Todd Gagne:

So well, Kyle, welcome to the podcast, man. I appreciate you making the time. It's nice to see you. You're on the East Coast. Hopefully, it's warmer there than it is here.

Kyle York:

Still pretty cold, Todd. Thanks for having me, though. But, you know, it's warmer than yesterday, so we'll take it.

Todd Gagne:

That's good. That's good. Well, good. Well, let's dig into it. I know we're a little short on time, but I'm curious about just maybe your background.

I I'd looked at it, and it's like one of the things I thought was pretty interesting was, you have a wide range of kinda sales marketing, some operational experience, and then obviously kind of the investment side of it, which I think makes you really uniquely, kind of qualified to kinda talk about startup related stuff. And so I'm pretty excited to hear about that. But maybe give me a quick intro, maybe a couple minutes on just how you got here.

Kyle York:

Yeah. Great. So yeah. So great to have, be here today, and thanks for having me on. You know, so I'm CEO and managing partner of York IE, and we're an advisory and venture capital firm, that, you know, wouldn't be possible without my background.

You know? I I grew up in a small main street, small business. I ended up going, to undergrad business school. And right away, luckily, I got internships in software and technology. And, you know, first jobs are marketing.

I kinda moved into sales when I realized I had some of that natural DNA. And Yep. You know, spent 7 years in my first startup, which was an education software startup.

Todd Gagne:

Okay.

Kyle York:

I had moved to California. I was traveling all around North America. We sold k to 12 private school software to run the schools. It was my first company. But, actually, a high school classmate, had moved, a small little startup called Dine, from Worcester, Massachusetts back up to New Hampshire in my hometown of Manchester, New Hampshire.

And the company was called Dine, and, turns out it was kind of a good opportunity, and they were looking for somebody to be the I would say the cofounder they never had, the sales marketing business growth person to complement, super technical, product and engineering, cofounders. And I joined that company, 2008. And from 2008, to late 2016, we scaled to a 100,000,000 of annual recurring revenue. It was a SaaS business that specialized in Internet infrastructure. The domain name system was our core Yep.

Expertise in technology. And, a lot of people who who who aren't technical may not have known of Dine and know DNS, but, for those listening, you know, we powered everything from cnn.com to the new yorktimes.com to Twitter, Netflix, Airbnb, Uber. You know, if you were a fast growth global web brand, you probably leverage some sort of dying technology along the way. That great experience as a chief revenue officer running sales marketing, BD, corp dev, customer success, led to our acquisition, by Oracle. So Oracle was a client and partner of ours over many years and developed a great relationship with them, and we're able to, land inside of Oracle, for a heck of a heck heck of an outcome for everybody involved.

Ad then I spent a few years inside Oracle. So, you know, I've kinda I've been in the early stage small scrappy bootstrap startup. I've been in the venture backed startup. I've been, you know, in a private equity growth equity startup, and then I've worked in Big Red, you know, which is quite a behemoth.

Todd Gagne:

Yes.

Kyle York:

So a lot of operational experience. And then just quickly in parallel to that, I I started to advise and sit on boards and angel invest along the way. And all with this lens of, like, my operational background, and I started to pull capital with other operators and build different investment vehicles. And I was doing that all moonlighting with this dream that someday I would maybe build this advisory venture capital firm I'm now building. And and here you are.

Yeah. Here we are. Yeah. So it's, like, all all very easy and hand wavy, but, a heck a heck of a run.

Todd Gagne:

Yeah. Well, that's cool. It seems like there's a lot of parallels for me. I I worked at Concur, and I was there pretty early. So I was there, maybe the 40th employee, and then basically left, in 2016.

We were about $1,200,000,000 in revenue, and we sold to SAP for 8,300,000,000. So, and, you know, I did the acquisition thing for a couple of years. It was a little jarring. I'm sure yours was jarring too in a different way. Just, you know, like, large organizations, a lot of independence before, and then you you've got somebody you answer to.

And so, it was it was it was a good experience for me, but I only did 2 years, and then I was out.

Kyle York:

Well, I beat you by 1 year, but that was probably only made possible because, you know, when we sold the business, we were about 500 employees. But the group that bought us was called Oracle Cloud Infrastructure. It's called OCI, Oracle Cloud Infrastructure now. Akin to AWS and Microsoft Azure and GCP, they were only 300 when they bought us. So we almost had this, like I wouldn't call it, by any stretch, a reverse merger or anything, but, like, we ended up in pretty senior roles in a in a in a joint org that ballooned to almost 10,000 people over the run we were there.

