The Pomp Podcast - #426: Ryan Denehy on How To Be A Startup CEO

Episode Date: November 10, 2020

Ryan Denehy is a 3x entrepreneur and the founder/CEO of Electric, which is revolutionizing IT support with the world’s first automated IT platform. His previous two startups were both acquired by public companies.  In this conversation, we discuss the 3 jobs of a CEO, hiring and firing, the most underrated startup hire, how to communicate with a board of directors, and why you can’t outwork bad people.  ======================= Get fresh, pre-measured ingredients and mouthwatering seasonal recipes delivered right to your door with HelloFresh, America’s #1 meal kit. HelloFresh lets you skip those trips to the grocery store, and makes home cooking easy, fun, AND affordable! Go to http://www.HelloFresh.com/pomp90 and use code pomp90 to get $90 off including free shipping! ======================= Athletic Brewing is re-imagining beer for the modern adult. We love beer. But we also love being healthy, active and at our best. No matter your motivation, if you want to keep a clear head and drink healthier, we are here for you. Athletic makes non-alcoholic beer that you don't have to compromise to enjoy. The beers are fully flavored, clean ingredient, and a fraction of the calories of full strength beer - they fit in any occasion. Check out http://www.athleticbrewing.com for more details and free shipping nationwide. ======================= Smart investors know being early is critical to success in crypto. CoinList is where early adopters invest in, earn, and trade the best new crypto assets before they list on other exchanges. Try CoinList Pro and be first to trade on network launch. Sign up via coinlist.co/pomp and earn $10 in BTC after you trade $100.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Ryan Dennehy is a three-time entrepreneur and the founder and CEO of Electric, which is revolutionizing IT support with the world's first automated IT platform. His previous two startups were both acquired by public companies. In this conversation, we discuss the three jobs of a CEO, hiring and firing, the most underrated startup hire, how to communicate with a board of directors, and why you can't outwork bad people. I really enjoyed this conversation with Ryan,

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purposes only. All right, guys. Bang, bang. I've got Ryan here with me. Thank you so much for doing this, sir. I'm stoked to be here. Absolutely. Let's jump right into your background. You've built and sold two companies and now working on your third. Walk us through your journey to becoming a three-time startup founder and CEO. Yeah. Very first company got started young. It was an online ad network called Banquet. Basically, we sold ads on other people's extreme sports websites um and so that was as big of a business as it sounds like we were we were about a million dollars in revenue uh when we got acquired it was sold business to usa today sports on new year's day 2008 i was uh in my junior year at hostra

and uh and barely graduated while you know trying to work for a public company uh and and finish my work there. I stayed there for four years, had a good time. Ultimately, while I loved the ad business, in some respects, I just couldn't see myself selling squares and rectangles on webpages for the rest of my life. I left in 2012 with my co-founder from that company, a guy named Rod Davis. Moved to San Francisco, started a company called Swarm. It was a retail analytics platform for small business retailers. So we could tell you foot traffic, conversion, sales in a web dashboard, that was a slightly better business. Still really challenging.

We attempted to build our own hardware, which I would not recommend to any founder. But we ended up having a really great outcome, sold the business to Groupon in November, 2014. And at that point, I moved back to New York. Rudd and I went our separate ways. He and I are still best friends. He started a company though called Blackbird,

which was later acquired by Surf Air, which will be going public soon through his back. So that has worked out really well for him. I got back to New York in 2016 and started Electric. And so the premise for Electric is pretty simple. We do managed IT support for small and mid-sized companies, but we sell it as a subscription SaaS solution with some services. So instead of having the old way of doing it, some random local dude, IT consultant, who takes a day to return your call, you work with Electric, we integrate with Slack and Microsoft Teams.

you have a web-based dashboard, you have an awesome account manager. So we've really kind of modernized IT management. So that business is doing very well. We have about 250 employees, raised about $60 million. We're doing kind of mid eight figures in recurring revenue. And yeah, that's probably the fastest I've run through my highlight reel. So I'll turn it back to you. Explain what IT support is for those that don't know. Yeah, well, you know, nowadays, is in 2020, you know, what it means is basically three sort of major food groups. The first is SaaS management, right? So you've got companies now, the average business we work with is about 100 employees, and they're using anywhere from 50 to 75 different applications, right? 10 years ago,

