Top Advice for CEOs from an Investor with David Shapiro

Intro: Welcome to The Daily Bolster. Each day, we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster. And I'm here today with David Shapiro. David is the managing partner at Blue Ivy Ventures, which is part of the Alumni Ventures Network, and is on our cap table at Bolster as well. David, welcome to The Daily Bolster.

David Shapiro: Thanks, Matt. Great to be here.

Matt Blumberg: Yeah. Good to see you. So let me start by asking to just describe to everyone really quickly, what is Blue Ivy Ventures, and what is Alumni Ventures, and how do they relate?

David Shapiro: Yeah. Sure. Great place to start. Complicated. So Blue Ivy Ventures is really a smaller venture firm and fund set up around the Yale entrepreneurial tech and venture ecosystem. So alums have access to venture capital, and can invest in the fund. And the fund then invests in, it doesn't have to be Yale founders and CEOs, but it's often a common ground that we can reach out to, and get to know companies. And we support both sides of that ecosystem. We are a part of the larger platform, Alumni Ventures. Alumni Ventures has grown quickly over the past few years, and has become the most active venture fund in the country actually. Now we are a co- invest model. So we do a lot of lot of deals alongside really the most established venture funds in the country, providing a really broad network, and community, and support. We have about 600 and something thousand alums all part of the Alumni Ventures ecosystem. Not all investors, but they're all there as supporters and hopefully involved folks that again, are interested in entrepreneurship, tech, and venture across about 18 different school ecosystems like Yale, including Harvard, MIT, Stanford, Berkeley. And we all have names that are again, affiliate funds, part of the Alumni Ventures platform.

Matt Blumberg: Great. I appreciate that, because I know a lot of people don't know much about the firm. But one of the things I appreciate about the firm is it's network of networks, which is a little bit like Bolster. And you guys have been a great partner for us. All right. So here's our topic for today, David. You've invested just out of Blue Ivy alone in about 150 portfolio companies. You had a prior life in venture capital. So you've seen a lot over the years. What are the three pieces of founder advice that you find yourself giving over and over? What are your top three?

David Shapiro: Yeah. Okay. Now, the first one in particular is not unique to founders where we back at Blue Ivy Ventures, but just more broadly. And it's really just, " Align your business with the proper source of capital." Right? So there's often the technologic term impedance mismatch between these, I guess I'd say. So many founders almost by default, or they default into the idea that to get going, they really need venture capital. I would say not all startups, and equally importantly, not all founders ought to be venture backed, or seek venture capital. That's not to say it's either, " Scale fast, and if I need to do that, I need VC money, and be a unicorn, or I'm just running a lifestyle business." I almost put it's not that extreme. There's a gradient in between, but it's just really wise to think that through, what business yours can be, how scalable really can it be? What are the big markets, and then really what you want in terms of control, and influence, and longevity, right? So there's other sources of capital that maybe it's worth tapping into that may not require so much giving up so much control, or timelines.

Matt Blumberg: Yeah. That's a great one. There is definitely this myth just because of the size of the venture business that you either have to get money from there, or you're not sure where to get it. So that's a good one. Align your type of financing with the type of business you have. Okay. What's number two?

David Shapiro: Okay. Number two, I would say I'm probably going to, well, I could almost pull a page out of your own book on this one, but it's about governance, right? " Get proper corporate governance and robust board activities early on." I'll start with the red flag, right? The board's two family members as they're raising a seed round, or maybe it's the CEO and the CTO only. Certainly at an early stage, it's hard to go get a board member. You may not want to too early, but as you get a seed round, or outside capital involved, I just think a diverse, independent board almost always leads to healthy discourse, and best practices. So I'll add another dimension. So many things can go wrong in a startup. Boards ought to be sources of information, best practices, networks, sound advice. It's, " Why add one more variable to it when you actually have the opportunity to make it one less, right?" So if you can control what you can control, you can control your board. And when you create that, rather than have it be a negative signal, you can make it a positive one. So good governance, dynamic, robust board engagement pretty early on, never bad.

Matt Blumberg: Yeah. I'm obviously a fan of that as well. I think you use the word governance, and a lot of CEOs automatically start yawning. But it really is important. Just think about it from the perspective of independent board members are very inexpensive sources of amazing strategic advice for you and your business.

David Shapiro: In fact, maybe we use it to your point, not capital G governance, but small G.

Matt Blumberg: Right. All right. And what's your third most frequent FAQ?

David Shapiro: Yeah. So this one, I'll state it. " Focus on the problem, not just the solution." This is common. I think it's commonly said, but it's worth saying again. It's always great to really have the founders, the CEOs spend time living the problem, understanding all the dimensions, I guess from the problem haver. A lot of times we're on the solution side. And it's that technology seeking a market. I'll add a term here, which I got from a book. It's called The Job to Be Done. So it's the JTBD. We use a lot around here at Alumni Ventures, right? The Job to Be Done, that came from a book called Competing Against Luck. So this is a plug. Competing Against Luck was written by Clay Christensen who recently passed away, one of the great thinkers. I recommend this book actually as well to almost anyone who's building a product of any kind. Read Competing Against Luck. It's just a great framework, this Job to Be Done. And it just tightens, " What is the problem that you're trying to solve. Not a vision, not a expansive thing, but what is the real type problem?" And I'll give you. I can give a quick example from the book. It always stands out. It was about milkshakes. It's chapter three or four. I don't know. Anybody read it. And you'll get there. And you'll understand it. But it was an ice cream shop, and milkshake shop. And they innovated around Job to Be Done thinking in this way. They tested their creaminess, and richness, and flavors, and none of that got foot traffic. None of it moved the needle. But as they looked at their data a little bit, they started noticing some trends. They noticed people would come in. Parents in particular would come in with children after late afternoon. And really what it was about was after practice, a parent would bring their children in or their child in for a little small treat, but this conflicted with dinnertime. And what they innovated, the way they innovated in their product has nothing to do with flavor, or creaminess, but size. So they came out with a small size, a half size, and they called it something cool, but it was a half size. That way the parents could basically not feel guilty about spending time with their children, and bringing them for a small treat after baseball practice, but not ruin their appetite for dinner. And more and more people found that helpful and better. Great way to innovate, which sometimes has very little to do with what you think the problem may be, or what you're trying to address. I thought it was pretty brilliant. So that's a little plug for the book.

Matt Blumberg: Yeah. I haven't read that book. I've obviously read Innovator's Dilemma, and a couple of his other ones. But Competing Against Luck sounds like something that is impossible to do. So I will look forward to picking that up myself.

David Shapiro: Yeah. I was going to say, I recommend it's you too. I'll send it to you.

Matt Blumberg: Yeah. David, thank you so much for joining me today.

David Shapiro: You got it. Can I sneak in one little request?

Matt Blumberg: Yeah. Sure. Go for it.

David Shapiro: Okay. Cool. So you can cut it if you want. There's always advice on, I love The Daily Bolster. I listen to them every day, CEOs giving great advice to CEOs, venture folks who love to give advice to CEOs. I think it'd be great to have a little bit the other way. How about some CEOs giving advice to venture people? It may be to listen a little more than talk. I don't know, but good advice to their board, right? So what's shareable, almost back to venture investors? What's a good best practice? What's a bad practice? Right? And maybe us venture folks can learn a little thing or two as well.

Matt Blumberg: All right. I love that. I will put that on my list for some of my CEO episodes coming up.

David Shapiro: All right.

Matt Blumberg: Thanks David. I appreciate you being here today. Good to see you.

David Shapiro: Great to be here. Thanks Matt. Take care.