Jae Hwang — Why Experience May Be the Founder’s Greatest Edge | FV Podcast Ep. 67

Jae Hwang is the co-founder of Former, where he is challenging a deeply embedded assumption in venture capital: that the best founders are young, technical, and built for hypergrowth at all costs. His own career followed a different path. Jae began in brand consulting and strategy in New York, worked across North America, Asia, and the Middle East, and eventually became a Chief Strategy Officer within a Dubai government asset management organization, gaining firsthand exposure to strategy, operations, venture capital, private equity, and large-scale economic development. 

This conversation matters because Jae makes the case for a different kind of entrepreneurship—one built around experience, domain knowledge, disciplined capital, and profitability by design. Maxim and Jae explore why experienced founders may have an advantage in finding product-market fit, why a successful $10 million or $50 million company does not need to become a unicorn, and why founders need to get much clearer about what they are actually trying to build. They also examine AI, overlooked markets, capital deployment in the Middle East, and the difference between having good intentions and building structures that actually produce the desired outcome. 

5 Key Topics Covered 

• Why experience can be a founder advantage — Jae explains how years inside an industry create pattern recognition, networks, and an understanding of problems that can shorten the path to product-market fit. 
• Finding product-market fit before building too much — The conversation explores why founders need to talk to customers early, narrow their proposition, and resist being distracted by every possible application of their idea. 
• Rethinking the venture capital model — Jae breaks down the gap between bootstrapping, traditional VC, and private equity, and explains Former’s concept of providing formative capital alongside embedded operational support. 
• Profitability versus hypergrowth — Jae and Maxim discuss why raising increasingly large rounds should not automatically be treated as success and why profitability can be intentionally designed into a company from the beginning. 
• Clarity, focus, and organizational structure — Jae introduces his “tip of the spear” approach: identify the singular proposition that matters most, align the organization around it, and be disciplined enough to say no to everything else. 

3 Key Insights 

• Experience becomes more valuable in an AI-enabled world, not less. AI can dramatically increase productivity, but domain expertise is what allows someone to recognize when the output is incomplete, unrealistic, or simply wrong. 
• Founders need to decide what kind of company they actually want to build. A durable, profitable $10 million, $50 million, or $100 million business can create enormous value even if it never fits traditional venture-capital mathematics. 
• Good intentions do not determine outcomes—systems do. Culture, strategy, and growth ambitions only become real when incentives, priorities, operating processes, and accountability mechanisms reinforce them. 

Links 

• Jae Hwang on LinkedIn: https://www.linkedin.com/in/jyhwang 
• Former: https://www.fmr.vc/ 
• Future Ventures Corp: https://ca.linkedin.com/company/future-ventures-corp 
• Subscribe to the YouTube Channel: https://www.youtube.com/channel/UCZgPPHfPBZz-r5NQLq_dWfA 

This episode has been brought to you by the Capital Intelligence Platform: https://capital.futureventures.ca/ 

About the Guest 

Jae Hwang is the co-founder of Former and a strategy and operations leader with experience across North America, Asia, and the Middle East. His career has included brand consulting, government-backed asset management in Dubai, and extensive exposure to venture capital and private equity. Today, his work focuses on backing experienced founders and helping build disciplined, profitable businesses that may fall outside the traditional venture-capital playbook.

Transcript

SPEAKER_00 0:02

Welcome to Skilling with Clarity. My guest today is Jay Huang, co-founder Former, where he's challenging some of the conventional wisdom around who makes a great founder and how those founders should be founded. Jay believes that decades spent inside an industry can be an extraordinary entrepreneurial advantage, particularly when experience and judgment are combined with today's ability to build faster and leaner. So today we're going beyond the traditional venture playbook to explore experience, capital, profitability, AI, and the decisions founders need to get right if they want to build companies that don't just grow but endure. Welcome to the pod, Jay.

SPEAKER_02 0:51

Thank you for the introduction. It's great to be with you.

SPEAKER_00 0:55

It's my absolute pleasure. Why don't we start with uh a little double click on who is Jay and kind of like how did you come to do what you're doing?

SPEAKER_03 1:03

Yeah, um, it has been an unusual path as I like to describe it. Um, so by training, I started out in New York City in the brand consulting space. I focused primarily on strategy and operations, and that journey took me, you know, uh through multiple engagements across North America, Asia, and the Middle East. Um, I was fortunate enough to kind of catch the tide of the early real estate development boom in the Middle East and went over there, and then through the connections there, allowed me to experience a rapid growth and expand my knowledge base into becoming a chief strategy officer at a Dubai government uh asset management where we had a portfolio of assets and also get very deeply into the venture capital PE space as well. Um, and then for personal reasons, namely, my son wanted him to come to high school in the United States, moved back here about three years back, and looked at what we wanted, what I wanted to do, spend my next kind of focus on and landed at Former.

SPEAKER_00 2:08

Nice, nice. Um what was the transition like moving back from Dubai to New Jersey?

SPEAKER_03 2:15

Well, look, I'm sure a lot of expats who share a similar experience. I too went over to Dubai. Um I started working Dubai in 2002, but went over there uh after I got married in about 2007 with a five-year plan. I ended up staying for 16. So uh quite a long period of time. But you know, I returned back to Jersey where I was based at, and I have family here. So the transition wasn't as shocking. But what I think is really interesting is to see the where in certain capacities that part of the world has really, really advanced, and then you know, where other parts where I think is you know the United States and North America generally are still leading.

SPEAKER_00 3:04

Jay, I'm assuming that his son was born in Dubai.

SPEAKER_03 3:07

Yeah, well, he yes, for he spent 16 years of his life primarily Dubai as his home base.

SPEAKER_00 3:15

What does he think of the move?

SPEAKER_03 3:16

Oh, he had a well, look, he's a senior now. He came in as a freshman, and I gotta say that uh kudos to him. His first half year of freshman year was not easy to say the least. Luckily enough, you know, I think about midway through his freshman year, he kind of acclimated it and enjoyed it. But I've got to tell you, it's uh it was much more of a shock for him than it was for me.

