This week's podcast guest, Sam Ellis, doesn't miss a beat - whether it's competing in a 24hr races, writing hip hop music, or coaching our audience on how to gain momentum for growth!
In episode 14 of Pit Stops to Podium, Sam Ellis coaches on how to get traction and maneuver smoothly as you accelerate your company from zero to one. Sam is a West Point graduate, the technical co-founder of the unicorn company Dutchie, and currently the Managing Partner of WPMC and Scout Ventures. Hear what Sam advises will give your company direction and momentum.
Take 20 minutes to listen and then head back to the races! 🏁🏆
Pit Stop Highlights
The Big Idea
“All companies have the ability to be successful if they can pivot infinitely quickly”
Investor Lens vs Entrepreneur Lens
"Entrepreneurs tend to be concerned about the next fire..the successful ones are able to stay acutely focused on key KPI’s."
Investors, on the other hand, tend to be more concerned with the company's ability to safely take on risk. It can be challenging for them to see the “executing” lens of the entrepreneur.
Modern entrepreneurs miss when to raise capital. You can raise capital when you take on risk. You take on risk when you have a proven path to constructive product market fit.
Value Market vs Product Market
What is the best point to take on risk? Is it when you've accomplished value market fit?
Sam's Recommendation: Move from Value Market Fit to Product Market Fit before taking on rise. That is the point you can most confidently do so, but it takes stamina and persistence to get there.
Critical Early Stage Decisions
In addition to the two categories above, Sam also offers advice on decisions surrounding early stage hiring and go-to-market strategy.
Connecting with Sam:
- Follow on Linkedin: https://www.linkedin.com/in/sam-d-ellis/
- WPMC.fund
- Scout Ventures - Check out the portfolio!
- Or if you are out in the rain and see Sam, see if you can catch him and keep up with his pace!
Full Transcript
BT: Hey, everybody, welcome to Pit Stops to Podium the RevPartner's podcast where we talk to execs who have competed and won. My name is Brendan Tolleson. I am the Co-founder and CEO of RevPartners and I'm excited to have with me today Sam Ellis, a West Point grad, the technical co-founder of Dutchie, who has reached unicorn status, and currently serves as a managing director of WPMC and partner at Scout Ventures. Welcome, Sam.
SE: Thanks, Brendan, I really appreciate it. Happy to be here.
BT: Well great, it's a joy to have a West Point grad. I am not a West Point grad, however, my partner and co-founder in RevPartners is a West Point grad. So it's fun to have that connection. Well, Sam, before we kind of get into our typical rhythm, I would love to understand a little bit more about who WPMC is as well as Scout Ventures.
SE: Sure thing. Yeah, so I did a couple 0 to 1 roles back to back, both at dutchie and then at Point72, building up some systematic infrastructure for their large book. And for me, I really wanted to do more 0 to 1 at that scale. So horizontal scale in particular across several companies. Right so I think the best way to do that is oftentimes being an early stage investor or an incubator accelerator. I leaned a little bit more towards the early stage investor, the faster attraction. And so I put together a small fund that was focused on investing in software companies that have a fairly heavy affinity towards founders of West Point grads, mostly as a kind of bolster innovation in that community. And then also building a brand around that immediate first degree network, because it's kind of like, “hey, this is a really good person to go talk to and a good touchpoint for software companies and the early stage.” And I think for anyone who's doing a first time fund, it's kind of a challenging experience, right. Because it's like your track record is really important for fundraising. And usually it makes sense to start at a relatively small scale. And this very much was the case rate where people see it as kind of more of a lower volume, higher touch shop as we really figure out how to get the mechanics down to managing a fund and in particular, look at early stage software funds. So almost all business companies sizes between 100 and Arctic and really, really focused on getting fantastic founders and frontier market fit and indexing pretty heavily on leadership and ability to execute a venture skill company from the early stage forward. So that's kind of the quick, quick of it. WPMC also recently joined scout ventures as a partner and we'll be work. There are traditionally a dual use and tech fund as they've done some SaaS in the past, had some success there and are looking to expand upon that. So I'm joining Scout as a partner to really focus on the SaaS portfolio and continuing to bolster their deal pipeline and a number of deals and kind of the pressie and seed stage and even some incubations as a kind of the software and SaaS space.
BT: That's great. Well, we'll get back to that core competency is our big idea, because I think you have an amazing experience within that category. But before we do that, we have a tradition here at the podium where we get to know you a little bit. So you're a busy guy. But what are three fun facts that our community should know about you, Sam, outside of work?
