Becoming the Pepsi to Indeed's Coke (

By Jason Yeh
September 12, 2023
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Lucas Martinez
Jason Yeh (host)
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Becoming the Pepsi to Indeed's Coke (

It's becoming more and more common for people to get through college and realize they still have no idea what they want out of life. On top of that, majority of the time we're too scared to do anything about it. Next thing we know time has passed and we feel suffocated in a job we don't even like. We put our dreams on the back burner, sacrificing creativity for stability. For today's guest Lucas Martinez - Co-founder and CEO of - he knew right away that the corporate world wasn't for him. Because of this, he knew he had to act on it - fast. This decision let him to start his company with two of his closest friends. It was a messy start, but once they got the ball rolling they were able to land around $1M CAD from angel investors alone. Because of that raise they were able to become pretty profitable. Great, right? But after some time the investors were ready to pull out, and it was time to run a process. In this episode, Lucas talks about what it was like trying to create a business of quality while at the same time scaling it. He talks about mindset, the benefits of working with VC's, the ups and downs of raising, learning to plan, and how passion was the key to's success. If you're a founder looking to understand all that goes into scaling and raising for your company, give this episode a listen

Episode Transcript

Lucas: Every single time we've raised, there was a point where we thought we're not going to raise. it's a roller coaster for sure. Like, it was really


Jason: This is the Funded Show, where founders who raised millions in venture capital share the gritty side of what it actually took to get that money in the bank.

Jason: I'm Jason Yeh. Not too long ago, I was trying to get my ideas funded. And back in the day, I was a VC listening to founders pitch me for money.

Jason: It can be all too easy to get caught up in making it through college, to get that stable job most parents wish for us to have. Next thing you know, you graduate, find a corporate job, and realize that dream you were sold was more like a nightmare. That daily grind eats at you. Some of you might even want to walk out on your first day. For today's guest, Lucas Martinez, founder and CEO of, that's exactly what happened.

Lucas: I'm the son of Spanish immigrants in Switzerland. A lot of immigrants left for Switzerland in the 50s, 60s, and 70s. It's even still happening today. And I was born and grew up in Geneva, Switzerland. It's an amazing country to grow up in. There's a lot of social mobility.

I worked, you know, like a son of a working-class family. And I was a very happy kid.

Like, I was a very happy kid and a very extroverted kid. I was never attracted to money at all. The only thing I was attracted to was experiences. I played a lot of table tennis.

I traveled all around Europe and other countries, you know, as well, around the world to play tournaments. And so, since a very young age, I've been more driven towards cultures and languages, and new experiences. I had a very strong competitive drive, but never really thought about entrepreneurship or sales or money.

And it really wasn't until I went to college in Switzerland and studied accounting that I started to think about my future career. You know, my co-founder still likes to joke about it. My first job was at PwC, and he said, "Seriously, man, what are you going to do there? You know, that's not who you are."

So I did one day and I started sweating after one day at the office there and I quit after one day already, right after college.

But I think at that moment in time already, like, I didn't even, I didn't really know who I was. I think when I was like, after graduation at 23, it was really weird that I got out of my parent's house and this is when life started.

Jason: Yeah. Well, you know, it's interesting. We talk a little bit about the transition to at some point entrepreneurship, but I'm pretty impressed that you would even start going down the path of what people expect of you, which a lot of, I think immigrant parents would want you to get a good stable job.

And it feels like you were getting pulled into that. But one day into the job, you knew, and you had at least the gumption to step away from that. Do you remember what was going through your head? Like, you obviously didn't have anything lined up after that. So, what were you quitting to do?

Lucas: I think this is a very strong trader personality that I have. I don't care what people think, as long as I believe it's the right thing to do, I'll do it.

When I was growing up and liked the Backstreet Boys, it wasn't cool. And I still remember saying to everyone, you know, "I really like the Backstreet Boys." I loved music stuff. I know they were laughing at me, but I didn't care. And so I think I just kept that.

And so, what happened is that yeah, after graduation, you know, as I said, a lot of expectations from my family as well to get a good job. I was the first person in my family to actually study college and I went to college and so, when I get to top PWC and I do this first day, and I just realized that, oh my God, auditing Swiss banks is just not for me.

I can't see myself doing this for the next few years. And I started sweating and just like, I just didn't know what I wanted to do. I just liked the idea of working for this large company. And so I quit and I was very fine. I was actually super happy that I did this extremely fast.

And I think it's like an entrepreneurship, fail fast, you know, like as long as you fail fast and keep learning, it's a lot about knowing who you are, the learnings of who you are is by knowing also what you don't like, you know, life and when you're young, you don't know. Right. So, and so then I got a job at Procter Gamble in logistics and that's seriously not me, again, logistics wasn't for me. I did two days there and then I quit. And so by that time, I think my family was like, man, what are you doing? My friends as well. And this is when I found a job that I didn't even know what it was. It was a job as an ERP consultant. an Oracle consultant basically implementing, the financial suite of Oracle for a full, larger Swiss company. And they relocated me to the UK, to London. So I was like, this is for me. And, you know, I just want to move out and have an experience abroad.

