Lisa Calhoun
Okay, so welcome, everyone. I am so excited to have you on the program today. Lynne Laube. I’m Lisa Calhoun, founding managing partner at Valor Ventures. And Lynne is just coming up on her one year as an operating partner at Valor. Lynne, it’s been an incredible year.
Lynne Laube
It has been fun.
Lisa Calhoun
It has been super fun. Maybe talk a little bit about how you got into VC with Valor. I mean, as a founder, it’s not that unusual for someone to make the leap from founder to investing, but you did it, and you’re one of the first in this region. So let’s talk a little bit about that journey prior to.
Lynne Laube
Yeah, it’s funny, Lisa. I always said I was never going to be in a because I like founders and I want to help founders. It turns out that over and over again, being investors, is one of the best ways to do that. And so I sort of broke the promise to myself because I always felt like just because you’re a good founder doesn’t mean you’re a good investor. Right. And I never wanted to presume that I know how to invest just because I happen to have a company that I started that was successful. So I’ve been cautious about making sure that I don’t come in here and assume I know everything about investing or assume I know how to pick the right companies.
Lisa Calhoun
But what I do know is how to.
Lynne Laube
Do is work with founders. And I do love founders. And that’s been by far the best part and the most fun part of the job for me.
Lisa Calhoun
You know, that reminds me of what it’s like to be a founder. You don’t know what you don’t know, but you just have to start.
Lynne Laube
Yeah.
Lisa Calhoun
You have just to jump right in. One of the wonderful things about founders who’ve become investors is you already have that muscle memory of learning fast and inventing at the forefront of your industry.
Lynne Laube
Yeah.
Lisa Calhoun
Well, I’m super proud you’re choosing to invest at Valor. You were one of the first tech IPOs of 2018. Take us back there to some of those lessons learned taking a fintech from Atlanta public.
Lynne Laube
Yeah, well, you know, it was a great experience. But I do want to remind people it’s just another financing event. In the end, taking a company public, the reason you’re doing that is you need capital to invest in the business. And whether you’re doing it through your Series A or your pre-seed or whatever round you’re doing it in the end, it’s just another financing event to grow the business. Now, an IPO has a lot of sexiness. It was cool to see my company in the middle of Times Square. Like, it was really fun. But the next morning, all the same problems were still there, all the same customers were still there. It was, you know, it was just another financing event.
Lynne Laube
What I did think was interesting is it was an unusual financing event for the city of Atlanta to have. And, you know, that is what we want to change. Right. We want more successful companies coming from the south. There is just as much talent here as anywhere else. Why do we have so few IPOs? That’s what we need to go figure out how to solve.
Lisa Calhoun
Well, I think we’re in the right place to have a meaningful role in that. You’re very humble, and I will say you’re still less than one of 30 women who’ve taken their startup public as CEO. So although the Atlanta story and the South story are very close to me and dear to me, is the story of being a woman building a major tech firm. And I honestly think that some of the reasons we can look to repeat some of your successes here is that the south is still growing its venture firm capacity. Valor is one of the very few.
Lynne Laube
Firms that lead at seed. Right
Lisa Calhoun
We don’t have that many seed-lead firms. And, you know, my eyes were blowing open wide when you were talking about, oh, it’s just another financing event. And I’m like, well, from Lynn’s humble perspective, but the IPO began with getting your seed round together. And so I wonder, from where you’ve been and where you sit now, what.
Lynne Laube
Do you, how do you, how is.
Lisa Calhoun
Your perspective changed on the importance of a seed round. Is it important, how would you advise founders to think about a seed round today?
Lynne Laube
Yeah, I mean, we, lots of people call it lots of different things, but in the end, financing your company and getting the capital that you need is probably one of the most important things past having a good team with a good idea. Right. I mean, good ideas can only go so far if you don’t have the money behind it. And the challenge with getting the money behind it is, you know, if you’ve got a big idea, it’s going to take a lot of money and you don’t want to get too much dilution. So having a really good seed round where it’s a small amount of money, usually a smaller valuation, but also less dilution to get your company truly into a scalable position is incredibly important.
