Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, Greg Stewart
[00:00:00] S0: Why did you decide to join it? If you think about the circumstance that you were opting into, he said it best, no money, no product market fit, needing a whole new team. Why not start a new company or something? Why come into this specific situation? [00:00:00] S1: It was this perfect moment that is very unlikely to ever happen again. I was building a company inside of a big real estate private equity business, a consumer company, which had all kinds of complexities of trying to be an innovator inside of a really established company. But I had this amazing team of people, some that have been with me for a couple of ventures, some that I've worked with for two to five years. Really powerful team that could build anything. It was a product and engineering and marketing, but a core group that, we wanted to just keep working together. And we wanted to be in consumer. We wanted to work on a hard problem. But we had a group of people that were not at a stage of life where they could take zero salary and start something from a garage. People were starting to have kids. Life is starting to happen. We got spouses. And so just starting something from scratch and we thought about it, it just seemed like it was a hard task to keep the group together. And that was my number one focus is I keep this group together. It's special. And I want to hold onto it for dear life. So that's what I was solving for consumer and bring my most important people. And let's take another swing together.
· Greg Stewart, Patrick O'Shaughnessy
[00:00:00] S1: It was this perfect moment that is very unlikely to ever happen again. I was building a company inside of a big real estate private equity business, a consumer company, which had all kinds of complexities of trying to be an innovator inside of a really established company. But I had this amazing team of people, some that have been with me for a couple of ventures, some that I've worked with for two to five years. Really powerful team that could build anything. It was a product and engineering and marketing, but a core group that, we wanted to just keep working together. And we wanted to be in consumer. We wanted to work on a hard problem. But we had a group of people that were not at a stage of life where they could take zero salary and start something from a garage. People were starting to have kids. Life is starting to happen. We got spouses. And so just starting something from scratch and we thought about it, it just seemed like it was a hard task to keep the group together. And that was my number one focus is I keep this group together. It's special. And I want to hold onto it for dear life. So that's what I was solving for consumer and bring my most important people. And let's take another swing together. [00:00:00] S0: Talk about what a given day was like. And when you guys joined forces, there's still this mess to clean up. And then there's this thing you have to go build. And it's like two sides of the coin. What would a day look like in those early days?
· Patrick O'Shaughnessy, Tom Digan
[00:00:00] S0: Talk about what a given day was like. And when you guys joined forces, there's still this mess to clean up. And then there's this thing you have to go build. And it's like two sides of the coin. What would a day look like in those early days? [00:00:00] S2: It's literally late March 2020, when we have zeroed in on the concept for this new product and we're having to go fully remote. The team's new. So everyone's working from home other than Greg, myself, and Johnny. The mornings were for the messy stuff. It was figuring out how to untangle some of the situations we found ourselves in, debt collectors, and actually just trying to fix things so we can move forward. In the afternoons, we're actually building product. And Greg's focused on winding the team up and iterating on what we're about to build and launch. A few months later, we're raising money at any moment during that. I'm spending every moment redialing people that are already investors and reaching out to new people. What I remember most, though, about those days, because it was hard, but it was also so exciting. And I think about at night at 10 o'clock, we had finished. The whole world has stopped. Everyone's at home. We've been in the office grinding since 6 a.m. And at 10 o'clock, it would be like, all right, like whatever win we had that day, let's celebrate. And it was like, you've seen that scene in Goodfellas when they're all in prison. And when wise guys go to prison, it's not like everyone else. They got lobsters coming in. [00:00:00] S0: Slicing the garlic.
· Patrick O'Shaughnessy, Tom Digan, Greg Stewart
[00:00:00] S0: Slicing the garlic. [00:00:00] S2: Slicing the garlic. With the little razor blade. For us, our version of that, we're cooking steaks on the grill. We're smoking cigars in the office because no one else is coming in. I'm shaking martinis up there. And we're high-fiving about raising $10,000 checks. That was exciting because, frankly, it felt more like the startups that were romanticized by the podcasts and books and all the fun stuff. [00:00:00] S1: It was survival. And when you're in a moment where it literally is survival, it's not hard to know what to work on or it wasn't hard for us to know what mattered. We needed to not run out of money. So Digan was spending time trying to solve that problem. We were in debt and owed a lot of people a lot of money. And it's a startup, so it's really hard to get a clear picture of the financials and where money is going. And it was the first thing I worked on was, where's the money going? We put that piece together and no one can really see this or is looking at it. You realize money's going in different places that we're not totally aware of. And mission number one was figure out the cash flow. And we got visibility into that. And then we had some money that we owed to people. And we owed some hardcore creditors like American Express, who doesn't really mess around. And I learned and Digan learned all about how to negotiate with creditors. And that was a new skill set for me. [00:00:00] S0: What's the key to that? [00:00:00] S1: Begging. [00:00:00] S2: Telling them you had no money.
· Tom Digan, Greg Stewart
[00:00:00] S2: Telling them you had no money. [00:00:00] S1: We get them to really believe, and it was true, that there's a chance you get zero. There's a door to negotiate. And we were negotiating with big creditors at 20 cents on the dollar. We knew the list of groups that we owed money to. And it was like sales. We're like, all right, we got to go one by one and figure out how to close the door on this and not let it overhang the business. And so we raised money, get money back to the right people, clean up the house to survive. And then we had this moment around this time where we had this existing business. It's not working. There's some insights that are coming out of it, but it's really not working. But we're still trying to maintain it. So we're living in this in-between moment of keep that thing alive so we can pitch something to folks on the outside. But also, what are we going to do? What are we going to build? It isn't this. There's no path in this thing that we've built. So there are really funny stories where Digan was pitching, I'm pitching, and you're basically trying to figure out what the investor likes. Let me tell you about this one-to-one business we got. It's like super exciting. Oh, you don't like that? We're thinking about this social concept. You just live in this world of figuring out, how do I make it through? And there were enough wins. The micro wins on survival felt big to us. And there was enough to celebrate to keep going and wake up and go do it again.
· Patrick O'Shaughnessy
[00:00:00] S0: If you were to teach a class on fundraising for startups now, you've done this as masterfully as anyone with the cards you were dealt. What would the lesson plan look like?