A Train on the Track to Revenue w/ Varag Gharibjanian | Ep. 106

In this episode of the Biz/Dev podcast, Gary and David have a chat with Angel investor and Founder of Actuate, Varag Gharibjanian. 

Links:

https://www.linkedin.com/in/varag/

https://actuatetech.io/

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David Baxter - CEO of Big Pixel

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The Podcast

David Baxter has been designing, building, and advising startups and businesses for over ten years. His passion, knowledge, and brutal honesty have helped dozens of companies get their start.

In Biz/Dev, David and award-winning Creative Director Gary Voigt talk about current events and how they affect the world of startups, entrepreneurship, software development, and culture.

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Transcript

David: 0:05

Hi, everyone. Welcome to the biz dev podcast podcast about developing your business. I'm David Baxter, and I'm your host. I'm joined for usual by Gary Voigt. Hey, Gary. Yeah, as a Taylor Swift at 211. The one that's all over your back. Did you get that finished?

Gary: 0:22

We talk about this on the air. Can we edit this out?

David: 0:27

Now, man, no man, be a Swifty. Loud and Proud baby. I know you went to that era tour like 14 times.

Gary: 0:34

I constantly tease my daughter about Taylor Swift and she gets so upset. Diehard.

David: 0:41

No one like admits to being a Swifty, and yet she makes billions of dollars of all these people who are not that's all I have to say. And I know this will be this is putting a date on this podcast. But I have I do have tickets to the movie version of her tour. So yeah, I mean, I don't know if my tattoo needs to dry or was just gonna say I'll give you the

Gary: 1:04

number to my death. You have your tattoo you got guys.

David: 1:07

More importantly, we are joined by varad gerbe Jenean who is the founding partner of actual tech actuate actuate did I say that right? Actually, I said your name right. I worked very hard.

Gary: 1:20

I was super surprised you got his name right. First try. I got his name. I lost my breath. I second.

David: 1:26

I butchered his company name. So killer. Go me. I'm a professional. Welcome Parag. How are you man?

Varag: 1:35

doing really great guys. Good to be on the channel with you guys. And I am really surprised that you pronounced the right like that's we didn't even practice you practice, we practice that that was

David: 1:45

I will take zero credit. You did a fabulous job on your LinkedIn saying your name. Ah, okay. So 37 times, get it right. And family like a pro. And then I put you the company name, I am on fire. So give me the 30,000 foot view what is accurate.

Varag: 2:06

actuate is a management consulting firm. We help two different kinds of companies, usually large organizations with tech partnership, strategy, innovation, and then with more b2b tech startups who we serve as well. And it's anywhere from like seed a series B. And it's usually go to market help. Deal coaching and fundraising. Okay, yeah.

David: 2:32

How did that begin? You've been doing it for a couple of years, almost three years, it looks like yep. So how did that come to be? Is that just putting together everything you want you struck out on your own classic consulting?

Varag: 2:45

Yeah, it's actually so it's good story. So it was like, in the midst of my last startup clay, where I was still running, it was an AI company. And I was doing a lot of selling to the larger companies on technology integration work, especially. So this was with AR VR headsets and smartphones and TVs, I saw the first challenge that made me think of actuate. And the first challenge was with these for these big guys, you really want to do partnerships, it's really, really hard for them to get clear on what they're looking for. And it's a broken process that starts to affect both parties involved. So they waste a lot of time of startups time. It's hard for them to get clear within their own larger company with all the stakeholders on what they want. And so the first version revision of actually, it was supposed to be a technology partnerships as a service. Company, right. And we started with that when then we started to seeing like, okay, all these startups keep hitting me up for consulting. And then there's some different asks as well from some of these larger companies. So it's kind of expanded into into more than that in terms of services. But that's the sort of the genesis.

