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June 12, 2024

Building businesses that last

Inside Curious

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Inside Curious: Building businesses that last

In this episode, we focus on building businesses that last.

Today, we're excited to have Andrew Dumont founder at curious, a long term holding company that buys and grows software companies with empathy.

Andrew's background include roles at Betaworks, where he was involved with companies like Giphy and Bitly and at Tiny, where he managed and scaled several companies.

We'll also talk about how his journey through the tech industry influenced his current mission to build companies that are built to last.

Subscribe to Zypsy Spotlight wherever you listen to podcasts to learn more useful insights on what the future of venture capital looks like.

Show notes

Timestamp

00:00 Introduction

01:05 Andrew’s commitment to growth

02:36 Building businesses from zero

03:52 A studio’s journey from growth to exit

06:24 Being a problem-solver

07:43 Building for the long-term

10:18 Acquiring companies at Curious

11:37 AI and FOMO

12:34 What AI is doing to the industry

13:19 Evolving dynamics of venture capital

resources

Links

Andrew Dumont’s LinkedIn

Andrew Dumont’s Twitter

Curious LinkedIn

Show notes

Transcript

[00:00:00] Andrew: the hardest part about studios in practice is that it's really hard to get something from idea to initial product, to market, to product market fit. It's also super resource intensive. It costs a lot of money. So I think that's really like the fundamental challenge of studios is that you're betting on your ability to be very successful in that process over and over again.

[00:00:24] Kaz: Welcome to Zypsy Spotlight. I'm Kaz, co founder of Zypsy, a design and investment firm that supports startup founders with brand building expertise.

[00:00:32] Kevin: In this episode, we focus on building businesses that last. Today, we're excited to have Andrew Dumont founder at curious, a longterm holding company that buys and grows software companies with empathy.

Andrew's background include roles at Betaworks, where he was involved with companies like Giphy and Bitly and at Tiny, where he managed and scaled several companies. We'll also talk about how his journey through the tech industry influenced his current mission to build companies that are built to last.

Let's deep dive in. We're your cohosts, I'm Kevin.

[00:01:05] Kaz: I'm Kaz.

[00:01:05] Kevin: Andrew's commitment to growth has defined his career from his first steps into startups to his current role at Curious, focusing on scaling operations.

[00:01:14] Andrew: It's a series of startups for the most part. I started when I was super young. I actually reached out to a local startup that was being built when I was at school first year of university. And I reached out and I just said, Hey I don't have any skills but I want to get involved and I want to help however I can.

So that's how it all started. I think I was 19 years old and that was the first company and have done a lot since then. But it's all been early to mid stage companies. And that really just comes back to, I just love the process of building something new. And actually over time and over my career, which led me to Tiny and what I'm working on now, I actually have fallen in love with taking something after phase one and helping it scale to become a real meaningful successful business.

So the last seven years of my career has largely been focused on that. Helping these businesses that have product market fit go from there to a real meaningful business and scale and grow. That's really where I've spent the time now. And I just love that work because at that time it's revenue focus.

It's growth focus. It's marketing focus. It's all those things. And that's what I've learned that I'm best at. So I've focused that way. Got to do that a tiny, and I'm doing that now with Curious and what we're building here, which I'm sure we'll get into later.

[00:02:36] Kevin: Up next. Andrew gives us insights on building businesses from the ground up from scrappy beginnings to strategic roles across well-known companies.

[00:02:43] Andrew: It started very tactical. Like I said, that initial outreach, I was doing everything, touching all parts of the business. And then I went to Seismic and really worked on like the BD marketing side, went to Moz, worked on. Same sort of thing, BD marketing. And then I went to beta works and beta works was one of the more exceptional places I've ever been.

Just in terms of the concentration of really bright, compelling people. And at the time out of the studio Giphy was being built. Instapaper was being built. There's all these great companies that emerged at that time. And it was just exceptional being around. And I got to basically work on the conception to go to market of those companies.

So it was really special. And then I ended up going to Bitly, which was which was an ex. Betaworks company and was a CMO there and really became that marketing revenue type person who helped drive that business from free to mid market enterprise type model. And it's actually done really well now as a standalone business and built out that that side.

And yeah, so it's just a, exceptional kind of group of places. I feel really fortunate to have spent time in all of them.

[00:03:52] Kevin: Coming up, Andrew dives into the journey and challenges of taking a studio from growth to exit.

