Lisa
Welcome to the Atlanta Startup Podcast. I’m Lisa Calhoun, your host today and the founder of Atlanta venture capital firm Valor Ventures. I am thrilled to have as our special guest today, one of my dear friends and one of Valor’s very first investments, CEO, Jennifer Silverberg of SmartCommerce. Thanks for joining me here today, Jennifer.
Jennifer Silverberg
Thank you for having me, Lisa.
Lisa
You’ve been on the program before. The last time you were on the program was about a year ago, and SmartCommerce was growing really fast. And in the last year, that hasn’t changed. Catch us up a little bit for those listeners who don’t know what the company does. Just a little bit more about you and SmartCommerce.
Jennifer Silverberg
SmartCommerce works with primarily CPG manufacturers, manufacturers of different types, and helps them sell more stuff online by connecting their digital touchpoints with the retailers that they work with. An example would be if we worked with a diaper manufacturer, and they took their ads, and they were able to put a link on those that let consumers shop from those ads directly from the retailers and buy things directly from the retailers that sell those products. Basically just making it easier for consumers to find and buy clients’ products at retailers. Obviously, over the last year, consumers have had to have been massively shifting their buying habits and the way that they find products and have them and fulfill them will say whether it’s delivered to their home or picking up in-store, or going to a store and shopping. A lot of those have accelerated the adoption of our technology and excel. It certainly accelerated the need of our technology. And now we’re starting to accelerate the adoption and it’s been a sort of an interesting year as COVID has maybe accelerated the company just a little bit. We’ve been catching up with it.
Lisa
How many countries is SmartCommerce available in now?
Jennifer Silverberg
All of North and South America. Everywhere, basically, other than a few countries in Asia.
Lisa
Jennifer, I get it. Totally the wrong question. Hundreds of countries, you’re looking at the continents.
Jennifer Silverberg
Sorry, sorry. If you wanted me to list all all the countries, that would be a lot, but we do have a focus in the Americas, Europe, and certainly anywhere where e-commerce is more developed. It’s interesting. We’ve been going into some of the countries where e-commerce is still developing. Each one’s just a little bit different both in in terms of technology enablement, and on the part of the consumer and the part of the retailer, and then certainly the manufacturers that are selling there. It’s been really fun to help a couple of manufacturers take what I would call an unfair share of early e-commerce in countries where that is still developing.
Lisa
How long has the journey been since your first beta clients to the multi-continental powerhouse for brands?
Jennifer Silverberg
We started the company in 2016. We didn’t sell anything in 2016 and 2017. We took two years to build a data core because the founding team had done this before and another company called Channel Intelligence. We knew what we needed to do again, and what we needed to build, and we knew how we wanted to do it differently. You know, the second time you do something is always you get to learn from the mistakes of the first time. We took a couple of years to make sure that we got it right. From 2016 to 2017 we were building a very solid and scalable data core. 2018 we went into the marketplace and started with a few of the clients that actually we had co-developed within 2017. 2018-2020 have been years of growth and adding new manufacturers to our roster. And at the same time also, working with more retailers building out into more countries it’s really been an expansion story over those years.
Lisa
It’s amazing when you talk about it that way because it’s really only three years of product in the market. And for that matter, it’s only five years as the company. You’ve been doing a ton of growth, not just in sales, but also in hiring. On the Atlanta Startup Podcast, a lot of times, our listeners are founders, we have a few investors and a lot of founders that are really learning as they go and I think you can relate to that. As you’ve been growing talent, what are some of the things you’ve learned about the people you’re hiring now, in a larger, fast-growth scaling company, as opposed to maybe the first five or so people that you hired? There are lots of stories that there’s a big difference between the startup team and the scaling team, have you found that to be true?