you might have used five, right? So just SaaS management, doing that in a really cohesive, efficient, secure way, that's a big responsibility. Then it's device management. So if you have 100 employees, or even if you have 20 employees or 200 employees, you got to make sure that those computers that you know where they are, that they're secure, that they're running correctly. So we handle that. And then the third piece is network and server management. So if you have some physical infrastructure, making sure that that's running correctly, that it's secure, tie it all together into sort of, you know, one, one cohesive, easy to manage solution. So pretty straightforward. Absolutely. And one of the things that I really appreciate about kind of

the way you approach building companies is you are very straightforward, right? So there's no kind of bullshit here. You're like, look, you learn on the job. It's really hard. If you're good at it, then it can be very rewarding. But like the celebritization of founding companies and being a startup founder doesn't tell the whole story. And you basically through Twitter and kind of a bunch of different mediums explain like, here's what it takes to do this. And maybe sometimes you do it well, and sometimes you don't do it well. But like, this is what it kind of entails. Where does that interest come from? Or like, why are you drawn to sharing that type of information? I think because I was so bad at my job for so long. I mean, my first two companies

were just were dumpster fires, you know, we ended up having good outcomes. But every possible mistake. I mean, we were talking about fundamentally flawed business models mixed with the wrong talent at the wrong times mixed with, you know, me and, and, you know, Rudd and I, when our first two companies not knowing anything about how to, you know, manage the people work for us, not knowing how to manage up to the board. And so, you know, every day, it wasn't a question of like, oh, is today going to be a good day? It was like, how many fires am I going to have to contend with today and so you know it wasn't until it wasn't until the tail end of my time running swarm back in like 2014 where I finally had been doing this for so long and just screwing up enough things

that it just sort of clicked that like this you know the sooner I can acknowledge that I suck at a lot of things and the sooner I can get really focused on seeking out answers from people who have done the things that I've done before like the better I'm going to get at the job and the better I get at the job, the more fun I'm going to have and the more successful the company is going to be. But it's just so hard, even if you think of yourself as a relatively high EQ person, it's so hard when you have all this confidence driving you as a founder to also admit that you really don't have all the answers. And that in most cases, you're probably going to be wrong and that you've got to turn to other people to get the answers. So once I saw the benefits of

actually just kind of embracing that mindset, all of a sudden I started learning faster. I started doing better. My company started doing better. And so to me, it's just something I'm really passionate about and like to talk about. Absolutely. So you've got this one tweet where you said, look, here's the three jobs of the CEO, right? You said recruiting, storytelling, and awareness. Maybe walk us through why are those the three things that you feel like are the most important to focus on? Yeah. I mean, it's cliche at this point to point to the fact like oh the team is everything but but it is right at the end of the day like a software business is a completely fictional concept right like we don't sell anything i don't have a warehouse full of

electric licenses somewhere i don't have an assembly you know what i mean like end of the day like the our company and really any technology business is just a collection of people who all generally believe in the same thing and agree to work on something together right and so the quality of the company you build is, is, is entirely contingent on the quality of the people and not just the quality of the individuals, but can I, can I hire a group of people who are all going to work well together? Right. One of my, one of my board members, Tim Harvey, he, you know, he said this to me, it's like, dude, it took me until my third time being CEO to realize it's not about the best talent. It's about the best team. And those two things are not always the same thing.

And so, you know, when I think back to my first, you know, my first two companies, almost every problem that we had almost every business problem that we had was actually a people problem right and i see this all the time when i get a founder who calls me and it's like hey like i i have a sales problem and it's like no you have a you have a people problem and the people problem is that you actually have a marketer who's not delivering any leads and you have a product person who's not shipping what the customers want sales are actually the least of your worries, right? And so I think it's just, it can't be emphasized enough that the only way you're ever going to build a company that's really going to be worth anything is focusing on the

people first, focusing on the team. So that's the first one. The second one, storytelling, you know, as a founder and CEO, at every stage of the journey, you're only as good as what you can get people to believe in, right? Metrics are great, but at the end of the day, if you're trying to secure financing, if you're trying to hire those great people to come work for you, if you're trying to get the story in front of the big customer, if you're trying to explain internally what's going on to sort of keep morale high, you have to become an expert at distilling things that are extremely complicated and frankly, most of the time, not that interesting and make them very simple and very exciting. It's not dissimilar to

Like one of the core principles of pop music and like writing pop music is taking something that's really unique and making it so that everybody can understand it. And therefore, anybody can be a one hit wonder as long as people get what you're doing. I mean, it's no different with storytelling in a startup. In fact, it's even more important. How can you take something as unsexy as IT support and get to a place where people are throwing tens of millions of dollars at you and leaving their jobs to work for you, right? And there's a skill to that, but you just have to do it a lot, right?

