YouSaid · the spoken record

Michael Dearing

lines on the record: 22
first: 2017-10-09
most recent: 2017-10-09
sittings or episodes: 1
sources: podcast

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“Of work productivity. And so that was a really easy one. This is an accomplished team that knows their domain cold and is a market that I love, which is bringing productivity tools to business.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, publicly announced that's hard. I can't keep track all the time of what we publicized and what haven't. Well, I know one for sure that I just tweeted about yesterday is Astro. Astro is basically saying, look, there is a whole bunch of work that we do in our daily lives. And that work can be made much simpler. And the way to make it simpler is to take AI and voice and even rules-based heuristics that the user provides. Combine all that into kind of a personal turbocharger, somebody, a service that can live on top of Slack and email and chat and eventually things like Google Docs and Salesforce. What can live on top of that to organize that work and make it able to zoom through it a lot faster? The company just announced voice powered email feature where you can read and respond to your emails with voice. This is across different email platforms and it's powered by some of the smartest people in the world.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Him, I don't know. I only know what I read, and I hesitate to opine on that. I would say that benevolent dictatorship is a beautiful thing. And when CEOs can master and notice the word benevolent comes first in that label, if they can manage to be that benevolent dictator, it is a beautiful thing. The benevolent dictator in product roadmap decisions to me is a very listening focused executive. She or he spends a ton of time listening to people. And then after the listening is done, there is a judgment call. And listen, this is what we pay people for, is to make judgments. We don't pay people to run AB tests. We don't pay people to do oil the ocean analytics on what is the quote right answer. We pay people for their judgment. And so when she or he exercises that judgment, I think that's a magic moment and product roadmap is a particularly powerful.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Rainy day, I read a lot of economic history. And so I follow this gaggle of economic historians on Twitter. And one of my favorite is this guy named Anton Howes. Anton is an historian who was at Brown, my alma mater. He's way younger than me, so he just finished his PhD, I think not that long ago. Anyway, he and I met on Twitter, and he runs this fantastic daily invention quiz where he puts up an invention from the 17 or 1800s and part of the Industrial Revolution, puts up an invention picture of an invention.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Very much so. Yeah, it was a big moment for me in college when I read that and I realized that some of these wacky ideas that I believed personally were actually”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, mostly because of the pricing system that's inherent in the market. So, one of the biggest problems with internal capital allocation inside a company is very rarely do CEOs have access to true opportunity cost-based prices. And the market's really good at that. The market's really good at saying, well, if you're going to use my fill in the blank, labor, technology, physical asset to build your thing, you got to pay me for the next best use of that asset. What I could be making from someone else. That doesn't happen inside companies very efficiently. And so when people are confronted with those very clear crisp pricing signals, they're able to make way smarter choices about what to buy and what not to buy.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that most people are basically good. And I believe that if you leave people alone and you give them the right incentives, they can self-govern.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“And a couple of those people who bought from me said, you know, your listings would be better if you had pictures and I didn't know how to do that. And so strangers on the internet taught me how to make better eBay listings. And that was for me. I mean, I was really bummed. I thought my career was over when this business failed. And to have that experience and have people say, you know, hang in there. Let me show you a cool trick on how to sell more stuff better. That was like a lifeline. And that lifeline turned into a job at eBay. And I'll never, I couldn't even imagine my life today not having gone through that period.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, sure. Well, after I left I had a job, a really good job at Disney after grad school. I worked in corporate strategy. I worked with some amazing people. And I got this bug to start a company. And so I joined a business partner. We started a chain of, well, he had one store up and running and then we expanded it to five. It was my entrepreneurial dream come true. These are physical stores, by the way, back in the 90s. Fast forward to the end. The whole thing fell apart and failed pretty miserably. And I was financially wiped out and stayed through to the closing of the very last door, sold the very last pair of shoes. The transformation for me came when I was out of money personally and I needed to raise cash as much as possible. And for the business to pay back our creditors, I started selling on eBay. I started selling on eBay in 1999. I didn't know what I was doing, but I sold some stuff and I keep strangers paid me.