SE: Sure thing. I think the first problem, most central to life outside of work, is really, really into endurance sports. Triathlon is like Ironman Triathlon and then ultra running. So recently did a 24 hour race and have two full Ironman's coming up in the two half hour minutes coming up at the end of the year. So that consumes a lot of my time and bandwidth outside of work and it's very functional, very functional hobby or like you're working on fitness and mental fitness as well. So that probably takes like the majority of time. And then also probably another sort of fun fact. People who are fairly close to me know this one is like I really mean, so many forms of expressive writing, but I really like lyrics and hip hop and enjoy writing and occasionally recording and just kind of Messing around with that is just like a form of creative expression. And I'd say the last fun fact is that I'm really obsessed with personal growth and growing as a person to the point where I'll go outside if I know it's going to rain. I'd rather choose to run in the rain so I can get a little bit better, just like mentally, because it's harder and more of a barrier to overcome. So any of those barriers I welcome them and which I know it's just a touch and see and touch and tense, but I think for part of life is about self transcendence and like that's kind of my way of constantly chasing. It's like hunting harder stuff that's hopefully functional and productive.
BT: I feel like that's a common theme with the West Point people that I've met. So if anybody ever complains about not having time, just remember this interview with Sam Ellis and what he does with his time. There are no more excuses. Well, let's transition to the big idea, Sam. And so the big theme of our podcast is all about transitioning from high growth to high scale. However, I think what you have expertise in is really interesting, especially for our audience, and that's really around that traction concept that you mentioned, where you go from 0 to 1. So how do you go from 0 to growth? And so you had mentioned a few experiences. How about you dive into that a little bit further? And then let's jump into three big themes that you've been able to capture as a result of the experience that you've had.
SE: Sure, yeah, so I think. I think there's tons and tons of common mistakes that entrepreneurs make and that kind of 0 to one, that I think this is where most companies either die or incur fatal wounds that cause them to die later on. And it's like a lot of it. I like to lean on this. This maximov, like all companies, have the ability to be successful if they can pivot infinitely quickly. Right so I think if you like, keep in mind because. The early stages of building a company that are understanding of markets, and I think that good thing to jump into it in the second, but at its core principle, it's like understanding currently where you are, where your customer sees value or their problem is, and then being able to close that gap and you can close that gap and fairly quickly, then you'll still find success. Right but like, it oftentimes is challenging for companies to be able to look into it quickly enough on the product and to learn quickly enough and in order to cover that gap and actually find a market fit and get traction, be set up to do more of the robots and growth stuff.
BT: So the quick snippet of it, that's great. Let's dive down a little bit further and let's use some anchors for that. So let's first talk a little bit about the perspective of the entrepreneur and investor. I mean, you've sat in those seats, so I'd love to get your insight on that lens on both sides.
SE: Sure thing. So I think as an entrepreneur, it's fun, especially for me on the technical side. And they help support a lot of the fundraising and support, a lot of filling out the early stage data rooms as it starts. And so I think as an entrepreneur, you're almost always concerned about the next fire rate or feels like an early stage. You're just like, all right. Well, I have. And it's often times you forget about, like, the metal strategy and what's really centrally important. And I think the really smart entrepreneurs are able to stay acutely focused on their KPIs and the right KPIs. Right and are company doesn't affect that. But it is very easy to get in the trap of like, whoa, I have like 60 things to do on my to do list. I just need to start blasting them. Right and it's like these to be kind of heads down and forget about the actual mechanics, the business that really matter. And so I think from like, it's so easy to get trapped in a vision, trapped and locked in to like. All right. Well, we had this initial vision as founders were setting out. And there's almost a subconscious blindness that occurs because you have opposing vision. You're like, actually you up I want to execute. Right? and like, look it up. Nerves are like Dewar's. Now what's the next step? So it's like I think you the second time founders have this like 30,000 foot view a lot better. And I think a good parent leaned into his head like when in doubt Zoom out. Right so if you're not sure you like what you're doing then or those are like Chief importance, then it's important to keep that retrospective reference. It's like, OK, what have I done, what hasn't worked and what I want to be doing them forward. I think as an investor, it's a lot easy to look at the company as a unit. Right and be like, OK, well, I know there's a variety of inputs are coming in to be successful. And you don't see it's a challenging to see like that lens of the entrepreneur where they're just like I do. I'm just executing. And so it's like, so you're I mean, you're more like you're more concerned about probably principally the team. Right and like that's at least early stage and that's like a central element. But when you're looking at the actual mechanics of the company, like, I think for the investors the most part, I think it took me a while to really figure this out as an entrepreneur. But like, you're effectively looking at the company's ability to safely take on risk. Right which which is a capital that you're putting in the company. Right so and I think a lot of entrepreneurs miss like one you actually raise capital. Right and this is a really important point, I think is like, all right, well, you should raise capital when you take on risk. You can take on risk when you have either a clear path or a proven path to generating constructive capital to be right where you're like, OK, we've built some product or service. And we know that like art, we know we have a customer segment that wants to receive this right and are willing to pay for it. We need to figure out, like, OK, how do we systematically and efficiently acquire the customers and then being able to have a favorable ratio to like how? Like lifetime value. Right so it's like I mean, that's like I think the central figure of what makes a company work. Right? it's like, can you like, scalable, scalable and systematically acquire customers and have that favorable ratio? Right and so it's like obviously it's much deeper and deeper than that. Right but like I think kind of like a core principle, that's a really good thing to stay focused on. And as an investor, it's much easier then because you're looking at this kind of like high level view, whereas like as an entrepreneur, you're like you're not constantly obsessed with that kind of central paradigm. Right I think those are probably like the there's probably several those differences, but probably one of the biggest ones I see.