SPEAKER_00 3:42

Yeah, well, I mean, for you it's coming back to something you know and the family, and like I get all of this. Now, before we I guess jump into the meat of the conversation, I'm curious. I mean, um, I I'm I'm a father of two two girls minor, not as old as you. Well, actually, my older one uh is going to be first year in high school uh this year, and so what is what is this unthinking like in terms of like careers and prospects and opportunities and AI? Like, I'm I'm just I'm curious, like kind of like what is the the person of a you know 16-year-old, like how are they thinking about the world and everything that's happening?

SPEAKER_03 4:27

Yeah, uh I think that's a common question that all parents when they we meet together with like age people always ask because the teacher is right, it is a support group. I think it's a support group largely, if we're honest with ourselves, we can't we don't know what's going to happen, yeah. Right, that's things are changing and it's a little bit murky of how that's going to be. So I don't have a kind of a broad strip, but I do have a very personal take on my specific, you know, son. Um, you know, we never forced him when he was growing up into one career direction or the other another. But you know, about middle school, he said, Dad, I know what I'm gonna do. And I was like, Oh, okay, you know, what do you want to do? He's like, I'm gonna go work at the State Department, and I was like, Oh, well, that kind of makes sense. You know, you have a lot of friends, you know, because you grew up in Dubai, you know, a lot of people who, you know, are career State Department people. You love travel, you're very global by nature, so that makes it sounds like a great career for you. Um, so he was kind of set on that for a while, and then when he came back to the United States and you know how things were rapidly changing, he looked around and said, This is also him getting you know wiser to the ways of the world. Says, Dad, if I don't have job security, why would I take a lower paying job? Right? So, I mean, I get if you have job security, you might take a long, you know, lower paying job, but without it, then why would you take that? So I don't know about this State Department. So he's still trying to figure out where that, you know, where what that career path you know uh would would go to. Yeah, but as in terms of AI and how it's impacting, I don't know about you, Maxim, but I know that I was the first freshman class in college to be given email addresses, yeah. Right, like as a freshman in coming in. And so it wasn't while the seniors above me and etc. was that there was a transition and a learning curve. It was something that was very natural, and you know, you you felt uh it didn't feel foreign, it just felt very on par with everything that was developing, right? I think that's how kids today react to AI. It's not a new thing. It's like there isn't a very clear of like pre, like we know, uh you know, we can we can have these eras like before mobile phones and post-mobile phones, we know pre-internet and post-internet. I think for this generation coming up, there isn't that of a clear divide of like, yes, this is the world before AI and you know after AI. And also, I don't think we give the younger generation enough credit in terms of how savvy they are and their understanding and how natural they are in their uses. So some of the you know worries that we have of like, oh, blatant copying, or like there's a complete brain knot, they're not learning anything. Sure, there are segments of the population and usages that take abuse of that. I think for all in all, I think there's a generation that are very, very savvy, understand what the tools and the limitations of it, and have very naturally incorporated into you know their their uh peace.

SPEAKER_00 7:38

I agree, agree. No, I agree. I mean, I'm seeing it firsthand. I mean, when when it comes to like, you know, I personally think that we have uh very well-mannered uh girls that we've we've done everything to raise them properly, but sometimes they would misstep. And um recently I had my my daughter write um an apology to a teacher. I can tell you a hundred percent of it was yeah, so you guys okay, um, yeah, I see what's happening. But uh I mean I mean in in other ways, like she just passed her uh driver's license, well, learner's permit, um and uh passed it on first try. I never I've never seen a study. I'm like, like, did you use ChatGPT? I'm like, how can you use ChatGPT? Like they're watching you like like no, no, I didn't use any AI, but she said I used AI to learn. Yeah, in addition to answering the question, okay. Well, there's a use for it, anyways. So I I want to shift the conversation from kind of like the lack of experience to the abundance of experience, and and and you you have a very different thesis around um um former, uh, but it's as well as kind of like what makes uh a great founder. And so what I wanted to ask you is like there's this mythology around entrepreneurship and that the ideal founder is young, unencumbered, willing to be like, you know, in founder's malt all the time, put a hundred hours a week. And you seem to be making almost the opposite bet. Um, what's what does the traditional venture ecosystem actually misunderstand about the experienced founders?

SPEAKER_03 9:28

Yeah, you know, I think I would say there are clear examples where the persistent perception, so that profile that is highly celebrated, right? The the you know, going even back, like the Steve Job profile, the Bill Gates, the you know, Zuckerbergs of the of the world. You look at that profile of a younger, technically, you know, engineering background, maybe a college strap out, um, and goes out onto really embody their cutting-edge technology and build these transformative companies. So there are clear examples that that youth-driven burn at both ends of the candle are great examples of transformative companies and ways to create generational wealth, right? So I don't want to be naive coming off of like that's that that's the wrong model. But I also think the perpetuation of that cycle is because it makes for such a better, more compelling story, yeah, of this younger upstart who would come in and disrupt the industry, just makes for a lot of it makes for a better story. So there's a lot of focus and pattern matching around that. Now, but on the other hand, if you look at the aggregate data that's available and look at the one of the top reasons why startups may fail, uh, beyond before like capital running out of money, one of the things that is the biggest tripping point often is the lack of product market fit. So one of the when I and uh this Spark of Former was started by a a stat that I came across, it was an MIT study that came out and said, you know, of the 0.1% fastest growing startups, the median age of the founder was 45-year-old, right? So that's a dissonance from the media perception, right? So I I dig the I dug a little bit deeper into that and I came up with two conclusions. Number one, it makes sense. If you had somebody like Bill Gates or somebody who started young in the Silicon Valley ecosystem, maybe out of college, and he's gone through two or three cycles of failures, and maybe he had a successful exit or whatnot, that person is very, very well accustomed to how the ecosystem works, right? Whether it's fundraising, how to pitch, you know, who the networks are, and how to craft a company designed to thrive in that type of an environment. So it makes sense, a repeat founder. And there's a plenty of very prominent people who will almost blindly say that if you are a successful repeat founder, we will back you regardless of what the technology in the sector is. So there's that, there's certainly that group. By the time you're 45, you had a couple of rounds at this, and you might get better at doing that. The other, I think, angle that I saw was, and if you step out even outside of the Silicon Valley, by the time that you're 45, you had you know 15, 20, 30 years within an industry, right? And when you're inside of that industry, what you begin to see firsthand is that you see where all the failure points are, right? You know all the solutions that are out there, the problems that are being solved, how they're being sold, what the limitations are, what the frustrations, what those frustrations are. And in certain cases, for a certain subset of people, they're able to see kind of around the corner and say, oh, I see something that's happening that the current solution set isn't set up for. And I think that is almost a supercut shortcut to a finding a better product market fit, right? So I think that experience and that kind of domain knowledge and understanding of the network uh gives a lot of people, um, gives that particular group a heads up.

