Lisa:
Welcome to the Atlanta Startup Podcast, the briefing room for the innovation ecosystem. I’m Lisa Calhoun, your host and general partner at Atlanta venture capital firm Valor Ventures. On this show, I bring you the investors, the founders, and the activators creating the fastest emerging venture capital ecosystem in the country.
Aaron Hurst and Alaysia Brown from Endeavor, I am so glad to have you on the podcast today. Thanks for joining us.
Aaron:
Thanks for having us, Lisa.
Lisa:
Let’s jump right in. Endeavor’s been active in Atlanta for a while, but Endeavor is a unique investor and platform. Tell us what Endeavor does.
Aaron:
Yeah, I like to say that Endeavor is in the business of building ecosystems. We’re this weird, funky nonprofit that’s been around for now 23 years. We’re still fairly new in Atlanta. We’re about to turn three years old. We’re a toddler. We are really looking longterm at sort of tier two ecosystems for entrepreneurship around the world and trying to help them increase not only the rate of success of startups, but the rate of growth of the scaling companies that are founded here locally. That’s Endeavor at a high level: a founder-focused organization that is trying to help those founders scale their businesses and think bigger and give them resources to do that.
Lisa:
So let me dive right in. What do you mean tier two market?
Aaron:
This is an “Aaron term,” so hopefully I’m not coining anything. When I say tier two markets, these are markets that have a lot of startup activity, increasingly so have some level of investing activity at the venture stage, have had success with companies founded in their ecosystem that have scaled to large exits or potentially IPOs or some are still private, yet are still, I guess in our view, haven’t reached their full potential. If you look at the markets that have the most startup activity, have the most scaling companies, have the most early stage capital deployed, obviously Silicon Valley and San Francisco would be one, New York and Boston would probably be two and three, Seattle somewhere in the top four or five, and then the dropoff for the rest of the world really, not just other parts of the US, is significant. I think a year ago I summed up the venture capital raise across all five or six Southeastern states — as Aaron defined it — over a two year period, and the amount of capital raised in Silicon Valley alone, just part of California obviously, was something like 50X what was raised across six states in the Southeast. That’s obviously a proxy for sort of the ability of the ecosystem to support companies that scale. When I say tier two, it’s not a bad thing. It’s more of a data driven approach to looking at ecosystems that haven’t reached the potential that we think they can.
Lisa:
Cool. So tell us a little bit about your role. Alaysia, jump in and share a little bit more about your role. You’re actually physically located in Atlanta, so what’s your day to day like?
Aaron:
Yeah. Alaysia, why don’t you start?
Alaysia:
Yeah. I’ve been with Endeavor Atlanta for one year, but I swear it’s been like five. I feel like the time at Endeavor Atlanta flies by. I lead marketing within the Endeavor Atlanta marketing and community, so basically just writing our blogs, making sure that our entrepreneurs have events that really just speak to them and where their companies are, and just really establishing our brand identity has been a big part of my role over the past year.
Lisa:
What kind of companies is Endeavor looking for in Atlanta?
Alaysia:
There’s a lot of different ways that you can answer that. I feel like there’s a couple of questions that I feel like companies should ask themselves before they apply to at Endeavor Atlanta. One of them is: can these entrepreneurs scale their companies at least 10X beyond where they are today? That’s definitely a question that I feel like entrepreneurs should ask themselves before being a part of Endeavor. Another one is: do they possess the growth mindset and values of the global Endeavor community? We really focus on entrepreneurs who are all about giving back and paying it forward. We’re industry agnostic, but when I just kind of think about the entrepreneurs that we work with, those are two normal qualifiers.
Aaron:
Yeah. We’re looking for companies that are already scaling. Usually that means at least $3 million in revenue, but I think the average now is around $10M to $12M and have the potential to create a lot of jobs, economic development, and wealth in the community. We’re looking for companies that are already successful at some level, especially locally, but have the chance to be really, really big and our goal is to help them think bigger and scale more effectively with Endeavor’s help, and, as Alaysia greatly pointed out, have them pay it forward after they have all that success.
Lisa:
You’ve already got a really nice portfolio growing in Atlanta for only three years. Tell us a little about some of the companies.
