How to Master M&A and Network Globally: Strategies for Tech Founders with Shawn Flynn by Kazuki Nakayashiki

How to Master M&A and Network Globally: Strategies for Tech Founders with Shawn Flynn

Kazuki Nakayashiki

Dec 19, 2024 6:29 PM

Summary

00:08 - Introduction to Shawn Flynn: Shawn is a seasoned investment banker specializing in M&A and growth capital and is the host of The Silicon Valley Podcast. With a background in founding a successful company in China, he has transitioned to mentoring startups and fostering innovation.
01:33 - Shawn's entrepreneurial journey: He shares his experiences starting multiple companies in China, highlighting his successful Western staffing company that provided teachers for universities before returning to Silicon Valley, where he became involved in angel investing and deal flow agreements.
06:08 - Advice for international entrepreneurs: Shawn emphasizes the importance of cultural understanding, listening, and observing when doing business in a foreign country. He discusses the significance of learning the local culture, language, and networking effectively.
21:44 - Insights into M&A processes: He explains the general processes of mergers and acquisitions, including building a data room, creating marketing materials, identifying suitable buyers, negotiating terms, and going through due diligence.
46:41 - Reasons for mergers and acquisitions: Shawn outlines various motivations for M&A, such as geographic expansion, acquiring technology or talent, and the personal circumstances of founders wanting to exit or transition to new ventures.
58:45 - The impact of AI on M&A: He predicts that AI will significantly change investment banking by automating research, creating marketing materials, conducting due diligence, and streamlining the entire transaction process.
1:29:08 - Networking advice for aspiring professionals: Shawn encourages early career professionals to build their networks, emphasizing that relationships can lead to opportunities. He suggests finding mentors who can offer guidance as they navigate their career paths.

Transcript

Hi, everyone. Welcome back to another episode of Glasp Talk. Today, we are excited to have Shawn Flynn with us. So Shawn is a seasoned investment banker specializing in M&A, growth capital, and secondary transactions as a principal at Global Capital Markets. And he's also the host of The Silicon Valley Podcast, where he has interviewed visionaries such as Jim McKelvey, co-founder of Square, and Melanie Perkins, co-founder of Canva, and on topics

like leadership, scaling businesses, and tech innovation. And with a rich international background, Shawn started his career in Beijing, China, successfully founding, scaling, and exiting a company before bringing his expertise back to Silicon Valley. And beyond banking, Shawn is deeply involved in mentoring startups and fostering innovation and supporting emerging technologies through roles in organizations like the Blockchain Founders Fund, The Mentoring

Club, and Bay Angels. So today, we will dive into Shawn's journey, his insights into the global tech ecosystem, and his vision for the future of startups and investment banking. Thank you for joining us today. Thank you for having me on your show. Thank you. So first of all, you have a very interesting international background. So can you share the story of your journey from founding a company in Beijing to becoming an investment

banker in Silicon Valley? So I'm not sure how much detail you want, but I was in China for almost five years. I was in Costa Rica before that. But in China, I tried a couple of times to start companies. The first ones, and there were several, but I really look at it as three companies that I started when I was there, where the first two were failures and were learning lessons. And then the third company actually did well.

I was able to leave with more money than I went to China, which is very rare for a Westerner to do. And it was successful based on the knowledge and experience I gained from the first two failures. I knew I had to have a local partner. I looked for a niche. And the company basically was a Western staffing company, where we found a niche that the universities wanted to hire foreigners to be the teachers but couldn't provide the work visas.

I had a professor, one of my first professors that had the contacts with universities, I had the contacts with the foreigners. And then we were able to find the businesses that would sponsor work visas and that, or other types of visas or however we wanted those teachers, so that they were able to teach at some of the biggest universities. And then that gradually moved on to provide teachers for summer and winter camps for some publicly traded companies. And then we had all these teachers.

So then it was, okay, what are other avenues that a Westerner might be sought after, such as extras and movies, voiceover work, model shows, the list went on and on, and it expanded. And it was a lot of fun. I have stories that most people do not believe happened, but they did. And, you know, it was a good time, but exited that came back to the US 2013. When I got back to the US, I got involved in the startup ecosystem.

I volunteered at the second oldest angel group in Silicon Valley. And I went from a volunteer to the investment director. Later on, I became the president of that group. And in that journey, that was Bay Angels. Yes. And in that journey, I was brokering deal flow agreements between the Bay Angels and these Chinese groups that were setting up in Silicon Valley. This was before the trade war.

And you had one group with brand new money, and you had another group with long standing connections and relationships. And it was okay, let's put these two together. You want access to the network here in Silicon Valley, and you have capital to deploy in some of these portfolio companies, some of these startups. So let's match everyone together. It's a win-win for both sides. And I was doing that for a little while. While I was doing that, I started getting offers from Chinese groups that were looking to hire a

local person that could understand or knew the culture, could speak the language. From living there five years, I had both. And I got some offers. One of the groups that made an offer, I was with them for a few years after helping companies from Silicon Valley set up in tech parks built in China from the parent company. So I was going back and forth almost every other month. And in that process, the network was expanded.

I started to meet some investment bankers, started to meet a bunch of investors on these trips, and was making intros. And then one of the investment banks said, Shawn, we want to sponsor all your FINRA licenses. I went over to that bank for a short amount of time. And then I switched over to the bank I'm currently at about five years ago. So that was kind of the journey from China starting a company to Silicon Valley, and then from Silicon Valley

to an investment bank with an office in Silicon Valley. So that was a good 10 years journey right there in 60 seconds. And I was curious, because as you mentioned, doing business in China or other countries are really tough and hard for especially international founders. And we are international founders and doing business in the US, but still struggling. Do you have any tips for international people doing business?

Oh, I think it's so challenging doing international business. It's challenging enough just to do business, and then to add a new culture, a new language in the mix. It's so challenging. I give so much respect for international founders when I meet them, because I look at them and go, okay, if you're able to find a company in a different country, not in your native language, you must be so much smarter than the locals.

I mean, really, because if this was in your home country or home language, it'd be so much easier than wherever you are. And so I'm always impressed by foreigners that start companies here in Silicon Valley and that make them successful. Some tips I would offer people out there, and I noticed this so much when I was overseas in China, that a lot of people felt they needed to talk in every situation. No, just listen.

And especially a lot of people that they might have studied the language, but not the culture. A lot of people are getting a lot of trouble doing that. I remember when I was in China, I was at this one dinner. I still cannot believe this. There was this French guy. His Chinese was spectacular. I mean, I think it was HSK5 or is it six, whatever the highest level was. He had studied, majored in it, had all these years of the language, but didn't know the culture.

And when people heard him talk, everyone just assumed his language was at such a high level, he must know the culture as well. But he just made blunder after blunder. I'm not sure, I don't know the Japanese culture, but in China, to show respect, you lower your cup a little bit to that person. You lower it, then they lower it a little bit, then you might lower it some more, then you might put the hand underneath to show that everyone's... You might do that.