SPEAKER_00 13:09

I couldn't agree more with you. I mean, um I don't know if you've if you've had a chance to read a book um called Range by David Epstein.

SPEAKER_02 13:19

I love that book.

SPEAKER_00 13:20

Oh my gosh.

SPEAKER_02 13:21

I love that book.

SPEAKER_00 13:23

You and I are brothers from another matter. Um the I mean the the the key premise behind the book is that depth is absolutely important, but all of the disruptive innovations are the bipart, the result of somebody being able to connect disparate domains into a single idea. So um because because that way you can perpetuate or you can create uh unfair advantage. Uh and and like the book describes a number of different like disruptive innovations, it's kind of like how those come about, but um that pattern matching, that pattern recognition only comes from experience.

SPEAKER_03 14:04

Yeah, there's very few substitutes around that, right? Um, again, there's been very successful people who did it and created their own industries, but I think from from an from we have the system overall, I think underestimates um experience, right? Especially experience maybe outside of a corporate outside of a startup setting. We have these perpetual myths that I think uh that resonate, like you can't teach old dog new, you know, new tricks. Or it's like no, you can't take you can take the guy out of this, you can take someone out of corporate America, but you can't take the corporate America out of him, right? So they for she makes a very, very poor fit to uh the requirements of what a startup you know needs to do uh and the hands of nature. So there are, I think, certain certain cases for certain people that is very, very true, but I think uh there is a great perceptual barrier that works against domain expertise. Right?

SPEAKER_00 15:07

Yeah. Well, it's it's kind of interesting. I mean, I just um um this is just my own empirical observation of just my way of working, and so I I was recently listening to an interview with Angela Dawk, um, the the the researcher, uh professor at UPenn, um famous for her great research, but she was talking about AI and kind of like the the impact, and she was talking about the bifurcation impact of AI. You can use AI in a lazy way, or you can use AI in a way that makes you better. And as I'm looking at at just my own personal observation, uh the way that I use AI, I've like given that similar to you, I I spent 15 years working in consulting before I jumped into industry. So I've worked for, I don't know, probably 50 of the Fortune 500 companies, and that experience is extremely, extremely valuable. So even when I'm using AI, uh it's kind of like a tool. Like you give a master carpenter a tool, it doesn't matter what do we give them? They're gonna create something that's amazing, versus giving uh even the best tool to an apprentice and asking them to use it. So that's kind of my always simple analogy of comparison in terms of AI in the hands of somebody experienced and giving AI like is it to say that they're universally applicable? No, I mean, like there's founders like I mean, Bill Gates, but then there's the audio question around like, well, by the time he was like, I don't know, yeah, the first year in university, he had accumulated 10,000 hours because he he will he attended a private school and had access to computers, right? Like so it's but again, it comes back to does it the age is not the the the determinant, it's how many hours you spend doing what you're doing is kind of that experience.

SPEAKER_03 17:09

Yeah, I it's I think that's certainly true. Um, you know, I think I agree with your assessment of AI. Maybe I'm a little bit cynical, but the companies that perpetuate this idea that this is a marvelous tool that can take somebody who has no knowledge of how to do something. For example, I don't know how to code, I don't know how to build, I don't know how to design. And you know, with a few prompts that I'm able to create this fantastic app that's ready for the market and you know, ready to go. And those companies have it's in their best interest to keep those, you know, keep those uh perception alive, right? And keep uh oiling the machine. But for most people like yourself and myself, you know, and myself as well, when you actually try to work right with AI that exists right now, um, I see two two things, right? Yes, it does allow you to do stuff that you might not have a technical expertise in doing. I'm not a designer, yes, there are tools that can help me design and create something that is passable. But what I but if when you start dipping into an area of expertise that you have and you start working with them, what I find the most valuable, valuable thing that I possess is I know what's missing and what's wrong with it.

SPEAKER_01 18:25

Exactly.

SPEAKER_03 18:25

Right? So that can only come from only come from experience and understanding of that system. Yeah, because otherwise, what it actually generates, yeah, it reads great. This is this is far beyond what I could ever imagine. It sounds really logical and great, yeah. This is all done, but yeah, you know, if you're in-depth expertise and you look into that and you're like, this is really problematic. Yeah, so you still work with it because it's very it does increase productivity, but you need to know what's missing, right?

SPEAKER_00 19:02

And that's that's uh it it becomes the push admitter because it's like, hey, that sounds good on paper, but that doesn't work in practice, yeah. Um so you're talking about product market fit and one of the reasons um why you choose to invest in more experienced founders or second act or third act. Um, what what do most founders get wrong about product market fit? Um, how how should I think about the journey of continuous product market fit?

