Interviews with Leaders in Fintech & Web3
Interviews with Leaders in Fintech & Web3
Surrounding Yourself With Exceptional People - William Quigley (Part 2), co-founder of Tether & Wax, first institutional investor in Paypal
In his second appearance on the Work in Fintech podcast William Quigley and Matt Cheung discuss career options, education, big companies vs startups and it what it takes to succeed when you start your own company.
William Quigley, a long-time VC - he was Paypal's first institutional investor - and entrepreneur, from gaming to blockchain (he cofounded Tether and WAX) shares his insights on:
- Foundational skills, such as critical thinking, are valuable in career development.
- A university education can provide a broad set of skills and opportunities.
- Working in a large, established company can offer exposure to exceptional business practices and experienced professionals.
- Assessing the financial health of a company and understanding market perceptions is important for career stability.
- Identifying opportunities and launching new products or services requires assessing market demand and managing resources effectively. Finding a co-founder or small team is important when starting a startup to share the workload and bring complementary skills.
- Assessing who would work well as a co-founder is a skill that needs to be developed.
- Consider the amount of capital needed and the potential for growth when deciding whether to raise funding.
- Surround yourself with exceptional people who challenge and push you to grow.
- Curiosity is a key trait for entrepreneurs and can lead to insights and new business ideas.
- Assess the size and potential growth of an industry to guide career decisions and identify opportunities.
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Matt (00:01.352)
This is Matt from Work in Fintech and we now have William Quigley back with us again in the interviews with leaders in Fintech and Web3 podcast. We spoke to William a few episodes ago. If you recall, William cut his teeth as an investor, who's one of the first institutional investors in PayPal, moved onto the technology side, very much focused on that, co -founded Tether and went on to found also Wax, one of the most active blockchains to date. In our last conversation, William touched on many interesting pearls of wisdom that
Let's call it such as talking about new ideas and business models and how great businesses stem from brilliant insights and actually insights are the most rarest available assets through to getting involved in industries like AI or blockchain. And the only way to do it really is to immerse yourself in the industry. And that's where some of those insights will come from as you start to understand the problems and speak to customers. And then how does that feed into startups and entrepreneurship? And really the
best way to do it is to build some foundational skills which is what we're going to talk about today. So William thanks for coming back again.
William Quigley (01:12.388)
You're welcome. Yeah, that was a pretty good summary of, I think, the things we talked about last time.
Matt (01:20.392)
So I want to jump straight into probably where we left off previously and you were talking about this idea of a fork in the road where you need to choose your path and that path may be working in a big company or working in a small company but can we just jump straight into that and double down on
Yeah, thinking back again, I think we ended the last episode about, what would you do when you're 18 and thinking about how you would start looking ahead. So there's lots of people listening to this podcast who are 18 or early careers or just about to graduate. Let's talk about that fork in the road and some of those big decisions they might think they need to be doing.
William Quigley (02:02.426)
Sure, and because this is such a gargantuan topic, Like how to manage your work life, your career. You know, there could probably be an entire podcast category dedicated to this. Maybe there is. We'll naturally not be able to cover everything in detail, but to begin,
At 18, let's say, in traditional markets today, advanced Western economies, the path is typically to go and get a college degree, right? And there's been a lot of complaints, I think maybe in the last 10 years, 15 years, that those degrees are not providing what they used to provide. So when I started working
post -university in the 1980s, not a lot of people had college degrees. And if you had a degree, particularly a degree in a good field, you generally had multiple job opportunities in multiple industries. And what you chose to do sometimes was based on your degree, but sometimes it was based on the companies you were talking to and how much they were going to train you.
And at some point we should get into that because there's been a radical change in how companies think about the people working for them and what obligations the companies have to upscale the skills of people. think it's changed a lot in the last 40 years. But as far as someone who's thinking, I'd like to be financially well off in the future. I'd like to be well positioned in a good job down the road.
I still believe a university education is a valuable thing to have. There's the trade -off of, how much do you want to go into debt? Ideally, not at all, in order to be educated. But assuming you decide, yeah, I want to do that, you're going to have a lot more avenues available to you because...
William Quigley (04:24.802)
You're getting something that's that foundational set of skills, whether it's engineering, could be computer science, it could be finance or accounting, it could be something in life sciences. I do, I am one of those people who believes with rare exception, you should probably get the degree in the field you think you want to work. Understanding that you may ultimately never do that, you may choose a different field.
And the only exception I would make, and this is probably somewhat controversial, it was controversial even in the 1980s, I think the best undergraduate degree for anyone is a degree in philosophy. I've always felt that way. And the reason I think that is because you can always pursue the vocational skills that are going to help you in a job, whether that's...
Business skills you get from an MBA. Engineering skills you can get from a master's in engineering. All universities have nice graduate schools. You can go for that later. But I think learning how to think properly, how to assess the information in front of you, how to reason through arguments.
Philosophy itself, of course, has many different branches. Logic is one of those branches that's really well suited for people who want a degree or want to ultimately pursue something in the legal profession. I teach the people who work for me ways of assembling information in order to understand what you're trying to accomplish and maybe what the best path will be. And a lot of that is from philosophy.
So you may not go that route. You may decide to be an engineer or a business person. That's OK, too. But I would recommend highly that you become well -versed in all of the great works that have been carried forward for millennia in our academic institutions in order to teach yourself how to think well.
