Kyle York of York IE joins Nick to discuss The VC Myth, AI Hype, Mastering GTM, and The Smart Approach to Capital Strategy and Achieving Startup Success. In this episode we cover:
- Rolling Syndicate and Market Challenges
- Operational Support and Early-Stage Investing
- Sustainable Growth and AI Opportunities
- Vertical Software and Market Consolidation
- Founder-VC Relationships and Due Diligence
- Successful Founder Traits and Market Trends
- Venture Trends and Future Perspectives
- Master Class for Early-Stage Founders
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0:17
Kyle York joins us today from Manchester, New Hampshire. He’s the CEO and managing partner at York IE, an advisory and venture capital firm investing in B2B SaaS at the Seed stage. Some of his notable investments include Maxa, Cranium, and Cyberhaven. Before founding York IE, Kyle was a General Manager and VP of Product Strategy at Oracle Cloud Infrastructure, following Oracle’s $600 million acquisition of Dyn, where he helped scale revenue from $3 million to $100 million. He also played a key role in Fastly’s 2019 IPO, which peaked at a $13 billion market cap. Kyle, welcome to the show!
0:56
Thank you for having me. Yeah. Give
0:59
us a sense for your you know, quick, two minute, two minute. Background, your path to venture capital?
1:04
Yeah, sure. So full operating background, all started in a very entrepreneurial family. My parents had a bean street small business growing up, and ended up going to business school, Bentley University, outside of Boston, and got pretty fortunate to start interning right away and B to B technology companies, and spent seven years for my first company in education software. I’m a sales and marketing guy by background, so I kind of climbed the ladder from the lowly doldrums of BDR work all the way to a first company I lived in California for a while, running west coast go to market. Yep, San
1:38
Diego. Are you a cold email wizard Kyle, I’m good.
1:41
Yeah, I’m good. You know, I could do all. I could juggle a lot of stuff after being a sales guy for so long. And then I then, kind of climbed the ladder and became the chief revenue officer of a company back in my hometown, which was died. It was a internet infrastructure company. We specialized in Domain Name System Management, and it was a heck of a journey in my hometown. We actually bootstrapped that business to 30 million ARR before we took $1 from any outside capital. So a lot of the fundamental points of view on business scaling and venture capital come from not taking it right and kind of understanding what it means when you do and that all led me to where I am today, building York ie my advisory and VC firm while I was the Chief Revenue Officer of dyne in the GM at Oracle, I actually started the angel invest and create different investment vehicles, Moonlighting, because so many of the dyne client base, I could see their traffic. I built great relationships with all the fast growth startup founders, given that I was a young guy, kind of hustling, working hard building my own business that was, actually became a 65 company portfolio before York IE. And I kept thinking to myself, Man, if I could do this full time, it would be really exciting. But I also don’t want to hang them up the cleats in my, you know, in my 30s, and only be a VC. I thought I had a lot more operational time in my career to have. And so we created this hybrid where we have this advisory as a service platform. It’s our subscription platform to help companies with strategic growth across R and D go to market and G and A, and then we have a venture arm that invests in our favorite pre seed, seed stage B to B SaaS businesses. And it’s been, it’s been really fun to build this over the last five years or so.
3:18
Love it. So what is the thesis at York IE? Yeah. So like I
3:23
said, we kind of have two sides of the house, you know, we have our advisory business that really works with any technology company from IBS stage to pre IPO. We have a set of capabilities that we could sell any company. We actually partner with a lot of larger private equity, growth equity firms as an extension of their operating partnership teams or their value creation platforms. So that’s very broad and diverse. It’s really more tech forward, subscription based growth businesses and everything from the beginning to the end of the startup life cycle. From an investor thesis, we are B to B, SaaS, pre seed, seed up and down the stack. We do everything from our heritage and infrastructure cybersecurity up through data platforms, all the way up to vertical and horizontal app. The model for us was, how do we create, sort of, for rlps, create an index of early stage software, and for us, you know, work with founders that we thought were disrupting markets and industry, and could use help from people who’ve been there, kind of done that, and the infrastructure I was creating on the advisory side. So it’s really, it’s really a honed thesis on B to B, software and subscription businesses that we don’t veer outside of that, or the stage that we play in, which is really pre seed C, perfect Kyle.
