Tim Schigel’s life and career have been shaped by his Cleveland roots, a large ethnic family, and a passion for music. In this interview transcript, Tim shares his journey from growing up in Cleveland to becoming a pioneering figure in the tech and venture capital space.
His VC firm, Refinery Ventures, has invested in top-tier companies like bitewell, FRAYT, StoryFit, and Livegistics.
In this episode, you will learn:
- The Cleveland upbringing and diverse family laid the foundation for his resilient and innovative approach to life.
- From a guitar-playing gadget enthusiast, Tim transitioned to engineering, recognizing the future’s demand for technical expertise.
- Tim’s venture into custom software development for Apple-connected companies in Silicon Valley opened his eyes to the world of venture capital.
- The dot-com era taught Tim valuable lessons about the dynamics of venture capital, emphasizing the need for adaptability and learning from failures.
- Navigating the highs and lows of Advertising.com, Tim underscores the significance of distribution and wise fund management during economic downturns.
- Tim’s transition to Refinery Ventures reflects his commitment to nurturing growth experience in the Midwest’s startup ecosystem, focusing on the “early scale” stage.
- Reflecting on past experiences, Tim emphasizes the importance of leadership, healthy tension, and surrounding oneself with advisors genuinely invested in personal interests.
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About Tim Schigel:
Tim is a serial entrepreneur and investor with roots in the Midwest, experience in Silicon Valley, and connections around the world.
Tim created ShareThis, a social media pioneer that nearly a billion people use to share online content every month. ShareThis, based in Palo Alto, CA, was one of the fastest-growing companies in the country, growing to $50 million in less than four years, which earned him the EY Entrepreneur of the Year award in his region.
Tim also launched and managed Cintrifuse, one of the best-performing funds in the country, investing in 15 top-tier early-stage funds across the U.S.
Tim has been in venture capital since 1998. Prior successes include Advertising.com (AOL), Get2Chip (Cadence), and DotLoop (Zillow).
Tim grew up in Cleveland as the son of a steelworker and Vietnam veteran. He received his B.S. in electrical engineering from Case Western Reserve University and is a Member of YPO, a global network of chief executives.
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Read the Full Transcription of the Interview:
Alejandro Cremades: All righty hello everyone and welcome to the dealmakerr show. So today today we have a really amazing founder a founder that has been there has done. It is now on the other side of the table and at 1 point he was actually operating one of the fastest growing companies in the us we’re going to be talking about hypergrowth entrepreneurs. Also capital. You know how you go about that raising it you know category creation to and then also creating a high performance culture amongst many many things but again what we have today is a very inspiring conversation so without further. Do let’s welcome our guest today team shigo welcome to the show.
Tim Schigel: Thank you Alejandro pleasure being here.
Alejandro Cremades: So give us how a little bit of our walk through memory lane here. How was growing up in Cleveland.
Tim Schigel: Ah, well, ah, great memories. It came from a very large family large ethnic family ah 36 cousins on my mother’s side my dad was in Vietnam and worked in the steel mills and I even worked in a steel mill for a summer and ah. So we had large families surrounded by a lot of music also play guitar have a lot of musicians in our family and yeah, it was great.
Alejandro Cremades: So at what point do you get into engineering problem solving.
Tim Schigel: My dad was technical he was electric. He was electrician never went to college but was very smart knew how to fix Tvs radios cars and I had good grades I could have gone into anything. Ah. Yeah, know as a guitar player I was also a bit of a gadget person as a lot of guitar players. Are we yeah, we we love to work with all our gadgets and toys and music and sound and so ah I knew the 1 thing I knew was that and I wish young kids knew this I knew the world was going to be more technically or technology driven in the future and that i. You know that was pretty simple to understand and I didn’t know what I was going to do for a job I had no no clue but I knew electrical engineering degree. Yeah, a good engineering degree was going to suit me well and so what I tell my kids what I’ve told others is just get your degree get a good strong education and then you’ll see where you go from there and. Electric electrical engineering is great. It can take you a lot of places I actually started a curriculum between the Cleveland Institute of music and the case school of engineering where we were doing some of the earliest digital music production so that was just kind of my hobby and passion which. Which led to my first job actually.