David: 3:57

Okay, it reminds me early on in big pixels life. I was doing what I was in the stage where I would wash your car, if you do my bill rate, right. Yeah. And we've all been there. And I was approached by large university, which I will not say the name. And they were looking for an RFP to rebuild a website, they were a university connecting to a health organization, and they wanted this beautiful website, and it was going to be pretty good size. And they had told me we have just spent $200,000 A year ago, we'd hired a major firm to build this. And now we don't like it a year later. So we've gotten another $400,000 to rebuild this next website. And so, and I said, Okay, so I was coming in, it was just me, like big pixel was literally just me at the time. And so I'm talking to them and going well, why did you fail? And they're like, Well, we have this. We didn't know what we wanted to build. Right? They spent $200,000 and all of their stakeholders, like you said, All one is something different now and university space if you've ever worked there it is fiefdoms like those big universities, like each professor has their own little fiefdom. And no one, they are the King of that domain, and no one's allowed in it. And this overarching website crossed lots of them, right. And so all of these stakeholders had their fiefdoms. And no one could agree, because their fiefdom was the winner. And that should be the focus. So they spent$20,000, building the site, no one wanted, no one liked. And I said, Hey, you know what you need to do, you need to hire me, course I'm selling, you need to hire me, instead of doing this RFP thing that you're doing that you're going to end up with the same situation you're in before, you need to hire me to show you just what you need to build, I'll meet with all the stakeholders will do this. And then you can do whatever. Of course, they did not do any of that thing. They put it out and I lost the bid. But it reminded me is like, Man, when you have a lot of stakeholders, all cooks, all chefs, you know, no, no cooks, whatever. That horrible analogy that I'm butchering is. They're smarter people than I but it never works. And we've even said that startups, we've had startups, especially those that do a lot of the competitions and stuff around the area, to win money or procedure or whatever. A lot of them have founding teams of like seven or eight people. And one of the first advice when we're mentoring land is, do you know what you call somebody with multiple heads, right? A monster, it doesn't, it doesn't work. And you can't, you can't manage this, you got to choose a leader and go, which is of course hard when you're all young people, but I've digressed yet again. So one thing that interests me about your history is your time as well. And you still are but your past as an angel investor, which to me is a different side of the fence, then we see a lot. Most of our guests are startup founders, which are you are but don't have a lot of experience there. So I would love to know, a little bit more about that world. I mean, tell me, let's just start at the very beginning, what is an angel investor, just at the highest level?

Varag: 7:16

Yeah, that line is getting a little murkier lately, but I see it as kind of non institutional money. So it's somebody, it's usually an individual who is investing out of their own net worth, then they don't, they haven't, maybe I would define it as they haven't set up a separate entity to draw funds from right then no one of their own, that represents them, right. So they don't have like multiple people investing, it's their own money, I would call that an angel. Typically, those checks are anywhere from as little as, you know, five grand to as much as a couple 100 grand I've seen, it depends on the person and their strategy and their own, you know, amount of wealth they have. And then we can go into it. But there's, there's kind of pros and cons of dealing with angels. You know, there's trade offs. I got into it, I wasn't in and I went out and like chased. To be honest, it was just more, you know, in the work that I do, there was just some opportunities that came my way. And I looked at and I said, you know, this is interesting enough for me either have a personal interest in what they're doing, or I see that there's others that would really want that kind of technology or product, as it got more mature. And so I can kind of see down the pike, and it's like, okay, you know, especially how it was the last 10 years, it was it's much more about like, can you see the ramp? Right? Can Can you see them getting to the next funding milestone? The answer? Yeah, go ahead.

David: 8:45

When you're an angel, the the trade off, that unwritten trade off is, I'm taking a ton of risk, right? Because you don't exist. Most of the time when people are raising Angel, correct me if I'm wrong, most people I've seen in my world is, if you're going for Angel, you probably are pre product, or brand new product, right? So that angel is believing in you as a person or your ideas so much, that they're gonna write you a check of various sizes, like you were saying, purely based off of the idea or who you are as a person, because the chance of success at this point is very low, just because of startups and statistics and all of that. So it's usually you get more equity at this stage because of that risk, is that correct?

Varag: 9:33

That's generally true. Although I think literally quarter over quarter, these dynamics are starting to change, right? So. And maybe even within angels, there's certain there's, you can also just draw a line or some angels that are, I mean, there's so well connected into certain funds, or certain ecosystems, that it's more than just like a friends and family random person who's just an angel right? I mean, It's like somebody who's like, if this, if you get this angel they know so many other VCs that they will open doors to. What I meant by the changing dynamics as well, is that I feel as if you know, this last market correction, it seems like you might even be further along, and you would still go collect angel money. So there's so many institutional VCs that have just said, Either I'm on pause, or I'm shifting all my energy to generative AI, that there's there's a lot of there's a lot of startups that are out there right now trying to figure out well, how do I get my next check? And whereas there would have been a VC before now, they might be thinking, hey, I need that next million. I'm just stay alive, I might just go get 10 Angel checks. Right, and I do them a product. And I do have a little more progress than what you'd mentioned. So

David: 10:52

and I assume you on the angel side? Are you hearing this all the time? Do you? Are you asking these questions like, okay, they all say AI? are you digging in at all to see if there is?

