The Times They Are A-Changin (Flow Club)

[00:00:00]

Jason.:

Ricky: at the time there just weren't that many investors. And so I think the mentality is you're kind of like cherishing every single meeting with them and all these, you know, these people you need them.

This is funded a show where founders who raised millions in venture capital share the gritty side of what it actually took to get that money in I'm Jason. Yay. Not too

I'm Jason. Yay. Not too long ago. I was trying to get my ideas funded. And back in the day, I was a VC listening to founders, pitch me . For

In Silicon Valley's highly

[00:01:00]

What happened to the fundraising climate? Once COVID hit is a Testament to the fact that sometimes your fundraise comes down to things outside yourself. And fluctuations in the markets are prime example of that.

Ricky yean co-founder of flow club. The Peloton for digital co-working. Knows how much timing matters.

He's run fundraisers for three different companies, all of which were impacted by things beyond his control. . Like what the overall market was up to what infectious diseases were spreading. And of course the state of the investing industry. You'll hear he was one of Y Combinator is early graduates and then came back for a second round almost 10 years later with an entirely new game plan.

As he's gained his footing in fundraising, hacking confidence during investor calls and landing bigger and bigger fish for his cap tables He's seen the industry shift. Which he says had the [00:02:00] unexpected impact of also shifting his approach. So today is about how a bright eyed Stanford grad became a YC backed entrepreneur for a second time. And the decade in between.

But let's start where we always do with what this disruptor was like as a kid.

Jason.: I grew up in a low income household. Um, I started working when I was 14 and the money all went to paying the bills. It wasn't my own money. and so one of the things that I have never thought that I would be able to have millions of dollars to deploy.

Ricky: Uh, even the thought of that is, um, it wasn't like I . Was so poor. I wanted to get the money that wasn't like the thinking, what [00:03:00] really got me into startups. Um, well that whole story changed when I was lucky enough to get into Stanford. And I was all of a sudden in the same hallway as all these other privileged kids that have a very different relationship with money.

And obviously there are a lot of kids like me, which is like the cool part about Stanford is they have a variety of people, but, seeing how empowered everyone is when part of that is upbringing, but money is a big part of it. Um, That was actually the beginning when I felt like, oh, like if they could do it and I'm here in the same room as them, maybe, maybe I could do it.

And, uh, yeah, so that was the beginning. And then as I raised more money over the years, and doing it poorly, like for example, I've raised money and not use it before. And then, then over time I've learned how spending the money [00:04:00] is a skill, that some people have had a chance to learn about growing up.

Jason.: I think, um, yeah, I'd love to ask you more about that because that's something I struggle with too, you know, I've raised money in the past and ended up being good at it because of my exposure to venture capital.

But it's, uh, it's not just raising the money, right? Like you sound like you grew up

in a household that was like, every dollar you got was something that needed to be cherished.

You know, it's like you don't spend it frivolously. Um, the idea of spending to make money. Was that something that was, foreign to you or you understood naturally? How do you think about that?

Ricky: it wasn't completely foreign because my dad who, had money, I was at one point in his life. It just so that when I was going up, like he didn't have it. So he knew the power of money and he never really was counting pennies and that kind of stuff. I sort of absorbed that just from checking the reality, and kind of resisting his mindset of how he, his relationship with money. Um,[00:05:00] but I think I was fortunate that, even though I was running. Learning that from him growing up, I did get glimpses of how money is really ultimately just a tool. and to get us out of the situation, we probably need to be smart about

that too.

Jason.: Cool. So uh very interesting evolution, growing up with not that much money, but made it to Stanford university. Very impressive. And in a launching pad in many ways to, to really get you into this career around startups, um,

We're going to talk a lot about your current company Flow Club, but we'd love for you to do a quick rundown of, your history and experience of raising capital has been like pre Flow Club,

Ricky: 2010. Graduated from Stanford and got into Y Combinator. At the time, there weren't that many angel investors, the demo day, all of the investors fit in one room. Um, Y Combinator gave us $11,000 [00:06:00] plus $3,000 per founder or something like that. So I think we got $20,000, for 7% of the company.

and at the time we were ready to go work at a Google or something, and then just work on our projects at night, because we didn't know that many investors and you know, the programs out there, like there was a summer program, Lightspeed ventures used to have, and then there's Y Combinator there's Techstars.

It's pretty much it the end. And then there's maybe a few angel investors. They don't invest that much. Um, it's not like today. So, 2010 doing YC is sort of when the beginning of this current startup bubble started, um, during, during demo day or like right around demo day when people were raising money, you know, w I raised money at, at the time, it was a $3 million, convertible note cap.

and other companies would go out there and come back and somebody does [00:07:00] 5 million. Somebody does 7

million, 10. And then somebody did 12 million every, like what, how did you get that valuation? And then somebody comes back and say, ah, on cap note. And like, we were watching the bubble, we're watching the beginning of the shifting, power dynamic.

and in that one summer, we saw the beginning of that and it's 10 years later, we haven't, haven't looked back, uh, and it's just gone Wilder and Wilder. So was in the beginning of that 2010, raise a little bit more money, right around 20 15 20 16. Um, and then raise money again around COVID in 2020 to in the beginning of, what ended up being Flow Club and then, uh, raise money last

August.

