This weekend Evan Bayless interviewed Randy Rayess, cofounder at VenturePact and Wharton and Penn Engineering alumni. VenturePact helps companies execute on software projects and build remote software teams.
A firm believer in putting learning opportunities first, Randy had a lot to say about dealing with risk and learning from failure. Here is the full interview!
Evan: So if we could, I’d like to start with some of your background. I’ve done a little bit of research but I’d like to hear from you, how you paint the picture of your path, starting from college.
Randy: So in college I studied finance, stat and systems. I think the key thing I did in college was to experiment and do things differently. Every semester I tried something new. I met a friend at a rock-climbing event who convinced me to join a startup that she had worked at and loved, so I worked there. What I realised was I loved the people and the experience, and that got me into the startup world. So I think a lot of the time it’s the people you’re with that drive you and change the way you think. They convinced me of the power of challenging the status quo and what we think of as the standard career path. It was all about dreaming big and believing you can do it in spite of all the challenges. That experience really got me on this path. After that, I went into the tech investing side. My business partner Pratham Mittal and I saw a common problem when it came to building software, so we wanted to spend more time on it. The result was VenturePact.
Evan: So with VenturePact, were you worried coming out of school that it might flop? How did you rationalize the choice to work on VenturePact against other offers you had at established firms?
Randy: Sure. Most of the time, we overestimate the risks of short term decisions. So the best way to rationalize your decisions is to change your perspective – instead of thinking of the decision at your current state looking forward, think of yourself towards the end of your life looking back. How would you perceive that decision then? This changes your entire perspective on risk. You become a lot more risk tolerant because you realize you’re more focused on minimizing regret. That’s how we made the decision to go with VenturePact.
Evan: Interesting. What’s the first thing that comes to your mind when I say failure?
Randy: I think it’s a rite of passage. It’s a shared experience by anyone who tries to do something great or impactful. At the end of the day, everything you do is an experiment. If you’re doing something new and innovative, most of your attempts will be failures. The only thing that matters is that you keep experimenting until you find what works.
Evan: So you talk a lot about putting learning opportunities first. Why do you think entrepreneurship is the preferred route over working in a larger company that may have established programs for professional growth?
Randy: I don’t necessarily think everyone should start a company. I think that smaller companies will give you more responsibility and hats to wear, so the opportunity to learn is very high. That doesn’t mean you aren’t going to learn in big companies, it just means the learning curve is going to flatten out a lot faster. Unless you find a large company with a great team that’s building learning into the equation, you’re not going to learn as much as you would at a startup. In a startup you get to see the mechanics of the business and work on the ground level, which is very different from a big company where you already have very well established and predictable revenue streams. It’s a different ball game.
Evan: Have you been able to apply any lessons you’ve learned starting and running VenturePact to your personal life?
Randy: I’ve never got that one before! It’s a good question. I think when you’re an entrepreneur, your personal and professional lives blend together, so it’s hard to make a clear distinction. That said, I would say there are a lot of things you learn that are relevant to your personal life, because after you build a product you change focus to building a customer base and growing the company. At this stage, most of your role is hiring, leading, and managing people. After being so focused on motivating people, in your personal life, you can become overly analytical about relationships and how you’re engaging with other people. I’ll give you an example to bring more clarity to it. Let’s say you’re giving feedback in a business setting. You can give it in many different ways, and over time, you optimize how you give it and how you hire, as a company. In your personal life, hiring is selecting the people you want to hang out with. So you can take a lot of the personal qualities that you look for in people you hire and look for similar qualities in the people you hang out with. Do they hold similar values? Are they positive, thoughtful etc?
Evan: Can you tell me about a time you really struggled? What were you doing, and how did you overcome it?
Randy: Well, every day there are struggles and challenges to deal with. A time when you have extreme struggle is when you have to make large decisions. Most of the things you do don’t actually move the needle that much, but a few decisions you make are a lot more critical. Decisions like adding new business lines, changing the way you do something critical to the business, doing things that are counterintuitive – those are all struggles. Hiring and firing are also tough. In the startup world, you just have to be comfortable having all these challenges and struggles on a daily basis. It’s part of the game.
Evan: What do you need the most at VenturePact right now?
