to then talk about some of the detail. So it's, it's one of many meetings. Don't put too much pressure just to achieve everything in one go thank you very much for sharing this wisdom with us.
Speaker 4:so now we would like to explore the methodology behind your book. When I read it, I had such a light feeling and it felt really effortless for me, but I know it's a hard work. So how did you decide which word to pick? Which one is going to be the winner and a good candidate for your book?
Speaker 1:Well, I think, go ahead. No, you go. I was going to say I think Eamon says it was my idea but an idea is an idea, but you need to work with people to make it happen. And the reason I went to Eamon is that I knew there were some words out there that I struggled with and would definitely benefit from a definition, but I knew there were hundreds and hundreds more. So I needed someone who had that knowledge of of more words that we could join together to get a reasonable list to create a book. So, um, there's no rocket science to it. I mean, if I remember correctly, I I chatted to amen and we decided to set up a google doc and we just listed words as we found them.
Speaker 1:So I had about 10 or 20 from my horrible first few meetings where I didn't understand anything, and we just added those words on and we got to a point very quickly where it was 60, 70, 80. And then I think I can jump in, I'm sure we got to kind of a point where it was 80 and it was growing and we thought, well, we could do a book on this and then we started going back and writing definitions. Um, we didn't copy and paste definitions. We looked at all the definitions around there for one word and we created a new definition from it. So all the new, all the definitions are our, our words, um. But we wanted to see what definitions or views were online and then we created more of a, a new definition which encompassed it. But yeah, it was a Google Doc. Nothing sexy Google Doc, just grew and grew and grew, and that's how you saw it. That's how my memory tells me what it was like.
Speaker 2:Yeah, it was exactly that Words going into a Google Doc. And then, I think, just by, I suppose, reading Bloomberg and TechCrunch and the Verge and Twitter and all of the various different places that we source news and source content, you started to pick some of them up, and you also, I guess, to a certain extent. I went back to kind of almost square one and started almost examining the language that I was using in conversations with founders and going, OK, what are the kind of questions that I always ask and what are the assumptions baked into those questions and therefore, the words that I use? As part of that, we did a little bit of crowdsourcing. So when we got to, I think, when we got to about 80 or 90 words, we started socializing the concept a little bit more with people and saying, hey, what do you think?
Speaker 2:And actually a big part of the first edition was at the time that the whole kind of web three world was was really booming, and so some feedback that we had was look, you've included lots of things that are about startups in the let's call it web one and web two era, but actually you haven't, you know, included anything really about beyond, say, blockchain, Bitcoin, Ethereum, et cetera.
Speaker 2:But there's an awful lot more in there that we looked into in the in the first edition and likewise, as we looked at the second edition, starting to look at Google trends and seeing which words are starting to become more popular.
Speaker 2:So there's a certain amount of crowdsourcing, there's a certain amount of research and there's a certain amount of just catching yourself and other people in conversations and I'm like a power user of the Apple notes app on my phone, so I'm kind of constantly talking into it and reminding myself of different things that I have to do or scribbling things down in a notebook, and that was very much part of it and it would then go into that Google doc. And you know, I think we probably we spent quite a bit of time actually deciding which words not to include as well. Um, because there are some that are too technical or too specific or too esoteric. You know we wanted this to be a book that wouldn't necessarily put people off by having, you know, too much depth, I suppose for want of a better description. Like we wanted this to be a jumping off point for people's journey of discovery into this world and into these phrases.
Speaker 4:When I was reading your book I saw a lot of terminology which we as lawyers use in our legal world, like due diligence, NDA, common stock, preferred stock, right of first refusal. So I was just curious, because all those terms they are legally defined or they're part of the common law system, so did you take those legal definitions into account? How do you define those terms?
Speaker 2:We had.
Speaker 2:We were very lucky to have a couple of lawyers contribute to the book and a lot of people who have spouses and partners who are lawyers who read through it as well, but I think it's one of those.
Speaker 2:I think, because the startup world intersects with the financial world and the tech world and particularly the legal world, which is probably the part of the universe that startup founders tend to have the least exposure and experience in an awful lot of companies who have signed their own death warrant, for want of a better description, by signing the wrong term sheet with the wrong terms in there, or maybe not understanding what liquidation preference is, or what participating liquidation preference is, or understanding a right of first refusal.
Speaker 2:So we wanted to make sure that we really got those terms in there, because they are business critical ones for a lot of the companies that I work with who are going and seeking investment. So I think that was really important to get in there and I think again, what we wanted to do is go look at least if someone says convertible note in a meeting, you have a conceptual idea of what that means. Of course, then if you want to dig into it in more detail, you know there are a thousand online resources and different places that you can go, but we want it to be like the highlights reel rather than the full movie.
Speaker 4:Interesting. I noticed in your second edition new words such as chat GPT, for example, and I wanted to ask this provocative question because chat GPT entered into the life of everybody and there is a fun fact about the chat GPT and the US legal market. So picture this US lawyers started using ChatGPT for legal research and, instead of finding like solid legal citation, chatgpt supplied them with fake court cases and of course, there were some embarrassing moments in the court and the penalties for those involved. And some federal judges reacted to the situation. They actually mandated that lawyers disclose if they use AI models in preparing their submissions models in preparing their submissions and actually they asked the lawyers to certify that they checked the accuracy of the content generated by AI. So how chat GPT influenced their second edition?