Varag: 11:02

Yeah, I mean, in my case, the stuff that I tend to see is a little bit more deep tech. So what that means is, it's either someone who is like, innovating with in those large language models and trying to make that better in some way, or differentiated. Or it's somebody at least who is using those large language models, as a core core part of their product, like they're really leaning hard. And you brought a couple examples of that up. And I'm pretty aligned with you guys that is overhyped, and it necessarily needs to be right now, because people have a lot of dry powder still, and they're trying to figure out where to put it. And here's like something that actually is a little bit in my opinion, compared to all the other technologies that we've seen over the last decade, you know, come and go, I feel like it's one of the few that's actually hidden in consumer and they're using it. Now, that doesn't mean it's as big as everyone's purporting it to be but people are using a form of a large language model right now is like, a fast growing, right. So that's exciting. It's exciting. It's exciting. But but it does need to be something that at the end of the day, going back to more product principles, right? It needs to for me listening to it, it needs to be something that I look at and say hey, it's solving a problem for the end customer in some unique way because of that, right? Or it's and some people are just betting on it, like taking away some of the friction for a customer and using a product. Great. Show me that. Right. But of the overall value delivered to the customer for a product I think I think it's a piece. I don't think it's necessarily the whole thing. Right? I think it's a piece of it, right? So it's a nice, I see it as like, you still need a nice train on a train track. And this is a nice oil for you to use. Right but you still need a train on a train track. That's a horrible analogy, but you get the point. Like yeah, oil.

Gary: 13:04

It's a nice bonus feature. Yes. helps. But it's not the feature. It's not the main Yeah,

David: 13:11

I can see it being used in useful ways in almost every business. Yes, but for the most part the people who are trying to do it aren't in that deep tech world. They're just trying to use chat GPT and some fun way and that's cool. But it's not what anybody is going to give you money for shouldn't be shouldn't be why someone's giving me money. I mean, I guess now it's probably is if you don't have aI people aren't interested but and I get that that man what a tough tough needle thread the needle I don't need man. I'm killing my analogies today. needle tip now

Gary: 13:43

you're great. If you totally will make fun of

David: 13:46

gold. Everybody. Gold. This should be my new T shirt.

Gary: 13:49

Thread. Anyone macaroni? Yeah.

David: 13:54

i It's tough because you want you need that money to keep going like you're saying. And those people are telling you those investors are telling you. I want to get into AI, which is basically code for if you make it yours AI will write you this check right here. So they're all sneaking it in in some silly way. And they did that before with crypto we would get when I was mentoring and stuff. We would get pitches everything had crypto in NFT. Blockchain smart contracts. Oh, yes. can change the world. Has it? Anybody changed their world today based off smart contracts? No. I think in five years AI Well, I think it'd be really interesting in 510 years, AI will be everywhere. We just won't be talking about it.

Varag: 14:38

Right. Let me let me flip the question to you guys. Do you guys use any form of let's be specific about the kind of AI you're talking about? There's a lot of different forms of AI. In this case. I think we're talking about generative AI. Do you guys use generative AI? Day to day? If so how often?

David: 14:57

I do not. I will let Gary speak for himself. Artie. EME uses it. Every day when they're coding, the copilot tools are built in, and they, and I have to say I'm using it. And when I code a little bit like it'll fill in things and do things, it's your IntelliSense is on crack. Now, it's really, really good. And it saves you a lot of typing. But like some of my guys, I code only some of my time, but some of my full time guys, they will like, hey, they'll pull up a chat bar, which ones they use just depends. And they'll say, I need code this and they'll go, and they'll throw up. Now, it's not great code, but it saves them a lot of typing. Right? So that's been used a lot. Yeah. What I will like some of our guys, I asked them the same question. And one of my guys says, I don't use search engines anymore. I put it all into chat GPT, because I find the answers to be more actionable than the 30 minutes that I would need to comb through the, I haven't done that yet. Even though I feel like I need to, I feel like I need to jump off of this thing and figure all that out. Because I have a team license for my guys to use chat GPT to play with it. But that is as far as I go, Gary, how are you using if at all,

