In this episode of the 20 minutes VC, host Harry Stebbings interviews Lob CEO Leo Avadar about his journey from Wall Street to tech entrepreneurship. Avadar discusses the inception of Lob, a company transforming traditional mail into a programmable digital service, following his and co-founder Harry Zhang's experiences with inefficient mailing systems at Microsoft. He emphasizes the importance of controlled growth, maintaining the ability to become profitable within six months, and creating a company culture where employees are invested in for the long term. Additionally, Avadar shares insights on fundraising, advising that building relationships with VCs early on is crucial and that leveraging fear of missing out (FOMO) can be a powerful tactic. He also highlights the need for founders to maintain leverage by having sufficient runway, thereby avoiding desperate fundraising. Throughout the conversation, Avadar's competitive spirit and commitment to innovation in an "unsexy" industry shine through, illustrating his vision for Lob's future in providing enterprise-grade APIs.
"I'm thrilled to feature today one of their latest investments in the form of Lob, with founder and CEO Leo Avadar joining us in the hot seat today."
This quote introduces the guest, Leo Avadar, and his company Lob, highlighting the significance of their recent investment from YC's continuity fund.
"And that was the point where I was like, Harry, we need to be able to build this into an API so that one, we can play video games at an earlier time, but two, we can start giving people a superpower to solve this problem, because if Microsoft has this problem, so does everybody else."
This quote explains the pivotal moment leading to Lob's creation, aiming to transform the mailing process into a simple API-driven task.
"The easiest way to fundraise is to have a really great product and team."
This quote emphasizes that the foundation of successful fundraising is having a strong product and team, which attracts investors more than any strategy or tactic.
"So I occasionally, and definitely in the early days, I would meet a VC, I would try to figure out how they could add value to lob, and I would say, hey, let's work on this project together."
This quote emphasizes the importance of proactive engagement with VCs to establish a working relationship that can later facilitate investment.
"You need to create a lot of excitement and you need to create a lot of excitement all at once."
This quote highlights the strategy of generating simultaneous excitement among investors to induce FOMO and drive them to invest.
"All you have to do is talk to everybody in a short period of time."
This quote suggests a concentrated effort in scheduling meetings to create a buzz within the VC community, which can lead to FOMO.
"The more that you don't want their money, the more that they want to give you money."
This quote encapsulates the counterintuitive strategy of appearing less desperate for funds to gain leverage over investors.
"I actually think a year or even more sometimes, because when it gets to under a year, you're putting yourself in a position where you can't say no to any term."
This quote stresses the importance of starting the fundraising process early to avoid desperate situations where founders have to accept any offer that comes their way.
"I wish I hadn't raised money because we keep doing well and we're able to self-fund through sales."
This quote expresses a retrospective view that fundraising may not always be essential if a company is performing well and can self-sustain.
"So it's a balance of growing aggressively, but not spending wastefully or blindly, and ultimately it gives you control over your own destiny."
This quote defines controlled growth as a deliberate and flexible approach to scaling a business, emphasizing the importance of not overextending financially.
"A hair's breadth away from profitability. And I do think that that will add the right leverage for fundraising and setting up your company for success."
This quote highlights the belief that being close to profitability can greatly improve a company's position when seeking funds, as it demonstrates financial viability and potential for success.
"I think it's from day one... Like know the growth that you can control. And so if you start in the early days, you start spending wisely. You don't just spend recklessly."
Leo Avadar stresses the importance of adopting a controlled growth mindset from the inception of a company, which includes spending wisely and understanding manageable growth.
"You should be spending probably pretty aggressively. But again, if there are external market factors that happen, you have to know how to change the gear down."
Leo Avadar acknowledges the need for aggressive spending in competitive markets but emphasizes the importance of being able to adjust spending strategies when faced with market changes.
"Most companies go bankrupt because they weren't responsible about their growth."
Leo Avadar points out that many companies fail not because they aren't growing, but because they manage their growth irresponsibly, often by mismanaging their finances.
"And then as soon as I figured that out, as a CEO, your job is to hire and replace yourself."
Leo Avadar describes the progression of a CEO's responsibilities, from hands-on work to hiring the right people to take over those roles, allowing the CEO to focus on higher-level strategic issues.
"It usually happens probably at the 20-25 person mark... That's when you start hiring an exec at the end of the day..."
Leo Avadar identifies the growth stage at which a CEO transitions from being deeply involved in execution to taking on a more executive role, managing people and larger business problems.
"I wanted to create a culture where people have an emotional connection to the company."
Leo Avadar emphasizes the importance of fostering a company culture where employees feel emotionally invested, which he believes will encourage them to stay for many years.
"I really want to show people that I care about them."
This quote highlights the speaker's commitment to demonstrating genuine concern for the well-being and long-term presence of employees within the company.
"I think people need to be challenged."
The speaker believes that employees should be given challenging work to stimulate their intellectual growth and keep them engaged.
"You got to give them purpose."
The speaker stresses the importance of giving employees a clear sense of purpose through the company's mission, which can vary in personal significance for individuals.
"And the last part is, it has to be fun."
This quote underscores the necessity of creating a workplace that is enjoyable and where work doesn't feel burdensome, contributing to a positive company culture.
"I give people a lot of accountability and trust, probably sometimes too much."
This quote reflects the speaker's approach to management, which involves entrusting employees with a high degree of accountability and the freedom to make mistakes as a learning process.
"The only way that I've learned is by making my own mistakes."
The speaker shares a personal philosophy that making mistakes is an essential part of the learning process and applies this to how they manage their team.
"Multipliers by Liz Wiseman."
The speaker recommends this book for its exploration of leadership styles and the impact leaders can have on their teams' performance.
"Unsexy is the new sexy."
The speaker humorously redefines what is considered 'exciting' in the tech world, highlighting innovative uses of traditional media like paper.
"I am very, very competitive."
This quote reveals the speaker's competitive spirit and their commitment to self-improvement, even in areas that are not of primary interest.
"It's definitely leaving my job on Wall Street a couple of weeks before I got my first big bonus."
The speaker shares the biggest risk they've taken, emphasizing that personal growth and challenges are more important than financial gain.
"Our goal is really to create a suite of APIs for the enterprise and make the world programmable."
This quote outlines the company's vision and strategic objectives, focusing on enterprise solutions and global impact through APIs.
"We're the first company in ten years to be able to provide that via an API."
The speaker takes pride in Lob's innovative approach to address verification, highlighting the company's unique position in the market.
"I've always been enabling about starting a business and leaving Wall street, my first job out of college."
The speaker reflects on a pivotal moment in their career, highlighting the courage it took to pursue their entrepreneurial ambitions.
"Thanks Harry. This was fun."
The speaker thanks the host, indicating a positive experience during the interview.
"Well, I have to say, and I really shouldn't say this, but I think that was one of my favorite founder episodes ever."
The host conveys high praise for the interview, suggesting it stands out among many founder episodes.