Randy: In our current state or our original state?
Evan: In your current state.
Randy: I would say most of my time is spent on hiring. Great talent is what we need. When we hire salespeople, we are looking for those who are comfortable with the software world. Finding people at the intersection of software and sales has proved challenging. Another struggle is finding a head of business development, because management is hard in its own right, but management of sales is even harder. So the biggest thing that we focus on is hiring great people, because they’re the ones really building the company. Find the right people, and the right things will happen. Put the wrong people in, and everything gets a lot harder. I think finding the right talent is the number one challenge for most startups.
Evan: As a follow-up question, what was your biggest challenge in starting the company?
Randy: At the beginning, you and your business partners are doing everything, so you’re really looking just at product-market fit. You have to find the problem and create a product that solves it. Then you must prove to customers that they should try you out, even though you have zero track record. You’re running sales, product, legal, and finance, all while you’re bootstrapping and working with limited experience in those areas.
Evan: How did you assess the viability of your idea without extending too far and sinking a lot of capital in, especially with something like VenturePact?
Randy: So we ran an experiment with three companies. We gave them great deals, and they gave us validation that there was a problem and our solution made sense. So after those three companies, we knew we could push forward and find more success.
Evan: So I see that you’ve invested in a bunch of companies as an angel, so I was wondering: What are the unique struggles of running a company versus investing in one?
Randy: Investing is not for everyone – it’s very difficult. Two assessments to make when investing in a company are whether the team will be able to persist through struggles and if their product is addressing a real problem. Those are the two main things. Also, you have to understand their potential for growth. A company with passion and vision will be able to hire effectively and continue growing.
Evan: What has been your biggest personal failure in life and how did you respond to it?
Randy: So I worked on a lot of small startups during college. I realized that sometimes what we did was useful but marginal, so we weren’t extracting enough value to run a growing business. I realized that I had to think about the value of my time, and put it towards something that mattered. That led me to the insight that to build a big company, you need to do something where there’s a lot of pain. We had a lot of failures in these startups, and they helped me understand that failure happens a lot – it’s something you’ll have to deal with. Failure is just an opportunity to learn. Just don’t make the same mistake twice.
Evan: What do you find is most difficult for you at work, and how do you overcome it?
Randy: The biggest challenge is the mental challenge. You’re accountable to every part of the company, so as soon as you have a lot of people at the company, the hiring and HR work piles on. There’s also a lot of legal and finance stuff to deal with. It becomes difficult to do things that are productive and push you forward when you’re stuck operating the business in its current state. Operations take a huge chunk of your time.
Evan: What’s your least favorite thing to deal with running a startup?
Randy: My top three are legal, accounting, and office politics.
Evan: So how do you convince great talent to work for an early stage company like yours?
Randy: Vision and culture, that’s it. Tell them about the vision and the culture – if they aren’t excited, they’re not the right fit.
Evan: How does it affect you when someone tells you that you can’t do something – essentially, how do you separate out taking other people’s advice and not being discouraged by it?
Randy: Listen to what everyone has to say and make your own decisions about the credibility of each source. Listen, listen, listen, take it in, understand where they’re coming from, and realize that if everyone liked your idea it’s probably not a good one. If everyone likes it, it’s probably already been done. If others question whether it’s feasible, they’re showing you that it’s challenging and might be worth pursuing.
Evan: What’s the most important thing you learned at Penn?
Randy: I took a lot of courses at Penn, so that’s a tough question. That said, from a high level, what I do on a daily basis that Penn taught me is how to challenge my thought process and the structural norms that we take for granted. Once you do that, you become a lot more thoughtful and can do things that are a lot more powerful. I learned that mainly from attending a lot of events and meeting many awesome and talented people that Penn brought in. Through time with them, with professors, and with peers, I broadened my horizons and way of thinking.
Evan: What drives you?
Randy: What drives me is solving real, tough problems. I love that at VenturePact we get to be at the forefront of a lot of technological change. Empowering change through new technologies really excites me. Once we satisfy our basic needs, I think life is all about ownership and flexibility.
Evan: Well that’s all the questions I have, thank you Randy.
Randy: Thank you Evan and best of luck!