In the evolving world of entrepreneurship, few stories are as compelling as that of Stephen Bailey, a former lawyer who transitioned from the courtroom to the startup ecosystem. His journey is a testament to the power of leadership, reinvention, and adaptability.
Stephen’s company, ExecOnline, has attracted funding from top-tier investors like Kaplan, ABS Capital Partners, NewSpring, and Osage Venture Partners.
In this episode, you will learn:
- Shifting from law to entrepreneurship can leverage skills like structured thinking and rigorous problem-solving.
- Early-stage investors bet on the founder’s potential and adaptability, not just the idea.
- Headline valuations matter, but investor rights and preferences can significantly affect your true value.
- Keeping investment rounds simple and transparent facilitates smoother future funding.
- Implementing founder-friendly provisions, like super-voting rights early on, helps retain control in later funding rounds.
- The pace of change demands continuous learning and adaptation in leadership capabilities, accelerated by recent global events.
- Successful entrepreneurship combines a clear vision with the agility to navigate unexpected challenges.
SUBSCRIBE ON:
For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
*FREE DOWNLOAD*
The Ultimate Guide To Pitch Decks
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Stephen Bailey:
Stephen Bailey is a regarded entrepreneur, leadership and workforce expert, and futurist who works with corporate leaders within the Fortune 500 and Global 2000 to create life-changing learning experiences.
He co-founded ExecOnline, a premier provider of certified, online leadership development experiences, to diversify the leadership pipelines of the world’s largest organizations by democratizing access to high-quality leadership training.
As CEO, Stephen oversees the organization’s partnerships with top universities and its broader efforts to produce impactful and life-changing experiences for leaders worldwide.
ExecOnline partners with the world’s top business schools to deliver online leadership development programs.
Prior to ExecOnline, Stephen was the CEO and chief product officer of Frontier Strategy Group (FSG). Before joining FSG, he was an associate in WilmerHale’s venture capital and private equity group.
Stephen earned his bachelor’s degree from Emory University and received his JD from Yale Law School. He is the board chair of the Truman Center for National Policy and a member of the board of Prospect Schools, a charter school network in New York City.
Stephen was also recently named to the Board of Directors of Match Group, Inc. He was named 2022 “EY Entrepreneur of the Year New York Award Finalist.”
Under Stephen’s leadership, ExecOnline was named Forbes 2022 “America’s Best Startup Employer” and has become a member of the World Economic Forum New Champions Community.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
Connect with Stephen Bailey:
Read the Full Transcription of the Interview:
Alejandro Cremades: Alrighty. Hello, everyone, and welcome to the DealMakers show. So today, we have a very exciting founder joining us, you know a founder that day was a lawyer, you know now turned entrepreneur, which I can definitely relate to that. And we’re going to be learning quite a bit on how he made that switch you know from being a lawyer to now being a founder, you know to joining the startup world, to um Ultimately, you know like ah what he has seen too when it comes to leadership, because that’s something that they’re one of the leaders had, funny enough, and some of the changes that they’ve seen you know with COVID and so forth, and especially with some of the pivots when it comes to their business model as well, which I think is going to be all in all very inspiring for for all of us. So without further ado, let’s welcome our guest today, Stephen Bailey. Welcome to the show.
Stephen Bailey: so So good to be here. Super excited for the conversation.
Alejandro Cremades: So, originally born and raised in Louisiana, two parents there that were doctors. So, it gives us a walk through memory lane. How was life growing up?
Stephen Bailey: Life is great. New Orleans, best city on earth. um It is a fun place to be from. I try to make it back as often as possible. um But yeah, born and raised in New Orleans. um My family still lives there. My mom and dad are ah ah doctors. My mom’s a psychiatrist. My dad’s a desk. Much to their chagrin, I decided to ah pursue law, which you know doctors usually hate. um and um i In high school, I spent a lot of time debating. um As my activity, I also did that in college, and that really helped shape my trajectory into law school. so
Stephen Bailey: went to Emory for undergrad, went to Yale for law school, and after spending all of that time preparing to be a lawyer and working at a firm that it turns out we we share in common, Wilmer Hale, um I figured out after all that that I wanted to do something totally different and and move into the world of entrepreneurship. So I now define myself as a recovered lawyer um and you know I know still probably just enough to commit malpractice at this point.
