PEP Episode 034 — Decoding Startup Jargon with Ken Valledy & Eamonn Carey | Authors of The Startup Lexicon

Podcast Description:

Unlock the secrets of startup jargon with our esteemed guests, Ken Valledy and Eamonn Carey, co-authors of The Startup Lexicon. We promise you’ll walk away with a deep understanding of the language that can make or break your entrepreneurial journey. Listen as Ken recounts his transition from corporate marketing to the startup world, where intricate terminology initially felt like a foreign dialect. Together with Eamonn, they share their mission to demystify this complex language, making the startup landscape more accessible and encouraging for budding entrepreneurs.

Our conversation, lead by Sr Associate Attorney Olesya Trusova, and Global’s Director of Operations Jeremy Stock, navigates the challenging intersection of finance, legal, technology, and strategy consulting, focusing on the power of clear communication in pitches — an essential skill for founders aiming to secure investment. With insights drawn from experiences with companies like Stripe, we discuss the importance of founders having a unique perspective or personal pain point driving their innovation. Ken and Eamonn highlight the necessity of simplicity in pitching, particularly when engaging with resistant industries such as fintech and payments, ensuring the startup’s value proposition is conveyed effectively to potential stakeholders.

Explore the evolving startup terminology landscape, as we break down significant terms like liquidation preference, convertible notes, and KYC — essential for those seeking investment. The discussion also touches on the rapid evolution of tech language, with the emergence of SaaS, generative AI, and quantum computing, urging founders to keep pace with these changes. Ken and Eamon share insights into updating their book to include new terms, providing a consolidated resource that offers clear definitions crucial for navigating the startup ecosystem. This episode is a valuable guide for anyone looking to understand the language that underpins successful startup ventures.

Ken Valledy (00:00:00):

I can’t think of a word that I wouldn’t have in the book. I still struggle to pronounce one word and I’ve forgotten what it actually is. When we did the podcast, I forget which one it was now, but there’s a word that I still can’t,

Speaker 2 (00:00:12):

I’m have to look through. This is not a blatant ad, but it’s in here.

Speaker 3 (00:00:18):

There. I’m giving you different answers to the answers

Eamonn Carey (00:00:22):

Here. Anthropomorphism.

Ken Valledy (00:00:23):

Anthropomorphism.

Eamonn Carey (00:00:24):

I can’t. Good word. Good word.

Ken Valledy (00:00:26):

So there’s a word that if you want to catch me out in any interviews, ask me what that means.

Jeremy Stock (00:00:33):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode. Welcome to the Payments Experts Podcast, a podcast of global legal law firm. We are very excited. Very special episode. Today we have joining us in studio senior associate attorney Alicia Truva, as well as our special guests. We have the co-authors of the Startup Lexicon, which is now in its second edition available. Everywhere that books are available, we have co-authors, Ken Valdi, as well as Amen Carey. Gentlemen, thank you very much for joining us on the Payments Experts podcast today. We’re looking forward to a great conversation with you. And if you wouldn’t mind, Ken, and then maybe amen. Would you guys mind introducing yourselves to our audience?

Ken Valledy (00:01:32):

Yeah, pleasure and great to be asked onto the show. My name is Ken Dy. My background is marketing in brand marketing. 10 or so years ago, I was a brand marketeer. I worked for Ein Hauser Bush InBev, so I spent a lot of time in Europe and over in New York, and I started my own business 10 years ago. And since then I’ve been immersed in the world of startups and I started on my own and I formed a small agency. We were acquired very recently by a company called Anthesis who are of a global sustainability consultancy. So now I work connecting large corporations to startups in the world of sustainability. But my love and my passion is really helping startups get new business and scale through working with corporate. So I spend a lot of my time chatting to startups and people who represent large companies. That’s me.

Eamonn Carey (00:02:23):

And I’m Amon Carey. So I’m a general partner at a VC fund called Terra Ventures. We’re investing early stage in companies across the Nordics Baltics in central and eastern Europe. Before that, I ran an accelerator program called Techstars, which is a global network of accelerators that invest in companies, support them through a three month program of mentorship and growth and continue to follow on and support them throughout the lifetime. So it was with them really from 2015 through 2021. And prior to that I was a founder myself, so somewhat depressingly. I started my first company 20 years ago back home in Ireland and have had a couple of successful companies and a couple of failures along the way now. So I’m probably still a little bit more on the founder side of the equation than investor. But similar to Ken, I think people who start companies take such a huge risk and do such amazing things. And so being able to support ’em in any way that we can through mentoring, help books, et cetera, has been an absolute privilege.

Olesya Trusova (00:03:23):

Ken. Amen. Thank you very much for this introduction and for joining us today. And of course, the language of startup is very complex and it’s full of jargon. And of course it abstracts the progress rather than facilitates it. And when I think about it, it really reminds me the cures of the Tower of Babel when people once were united by a single language, they had this great ambition to build a tower that reaches the heavens and they were punished for that. God confused their language, it scattered the language into many different ones. So people were unable to understand each other, and of course they could not build the tower they wanted to. In the same way in the world of entrepreneurship, this complex language really abstracts the way how people can understand each other, how they can communicate. So it’s very complex ecosystem to penetrate. And what I really like about your book, it helps break this curse of the Tower of Babel. It makes this language accessible and it helps really demystify this complex terminology. So it would be great to hear, based on your personal experience, how complexity of this language actually make the life of entrepreneurs really difficult.

Ken Valledy (00:04:59):

Yeah, I love the example of the Tower Bay. I would say for me personally, I experienced these barriers from the word go. So when I left the world of beer, the corporate world, I started to work with startups and I was very excited. I thought, I’m going to work with these very dynamic forward-thinking positive people. And I think after two or three meetings, it felt like I was listening to another language Burn Mate Roadmaps, convertible notes, series A, series B, and I just thought, what is all this about? I mean, there’s enough jargon in the corporate world to be honest. And I went over into the startup world and there was even more jargon there. Now, how would I word this? I was quite confident and maybe a little bit egotistical. So I kind of winged it a bit and thought I can get through and I will find out what these words mean.

Ken Valledy (00:05:46):

But that was me. And since that, I’ve spoken to a lot of founders who had some fantastic ideas who went into similar meetings and got bamboozled by the language that was being spoken around them. And I think in some cases it led to those people deciding it wasn’t for them. And I think that’s a real shame because there’s some fantastic business people out there, founders who have got great ideas, it may never come around again. And the thing that stopped them wasn’t that they tried it and it didn’t work and they had a bad luck or bad run in the market, it was because the language just knocked their confidence and they never made that big step, that first step forward. So from a personal experience, I saw it and thankfully I kind of pushed through, but other people didn’t see it the same way and saw it as a way to kind of confirm that they weren’t good enough to be an entrepreneur. And that’s the thing I think that spurred myself and Amon on to help these people carry on with that bravery, that courage and push through with their idea and start to get into the startup world and build a business. So for me, I think it’s crucial, but I experienced it firsthand and luckily I kind of pushed on through. But Amon, I’m sure you’ve got other experiences as well.

