and founders who exit but don't have much of their equity left, arguably you might as well have had a job.
Hello, and welcome to the Foundershares podcast, brought to you by Hutchison, a law firm in Raleigh, North Carolina, that helps founders and entrepreneurs in technology and life science companies start up, operate, get funded, and exit. So whether you're already an entrepreneur or want to be one someday or are just fascinated by the stories of how a business goes from idea to success or not such a success, this podcast is for you.
Today's guest is Bill , entrepreneur, investor, board member, and most importantly, someone who's focused on the growth and connectivity of the Research Triangle Technology ecosystem. You may know Bill as the founder of Global Data Consortium, which sold 18 months ago for hundreds of millions of dollars. And in the process made 25 new millionaires right here in the Research Triangle area. We'll
get to that. In our conversation today, we talk about how Bill is fostering a workplace revolution, how he's thinking about his legacy and diversity, or really the lack of diversity in funding. One thing I was excited to learn is that throughout his life, Bill has been into science fiction books and movies, which is something that shapes his career and leadership style even today.
Of Isaac Asimov, his character Harry Seldon, and the whole exercise of psychohistory, the idea that you could predict the movements of a society through the actions of a few or the many, just fascinated me as a youth. And it still fascinates me today, thinking all the way from the 50s to now, how I think psychohistory actually is perhaps even
more applicable potentially out there. And the idea of the Second Foundation being this invisible group whose objective it was to keep the plan on track really kind of forms the foundation of how I look at things. You know, I look at my family office, my team as a group of people who are trying to make the Research Triangle area of better ecosystem, a better environment. And our job is to try to keep that on track.
Bill and his team are definitely on the right track, and the Triangle's lucky to have him here continuing to give back and build what's next. And that growth mindset started all the way back to step one of his career as employee number five at CED, the Council for Entrepreneurial Development. There he met entrepreneurship leaders like Monica Doss, Mitch Mumma, and my partner, Fred Hutchison. Bill's eyes were wide open.
The big things I learned there were, you know, the value and where fundraising fit into the equation, the need to build a team, the need that you had to have a core idea that Not everyone had to believe in, but you needed to be a big believer and advocate for. I think the greatest example of that was watching the journey that
Bob Young took with Red Hat early days. And I can guarantee you that most people, I remember very distinctly, most people could not fathom how you could build a sizable business off of free software and professional services. Right. And lo and behold, we ended up with a rather sizable company called Red Hat that was built on that model. And I remember that things for Red Hat really took off when they recruited Matthew Szulik. To come in and work alongside Bob to accelerate
the growth of that business. And accelerate that growth is exactly what they did.
So then what led you to leave? I mean, it sounded like a great position, great kind of experience and exposure. What led you to leave that role with CED?
So, you know, I would tell you it was evolution is the term I've been using a lot more lately. It was time. You know, I bumped up to the limits of what I could do at CED. And also there was the allure of going out and doing that in a for-profit mode. So I left there and actually went to try and do a for-profit version of CED that was called Startup Street that was part of Fusion Ventures.
Okay.
And, you know, I left at a very interesting time, 99-2000. And I got to also witness, you know, startup, the high-growth startup universe on the backside. Yeah. Of a high. Yeah. And I most certainly got to participate in the first winter of tech when web meltdown occurred. Yeah.
So, I mean, I... Having seen a couple of cycles, you learn different things from the up cycle than you do from the down cycle. What are some of the things that stand out to you that you learned from that experience?
People who know me have heard me espouse this many, many times. But your customers should be your number one funders. The number one thing I usually will talk about is raising money is great, but raising money from customers is better. And that was something I learned during that cycle and process. The other thing I learned and took to GDC on the journey was your money, the money that you raise, the money that you have should
be spent frugally on the business. And when I say that, I mean, you know, I'm not a big fan of parties, ping pong, beer, and so forth. I'm a big fan of spend the money on your team, spend the money on, you know, building great product, selling great product, growing your customers. And so, you know, things like swag, things like.
All of that stuff. Never part of my DNA. And people, I think, question that, but they don't understand that I watched us go from a point where we were throwing lots of parties, having a lot of fun, to we were trying to find coins in the couch. I was there when a company came and reclaimed our phone system. And not a fun experience. My last paycheck was an IBM ThinkPad and an office chair. And because we didn't have the cash to pay me on that last check. Right. Those, you know,
those learnings I was able to take forward. Yeah.
Well, and it certainly shapes your view of the value of money, the value of what you can do with it, how you spend it. Absolutely. It's got to shape that. So then what do you do? So you talk about that last paycheck coming in and Where do you go from there?
