Business Problem Solvers with Eric Alspaugh, Episode 11

In this episode of Business Problem Solvers, Eric Alspaugh speaks with John Samuelson, Venture Capital Executions & Operations.

Tune in to the episode to hear about:

• The significance of strategic investors
• How startups can make themselves more attractive by having well-organized data and presentation materials ready
• The importance of ongoing, transparent communication and periodic reviews between startups and their strategic investors
• Anecdotal stories about pitfalls and successes in investments, highlighting the value of both effective internal practices and leveraging strategic partnerships
• Practical tips for managing investor expectations
• The need for startups to address AI implementation in their business plans

Learn more about John Samuelson:

• Visit John’s website: https://www.johnsamuelson.com
• Connect with John on LinkedIn: https://www.linkedin.com/in/jsamuelson100
• Email: john@johnsamuelson.com

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About Business Problem Solvers:

Welcome to Business Problem Solvers Podcast, where legal insight meets entrepreneurial innovation. Are you a startup founder navigating the complex legal landscape of entrepreneurship? Are you seeking practical advice, actionable strategies, and expert guidance to propel your business forward? Look no further. In each episode of Business Problem Solvers, seasoned attorney Eric Allspaugh takes a deep dive into the intersection of law and business, bringing you insightful interviews with a diverse range of industry experts, thought leaders, and successful entrepreneurs.

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• Visit Alspaugh Law’s website: https://alspaughlaw.com
• Connect with Eric on LinkedIn: https://www.linkedin.com/in/alspaugh
• Follow Alspaugh Law on LinkedIn: https://www.linkedin.com/company/alspaughlaw
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• Follow Eric on Twitter: https://twitter.com/EricAlspaugh

Read the entire transcript:

Voiceover: [00:00:00] Welcome to Business Problem Solvers podcast, where legal insight meets entrepreneurial innovation. Are you a startup founder navigating the complex legal landscape of entrepreneurship? Are you seeking practical advice, actionable strategies, and expert guidance to propel your business forward? Look no further.

Eric Alspaugh is a seasoned attorney. Based in the vibrant startup hub of California, and he’s thrilled to be your host on this exciting journey. In this podcast, we’ll dive deep into the intersection of law and business, bringing you insightful interviews with a diverse range of industry experts, thought leaders, and successful entrepreneurs.

From intellectual property and contract law, to corporate governance and regulatory compliance. We’ll cover the essential legal topics that every startup needs to know. Our guests will share their wisdom, [00:01:00] experience, and practical tips to help you navigate legal challenges, seize opportunities, and build a thriving business in today’s dynamic marketplace.
So whether you’re a seasoned entrepreneur, A budding startup founder or simply curious about the intersection of law and business. Join Eric on Business Problem Solvers podcast as we explore the legal insights and entrepreneurial inspiration that will fuel your journey to success.

Eric Alspaugh: Hey John, welcome to the Business Problem Solvers podcast.

And to my listeners, I want to introduce you to John Samuelson, a friend and colleague here in Southern California. I’ve had, uh, pleasure of, uh, going to events and hanging out with John for the last five years and had some very fun, uh, experiences attending blockchain conferences and, and things like that.

And [00:02:00] I’m really excited to get, uh, John’s, uh, insight on family, uh, venture capital and family offices and help some of you out. And John has particularly interesting background from, from my perspective because he’s worked with NASA and he’s done extensive deep diving and has experience as an electrical engineer as well. So his technical expertise and his business prowess should connect with a lot of you today. Hey, John, welcome.

John Samuelson: Thank you very much, Eric. It’s an absolute pleasure and I’m looking forward to it.

Eric Alspaugh: Awesome. So what I’m hoping we’ll do is just jump into some questions, uh, to help out entrepreneurs that are interested in and how to maybe reach out to family offices to manage expectations, maybe some of the back and forth that might happen in [00:03:00] some due diligence and then any practical tips you might have.

So if you want to, um, tell us a little bit about maybe your background, how you got here and let us know a few tips on, uh, getting the foot in the door with the family offices,

John Samuelson: thank you very much, Eric. I appreciate it. Yes. And the background is relevant. So I’ll quickly get into that. I spent my initial career leading fortune 500 developments.
In everything from deep water commercial construction where I was operating as a deep water commercial diver in my youth, very early twenties. Um, and then also in that leadership role. And then, um, following a degree in business and electronic engineering, um, moving into the space domain, operating [00:04:00] with NASA through various Fortune 500 contractors.
In leading developments for space station and that emerging forward into medical device developments and international telecommunications for the emergence of the cellular, uh, systems that are obviously prevalent now, um, among some other areas in commercial aircraft in other areas, the, the fundamental of all that is that to me is that.
Many times divisions or new projects in fortune 500 companies, they really are analogous to operations of a startup or even a new business venture in that the same fundamentals are there. Is there a business model? Is funding available and many times typically [00:05:00] looking for appropriate funding coming from the fortune 500 company, which is analogous to going to an investor and presenting a solid case and a solid need for the funding and use of funds and all these things.
So jumping forward, getting into venture capital. Um, venture firms and their funds and family offices. Some 15 years ago, getting into that domain was an easy transition because of the analogy between the two and fundamentally understanding from going into startup 500 companies, knowing how to make sure to analyze if the team is formed correctly.
where the holes are for execution and schedule to planning and also to the outside contractor that may be there, such as NASA or another fortune 500 company, uh, be it narrow [00:06:00] space or medical device development and treating the investor in the same way of making sure they’re knowledgeable in what’s happening.
As you would a prime contractor that has an immediate need for integration of hardware coming together on very, very large scale projects and programs, as you know, um, pulling together a space station development. Everybody has to be on the same page for integration and the fundamentals of managing that correlate over into a more streamlined way of how startups can operate to make sure that they’re receiving the funding they desire from their strategic investors and also executing the plans that can be appreciated and supported by those strategic investors.
Awesome. Um, I can go on off it. I didn’t want [00:07:00] to talk too long without you being able to interject. I can move forward a little bit in some of the ways that a startup needs to be ready and for the investor, if that’s helpful. That’s

