Transcript

Strategy Session LIVE!: How to protect yourself from copycat businesses? When should you seek funding? How to entice funders to invest in a niche business?

The very best founders I know are brilliant at building systems. They connect teams, they remove bottlenecks, and they eliminate single points of failure. And yet When it comes to their own wealth. Most are running a disconnected stack. A tax accountant here and a state attorney there, a wealth manager who doesn't talk to either one of them.

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Hey listeners, it's Bob. We have a special episode to share with you. Today you'll hear our live strategy session recorded remotely in front of a virtual audience full of small business owners and masters of scale members. As you probably know, in a usual strategy session, Reed answers a series of questions from a group of entrepreneurs with in-depth analysis on how to respond to the challenges they're facing in their business. Today is just that. But with much, much more. In addition to this being recorded live, we have many surprises for you along the way.

This episode is co-hosted by Reed, myself, and our executive producer, June Cohen. You'll hear June kick off the event and then I'll join in a bit later. I hope you enjoy it. I'm June Cohen. I'm the executive producer of Masters of Skill and co-founder of the company behind it, which is called Wait Wat. And our longtime listeners will know that we regularly run strategy sessions in the podcast where entrepreneurs ask questions of our host, Reed Hoffman.

In the course of this afternoon. Five entrepreneurs will ask questions of Reed. And if those names look or sound familiar, it might be because each of the entrepreneurs will see tonight asking questions have been featured on Masters of Scale in one of our signature three act ads. And these ads, which we developed with Capital One, celebrate their entrepreneurial innovation. So each of them will be asking Reed one of their most urgent questions, and we have a feeling that you'll see many of your own challenges reflected in the questions and in Reed's answers. And along with those

serious and strategic conversations We will also have some fun. Which is our way at Masters of Scale. So along with these strategic questions and answers. We will be premiering for the very first time today.

A game show called The pivot point. where different sets of entrepreneurs will compete. And we think you'll love it. And now I want to welcome to this virtual stage.

The wonderful host of Masters of Scale. He is the co-founder of LinkedIn. partner at Gray Lock, board member at Microsoft. Legendary Silicon Valley investor, devoted mentor to millions. Please welcome my dear friend Reed Hoffman. Thanks, June.

It's awesome. Although I'm kinda don't recognize the introduction. You're all of those things in war, my friend. It's so much fun to have you here, Reed. I don't always get to sit down to all your strategy sessions, but I always listen to them afterward. I always love hearing you freestyle. And that's something that people don't always get to hear you on the show. I am looking forward to that.

As we get started, one thing Reed and I wanna acknowledge is along with thanking Reed for being here, we wanna thank each of you for showing up. Each of you listening, your leaders, there are fires burning when you're going home. So we want to thank you for being here. But before we move on to the full strategy session. We have a tradition at the top of every Masters of Scale event and Reed, I'm wondering if you're ready for it.

I am ready, waiting, and anticipating. Excellent. Okay, great. So most of you are very familiar with the Masters of Scale podcast. It's sort of And ow to entrepreneurs everywhere. And we have a tradition of playing it at the top of our live events in the form of a cathartic

sing along. So I know I can count on some of you to join in. Let's hear that theme song now. You gotta have incredible talent at every position. There are fires burning when you're going out. Can you believe it? Such an idiot. And then you go back to this is totally gonna be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. We're gonna add a free bedroom part. Ten years later I'm like, well that's just how you do it. We haven't made just how you do it.

This is masters of scale. I'm really excited to introduce you to the very first founder, or rather co-founders, to ask you a question in the strategy session tonight. Many of you here will remember them from being part of a Capital One Business Campaign. They run a charming cheese shop in Austin, Texas, called Antonelli's Cheese Shop. Will you please welcome to the strategy session, John and Kendall and Samelli? Mm-hmm!

Mm. Hey, Reed. Thank you so much, June. Reed, we're so excited to pick your brain tonight and we're just thrilled to be here and love the energy you're putting out. So we're gonna give it back to you. Awesome. All right, so our main question to start us off is clearly haven't shifted dramatically to virtual engagement during the pandemic, and we hosted over seventeen thousand people in our virtual events program during COVID, each eating cheese and cheese tastings around the world. But there are signs in areas where things are shifting back. So what patterns do you believe will persist and how much do you think virtual experiences, which really prove central to our own COVID survival, will continue to be leveraged and relevant as we move forward?

Well it's a great question, and the short answer is it's gonna be both. It's not gonna continue exactly as it is, because obviously people will have time allocations where they get back to things. There's obviously the fun of doing things in person as well. But now the entire world has discovered the interest of doing these virtual events, the global distribution, exact kind of thing we're doing today. So I actually think that not only are virtual events going to be continuing in a vigorous way, but also it's gonna continue iterating. You're gonna continue trying to figure out how to differentiate, how to have new kinds of interactivity. Actually, in fact, I really like cheese, so I'm gonna figure out what the next virtual event is and participate in that, because I can do that from Seattle, Washington.