[00:03:57] Andrew: I think the hardest part about studios in practice is that it's really hard to get something from idea to initial product, to market, to product market fit. That's essentially the cycle that you have to go down in a studio. And not only is that really hard to do, it's also super

resource intensive. It costs a lot of money to do that. So I think that's really like the fundamental challenge of studios is that you're betting on your ability to be very successful in that process over and over again. And I think just conceptually that's, it's really hard to do now.

Sometimes you hit a Giphy and it all works out, because you have this exceptional outcome. And that, I don't know if that was one of the largest studio acquisitions, but I imagine it was up there to your point. I think that's the hardest part for the model and then, for my side in terms of getting these things, really, I was like helping

Giphy business model came later, but a lot of them like figuring out what the business model was, how do we get these things to market? How do we launch them effectively? How do we scale them effectively? Like, how do we build a repeatable, efficient customer acquisition channels that we can, so that the hard part was working across, I think I was working across four or five companies at the time in the studio.

So just being able to do that effectively and like really lean into each one. That was tough. But, that's really like the fundamental challenges when you think about the studio, but they're exceptional if you can figure out how to, build that into a machine which, beta works did at the time.

I thought it was really well done. It actually comes from what I said there on being very difficult to do that in a studio. Part of the reason why I went to Tiny after, and I started working with those guys is saw how hard it was to get something that didn't have product market fit to product market fit.

If you think about the concept of what Tiny is doing and what I'm doing now, and these other, kind of acquisition firms are doing is. They're skipping the product creation and, go to market and finding product market fit. And they're basically taking a company that already has that.

Now, by doing that, you're giving up some stuff, right? It's not your concept. There's typically problems with the business. There's inefficiencies, there's all those things, but I really like those problems. And I like working on those problems. So for me, that's why I love my time at Tiny so much.

And I love what I'm doing so much now as well. Cause it's those problems. You're figuring out how to take a company that presumably has figured it out to a certain extent, but help them, scale from there.

[00:06:24] Kevin: Through Tiny, Andrew's experience evolved from managing a single project to overseeing multiple businesses, focusing on operational growth and problem solving.

[00:06:33] Andrew: That actually started after I left Bitly and I had known Andrew Wilkinson for quite a while. So I reached out to him actually. And I was investing at the time just doing angel investing. And I missed like working on something like operating something. So I reached out to Andrew.

He had this little property called WeWorkRemotely, which was really small. Back then. And that was the first company that I started working on with Tiny. And I was doing that off the side of my desk part time, and then it kept getting bigger and bigger and it became more of a focus. And then I worked on Meteor, worked on that.

So I was running both companies for a time with tiny and that kind of just became a little bit too difficult running two companies at the same time. But also I really wanted a bigger property to work on. And then they bought Stamped and went over there and worked on that for a couple of years and help get that to a good spot.

So that was the experience there. It was a course of about six years and it was like purely operational. It was like taking these things after they were thrown over the fence and acquired and figure out how do we scale these? How do we stabilize them? In a lot of cases. So it was really fun work.

[00:07:43] Kevin: With a background in venture backed businesses, Andrew brings a fresh perspective with Curious, focusing on building companies for long-term success.

[00:07:51] Andrew: The general thesis behind what we're doing and why I feel so passionately about it is I've spent so much of my career working in venture backed startups. I've invested in over 20 early stage companies. And so I have this, all this direct experience, either as operating venture backed companies or investing in them.

And the thing that you see persistently come up is this urgent hair on fire. We need to grow at all costs mentality and just a propensity to burn money. And it's built into the model, right? And that goes back to what you said about when venture capitalists invest in companies, they expect 80 percent of them to not do that well or fail just like by nature.

That's the whole concept of the power law and venture capital. With that in mind, that means 80 percent of these companies like don't fit anymore, or they end up failing or they end up going away. And that's why you see so many layoffs in these early stage startups and wind downs and things like that.

It's because they're taught and they're built to grow unsustainably because it's all about growth in that model. Especially like with my background, which is, go to marketing growth. You can do that profitably. You can do that efficiently. You don't have to burn money to do that. I've just seen it so much. I just think it's really unhealthy. And I just think it's not the way that it needs to be done. And there's a better option, which is to have these companies that are reset they're off the venture hamster wheel and they're built for longevity.

And that's really what we're trying to do. And that's to your point on the permanent capital thing. So we are a private equity fund. So we don't intend to sell these businesses ever. So when we're building them we're running them. We're intending to run them for. Forever is a long time, but like basically, without any, any sense of trying to get them acquired or exit them.

So that it just changes the model. It changes the way that you build these companies. And, I say this on the side, I said this when we announced, but like the fact that these software companies that are highly efficient have become these, like cash burners just doesn't make sense if you think about it.