Eric Alspaugh: spot on. That’s where I want to start exactly. And I think that’s where a lot of entrepreneurs get hung up with.
Go for it.

John Samuelson: Okay. Yes. And, and I deal with this on a regular basis and it’s, it’s actually one of my areas of passion, so I’m really happy to be able to help your audience and anybody that reaches out later through you in this whole domain, um, there’s two approaches, right? There’s. A very, very new startup really isn’t expected to have the expertise in knowing how to be ready on point with all of the materials and such.
So they’re going to go through that, [00:08:00] that phase of getting things together. If they can pull that together or be coached how to get that together in an organized manner early on, the investors they initially meet are already going to have a sense that that startup, or even that later stage company that is doing a raise for the first time, because you don’t have to be raising funds right off the bat, you can grow organically, but.
It’s best to make sure that you have all the materials in place, a deck, a brief, a, any of the, um, at appropriate time frames, any sort of drafts of term sheets. And also to make sure that you have a data room set up that’s easy access. All these and others are clues to the investor [00:09:00] that you’ve been operating in the space.
And you fundamentally, you follow best practices in business period, right? So if you’re doing things in this area, there’s an initial implied belief that you probably are operating the rest of your business that way. And that you have these. These best practices in place. So opposite to that many times, um, a startup or a later stage company that hasn’t been looking for funding.
We’ll start with just a verbal word on, Hey, we’re, we’re looking to raise some money. And then, yes, great, you ask the appropriate questions and you find out sort of quick that they’ll say, well, we have a deck to deliver or some briefing material, short stuff, right? Page 3 page type things, um, along with the deck.
That’s the appropriate length. And we can even get into that. But many [00:10:00] times they’ll say. Yeah, we have that. Oh, it’s, it’s just gonna, I’m going to get that back to you in a week because there’s some things that I need to adjust in that. Well, it fundamentally tells an investor subconsciously that they probably don’t have something that they’re really ready to deliver.
And they, they, they’re brushing it up and it doesn’t, it really doesn’t show that polished attribute. That the startup or the later stage would like to present. You’d like to present. We have a data room, right? And it would be actually, I believe in the philosophy of two data rooms. One, a very simplified one where there’s a deck and a brief and some other, um, non proprietary information that you would be giving out to anybody.
That would be an easy way that an investor can take a look and then also tell [00:11:00] anybody on their team. That may be more on their diligence team or otherwise, or hopefully you’re, you’re hoping they’re talking to other investors and saying to their business constituents in the industry and saying, Hey, I reviewed a pretty interesting company today.
Oh yeah. Where is it? Well, look, here’s their, here’s their briefing. It’s all in their, in their data room. Right. And then they can get to that in a simplified manner. And again, easily delivered, would already be in an initial email in the footer of the information links. Along with the website and things like that.

Eric Alspaugh: I like it. That’s a great idea. So spoon feeding people making polished materials available easily really goes a long way.

John Samuelson: Absolutely. And there’s. There can be a general concern [00:12:00] from a startup or later stage company that they’re, they’re worried about giving up proprietary information. Well, that can go in another data realm that is ready for dealing with an investor on a longer scale.
Um, the initial discussion is not meant to close the deal. This is nothing really new in that regard. It’s, there’s an old analogy about dating. You know, you’re, you’re looking for a long term relationship.

Eric Alspaugh: Okay.

John Samuelson: And so you’re, you’re giving an appropriate amount of information. At a 30, 000 foot level and then down and then down tighter.

Eric Alspaugh: Okay, I like, I like that. A question that I get and I’m comfortable signing non disclosure agreements and I deal with some uh, offices in Venture Capital they just sign routinely and some that say we don’t sign. Do you have a preference or some objective gauge to share with the listeners on what [00:13:00] their expectations really ought to be.
Thank you.