Jennifer Silverberg
Such a good question. The startup team was largely comprised of people we knew who already knew how to do the thing that we do. When you get that next layer of people, you’re hiring people who you have to bring along and you have to actually train so there was this really interesting space where all the people that worked with us were people that had worked with us before at other companies in an analogous business, at least, but it had already operated in this space. We were able to just talk in shorthand right off the bat. When we started expanding, we had to start bringing people in who we had to teach. We thought we only just had to teach them what we did but we had to teach them how to think about the entire category and how to approach the category. Now we’re hiring people who are coming in and managing some of the people that know the business really well. We’re having to figure out how to quickly bring them on board, get them trained to get them steeped in the industry and make them productive as quickly as possible. That’s just not something we even had to think about at the beginning because we were bringing on people that we knew and had worked with before. We had to figure out how to train somebody to, I don’t want to say think as we did, but at least think like we did a little bit and understand the category that was the way that we did. The second piece was part of that shorthand, and part of that experience was that we had a very defined culture. Culture is very important to me. It always has been everywhere I’ve ever worked. I want the culture to be a place that is the kind of culture that I want to go to every day. We’ve very carefully defined that. We’ve sat down together and we’ve defined what are our values and they’re all around treating each other the way that we want to be treated and having each other’s back and putting the client first but a close second is our internal client as well. Making sure that we didn’t make any hires that were contrary to that has been paramount. Actually, we hired an HR person. That’s always a big line in the sand, by the way. I didn’t realize it until we did it. And then it was like holy mackerel, that changed everything.
Lisa
Congratulations.
Jennifer Silverberg
I know, right? She is just a complete rockstar. She and I sat down and talked about this when she first came on and she said, “Well then, how about you’re the first interview and not the last? You’re a filter.” And so for a lot of positions, I’m the cultural filter. First to make sure that there’s somebody who fits and then we have the functional filter next where the line manager or leader of a specific group will interview because we felt like the cultural fit was the harder part and functional fit was actually easier. This has turned out to work really well. We’ve kept very true to who we are and the people who come on are very quickly assimilated because they are first the kind of people that we want to have as part of the team and then you know, bringing in the knowledge that they have. Maybe I should have started with the cultural piece of it and then gone to the functional. The training functional piece has been a really interesting thing as we brought in new people that we didn’t even realize didn’t know our business because we knew it so well that we assumed everybody in the world knew it.
Lisa
You’re a visionary and every founder I think is sort of like that. You live and breathe what they do. It is often on the edge. You’re a pioneer. That’s what you get those kinds of challenges for being a leader. People love to think about, “Well, if I were going to apply to an opportunity at SmartCommerce, how many roles do you think you’ll be filling?” And I know it’s arranged and you don’t have an exact answer, but give us a sense of the scale over the next year.
Jennifer Silverberg
Over the next year, wow. I don’t know because it kind of depends on growth and change in a couple of big decisions. That strategic decisions that we’re making right now, we’ve made a lot of hires since series B so, at this point, there are four or five open positions. But I suspect that before next year, there’ll be another five to ten. But I don’t know for sure, it will depend, it could be twice that and it could be half that.
Lisa
I’m glad you brought up the Series B. It’’s just been a few months ago, maybe two months ago? I mean not very long since it was announced and for an Atlanta startup to raise such a significant Series B from an East Coast firm, I would love to have you take us back to before you raised it and what was going through your mind. And then what you actually wish you had known if there were anything along those lines because there are very few founders in Atlanta that have created that level of success and stayed in Atlanta. You’re in a very small club of top performers and I’m just hoping you’ll share anything you can with us, for other founders, who are thinking about going on that same journey. You’re hearing things like you’re going to have to move, you can’t raise a good series B in Atlanta, and what’s your perspective?