Unemployment for a little while was the answer there. And then I was lucky that I had a friend from CED who actually connected me into a job at what was then Dataflux, but it was a local tech company, but then it was acquired by SAS Institute, Inc.. So I basically went to work at SAS Institute, Inc. As a business development manager. And that was where I cut my teeth on enterprise software.
Now, I think I'd read somewhere that up to that point, your exposure to enterprise software had been through other people's companies, essentially. So how did you feel you could kind of take on that role, or how did you have the confidence to kind of play that part?
Well, what was identified to me, and this was a great person, her name was Katie Fabizak. I got to know her through CED when she was in marketing for Ernst & Young, and she moved out into the private sector at Dataflux. And one of her points that she drove home was one of my superpowers was relationship management. I'm a great relationship person, and that is one of my superpowers. I'm a super connector. I love building longstanding
relationships with people. So doing that in enterprise software was a natural fit for me.
And had the technology side always been a draw, or do you think... Again, that was just a matter of connection. Could you see yourself doing the relationship connection outside of technology? Sure.
There was a point in time where probably a little known fact, I was in the independent film community here in the state. And I helped organize something called the North Carolina Independent Filmmakers Association and tried to help organize that community. So, you know, whether it was film or whether it was tech, I was always going to try to bring people together to do something interesting. For me, it was just enterprise software turned out to be the right combination of things for
me. That's interesting.
And when we think about kind of your superpower, is that something that you would say? Has it come naturally to you, or do you feel like you've honed that skill and developed it intentionally over the years?
Raw, natural, absolutely, but honed it over the years 100%. If I had been able to hone it even more so earlier in life, who knows where things would have ended up. But most certainly, all along the way. And I would tell you that from my upbringing, whether it was being in leadership in Boy Scouts, being an Eagle Scout, being a member of something called the Order of the Arrow, all the way through my university days, career arc. Those were always things I was good at was relationship
mechanics. Okay. And this was all even in the pre-internet days, mind you. Okay.
Yeah. Well, I mean, it's just interesting to think about how that changes and how you develop that skill and, be able to apply it in different scenarios. It seems like an important skill set to have.
It is. It is. I still enjoy it. I use a euphemism that I like to collect people. And it's a truism. I love spending time with people. After this conversation today, for instance, I'm going to spend the day in Durham having interesting conversations with four or five people. No business objective whatsoever. It's just about having some really good conversations with some interesting people.
Well, I think that's interesting, too, is having that interest in people and not necessarily what that person is doing for you or anything. Just you have that fascination and interest with people.
100%.
So when Dataflux was acquired by SAS Institute, Inc. Institute, Inc., was SAS kind of a big operation at that point of time? Absolutely.
The campus was amazing. I think they only went up through maybe the letter K on building. I think. At that point, maybe a couple short of K. But it was amazing campus. If anything, I think there were two, maybe three cafeterias on site, so forth. But Dataflux was off campus. We still wanted to maintain our independence at that point.
So we were off of Western Parkway. Okay. And still had our operations over there, still kind of maintained a separate P&L and very much operated as an independent org.
That was going to be my question, because there seems to be a huge difference between working with a startup kind of in that scrappy environment versus working kind of a larger, more established entity. Did you kind of run into any of that, or were you able to stay far enough siloed away that you could avoid some of that?
You know, I most certainly ran into that. I would tell you, again, one of my great stories I share with people from my early SaaS days was... Our manager came to me one day and said, I need you to go down to Dallas. And I had only been with the company maybe for a couple of months at that point. He was like, I need you to go to Dallas and meet with IBM, talk to them about a strategic relationship. And so I said, OK. And
it was like, all right, how do we do that? Work with SAS Institute, Inc. Travel, work with our office managers. So SAS Institute, Inc. Travel had a look. They had an arrangement with American Airlines at that time. And so for myself and my engineer to go to Dallas, fly there, fly back, it was going to be $2,500 a person. And I was like, that's for one meeting that doesn't sound rational to me.
I can't do that. Right. And, uh, I looked online and found that Southwest Airlines, um, basically we could fly there the night before the meeting, stay at the Omni Hotels next door to the IBM campus. Rent a car, do all of these things, everything for less than $2,000 for the both of us. Okay. And so I said, well, this seems like a much more realistic exercise. And I remember the office manager at that time said, oh, you can't do that. You have
to go through American Airlines. Okay. And I knew at that point in time, we weren't making money as a company. And I said, meaning the data flux wasn't making money. And I said, well. This doesn't make sense. So I just went my own way. And we booked through Southwest Airlines. And we stayed overnight. We had a great meal. We did everything we needed to do the next day. And we came home.
And it all worked out great. And I'm glad I did that because that relationship, that meeting didn't necessarily yield it.
It didn't need to justify the expense. Exactly.
Exactly.
That's interesting. So tell me a little bit of how you go from Dataflux then to Global Data Consortium. Sure.