John Samuelson: Yes, absolutely. A fundamental is less barriers of entry for the investor and less speed bumps that the investor has to go over if they have to add a password to get into the data room. It is a little speed bump that it may have not got handed over correctly within the family offices, due diligence team, or a family member within the family office structure.
And so all of a sudden, Oh, I couldn’t get into it right now. We’ll get back to it later. Okay. Yeah. Well, that later opportunity may not come around in the, yeah, in the area of. NDAs and other non disclosure speed bumps, it’s, it’s all barriers of entry. And then somebody has to really review that and make sure that [00:14:00] it’s appropriate and it’s time consuming.
And then there probably will some language, be some language that gets A need for adjustment and all these things are building up. Meanwhile, you wanted the investor to be in the data room. And again, first level data room, a brief, or even deliver it, you know, over email. Um, you, you want to get that to them.
To that regard on NDAs, there are many operations that have absolutely no interest, and I’m, I actually abide by this philosophy, interest in signing an NDA right off the bat. They typically, they’re wanting to operate as lean as they can. They’re receiving a multitude of investment potentials. At family office dinners or otherwise such as I was at last night where the number [00:15:00] came up and said hey We have a great opportunity here.
Oh, that’s that’s really great, right? But um, so you Generally, there’s a pretty broad scale philosophy of not wanting to sign ndas and the other aspect is You end up in a situation where somebody may have a great idea for vehicle mobility, but the investor’s probably looking at a number of others that correlate over, and they don’t want to get in something where they’re off the bat looking at proprietary information that there could be a legal issue related to something they reviewed.
A year earlier or otherwise. So generally the philosophy by venture capital firms and family offices. No interest in India. It’s like,

Eric Alspaugh: yeah, I, I, I tend to agree with you, but I work with the inventors and they’re [00:16:00] always excited about sharing. Their secret sauce like that’s the hook rather than some of the materials and I’m quoting you.
You’ve referred to materials and I want to follow up with you on what the materials are and your process. But real quick, a simple question in terms of numbers. If you’re going to a family office dinner, I have a number that I’m familiar with. How many different ventures Are you pitched in a year on average?

John Samuelson: Hundreds. Hundreds. And, and that, you know, and that will vary when you, when you get into, well, family offices is number one. They come in a wide range of types. Sure. You have some in the area where really they’re just, they want to invest in funds and they’re not gonna do as [00:17:00] much diligence as one that may be operating in direct investing.
Where they’re going to maybe, well, where they would be typically more hands on in understanding the business because they have an internal capability and desire to do that. They may be even bringing up next generation and they want the next generation to learn about the process and practice by doing it themselves and then coaching back to the seniors of the operation.
Okay, so, um,

Eric Alspaugh: so to

John Samuelson: your question, hundreds will get delivered. Um, and then some individuals may, they may be operating only in clean energy or AI, right? And they’re just saying, I don’t, they don’t want to see anything other than specific areas. That may be [00:18:00] that they’re looking at. So it goes back again, lowering the speed bumps of the delivery and getting something into them and just.
Making sure you don’t deliver anything that you’re concerned about as being proprietary.

Eric Alspaugh: Yeah, you’re highlighting my, my, uh, thinking and my point, which is I’ve heard that many VCs and family offices are looking at 600 opportunities a year. And so there’s lots of great ideas out there, but folks, uh, you know.
Make it simple, spoon feed them. And, uh, I’m trying to manage my listeners expectations and, uh, give them practical tips to be able to get the foot in the door and deliver. Uh, um, uh, what did you call the room? A due [00:19:00] diligence room.

John Samuelson: Yeah, it can be phrases that are a data room,

Eric Alspaugh: data room.

John Samuelson: To me, it shows a little bit more of a professionalism to be able to have a data room.
One. And a link on the back of your business card, a QR code on the back of the card that says data room and other information or, you know, the, the things that are, you’re trying to easily onboard them into your experience and giving these information points without them having to ask or separately emailing them and things like that, all these, they’re not appropriate for every case, but everything lowers the impact of it.
Review.

Eric Alspaugh: Okay, so let’s let’s assume we ran into somebody at one of these conferences or dinners. They’ve given you the business card in the link. What is your process? Is it a common process? Or do you have anything [00:20:00] proprietary or tips for our listeners? Sure.

John Samuelson: Um, one thing in touching immediately before that, when If you’re presenting or meeting someone that is an investor, family office, venture capital lead, otherwise fund manager in private equity or otherwise, you don’t want to inundate them with information unless you’re getting feedback in that conversation that they want the information.
An interchange of You want to make sure that you have your 30 second intro memorized, and that if you’re operating with others in the team, say you’re going to a conference, that’s you’re expecting to find a number of Individuals there and you brought your entire startup team, right, or [00:21:00] later stage, but startup team, you need to make sure that everyone is operating that same 32nd message.
So fundamentally, you want to make sure you write that down in advance. Don’t have to. Have it word for word when you speak it out, but you want to make sure you deliver a 30 second and then look back for feedback. Is that other person giving you some sort of feedback saying, that is awesome. Can you tell me more about A or B or C?
And then you can go in another level and make it interactive and make sure that they’re, they’re interested to begin with, right before you go and start. Putting out a three minute verbalization, which, which happens a lot, right?

Eric Alspaugh: You

John Samuelson: don’t want to waste your time. If there’s no interest there, you can make the contact and you both can go off in the, the, whatever the event is.
And [00:22:00] you didn’t disturb anybody and you can follow up.