Eamonn Carey (00:06:55):

Yeah, I think that was a big and credit where credit is due, I should say. The idea for the book is cans. He came to me when we were all sitting in separate spaces outdoors during covid times to tell me the idea. And it resonated so much because what we did at Techstars, which is where I was working at the time, was we invested in founders really at the idea stage. They might not have a team, they might not have a product, they might not have even incorporated a business in many cases, but they had some passion or some idea or some opinion that they wanted to go after and build something. And in many cases, those founders didn’t come from a technology background. They didn’t come from an NDA background, they didn’t come from a strategy background. And so they would come in and as Ken said, on day one of our accelerator program, they would meet a VC who goes, Hey, what’s your LTV to CAC ratio?

Eamonn Carey (00:07:44):

Or what’s the tam, Samsung? What’s the sammon in this market? And they would kind of nod politely and in many cases get dismissed by investors because they just didn’t know this jargon that we’ve created in the industry. In many cases, they would come to me and say, I’ve being asked this and I feel like an idiot because I don’t know the answer. It’s a challenge because I think the startup world and the tech world is kind of at the intersection of finance, legal, and technology and strategy consulting to a certain extent, all of which are industries that are well known for their love of an acronym or a complex way of describing actually a very simple concept. So we saw with lots and lots of marketplace businesses, lots of direct to consumer businesses that they would come in and be dismissed by investors on day one, but on day 10, when they knew all of these words, they knew these phrases, they knew how to kind of transmute them in their head from the complex to the simple. All of a sudden they were nailing these meetings and people were getting excited about the business instead of thinking about the fact that this person didn’t know one phrase. So I think it’s transformative for founders coming to the market to be able to pull the curtain back and understand what these words really mean.

Jeremy Stock (00:08:51):

Excellent. I can see that it would be, I know just even preparing for this podcast going through a number of these terms, and here myself and Alicia we’re in this industry. Many, many of our clients, the vast majority of them actually are businesses and entrepreneurs themselves. And so you would think we’d come into contact with a lot of this stuff, but I found myself even this morning, Elisa and I were talking about quantum, we’ll get into that later. I had no idea what it is, and I still, I’ll be looking forward to you guys to explain that to us later. But yeah, so the utility of this I think is can’t be overstated with your extensive experience helping startups and talking about these terms and the terms that are crucial for these transformative breakthroughs as you were discussing Aon, can you guys talk about maybe some of the core principles that you think would be important for a startup, maybe particularly in the payments space, given the fact that global legal law firm is a payments litigation firm?

Eamonn Carey (00:10:02):

I think one of the key things certainly that we looked at from a Techstars perspective when we were investing in these companies, and even if you look at maybe one of the canonical big examples of a company in the payment space is the folks from Stripe is that in many cases they are founders who have a real pain point, an itch that they want to scratch or a perspective on the industry that they want to take forward. And so I think you need to find those people because first of all, as I said before, starting a business is kind of a crazy thing to do, especially if you’re starting a business from a perspective of having worked somewhere that is stable, maybe publicly traded with a good salary and a pension plan to somebody going, well, I’m going to take all of the risk. You have to find very driven people, very passionate people who can not only create an idea from a technical standpoint, can will an idea into existence, but also build the underlying technology behind it, but then also explain that to potential customers, partners, hires, et cetera, et cetera.

Eamonn Carey (00:11:00):

So you look for people that have very high eq, you look for people who have founder market fit was how we always used to think about it in terms of the people that you would bring in. But you needed that ability to bring up an idea, be passionate about it in terms of the way you explain it, and then also be mindful of the audiences that you’re talking to, whether it’s partnering with corporates, which in the case of most payments companies, you have to then build relationships with Visa, MasterCard, banks, a lot of industries and corporations, let’s just say wouldn’t be the fastest moving in the world. And in many cases when we were investing in FinTech and payments companies in the early 2010s we’re pretty resistant to change. So I think you have to have a combination of factors in there to facilitate that, not only ideation of a business, but also the build out and the communication that you need to help at scale.

Eamonn Carey (00:11:53):

And so if you look at a lot of the big successful payments companies that are out there, they’re either founded by people who’ve come from industry and have some very relevant experience and connections and network, or they’re founded by people who go, this is a pain point that I cannot abide, and so therefore I’m going to create a buy now pay later system, or I’m going to create a new payment gateway that is going to eliminate a lot of the challenges that we see with the kind of incumbents. So it’s a tough one at that pre-seed stage. It’s really a people business that you’re looking for, but you then have to be confident that those founders can build a people business that will scale to be worth billions of dollars hopefully.

Jeremy Stock (00:12:33):

Ken, to kind of piggyback on that, if you wanted to maybe add in your thoughts in terms of what factors, what strategies, what perspectives are you seeing in new startups where you’re seeing a likelihood of success? What are some of those key elements that you have found that if you’re seeing those being put into place, you’re maybe more on the optimistic side in terms of the turnout?

Ken Valledy (00:13:01):

Yeah, I mean, I echo everything Amon said. I think it applies to any company that wants to sell or to pitch a business to a potential customer. I think from the startup and the corporate relationship, I always say to startups if there’s two or three things you should always do, one is keep things simple. I think there’s a danger that a startup will go, will get a meeting in front of a corporate and will think this is it. This is the meeting, this is the one that I’m not going to sleep up to. This is the one that’s going to change my life. And they put too much pressure on themselves. So when they’re there, they almost lose a little bit of discipline and over present,

Ken Valledy (00:13:37):

They make their, rather than that, amen said, explaining the problem, the itch and going through their product and what the USP is and why they are better than the competition, keeping it simple, they almost oversell over pitch and they get too excited. So what you end up with is lots and lots of words, and at the end of it, the recipient, the corporate might think, well, I think I get what you’ve got, but it seems a lot bigger than what I thought it was, and I’m not sure if I really understand what you’re saying. So maybe not. And I think the advice I give is just keep it simple. And when you pitch to a corporate or anyone, especially a corporate, I always say, your aim isn’t to get that big ticket or that big deal signed off there, and then that won’t happen. Your aim is to, at the very least, is at the end of your pitch to let them know or for them to understand what your product is, what the problem is it’s solving, and why you are the best option out there for it to work with or to buy or to invest at as a corporate.

Ken Valledy (00:14:33):

If you do that, that’s all you can do. And then leave time for good discussion and question and answers. Don’t go over the top pitching, don’t waste all the time pitching. So my big bug bear Amon, and I always go on about this, is of all the hundreds of pitches I’ve seen where startups have pitched to corporates, one of the main reasons why the startup doesn’t a certain startup which should win the business doesn’t win it is because they over pitch. So if they’ve got 15 minutes to pitch and 30 minutes for chat or q and a, they will pitch for half an hour, 30 minutes and leave hardly any time for questions. And people are very polite, especially in Britain, they will say, very good, great pitch. And as that person leaves the room, if they can’t keep to time now, what are they going to be like when we work with them? So just keep to time and it’s a simple thing, obviously pitch well, but keep to time. So just keep it simple because my point is you’re not going to get it all in that one meeting. Your goal is to get your products across and to secure another meeting to then talk about some of the detail. So it is one of many meetings, don’t put too much pressure to achieve everything in one go.

Olesya Trusova (00:15:36):

Thank you very much for sharing this wisdom with us. So now we would like to explore the methodology behind your book. When I read it, I had such a light feeling and it felt really effortless for me, but I know it’s a hard work. So how did you decide which word to pick which one is going to be the winner and good candidate for your book?

Ken Valledy (00:16:04):

Well, I think you Go ahead. No, you go.