William Quigley (06:44.974)
been in business a long time. I've worked in large corporations. I've worked in startups. I've started some of my own companies. And I think there's a limited number of people who can think extremely clearly. know, trade -offs, pluses and minuses and whatnot. One of the things I like to do early on when people start working with me is I ask them to
draw out a decision tree for whatever it is we're trying to do, which can be very simple. But you know, basically the paths you want to go and what the trade -offs are for each of those things, because lots of trade -offs exist. I think Thomas Sowell said, there are no perfect solutions, there are just trade -offs. And I believe that's true. So get a degree, ideally in the area in which you want to work. If you don't know,
Philosophy is not a bad way to go. And then after that, you're going to have a, hopefully, you're graduating at a time when the economy is pretty good. Much of how your early career will advance, frustratingly, is based on the state of the economy. And I have witnessed this over many decades. When people graduate,
when the economies are doing really well, those people 10 years later tend to be pretty well positioned. When equally smart people graduate during a tough economic time, I think the long -term effects of that stretch easily 10 years, where you are less, you're earning less, and maybe even your skills are less advanced.
because you didn't have all those opportunities. But that's a random factor that you can't control. I would recommend, and I'm trying to not be wishy -washy with my advice, and there's all kinds of trade -offs, but I would recommend for almost everybody, you work in a large company that's been around for a while.
William Quigley (09:10.33)
And some people might say, well, that's like working for a dinosaur company. I don't want to work for a company that was made a hundred years ago. But my logic has always been most businesses fail in the first year. Very few businesses last after five years. If there's a company that's been around 50, 75 or a hundred years for all of their problems, they must do something exceptionally well.
And you want to work in an environment where you're exposed to exceptional business practices, exceptional people. That's really critical. And you may not be able to pick a great company, but maybe you can pick a great boss in that company. Working for people who are not impressive.
Is is a negative it's like having a poor teacher You know you you you will never benefit as much as someone who has a very Demanding and also very competent teacher. How long should you stay at that big company? When I was younger, you know the longer the better that's actually flipped there is now an expiration date on you as an upwardly mobile professional
if you stay too long in one company. And it's interesting for me to have witnessed that. Not just it being less important, but it actually is reversed. The hiring managers in companies all over the world, now if you stay, and I would say 10 years is too long, maybe seven years is too long. Three to five years, probably fine. And five years only if it's exceptional and you're moving up.
in in responsibility and title. Even two years can be okay if you're what you're trying to do is maximize your skill sets and maximize your salary. But if you are going on year five and you're kind of comfortable in a bigger company, I would just say to you, know, you are becoming less valuable in the overall market and for certain.
William Quigley (11:35.994)
your salary or your total compensation is not as competitive as it would be if you jumped into a new business. You never get the same amount of increase in salary year over year if you stay at a company than when you jump to a new position. So I would pause right there. You you asked me you're 18. So now you're whatever.
graduated at 22, 23, and you've worked for three to five years, you're in your later 20s. And I'll stop there for a second. So if you wanna ask anything about what I've just said or go forward.
Matt (12:21.608)
So I guess one thought I had when you were talking about that was we were very focused on, or you were very focused on getting a degree and there's that trade -off about having debt and some people just might not be able to afford to do a degree full stop. But presumably then the same logic still applies that go and work in a big company that's been around and find one where you've got a great boss. Because if you haven't got a degree, you're not going to go and be able to work at JP Morgan.
right? But you can go and work in some other big company and learn from a good teacher and you can still take that same philosophy of working then for a couple of years learning and then trying to go to JP Morgan or wherever the case may be.
William Quigley (12:52.314)
That's great.
William Quigley (13:05.036)
Right? And that probably happens a lot, right? Even old, extremely prestigious and restricted to most everybody else type of institutions like a Goldman Sachs or a McKinsey, even these kind of bastions of the best and the brightest, so to speak, I suspect more and more
if they took a snapshot of their workforce, particularly their workforce, you know, in their 30s plus, way more than half did not start their careers at those companies. It's a change, right? Now they know, well, we have to constantly replenish our workforce with new people who are skilled. Companies put a very high, and I think a mistakenly high,
degree of value these days on pre -existing skills. And, there are things like your ability to reason, your ability to communicate, your ability to get along with others, those kind of base skills. I understand, but many companies, I see it constantly, sometimes my own companies. I'm like, why do we need somebody?
who knows some obscure program, either that marketeers use or salespeople use or engineers use. Why? Why can't we train that? I mean, a few months of training, they will have mastered it. Do we really want to sacrifice by not targeting the broader pool of great candidates? Because we only want people who've used that particular software package.
That to me is nuts, but that happens more and more. And so what I haven't said is, what about going to work for a startup, right? And I think the Mark Zuckerberg era for millennials really caused a lot of people of that age, so we'll say in their late 20s to early 40s, to think that
William Quigley (15:28.586)
Working at a startup, whatever that means, it's always innocuous, working at a startup is the right way to go and place to go. Well, I would say yes, if, and the if is if the startup you go to work at becomes an iconic company around the world, if everybody ultimately hears of it, it's Amazon or Uber.
or Facebook, any company where everybody knows about it and there's a lot of prestige associated with it. The chances of that happening are about the same chances that you're winning a lottery. They're highly remote. So most of the time what's going to happen if you work at a startup, it's going to fail. And it's going to fail within one, two, three, four years of launching.