Jason.: right. Okay. So quite an interesting evolution and it, yeah, it's kind of your fault. We're in this bubble of 2010. YC, everything. Um, no, butso just quickly on the past experiences, pre Flow Club,[00:08:00] what just estimating you raised maybe five to $10 million.

Ricky: We raised a total of, let's say the first time I raised, I raised 300 K and that was like, kind of average, like superstars are raising $1 million. Um, yeah. and then later on in 20 15, 20 16, I raised another a million-ish.

Jason.: for a different company?

Ricky: for the different company. And then in, this last round we raised a total of

five.

Jason.: okay. So you not only been able to raise money for multiple companies, multiple million dollars, but you went through YC in 2010 where a big component of their training, I think is around fundraising. you mentioned something about raising money, but doing it badly. Can you talk a little bit about like what you saw or what you did or what you remember doing that you're kind of like, you know, like so embarrassed that I did this, like tell me a little bit about that and anything come to mind?

Ricky: I thinkat [00:09:00] the time there just weren't that many investors. And so I think the mentality is you're kind of like cherishing every single meeting with them and all these, you know, these people basically you need them. and they also know all these things that are supposed to help you. so,I would say like, what's really different, from

that, what I've learned over time is how important, running a really tight process is. And I think this is something that like Everyone says, you know, as advice to, founders looking to fundraise, and I get that advice every single time. and I've tried to practice it different times. only this time, this last time that I really was,

I really able to execute that perfectly. And I see the, I see the difference. I don't think I'm any better of a storyteller. Yes. There's more investors out [00:10:00] there. but the thing that made me feel like I'm finally doing it right, was how well I ran the process.

Jason.: that's awesome. I think you're probably underselling your ability to tell the Flow Club story, but I mean, you know, some of my philosophies and how important I think process is and fundraising, and so it's,it's really cool to hear that that feels like the difference maker in what you did.

Um, this is a great opportunity to fast forward to Flow Club and, You know, I'll just put it out there that I am a proud investor in Flow Club. have not interviewed one of my angel investments yet, but, I think it's interesting because, we can maybe talk through a play by play of just what was happening at flow club when you went to go out and raise.

And, I don't even know what order of operations we should go through and, I've been telling this, because I just want to say that it was a very organic way that I met you. so before I actually spoil that,

tell me a little bit about the start of Flow Club and, you know, whenever I asked [00:11:00] this question,

I always want to talk about the fundraising triggers in there, but for me, I think you started Flow Club in my memory is right around the beginning of, of COVID or like We were working on trying to build a business with your repeat co-founder David. but I want to hear you talk a little bit about that and then the realization that, you know, what, we should raise money for this and what triggered that thought?

Ricky: We had both taken time off from our, you know, having worked together across multiple companies and,just kind of feeling a little burned out.

So 20 18, 20 19, we were taking time off, but we were also like, we have this chip on our shoulder. We feel like we could do better. and so we were best friends and we're talking about starting another company, but especially if you're, if you've done it before, it's kind of hard to start

again.

Jason.: You know, just how difficult it is, right?

Ricky: you know, just how hard it is and you try to make the game easier for yourself. to try to analyze markets and spaces and, you know, know, when [00:12:00] I was taking time off, I was still interviewing customers, just kind of going down rabbit holes, exploring different problems and try to be smart about it.

Almost trying to think like a VC, but wasn't that useful. Um, what ended up happening was I just wanted something for myself. and the thing that I wanted to work on was to bring my friends together, plain and simple. Um, my friends are, mid career professionals. Some of them have just started families.

They're very busy people and I find that it's getting harder and harder to hang out with them. And so I just want it to build something social. And so in the beginning of 2020, uh, decided to jump and do something and build a vaguely consumer social product, have no idea what it's going to be. And in the beginning, I wanted to raise some money to, uh, help us explore.

And so, in March of 2020, uh, two weeks before [00:13:00] COVID, I started fundraising with no idea, a prototype that we were working on. And since I've been in the valley for a while, I have friends that I can go to and, bring in some initial funding and, I did that. And I was able to raise around 300 K. and then COVID happened and all the meetings got canceled.

and everyone was panicking about what's going to happen. So no investment were happening. The few meetings I had during that time after COVID the investors were saying, the world just changed, you know, like instead of asking for whatever valuation you're asking for, we should be asking for nothing in exchange for my money.