Jennifer Silverberg
I’m going to put the “what I wish I’d known” question a little bit aside and make sure I come back to it, I’m going to speak first about how we got to where we got and what I think was important. First of all, this is my first time as a CEO, so I came in knowing nothing about fundraising. I remember the first time I had to figure out what a convertible note was and I was always pretty good at finance but there were just things I didn’t know. It felt like fire hosing from the beginning. Starting out in and I’m going all the way back to, you know, pre-series A, it was just this kind of constant learning thing and doing stupid things until I figured out they were stupid. But one of the biggest moment was when I spoke with actually a VC. He was no longer a VC, but a friend of mine, who is a VC. I asked him for advice and I was like, “How do I build a company? How do I figure out who the investor is going to be so I can build a company for that investor? How do I figure out who the acquirer is going to be so I can build a company for that acquirer?” And he said, “You’re thinking about it completely backward.” He said, “Build a company, that’s great. Build a company that’s profitable, build a company that can grow and has an opportunity, and all that other stuff will come.” He said, “Stop trying to push the string. Go pull the string for a while, and you’ll see what comes after you.” And I think that was the most important piece of advice. I ignored it for a long time, which is now getting into the second half of the question what I wish I’d known. Because there’s so much pressure to go to the these fundraising events and pitch events, and staying in front of investors, and there’s sort of this merry go round that you get on that you’re constantly pitching and constantly pitching and trying and trying to keep that going that sometimes if I had it to do over again, I would have spent more time doing what he said. Building the great company, and less time pushing the strain. I would have spent more time pulling in, less time pushing. The other thing that I would have done that I just literally didn’t know and this is the one thing- I’ll write a book if we have to at some point- is only ever take meetings or only ever talk to investors that invest in your sector, your size, or the size that you’re likely to be soon.
Lisa
That is incredible advice, Jennifer. I just have to say, everyone rewind, and re-listen to what she just said.
Jennifer Silverberg
Your sector, your size, and your geography. Because if they don’t, every single meeting you have is a waste of your time and I didn’t know that. I was flying to Silicon Valley with people who wanted me to talk about my $200 billion potential, which I wasn’t. I was talking about the real potential of this company. Or I would talk to somebody who was looking at seed stage when I was past seed stage. I wasted so much time and money on that one. I wish somebody would come up with an app that lets you put in on this sector in this size, and this geography, and show me a filter that shows me the, the investors that are investing in that space, and I only want to talk to those. I can’t tell you how many I got to the end of a presentation about TPG. By the way, that’s consumer packaged goods. And at the end of the presentation, somebody said, “What CPG again? I don’t know what that is.” And they didn’t know the category at all. I’m not going to take somebody from zero to investing if they don’t know this category somewhat. You probably already knew that, and I should have just asked you one of these times, but sometimes you have to learn things the hard way. And I definitely did. I think those are the big things that I learned. And then the last one is I got lucky. But I don’t know if everyone else would get lucky in this. I’ll just go ahead and say it. The investor is your partner, and you want to make sure that you are also picking a partner that you want as a partner. I talked to several that didn’t fit that. And yet, I still continued to have conversations with many of them. Because they were interested in saying yes, it’s kind of like dating, I guess. You don’t just keep going because they’re interested, you need to keep going because you’re interested. We wound up with a group of investors both for our A and for our B, that I would invite into my family if I could. They’re just amazing humans but I don’t think I knew enough to do that. I think I got lucky. I think if you’re being intentional, find somebody that you want to spend time with, find somebody you’d call if you had a problem or somebody that you would want to talk to as you grow or somebody that you can you feel like you can be transparent with and they can handle that, um, I got lucky. But I can see how that one could go sideways fairly quickly if you don’t know how to look for it. While I was going through this, one of my nieces was going through the college application process and you know how you get caught up in college applications like, “They accepted me.” And sometimes you forget that you need to make sure it’s the one you want, not just the one that would accept you. You just don’t want to get caught up in the froth of the pursuit that you forget that you’re also getting in, I hate the getting in bed comment, but you’re getting in a long term relationship with this person, and in this group of people, and you want to make sure that it’s somebody that you want to be in this relationship with.
Lisa
100%. I think a lot of founders don’t realize that investors are literally paid to full-time educate themselves, learn about markets, and learn about founders. They fill their day with that. I fill my day with that. And that means that there’s a whole calendar of meetings with founders. The founder also though needs to want to be on that calendar and feel like there’s a there at the end of it. And it’s a learned behavior, I couldn’t agree with you more. Really focusing on what’s truly going to be more likely a possibility than long shots. That’s hard. I really appreciate you sharing that with the audience because I think your experience will speak more to them than all the advice in the world like that. This is how you would do it. Speaking of qualifying investors, do you have any favorite questions that you would use now if you were going to raise a series C or just if you were coaching a younger founder on their raise, how would you ask them to qualify an investor?