BT: Yeah I like how you outline the different perspective, depending on where you're sitting on that side of the equation. There the entrepreneur, the investor, I think a natural segue even into that is thinking about the value of it versus market fit that you were just describing. So walk us through kind of how you view those two things. In light of what you've already described.
SE: Yeah, for sure. So I think, like the product market fit, I think that's kind of like the range where you can confidently take on risk. I think the market fit. You can take on risk somewhat comfortably, but not with confidence yet. Right so and to draw the distinction between those, I think the market fit in my eyes. This can and should occur before you even start engineering efforts. Right it's like I think this is probably one of the highest high casualties for companies. It's like over spending and over delivering on products. They don't quite understand where it fits yet. And just because of like. All right, well, I'm excited to have this vision that we'll start building stuff like that's like the general demo for like I think most entrepreneurs. It's like, Yeah. I mean, like you're excited. You're back from looking at the wall. To some extent, you are building stuff like, I get it, let's go. But like achieving a market fit first, which is this notion of coming into an understanding of what your customers problem is and like the solution that they want to see. But before you have a product. Right I mean, I think most simply it could be like in an or sigma prototype where we're working with a designer like, OK, well, here's the prototype that we have and we suspect we suspect that this is the problem. But does this actually fix the problem for you or can you see and feel this and this makes sense? And like is there a reasonable amount of excitement over it that it does fix your problem of a value market? Is is being able to feel that, like excitement and expressiveness from your prospective customers? Or it's like, yeah, Yeah. One does this one does this come like when you go from prototype to like a real thing that I can use? Right and so there's really no reason to start building until you have a reasonable degree of confidence from that point. Right and I think that for a little bit more experience or entrepreneurs would like a better vision than once you can have that market, then I think that's kind of a checkpoint recapitulating on capital, be able to build out. I mean, like I think the safest point will take on risk is like post like a good fit. Right we're like you actually have built the thing, people are using it and you're not constantly getting like people screaming at you because there's stuff missing or broken. Right it's kind of like the it's a tremendous amount of work to an iteration and like, honestly, look, stamina and persistence to get there. But I think the I think people really underestimate how important it is to first get value market for product market fit and be able to actually save on all the resources that would have gone into building product. When you're not even entirely positive that like that the kids want it like that.
BT: It’s like don’t skip steps. The value market fit informs the product market fit, which I like a lot. And so let's transition at last point because I think it plays well and that is some of these major decisions that had to be made along that kind of road from value market, that product market fit to ultimately raising that money that you were describing. So two decisions that I'd love to hear your input on. One thing about people, and the second is just think about the go to market strategy. So that's a big ask for those two specific decisions. But I think it'd be interesting to think in light of that progression, how do you make those decisions around people and strategy?