And so I think that the The notion is to say it'll blend, it won't go back to the previous and then the iteration And the differentiation will continue in terms of what to do. So that's what I would By reflex. double down on.

While always paying attention because we're in uncharted waters. And that's awesome. Can I ask a follow up question? Of course. So As we're looking to sort of double down, perhaps. What kind of testing can you undertake as a business to track a fluid trend like this virtual engagements? And then how do you balance that with the pursuit of like actionable data?

With the need to just Go and iterate and be quick. How do I know if our historical data is actually useful, a reliable predictor in this moment. I guess this is more than one question, but What key indicators should we keep in mind as we move forward?

No, it's the exact right set of questions. One of the pieces of wisdom in your question already is you can't just say, Hey, I measured this piece of data and that piece of data says X and now it's stable. Because The very market might change, um, not just competitors and all the rest. And so I think you need to be keeping a relatively fluid measurement going, just as you're gesturing. Now. Usually when you're doing that, you're trying to do good, not perfect. You're trying to do quick and hasty data measurement like for example surveys or not very quick you know like round robin like okay how is this working or did you guys like this or would you like to see more of this like fall off what registrations look like

I actually would do what Internet entrepreneurs do, which is kind of paper testing, which is like do little low cost advertising inventory saying, Hey, do you like this or do you want this? And that gives you some market signal, and you want to do it every so often as you're kind of thinking that things might be evolving or changing. And even though some of the data will be noisy, some of it probably even inaccurate, which is always frustrating, right? You'll be able to kind of measure through it. And then I think the last thing that I always do for this kind of data measurement is there's this kind of philosophy of this, which is like data is fact. It's like Newton, you know, dropping the ball from the tower. And and actually, in fact, it all comes from a theory of the world, a theory of how things are today, how things are moving, and kind of where they're going. And so refining that theory.

And that means talking to the other smart people you know because That can help you evolve your theory. And then in evolving your theory You can Essentially

kind of get to Is my theory for interpreting my data is the way that I should be monitoring it. Right. And then you know, I guess the the last thing I'd say is Look for Cheap quick ways.

To measure that are specific. to your kind of virtual events. You know, you guys are in it and you guys are entrepreneurs and clearly part of the innovative hustle to Well, we went from a physical world to a virtual world and virtual cheese tasting Sounds cool.

We had a lot of fun doing it. Well we're taking notes. We want it to work out. Taking tons of notes. Um and thank you for taking some time to answer some questions for us and let us know where we can send some cheese. I will for sure. Thank you both very much. Awesome. Oh, thank you for that first question and answer, Reed. That was so much wisdom compacted into one answer, including My favorite read classic, which is always Talk to smart people, talk to smart people, talk to smart people.

That's what I do too. I know that about you. Moving into the premiere of our strategic game show called The pivot. Point. So welcome to the pivot point. This is the entrepreneurial game show where the answers aren't trivial, they are strategic.

Here's how the game works. So in each round, I will present to two contestants a mission critical business moment. drawn from or inspired by one of the Masters of Scale episodes. No prior knowledge of that show or that business is required because what we will be asking you to do is consider if you were in the shoes of this business and you were at this point when you had to pivot. What would you do? Each contestant will have twenty seconds to gather their thoughts and then will share their own approach to the problem in just thirty seconds.

Reed will decide. I'm the Best answer there. The winner of the two rounds will join a final round and vie for the ultimate prize. So Reef, you will be judging. Can you tell us what you're looking for?

What I'm looking for is less like oh my God, lightning strikes like you were just genius at this particular thing. But more how it is that you operate at a kind of entrepreneurial speed. Cause one of the things that's very key around entrepreneurship. Is the speed at which you make decisions, the speed at which you analyze possible outcomes. Because part of the thing that in almost every entrepreneurial

Scenario is you have a limited amount of time for making those decisions. Now, that being said, just like entrepreneurship. You're gonna have to express yourself clearly and quickly, just kinda like the classic three floors in an elevator pitch. But that's the nature of the entrepreneurial game is running fast through the dark, uh, you know, in the fog, with uneven ground, and then still keeping a coherent vision and being able to articulate. Your particular answer. to the pivot point quickly.

And with that It's time for the first ever game. Uh the pivot point. Let's go to round one and let the games begin. Read.

Let me introduce you here to our first two contestants. Contestant one is Tara Wilson. She is the founder and CEO of Fierce. Lab in Fort Worth, Texas. Fierce Lab is an event series and a network for women to grow their careers. Welcome, Tara. Wow.