And that's what I did. So I moved to the, to, the UK.

Jason: Yeah, well, look, it seems like there's a pattern here of, one not doing what people expect of you or what's cool, which is, I think a concept that I'll bring up later, I'll at least reference when we talk about how you've raised money and just the belief in what you're doing. Right. And whether or not people are saying this is bad, this is dumb, or embarrassing that you like the Backstreet boys, which by the way I was, I think I was more of an NSYNC guy.

Lucas: Oh, yeah. Give me something, see

Jason: No, but I think it's really interesting. It sounds like at least the first opportunity to be exposed to technology sort of peaked your interest. And then obviously the adventure of moving to the UK.

I won't spend too much time on the story that you probably tell on a lot of different interviews about the starting of Talent, but, we'd love to hear a little bit about, you know, as you transition to entrepreneurship, I read that this is something that you did out of grad school.

And so when you started the company, was it always meant to be a venture backed endeavor or were you just starting a business that, you know, you might bootstrap?

Lucas: Yeah. So I think that our level of sophistication was you know, with three co-founders, right. our level of sophistication was pretty low, you know, we European guys, two living in London, but originally from Switzerland, one from Montreal and actually living in Montreal. What the original idea and so the idea first, you just asked, like Maxime was actually working and the guy London as well, working in a hedge fund in the UK and put some of his, savings into this startup so that we could get going, but the idea was to get started and, Maxime thought like, "Hey, maybe we could raise money," but like, because we knew that we needed this money to make it happen, but raising money at this stage for us was so hard that, it took us literally more than a year, I would say like 15 months or so to get going. We were that close to, to go bankrupt and stop that, we decided once we raise, we gotta be profitable, you know, that's we don't want to go back to our jobs, we're having too much fun.

And so, yeah, this is how it started.

Jason: Well, I want to make sure that you don't glaze over something that's important to us and these conversations, which is, you know, you started this company, you wanted to put up a few dollars in a cofounder savings to get going. But when you talked about the first attempt or the first push to go raise, you quickly said it's just, it was so hard.

Tell me more about what that meant to you. Like. What was so hard about it? and feel free to go into the details if you can put yourself back. And this is we're talking like, 2011 or 20 20 11, 20 12.

Lucas: 2012. Yeah.

Jason: Tell me what this meant to you.

Lucas: Well, the thing is, I think in 2012, first of all, again, we were not very sophisticated, so we didn't really know how to start. I remember Maxime was doing an MBA in Madrid at IE and basically using every single school class to just talk about Neuvoo, now And he was bothering everyone and trying to meet business angels all around and no one wanted to know, they didn't want to hear anything from him.

I was in Montreal with Ben who started the technology and me on the sales side, and going to these events and I remember going to those venture events, talking to investors like we had a very poor deck that we created. And so just being told, "Hey guys, you need to go to the valley. If you want to raise money."

I also remember going to a venture event for startups and trying to talk to every single business angel. You have to remember that in maybe 2010, 2011, aggregators were not really in. I think that after what happened in the bubble and year 2000, investors were not really keen into investing into aggregators. And so, you know, no one really wanted to talk to us. No one really believed in what we were doing, basically in the business model.

And you have to think that at that time, you know, like, not now, people click is the way to monetize in the job recruitment space, but at that time it wasn't clear, it was still a paper post model, either Monster or like you're a builder.

So when we, I remember going back to this about, to this VC events and basically trying to talk to every single investor, including one from China, that seemed to be investing a lot and like, it was nice. And talking to a lot of all the startups and I went to the restroom because the guy was actually going to the restroom and arriving there, I just started pitching him while he was actually taking a pee, you know, and there was a Twitter feed right there, in front of the main events. And it just said, like, "I'd just been pitched by Neuvoo in the restroom." And that's where it is still there.

Jason: Oh, my gosh. Amazing. Well, you know, I wanted to take a pause here and call something out, which is you lightly referenced the backgrounds of your co-founders and yourself. Right. And I love that you were you're being pretty honest with me. Like when you started, you said we were really unsophisticated except for you were MBAs from top programs or grad school students from top programs, you had worked at some great companies, you worked at some pretty big companies, twice in a row. And then, you know, obviously some great experience. And so I think it's worth hearing from someone who has made it this far, that even in the beginning, it's a hard game to feel sophisticated at, right? Like you just don't know, until you jump into it. So even a group like you, started with the feeling of being, you know, a fish out of water very green.

Lucas: A hundred percent.

Jason: And then you know, you talked a little bit about the mistakes you made, it looks like you able to raise a little bit of money, but if you were a new founder, all the stuff you did, what do you think was like your biggest mistake in the beginning?