Right. because investors will use whatever they can to justify their position. Right. so I decided to just stop fundraising, and just go work on it with the money that we have, um, 11 products later, so all of [00:14:00] 2020. 10 different projects that didn't work and at the tail end of kind of our energies,

in the beginning of 2021, we decided to try the idea of Flow Club, and it felt like in instant traction, uh, and it felt like the thing that we'd been looking for, and we took another two months to confirm it.

and, uh, that's when you came in, that's when you found out about Flow Club and at the time, we were going to our existing investors, mostly our friends and we were saying, Hey, I think we found it. And just in case, just in case we need to ramp up, I'm going to raise a little bit more money. And, so within two days, we raised another 700 K mostly from existing angels and tiny funds.

and, uh, that's when you heard

about it

Jason.: Yeah. Well, let me, let me jump in, and tell a little bit of my side of the story, because I think it's illustrative of what can happen when you know, you really start working on something that feels right, that feels right to you because it'll start [00:15:00] attracting the right people. So, you know, I've been in Silicon Valley a little bit shorter than you, but almost as much time, and so I have a lot of connections between angel investors and VCs, and a lot of times every hot deal that will come through will come through one of these natural, like sharing nodes of people being like, have you seen this? Have you seen that? I happened to meet a random friend of yours, um, Yosh. Right? Yosh. And, uh, it was a random connection from a friend of a friend, a friend's girlfriend, and was just, there was no real reason for me to meet this guy other than someone was like, oh, you should really meet him.

Like, he seems like someone you would like, and we had a really great conversation. We talked about a bunch of different things. And, one of the random topics we were talking about were, cohort-based courses. We're talking about cohort-based courses because I had started teaching one of mine and just the random topic was, you know, I was in this one, YouTube, creator course, and he was doing this thing and he had study hall, [00:16:00] the course had study hall on it.

And where the only reason the study hall existed was for people that were taking the class to actually implement the things that they said they were going to implement. And it was just like jumping in the same room and doing it. And the concept blew my mind. I was like, that is perfect. One. I need that for myself.

But the founders that I work with need this. There's so much work they need to get done, but stuff that they don't want to do, you know what I'm going to do that in the next course idea, I'm just going to run a study hall and, you know, she was like, well, If you like that, you should check out this new product.

And that's how I found out about Flow Club. Um, didn't know, the founders, had never met you or David before, and he was a good, check out this product. And I must've jumped into a session. It must have been one of your first handful of sessions to be honest, and, uh, when I went in and I was like, oh, I get this, like, I get this a lot and super basic product to start.

I can't even remember if it was done over zoom. Yeah, it was, it must've been, [00:17:00] it was totally MVP zoom. And just like some of the small details made me realize whoever made this like has an insight here. Like it has a very interesting insight and the fact that they're putting into market, but just zoom and just getting it out there, I'm like, I got to meet these guys.

So like, I don't know if you remember, but I like tracked you down, got an intro to you, found out, I think I found out that you like basketball, which I also love basketball. And I was like, oh, you're in San Francisco. I haven't been in San Francisco and I ran you down to just like, see if I could spend some time with you.

and luckily enough, you know, random guy being annoying and bothering you, let me into this round. But, you know, I started, I started seeing what you were doing and these intros you were getting, um,and the fact that you were connecting with people like me. I wonder if you could tell me a little bit about what was going on at that point.

Like when I, found you and the types of investors that were coming, because my feeling is that at that point, you weren't engineering this like crazy process. It was just, [00:18:00] it was kind of coming to you at that point.

Ricky: yeah, it was, I was optimizing for, time and speed. Capital was I wasn't out there looking to get more on capital. I was mostly asking existing investors to put in a little bit more money now that, you know, we still have all the most of the money in the bank, but just in case we need to hire a person there to, to take this idea further.

I was just trying to bring in a little bit more capital. and I wanted to get it done in a matter of days. and so I actually did it in two days. and when we met actually, so like this, this meant that like, I wasn't out there, I wasn't hitting the market. I also wasn't, I wasn't engineering a process around my stock you know, so I don't, it's not a hot deal is not a hot deal.

It's more like an insider deal. and so when I met you, it was actually at the tail end of the process. I was just like, kind of collecting some final checks and I'm like going back to work. and so like when you [00:19:00] ask for a small allocation and I was like, oh, yeah, fine. It's great. Cause I wasn't, I wasn't, you know, it was perfect timing basically.

I mean later on when we raised that later, around, I had to turn off, turn away a bunch of people. I actually ran a process and it became a hot deal.

and that's how you turn a deal, hot props to Ricky for simulating the kind of fast moving deal that investors dream of. And that can turn an okay res into something everyone wants and on.

[00:20:00] So now that Ricky's got 700 K in the bank, he's facing the question that always comes next after a successful fundraise. What do we do with all this money? You might've heard me say things about the market pulling ideas out of founders. What you're about to hear is the textbook example of what that means.

Ricky: ... product that is really started off with just me sending [00:21:00] out a schedule over email of here are the times I'm going to host co-working sessions to my friends and with the link to zoom. And then after we saw that people were interested, more interested in any product we built before that, you know, more explosively, try to bring people together.