And, yeah, I'd say for, you know, the majority of it, like, you know, 2 years, 11 months, or 2 years, though, was really actually like a like a really well funded startup inside a large organization. It was once it became substantial is when we dealt with all the, oh, boy. You know, they're gonna integrate everything. They you know, we're getting a lot more process and, you know, it just it just was like, okay. White towel wave.

You know, maybe it's not Exactly.

Todd Gagne:

Yeah. Was Mark Nelson there when you were there? Did you know Mark Nelson?

Kyle York:

He was at Oracle. Wasn't that good? What org was he in? Sales?

Todd Gagne:

He was in no. He was in development. He was on the development side in cloud, infrastructure early. And so he was our CTO for a while.

Kyle York:

Okay. Yeah.

Todd Gagne:

He was based out of Seattle.

Kyle York:

Came across him. Yeah. If he's out of Seattle, then yeah. I mean, I reported directly to Don Johnson who, came out of AWS. You know, you know, but yeah.

I mean, it it got it got big fast, and it kinda like Yep. There's also there's also also multiple, iterations of Oracle Cloud. Like, I think we were called gen 2 cloud because there was, like, a kind of miss. And, you know, so, I mean, it's obviously giant. Right?

I mean Yep. Jeez. I I think at the time we were there, it was a couple 100000 people, whole holistically.

Todd Gagne:

Yeah. Well, that's pretty cool. It's a fun run. It's fun to compare some stories. So let's pivot a little bit to, kinda maybe your philosophy on you've taken all this experience, and now you look at start ups and stuff.

And I think you and I are probably in the same boat. We look at a lot of start ups, but execution is really king. Right? Like, that's basically at the end of the day. Right?

Good idea. Great. But unless you can actually put the pieces together and prioritize the right things to focus on at the right time, you ain't gonna move the needle. And so I think, you know, as I was doing some research for this, I think your kind of understanding of the customer problem, this one's a key for us. I think that so many people build products that nobody wants to buy.

Like, they they think it's interesting, but they're not willing to change their behavior or to actually pay you to go do it. And so maybe talk a little bit about your kind of philosophy on this because I think it's a key component where, like, it's a do not go forward if you can't figure this problem out.

Kyle York:

Yeah. So we call that the market in approach to company building. You know, I think what you tend to see a lot, especially with technical founders, engineering founders, is that, like you said, they know they can build it, you know, and they they they might might, you know, have a hypothesis on why, but maybe haven't, you know, analyzed the market, the competitors, the comparators. We where is the funding going? Are the big players doing it?

Are the small players doing it? Like, you still need there to be a market to disrupt. Right? And you've seen over the years, a lot of times, the winners of markets end up being the ones who are 3rd, 4th, 5th, you know, place in the beginning or or or or sequentially or you know? And that really just comes down to timing and and market execution as as you discussed.

So we call that the market and approach, right, to company building. And then I I think secondly, it's like, so many technical founders, especially in tech, like, don't talk to customers. Right? You know? It's like it's like creating those alpha and those beta programs, like like letting customers inform or, your product road map, or or even bringing on customers as design partners to help you build your applications in the early days to really find that you really need to even if you're building a platform, you need to find that wedge that's the the repeatable early use case that enables you to to to to to start to hopefully bring on customer funding as what I like to call it.

Paying. Yeah. Yeah. That is such a a thing. So so that's one side of it.

I think the second side of it that we've started to see, emerge over the last few years, and I'd love your perspectives on this too. We started to see a lot more vertical software, vertical SaaS, get created where it's not technical, founders building SaaS applications, but it is like domain and industry experts coming into, technical, technical companies to build technologies and platforms to disrupt their markets. It kinda has, like, a very akin issue, though, where the, you know, domain expert in the supply chain industry or the fishing industry or the agriculture industry may not have the the software SaaS, metrics, KPIs, go to markets, technical competencies to understand actually even how to how to organize or to prioritize how to, you know, build product and bring them to market. And so those are the I'd I'd say the commonality of, like, the 2 founders that we work with either in our advisory as a service offerings or that we invest in, they kinda, like, look like 1 or the other. Right?