Lucas: Oh, there were so many mistakes. But the reality, I think that those mistakes are the ones that made us who we are. The reality is that we were three, three guys that were not from the industry. So the only way to learn was to actually make a lot of mistakes.

Jason: Like pitching people in the bathroom.

Lucas: Yeah, that wasn't probably the right thing to do looking back at it. But yeah, I think that what we did right for sure and that first year was to like fail fast. So I remember changing the business model, every single month to the point that, you know, our clients were like, "Okay, we don't even know who these, who these people are, you know, like until we don't get it right. We won't get right with pivot until that key will, you know, will open the door, you know?" But I think, you know, like the biggest mistake, you know, many times we've been told by, by people that know more than you, more sophisticated.

Lucas: I think at the time, the first round was from business angels. It was 600,000 Canadian dollars at the time. And then those same business angels reinvested another 500,000 about 18 months later.

Jason: And then you held your breath for how many years after that?

Lucas: That was in 2012, then another year-round in 2013, and then until 2018. The company was pretty much profitable. We had no choice, you know, it's just like, we were growing, but not at the rate that you would expect, but we were doubling every single year. So, we were happy with that, but at some point, you know, the business angels wanted to see the color of the money. And so we needed to run a process.

Jason: Okay. Amazing. So, you raised maybe a million dollars over a year, which you know, is an okay amount, but not a spectacular haul by any stretch, even back then. And then, so, you ran for another six years before deciding to raise more capital.

Tell me a little bit about the dynamics in the company at that point, because I always love asking founders, cause there are different trigger points, right? When you're like, "We should raise money. We need to raise money." Yours would have been different, I would say, than a lot of startups where, when we talk about it, freshly raised around a capital, especially when you're on the venture treadmill, it's oftentimes triggered by when cash out is going to be.

Right. But you were running a profitable company that was systematically doubling every year. Like not crazy hockey stick growth, but growth, nonetheless. In 2018, when you knew you had to raise money, talk us through a little bit more about what you were deciding between, and why you said, okay, let's go run a process.

Lucas: So, yeah. So, we've been told by, I've been asked by, the business angels that also wanted to retire and saw that they could actually make good money from their investment. If we could run a process, I think this is when Max, Ben, and I sit down and decide, okay. So where do you want to take the company? And you know, by the time, you know, the fun thing about our industry is that the job board industry, it's not a one-player takes it to market. And so when we started, we're probably the hundredth best product, you know like that's, it wasn't that good, but we were getting better every single day.

And so. The idea was like, okay, so we are getting better, like, we're getting stronger. Like we, you know, biking and we slowly overtaking a lot of players, and that's what actually funding would enable us to do. Imagine what would happen if we would actually fund.

And so, we said we decided, okay let's run a process and professionalize the company to really try to go for, you know, like to become Pepsi to Coke, being, being Coke and us being Pepsi in the future, ideally. And so this is one when we started to say, okay, let's do this and that was in 20, in 2018 when we decided this. The company is, we were three, very close. So like it's pretty much like a family-owned company.

Jason: So how much money did you want to raise in 2018?

Lucas: So at the time we didn't really have it very clear, and that was a problem. That was a problem with our raise that we were not clear with what we wanted. And that's because what triggered the raise was, or the process was really like business angels wanting to go out. And so we were pretty much talking to everyone, you know, including strategic players, you know, like, Hey, we're raising we don't know how much, you know, like, and we just know that these, they want out the business angels, but we don't really know how many, how much you want because we don't have a very strong plan, you know? We don't have business plans that says like a waiting that much, you get to this and that.

Jason: Yeah. Lucas, let's pause here because this is an interesting dynamic that we haven't actually talked about before. So, what you're describing—and you can correct me where I'm wrong—is that you had angels who had funded the company from the beginning. And these are, you know, these are individuals that put money in, and six years and realized that they had funded a business that had grown significantly and were looking for liquidity, right. They were looking to see if they could realize their investment. And this is interesting because you're like, "We didn't have a plan." Right? So the dynamics of going out to raise a round of capital where a big chunk of it would actually just be to take out existing investors is actually a fairly interesting dynamic where an investor doesn't just want to see money go out the door, right. Like, and not fund growth otherwise, like what are they buying? So tell me a little bit about like the lack of plan and how that impacted your raise at the time.