Like nobody took me up on those, but when, When I made a proposition that wasn't about getting together, but more about helping you become more productive, all of a sudden, all my busy friends, more productive work better, what, like all of a sudden they, they reacted. And this overwhelming way. And we, you know, went from an email schedule to, we started building this, putting up a schedule on the website to allow you to book from a website.

The video, platform, was still zoom at the time. And we were using screen sharing to share a timer and using audio sharing to share some music. so it was really janky, but we started observing what people were doing. So [00:22:00] one of the first things that started happening was I want more sessions and there's only so many sessions I could host myself.

And so people started raising their hand because they saw what I was doing and what I was doing. I wasn't like a Peloton instructor that was clearly like super charismatic and has all these big muscles and stuff. No, I was just another dude working and I just played host a little bit to help everyone set their intention and just curate some music.

That's it. And people start raising their hand to be hosts, which was the first thing was like, oh, interesting. Not only are people interested in participating, they're interesting to doing, going out their way to do something that I didn't think they would do. and so we started looking at that behavior, embracing that behavior from our users to make it host like a thing. You eventually became a host became one of our most popular hosts.

um, and after that is, we started seeing, okay, interesting. Um, people want us to do more for [00:23:00] them. They want us to keep track of what they're working on. They want us to kind of celebrate the achievements they've done. They started meeting each other in real life because they're coworking next to each other.

So we thought, okay, now those are all things that we can build into the product. So in July we finally built our own, video service that made a very clear that it's not zoom and overnight, like as soon as we launched that video service, Everyone started giving us a bunch of ideas for what we could do.

It's almost like you associate zoom. Like you don't think it's a product. It's just like a thing I used to do meetings. And then now that you see this other video interface, it's still just video, but it's like in a different interface and it's a blank canvas that you feel like you could, project all your hopes and dreams onto.

So as soon as we released the video platform, we started getting a ton of requests. What if you do this? What if you do that?

Jason.: also also, Ricky, what a crazy advantage you [00:24:00] had where you're building a product where three, four times a day, you're just talking to your users. You know, you're like engaging with your users and they know you and they want to talk to you like such a weird advantage huh.

Ricky: Yeah, no, it's a great advantage. and, everyone feels like they have the license and they have ownership and because some of them are hosts. They still, they do play a pivotal role in the community. So they do have ownership. It is a community and it's very face to face. So you're right. they say that, like part of market fit is when the market is pulling the product out of you.

You can really feel the pull for something like this, because you're literally seeing them all the time. They're telling you exactly what they want. and they're showing up.

Jason.: so as the company is actually pulling towards product market fit, that's a crazy feeling that I candidly have never felt like that transition point. So very jealous and I could see it in your eyes as you're describing it just now, Um,

an opportunity was presented to you, right. tell me a little bit more [00:25:00] about this decision to go back to Y-combinator.

Ricky: yeah, so we knew PG from back in 2010, Paul Graham, because in 2010, when we did YC the first time, there were only 32 companies and they were already scrambling to figure out how to scale, cause they jumped from 24 companies and 32 companies, something like that.

Jason.: something like 400 now, by the way,

Ricky: yeah, and there were only four, the original four partners, um, that started Y Combinator and Paul Graham being obviously the main guy.

And, uh, we took a walk with him every week. and I got to develop a relationship with him. And so during the 700 K round. and the beginning of 2021, I had just, emailed, my old YC 2010 cohort for them to try out the product. Um, there was a listserv that we were all on and PG was on there, and PG responded and was like, oh, so cool.

Like this seems really cool, uh, what you're working on. And so [00:26:00] I just like use that and kind of like said, Hey, would you like to invest? And, um, PG said, yes. Uh, and also, kind of brought up the idea of like, why don't you guys do YC again also? And, that was like the first time we were like, oh, let's think about it.

We are building kind of like the virtual office for people who are working on, you know, ambitious things, uh, they are often working on their own. Um, and, you know, given the size of Y Combinator today, if we go, we would instantly have access to, a thousand new users basically. Um, and so that was, uh, that was like, oh, maybe we, could do that as a way to kind of like ingratiate ourselves again in the community.

And, kind of, uh, before we figure out, how to really acquire users, we can use this as like a testing [00:27:00] ground. Um, and yeah,

Jason.: no. No. So, there's obviously a lot that goes into YC and famed for driving you towards shipping and growing and growing and growing. Um, I'll obviously focus where my skillset and my topic gets focused on, which is, um, what it does for fundraising. Right. And your prospects are fundraising.

So by the time you were going into YC, I think, you had a sense for. Now there's going to have to be a strategy around how you raise capital. and things that are happening in and around YC are just crazy now. In fact, like that was, that was last summer, right? So in that short eight months, things have changed again.

YC has released different products for how they fund companies, but at the time, why don't you talk me through what you were thinking about? Like, how did you, what did you think would happen and how did you think you would raise money with YC as a component of all of it?

Ricky: I think, YC is a great forcing function because what [00:28:00] every investor knows is the deal's gone by demo day. Every investor knows that. And, um, you know, by the time you're watching that deal present on the demo day platform, the deals most likely gone at that point. Um, and why is he tries to like push people to say like, Hey, like, you know, it's still, like way until after demo day to fundraise, but the founders know kind of like, it's like a wink, wink.