SPEAKER_03 19:38

I you know, this is a repeat of a lot of advice that's out there, but what I find the biggest, the most important advice is you have to talk to customers. Right, you know, out of the spectrum, I like I like to focus on the earliest stages, right? I because I feel that's where a lot of your pathway gets determined. That's not to say that you can't pivot later on and have greater success, but in the early stages, it really sets the guardrails and the frameworks for what the startup could potentially be. And the decisions you make then, I think have lasting implications, you know, as the company grows and scales. But before you even decide what you're particularly doing, I think speaking with potential customers in real, real manner and getting down to the nitty-gritty of like understanding what they are looking for and their problem points is critical to the process. You could get siloed, and you know, I have I have this thing about I can almost spot who is a uh technical founder, like an engineer background finder from first five sentences that comes out of his mouth. Is that as great as those people good, that type of archetype founders are, what oftentimes I I see is that they get really involved in the the weeds of developing that particular product before asking, is this what is needed at that price or need it, right? Um so that I think is is something that I constantly kind of go back with uh with our founders. The second thing I see most common maxim is what I as you know, parents, um, I call it kind of the baby syndrome. So, what do I mean by this is that when a new you hold your newborn in your arms, that baby represents infinite possibilities, right? Yeah, she is an Olympic athlete, she is the next greatest inventor, she is a teacher, a fireman, president. Nothing precludes it. And in your mind, you have this infinite possibility out for what the what the baby can be. Founders often get so enamored with their idea, and in their mind, because they've been living and breathing it, they see phase zero. To like phase 100, right? So they see every permutation and possibility and the benefits that this product, service, or company can provide. And when you speak to an investor or the customer, they haven't been on the journey with you from zero to 100. So I think you get lost in terms of the infinite possibility. And it takes real discipline to say you gotta narrow that down to that singular, differentiated, competitive advantage and offering, and make sure that really lands with your target audience. And that's a that's an art and a science that uh it's very easy to shuffle away as oh, that's just marketing speak. Right. And I think that's a common mistake I see founders make.

SPEAKER_00 22:49

Yeah, couldn't agree more with you, Jay. Um another fellow VC um gave me uh advice years back. Um, and and I've adopted that thing. He he used to say, niches make riches. So like focus, focus. One red flag word for me is platform. When I hear the word platform from a father that they're building a platform, like okay, not an investable company, because sure, over time you can build a platform, but if I pull up HRS and you're getting like 500 you know visitors a month, like you're nowhere near a platform.

SPEAKER_02 23:34

Yeah, I those are the companies I avoid too.

SPEAKER_00 23:38

I get the dreaming, I get the visioning, that's important. You need to know where you're going, but stay focused. Like, there aren't that many ideas that haven't been tried before many times. So stay uh stay focused. Now we talked a little bit about your investment focus in terms of the ideal founder, but kind of like what is the ideal portfolio company for former?

SPEAKER_03 24:06

Yeah, so I looked at it, I looked at we looked at this from a kind of interesting. So, as I said, that spark of that the median age 45 was the kind of the catalyst that got us all rolling. But we did really a deeper dive, and it's obvious to say that okay, that doesn't that has dissonance with what we commonly perceive as the founder profile. But let's a little let's dig a little bit deeper into the current ecosystem of funding opportunities, right? And there are there are many, many variations and subtleties, but let's just block tackle them. So you have bootstrapping, right? And then you have VC and its various phases, you know, from pre-C to HG, and then you have private equity, right? And what we have seen is that there's been a growing sentiment of builders who advocate for bootstrapping, right? And a lot of them come from one-time founders who have exited, and a lot of them and are advocating this because they feel they've got screwed. You know, by the time they raised Series B C D and had a large-scale exit, what they took away was much, much less than what they had envisioned and dreamed of, right? So they go back and say, like, look, if I had to do it all over again, I wouldn't talk to any VCs, I would bootstrap it and bootstrap it and bootstrap it. That's great, but that's a sentiment. Then there's venture capital as it is, and venture capital, I think, as it what I call in the 10 years have become very institutionalized. It has kind of it has gone away from um on a very macro general level, it has shifted their focus away from truly pre-seed, you know, pre-revenue stages to move further up, right? So the constant refrain you hear is like, come back to us when you have more traction, or come back to come back to us when you have some revenue, then we will invest in your early stage at that level. So there's a shift that's happening in venture capital. Private equity with all the dry powder that is now, have seen over the years started to you know come in and poach in what was territorially venture capital landscapes, right? So whether it's distressed they're looking for or secondaries, they want to try to bring in some of their PE playbooks later, but they still have that is still targeting you know revenue generating cash flow businesses, right? So when I look at that, it's there. So you see VC VC kind of vacating the early space, right? For a large part, there are exceptions. And when you look at bootstrapping ability, that it is a self-filter in itself, right? So there are people who can naturally, and I have founders I spoke to that have invested anywhere from half a million dollars to fifty thousand dollars of their own capital towards their startup idea, yeah. That's except for a very, very, very, very small percentage of people, it's a finite resource. Right? There's there's only so much you can go with bootstrapping. And a bootstrapping company, I think, is very ideal for a certain type of let's say SaaS or software-driven businesses, right? Where that can you can grow a little bit with that and then start getting revenue and go otherwise. If you don't fit into that profile, bootstrapping is very difficult, and there isn't an a bridging gap that you can have in the pre-revenue stages that can bridge can fill that role. The 45 angle came in because of the perception, it's even harder for those founders, and because of the kind of lived experiences, there are a lot less people of that cohort who are enamored with the founder life, right? They're not, you know, like you know, I want to be on there, I want to be partying in visa, you know, I want to network with people in the maldemes, like, you know, when you not everybody, obviously, but when you're at a particular stage in that in your life, you're like, I don't have that's not that's not what I'm dreaming of, right? I don't have illusions of that. I actually want to build something that is there, that is profitable, that can support us and grow a community and have employees and build something and address something that is more tangible. But what that promise actually does is it actually gets you out of the venture capital cycle because that's scaling high enough. A $10 million a year business is a solid business, right? Anywhere from 10 to let's say on the high end, 100 million, right? It's a solid business. Most of those companies will not work for venture capital math. Yeah, it's structural, right? It's not, I don't like the founder or there's weaknesses in the business plan. No, the structural dynamics of what a venture capital fund and how it operates cannot value those companies usually, right? So they're at even greater odds with that. Then I look so in determining that, I was like, and when we came up with the idea of formative capital, you know, it was like, hey, look, there is a there is an opportunity in the market that there are great founders with great ideas, kind of validating their way in, who wants to build outside of the venture capital, but lack the resources in order to reach that profitability.