Um, and the, and the third piece, which I think makes the first two, uh, work really well together is, is awareness. You just have to have, um, you have to get to a place where you can be a spectator to your own thoughts, right? So like every day you're going to have stuff that blows up every day. You're going to have people mad at you every day. You're going to have things that you're, you're uncertain about, but to be able to step outside of yourself constantly and say, why, like, why am I feeling this way?

Why are things going this way? like am i doing a good job you can't you can't let it get to a place where you just go into some like tailspin of anxiety i mean i've i've been there as have probably most people but um you've got to constantly be able to just just get to a place where you can take a step back and really ask yourself the tough questions is this going well am i being a jerk do i have the right people on the team um you know because ultimately like like most businesses that wind up being successful it's because they avoided the things that killed them more so than it was because they were really brilliant and executed on a bunch of amazing things absolutely and one of the things that

you talked about a little bit there in recruiting uh but you've elaborated on is this idea that like just as you can't out train a bad diet you can't outwork bad people on the team uh talk a little bit about how, I'm assuming you learned that lesson by experiencing it and then came to the realization, but kind of how do you think about that today? Yeah. I mean, everybody's been in a situation, particularly whether you're a business owner or you're a manager of people, or you're on a team that's where you're working with colleagues, where everyone at some point in their career has been in a situation where you're just going in circles, you're going in circles, you're in meetings, everyone's talking past each other. Nobody can agree to goals or you agree to goals,

but you kind of know that no one's ever going to hit them. And when those things start happening, almost always what that means is that you've got the wrong person on the team, or maybe it's the wrong people. And I think that the problem that a lot of people have, I certainly had it, was that most people don't really know what excellent looks like, don't know what world class really looks like. And so it's easy to be in a situation where maybe you're managing somebody or your colleagues with someone and they went to the right school they have all the right experience from you know some other company they worked at they're a nice person seemingly right and so that it's but you wake up six months later and you're like we've gotten nowhere on this initiative we've

made no progress on this thing and you're just continuing to go in circles it's like guess what what's the common denominator that person maybe that person's you right i don't know but um you know, that's, that's the, that's the single biggest thing. And where CEOs often make mistakes and, and frankly, nuke their businesses is that they have the wrong people on the team and they either take too long to realize that that's the root cause, or they know that that's the root cause and they don't act fast enough. Yeah. One of the things that I think a lot of this gets back to is like communication, right? So it's the CEO communicating to the people, people being able to communicate back to the CEO and kind of horizontal and vertical communication.

I remember at Facebook in 2014 when I was working there, basically product managers interview prospective product managers and they kind of have this unique hiring process. And that year I said, hey, I want to get much better at interviewing. So I just, every time there was an opportunity to do it, I would just volunteer and say, hey, I'll interview that person. And in it, one of the tracks is basically like a made up situation, like a war game almost, right? So you would say to somebody, hey, Ryan, you're in charge of this team here at Facebook, you go home on Friday, everything's great. Monday morning, you come in and traffic to your product has dropped 50%. What do you do? Right? And basically, you just talk through them. And kind of as they begin

to tell you what they would do, you would feed them more information. And I'll never forget that during that exercise, I probably did, I don't know, somewhere between 80 to 100 interviews in doing this. One person said, the first thing I would do is I would immediately alert every stakeholder that we had a problem. One person. And I remember being like, this person is the person that we need to hire because they've done this before. They understand how important communication is, like they're team oriented, like all the things you're talking about. It was so interesting that only one out of all of these people jumped to, let me communicate first. Everyone else said, let me solve the problem.

Let me jump in and try to figure out the answer. And I think that that is kind of the differentiation between somebody who's high quality and then somebody who may be good, but they're not kind of that world-class, highly experienced person. I mean, you're totally right. i mean communication is is is the thing that either makes or breaks most relationships business or you know personal right and most people know that right and and and that's something that we've at least at electric you know the way that we run the company now is like it we've acknowledged the fact that it takes maintenance it takes effort it takes you know i was talking to my my vpa product this morning and you know we were talking about the fact that

yeah, as an executive team, we all came together very organically. Everybody kind of hit it off right off the gate. We did a bunch of hiring last year. So we basically doubled the size of our exec team about a year ago. But one of the things that we were talking about is that there's this tendency when you have people who already are very aligned and getting along well, and everyone's kind of clicking, there's a tendency to actually under invest in those relationships and say, hey, you know what? Like, hey, you know, me and pop, we get along like we're all good. We don't we don't need to set aside all this time we don't have to you know it's the actually it's the opposite it's that if you actually are lucky enough to have that chemistry with your co-workers or