Lynne Laube
Growth capital when you’ve got all sort of the track record and you can say, look, I have 27 customers and I’m making 20 million in ARR. And, you know, that growth capital can be a little easier sometimes, although probably not always feels that way, but that seed capital, that initial kind of, do I have something here? Can I blow this thing up and scale it? It’s just really important to get that, to set the foundation for, you know, everything else that’s to come.
Lisa Calhoun
Well, there are a lot of different types of seed capital the founders are looking for these days. I know we just had our pipeline meeting this morning, and we reviewed so many opportunities, and yet it starts to become pretty clear that founders are self-sorting into different buckets. I don’t think the founders necessarily have that perspective. And thanks to you, being able to wear a couple of hats in any given situation, what do you think is the best approach for a founder in the south? Say, looking to have a very strong, very good for them, good for their company, seed round in the next month?
Lynne Laube
Well, I mean, the first thing is, look, I say all money is green, and that is true, but it doesn’t always spend the same. I think getting an investor who’s not just writing a check, but can truly meaningfully open doors for you, make introductions, and give you perspective because they’ve been there, done that can be as valuable as the money. So it is easy for me to say, I know because I am a founder, but I think having another founder who has been there, done that by your side is probably one of the most critical things you can get as a founder, besides obviously getting money. I will tell you a story. When we raised money for Cardlytics, we had the opportunity to bring another founder onto our board. Local guy around here who built a very large company himself.
Lynne Laube
And we took slightly better, slightly less good terms to get him on our board. And to this day, I still give credit. His name is Mark. I give credit to Mark. I almost call him my third co-founder. We couldn’t have done it without Mark.
Lisa Calhoun
No regrets.
Lynne Laube
And, we took, we, it wasn’t a huge haircut evaluation, but we did take a haircut evaluation to get Mark on the board.
Lisa Calhoun
You know, I think you bring up a great point, getting mentorship and advice from someone who’s been there and done so that you don’t have to invent every wheel.
Lynne Laube
Right. It’s not that hard. It’s just if you’ve never done it and you’re learning everything the hard way and you’re doing it all at once, it becomes overwhelming. But having the ability to pick up a phone and call somebody and say, hey, look, I just got a contract and they threw in an MFN clause. Should I take it? Should I not take it?
Lisa Calhoun
You know, I mean, you could spend.
Lynne Laube
20 days agonizing over something like that versus you just pick up the phone, call someone who’s been there, and you. Yeah, the MFN clause, is super simple. This is what you do.
Lisa Calhoun
This is the market.
Lynne Laube
This is the market. Yeah. It’s just, it just, it saves so much time to have someone who’s been there done that well.
Lisa Calhoun
And time is money. One of the most interesting things about a venture-backed startup is they’re supposed to get to venture scale or IPO in a decade or so. And so you can only reinvent so many wheels.
Lynne Laube
Right.
Lisa Calhoun
And if you’re already transforming your industry.
Lynne Laube
You don’t have the time to reinvent wheels that people have already invented. Exactly. And so just pick up the phone and call those people who’ve invented those wheels. Right. But the challenge you have in the south is there’s not a lot of people like that. Yeah. So, you know, that’s what, you know, firms like Valor, by starting with seed here, the hope is that the companies will stay here and they’ll get a here and they’ll get b here, and they’ll continue. Right. And we can build big companies and big IPOs in the south. That’s the hope.
Lisa Calhoun
That is the dream. And I tell you what, I see it happening. And with you now that Valor is investing in our third fund. And our third fund, depending on when you’re listening to this, it’s, for us, very real. This is our first full quarter of investing in this new fund. Lynne is leading our fintech portion of investing, looking for the next frontier of fintech founders, is this south a good place to build a fintech company? Let’s start with the basics.