This guy was full on, raise the cup higher than everyone at the table, look around, chug it, make sure everyone saw how high his cup was. I'm just looking and going, what is this guy doing? Just stop it. You're embarrassing. You're embarrassing us. Just stop this. And if he hadn't spoke Chinese, people would brush it off and go, okay, he doesn't understand. But because his level was so high, everyone thought he was purposely being rude, purposely being obnoxious.

So the trouble there was his language was at a level that his cultural knowledge did not match. And that's a problem I see sometimes with people that have studied language, but not the culture. They get in more trouble than not if they hadn't known the language and was just sitting there listening, trying to observe the culture. So make sure your levels are at both. So listen more than you talk.

And one of the best things when you're in a new area, just go to a restaurant and look at people. Just look how they interact. Who's talking? When are they talking? How are they gesturing to the waitress? I mean, how many times have you gone to a restaurant here and you'll see the Chinese person hit the table and be like, waitress. And you're like, oh gosh, but if this was China, it was like, who are you and why lie? It's like, oh, it's okay, because that's what everyone does there. But here it's embarrassing. Wait, but...

And I just see troubles when people try to take their culture into a new area. And that messes up with business, that messes up with relations. It's go someplace, listen, learn, and then... start, start acting, start working on things. So that's my advice for people when they they come here or to another country is before doing any anything, just try to observe, try to learn and ask a lot of questions.

Ask a ton of questions, even if you think it's silly. You know, I mean, gosh, I we're just in Malaysia with my mother in law is her first time out of China. And it was hilarious. Just the using a different currency, you know, her like, like, okay, how do I convert this? When do I use this? driving on the other side of the road? Like look at her looking one way as the cars are going the other is like pulling her back.

Oh, no, no, look both ways here. Like cars are going to go that direction in this country, not what you're using. Just all those things. So I mean, I guess that would be my advice is to get meant a mentor that you know, like and trust that's there, you know, meet people that may be from your university that have moved over in advance and try to connect with them or some alumni group or some networking group, build those relationships in advance.

Then when you go there, you already have a small network that you can ask questions to, hey, what were the mistakes you made when you first came here? Hey, I don't know this. I don't know that do you have any advice on getting that apartment or the bank account or whatever? You know, I've done research at home but I know at home internet is not the same as here in real life.

Coach me guide me and then branch off but a lot of listening a lot of learning it. I mean, I think you learn more traveling live in someplace else than anything else you can do in life. And then on top of that building a business in that other country. Oh my gosh, it's you're just exhausted because you're learning so much all day and night. It's incredible. Yeah. Yeah, interesting point. And actually, I have the same story similar story to that and I'm from Japan and you know, one

day my friend came, you know, visited San Francisco from Japan. And in Japan days, kind of looking back now, you know, it's a weird culture that you know, we ask age when we first meet. So, you know, my friend came to the San Francisco and to the event. And I introduced, you know, my friend to, you know, other friends, you know, based in here. And then the first thing was, hey, nice to be here.

What? How old are you? That was his first question. And we were based to two years too fast. And, you know, I mean, yeah, so I understand your culture. Understanding culture is very important. Yeah. I mean, just imagine going to a business meeting and not knowing where to sit and sit in the boss's chair or that. I mean, you can mess things up without even knowing just because you're not aware of the culture.

And gosh, I got too many stories of making dumb mistakes while living overseas. And rolling cups when pouring alcohol is, you know, in the same culture as Japan. So we do it every time. Yeah. It reminds me. And so, yeah. So related to Chinese culture, do you have any tips or advice to expand the network in Chinese people? So what is the best practice to expand Chinese people network? Oh, that is so tough. I mean, it is.

It's challenging, because friendship, I think, is seen a little bit different there. It's a challenging thing to say. It, it, it takes a long time to meet someone and really get to know them. And even some people I know for a while, they keep their connections really close to air close to them. And what I mean by that is, here in Silicon Valley, if you meet someone, one of the first people probably do is go, Whoa, you should meet so and so.

Let me connect you. Oh, let me introduce you on LinkedIn. Let me do an email intro. Oh, I think you would have a great time talking to this person about what you're working on. And it's, it's one of these environments Silicon Valley where really quickly people open up their network or really quickly people close their network, but they'll give you a chance and they'll introduce you to some incredible people.

And you can give you a chance and they'll introduce you to some incredible people to try to help out with what you're what you're working on. I have friends in that I've known in China for years. They've never introduced me to anyone they know. It's, it's, it's not one of those things. It's their connections. They hold them really tight to their chest. They don't open up. Whereas in the US it's it's here's everyone I know, who do you want a warm

intro to let me let me make that intro. So it's very challenging. I think for a Westerner that hasn't grown up who's doesn't have family connections or that to really build those strong, strong ties with people there. And the language and cultural barrier, it's it's a different. It's, I mean, yes, it's a different country, but it's a different world. It's there's so many things that even after I'd lived there five years, I didn't understand.

I would just shake my head at things and just go, gosh, why ever get used to this? And, you know, ultimately, I ultimately I wasn't able to, I mean, there's still so many things there with a hierarchy society and these cultural traditions that even when I go there, I don't quite understand. And I can't really adopt to it with growing up in the West with, you know, Catholic background and all those things.

But you know, I do understand more, I'd say the most people about the friendships and connections, but it's, it's challenging. Like you have to be there a long time before building connections. And I mean, if someone's planning on going there for six months to a year, yeah, you might meet someone you might, you know, have a, you know, some, some get togethers, or maybe, you know, but it's shallow. It's not, it's not that, that like family feeling that you might get other places

in a, in a shorter time, you really got to be there a long time. But then once you're in, you're kind of in. I mean, that's, that's, that's the difference. At least how I kind of experienced. I'm not sure. I mean, I would guess Japan's kind of similar or not. I think it's similar. Yeah, similar to Chinese culture, I'd say. So, yeah, so I stayed in the US for six years. And you know, I got used to like in the secondary cultures, open to

network, introduce other people to, you know, my network. Yeah, but so coming back to Japan, I noticed that so people are not like open to network, or so they don't know the power of network there. So they are closed network, I think. Yeah, I have a Japanese friend here in Silicon Valley that I've known now probably maybe 10 years. And just recently, whenever someone visits, he introduced me, we grab coffee,

we meet him. Oh, I've known this person for 2030 years. But it was only recently after knowing him for so long, that suddenly, it's like I'm in this inner circle. It's, it's kind of a crazy feeling, even though for, you know, eight years now, however long I've always been introducing him to people. It's just right now something happened where he's like, Oh, now Shawn's part of this, our circle that we grew up and went

to school at all. It's, it's kind of a crazy switch. But yeah. And also, you will, you know, as you mentioned, like you were representative in China, Silicon Valley, right? Is that a company or organization you were bridging, you know, China and Silicon Valley, right? It's a nonprofit organization that's been around for years. So I started by I was involved. Gosh, I'm not even sure what year it was at this point.

They were looking for a representative to represent them at an award at the ECI awards. I forget what city was in it that the time of the sheep, perhaps, or maybe it was in Shandong. I forget the city, but they asked if I could represent them. So I flew in. And this was just on a maybe two, three day notice, because the person that was supposed to go on their behalf, fell ill. So they asked me to take her place. So I went there.