Aaron:
Yeah, it’s getting more diverse too, which is great. I think a few of the early companies that I’d highlight, one would be QASymphony, which is actually now Tricentis. Dave Keil was the CEO of QASymphony at a very early stage and scaled it very quickly. Great software business. They merged with one of the leaders in their space and just now just hit $100 million in recurring revenue I guess last month. I think the first entrepreneur we actually had selected with Dave. Then shortly after that we had a company that no one in Atlanta had heard of called LeaseQuery that we were working with. That has been a huge success story. They’re really just getting started. They sell in the very sexy lease accounting software space and it’s a huge global problem that they’re helping customers of all sizes solve. Then more recently, I’ve met an entrepreneur named Mark Wilson who founded his second call center business called Chime Solutions, but it’s really a double bottom line type of business where, it’s certainly for-profit and he’s thinking big and it’s already a very big business, but he’s basically putting call centers here in the US and communities that have the highest unemployment rates. Creating opportunity, creating really quality jobs, and training for people that need it the most while also providing his clients an exceptional service. Mark was, was one of our more recent additions.
Lisa:
Awesome. Unpacking that a little bit, it sounds like it’s really broad like Alaysia was saying. There’s call centers, enterprise software, QA symphony. How would a founder know to reach out to you?
Aaron:
Yeah, hopefully your podcast and Valor’s podcast, Lisa, will be a new way for us to get our word out.
Lisa:
I love it, Aaron.
Aaron:
We’re a little, I’d say, understated in sort of our brand, although Alaysia has been working really hard and doing a great job with building our community. We try to be thoughtful about how we get the word about Endeavor out. Most of the companies we work with hear about us through their own networks of entrepreneurs, mentors, investors. Obviously as we’ve proven success and the value we can add, we’re starting to get more inbound referrals, including from local investors, which is great. I think that’s certainly a great sign that says they trust us that we’re going to increase the enterprise value of their portfolio if they get selected into Endeavor. So lots of different sources.
Lisa:
Endeavor — let’s backup a little bit — is a global brand and Atlanta is three years or so in the making. Why did Endeavor choose Atlanta?
Aaron:
Yeah. Endeavor operates on a pull model, so anytime it opens a new office around the world it has to be pulled in by usually local business leaders, usually former or successful entrepreneurs who’ve already had success scaling companies. In our case, the pull for us was several of our board members, Lane Moore, Jeff Arnold, and Boland Jones, all successful entrepreneurs, heard about Endeavor and learned about it through their own connections as our Louisville office was starting to grow, which opened a few years ahead of us, and thought, “Wow, this is a resource that frankly we needed when we were building WebMD, or when we were building PGi or Rubicon and it’d be amazing to bring this to Atlanta.” That’s part one is having pull and Cox Enterprises has been part of that as well and really instrumental in supporting us. The second part of that is that we look at data. We look at data from the Kauffman Foundation and other sources to see: is Atlanta or any other place an ecosystem that can support Endeavor? By that, I mean does it have enough startup activity to even have an Endeavor office that could be successful? Because if there isn’t any startup activity, since we focus on that scaling stage, we’d have zero pipeline and we’re not in the building a startup ecosystem business. We’re really in that scaling stage. That’s part of what we look for. We also look to see: is this ecosystem already successful? Does it not need something like Endeavor? Can we really make an impact? The push comes into the data analysis and those two things are kind of what led to Endeavor Atlanta launching.
Lisa:
That’s awesome. Well, I’m a huge fan of Endeavor Atlanta, but I want to definitely keep the words in your mouth — I can think of 20 reasons myself but I’d love to hear from you and Alaysia — about why an Atlanta founder would want to be an Endeavor entrepreneur. What do you do for your founders?
Alaysia:
I think that the biggest reason for entrepreneurs to want to become a part of Endeavor is that we encourage them just to think bigger overall. I think so many entrepreneurs, especially at that inflection point where we like to bring entrepreneurs in, their head is down in the business every single day, and very rarely do they have the opportunity to pick their head up for air and say, “What was the big vision though when I started this? If I got out of the day-to-day and someone said think a thousand times bigger, what would you do?” We not only encourage entrepreneurs to do that, but we give them the resources to make whatever crazy, wild dream they just thought of. We help them make it a reality.
Lisa:
Awesome. I know you have a pretty strong Atlanta portfolio, but is there an example that we could share with the listeners about how you’ve done that recently or just kind of a kind of a point in time moment?
Aaron:
Yeah, I’ve got a great one. Back to Mark at Chime Solutions. Again, this is the guy who’s won Ernst and Young Entrepreneur of the Year award. He has successfully started, scaled, and sold a company before. At our final stage of selection, Endeavor has this long selection process you have to get through to get in the final stages and international selection panel, and you go through a series of interviews. In Mark’s first interview — this is probably within the first 60 seconds of his first interview at his international panel in Tokyo last year — the first panelist looked at him in the eyes and said, “Mark, I see that you’re trying to create 10,000 jobs by 2020. You know, that’s aggressive. You only have 2000 employees. But I’m also wondering why isn’t there another zero in this number?”