Ken Valledy (00:16:09):

I was going to say, I think Amen says it was my idea, but an idea is an idea, but you need to work with people to make it happen. And the reason I went to Aon is that I knew there were some words out there that I struggled with and would definitely benefit from a definition, but I knew there were hundreds and hundreds more. So I needed someone who had that knowledge of more words that we could join together to get a reasonable list to create a book. So there’s no rocket science to it. I mean, if I remember correctly, I chatted to Amen and we decided to set up a Google doc and we just listed words as we found them. So I had about 10 or 20 from my horrible first few meetings where I didn’t understand anything and we just added those words on and we got to a point very quickly where it was 60, 70, 80.

Ken Valledy (00:16:56):

And then I think I even jump in, I’m sure we got to a kind of a point where it was 80 and it was growing and we thought we could do a book on this. And then we started going back and writing definitions. We didn’t copy and paste definitions. We looked at all the definitions around net for one word, and we created a new definition from it. So all the definitions are our words, but we wanted to see what definitions or views were online, and then we created more of a new definition of encompassing. But yeah, it was a Google doc, nothing sexy Google Doc that just grew and grew and grew. That’s how you saw it. My memory tells me what it was like.

Eamonn Carey (00:17:33):

Yeah, it was exactly that words going into a Google doc. And then I think just by, I suppose reading Bloomberg and TechCrunch and the Verge and Twitter and all of the various different places that we source news and source content, you started to pick some of them up. And you also, I guess to a certain extent, I went back to kind of almost square one and started almost examining the language that I was using in conversations with founders and going, okay, what are the kind of questions that I always ask and what are the assumptions baked into those questions and therefore the words that I use as part of that. We did a little bit of crowdsourcing. So I think when we got to about 80 or 90 words, we started socializing the concept a little bit more with people and saying, Hey, what do you think?

Eamonn Carey (00:18:19):

And actually a big part of the first edition was at the time the whole kind of Web3 world was really booming. And so some feedback that we had was, look, you’ve included lots of things that are about startups into let’s call it web one and web two era, but actually you haven’t included anything really about beyond say, blockchain, Bitcoin, Ethereum of et cetera. But there’s an awful lot more in there that we looked into in the first edition. And likewise, as we looked at the second edition, starting to look at Google trends and seeing which words were starting to become more popular. So there’s a certain amount of crowdsourcing, there’s a certain amount of research, and there’s a certain amount of just catching yourself and other people in conversations. And I’m like a power user of the Apple Notes app on my phone. So I’m constantly talking into it and reminding myself of different things that I have to do or scribbling things down in a notebook, and that was very much part of it. And it would then go into that Google Doc. And I think we spent quite a bit of time actually deciding which words doc to include as well, because there are some that are too technical or too specific or too esoteric. We wanted this to be a book that wouldn’t necessarily put people off by having too much depth, I suppose, for want of a better description. We wanted this to be a jumping off point for people’s journey of discovery into this world and into these phrases.

Olesya Trusova (00:19:40):

I was reading your book, I saw a lot of terminology which we as lawyers use in our legal world, like due diligence NDA common stock, preferred stock right of first refusal. So I was just curious because all those terms, they’re legally defined or they’re part of the common law system. So did you take those legal definitions into account? How do you define those terms?

Eamonn Carey (00:20:11):

We were very lucky to have a couple of lawyers contribute to the book and a lot of people who have spouses and partners who are lawyers who read through it as well. But I think it’s one of those, I think because the startup world intersects with the financial world and the tech world, and particularly the legal world, which is probably the part of the universe that startup founders tend to have the least exposure and experience in. To me that was one of the really critical sections to get right, because I’ve seen an awful lot of companies who have signed their own death warrant for ones of a better description by signing the wrong term sheet with the wrong terms in there, or maybe not understanding what liquidation preferences or what participating liquidation preference is or understanding a right of first refusal. So we wanted to make sure that we really got those terms in there because they are business critical ones for a lot of the companies that I work with who were going and seeking investment. So I think that was really important to get in there. And I think, again, what we wanted to do is go look, at least if someone says convertible note in a meeting, you have a conceptual idea of what that means. Of course, then if you want to dig into it in more detail, there are a thousand online resources and different places that you can go, but we want it to be like the highlights reel rather than the full movie.

Olesya Trusova (00:21:28):

Interesting. I noticed in your second edition new words such as Chad g PT for example, and I wanted to ask this provocative question because Chad GPT entered into life of everybody, and there is a fun fact about the Chad GPT and the US legal market. So picture this, US lawyers started using Chad GPT for legal research and instead of finding solid legal citation charge, GPT supplied them with fake court cases. And of course there were some EM embarrassing moments in the court and the penalties for those involved and some federal judges reacted to the situation, they actually mandated that lawyers disclose if they use AI models in preparing their submissions. And actually they asked the lawyers to certify that they checked the accuracy of the content generated by ai. So how would JGPT influenced the O second edition?

Eamonn Carey (00:22:39):

I can say for sure, Chachi PT was the birthplace of the second edition. I think we published the first edition about a month before Chachi PT came to the market. And so it was really interesting because all of a sudden this whole explosion of generative AI and everything else started happening. And I think we very quickly realized our book is now six months out of date even though it’s only been one month. So it kickstarted the conversation about a second edition. And absolutely we use, I mean, I use Joan I and chatt PT is almost like a research assistant to help me find new words. It was really useful to go, are there words that are emerging in certain markets? Are there phrases that are emerging in certain types of publications? So it was good as a kind of research tool, but to your point around the hallucinations, we

Olesya Trusova (00:23:29):

Exactly

Eamonn Carey (00:23:29):

Certainly didn’t use it on that side of things for exactly the outcome that you described.

Ken Valledy (00:23:35):

No, I think Damon’s point in my introduction in the second edition, I mentioned that after we launched the first edition, we realized very quickly that we have to do a second edition because of chat GDP and GBT and everything that came out after it. I know the funny thing is the chat GPT definition, Daniel who wrote the story behind it, I think he actually used chat GBT to do the story or help him do the story, which he disclosed.

Olesya Trusova (00:24:04):

I saw that

Ken Valledy (00:24:05):

Bit. But yeah, in Ava’s point, in the words that we worked on from memory, it was good for a piece of research, but the definitions were she was say, done from scratch, done by hand. I wouldn’t necessarily trust chat GBT to write the book for us, and that’d been a very dangerous move. We didn’t do any of that, but it was the catalyst. I think it was definitely the catalyst that to us saying we’ve got to do a second edition.

Olesya Trusova (00:24:34):

So another provocative question. So what would be, in your opinion, the advantage of your book comparing to Google? Because nowadays you can just type the word in the Google search and have your definition ready.

Ken Valledy (00:24:53):

I can have a go at this one. We get asked this a few times. It all comes up my own personal views, I think there’s a space for both. I don’t think we are competing with Google. I don’t think we’re better than Google in terms. I think Google is quite reactive though. So if you are in a meeting and someone asks something and you just wait for that moment where you go and you look to Google, I think you can’t really sit in Google it, and you can’t really sit there in a meeting and start going through the book to find a definition. I think what a book does is brings it all together. So Google is very good if someone says something, you need to know what the answers. If someone emails, you need to know what the answer is and you go and Google it.