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Confederacy of Dunces, John Kennedy Toole wrote this book about these wacky, wacky figures in New Orleans. I think he wrote this back in the 60s, tried hard to get it published, was unsuccessful, really suffered from a terrible depression, and took his own life. His mother made it her mission to get this book published after his death. It was published and won the Pulitzer for fiction, which is a triple tragedy. So it's a phenomenally funny book, probably the funniest thing I've ever read in my life.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we've done a little bit of it over the years, but it's really not a core part of the strategy. And I've talked to people who feel very differently and who run terrifically profitable businesses and who believe very strongly that recycling is an important part of the strategy. I mean, if I did it, it was in the case, it was in just a handful of cases where we were slightly off on reserves. I don't consider it a bulk part of the strategy because, let's be honest, my numbers call it 80-90% of my final outcomes on a fund are driven by my initial investment picking. So picking is the primary thing I do. If I pick really well, I should generate great multiples and liquidity for my investors. I just sort of have an operating principle that I want that liquidity back in their hands as quickly as possible. When you stop and think about the mission of these organizations, universities, museums, scientific research foundations, getting that cash back to them is incredibly important. So I tend not to try to hold back.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“No, and I really straightforward with the founders about that. I mean, I have reserves. They also understand that I don't have unlimited resources, and so I have to make decisions on the margin. And I have to say, is this the highest and best use of this $1? And just try to be transparent about that. I've rarely come into a situation where I've completely pulled out. I mean, it has happened, but usually for real values violations, you know, dishonesty. And thank God that's only happened two times out of more than a hundred cases. But yeah, so the reserve strategy for me is to treat it like, as you said, it's a fresh backing decision. Would I have presented with this opportunity, make that investment today on behalf of my investors? And so try to treat it very much like a fresh decision.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Over time, the way I've funded the reserves pool is varied between taking that ratio all the way up to two to one, back down to now I reserve about a buck fifty for every initial dollar. I'm confident that each of those guesses is wrong, but I don't know for several years how wrong is it.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“If there's anything I've gotten wrong over the years, it's this. When I started, when I built a very first spreadsheet model of what would Harrison Metal Capital One look like, reserves was the big unknown to me because you have to make a range of assumptions. You have to make assumptions about the mortality rate. You have to be cognizant of what the premature M&A exits look like. You have to be cognizant of what's going to happen in the A and the B market two years or more after you make the initial investment. It's full of guesses, basically. And so initially what I did was I used to reserve $1 of reserve money for every dollar of primary money. And so when I made an investment, I would basically just sort of park the same amount of money in my reserve account. Now that reserve account is allocated very unequally. So we don't park the money in the name of that company. We park the money in the name of general reserves. And so I fund the reserves separately from the decision about who gets the money.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Factors behind that, the abundance of capital among the angel community. I would say the tulip auction vibe that you get from some of these demo days. But I think overall the market's got two sides to it. The equity side of the house, I think, is much more disciplined. The convertible debt side of the house is about as undisciplined as it could be. No, I agree. In terms of kind of dividing elements into two, I always believe that the best investors not only pick companies once, but pick them twice in terms of the reserve allocation. I'm super interested to hear your thesis then around”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Of pricing in the market itself. I think this is a multi-sided market, and this wasn't true 10 years ago. 10 years ago, there was a handful of people doing institutionalized seed investing. There was a relatively small market for seed capital. Today, it's completely exploded, and there are hundreds of firms that are organized just like mine, and forget about the thousands of individual angels who are chasing convertible debt deals or the so-called safe notes. So I would say on the equity side of the market, I believe for the most part companies are priced reasonably that equity investors that I work with are very conscious of the kind of calculation I mentioned before, how much progress have they made, how much potential is there, and let's price that asset accordingly. On the convertible debt side of the market, I think it's terribly toxic and about as undisciplined as it could possibly be. I think there's a lot of”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Stay away from situations where pricing expectations are totally out of whack with the opportunity and the team's level of progress so far. Look, I mean, pricing is the way that we manage our risk. It's the primary tool I have to manage my own risk in the situation. And so as my risk goes up, my price should go down and vice versa. And so I just try to keep a very disciplined view of, okay, given the level of progress they've made, given the level of potential outcomes here, what's a percentage ownership that I feel