Alejandro Cremades: That’s amazing I mean your first job I mean let let’s just say tola. You were the first one there 1 of the first in the family to go to a university so make your parents proud. You know that’s incredible now. Let’s talk about finishing university so when you finish university you basically joined this company that was very close to Apple. So you were able to have access to innovation. You know at that time you know Apple you know, incredible. The the kind of stuff that they were rolling out. Ah but I guess in in your case, how did that transition into vc because here you are you know corporate you know, stable job. You know you’re seeing cool stuff you know around innovation and. Making the shift to the venture world. How did that happen.
Tim Schigel: Well first I made the shift from being a technical person. Ah and to to being more on the customer facing side of business I was building. Yeah, at the time we were working large enterprises that were using Macintosh computers. And we were developing applications in Hypercard that were networked with vax mini computers. So at the time this is pre you know pre-windows pre-networking. Um so very innovative. Um, the the small company I worked for one of the founders went to Stanford and so his friends were at Apple. And we became one of the 2 leading companies that Apple would turn to to do custom software development for their largest customers so that included Procter and gamble. Ah Ge Hallmark Greeting cards Mayo Clinic Hughes Communications many others. So we I was literally in. Newton Massachusetts with John Scully with the launch of the Newton first handheld pda because we developed the showcase application for Monsano to to basically do um, tracking for for bugs and and stuff like that for farming for precision farming. So um, that exposure to the west coast I was on the West Coast a lot out in Silicon Valley a lot and that’s where I became aware of venture capital and thought that was something that I would be really interested in because I’m just naturally curious and I I love the amount of variety that exists.
Tim Schigel: When you’re in venture capital and it’s as I always say in the world of venture capital. It’s kind of like living in the future right? You’re ah you’re often seeing technologies and ideas and concepts that may not come to the broad market for ten or fifteen years
Alejandro Cremades: So so so how do you all of a sudden jump to Bc.
Tim Schigel: Well I was actually that was a good question because my my choice was I thought either I would go to Harvard business school and get into a venture firm or run a company and get to know the investors and and you know have success and they would hire me and so that’s the path I went down I started a internet company in the early ninety s and um, along the way was raising money and the company utimately was you know failed didn’t get very far before it failed but the venture firm wanted to hire me so the plan worked not exactly the way I thought it would but it worked. I was thirty one years old at the time the firm was blue chip venture company. It was the first in Cincinnati one of the largest in the Midwest we had 4 funds 600000000 under management and that was that was my start and I always thought I always thought I’d have to move to Silicon Valley or Boston.
Alejandro Cremades: Tremendous.
Tim Schigel: To get into venture I didn’t even know there was a venture capital firm in Cincinnati I just lived in since I worked all over the world I was I used to do some projects in Asia I was going to Asia once a month I’ve I’ve yeah been all over Europe Saudi Arabia the West Coast the East Coast I was raped but I was raising my family and lived in Cincinnati and. The fact that I met a venture capital firm. It happened to be in Cincinnati was a complete surprise.
Alejandro Cremades: Now obviously you are in venture again. So we’re gonna talk about that. But on this first go at it. You know you were for 9 years and you actually invested in some really interesting companies like for example, advertising.com and and and that was sold to Aol it’s it’s very interesting. You know this time that.
Tim Schigel: Yeah.
Alejandro Cremades: That you were really investing because you had the opportunity of experiencing the dotcom bubble and the dotcom Bust. So Really the cycles. So What did you learn from that perhaps experience from those cycles that you saw from all these companies that you were investing in. But perhaps you could share with the founders that are listening now as to how to embrace what’s coming right.