Thank you for having me. Course. Contestant two. Is Tudor Mihala School. Tudor is the CEO and co-founder of Speechify. That's Speechify ending in AI.

Speechify is in New York City and it's a tool that helps people express themselves more effectively on social media. Welcome. Thank you so much for having me. Great. All right. Tara and Tudor. You know the rules.

I will share with you a business scenario inspired by a Masters of Scale episode. You are asked to imagine yourself as the CEO of that company. Faced with a critical pivot point under time pressure, what would you do? This is a question inspired by the Nike episode of Masters of Scale. Your company makes high performance shoes and gear for serious athletes. But there's a new competitor in your space, or just next to your space, and they are making stylish athletic streetwear.

You're pretty sure you're already losing some sales to this competitor at the edges of your core market of serious athletes. Now, you are not an expert in streetwear design or streetwear marketing, and you're not sure you want to become one, but You worry if you don't get into this streetwear space, this competitor will eat your market share. So What is your pivot? You have twenty seconds, and in the meantime.

Ar music director Ryan Holliday will offer us. Some thinking music. Right. Tayra, I'm coming to you first. You'll have thirty seconds to respond. Tell us. How would you pivot?

Well, first after stress eating all my Halloween candy, then I'd recognize that startups are as Reed says, a marathon of sprints. And in this particular case I'd sprint really fast. To my consumers, and I would start to ask them. How else can they imagine our product in their hands? How would they like to engage with it? Who else should know about our product and how else should we be showing up? within their communities. I think it's best to hear from those that are using your product and those that you want to be using your product to get some feedback.

Always with a smile here at Masters of Scale. We completely encourage you to run out the clock just as you did, Tara. And Tudor, we are coming to you next. You have thirty seconds. Also encouraged to run out the clock. over to you. How would you pivot? I would Think that the customers have already spoken.

They wanna uh see Sports shoes as going streetwear. So I'll try to make that the norm. And I'll try to do that by picking stars were recognized in the sports world, but they're also recognized as icons for streetwear, and I'll try to combine that.

TAAAAAA Over to you read. So look, both of you are entrepreneurs, so you understand measuring the customer, and both are kind of responding to a limited data circumstance. I'm gonna actually say today the winner is Tudor because I think going to the theory of the case. Where you go, OK, I'm gonna go to a hypothesis.

as of where I'm pivoting in addition to the data and the customer is the right place to go. And I also share the sympathy of stress eating through the Halloween candy, which is the reason I don't go trick or treating. But both quintessentially smart entrepreneurial answers. Thanks for playing, Tira. We will be watching your company Fear Slab. And cheering you on. But now it is time to move on to round two. Weed, let me introduce you now to our next contestants.

Contestant three is Greg Gallimore, and Greg has two identities. He is an entrepreneur. At Gensler Group, where he is a digital experience design director, and he is also an entrepreneur, as the founder of the patient experience company called Wubi. W UBI in San Francisco. Welcome, Greg. Thank you.

And we have contestant four, Becky Talek. She is co-founder of Arizona Luminaria. It's a digital journalism startup that's based out of the Arizona Daily Star. In Tucson. Welcome, Becky.

Thank you, this is so fun. We're so glad. That is exactly the right spirit. Here is your question. Now, this question is inspired by our episode with Radio Flyer, the toy company, which is actually part of our episode. about fiat, the car company. So you and your family own a small toy company. It's been around for more than a century. You built a solid business around a collection of beloved classic

Toys. But you're worried that as the twenty-first century goes on, kids' appetite for classic toys, like non-electronic toys, is going to fade away. You want to make sure your family toy company survives for the next hundred years. What is your pivot? You have twenty seconds to think about it, while Ryan.

Can you play us some thinking music, please? Greg, I'm gonna come to you first. Tell us what is your pivot point. You will have thirty seconds for your answer. Over to you. Well like Radio Flyer, I wanna be

true to our core product essence, really kind of lean into what we do well. And also analyze the market to see what can we pull in that's really successful, that's achieving the goals of Children's learning and entertainment needs. How do we augment the existing product line? How do we leverage our IP? And get the most bang for our buck while having a long tail so that the company does last for the next hundred years.

This could be through user testing, through some market research. But really kind of, you know, unlocking the value of the Greg, thank you for that. And now, Becky, we are coming to you. Tell us how would you pivot? All right, so kids are the influencers here, but parents are really buying the toys.

So I would focus on the nostalgia factor of the toys that parents remember having fun with. And then I would surround that with Great media that has suggestions for family playtime that would engage kids. Because parents are also worried about too much screen time right now. So Give them some ideas of how to use the toys.

to overcome that fear. Yeah. I think this time I will pick Becky because I actually think the question is also how do you refra what you think the market is? It's a classic kind of thing that entrepreneurs need to do and go, Okay, and obviously there's the mommy daddy I want and you know that kind of the classic and but yet it is that decision. And then as you were beginning to sketch your pivot, you begin to sketch things that you could then go measure very quickly and know whether or not that pivot is the right thing to be doing.