Ken Valledy (00:25:27):

I would argue, as we did when we started looking at definitions, a source to build a new definition, there’s loads of different definitions out there and Google, so Googling a word sometimes will make you more confused than you were before you Googled it. So many views out there on certain books. I think what the book does is bring all that together into cleaner definitions, but also brings them all together. So if you are looking to start a business and you want to get a gist of the kind of language that is out there before you go into meetings, I think the book’s really good to look through, get some ideas. And a lot of feedback we’ve had is that founders who look through the book actually recognize words in there they weren’t aware of, they recognized, they say, oh, I saw that word. Yeah, that came out the other day. So the books actually prompted them on words that they’ve already heard and they weren’t quite sure about. So I think it’s having it in one place and having one definition, one definition for each term, whereas Google can set you off down rabbit holes and everything. And I think it’s a bit more reactive, maybe my own view.

Ken Valledy (00:26:25):

I think there’s a place of both, but I think the book brings it all together. It’s quite a good companion to have on you, be it a Kindle version or

Jeremy Stock (00:26:33):

Agreed, agreed. We’ve been talking a lot about, I want to show them here for our audience, this is the first edition of the book that we’ve been discussing today, the Startup Lexicon. And I’ll note that if I can somehow show the size of this, the second edition is substantially larger, substantially many more definitions. And what I’d like to kind of get your thoughts on are some of the terms that made it into the second edition that I don’t think were found necessarily in the first edition. And again, some that are particularly related to payments. One that we talk a lot about is software as a service. Could you maybe talk about that, maybe even in terms of why was it not in the first edition and it is in the second edition, maybe some of the methodology and thought process behind that, if not also defining that term for our audience.

Eamonn Carey (00:27:35):

So software as a service is a subscription service. So where previously you would buy, and maybe I’m showing my age here, you would buy in Carta or a Lotus Notes or a piece of software and it would cost 30 bucks or a hundred bucks and you would install it on your computer and it would last for a couple of years. What you have with say Google Docs or even with chat GPT with lots of different products that are out there now, you subscribe to that service and so you get a version of it that you can use online, but it’s constantly updated. Iterated generally, these services are in the cloud, so you don’t have to install anything physically on your computer to use them. And so that idea of X as a service has become incredibly popular because for tiny lizard brained investors like myself, a subscription service is great because it gives you predictable revenue.

Eamonn Carey (00:28:26):

You can start to think about modeling your customer acquisition costs, the lifetime value of those customers. You can make confident predictions about the future, you can borrow money against that, et cetera. And so you have now everything from platform as a service, hardware as a service, and that can be everything from using AWS or Google Cloud platform for your cloud storage instead of, again, 20 years ago when I had the first company, we have to rent our own server or buy our own server. So you have a lot of these service models that are out there now that are hugely popular. I think the reason that we expanded on the definition so much in the second book and included it is I think a large part of the second edition was exactly what Ken just said, where we saw all of these new phrases very, very quickly entering the public discourse.

Eamonn Carey (00:29:15):

You think about the idea of a deep fake really didn’t exist in the public kind of conversation or in very many non-academic conversations three or four years ago now you can’t go a day without seeing something being discussed on CNN or New York Times or various different places on Twitter or X. So there were a whole bunch of these phrases that started becoming more popular. And alongside that, we both have a lot of friends who are both very supportive but also very critical who would email going, why is this word not it? I can’t believe you didn’t have this definition in there. So I think a lot of what was added in was partly having a really good network of people, many of whom ended up contributing to the book out there. But also just seeing the pace at which conversations, even at kind of the family dinner table would include things like generative ai, deep fakes where even you start seeing movies.

Eamonn Carey (00:30:11):

Alex Garland did an amazing HBO series called Devs, which is all about quantum computers. So all of a sudden all of these kind of topics started surfacing not just in the tech world, but also started becoming topics of mainstream conversation. And at that point you kind of go, we kind of need a definition in here. And I have no doubt in three months time or in six months time or over our startup Lexican Christmas party, there will be new words that Ken and I will look at going, I can’t believe we didn’t put this one in. And so third edition, who knows?

Ken Valledy (00:30:41):

Yeah, I think the software service and EBITDA and words like that, technically speaking, we maybe should have, I would say maybe included them in the first edition. I mean, could it moved so quickly, the first edition, we wanted to get something out there and we wanted to get to a point where we wanted to release something. As Amen said, once we released it, we realized that there were a whole new words coming out as a result of generative AI chat, GBT, but also the terms of maybe we should have included. And we were very lucky, they were very supportive network that let us know if we, we’d missed a few words and we decided, okay, let we go on the list for the second edition. So it isn’t a linear process where you get all the words nailed, release a book, and then new words come out and you do another book.

Ken Valledy (00:31:23):

There’s some words that maybe have always been there. We didn’t include ’em in the first edition food, the decision we made or we forgot to include them, or they just got more prominence. So they’ve always been there, but software as a service prominent or deep fake became more prominent. So it is an evolving thing and it’s impossible to control it all. So the words kind of get away with you, and we are trying to play get ahead of it with the book, but the book will always force words and we have to catch up again. But that’s the joy of it. It’s part of the fun.

Jeremy Stock (00:31:52):

Yeah, no, it is. It’s very interesting. You talked about discussing around the table. I got something I’d like to walk away from this podcast with a higher iq. So gentlemen, I would like you to discuss, if you don’t mind, quantum as a service, this is one of those terms I mentioned. I don’t even really know what the term means and how it can be applied to a startup, et cetera. Would you guys mind talking a little bit about Quantum as a service?

Ken Valledy (00:32:20):

I’ll pass it over to Amon because Amon is out.

Eamonn Carey (00:32:24):

It’s my favorite phrase. So I will apologize to in advance for any nuclear physicists or quantum enthusiasts who are watching this if I butcher the description. But in effect, the way that computers work nowadays is zero on one, right? Binary. So it’s a transistor, effectively switches is on or off, and that is really what powers all of the computers that are out there. The majority of computers that are out there at the moment, quantum computing is the idea that that switch is neither on or off. It can be both simultaneously. It can be some combination of the two. And so what it means is you go from having a certain amount of processing power and compute power to having an infinitely more powerful computer because it can perform more processes at once. And so the idea with quantum computing in particular is that you can apply it to extremely challenging, usually mathematical problems is what a lot of people are working on them with.

Eamonn Carey (00:33:18):

Now there is a huge, one of the big challenges with quantum computing when people get it right and they build a true quantum computer, a lot of what’s out there at the moment is still relatively experimental. When they build a true quantum computer, it will be able to crack effectively every password that we have in a matter of minutes as opposed to now, if you wanted to, and you see this in a lot of law enforcement cases, if law enforcement wants to access an encrypted computer or an encrypted online service, they can do it in some cases it can take days and some weeks, and in many cases it can take years with one of these quantum computers because they can perform those processes in order of magnitude faster. They can do it in seconds. And so there are big concerns around the security implication of quantum comput coming out.