Speaker 2:Yeah, I would say for sure ChatGPT was the birthplace of the second edition. I think we published the first edition about a month before ChatGPT came to the market and so it was really interesting because all of a sudden this whole explosion of generative AI and everything else kind of started happening and I think we very quickly realized our book is now like six months out of date even though it's only been one month. So it kickstarted the conversation about a second edition. And you know absolutely we use I mean I use Gemini, and ChatGPT is almost like a research assistant, right, like to help me find new words. It was really useful to go. Are there words that are emerging in certain markets? Are there phrases that are emerging in certain types of publications? So it was good as a kind of research tool. But to your point around kind of the hallucinations, we certainly didn't use it on that side of things for exactly the outcome that you described.
Speaker 1:No, I think Damon's point. In my introduction in the second edition I mentioned that after we launched the first edition we realized very quickly that we have to do a second edition because of um chat gdp and gbt and everything that came out after it. I know the irony. The funny thing is one of the chat gpt definition, um daniel who wrote the story behind it. I think he actually used chat gbt to do the story or help him do the story which he disclosed.
Speaker 1:I saw that but yeah, in Ava's point it was in the words that we worked on from memory. It was good for a piece of research but the definitions were, she was saying, done from scratch by hand. I wouldn't necessarily trust chat GPT to be there to write the book for us and that would be a very dangerous move. You know we didn't do any of that but it was, um, it was the catalyst. I think it was definitely the catalyst to us saying we've got to do a second edition so another provocative question.
Speaker 4:So what would be, in your opinion, the advantage of your book comparing to Google? Because nowadays you can just type the word in the Google search and you have your definition ready. I can never get this one.
Speaker 1:You get asked this a few times, it all comes up my own personal views. I think there's a space for both. I don't think we are competing with Google. I don't think we're better than Google in terms. I think Google is quite reactive though. So if you're in a meeting and someone asks something and you just wait for that moment where you go and you look for Google, I think you can't really sit and Google it and you can't really sit there in a meeting and start going through the book to find a definition.
Speaker 1:I think what the book does is brings it all together. So Google is very good. If someone had someone says something, you need to know what the answer is. Or someone emails, you need to know what the answer is and you go and Google it. I would argue as we did when we started looking at definitions as source to build a new definition. There's loads of different definitions out there on Google, so Googling a word sometimes will make you more confused than you were before you Googled it because there's so many views out there on certain ones. Um, I think what the book does is is is bring that together into cleaner definitions, but also brings them all together. So if you're looking to start a business and you want to get a gist of the kind of language that is out there before you go into meetings. I think the book's really good to look through, get some ideas, and a lot of feedback we've had is that founders who look through the book actually recognize words in there they didn't, they weren't aware of, they recognized.
Speaker 1:Let's say oh, I saw that word, yeah that came out the other day, so the books actually prompted them on words that they've already heard and they weren't quite sure about. So I think it's having it in one place and having one definition for each, one definition for each term, whereas google can set you off down rabbit holes and everything, and I think it's a bit more reactive maybe my own view. I think there's a place for both, but I think the book brings it all together. It's quite a good companion to have on you, be it a Kindle version or Agreed, agreed.
Speaker 3:You know we've been talking a lot about. I want to show them here for our audience. This is the first edition of the book that we've been discussing today, the Startup Lexicon, and I'll note that you know if I can somehow show the size of this. The second edition is substantially larger, substantially, you know, many more definitions, and what I'd like to kind of get your thoughts on are some of the terms that made it into the second edition that I don't think were found necessarily in the first edition and again, some that are kind of particularly related to payments. One that we talk a lot about is, you know, software as a service. Could you maybe talk about that, maybe even in terms of why was it not in the first edition and it is in the second edition? Maybe some of the methodology and thought process behind that, if not also defining that term for our audience?
Speaker 2:So software as a service is a subscription service. So where previously you would buy and maybe I'm showing my age here you would buy Encarta or Lotus Notes or a piece of software and it would cost, you know, 30 bucks or a hundred bucks and you would install it on your computer and it would last for a couple of years. You know what you have with, say, google Docs, or even with ChatGPT, with lots of different products that are out there now. You subscribe to that service and so you get a version of it that you can use online, but it's constantly updated, iterated. Generally, these services are in the cloud, so you don't have to install anything physically on your computer to use them, and so that idea of X as a service has become incredibly popular, because for tiny kind of lizard-brained investors like myself, a subscription service is great because it gives you predictable revenue, you can start to think about modeling your customer acquisition costs, the lifetime value of those customers, you can make confident predictions about the future, you can borrow money against that, etc. And so you have now everything from platform as a service, hardware as a service, and that can be everything from using AWS or Google Cloud Platform for your found storage instead of again 20 years ago when I had the first company. We have to rent our own server or buy our own server. So you have a lot of these service models that are out there now that are hugely popular.
Speaker 2:I think the reason that we expanded on the definition so much in the in the second book and included it is, I think, a large part of the second edition was exactly what Ken just said, where we saw all of these new phrases very, very quickly entering, you know, the public discourse. You know you think about the idea of a deep fake really didn't exist in in the public kind of conversation or in in in very many non-academic conversations three or four years ago. Now you can't go you know a day without seeing something being discussed on cnn or new york times or various different places on twitter or x? Um. So there were a whole bunch of these phrases that started becoming more popular. And alongside that, uh, we both have a lot of friends who are both very supportive but also very critical, who would email going. Why is this word not in? I can't believe you didn't have this definition in there.