Gary: 16:14

I use it as a supplemental. On my site. Since I'm not coding, I'm doing more of the design stuff, I'll use chat TPT for help with like, anything from creating, like a user flow user profile all the way to just some generate marketing, copy marketing copy for me to kind of start with, and I can say like, give me, you know, these five topics, give me some Hero section copy, and then imagine features for this. And that just so I'll have something more than lorem ipsum to start with, and then I'll be able to expand upon it like that. I do use Adobe Firefly for image generation, I have not actually generated an image that I'm comfortable using. But it is fun to play with. Like, it'll get close to what I envision and of what it could be. But there's always that small amount of like, Okay, this looks close to what I'm actually trying to pull off. How can I change this prompt to make it you know, 90% there instead of the 70 or 80% that it is. And then the amount of time spent trying to, you know, tweak that prompt to get what you want. After a while you're just like this is wasted time I could have built this in a 3d program. So it's great for a prompt, or not a prompt, but it's a good starting place for the things that I do. But it's not good enough to be a finisher, like,

Varag: 17:42

yeah, I can see that. How about you how much you use, I use it a lot. Now, it used to be once every like two weeks. But then what was funny was I just I kept the window open, let's just say with Jack JPD. And I started realizing, oh, I can use it for this and that. And then I started replacing Google searches with it. Right. And then I started realizing that to Gary's point, at least for now. It is really only as good as you prompt it. And then so having the right prompts, is kind of being part of the IP, what you do how you use it. Right? So going back to the technology startups who want to use this, right, in some way, I think it's, it's like, if you just think you're going to add some chat GPT like widget or chatbot into your product and think you've got something differentiated, like no one cares anymore, right? No one cares, no one cares. But if you use it as part of your product flow in some way that again, takes away some of the friction or makes it easier to use or keeps the customer coming back. And it's prompted in the right way. And it's context specific and and you've bounded it, so it's not hallucinating and saying stupid things. Now, maybe you overall have a better product than the guy who's not using it. Right? Or the gal. So that becomes interesting. But you know, to your point, David and Gary a lot, a lot of people don't say it that way. They just kind of tack it on and hope for the best. And I don't think that when's

David: 19:13

what I think it can do not yet. But I think the promise that I see in it. And this is just one of the many areas. But like I give for instance, Apple, right? I wear all the gizmos and doodads. It has a lot of data on me. My health data, let's just do the rings, right? I've been closing rings forever. I'm about the fifth 1750 I think is my current mark that I may or may not. I close those a lot. That's a ton of data. What does Apple tell me to do with that data? How do they improve my health? None zero zip it? Did you close your ring? Did you stand enough? Did you do anything today? That's all they can. The companies that figure out how to use all of this quantified data, not just self but all over the place. In every app. You're collecting data. When you then take that app and apply AI and say, now that I have this raw data, I can use that data to now analyze it and tell you an action plan, whatever. That to me is something AI can do. And when they figure that out when people in startups figure, okay, I'm collecting all this data, now I'm going to use AI to apply and give it that's where you're gonna have startups that just explode. Because no one's been able to do that in 50 years like that is we've been stuck, we gotta we collect it, we have it all what and I'll sell it. That's as far as we've gotten with data right now. Right? Everyone, just sell sell, someone's gonna do something with it. And eventually, you know, where AI is being used a ton, is which ads you're going to see, whenever you're looking at us. They're very good at that right? There scrape really good at what ads you should see next. I want to see that in other startups, I want to see that in, you know, LinkedIn as a cheesy example, to say, hey, you should get connected with this guy. Because of these reasons. You need to you guys would be able to do business together. Hey, I can do this stuff.

Varag: 21:03

And like put a plan of how you might work together to something like that. Yeah, some recommendation. Yeah.

David: 21:08

I know what you do. I know what he does. He's posting over here. He's in Colorado, I don't see him. He's posted about the need for custom software. Boom, I'm a Sales Navigator person, right? I'm paying for that. And so boom, we're gonna connect you to or think you should, hey, do you think this might be a thing? He was just asking about what you do for a living? Maybe you should reach out? Oh, my gosh, I mean, how much money would I just fork out for that? But and this is a cheesy example. But that's where it's going to be exciting. Not? Is it writing my email? Well, I don't know. I mean, now I can tell when it's aI written for the most AI is they all look a certain way.

Gary: 21:49

That gap between, like AI is going to take over and make us obsolete, and everybody's worried about it to five minutes later. Everybody's like, that's obviously done by AI. That's not worth it. You know, like, that scary gap got closed real quick.