Alejandro Cremades: That’s amazing. That’s amazing. So so in your case, you know when I guess being a lawyer, you know what do you think you know that opened up for you? you know When it came now, you know obviously, even though you left that behind you, I’m sure that there’s a lot that in that you use from that background, from that day learning, now that you got in and that training too. no So what do you think you took away from with you you know from those years as a lawyer and studying law?
Stephen Bailey: Yeah, it’s a great question. I think really three things come to mind. So one, Yale was just a really inspiring place with a great network of people that were doing really exciting and interesting things, both inside and outside of the law. So to give you an example, the ah first company that I left to join, that startup, was founded by one law school classmate and funded by another law school classmate, just to give you a sense of the value of those connections. I’d say the second thing um was really understanding how to think in a really structured and rigorous way about complex problems. And that was a combination of both what I learned at Yale as well as my time debating in high school and college. And I would say in addition to being able to think in a really structured way, being able to see both sides of an issue and understand how to make difficult decisions between um competing options.
Stephen Bailey: And then the third ah piece was just the very specific experience that I got at Wilmer Hale in the Venture Capital and Private Equity Group, and that’s been tremendously helpful as we’ve gone through um various financing rounds. We’ve raised over $100 million dollars of capital i’m at Tech Online, and I always appreciate um having a working knowledge of the legal side um of deal-making, which has come in handy at it Tech Online um on a number of occasions.
Alejandro Cremades: Now, one thing that is crazy here is, and and obviously, as I’m also a recovery lawyer, I can’t relate to it. you know All the years that you put into studying law, you know doing the bar, then joining an amazing law firm, one of the best actually. ah How was that how much that a journey you know of getting to the decision of, hey, I got to leave this career behind and I got to switch gears?
Stephen Bailey: Yeah, it was a really tough decision. And just like you said, you spent all of this time preparing for a career. And when I went to law school, I had no conception of a potential career in entrepreneurship. So this was not something that was on the back of my mind. If you’d asked me on day one of law school, I was going to go to Yale. I was going to go to a big firm like Wilmer Hale. I was actually going to be a litigator, likely ah an appellate litigator. I’m actually one moot court at Yale. So that was very much the path that I was on. um but But I find that in life, um being open to new possibilities ah can really be, not just career defining, but life defining. And as I started to, you know, I spent a summer at a law firm after my first year of law school as a summer associate, which is something that’s pretty common amongst law students. And that was sort of my first inkling that, you know, this is interesting, but it might not be where I want to plant my flag long-term. And then separately from that, I started to have conversations with some classmates, one in particular, um Thomas Lehrman, who’s one of the,
Stephen Bailey: co-founders of Gerson Lehrman Group, um who had started Gerson before law school. And so talked about entrepreneurship, met some other folks who were interested, and that sort of planted the initial seed that maybe there was something else out there. um Then I went back to a law firm after my second year of law school, and it was really between that second and third year that I got serious about considering, is this really what I want to do? So um I had the good fortune of being at a firm like Woomer that had a diverse practice, and so So what I said to myself when I graduated is instead of going into litigation, I’m going to actually go into private equity and venture capital because that felt like an easier way to transition. And it just so happened that one of the law school classmates that I was talking to um was thinking about starting a business. And I ended up introducing him to Thomas, who was the initial investor in that business. front ti drive group So that’s sort of how it happened.
Stephen Bailey: My decision to actually leave and say, I’m walking out of the law firm and I’m going to be working for a startup for my kitchen table, ah you know leave on a Friday, work at the kitchen table on a Monday, was driven fundamentally by a conversation that I had with a good mentor at the law firm, a guy by the name of David Sylvester. And I was going back and forth, and he said, look, I’ve done a lot of deals for a lot of entrepreneurs. I assumed at some point that I would leave and I would join one of those companies. And I kind of never did. And I always have a piece of me that wishes that I had. And what that what he sort of said is, like look, you’re young. you The firm is always going to be here. But what I ultimately took from that, and as I went through a lot of soul searching, was that I feared um regret more than I feared failure.