Tim Schigel: Yeah I’m a yeah, great. Great question I’m a big believer after going through that that you know the rule of thumb is it takes 10 years to learn venture and I believe it’s still true even though company cycles are faster. There are just so many different ways to succeed in so many different ways to fail and. Um, you learn the most from the failures. Ah so having the time and as well as going through the cycles. You know the the up and down cycles where at the beginning when I joined everything was up. You know first company I worked on we funded it ah started it. Went public was worth several billion dollars I thought this is easy and then it wasn’t easy right? when the when the when the bubble burst um I was definitely probably cocker or more confident in myself at the in the early days you know, being on boards of companies. um and um I always say my bookshelves when I was younger my bookshelves were filled with technology books now. They’re filled with psychology books because the biggest limiting factor is not technology right? Everybody has access to technology technology has been democratized. Um but getting.
Alejandro Cremades: Wow.
Tim Schigel: You know people to ah, be aligned to do what needs to be done and getting them to want to do what needs to be done is extremely hard and um, there are interesting dynamics ah both within companies as well as in the board. So like for example, 1 of the biggest lessons I learned with the board is it’s kind of ridiculous. That you raise money and investors spend a bunch of time doing due diligence and um, they get together 4 or 5 times a year for a board meeting where everybody flies in and flies out and plays armchair to quarterback this is supposed to be kind of the strategic decision making body for the company. Yet those people probably have never worked together right? It’s a group that really is not very well aligned and people have different motivations. Their their motivations are driven by their fund cycles when they’re raising money when they need to exit and that is very difficult for Ceo, especially a new Ceo to navigate that. So one of the things I like to do when I started refinery for example, right? after we invest is do a little bit of baseline getting to know you with the other board members and talk about what they’ve seen their successes are and what their failures are because oftentimes what you’ll hear in the board meetings is. You know, ah a board member maybe pounding the table on some topic and you’re like why is this person so upset about you know this thing and you find out they’re upset about it because they got burned by it in the past totally unrelated to the current company but they’re they’re still smarting from something that happened in the past and so.
Tim Schigel: When you share those things those underlying kind of assumptions that people all bring to the table you find that the group starts to be able to work Better. So just understanding how to navigate board dynamics and um is really important. It’s not about being the smartest person in the room. It’s not about the person that it’s not about being the one who talks the most. You know some of the best board members that I work with were also some of the quietest but when they did speak up or when they did speak up is usually a question that led to a whole new interesting Discussion. You know from there.
Alejandro Cremades: Now as you were saying it takes a decade to learn the ropes when it comes to venture capital and you were there but in 2007 things took a different path and there was an idea that came knocking and you decided to take action and you switched the side of the table that will share this.
Tim Schigel: The hint.
Tim Schigel: Yeah, so you mentioned advertising dot com. So that was one of the largest ad tech early ad tech companies out there a very Fast-g growing company I was yeah there at the board from the very beginning and got us to witness all of it and because of that and several other media tech.
Alejandro Cremades: Tell us about this.
Alejandro Cremades: My god.
Tim Schigel: That distribution got so big and the nature of Networks and distribution is the bigger. It gets the bigger. It gets is this. It’s it.
Alejandro Cremades: I Mean the network effects are real. You know something like that. But they also the growth is like out of control I Mean how do you? How do you keep up with the with that level of growth as well. So that things don’t break.
Tim Schigel: Ah, things do break I think that’s one of the things to understand about about growth about fast growth is it could be managed chaos and that that growth could be going from 0 to 20000000 to one hundred million or one hundred million to billion I think I think there’s ah ah, there’s something about growth itself.
Tim Schigel: Especially when you’re ah when it’s something that is kind of grabbing a lot of market share quickly that has its own dynamic and so we went from the first year we had 700000 in revenue in the second year we had 12000000 and the next year thirty something so it.
Alejandro Cremades: My god.
Tim Schigel: It it was a bit of chaos and there are a bunch of lessons in that you know you had to ah there were some people that worked great. You know that that were were awesome in terms of their contribution for the first million but when things got to scale. They weren’t you know, very few people can make it from each step and so um, you had to continually adjust to that and it dawned on me my my big learning on that ah dawned on me in one of those early cycles when I looked around and I thought most of the people that work here.