Speaker 2:So I think a lot of what was added in was partly having a really good network of people, many of whom ended up contributing to the book out there, but also just seeing the pace at which conversations, even that kind of the family dinner table, would include things like generative AI, deep fakes where even you start seeing movies. Alex Garland did an amazing HBO series called Debs which is all about quantum computers. So all of a sudden all of these topics started surfacing, not just in the tech world, also sort of becoming topics of mainstream conversation, and at that point you kind of go. We kind of need a definition in here and I have no doubt that you know in three months time or in six months time or over over, you know our startup lexicon, christmas party, there will be new words that ken and I will look at going. I can't believe we didn't put this one in, and so you know. Third know, third edition, who knows?
Speaker 1:Yeah, I think the software at the service and the few EBITDA and words like that, technically speaking, we maybe should have I would say maybe included them in the first edition. I mean, it was because it moved so quickly the first edition. We wanted to get something out there and it was. We wanted to get to a point where we wanted to release something, as Eamon said. Once we released it we realised that there were whole new words coming out as a result of generative AI, chat, gbt, but also the terms that maybe we should have included, and we were very lucky to have a very supportive network that let us know if we'd missed a few words and we decided, ok, that would go on the list for second edition.
Speaker 1:So it isn't a linear process where you get all the words nailed, release a book and then new words come out. You do another book. There's some words that maybe you've always been there. We didn't include them in the first edition through the decision we made, or we we forgot to include them, or or they just got more prominence. So they've always been there, but software service so, or deep fate, became more prominent. So it's it's it's an evolving thing and it's impossible to control it all. So the words kind of get away with you and and we're trying to play get ahead of it with the book, but the book will always fall and we have to catch up again, but that's the joy of it, it's part of the fun.
Speaker 3:Yeah, no, it is. It's very interesting. You talked about discussing around the table. Um, I got you know something. I'd like to walk away from this podcast with a higher IQ. So, gentlemen, I would like you to discuss, if you don't mind, quantum as a service. This is one of those terms I mentioned. I don't even really know what the term means and how it can be applied to a startup, etc. Would you guys mind talking a little bit about quantum as a service?
Speaker 2:I will pass it over to Eamon, becausein is out, it's my, it's my favorite phrase, so I will apologize to in advance for any nuclear physicists or or quantum enthusiasts who are who are watching this if I butcher uh the uh the description. But in effect, the way that computers work nowadays is zero and one right binary, so so it's a. It's a transistor, effectively switches is on or off, and that is really what powers all of the computers that are out there, the majority of computers that are out there at the moment. Quantum computing is the idea that that switch is neither on nor off, it can be both simultaneously, it can be some combination of the two, and so what it means is you go from having a certain amount of processing power and compute power to having an infinitely more powerful computer because it can perform more processes at once, and so the idea with quantum computing in particular is that you can apply it to extremely challenging, usually mathematical problems is what a lot of people are working on them with now. Working on them with now.
Speaker 2:There is a huge one of the big challenges with quantum computing. When people get it right and they build a true kind of quantum computer. A lot of what's out there at the moment is still relatively experimental. When they build a true quantum computer. It will be able to crack effectively every password that we have in a matter of minutes, as opposed to now, if you wanted to. And you see this in a lot of law enforcement cases. If law enforcement wants to access an encrypted computer or an encrypted online service, they can do it. In some cases it can take days, in some weeks and in many cases it can take years With one of these quantum computers, because they can perform those processes in order of magnitude faster. They can do it in seconds, and so there are big concerns around the security implication of quantum computing coming out.
Speaker 2:There are also big benefits if you think about analyzing massive amounts of data far more quickly than we can now, and so you have Amazon and others are working on quantum computers.
Speaker 2:They have quantum as a service available for researchers, universities, companies that want to start accessing this, and so it's one of those phrases that is at the cutting edge in terms of the technology. Like we're still super, super early, I would say, in terms of that technology, but it was a phrase that started coming into sci-fi a little bit more and more, and it was a phrase that we started hearing a bit more. Certainly, a lot of VCs now are kind of setting themselves up as deep tech investors, and one of the areas that they're looking at is quantum, and so it felt like one of those ones that we really needed to have in there, because I think it's a phrase people have heard, but the idea of kind of quantum physics. You know, maybe not necessarily the breakfast time reading that everyone wants, but we wanted to try and have a distilled definition that would at least allow someone to conceptually understand that this is about processing power and the speed of being able to do these equations.
Speaker 1:And on the back of that you'll see governments putting in millions and billions of pounds into quantum computing. So it's not just a kind of a nerdy thing that people are doing in the back office computing. So it's not just a kind of a nerdy thing that people are doing in the back office. It's actually now got international focus by governments and there's so much. You look at the main areas of investment.
Speaker 3:Quantum computing Wow, that's really amazing, Before I hand it off to Alicia, a term that I imagine has expanded, at least in terms of not only just the usage but what it means and what it means in certain industries, and that is when KYC know your client, know your customer. Can you guys talk maybe a little bit about the evolution of that term and maybe, as it's applied to different industries, how it might look different even though it's the same concept?