Stephen Bailey: And so what I said to myself is worst case scenario, I turn over some cards and I learn what it’s like to be an entrepreneur. And that’s going to fulfill me a lot more than staying at the law firm on the safer path and then wondering what could have been on your cell phone.
Alejandro Cremades: so So I guess say you then now become, I would say, part of the venture world with these folks. ah But one thing that is very interesting as part of that journey is you go from being a lawyer to now a heading product out of all things, and then slowly you know you end up becoming the CEO. I mean, that’s quite a shift of um of gears there when it comes to titles and responsibilities.
Stephen Bailey: Yeah, you know, it was um so so my first startup was a company Frontier Strategy Group. Information Services Company sold a subscription um that helped organizations benchmark their performance, improve their performance in international and emerging markets. And so it was a business that I had ah very little experience in. On day one, it was three of us, ah the two founders and myself as the first hire. so it Saying I was the head of product sounds a bit lofty. I was really you know just sort of one of three people doing the work that came in as it came in. um and Then over time as the business grew, um I grew my career with the business. The ability to go from really what on day one was doing bespoke work for a couple of individual clients to then thinking about how do we build a scalable subscription offering.
Stephen Bailey: to then, as you said, taking over as CEO of the business was a really important journey. And I think I had the benefit of growing with the business as opposed to stepping into a business that was already large and established. And so one of the things that I sort of say to younger folks who are thinking about their career is constantly put yourself in uncomfortable positions. I mean, there was, through my throughout my entire run at Frontier Strategy Group, there was rarely a day where I felt like, I’ve done this before and I know exactly what I should be doing.
Stephen Bailey: I was learning as I went, I was making mistakes, I was hopefully getting more things right than I was getting wrong. But ultimately, it’s kind of like going to the gym and pushing yourself with a really hard set of workouts versus just kind of going through the motions. If you do that every day, you’re going to get up the curve so much faster than your peers that are maybe taking a safer path. What I think about if I’d sit at the law firm, the conversations I was having, the clients I was meeting with, I would have never seen those folks. And I certainly would have never been in a room sort of leading conversations with them if I’d stayed on the on the safer path.
Alejandro Cremades: So then, I guess, at what point does it become evident that it was time to um start your own company? That’s that’s a mega step.
Stephen Bailey: Yeah, it was ah it was a it both was and it wasn’t. it you know When I think about um the biggest ah moments in my career, the first decision to leave the law firm and join a startup probably felt bigger at the time because it was a whole change in professional identity. um Whereas when I went from a frontier to starting my own company, I already saw myself as an entrepreneur. Now, what was interesting is I never started a company before. And so I did have some questions around, OK, if I was going to start something, what would I start? And does it make sense for me to start something? Or does it make sense to join a startup and take over as CEO and help them scale their businesses I had done um at Frontier? And so I learned a couple of valuable lessons um before I talk about specifically why I started Tech Online.
Stephen Bailey: And the first is that we often have a tendency to um define ourselves by our past experiences. So because I had joined as the first hire and because I’ve become CEO and helped build someone else’s idea, the first thing you think is maybe I should do that again. And you know when I started to step back and reframe, I said to myself, well, why wouldn’t I want to stop my own thing? Why wouldn’t I want to bring a great idea into the world and scale it as opposed to taking someone else’s idea? And when I reframed it, it opened up a whole set of possibilities that maybe wouldn’t have been evident if I had sort of thought about my future based on what I had accomplished in the past. And so that sort of led me to um exec online.
Stephen Bailey: um I always had the idea in the back of my mind that um I’d be interested in a business that solved the challenge that I heard repeatedly from executives at frontiers strategy. So we would host roundtables for leaders all over the world. We’d have agenda different topics on the agenda and talent was always a topic. and leadership capability was a top topic and so when I left I started to think about what could I build that would fundamentally help organizations develop leaders in a different and kind way and help leaders accelerate their career and the more I learned about leadership development the more I was surprised to find
Stephen Bailey: how few leadership development resources were available to um the the typical and a leader in an organization. There were a few people who got heavy levels of investment, but the vast majority of folks were not really being invested in from a leadership development perspective by their companies because all leadership development was happening in person. And so the idea behind the tech online was what if you could take leadership development, which traditionally everyone thought had to be done in person because you couldn’t engage leaders online. What if you brought that online and what if you did it in a way that was higher quality than what you could do in person. And the way we did that initially was by partnering with some of the best business schools in the world.