Tim Schigel: Have never worked in a high-growth company when I thought about where they came from they were used to they get their job. They get a function. They get their title and their name and they get a desk and a cubicle and they want to hang out with their friends and life’s pretty comfortable growing at 10 % a year or 20% a year or whatever. When you’re growing at hundreds or thousands of percent a year it can be very destabling for people and that puts a premium on the leader and the Ceo to communicate and make sure everybody knows their roles and revisit that often because it’s often changing. And um, once you understand that it starts to get a little bit easier easier to navigate. But it’s if you have never been in that environment as as a manager or leader. Um it can it can um it can be a big challenge. So.
Alejandro Cremades: And how much a how much I mean obviously that that that growth is absolutely crazy. How did you guys go about capitalizing the business as well. Okay.
Tim Schigel: Well, we raised our series a from draper fisher and it was the the lead was Emily Melton who now is the founding invest founding partner at threshold ventures. We raised that. Close that round at March basically March first of 2008 ah basically a week before the great recession started. We were still pre- revenue. Ah what was interesting is we raised. We had a lot of interest. Because of the distribution was growing so fast but we were still pre-revenue and we raised 15000000 at a $60000000 valuation in 2008? Um, so that’s pretty incredible even in today’s standards and I remember thinking the moment we closed it. Our job now is to not spend it literally like it wasn’t like hey we got all this money. Let’s go spend. It. Let’s go hire a bunch of people our job was to not spend it the the great recession was starting. We had no idea how long it was going to last. We kept our burn rate very low. Don’t remember exactly what the number was but it was probably under 200000 or something like that. Um, and we said we’re going to keep it low until we start generating revenue until we have some visibility right in terms of that that income and cash flow and.
Tim Schigel: So that was the first important lesson. Yeah, we we raised it. We’re not going to spend it second thing was um I developed a point of view on what I call test revenue versus scale revenue so that first seven hundred thousand dollars in revenue you know we would generate revenue and I come to board meetings I say hey we generated revenue last month but I’m not even going to report on it. It wasn’t very much. Don’t worry about it. What I was optimizing for was not revenue growth I was optimizing for learning that first million or so you want a variety of different customers. You want to understand the ah roi of your product. You want to understand the pricing of your product you want to understand how you go to market. So you optimize for learning not optimize for growth and this is a mistake I think that happens often with seed the series a stage companies is that they get a lot of pressure from their investors to grow the second their revenue starts and that promotes bad behavior. They’re trying to do whatever it can to make that number grow versus just trying to learn excuse me and try to figure out good come you know what what’s a profile of a good customer what today they call icp a deal customer profile and what’s a bad customer oftentimes your first customers. Some of them are not good customer profiles like if you had to do it again. You would not. Want them as a customer not because they’re bad but just because you can’t scale them. You can’t find others like them. So there’s just a dynamic of that test revenue and we had enough test revenue to then predict when we started to go into scale how we could scale and in our case, we.
Tim Schigel: We aimed to do 10000000 the next year which sounded outrageous ah and um it it was but since we raised so much money we kind of had to grow. We had a big valuation. We had to grow fast and I knew that so I did the test revenue knowing that I had to get the data points to know I could with confidence. Say we can scale fast because if we did 4 or 5000000 revenues still would have been great but it would have been. We would have gotten kind of the golf clap from the investors because they put in so much money at high valuation so we set the plan to 10000000 and what we achieved was 12 and I remember one of my friends. And advisors and investors I called him all excited said hey you know we’re going to do 10000000 this year but we did 12 and his first reaction was why not 15 and I was I was so mad at him. But I’m like that’s the right question right that’s the right question what’s limiting why not 15? What’s the what is the limiting factor if you can go from seven hundred thousand to twelve why not 15 and so I try to take that view. Ah and and help our you know companies we invest in take that view we looking at companies yo the think of think of growth as not not like pushing something uphill, but it’s it’s how do you.
Alejandro Cremades: Right.
Tim Schigel: Remove constraints. How do you remove friction.