Speaker 2:I think KYC is one that we've put in because it has started to become used across multiple different industries, right? So when it first emerged, it was really associated with banking, and so opening a bank account, opening, getting access to any sort of financial product you needed to send in, I know your customer generally means you do a check on someone's identification so you get a copy of their passport or a scan of their face, a copy of their passport and maybe some identifying information around their address, proof of address, et cetera. So we started hearing the phrase in a lot of cases in the kind of 2010s, in that kind of first fintech boom, and then we started seeing it more in the VC world on both sides of the table, right, when, when we're making an investment in a company, we have to KYC the founders of that company to make sure that they are who they say they are, that they're not serial fraudsters or serial killers or anything like that. And on the flip side, especially now in an era where there are more sanctions than ever before, founders want to KYC the VC funds that they're working with and make sure that those funds are legitimate where their sources of capital come from. There's a lot of concern, certainly amongst NATO countries at the moment, and there's a lot of concern, certainly amongst NATO countries at the moment, that there are hostile states some would describe them as that are actively looking to fund innovation in everything from defense technology to quantum and so on. So being able to do that kind of KYC checking of who's on both sides of the table is really important.
Speaker 2:Move into more regulated industries and a more kind of almost identity proof, of identity centric world online. Um, I think we're starting to see it become a more prevalent phrase and idea. So I think for the first edition, it was one of those ones that I I think we had it and we discussed it, but it felt like it was maybe a little bit too too focused on fintech and I think when it came time to look at it for the second edition, it's like gee, this is a phrase that everyone is going to encounter on an ongoing basis, whether it's proving their identity to get an Instagram account, to opening a bank account or starting a new business. So that was kind of the evolution of the thought process on that one. It felt like it was a phrase that and it's one of those classic acronyms that I think 100% of the people who buy the book will have heard and 90% of them will have gone. I think it means know something and and so being able to again to see that kind of headline view of it was was important.
Speaker 1:Yeah and I'm sure, this world is very important for the corporate world as well, right, ken?
Speaker 4:yeah, absolutely.
Speaker 1:I to Eamon's point. I remember doing a brief with a banking client and KYC was all around KYC and helping customers start a bank account, with scanning their passports and pictures et cetera, and utility bills and this was nine years ago. So KYC then was very much fintech. But, as Eamon said, it got the chop, maybe for the first edition but came in very easily for the second edition. It's one of those words that hasn't changed, in definition maybe, but in terms of its scale and how it's adapted and used now it's just blown up. So it's one of the few words I'd say um that that was refused for the second one. First one went into the second book, second edition, but has taken a life of its own, literally in terms of how it's used and how important it is across many sectors, whereas initially it was very much financial services.
Speaker 4:Ken Eamon, can I ask each of you to share with us three words, the most favorite one, the one that you dislike and you want to get rid of. You think it's a buzzword, it means nothing. And the word which is the most debatable.
Speaker 1:Okay, I know the word I and this is a slightly different. It answers your question, but it answers it in a different way. So the word that I like the most is founder burnout, and I know it's a very you know it's a very important term. It's not necessarily, you know, one that people talk about, but it was one of those times where, in the moments in the book where we ask certain people to write stories, and there's a lady called Christina who wrote a story about founder burnout and I thought she would come at it from a this is why you have to watch out for it and talked about it from a third person. But she actually wrote a very personal story about her own burnout and I thought it was really brave of her to put that into print and and so my, in a way, my, my, my favorite word, because it it really resonated with um, it's a really important word and she was very brave to put her story behind it. So it's one of those words that always sticks out to me as a big part of the process of building that first edition.
Speaker 1:So my favorite word favorite's the wrong word, but a word that means a lot to me because of the importance of it and also, christina being so positive was found, a burnout, one that we, one that I and Eamon you have to remind me. I can't think of a word that I wouldn't have in the book. I still struggle to pronounce one word and I've forgotten what it actually is, eamon, when we did the podcast. I forget which one it was now, but there's a word that I still can't. I don't know if you can look through.
Speaker 2:This is not a blatant ad, but it's in here.
Speaker 1:I'm giving you different answers to the answers here Anthropomorphism, anthropomorphism.
Speaker 2:I can't pronounce that Good word.
Speaker 3:There's a word.
Speaker 1:If you want to catch me out in any interviews, ask me what that means. The word in a way for my own ego that I basically would take out. Just because I can't pronounce it, is that I still can't pronounce it. And the third one was was it the most debated word you said?
Speaker 4:Yeah, that generated the most debate.
Speaker 1:I think a lot of the generative AI wants to create a bit of debate because it's such a big area. So when we went through all the editing and we worked with with our publisher, we went through to just make sense quite a lot of the chat, gbt, generative ai, hallucinations, all this thing because it's they can be quite heavy llms, it's quite heavy subjects. I think that was debated a lot because we had to really take out a lot of the the dryness in the definition to make it plausible and understandable. So I think there's a lot of debate around some of these heavier terms quantum being one because we want people to read it and think I've kind of got it, I've got the first stage of it.