Jennifer Silverberg
The first filter would definitely be size category and geography. You know, where do they invest? What are they looking for? Because where I screwed up was I would get to the end of the call and they would say, “That’s great, you’re at 4 million. That’s so cute. We were looking but we invest in the $15-25 million range.” It was like, why did we just spend an hour? Why didn’t I ask that upfront or vice versa? “It’s cute, you’re at 8 million. We don’t invest in anything over 2 million.” I’m like, now really? Why did we spend this hour because there’s nothing? I would early on just say, so that we can make sure that this time is going to be fruitful for both of us, could you give us a sense of the size of the market and the geography that you’re interested in investing in and if it doesn’t match, cut it off. The other thing is you have the hunters within the investment groups that will have a meeting with you because it’s their job to get meetings. You might get the, “We like to invest but it’s a minimum of 10 million ARR.” And you say, “Well, your company’s at $4 million.” And they’ll say, “Well, I want to talk to you anyway, because you’re going to get to 10 million at some point.” Tell them I’ll talk to you when we get closer. I’ll talk to you when it’s in range.” Because those you do forget, you’re an entrepreneur. Let’s assume you work a 12 hour day, you still only have 12 one hour meetings. And if three of those in a day are taken up by these or two or three of them in a week or whatever are taken up by people where there’s absolutely no potential of return, don’t take that meeting. Just go do something else. Go find another person to talk to. That would be the first filter. I guess beyond that, the second filter would be getting to know them and figuring out if this is somebody that you want to be working with, and that I think takes time. So if they pass that first filter, take the time to get to know them and understand who they are a bit. Because that’s important to you. I forgot exactly how you phrased the question. I’m sorry.
Lisa
That was perfect. I know, there are literally thousands of bright young people, many of them from Ivy degrees, who are interesting, and lively, and a joy to talk with. They are calling founders. And so yes, you can easily blow 10 hours a week without trying. There’s just like thousands more of them than there is of you and they have some pretty good skills when it comes to getting the meeting and trying to find alignment. But I love your direct advice to founders. That was so simple to just tell them, “We can talk when I get closer.” You’ll still move quickly. So that’s the other thing. Of course, an investor who’s really motivated by a deal is capable of moving relatively quickly. It’s okay. I wanted to ask you, if you don’t mind sharing the story, how you got connected with and how long it took to have a relationship with your Series B lead investor? If you could open the door a little bit to how that relationship evolved, before the investment was made, and maybe a little bit about during?
Jennifer Silverberg
They actually contacted us,. They stood out, because, in the outreach, they mentioned that they understood this space, and they were interested in investing in this space. Because most of them I got just like any sales email. You can read a canned one a mile away and this was not a canned email. They got my attention and we jumped on calls. And then in the very first meeting, they asked questions. You can tell more by the questions they asked, right? The statements they make. And so they asked questions that made it very clear that they understood this space, and that they had experience in this space. I got very interested very quickly and I tried to think what else I can tell you that’s really relevant about this one.
Lisa
No, I mean, it sounds like they were actually what you were looking for. You could recognize it because you had learned behavior to focus on these things; geography, check size, and industry expertise.
Jennifer Silverberg
Check size is one thing. Check size is related to the company size. I wonder if it’s four; geography category, check size, and stage. It’s actually four. Thank you for bringing that up because that makes sense. They passed through all those filters. But then there was the last one that was maybe the most important that I didn’t even know how important it was, was how respectful they were of us through the process indicated that they were going to be a respectful partner moving forward. And so little things mean a whole lot. I remember that we had some meetings early on where I was having trouble fitting the meetings in among client meetings, and they said, “We’re just gonna throw it out there. Would you rather meet on Saturday?” And I was like, “Oh, my god, yes, thank you.” And so they understood the amount of time we were in, or the difficulty of fitting in some of the meetings that they had and that they were requesting, and that was really helpful to somebody else. Maybe that would be a negative, but to me, it was a huge positive. When they were asking for it, when we were going through due diligence, they were reasonable in the timeframes and the amount of information that they needed. They were among the first actually that understood the stage where we were in and the category where we were that meant some things about what we would have available for diligence, like, for example, when we were starting this, actually even now, we don’t have a CFO. We’re hiring one now. I’ll throw that out there. They understood we didn’t have a CFO and so they said, “Well, then we would expect the books to look like this rather than that.” They were reasonable and flexible, and respectful in ways that really told us how the relationship was going to go later on. And that was really telling, and maybe I couldn’t have articulated it at that point, but I can now. I can see those were all signs that things were going to go well.