It was a great event, accepted the award on their behalf. And through that I got more involved with them. Just from that, that was the catalyst. Then I spent a couple years being fairly involved. But then the trade war happened. And when the trade war happened between us and China, a lot of things stopped or slowed down. I mean, taking companies from Silicon Valley to tech parks in China, I was going every other month to nothing.

The investments from China, I remember there's a lot of companies that we were working with, that lead investor was from China. And then suddenly it was, well, actually, prior to the trade war, there was sanctions imposed on transferring funds. And when that happened, a lot of the money, the investors, it dried up. And a lot of startups in Silicon Valley, when their lead investor wasn't able to deploy capital, the follow on investors

got nervous. And those companies ended up shutting down because of that. And then when the trade war happened, that ultimately stopped pretty much everything between the two countries, if there was anything. In the startup ecosystem, that is. Where was I going with this? I forgot where I was going. The city was Chaohu. Oh, okay. I've been to pretty much every major city on the east coast of China. From Harbin down to Xiong'an, you name it.

If there was a train station, probably I've passed through it or spent the night. When I was there, I would use every opportunity to get on a train, go someplace for work, spend a few extra days, see some sights. So yeah, it's pretty interesting because I'll meet people from China and they'll say the city they're from. I'm like, oh, I've been there. And they'll go, wait, no one's been there. What do you mean you've been there?

Yeah, I see. Then, you know, later you more focus on investment banking. Then now you're working at global capital markets, right? Yes, yes. Could you tell us what do you do as an investment banker? So we focus on a couple of areas, mergers and acquisitions, growth capital and secondaries. So a nice way to look at it for people that are not really sure what those words are in terms of a business. Think of it as two people, husband or girlfriend, boyfriend.

They decide one day, okay, let's get married. Two equals become one. That's a merger. Now, maybe that couple's in the park holding hands and they see a puppy and they go, oh my gosh, I want to take this puppy into my house, make our house bigger. They acquire that puppy, an acquisition. Now that puppy needs to go to the vet to go from this little puppy to this big dog. It needs money for food, shots, everything.

So that money is the growth capital. So all these transactions that happen in life, that's what I work on with businesses. So if a company is looking to acquire another company, raise capital, debt or equity, or possibly go public or all these transactions, that's what we do on a daily basis. That's a really, really simple example. And that's really easy to understand the terms, mergers, acquisitions, growth capital.

And do you have any good example for secondaries? Secondaries, no, I wish. In fact, that little story I just said, I actually had it made into a cartoon. So if you go to my podcast website, the Silicon Valley Podcast, and scroll to the bottom, you'll see the little cartoon of that. For secondaries for your audience, think of it as these unicorn companies stay private for so long. But the early employees, the early investors, they might say, wow, I'm on paper very rich, but in my bank account I have almost no money.

I need to sell some of these shares that I've held on to for seven, eight, nine years. So how do I do that? Well, they'll come to us and then we'll find the buyer for those shares. Or if it's a buyer, we might find a seller of those shares. So we'll broker the transaction. So those are secondaries. When the money doesn't go to the company, that's a primary. It goes to someone that has those shares already.

That's a secondary transaction. And we do that as well. And I recently saw the news that OpenAI raised some money from SoftBank and some employees sold some stocks, shares with SoftBank. I think it's kind of secondary, right? Yeah. So it depends. If the money goes to OpenAI, that's a primary. If it goes to an investor that's looking to sell their shares or an employee, that would be a secondary. There are situations – and we'll leave OpenAI out of this, but we'll just say a company.

There could be an example where an investor that has access to the cap table to invest in around might have a SPV or special purpose vehicle that people could invest in. So the money is going in the SPV and that person is then investing on the cap table, but the person in the SPV has access. So that would be a secondary. It goes to the person who then primarily would invest in a primary transaction. So you can see the kind of chain right there.

And these things can be very simple or they could be complicated. I mean you could have an SPV and an SPV and here are the fee structures and here's a forward transaction and then this or that. It can go from very simple, just this person selling their shares to me, to super complicated where there's all these different structures and this and that and it gets ugly. So it's kind of nice to have an investment banker there to filter it all out and make sure these transactions go smoothly and you can see the paper trail and the right people are involved.

This is just my comments or just what I heard from my friends. But in case of OpenAI, I heard there are so many SPVs, SPVs, SPVs, SPVs. So like a fourth generation, like a fifth generation and that's kind of really complicated and people don't know what's going on. Oh gosh, there's transactions you'll see and there's like seven investment bankers involved. Or this person who says they're direct to the seller or buyer and then it turns out, oh actually that person is not the buyer seller, it's someone else.

And then that person is someone else. And you're right, some of these things get pretty messy where it's an SPV and an SPV and an SPV. And if the paper trail is not there and you don't know what you're doing or I mean it can be ugly. It can really, I mean it's a black hole sometimes. So unless you set those rules of I only invest directly in the cab table or first layer or whatever it is, whatever. I mean you have to know going in, these are my rules, these are my guidelines, yes or no.

And the people that do that, I mean great. The people that don't, well those are the ones you hear the stories about. I think this is my first time to talk to people who are working on M&A. So just curious, what is the general processes of M&A? So how do companies find other companies to buy? And so how long does it take? And after M&A completed, so what is the next phase? In general, yeah. Okay, so there's four or five questions there.

So let's go through each one. So general, yeah. So the general process of a merger acquisition. And for your listeners that are in Silicon Valley, it's surprisingly very similar to raising capital. So if you know of a startup that's raised capital, keep that in the back of your mind as I walk through the process. So the first part of it is to build out the data room. So you'll put all the information in one central location.

The cap table, the org chart, the employee contracts, the IP, the financials. Everything you can think of for the company, you put in one location. Then from that, you build out the marketing material. The marketing material is normally a blind profile where it says enough information about the company to get a potential buyer interested, but not enough so they can identify which company that is. Then you'd also build out the book or confidential information memorandum, which is a more complete document,

which will summarize maybe 80%, 85% of the data room. It should give someone, after they read that, enough knowledge that, yes, I'm going to make an offer, or I'm going to make an offer based on just a few more questions I have that I didn't find the answers here, but I really need to know those answers to move forward. So you create that while that's happening. You're also creating the buyer list. Now, this is where a lot of people are confused because same with going out to raise capital.

You'll go to an event and someone will go, oh, right, I met three investors. This was such a great event. But then when you ask them, you go, tell me about those investors. Well, they're investors. Well, no, no, no, no, no, stop. What size checks do they write? What sectors do they invest in? Are there any parameters such as the company has to be headquartered in Silicon Valley and it has to be a founder with a successful first exit, and this is their second company,

and that they have revenue. What are the parameters for that investor to invest in the startup? And then you'll know if those three angels or VCs you met at that event are a good fit for you Maybe they invest in ag tech only and you're a fintech company. Not a good fit. They're all fintech investors. You're a fintech company. They invest in pre revenue. You're pre revenue.

They invest in headquarters in Silicon Valley that are Stanford graduates. You're headquartered in Silicon Valley. You're all Stanford graduates. When you start matching the criteria for their investment thesis with the company and it all aligns, now you have a good fit. Now those connections make sense for that company. Same with when you're selling a company. You look, okay, our company is making 10 million in revenue, 2 million in EBITDA. It's a fintech company. It's located in North America. All these things.