David: 22:05

It's the uncanny valley humans from Earth are trained to recognize humans. And we are very, very good everyone. Every human on the planet is very good at looking at you and going, you look like a human. Anything that breaks that is creepy. It's immediately creepy. Our fight or flight starts flaring up. Right? Oh, I don't know what this is. And, and you don't like you don't trust it. It's now something I'm going to back away from, which is the thing you need to be worried about. If you are that startup? Because if you can't cross that line, it's like the old I'm a big gamer. If the old video game is your movie, eyes, nose will dead inside. No one wants to watch that movie. Super creepy. And Polar Express being the classic example. Sweet movie, but do they? They're all zombies running around Santa. You know, it's Whoa. Same thing for AI. I still am fascinated and the fundraising stuff that side of it. Because we don't hear much of that. What is it? If you're looking at and thinking small thing? $25,000 or less, right? A startup comes up to you pitching their idea? What are you as a potential say you You've haven't worked with them. I know most of your people you're investing in, you know them from a deep level because of your actuate and all that good stuff. Take that put that to the side for a moment your guy comes up to you. What is it that's going to check the boxes for you to invest to give right that $25,000? Check. Don't think

Varag: 23:38

I do anything too different from the standard check boxes that people have out there? Like is,

David: 23:48

what are those standards? Because I don't think most of the people in our audience aren't going to know those standards.

Gary: 23:52

Okay, they're probably even too afraid to go down the fundraising route at this point. So okay.

David: 23:59

I mean, pre revenue, that's fine for you, generally speaking. That's cool, right?

Varag: 24:03

Yeah, I mean, angel investing is still predominantly that, right? It's still pre pre revenue, right? But you want to see that they are going after a market that's growing and big enough. And so to get a little more specific there, it's not just some report, it's some addressable market, hey, we're going after these kinds of businesses in the United States, this kind of size, this is the number of them that are out there. And we're gonna, you know, charge them this amount for this product that we have, we're solving this problem. It is a I like to use the Y Combinator language it's like a recurring an urgent problem. And no one is it's there's an unmet need the people that are addressing it are doing it in this way. Right. And so there's still something that's missing. And, and we're gonna attack it with this kind of product and that product. What I like to look for that early stage is that That founder product market fit. It's like all three, right? It's like, okay, you starting from the market growing, there's still an unmet need. It's a cool, interesting product for it awesome. But then I'm gonna look at, like, Who's telling me about it? Have they done something like that before? Do they know the people that they're trying to go in business with? If that's if that's like, out of whack in the earliest days, it's like, I don't have I don't have the risk appetite for it. Yeah, another angel investor might write. But I'm looking for that kind of really strong alignment. For me, again, I won't, this is not typical of other angels. Other angels may do this, but I won't invest if it's not in my scope of knowledge, if I don't have, you know, my own understanding of what that problem is, and like, I can relate to it, or I know that the people who have it, I'm just, it's too risky for me. But there's no that could be folks that are they love angel investing more, or they have way more money where like, you know, they're, they'll invest things they don't understand, right? Sure. Not me that we allocate, that's the thing about an angel investors, like the allocation is different for each, each one, right, like someone who might just be like, hey, all the money, I would have normally invested in other more risky things, my portfolio, I'm doing only an angel investing. So they have more appetite. Right. And I think what's happened recently is, you know, the stock market got so cheap that a lot of angels on including me, in some capacity were like, you know, what, you should like known entities, right? That have great businesses that the price of which has fallen, like now I get to choose between that, and something from the ground ground up. So these are always adjustments that every investor is making, and the angel can make them even faster. Because they're an angel, they're not institutional.

David: 26:51

What it is a common belief that in order to get any sort of investment, angel or otherwise, you need to be targeting Unix unicorn status. If you're gonna, you know, the end goal, that you're not going after a billion dollar valuation eventually, that no one's going to give you money. True or False.