It's kinda like analytics. Data theory customers All the things. That are the things that live and die. For entrepreneurs. So thank you both very much.

Read, I don't envy you having to choose between these answers because everybody who's been on here has just such a great instinct, has a particular perspective. Expressed in just thirty seconds. Thank you, Greg. We will be following Wooby. As you evolve and grow, Becky, we will see you back for the final round in just a moment. So before we begin here. Reed, I would like to know if you are curious what the winners win.

I am always curious as you know, but I'm super curious in this particular case. So everyone who listens to the podcast knows that our partner Capital One Business has been running a series of ads that celebrate entrepreneurs. They're in our signature three act ad format. They run like a podcast inside the podcast. They tell a key part of the entrepreneur story and give their business really wide visibility to our sophisticated audience of business leaders. The reason I am telling you all of this is that the winner of this final round will be featured in their own three act ad on Masters of Scale. You know, I'd like to get in on this action. This sounds good. Ha ha ha

Um We'll think about that, Re well, we'll see, Reed. We'll see. When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative planning works with business owners to build a strategy around concentrated equity.

When to diversify, how to manage tax risk, and how to protect what you've spent years building. Creative planning where wealth works together. Learn more at creative plating dot com slash masters of scale. Humans will never be more intelligent than AI. There's gonna be two types of companies. Those are great at AI and those that went out of business because they weren't. How do we build a future?

That is human centered. I'm Rana El Calyubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week I sit down with the pioneers shaping our future. and we take you behind the scenes of the AI that's transforming our lives.

Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the rapid response feed. The guests and topics are just as compelling and timely from Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

So welcome back. I wanna welcome our two winners back to the final round. Welcome back, Tudor, and welcome back, Becky. So here is the final question for you, Tudor and Becky. This is a question that's actually inspired by several different episodes of Masters of Scale. It's not just one person's journey, it's several different companies' journeys. So two years ago. You and your team launched an app.

Now this particular app was to help shoppers choose the perfect meal. But it turns out the market just wasn't there. People didn't want to use an app in quite this way. And this happens. You took your shot, it didn't work, and you and your advisors have decided to call it. You're gonna shut the app and the business down. But the thing is you have this team and they're so good at what they do. You have coders, you X designers, marketers, and a this wonderful culture of trust and creativity like you've never seen before. It seems like a missed opportunity to just let the entire team go. So What's your pivot?

You have twenty seconds to think, and Ryan, you know what to do. Give us some thinking music, please. Becky, I will be coming to you first. You'll have As before, thirty seconds to respond, tell us How would you pivot?

Okay. I think that I would zoom in on Choosing as a job to be done since the app was made to help you choose a meal. And I would turn this into a lab. So I would see what other ideas my team had around Choices. that people have to make all the time that they find really difficult. And then I would prioritize their ideas and run really quick live experiments, maybe even in person, to watch people's reactions to the app in case the app is actually just a frustrating experience.

I think that would be. Yeah. Thank you, Becky, for your gameness. And now I am coming to you next to you, Dora. Tell us how would you pivot? This is actually inspired by the Slack story.

Which I find really impressive. In the course of developing this app, there's been a lot of ideas about how the technology can be built. And In order to make sure we respond to a need that we realize wasn't there, we actually found out other needs. that we are actually solving in the course of building this app.

One of them is the speed of getting. It's a rough game. I wouldn't want to be in your guy's shoes. Alright. So

I'll start with the punchline. I think Becky is gonna win. Tudor, the challenge was, of course, by referring to the slack thing. You lost some time in getting your answer out, which is actually kind of, by the way, a classic for your kind of two floor elevator pitch. I think you were gonna end up in a very similar place because the notion of diving into the team, the problems that they've been solving before, exactly as the kind of lab that Becky was describing, is actually in fact A very good way to find it. You both had the very smart answers. And not envy. The very quick answer you have to give. But it's been a delight. Thank you both.

Thank you so much. Thanks for having us. What great answers and a super shout out to Tudor definitely for clearly knowing his masters of scale episodes. Becky, so excited to have you as our winner, excited to have you uh featured on a spot coming up. Oh, this was really fun. Yeah. You know, thinking on your feet is part of the entrepreneur's job and it's just so much fun.

Great. Thank you so much, Becky. We are looking forward to having you and Arizona Luminaria in a three act ad and we will be talking soon. Thank you so much. And then I want to share with both of you, Becky and Reed. What every contestant wins because in fact every contestant on the show And every entrepreneur on the screen tonight.