They're all 80, 90 percent gross margin businesses. Like, why are these businesses losing so much money? And it's because they overhire, they overspend on marketing. They do all these things. They don't need to. Philosophically, like that's what we're trying to do. Trying to change like that narrative and provide a path for companies to run and operate sustainably.

[00:10:18] Kevin: We'll hear from Andrew about what curious looks for in the businesses they choose to acquire from revenue specifics to the founder's role post-deal.

[00:10:26] Andrew: It's early days. So we we formed officially in, in October of last year. So we just did our first acquisition last month, which is great. We have a pretty intentionally broad profile. So I'm looking at anything with 500k a year to 5 million a year in revenue.

That's our range and we are. Vertical location, agnostic, like we don't really care. We're looking at the quality of the business. I would say most of the companies that we're looking at are ex venture backed companies that don't fit the profile anymore. So they're either not growing fast enough or, they're not compelling enough for venture capitalists.

So those are good candidates for us. And some of them are profitable. Most of them are not. But our intention is to basically recap them. The founders can stay or the founders can go whatever their preference is. And then we will basically recap and acquire that business. So they can cash out.

We don't buy a hundred percent of the business. We prefer to do that, but in some cases the founders want to stay on and continue working on it. And there's, we'll do something like that where they retain equity. That sort of thing. So that's a profile like very high level, and I'm sure we'll get a little bit more thesis driven and vertical focused over time, but right now it's intentionally broad.

[00:11:37] Kevin: While many chased, the latest trends. Andrew stays true to his strategy, examining AI's role in his existing portfolio.

[00:11:45] Andrew: I will say that the only thing that I'm thinking about as it relates to AI is how does it impact the software business as a whole? Because the ease of creation of different software products, presumably as, become more accessible.

And I think that's been the general trend, which is great. And that's why there's so many, there's so many software products now. If you look at the landscape of just like the number of software companies it's remarkable. So I think, that's really the main thing I'm trying to think through is just what's the risk to, the companies we're looking at or, companies in our portfolio and that sort of thing, but is there FOMO?

No not at all. Now that being said I'm a huge believer in it, so no, don't get me wrong, but yeah, it's just I think you stay in your lane you don't get distracted by things, and you think about how it impacts your business and how to integrate it, but you don't think about, oh, man, I'm missing out.

[00:12:34] Kevin: On the topic of AI. Andrew also points out that AI is cutting down the time it takes to start new projects. First in studios and later in private equity.

[00:12:43] Andrew: There's efficiencies certainly, but actually it goes back to the original discussion on like the studio model. Studio model looks probably a lot different now with AI tools that exist, because when we had a concept, we would have to go spin up a team and that team would be, starting at ground zero in terms of writing code and building things and.

Presumably a lot of that has gotten a lot more efficient with those tools. So I think actually the studio space will probably get, not disrupted, but start being able to integrate that a little bit more directly first, and then, kind of private equity will come a little bit later.

[00:13:19] Kevin: As we wrap up, Andrew has given us a look into evolving dynamics of venture capital and the cautious approach companies are taking towards it in today's tech landscape.

[00:13:28] Andrew: Each company that we're looking at is in their own space and in their own world. So I'm looking at each individual company as an individual company. I'm not really looking at a ton of trends for, the space as a whole, I will say just zooming out, looking at the technology industry as a whole, obviously AI is a big advancement and topic.

But actually I think that the thing that, there's not a lot of people talking about is there's actually become a bit of a disdain towards venture capitalists and the model of venture capital. I've felt that over the past year where I've been saying this stuff for a while, but it didn't really hit with people until it seems really the past year. And I'm not sure what that is. Like maybe it's availability of capital, with rate tightening. I think that it's just tighter. And a lot of companies are seeing that like maybe venture capitalists, when things are hard are not your friend. Like they're not bad people, obviously, but like they have a business to run to, I think more people that have gone through the technology startup ecosystem once or twice, like they're realizing the implications of this.

And I think that's been the biggest trend that I've seen is just like a general shifting of the way people think about early stage capital and how to how to finance a business and all that. That's been interesting to watch and I think it's a good thing. I think it's like a net positive as I think it's needed. I think we need more people questioning, like the models that exist and like the incentive structure of these different groups.

[00:14:59] Kevin: If you liked this Spotlight episode, please leave us a review. Every review really helps. Follow us on Twitter at zypsycom if you don't want to miss an episode. That way, you'll be able to see every time a new show goes live. That's all from us today. Thank you for listening to this episode of Zypsy Spotlight.