SPEAKER_01 29:31

Yeah, right.

SPEAKER_03 29:32

And from our perspective, because we don't we don't want to have infinite capital, we we preclude there's no uh preclusions of what type of companies we would target, but we wanted to provide that bridge and that that formative capital is it was our way of saying that there was a different type of structure I think fits you know potential founders. The the one more part I would add to that, Maxim, is the other thing that I heard over and over was the common refrain. If you're lucky enough to have a venture capital firms compete for you, right? To wanting to you know kind of get your attention, the pitch is usually the same. It's like, you know, we can give you X million dollars or whatever, and you know, and we have a great network, we'll put you in touch with customers, you know, and we have all these mentors you know on tap. We can help you with hiring, and oh, you know what? Either we have portfolio companies or we have connections with potential customers that we've put you into, and it will really help your businesses, and that's why you want to choose firm A versus firm B, right? Firm B says the exact same thing, but in reality, more often than not, once everything is in and money is in, yeah, besides maybe monthly advisory calls, check-ins, you know, a quick slack message that says, Hey, I'm having this problem. Do you have an idea for me? There is very little, there are very few founders who said, Yes, that venture capital lived up to its promise. It provided me everything, it got my hire, it gave me customers, it gave me everything beyond capital. There are very few firms, again, structurally, that are capable of doing that, right? And that was a very big complaint of the founders because it was more than capital, and it's given also proportionally the amount of pressure VCs would put on you to grow at a particular scale, right? So we we felt it was important in the select group of companies that we would invest in, is that we would provide embedded operational experience at no cost to the company, right? Uh, and that and that's not just advisory, that is taking on kind of an active, accountable work within the organization, within the startup. That's not to replace the founder, that's not to say we're going to become the CEO, but there's a specific sets of skills that might be missing from the gap. And if we have the capabilities, we will go in and help and take accountability of that without inflating the overhead, right? Um, so those two the capital and the expertise coming in together at the pre-revenue stage was the opportunity we saw.

SPEAKER_00 32:17

Amazing. Um I want to ask you um just what they say, Tuesday, Wednesday. Um I mean, I'm recording the interview, it's it's 7:30 cavalry time. Um in the last 48 hours, I've had a couple of conversations with founders that that uh that want to come work with us, and they they've opt there, they want to opt out for a seed strapping model. They've grown their company to a certain point, bootstrapping. Like the conversation yesterday was with uh with a with a company that's in the uh in the plumbing business. And so they wanted to work with us to get them kind of through the seed round, get them to a point of scale, and then do roll-ups and just do debt, like no kind of like the private equity, but not even thank you, private equity money, just private credit. And this is the second conversation in 48 hours. I have another conversation in in an hour with uh with a founder that that's uh part of our portfolio companies, and it's the same thing. It's like I want the initial ignition, I want the initial capital, and then I to your point, what's wrong with a $50 million business? Like, uh if I don't have the dreams of being a billion-dollar business, what's wrong with a $50 million business?

SPEAKER_03 33:46

Well, you know, which you can hold forever or potentially be strategically acquired at anywhere from two, four, five, six, seven times multiple. It's if you would want. I mean, that's a very good deal to be had, right? Um, it's but there's you know, it's condemned in certain circles because it's a that's a lifestyle business. I love how offhandedly we could dismiss stuff, and analysts can kind of dismiss that kind of stuff, saying, like, oh, that's just boring and lifestyle business. Yeah, well, from a founder's perspective, that lifestyle business makes better return and you know, better wealth creation for me than any you know, Cr any venture capital math can do for me, right?

SPEAKER_00 34:25

So, but it's kind of interesting. Do you know my L Gavet?

SPEAKER_03 34:28

No.

SPEAKER_00 34:30

So my L um French citizen came in to run Techstars when David uh stepped out. Um and her premise behind Tech Stars, but TechStars is the second largest accelerator after YC. Um was that I want to help founders build dragons rather than unicorns. And a lot of her ideas were very similar to what you described. Now we're talking venture backable companies rather than um, but um, it was like I want companies that achieve skill, sustainability, profitability earlier on. It's part of the journey, it's it's part of the journey by design rather than like I'm gonna plug away for seven, ten years with no one, and at some point we're gonna be huge. Um, she only lasted four years. I I I absolutely love the work that she was doing, but it was like a square pack in a round hole. Like you just tried to find a VC, very much VC focused industry.

SPEAKER_03 35:33

That's sweet, that's definitely swimming upstream where the current's the hardest.

SPEAKER_00 35:39

Yeah, it's like the Sam and trying to go find one place to I'm doing I'm swimming against the current, but I'm not in the full force, right?

SPEAKER_03 35:46

I'm kind of trying to operate on the edges where it's safer.

SPEAKER_01 35:50

Yeah.

SPEAKER_03 35:51

She went into the heart of the mouth of the beast to try to make that change.

SPEAKER_00 35:56

What is your personal take on this? Like profitability versus growth.