The founders know like, no, the demo day is the end of the fundraising, and you should use the FOMO that's there, um, to, maximize your ability to bring interests around what you're selling. So that's the, um, yeah, so I was thinking I'm going to spend the first half of Y Combinator heads down, making as much progress as we can.

and then, starting with, like four weeks until demo day, I'm going to start thinking about, I'm going to start planning a fundraise, basically. [00:29:00] Yeah. And that's what I did.

Jason.: Awesome. And we don't have to go into the mechanical steps, but like broad strokes. Tell me how you thought about like how you would phase that out or like, what did that mean? What did that four weeks look like? Because what was cut to the chase? You close an amazing round before demo day.

Ricky: Yeah. Yeah, but it was done like I presented on a Monday, but all the fundraising was done already. It was just, the presentation was, uh, there was no stakes

basically.

Jason.: yeah,

Ricky: Um, yeah. And the way I did it was, um, I had kind of, put a pin on the last two weeks leading up to demo day as the two weeks I'm going to be doing the fundraising, and then I started preparing for it two weeks before that.

and one of the most important things I did this time around was, you know, they tell you, you asked for intros from your friends, from your existing investors to other investors. but what I did was I talked to all my friends that [00:30:00] recently raised rounds and I talked to all my existing investors about the intros, but, I told them not to insure me right away.

I coordinate it so that, all the intros went out on the same day and then the meetings all lined up at the same time, so that I was actually able to have eight to 15 meetings a day and on zoom is even better because if they're 30 minute meetings and they're often back to back, so you really have to go cause you have to go see the next person, but that also comes out in how you talk to investors.

Like I don't, I gotta go. Right. and kind of brings out that chase in the counterparty. but I wouldn't have been able to, I guess, just do that myself without how the density. the calendar without really having to go cause I'm a nice guy. I'm not gonna like jerk you around. The only way I can do that is if I'm going to disappoint the [00:31:00] next guy, if I don't leave.

Right. So it's so important because it, it just affects how you tell the story, how you come off to somebody because of that like sense of urgency that you have,

of the density.

Jason.: That's a, well, first of all, the like complete ninja set up in terms of, you know, Jedi approach to fundraising. It's what I tell every founder. I think, um, the process that I coached sounds a lot like that it's like, people don't realize how important doing all of that preparation work to get the approval of the intro first before actually asking for an ex isn't. And if you do it that way, like it can lead to that perfect situation.

And the other thing I tell people is like, there's some people, even probably me, if I want to go fundraise, I might be able to like game the emotions, right? Like I might be able to say certain things very specifically to trigger certain reactions from investors, because I had been an investor and I do this so much, but the standard in a [00:32:00] founder is not going to like, be so Machiavellian about this.

And like, won't be so salesy about this. And so creating that situation where it just naturally happens is so, so important.

Ricky: Yeah. Yeah. And I think, I don't naturally think like that, but. In the process I met, some of my friends are amazing masterful fundraisers, and others, like you have tremendous insight. And, when I asked for intros the way, um, the masterful intros, almost set me up to not be able to fail, that first impression, of how the deal, how I'm introed to somebody, you know, it's like, Hey, you really need to get in on this deal.

You need to really see this deal instead of like, Hey, do I have permission to introduce you? Something like that. It's a huge difference maker. because by the time the meeting happens, I almost don't have to pitch. It's like, how much allocation do you have? It [00:33:00] changes the whole dynamic of the conversation.

Like it makes the job a lot easier. and like, it just all through almost no work of my own, but like how I was set up by other people. and then if you can coach the other people that are also helping you out sending intros to do it that way, then, then your job is a lot easier.

Jason.: a, a, such a fantastic thing to call out I always say with their first impression, people don't realize how impactful the first impression of a deal is on how they perceive the rest of the time, interacting with a deal, a company, a founder. And if you can lean into that, and like you said, coach people to create the right scenario and feeling as it's happening,

Ricky: Yeah.

Jason.: it changes the game.

Ricky: Even this idea of like, okay. You, you can introduce me to these people. And I would like also like, well, how, how close are you really to this person? So like multiple people know the same person. I'll find out my strongest way in, but also it's like, okay, great. [00:34:00] I have your word, but don't do it yet. You know, most people are like, okay, I'll just do it whenever you want me to.

But right. And, uh, it's such a simple thing, but, I always underestimate the stuff like this, but it's tremendous how big of a difference it made. Here's another thing that's just kind of sad, but kind of makes sense. I've been in this game for so long. I know a lot of investors. I know a lot of them, but, I used to think that like, oh, I built up these relationships, I know these people, so I can just hit them up myself and

Jason.: yes,

Ricky: I can, but if I'm not like super buddy buddies with them, having the intro come from someone else is an opportunity to have a new first impression that is conducive to the, the thing that you're trying to do right now. Right. Because if they're coming in as a friend, they don't necessarily feel, in fact, they might feel the opposite.