Eric Alspaugh: So this is more than a, this is a psychology class too, or just basic social. Emotional intelligence, uh, inventors, just listen, look at your audience and listen, listen back

John Samuelson: very, very much. So, okay. As far as where you were going and related to, okay, typically there will be an investor deck that is provided.
https: otter. ai Around 12 pages plus or minus in other words not 25 or 20 and several points that are well respected and I I can go into more depth another time and I have a Presentation on that actually of what are all the fundamental points in the order you should go through them on [00:23:00] that. Make sure the, uh, investors getting the key information that they typically are looking for.
Again, easy onboarding for the delivery of the information.

Eric Alspaugh: Great, great practical tip right there. So, um, that’s, that’s, um, great opening, uh, recommendations for our listeners. What about your, uh, your firm’s, uh, process? Uh, more specifically on, on maybe onboarding at, let’s say that they’ve set the hook, you’re interested, what, what’s some of the process that, that might occur?
Sure.

John Samuelson: Um, many times you can have an investor, family office or otherwise, that has strategic value to that startup. In those cases. There’s, [00:24:00] there can be a bit of a difference in the due diligence process because it’s not all just about, does it make sense for an investment, but how can we provide strategic value back to that startup or that later stage company?
And I may be a gift and a curse, but I, I tend to also think if there’s some things that don’t seem to be completely right. In their plan forward, maybe they look light on engineering or there may be a reason that you think that they’re going to need more help in marketing or other planning out the door.
Um, a strategic investor that is accepted by the startup or the later stage will typically be happy to give advice and they also can be operated in that strategic relationship to provide [00:25:00] proactive support throughout the investment. If they’re a larger scale investor family office or otherwise the investor either a venture capital firm or many times family offices Number one, the Rolodex is going to be really deep, right?
In all sorts of various ways, such as I use you, if I’m thinking about somebody that would need your best practices and things like that, and I think they’re light. Or others that are in engineering development or financial needs, where they may need some augmented support in these areas. Um, so that due diligence of going in and looking at everything in their data room, by the way, that we’re, we’re a pretty good ways down from where we initially started at that point, when you’re really getting in and doing deeper due diligence, and you’re really [00:26:00] seriously considering an investment at a larger scale, smaller one, maybe you’re doing it holistically and more thinking, everything looks good, brief review, Um, getting some understanding, some other serious, more serious, deeper investors, um, and then just moving on, but on a larger amount, most likely there’s going to be deeper review into the financials.
I certainly coach and making sure that the team is understood and putting together ideas of how to augment that startup or that later stage to de risk the operation and move revenue. In closer to whatever their plan is many times We have looked at the operation and thought okay. They’re still looking for a strategic um First client [00:27:00] for their sales and otherwise well family offices many times will have a multitude of appropriate first customers or secondary customers And if you’ve appropriately gained their respect In what you’re doing, they’re more likely than to give a, uh, a reference and pull in somebody else and say, say you’re developing a product.
Um, they may be able to pull in a supermarket chain. That may consider, okay, well, yeah, we’ll put it on the store shelves in a few supermarkets and see where it goes. And maybe we’ll take a little bit of a, an investment out of this ourselves, because we’re talking to this other family office that did do deeper diligence and is seeing this, we’ve done a number of business transactions with the others that have worked out.
So you, you want to make sure that you’re. You’re [00:28:00] giving everything you can as that startup or that later stage to support your investors beyond them just giving you a check. You want to use them strategically when they have that value.

Eric Alspaugh: Yeah, a lot of people who are doing capital raise for the first time aren’t aren’t aware.
They hear things like what’s good money and what’s bad money. And I think the term strategic the way you’re using it is pretty close to strategic is good money because You’re leveraging relationships and expertise, uh, from individuals who either have a deep Rolodex or are, have a deep industry, uh, connection and can, can make introductions beyond just writing that check.

John Samuelson: Absolutely. Absolutely. And, uh, [00:29:00] you know, it’s, it’s not a quick process of getting to a logical exit. Things come up over time of the years that the investment’s transpiring. Sometimes things don’t work out as, as planned and other plans need to be pulled in. If the family office or the venture capital firm is a proactive.
Interested party as a strategic investor. They can actually, I actually fundamentally, I have a belief that it should be set up at the initiation that you use a strategic well operating investor as a strategic alliance throughout and bring them into periodic reviews where their expertise can be used to be able to work out some of the problems or come up with even.
New angles [00:30:00] to the operation to move in revenue, de risk any of the plans that may be taking place. And then also that investors more likely to be doing bragging rights when they’re talking to other family offices or other business relationships. And they’re, Hey, what have you got into? What have we gotten into?
Well, we got into this, um, water purification operation and we, in fact, we just went to one of their business reviews and, and we really learned some interesting things and we’re helping them out. In some business planning, these, these family offices didn’t get to their wealth without extreme knowledge and capability.
And there’s an ability to use that by bringing them in to strategic business reviews and not solely sending them a deck update deck periodically, and then saying, Oh, Hey, we’re in a new investment [00:31:00] race because we’re going to need some new funds. You want to nurture them throughout the entire process.
And there’s some easy ways to do that.