Lucas: Yeah, I think it's, we never had the chance, like, you know, because we always had to, we're always growing, like in like doubling we lead a means, we always short-term focus like, okay, well, where do we go next? Okay. This is next. You know, we didn't have that product roadmap. We couldn't afford three years roadmap. It was like, really like, okay, we're going there. We're going there now. We want to be there in a year. That's pretty much as far well, we would go; that's pretty much where we were. When we, when I say we didn't have a plan, we didn't have this like a very clear five-year plan for the company. And so we had this long-term vision, well, long-term vision, but we didn't have a long-term plan. The plan was always short-term. We always had to think short-term because we needed to put food on the table. And so I think it was a mistake going in, into the raise because it definitely, like we, we came out with a weaker hand. And the reason why we managed to raise, I think, was because of our passion and knowledge of the industry and our execution for the last few, for all these years. And obviously, I'm pretty sure we could have had a better valuation and all of this. You're like, you know, like many more offers on the table. If we were better prepared, and I think this is something that when looking back, have we done something different, probably, but at the same time, our hands were tied, and our knowledge also was. We didn't have the knowledge that we have right now. So it's so much easier to say, you know, like now, you know, I would have done this way with the realities, but you didn't,

Jason: When we come back, Lucas shares with us the results of his 2018 raise that pretty much came together without a plan.

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I tell founders this all the time. You can tell somebody the way it's supposed to go, or the things that they're supposed to do, or the way it's going to feel, and it's just so hard to really internalize that. You're like hearing the advice and you're hearing people tell you, but until you go through it yourself, it's so hard to be like, "That's how it's going to go." Or the planning and the understanding of this sort of strategic vision of the company will be so impactful on the way investors perceive you. And then you go through it once without having that, and you're like, "Ah, I see. Oh, okay."

And this is going to be fun to connect the dots because your most recent raise was significantly different. Can you tell me a little bit about it? Well, tell me how much you raised in that 2018 round?

Lucas: So it was 53 million Canadian dollars at the time.

Jason: Okay. And how much of it was primary, and how much of that was secondary?

Lucas: On the 12th, the rest was in the, in secondary together.

Jason: Oh, wow. Very cool. So you were able to give 40 million to investors. Great outcome for them over six years. And then 12 million to—

Lucas: Exactly, but it wasn't that much because we were already at a—at that time, we were probably already like at, I would say, 50 million run rates or 60 million run rate our revenues. So it wasn't that much. And I think the investors that came in, we also—okay. We understand what are the dynamics and what the shortcomings right now? We think we can help. We can, as long as they here for the long run, we think we can help. And that was the thing also is like, are they here for the long run? And we were here for the long run, you know? And so, and that played out well for them because then they're like, they really helped us to get to that next level and prepare us for the round that came after.

Jason: So, the dynamics of the company significantly changed because now you have some real institutional investors that expect, you know, a 10X, maybe more at that stage. And so this is when you start really spending right spending, spending ahead of profits, which would bring you to a point, I would guess sometime in 2011, sorry, 20, 21.

Lucas: Yes.

Jason: Where there is another decision point or there's another trigger of, Hey, we're going to go raise again. So, this one is different, right? 2018 was a lot of existing investors asking you, Hey, can you go raise, like we love liquidity. Tell me a little bit about 2021. And when you looked around the table and said, Hey we're going to have to do this.

Lucas: So, what happened exactly is like when investors arrived in 2018, they said, okay, let's, you know, and we were ready for this, you know, like, like we needed to professionalize the company and they said, well, the first thing we've got to do here is find the finance function because it's, you know, it's not where it needs to be. Let's put it this way, let's put it nicely.

Jason: That's a nice way to say it.

Lucas: And so at first they felt we needed a CFO, but then they said, no, you need a controller first. And so, you know, we, we did all of that. We hired a CFO, who was a very strong CFO in Montreal. And you know, like, we started talking a lot about the industry and the vision to the investors and the CFO. And I think everyone embarked on the vision and where we wanted to be and who we wanted to become.

And everyone loved that, but everyone was like, Hey, you can't do this with you know, with 12 million in a bank, you know, like the company is growing fast right now. If you want to do this, you need liquidity. And that triggered the raise. Like, okay, now, let's do the raise, and let's do a proper raise, a primary round just to give you the means to, execute the vision.

Jason: Right. So was the plan to go out and raise over a hundred million dollars or always? And were you burning capital at the time? Did you have a cash-out position bearing down on you?

Lucas: No. We were literally like, we were like always flat, basically the idea of to just reinvest that in growth.

Jason: Awesome. So, I mean, that's a really great place to be because that's a team on the offense, right? It's like we can take as long as we want, but we know we have this big vision.

And so, tell me what it means to plan for a fundraise that is going to be a nine-figure fundraise. That's a massive fundraise. And you had been through now two different types of fundraises, one very small scale with individuals and other one where, you know, you wanted to bring institutions on, but really didn't plan for it. Here now, you have a team behind you, a set of investors that understand the game. What did planning for this new fundraise feel like, and can you remember some of the biggest, most important components of that?

Lucas: Yeah, no, a hundred percent. This is something we've done a few times now. So, I think that, well, the first thing is the last time in 2018, we used an investment bank. So, it was hard because we were not very sophisticated in finance. Plus, we were using sampling data, talking, you know, like, we wouldn't go talk to them. So there was never the right data when talking with them. And so they were doing investment bank was frustrated because of our lack of sophistication in finance and they struggled to understand what we were doing, but they put us in front of a lot of people. But again, we had very little support internally to get things going.