They might feel like, oh, I can invest in Ricky anytime, because I know him. [00:35:00] Right. and I'm nice enough that like, you know, you might believe that's true, but if another person, not me, I don't want to be the bad

guy of another person and shows me to a friend that I already know and say, Hey, this deal is crazy.

If you haven't talked to Ricky, you should, then it's a completely different first impression.

Jason.: Yeah, it's another great like Jedi level point to make around this. It's like, you might have credibility with someone, but you can always get more credibility. There can be even more added credibility in the deal and the opportunity and the scarcity. And so being able to have that indirect sort of third-party person . Bring it up is just incredible.

Ricky: Yeah. I think it's just user experience. I think it's like, if you think about it as a product person, it's like, people cannot, it's so hard to make these decisions to invest or not. and, uh, what you're doing is you're designing that first mile experience that you were designed for your user, but you're designing it for an investor.

I mean, like, it sounds Machiavellian, like you said, but, if [00:36:00] you're thinking about it from like the, you know, you put on your product hat, you would totally do that.

Jason.: Yeah. Yeah.

It's, it's really true. I mean, it's like last thing before we move on, they'll say is that once people realize what the process in the game of investing is all about the fact that they have to make a decision. Based on very few data points, and data points that cannot be extrapolated to infinity.

There's, there's no scientific decision making algorithm that makes me look at what you have Ricky, and be like, do, do, do, do, do deal. And because that doesn't exist,

Ricky: unless it's too good of a deal,

Jason.: it,

Ricky: it's a steal of a deal.

Yeah.

Jason.: which is not great either. But, uh, you know, so unless it, without that, now all of a sudden they have to rely on signals and other things in, and things that will influence their decision-making.

And like you said, if you're a product person and you want to create your, fundraising user experience, you lean into that. And you impact that with everything you do in that, that [00:37:00] first onboarding experience.

Ricky: Yeah, and I think if you've been doing this, you know, you know, for example, an investor at the 2:00 PM call might tell a founder, uh, 10 million is too expensive. it's out of my, it's out of my mandate, whatever, whatever excuse they have. And then, 3:00 PM invest in the company, 60 million cap or something like, I'm feel really good about it.

Like, I'm so glad I got into that deal. It's, it's, it's crazy. And same thing with like, you know, if you want to raise a series, a like a lot of people say like, oh, we wouldn't start a conversation until you have 50 K Mr. Like, almost it's like a science, kind of like a benchmark, but then like turn around and invest in the company.

Pre-product, you know, series. Right. And it's just depends.

Jason.: Totally,

Ricky: Yeah.

Jason.: but, uh, to ask you, in this past fundraise, um, you're able to get it all done and closed and amazing around. were there any bad times [00:38:00] in this fundraiser, were there any experiences that even through all the highs of executing really well thought out raised, still felt like punches to the stomach.

Things that like hurt the ego, anything you remember?

Ricky: I think the process was so tight and so fast that I didn't have time to be down on myself. Cause obviously there's, I mean more rejections than not, but, It was all, it was really good for emotional management because of how busy I was and how tired I was. Right. And like the first 30 minutes, like at the end of the 30 minute call, I was sad.

I couldn't get this person to invest. And then I have to get on another 30 minute call. And then at the end, dark hall is a yes. But yeah, like when, uh, I think in the previous, raises there's a lot of, you know, especially kind of going back to like, oh, like I have a relationship with this person, but they passed on me.

Right. And now you know, like it's not personal, right? Like it's, it's not, it's, I'm not going to just invest in my friends, like for no reason. Right. it just [00:39:00] how you present yourself, and the conditions around your deal.

Jason.: so, uh, the flip side of that question, great answer, true sign of a, of a experienced fundraiser.

but even with the experience of fundraising, I think getting to the finish line. it's always going to have a feeling like a bit of a rush. Do you remember where you were when you found out about the deal.

that that you'd end up accepting?

Ricky: yeah, I think I would say like, we finished it all in about two weeks, but the first week it's always like, it's not happening. It's not happening. It's not happening until it's happening. Right. And so, I kind of knew to expect that. So I kind of was just saying like, okay, like the first 30%, 40% of the raise is really slow.

Um, and then you become oversubscribed in like a few hours after that. Right. And so when,I don't remember exactly when like it tipped by, remember it was, I think the first, [00:40:00] so I had given myself two weeks. Right. And at the end of the first week, it still wasn't there. Right. I was kind of hoping that like, you know, after the first week it will start to tip now, like it kinda tipped at the second half of the second week.

Jason.: it's that very, it's very much that feeling of, and this is fundraising. It's a, you're either dying of thirst or you're drowning. And that, transition happens so quickly.