with your boss or whatever those are the relationships that you want to double down on and you have to be really really intentional about cultivating trust and figuring out everyone's you know kind of unique communication styles and investing in the quality of those relationships because you're only going to get so far sort of just getting there by accident or sort of getting there, getting there organically. And I mean, that's just where I've seen, just at other companies, you know, otherwise very high performing, high potential individuals just go sideways because of bad communication. And so I think that'll be, that'll be an issue most humans have probably till the end of time. But, you know, it's an important thing to focus on

because of that. We've talked a lot about kind of the executive team communicating with each other or also communicating with employees. You mentioned earlier kind of managing the board or managing up to the board and talk a little bit about kind of the communication there. And most CEOs, especially first-time startup founders, they've just never had a board of directors before. And so kind of talk through a little bit about the relationship between being a founding CEO, the board, how you communicate and manage kind of those outsiders slash investors. Yeah. I mean, look, the board, the board is either going to be your biggest asset or at some point could wind up becoming very problematic. You know, most, most VCs have been doing this almost 15 years now. Like

most vcs really do want the founder to succeed they want everything to go well um and they really want to have the founders back you know fred wilson wrote a post recently about you know when it's time to fire the ceo and i mean even he said look it's only in you know pretty extreme circumstances that that's that that's considered but but like anything like what we were just talking about you have to invest in those relationships and so one thing i did a really poor job with uh i think in the early days of electric and at my previous companies was like i didn't really understand or respect the fact that like hey the board one they're ostensibly my bosses right so like you want to be communicating with your bosses a lot too

you want to establish good relationships but but the third thing was like the the more open and transparent and clear and free the communication is the more trust you build every time an email update goes out every time a text message comes in right and the more trust that's built there the more productive those relationships become so like in the early days of electric, you know, I would get an email from like, you know, Bob Goodman at Bessemer and he'd be like, Hey, we should catch up. And I'd be like, Oh shit. Oh no. Like Bob wants to talk. It's like, I'm just like one of a dozen portfolio companies. And he hasn't heard from me in a while. And he's curious what we've been up to. Right. And I would rush and try to put together some big update.

And it would be like this kind of awkward conversation. And I remember before we raised our series B, you know, he called me and he's like, he's like, Hey, so he's like, you know, you really got to step your game up. You know, we're going to be bringing in some big money for this next round. And, you know, I think you just really got to step up the professionalism with how we kind of manage things. And, you know, once Jeff Richards from GGV, he led our series B, great podcast that you guys did, by the way, a few weeks ago. You know, he came in, I just kind of use that as like an opportunity to sort of turn over a new leaf and say, all right, everything good, bad and ugly, I'm going to be clear, I'm going to be concise. Anytime I have news that

is material to the business, it's boom, it's going to go to them. And it completely changed my relationship with the board. You know, I send them updates almost weekly. They're not formal. You know, for example, our professional services group hit a big milestone on Sunday night. I just forwarded the email from the guy who runs that department of the board and the board's like, hey, this is awesome. Great. Thanks. A little bit of stuff like that every single week. By the time you get to the board meeting, everyone's like, yeah, cool. Like we know what's going on. Let's talk about the strategy. Right. But it's just so hard for a first time founder, I think, and even some multi-time founders to wrap their head around the fact that like your board, they are

your friends, or at least they want to be. Okay. So you just got to be honest and you got to communicate often with them. One time somebody said to me, the problem with boards and startup founders, especially first-time founders who don't yet understand how to use the board is that founders look at the board as a fundraising mechanism, right? They look at them as a potential problem solver. And then always looming over their shoulder is the board could fire me, right? Or the board could be adversarial in some way. And what he said is the thing that people don't realize is like, if you tell others your problems, the right people will try to help you solve them. And who better to try to help you solve your problems than the people who are

financially aligned with seeing you succeed. Like that's the key. Just continue to communicate good, bad or ugly to them and they will help you. Yeah. Like in some ways, you know, I kind of like look at part i mean ultimately i'm responsible for everything good or bad that happens in the business and i take that responsibility very seriously but there's a part of the startup ceo where in some ways you're also a little bit more of like the weatherman in the sense that it's like it's also just your job to sort of report stuff and have a dialogue about why it's gonna rain on tuesday not like thinking oh they're gonna yell at me because it's gonna rain on tuesday like it is what it is you just have to be able to have the dialogue and like actually jeff jeff richards is a