4:28
I know you do some investing via a rolling syndicate. How has that structure, that investment structure, been impacted in this sort of protracted down market we find ourselves in? Let
4:39
me explain the rolling Syndicate, rolling fund that we operate. It actually came from for a handful of years, while I was at dyed in Oracle, I ran what was called the SaaS syndicate on Angel List. And I thought the sort of like Master Series structure of in a deal by deal capital call was really interesting. But the problem with that is you never, kind of knew how much capital you had to potentially put. And around. And so it was always a crapshoot, right every single time. So I kind of took that model, that Master Series structure, and I decided, hey, wouldn’t it be cool to have a more captive pool of capital? All of our LPS today are all high net worth individuals, tech executives, entrepreneurs, people who are looking for a sleeve of early stage venture. And so I can kind of answer your question in two capacities. With that to the LP base, everyone’s been tight. They have any markets. The IPO markets have been installed. Interest rates are high, so people’s cash is making money for them, because there’s been no exits. There’s not liquidity flowing back to redeploy. So it’s been a little bit of a tighter fundraising market, where, historically, we add our rolling nature as we add new investors every six months, so grow our capital pool. So it’s been challenging when it relates to fundraising on the vehicle, as it relates to deployment, or on the investment side in companies, I think the best companies are invested in in the worst times, right in the market. And I think the constriction on valuations and the move towards operational efficiency is thematic to what York ie likes anyway, based on what you heard a little bit about my background, right? Like we believe in pragmatic growth versus growth at all costs. And I think this is resetting the market. And founders to look at that a little differently. With that said, we have a portfolio of the 60 plus companies. Half of those are still alive from prior to York IE, those pilot vehicles that we operated, plus we’ve now done over 60 investments in York ie rolling fund. Usually you would have been seeing more mergers or more up rounds or follow on rounds, and I think it’s reopened, by the way, over the last six months or so, but it certainly was for a 24 month period, not a lot of action at the next stage beyond seed, which has led to a lot of challenges within the portfolio. So, like anything else, when you work with startups, like, there’s good, there’s bad, there’s great, there’s crap, there’s, you know, everything in between. Love
6:48
it. Well, we also got our start on Angel List back in 2014, 15, with a syndicate. And love that platform. So can relate with that. Kyle. You know, I came across your blog post bridging the gap in early stage investing. And in that post, you talk about the disconnect between early stage capital and operational support. What is the biggest failure point for seed stage startups that most investors overlook, and how does York ie address it differently?
7:14
Yeah, well, I think there’s a natural inclination for companies to just raise money, right, and they build financial plot plans with like, aspirational views think they might be able to achieve, and then they go raise money to do it. And I just see so often that the milestones and the pitch decks we’re being pitched really early are like, raise seed, raise seed, plus raise Series A, raise Series B. And it’s like that is not the operational milestones or metrics or things that need to be achieved to then go potentially raise or not raise, yeah? So they can be signals of success. Yeah, it’s a weird, it’s like, a weird dynamic. So, like, I’ve even talked a lot about, like, eight stages of business growth if we didn’t have venture capital rounds, right? Like, like, what would those look like? I think it’s, that dynamic mixed with just the reality of early stage investing and sites like AngelList are great, and crowdfunding is great, and Angel networks are great, but the reality is most of the people doing that were no different than me. For you where you got your start, like we’re Moonlighting, or we’re part time, or, you know, had jobs, you know. And so it’s either that from like a democratization of investing in this asset class, or most funds who invest this early are just really, really small and can’t provide operational infrastructure because the two and 20 model of a fund doesn’t support having a large team to actually help. We saw this massive operational void at early stage, companies where there was access to resource that could not just help on strategy, like you do at a board meeting or something, but literally get their hands dirty and build out the capacity, the solutions, the products, the throughput to help. And what we’ve seen is even the largest funds in the world who have operating partners at value creation platforms. I’m doing that in air quotes. Sorry, I was a little off the little off the video. A lot of times they don’t it’s 1090, nines. It’s contractors. It’s, you know, most people go and become operating partners. It’s kind of like a retirement or semi retirement gig, or like a last act. And again, there’s not a lot of hands on keyboards doing any work. We’re actually finding that even later stage, funds are partnering with York ie in our advisory as a service platform, as an extension of their operating partnership to help do product or help to rev ops or help do FPA or these types of different services that we offer. That’s what I mean about bridging the gap. It’s like there is a massive void between, between the stage you start at any truly smart money with any help. And, you know, I think that lives between million and 10 million. Arr, where, like, if you’re not a shooting out of a cannon rocket ship, you’re not getting tier one, multi stage venture. What about everybody else? Right? They’re just gonna wait until they get growth equity or private equity over 10 million. Arr, and profitable. It’s like a pipe dream. I think there’s a whole market for the sub 10 million Arr, business to get a ton of help and have a great capital partner to help them. On the journey so
10:00
related to that, related to all these fundraising rounds successive 12 to 24 months, the venture industry also kind of glorifies exponential hockey stick growth. But you challenge that mindset, and I know that York ie emphasizes sustainable growth over just, you know, rapid scaling. Do you have like a real world example of a company that has thrived because it scaled more methodically. Instead of this, this crazy aggressive sort of got a double trip.