Um, but Brian Kimmel from worklife, came in, right. And decided to, lead that round,

Ricky: yeah,

yeah, Brianne basically came in, towards the end. and, um, she basically, pitched me. she started the conversation, kind of pitching me what she sees in the company. I just let her pitch me. And then I kind of pitched her back. and how, like our visions actually are very coalesced and very aligned.

and, uh, around that time there were several other, funds that I was starting to, I, I started with angels first as always. Right. And then I started talking to funds [00:41:00] in the later half the process that was all staged. and, um, there were a few other funds and I had to turn away all of them, that's

that's great.

Jason.: Yeah.

Yeah. That's a good feeling. Uh, when you were done with it, uh, what was the feeling, feeling accomplishment, uh, how did it feel?

Ricky: No. Um, no, I don't like fundraising. I don't feel accomplished with fundraising. I think it's really just about getting back to work, using the money as the fuel to drive your company forward. And that's, that's the feeling it's more like you're now burdened by your own expectations and everyone else's expectations.

And now you just kind of like raise the stakes every time you raise money, you're raising stakes basically.

Jason.: Yeah, well, we're, we're not here to glamorize fundraising at all. It's like it's to try to tell the realness of it. And, and this has been such a real conversation [00:42:00] about how you did it, how you got here to do it. And, we really pulled apart some of the most important things that founders need to understand. so really, really appreciate all the time going through this.

That was my conversation with Ricky yean co-founder of flow club, an online community where everyone puts their heads down and gets their best work done. When we come back onto the debrief with my producer, Olivia who comes from the journalism, not VC world. And much like a journalist. She wanted to get the timeline, right.

Olivia: okay. So Jason, I was thinking we could do some time travel this episode, like put in time travel sound effects. Okay. And now we are in 2010. Um, I wanted to talk about [00:43:00] this is when Ricky said he. did Y Combinator. And I was surprised to hear the way he described the state of, I guess, just like fundraising or Silicon valley.

He described it as just a baby. And like, there weren't even that many investors. Um, and he used this word or I guess it's a phrase he said, He described the present as a startup bubble, which really confused me and made me wonder maybe these questions are too big, but like, what is new about startups?

Jason: Yeah, it's um, it's a really good question. And, you know, he talked a little bit about this progression from 2010, um, and this bull run that has changed the market and it's completely true. So just going back to 2010, I can point out a few things that might paint a picture in your mind of, of how different things were. Today. And I know you're [00:44:00] outside the technology bubble and this ecosystem, but I think you have a sense based on our conversations of, of how now people can raise money from around the world. You don't have to meet investors in person anymore. You can do it all over zoom. It almost doesn't matter where you are back in 2010, where you were really mattered.

In fact, When I got into venture capital in 2012, I started in Los Angeles and Los Angeles was thought of as like, wow, like a tertiary city at best, maybe a fourth level city. There probably wasn't any, uh, activity in LA you know, New York was ahead of us. And, The core was, always San Francisco. So back in 2010, it would've been even more.

So, the only venture capital dollars were in San Francisco and the vast, vast, vast majority of startups were all started out of San Francisco. Why Combinator, which is the accelerator program we've talked about [00:45:00] in the

Olivia: Yeah. Yeah.

Jason: is the one that he went through as well. My Combinator up until. Very recently the pandemic forced founders to move to San Francisco for the program.

Olivia: Oh, wow.

Jason: Yeah. And so whether you were in San Francisco or not in San Francisco, YC made you go to San Francisco and essentially the companies then just set roots in San

Olivia: Mm.

Jason: So there were so many reasons why companies and capital only existed in San Francisco. How that's changed is other cities popped up and. More people started making money, investing in early stage tech tech companies, which caused more dollars to flow in the direction of early stage investing.

And to the point where, you know, we're in 20 20, 21, 22, individuals are writing million dollar checks. people. Can start companies anywhere in the world and get invested by investors from anywhere in the world. And so if there's one thing that I'd have you take away from the [00:46:00] difference between 2010 and 2022 is just the world was much smaller and there were limited sources of capital and, um,

Olivia: yeah.

Jason: there were, there was just a harder time to, to come buy money.

The numbers, he was talking about $300,000, $700,000. Those are like one, two, 3 million rounds. Now,

today

Olivia: I guess another thing that interested me was that Ricky said that the scarcity of investors. also kind of played into the dynamics of his meetings where like, when there were less of them, he basically said like, I didn't have as much.

Cool. And then when there were a lot more of them and he did that like scheduling hack where he had, what, whatever, like, you know, 10 meetings in a day. just when there were more investors, like he had this hack, but he said that that also just seemed to change. the dynamic.

So I wanted to know, like, have you ever heard of this scheduling hack before, and maybe not this exact hack, but is [00:47:00] the fundraising game just full of like little, power play moves. And are there lots of hacks like this in the fundraising game?

Jason: So The first thing I'll say is he talked about number of investors and the availability of investors changing over the 10 years since he's been in the game and how that impacted the way he. investors and the way he came off to

Olivia: Yeah.

Jason: I would say that's part of it, but it's also just the fact that he in 2010

Olivia: Mm.

Jason: time founder and

Olivia: Oh, interesting.