Sure. So I did a five-year stint at SAS Institute, Inc.. It was great. Learned a lot about enterprise technology. Learned a lot about licensing. I actually helped write the first OEM license at SAS Institute, Inc.. OK. And because they use a perpetual licensing model, but- Uh, most of our, the people we were trying to license to weren't interested in perpetual licensing. So we actually found accommodation by doing a hundred year licensing. So it created
the same dynamics, but it wasn't perpetual. So everybody was happy with that particular negotiation. But the thing for me was I was always a small company guy. So much like I talk about that Southwest Airlines versus American story, I'm not the greatest fan of large company bureaucracies. I think they have their place. Large companies grow for a reason, and SAS Institute, Inc. is a wonderful organization. But I thrive in small company environments. The
smaller, the better. In fact, I've learned through all of my experiences now over a 30-year-plus career history that At best, I'm great up to about 20 people. Beyond 20 people, it starts to shake and shudder a bit. Once we get to 40 people, I'm probably not the best guy.
Tell me about that. So what is it about that size of a company that appeals to you or is within your skill set or just your lane, I guess I would say?
At 20 people, you still know everybody. You still have a very clear understanding of where people's dynamics are, what their drivers are, and how they want to move ahead. At 30 people, it gets a little bit harder, especially if you're putting the right leadership layers in beneath you. So you're not doing all the hiring anymore. Others are doing that hiring. And then at 40, you're removing yourself more and more from that
feature function. Right. And how you scale beyond that 40, I just haven't had that level of experience yet to say, okay, how do I make sure I still have that? That impact on people, but not have to be involved with every single individual.
Well, it sounds consistent, again, that whole relationship drive.
Yeah. You learn the things you know and do those well, and the things you don't do well, don't do those anymore.
Yeah, absolutely. So you've had this desire to kind of be in that smaller space. Did that lead you to leave SaaS then?
It did. That led me to leave SaaS. I actually went out on my own. I had a stable of companies that I worked with, or portfolio is a different way to look at it. I worked with this small company out of Germany called Address Doctor. They were an address verification software company. Okay. I had another set of companies as well that I was working with, but Address Doctor at that time basically started to grow. And in parallel with that, I actually met my co-founder for the second
time, my co-founder, Charles Gaddy. I was working from a local coffee shop called Helios Coffee way back in the day. And so I would sit in there. And then Charles, I had met him years before working at SAS Institute, Inc. on the partnering side. And he would come at Helios on a regular basis. So we reconnected. Turned out he was a product technology guy. He was out on his own doing product technology work with people. I was out on my own
doing sales biz dev with people. And we got to a point where we said, we're spending a lot of money on coffee and lunch here. We could probably pool our resources and rent an office. What would that look like? And we had that conversation and we found an office on Fayetteville Street in downtown Raleigh that was cheap enough for us to rent with flex terms and moved in there. And the rest was history. We actually, Address Doctor took off as a business. We both ended up working there.
I became COO. He actually ran US on that side. And it was a great experience for us. We helped to sell that business to a company called Informatica, which was a large enterprise software company out on the West Coast.
So was that the idea at the time? You were going to find, I guess, the clear winner and kind of run with that one? Or were you imagining you were going to just continue to serve multiple companies?
You know, the idea at that time was going to serve multiple companies. We didn't know what we were going to find. It was all experimentation for us. And it just turned out, Address Doctor definitely at the time was not a clear winner. When I joined that business, they were doing less than a million in revenue. And when we sold the business, we were over 10 million in revenue. And a lot of that was through the biz dev relationships that we put in place. Sure. We grew a set of channel
partners. Uh, SAS Institute, Inc. was one of them as well as a number of others. And we grew those partnerships on a global basis and they generated a great, you know, royalty revenue string for us. And then that allowed for us to sell that business.
Yeah, well, it seems to me like in a number of different kind of levels of your career, you've had exposure to a broad number of companies and had that opportunity to see things that are working, things that may not be working. So I guess what stands out to you kind of from that early stage? About companies that you found to be successful or the ones that were kind of making a go at it in a way that others weren't?
You know, the thing I will say is the success of Address Doctor was very interesting because much like GDC, it had raised no venture funding. The founder had bootstrapped it. I was not the founder of that particular company. The founder and I were good friends. He bootstrapped, he was a technologist, and he got it to a certain threshold. Then I was able to come in working with him and the rest of the team to take it the rest of the
way towards that great successful outcome. Along that journey, I also got to observe, also while I was at SAS Institute, Inc., I also got to observe a number of companies in our space and field who went down the venture route. And there was a variety, you know, there was varied success and failure around those models. And so I got to observe all of that being the partnership, you know, that partnership relationship universe. I got to actually engage and observe what was working and what wasn't
working. And really I found that people who were able to concentrate on their business, grow their customers, look at growing their business in a profitable modality, Those seem to work slightly better than free software, no consistency around revenue model, on establishing true product market fit. Yeah. It's not to say that one model was better than the other, but I found at least that I indexed towards one more so than the other.