Eric Alspaugh: All right. So we’re, we’re walking through the process. We’ve set the hook. Uh, we’re, we’re kind of assuming that, um, there’s a relationship that started and we’re working on communication and managing expectations. You brought up the issue of time, which is, I actually thought we should discuss how long the onboarding process takes months.
Forget the exit strategy, which takes years. Maybe you can opine on different investments, different industries and how that might impact maybe different levels of capital raises that you’ve seen and can give some, I don’t know, some anecdotal experiences. [00:32:00] Sure.

John Samuelson: Well, okay, if we’re talking about an investment from an individual versus.
The entire raise say that it’s an investment raise of 1 million, but the individual investment from an individual may, maybe it’s 100 K, right? It depends on who we’re talking about, right? Angel investors. They tend to go in on lower amounts 10k 50k Whatever that the boundaries are in that kind of a domain Um or more but they tend to go in and they go in quicker typically because they’ll do it They’ll do Not the same due diligence if they’re an individual as A firm would, and then we got the amount, right?
And if, as the amount goes up, typically [00:33:00] there’s going to be more due diligence done in that time frame, right? Yeah. There’s a number of attributes tied to that, and, and I don’t really look at it as there’s really one answer. Um, it could be. Lower amounts, you know, and it could be a few weeks. Otherwise, it could take several months.
Sometimes, you know, family offices and other, um, venture capital firms, well, they’re not just necessarily sitting on money hoping tomorrow to invest in something. They have a strategic plan set for the entire FY24. Or and maybe they were already allocated that you don’t want to disregard them in that because you’re building, certainly with family offices, you really, you’re building a relationship and [00:34:00] the last thing you want to do is come across needy and having, Oh, we got to get the money raised.
You know, we’re trying to close this thing by December 15th, right? You’re building with family offices, you’re building. hopefully a long term relationship.

Eric Alspaugh: Absolutely.

John Samuelson: So that you can use their value, but also the fact that you, you’re not trying to come across that you’re needy, just like you do in any other form of business or relationships.
Um, and, and that process, depending on what else they’re working on, it very well could take months.

Eric Alspaugh: Absolutely. So you so help me. We’ve been walking through the process. What? What are the next steps in the process to advise people based on what your process is? And then tell us a little bit about how you came up [00:35:00] with this process.
Or is it just de facto? It’s been it’s 50 or 100 years and everybody follows the same process.

John Samuelson: Well, thank you. So the one process process. That I really claim is something that I put together on my own is the post investment thesis that from the time the investment is placed that there should be a solid strategic relationship between the startup and that strategic investor, a larger scale relative to the percentage you were raising and has strategic capabilities, which is The type of thing that I provide within the family office.
Um, it’s a process that I put together from my [00:36:00] original careers in venture in fortune 500 companies of going into different operations. That we’re not performing correctly and sometime, many times it would be that there was actually a widespread problem that had boiled up to the C suite with another Fortune 500 company, having complaints and schedules weren’t being met and going in and taking a look at those operations and figuring out what are the fundamental problems here.
Let’s get everything on track. Let’s get everything organized. And let’s them present the plan, right? And so that everybody on the outside of the operation, meaning in the analogy, everyone outside the investors outside the startup, no, Hey, look, we got it together. We, we know what we’re doing in this regard.
If there’s maybe a software hiccup or something that’s forcing a delay in schedule, this is [00:37:00] bringing that strategic. Investor up front to tell them here’s what’s going on. And then very well may be that that strategic investor can operate as what they’re supposed to be doing is they want an exit as well as you do.
Right. Yeah. So they may be able to bring in some outside counsel from their business. relationships or somebody else that can come in and foster some brainstorming of how to get things going in the interim while the, and, and pull in a smaller revenue plan while still keeping the major goal that’s set.
So the fundamental that I have is a methodology from the time of investment to operate with the strategic investor as an alliance.

Eric Alspaugh: Okay, so

John Samuelson: [00:38:00] they can provide you things and you can provide them things rather than just being, we’ll send you a deck once a month. That’s an update. on where we are.

Eric Alspaugh: So that you’ve opened the door for me to ask, um, specifically what I really enjoy.
And I haven’t had the feedback from listeners yet, but I expect they would be similarly situated. Do you have any anecdotal stories of pitfalls or legal catastrophe or legal successes? That, um, helped you arrive at this process or anything on point that you’ve seen in the, in recently or maybe deep into the past.
Sure,

John Samuelson: sure. Uh, going back a ways, um. Don’t name names, protect the parties.