Mark laughed and said, “Well, we’re going from 2 to 10 in a year and a half. That’s still a lot.”
The panelist, who was one of our board chairman of Endeavor Malaysia, looked at him without a smile and said, “No, I’m serious, Mark. You may not hit it in 2020, but I want you to think about how you can take your model and everything you’ve done in your career to create 100,000 jobs. And maybe that’s not by 2020.”
Mark said, after kind of pausing and looked at him, “Okay, I’ll sign up for 100,000. I don’t know the date yet.”
I mean that’s obviously a very specific example of pushing somebody to think bigger. But I think Alaysia is spot on. It’s probably the first thing I would think up to in terms of how we can help entrepreneurs. It sounds sort of trite to say “think bigger,” but to have a group of people that are pushing you. By the way, we’re non-dilutive, right? We have completely independent thinkers advising you and pushing you that don’t have any vested interest in your company, which is truly unique. When you have that environment and you also have people from all over the world that you interact with that are thinking big, it sorta reminds you “Wow, Atlanta is great and I’m a big deal in Atlanta, but there’s the whole country to think about and there’s a whole world and there’s a lot of really smart, successful people that have done way bigger than I have. Why can’t it be us? Why can’t we build more businesses like that here?”
Lisa:
How many countries do Endeavor mentors hail from, just generally speaking? I have been incredibly impressed, in just my own small experience with Endeavor, with the global scale of the network.
Aaron:
Yes. We currently have physical affiliate offices in 35 countries around the world, and we usually add a few every year. There are probably offices and physical presence in over 60 cities around the world. Then our mentor network at least covers that, but also includes mentors and countries where we don’t have offices, like in the UK and Germany and France. I’d probably guess there’s probably 70+ countries where endeavor mentors physically live.
Lisa:
Let’s dive into that non-dilutive capital. What does that mean? Explain? It’s a very unusual model. Endeavor is different.
Aaron:
Yeah, so to get into Endeavor is a non-dilutive process. Unlike I guess a traditional startup accelerator program where you are giving up equity for the ability to be in the program but also a little bit of money. If you get selected in Endeavor, there’s no equity exchange, and that remains the case for life for the entrepreneurs that are part Endeavor. The only time we would ever take equity is if our fund — we do have an investment fund called Catalyst — if it participates in one of your qualified investment rounds, that’s when we would just take whatever our pro rata equity percentage is. But that’s an optional fund. It’s not required that Endeavor entrepreneurs use it if they’re raising a qualified fund. We obviously are very, very encouraging of the fund and would love for them to take advantage of it and they can get up to $2 million in their rounds based on that fund. That’s essentially how it works. Again, it allows you to have this independent group of people that are behind the entrepreneur a hundred percent and don’t have a “return for themselves” mindset whenever they’re advising the companies.
Lisa:
Just changing gears here for a minute, a lot of the people who listen to this podcast are interested in the Atlanta market but may not actually be in the Atlanta market. So to switch gears, because you both are local experts and have been in Atlanta for a while, I wondered if you could go through your Rolodex internally of who is really helpful to scaling startups in Atlanta. Something that you really know well because that’s what you focus on. Where would you suggest they point? I always like to ask for a shout-out to real people in Atlanta who are super helpful so that people who are listening know some of the network can get a real sense of it.
Alaysia:
Yeah. One person that immediately comes to mind of an Endeavor entrepreneur is George Azih. I feel like everyone should know George because he’s a great example of just remaining heads down for years at a time. I feel like I told George he’s having his coming out party in 2020. He’s just starting to speak more and he’s definitely diving into the community a lot more because he’s spent so many of the formative years of his business just heads down getting the work done. I think that he’s a great person to be in conversation around building a business in Atlanta.
Aaron:
I could not agree more. I think George, he’s built businesses before and LeaseQuery is not his first learning experience. I was super excited that Valor was able to participate in that first equity round and could not agree more that his perspective on what it takes to build a world-class company is first class. So that’s a great one. Aaron, anything you’d add to that?