Alright, this buyer here wants companies that are doing EBITDA between 2 and 8 million, that are based in North America, that are fintech, that it all lines up. The company and this investor and the investor's thesis lines up. Perfect match. So based on the information in the data room, you build out the market material. Based on all that information, you know what investors or buyers you should be targeting because the information there lines up with the information of their

investment thesis. Now it's time to go out to market and contact those buyers. Email, phone calls, face-to-face meetings, whatever you need to get in front of them, that's the next step. From that, many of these buyers are going to say, you know, it's not a fit for these reasons. Great, we know more information on you. Oh, sorry, we're in the middle of acquiring another company. We don't have the bandwidth. Okay.

Oh, we've, for this reason, it's not a, who knows, we're not, we don't have cash right now. They will never say that, but maybe that's a reason or, you know, who knows what it is. But many of these that you think is going to fit, turns out it doesn't. Well, hopefully you've had enough conversations so you end up with a group of companies that, or buyers, financial buyers or strategic buyers or whichever, that will make offers. Because having one offer, you don't have the competition. You have many offers, great, you have competition.

You can pin those against each other, bid up the price. During due diligence, you don't have to worry as much because you can fall back on some of these other offers. I mean, you want multiple offers. But from those offers, maybe before or after, you'll have some management meetings, depending on how the process goes. And from that, you'll pick that one LOI, letter of intent, that you'll move forward with after signing into due diligence. In due diligence, they'll go through everything.

It's actually, before the LOI, they do a lot of due diligence. During, after the LOI, it's more confirmatory due diligence. Are we making sure everything we saw in the sim is true? Are we making sure there's no skeletons, any red flags, anything that would kill this deal? They'll bring in IT experts, legal, financial, environmental studies, who knows what it is. But they'll go through everything to check off all the liability boxes on their side.

And while this is moving forward, I mean, this could be 60 days or 90 days, you're running your company and then hopefully it goes into the definitive documents and then things move forward. So think of it as three phases. You package all the information together, you market all the information, and then you're doing the negotiations and finalizing everything.

And it's just moving down this assembly line that is the process. And people sometimes have problems where they'll have these conversations and those conversations are at an earlier stage or these conversations are at a later stage. To really run an effective process, it really is like an assembly line or moving a ball down a soccer field where it's, okay, we know who we're going to target, we have the market materials. We send out the blind profile this week and next week, have conversations, great.

We get the NDA signed. Now we send out this confidential information memorandum. We follow up with people. We answer any of their questions. We might have management meetings there with a few or wait till after. We might throw an indication of interest right there. Then go into the letter of intent, into due diligence, into closing the deal.

And if you look at all of those steps, and this is where a lot of companies run into problems, they think, oh, I can do all, it's August, I can do all this before the calendar year ends. Or, oh, I wasn't able to go out and raise capital and I have four months of money in the bank, maybe now I'll go and sell the company. But if you listen to all those steps that happen, building out the data room could take a few weeks, depending if you're prepared or not, finding all the documents.

Creating the market materials, you're going to have to do a couple of iterations. That can take a few weeks. You can do the buyer list simultaneously as the market materials because you're taking the information from the data room as well, simultaneously. Then going out to market and have these conversations, maybe that's six to eight weeks right there. The follow-up, answering questions, multiple emails or conversations, calls with them. Then from there, filtering it down to indication of interest and then

possibly, or the indication of interest and then after LOIs. That could be another six to eight weeks, depending on how much time you want to give between, how many conversations you're having. Then going to due diligence. Some may say 45 days, some may say 60. It always gets extended. So say 90 days to be safe. It's six to nine months right there from beginning to end, that whole process. That's realistic. I've worked on deals that have been two years.

I've worked on deals that have been four months. It all depends. Going in, you have an idea of a rough estimate, depending on the time of year, depending on the cleanness of the deal itself. If there's yellow flags, red flags, if there's anything. You have an idea of if it's going to be a smooth process or not, how much demand there's going to be for that company. Realistically, time it out to be six to nine months.

Know that to do a process for six to nine months, you should have a year's worth of cash. An issue right now with a lot of startups in Silicon Valley is they'll have a few months left of cash in the bank and then decide to sell. There's not enough time to do anything. You can't go into due diligence and not be able to pay your employees. There's just not enough time. You have to be thinking of this way in advance.

Then you have to be thinking about, if we do get offers and we need additional runway, will our board support us? Are there outside investors that will support us? Who will get us past any hump to closure if we need? Then fund us enough to close shop if we don't get these offers. Those conversations, which are very difficult, I see a lot of companies not having them, but they need to be had very early. Process itself, those are the steps. Timeline, six to nine months.

Plan that out. I'm not sure what were the other questions asked. Sorry to cut in, but by the way, what's the fastest M1 day happened? I have not been involved, but I know of a person that literally did a deal over a weekend. A company, they weren't going to be able to make their payroll on Monday. The investor decided not to invest and then he came in and made the offer over the weekend. There's no other way. There's a ton of risk.

He just bought certain parts of the company. It was basically, this is an offer. We will take anything because we have no other choice. What offer can you give without closing the business and making sure that you can have the money to make payroll next week when things are due? They had no other option. It was get the deal done or the company closes. They were able to do the deal.

I know of other deals that have taken two weeks to do, but once again, it was the situation of this deal gets done or the company's dead. How do we get it done now? Any offer is a yes and we will not sleep until things are papered. It can be done, but the risk that people are taking on both sides to do that. You just go on story after story of why that's such a bad, bad situation, bad idea, and how many things that can go wrong in situations like that. By the way, in my understanding, you know, I know some couple

you know, big, successful, you know, M&A example, such as like, let's say Instagram, you know, acquired by Facebook at the time, a billion dollars or something. And to me, it seems like sounds like happened at one night, overnight. But do you think it? I don't know. But yeah, I mean, transactions like that. So so let's, let's put that one to the side. Most transactions happen in Silicon Valley around their a round.

And most transactions happen after the company has had a relationship with the acquirer for a year and a half. Right? That's pretty typical. So yeah, they'll make the announcement of Yeah, we were acquired. Great. But the conversations and the relationships had had been building for, you know, over a year, two years, maybe even more where the conversation was, hey, let's start as a partnership. We'd like to license your software.

Hey, we're using it more. Have you thought about, you know, what the future could look like with us together? Oh, you know what? Are you? Are you open to to kind of acquisition conversations to? Hey, you know, we're kind of serious about this. We're willing to make an offer in this range. What are your thoughts? Yes, or no? Hey, you know, here's a, there's so many conversations that happen.