But this time it was a different game. So, our original investor knows pretty much everyone, there are LPs in all around in all the largest funds in the US and around the world. And so they've put us in front of a lot of people. So, that part was done. You know, they could actually put us in front of people, which is not easy. Right. Then, you know, having the CFO with experience in public companies, a lot of buys and, you know, working with a lot of investment banks understood the process. So he pretty much orchestrated the entire process. So that was there was a lot of work there. We actually also had in place a CLO, a chief legal officer, not to have illegal fields go to the roof. They still went to the roof, but for the reasons, but yes, so I think that was coming in. We were already like stronger.

And then, you know, we knew our weaknesses. You know, like, specifically in understanding, I think more product marketing, like understanding who our clients are. What are differentiators? What problems do you solve? I think there's, we've always been struggled with those kind of elements, specifically in a world where job boards are like different, but at the same time, kind of similar, you know, they don't bring that much differentiation between them.

And so this is something that we're struggling with. We still struggle throughout the process. But I think that knowing this, got us better than last time, and I think there's a lot of progress that needs to be done like I think we're going to get better. The thing is we didn't have, you know, the right leaders in place internally to help us there because we didn't, we just didn't have knowledge in, in, in house. But in the rest, and I think all the preparation in terms of the financial model, the deck, the vision, showing that we'd been amazing at executing and showing that, we had a plan, a very strong plan to become Pepsi to Coke. I think mattered a lot. And I think that, and showing that between the founders, we had clear, you know, mandates and, you know, functions that we take care of. I think that has been a winner for us.

Jason: So, I wanted to ask, you know, there's a distinction here that I'd love your commentary on, which is in 2018 when you went to go out and raise. And like we said, you're trying to help existing investors get liquidity. And then also have a little bit of growth capital in there. You used an investment banker, and this time around you get to use your existing institutional investors to help. I don't want to go too much into it, but I do want to like paint a picture here. What was the difference like? How did that feel in terms of your ability to execute the fundraise? I assumed the investment banker was because you just didn't have any other connections. So, like, you wanted to go with a service provider.

Lucas: I guess it depends if you are someone very anxious. So I'm someone very anxious. And so, I would always wait for, you know, like, with the investment bankers, I would always wait for like them sending an email about you know, like what was going on. You know, like every week they would send like this rundown of like who they talked to and what they said.

So it really felt like we were a bit disconnected from the process somehow because we really wanted to be closer, but we were not. But, they, they ran a tight schedule. Investment bankers always ran a tight schedule, like, okay, this is the time you have to put offers in place.

And what we realized is that's a lot of VCs don't really like working with with investment bankers and we didn't know, you know, and so this time our institutional investor, they said no need, don't worry.

So the good thing is that we were, we were closer to the to anything that was going on between the CFO and I, we were like always talking with different funds and, keeping a close eye, we basically, we were the CRM, you know. Like we knew everything that was going on there. And we didn't have to have that much of a tight schedule with with the VC. So we could, if a VC would say, listen, give me two weeks, because I need those two weeks. I'm working on a different deal. We would obviously say yes.

And so they gave us. Yeah. And so they gave us a bit of more flexibility. And the reality, I think that the. there. It was super easy for us to get like first meetings with like a lot of them just because they were so well-connected and so it really facilitated the process.

Jason: No, that is my expectation, but I wanted to hear it come from you. It's a. Yeah. Venture capitalists don't love the signal of having to talk to an investment banker, but for someone who didn't know for a team that didn't know, and didn't have the connections, sometimes that's the way you have to get it done.

And, I'm glad to hear that you got through that period and then were able to get to the other side and kind of learn even more sophistication around what's important and how you make connections.

Do you remember your top of the funnel, as in like, how many funds did you have on your list that you'd have to talk to in this most recent round, the a hundred plus million dollar round?

Lucas: I think this is actually a good question. And I think we again, talking about sophistication, we didn't know which fund would be better for marketplaces or job boards, or, you know, like this or that. And I think that was a mistake. We should have gone straight to the qualified leads, you know, like a bit like in sales. And so we really went for the ones where our institutional investor had a lot of contacts. And I think overall, we contacted like 30 of them, total, so not too many. And we we pretty much stuck to all of them all, like 95% of them.

Jason: Yeah, that'd be up. That's actually a fairly small number. But it is good to point out that like at this point, how much revenue are you doing?

Lucas: We have a run rate of around like 150 million per month.