Speaker 1:Um one word I still say we moved around a lot on was from the first edition, which was convertible. No, I remember having lots of conversations with raymond how we define what convertible note is and we got a great story in there in the end, I think from andrews yeah, my see how my colleague andrew said yeah. So there was a couple where I think the ones that we had the most debate about were more ones where we had to turn it into a more palatable, bite-sized chunk. So people seeing it for the first time got the gist of what it meant and they can go away, as amos said, and do more google research on it, but he gave them the primer to what it was.
Speaker 1:I don't know if that answers your question. It's kind of a roundabout way, but there's some words that come to mind to those three questions and I'm sure, amos, you've got much better answers than I have for those.
Speaker 2:I think I would agree that we had a lot of conversation around generative AI topics. I think also there were several. We took out a lot of the Web3 definitions from the first book as well, because we just felt and there was, you know, we had quite a bit of debate on this that are these phrases that really quite as many people are using or are quite as useful for people in their kind of day-to-day, because in kind of 2021, when the first book came out, there wasn't a you know VC phone call or founder that didn't have some Web3 strategy or some kind of DAO that they wanted to set up, whereas I think that changed very radically over that period. So there were a lot of words that we took out that we debated quite a bit.
Speaker 2:The word that I would love to from a personal perspective, a word that I would love people never to have to think about or worry about anymore, is CAC, is customer acquisition cost. I hear a lot of VCs ask a question that is really unanswerable. You have a customer acquisition cost that is correct at this moment in time, but in an hour it'll be different and in two days it'll be different again and you might do a partnership go to market, that changes it totally in a week's time. So I think sometimes it's one of those things that people get hung up on, probably similar to kind of like uh, in in private equity, you hear a lot of people talking about discounted cash flows as a way of valuing a company, and, um, it's very hard to you know. We see a lot of people thinking about that in terms of startups, which, which doesn't work, so, but customer acquisition costs I would bin it and I would be very happy never to hear that question again.
Speaker 2:And then the word that I'd like the most in the book is a word that is in shitification, and so it's the idea that in tech, it's this idea that at a certain point in every business's life cycle, they stop serving the customer and they start serving or their user and they start serving the advertiser, or they start serving the quarterly requirements of Wall Street. And so it means that in your Instagram feed or Facebook feed, you go from having a ton of information about your cousins and your friends and your schoolmates to having a bunch of irrelevant ads. Or you go from having ad-free Netflix to paying the same price to see ads, and that experience kind of goes, not just in the tech world but you know you go to the cinema and you pay $25 or $30 to sit through 45 minutes of advertising before you even get to see the movie. So I think that it's one of those phrases that has spread from online into offline and is one of those kind of weirdly symptomatic phrases of the time that we live in.
Speaker 4:Excellent, thank you. So, and now the fun part. Just to demonstrate how complex is the world of the startup and how difficult it is for a newcomer to understand the language, we came up with this imaginary story and we need your help to guide us through it. So the story takes place in FinTechville and it's about the founders of a startup. Let's call it PayWise. So the founders of a startup bootstrapped through the early stage, focusing on an MVP and securing angel investors with a strong elevator pitch. They joined an accelerator, optimized their cap table and secured a seed round, managing burn rate, churn rate and RRPU. They aimed for hockey stick growth With a keen eye on cash flow, positive and marketplace health. They prepared for an eventual IPO.
Speaker 4:So for someone unfamiliar with the startup lexicon, this story really sounds bizarre. So can you help us to demystify this narrative and convert it into layman's term? And let's do it sentence by sentence so the audience can follow us. So let me repeat the first sentence In FinTechville, the founders of a startup bootstrapped through the early stage, focusing on an MVP and securing angel investors with a strong elevator pitch. So here you go.
Speaker 1:I'd say that and, by the way, that sentence or that paragraph sounds very familiar to the first time I sat in a meeting and a company described what they were doing and I thought I don't understand half of this.
Speaker 1:So it was almost a throwback 10 years ago made me think about chatting to Eamon about a book. So it's a bit of a I mean generally speaking, some words there that are in the book. You know startup is prominent. Uh, that's obviously a very early stage company, a new company. So when people generally say startup, it's from scratch, it's a new company. So when people generally say startup, it's from scratch, it's a new company.
Speaker 1:Bootstrapping and Eamon jump in. Bootstrapping is where, before you go to any investment rounds, you actually the money you get or you earn your money either from revenue or from personal money or from friends and family or savings. So everything comes from, usually from your own money or people lending you money. So it's called bootstrapping and and a new, it's a history behind that term, but we're part of that for now. Um, and bootstrapping I think is a is is something a lot of early stage companies do before they start getting into investment. Or even if they're investment, they're not even investment ready, so they have to get money from other sources. Um, early stage is a bit like startup, that that's I don't know 12, 18 months, 24 months. So it's an early stage company.
Speaker 1:Mvp, minimal, variable product is where you have the core features of a product but you put it out to market and you get some feedback and that's where you get iterations of the term that's in the book.
Speaker 1:So you actually learn from the marketplace or you learn from an early stage product, early version of the product, what works, what doesn't. So an MVP is crucial. Angel investors is more where you get. You go to bootstrapping angel investors. You get more high worth individuals another definition in the book but people with money will come to you and offer you more substantial funding and usually that comes from high net worth individuals, wealthy people or people who are business people who've just got money to to invest. And you also sometimes um with angel investors. They come into syndicates so they join together and then finally, um, elevator pitch. Um is where it's, I think, from memory is how long it takes to get up an elevator 30 seconds or so. So one key thing you need from a startup is to actually write a pitch or describe what your company is all about in 30 seconds, and that is a key, key thing.