Lynne Laube
Well, first of all, let’s start with the basics. This step might not be exactly, perfectly correct. It might be a little dated, but something like 90% of all payments go through the step. What I mean by that is the largest processes are here. So when you think about fintech is about money, it’s about moving money. Most of the money that’s moved, at least in this country, happens here. So it is a great place. It’s a great place for fintech. So that’s. .1 and then if you’ve got a lot of these big companies here, you’ve got the fiss and the fiservs and the ncrs and you’ve got these, and they all are trying to innovate, but they’re also great potential customers for fintech startups. They can be hard cause they’re big companies, but they are great potential customers.
Lynne Laube
So you look at the South as having just a ton of fintech knowledge, although some of it’s old school knowledge, a ton of fintech knowledge, and a ton of fintech companies here. And then you look at putting innovation on top of an industry that is ripe for disruption. You talk about every time we, you know, I just think there’s a ton of potential for fintech in the south. Absolutely. Fantastic.
Lisa Calhoun
Well, when you’re looking for a founder and you’re thinking about backing a founder and you’re developing your investment memos.
Lynne Laube
Or thinking about talking to our IC?
Lisa Calhoun
What are some of the things you find most compelling in fintech founders today?
Lynne Laube
I don’t know that it’s that different than what I find compelling in any founder, to be very honest with you. Right. But I mean, what are the things we all look at? You know, you look at the founder, you look at the team. That’s critical. Most companies have some form of a pivot over their journey. So you’ve got to invest in a person or a team that you think can manage that pivot and figure out how to react to a changing market. So you always look at the founder, you always look at the founding team. I always put a ton of weight into that, and then I put a lot of weight into how big is the problem they’re solving. The bigger the problem, obviously, sometimes the harder it is to solve, the longer it is to take.
Lisa Calhoun
They seem like they’re all huge problems.
Lynne Laube
They can be huge. But I also sometimes see a lot of fintech companies confusing a product feature or enhancement with a business model. So there’s lots of, you know, tweaks and features and things that can be done anywhere in fintech. Lending can always be better. You know, credit experiences can always be, everything can always be better. Everything can always be better faster, you know? But is that a business or is that just a feature? Right. So I’m looking for fintech startups that are a business, not a product or a feature. And then the next question is, how disruptive are they? Are they working within the ecosystem? So are they working with the issuers, the processors, the acquirers? Or are they doing something outside of that ecosystem? And then you start to think about the sales model, and what does that mean for it?
Lynne Laube
But, I believe fintech is right for disruption, but that doesn’t mean that you have to compete against the existing ecosystem. It can also mean that you can help them make their ecosystem better. Either one could be very exciting.
Lisa Calhoun
You know, one of the things I love about you as a founder is you got depth in fintech before founding part of it.
Lynne Laube
Yep.
Lisa Calhoun
And you did that through helping to build Capital One as their coo. What are some of the things you draw from that experience in classic banking, and transformational banking, that you bring into your role now as investing?
Lynne Laube
Yeah. So, first of all, I was coo of a division. Capital One itself does not have a coo, but they’ve got all these different divisions, so they’ve got presidents and CEOs.
Lisa Calhoun
You know, Capital One taught.
Lynne Laube
Me how to think. I don’t know how else to say it. They taught all of us the discipline of thinking, of evaluating a problem, thinking about that problem holistically, and getting counter opinions. If there’s one thing I learned at Capital One, it’s get an opposing opinion. And so that discipline in teaching us how to think, I mean, the CEO of Capital One has a saying. He used to say, eya, not cy, expose, not cover. And, you know, that motto has stayed with me. So I see that the way you.
Lisa Calhoun
Work today, because you are unafraid of contrarian opinions, and you might have one yourself, and the way you handle that gracefully and aggressively helps make us stronger. But it’s interesting to hear that some of those roots go back, they go.
Lynne Laube
Back to Capital One. And that critical thinking that they taught all of us, including me, I think helped me as a founder, because one of the things I know, you see it. I see it sometimes with founders, they get so caught up in their own ideas and their own businesses, they can’t see that they’ve got to do something different until it’s too late. And I think the more you can constantly, you have to believe in yourself, you have to believe in your business, but you have to constantly say, could I be doing something different? Should I be doing something different? Is there a different way that I think makes a really good founder?