Jason: Yeah. So this is a big business at that point, and I think it's important to know that we're both saying that 30 firms are still a fairly small number. And it's just a good learning. It's something good to hear because you were doing over a hundred million, right? So if you're a seed stage company or pre-seed stage company, you have to imagine that your top of the funnel has to be quite a bit bigger than which is doing tons of revenue. It can point to years and years of data to then go after. And let's just talk to like 30 focused funds and get to the end. If you're a pre-seed company, that number has got to be quite a bit larger, you know, five times larger in order to even feel like you're talking to enough companies, enough firms to get to the promised land.

Lucas: I needed to be pitching everywhere. Right.

Jason: Pitching everywhere. And now we're in this zoom world, right? I always like hearing you know, $120 million raise, incredible outcome. But that doesn't mean it was all easy. Right. Do you remember some of the harder conversations or the things, the low points in the last raise, anything that comes from.

Lucas: Oh yeah. I think at some points you know, like, Yeah. Every time you raise in there and this PR who wants sees that and she's like, oh my God, it's been amazing. The reality is that there are so many things happening in between. And at some point, you've been thinking that is gonna happen. not going to raise, it's not going to happen right then. So I remember being always like Christmas Eve destroyed literally like I'm with family and I'm supposed to have a good dinner and be happy. And I can't, you know, it's my daughter's birthday as well. And like, and I'm not there just because it's not going to happen. And just because, you know there's, some things that we needed to change in the financial model in the way we presented things that didn't work. And we were able to turn around and make it happen so that people would come back. But the reality is that listen, every single time we've raised, there was this point. So there was a point where we thought we're not going to raise. And, and so, it's a roller coaster for sure. Like, it was really tough.

Jason: Yeah, I've had many conversations with founders, either for interviews or just behind closed doors. And there are these fantastic outcomes, you know, Parker Tracey, the founder and CEO of Cobli raised like 35 million from SoftBank, which like you said, the media is just an incredible headline. And there are these periods of time when he was like, I don't think this is going to happen. Like we're not going to land a deal. So it's always great to just make sure that the reality of what this process feels like is shared. So thanks for, pulling back the curtains a little bit. Now on the flip side, You are able to get it done, right? The $120 million, was led by a fantastic Canadian fund. I know via whom I've known some partners. Do you remember where you were when you got the indication that they were going to give you a term sheet?

Lucas: Yes.

Jason: Tell me, tell me about that.

Lucas: Well, I was actually here in Barcelona, in this office, when we realized this was going to happen. I mean, again, you don't want to get too crazy about it, but we were definitely happy. You know, it's just like you're extremely happy, but then you're like, "Wait a minute. The moment you sign, the moment it's done." I remember because I was in bed, and we had to sign everything. The deal took a bit of time as well, but at that moment, on the day it's over, you feel extremely happy, but like a wounded soldier as well. You feel beaten up because it's been tough. Right? And then you're like, "Okay, great. Now here's the Mount Everest I need to climb." And you feel like a wounded soldier, so you get to take time to recharge your batteries right after that.

Jason: Before the episode ended, I asked Lucas to share one piece of advice he would have given to a younger Lucas or future founders going out to raise money. Here's what he said.

Lucas: I think trust the process a bit more. It's supposed to be a rollercoaster. I wish I could be a bit more like good enterprise salespeople, who go through the lows and the ups, and just focus on what needs to be done, head down, and work hard. And it happens, you know? It always happens if you do the right things and be ready to pivot when you need to pivot, be smart enough to pivot when you have to.

But I think trusting the process not getting too excited when you don't have to, and not getting too down when things get hard, is something I wish I would have done more of. And I think we, in retrospect, I think the three of us would have done more, but it's also part of the learning curve. It's easier said than done because when you live it, it's hard.

Jason: Well, I think the, also the superpower you had is that belief in things that you cared about, even though other people might think they're silly, like going back to the whole Backstreet Boys thing. I'm sure you pitched to many people that were like, "Why would you ever compete with Indeed?" You know, like, as it's as a silly thing to like the Backstreet Boys, but you know, here you are. [00:37:00]

Paige: That was my conversation with Lucas Martinez, founder of, the platform connecting the world to work.

Jason: When we come back, I'm curious to see what questions my producer Paige has for me today.

Paige: Some people might be surprised to hear that I've struggled with focus my entire life because I got good grades, went to good schools, landed good jobs. But all that was in spite of being a crazy procrastinator. I tried a bunch of things like productivity apps and planning rituals, but nothing really stuck.

Paige: When I heard people talk about Magic Mind, this super productivity drink, I was really skeptical, but a friend convinced me to try it and totally changed my mind. When you drink Magic Mind, you just have this focus kind of wash over you. Like those distractions that normally make you do the things that you don't want to do, those are gone and it's been kind of amazing for me.

Paige: I'm a fan of Magic Mind and they've been awesome enough to give a crazy discount to my listeners. My discount code is FUNDED and it will get you 20% off your purchase. But if you go to the site within 10 days of this episode airing, your total discount will be 50% off. Check it out, it's awesome.