10:27
I mean, yeah, I mean, like, right? They say triple, triple, triple double, double, double, whatever, whatever the non sex is, right? It requires an insane amount of money to do that, and an incredibly unhealthy, upset out business to do that. And I think all the books, all the podcasts, all the case studies in business school are actually all study the outliers. And like the famous, celebrity founders that have done that right, which is great, like, Wouldn’t it be great if we were all Mark Betty off, right? Or Larry Ellison or whoever, but, but the reality is, like most of us, can build good, healthy companies and make life changing multi generational wealth by owning more of our business. The real premise of that did come from my dying experience. Dyne was a company that was kind of around for six, seven years before I even joined it. It was mostly focused on selling domain names and more of like a consumer orientation, but they had this B to B idea. That’s when I came in, and because we took it from nothing to 30 million before we ever raised the founders in leadership and management owned the company, and you didn’t end up with like, dilution, dilution, dilution, dilution. And then all of a sudden your founding team owns 5% of the business. So so much of it came from that like independence and that pragmatism, that then when we had a $600 million exit, it’s almost like the equivalent of a $6 billion exit to someone who would raise, raise, raise, raise, raise, to get to 100 million. Arr, you take that forward, and if you look at the majority of our client base, the majority of our portfolio, I’m not just advocating for, like, Bootstrap, like, there’s a hybrid approach to this right? Like, if the market opens up for you, sure raise money, but raise what you need right at the valuation you’ve earned, not just because you can, right? And I think too many companies do because they can. And then what you see is down rounds or exit exits that are way worse. And people just don’t understand preference stacks and in the way that the actual waterfall works when a deal ends. So we have so many companies. I mean, I was just talking this morning that one of our companies called vetro, out of Portland Maine, they’re a SaaS platform for GIS mapping for the infrastructure, telecom space, you know, vertical SaaS, and they’ve methodically gotten themselves to a solid mid eight figures. Arr, like, you know, they’re growing fast. It’s, it’s a, it’s a heck of a business. It hasn’t required a ton of capital to get here, and is evaluating its next phase of growth and activity, right? And I just think, like looking at the world a little bit more like, how do I preserve my cap table? How do I understand that when I raise money, I’m selling a little bit of my company to to a bank or a financial institution, right? Who’s gonna whose clients are not you. They’re the LPS they serve. It’s just having a lens of that, and having a lens in the business fundamentals and the milestone thing we talked about earlier. Now, with all that said, if we have a company that is triple triple, triple double, double double, this is like, yes, we talk a lot about pragmatic growth, like, then, yeah, if you get, if you get COSLA who wants to come in, or wants to come in, I’m not going to sit here and get in the way. I’m just going to I’m going to sit there and say, Okay, I’m going to study your your business fundamentals, your go forward projections, your five year, three year plan, and we’re going to raise the right amount of money at the right valuations that we could still grow into and not not end up in a tough situation, because so often what you see out there is just very tough situations. You invest
13:30
in a lot of vertical solutions in AI driven applications. Where do you see the biggest untapped opportunities for AI in vertical markets? And what’s a common mistake that AI founders make when pitching VCs. This isn’t going
13:45