really good example of somebody who you know believes in that but actually um you know really embodies that as a board member you know we we right after he invested we we hit a little bit of a rough patch with with the business and there was some stuff that we needed to fix and i called him and i was just like dude i think we got to take some growth projections down a little bit i think we got to make some staff changes like i know this is a little sudden after you know we got the deal done he's like he's like dude i don't care he's like i'm what i care about is the next five years, not the next five months. And he's like, I'm just glad you're calling and telling me now, not six months from now, or a year from now, we got a much bigger problem on our hands,

you know? And it's like, what ends up happening and the advice I would give a lot of founders is like, I can't tell you the feeling of relief that will wash over you when you have the hard conversation, because it's never as hard as you think it's going to be. And you're going to walk out of your office that night going, wow, oh man, like now that's off my chest, we can actually to start solving the problem. Yeah. I wish I had that conversation six months ago or three months ago. Yeah. Well, you know what I saw? Cause when I was at USA today and when I was at Groupon, you know, both were public companies in the midst of, of, you know, pretty colorful turnarounds. Right. And so I think part of what gave me the, the, the motivation to be more proactive on having

the hard conversations at electric was living through, you know, two turnarounds at public companies and watching what happens if you just bury problems forever and ever and ever. It's like, guess what, then someone who's not you is going to come in and flip the lights on and start rummaging around in your business and start telling you how to make the sausage. And usually that ends up with you not having a job anymore. So it's entirely avoidable. Absolutely. You talked a little bit earlier about when you have the wrong people, being able to kind of get rid of them and get the right people in there. One of the things that I've seen in founder after founder after founder that is very hard for them to get comfortable doing is firing people. Talk a little

bit just about kind of your own experience with having to fire people and kind of how you've gotten more comfortable with it over time yeah I mean look it sucks and everybody at some point in their career goes from having never fired someone to having to let somebody go uh for the first time and you know I remember uh yeah back in my first company right after we got acquired by USA Today we we had a guy on the team who I was always complaining about I just didn't think was the right fit and uh and so I reported to my co-founder Rudd because he became the GM of the group once we we got acquired and uh he ended up getting promoted i became the gm and he's like first order of business you got to let go of that guy you've been complaining about for the last

three months i never fired anybody before i was i mean i was i i wanted to call out sit for the whole week so so i went home and i watched uh hard knocks on hbo because you know what i found was that these nfl coaches are really good at letting people go you know because they have to release like half the squad you know before the season starts or whatever and so i just watched a bunch of hard knocks episodes and i was like okay like you just got to be you got to be direct you got to sit down you just got kind of got to do the thing um so whatever so i got through it it ended up um ended up being fine but but sort of fast forward to today the the biggest thing that that we've realized is that you're never going to bat a thousand you're never going to hire

always make the best hires the key is being really clear in the expectations in the first you know months two months and figuring out as soon as possible and then you know what i always tell the company is that all attrition is regrettable right if we realize that we've that we've hired somebody and they're not living up to the standard that we that we want at the business that's our fault we shouldn't have hired them and we should have figured that out before we extended them an offer before they left their job before they came over here right and so so that's always been my stance of the team here is like it's always our responsibility if someone's not a fit and so and we have to treat it as such and so as a result one we're really clear about expectations so that it's

it's not a surprise though no matter how hard you try it always is for some people and the second thing is we try to be pretty generous with uh with severance more so than one might be for somebody who might have only worked at your company for a month just because it's our responsibility you You know, we're half the reason that we ended up in that situation. And so I think if you can, if you're clear with people and you're a real, like a decent human being about it, send the message to the rest of the org and to that person, wherever they end up next, that, you know, that you're the kind of company that cares about people. Absolutely.

One of the things I'm really interested in is as you guys continue to build electric and you're providing this IT support, you've got all the internal challenges and just kind of being the CEO, running a business, growing it. But there's also some challenges that your customer base has experienced with the COVID-19 pandemic, the economic shutdown. Talk a little bit just about how you've been able to balance dealing with your internal just scaling obstacles that every business kind of goes through, but also then having at the same time, your customer base go through just changes, right? Some of your businesses may actually be benefiting from it. Some of it may be