And that, you know, with strategics, they're using the software or, you know, private equity, where they're emailing people years in advance going, hey, you're building a company in the sector area that we like. Let's have quarterly calls and just kind of check out your progress and keep each other up to date. Do you have a an investor email list you can add us to so we can have the monthly updates or quarterly updates? Or let's just block off time on the on the calendar

right now every six months to check in. And I mean, these relationships are, are built over years that you only you only hear about the final thing in the newspaper or your friend saying, yeah, my company is acquired. You don't hear about the, all the meetings, whether it's going golfing, or warriors games, or San Jose Sharks games, or coffee meetings, or you don't hear about, you don't hear about that board member talking to the

founder going, yeah, the company I was at before, that's a strategic fit. I still know people there, let me set up some meetings now just to get to know. So when you're big enough for them to write that check, everyone already knows each other. And you don't hear about any of that stuff, but it's all there. Interesting. Yeah, thank you. Yeah. So, and sorry to cut you off.

But to add to that, and that's the same with raising capital. Right? Most people go, oh, yeah, it's Silicon Valley, just land at the SFO. And then someone writes you a check. But I mean, as yourselves, I'm sure you know that no, these relationships with investors, they're long term relationships, you start having the conversation for next round, that's two years from now, today, and you've already had conversations a year before that for today of, okay, these

are the investors that invest in our sector, in our space. Okay, let me map it out. These are the people that would invest in our B round. These are the people that invest in our A round. Here are the angel groups that might be interested. Now, let me build the relationships with these people today, these people for tomorrow, these people for a few years from now. Let me build all these relationships and have these conversations.

And of course, then magically is, oh, yeah, we got all these checks written to us. But no one knows that you've been having coffee with these angels or these people for a year and a half, two years now, as you're pitching them the idea of, hey, if I build this, would you be interested in taking a look at it? Hey, I've built it. What do I still need to do? I need to hit these metrics. I need these sales for you.

Hey, I'm almost at these sales. Oh, what? You want a meeting now? Great. These are all very long term. It's very rare that people just send a pitch deck and then they check. No, you send a pitch deck, you have a first meeting, a second meeting, third meeting, fourth, fifth, and then, okay, it's been a few months. There's something there after all the checkboxes are checked. Same with M&A. Say it's very similar.

It's a lot longer than people. And that's a benefit of working with investment bankers and that for these M&A transactions. They've built these relationships over years. They're talking to these private equity guys, the strategic M&A departments, that's all they're doing is building these relationships. So when a company comes to them and go, listen, we're ready to get acquired, they go, great.

I have relationships, I can just text this person, call them. I can get a meeting next week. And you're going, oh, gosh, I had no idea who to talk to. I had a few ideas, but maybe these companies or these private equity, but I didn't have the email or phone number. I couldn't text them. I don't know what they're currently looking. There's so many benefits to working with an investment banker for these transactions because of the years of relationship building,

how to talk to them, communicate, positioning that they can bring to the transactions. So, you know, just bringing that up that these transactions you hear, people try to, people are very good at simplifying some things that were very complicated by leaving out almost all the details. Thank you. Yeah, really interesting. And also, QG is curious, like, you know, what is the most main reason of M&A, so merger and acquisitions? Is that because like, you know,

people, founders want to get rich, or, you know, company want to acquire technology or acquire higher, or company go bankrupt? What is the main reason of M&A? Oh, the main reason for merger acquisition, or I think there was a question before about biggest lesson learned. So I'll start with the second question. I mean, the main reason for M&A, well, there's so many reasons why a merger acquisition could take place.

It could be to acquire a company in a different geographic region that you want access to. I mean, going back to what we said earlier about culture, starting a business in a different country where you don't know the culture and the practices, very challenging. Buying a company that's already established themselves there. Yeah, probably an easier way to go in most situations. It's faster growth for many companies instead of organically growing.

Maybe you're growing organically 10-20% a year or acquiring a company, you could have just doubled the size of your company with one transaction. And there's many benefits of synergy and economics of scale and all these things. Maybe you'd mentioned Aquahire, maybe you're looking for that engineer team that no matter how much you advertise, you just can't seem to acquire or attract those engineers.

But this company that has them that you're looking at, they built out a product similar to one that you want to build. So you know these engineers are capable of doing that. So by acquiring them, it could fast track things. Maybe you have a product that's missing a feature, but this company has the patents for that feature and the engineer team and acquiring them, you know, is going to increase your sales 10% next year from $5 billion to whatever $6 billion.

We're doing organically, you have no idea if you could even build it. Who knows? I mean, there's many reasons for mergers and acquisitions. And then from the company side that's being bought, you know, they get some liquidity, maybe they get resources that they needed. I mean, what's very common in Silicon Valley is a founder that says, you know, I've been at this company for eight years, and I'm tired.

I'm looking to do something else with my life. I want to sell this company, take that money. Yes, I know there's probably gonna be a one or two year transition period or maybe longer, but you know, I'm willing to do that. So I have this exit event. So then I can do anything I want the rest of my life or start another company or, you know, that's a very common thing in Silicon Valley. Another common thing for Silicon Valley is, you know, I've grown

this company to maybe series A or series B. And I've realized that I'm not a CEO, I'm a product manager, I love building product, I don't want to be the CEO of a company. But at this point, I think the best thing to do is sell the company, maybe not all of it, a majority share, and let this other group bring in their team to really grow and expand it to take it to the next level or beyond.

And, you know, they'll roll over equity so that then then the second sale or third sale or the upside is bigger than that acquisition, but it's because maybe the CEO has reached their, their capabilities, their skill set. or they're just burnt out, they want to do something else, or maybe there was a sickness in the family. There's many reasons why someone would want to sell their company at some stage, and some of it are planned. Many of them are not planned.

Maybe divorce, sickness, or something like that came into the picture. Who knows? There's a lot of reasons why a transaction takes place. Lessons to learn. I think there's countless lessons. One of the biggest ones is expectations for the exit, and valuations in founders' eyes sometimes are not what the market will give for that company. I was just recently talking to a founder that said, I won't sell for anything less than

$25 million. Great, but realistically your company's worth 10. Realistically if you look at the numbers, maybe there's a strategic out there that might be willing to pay that, but odds are you're going to end up between 8 to 12 million, depending on how it's structured. You're 25. If you're held off on that, you're probably not going to sell it. Realistically you're not probably going to sell this company.

No matter how it's structured or that, because the valuation of what the person had and the market are so far off each other. Maybe there's an outlier, but most likely not in this case. If I told you more of the details, you'd go, okay, yeah. That doesn't have that software out that you see in Silicon Valley. Having expectations early on on the valuation range, having conversations with your wealth advisor and tax strategist for that exit, what it looks like.

Some people go into these transactions. I had one conversation where the founder of the company said, I need this amount of money to live the rest of my life, so I'm planning on working on this for another four or five years. She's at the company about six building now. I just told her, what do you mean another four or five years? You could have sold your company last year for more than what you're talking about.

She's like, what? This is unusual for someone to really undervalue their company. Normally it's the opposite. Normally it's the first one where they overvalue it. She had her expectations. It wasn't aligned with the current valuation. If she had had an appraisal done before with her wealth advisor, the wealth advisor told her what she needed to live off of after, she would already be doing that. She would have already been saved.