Jason: Paige, how are you?

Paige: I am doing well. How about you, Jason?

Jason: Good, good.

Paige: Lucas was an interesting guy, huh?

Jason: Yeah, he was. And just wanted to start off by saying I just love the beginning of this episode. In the beginning of his story of how, you know, he realized right away, right out of college that the corporate world was not for him. And the fact that he had the courage to leave his job on his first day. And when you asked him if that was scary for him because he comes from a background of immigrants, he was like, "No, I usually just trust myself. If I wanna do something, I'll go for it." And... [00:39:00]

Jason: I am. I'm super impressed with that too because I think a lot of immigrants, sons of immigrants, or immigrants themselves have a very similar sort of scarcity mindset around having to protect what they have, not risk what they have in order to go out bigger. I mean, I'll just speak for myself. It's like, took me 30 years to start venturing out of the warm confines of corporate America.

Paige: So for sure, and the fact that he did that multiple times, very impressive guy.

Jason: Yes, definitely. I totally agree with that. And not to mention the fact that he also had the courage to pitch a VC in the bathroom. Yeah, I mean, I, I don't know if I had the right time and space or relationship with him to dive into that deeper, but you know, that wouldn't work for everyone. But I feel like Lucas is a bold guy.

Paige: I love it, but I did want to ask you some things that, you know, I don't even know, these might be well-known answers, but I was just personally curious about them when he was talking about, you know, how his first round of raising was all angels and it was pretty successful. They raised a few hundred k and then, you know, started doing really well and the investors wanted to pull out.

I was just curious, does that create a negative or positive impression when going out to raise and talking to firms? Because on one hand, it shows that you're making a decent amount of revenue enough that the investors can pull out, but at the same time, does that make them wonder, like if it's stable or not?

I just have so many questions about that.

Jason: Really good question. Also, I love how your instincts are developing around this because this is a nuanced topic because it's not a consistent answer. It really depends on the type of investor that's pulling out. So your spidey sense tingling around this is accurate.

And this is what I'll say is angel investors are angels. They're not professional investors. Generally speaking, which means that they are doing it out of the goodness of their heart, and hopefully they'll make money off of it. They don't have like professional guidelines around the way they're putting money in.

And so when it comes to the signal of whether or not an investor is pulling out, if an angel is saying, "Look, I kind of need this money," or, "You know, I just don't want it locked up in this company," it's way less of a negative signal than if it were an investment firm, like a traditional formal investment firm that has sort of longer-term horizons outlooks on businesses, the way we, they think about companies.

If that type of investor is pulling out, you're right, that does kind of indicate something is, it's like there has to be some kind of story wrapped around it otherwise, just by looking at it at face value, it means that they don't think there is more upside in the future.

And if a company that is close to the business and close to the founder is pulling out, they know more than outsiders know. So if you ever see that signal, it can be very negative.

Now I'll just give additional detail. You can manage that story by saying, "Look, a lot of different things could happen for a traditional venture capital firm that needs their money back." They're like, "Look, they're at the end of their fund," as in their funds are already, the fund has already been fully invested and they don't need to max out the dollars there. They just want liquidity.

That could be a story that gives a relatively safe answer for why Affirm is pulling out. But at a high level, pulling out of an investment is a bad signal.

With angels, it's less impactful because they're like, look, they're just kind of putting money here and there willy-nilly, and I'm sure Lucas did a great, obviously Lucas did a good job of going out to the market saying, "Hey, my angel investors want liquidity. This is an opportunity for us to bring in new blood, new investors."

"We're gonna buy out existing angel investors and then put more money into the company to grow even further. And here's the story of why." And here's the story of why. Does that make sense?

Paige: Yeah, I think so. And I mean, you did talk about when you started talking about, oh, they max out their fund. I'm like, okay, you lost me. But I wanna save that for another time. But I do think, you know, then it seems like angel investors just wanted there, they just wanted to exchange and get their dollar.

Jason: Yeah.

Paige: And VCs you know, they put more effort into the relationship they have with the company where angels are just like, Hey, I'll give you my money 'cause I wanna support you, and maybe I'll make some more money off of it. So, honestly, that makes sense.

Jason: I think it was like a blessing in disguise for Lucas at because they probably wouldn't have forced themselves to go become more formal, get more formal investors, push for more growth if their existing investors weren't like, Hey, like, we want out. So...

Paige: ...and they were able to...

Jason: for everyone.

Paige: They were able to get a CFO because the firms were like, Hey, you guys are not that good at managing your financial. So they were able to get help from it and advice and, like, mentors, which is honestly really cool. And that probably helped push them forward.