comfortable with? And what's the check size that feels right to go with that and have a very honest conversation with the team about how my thinking evolved around each of those points? I would agree with Peter if what Peter means is that pricing is one consideration. And for those companies that you have strong conviction and you have evidence of terrific progress, you should be willing to pay up for those. Where do you feel we are at now in terms of market timing and”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“And a business leadership problem. We spoke earlier about the movement to the institutionalized fund structure that you have at the moment. I'd like to dive in on this a little bit, and you said about the benefits in terms of being able to lead rounds and ownership stakes. So if we're to take kind of three core tenets that I always feel that are kind of quite crucial, I'd love to start with price sensitivity. Peter Fanton said on the show never turned down a company based on valuation. It's a mental trap. How would you respond to that and what would you evaluate as your price sensitivity-ness? Well, I'm tempted to say that if I had Peter Fenton's resources, I might feel exactly the same way. But I think where I come down on this is the message I see behind his comment or the assumption beneath that statement is that price is but one consideration and that you always have to manage your sensitivity to price against your conviction in the business and the team. And so the way I think about it is I try to stay away, put it mildly.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Partners on the show, and he said the timing killed more startups than dollars. I'm intrigued. Would you agree with this statement as the mortality kind of causation of startups? Well, I like the point, and I certainly have observed situations where timing was a huge handicap on an otherwise brilliant product or a brilliant team. I would say, though, that if you start with the premise that timing is always slightly wrong, I mean, listen, what are the odds that we invent something? We productize it, and we turn it into a company at exactly the right moment. It's practically impossible. So if timing is always a little bit off, it becomes a general management problem to figure out how to either accelerate the external conditions such that your product is a fit or pace your product investment so that you don't run out of money before the market becomes amenable to your product. And so, you know, listen, I'm a man with a hammer. I see a lot of nails. So I'm going to see every problem as a general management product.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think the personal exceptionalism point is important because that's the reservoir, that confidence that you are capable of building extraordinary things. That confidence is very necessary in the low points to get you through those disappointments. But in addition to that, I'd say high velocity. The fact that they're impatience and their ability to iterate their product and their service and their team in every aspect of their business system is hugely important. And I also think this checklist of five things that McCallum gave us, if they are good at those five things, they are in the 99th percentile of general managers on earth. Now that is a pathetic indictment of the state of general management that it's that easy to be exceptional, but it really is. It really is. And I'm encouraged by how many people are starting to realize that it'd be hard to not conclude that general management matters just reading the news. Going back to the cool statement though, that bad leadership can kill companies easier than bad products. We recently had Mike Dawber at Amplify.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“All of this with humanity and respect for other people. Now, the way he phrased humanity and respect for other people was in a very 19th century way. It was don't embarrass people who are senior, et cetera. But I sort of round that up to treat other people the way they deserve to be treated. So that checklist of five things is the same today as it was in 1855 when he first wrote that treatise. And so I very much subscribe to the idea that I could take that checklist into any company. I could talk to a handful of people and I could come away with a real strong opinion about how are they doing on picking the right stuff to work on, allocating responsibility, checking how things are going, et cetera, et cetera. So that very simple five-part checklist is exactly what I use today when I diagnose and try to coach and help these companies that I work with.”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I'm sort of a disciple of this fellow named Daniel McCallum who was an executive in the railroads in the mid-1800s. Daniel's story was he was promoted up from within the railroad, from inside the New York and Erie Railroad, which was a huge high-growth company of its day. He was promoted up from individual carpenter to bridge builder to superintendent of bridges and then up through the ranks of general management until he found himself very quickly at the top, essentially what would today be called the CEO of the railroad. wrote this treatise on general management which I still use to this day in teaching general management class that I do at Harrison Metal his philosophy boiled down to a handful of things he said look the general manager has to get everybody aligned behind the right projects the right investments second make sure that the responsibility and authority is allocated appropriately third measure how things are going along the way fourth stop and make corrections if things are going badly fifth do”
2017-10-09 · The Twenty Minute VC · 20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs · IDENTIFIED FROM THE TRANSCRIPT · source