SPEAKER_03 36:00

I tend to look at it from a um, so I saw recently, and it escapes me which company it was. It was a big celebration because they had raised like 130 or some ridiculous number. Uh and it was their Series H, right? Oh, wow, yeah. It was like Series H or something, it wasn't like A B, it was like Series H. And I'm like, if you have to raise at Series H, isn't there a problem? Right? So you're raising at Series H and you still don't have enough kind of internal catalyst to grow and reach profitability. That yes, it's amazing that you you found an investor who can give you hundreds of millions of dollars at that stage and you know catch your valuation to astronomical figures. But you know, that I've always been the person being like, that sounds like a red flag to me, then others. Now, people a lot smarter than me had made oodles of money on that, so you know whoever might a question, but instinctively I think that that doesn't. So I like to actually look at it if you go outside of the startup startups, um, as defined by Silicon Valley, yeah, and just think about startups as a business. Anything else, anywhere in the world around that operates on very fundamental principles, which is you don't build a business that cannot is not profit driven. We have another term for that. That's a non-profit organizations, right? That's a whole different caliber. But you don't build a business with a model that says it's we're going to you know continually burn with infinite tap to capital, but the business is never set up to make money. I don't, I just don't understand that, right? Yeah, so I think more and more what we want to emphasize and how we have structured our programs have been to say we want to reach profitability by design from day one, right? This is how we need to build, this is the discipline we need to put under ourselves, and then we need to be realistic about those particular targets and build with it. And that's uh both the criteria in us selecting, and is this also a criteria as we build with them, right? Yeah, um, I don't, I don't, and I've never understood. I believe hypergrowth is unnatural.

SPEAKER_00 38:23

Yeah, I I I couldn't agree more. Um I spent uh um 13 years between you and Deloitte in in in future ventures. We adopted one of the Deloitte's framework that they've actually abandoned, called the Enterprise Value Map, and we made it our own. But essentially it focuses on um levers that you can pull revenue, cost, stakeholders, and then positioning, kind of like the Hammer, the Hammer, the the seven powers. And a lot of people don't think about the business holistically around how do I build something that's sustainable? What are my levers that can pull, that can you know kind of pull me into a trajectory growth, but but do it in a way that endures. Um like I mean, to your point, a hundred and six a hundred and sixty, a hundred and thirty million, whatever the series age round was. The media is infatuated with celebrating, and and so are founders celebrating raises rather than company success. That's great. You raised $130 million to series H. Guess what? That counts with pretty high expectations from the investors around what are they expecting to achieve with this $130 million. It's not for you to go buy a second Ferrari, it's about you achieving the next set of milestones.

SPEAKER_03 39:43

Yeah, and you know, it works for certain companies, certainly does. Um, but I think it leaves off the where our focus had been in the you know, look by training, what I was always taught to do from you know early on in my career is to always look where people aren't at. Right. So, in the most basic business lesson I learned very, very early on in college was like you have two basic choices go into a very competitive area and then just outspend everybody. That's how you take dominance. You just either cost cut or however you do it, you scale, you just outspend it and you become the top market share, or go where there isn't competition, do what people aren't doing. Okay, there's a lot of you know calibration that needs to happen there, but go there, look there and see what you can do out of that. And that's the kind of the same principle that's guided me throughout my career and all the engagements that I have, and it also informed what Former has done, right? There, the venture, if I have ambitions to build another SpaceX, there is a very well-established ecosystem for you, right? That there's from every conceivable advisor to accelerators to firms, there's a plenty of people who well established that can get you through that. But if you don't fit into that, I think that's where there is an opportunity. You know, I just want to head back to hit back to the AI point. Yeah, I think the one of the why I think it's very timely for former right now has been all the capital and media attention around everything AI, right? So it's like it's like when there is so much concentration on one side, it creates opportunity the other side, right? That this is not being this is undervalued overlooked, and there's great opportunities to be there. Um, and that's where I think you know there is uh not as many eyes, and there's certainly I know several uh who kind of have similar thesis uh as us or see the same opportunities we do, and then trying to find solutions around that. Um so yeah, I like I like to go where people aren't throwing hundreds of billions of dollars and trying to find something, some value there.

SPEAKER_00 42:05

Yeah, I couldn't agree more. Um we are in the process of launching a new venture seed fund, and so um our thinking is very, very similar to yours. Very similar to yours. Um the two additional data points that that that we are relying on is 70% of venture capital or capital is really concentrated on the coast. Atlantic Ocean, Pacific Ocean, kind of like you know, where you are in your Jersey um or the Pacific, and like Canada or well, more so US than than Canada. Um and so that means that 30% of the remaining capital goes into the industrial heartland of Canada in America. But guess what? In addition to that, because you know, this disproportionate attention to uh AI companies because they're typically on the Pacific coast, um the valuations in the industrial heartland of America is 30% lower. So you get to work with a second-time founder or third-time founder that has been there, done that, that has domain expertise. Um, it's in the industrial space. And and we personally like on sexy industries. We like to invest in energy, defense, manufacturing. Um, but guess what?

SPEAKER_03 43:20

There's amazing opportunities to be had there. Yeah, I couldn't, I mean, I really see that. I mean, look, some of the most interesting things that we've had you know early discussions on for us, um, you know, is a group, is a trio of founders, primarily based out of North Dakota in the oil and gas sector. And another one who's doing healthcare, um, and it's out of Oklahoma, right? So this is not, those are states that come up often in terms of you know bankable kind of startup ideas, but we're finding them. We're finding these amazing kind of founders um that are outside of um outside of the coast, as you said. I mean, that's not a filter for us, but I think by natural inclination, it happens to go there because that's where a lot more founders are overlooked by pure geography, right? You don't have the right address, you're not living on the right streets.

SPEAKER_00 44:16

Um, I'm curious, Jay. Um, after spending 16 years in United Arab Emirates, um and you said you work for a state organization. What is the difference in mindset in terms of how they deploy capital versus maybe how we in North America deploy capital?