And read you actually just up the ancient, but they are actually going to receive an epic Gift box. It contains an Apple iPad. It contains a beautifully designed Masters of Skill mug. It contains five books that Reed has shared with us over the years that are essential reading for entrepreneurs, including The Lean Startup by Eric Rees, Founders at Work by Jessica Livingston, No Rules Rules by Reed Hastings, The Four Steps to the Epiphany by Steve Blank, and hi. Output transcript: By Andrew Grove.

I'll show you the final items in the box. Now we were already going to include one of our masters of scale books, but now Reed will sign it. I had to add something to it. The contestants were just too great. We have.

Ar Masters of Scale hoodie with the signature. logo on the front. And on the back. Our favorite read expression. Which read perhaps you can share.

Well starting a company is like jumping off a cliff and assembling an airplane on the way down. So every single person who is on the show today will get that epic gift box. Thank you. We just loved having everyone. It was such a great experience. And with that, it is time actually to return to the individual questions from entrepreneurs being posed to you.

But one of the things you also know if you listen to the strategy sessions on the podcast is that we have another Host of Masters of Scale. We have our host of Rapid Response, who is also our co-host for Reed on many of the strategy sessions. His name is Bob Safi, and he is the former editor in chief of Fast Company, whose career I admired from afar for many years before we got the chance to work together. He is now our editor at large at Masters of Scale. Will you please welcome to the screen and stage our co-host and my wonderful friend. Bob Safian. Hey guys.

Welcome, Bob. Great to be here with you. So from this point on, Bob, I'm gonna hand it off to you and I'll be back on the other side of these four entrepreneurs to close us out. But I'm looking forward to just watching and listening now. So Bob, you take it from here. So we're gonna hear questions from four entrepreneurs from all around the United States. Their businesses are different, but their questions Are very broad. I've spoken to each of them, Reed, and you'll need your thinking cap on. They're very good questions.

So are you ready to jump in? I am indeed. All right. Here we go. So the first question is gonna come from Brit Redigwald. Now Britt's the founder of Grit Fitness, which is a women's empowerment fitness studio based in Dallas, Texas. Brit also has an MBA from Harvard. She's worked at big companies like

IBM and Deloitte before striking out on her own. Her question echoes one that many entrepreneurs feel. They don't always voice. So it's personal and insightful. Let's bring on Brit to ask her question. Hi Brit. Hi, Reed.

How are you? Good, how are you? Good, super excited to be here today. So my question is a personal question because I've been self-funded from the get-go. I now have built out three fitness studio locations in Dallas and we thrive through COVID and business is good now. Would it make me a bad entrepreneur? If I didn't want to open fifty or five hundred studios around the world and I was just content with the three that I have right now, you know, I'm really proud of the model that we have, and I know that there's a lot of risk with each added studio that we open, also a lot of risk with taking on investors. But you know, as a high achieving person, the voice in my head says, grow, grow, grow. And so should I really be listening? Or, you know, if we aren't growing, are we actually dying? Well, first, congratulations. Thank you. Uh gym business through the pandemic.

You must have grit. And you know, kind of just heart of going forward because my heart goes out to you. Thank you. And you know This may be funny from, you know, we're here on a masters of scale and so forth, where you'd think the answer would be, no, scale always, scale always. And actually it isn't. There's a couple of different things where that could be. One is the question of

If things are working well, if if you can project the future and you don't see competition or disruption coming either in technological or shift of the market. Then it's actually in fact not irrational to say this works and we're gonna actively continue it. You shouldn't continue it just because you go, Hey, I don't have any better ideas. You should always Have that active mind to Disruption might be coming.

I actually think that that little internal voice you have is part of the reason you're such a high performer, which is a good thing, which is No, shouldn't I be doing more? Shouldn't I be doing more? Right. And I think that you want that voice to stay. You don't want the voice ever to go no studios. Those are what I'm doing. Now

Growth is always good in terms of business strength, position When it makes sense in the market. I'm thinking about the Danny Meyer. Episodes that we've done. Where it's thinking a little bit about like well, how would you test

What it would be like To do The fourth studio or the fifth studio. Could you do it without like fully committing to it and see if that makes a decision? It's a little bit like what Danny found when he was doing the hospitality business. was to say well we have such a special experience here

I don't know what to do. Now eventually that led him to Shake Shack. And that might be the kind of thing that could be really important to you. And so My primary modification of the nudge for you.

Із тот або оке, хатувай експеримент. And try to act. To get some answer. to the question not just Growth or not growth and what that could be. I mean it could be a I don't know, I'm you're an expert in your business where I'm I'm a novice, right? But something in that arena.