Varag: 27:20

True, if the angels you're targeting are the ones who are hoping for a follow on round with with VCs, right? VCs are oriented that way. And I think the large now take the word large back, the majority of angels that are out there are trying to stay on that path, right where they're looking for, I want to cut this check, and I want the institutional VC investor to get in afterwards and mark up the value. And no institutional VC is going to get in unless they see that kind of billion dollar outcome. Now, there's two caveats. One is I think the market is cooled off enough slash corrected whatever you want to call it, where institutional money is rethinking? I think they're their portfolio. And do they really want to still have the same mindset of I need one unicorn per 15 companies I invest in? Maybe we're okay with, you know, a few base hits that don't need to be a unicorn. Right? So I think that's actively being decided now. And then of course, there are always angels that are like looking to invest in something like a little bit more sure. That is not a venture bankable thing it's just a small business or more of a lifestyle business that could one day exit for sure much less but at a predictably higher probability. Right? So that exists to that I don't think that

David: 28:46

there's a majority are there angels that let's say you are building a super niche lifestyles type business right software? And you know, when you're up and running your Tam and Sam and all that good stuff, you're probably going to be a million or two in revenue. Right? Good living going to be a small team. As a lifestyle business you'd be wealthy by most standards, you'd be sure it'd be really great but he in order to do this this lady needs to get $100,000 $50,000 Something around not million 100,000 also is a great idea whatever is that as a no go and you're gonna tell them hey, you know, friends and family maybe maybe a bank loan, but I'm not it is that is that what most angels are gonna say to that person? Think so. Okay. Yeah, I think it's just not big but I mean, that's you're saying but say the idea is great, right and the to untapped market, but it's small, super niche. The surety is much higher, right? Because she's tackling something great. And the return you give $50,000 You're gonna get say profit sharing for 10 years. I'm making this up and you're gonna turn that $50,000 into $300,000.06 times any invest spent over 10 years, that would be insane. But you're saying most, almost all that you would know of would say probably not. That's to to small potatoes. That's what I'm curious about. Is it the small potatoes that just killed it?

Varag: 30:13

I think for the like I said, it is changing a little bit now. Right. Sure. But traditionally, the idea of the angel investor, so many of them were so closely tied to like that track of venture money. Right. But there's a good amount of them out there. I don't know as many of them, but there's a good amount of them out there that will do checks for those lifestyle businesses. I think, certainly our I don't think people have done a good job maybe putting those kinds of options together, you know, maybe I'm so deep in like technology innovation world that like I don't come across it as often very possible, right? Well, I

David: 30:58

don't see that in the mentoring land, either. One of the things that always frustrated me for doing this in the last 10 years is you have two paths, your lifestyle and worthless. Or you are billionaire bound, and I want to talk to you, that's it, like you lifestyle is poopoo go away, you are not worth my time, even though that's what most small businesses, let's be honest, the vast, vast majority, but it's like in colleges are on him. And we have tons of colleges in North Carolina, and the all the accelerators of any sort. If you're not billionaire bound, they want nothing to do with you. And I'm like, Man, that just really irks me, because some of the best businesses you're ever going to find, are never going to be more than two or $3 million in revenue ever. But they are taking great care of their customers. They're the founders, you know, live in suite, living a great life. He's not eating ramen noodles on the wall. Everyone's mad at him because he owes so much money. I've just always, like you said, I wish there was something for those people. Because I mean, I guess there is a column banks, I suppose. That's, but a bank doesn't invest in technology like that. That's super risky for them. So

Varag: 32:17

I'll add to the problem. I mean, there is companies that come up for sale. Now, you guys may or may not have heard of acquired.com. And took us decades company, there's a few different websites that have been popping up where you can kind of post the business for sale. And let's say it's doing exactly what you just said it's doing 50k A month or two and 100k a month. Right. And they've been running it for three years. For whatever reason it is they want to sell, if you want to be a buyer and that kind of company. Like if it's not something that has physical assets behind it, no bank is gonna touch it. Yeah. Right. So it's just so where are those angel investors? Right? I mean, it's a similar question, right? It's like, why don't you pick this thing up? That, I mean, it can be a great business, like everything you just described, like, it's got pretty secure customers. It's not a fast growing market, but it's solving a problem. It's small. It's a small business, but a bank won't touch it. Because it's software. Right? And like, they're like, oh, there's no, there's no collateral, go get no collateral and on this. So it's kind of I've been in those situations where I've looked at them, and I've thought of maybe buying it myself, but then when I look at like, five financing options, which doesn't exist, yeah, right. And so then you're gonna go, go talk to the same angels on, let's say, $4 million business, when they go on, it's just gonna start from scratch. And built in that could be, you know, a billion dollars or more, right. So it's interesting.