Stephen Bailey: um having a very intentional methodology around how you develop world-class um leadership programs, bringing those online, and then democratizing that access without sacrificing quality.
Alejandro Cremades: So how do you guys make money at Except Online? what is the business What ended up being the ultimate you know business model here?
Stephen Bailey: Yeah, so we partner with um many of the world’s leading business schools, so schools like Berkeley and Columbia and Wharton and MIT, um taking programs um that traditionally, before I took online, would have been delivered purely on campus in their executive education group. So we’re all non-degree certificate programs that you would call executive education. um We partner with them to build exec online specific offerings that we host and deliver on our platform for the corporate enterprise. So we partner with schools. We sell to companies who then buy the programs we offer on behalf of leaders within their organization. And we now work with hundreds of companies. We develop tens of thousands of leaders um every year. And we’ve expanded our offerings to include not only school partners, programs but our own proprietary programs and our own coaching capabilities so effectively we become a one-stop shop for all leadership development needs from frontline managers up through the most senior leaders in the organization.
Alejandro Cremades: So I guess see you guys have raised quite a bit of money, too. So you were alluding to it earlier. You guys have raised about $110 million. So how has it been through the experience of raising money, and how have those financing cycles, how have they gone in parallel with the life cycles of the business, and how those expectations, too, have shifted from one cycle to the next?
Stephen Bailey: Yeah, so one of the things that um I think is really important when you’re thinking about raising capital is, you to your point, where are you in the stage of your company and understanding what investors expect at different stages? um So when you’re raising a seed round, which you know is, in my view, um both the most exciting time for the business and also the hardest capital to raise, You’re raising around an idea. um you know Every great startup has to solve ah chicken a number of chicken and egg problems. And the first problem you have to solve is it’d be really great if I had some money to build something really cool. um But in order to get that money, um I’ve got to sell someone on a vision before it’s built.
Stephen Bailey: um And so for for that stage, people, by and large, are just investing in you. When I talk to um seed stage investors, the thing I hear pretty consistently is, yeah, the business idea needs to be a good one. um And it needs to make sense. But fundamentally, I’m evaluating the person. Because I assume they’re going to pivot. The but the world’s going to change. The business is going to change. And i have I’m betting on whether I think they’re going to figure it out. And so that is fundamentally a very personal sale. By the time you get to the Series A, I think what investors tend to be looking for is product market fear. So you’ve gone out, you’ve proven there’s something here, you’ve sold some customers, there’s traction, the business has some early things to grow. Then when you get to your kind of Series B, Series C, I think this is a mistake that a lot of young entrepreneurs make, is they go with the same pitch for their Series B and C that they did for their Series A.
Stephen Bailey: And it is a very different set of expectations. And the sort of way I think about it is by the time you get to Series B and C, you have investors that are really starting to think about, okay, how are the economics of this model coming into focus? What your what are your retention rates? What is the lifetime value of your customer? What is your LTV to CAC? You know, all these things that then start to create the long-term view of how the economics of the business is likely to trend. And is this going to be an exciting growth, our growing profitable business over time? And then at the latest stages, you’re starting to really have investors that are thinking about exit. So what are the likely paths? Is this an IPO? Is this an acquisition? If it is an acquisition, what does the acquisition market look like? What type of return am I going to get on that acquisition? And so I think understanding
Stephen Bailey: each one of those stages is really important. And through the life cycle at Tech Online, we’ve gone through our Series E round. um but We’ve been able to tailor our message at critical moments, given those expectations of particular investors.
Alejandro Cremades: So then, in that in in that case too, you know being a former lawyer know and and having that training too, you know now that you’re looking at it from the founder point of view, there’s probably a lot of founders that are listening to us right now, and they’re probably about to go through financing rounds, through dealmaking. What would you say are the three biggest things that a founder should keep in mind when it comes to legal, when going through those deals?