SPEAKER_03 44:41

Um it's it's radically different, right? Okay, and they are they are structural elements, right? Meaning that they have a type of government system in a hierarchical structure where it's one person, quote unquote, one person decision making, right? So that makes a great number of efficiencies and scale and determination. They also are a petro state, therefore, not every emirate, but as UAE as a general, they have funds that come from oil and gas, right? So those are caveats and you can't ignore that. But beyond those kind of baselines, when you think about the mindset, I see two, I see two really, really strong and strong, persistent characteristics. First is they're at um maybe it's not two stage, but it's like a stage. So first is if they find a need internally, right? Yeah, and the biggest one that had they had so they had tried to address was how do we diversify the economy beyond oil and gas, right? So that was the macro question that they're trying to serve solve. And at that, it'll go out and they will send people and to research, meet with people, speak with people, pay the people for their expertise and opinions and et cetera. They would come and aggregate it, look at it from a different perspective, make it their own, not necessarily as oh, I'm gonna take the exact model and implement it, but they would add their own scale and flavor to it. And once they have made that decision, their focus on trying to achieve this is tremendous conviction, which means that it's and I how I have learned to frame that is the why not scenario. Okay, so if I give I give you two kind of different states, but in the early 2000s when the real estate brew, when they were making things like the Palm Island and you know, all of these fantastical real estate development projects, I would say 99% of the established industry said they were crazy. That it would never work, and it would not work for these various reasons, and there were so much negativity and naysayers around it that it would have been within their rights to say, yes, this is a poor idea and uh in an improper use of our resources, we need to look at something else. But the leadership there had a very different perspective and view because they have done their due diligence and what they've said it, no, no, no, why not? And I'm not going to be wavered by the the naysayers because it's always easy for someone to tell you why something won't work. There are very few people who can tell you this is how that can work, and really put their resources behind that. Um, and then I think what I seen in the in the second half where I say post-COVID period, um, with Abu Dhabi and Dubai specifically, and you know, some of the other country states, but is they had looked at it and said, okay, AI, and now they have also if they had crypto, you know, Web 3.0, AI, and now they started talking about longevity and health, right? Yeah, and they see these kind of very forward-leaning vectors, and they they will look at it and say, Do we agree that's a thing? Is it foundational? Can it be transformative? And then they will again take that same spirit into the same kind of tenacity they had to build their real estate, they're now putting it into these separate verticals, right? And I've learned from experience and other things, it's they will make mistakes, not everything will pan out, but I think what my 16 years has taught me is like it's very hard to bet against.

SPEAKER_00 48:32

Yeah, I can imagine. So, what I'm wondering, Jay, um I mean it's it's it's interesting. Like two two two thoughts came to mind, and uh, I'll blur them both just to make sure that I don't forget them. One um is Riyadh, the new Dubai. And the second question is come around the mainstairs. How do you check your convictions to make sure that you're they're not the wrong convictions? But I mean, I I hear a ton uh about Saudi, Saudi, Saudi, Saudi, Saudi, Saudi, Saudi, Riyadh, Riyadh, Riyadh. Um, Adam Newman starting flow there, like we're launching like I hear a ton, just because we work with global founders. Everything at the moment is like all about, yes, Dubai is important for sure, for sure. But at the moment, I hear disproportionately more about Riyadh than any other place in the Middle East.

SPEAKER_03 49:32

And it's it's rightfully so. Okay, um, purely before we get into the intricacies, is that it's purely by scale, right? So UAE, you know, it internal population, let's say it's at 10 million, right? You got triple that in Saudi Arabia, right? So from a domestic market, the startups trying to attract domestic market first before moving on into other regional markets. Saudi Arabia makes for a sizable, interesting market. Dubai at 10 million, almost markets too small. Okay, right. So it's great to start there seated, and then you need to go expand. But Saudi Arabia can actually have a domestic market from a scale perspective and population perspective. Also, they are much there's much more capital there. Right now, I think it's a misnomer when they imagine that it's like this free-flowing, unencumbered, you know, access to capital. That's where a lot of the hype, you know, and wish people, you know, when they make their tours, and that's certainly not the case because that's not that how they operate, and they have you know a very different protocol of how they do that. But what has really changed um in the post-COVID time period and the rise of Saudi Arabia is the the focus has gone from where in the previous period has been externally focused in terms of investment, it has really turned internal. Right. So it's it's not about what assets, I mean, they're still doing international investments, but it's not about what assets can I acquire or what you know, where do I put investments into you know, X, Y, and Z in different markets. There's a tremendous emphasis on no, I want to do it on domestic, right? I want I want the focus to be domestic. I want you to come here, establish a base, build a product for this particular market, then we can talk about you know X, Y, Z. So there's a even a greater onus that would put on people, and sometimes it's bureaucratic in the sense that you need to have a market focus internally here if you want to get anything out of them. But that domestic transference of trying to do that has been a big, big shift.

SPEAKER_00 51:52

Interesting, very interesting. Um, I mean, I love this because it it's in a way it's like almost a community benefit agreement. Like, sure, we invest in short one company that that's exportable, but we want to first unlock benefit within our own home base before you scale outside of Saudi.

SPEAKER_03 52:14

Yeah, it's um you know, it's a it's it's different, right? This is not, you know, I think sometimes the Americans um we have we still have this sense of arrogance where we think however it works in New York or in the valley is how the rest of the world operates, yeah. And you get into some rude awakenings, yeah.

SPEAKER_00 52:39

Right, for sure. Jay, um, I want to go come back to the the the the title of the of the podcast, which is scaling with clarity. And uh to be honest, I mean we've recorded tens and tens. I think this is like I don't know, seven, eight episodes. I this is the first time that I'm talking to somebody that focuses on strategy and operations. I mean, I I've worked with the firms, but I've um it's I want to get your perspective. Where do founders struggle to get clarity? And how would you advise a founder around finding that clarity? If you're thinking about strategy, like how would you advise them to go about it? Because I know you guys, like I mean, you said you embed your teams within the portfolio companies to give them that augmented. I mean, it's almost like um uh augmented virtual reality is kind of like what you give these founders because it's like, hey, I've I've been a branded specialist, I've been a strategy op sky for uh 30 years, like I can help you, yeah.