to be the answer you expect, but I think a lot of vertical applications need to cut it out with AI and stop over indexing to AI, right? Like so many vertical industry solutions, the concept and idea of them come from someone from those industries who sees something that can be more automated and solved with software and software workflows that hasn’t been done that way before. Many times, those industries are not like the bleeding edge industries that are ready for the most innovative solution. Yes, I think having AI as a component of any platform and some feature set or capability integrated into any app in any industry is important. But there’s been a little bit of an over student body shift to like the AI company for the shellfish industry. It’s like, Well, how about just, let’s build software for fishermen, right first? Right? Because they’re not using software. When we look at AI, we certainly look at it from the vector of the market opportunity and the disruption and the TAM and everything else you’d look at. But we also look at, how do you leverage AI internally for operational efficiency? How do you leverage AI yourself to not have to hire as much or spend as much or raise as much capital, these types of things, especially when it relates to these vertical industries, where the challenge historically with vertical industries is it’d be from a venture. Perspective is they be questioned of how big their Tam and their Sam and their how like, how big the outcome could be, and is it really venture capital backable? I think that’s also flipped, because so much private equity mid market, private equity roll ups are happening in all vertical industries that once used to be fragmented. SMBs are there’s now like an enterprise to mid market to SMB. It’s kind of happening everywhere, from manufacturing, the healthcare to seafood. Say more
15:25
about that? What? What do you mean about this sort of Oh, yeah. So, so
15:29
we meet every week. We so our big approach to our go to market, as I’ve discussed, is this ecosystem led growth. So we just partner with a lot of firms, right? We play pitch and catch on. Hey, here’s some deals we’ve got in our portfolio that might need investing. They send us deals that are too early for them. We partner on the advisory side with these firms, and we’ve been partnering a lot with more of these mid market or large market private equity firms who are rolling up more traditional industries, HVAC companies or fire suppression businesses or veterinary hospitals or whatever. And what that’s doing, actually, for vertical software, is it’s, it’s creating a market where you’re not just having to sell every local pharmacy, but there’s Walgreens and CVS and local pharmacies and so that never used to exist, right? Like in veterinary you can sell Banfield and it’s PE owned, right? Or and there’s dozens of others that are now, like roll up enterprise opportunities. So what that does is it creates a larger Sam and a larger Tam and more capital flow. And those companies obviously are looking at, how do we gain more efficiencies across a spread of spread of locations, and they need to use software. And yes, eventually AI to do that. So I think that’s why you see, like the hottest thing I’m on is actually vertical software period. Give me obscure, random niche industries. Tell me what you’re doing in those industries, to automate, given the market, the entry valuations are quite nice, the pre seed, seed stage. And you know, you don’t need it to be a billion dollar company to be a roaring success at 1020, 50x right? You need a good, healthy business to be created. Because again, I think there’s going to be a lot of roles. I also think those PE firms, over time, are going to see the multiples on software and want to have more IP and technology inside their more physical platforms. And there’s a huge opportunity there as well for consolidation and acquisition. I love
17:14
it. It heavily relates. I have a conversation frequently with our portfolio company founders about in some cases, if ATVs are too small, and you’re running like a sales driven motion or what, what have you, you can actually reshape the customer, the ICP, and reshape the go to market motion to focus on a much bigger entity that represents a lot of these constituents. Like a quick example is we have an investment in a company that sells pet insurance, and they do at point of sale, and their original go to market motion was going around to the Humane Society and all these shelters, and then they realized they could partner with the ERP systems that serve every shelter. And then they started closing these pseudo channel partners, and they’d get 1000 shelters in one go. So their ACVs went up north of a million ACV for each one instead of picking off onesie twosies.