Eric Alspaugh: I,

John Samuelson: I promise you that’s, that’s one of my fundamentals. Right. So I am going to kind of be a [00:39:00] little high level here and there, because that is one of my core beliefs for anybody. Thank you though, for the reminder. That’s very important.
And that shows where your expertise is coming from. Um, I have. I have seen situations in the past in a number of cases where things were not transpiring as planned. And from a legal perspective, one that was very interesting was many, many years ago on a hardware development in telecommunications that had a number of different avenues.
Of revenue

Eric Alspaugh: from

John Samuelson: different products out of a core electronics function, where family offices had invested to a larger scale in it. And then it started [00:40:00] coming around. We just need another, whatever, 150K in 2 months, and we’re going to get there. We’ve got the, we’ve got a strategic customer that’s very, very interested.
They hear that a lot, by the way, I hear that a lot. That’s very, very interested. We’re right at the edge of this product. We’re gonna get this product out and then, okay. Okay, so then some of the family offices write the check for whatever’s needed. And then another month goes by and there’s another deck that comes out right on the edge.
We kind of pivoted a little bit because we got a new strategic customer and they’re just about to sign. And we’ve moved the product focus a little bit, same core electronics, but in a different way, we’ve pivoted a little bit based on this one. And then they get the [00:41:00] same message in another six weeks or so.
What, from a legal perspective, what turned out to be interesting, this is, I’m going back. Um, quite a ways. And so I learned this many, many years ago. What’s interesting is that there turned out to be a problem where the company was not going to succeed, the startup was not going to succeed without immediate funding.
And it started to become, well, what can we do as the multiple, the several family office strategic investors, what can we do to resurrect this thing? What can we do to take it over? The CEO was happy just to go, Hey, you know what, I’m just going to get out of this. Um, Because it’s not working. So actually the CEO is working with the [00:42:00] family offices going, well I don’t know what to do anymore.
And through me being involved in the operation, in doing the, at that point it became an urgency to hold business reviews. So then I’m coming in to hold the business review with the company and also even some of the suppliers that were strategic consultants in there and figure out really what is not happening to get this to success.
Well, from a legal aspect, it came about of an understanding that the board members that were, I should say it the other way around, investors. That we’re sitting on the board, we’re actually taking a risk when they started to talk about, um, an acquisition or a merger acquisition. Of the operation that they were actually advised very quickly.
You had to get off the board, several of them because they’re operating [00:43:00] on two sides of the fence in this legal aspect. Right. Okay. I’m saying, Hey, we’re going to, we’re going to take it over. Well, wait a minute. You’re operating as a board member within the company. I’m staying away from the details. Cause this isn’t always sure,

Eric Alspaugh: but I’ve seen it

John Samuelson: well can be.
Yeah. Intentious or actually there’s legal implications in some cases of being on a board if you’re an investor and you’re looking to do something that is against. the initial plan of the company, I’ll say. And that’s where somebody like you comes in as, as another level to make sure that the situation is understood.

Eric Alspaugh: Absolutely. That, that does happen when you have, uh, deep industry insiders with extensive experience. Those are the people that you want on your board for strategic investments and alignments, but they do have [00:44:00] multiple Interests and so that’s that’s a great point. Thank you for bringing that up john.
Yeah people

John Samuelson: It works out in the beginning But at some point there may be reasons that that person has to get off the board For the best interest of the overall situation Including their position.

Eric Alspaugh: Absolutely. Yeah, I’ve I’ve been involved with a number of companies doing exits for various reasons and had to work with board members recusing themselves bowing out being screened off or not participating in certain offers and auctions for positions.
So that’s that’s an excellent point. Thank you. Thank you. Yeah,

John Samuelson: another one. Can I. Do you want to bring up another one?

Eric Alspaugh: Yeah, absolutely. This is what I love. Sure.

John Samuelson: Um, in a water, um, a water treatment company that was [00:45:00] working with, um, again, various applications of their, they had a containerized water treatment operation and they had, again, a number of product avenues that they can go down and a number of customers that were interested in various.
Uh, applications and they really weren’t understanding why they couldn’t get anybody on board and so a family office asked me to take a deeper look at the situation. And so I formed a relationship with that startup to make sure that they didn’t think anybody’s coming in as. A negative persona or a negative entity to take a serious look and look at whether there’s an exit or something that needs to take place.
But I tend to go in and take a look and figure out what is [00:46:00] the solution aspects to it. Um, we, through bringing in the investor, strategic investor and holding the appropriate business reviews, small scale first, larger scale later, uh, really got to the understanding. The customers wanted to get involved, but they didn’t know how to implement the product into their equipment, integrated into their systems.

Eric Alspaugh: Okay.

John Samuelson: And so each one was going to require a large scale amount of handholding and the startup didn’t have that manpower to be able to give an exorbitant amount on an individual basis. Okay. And so from, from holding the business reviews. Me operating from the investor perspective, I formed the idea of a center of excellence where this startup [00:47:00] then formed.
It was an international company to the U S formed a U S center of excellence to be able to decipher customer needs. and provide the integration support that a customer would need. Again, lowering the barriers of entry from the customer perspective on use of the products.

Eric Alspaugh: Okay,

John Samuelson: and so legal then came into into mind there because it was an international company and all of a sudden they’re going to have, they had an immediate desire.
Everybody bought into the idea of, wow, this is great. Others can come to the center of excellence for water solutions and then your products are in the core of that. And in being able to get the applications engineering and application support. Well, immediately there was a new need for a different relationship, illegal to be able to form that us entity and tab it tied back [00:48:00] to the mothership startup company.

Eric Alspaugh: Okay. And,

John Samuelson: um, having that be another international relationship, so.

Eric Alspaugh: Interesting for sure. Do
you have, uh, any more anecdotal stories or more details on the process that you use on onboarding and maybe what the perspective or expectations of the startup would be in the future? In, you know, differential valuations that might come up or how there’s value add with these strategic partners and, and part of your process.
Sure.