Sure. I think that makes sense. And does that change, I guess, how you think about funding now? Because now it feels like you're at the other side of the table in some respects, investing in companies. Yeah. How do you think about the value of bootstrapping versus the value of taking outside funding and what you can do with it?
Well, I'm going to paraphrase something that another great podcaster, Ben Gilbert, from the Acquired podcast, he and I had a conversation last year. We were talking about this subject. And something that we both observe is that a fair number of companies out there, technology companies, are not venture fundable. They should not take
venture money, in other words. There's a deep logic well one can go down around that, but I think there's a difference between what type of money you take to achieve the objectives that you need to achieve. It's not to say that you don't raise money, but you might do better raising money from angels or other types of capital versus venture capital. Because the math for venture capital requires much higher growth multiples,
much faster. There's a lot of dynamics that come with venture funding that don't come with every high growth company. Right. Yeah. You can be high growth, but not a venture fundable company. Yeah. And it's always interesting when I talk to people around, you know, is a business growing at 100% a year? Business, especially if they're growing profitably at 100% a year? I would say no. Right. Yeah. But are you really venture fundable in that
model? Maybe not. Right. And so it most certainly has, you know, all of those experiences and observations along the way have definitely influenced how I look at companies and say, does venture funding really work for you? And I try to talk to founders about that a lot. Is this really the path you should be on or should you be thinking about a different path?
Yeah, I think it's a super helpful conversation because I think there's a model that people have in their expectation that we start, we grow a little bit, we get some funding in the door, we get more funding, we get institutional funding and then exit the business. But that doesn't have to be your path.
It really doesn't. And in fact, I would argue starting the business as scrappy as you can with the resource base that you can bring to bear and raising as little capital as possible until you reach what I would call product market fit. And when you're ready to scale, then raising money. And definitions of scale can always be different. But I would argue if you actually can wait until you get to one or two million in revenue, then you can actually write your own terms into
the equation. And oh, by the way, you're retaining a lot more of your equity at the end of the day. And founders who exit but don't have much of their equity left arguably you might as well have had a job. Yeah, so you really, I think a lot of times founders don't do the math. Right. And that's something we talk a lot about at the Second Foundation is the venture math. Do the math.
That's good because you've got to see it and you've got to have realistic numbers put down. Right.
Think about the end in mind and then if you back into it. And the end in mind is ultimately, what do you want as a founder? What do you want your personal outcome to be? Right. There's a difference between your personal outcome and what the company may sell for. Right. Those two very different things. And if you don't understand what those two outcomes need to be for yourself, you're just sort of… randomly setting yourself off on a path and you have no idea how you're going to do that.
Hoping it works out for the best.
Exactly. Hope is not an option, as a friend of mine just pointed out.
That's a good one. So, after Address Doctor, then, did you go straight to a global data consortium at that point?
So, we had already started iterating a global data consortium. I invested in a company called Locate. Which did something very similar to Address Doctor, which was again, international address verification. Sold that company to a UK company called GB . And so that was another exit on the docket. And then in parallel with that, and I guess I should step back and explain that my co-founder, Charles, and I, all along the way, we had this separate parallel entity that we had created early
days called BSG. Now, on the corporate, it was Black Book Solutions Group. And the idea was we were leveraging our little black books to, you know, people don't know what those are anymore. But we leveraged our CRM, our contact database. There we go. There it is. And to create business opportunities for ourselves. But the real funny thing around the name BSG really was that it meant it was actually stood for Battlestar Galactica, the reboot. Okay. And so we were both big fans of the reboot.
Another great, great show.
Another great show out there. And so we created a company name that could embody that while also embodying the business. That's what we were doing.
I like that. A little piece of trivia. I hadn't heard that one before.
So all along the way, we still had this other entity that was out there. And that's where GDC sort of sprung from. Okay. Was we were, again, observing, experimenting. So we started GDC with the idea that we were going to, you know, license raw data to larger organizations like Visa, LexisNexis, and others. And then we actually moved into this model of being able to provide that data via web services. Wow. And then we moved and it was all
around addresses. And then we migrated into a universe where we said, oh, actually, we're going to pivot into providing these via identity because we realized that identity verification was far more lucrative than address verification. For address verification, that market had been somewhat commoditized down to about five cents a transaction. Okay. For ID verification, I could get 50 cents
to a dollar a transaction. So you look at the math and the margins associated with that for roughly the same costs underneath on the data side. Kind of say, I like that dollar transaction.