Does that make sense? Yeah, for sure. Because there's other ways to grow besides brick and mortar studios. I mean, we grew with a virtual fitness studio that we have now and operating both. Yeah. And it could be like kind of thinking, okay, well Let's expand the virtual a little bit, or maybe let's think about is there A way to experiment doing a hybrid. Just like offices are not just gonna be fully distributed or fully backed, but there's gonna be more hybrid. Maybe that's

Something that could have an analog. Is there a technology that's coming or that it's currently present? You know, people being familiar. with the market on these things. That could be pretty central to this. Those would be the kinds of things that I would look at. So Pret?

Thank you for your most excellent question. Thank you. Much appreciated. As always, Reed, so great. Your answer to this question in some ways has to do with your own mission, about your own business. how much you want to grow and where you want to grow.

And then I did love the Danny Meyer idea. I had not thought of this idea. of sort of essentially like a pop up shop as a way to test your way forward. So many great things in there. All right. So

This next question comes from Matthew Goyne, and Matthew is the founder of DC based puzzle huddle. A direct to consumer children's puzzle company. That features diverse characters and awesome careers, astronauts, chefs, all kinds of things. Some of you may be familiar with Matthew's story from his appearance on the Capital One segments within the Masters of Scale episodes. Matthew's question is one that lots of startup folks ask themselves And it's about funding.

So Matthew, why don't you come in and ask your question? Matthew, great to see you. Hi. I'm so happy to be here. I have the fortunate uh humbling opportunity where I founded a puzzle copy. A few years before the pandemic. And owning a puzzle company was like owning ring lights or webcams. Like that was the year to own a puzzle company in an awkward way because as the country was suffering.

People wanted puzzles in their homes. So the question I have for you is in pursuing funding. I'm a fully self funded This company was built off of my bank account, but I often admire some of the headlines that I see other entrepreneurs achieving with seed rounds and venture capital and and raising significant amounts of money. And I wonder sometimes if I'm playing myself short. by not participating in that

Or if I should be more confident in what I have as a self funded business and continue to pursue the growth that I'm able to achieve. Through my own funding mechanisms. So Matthew, excellent question, one that applies very broadly to very many entrepreneurs. So thank you for coming on and asking it. And you know, one of the things I'm gonna have to remember to do is come order one of your puzzles, since my family likes doing puzzles. So I'm familiar with the puzzle explosion during the pandemic, and it's a great place to be. Now Some of it is you do the analysis, and I obviously don't know what the puzzles market is.

When you kind of make the decision about Should I get serious capital hit the rocket boosters take additional risk do dilution'cause you know, the risk is not just the capital, not just dilution, but changing the way you operate.

Usually when you raise money you go into the red sum, which is scary, especially when entrepreneurs such as yourself have said, look, I did this on my bank balance sheet. I made it work. I'm very cash flow attentive. I calculate the cash daily, weekly, right? I model my growth and all the rest, all the things that you have done in order to have gotten to the success you've achieved. Yeah and

What you have to look at is the simple set of questions. One, is your competitor to come in? Cause if a competitor comes in, raises a bunch of money, And then attacks the market. That could disrupt you because the capital side of it is part of the entrepreneurial competition. This happens all the time in tech, raising large rounds, going really fast and inefficiently, right? Kind of blitz scaling speed over efficiency and an environmental uncertainty. So if you have that, that's a reason. And if you think that's possibly gonna come, you may want to be the first mover in proactive. So competition's one. Another one is when you look at it, you say, well, Is there some velocities that get me to a different

level of business. Right. And this could be the well, if I had some capital, I could experiment with more channels, I could run some marketing campaigns that maybe I'm not running, maybe I could have a broader product line, maybe it could be in markets that I'm not in currently. And that will change. The level and speed of my business because if you change the Kager and the speed at which you're going in your business.

That might be worth taking the risk. Because just like all of the entrepreneurial things, you're very familiar with this, because you went and took the risk of building a bootstrapping business. Didn't know the pandemic was coming, just like you had the a sense of the market and puzzles and probably had some personal engagement. Uh a knowledge of it. Бо такі на риск. might be worth it.

To change a growth curve. And you know, a little bit like when I was talking to Brit You know, there's kind of things like well, could you test it? Right now, I don't know how you test whether or not there's non existent competition, but if you look around the competition, see what they're doing, see what's happening. Entrepreneurs will buy low cost test ads on Facebook or somewhere else and see if there's demand for a product within certain things and then say, Okay, if there's demand there, then I will go for that and I will build that out, whether it's a product line or a new market extension.

Those would be the kind of things. That I would look at in considering this. And you know, by default, given that you've been successful not raising money. I would say that you'd want to get to an active theory. that I should raise money.

Now normally I do tell entrepreneurs Like raising money is important because once you start demonstrating within like an app or something else that it's working, you're gonna get ten to a hundred well funded competitors, not just in China, but in other places. And so the general default is go, go, go. And that might be true of the puzzle space, but I don't know. Does this make sense? Yeah, it makes a lot of sense. Where some people see success that attracts attention and other entrepreneurs that w want to model the success that they admire. So whereas I didn't see any diversity owned children's puzzle companies.