John Samuelson: Um, typically as is true with well formed longer standing [00:49:00] companies. Internal problems, they want to keep them internal and get them solved internally. They don’t want that getting out. And there is some level of that that takes place. And it’s sort of, it’s a natural behavior and such, right? In Fortune 500 companies, many times when they are operating with another Fortune 500 company, and they’re jointly developing a larger scale product, and they both have their own portion that they’re putting together.
That still will be multimillion dollar in the individuals. They will have periodic reviews where they make sure that they’re completely aligned. Well, the startup, if they’re operating with best practices. They better already be having these internal reviews for development, either [00:50:00] if it’s a software as a service or a hardware development, or it’s just in another type of function.
In their development cycle and later stage, they should be having organized business reviews. And you can have streamlined ones more, uh, more often. And then larger ones, sprints, in other words. In short ones, are we on top of our problems? Do we have any holes? What are the roots of risk mitigation and such?
Well, those should already be in place internally.

Eric Alspaugh: Right.

John Samuelson: So, the analogy to Fortune 500 is that if you’re already doing the best practices inside, Then to have a periodic review where you bring in again, your strategic investors, not all your investors, but your strategic ones that provide you proactive value in return to bring [00:51:00] them in and make sure they’re aware of all of the issues on a regular basis.
Is actually a good thing, but if they’re not done regularly, then you’re having to dump a whole bunch of bad things at once, rather than making sure they’re aware and why you’re going to need a raise, an investment raise in nine months. Okay. Other than waiting eight months and saying you need it, if they’re strategic and you bring them in to these reviews on a regular basis, they’re going to understand that you’re operating in a way that you’re on top of.
Best practices.

Eric Alspaugh: Yeah.

John Samuelson: And they also then they can be on the, when they’re not in the reviews periodically thinking about, oh, wow, you know, what would be a great, uh, consulting relationship that I can probably get off this other family office at no cost. They’ll just come over and take a look at it [00:52:00] and see if there’s.
A longer scale relationship that could be there. You can end up bringing in outside entities to solve problems and make things more efficiently. So fundamentally these should be taking place on a periodic rate, or again, larger scale investors, either investment firms where you’ve been brought into a. Uh, a fund larger scale or in the family office domain.
And then they can continue to be looking for other ways of strategic exit to be able to pull in the revenue. And also then being able to get that revenue up and taken off along with moving in the exit planning.

Eric Alspaugh: All right. So I’m, I’m hearing a lot of, um, and these are like first principles. There’s [00:53:00] communication, um, uh, being accounted for taking responsibility, uh, is part of your process of that, you know, post we’re in as a family office.
Do you have a hard and fast rules or minimums that you would, uh, advise? For, you know, meetings need to be weekly, monthly, quarterly. What is that? What is a, a best practice if, if

John Samuelson: any? Well, the business itself and its development is going to have its own meeting review plan. Hopefully they’re doing them at some level weekly.
Which may be more of a sprint type format. It doesn’t have to be a physical meeting, right? On a, on a weekly basis, there’s various ways to have a sprint format. And it’s, [00:54:00] it’s really dependent on what is being developed. The, um, how intricate that development is and, and how many different issues and broad scale it is, but there should be weeklies, there should be a more serious monthly type review.
And then certainly a quarterly, the function within the company. is to make sure that everybody in the development of that company is all aligned on what is transpiring. Finances, they need to understand where the money’s going. They may need to understand that there may be an expectation that there has to be an infusion into engineering or into operations or into marketing.
In three weeks and not if something isn’t going well still in three weeks. There may be that need for infusion And not be brought into it the last minute with a what? [00:55:00] Oh, I didn’t even know there was a problem

Eric Alspaugh: Yeah. Yeah

John Samuelson: and with The augment of our electronics capabilities, now there’s even more ways to do these sprints and keep everybody efficiently up to speed on all of those, where they’re doing a weekly, at least a monthly, and then quarterly, internally.
Now, from the outside entity of bringing in a strategic investor into that process of that business review, that’s not going to be on the weekly or the semi weekly. It may be. If the strategic investor has the bandwidth and somebody appropriate on their team, maybe they do sit in on a monthly review, but certainly be quarterly, where there would be a larger scale on where that proactive investor could be coming in [00:56:00] and saying, Oh, I know some way to help in that regard, or we have some expertise through another relationship or even in house.
Right. The brainstorming thing and go, Hey, kind of like the water center of excellence. Well, what if we did this right. And to, to bring in some new eyes into the operation. And that have that business expertise because they are a family office or they’re a venture firm. They have a multitude of capability in there.

Eric Alspaugh: Okay. You don’t want to

John Samuelson: overload the, the operation with obviously with meetings and reviews and things like that. You want to add them into the existing plans. And you do that by having them on a regular basis.

Eric Alspaugh: Okay.

John Samuelson: So that you’re not waiting until you have a stack of issues and you’re saying, if we don’t get cash infusion, we’re not going to be able to make it another six months or something like [00:57:00] that.
Use them as a strategic alliance.