David: 33:45

I think that that discounts, what that founder did, right to take a company from zero to 4 million and right hardest part, hardest part. Oh, my goodness, as a guy who's not even at $4 million in revenue, let me tell you, that is hard. It is in discount, oh, you could just start your own like, that is so you are so out of touch at that point. It's like the rapper saying, you know, the first billion the hardest, Oh, shut up. I mean, man, it's just, it's frustrating because that person is, has a skill set that founder to take a business from zero to a million, let's say, is a skill set that is so rare, because they didn't die. They weren't part of that 80% that died in the first two years. He's not in the other 90% who doesn't live get up to a million or two in revenue. Like the that that percentage of that founder, that guy or girl who gets up to 2 million in revenue is like point 1% of people who have that skill set and tenacity to do that. And you're just saying, I could just start that up. It's not a problem. I don't get up for less than $10 million. Just dry this stuff drives me nuts. I'm sorry. I'm on again. I'm on a soapbox. It happened to get I think, David I think

Varag: 34:58

I think it's changing. That's fine. point, I think I think it's something that people realize, like, kind of part of the economy we were in over the last 10 years. And, you know, I mean, there wasn't there was a lot more of an infrastructure for people who were trying to go from who are shooting for that billion dollar outcome. Right? There's just so many companies that got funding over the last several years stupid word, that we're never given a chance to do that, and most still won't make it but at least they're getting paid well enough to keep trying right and keep pushing. Now that I think that some of that is not as readily available, let's say that way, people are going to be more open to different a different model where like, they don't have to have a billion dollar outcome for some success. Right? I think that that's going to be something that will be more common going forward.

Gary: 35:49

I have a question. That's a little bit of a tangent, but it's more related to your company's services. So five out of the companies that you do consult for big or small, but I'm basically asking about the newer ones, the startup ones, one of the services you provide, it's like marketing consulting, we've found it extremely hard to try to find the startups to market to because they don't exist yet. For our services, what are the kind of marketing services that you suggest newer companies and smaller startups, like apply to get them known to go from being in that slog where no one knows about them, to having a little bit of gravity to pull in customers based on their reputation.

Varag: 36:33

So I don't usually provide marketing services for the startups that I work with, in the sense that I don't do like, or I don't execute for it before them, like I won't do any like, you know, LinkedIn marketing or anything like that, right. What I do help them with is thinking through the marketing strategy, maybe. But keep in mind, the companies that I tend to deal with are like b2b, deep tech. And sometimes it looks like we've got this amazing, let's say XR application, and we're thinking through what markets we can hit with it, and maybe trying to still find product market fit. And in that case, it's like, okay, let's look at the potential markets a little more strategic and kind of business strategy and do some personal development and opened up those doors, you know? So I don't know if that answers your question. But it's a little bit of a different scope.

Gary: 37:36

Based on your experience, what would three pieces of advice be that you would give to a small business or an entrepreneur or someone you've just invested in, to try to get to the level of success that you, you see them getting to?

Varag: 37:54

What I see is that a lot of founders forget that at the end of the day, especially if they're doing something more b2b, it is really about sales early on. And it's a word that no one likes, you know, because they don't, they have jaded kind of opinions about it. And we're, you know, where that word comes from what they've seen. But, you know, in my world, I see a lot of people coming from really sophisticated, amazing backgrounds and different disciplines or functions, because they've had a lot of success and what they don't, they tend to forget or underestimate is that when they take it, decide, take that leap and start a company, then the, you know, the first point is actually just trying to make a sale. And that is something that a lot of sort of sales, native people that are like grew up doing sales will tell you, but I'm, I'm someone who's come like, back my way into that and understanding that, right, I didn't start off as like, Oh, my first job is sales, I just realized that I've learned that myself. And, and I think that's really important to know. So, you know, pick up a couple of books on it. It's not rocket science, but just like, get decent at it, that's going to really, really help in the early stages. The other thing I would do is, keep in mind that if you're doing something new, if you're trying to be innovative and change the status quo, even on a micro level, you're most likely going to be wrong. And what that is, or people are not going to accept that change or don't want it there will be resistance. Most of the time, it's because you thought you had a good idea and like you don't, right. But every now and then you'll be right. Maybe one out of every five, six times, right so if you're trying to be you know full time entrepreneur your whole career, bake that into your plans. And recognize that like, you want to iterate and test as quickly as you can, having other people's money to do that can help accelerate it, realize, now you're burning other people's money. But like being being really good at testing the hypothesis and some analytical way, and getting through those different grade ideas, it's, that's a good thing, right and like, Don't stick too long to one, it shouldn't be so much resistance. Right. So that's another thing to keep into account. A third is, let's see. This is this is one that I've learned, that's so important. It's, it's who you work with is like, probably as, as important as almost anything else. And I think this gets true as you get older, right? Like, who you decide to spend your time around, if you're gonna do something like, like starting a company, like, it's good to pick great, great people to be around. Because as things are, you know, likely going to go wrong, at times, you're gonna have ups and downs, it's gonna who you pick to do that with or, like, don't like that's like, people say it's like getting married, it kind of is true. But you want to have fun. And during, during the process, right, and you want to be able to like, get through the lows, so pick someone you want to do it with. And I would say like, if you don't have these things set up, if you're at a company right now you're trying to like leave, and go to start something, I think it's really wise for you to know who you would do it with, and at least an idea to start, like, if you don't know who you want to do with like, you have to be a very specific kind of person to go ahead and like do that alone, you know, for an extended period of time. And and that's if you are that person, great. Go for it. But like know that if you're if you haven't done a lot of stuff on your own before and been through, a lot of ups and downs picks pick someone to do it with it's going to be a lot lot better. So those are my my three bits of advice.