Stephen Bailey: Yeah, it’s a good question. Well, you know, I will preface it by saying, and my my general counsel would probably appreciate me saying this, I know just enough law at this point to commit malpractice. So take everything I’m saying with the grain of salt. But in all seriousness, I think um founders tend to over index on headline valuation. And the first question that everyone’s got, what was the valuation? And that’s really important. I mean, that’s a critical economic term. But there’s so many other pieces that go into when you think about rights and preferences of investors that really determine what I would call the true valuation. So, for example, if you get a
Stephen Bailey: $200 million pre-money valuation, but your investors have a heavy lip-pref on top of it, then that’s not really a $200 million dollars valuation. And I would argue that you should pay a fair amount in a valuation, a headline valuation to get that lip-pref out of the deal because ultimately that’s going to make a big difference in terms of your own personal economics. But secondly, it’s going to make a a big deal in terms of your ability to do future rounds. So I think the second thing that um a lot of founders underestimate is the extent to which complexity in one round, in addition to creating potential potential drag on your economics, also makes it harder for you to do future deals because new investors like to come into a cleaner capital stack.
Stephen Bailey: And if they’re coming into a messy capital stack, then they want certain rights and preferences, which just makes it more complex and attempts to snowball round to round. So as you’re thinking about building your business, particularly in the earlier stages, one who survives is I try to make your rounds as clean as possible. ah the The third thing I would say is, um Think early on about ways that you as a founder can maintain control of your business as you bring on capital. So super voting rights um are kind of one ah way to to do that. That’s something that we did at Exec Online. And what I would say is people often think about it too late. So in the earliest days of a business, when you’re raising your seat round, if you put into your incorporation documents that you have 10X voting,
Stephen Bailey: for your common shares, then most seed investors just don’t care. Because they’re investing in you anyway, it’s like it’s you know whatever. um It’s already in the document. So when you incorporate initially, put that in there. And then once it’s there, if your business is doing well and things are are continuing to progress, most investors aren’t going to make you take it out to do a deal. And so it kind of is in there. If you wait and try to do it later, No investor is going to go for it. So I think my third thing is think early and proactively about how you maintain control of your business as you take on more capital, even if you don’t own a majority.
Alejandro Cremades: So, let’s say you were to go to sleep tonight, Steven, and you wake up in a world where the vision of exec online is fully realized. What does that world look like?
Stephen Bailey: That world looks like a world where um there is much greater leadership mobility in organizations. People who enter organizations feel like they have a real path to leadership, no matter their background, um but whether they went to an elite school, whether they’re in the right networks, whether they’re you know male, female, what their race is, all the different axes of diversity. um People have the opportunity to advance in organizations because high quality leadership development is available to them at scale as a benefit that every leader comes to expect and have access to.
Stephen Bailey: And that has been the opposite of what leadership development has been traditionally, traditionally going to tap on to show the resource for a handful of folks that have been selected because they’re seen as high potential. And then 95% of people who aren’t categorized that way have to kind of fend for themselves. And that creates self-fulfilling prophecies that aren’t good for companies because they tend to have thinner leadership benches than they need in a world of significant change. And it obviously um has a huge impact on the careers of really talented folks that with a little support could advance and accelerate to higher and higher levels of leadership, but are often trapped and and kind of hit ceilings because they don’t have access to the development that we all need to push our careers forward.
Alejandro Cremades: and We’ve seen a lot of shifts in the world that we’re living in, that we’re living in now especially you know after we experienced COVID. So I guess a with that in mind, what kind of leadership changes have we seen ah in the last couple of years?