being hurt by it, but just how have you guys thought through that or how to deal with that? Yeah, well, I'll tell you what's been really interesting is that the more internally focused we get in terms of hiring great people, taking care of them, you know, fostering really productive dialogues around tough issues makes us better with how we deal with our customers, right? And so I'll sort of explain that. But, you know, if you think about if there was ever a year to sort of like earn your stripes as a CEO, like this, this was definitely one of them, you know, between COVID, between, you know, a lot of the things that are happening, you know, socially and politically. and what's different now versus you know even five years ago is there's a much different expectation put on CEOs particularly startup CEOs around their stance and their voice and their involvement in these things that are that you know that are that are happening in the world and so I think the the challenges that I've seen other companies run into are that you know these founders and CEOs get so paralyzed over you know being afraid to say the wrong thing that they

either wait too long they say nothing or they don't really say anything at all right they issue some bland statement that was run through marketing or whatever and at the end of the day as i said before it's like companies are a collection of people right and so what what what the employees want and ultimately what your customers want is they want to hear from you the human being they don't want to hear from you the venture-backed ceo who's watching every single word now obviously you have to exercise some discretion but for example you know back in the beginning of june or that last weekend in may um you know when when there were you know a lot of the protests started happening and you know across america i was yeah it was saturday afternoon i was standing in my

kitchen and i was like i was like shit like i don't know i have to address this we have a very diverse um you know group of employees here like what do i say what do i you know and finally i just like, God, I was standing in my kitchen, I get on my phone. And the first thing I said in the email was, I haven't sent this email yet, because I was afraid that I was going to say the wrong thing, or that it was going to come off disingenuous. Like I literally just I opened the email with that just to let everyone working here know, like, I don't really know. But here's how I feel. And I'm just going to put some words down on paper. And the response is amazing. People are like, I'm just glad you said something. I'm glad you spoke from the heart. And so,

you know, in contrast, I'm on a bunch of CEO, like email threads and stuff. I saw a lot of companies just get smoked because the CEO would hide in a room with their head of HR for a week saying nothing. And it's like, I think when in doubt, you just got to default to, you know, you got to think of your employees almost as if they're an extension of your friends or your family. And it's like, what would you say on a phone call with a sibling or a friend, right? Kind of treat it like that. Don't overthink it. Yeah. And I also think that this idea of setting expectations is really important as well. By simply saying like, hey, I haven't sent this because I've been scared of saying the wrong thing. You're taking ownership of the fact that

here's why this hasn't gone out yet. And two, by the way, here's my vulnerability. So if I say the wrong thing, I was already worried about that. And it almost is in some weird way, when you tell people, especially in communication, the vulnerability, it seems like they immediately become much more empathetic in the way that they receive the message. And also they're much more understanding if, uh, maybe they disagree with you, right. Or they, they have a different viewpoint. Um, it's just like, Hey, look, Ryan's doing the best he can with the information he has. And like, so am I, and we may not see eye to eye on, especially really polarizing controversial topics, but I appreciate the fact that the person who's leading the company I work at

has the courage to say what he believes, how he believes it, uh, and kind of help us all move forward together. Right. A hundred percent. I mean, look, everybody, I think about this all the time like every person on the planet has some battle they're quietly fighting some more publicly than others but like everybody's got something inside that's not going well some vulnerability whatever and so you know i think it is as a leader as long as you can just show people that like you're just like them too i i think it gives you a lot more leeway in terms of um you know not not it sort of diffuses any tension that might be there people just look at you like a human i mean we did i sent a note out yesterday um you know ahead of the election i basically you know what

i opened it with was like listen i have no unique point of view on politics or election law or anything like that okay but here's a few things that are purely fact-based that i think we should all take into consideration you know and i think and the and the note went over well because ultimately i was just saying like i'm not an expert on this but like just here's some facts just so that we can all you know kind of align on a few things and and that type of stuff goes over a while with people. Absolutely. One of the things I've been really interested in too is, and maybe we'll close on this, is just as the CEO of a business, there's lots of social issues now. There's obviously the election kind of uncertainty. There's just a lot of non-business activities that

are going on. And I always joke and say that if companies were purely capitalistic in nature, and they didn't worry about anything else other than optimizing profits, then there would be no politics in the workplace. There'll be no social issues that you'd ever have to deal with. Like it would just be machines basically, right? Every company would just have like none of the other things that they have to consider. Obviously though, these companies are made up of people as we've been talking about. And so those people have political ideologies. They have certain positions on social issues. We've seen CEOs kind of take a couple of different approaches. Some CEOs say, Hey, look, we want you to express your opinion here. We want you to kind of feel