While the people initially in that startup will be highly motivated, probably experienced, so you could learn a fair amount from those people, once you get beyond 25 employees, you might not be getting the same high caliber people as you would at one of the branded companies that you see at universities recruiting hundreds of people every year. And the brand...
that you put on your resume is still, and I'm not defending anything, I'm just saying what it is, it is still very important. It's even important in people who should know better. When, you know, in Silicon Valley, we see someone's background, their resume, and we all hear about the proverbial dropout from Stanford, but...
Most of the time, what people want to see is some prior experience with a respected organization. That could be a, and it would be best if you were an early person in a startup that became wildly successful, maybe even defined a new industry. Of course, that would be great, but that's unlikely.
William Quigley (17:52.972)
What usually happens is they like to see, if you want to get very particular, someone who worked in the product area, either as a lead engineer or a product manager, who had experience at the onset of developing that product, maybe even in helping to motivate the team to go and build that particular product, get it launched.
figure out how to get attraction and then make it successful in the marketplace. So they will talk in shorthand about the people in who they're looking to fund. And it's like, they were a product marketing manager at whatever, know, Amazon. They started the, you know, they were person number five in AWS, you know, the cloud initiative.
You see, by the way, this extremely good examples of this today in all of the AI related companies. When you see big funding events around those companies, you see the people who are being funded, they're always mentioning where they previously were. And it's a company that has some degree of respect among technologists or even everybody in general, like maybe, they did something at Google.
The reason, by the way, I think that's wrong headed is because the vast majority of people who go to work at big companies are pretty mediocre. You know, they don't do anything spectacular, nor does that position they have require them to do anything spectacular. The whole point of this big branded company with great IP and great market share and great business practices is
You just keep doing what everybody else did before you. Most people, if they're honest with themselves, know almost anybody in a big company could leave and no one would notice. And you know, so that kind of tells you these experiences are not all that important in most cases, but a lot of people who are important to you, people who will hire you down the road,
William Quigley (20:12.986)
People who want to partner with you if you start your own company, they look for these branded resumes and so that would be one reason why I would say you could work in a random startup But given that that random startup will disappear into the ether never be known. It's almost as though you didn't work And so yeah, if you can go get that big
you know, company name on your resume. You really only need one and you only need to be there kind of two years. And then you can say, look, Microsoft hired me, you know, in their whatever, you know, their desktop business unit or there are at Xbox. If you want to get in the video gaming industry, Valve Corporation hired me. You know, I worked at PlayStation. It's it's just the way we are. We we.
We want to associate somebody with something we think is prestigious and maybe difficult to get into.
Matt (21:21.086)
So some insights from you so far then is think about how you can learn how to learn when you're studying, if you're doing a degree and having something like philosophy is a really good way to sharpen the mind and your process of approaching problems. You've got the, go and work in a big, great company and work for a great boss, but don't do it more than two years really. Can you talk about? Yeah, okay.
William Quigley (21:31.524)
Yeah.
William Quigley (21:47.034)
mean, I would say two to four years is okay, you know?
Matt (21:50.242)
Can you talk about risk? So there's lots of dimensions of risk. One is risk of the big company versus the small company. But actually...
Can you talk around, you're very experienced person, can you talk around risk in terms of the stage that you are in your life? Because one of the things, obviously, when you're much younger, you probably don't have a family, you don't have kids, you don't have a mortgage, you don't have these other pressures that become more of a pressure as you get older and start to have these things. So you can afford to take more risk when you're starting out and maybe even pivoting a few times as well, because you might not, that first big company you work for, you might hate it.
William Quigley (22:21.572)
Yep.
William Quigley (22:25.466)
That's true.
Matt (22:31.113)
and then you might want to go to a completely different sector. Can you talk about that as well?
William Quigley (22:36.762)
Sure.
Yeah, the risk piece is complex because it relates so much to not just where you are at a particular point in life in your career, but like your own unique set of experiences, right? When most people talk about risk in the context of career, it usually has to do with, frankly, the risk of being unemployed.
and not wanting to be unemployed, right? So that comes down to really a multitude of factors. The first would be if you have a particular skill set that is broadly needed, you could say in the common ones we talk about, finance, accounting,
many types of marketing, certainly in various areas of software development. You've lowered your risk because those are fungible skills that can be plugged into most any company. If you are in an industry that is receiving lots of capital, it's growing fast. Again, AI is the most relevant and most recent example of this. I am sure there are a lot of...
very average, even mediocre, AI people, people who've had experience in some AI systems, who are suddenly seeing their salaries going way up and their job opportunities going way up. So that's probably one of those things which is a bit random. You can't really plan it. I could give you some ideas of how to think about being in the right growth industry versus the wrong one, but there's a lot of...
William Quigley (24:34.646)
of randomness that will ultimately determine that. Even AI, right? For decades, it's been the thing that's going to come. And then for some reason, two years ago it came. And then it's your particular, the particular company you work at. think most people, you can't change your base set of skills.
and your job title, the things you do, often you can't easily get out of the industry you're in. If you've been in the video gaming industry for 10 years, going into the fashion industry is not gonna be a direct and logical step. But you can be, and I think we should, be much more cognizant about the financial health of the company we work for.