Speaker 1:I would say a bad elevator pitch is a really bad place to be. After that You've got to get someone's attention in 30 seconds, get them intrigued. So they're kind of basic-ish terms but I would say a lot of people will think they know the definitions of loads and and and may not. May not really know as much as as they they think they do.
Speaker 4:Anyway, if you want to jump in, if I miss things there or that was a whistle that's fine, I'll take the second sentence okay, so, but just to recap and put it in the simple so basically, the first sentence was about the founders who started their new company from the scratch and they decided to finance this company using their own money, and during the first 12 to 18 months of their journey, which is the early stage, they focused on building the basic version of their product, which is mvp, and to attract wealthy individuals to invest in into their business, which who are angels investors. They crafted a brief 30 second story explaining their product and how they're going to commercialize it. Right, just elevate the pitch perfect, fantastic that's great, that's really great.
Speaker 3:All right, amen. You ready to tackle the second sentence with me? Let's do it let's do it um. They joined an accelerator, optimized their cap table and secured a seed round. Take it away, Eamon.
Speaker 2:So an accelerator program there are multiple different forms of them. Some of the best known are Y Combinator, based in Silicon Valley, techstars, who I previously worked for, entrepreneur, first, ampler, lots of others, and what these programs do is typically they invest a small amount of money into the company so from $50,000 up to $500,000, maybe in some cases $750,000 into companies and they put them into a three-month accelerator program where they connect them with lots of other founders, with mentors and advisors, with potential customers, with potential investors and, as the name suggests, try to accelerate, you know, two years worth of growth and learning and experience into a very condensed kind of 12 or 13-week program. So these programs are usually three months. They usually conclude with some sort of demo day where everyone gets to present what they've done and what they've learned and where they want to go next. So there are accelerator programs that really help kind of companies, as the name suggests, go kind of from zero to one or get their first revenue or secure investment a little bit faster.
Speaker 2:The cap table of a company, then, is basically the ownership structure of a company. They call it cap table because usually it's in an Excel table format and so at the start of the company, it will be the founder or co-founders of the company as a single line saying they own 100%. If, as was the case in the first sentence, they raise some money from angel investors, they may have three or four angel investors who come in, each of whom maybe owns between 100% and 2%, depending on how much money they invested into the company, and so they get added into the cap table. Their ownership gets recorded in there. When they raise their seed rounds, which I'll talk about in a second, those additional investors get added into the cap table.
Speaker 2:Employees of the company get added into the cap table, so it's a way of tracking the ownership structure of the company. Who owns what shares. As the company grows, you then start to change. You know, are they common stock, are they different classes of stock, which again, we go into in the book? So that's your cap table. It's one of those really important legal documents that you have to get up to date, and I cannot tell you how many times I've seen two versions of the same cap table that tell wildly different stories.
Speaker 2:So not one that many lawyers want to see. And then a seed round is generally, you know, once the company has started generating some revenue. So the kind of most recent data that I've seen in investments that we've done is, you know, when you're somewhere between five and maybe 50,000 in monthly recurring revenue or in monthly revenue, you're at a point where you can raise a seed round. Typically a seed round is somewhere between $1 and $4 million, depending on the one and three, depending on the market that you're in.
Speaker 2:In some cases it's a little bit lower, but generally a seed round is you raise from angel investors or very early stage to get to what they call problem solution fit. So you have an idea, you iterate it and and you find a solution that people want. Your seed round is then to help you get to what they call product market fit. So you're generating revenue, there's a clear demand for for your product or service and you then raise your next round of funding in order to buy higher sales team, do more marketing and sell the products to more people. So seed round is really to kind of, you know, as the name suggests, kind of plant those roots, get the first kind of green shoots of growth. And then you're off and at the races to series A, B, C and beyond.
Speaker 3:Excellent, Excellent, Well, so what this might sound like, if I can put this back into the sentence form, the founders joined a program designed to help new businesses grow quickly. That would be the accelerator. This program provided guidance and resources to help them improve how they organized ownership stakes in their company, CapTable. I got to say I was hoping for a much more exciting answer on CapTable. It's basically a fancy spreadsheet, is what I learned Then. They successfully raised between one and three million from large investors ie our angel investors to help get their product to market and prepare for rapid growth. Ie seed round. Excellent, Alicia, take it away.
Speaker 4:And now wait for the third sentence. That's something. Third sentence that's something managing burn rate, churn rate and irpu. They aimed for the hickey hockey stick gross.
Speaker 3:I don't play hockey either yeah.
Speaker 1:So I mean they're all important metrics and they and metrics that I would say get asked quite a lot and you've got to be on top of them as a founder because you're going to get asked these numbers, and I think to Eamon's, before we go into each one, to Eamon's point earlier, these things sometimes change. So what your churn rate is, your burn rate is your average revenue per user, is at one moment in one presentation, could change one month later. So it doesn't mean you don't pay attention to it, but it's fluid. So if you look at the first one, burn rate, this is one I think people don't, sometimes early stage founders ignore a little bit. They just throw money around and then someone goes what are you burning? And they go and that's how much money you spend each month in effect. So you know it gives you an idea of if, if you've got so much money, how much many months you've got left, which is another definition itself. But burn burn rate is how much money you spend each month and I would say the very first thing you should do is work that out and be very clear on that, if it's going up down, whatever, because people will ask you what's your expenditure each month. What's your burn rate?