Jason: Yeah. It's a great illustration of something that I share a lot with founders. Sometimes they bristle at the idea of having formal venture capitalists on their boards and looking over them and requiring them to report and do all these different things, these expectations. They're like, oh God, VCs, they're terrible. They fire founders or whatever. The reality is, that the VC is not trying to fire people or implement really tough restrictions on a company just for fun or just to be cruel. They're trying to make the business as big as possible. So a lot of times when you bring on formal investors and they start implementing these requirements and they're like asking you to do these things, it's because they wanna drive the business forward and upwards. And so bringing on formal investors, it means that they're gonna do things like, Hey, you need to upgrade your financial planning, your financial leadership, get a CFO, do all these things. And obviously, now that we are looking at where has gone since then, it's worked.

Paige: Yeah. And now that we're toying around with this topic of how VCs can be beneficial, which I find to be interesting and true, but you know, there have been a lot of things that maybe I've noticed within the founder community where they'll label VCs and VC firms as bad when, I mean, I guess in some ways they can be harsh. But really it's all for the benefit of the company and the founders.

But now that we're on this topic, I was curious to ask you, 'cause Lucas also touched on how working with these different VC firms opened a lot of doors for him and his team. in general, and networking and making connections. And I know something else that we talk about is that you don't have to be a venture-backed company in order to be successful, but is there some things that you get from a VC firm, like networking and making these different connections and doors opening all over, which seems impossible if you're not working with them.

Do you think it's harder to grow your network as a founder if you're not venture-backed? Or is it just different?

Jason: I want to shy away from like completely blanket answers, but more or less it is harder. Yeah, I think the more nuanced answer is that it's different and it depends on the founder and what networks the founder is already in. But for sure, a venture capital firm comes in and whether you're a tiny firm or one of the top firms you bring alongside your dollars as a venture capital investor, network.

Awareness and expertise in different spaces and sort of pattern matching and data, all these different things that you get dollars and then that additional layer of value should get plugged into the company. And I don't think a lot of entrepreneurs like to hear this, but I do think venture capital in a lot of ways is a king making industry. Like there are companies that. Just the sheer force of effort and capital and push and, you know, sort of bear hug of a venture capital firm's efforts can take relatively good companies, not amazing companies, and bring them up to the next level. It's because like you have all this pressure and people are expecting more of you and raising the bar and then giving you the resources to get there. So it's, if I'm not trying to invest in you and make you the best company possible, I'm gonna give you dollars.

Paige: Yeah.

Jason: The expectations that you're gonna spend those dollars in a really smart way to grow your business, but you don't know how to do that. So if I were to just give you dollars, you would be like, I'm not really sure. Like, not you, but anyone. 

Paige: Do they 

Jason: It'd be

Paige: how you spend your dollars? Do

Jason: they don't, I mean, initially when they don't control the board not like technically they can't tell you exactly what to do, but further and further along, as they get more control of a company, they can tell you what to do. And. In a way that's like, if you don't do what we say, we're just going to fire you. But initially, in the first rounds, the VCs usually don't control the board and can't fire the the c e O. And so their influence is more sort of suggestive and social pressure related. It's like, Paige, you have to do this, and I guess you could be like, I don't wanna do this, Jason. And it just makes it uncomfortable. But

Paige: It reminds me of Silicon Valley when the CEO of Pied Piper got fired because too much of the board had power. See, I love watching that show. I'm learning.

Jason: It is a very, honestly, it's a weirdly accurate representation of venture capital and startups, people outside of the industry when they watch that show because it's so. Comedic driven, assume that it's extreme exaggerations, and my friends and I, in the world of startups and venture capital, we're often like, ah, it's like maybe a five to 10% exaggeration, not a hundred percent exaggeration that many people think.

Paige: I do feel like each time we do one of these I get smarter, but you did bring up a bunch of topics earlier about maxing out the fund and all these fund terms that I have no idea what they are. But I do wanna save that for another time because I wanna keep the focus on Lucas and his company today.

Jason: You know it's a good idea. We might have to do a spinoff episode where it's just all the additional questions that have come up from these debriefs. We do a rapid fire, separate one, and you just ask me, 'cause this is always fun.

Paige: Yeah. Are you a beginner and you want to have someone ask these beginner questions for you? Listen to this episode with Paige.

Jason: Exactly Paige's problems. We'll Paige: Yes. Oh my God. Okay. Jason: get on the same page

Paige: Did we just.

Jason: new funded show, get on the same page. I love That If you're looking for more insights, strategies, and support around fundraising, subscribe to our weekly newsletter at slash newsletter. And find me on social. I'm @JayYeh, that's J a Y E H on almost every platform. I respond to newsletter replies and DMs. So hit me up.

This episode was produced by Paige Randall.

Paige: Hey guys.

Jason: Thanks also to John or Lee from Adamant.

Jonathan: Hello!

And thanks to Lucas Martinez for sharing with us, all the ups and downs of his journey. From what I can tell is on its way to becoming the Pepsi. To indeed Coke.

As always one last thanks to our fantastic sponsor. Vanta the leading automated security and compliance platform.

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