This is an area where I have seen people with no university education to Harvard MBAs frequently be ignoring signs that they maybe should be looking at working somewhere else. And it's happened so many times for me, I've decided that for most people, what they do is they get a job at a company, if it's a relatively bigger company, they never think about.
the overall health of that business. They might think about the performance of their particular division, but they don't typically think much beyond that. I saw this in the 1980s with friends of mine who worked in the US automobile industry. And I'm looking at them saying, know, some of these companies are going to go bankrupt. And this was news to the people working in the very companies that did go bankrupt. And so this is one of those things I tell people.
have to pay attention to how the company's doing. Now, there are rare instances where you think the company is doing really well. And you're right. It is doing well, but the market, maybe Wall Street doesn't think that. By the way, that's a great opportunity to be in. This might be
William Quigley (27:00.506)
in the late 90s, post 1997 after Steve Jobs joined Apple, within a year he really had stabilized that organization and people were hopeful, but it was still being written off as a dead company. that means those, Apple had to pay, combat pay to get people to join it because why would I want to join Apple? It's probably going out of business.
You get a lot more stock options and because Wall Street doesn't value them very much because Wall Street thinks this company isn't maybe going to survive, you get a lot more bang for your buck. So that's quite rare. But if you see that opportunity, take it very seriously. The other side of that would be you're a little clueless. You think you're doing great as a company, but for some reason, Wall Street has just a
batter down your stock price. You really should have enough financial acumen to you don't have to be a Wall Street analyst, but you should understand why does Wall Street think my company is not well positioned? Why is, you know, because remember Wall Street doesn't care about what you've done. Wall Street only values businesses based on their future prospects. So Wall Street can be wrong, but
you should at least understand why. And this is something where I think many people, they just think, well, my particular division is okay, or my boss tells me my job isn't at risk, but your boss doesn't know really. Like, you you can get a great raise and a great performance evaluation and be part of a, you know, redundancy elimination, a reduction in force.
simply because other parts of the organization aren't doing well. So they've got to cut out muscle with the fat and you're part of the muscle. So don't abrogate your responsibility to understand how the overall market thinks about what you're doing. It is another, I think, valuable thing to do. And I'll pause there for a second if you want to go in any other particular direction before I move on.
Matt (29:22.94)
Yeah, well, I guess is there a process?
you would use then for, so it's the number one, there's asking the right questions and looking at everything that you've just mentioned about looking at the company and where it sits and how well are they doing versus what people think they're doing. But if you were working in either one of those companies or if you're working in one of those big exceptional companies we were talking about before, what process do you use to identify opportunities? Because last time you said about
when we spoke previously, if you're in the company and you can see there's a problem that people keep talking about, but this big company I work for is not solving for it because it's too small. This process of finding and spotting these opportunities and then having this element of intuition or gut -fill and analytical looking at it as well, can you talk through that process and how someone can activate, I suppose,
their mind to look for those opportunities.
William Quigley (30:30.488)
Yeah, and another area where you can spend many years in this particular area trying to think through and become better at taking advantage of opportunities that are always coming, but we don't always see. So in the case of you're working at a bigger company, you see something
let's say a product opportunity, a service opportunity, and of course early on it's not going to be even, you won't even be able to put it in words like that. Maybe it's more like, you know, I feel like our current product is fine, customers buy it, but it could do so much more. It could be so much better. Or there's a complementary product or service that would help my customers.
And I'm only aware of this because I'm deep into this particular customer segment, you know, in some area of, let's say, of technology. I see that my certain types of my customers and the, you know, in the hospitality area or in the insurance industry, right? We all, verticalize all of our customers. Now there may be
a particular set of customers that you see are needing something. Let's say you see that. should you, well at a high level, should you quit your company, go and do a startup and try to build that very thing? Well, if you worked with a very good venture capitalist who's used to incubating projects, you might be able to figure that out with them, but you can also do stuff on your own.
And of course, in large companies, many of them have strategic planning departments that do this work. But from a decision tree standpoint, you would want to start with, is the product or service that I'm contemplating, is it fairly broadly applicable to a larger set of customers? If you have one customer that really likes something,
William Quigley (32:55.798)
you might start to explore, would this be useful for other customers? You try to figure that out and there's different ways to do it. If you're in the sales team, it's pretty easy. But even on the engineering side, you can start to see what things customers are asking for and is this look like something that is high on the ranking of priorities? If you've decided, yes, this is something that I think would be useful for more than one customer,
And that used to be something that I worried a lot about when I would be looking at very early stage companies. I could reference check those potential customers who would say we really want this. But what I couldn't know is, is this a one -off situation where only that particular customer has that unique need for that thing? there's not enough time in this podcast to go through all the methods you would do it.
but you have to assess and figure out is it a product or service that is more likely to be adopted by a larger set of customers. Once you've figured that out, the, a lot of people criticize VCs and I do too, but there are certain things VCs do really well. One is to milestone base the amount of money needed to
As cheaply as possible, launch a product and assess its market demand. That's really what you want to try to do, right? Build a product in its most stripped down way that still is satisfying the base needs of the customers so they'll buy it, but you don't overbuild it such that by the time you're ready to launch it, you're out of business because you ran out of money.