That makes, that margin makes much better. 100%. How did you manage alignment with BSG and as you're exploring these different companies? Was there any challenges associated with that with you and Charles? Or has it always been kind of an easy work relationship?
Charles and I, I will always and forever say he has been one of the best co-founders to work with out there. We certainly by no means have achieved the same heights as Buffett and Munger did. But I would definitely argue that Charles has been very much that. Now, which one of us is Buffett or Munger? Neither. None of us will say. But I will tell you that that co-founder dynamic, we always have been able to work together. And he and I, in fact, there was a third founder
and I'll tell this story. Um, and hopefully he will, you know, I'm sure he'll come back and say, oh, okay, that's how this played out. But there was a third co-founder in the business. And one of the first votes Charles and I actually united on was, we don't know that we need the third co-founder. And so we voted him off politely and everything. But it was like, we got this. And we just realized we could work together. And that's what we did across multiple companies over, again, a 20-year
span. That's fantastic.
And I think it's important and kind of, I don't want to say rare, but that founder dynamic and being able to find the people that you can work with. Having complementary skill sets, having the ability to kind of trust that other person, I think it's a huge, huge element to the success of some companies.
100%. And, you know, our relationship over the dynamics across all the companies grew and grew and grew so that when we were doing GDC, we kind of... We knew what the other one needed all along the way. And I could tell you that when we knew we couldn't talk to our spouses about things, we could always talk to each other about things. And the fact that GDC was a very global company, so we did a lot of international travel together, it just built a really, really strong
relationship dynamic there. So one that will last a lifetime.
I love it. So I guess at this point in time, it sounds like you've had multiple exits, multiple different kind of experiences, even before starting GDC. So I imagine there was no hesitation kind of when that opportunity came that this is what we can do.
No, that's a great question because I like to talk to people about the fact that all along the way in my career, I've had the opportunity to just stop and settle. Yeah. I could have stayed at SAS Institute, Inc., made great money. I was doing well and so forth. Could have stayed at SAS Institute, Inc.. Could have stayed with Informatica. Making even better money and doing quite well, no issues at all on that front. And all along the way, I could have just sort of stopped and
settled. Uh, but. No, there was always that, let's go for the next thing, let's go for the next thing.
And tell me a little bit about that. Is that a competitive drive? Is that a curiosity? Is that just? I would tell you. Restless motion.
Well, you know, it's interesting. That's a great question, too. You know, I get that one at home. It's like, why aren't we, why aren't you relaxed? Yeah, but I would tell you there's an argument that it's both competitive for me and important to say, move for the next thing. Bump up against a ceiling, break through, move to the next thing, move to the next thing. And the one thing I determined when we sold GDC, I had a series of people. One set of questions was,
what's next? What are you going to do? What's next? And I was like, I am not doing another company, but I'm going to do something a little bit bigger than that. And that is to try to help grow an ecosystem. So, again, doing another company, been there, done that. I've won some, lost some. So, I've had my failures as well. I don't need to really continue to experiment with that. How do we actually make the overall ecosystem better?
But I remember my head of sales at GDC at that time, I remember we sat down and, We were having celebratory drinks after the deal. And he says, well, what's it feel like to get to the end and, you know, and just be like, all right, you're done. You don't need to do anything else at this point. Right. And I said, what makes you think I'm anywhere near being done? I'm just actually getting started. And you know, that's just the way my brain operates.
So was there even a point in time where just like, well, I'll take a break for a little while, or were you just like, as soon as it closed, you're ready to jump into that next thing?
You know, I had the benefit November we negotiated the letter of intent in of 21. And we didn't close till May of 22. Okay. So it was a long closed cycle due to regulatory reasons. And so I had the benefit of recognizing that I knew I was going to be getting off this bus. Yep. And I knew because of my past experiences with Address Doctor and others that I didn't really want to stay in that big company environment. LSEC's huge. Yeah. You know, by the way, 100,000
plus employees. Yeah. Just a huge organization. So I knew that wasn't going to be for me. So I started that thought process of, okay, what's next? And I talked to a number of people. They're like, oh, you need to take a year off, go sit on a beach and just relax. And sure, on the surface, that sounds really nice and pleasurable. But I was like, you know, I get bored quick. Yeah. I do a few things well. I only, you know, I enjoy
a few things in this life. And doing what I do, you know, sitting on a beach in some remote place was not going to be the answer to that. Yeah. Yeah. So I kind of came up with the foundation off, you know, along the way, uh, as, uh, we were going through that process. Right. And once I knew the deal, once we closed and we were done, it was, it was melancholy to sort of leave GDC behind, but. I very quickly moved into the modality of, okay, we've got this next thing. Now, I took
a month off. Okay. You gave yourself a little bit. Good for you. A whole month of September and went out traveling and enjoyed that.