Aaron:
Yeah. First, we have a ton of great local mentors. That’s part of what Endeavor does is we recruit people like you Lisa – I’d give you a shout. You’re one of our fantastic local mentors that we lean on a lot and have great counsel for our companies. I think a couple that stand out, one would be Sean O’Brien, who’s the former head of strategy at PGi, just has a ton of experience with a very deep M&A background; he worked along with Boland as that company scaled while it was public and now is on the investing side. Sean is just an amazing person but also has a lot of I think unique perspective given his different career experiences. I think a name that a lot of people know, but every time he has interviews with our founders I think something very tangible comes out of it that’s super helpful, is David Cummings, who is from our board. I know he’s involved in Valor as well. David’s awesome. He’s an infinite learner, the kind of person you want to be around, and he always has the entrepreneur first whenever he is advising companies, which is great.
Lisa:
Those are great referrals. Solid people. Absolutely. Aaron, thanks for sharing some of that network with people who are trying to get their arms around Atlanta so to speak. Then if someone wants to get in touch with Endeavor — you’re a small team, you’ve got a big portfolio, you’re really rapidly growing. I think you just expanded into Birmingham, is that correct?
Aaron:
That’s right. Yeah. Maggie Bellshay, our first hire, just started a few weeks ago in Birmingham. We’re excited.
Lisa:
That’s exciting. How does someone get involved in the Endeavor network? I guess mentor or startup. Tell us what the on-ramp looks like.
Aaron:
Yeah. It’s as simple as emailing Alaysia or myself or Adam, Rachel, Maggie — any one of us. Or go the generic way through the website and submit a note that way and we’ll get back to you. It is really is a very relationship driven business, so we love to grab coffee or lunch with anyone who’s interested, whether it’s applying to be an entrepreneur and going through the process or being a mentor or just frankly learning more about what we’re doing.
Lisa:
One of the things I love about Endeavor is I feel like I see you at every event and every coworking space, whether you’re out at Atlanta Tech Park, Atlanta Tech Village, ATDC, Tech Square Labs. You are really out and about in the Atlanta community. It’s something really noticeable about Endeavor.
Aaron:
Yeah. We try to, and looking at Endeavor’s offices that are a lot older than us, that’s one of the things they’ve done really well. We sort of become this organization that’s the connective tissue across the whole ecosystem, and in places like Atlanta that are really sprawled out physically, that’s part of what our job is: to be out there and be seen and hopefully be a resource.
Lisa:
Just to kind of close on how you are seeing the Southeast, now that you’re expanding into Birmingham and all of this, what do you think is unique about the Southeast as a startup ecosystem? What would you say stands out for you? Because I know you spend a lot of time with the global Endeavor network and go to global selection panels and really have a broad perspective to bring to this region.
Aaron:
Yeah. Lisa, why don’t you go since you were at a scale up previous to Endeavor and are from the great state of Louisiana?
Lisa:
I really think what I would say that Endeavor brings to Atlanta is a little bit of that “what it takes to build a company is a global effort.” Just like what it takes to acquire a company is there are a lot of global benchmarks; business is business no matter what your original language is. There’s a lot of lingua franca that’s really spoken well and fluently with the Endeavor network. But Valor is very focused on the Southeast, so I’m very curious about you and what you see is special to our region because you spend a lot of back and forth time between the global network and bringing resources to the local network.
Alaysia:
One of the things that I’ve noticed that I love, I think that Atlanta is still very hungry for success and I think that Endeavor just kind of tussles that friendly competitive spirit a little bit more. It kind of goes back to what you were saying about the global aspect. We have Endeavor Atlanta entrepreneurs who go to these events — our international selection panels — who are able to be a part of the Endeavor Outliers program. That program highlights — correct me if I’m wrong, Aaron — the top 5% of Endeavor entrepreneurs globally. I think that Atlanta entrepreneurs are so hungry and that Endeavor Atlanta just really puts that fire under them to be like, “Okay, how bad do you want it? How much bigger can we get?” Just the the ideas that come out of conversations within Endeavor entrepreneurs, especially the ones in Atlanta, you just can’t get that anywhere else.
Aaron:
Yeah. I think we quietly have amazing base of talent here and it’s getting better. People are even moving back from the coasts that have had startup experience or scale of experience, which is great. I think that there’s sort of a quiet smartness I guess to our talent community here. My hope, and I think part of our job too, is to convince more and more people to — no offense to our friends in the Fortune 1000 companies in Atlanta because we have many of them — to jump from those types of environments to the earlier stage companies and continue to do that, because that’s really the future of jobs in business here will be those companies.
Lisa:
I could not agree more. Jump on in, the water is fine!
Aaron:
It’s a little hot, but it’s okay!
Lisa:
Exactly. Hey, waves are fun. I learned how to surf. Listen, thank you both so much for your time today. I really appreciate it and look forward to staying in touch. We’ll have to have you back on the program in a few months for an update.
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