Lisa
Awesome. That’s super helpful. Was Atlanta a pro, a con, a nonissue? I’m always curious about what it’s like building these globally valuable startup companies from Atlanta. And you’ve been here from the beginning, still live here and I haven’t heard you talking about having to move, but it’d be great to break the news on the show. I mean, tell us a little bit about how Atlanta has or has not factored into the success at SmartCommerce.
Jennifer Silverberg
Wow, I think initially, sorry, because I’m thinking in like three different directions on this one. I’m gonna separate it into running the company, and then having a company based here versus the investment here, because it’s two different answers. In terms of having a company here, we could not have had a more supportive atmosphere. We’ve partnered with ATDC and they’ve welcomed us in and provided all sorts of great support, and reasonably priced office space, and all these other things that have assisted. We’re right there at Georgia Tech so we have access to some of the best technical minds in the world. We have hired from there. We have a data scientist from there and some other people who come out of Georgia Tech. This is gonna sound goofy, but this airport, I was just literally talking to somebody this morning and they said, “Have you considered moving the company to New York?” And I said, “Well if I did move the company to New York, I’m going to assume I’m going to live an hour and a half train ride outside of New York because that’s just the way it goes. And right now, I live in Atlanta, which is an hour and a half plane ride to New York, so why on earth would we move a company to New York and have to use additional costs?” That would be crazy, right? I don’t get that. We have a great cost of living, which means that we can hire people at a reasonable rate. We also have a pod of people that are in Orlando, Florida, because that’s where our prior company was. We hired people where they were also a very affordable cost of living. I think that’s important because with a startup you don’t want to be pouring out all of your money to support an unreasonable cost of living like you would have in New York or San Francisco. It’s allowed us to really hire twice as many great people as we would be able to if we were in one of those other areas and aso be drawing from this great talent from Georgia State to Georgia Tech. Athens is nearby and so we’ve been able to really recruit well. The second part is around investment and that was a little bit harder because I think early on was one of our very first investors, I guess I can say that on here, was Frank Blake who used to be the CEO of Home Depot, which is here in Atlanta so that was fantastic. Another one of our super early investors was Valor. You guys really help see this and have both been very instrumental orl I should say, been very instrumental in helping us think, grow, and get better. We spoke with a lot of other Atlanta investors and I think the knowledge base of Atlanta investors historically has been more around health care and in other categories in tech and healthcare.
Lisa
And there’s really just not enough of them.
Jennifer Silverberg
I was gonna say healthcare and FinTech, they were some of the ones that at the end, “What’s CPG again? I think I might have overspent time trying to force Atlanta to be where we got the investment as well as where we seeded the company. You’re right. There just aren’t quite enough of them. But it’s coming, it’s changing. We spoke to some that we loved and we thought were really great but just didn’t quite get it as far as we needed to. We did go outside of Atlanta. Our investors now we’re based out of New York and the nice thing about New York is there’s a lot of experience there with manufacturers and retailers and that sort of thing because it is a commercial capital. Atlanta has been less of commercial capital historically, it’s sort of been a field office or something like that, other than the obvious exceptions, like Delta and Home Depot and that sort of thing. Anyway, we wound up finding our Series B investor outside of Atlanta, but I don’t want that to reflect on the Atlanta investment community.
Lisa
I love that about you. It’s not from a lack of trying. They had this shot. And they can also be celebrating successes, like SmartCommerce’s, as you continue to scale and grow and be a global must-have for retailers and brands.