comfortable having every conversation you'd possibly want. We've also seen the other end the spectrum, um, you know, kind of the coin based approach of like, Hey, we were a mission focused company and, uh, there's no room for politics in the workplace. How do you, maybe not so much just like which end of the spectrum are you on, but just how do you think through, um, the aspect of like the people who work here have other interests other than just coming to work here every day and operating like a robot. And how are we going to, um, kind of deal with that along with trying to build the company yeah well okay so i think the first the the first thing and just sort of going back to sort of the early stages of of company building is the most overlooked

hire in every startup is a great head of people right and why it's a combination of hr and talent right so so we hired a vp of people uh jamie coakley a couple years ago and i can't tell you how big of an unlock that is for me as a ceo for the rest of our leadership team To have somebody, if we all believe that a company is just a collection of people, to have somebody whose sole focus is to just look after sort of the health and well-being of this group of people, right? It's just companies wait. I mean, we waited too long, but we nailed it and nailed the hire and ultimately got around to it. But companies wait way too long. And the reality is like if you believe that the people side of the business is that important, you have to invest in having somebody to sort of run that.

So that's, that's a huge thing that most companies overlook that you just, you gotta, you gotta get it dialed in. The second piece is what, what I always try to get people to understand and what we really believe in here is that using the company as a force for good is inherently a competitive advantage and a force for good. So I don't care, you know, how, you know, sort of how rigorous your like moral compass is, at the end of the day, if all you are is just a purely capitalist profit driven person, it's still better business to be a good human and to be inclusive and to have a diverse, you know, team and a diversity of opinions. And so, you know, for us, I think when, you know, back in, you know, June, July, when a lot of companies were announcing like, oh, we've donated $100,000 to the ACLU or we did this or that. Hey, look, that's fine. Those are all really good causes. But internally, we looked at it and we said, our payroll is going to be $35 million next year. If we can make our recruiting processes even a little bit more diverse, a little bit more inclusive, I have a $35 million money cannon that can actually create real change in real communities, right? And so, you know, and the sort of follow-on effects that that has in terms of the company culture that you build and productivity, all that stuff, it's all very obvious. you know salesforce is a great example of a company who i think really led the way on this um you know mark with his like one one one kind of pledge approach and i can't tell you the number of of salesforce executives who i've spoken with over the years we're like that's a big reason they

went there and it's a big reason they stuck around so um you know i don't know if that directly answered the question but we've tried to orient the company really around that as like how do we use the whole thing as a force for good. And then in return, we have a diversity of employees who all have different opinions and different things that they care about. But look, at the end of the day, they recognize that we're trying to do good and running this company. And as long as their opinions and their interests don't hurt anyone, then that's what diversity is all about. We support it. Yeah. What's so interesting about your answer is it really highlights just the complexity of all of this. There is no black or white answer, right? There is no kind of single

magic bullet of like, hey, here's the position to take. And if you take that position, then it's going to solve all your problems. Like there is complexity and that's ultimately a net positive if used the correct way. So I think that makes a lot of sense. I always wrap up every interview with the same two questions and then you'll get to ask me one question to finish it. The first question is, what is the most important book you've ever read? It's interesting. It's going to be a less shallow answer than it probably sounds like. But when I was in high school, I used to walk around with a copy of Barbarians at the Gate. And I probably read it five times. And it was, I think, you know, I hadn't, I was just in the

early days of starting a business, but it just, it was so colorful and so fascinating reading about these crazy, you know, leveraged buyouts and all this stuff, which I had no, you know, didn't know anything about that stuff at the time, but like me as a high school kid realizing like, like, yo, this is, this is business or like, you know, it just, it just opened my eyes to just, you know, what, you know, kind of what was possible and just how gnarly things were. And so, I mean, I've read plenty of books that are, that are much more impactful, you know uh professionally i'm staring at a copy of uh tape sucks which is frank slootman's book uh which is awesome i've already read it twice uh but now barbarians at the gate i think because

i read it as a 16 year old was uh hugely influential it's a great book and uh tape sucks is another good one so there's two good suggestions uh what about the second question which is more fun aliens are you a believer or a non-believer i big big time i mean come on you can't you can't if you just if you just look at the data statistically there has to be alien life it's so we had a our in one of our weekly exec team meetings we went off on a tangent for 10 minutes at the beginning of our meeting and we like genuinely debated it when we we all came to the conclusion like there are for sure aliens out there and maybe it's like some worm on some you know moon outside of some random planet or maybe it's intelligent life but it's definitely out