It's on to the next thing. On to the next thing. Well, I do want to talk about Second Foundation. But before I get to that, you did mention kind of like through your career, you made some mistakes. That's bound to happen. But anything that kind of stands out that a mistake that you really learned something from or something that could be helpful for somebody who's thinking about coming on.
Yeah. Learning, something I probably guide founders to more and more is understand who you are faster. Learn what you're really good at and what you're not good at faster so that you can index toward those things. I probably made a set of mistakes along the way. I'll say immature mistakes. I think about when I left CED, we didn't leave that in the best possible way because I knew I was going to this other thing. But I didn't necessarily, you know, I didn't negotiate my exit the way you
normally should have or would have. And that was just an immaturity exercise, if you will, around how do you do that kind of thing. But more importantly, I was not confident. So immaturity and confidence, I wasn't confident about who I was and what I was going to be. So the sooner you know who you are and what you're really good at, then the better
off you will be. And that's something I very much try to get founders to think more about, especially early stage founders who are fresh out of college or early in that exercise. First, is this something you really want to be doing? And then second, do you understand where you really fit in the universe and what you're really good at and whether this is something you want to do?
Well, and sometimes I think that especially early on, there's that pressure to be all things to all people. I'm like, oh, I'm the CEO. I'm the founder. I've got it. Be able to do everything in the company, at least at a surface level. But you really don't have to do that. You have to know what you're good at, know your skill sets, and then surround yourself with good people.
Surround yourself with good people and ideally find a great co-founder or two who can actually augment wherever those weaknesses may be.
That's great. So now let's talk about Second Foundation, because you talk about this vision of kind of building an ecosystem here in the Research Triangle. So talk a little bit about that and what the goal was and really what prompted you to start down this path.
Sure. So this is just a derivation of the story from my CED days. So CED, Council for Entrepreneurial Development, has been one of the first and still one of the longest- running nonprofits that are focused on the development of entrepreneurial ecosystems. It was there before anybody else was really talking about this thing. They were there. CED did some amazing things during those early days, and they went through a lull where things
just like companies do. You get off the rails a little bit, a little ahead of your skis, whatever the case may be. And for me, I've always looked at that organization as being the ecosystem developer. Had they not existed, I would say we might not have Red Hat here. Would Crew have existed here? Maybe. There's a number of companies. Would Pando Daily have existed here? Maybe. I would argue probably not because of the early days of CED. I would argue Channel Advisor
exists because of that. All of this came about because CED set that foundation for a lot of these early-stage entrepreneurs. And how we actually get the next generation of entrepreneur engaged and understanding why you have to pay it back into the community is a really important thing. I think a lot of times entrepreneurs, founders in particular, I say entrepreneurs, but founders in particular are guilty of revisionist history. And we forget that others helped to bring us.
Right. Along the way. It might have been a little thing. It might have been a big thing. But we generally will come at it and say we did it all. We were the greatest thing since sliced bread.
And the honest truth is we didn't do it all. And so growing the ecosystem is really about getting this ecosystem's current exited founders reengaged and supporting and getting the future founders to understand that you have to reinvest and engage in the next generation if we want to see this ecosystem continue to grow and grow and grow. And so that's really a big part of what we're about. And again, it sort of goes back to if you think about the Harry Seldon aspect of Second
Foundation, it's realigning to the plan. Yeah. And getting us back on course to say this is what the original mission was and this is what the mission is now.
And how are you finding the kind of are people responsive to it? Are the founders that you're talking to open to it and kind of ready to engage?
100%. It's been great. Yeah. Look, the wild success that we had within the community gives us a lot of social capital to be able to talk to people about this type of thing. And the fact that I'm willing to put my money where my mouth is on this exercise without any return on that front is another big driver, I think. And again, there were people doing things in the community well before I was. I reference some of my blog
posts around the fact that. You know, one of the big people I wouldn't use the term idolize, but I deeply respect in the community, Scott Winger. And that's because as a serial, you know, he's one of the few truly serial entrepreneurs we've got in the community. And he pays it back. You know, he's doing tweener not because he has to, but because it's something that interests him and he feels like it's a great gift back to the community. Yeah. And he puts that time and energy
into that. And again, when you're doing that kind of thing, the more and more of us do that, that is the secret. Sauce of the, of the valley is the fact that you have this preponderance of people who just put it back into the system. Yeah. And they put it back in either as investors or mentors or whatever the case may be.
Well, I think that's important, too, because it's not just money. There's a number of people I talk to, young founders are like, yeah, I talked to Scott, and Scott was very generous with his time. And other founders that have come back and just are willing to share that time and that mentorship about what worked for them. I think it's just huge.