17:58
It’s the same thing, I mean. And I think the challenge I see is even horizontal solutions. If they’re smart about go to market and their go to market motion, and they’re like their whole funnel from demand gen all the way through, are picking a few verticals to start it right, like it’s very difficult to launch and get this plg, all industry thing, it’s like a pipe dream. It’s back to the what’s like. Just chase the outliers. If we, if we all could be MailChimp or bloom or whoever, like, whatever, right? Like, it’s just crap. Like, and so I think again, one thing coming up through sales and marketing, especially landing in dime, like, my first company was vertical software and education tech. We sold K to 12 prep schools. That’s all we did, right? So, so I got a lot of experience in selling, like the K to eight Montessori School, and then selling Phillips Exeter, which is, you know, like, has a bigger endowment than most Ivy League schools, you know what I mean, and everything in between. And selling the first grade teacher who’s the most technical person in the place, to selling the board chair at Lakeside school in Seattle is Bill Gates, like, literally, and so I saw that spectrum. And then when I went to dine, I mean, it was founded on a freemium model, and then, like a $20 a year consumer e commerce, sale. And yes, if you go book back through the history of dying, if you go read our Wikipedia page, you’ll see Netflix, Twitter, Amazon, Salesforce, workday, those were our clients. But the reality was, our go to market was an inside sales, an inbound outbound, BDR, inside sales, high velocity, land and expand model. Like, I never won a million dollar deal. I won the 100k deal that became 250 that became 500 that became a million and a half. Arr, right? And, and I think that’s a little bit of issue we see again. There’s like back then, there wasn’t all these playbooks, all these like SaaS, experts go to market experts, consultants everywhere, metric benchmarks to look at. The reality is each company has a different a different context and a different product and a different market and a different competitive set and a different selling motion and like there’s no playbook. You have to actually be thoughtful enough to understand their context and then create their plan that makes sense and. Again, that’s a as a guy who runs an advisory the service firm that is trying to saasify and bring the subscription business model to management consulting. It’s funny that I say that because, like, in the end, each each company is a butterfly or a unicorn or a snowflake or whatever, right? Yeah, it’s nuanced, but what can be replicable is the support that’s required for each of them, and having an ability to pick and choose in a Chinese menu set up of what you might need on your growth path. But yeah, I think it’s an interesting dynamic of that vertical, SaaS industry. Back to the examples we were giving, where it’s no longer like you’re selling SMBs only, even if you’re targeting SMBs, because SMBs are being rolled up, and when they’re rolled up, they become enterprises. And like we have one company that sells cybersecurity, company called defendify. It sells a SMB cyber platform. So SMBs aren’t going and buying all these cyber point solutions. They can’t afford them all, so they built a 13 module SMB platform. Well, guess what? They sell like law firms and healthcare providers and their largest company in the world is a nonprofit. We all know, with lots of locations, that their average deal was sub 20k Arr, this is an $800,000 contract. What that does to a company in single digit? Arr, boom grows. Our growth rate gives invest later stage investors confidence. There’s a larger Tam, and it’s just an exciting, exciting opportunity that never used to exist 10 years ago, and that’s why I think you’re seeing this vertical SaaS boom. So York
21:24
ie operates at the intersection of venture capital, operational support and advisory services, as you’ve articulated, what’s one area where early stage founders need help, but don’t realize until it’s too late. When
21:38
we launched the firm, it was on the thesis that the only people who could start software businesses are engineers. And I do think that was true in the first two, two and a half decades of there’s a lot of people that still believe that, yeah, yeah. There are a lot of people. And I And again, that that that was what I found the business on. So I found the business on these, these technical founders, and these were the CEO founders I worked with, right? And the CTO founders I worked with and and I literally built my career as being the the translation, kind of like business go to market guy, alongside these really smart people, and that’s how I have this foundation to do what I’m doing now, right? But what I realized, like, right when I launched York IE is that it’s actually back to that vertical point so many people from industry who are in go to market roles or business roles, or in larger companies who are saying, well, why isn’t there technology in this space or to solve this problem or for this use case, and then are absolutely clueless on how to build the technology, how long it takes, how much it costs, how to prioritize features and roadmap, how to hire engineers, what to what to give them as resources. Or what’s the difference between a full stack Dev and a UI UX person and a DevOps engineer, like amazing like, stuff that I know because I work in such deep infrastructure tech that most people don’t never even thought about, right? They just think an engineer is an engineer. Is an engineer depending upon the founder and depending upon the founding team and the early leadership. I think it is bifurcated between sort of business or product and technology. And if the founder is is one, then they really need help on the other. So there’s no simple answer there, obviously, but I think that’s that’s a big part of it. And the second part of it is something that’s thematic, and we talked about a little bit earlier was like it is the capital strategy, right? And so often it’s that sort of like today out planning versus like the like, if I want to get the 10 million, Arr, how do I do that? What milestones do I need to hit? You know, what funnel metrics do I need? What go to market motion do I need? Having to track expenses relative to revenue by percentage? Like, like, a lot of people just really don’t have that, like that backwards in planning view, right? Like, from a business perspective. But also, we call it the market in approach to company building, not the product approach to company building. So, like, it’s like, look at look at it the outside way in and and do do planning and strategy and then determine what you need, or potentially need for capital. Um, assuming things work. But yeah. So those are, those are the dynamics, I think that I would, I would answer that one on
24:07
Kyle, founders obsess over investor due diligence, but few think about how to vet a VC themselves. If you were a founder raising today, what three questions would you ask an investor before taking their money? The
24:20
amount of times I get pitched. I mean, it’s all like, you did a little research on me. It’s all over everywhere we do that we’re a B to B SAS investor at the seed stage. The amount of times I get pitched, like, hardware, marketplaces, consumer veterinary hospitals, sports teams, energy drinks, like, you know all the time. Like through, through our website and our inquiry forms and like, direct email on LinkedIn is incredible. So first and foremost, like it is a matchmaking exercise, and make sure, just like you would prospect the sales prospect, that you’re actually reaching out and pitching VCs who who invest in what you are doing.