Eamonn Carey (00:34:05):

There are also big benefits if you think about analyzing massive amounts of data far more quickly than we can now. And so you have Amazon and others are working on quantum computers. They have quantum as a service available for researchers, universities, companies that want to start accessing this. And so it’s one of those phrases that is at the cutting edge in terms of the technology. We’re still super, super early, I would say, in terms of that technology, but it was a phrase that started coming into sci-fi a little bit more and more. And it was a phrase that we started hearing a bit more. Certainly a lot of VCs now are kind of setting themselves up as deep tech investors, and one of the areas that they’re looking at is quantum. And so it felt like one of those ones that we really needed to have in there, because I think it’s a phrase people have heard, but the idea of quantum physics, maybe not necessarily the breakfast time reading that everyone wants, but we wanted to try and have a distilled definition that would at least allow someone to conceptually understand that this is about processing power and the speed of being able to do these equations.

Ken Valledy (00:35:11):

And on the back of that, you’ll see governments putting in millions and billions of pounds into quantum computing. So it is not just a kind of nerdy thing that people are doing in the back office. It is actually now got international focus by governments. And there’s so much if you look at the main areas of investment, quantum computing plan.

Jeremy Stock (00:35:32):

Wow, that’s really amazing. Before I hand it off to Alicia, a term that I imagine has expanded at least in terms of not only just the usage, but what it means and what it means in certain industries. And that is one KYC, know your client, know your customer. Can you guys talk maybe a little bit about the evolution of that term and maybe as it’s applied to different industries, how it might look different? Even though it’s the same concept?

Eamonn Carey (00:36:05):

I think KYC is one that we’ve put in because it has started to become used across multiple different industries. So when it first emerged, it was really associated with banking. And so opening a bank account opening, getting access to any sort of financial product you needed to send in and know your customer generally means you do a check on someone’s identification. So you get a copy of their passport or a scan of their face, a copy of their passport, and maybe some identifying information around their address, proof of address, et cetera. So we started hearing the phrase in a lot of cases in the 2010s in that first FinTech boom. And then we started seeing it more in the VC world on both sides of the table, where when we’re making an investment in a company, we have to KYC the founders of that company to make sure that they are who they say they are, that they’re not serial fraudsters or serial killers or anything like that.

Eamonn Carey (00:37:04):

And on the flip side, especially now in an era where there are more sanctions than ever before, founders want to KYC the VC funds that they’re working with and make sure that those funds are legitimate, where their sources of capital come from. There’s a lot of concern certainly amongst NATO countries at the moment that there are hostile states, I would describe them as that are actively looking to fund innovation in everything from defense technology to quantum and so on. So being able to do that kind of KYC checking of who’s on both sides of the table is really important. And now as we move into more regulated industries and a more kind of almost identity proof of identity centric world online, I think we’re starting to see it become a more prevalent phrase and idea. So I think for the first edition, it was one of those ones that I think we had it and we discussed it, but it felt like it was maybe a little bit too focused on FinTech.

Eamonn Carey (00:38:01):

And I think when it came time to look at it for the second edition, it’s like this is a phrase that everyone is going to encounter on an ongoing basis, whether it’s proving their identity to get an Instagram account to opening a bank account or starting a new business. So that was kind of the evolution of the thought process on that one. It felt like it was a phrase that it’s one of those classic acronyms that I think a hundred percent of the people who buy the book will have heard, and 90% of them will have gone. I think it means no something. And so being able again to see that kind of headline view of it was important.

Olesya Trusova (00:38:35):

Yeah, and I’m sure this world is very important for the corporate world as well, right, Ken?

Ken Valledy (00:38:40):

Yeah, no, absolutely. I mean, to Amy’s point, I remember doing a brief with a banking client and KYC, it was all around KYC and helping customers start a bank account with scanning their passports and pictures, et cetera, and utility bills. And this was nine years ago, so KYC then was very much FinTech, but as Amen said, it got the chop maybe for the first edition, but came in very easily for the second edition. It’s one of those words that hasn’t changed in definition maybe, but in terms of its scale and how it’s adapted and used now, it is just blown up. So it’s one of the few words I’d say that was refused for the second one. First one went into the second book, second edition, but has taken on life of its own literally in terms of how it’s used and how important it’s across many sectors, whereas initially it was very much financial services. Yeah,

Olesya Trusova (00:39:32):

Amen. Can I ask each of you to share with us three words? The most favorite one, the one that you dislike and you want to get rid of? You think it’s a buzzword means nothing, and the word which is the most debatable.

Ken Valledy (00:39:55):

Okay. I’ve never got, I know the word I, and this is a slightly different, it answers your question, but it answers it in a different way. So the word that I like the most is founder burnout. And I know it’s, it’s a very important term. It’s not necessarily one that people talk about, but it was one of those times where in the moments in the book where we asked certain people to write stories, and there’s a lady called Christina who wrote a story about founder burnout, and I thought she would come it from a, this is why you have to watch out for it and talked about it from a third person, but she actually wrote a very personal story about her own burnout, and I thought it was really brave for her to put that into print. And so in a way, my favorite word, because it really resonated with, it’s a really important word, and she was very brave to put a story behind it. So it’s one of those words that always sticks out to me as a big part of the process of building that first edition. So my favorite word, favorite’s the wrong word, but a word that means a lot to me because of the importance of it. And also Christina being so positive was bound to burnout.

Ken Valledy (00:41:09):

One that I, and you have to remind me, I can’t think of a word that I wouldn’t have in the book. I still struggle to pronounce one word and I’ve forgotten what it actually is. When we did the podcast, I forget which one it was now, but there’s a word that I still can’t,

Speaker 2 (00:41:24):

I’m going to have to look through. This is not a blatant ad, but it’s in here.

Speaker 3 (00:41:31):

I’m giving you different answers to the

Eamonn Carey (00:41:33):

Anthropomorphism.

Ken Valledy (00:41:35):

Anthropomorphism,

Eamonn Carey (00:41:35):

Okay.

Ken Valledy (00:41:36):

I can’t.

Eamonn Carey (00:41:37):

Good word. Good word.

Ken Valledy (00:41:37):

So there’s a word that if you want to catch me out in any interviews, ask me what that means. A word that in a way from my own ego that I maybe would take out just because I can’t pronounce it, is that, and I still can’t pronounce it. And the third one was most debated word you said.

Olesya Trusova (00:41:55):

Yeah, that generated the most debate.

Ken Valledy (00:42:00):

I think a lot of the generative AI once created a bit of debate because it’s such a big area. So when we went through all the editing and we worked with our publisher and we went through to just make sense, quite a lot of the chat, GBT, generative, AI hallucinations, all this thing, they can be quite heavy LLMs. It is quite heavy subjects. I think that was debated a lot because we had to really take out a lot of the dryness in the definition and make it plausible and understandable. So I think there’s a lot of debate around some of these heavier terms, quantum being one, because we want people to read it and think, I’ve kind of got it, I’ve got the first stage of it. One word that I still say we moved around a lot on was from the first edition, which was convertible note. I remember having lots of conversations with Raymond, how we define what convertible note is, and we got a great story in there in the end, I think from, was it Andrea? Andrea

Eamonn Carey (00:42:45):

From Andrews? Yeah, my colleague Andrew said tarot.

Ken Valledy (00:42:47):

Yeah. So there was a couple where I think the ones that we had the most debate about were more ones where we had to turn it into more palatable bite-sized chunks. So people seeing it for the first time got the gist of what it meant, and they can go away as a said and do more Google research on it, but it gave them the primer

Speaker 7 (00:43:06):

To

Ken Valledy (00:43:07):

What worked. So I dunno if that answers your question. It’s kind of a roundabout way, but there’s some words that come to mind to those three questions. And I’m sure, Amy, you’ve got much better answers than I have for those.