Like, industry founder, deep domain expertise, business oriented, or technical. And, you know, we try to bring in our advisory platform. We have r and d capabilities, go to market support capabilities, and g and a capabilities. And Yep. No two companies are created equal on what they might need help on.

We obviously have to bob and weave and and and scope appropriately for what companies need.

Todd Gagne:

So I think it's good. I think there's a lot of commonality the way we see it. I think vertical SaaS is kinda where we're at too. I think that we're looking for founders that basically will go deep in their area, and maybe they don't have a technical background, maybe they don't have a sales background. And what we're trying to do is provide maybe more technical, just tools along the way to help them.

Right? And so I think that the tools have gotten so much better even in the no code solution to get you an MVP. Right? And so we've got people that are basically saying, I'll spend, you know, 7 to 12 k to get something that will get me a 1000 customers on the platform. And then once I know I got a real business, fine, I can redo it.

Right. Or, like, there's people that just don't know email marketing. Right? Like, all the steps you have to go to to anymore. Like, we're stitching all that together to say, look, we'll help you do that.

You still gotta understand the messaging. You gotta go understand the drip campaign. But, like, you don't need to understand how to, you know, do, like, burner domains, warm up the domain. You don't have to, like, figure out how to go Google to Google and Apple you know, like, you have to figure all that stuff out. And then the last piece that we've been working on too is how do you build sales agents that basically gives them some discipline that says pick a, like, pick a methodology for sales, but then let's help you coach you to say, you're not selling your features.

You're doing discovery. Right? You see so many founders that basically just wanna, like, throw up and say, look at this wonderful product I've built. Really, what they should be doing is saying, what's the biggest problem that you have, and if I could solve it, does that really give you the value proposition you're looking for, and will you buy? And so I think, like, driving more discipline and more training wheels to a deep domain knowledge founder to basically validate, do you have a business or not?

We we deal with really early people. And but I think it's very similar to your philosophy.

Kyle York:

Yeah. It is. No. And I think it's ironic. Right?

I mean, we we we've just lived through 20 years of the growth at all cost model of companies raising, you know, tens of 1,000,000 or 100 of 1,000,000 evaluation or or dollars at valuations that are insane. Right? Yep. In a world where everything's moving towards automation and AI and inefficiency, and then, you know, outside of, like, the co COVID bump, I think we've now been, like, corrected appropriately in the venture and start up technology arena, that it's it it it can actually capitalize on the things you're talking about. Right?

Because I think boards and VCs are all starting to think more like, how are you more efficient? Like, how do you truly have a path to profitability? How do you manage the growth? You know? And and across our companies, you know, we we kind of view it like, it's okay to, like like, raise money and go for it if you've earned the right to raise money and go for it.

But, also, don't just spend the spend. If you can be efficient and effective and, you know, whether you're lowering your CAC or you're lowering your COGS or you're increasing your gross margin or you're extending your runway, like, obviously, you should you should leverage technologies to do so. The other thing that's funny, like like, in some of these vertical industries, like, they don't need to be AI platforms in these industries. They just need to bring software and get people out of pen and paper or out of Excel spreadsheets.

Todd Gagne:

Yep.

Kyle York:

But that doesn't mean they can't leverage AI inside their operation to be more efficient and effective at operating their business and scaling their business. Right? So that's something that we we we wrestle with a lot because, you know, a lot of, like, LP dollars are moving towards funds that are saying they're the next big thing in AI or cybersecurity, and those markets are still really wildly frothy, from the fundraisers and the valuations. But but a lot of these industries don't need, like, bleeding edge stuff yet. If they had bleeding edge stuff, they wouldn't get adopted by their, you know, factory 4 4 buyer.

Right? So So it's this interesting balancing act that we see, and we like to have a diverse portfolio of engagements that, gives us a little taste everywhere, but, you know, also is as pragmatic as it gets.

Todd Gagne:

It's kinda interesting. I I guess there's a couple of pieces that I would overlay on it. For us, we kinda, like, have this idea that, like, there's a lot of room between a lifestyle business and a $1,000,000,000 business. And I think a lot of people just kinda forget about the middle of the space. And then I think that if you can basically find a niche that's pretty good and you sell for 60, 70, 200,000,000, and you didn't raise much capital, and you were capital efficient, your returns look pretty good.