Gary: 42:03

Those are good. If you're doing it alone, you're just a freelancer. So, yeah,

David: 42:09

I've said it before, when I started big pixel. Everyone asked if I was doing freelancing, because I was alone. I was doing my thing, right? Sure. And I would tell them, No, I'm just my first employee. And that was a huge mindset for me. Like, I didn't want to just fill my bucket, like a freelancer would is, oh, I'm working 40 hours a week, I'm killing it. Let's go. I wanted to fill my bucket, and then find someone else to fill their bucket and find someone else. And do nice, that's a big mind shift. And I took that early, because that's where I wanted to go. It was like, kinda like vision casting using the cheesy word. But trying to get there. Because otherwise you get you get complacent, oh, I'm full. I'm busy enough. I'm good. And we work with those people. Like we have contractors, we work with them all the time. And you know, they they fill their bucket, and they're done. Just fine. There's nothing wrong with that. But that wasn't my parents.

Varag: 43:04

Sure, yeah, there is a difference, it's good to know what you want, you know, earlier than later. And that way,

Gary: 43:11

now, if anyone wants to find out more about you or your company, what would be the best places for them to go explore.

Varag: 43:20

So to connect with me, I think LinkedIn is great, it's really easy to find me because I got like one of the hardest names out there. It's an army name.

Gary: 43:29

But you have a great description on how to say your name on LinkedIn too. So as

David: 43:33

does if you just need to add your company, try it again, David

Varag: 43:35

just fine. Exactly. And then the other is the company website, it's actuate tech.io. And there's things that we're constantly iterating and adding there on the services and you know, what we what we provide it to whom and all that. So that's that's gonna be to kind of learn a little bit more, but so connect with me. My LinkedIn is probably best. I'm on it all the time.

Gary: 43:59

Okay, we'll put those links into the show notes as well. So

Varag: 44:02

cool. Thanks, guys.

David: 44:05

Well, this has been an absolute pleasure to chat with you, man. I have enjoyed I'm sorry for all the tangents. But usually, that means I'm enjoying the conversation more, ya know, it's fun. If Gary's talking, that usually means I'm bored.

Gary: 44:18

If you ever let me talk, no, I was gonna say though, it's interesting to get the perspective of someone from the other side as an investor instead of someone looking for investments. So that was really enlightening. I appreciate that.

Varag: 44:32

Cool. Yeah. I mean, I'm not like the, by any means the world's best investor, but I, I've, I've studied the principles a bit enough. And I've been around all the other VCs and seen the way that they think quite a bit, and I'm in touch with many of them, many of them like my colleagues from grad school. Now, you know, active venture capitalists or partners at some of the best firms, you know, so I get to See the way that they think. And then, you know, kind of bring some of that back to the startups I work with. So it's cool.

David: 45:10

Awesome. Well, thank you again for joining us,

Varag: 45:12

man. Yeah, absolutely. Great to talk to you guys.

David: 45:17

All right, we were out and we will talk to you all next week. Have a go.

Christie: 45:21

Hi, I'm Christy Bronto, Content Marketing Director here at Big pixel. Thank you for listening to this episode of the biz dev podcast. We'd love to hear from you. Shoot us an email Hello at Doug big pixel.net the biz dev podcast is produced and presented by big pixel. See you next week. Until then follow us on Instagram, Twitter, Facebook threads, YouTube and LinkedIn