Eamonn Carey (00:43:18):

I think I would agree that we had a lot of conversation around generative AI topics. I think also there were several, we took out a lot of the Web3 definitions from the first book as well because we just felt, and we had quite a bit of debate on this, that are these phrases that really quite as many people are using or are quite as useful for people in their kind of day-to-day. Because in 2021 when the first book came out, there wasn’t a VC phone call or founder that didn’t have some Web3 strategy or some kind of doubt that they wanted to set up. Whereas I think that changed very radically over that period. So there were a lot of words that we took out that we debated quite a bit. The word that I would love to, from a personal perspective, a word that I would love people never to have to think about or worry about anymore is cac, is customer acquisition cost.

Eamonn Carey (00:44:09):

I hear a lot of VCs ask a question that is really unanswerable. You have a customer acquisition cost that is correct at this moment in time, but in an hour it’ll be different and in two days it’ll be different again. And you might do a partnership go to market that changes it totally in a week’s time. So I think sometimes it’s one of those things that people get hung up on. Probably similar to in private equity, you hear a of people talking about discounted cash flows as a way of valuing a company. And it’s very hard to, we see a lot of people thinking about that in terms of startups, which doesn’t work. But customer acquisition costs, I would pin it and I would be very happy never to hear that question again. And then the word that I’d like the most in the book is a word that is in ification.

Eamonn Carey (00:44:53):

And so it’s the idea that in tech, it’s this idea that at a certain point in every business’s lifecycle, they stop serving the customer and they start serving or their user and they start serving the advertiser, or they start serving the quarterly requirements of Wall Street. And so it means that in your Instagram feed or Facebook feed, you go from having a ton of information about your cousins and your friends and your schoolmates to having a bunch of irrelevant ads. Or you go from having ad free Netflix to paying the same price to see ads. And that experience kind of goes not just in the tech world, but you go to the cinema and you pay 25 or $30 to sit through 45 minutes of advertising before you even get to see the movie. So I think that it is one of those phrases that has fret from online into offline and is one of those kind of weirdly symptomatic phrases of the time that we live in.

Olesya Trusova (00:45:49):

Excellent, thank you. And now the fun part, just to demonstrate how complex is the world of the startup and how difficult is for a newcomer to understand the language? We came up with this imaginary story and we need your help to guide us through it. So the story takes place and FinTech will, and it’s about the founders of a startup, let’s call it Paywise. So the founders of a startup bootstrapped through the early stage focusing on an MVP and securing angel investors with a strong elevator pitch. They joined an accelerator, optimized their cap table and secured a seed round managing burn rate, churn rate, and RRPU, they aimed for hickey for hockey stick growth with a keen eye on cashflow positive and marketplace health. They prepare it for an eventual IPO. So for someone unfamiliar with the startup lexicon, this story really sounds bizarre. So can you help us to demystify this narrative and convert it into layman’s term? And let’s do it sentence by sentence so the audience can follow us. So let me repeat the first sentence. In FinTech wheel, the founders of a startup bootstrapped through their early stage focusing on an MVP and securing angel investors with a strong elevator pitch. So here you go.

Ken Valledy (00:47:57):

We can do to me. So I’d say that, and by the way, that sentence or that paragraph sounds very familiar to the first time I sat in a meeting and a company described what they were doing. And I thought, I don’t understand half of this. So it was almost a throwback 10 years ago, made me think about chatting to Eon about a book. So it is a bit of a memory lane. I mean, generally speaking, some words there that are in the book startup is prominent. That’s obviously very early stage company, a new company. So when people generally say startup, it is from scratch, it’s a new company, bootstrapping and Amen jump in. Bootstrapping is where before you go to any investment rounds, you actually, the money you get, or you are owning money either from revenue or from personal money or from friends and family or savings.

Ken Valledy (00:48:42):

So everything comes from usually from your own money or people lending you money. So it’s called bootstrapping. There’s a history behind that term, but we are part of that for now. And bootstrapping, I think is something that a lot of early stage companies do before they start getting into investment. Or even if they’re investment, they’re not even investment ready, so they have to get money from other sources. Early stage is a bit like startup, that’s, I dunno, 12, 18 months, 24 months. So that’s an early stage company. MVP, minimal variable product is where you have the core features of a product, but you put it out to market and you get some feedback and that’s where you get iterations. Another term that was in the book. So you actually learn from the marketplace or you learn from that early stage product, early version of product, what works, what doesn’t.

Ken Valledy (00:49:27):

So an MVP is crucial. Angel investors is more where you get, you go to bootstrapping angel investors, you get more high worth individuals, another definition in the book, but people with money will come to you and offer you more substantial funding. And usually that comes from high net worth individuals, wealthy people or people who are business people who have just got money to invest. And you also sometimes with aim to invest as they come into syndicates. So they join together. And then finally, elevator pitch is where I think from memory, it’s how long it takes to go up in an elevator, 30 seconds or so. So one key thing you need from a startup is to actually about a pitch or describe what your company is all about in 30 seconds. And that is a key thing. I would say a bad elevator pitch is a really bad place to be. After that you’ve got to better get someone’s attention in 30 seconds, get ’em intrigued. So they’re kind of basic ish terms, but I would say a lot of people will think they know the definitions of loads and may not really know as much as they think they do. Aim. Dunno if you want to jump in, if I missed things there or that was a whistle stop

Speaker 2 (00:50:37):

For No, that’s fine. I’ll take the second sentence,

Olesya Trusova (00:50:40):

But just to recap and put it in a simple terms. So basically the first sentence was about the founders who started their new company from the scratch and they decided to finance this company using their own money. And during the first 12 to 18 months of their journey, which the early stage, they focused on building the basic version of their product, which is M-V-P-M-V-P. And to attract wealthy individuals to invest into their business, which who are angels investors, they crafted a brief 32nd story explaining their product and how they’re going to commercialize it, which is elevator pitch.

Speaker 3 (00:51:31):

Perfect.

Olesya Trusova (00:51:31):

Fantastic.

Jeremy Stock (00:51:33):

That’s great. That’s really great. Alright. Amen. You ready to tackle this second sentence with me?

Speaker 2 (00:51:38):

Let’s do it.

Jeremy Stock (00:51:38):

Let’s do it. They joined an accelerator, optimized their cap table and secured a seed round, take it away.

Eamonn Carey (00:51:50):

So an accelerator program, there are multiple different forms of them. Some of the best known are white Combinator based in Silicon Valley, Techstars, who I previously worked for, entrepreneur first, ampler, lots of others. And what these programs do is typically they invest a small amount of money into the company. So from $50,000 up to 500, maybe in some cases $750,000 into companies. And they put them into a three month accelerator program where they connect them with lots of other founders, with mentors and advisors, with potential customers, with potential investors. And as the name suggests, try to accelerate two years worth of growth and learning and experience into a very condensed 12 or 13 week program. So these programs are usually three months. They usually conclude with some sort of demo day where everyone gets to present what they’ve done and what they’ve learned and where they want to go next.