Right? You you could basically you're not getting non dilutional, you're not basically getting a bunch of these you're not losing control. Maybe everybody's the same, common shareholders. There's a lots of benefits to do it. And your returns, both for you, the investor, as well as the entrepreneur, is a is is fine.

And so to me, there is a little bit of a rewiring in some of this where you're basically to your point, you don't have to go after the stuff that's super sexy. In a lot of cases, I want the stuff that's, like, kind of boring and, like you know, like, we even look at, like, things in precision ag. Like, there's we're in an ag world. You got all these people on the backside of precision ag that do nothing with the data. They don't understand what to do with it.

Yeah. So there's a whole bunch of products there. The same thing with machinist. We had a machinist come to us, and then we were, like, shocked at all the stuff they do manually on the shop floor. Right.

Or the guy Earl who's been here for, like, manufacturing, who's been here for, like, 30 years, he's retiring next week, and you're like, all that domain just goes out the door. And so Yeah. If you look at our so many opportunities.

Kyle York:

You'll get you'll get a laugh out of some of the industries we're in, you know, like, shellfish traceability, you know, produce, agriculture, you know, like, it's you know, it it kinda runs the gamut. You know, it's, and you're you're spot on. And I think that's that's what we like, we we don't need to be domain experts in agriculture or shellfish. Right? That's what these folks are bringing.

What we need to help them is build products, technology, capability, also the business side, the go to market side of their businesses. And, I think it's an incredibly exciting time. And I think the correction was a good thing. And, you know, and and and and I actually the one I have in my life, I you know, I'm I'm prolific on LinkedIn and Twitter. I always post blogs, all that stuff.

I've had 2 viral tweets. Okay? One was I, like, watched the folklore documentary on Taylor Swift, and I just, like, posted, like, great documentary if you haven't seen it on Disney Plus. And it woke up the next day, and I was like, holy cow. I'm a Swifty.

Right? The second was, I wrote something like, you know, a start up exit at 25,000,000, 50,000,000, 75,000,000 is a is a life changing event, but the VC and technology world is to minimize this exit. That's a damn shame. And, you know, went to bed next day, like, woah. Right?

Oh, And and it but but it's exactly how I feel. I mean, some of the some of the best outcomes I've had as an investor have been or an adviser have been just getting in early, taking a risk, getting at the right entry evaluation, companies who are prudent about their capital strategies, who who don't just dilute you to hell every freaking time, you know, and and and have good 25, 50, $100,000,000 exits. Like, by the way, for the founder, life changing generational wealth. Right? And I get that maybe a VC made a 1.5 times or a VC made a 2 times or a one x return.

But usually for the founder, they're in pretty damn good shape at those exits, and I think we gotta get back to that. Right? The founders are the ones who are actually building the companies. Let's make sure that they feel it, feel the love, and feel the reward.

Todd Gagne:

Yeah. And I think the other thing is just like the status. Right? It's not like about, how much money you take. It's not about the valuation that you do.

It's about, like, doing the math of saying, what is that interchange that that intergenerational wealth that I can create without doing all that. Right? Because I do think there's

Kyle York:

a metrics. It's like right on the vanity.

Todd Gagne:

That's exactly it.

Kyle York:

Celebrate it. And I remember after we sold Dine, our exit was Oracle. Our exit was 600,000,000. And the there's a company called Simplivity, that was you know, I think I think HP might have bottomed. I I don't recall exactly, but it was, like, an over it was a 600, you know, 25, you know, 1,000,000 or 650,000,000 investment.

And it was right in New England where, you know, right in Boston, only, like, 45 minutes south of me. And and I can remember getting a few notes like, oh, you must be annoyed that they, you know, were a bigger deal in Boston area than you. And I said, guys, their last valuation round was at 1,200,000,000, and they've raised, like, over a $100,000,000. Yeah. Like like like, we we win.

You know? But but, again, the headline number makes them look like they were a better exit. Right? And, again, I'm not demeaning anyone involved in that situation, but it's just it's it just is the the land we play in. It it celebrates, like, kind of things that don't really matter.

Right? So I I don't know. I'm with you entirely on that thought.