there. Yeah. I tend to agree with you, but we'll, uh, we'll, we'll see. There's some deep signal coming from the galaxy, supposedly I was reading this morning. So we'll, uh, we'll see what's going on there. You could ask me one question to, uh, to wrap us up. What do you got for me? Well, yeah. Seeing as how your, your listeners are, uh, are a lot of folks who are kind of hobbyist investors in, in, in one way, shape or form or, or another what's, uh, what's one trend, whether it's, it's a trend in asset class, an individual company, though, you probably don't want to be giving stock tips on here, but what's one thing if you had to place a bet that you think is an overlooked bet for 2021 for people who are investing, what would it be? Yeah. So I don't know

if there's necessarily one, there's probably just a theme. And the theme that I always talk about is like the fringe of society. So right now, if you said to me, like, what are the things on the fringe of society that maybe like your weird friend is into, right? It's kind of the way I think about it. And like that one weird friend who you're, you can't figure out, like, are they just weird or are they actually smart and just thinking about different things? But like, okay, so space, psychedelics, cryptocurrency, right? I mean, like that's all the things that everyone's got that friend who's always like on the tip of the spear of like the weird stuff.

Well, what we found is that weird stuff usually makes its way into the mainstream, right? Or some good percentage of it. And so just take the three things I just named there. Like space, now it's not weird. Like now everyone's like, yeah, of course, like space is going to become much more popular. 10, 15 years ago, that was kind of fringe.

You're telling me you're going to launch a rocket and then re-land it? That was a crazy idea. I think cryptocurrency maybe like five years ago was super fringe. I'm literally having flashbacks to being at Zach Prince's apartment in 2016, and he takes a sip of his drink, and he's like, Jenny, have you been buying any Bitcoin? And I'm like, you're nuts. You're crazy.

Right? So like five years ago, crypto was like super fringe. you have that one friend, Zach Prince, who ends up going to build Block 5, right? Who's like kind of like out there. Now, I think like psychedelics is a huge place, right? Although like the drug decriminalization that's happening, like there's just a whole area there that like I frankly don't understand really well. There's a great company called Mindbloom, another friend of mine, similar to the Zach Prince story. But a few years later, my buddy Dylan, he goes, hey, I'm starting this company. It's ketamine therapy. And I was like, you're nuts. You're going to get VCs to give you money to send people academy to the mail. And you know, I'm already

regretting not investing. So I think you're totally right with this recommendation. Yeah. And so like the reason why I say it's a theme more so than just like one asset class, if you will, or one kind of industry is okay. We just identified three. There's probably 10 more that like that one friend is already thinking about that just hasn't seeped enough into like the mainstream for like me to know about yet. Well, think about like e-sports, right? Like there's going to be a professional gaming league for world of warcraft 10 years ago people were like no absolutely and if you again uh play vs right if you look at like what delane's built there oh yeah they basically built an entire national system uh that mirrors the ncaa right but for gaming

across all these schools and so it's just i think that a lot about like investors are rewarded for one being early and two being right. And a lot of times when you're early, that means you have to do something different than everybody else. And so like, sure. Are there people that will spend all of their time trying to figure out, you know, is Starbucks current, uh, revenue multiple too high or too low? And what's the future earnings, uh, based on, you know, their rollout plan and their, and their international expansion and like, sure. And there's people who are good at that. That's not me. Right. And that's not where my interest lies. Instead, my interest is much more in like, what's that next thing that people are going to be talking about in five

years that they're like, wow. Remember when I was talking to Ryan and Ryan mentioned to me like this thing and I thought he was crazy. Well, now it became a thing. I mean, I remember when I had, you know, my, my best, my best performing seed investment to date has been a company called stadium goods. Um, these guys raised less than $10 million sold for $250 million to Farfetch. That stock is now ripping, um, was awesome outcome for everybody. But I remember in 2015 when they started the company, you know, and I was trying to make interest to investors for for Jen and John and the people were like, Oh, I don't know, like, are people going to care about sneakers, particularly like used ones, this and that. And it's like, it's streetwear literally

is is the next wave of high fashion for, you know, millennials and Gen Z. And it's like, so yeah, I don't know, I feel like if I could, if I can sum up this, this, this whole podcast, my two big takeaways are, be a good human and bet on the fringes. that is a a fantastic way to uh to wrap this up where can people find you on the internet or find out more about electric yeah so the best thing is uh if anything i said about electric sounds interesting just go to electric.ai um and uh if you want to find me on social i am at dennehy xxl on all platforms awesome man listen thank you so much for doing this i think people are really going to like this one and hopefully uh people will have a bunch of takeaways so i'll

to do it again in the future. Yeah. Looking forward to it. Thanks.