If she hadn't had that conversation, she might be at that company for another few years miserable. Talking to a wealth advisor, talking to people in advance of what the amount needs for this exit and then the tax rates and everyone for how could it be structured for it. Different structures of exits have different tax consequences. Talk to those advisors on that. You could talk about that for days. Then talk to your investment banker or whoever you're working with in advance to, okay, this

is the valuation range I'm looking for because of the conversations I had. Are you seeing that the market will justify it? This is the structure I want. I want to only have this long of a transition period. All these things. Have those conversations in advance and be prepared. Then also tell everyone you know, hey, we're starting a process or not everyone you know but close family. We're not going on vacation during these periods.

I can't do this during ... The worst thing is when ... Well, not the worst but it's awful to go, hey, we're about to go into due diligence. Great, I'm leaving for two weeks. Wait, what? We need you for that time. What do you mean you're just going to take off? Well, I promised my wife or husband that we would go on vacation at this time and I can't move it. What? You're delaying everything and time kills all deals.

No. Focus, focus, focus. Get this done. Allocating the time for the transaction and also thinking you can do a transaction without a representative. These transactions, I mean, it's not uncommon to hear one taking five, six, 700 hours from start to finish. Given that, while you're a founder where you're already tapped out on your availability, founders, it's very common for them to work 80, 100 hour weeks and now add in the additional stress

and time commitment of one of these transactions. It's daunting. If you miss milestones, the acquirer is going to notice it and go, oh, you missed these milestones. We're going to have to change our offer. You have to be very prepared going into it physically, mentally, and plan it out of what we are going to accomplish, the timeline, everything, and having an investment banker and a team with you to do that process.

It's very encouraged, I would say. Then mentally prepare in advance for what life's going to be like after the transaction. Most people, six months after a transaction, regret doing it because it went from this business where they spent every moment while they're awake, nights and weekends, to what do I do now as not the CEO, not the boss. Maybe they're an advisor. Maybe they're still working the company, but now they're reporting to somebody.

First time reporting to someone other than maybe a board in years. They're not accustomed to it. It just doesn't feel right for them. There's a lot of mental wellness issues, I would say, with the whole transactions with emotionals ups and downs and then after the transition period, which people are not prepared for going into. Being mentally prepared is a big thing going into these. There's so many lessons and takeaways to really maximize the value of a transaction.

Getting the right people involved early will only help that. Having early conversations, knowing what the exit goal is to build the company in that direction, knowing what all the steps in the process are so there's not going to be those surprises and cleaning up the company well in advance so that at any time, if you need to go to market, you can. You're always preparing. That's a lesson there. You're always preparing for the exit.

If you never do the exit, great. You're just really running a very well-processed business that that could be. You're checking your metrics. You're analyzing the data that's coming in. You're running the business based on feedback and you're moving forward. That's an efficient business. Now, if you sell it, great. If you don't, you've just got a good business and thinking of it that way, that's a great way to look at it, I'd say.

Yeah, thank you. Stu, after this really heavy process, preparation, and then I read the article, Harvard Business Review, that according to that, about 70% to 90% of MA fails. First of all, why is that so? Is that true? Why is that so? Is that another problem? It fails and it doesn't fail. It depends what the reason for the transaction was. For example, maybe you hire or buy a company for their engineer team and three months in

half the engineers quit. Well, yeah, that would be a fail, but why did they quit? Was the comp package or employee package correct to encourage them to stay? Was the work environment good? Was the 100-day transition period well thought out and planned, or did they just do the transaction then forgot about everyone? I'm curious when I hear a lot of these companies when they say, yeah, the business failed.

Did it really, or did they just not after the transaction forget about it? Going back to that, if that high percentage did fail, there wouldn't be all these transactions. Maybe it didn't get 100% of the return they were planning, but if it got 70% or 80% of the return, and it bumped up the multiple of everything, so maybe, for example, it's very common in private equity to do roll-ups, so you'll have a plan.

platform company, you'll buy a bunch of smaller companies, attach them, and then bundle the whole thing together, and then a few years later, sell it off. And these smaller companies, let's just do the math, say they trade at four times EBITDA. But when all these small little four times EBITDA companies, EBITDA is earned for interest, tax, depreciation, amortization. So it's a number used in very common interests,

transactions, and you'll hear people say multiples of them, like these companies trade at this size. Say they're doing two million EBITDA, all these, in this sector, they'll trade for four or six times EBITDA. But maybe if they're doing 10 million EBITDA, maybe they trade for 10 times EBITDA in that sector. Who knows? But, you know, all these private equity groups and that, family offices, they're just bundling up all these smaller companies together

that are trading at three or four times EBITDA, and then after a few years, package them, and then selling them for 10 times EBITDA. And they make that arbitrage. Now, maybe some of those acquisitions didn't go as efficiently as possible. Maybe this one, we thought we were gonna get this much EBITDA, and these resources would be added, and instead only 70% return or whatever from our math. But once it's all bundled up,

that big exit should be so massive that it counteracts all these little potential failures or maybe they all turned out better than expected. Who knows? So, I mean, I'm really curious about when they say that, if they're looking at the whole picture or just it wasn't 100% of what they wanted and they only got 70 or 80% of what they wanted, because that 70 or 80% in the larger picture could still turn out to be a massive win.

Yeah. So, yeah, I just kind of question, because really going back to what I said earlier, if mergers and access didn't make sense, they wouldn't be so sought after. Yeah. That makes sense, yeah. And also, another point I was curious was, nowadays AI, people use AI for anything in business, from business to consumer use case. And how do you think AI will impact on MA and the process? So, I wrote an article on LinkedIn back in March.

My thoughts of how AI is gonna impact investment banking, the process to raise growth capital. And it can go to the same for selling a business as well. I think AI is gonna impact the whole process. The first groups that are gonna get impacted are the research teams at investment banks, the ones that are sitting there doing Excel, creating the confidential information memorandums, the teasers, creating the buyers or investor list,

doing the outreach. I think most of that can be automated by AI. I mean, really, think about it. All this information goes into a data room. And then from that, we pull information to create market materials. Why can't AI do that? Okay, based on the market materials, we're gonna match this company with the thesis of these investors. Why can't AI do that? All right. So, now, we outreach to the investors, the whole funnel process of,

the whole funnel process of moving this down this lane. Why can't AI keep track of everything? Why can't AI customize the emails based on who you're talking to? Why can't AI follow up with edited emails? Even due diligence. Look at due diligence, how manual that is. Why? Why can't AI go through the thousands of legal documents to pull out any unusual things or flag things to go, okay, pay attention to this. Why can't AI do the IT due diligence

or cybersecurity due diligence or financial due diligence and then pull out the red flags or yellow flags or hear questions you should ask? And there's a lot of companies out there that are seed stage, early stage, that are solving different parts of the process. There's one company, and I wrote about them in that article of Vilify. You can use them for IP due diligence, right? And there's another company I just talked to you,

I think it's Finoscope. Not sure. Finds Finscope? I think that's it. That you can use them for financial due diligence. You upload the three years of financials, it spits back information of, okay, here are the margins for the industry. Here are some questions. You should notice the revenue decrease or the quick ratio or whatever it is. It just sends out a list of questions that as an investment banker or as an investor

or as a owner of a business, you should focus on that the financials brought up that AI picked out. So there's a lot of other companies out there as well that are developing these, but we just don't hear about them yet because they're so early. They're still building out their beta. They're still getting their first customers. But I really think in the next, who knows, two years, two to five years, that if you're not using AI in your investment bank,

you're gonna be losing market share to the companies that are because they're gonna be able to do things quicker. They're gonna be able to do things more cost efficient. They're gonna be able to come up with some things that are out of their existing networks that they didn't maybe think of, but the AI maybe came up with once they asked it the right questions. So yeah, I see it changing the landscape and shifting market share to groups

that will adopt the technology. That's kind of how I see things moving forward. Now, where that plays out, who knows, but I can't, I mean, I really can't think of a scenario where doing it the more traditional, slower, manual way will put you in a competitive advantage to someone that's using AI with experience, with the knowledge, with resources as well. Yeah, totally, it makes sense. And I think it's same for developers, software engineers.