Yep, putting it back in. And so that's really what we stand for. And the work we're doing at NC State right now is sort of the tip of the iceberg around focusing on hard science and deep tech. And getting more focus and investment and access to spin-outs and truly deep technology plays where we have defensible modes. This is something that I've learned along the years is, is the Southeast, is Raleigh a big place for us to be building what I would call B2C, business to consumer businesses?
No. When compared to Silicon Valley, which is more deeply funded, more deeply experienced, all of those things. We shouldn't really be focused there. But where we have great experience and resource, agritech, material science, medical device. We have great domain experience here. We have talent. We have all sorts of network resource here between the universities and the private
sector. So doing more of that seems to be where we need to be putting our energy and resource and not trying to emulate others, be who we are.
But again, I think that's important. Again, not trying to be, you've talked about it for yourself, you've talked about it for other founders, but even as an ecosystem, not trying to be Silicon Valley, not trying to be Austin, Texas, not trying to be Boston. Correct. We're Raleigh-Durham. Let's do what we do.
Let's do what we do, and let's do that really, really well.
So I think you've touched on it a little bit, but what are some of the positives and negatives that you see about our current ecosystem here in the Research Triangle? Yeah.
Ah, okay. So, you know, look, the three areas that I would tell you that we focus on, which kind of highlight, you know, and I'll talk about positives and negatives from those. So, normally I talk about it in terms of capital formation, ecosystem development, and minority achievement. I'm going to reverse the order and talk first
about minority achievement. In this community, as an ecosystem, we have not had widespread minority engagement and success, both on the venture investing side and as well as just true founder engagement side of the equation. So, part of my mission is to actually improve that. Now, what it does not mean is that I'm specifically only focused on minorities as it relates to tech investing and so forth. But what it does mean is we should have a more inclusive environment around minorities.
And I very much mean people of color, to be very specific on that front. So, I'm very intent on trying to see how we make this ecosystem better around that. You know, when I talk about the broader ecosystem, I absolutely mean that the tech ecosystem, high-growth tech ecosystem is important, but also the supporting underlying needs. So, Main Street retail is important. And one of the things we've forgotten in the post-pandemic universe is that we have restaurants and we have Main Street retailers
that make our community a community. And by not coming into the office, for instance, we literally are causing them to go out of business or have to change their business models. And many of them are going away. Yes, new ones are springing up. But I think it's important that we think about our community. Mental health is an issue. We don't talk enough about it, both at the founder level,
but at the community level. And if we're not dealing with Mental health and the issues of homelessness and other issues associated with that, our community will fracture and become less interesting as a community. And so instead of just thinking about it as a bunch of people making money at the top, and it's all about us making money at the top, it's about, yes, we want to have great outcomes, but we also need to make sure we're funneling the results of those outcomes into the broader
community. So that's what I mean when I talk about ecosystem development. It's not just this one piece. There's a lot of layers underneath that. And then capital formation. We don't have enough seed and Series A money focused in this area. We just don't. A lot of people like to try to parse that. The math is there. Yeah. The actual math is there. And so as a result... Our good companies end up being underfunded good companies. And it's not to say that we have a preponderance
of good companies. I'm not going to throw that out there because I'll go back to what we said at the very beginning. Not every company should be venture fundable. But the ones that are venture fundable should have the most robust venture funding possible from our community. Because if we want those monies to stay, you know, I used a coffee
shop example all the time. If you have a choice of going to a local coffee shop or to a Starbucks, you should always remember that when you go to Starbucks, that money goes to Seattle, right? When you use a local coffee shop, that money trickles back into your community. So do you go to a Benelux? Do you go to a Helios or Morning Times? 100%. You go to Starbucks, you know what you're doing on that front. I think the same is true within
our community. I think we need our investors investing more locally and getting better returns out of those investments so that that cycle helps drive a much more local environment. But I do also want to attract outside area investors to help bulwark that as well. But I want them to be participants on that, not drivers of that, if that makes sense.
It does, and I appreciate the view of the ecosystem. I feel like sometimes in these conversations, there's this idea of the startup ecosystem or the tech ecosystem as being somehow separate from the broader economic community here in the Research Triangle. And we operate. We operate in our own kind of little silo, and downtown retail is a little bit different. But I appreciate that view that it's all connected and really kind of to make it a community that we all want to be
a part of. It needs to be interrelated.
We don't want to end up like San Francisco is dealing with right now from a downtown perspective because they forgot that aspect of community engagement. Right. And how do you actually make the community better? And we need to jump the shark and try to get ahead of that curve before we end up along those lines. And the answer can't be retreat to the ex-burbs and hide out in our apartments or homes. That's not the answer.
That's just not going to work.