Eric Alspaugh: I get it. Um, is there any more, um, tips that you have for, um, onboarding the process? Do you want to share any anecdotal, um, tips about exits? Um, I’m interested in, you know, what’s, what’s on the cutting edge of technology right now and how. Offices might be using our AGI generative artificial intelligence.
And I don’t want to go down a rabbit hole if we don’t have time, but besides the fact that you’re probably being approached by a hundred, 200, or maybe 500, uh, business plans a year. And it seems like. About three years ago, everything had, um, uh, a ledger [00:58:00] or some sort of, um, um, blockchain associated with it.
Now everything has generative AI attached to it. Um, are you seeing the The implementation on your side of, of family offices and VCs using those tools, or are you seeing an interest in investing in particular?

John Samuelson: Sure, um, from the, the, the fund, the private, say, a private equity fund, or separately, a family, well, let me, let me streamline a little bit.
From a family office operation, where they have a back office and a front office, a larger scale family office, Where they actually have those, um, some of the software packages that they will use for back office operations, tax accounting and other financial [00:59:00] internal management and other things in that domain.
Um, those software packages are starting to implement AI functionality within them. And that can be true also in some ways in front offices. What’s, what is interesting. Is I’m having conversations with another number of entities where they’re interested in providing software functionality into investor operations.

Eric Alspaugh: Okay. Very cool.

John Samuelson: Now that could be to a fund where it’s helping the fund or that venture capital firm analyze that, like you said, 600 a year. Well, In that analysis of 600 a year, hopefully they’re not throwing away that information that they had, because if they decide to get into an area that [01:00:00] they haven’t explored for a year, well, they probably made some contacts two, three years ago in that area, so that if it’s an efficient database of that, they would have that information and there’s AI functionality to be able to help understand it.
Your database of either analyzing a new existing potential by comparing it with other, um, um, other companies that may be, um, operating in the same domain or actually going back and looking at trends. Or looking at prior investments of how this one may line up with other companies that you looked at three years ago.

Eric Alspaugh: Very cool. Very cool. I like that. That’s that’s going to be interesting. I’d like to have a follow up on that. Um, I’m thinking that we [01:01:00] probably don’t want to take up too much of your time today and we should follow up on that. I’d, I’d like to give you the floor to, um, uh, allow people what’s the best way for people to get ahold of you and, um, any final thoughts on, you know, the process that we’ve been diving deep into here today.
Sure.

John Samuelson: I want to touch on one more thing if I might for a minute. In that area of AI, there are a number of investors that when they look at an opportunity. And I fall in this category of asking the, asking the question on a regular basis. What is your AI implementation plan? Now that doesn’t mean that they have to say they’re doing something today and it’s a huge amount of their operations, but they should be able to show at a [01:02:00] minimum.
What their thoughts are on an AI, a roadmap. For AI implementation.

Eric Alspaugh: Okay. There

John Samuelson: are, there are so many different opportunities. That any startup or later stage company should be thinking about the implementation. Maybe it’s in operations. Maybe it’s in internal data analysis. Maybe it’s in customer support.

Eric Alspaugh: Yeah.

John Samuelson: Um, and I’m only touching on a few of these. There are, there are companies that are, that are, and projects, I’ll say, that are in that investor area. They’re needing the input from the companies of what the company is doing. And one of the form fills in there will be, what do you, what is your roadmap for AI implementation?
And so that [01:03:00] company should be spending some time putting that plan together,

Eric Alspaugh: whether or not they

John Samuelson: have the funding today, they may need to complete the final product in the next six months or whatever, but they need to have that roadmap started the conversation then will ultimately drive putting it to a financial execution and bringing that in.

Eric Alspaugh: Thank you for sharing. That’s a great tip. So listeners, you need insurance, you need strategy. Nowadays, you cannot put together a pitch deck and a business plan without addressing artificial intelligence. Whether you, you need it now, you’re gonna need it later. even if you’re just building, uh, widgets for surfboards, you’re going to need to address, uh, that or to, to de risk it and at least alert investors that you’re sophisticated.[01:04:00]
And you’ve thought about it and, uh, yeah, thank you. And thank you, John. That was a great tip.

John Samuelson: Thank you.

Eric Alspaugh: So, uh, what’s the, what’s the best way to get ahold of you? And, um, we will, uh, arrange for another, uh, deep dive into, uh, venture capital, family offices, processes, and, uh, helpful tips soon.

John Samuelson: Thank you, Eric. So again, John Samuelson.
It’s John, J-O-H-N-S-A-M-U-E-L-S-O-N. Email address is john@johnsamuelson.com, so JOHN at JO Hn, S-A-M-U-E-L-S-O n.com. Uh, website is samuelson energy.com and um, I think that’s enough. [01:05:00] I do have a number of white papers and briefs in some of these various areas, and there’s. The number of other things that we can get into Eric, one going down the road, we might even talk about how a startup needs to present their booth at an investor conference where they’re spending five or 10 or 15, 000 for a booth.
You want to make sure that operation is set up correctly. There’s a whole 20 minutes that I think would be of value.

Eric Alspaugh: Awesome. I’m looking forward to it, John. Thank you so much.

John Samuelson: All right. Thank you, Eric. Appreciate it. Take care.

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