Todd Gagne:

Yeah. So we got about 10 minutes left. I'm curious on, let's talk about AI a little bit because I think it's changing the landscape. It's changing the entrepreneur opportunity. It's crashing a lot of things, and it's gonna be massively disruptive.

I mean, I I really feel like it's the trend line for the next 20 years for my career. Right? Like, I you know, like, if I wanna continue to do this, like, that is the true line for a lot of stuff. I think the tools are coming out. I think people are confused about how to use it.

You know, some of the stuff that I did from a research perspective, you talk about how to use kind of AI and even product strategy, and it's not like just and I think what I what I have been concerned about in some cases is people just bolting on, an API to, like, basically or an existing workflow process. Right? And so Yeah. A lot of what you want to see from founders is go back to first principles, understand how this workflow actually should work. Well, CRM is a great, you know, example of that.

You know, Salesforce has built a huge business on this. Right? And so it's a workflow productivity tool. But if you could reinvent that with a read, you know, read AI or something that was taking that information and populating it for you, like, you could redo the whole thing. And so I'm just kinda curious on, like, are you seeing founders start to, like, look at that and say, this is not how the process is and just making it a little bit better by pumping and and building something on top of it, but rethinking from the beginning of what's this product strategy really look like?

Kyle York:

Yeah. I mean, it's I think it's kind of a loaded question. I don't know what joggle to take. I mean, I think there's so much hype and buzz in the AI movement, and it's it's deserved and earned, and I am I'm bullish as all bullish. I think there's layers like in anything else of the stack, just like there were in, like, the SaaS movement or the cloud movement or the dot net movement or the Internet movement before.

Right? And and there's, like, deep infrastructure layer, and those are the companies that are, you know, require immense ridiculous funding. You you recently saw Stargate announced that says Yeah. 500,000,000,000 dollars. Right?

Right? But then there's, like, a lot of tools at the very tippity top of the stack that are apps or, you know, you know, plugins or layered on technologies that are more in that kind of workflow world. Right? The what I look for is I think AI is only as powerful as the data it's being fed. And if you don't have unique and proprietary data and or access to unique and private or data, married with domain expertise and prompts to, coordinate that data and create outputs and prescriptive, proactive, action oriented, behaviors.

And, like, what's the point? Right? So I think that's one core point. The second thing for me is I hate how everyone's just buying, like, a dot AI domain and, like, turning what was software and automation and algorithms to call it AI. Right?

Like, an AI company. Like, I I like when I when I review pitches, and I'm like, okay. Here's how they're incorporating AI into their feature set either for expansion of engagement or usage or for retention of of their product, or for innovation of their product. I don't want you to, like, reinvent the wheel and and necessarily launch something entirely new. Because as we discussed earlier, not every, industry's buyer is ready for all this, like, wild sophistication or innovation at the bleeding edge of AI.

Right? So incorporating I want everyone to have an answer of how they're incorporating AI into their application. I want everyone to have an answer of how they're incorporating AI into their operations, their business operations, their go to market, you know, the product development cycles, like, you know, customer feedback loops, CS. But I don't necessarily wanna see everybody reinvent the wheel. Right?

Now with that said, when you work across a portfolio, you know, one of our biggest high flyers is a company called Cranium that is an is an AI business that's that's cybersecurity on your language learning models for large enterprises to make sure that they're compliant, that they're regulated. Right? Like so, like, there are, like, plays we're making, and then we have others like canvas dotai that is a market research tool for consumer brands to measure emotional, cues and, sentiment in open ended text responses to product reviews and surveys and things like that. So so there are plays where it, like, makes a heck of a lot of sense, but I think the student body shift of everybody running that direction that maybe doesn't even isn't even relevant to their buyer or their industry yet, or is a complete, like, shift, in their business, is a little bit too far forward, if that makes sense.

Todd Gagne:

It does. And I think what resonates too is, you know, we go back to the vertical SaaS and the domain expertise. Having the data that's unique across, like, most of these are horizontal models, and so they're, you know, they're only trained on public stuff. And so if you've got something that's proprietary and you could basically build inference with it, then basically you have a much more value to add to your workflow or to whatever problem you're doing. I'm curious if, like, your clients and stuff are using, you know, Llama.

Like, DeepSeq just came out. You know, they're they're performing really well. Their licensing is even more generous probably than Llama is. It just seems like, places like OpenAI are paying the price for innovation, and they're paying a lot of money. And then it's getting democratized extremely quickly with these open source tools.