24:55
Yeah, what’s your ICP? It’s reducing equity. It’s.
24:59
Such a spray and pray, and it’s just, it’s just ridiculous. I get it’s hard, and I get it’s a black box, and no one knows how the sausage is made and all that. So then the other thing I’d say is, when you when you have that match, and now you’ve got a term sheet, or you’ve got a commitment, the key is to kind of understand, just the same as you’d pick a co founder, you literally are going into business like this is a marriage. As I said earlier, you’re selling a piece of your company to someone who, most oftentimes is has built their career in investment banking or financial services or PE or venture capital. And you got to really make sure that just you like them, you know, so first and foremost, that you have a rapport, that you have a cultural fit, you have a philosophical alignment on how to build the company, no different than if you were even more so than if you were hiring somebody, because you can’t really fire them the moment you take the money and you get them on the cap table and they’re living in the preferred equity stack ahead of you. So I think it’s, I think it’s really more like those interpersonal, like philosophical, like cultural alignment, things in the same way that you you bring on a co founder or a senior executive, except with the added pressure of you can’t, you can’t just, you can’t just break up.
26:09
But aside from just feel, are there certain specific questions you would ask the investor to kind of run that to ground.
26:15
I would probably not even ask the investor. I’d probably ask to talk to a bunch of their founders. I’d actually asked the founders, like, what do they like to work with? You know, what are the hot button topics in board meetings? You know, did they focus more on the, you know, the top of funnel, the mid funnel, the close rates? Do they focus more on R and D versus back office, scalability and finance and accounting and all these other Right? Like, get a feel for what they’re actually functionally interested in, or, or how they like, kind of, like, mechanically operate, related to kind of governance and support. And I think it’s also like, back to the what I would ask an investor is, like, how do they view governance versus advisory? Like, that’s something that I doing this full time now for a while, and having this, like hybrid business, it’s like, I like to function like an independent even though I’m a fiduciary to my fund and my investors, and even though I’m governance, like, I like to bridge the gap between other investors and the operators, because I’ve got the rare and I think, unique experience To live both. And I always sort of bias the founders and the executives, because, like, we really, as investors can’t actually go do their job and won’t do their job because we have other companies we’re looking after. I think too often, like the biggest VCs in the world, think anybody can run any company sometimes, right? And it’s like because, and again, I might make that might be true if you’ve got, you know, a billion dollar fund, or you’ve put 100 million in and it’s sitting on the balance sheet, you can go higher. Great hire, true search to go, you know, bring in the top exec team in the world. But, you know, I always at my stage and, like, making sure there’s, there’s that. And so those are the types of things that I think it’s like, you’re really gonna no different than you talk to, like, reference customers of your ICP, you have to do that here, too, and then, you know, I think that’s that’s why you see my firm put out so much content, so much collateral. We’re super active on social. All of our leadership and managing partners are super active everywhere. It’s, it’s, it’s not, it’s about brand and company, brand, personal brand. I want people to know the type of firm, the type of people, the philosophies, the points of view, the perspectives, the way we operate, that should not be hidden and right. It’s like the same you used to always hear like, you know, 75% of the buyer journeys done be by the time someone decides to fill out the lead form. If you still believe that, and I think you should on VC founder fit, then you better put a lot out there. And it’s so funny how so many VC firms people are ghosts, and so I think it’s a really important point.