No, I count probably ten that I'm aware of in the ecosystem. Yep, and that might be exactly why you would want to Essentially Say okay, I'm gonna put An order of magnitude difference. And an ability to move faster, and that might be why you would consider it. So

Matthew, thank you for asking a question that is on the majority of entrepreneurs' minds. All right. Thank you so much. Well, as usual, Reed, you got right to the heart of it. As I was reflecting on Matthew's question. It's like to be an entrepreneur, you start something, it requires you to take a certain kind of risk, right? And then

At each stage you sort of have to take the next risk and the next risk and the next risk. And sometimes it's scary to take that next risk. all the way down. I mean you're jumping off the cliff and building a plane over and over and over again. Yeah, and by the way, that's one of the reasons why we celebrate entrepreneurs. Because that is scary and difficult, and yet so essential for creating the future.

So let's go to question number three. Our third entrepreneur is also in the direct to consumer space, and that's where her question is based. And actually This issue of risk sort of comes into it. Mognesha Edwards is the founder of Scent and Fire. It's a maker of eco-luxury scented candles and scents made from domestically sourced. Raw and recycled materials.

Excuse the bad pun read, but her business has been on fire. But she's a little concerned that the success could in itself make her vulnerable. So let's Bring on Manisha to explain and she'll ask her question. Manisha? Over to you.

Hi, Ree. Nice to finally meet you. Likewise, and welcome. So as you heard, my business is on fire, literally. Um not literally, but we're doing really well. I launched two years ago and things have been taken off. I've gotten a lot of press features and recently we've been accepted into the Amazon Black Business Accelerator. And My issue with that is I've been kind of weary about putting my products on there. I only have one product on the platform right now. And it's because I've Heard a bunch of people talk about how they will put their products on there and other companies would dupe them, they would copy them. And I want to grow.

And I know that these platforms such as Amazon, Walmart, Target, I know they provide a lot of reach and exposure, but I don't want to be copied. And I've had issues with people copying so far. There's fake Instagram pages. with my brand. There's another company that have my name backwards. So my question to you is how much more copycating risk will I face being on one of those platforms? And is it worth the risk? And then also what can I do to protect my business from something like that? Yep, as kind of a classic Innovators question. You're doing all this innovation and you're putting energy and risk and work into the innovation. And is someone else going to make life difficult? By copying your innovation and then challenging it in various ways. And this is a again quintessential.

entrepreneurial problem. And so I guess the question is You know that you're gonna need to grow and be successful. You know you're gonna need a size, and you know when you get to that size. You're gonna have the copycat problem no matter what.

Right. It's not an if, it's a when. In terms of how to play out. So what you want to do is you want to strategize about how you best deal with that when. Now you could say well look I could grow in these other areas that's not on major platforms.

you know, Amazon, Target, et cetera. And get to more elevation before people realize how successful the products are or how valuable they are. Because one of the problems, of course, on Amazon is people can see how well it's selling. So that's part of what drives potential, you know, kind of copycat copiers for this. So you might say, Okay. I want to get some acceleration before I get there.

But you know you're gonna need to end up there. You know, you're gonna want ultimately to have all your products on Amazon, all your products on target, et cetera, and growing as strongly as possible. So that also then gets to what are the things that you can do to reinforce Your competitive position. One obviously I'm sure you've thought about his brand.

Right, because you go, Okay, how do I have that brand? How do I become synonymous with it? You might say, Hey, I'm gonna try to get more broad reviews and messaging out there that are already out there on the web so that that's harder to replicate because I use that early time in order to make that happen. And you might actually, in fact, do something like Alright, so what's the way that I can move much more fast? Now if you can think of things that would Есенці

give you competitive moats. I think that could be very useful in terms of kind of how you accelerate forward and kind of what you do. And so Manisha awesome product idea. Awesome direction.

And thank you very much. For the question. Whatever you thought your moat was yesterday, it doesn't get any easier. You have to keep creating new motes. I remember asking Daniel Eck, the founder of Spotify, what was the most difficult phase of building the company? And he said, it's always the next one because I've already done what I've done, right? It's always the next one. It doesn't get any easier, but the rewards get bigger as you go along.

And I think Manisha's challenge is if people copy you, you've got to stay one step ahead of them. And it's exhausting. I know. I'm sorry, Manisha, it's exhausting, but It's the game we're in. But by the way. The thing is is it's being a sign of success. At least you have the success too, which is the key thing.

That's right. And you use that the springboard that allows you to get to that next place. Or whatever the next place will be. Yep. All right, we have one more questioner waiting. His name is Ricardo Regalado.