And I was talking with my friend, software engineer, and when we hire software engineers, then sometimes people don't want them to use AI to write code, but we had an opposite opinion that we wanna work with developers who can leverage the AI the most so that we can work productively and also produce more things and work on more things. And yeah, I think I resonate with that part. Yeah, I mean, how many times have you probably seen code,

the AMA that you went, oh, I didn't think of it doing that way. Oh, I kinda like that. Okay, that makes sense. And it's saving you a ton of time to use your brain and your resources for other things, for the next steps. And I mean, I really see with AI being adopted by investment banks, the role of the investment banker change into more of almost a Sherpa, a Sherpa guide. So think of that person that takes the tourist

to the top of the Himalayas, the top of the mountains, where if that guide's not there, you might fall down, you might get lost, but that guide is bringing you. Right now, currently with investment bankers, they do that for these processes, but I really think in the future, it's really gonna be a bigger part of their role and their time. It's not gonna be spent so much on emails and checking this and Excel,

and that is gonna be more building that relationship, walking the client through the process. Yeah, totally agree with that. And sorry, switch to move on to the topic of podcast, since you have a wonderful podcast, the Silicon Valley podcast, and we wonder what inspired you. I know you answered many places, but what inspired you to start the Silicon Valley podcast and how has it evolved over time? Because you interviewed very great,

successful people there. Oh, I got some very good ones lined up for next year. So actually, I mean, I'm gonna start again. I kind of stopped it, I got a little lazy, but I'm gonna start doing live recordings again. So next year, it'd be great for you guys, if you'd like to attend any of them in Silicon Valley. I got some really good guests lined up. I won't say names, but I do have a billionaire lined up that his career is spectacular.

The date hasn't been confirmed, but it's probably gonna be sometime in February. No, no, not that big, not, not. Well, I mean, this guy competed against him for a little while and that, but he, I mean, he's still a billionaire, but you know, not, not, what's Elon? Like 300 billion now, something, something. It's just ridiculous, but okay. But the podcast itself. It's kind of funny, so when I was back helping companies set up operations over in China and

Chinese companies and other companies from other countries set up operations in Silicon Valley, I was having the same conversations over and over again. Here's an IP lawyer, here's a commercial real estate for a lease, here's a professional employment or outsourced employee employee company, or I was just over and over again. So I found out Moundview had a public access TV station. I went, oh my gosh, I could just record myself interviewing these experts.

And then anytime I meet a company, I could just go, oh yeah, look at this episode or that episode. And if you'd like a warm intro, I'll be more than happy after it. And it'd save everyone a ton of time. And through that, I got connected to a podcast network. I had a six month contract with them. I was there for the six months and the pandemic happened. And then I decided, yeah, let's just branch off and keep the podcast going. And I rebranded it to the Silicon Valley podcast.

And I've been doing it since then. I mean, I did take a few months off during the pandemic, but for the most part, up until most recently, it's been almost every week where we released an episode. We're at 240 plus episodes. In that time, I've gotten to talk with the person that brought PayPal to Asia. I got to talk to the co-founder of Intel Capital. I mean, the list goes on and on for the people I've gotten to sit down with, have conversations.

I've interviewed two consulate generals from Israel. I've interviewed the head of technology for Singapore, who is the former prime minister's son. I mean, it's incredible the conversations I've been able to have because of the podcast. And it's a ton of fun. It's a ton of fun. And I really enjoy it. But how did you ask them to get into the podcast? Did you call the email or is that a friend's intro? So the TV show when I first did that, that was challenging.

Everyone there was a connection of mine or I was asking people, please make an intro, please make an intro. After I did a good number of those episodes, some of the past guests started making intros to their contacts to be on the show. And then when I moved to the podcast station, they had the first guest lined up for me. And when your first guest is Mellie Perkins, it's pretty easy to get the founder of Canva, it's pretty easy to start getting others.

But the one person that really made a difference, so Alan Tian. Alan Tian is the guy that brought PayPal to Asia. And I met him because I was on a panel in China, the big data conference, and we were on the same delegation. So I got to know him for, you know, not sure, was it five days or a week or something like that, that we were hanging out together. And we became buddies. And when I told him I was doing the Silicon Valley podcast, I called him up, and he was going to be guest, you know, four or five.

And I said, Hey, Alan, it'd be great to have you on the podcast. You know, I really respect everything you've accomplished and think you'd be a great fit. And he's like, Oh, do you need any more guests? I was like, Well, actually, I do. And in the next two hours, I had a phone call with the founder of Rotten Tomatoes, that that website, he was on, you know, top 50 per traffic website globally, he was on my podcast, I had a warm intro to the current at that time, CEO of Upwork, I had a warm

intro to Point, I interviewed that CEO, they had just raised, I think it was 230 million to date at that point. I had he opened up his Rolodex for me. He made all these intros to these pretty seasoned CEOs or people that were investors or exit just, and all of them just responded, Oh, yeah, you're an intro from Alan, Alan's a buddy of mine, how can I help? And because of Alan's intros, next thing I know, anyone I talked to, oh, who's been on your podcast, and I just

sit down and name Oh, yeah, Patrick Lee founder, Rotten Tomatoes. Oh, this person, this person, Oh, okay, I'll be on it. And it just got easier. Yeah, it just got easier. Because the past guests, I got to know them, they would introduce me to their contacts. And honestly, after about episode 30, none of my guests, they've all been warm intros, either even been warm intros from a PR company, chief marketing officer or a past guest.

Like I really and even right now, I'll get one or two people in my inbox every day. Oh, the CEO of this big companies is going to release a book, would you like to interview him? This person was employee 100 at this company or employee 10 or I mean, I got to interview the first salesperson at Salesforce that took it from zero revenue to a when he left, they were at I think it was 2 billion. I just his story of it was crazy. Listen to that episode.

So all these people have more or less been warm intros from past guests that I got to know from the show that, you know, we just built a relationship and they decided they were comfortable opening up their network and introducing me people that they that they knew. And so it's been spectacular. Really amazing. Yeah, impressive. But so yeah. Do you have any typical question or like something you want to ask? So always for the guest podcast guest? That's a good one.

All the podcast guest I, I kind of am a little selfish in the sense that I look at it as this is my opportunity to ask this person any question I want. And so I use it as a learning experience. So I'll go into a podcast going, okay, this person is an expert in this area, what have I always wanted to learn? And in fact, some of my guests, I'll line them up, because there's a topic that they're an expert on that I'm looking to learn more about. There's a guest coming up that, you know, made his fortune in the solar and clean energy space.