28:52
You know, Kyle, looking across your portfolio, what’s a common trait amongst the most successful founders that you’ve backed? You know, is there a specific mindset or a strategy that sets them apart?
29:04
Yeah, I think the a lot of our best founders are, like, obsessed with their market, right? And they represent, they evangelize and represent that market just as much as they are their company. So they really embed themselves in like, the fabric of their industry. The reason that’s so critical is because it ends they end up having, like, you know, a lot of, like, name recognition alignment and a lot of partnerships, integrations, channel relationships, potential, strategic acquires, perception potential, you know, speaking gig alignment, panel alignment, right? All these things kind of are, like, really important. So I think we definitely see that like, sort of like, masters of their craft, evangelists of their space, very, very consistently. Secondly, unbelievable team builders. This is a team sport, and so often. Again, you you hear like the celebration, even right now, I was thinking about this last night. How many companies does Elon Musk run like? This is like a thing right now in America, Elon Musk is not running like the day. To day operations of these companies. He’s not designing the engineering himself. He’s not running the books. He’s not doing all the sales. He’s living up here in like, Chairman land. And his master skill is obviously working on a lot of things, but it’s being an evangelist and a brand for those businesses at this stage. If you kind of think about that, like it’s like, what’s the role of a CEO or a founder? It’s like build amazing teams where you can fire yourself from all the day to day execution, right? And so especially as you scale, that’s what we’ve really started to see emerge with our portfolio that’s doing really well. Kyle,
30:33
what’s a venture trend or maybe some conventional wisdom that you believe will be completely irrelevant in five years?
30:40
I’d love to believe that it’s this growth at all costs mentality, but I think the the rich truly get richer in venture and I still in the funds, the funds, the mega funds, have all gotten so damn large that it’s probably still always going to be the case that the outliers can grow inefficiently and unhealthily and still get value to 20x Arr, but I think the trend is like the everyone else. I think there is still an opportunity for a lot of wealth and impact to be created for everybody else. That isn’t that like 10th of 1% outlier when we sold our company dying for 600 million. I’m not kidding. There was, like five to 10 Max companies in the world that could have bought us for $600 million and that was 2016 Google, Amazon, Microsoft, IBM, Google, Oracle, dare I say Google twice, maybe Salesforce, right? Like, think about it. Like there was alpha, not that, right? Yeah, alphabet, yeah. Now I’m getting confused, but you don’t even like Facebook. There was very few companies like now, there’s a lot more companies who could buy us for 300 million or two 50 million or whatever. And then there was like, maybe, like, tomo Bravo and VISTA and private equity, maybe. So guess what? When we wanted to sell the business or thought, Hey, we should test the market, which is how that that went, I called everybody I knew, and I cultivating those relationships with all those places for years and years and years. And some of them were like, Yeah, I’m interested in that ballpark. Some of them, like, that’s too much for us, or for you. We don’t think you deserve that or and, you know, and it ended up being a small subset that Oracle ended up coming in, running a great process and acquiring the business from nowadays, there’s dozens and dozens and dozens of private equity firms, and, you know, capital funds that can buy a company for five, $600 billion and and there’s hundreds, maybe 1000s of companies that are now public and worth billions who could go do a deal like that, right? So that that is what I mean about the markets. Should, you know, instead of the last two years of freeze in M A and IPO should open up and liquidity should flow, and massive M and A should happen on a very high volume and velocity moving forward like that’s it. That’s what I’m betting on, right? Obviously, it’s not just that m a is going to reopen. It’s that there’s way more strategic acquires that exist in the world than there ever were. And again, if you if you practice pragmatic growth and you don’t raise to raise, and you are thoughtful, then a 25 million, a 50 million, 100 million, a 200 million, a 400 million, these deals should be absolutely life changing for the people involved in these businesses. I think it’s a mix of those two things, the thoughtfulness around growth and the much larger market of strategics to do M and A that have changed, changed the game. I think that’s the trend I’m betting on. I think you’re
33:26
right. The number of yearly IPOs, you can still can’t count on one hand, but data suggests that M, a is really opening well.