Ricardo is the CEO and founder of two businesses based in Chicago. One is Regalado Services, which is a family owned building services company and the other is Route, which is a software platform that empowers service providers in the building maintenance industry, and he knows that even though building services is a huge market. He feels like he's

Kind of bumping up against some stigma. That's making it harder to ramp up more quickly. So for the question itself. Uh let's go over to Ricardo. Thank you, Bob, for the introduction.

I'm a founder that is building a solution for the space that I've built and scaled. to uh eight figure business, the cleaning and maintenance service industry. But my issue right now with the investor market is It's a non sexy. Boring. blue collar and not big enough market space to what they think, right?

So this has made it a little difficult with fundraising. Right. So I've had to bootstrap myself to get us where we are today. So my question is how do I entice That uninitiated Investor group. to be interested in the space because it's the future, right?

Or Do I focus on investors in the smaller group? That does invest in that space. But my worry with that read is it's a smaller group, right? I want to find those investors in the groups to give me the firepower and support. But it's a niche space.

No. So great question and kind of canonical for all entrepreneurs kind of looking at this circumstance. The first thing that I tend to point out to entrepreneurs.

In this dilemma, this question. is that you're not looking for everyone to offer you a term sheet, everyone to offer you investment. Don't need that. You need one or more of the right people to offer a term sheet offer investment. And so therefore implicit already in your thinking and implicit already in your analysis. Going to people who would be naturally good partners, because if you end up with an investor who didn't understand it, it's gonna create some turbulence for you, which is, you know, substantially less good.

So that's a good place to be now. On the other hand You go, well, it's too small, too few. I may not get the investment that I need in order to grow this really amazing business. And then the question flops. Two How do I make

this business more interesting. Now, some of that is to you know kind of describe how big the market is. how much you have a competitive edge in that market. What the actually possible Kagers and other kinds of things because by the way, most investors They actually understand they, ooh, this makes lots of money. That's exciting. Doesn't have to be, you know, the latest Disney film or something else that's like, no. I'm excited by high growth, good margin, you know, defensible businesses but owning shares is a good thing. Right.

So you could do that way. And then the other one, you know, entrepreneurs frequently under Count how much I pitch. Can really make a difference. Like doing a pitch in a way that gets someone kinda lean in and be excited. 'Cause by the way, sometimes people go, Look, I don't know about your business. And so you go, Look, you've got energy, you've got grit.

Sometimes actually in fact they go like I don't know this business. But I wanna be behind this guy Ricky. Right. And so somehow how you do the pitch. And show how you're excited about it. And while you go look this is like Awesome business.

And then that's infectious, and so That would be another thing to possibly trying it. But I hear you like because by the way, when I started pitching LinkedIn, people were like What is it? Oh is it like Friendship?

What is this thing? So I I hear you on the difficulty. So I don't know. Is that helpful? Super helpful, man. I mean that cause it it is now the new pivot and the new pitch that I've revised for our two point oh going about it. That's exactly the response we're getting, Reed, is like Oh They lean in. I'm like, did you just lean in? Let's keep talking. Let's go. You know, that's what I wanted.

Totally awesome. So Ricky, thank you. Awesome question, and thank you for being here with us today. Appreciate it. Thank you guys so much. Ricky doesn't wanna be a traditionalist in a traditional industry, and so he's gotta search around a little bit more, but it sounds like he's finding his pacing. The storytelling matters.

Yep, and I like the fact he was already working on iterating in exactly the direction. So you know, actually in fact people might think it's strange when I go, Well, I'm perfectly like good that my Answer wasn't useful to you'cause you're already doing it,'cause that's what entrepreneurs should be doing. Well, Reed, as always, it's an education to listen to you. I always have fun when we talk. Thanks, Bob. Thank you so much, Bob.

And I have to say for everyone listening, if you have not listened to the episodes where it's just Reed and Bob talking about everything that matters in a way that is Pretty much the smartest way you've ever heard. You need to. First of all thanking All the entrepreneurs, thank you so much for sharing your ideas and your challenges. I really feel by sharing each of you who shared an individual challenge, it helps elevate all of us collectively. I personally found as I listened that I could identify challenges that I'm having right now.

Sometimes ones that I know I'm gonna have in the future. And I think that's one of the great gifts of these strategy sessions. Big thank you to Bob Safian for co-hosting. As always, love hearing you think out live, Bob. Thank you to the entire team at Masters of Scale for putting the event together, along with our partners at Rand Live. Huge thank you to the entire team of Capital One Business. For being just such extraordinary thought partners and generous patrons for entrepreneurs. Finally

I wanna thank you, Reed. For being the best host and friend that my co founder Darren and I can ask for Reed if I could throw back to you to take us out. I'm Reed Hoffman. Thank you for listening.

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