Jennifer Silverberg
I should say really quickly, we probably have, I think it’s six individuals, who were invested out of Atlanta who were angels or took convertible notes. It’s not that it doesn’t exist. It’s just it’s not in the institutional space right now. It’s more in the there are specific individuals that really understood this space that jumped in. So anyway, sorry about that.
Lisa
No, I know that makes a ton of sense. I think we’re still building out the scale of venture capital we need in the southeast period. It’s definitely got room to grow and opportunities like you’re bringing to the market just encourages that. I’m excited about the future but I totally acknowledge, and I think listeners should also just look at the facts, and if you do what Jennifer’s saying and look at geography, check size, company stage, you’re going to need to go find your investor where they are and that’s okay.
Jennifer Silverberg
That’s exactly right. Find them where they are.
Lisa
Regarding Silicon Valley versus New York, you mentioned you’d flown out to the west coast several times, do you feel like the West Coast has a little too much glamour or It’s exactly what you’d expected in? For founder’s who are being invited to come out on these West Coast junkets and there are a dozen or so. Was that valuable learning? I just would love to get your thoughts on it at this point.
Jennifer Silverberg
The West Coast investors, I don’t want to be unfair because there’s certainly a broad range, but I would say as a category, they would tend to look for a potential for a unicorn over the potential for a necessarily a solid, profitable business. In New York or the East Coast, I’m gonna say this is Atlanta too, there’s definitely a focus on a solid, profitable business over the unicorn. Obviously, there’s always the potential for the unicorn piece. We have some thoughts on where we take that. But we definitely err on the side of building a solid, profitable business. That’s what we want to do. That’s what we have done. We’re profitable. We needed investors who value that and wanted that over the “how do you get to 3 billion users” or whatever. It felt like the West Coast was really looking for that one-off big hit. Now obviously, there were some great ones out there. There were some great potential strategic partnerships and things like that, that some partners that we have out there now that we were exposed to because of our meetings with the West Coast investor. Those were still useful. But I would say if I overspent money and time on anything, it was going to the west coast over and over where we even won a big competition out there. It was a pitch competition with I think, 1000 entries, and 150 people pitching and we won. We won first place, and then wound up not getting investments out of that, which was really surprising. At the same time, we were getting people from New York, pinging us constantly saying, “You’re profitable at this size where you’re growing? Let’s talk.” I just think it’s different. I may be oversimplifying it. I know I’m oversimplifying.
Lisa
Your experience and sharing it, it’s valuable. And really to double click on something you said as an investor in this conversation, yeah, if you’re building a big user base, and you’re actually making money, go to the west coast. I’m good with that. I think you’ve talked about the personality differences, or the differences in vision and appetite really well. It certainly lines up with my experience, too. It makes a ton of sense. Listen, I know you got to get a packed day. I really appreciate you sharing so much with our listeners here. I wanted to ask you one final question; tell us what’s next for SmartCommerce? What should we be looking forward to?
Jennifer Silverberg
I would say more growth. We’re growing in the direction we’re going, my competitors are listening will listen. I’m not going to give you the most interesting parts of our roadmap. Sorry.
Lisa
I love it. These are the problems of the bigger companies.
Jennifer Silverberg
That’s been the funniest part of all this is when we started out, we created a new category. Now we’ve spawned competitors. People say that’s the sincerest form of flattery, but it’s really annoying. I definitely don’t want to tip our hat right now. How about this? Watch. Just watch. Because we’ve got some really, really interesting stuff coming up, particularly over the next five-six months that I think are equally category changing to what we came out with before, and uniquely fit the needs of the marketplace where we’re going and some great partnerships that are developing that I am so excited about. Maybe that’s the answer. The answer would be, we have some product and service changes that are coming and we have some partnerships that are coming that should make a significant difference in our growth trajectory.
Lisa
Wow, that is amazing to hear. We’ll definitely be staying tuned to your social feeds and your website. Thanks for sharing a little bit more about the story behind the growth story that people know is SmartCommerce. Jennifer, really appreciate your time.
Jennifer Silverberg
Well, I appreciate you. You have great questions, by the way. Really made me think sometimes that’s helpful to me as well. So thank you.
Lisa
It was a pleasure. Take care, Jennifer.
Lisa
Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.
