Friday, April 24, 2020
Carey Ransom, OC4 On Startups, Investments, and What To Do Now
For our interview this morning, we spoke with Carey Ransom, from OC4 Venture Studio (www.oc4v.com). Carey tells us a bit about what OC4 is doing, how it invests and works with companies, and also gives startups some advice about how to approach moving forward in light of the pandemic.
What is OC4?
Carey Ransom: The way I think about it, is it is really the culmination of almost two decades of software and technology company building and investing. After my last startup, and having come into a number of companies early on in an operational role, and in most cases, as an investor, I saw that having as good talent as possible around the company in the earliest stage increases your likelihood of success. In most cases, early stage startups, by nature, can't do that, either because you can't afford it, or you don't know it because you're too young and inexperienced. That naturally puts those early companies at a high risk and disadvantage. That led me on this journey to mitigate and improve those oods. I spent a considerable amount of time studying other studio models, and really trying to understand what they were solving for, what was working, and what wasn't. A couple of things I learned, is that most studios are borne out of ideas they had. What I really wanted to solve for, was how do you marry ability and talent, and bring that capability to a founder that could greatly benefit from that.
What were you doing before OC4?
Carey Ransom: I've been involved in more than ten different software and services, fintech startups and growth stage companies in Southern California since the early 20000. I've had every role in a company, from CEO, COO, CFO, CMO, chief product officer, head of business development, corporate development, and sales. I have built a number of companies, and have had success in selling companies, and have bought companies. I have really been through the life cycles of a company. I've also invested in those companies. I like to think of myself as an operating investor, and I think like an owner. Uniquely, I haven't had to be that serial entrepreneur, who has had to found my own companies and only work on my own ideas. I think that makes me uniquely capable of joining with founders and coming along side them, to help them amplify and improve the success of their business and vision. What I've learned, is building companies is a team sport. The best companies get built by the best teams. I've seen too many people reinvent the wheel over and over and over. They start a company, they haven't hired great engineering talent, they haven't hired great product talent, they haven't hired great marketing, growth, or other key people, and they go through the same mistakes and machinations you go through, when you haven't built a roster of great folks you can work with again and again and again. Part of the idea of this is to take that group, put it together in the studio, and make it available to founders who resonate with our values.
How far along are you in terms of making investments?
Carey Ransom: We've made five investments since November. Our target is, depending on where they are, to invest between $250K to $750K in a company, which is definitely a pre-seed round. We've invested in five, and have done a couple that are a little less than that, and others up to that total. In addition, the studio will work with companies very hands on, depending on where they are and where we can be most additive to them. We're very product centric, so the early team we have are all product, data, and technology centric. That's because at the early stages, it's all about building that great product that people can love and solves their problem, and doing it in a very thoughtful, effective way. As we continue to grow, we'll add go to market, sales, and business development resources.
Looking at those early stage companies and how you have been applying this, what is the most common issue you see startup founders running into?
Carey Ransom: I think there area few we see. One, is the loneliness factor. People are, by default, thinking they are by themselves and they think they have to figure it out themselves. They end up investing a whole ton of energy in things that ultimately don't have a critical impact on their success or failure. As an example, a whole set of capabilities we call the necessary but not strategic things, such as accounting, HR, legal, really that administrative infrastructure. We have that available and provide it to companies so they can take that off their plate and so they're not distracted by that. We see a lot of companies building those way before they should, really acting like a company before they are really a company. Instead, we want people who are really obsessive about the customer problem, and solving that problem for the customer. The other thing we often run into, are people who have started building without validated that this is a real problem that customers have, and where those customers want to see a real solution.
We're in a strange situation now with the pandemic. What should startups be thinking about now?
Carey Ransom: Great question. Two things. Number one, adding to whatever the vision and lenses you are looking at your business opportunity, you need to add the additional lens of what changes are likely to persist from this pandemic, short term and long term. For an example, if you are working on something in travel, people are going to want to continue to travel. However, the types of travel they do may change in the near term. You may see a lot more local travel, for example, because people will want to risk manage exposure, may look at staycations and local travel versus international and global travel. If you are in a business there, you may have to adjust where you are playing. We've looked at all of our companies, and looked at what behaviors are likely to change, in the short term, and may take awhile to recover, and what are other long term significant changes, and does our business model need to adjust. In some cases, that has been no, and in some cases, we've had to make slight adjustments, but there may be businesses which have been rendered not a good idea anymore because of this. The second one that is obvious, and people hate uncertainty. Investors are just like others, and hate uncertainty too. That will extend out timelines required for people to make decisions. Startups need to plan on things taking a lot longer than they were three months ago, and plan accordingly. That's why see so many people trying to reduce their burn, and extend their runway.
Thanks!