Alejandro Cremades: So So let’s let’s talk about that because same after this time you know I share this you know, incredible Um, growth experience. Eventually you become the Chairman and then you start what you’re up to now which is called refinery ventures so it’s interesting because you go From. Investor to entrepreneur to investor again and typically what I’ve seen is entrepreneurs. They either become investors or investors that become entrepreneur entrepreneurs they keep being entrepreneurs so in your case you went back to the other side of the table. What what triggered that.
Tim Schigel: Well, there was one media bo and step in the middle when I went to chairman that’s when this thing in Cincinnati started called centrifus and it was started by the leaders in town to create um a stronger venture backed startup. Ecosystem and the senior leadership at Procter and gamble asked if I would set up a fund of funds to invest in other funds to kind of create relationships with them in our region and at first I thought that sounded boring that was way too far away from the action. And I talked to my friend Chris Raac who’s the founder of Renaissance fund in Michigan and they we wanted to have a similar model and he kind of talked me into it said oh you can help everybody a lot and um so I did that which was really interesting. So I’ve worn three hats I’ve been you know the Ceo entrepreneur hat i’ wornd the gp hat and I also have worn the lp hat so I did due diligence on over two hundred venture funds. We’ve investested about 25 people like Graycroft Lear Hippo ventures bullpen bold start upfront ventures pellon ventures lot of great firms. And um I didn’t know what I wanted to do the question. You’re bringing up people would ask me often. Do you want to run a company again or do a venture firm and my honest answer was I didn’t know and I kind of embraced that and said when I did the fund of funds I was kind of in discovery mode which I think is important a lot of people face that in their careers.
Tim Schigel: And it’s okay to be in Discovery mode at the end of the day I think I’m a problem solver just like when I saw the sharing problem and saw the opportunity that nobody addressed? Um, what happened in that Discovery Period is I found this issue that most of the entrepreneurs.
Tim Schigel: Ninety plus percent of entrepreneurs I would meet in the midwest had never worked in a high-growth company and to me that is the fundamental constraining factor. Ah entrepreneurs would often say there’s not enough venture capital in this region and my answer is that’s true, but that’s not the problem. Because of what I call the first law which is capital follows growth if you’re growing 3 to 5 x a year you can get investors from anywhere and what’s interesting about this that this is true I think outside of anywhere outside of Silicon Valley or the new england area right? But I’m in the great lakes area. So if you look at the great lakes area. Um. I looked at the seed number of seed deals per year and it was equivalent to the new england area. But the new england area raised 4 times more money than the great lakes area did what does that mean? Well if you go a little deeper doesn’t mean that the seed rounds were bigger. It means they have more b rounds and c rounds which means companies were progressing. Whereas in great lakes they weren’t progressing well that’s interesting, right? because we have all these great universities Carnegie Mellon you know top of the list university of Michigan Ohio State Case Western Purdue University of Cincinnati you know list goes on. We have a lot of great universities. So what’s happening but what’s happening is the companies aren’t. Aren’t evolving from seed to series a they’re not making that jump and they’re falling into kind of common traps and not generating the growth so when I realized that most of these entrepreneurs had never had that growth experience. That’s when the light bulb went off for me and I said wow what if i.
Tim Schigel: But if I started a firm and address that stage which I call early scale the mistake people make is they get a little bit of product market fit and then they want to just dump money in and scale it but they have no, they have no um baseline of what their unit economics are for acquiring customers etc. So. The important thing you need to do in a cost efficient way. Capital efficient way is to figure out how you go to market and that’s what I call early scale so we focus on it stage we help entrepreneurs that don’t have the growth experience get through that but on top of that we recruit we recruit and build a network of entrepreneurs that have that hypergrowth experience. That are in the midwest or that are boomerangs people that have worked on the coast and want to come back and we launch companies or we pull companies out of universities where we partner up the technicians the scientists with the hypergrowth entrepreneur that idea. For me was super intriguing is a long term idea if we can change that it can change the landscape and the complexion of the entire region and many regions around the world quite frankly and it’s ah it’s a talent talent first um approach.