33:33
And if you think about it from like a point solutions, there’s a lot of point solutions. I think all these AI agents are really just point solutions. Or features of bigger platforms. I think similarly in vertical software, could that vertical software be applicable in many verticals, there’s going to be a lot of like platform consolidation of a lot of like either point solutions or vertical software businesses that plug into larger operations and larger platform. That was one thing that was fascinating. When I worked in Oracle, I worked in their OCI, which was their AWS, their Azure, their GCP, and I reported to the guy who ran it, who or the Larry Ellison, right and and when you were in that company, it was so fascinating to see, like, the different worldview and perspective of a company that large. But also I realized inside Oracle, like they have like vertical business units that are absolutely enormous in telco and government and manufacturing and industrial and, like all these places, it was like, holy cow. Like, I never even, like, I would never even think of those industries or those verticals to target with my software solution, right? So, and these are multi billion dollar revenue units, right in a company, and those are small units to an Oracle, right? So again, the world we all live in is a matter of a matter of perspective. The more perspective and and points of view and purchase and lenses you can look at this through, the more you can, kind of like, come up with your thesis and views of how this might might shake out over the next decade.
34:57
Cal, if you could teach a master class to. Early Stage founders, what would be the title of the first lecture? I wrote an e
35:04
book back in the day called How to be the CEO of your own career. And I think, like so many of the lessons of that are related to like setting a setting a company vision, having a mission, having a descriptor, having a tagline, having who we are, what we do, how we do it, who we do it for. And I think those things are true of an individual, and they’re true of a company. And so I would probably push people on, you know, kind of that vision statement, and driving it all the way forward to their growth. Love it.
35:32
If we could feature anyone on the show, who do you think we should interview, and what topic would you like to hear them speak about?
35:38
That’s a great question. I would love to hear the current day perspectives of anyone at a multi stage giant firm, because everything I say is sort of counter and antithesis to the, you know, put 100 million on a company doing 3 million, Arr, and value them at a billion. And I’m still seeing much of this happen in AI now and in cyber, right? It might have, might have been corrected the multiples and in the round sizes and evaluations and general SaaS and vertical SaaS and infrastructure and a bunch of these other but they’re every day I wake up and I see a $30 million round and an idea, you know, and so I’d love to hear those perspectives that and I want, you know, I’d love for someone to convince me that that’s that’s a good thing for entrepreneurs and a good thing for the landscape we plan. I think it still makes money. I think venture capital still is power law and it makes money for LPS. But I’d love to hear how they view the one of 20 need to win in my fund perspective, and how that’s good for entrepreneurs.
36:33
Cal, what book, article or video would you recommend the listeners? Oh, he’s grabbing something.
36:41
So these two books, I read it, and this is, you know, if there’s entrepreneurs listening, who are, you know, illiquid, and all your, all your, you know, you didn’t grow up with money, and all your, all your potential net worth is living on your company, Cap table. These stupid books I read over a decade ago, and they really shifted my perspective and lens. And I think they’re just both excellent.
37:03
I think it was Think and Grow Rich, and how rich people think, was that the two? Yeah, yeah,
37:07
exactly, yeah. This one’s very well known by Napoleon Hill, yes. Lesser known, okay, but a quicker read, and I keep them on my table. And whenever people founders are in here, I’m like, flip through this one.
37:20
Love it. Love it. Um, Kyle. Do you have any habits, tactics or behaviors that are a force multiplier? I work
37:26
in a flow based work style. You can probably tell just by my gift of gab. But you know, I’m always multitasking. I have an incredible Chief of Staff and executive assistant that keeps me on pace. And you know, my wife at home is also incredibly organized and very operationally centric, right? So again, it’s surround yourself with really good people and figure out your work style that works
37:47
for you. And then finally, here, Kyle, what’s the best way for listeners to connect with you and follow along with York IE,
37:53
yeah, great. You can find me at K York 20 across social channels. That’s my whole football number, an homage of Barry Sanders, the best running back who ever lived, as well as you can find York ie at York growth across all social channels. He is
38:07
Kyle. York. The firm is York ie Kyle. Thanks so much for joining us today. This was a lot of fun, and I look forward to doing it again. Appreciate you having me.
38:21
All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email. Let them know what particularly resonated with you. I can’t tell you how much I appreciate that some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same, a compliment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over, prepare, choose carefully and invest confidently. Thanks so much for listening.