It's not going to work.
So I want to ask about the minority engagement. Are there areas of kind of low-hanging fruit that you see that could easily be done that aren't being done that people could focus on?
So one of the things, we've got two programs that we've really fixated on. And again, this past year, a year and a half, has been a lot about learning. Went around to a number of communities. Went to Seattle. Been to San Francisco. And really tried to understand how is it working in other communities and understanding sort of the landscape around minority participation. One thing, before I answer your question, I'll point out. It's a factoid that I don't. I've used a number of times.
In the history of enterprise software exits, my exit is number four. And when I say that, in the history of enterprise software exits led by a minority, my exit is number four in a 40-year history of software. Now, let's just think about that. In 2021. There were roughly 70 non minority exits. Right. At my same level. So that's the disparity we're dealing with in our ecosystem right now. And I don't know if I explained that, if people really understand what I'm saying with
that. But I shouldn't be number four. I should be number 400. But right now I'm number four and we've done some digging. I had a bounty out there for anybody who could give me a list of 15 people who had done better than myself in a minority community in software. No one thus far to date has been able to collect on that bounty. And so I'm pretty confident around the accuracy of those numbers. But More to the point, the low-hanging fruit, I think, is basically access. And it's
access and engagement around networks. So we're looking at identifying high achievers, people who are already doing well and who most likely might take a development role at a VMware or something like that and try to put them on a path toward a much steeper inflection point. And the idea is you might want to work for a startup or you might want to take a corporate route. I'm okay with either path as long as if you take the corporate route, you can't just be a senior director. We
need to get you into the C-suite. So what are the things we need to get you tuned up to so that you actually end up in the C-suite? Or if you decide you want to take the startup route, how do we make sure you get not just the funding that you need, but the access to mentorship, guidance, network access, whatever the case may be, so that
we help you actually achieve those outcomes? And that, if you actually study sort of how different people have really accomplished what they've accomplished, those access points have been generally the answer. Those network access points.
I think it's super important, again, because you kind of… Talk to people that you know, but sometimes you need to expand those networks to include a much more diverse group of people on both sides.
On both sides. And we call that the The Initiative. And I modeled that one off of the Avenger Initiative, which, of course, Marvel Comics. And so, again, my second great love of Marvel Comics.
Okay.
And so, very much as Samuel L. Jackson was running around seeking out aspirations. And I think that's what we're doing. Okay. And we're trying to bend their arc. Yeah. And make them part of something bigger. And if we can create a cohort of those individuals and help them break through the barriers that are out there, then they become the next… They move me further down that list. Right. And that's the name of the game.
And that's the goal, right?
That's the goal.
So, I mean, let me ask you this question because I think it relates to that. How would you define success with Second Foundation? When will you look back and be like… We did what we came to do.
Look, if there are 100 Bill Spruills that are running around out there doing what they're doing, you know, and frankly, 100 Bill Spruills doing the exact same thing that I'm doing. And whether you're a minority or not, I don't care. But 100 Bill Spruill's out there doing what I'm doing over the arc of their careers is success. So it's not financial. It's not, you know, it's our people out there doing the work. Does someone take up the banner when I can't hold it up anymore?
And run forward with it. That's success for me. That's a great legacy to be built. Oh, yeah.
If you could do that, that'd be amazing.
Absolutely.
So we are the Founders Shares podcast. And so I always like to ask all of our guests, if you had one piece of advice for somebody that's either starting out in a career, starting out with their startup. What would that piece of advice be?
Piece of advice I could give is talk to 10 other founders who are at varying spots on their journey. And tell them what you're doing and why you're doing it and listen to what they tell you and refine your plan and your model from there.
That's great. And anything that we haven't talked about today that you want to share with people? Anything that's on your mind that people need to hear from you?
No, go out and do good things. Keep doing good things if you're already doing them. Engage with CED. Engage with your ecosystem. And I'm an open connector on LinkedIn. So if you hear this and actually decide something I said is interesting or you want to debate anything I happen to say, feel free to hit me up on LinkedIn. Be happy to take it up there. That's great.
I appreciate it so much, Bill. Thanks for your time.
Absolutely. Thank you for having me. Appreciate it.
That was Bill , who you can find and connect with on LinkedIn, or you can check out his website at 2ndf.org. That's the number 2ndf.org. Thanks for listening to this episode of the Foundershares podcast. If you're a founder or business owner and need legal advice, be sure to check out our team at HutchLaw.com. That's HutchLaw.com. We have the capacity to help you out with just about any legal need your company may be facing. We're passionate about the innovation economy and ready
to help you on your entrepreneurial journey. The show was edited and produced by Earfluence. I'm Trevor Schmidt, and thanks for listening to the Founders Shares podcast. Good.