SPEAKER_03 53:48

Yeah, I you know I I call it the the tip of the spear. Yeah, right. I like to focus a lot of energy on the tip of the spear, right? Yeah, and that comes for me, that's my articulation of clarity, right? And the tip of the spear is you need to have a singular focus that gets articulated and not only articulated but have proven backups around it that the market can engage with and experience with, right? And your product delivers against that, and getting that right is the I think I think it may be the most one of the most important steps any founder needs to take, but it's very difficult, yeah, because it it means if you do it correctly, it means saying no to certain things, yeah, or at a minimum saying that's going to be phase two, three, and that's not something that we're going to tackle right now. This is what we're going to tackle, and that's a very, very difficult i uh concept for founders to grab onto, right? Um, and you know, some of the questions in the early stages that I like to have with our founders is is to ask, hey, what's what's your ambition? Like, what do you want to kind of achieve? It's a good filtering because if somebody says, I want to build a unicorn, I say, okay, well, we're not for you. Like, that's great. There's great systems for you, and and you know, best of luck to you. And I, you know, I hope you actually succeed. Um, and I'll be cheering from you, but that's not how we are structured around it. But I think it's very important for them to find what their ambition is in terms of the type of company and the scale that they want to reach, not to set that's in stone, but to have a visioning clarity. The way that I like to describe it is if you understand that this is the mountain you want to climb and that's the pinnacle that everybody you're trying to reach, there's an infinite path to the up the mountain, but you need to understand you're going to the top of the summit, right? You may need to turn back sometimes, but if you don't have an idea, and you just slightly say, Well, let's just go up, right? It's like, well, to what? All right, and you get lost, you you operate with no clarity, and you can get very busy without producing results, right? Um, so that's that's something very simplistically put, and operationalizing that is a very um it's a again an arts and science set, but I think in an overall manner, that's something that I like to emphasize. And then the second thing that I really, really emphasize a lot is people mistake intentions and structural, right? So, what do I mean by that is that I want to build a very great family-like you know, company culture, right? That's intention, right? You want people to be fulfilled, love working with you, you know, solve these particular problems, and that's intention. But if you do not implement structure around that, right, or you are compensating and you set, and I hate KPIs, but you know, if you set your KPIs around something else that doesn't support that, it will never come in. You fail to your structure, okay, and you don't fail to your intentions, you always fail to your structure, right? So, you know, this is where it comes back to that VCR argument. The partners and the analysts and etc. could really love your idea, really love your startup, but they're handcuffed because as you are currently at, it can the system, the structure cannot help you.

SPEAKER_00 57:37

Yeah, completely, completely. Jay, you're a pleasure to talk to. I mean, I I really I'm loving the conversation, definitely want to continue the conversation, maybe co-invest. Um I love the ways you think you were very very much aligned, but I'd like to close my interviews with a choice of a question. What's the kindest thing that anyone has ever done for you? Or and or uh you can ask about what if you want. Um what is the best advice that you personally have received?

SPEAKER_03 58:12

Um I think the um the best advice that I I received was um this is a little bit you know kind of operational weak ready, but you know, in my first company that I got out of college, so you know, straight out of Columbia, you know, went to a consulting firm that was early stages. And you know, after a couple months in, you know, I don't know what I'm doing, you know, but you know, working hard, enjoying life there. Uh CEO invites me up to his office, you know, after hours on a Friday. Um, and he sits down, you know, we're having we're having some drinks, and you know, he looks at me kind of out of the blue. And remember, I'm a fresh college graduate, right? The lowest rung of the firm. Yeah, I have not done anything within this firm that says you are marked for great success, right? Yeah, but it generally takes a moment and turns around and looks at me and says, you know, you only have one job in this firm, and your job is to replace me. Right. So imagine hearing that as you know, 20 early 20s kid saying that, oh, wait a minute, what? Like, I don't even know how many levels between me and the CEO are, right? So I don't know anything about this industry. I know I haven't proven myself in any case, but he and he did not, you know, in hindsight, he did not make that comment to everyone, yeah, but he made it specifically to me, and that's been a very driving feature that I've tried to institute in every organization that I've been at, that when you grow a team, your team your success is that you need to find people who can replace you, yeah, right. And what it also means is that what what that also means though is unless and if you find somebody who can replace you, but you haven't grown, then you're in trouble too.

SPEAKER_01 1:00:15

Yeah, right.

SPEAKER_03 1:00:15

This isn't, you know, yeah, some find somebody to replace you so you can go sit on a beach. Is that no, if you found somebody who can replace you, then you need to be at another level where you need to be doing something that is different in its house, and that's been a transformational moment and a transformational kind of mantra that I was given very early on in my career that I still tried to implement in you know every step.

SPEAKER_00 1:00:40

It's a great advice. I've I've I mean I I talk to a lot of VC investors founders. It's the first founder that I'm hearing this, but um, it's got a lot of applicability.

SPEAKER_02 1:00:52

It certainly works for me.

SPEAKER_00 1:00:54

Yeah, absolutely, Jay. Absolute pleasure having you on. Really enjoyed a conversation. Um just want to say thank you.

SPEAKER_03 1:01:02

Thank you for having me. I enjoyed this great and I love that I found somebody who loved range as much as I did.

SPEAKER_00 1:01:08

It's an amazing book. We'll put it in the show notes. I like there's some books that I just I just find to be like so foundational. Lately I've been obsessed with a book by uh Tina Sealick, she used to run uh the Entrepreneurial Technology Program Ventures out of uh Stanford. Um I don't know what she does. I think she's probably semi-retired now. Um, she wrote a book called Luck. I absolutely love this book. Um we'll read that next. You have to pick it up. It's an easy read. I I I typically when I walk my dog or ride my bike, I listen to the book. Um, I can't remember. I think I think I crashed it in like six hours. So it was just like in the span of like two or three walks, bike rides age amazing book, amazing book.

unknown 1:01:54

Yeah.

SPEAKER_03 1:01:54

I'll definitely have to do that. Thanks for the suggestion.

SPEAKER_00 1:01:57

My pleasure. Thanks, Jay.

SPEAKER_03 1:01:59

All right, take care.