And it's just interesting to see, like, I mean, it it'll but I like, our companies are starting to use those tools and saying they're good rep. Yeah.

Kyle York:

I mean, totally. That that's absolutely with us. And and so the way that we build our advisors as a service offering is we we build technology and automation and leverage AI to deliver more efficiently to clients. And then we have a 170 employees at our India operations center, full time employees at York IE India. And there those things are 1 and the same almost in how we deliver.

And so we built a lot of our own proprietary tools that are emerging publicly available data to your point with proprietary data, like market assessments, market rationales, watch lists, deeper research across domains and industries. Right? Like so, like, I think you're right. It's the marriage of of both that makes it really powerful. But, also, I think you're right.

Like, there's there's so many tools that are gonna come, that are gonna be open source, that are gonna get hot, that developers are gonna rather work with, that are gonna be more cost effective. They're gonna have different models. And and that's where I like I gotta I've lived this. Right? So have you.

Like, we've lived through different stages of this, like, you know, Internet driven technology adoption, and it's just it's Everything. Yeah. Mow yeah. It's mobile. It's everywhere, and I think and and that exists in different vertical segments and at different layers of the stack.

And we've seen time and time again that, like, you know, no no industry is really ever one player. Right? And and Yeah. I always used to say this all the time at Dine. They'd be like, how do you compete with Microsoft?

And how do you can do with Google? And I agree with Amazon. I agree with Oracle. I'm like, well, they're they're friends, they're foes, they're partners. There's enough pie.

Like like, it's a big enough industry and market where I can still build a successful company and career, to impact the world that I don't need to be Microsoft or Google. You know? Right. And that and I feel that way now in venture and advisory. I don't need to be McKinsey or Bain.

I can aspire to be like them. I don't need to be a Andreessen Horowitz or Y Cominar. I can aspire to be like them, but there's enough of a universe in tech startups for all of us to do really well. I'm sure you feel the same way. And I think that's what happens is the Silicon Valley culture is like winner takes all, growth at all costs.

And I just find that all to be such so nonsensical to the reality of the entrepreneurs hustling out here.

Todd Gagne:

Yeah. Totally agree with you. I there's so much pie. And I think that it it just goes back to our thesis we keep talking about. Like, there's a lot of space between a lifestyle business and a $1,000,000,000 business and these domain expertise.

Like, you can build really good businesses that will create intergenerational wealth for you and your investors. And so, fine. I'm happy to play in that pool. So with a couple minutes left, I mean, like, what Yeah. What, what advice would you give to, like, early stage founders?

Right? You see a ton of this stuff. You've been through a number of these cycles. What are 2 1 or 2 kind of good take takeaways that you think, like, entrepreneurs that you see maybe fail, to, like, recognize early?

Kyle York:

Yeah. First of all, I think founder market fit is super, super, super important. I see a lot of founders come to me with their idea or their company, and they have 0 relevancy that they can point back to through their career trajectory to even be doing what they're doing. It's it's mind blowing to me how often this happens. Right?

Like, someone comes to me who built a great app in Martech, and all of a sudden, they wanna, like, disrupt, medicine. You're like, why why and how? Right? So that's number 1. Number 2, I think that focus on, like, brand building and customer adoption really early.

I see way too many companies have no right being stealth It's stealth. Right? Right. And I'm always like, I don't get it. Like, I I get that you might be figuring out your product and your MVP, but you have a vision.

You have a mission. You have a problem solution statement. Like, tell the world about it. Build community. Build fanfare.

Talk to people, get feedback. Again, that marketing approach, that's what drives innovation. That's what drives relevancy, and that's where that's what drives an actual healthy foundation of a business. Right? So I think those are the 2 things that I've been obsessing over more recently.

Todd Gagne:

Well, that's good. Good. Well, I'm gonna be sensitive to your time. I really appreciate this conversation. I think you and I could probably rift for a while.

We probably coulda had a beer and had a really good time. So maybe we'll continue this conversation sometime. But I really appreciate you sharing your insights, and kind of your journey because I think there's a lot of great takeaways for our entrepreneurs, in this. So thank you very much, Kyle. I appreciate it.

Kyle York:

Yeah. I appreciate you having me. Thank you.

Todd Gagne:

Okay.