Speaker 1:Churn rate is all around losing, potentially losing customers. Of churn rates, usually percentage, so it's if your churn rate is going up, that's not not a good thing. Whatever you're doing means net-wise you're losing customers. Churn rate can also be around employees, so you could be losing employees. You might ask if they're churn rate with your staff. So churn rate in itself is more all around losing business and you have to keep an eye on that. So losing business and how much money you spend they're very, very important metrics. Investors and corporates will ask, because the other thing is these are much more understood in the corporate world maybe than what they were two or three years ago. Average revenue per user is a bit of a mouthful but in essence it's the total revenue divided by the amount of users, so how much revenue each user customer is bringing in, and that's quite a straightforward calculation. But it's something that you've got to be aware of, something you want to plot. So all of these are good to plot over time. Keep an eye on them. It's not just a one number answer at one point in time and then you only look at it again when you get asked six months later. So they're the kind of the metrics as many of them and the book goes through all of them they're quite key ones and hockey stick, hockey stick growth um is is more around if you've got a hockey stick and you don't play hockey, but it's a kind of like a it's like a j in the alphabet and hockey stick growth is a really common term that people use.
Speaker 1:We're going to get hockey stick growth. We expect hockey stick growth, which is basically means you're going to grow really, really quickly right from the start. You're going to, you're going to dip a little bit. Maybe you get your business going, but once you go, you go you're going to go up like that, like a big tick and um, without being controversial, a lot of investors will expect a hockey stick growth. If you're going to, if you sell a business to someone or pitch a business just as someone you're going to want to, kind of project that there's lots of oh, I lost something. There's lots of um scope out there, scale out there in the market, lots of potential opportunities. So you're going to grow double your sales each year. So I would argue there's a very fine balance between being realistic but also being optimistic in terms of where you think the market's going, but hopefully growth is literally.
Speaker 1:you're going to go like that and I would argue a lot of investors would like to see that as a projection and want some reassurance that you can deliver on that.
Speaker 4:Yeah, and they wanted to tell the happy story. We wanted our story to be happy. We wanted our story to be happy, happy one.
Speaker 1:It is happy, everyone wants a good story and everyone wants investment. It's just being maybe sometimes realistic. Not everyone can deliver hockey stick growth, but if you aim for it, that's good.
Speaker 4:So, in simple, simple terms, this story sounds like that the company carefully watched how quickly they were spending money, which is burn rate, and how many customers they were losing, which is churn rate, and how much money each customer was bringing, which is apru, and the goal was to achieve rapid, explosive growth, which is a hockey stick.
Speaker 1:Yes, there you go. I'm getting confused myself.
Speaker 3:Excellent. No, that was great, that was great. Eamon, you ready for the four cents?
Speaker 2:Absolutely.
Speaker 3:Excellent, here we go With a keen eye on cash flow positive and marketplace health.
Speaker 2:They prepared for an eventual ipo so cash flow positive is is a phrase that has become an awful lot more popular and important in in the last couple of years and, in particular, it's something that every business wants to get to. So cash flow positive means you're bringing in more money than you're spending. So back to Ken's definition if your burn rate is $50,000 a month and you're bringing in $100,000 a month in revenue, then you're cash flow positive. So lots of companies are now starting to aim for that because, particularly in the kind of venture capital system, finding investors, getting investors to release their investment, has become an awful lot more challenging because they are all looking for this hockey stick growth. So now we're seeing more and more companies go hey, when we get this seed round, how do we make ourselves a profitable business so that we're in control of our own destiny? So cash flow positive probably not a word. You would have heard an awful lot five years ago when things were maybe a little bit more freewheeling, but certainly the last couple of years people have really aimed to achieve profitability, marketplace, growth, marketplace, health. So marketplace is, as the name suggests, generally a two-sided environment where you have a buyer of services and a seller of services. So in particular. Probably one of the best known examples, for example, would be Uber or Airbnb. Right when I, as a consumer, want to rent an apartment, I go on Airbnb. I find one. There is a person on the other side of that transaction that has an apartment in Lisbon. We make an agreement on the price, and Airbnb facilitates that. What we mean by marketplace health, then, is that you have a really good balance between the number of buyers and sellers and that you have that demand in check, because what I don't want to do is go to Airbnb and try and book an apartment for a conference in November and either for all the apartments to be gone or all the apartments to be a thousand dollars a night. So you've got to keep your marketplace health in balance at all times, because otherwise you have too many users and not enough sellers, and so people churn, or you have too many sellers and not enough buyers, and then the sellers churn, so you've got to be kind of balanced about that.
Speaker 2:And then the last one, which we all in the investment business hope for as much as possible from our portfolio companies, is an IPO or initial public offering. So, generally, angel investment and venture capital investment and even private equity investment is what's classed as private investment. So in many cases you have to be a regulated individual or a regulated firm to invest in these types of companies, because the assets, so the stock that you own in a very early stage company is what they call illiquid. I can't sell it to anyone else, it's not tradable in any places and you can't sell it to retail or public investors because the SEC and various other governing bodies feel, rightly so, that these investments are extremely risky.