I would also say if you're thinking of doing that, leaving your company and going into a startup, again, this might be controversial, I don't know, but I've never started anything alone. I have no desire to start something alone and I wouldn't anyway because I think you're much better off with someone else on your team. One person, two people.
William Quigley (35:17.796)
Probably not four or five, but one or two people. And the simple reality is building a product, even a very simplistic one like an app, requires more work than you can do in a day, you know, every day. You need multiple people typically. And also, of course, there's a set of skills that you want to bring to a project. You might have sales and marketing, but you might not have a really good sense of how to build it.
how to project manage the build of it. And so, yeah, you would be better off finding someone. Lots of people say, well, I've worked with two partners in my prior two attempts to launch something and they didn't work hard or we had disagreements. starting a company and working with somebody as a co -founder, there are many similarities to being married. not all marriages last.
or marriages end in divorce, you have to get better at assessing who would work well with you. And I can't tell everybody how to do that, just that that's a skill you need to develop. But don't ever be afraid that if I work with someone else and I have to split the equity with them, who cares? If the thing's successful, it's not gonna matter.
I don't think I've really ever come across somebody who said, I'm so glad I didn't have a partner because I sold this company for just enough that it met my financial goals. But if I had to cut that in half, it wouldn't have been enough. Now that's pretty unlikely. So that's kind of what do you do if you're at a company and you're thinking of leaving? One thing I want to add here, often the worry and it...
It's a bigger and bigger worry as people get older and they have more things that they have to spend money on to maintain their life is can I afford to not take a salary for a year or whatever it is? This of course comes down to each individual. But yes, you more than likely, you are not going to raise capital.
William Quigley (37:39.288)
the day you decide to leave a company. And I would even say, I never liked when entrepreneurs came to me and they're still working at, you know, in their day job and they're like, well, I will quit as soon as this company is funded. That to me felt like they were just, you know, a W -2 jumping from one company to another, that they weren't really taking any risk.
There is a, it's a form of almost due diligence that we as venture capitalists perform when we see somebody willing to quit their good paying job and take on a project that may not work out, but they have enough confidence at will that they're willing to take the risk that down the road, they're going to be okay. This, by the way, this is the reason why we've, you often hear people say,
Young people are the best people to start companies. I would say the data says the opposite. Young people have a much higher failure rate. And by young, I mean less experienced people, which makes sense. The less experience you have, the less likely you're going to succeed. However, when you look at the number of people who leave their jobs to take on
something new, it tends to skew younger because those people have less concerns about their monthly paycheck. And so we see a lot more of those people do those things, which means we see a lot more of those people succeed because the numbers are just bigger. But you're much more likely to be successful if you're 45 years old and you've thought through a lot more of the challenges of starting a business than you are at.
where you don't know much about anything.
Matt (39:37.478)
What would you say about taking funding? Because if you can grow a company organically, there can be a billion dollar company without raising any money, you're going to do that every time, but it's going to be harder and longer unless you've created something that's completely novel and changes the way an industry is done. At what point should you be going out raising money? With your VC hat on when you're looking at these early stage investments.
William Quigley (40:03.993)
Yeah.
This is almost down to a science, at least from my perspective. again, there would be, with more time we could go into all the details, but so I'm gonna try to give you broadly by telling you, giving you two extremely different examples. The first example would be when you would absolutely want to take venture capital. And that is the following.
First, the amount of capital that you are going to need to build the product, market it, hire a team to maintain that product, and expand globally because now everything is global almost from day one. If you look at that and you say, the amount of capital that I'm thinking about is in the hundreds of millions of dollars. Let's use extreme examples.
I want to build a space delivery vehicle that can send satellites up in space and send thousands of them in space and maintain those and constantly upgrade and replace the existing satellites. Okay, and that's going to take tens of billions of dollars. No one has tens of billions of dollars. No one probably even has hundreds of millions of dollars to put into one small business.
So in that case, there is no possibility of taking on this endeavor without seeking outside capital. Then raise as much as you can as early as you can. And the valuation is not something to be stressed about. The valuation will be what the valuation is. Like if you are in a
William Quigley (42:06.394)
I'm again thinking of AI because it's so front and center and it's so extreme. If you can leave your job at Microsoft or Facebook or even you currently work at OpenAI and you can raise 250 million day one with you and your two co -founders after having basically, you know, put together a PowerPoint about what it is you're going to do.
Knowing how many billions of dollars you're going to need if you are successful, that is the right path to go. Are you going to be diluted? Yeah, but of course, if you're raising 250 million, you're probably doing so at a high valuation anyway. But yeah, the generally speaking, the more capital you raise and the earlier you raise it, the less percent you will own of the company. But of course,
the ultimate company should be much bigger and more successful. So for every point of equity, you're to make a lot more money. What's nice about this one in the decision tree is when you get to should I raise capital and the question is, can I build this without outside capital? No, then you don't have to make a decision, right? You have to raise outside capital. That's easy. So let's go to the other extreme now.
When do I advise people to never raise capital? And by the way, nine times out of 10, I go this path. Nine times out of 10, I tell people, entrepreneurs, you should not raise capital. Here is when you should not. First, related to what we just talked about, you can start the business, launch the business, and be in revenue and generating profits without outside capital.
