Jason Smith is a five time startup entrepreneur. He successfully exited his first for double digit millions, learned hard lessons in his next two, and had another runaway success in his fourth. His latest venture has attracted significant funding from top tier VC’s like Tiger Global and Craft Ventures to help businesses leverage competitive intelligence to win more business.
On the Dealmakers Show, Smith talked about the importance of timing, picking a cofounder, and filtering business ideas to create a successful startup. Plus, why entrepreneurs should take a gap year to travel the world, fundraising, and how having a better handle on the competition can improve every area of your business.
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First Company, First Exit
Jason Smith was born and grew up in Toronto, Canada. A vibrant city, with a growing tech scene. He ventured West, studied at the University of British Columbia, and fell in love with the beauty and exhilaration of the outdoors of Vancouver, Between the snow, mountains, and ocean, he just didn’t want to leave.
He knew that if he went back to Toronto he would be sucked back into a job. While his only real option for staying in Vancouver was to start his own company. So, he did. With a freshly minted business degree, he and two friends did exactly what his parents, mentors and advisors told them not to do: they started a company with no money and no experience beyond playing in multi-user dungeons in the university’s computer lab.
It was early days of the internet. Yahoo was still a thing. Having tasted the potential of connecting with people in other countries online, and building websites for early pioneering companies, he was in awe of the web, and what it could be. He just had to be a part of it.
Jason and his two best friends pooled $5,000 into a pot to buy some old Mac computers and got to work. They pitched billion dollar companies on building their web presence and closed deal after deal. Few in the c-suite back then knew and understood the internet’s potential. It was a world ambitious 22 year old’s had knowledge of that they didn’t. 5 years, 100 employees and three offices later, they had built Canada’s largest web services company and were acquired by TELUS (NYSE: TU). .
This experience gave him the full cycle perspective of a startup. It instilled confidence that you can swing away at something, and bootstrap a business successfully. Of course, he says that the first time entrepreneur naivety and luck were key ingredients for success.
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The Ingredients For A Successful Startup
As you do when you hit a homerun with your first company at a young age, Jason Smith says he came out of that experience with a lot of ego. He and his friends walked away with millions of dollars, thinking that they were very smart.
However, his second venture brought some humility, as well as learnings about what it really takes to create a successful business.
This was a Groupon type concept for group buying on the internet before Groupon existed. He hit the Bay Area with two HBS grads to raise some money with a pitch deck.
Unfortunately, he says they were too early for the market. Facebook hadn’t gripped the masses yet and social media was in its infancy. To convince your friends to group buy a product you had to email them, a clunky way to get group buying momentum. They also failed to focus on tight niches the way Groupon eventually did, nail salons > deals on electronics. Market timing and getting the narrow focus right out of the gate were important lessons.
He determined that executing against something else could be “successful based on the right alchemy of timing and people and funding.”
He decided it was best not to take failure personally, that many factors are involved in failure not just ability, and to just dive in again. Otherwise he feared becoming frozen and getting analysis paralysis, as he had seen happen to others with similar second startup experiences.
There was a period of doing some angel investing, and helping other organizations. As well as starting two more companies, before really launching into what he is working on today.
Taking A Gap Year To Travel
One of the things Jason was most passionate about in our interview was the year he decided to just take off and travel the world with his family.
He took his kids out of school, and booked round the world tickets, and traveled for a full year as a family, starting in Croatia, ending in Costa Rica, and 10 other countries in between. .
He had just turned 40, and wanted to reconnect with his wife and kids after 4 startups. The best way to create enduring memories and connection is to get off the grid, away from your current world of comfort, and experience something new every day. From riding camels in Jordan to rolling through Egypt in the middle of the revolution to poking tarantulas in the Amazon jungle and diving with Crocodiles in South Africa, powerful memories have been created that they can still instantly connect on.
He encourages every entrepreneur to try it. Starting companies often have a natural end. Take advantage of those endings to create a different life chapter.
500 Coffee Meetings
On his return from his travels Jason said that he was ready to launch a fifth company.
He started out with around 17 ideas, before shortlisting five of them. He had the financial luxury to take a year for what he calls ‘smart person meetings’. 500 coffee meetings with smart people. Opportunities to get feedback on these ideas, and vet them. See which you have the most conviction on, and to get input on the challenges ahead. The key to those meetings is to ensure you extract blunt honesty, the cold hard truth from those you are meeting. There is nothing in it for people to shut down your idea. But there can be years of time wasted if you don’t get that hard truth out before diving into startup execution mode. You’ll come away from each meeting with investigation work to do that will either strengthen or chip away at your conviction that this is the idea to spend the next 10 years on.
This also doubled as an opportunity to screen potential technical cofounders.
He came back and settled on the problem he had encountered in his previous company. That was competition. He found that prospective customers were better informed than ever, and teams weren’t.
He says that there are three things that businesses will always have; customers, teams, and competition.
So, he decided to launch Klue to solve this. A business intelligence platform to inform all of the departments in your company about the competition, and to guide them in optimizing their decisions.
So far Klue has already raised over $80M. From investors including Tiger, Salesforce, Craft and OMERS.
Storytelling is everything which is something that Jason Smith was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Listen in to the full podcast episode to find out more, including:
- How to pick your cofounder
- Pitching investors
- How competition data can be so impactful for your business
- Jason Smith’s top tips when launching a startup