Jason: and was like, oh my God.

I like, there was probably so much imposter syndrome where was like, do I deserve to be in this room? And every opportunity or every meeting or introduction he got with an investor was like this precious thing that he didn't wanna, you know, like lose. Um, and certainly. Fast forwarding to 20, 20, 20, 21.

Yes. There were way more investors and it was just easier to get to them. So that helped. But he had been through YC. He had been through three [00:48:00] companies. he had a crazy network. And so I don't wanna discount the fact that his experience level certainly contributes to this idea of like, if I meet Olivia the investor now I'm like, yeah, Olivia, there are a hundred of you right behind you.

So. If you don't like this fine, I don't really care. You know? and so I just wanna make sure that people hear that aspect of it as well. And that, know, you asked about the scheduling hack, um, You don't realize this, but, um, that strategy, which is well known, um, I actually coined the term calendar density. That is, um, actually, like widely used within the industry. Now, if you go to calendar, density.com

Olivia: I'm wondering, did you do that on me?

Jason: probably. Yeah. I

Olivia: I remember I'll be honest, Jason. I remember you were like, okay. Hello, Olivia. and you were like pulling up your notes and you. Clearly coming from a meeting, like on your way to a meeting. And like, I, I [00:49:00] was like, wow, this, this man is busy. Like

Jason: I will

Olivia: you're like, and you're like, is it okay if I record this meeting?

Like for note taking purposes? And I was like, yeah, like, as I like click my mechanical pencil, like, like I'm like in the 18 hundreds,

Jason: it's funny. I tell people, I run everything like a fundraise now, you know,

Olivia: Oh, interesting.

Jason: it's a bit like, you know, when you have a hammer, everything looks like a nail, but it's also that I I'm fond of saying this almost any system that deals with humans, they're all the same. It just, there's a little bit of nuance, but it's really. Terminology like different terminology under the same thing, which is we're all trying to influence humans. Right. So if you're trying to get more listeners to your podcast, if you're trying to run a marketing campaign, if you're trying to run a sales process, if you're trying to hire, the next person for your company, these are all systems that deal with humans.

Fundraising is another one of those. And so All the processes look very [00:50:00] similar and one trick or one strategy will likely work, in another domain because we're all just dealing with humans. and so, you know, you know, calendar density, it's, it's a, it's a well known way of impacting the way your fundraisers perceived by investors.

And you. are there these little mental hacks? There are, there are a ton of ways to make sure that founders feel more comfortable and Come off more put together as they run their fundraise. and you do these things because if you're an inexperienced founder, you just need support and strategies to help, you know, calm your nerves and do the right things mostly just so that you put your best foot forward.

You don't self sabotage and you have the best opportunity of closing.

Olivia: no, it's honestly good advice that I think I'm gonna give to, My friends who are dating, like guys, like schedule something. Yes, yes. Yes. Like if you have this date, like schedule something afterwards where you're like, so sorry, really enjoying this, [00:51:00] like gotta run. but I'm like maybe the real advice here is vulnerability, but no, um,

Jason: The real advice is confidence.

Olivia: yeah, yeah.

Jason: and I, I think the real advice, the true advice is, and this is what I talk to all founders about. We are trying to make you as self-confident as possible. I think like so many people, whether you go into dating or hiring or recruiting or sales or fundraising, they lack a lot of self confidence.

And because of that, comes out and how they're perceived by the person you're trying to date or the person you're trying to hire the person you're trying to raise money from. And so the best thing you can do is talk somebody up your friend, who's dating or founders that I'm talking to about why they're great.

And like, they have to understand that you're great. Your company is great. And. Whoever's trying to invest in, you would be lucky to invest in you now that coaching helps, right? Like we wanna get people as confident in what they're doing as possible, but you add on things like calendar density [00:52:00] and, you know, time boxing and these other things that essentially just give you little hacks so that the system and the process kind of props you up.

Thanks a bunch for listening. Oh, and one more thing before Each flow club host has their own thing to make the experience special. Mine. When I host is dropping a productivity tip in each session.

And when Ricky runs one, well, here's his.

Jason.: Ricky, I want to ask you because you're well known for leading sessions and kicking things off or ending things with a dad joke. What is your favorite dad joke,

putting you on the spot.

Ricky: Yeah, well, um, my favorite dad joke, um, in today's session, I told the dad joke that was in the form of a thank you note. So here it goes. Um, thank you to whoever taught me the meaning of [00:53:00] the word many. It means a lot.

Jason.: okay. Very good.

If you have any questions about today's show, or maybe you're raising money yourself and want some help problem-solving if so, find me on social I'm at J Ja. That's J a Y Y E H. Or shoot me an email@jasonatfundedpod.com. I'd love to hear from you.

This episode was produced by Olivia Rheingold. Thanks also to angel Adriano from adamant. And thanks to Ricky yean for being a great guest and for keeping us in the flow.

As always one last, thanks to our sponsor. Vantaa the leading automated security and compliance platform.  

[00:54:00]

‍