Or maybe with some like angel capital, very, very modest amounts. Or, you know, best of all, maybe with some non dilutive capital, like a long term loan. All right. The fact that you can do this without raising any capital to me says that's a very good path to probably go. There's a caveat, but let's keep going there. Then why might
William Quigley (44:32.462)
this be ultimately important even if you could? Even if you could raise capital, why might you not want to? Here's one reason. Let's say you think this business could be, and now I'm going to label it, a lifestyle business. The term lifestyle business among venture capitalists is a bad word, but it really shouldn't be because you can have very nice lifestyle business, but a lifestyle business is generally thought of as something
that's not going to be very big and by not very big, let's say under a hundred million in revenue, even at its peak and much smaller than that going forward. You know, no company can ever go public on a stock market if it's upside is seen to be limited to a hundred million. So if you don't think that this business is ever going to be huge, then down the road,
You're probably not going to be able to take it public or maybe even convince a very big company to buy your business because they want to get into this emerging industry. This is important because when you take outside capital, there's a promise you're going to return the capital with profit down the road. How do you do that? You take your company public or it gets sold to a larger business. Well, what if both of those paths are closed because
Probably no one's ever going to be that interested in buying you. You're not big enough. Then that capital in your business can never get an exit. And we have a term for this in venture capital. We call these walking dead companies. Where they're not going out of business, but they're not growing at a pace where they can eventually go public. And they don't have enough cash to ever pay back the investors with a profit. And you can be in these companies for 20 years as a venture capitalist.
Because nobody really in modern capitalism, all value is based on perpetual growth. If you don't have growth, you have very low value and no big company wants to buy a business that is going to be growing less than the big company is growing. They buy businesses because they want to figure out a way to grow faster than they already are. So if you are in, if it's a relatively small business or industry and
William Quigley (46:58.042)
As a result, exits are going to be far and few between. Do not take outside capital even when it's offered. And the nice thing about that is if you don't take outside capital, you also can make this your lifelong pursuit. I've met many entrepreneurs who have run a smaller business that they initially started for 25 years.
I mean, that there's nothing wrong with that. So ideally venture capital, the way I would put it is venture capital is for putting like pouring gasoline on a fire. Like when there is already evidence that this thing can be a conflagration, it can be a huge industry. The way people talk about things like, you know, e -commerce back in the day or mobile or online video gaming.
are now AI, various types of biotechnology. When the capital markets believe that this is actually part of a brand new industry that will be global in size and tens of billions in revenue annually, there will be lots of ways to finance that and lots of ways to exit that business for yourself and your shareholders.
But when it's small, it's quite dangerous to take capital.
Matt (48:33.886)
Okay, so now.
You've left your big company, you've done your decision tree, you've decided to go into a startup, you've got a good idea, you've taken some capital. What's the first 10 to 20 people that you hire? Who do you need around you? You said you need more than one of you as a founder, because you need another one or two people to share the load really, and use their expertise. After that, let's assume you're a fintech company in that sector, so you your software, your technology.
what are the first hires you're looking at? And obviously that would depend on what your product and service is. But is there a core team that you always need around you?
William Quigley (49:16.954)
Here's what I would say about that. Of course, I have a very strong opinion about this, but I also will caveat that by saying, if you ask a group of footballers, what is actually the most important position or the two most important positions to have the most talent, you're going to get differences of opinion based on how they think about the strategy of winning games.
Right? So with that caveat, I'm not saying this is how it should always be. Right? I'm not that dogmatic. I just know what I like. And there are a few things which I will be dogmatic about, but let's say it's just beyond you and your co -founder. Presumably you've picked a co -founder or two co -founders who have the necessary skills to get the product to market.
right, whatever that is. And you can read lots of blogs and talk to lots of VCs who will tell you, you know, one of those people should have technical skills, right? And the reason for that isn't necessarily that they're going to be doing all of the technical build out, but that they can assess the people helping them do it. Many companies today, even very small companies,
They will outsource certain elements of their product build. the people building it are not even part of their organization and never will be. How do you assess who those people are and are they doing the job? You need someone who has some breadth of understanding of that area. So broadly, and in no particular rank order, but the key skills I would be looking for, if it's a consumer business,
It is fundamental you have somebody who understands the go to market, successful go to market strategies for an early stage new product or service. There is so much, there's such a large base of knowledge of how to do that now that learning on the job, you know, when I started in venture capital, was
William Quigley (51:40.984)
My partners and I started the first consumer internet venture capital fund. The internet was new. How you did, there wasn't such a thing as SEO marketing because ranking searches based on how much you pay had not been invented yet, right? So we had to learn all that. But now there is lots of depth in that area. So if you're a consumer oriented product, you have to have someone with that skill. By the way, very hard.
to assess if they really have the skill because often what will happen is people will tell you, well, I worked at, you know, think of a company, random, in, you 2011 when we started growing really fast, all of that hyper growth was due to me or I worked at WhatsApp, you know, maybe, or maybe the product was just the right place at the right time. And you just sort of
We're spending money on SEO, but frankly, it didn't matter. So this is very hard. Of all the positions I hire for, this is the one I just say, well, hopefully they actually can do what I need because it's hard to assess it. And then the other one would be, I'm going to say the skill you need. It could be resident in an early engineering lead.