Alejandro Cremades: I mean obviously creating ecosystem there which is fantastic. No now in your guys’ case you know you have right now in assets under management about 55 spread across 2 funds. You know more coming and you’ve invested in companies like astronomer where you were. 1 of the early investors are now they’ve raised over 300000000 which is incredible I guess imagine Tim you were to go to sleep tonight and you wake up in a world where the vision of refinery is fully realized what does that world look like.
Tim Schigel: What that looks like is that many of the technologies that we use on a day to day basis ah find their homes in places like Ohio and Indiana and Michigan and Kentucky and Pennsylvania and that those companies. Are creating the flywheel of other companies other spinouts. Ah it is you know I believe technology and talent are no longer tethered to geography right um right now or what has been for most of my career is if you think you’re a tech pioneer you move to the west coast right? because that’s the only place you can go do what you need to do and if you move out there. You kind of feel like it’s you’re entitled to change the world. Um, and I didn’t move out there because I did not want to sacrifice. The lifestyle and the family dynamic I had where I had you know three kids that were like junior high at the time a great community. Great family I did not want to sacrifice that just for my career and so you could have build a great company and have great family and. Live the lifestyle you want to live in the in the place you want to live um and still achieve all your dreams and that hasn’t been true for decades. But I think it’s it’s in the future. It’s going to be more likely true wherever you decide to build it.
Tim Schigel: Your companies.
Alejandro Cremades: No a hundred percent on that fully subscribe now we’re talking about the future here but I want to talk about the past and I want to do that time with a length of reflection I’m want to put you in a time machine right now and I bring you back in time. It’s 2007. You’re about to give your notice. And the Vc firm that you’ve been at for 9 years and you’re going into the unknown with this new company that would end up becoming share this your first venture. Ultimately, you know like real hypergrowth venture and let’s say that you were able to stop that younger Tim Schigel that was coming out of the Vc firm after giving the notice.
Tim Schigel: Hey.
Alejandro Cremades: And sitting that younger self and being able to give that younger self one piece of advice before launching a company. Why would that be and why given what you know now.
Tim Schigel: Great question I was just thinking about that this morning when I you know when we launched it I had no idea what was going to happen right? that that this growth was there I was confident that I was very Confident. We were solving a problem. Others weren’t focused on that was a very large problem. A lot of everybody on the internet. Shares content and um so I had high confidence in that um the probably the biggest lesson and then what I would have told myself at the time is ah, people. Want to be led including boards including your investors I I probably was um, you know too eager to build consensus ah too eager to have. You know Harmony I believe in having healthy tension Now you know, um, ah this was a concept that came from me. It didn’t come from somewhere else I created the concept and um the growth from that ensued. But. What what happens is I think you have some so you know you’ve heard the phrase success has many fathers right? So So everybody starts wanting to to take credit or think that you know their contribution was greater than it was or whatever and um, ah.
Tim Schigel: I would have I would have held on more tightly. Yeah I was I was I was trusting ah folks and and kind of probably naive to all the different dynamics that might have been going on I My the vision for what the company could be or could have been was bigger than it. Became ah but my time my time with it was basically cut short and it was because I was I was I was trying to do the right thing you know by everybody kind of make everybody happy instead of.
Tim Schigel: You know, really surrounding myself with advisors that were concerned about me right? Everybody else was concerned about their interests and except they weren’t concerned about my interests right? And um.
Tim Schigel: And would have found more advisors and kept advisors around me to help me navigate that.
Alejandro Cremades: Wow I love that Tim. So for the people that are listening all these founders, especially that are incredibly inspired. You know after listening here and and I would like to reach out and say hi. What is the best way for them to do so.
Tim Schigel: Easy Just Tim at Refinery dot Com So R E F I N E R Y dot Com I’d be great. Love to hear from you.
Alejandro Cremades: Um, amazing. Well you say enough Tim well thank you so much for being on the dealmakerr show today. There has been an on earth to have you with us.
Tim Schigel: Yeah, this was fine. Thank you.
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