Lisa Calhoun
I agree. And I also think that as VCs, we can get very caught up in our own space, that it’s a venture backable founder, but that’s less than 1% of founders. And one of the things for any founder listening that I would say is to know yourself. Like, know your ambition level. Your ambition level may not be to run a venture-backable IPO on Nasdaq. And that’s okay.
Lynne Laube
Like, you can be an amazing founder and have an incredible gift to give.
Lisa Calhoun
In business as a founder, building a great company that isn’t going to ever IPO. So there are different types of founders for different problems.
Lynne Laube
Absolutely.
Lisa Calhoun
And I think one of the challenges of building a venture firm in the South is that since there are not many models, founders think they don’t know when to come to.
Lynne Laube
They don’t even know when to come to venture. It’s not part of their lexicon. It’s not a part of, you know, the south still has a lot of really big companies. So this sort of startup thing is just not a part of our lexicon yet. And you know that, too. We have to change. But there is, I go back to there’s just no logical reason that the South doesn’t have more successful IPOs and more successful founders. It’s purely because we just don’t have the money and then we don’t have the ecosystem around them. So, you know, once we start changing that which we are, we should have just as many successful founders here as we do anywhere else in this country.
Lisa Calhoun
Absolutely. In fact, in the show notes and on the link for this video, I’m going to post the direct link for you as a founder to get in touch with Lynne with your fintech startup. She has her own input form, what can I say? But she’s looking for the next generation of fintech founders. And if that’s you and you’re listening to this and you’re like, I wish I knew, Lynne, your dreams are about to be realized. Share some information, and if you’re on that landscape that she’s looking for, you’re going to be talking with one about it. So one of the things I’m curious about those what’s different about being on the other side of the table now that you’ve moved from citing term sheets in one letter block to the other.
Lynne Laube
Yeah, I think the two things I’ve been most struck by, the first is founders do come in all shapes, sizes, and colors, and everything else in between. You know, we have founders who are introverts, huge introverts. I would have never really thought that possible. But yet it turns out that as long as you know that you’re an introvert and you need extroverts in certain other places in your company, and you can hire that team, you can be a great founder. And I’m just using that as a very silly example, but they do come in all, you know, there is no recipe for you have to have this kind of skillset to be a founder.
Lynne Laube
It’s really, do you have grit and do you have a good idea and can you motivate people to work around you, get around you and believe in this idea lots of different ways that can be done with lots of different leadership styles. I’ve been surprised by how different all of our founders are, even when their businesses are at very much the same sort of state.
Lisa Calhoun
We don’t have a type.
Lynne Laube
No, we don’t have a type. We don’t have a type. There is, there’s no, you don’t have to have a degree from the place and you don’t have to have. There’s no type. There’s no, you know, and the other thing I’ve been struck by, and this is probably a testament to Valor, VCs do care about Valor. I will tell you, it felt like over the years sometimes I always knew there were a couple VC’s really on our side, but sometimes it just felt like, you know, we’re just a cog in the machine of there are 120 companies and they hope a couple hit and they don’t care which one hits and which one doesn’t. Sometimes it felt that way. As a founder, I think those VCs exist. I think they do too.
Lynne Laube
But I will tell you, not just Valor, even the VCs I’ve met around here in the south, they do care about the founders. And maybe that is unique to the South. Maybe that is part of the southern charm we build or bring. But, you know, VCs care about making money, but they care about, they want to see their founders succeed. They want to see them create generational wealth. They want to see them create the next big batch of companies. And so that’s been exciting to see.
Lisa Calhoun
Well, I think it’s particularly important at seed. So, you know, maybe a little bit later in the capital stack, it does become a little bit more of a spreadsheet exercise. Do we have a fun size? But the truth is, at seed, even before I was at VC, I encouraged founders to find the right lead investor because that person should have your back in multiple ways.
Lynne Laube
They don’t know everything, but they know.
Lisa Calhoun
Someone who knows the answer to your questions. And if they believe in you, then they’re going to give you that time and access and you’re going to get access to the best of the best. That’s important.
Lynne Laube
Yes. I mean, that board member that I talked about, that we literally, took a pay cut to get him on my board.