Eamonn Carey (00:52:45):

So there are accelerator programs that really help companies, as the name suggests, go from zero to one or get their first revenue or secure investment a little bit faster. The cap table of a company then is basically the ownership structure of a company. They call it cap table because usually it’s in a Excel table format. And so at the start of the company, it will be the founder or co-founders of the company as a single line saying they owe a hundred percent. If as was the case in the first sentence, they raise some money from angel investors, they may have three or four angel investors who come in, each of whom maybe owns between a percent and 2% depending on how much money they invested into the company. And so they get added into the cap table, their ownership gets recorded in there. When they raise their seed rounds, which I’ll talk about in a second, those additional investors get added into the cap table.

Eamonn Carey (00:53:35):

Employees of the company get added into the cap table. So it’s a way of tracking the ownership structure of the company, who owns what shares as the company grows, you then start to change. Are they common stock? Are they different classes of stock, which again, we go into in the book. So that’s your cap table. It’s one of those really important legal documents that you have to get up to date. And I cannot tell you how many times I’ve seen two versions of the same cap table that tell wildly different stories that so not one that many lawyers want to see. And then a seed round is generally once the company has started generating some revenue. So the most recent data that I’ve seen in investments that we’ve done is when you’re somewhere between five and maybe 50,000 in monthly recurring revenue or in monthly revenue, you’re at a point where you can raise a seed round.

Eamonn Carey (00:54:28):

Typically, a seed round is somewhere between one and $4 million, depending on the one and three, depending on the market that you’re in. In some cases it’s a little bit lower. But generally a seed round is you raise from angel investors or very early stage to get to what they call problem solution fit. So you have an idea, you iterate it, and you find a solution that people want. Your seed round is then to help you get to what they call product to market fit. So you’re generating revenue, there’s a clear demand for your product or service, and you then raise your next round of funding in order to hire a sales team, do more marketing and sell the products to more people. So seed round is really to kind of, as the name suggests, plant those roots, get the first kind of green shoots of growth, and then you’re often at the races to series A BC and beyond.

Jeremy Stock (00:55:18):

Excellent. Excellent. Well, so what this might sound like, if I can put this back into the sentence form, the founders joined a program designed to help new businesses grow quickly. That would be the accelerator. This program provided guidance and resources to help them improve how they organized ownership stakes in their company. Cap table. I got to say I was hoping for a much more exciting answer on cap table. It’s basically a fancy spreadsheet is what I learned. Then they successfully raised between one and 3 million from large investors, IE our angel investors to help get their product to market and prepare for rapid growth IE seed round. Excellent. Alicia, take it away.

Olesya Trusova (00:56:01):

And now wait for the third sentence. That’s something. Managing burn rate, churn rate, and IRPU the aimed for the hickey Hockey stick grows.

Jeremy Stock (00:56:16):

I don’t play hockey either.

Ken Valledy (00:56:23):

Yeah, so I mean they’re all important metrics and they’re metrics that I would say get asked quite a lot and you’ve got to be on top of them as a founder because you’re going to get asked these numbers. And I think to amen’s before we go into each one. So a amen’s point earlier, these things sometimes change. So what your churn rate is, your burn rate is your average revenue per user is at one moment in one presentation could change one month later. So it doesn’t mean you don’t pay attention to it, but it’s fluid. So if you look at the first one, burn bank, this is one I think people don’t, sometimes early stage founders ignore a little bit. They just throw money around and then someone goes, what are you burning? And they go, and that’s how much money you spend each month in effect.

Ken Valledy (00:57:00):

So it gives you an idea of if you’ve got so much money, how much many months you’ve got left, which is another definition itself. But burn rate is how much money you spend each month. And I would say the very first thing you should do is work that out and be very clear on that if it’s going up, down, whatever, because people will ask you what you expend through each month. What’s your burn rate? Churn rate is all around potentially losing customers. Churn bank’s usually a percentage. So if your churn mate’s going up, that’s not a good thing. Whatever you are doing means net wise, you’re losing customers. Churn bank can also be around employees, so you could be losing employees. It might ask a churn mate with your staff. So churn mate in itself is more all around losing business and you have to keep an eye on that.

Ken Valledy (00:57:40):

So losing business and how much money you spend, they’re very, very important. Metrics investors and corporates will ask because the other thing is these are much more understood in the corporate world maybe than what they were two or three years ago. Average revenue per user is a bit of a mouthful, but in essence it’s the total revenue divided by the amount of users. So how much revenue each user customer is bringing in. And that’s quite a straightforward calculation, but it’s something that you’ve got to be aware of something you want to plot. So all of these are good to plot over time. Keep an eye on ’em. It’s not just a one number answer at one point in time and then you only look at it again when you get asked six months later. So they’re kind of the metrics. There’s many of them, and the book goes through all of them.

Ken Valledy (00:58:20):

They’re quite key ones. And hockey stick growth is more around, if you look at a hockey stick and you don’t play hockey, but it’s kind of, it’s like a J in the alphabet. And hockey stick growth is a really common term that people use. We are going to get hockey stick growth. We expect hockey stick growth, which basically means you’re going to grow really, really quickly from the start. You’re going to dip a little bit, maybe you get your business going, but once you go, you’re go, you’re going to go up like that, like a big tick. And we’re now being controversial. A lot of investors will expect a hockey stick growth. If you sell a business to someone or pitch a business just to someone, you’re going to want to project that. There’s lots of, oh, I lost something. There’s lots of scope out there, scale out there in the market, lots more potential opportunities. So you’re going to grow double your sales each year. So I would argue there’s a very fine balance between being realistic but also being optimistic in terms of where you think your market’s going. But hopefully growth is literally, you’re going to go like that. And I would argue a lot of investors would like to see that as projection and want some reassurance that you can deliver on that.

Olesya Trusova (00:59:25):

And they wanted to tell the happy story. We wanted our story to be happy. We wanted our story to be happy, happy one. Yeah,

Ken Valledy (00:59:32):

No, it is happy and everyone wants a good story and everyone wants investment. It’s just being maybe something that’s realistic. Not everyone can deliver hockey stick growth, but if you aim for it.

Olesya Trusova (00:59:47):

So in the simple terms, this story sounds like that the company carefully watched how quickly they were spending money, which is burn rate, and how many customers they were losing, which is churn rate, and how much money each customer was bringing, which is a PRU. And the goal was to achieve rapid explosive growth, which is hockey stick.

Ken Valledy (01:00:12):

Yes, there you go. I’m getting confused myself.

Jeremy Stock (01:00:19):

Excellent. No, that was great. That was great. Amen. You ready for the four sentence?

Speaker 2 (01:00:24):

Absolutely.

Jeremy Stock (01:00:24):

Excellent. Here we go. With a keen eye on cashflow positive and marketplace health, they prepared for an eventual IPO.

Eamonn Carey (01:00:35):

So cashflow positive is a phrase that has become an awful lot more popular and important in the last couple of years. In particular, it’s something that every business wants to get to. So cashflow positive means you’re bringing in more money than you’re spending. So back to Ken’s definition, if you’re burn rate is $50,000 a month and you’re bringing in a hundred thousand dollars a month in revenue, then you’re cashflow positive. So lots of companies are now starting to aim for that because particularly in the kind of venture capital system, finding investors, getting investors to release their investment has become an awful lot more challenging because they are all looking for this hockey stick growth. So now we’re seeing more and more companies go, Hey, when we get this seed round, how do we make ourselves a profitable business so that we’re in control of our own destiny?