Stephen Bailey: Yeah, so I’ll talk about leadership capabilities, and then I’ll also talk about leadership development and how companies are thinking about it. From a leadership capability perspective, I think with COVID, you saw an acceleration of a trend ah that is already that was already taking place, but it’s just that the half-life on leadership skills is always shrinking. And at the end of the day, there feels like there’s a once in a hundred year event every year at this point. whether it’s COVID, whether it’s been you know the last bout of economic uncertainty, ah whether it’s global wars, there’s constantly shifting landscape under our feet that leaders have to ah react to in terms of both things that are happening inside their companies and outside of their companies. And so leaders, the pace of change and the pace of learning has to accelerate as a result. And so what I believe is that we’re in a learning economy,
Stephen Bailey: And I think COVID really highlighted this, where success is increasingly determined by your ability to learn fast in the pace of change. um The second big thing that we’ve seen is the need for leaders to be able to communicate and align through different hybrid environments than they’re used to in the past. Leaders were able to do everything largely in person. They basically had their teams around them. There were leaders that maybe ran international businesses that had to do a lot more virtual, but most leaders had the luxury of being co-located with the teams that they landed.
Stephen Bailey: We’re now in a world where you’re sometimes in person, you’re sometimes virtual, you often they have teams that are hybrid, some in person, some virtual, and that requires different communication approaches just in the same way that you know as a leader when to pick up the phone or hop on a Zoom versus sending an email. You also have to figure out how to lead a team that’s all co-located versus a team that’s brought all over the world. And I think that communication has become um a key piece. And I would say thirdly, especially with the rise of AI, um alongside COVID, a long term alongside economic downturn, the ability to make complex strategic decisions effectively is really important because as there have been so many shifts in the world, COVID being a key one of them,
Stephen Bailey: um decision making has gotten pushed down in organizations because you just don’t have the time for everything to flow up and back down. So leaders have to make more agile decisions with less than perfect information in a complex environment so there’s a lot of pressure on decision making. So that has meant that leadership as a capability and a priority is on the agenda of um every organization I think in ways that it hasn’t been ah in the past. And then in addition to that, the obvious piece with COVID in our business is It took us from a world where every day we were working to convince companies that you could deliver high quality leadership development online as opposed to in person to a world where overnight it all moved online. And so there was probably a decade of progress in that one to two year period with COVID of you know really taking the market from an in-person leadership development market to what is now primarily an online and hybrid leadership development market.
Alejandro Cremades: So you’ve been pushing this now, Steven, for over 13 years. And that in the corporate world, it could be like 150 years, right? so Which is unbelievable. So let’s say I was to bring you back in time. I put you into a time machine, and I bring you back to, let’s say, 2011, which was the time where you were thinking about starting something of your own. And let’s say I gave you the opportunity of um showing up right there and seeing your younger self. And being able to give that younger self one piece of advice before starting a business. What would that be and why, given what you know now?
Stephen Bailey: It’s a great question. um To me, the the key to starting a business is to be but have the right combination of a vision, with the ability to pivot and be agile on the path to that vision. So I think you have some entrepreneurs that suffer from, they don’t have a vision, they just they’re doing stuff but they’re not really sure where they’re going. And then you have some entrepreneurs who have a really clear vision but the vision is almost too clear and they think there’s only one straight line path. And so in some ways I analogize being a successful entrepreneur to whitewater rafting.
Stephen Bailey: You know where you want to get at the end and it’s about getting through the eddies, it’s about knowing when to fight the current versus when to go at the current and ultimately finding your way um to the right destination. I feel like if I had to summarize what it takes you know, in my 2011 self, looking forward to, and I’ve never started a company before. I joined as the first hire of a company. If I think about the person setting the vision, that was the big new thing for me. It was staying clear of what we wanted to accomplish. And anyways, that vision today is the same as it was back in 2011, but the ability to make your way through those eddies and not to fight the currents that you shouldn’t fight, to figure out your way around them and to navigate to good places. I think the the the art that goes with the science.
Alejandro Cremades: That’s amazing. So I guess for the people that are listening that would love to reach out and say hi, what is the best way for them to do so?
Stephen Bailey: Hit me up on LinkedIn. Stephen Bailey at Zuck Online. You’ll find me pretty easily.
Alejandro Cremades: That’s easy enough. Well, Steven, I got to say thank you so much for being on the Dealmaker show today. It has been an absolute honor to have you with us.
Stephen Bailey: Thank you. Thanks for inviting me. It’s been a pleasure. I’ve really enjoyed the conversation.
*****
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com“>al*******@pa**************.com
Podcast: Play in new window | Download
Subscribe: Apple Podcasts | Spotify | TuneIn | RSS | More
Facebook Comments