But engineering project management, I never start companies anymore without that skill. And the reason is, as somebody who's trying to every day figure out where we stand on the resources we're putting forth to build our thing, that is now almost, I would say it's a professional practice area within overall engineering management.
You have great tools to track how you're moving along with the product and great methodologies. It's kind of not something you want to try to figure out on your own. So it's possible your principal engineer is well versed in that, but if they're not, I would have that skill as part of the core team. And then one that's probably controversial, it shouldn't be.
William Quigley (54:07.802)
And I'll even say maybe if you've raised one round of capital and you've only raised $5 million, you damn well better have someone in the financial management function. Back in the day, venture capitalists had a stupid view that you got even a vice president to finance kind of right before you went public.
Or maybe way down the road after you've raised three rounds of capital and you've a hundred million and it just never made any sense to me. So many entrepreneurs realize they're going out of business when the check bounces. When you're raising capital, yeah, you have to sell them on the product or the service for sure.
But at some point in the diligence process, the people giving you money are gonna wanna see projections. They're gonna wanna understand how are you going to track your cash every month? For me, I track cash weekly and where you're spending. And if you do raise any amount of capital, you might have a board. If you have a board, you're gonna have board meetings. Those board meetings are gonna require every board meeting a financial report.
And over the years, would see VCs get so frustrated at the board meetings where they're trying to play bookkeeper because there's no one with any damn skills in the company to assess the financial position of the business. You have to have that. It's not, you could outsource it. You know, that's not bad. But a lot of people confuse bookkeeper and VP of finance. They're different.
a bookkeeper is inputting, you know, receipts into QuickBooks. That's not helping you. And so that is another position that I, that's one that I, for me, I can't hire that position fast enough, to be honest. Now, what I do at this point is I have many companies and so I have
William Quigley (56:34.214)
a centralized financial management organization. So it's very easy for those people to say, okay, we will help you set up your company and whatever jurisdiction we're gonna set it up on. All the BS stuff, the payroll, insurance, all that stuff, and then frequent financial updates on everything. I can literally just allocate a certain amount of the existing team to take on that project.
Don't skimp on that.
Matt (57:10.397)
So we're coming up to an hour now, so I would...
If we go back to the beginning of the conversation, so I think there's an interesting kind of roadmap or blueprint or decision tree process to get to this last bit that we've just spoken about. But if I'm still studying, I'm 19, 20, what are some of the things I could start making sure I'm surrounding myself with at the moment so that when I'm starting to make these decisions in two, three, five, 10 years time, it becomes easier?
because you can learn on the compounding knowledge that's now available on the internet and listening to podcasts like this and so on. Is there any particular avenues you would suggest and promote or is it just getting out there and talking to as many people as possible?
William Quigley (58:00.698)
So I think it's a very good question to ask because I, of course, I've been a student myself of innovation, of business. have dozens of patents to my name. So I've done a lot of deep diving to understand what is it about innovation and taking some
new technology, some new platform, and being able to extrapolate from that platform and what it does a whole host of great new products and services that you can sell, right? It's difficult often in a very short period of time to convey how one goes about
exploiting something like that and building a business. You will often hear young people say, I want to be an entrepreneur, but I don't have a good idea. Right? That's a very common thing. Right? And I would say this. And I don't know if this is innate in certain people or if it's something that is latent in all people that can be pulled out if they work on it.
So with that caveat, don't know. I see a paucity of curiosity in most people. I have over many years thought about why did they not, like, why weren't they curious about this? Why weren't they looking at this? And I find many, many, people have no curiosity.
I'm the sort of person, and a lot of the people I back are the sort of people, where they hear about something that has nothing to do with the area of business they're in, but they still are curious, tell me more about that. how does that work, right? How does a satellite get up into orbit and remain in orbit? And by the way, what exactly are the costs involved? Why is it so expensive? What's the biggest piece of that?
William Quigley (01:00:25.954)
If you listen to someone like Elon, he thinks very much like this. He takes a look at anything from a fresh perspective and says, well, let me break it down because maybe it's been a while and people aren't aware there's new ways to do that now. And so if you're at a company, let's say, and you are maybe have hopes one day you're going to start something, you can start right where your company is now.
Often bigger companies are doing product upgrades and product releases, brand new products, right? Would be even better. Ask yourself, why are we putting resources behind that right now? How big do we think of a payback we're going to get for that? We've not talked at all about competition, mainly because I think competition is, you know, it's a boogeyman, but it's not that scary. There's, if you ask somebody,
You know, does the world need another hamburger shop or pizza shop? Most people would say no, yet every few years there's a new hamburger shop or pizza shop and it seemed to do perfectly well. So I would recommend that I can't tell you to become curious because I think it's innate, but how about if you are curious about a particular thing, please
explore that and indulge in that. That can be very useful. I don't think I've ever backed an entrepreneur who lacked this trait. you know, they've learned something. In fact, there's even a phrase I hear among entrepreneurs when they say it in a meeting, I kind of lean forward and they will say,
Have you ever wondered why it'll start like that? By the way, have you ever wondered why, you know, these components are so damn expensive? Maybe I haven't wondered why, but now that you've asked a question, yeah, I'm kind of curious. That seems to be a very common thread among people who start and build successful companies. They have just a
William Quigley (01:02:50.144)
natural curiosity for why a certain phenomenon is going on. You know, in the consumer space, you ignore these emergent phenomenon that just seem to come out of nowhere and are growing. You ignore those at your peril. know, when I admit after YouTube, I was like, okay,
YouTube does this thing called, you know, whatever, recording things that you then broadcast to everybody. It's really cool. How would you make that better? When I looked at what we now call streaming, I did not see that big of a difference between the two initially, right? And it's sort of the way...