Eamonn Carey (01:01:21):

So cashflow positive, probably not a word you would’ve heard an awful lot five years ago when things were maybe a little bit more freewheeling, but certainly the last couple of years people have really aimed to achieve profitability, marketplace growth, marketplace health. So marketplace is, as the name suggests, generally a two-sided environment where you have a buyer of services and a seller of services. So in particular, probably one of the best known examples, for example, is will be Uber or Airbnb where I as a consumer want to rent an apartment. I go on Airbnb, I find one, there is a person on the other side of that transaction that has an apartment in Lisbon. We make an agreement on the price and Airbnb facilitates that. What we mean by marketplace health then is that you have a really good balance between the number of buyers and sellers and that you have that demand in check.

Eamonn Carey (01:02:13):

Because what I don’t want to do is go to Airbnb and try and book an apartment for a conference in November and either for all the apartments to be gone or all the apartments to be a thousand dollars a night. So you got to keep your marketplace health in balance at all times because otherwise you have too many users and not enough sellers. And so people churn or you have too many sellers and not enough buyers, and then the sellers churn. So you got to be balanced about that. And then the last one, which we all in the investment business hope for as much as possible from our portfolio companies is an IPO or initial public offering. So generally, angel investment and venture capital investment and even private equity investment is what’s classed as private investment. So in many cases, you have to be a regulated individual or a regulated firm to invest in these types of companies because the assets, so the stock that you own in a very early stage company is what they call illiquid.

Eamonn Carey (01:03:13):

I can’t sell it to anyone else. It’s not tradable in any places. And you can’t sell it to retail or public investors because the SEC and various other governing bodies feel rightly so that these investments are extremely risky. But at a point where a company achieves cashflow profitable, it is a high growth business that has doubled maybe in size every year for the last couple of years as good top line revenue growth, maybe somewhere between a hundred million and a billion dollars in annual revenue. Then they become ready for what’s called an initial public offering, which means that then those companies list on the NASDAQ or the London Stock Exchange or New York Stock Exchange. So in New York, they get to ring the bell and sell shares to public or retail investors, which means that anyone, as they call it in the US mom and pop investors, can get involved in these companies and own a share of their future growth. And at that point, the investors who put capital into these businesses very early on hopefully see 2, 5, 1000 thousand x return on that initial investment that they put in. And particularly, I invested pre-seed stage if I invested a company that at a $5 million valuation on day one and they exit for 5 billion, and I still own a small stake in that, that’s been a pretty good day at the office.

Jeremy Stock (01:04:37):

That’s the day I think a lot of business owners are hoping for. Usually people do pretty well. Fingers on stage, fingers crossed. Yeah, absolutely. Well, excellent. Amen. Thank you so much. Just again, for our audience, what that might sound like now that it’s been explained, the founders of the startup company carefully monitored finances to ensure they were making more money than they were spending IE cashflow positive. They also paid attention to how well their business was doing in the market marketplace health. And with these strategies in place, they to eventually offer their company’s shares to the public for the first time, transforming it into a publicly traded company, IE, the IPO. Awesome.

Speaker 2 (01:05:16):

Much better than I could have explained it.

Olesya Trusova (01:05:20):

Thank you so much. I think it was great discussion. Very interesting. And as we are wrapping out our chat on the Startup Lexicon, I wanted to emphasize how your book really brings this startup language to life. And it’s not about definitions. Your book is full of personal stories, real life examples. And what else super interesting is that it’s not only for tech companies, any company in any industry can benefit from it, from FinTech to retail. And if someone is starting a venture, managing the startup Lexicon is a real game changer because it can help to boost the confidence and can help to navigate in this world of entrepreneurship. But most importantly, it helps people to communicate with each other and to find the common language and to reach for their ambition. So enjoy the stories, Irene, and get ready to make your mark.

Jeremy Stock (01:06:35):

Excellent. Yeah, it’s been a real pleasure having both of you on with us today. Gentlemen. I’d like to, again for our audience, the Startup Lexicon. This is the second edition available everywhere, gentlemen, Amazon, pretty much anywhere books are found. You can find this, Ken. Amen. I’d like to give you guys the opportunity to let our audience know how they might find you, if in fact you want to provide that. Is there a website, is there an email address if they’re interested in conversating with you, what you would have them do?

Eamonn Carey (01:07:11):

Sure. So they can go to, oh, sorry. So what they can do is that they can go to the startup flexin.com, which has links to buy the book, which has more information about the book of the many things that I can thank my parents for. One of them is being called Amen Carey, which is excellent SEO. So it’s very easy to find me and Ken on LinkedIn and get in touch with us that way. We check all of the dms and everything else that we received there. So certainly always happy to chat to people who are interested in learning more about the book or people who think we’ve botched a definition or need to add in a new word, but

Jeremy Stock (01:07:49):

That never happens.

Eamonn Carey (01:07:50):

Com is the place to go.

Jeremy Stock (01:07:51):

That never happens, Amy? Not yet. I’m sure no one’s questioning. Yeah, not yet.

Ken Valledy (01:07:56):

Not that I’ll admit to. I think just to echo Amy’s point, I think LinkedIn’s really good. I mean, it seems to be the simplest way. We get a lot of communication on LinkedIn and people letting us know certain definitions, having questions and wanting us to come along and talk about the book and everything. So LinkedIn seems to be the most prominent. So we can leave you LinkedIn links.

Jeremy Stock (01:08:17):

Great. Excellent. As we close out, we would like to give you guys the final word here. We’ve heard that there’s some talk of a third edition maybe in the works already. Would you want to talk a little bit about that as we head out?

Ken Valledy (01:08:32):

Well, as I mentioned at the top of the show, it wasn’t long after the first edition that we realized we had to do a second edition. We didn’t think it’d be so quick. So we haven’t, if I’m honest, Amy and I haven’t spoken about a third edition yet, but I would be surprised if there isn’t a need for one. I can’t see the language of startups slowing down or stopping. So watch this space. I’m sure if it’s anything like the last time, Aman and I will get together in a couple of months and start talking about the words that need to be included in addition three, and that will then be a growing, evolving process. But yeah, I’m kind of, as I said, we haven’t spoken about it yet, but I’m confident there’ll be a need for a third edition. And if Amy and I get back together and write it, hopefully there’ll be one in print in the near future.

Eamonn Carey (01:09:21):

Excellent.

Olesya Trusova (01:09:22):

Well,

Eamonn Carey (01:09:22):

We past this difficult second album, so the third one should be easy.

Olesya Trusova (01:09:26):

And from our side, we promise you a new world and a new personal story.

Speaker 2 (01:09:34):

Thank you.

Jeremy Stock (01:09:34):

Excellent. Appreciate it. And we would love to if that, if and when that third edition comes out, we’d love to have you guys on the podcast again. It’s been a real pleasure. Thank you for sharing your experience, your knowledge, your expertise. Everyone listening, thank you for listening this long into this podcast. This has been The Payments Experts Podcast, a podcast of global legal law firm you’ve had in studio with us Senior Associate attorney Alicia Truva, as well as our special guests, Ken Valdi and Amen. Carey, thank you once again. Bye-Bye. Thank you for listening to this episode of the Payments Experts Podcast, a podcast of global legal law firm. Visit us online today at globallegallawfirm.com.