Speaker 2:But at a point where a company achieves cash flow profitable it is a high growth business that has doubled, maybe in size, every year for the last couple of years, has good top line revenue growth, maybe somewhere between $100 million and $1 billion in annual revenue.
Speaker 2:Then they become ready for what's called an initial public offering, which means that then those companies list on the NASDAQ or the London Stock Exchange or New York Stock Exchange. So in New York they get to ring the bell and sell shares to public or retail investors, which means that anyone as they call it in the US, mom and pop investors can get involved in these companies and own a share of their future growth and at that point the investors who put capital into these businesses very early on. Hopefully see, you know, two, five, 10, 100, thousand X return on that initial investment that they put in. And particularly I invest the pre-seed stage. If I invest in a company that had a $5 million valuation on day one and they exit for $5 billion and I still own a small stake in that, that's been a pretty good day at the office.
Speaker 3:It's a day I think a lot of business owners are hoping for. Usually, people do pretty well at that stage. Yeah, absolutely Well, excellent Eamon, Thank you so much. Well, excellent Eamon, Thank you so much. Just again, for our audience, what that might sound like, kind of now that it's been explained the founders of the startup company carefully's shares to the public for the first time, transforming it into a publicly traded company, ie the IPO Awesome.
Speaker 2:Much better than I could have expected.
Speaker 4:Ken Eamon. Thank you so much. I think it was a great discussion, very interesting. Great discussion, very interesting. And, as we're wrapping out our chat on the startup lexicon, I wanted to emphasize how your book really brings this startup language to life, and it's not about definitions. Your book is full of personal stories, real-life examples, and what else is super interesting is that it's not only for tech companies. Any company in any industry can benefit from it, from fintech to retail. And if someone is starting a venture, managing the startup lexicon is a real game changer because it can help to boost the confidence and can help to navigate in this world of entrepreneurship. But, most importantly, it helps people to communicate with each other and to find the common language and to reach for their ambition with each other, and to find the common language and to reach for their ambition.
Speaker 3:So enjoy the stories, dairin and get ready to make your mark Excellent. Yeah, it's been a real pleasure having both of you on with us today. Gentlemen, I'd like to again for our audience, the Startup Lexicon. This is the second edition. Available everywhere, Gentlemen, Amazon, pretty much, anywhere books are found. You can find this, Ken Eamon. I'd like to give you guys the opportunity to let our audience know how they might find you. If, in fact, you want to provide that. Is there a website? Is there an email address? If they're interested in conversating with you, what you would have them do, Sure, so they can go to, oh sorry.
Speaker 2:So what they can do is they can go to thestartuplexiconcom, which has links to buy the book, which has more information about the book. Of the many things that I can thank my parents for, one of them is being called Eamon Carey, which is excellent SEO, so it's very easy to find me and Ken on LinkedIn and get in touch with us. That way, we check all of the DMs and everything else that we receive there. So certainly always happy to chat to people who are interested in learning more about the book or people who think we've botched the definition or need to add in a new word.
Speaker 2:But yeah sortofplacingcom is the place to go.
Speaker 3:That never happens. Amy, I'm sure, no one's questioning Not that I would admit to.
Speaker 1:I think just to echo Amos' point, linkedin's really good. I mean, it seems to be the simplest way. We get a lot of communication on LinkedIn and people letting us know certain definitions, having questions and wanting us to come along and talk about the book and everything. So linkedin seems to be the most prominent, so we can leave you our linkedin.
Speaker 3:Thanks great, excellent. Um, as we close out, we would like to give you guys the final word here. We've heard that there's some talk of a third edition, maybe in the works already. Would you want to talk a little bit about that as we head out?
Speaker 1:Well, as I mentioned at the top of the show, it wasn't long after the first edition that we realized we had to do a second edition. We didn't think it'd be so quick, so we haven't. If I'm honest, Damon and I haven't spoken about a third edition yet, but I would be surprised if there isn't a need for one. I can't see the language of startups slowing down or stopping. So watch this space. I'm sure, if it's anything like the last time, Eamon and I will get together in a couple of months and start talking about the words that need to be included in edition three, and that will then be a growing, evolving process. But yeah, I'd be. I'm kind of. As I said, we haven't spoken about it yet, but I'm confident there'll be a need for third edition and if Eamon and I get back together and write it, hopefully there'll be one in print, you know, in the near future.
Speaker 2:Excellent we have a difficult second album, so the third one should be easy. And from our side, we promise you a new world and a new personal story. Thank you.
Speaker 3:Excellent, appreciate it and we would love to, if and when that third edition comes out, we'd love to have you guys on the podcast again. It's been a real pleasure. Thank you for sharing your experience, your knowledge, your expertise, everyone listening. Thank you for listening this long into this podcast. This has been the Payments Experts Podcast, a podcast of Global Legal Law Firm. You've had in studio with us Senior Associate Attorney Alicia Trusova, as well as our special guests Ken Valady and Eamon Carey. Thank you once again, bye-bye. Thank you for listening to this episode of the Payments Experts Podcast, a podcast of Global Legal Law Firm. Visit us online today at wwwgloballegallawfirmcom.