SE: Right yeah, so I think like early days or charts are really, really tricky to nail down. And I think the way that people can sort of think of it is like what are our next few constraints? Right like what? Our next few major constraints. And that's kind of an interesting thing about hiring and being able to early stage. You have to have people that are like owners are almost like many entrepreneurs, that there's like a little independent pressure on you. Right like you're almost guaranteed to be under-resourced and you're in a challenging spot in terms of we need to deliver a lot. And so, you know, you can kind of think through hopefully the next couple of constraints. And that's kind of like what informs the early days of are. And it's like it's probably more individual contributor, heavy than manager, heavy, like it's very rare. You don't eat like VPI of anything too early. You need people like in the trenches digging. It's just that simple. And so oftentimes if you're constraint is engineering and then you can try. It's really engineering like, OK, well your next new hires probably engineers. Right or if like your constraint is like, OK, well once we have that contract satisfied, we're still kind of slow on sales for that sales. And you have a really, really strong anchor, like an executive, really strong, even like you. You don't really a couple of stars could be helpful. And so I think that's helped. And then there's always like from the injury perspective, the question I feel like I often end up discussing with people is like, do we do really engineers or do we do like contractors? We're like or overseas contractors or not? And I always think that is kind of a tricky one I. Always lean more towards having a good an awesome organic and house team or anything, but there are times I think contractors make sense. And that's like I think if you have a point of continuity and someone with high technical acumen who can manage the contractors I pick, the stack helped direct things properly that I think it makes sense before you have capital to bring out, like really competent engineering team. But it's really important to have that point of continuity where someone can like. All right, well, we know we're going to use this stuff and make hiring easier and reduce the stack, because I'm familiar with the scale and kind of some of the pitfalls. And and then I also think, like one of the people really quickly, I'm kind of the contractor, be the house have to be like if you're someone with strong leadership acumen and like you're good at building culture, and like, it probably almost always makes sense to go and have to you. So I think it's like I don't know. But there's a variety of times where contractors make sense, especially if you need to bridge an experience gap or like move quickly, frankly. Right we're like, OK, let's do it really fast enough times like hire the perfect person, because like I remember, every person is lot more important than hiring fast, I think. Right so that's a quick snapshot on kind of like think about personnel. And moving on to the other point, like go figure out early. Go to market. I think this is like so, so different across companies, US companies, even like consumers versus big business companies. I think for the most part, though, things are probably like a couple of probably there's like the large scale consumer marketing side and like B2B more enterprise SMB sales side. Right and I think companies that excite me most in that latter category because it's the category and more familiar with it. Look at more often it's like ultimately writing the notes and it's just a company like does this person have like a sales ringer? Right like someone who truly understands the product and how to sell it and understands actually like hey here like HubSpot best practices. And here are like how we maintain touch points here are we do if you don't have that person, then I think it's like it's stressful for me, for a company like I wouldn't want to invest in the company, doesn't understand and have that sound like go to market capability. So from a sales or if you're looking at enterprise stuff right on the consumer side, you know, there's so much, I think, tribal knowledge around understanding the variety of channels like ad channels, email channels, or just like more general organic social content. I understand like someone who can build a really good funnel on different stages of the funnel focus. So I think it's going to come down to honesty, comes out like personnel decision. Again, I would just kind of funny that that's our last topic, but it's like there's for me as an engineer or even looking at someone like Ross, the current CEO of dutchie is like amazing, natural, talented salesperson. Like, you have your core competency. And it doesn't make sense to straps how you're competitive and it's too much. So it's like. Yeah, like think through your next constraints, but I think that is one of them and make sure that you're covered down on the key hire or key resource. Right so it's just so hard to know. It's so hard to learn all of the like learning the intricacies of like HubSpot or Salesforce and learn like even like the etiquette for setting up calls and touch points and battle rhythm. It's like there's tremendous stuff to know to have the core competencies done well. But yeah, I think it helpful. We know enough to be deadly and know enough to recognize the right people. That probably most important part, right?
BT: Well, yeah, it's been a fascinating conversation. And I think to your point that 0 to 1 and get that traction, it's not easy. That's why very few kind of get past that point and ultimately look to be funded. Because what you just outlined is it's a hard road. And so when you think about it, we kind of summarize that whole concept of looking through the lens of the investor versus the entrepreneur, looking at the fit value, market fit versus market. Then ultimately the decisions around go to market and people you have to get a lot of things right in order for all that to work and ultimately execute. And so thank you for sharing your wisdom in this specific topic. Sam, if people want to learn more about you and/or more about the companies that you serve, what would be some practical next steps they could take?
SE: Probably just following on LinkedIn, probably easiest. Or you can check out you can set that fund or scout ventures com, check out portfolios and ask about the team and kind of like the thesis and mission and all of that.
BT: Right, or if you're running in the rain next time and you see sand, you can try to stay with him for the next six hours if you have that type of endurance
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