Ultimately, I came to understand the difference between posting something on Facebook and posting it on IG. They're radically different. What constitutes an appropriate thing to put on Facebook versus IG, right? Well, streaming would be a good example here. I didn't really get it. I thought, okay, it's, you know, it's basically the same thing. And then my company,
I had bought a company that was called Xfire for your video gamers will know about it. Xfire was a communication tool, in -game communication tool for many, games. And what we realized in like 2010 maybe, was that a massive amount of video that we captured from Xfire, you could actually video the game, was being sent to this thing that had been called Justin TV and then they renamed it Twitch and
We were very curious. Why are people doing this? then I figured out, this is radically different than what YouTube does, right? But I had to be curious and really dig into it. at a surface level, it wouldn't have been obvious. When we talked about what you summarized at the beginning about some of my remarks from the prior conversation,
William Quigley (01:05:08.536)
I said, you know, the rarest element in the universe is insight. Having insight about something, to me, meaning you see something others don't see. You've been curious about something, you've looked into it, and then you have that aha moment. what people really need is the same tool, but that integrates across many platforms or whatever the thing is. I see. Insight is a byproduct
of curiosity. So you have to be curious. And as I said earlier, I don't know if that's something all people have and it's just untapped or actually very few people have. But I do see every day when I ask people, why is that about something in their industry? I don't know. And so I think more often than not, most people are not curious.
Matt (01:06:07.906)
I guess on that point though, if it's inherent or if you can learn it, what would you say, and this is last question, what would you say about surrounding yourself around people that better than you or people that you can learn from, be it physically with your friends or maybe just people that you follow on the internet or on Twitter?
William Quigley (01:06:30.02)
that I mean it should be obvious but it is one reason going all the way back to should you work at a big company and we're make we're generalizing right but big companies often have exceptional people they may have lazy people too if you go to Microsoft I have no doubt there's incredibly successful talented people there
Bigger companies can attract and pay for higher caliber people. And it doesn't mean you can't have that at small company, but it's easier to find them at the bigger company. And so I'm a huge believer, and I tell people this all the time, you want to work for exceptional people. Exceptional people are often difficult to work for, right? Maybe when you're 60, you don't. You want to retire, you want to be lazy.
Jesus Christ, when you are young, you want to work for demanding, highly competent people. The people I reflect back on that I worked for in the first 10 years of my career, not all, but some were exceptional, always the most difficult to satisfy. you know, maybe while I was working for them, I wasn't at my, you know, highest level of satisfaction, but...
They get you to elevate your own capabilities. This is the reason why you don't want to get stuck at a job that's easy. Easy jobs mean you're not growing. And so, yes, I mean, of course, it's easy to say, should you surround yourself with exceptional people? Well, most people probably would say, well, why not? Right? No, it's not easy. But on the flip side,
When someone's telling me about where they are, they've been working at a company for a couple of years, they're doing something, and I ask them, tell me about the person you work for. I would say more often than not what I hear is, well, know, he or she, you know, they work from home and, you know, they're nice. They don't really bother me that much. I'm like, yeah, man, you're getting nothing from that relationship. You're getting nothing.
William Quigley (01:08:57.058)
A good test of whether or not you're working for a very competent, high quality person is assessing the level of anxiety you have every time you have an interaction with them. When you get anxious before you interact with that person, it's generally because you know they're going to put you on the spot. They're going to ask you things that maybe you didn't think of.
These are all the things that make you a better person. So, yeah, if you can work for someone who's exceptional, and if you're working for someone who's not, you should be making a plan to transition to someone who is gonna be challenging you more.
Matt (01:09:52.04)
So William, thank you for this. think there's a great framework that we can put out after this conversation of things that people should take into account when they're taking all these different decisions and steps across their journey in life. So thank you for joining us today.
William Quigley (01:10:10.02)
You're welcome. And I want to leave your audience with one thing to ponder. The hardest thing that venture capitalists do, the hardest thing that companies do when they're thinking about allocating capital to something new is trying to assess how big of a market or business is that going to be? Generally speaking, you never get it right, right? But
There are signs where it's probably small. And there are signs where it's probably very big. There are no experts in this area. Everyone is a student. Everybody. I've been doing this for 40 years. I still am a student. However, it's a muscle that needs to be practiced and flexed. I would say to your audience,
if even especially if you're in an industry, it's such a great healthy exercise. Think the next two years, five years, 10 years. How much bigger is this industry going to be? Is it going to be triple its size? Is it going to be roughly the same size? Is it going to shrink? That would be, you know, the very blunt ways of looking at and why.
There's lots of resources online. There's lots of great podcasts I've seen, books. Assessing the size that a market can be is a great way to figure out where to plot your next career move. And most people are terrible at this exercise. They're terrible. Start doing it when you're young. So that'd be the last thing I would leave your audience with to think about.
Matt (01:12:06.674)
William Quigley, thank you very much.
William Quigley (01:12:09.146)
Thank you.