Lisa Calhoun
That’s the way to think about it.
Lynne Laube
Right when you’re taking a different valuation. I took a pay cut to get him on my board. He ultimately made the introduction to the first big customer that broke it open for us. Wow. You know, he ultimately made a critical introduction to the right banker at the right time for series C. I mean, it just, there were moments where it was just like, we couldn’t have done it without him. And, you know, lots of times he, we could go months without talking to him sometimes, especially, you know, as we got way more mature. But, but, you know, when we needed him, he was always there.
Lisa Calhoun
Lynne, this has been a great conversation. I’m sure a lot of fintech founders are very busy filling in paperwork to get in touch with you. If there was, be patient. If there’s one thing you’d love to share with the next great fintech founder, is there any piece of advice that you would share with them today about what it takes?
Lynne Laube
I get what’s not. Again, this isn’t unique to fintech. I give all founders this advice, and I’ve been giving this advice for decades. The first piece of advice, guys, it’s your company. In the end, it’s not your VC’s company, it’s your company. You need to get lots of opinions, you need to get lots of advice. But in the end, it’s your company. You gotta, you gotta trust your gut, you gotta run with it, and you’ve got to drive the business. You can’t rely on your VCs or anyone else to do it for you. Related to that is a sprint, not a marathon or, sorry, excuse me, marathon, not a sprint. Sometimes it feels like a sprint. It does. This is, you know, Lisa Sutters, this is usually going to be for many, this can be a decade-long journey.
Lynne Laube
So, you know, keep that in mind if you’re starting a company because you think you’re going to make a quick buck and that’s the only reason you’re starting it, that might not be the best way to be thinking about it. Have fun. You know, I look back at Card Linux and it was some of the most fun I’ve ever had in my life. It was also some of the most stress I’ve ever had in my life. But, you know, there were so many fun moments along the way. And then the last piece of advice I’ll give you, and this is probably the hardest one, I’ll say it succinctly, fire fast, hire slow. You know, your money’s precious. I see too often, I see founders get money and the first thing they do is hire something.
Lynne Laube
And often the something tends to be a friend who may or may not be as well qualified as they should be for the role. And then you’re with this person and they’re helping you, but they’re not quite as good. And so then you have a hard time figuring out when to let them go. By far the hardest thing for almost any founders because we’re all human. But you know, a hiring decision should be done very slowly, very carefully, very thoughtfully. A firing decision should be as well. But you got to make sure that you’re, as soon as you know they’re not going to make it, they need to go because they’re costing you a ton of money. And if you’re not sure if they’re the right person, then wait. Interview more.
Lynne Laube
I know it feels terrible that you’ve got stuff to do and isn’t a body better than nothing? It isn’t. Especially when you’ve got limited resources. When you’re talking about a seed round, you don’t have that much money to get it wrong. So you can’t make a bad hiring decision if you’ve only got a million-dollar check.
Lisa Calhoun
So, well, you can’t survive a bad hiring decision if you fire very fast.
Lynne Laube
If you fire fast. Yeah.
Lisa Calhoun
Learning to manage a team is a skill.
Lynne Laube
It is.
Lisa Calhoun
I think founders should give themselves a little bit of grace on allowing yourself to learn that skill and accept that it is a learnable skill. But you’re going to make some mistakes and that’s okay.
Lynne Laube
They won’t kill you as long as.
Lisa Calhoun
You do what Lynne advises. And, you know, they need to be let go.
Lynne Laube
Let’s put it this way. You know, like many, we’ve all had.
Lisa Calhoun
To fire people in our career.
Lynne Laube
It’s never fun, it’s never easy, but it is something you have to do. I’ve never woke up the next morning and said, God, did I do the right thing? I always woke up the next morning and said, I wish I’d have done that six months ago.
Lisa Calhoun
True words. Well, thanks for all the real perspective and advice. And I’m excited to see the deals that you’ll be leading this year in the next few years with this fun. So onward and upward and thanks for your time today.
Lynne Laube
Absolutely. Go fintech. Thanks, everyone!
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