It's an area that I want to learn more about. So when I saw the, the email from his PR company, you know, this person, I looked at him, I went, okay, this is a topic that I want to learn more about. I'll do research for the interview. But I'll get to talk to an industry expert for an hour. And I can ask them anything I want. Granted, I get my questions for the most part approved in advance. But I tailor those questions for questions I want answers for.

So I really use it as an opportunity to have a conversation with someone that outside the podcast, I probably wouldn't ever be able to talk to and gain the insight that I can't even imagine how much some people would pay to have an hour of this person's time. And I'm getting that. So I mean, those, those, there's not one thing I want to ask my guest, it's okay, what can I ask them to get the most out of this? Selfishly, but at the same time, I know that my audience will gain a lot as

well. Because ultimately, this podcast, it's creating a reference library for anyone in the world to access the knowledge and resources that are here in Silicon Valley. I mean, ultimately, that's what it is. And the knowledge and resources here are not like any place else in the world. I've had the opportunity to travel, I've had the opportunity to live overseas. And you don't get an area any place in the world where you go to a Starbucks coffee place and in line, there's

a professor from Stanford or Berkeley that is world renowned for this research standing next to someone that sold three companies standing next to someone that's took a company public, or a best selling author in this subject, or just the people you you meet here. It's crazy. And to be able to record their knowledge for an hour and then share that with people anywhere in the world, it's it's incredible. Oh, sorry. Yeah.

And it's I think it's us interviewing and learning from you. And yeah, thank you so much. Well, for everyone out there, listen to my podcast, you'll learn more there. But do you have any episode that you know, like, that doesn't play much, the view itself doesn't. But hi, but you it's your favorite episode of you know, oh, it's was this up more views? Good question. There's, there's a lot of my episodes after after they get recorded I go oh my gosh that was that was a quote that I'll

never forget and I mean I remember Raz from what was his it was the there were a series B company at this time Flow Water I interviewed him and I mean there's so many other memories but this is one that really stuck out to me was you know the end of the interview I was like hey what are you gonna do this weekend he goes work I was like all the whole weekend you're not gonna take some time off he goes Shawn I don't think you understand like I've basically given up

my family my friends everything for this company like I've been at this for four or five years now I don't have anything else like this is it and when he would say that I was like wow that's impactful like the sacrifices that this person's made for his company are incredible and I had similar those moments with many of the other guests where they talked about you know mentally breaking down or you know Elsna I remember her she had like 200 meetings with VCs before she got the

one yes and it was for a four million dollar check and you know you have all these moments in these interviews where you're just shaking your head you're like that is crazy and you know did that really happen and you know you start really you know just thinking about it but I guess I guess one thing that stands out amongst everything is after you interview these guests you start kind of picking out some traits that the most successful people have and you could

really I mean listen to the guests Jim McKelvey Avra Miller the these people that either are billionaires or managed billions of dollars or had these just incredible careers and you realize a couple of things very common one and actually who was it the CEO and founder of sale point he had took it from zero to seven billion then went private and they're gonna take it publicly again but I told him at the end of his episode I was like okay everyone let's listen this

episode if you can identify the one thing that you know he does that similar with the other you know most successful guests you'll get a prize and he asked me after he's like what is I'm like well I'm not sure if you realized it but throughout the whole interview you're using my name he's like what he's like yeah you'd say stuff like Shawn good question Shawn this Shawn that and you notice like all the most successful CEOs they're not saying you or hey it was

they instantly tried to build rapport with who they're talking to where it's to the point where I would be in these conversations thinking god this guy is such a nice person how can I help this person and then I was thinking like wait how can I help this person this person has all the resources in the world and I'm trying to help them god is so weird but you know you just talk to them and it almost instantly they're able to build a rapport they're able to build a

relationship with you so that's that's one thing that's huge another is they're always asking questions I mean these are the people before the episode hey what knobs are you turning hey is my you know what mics do you use what how long you do they're asking questions they're learning the whole time other things I noticed is the most successful whenever something good happened it was you know we did this whenever something bad happened it was I made this mistake you

know who they held the responsibility with you know they had ownership I mean you just after after enough episodes you really and another got another thing that I mean this was this was here's a story for everyone and so when I interviewed Jim McKelvey co-founder square at the beginning I couldn't get the microphone to work with zoom and I had to restart my computer and I'm sweating you know I'm like oh my gosh I'm so sorry I'm typing into the chat

I'm like I don't know what's going on with my microphone and he just responds nonchalantly Shawn I blocked out this hour do what you gotta do it's not a big deal I was like oh and in the interview he talked about listen you can only rise up to the level of problems that you're able to handle if if you're you know stressing out about a microphone volume that you're capped right here I mean as your business grows your problems are only gonna get bigger and bigger you

know if it's a $10,000 problem and you're having trouble that's that's your level that's where you're capped at you want to be those people that have billion-dollar problems and you're still able to handle them because that's the capacity you're at now so you're only able to rise it to the point where the problems overtake you I was like oh that's good like that that you know so there's there's all those things I don't know maybe one day I'll create an e-book

of you know lessons learned from hundreds of interviews in Silicon Valley key takeaways but those are some of the the big things I would say yeah thank you yeah I was yeah yeah create a book or something yeah and so do you have anyone so you want to interview on your podcast but got rejected or I haven't reached out yet at this point no to be honest I honestly after like I said the 30th episode I haven't done any outreach it's all been warm intros incoming yeah

and I mean people have told me I should reach out but at the same time the queue is pretty long I got I got a pretty good list of future people to interview that I'm really excited for yeah there's there's no one in particular that I that I've gone wow this would be an amazing interview and they say no it's either oh I got this inbox full of people or hey this person would be interested in someone in my LinkedIn is second-degree connections could you make

a warm intro for the podcast and if it's a warm intro and you know how Silicon Valley is people don't say no to warm intro especially if it's some from someone they know like and trust make sense yeah and so and also I'm curious about your future vision so I know you investment banker and doing really great job and also you know your podcast is really amazing and what's what's next for you what's it let's say current focus or next or you know future vision

there's a lot of things that I'm currently working on last year I held a worked with a group to hold an amazing event called create the future we had a thousand plus attendees we had Rich Lyons the Dean of UC Berkeley as the keynote speaker we're starting to have initial conversations about doing another event this year but even bigger so that's one thing working on I'm working on important prefab homes from China with homes for the homeless and a

home Tunity that's something I'm working on so I'm working on a couple of little projects for the investment bank itself there's a pretty good there's some pretty good companies in the pipeline that I've been talking to this last year that I think next year they will go out to do a transaction that I'm very excited to work with those would be depend on which ones decide next year is year those could be very entertaining very fun and a great learning experience

so there's a lot of things basically I just want to kind of take what I'm doing right now and move up everything up one level or two levels you know more challenging bigger expand so yeah I'm there's a lot of things and I'm pretty excited for next year and so you already shared a lot of advice and insights with us but you know since our audience are like aspiring founders and and writers and then sometimes like a student product managers do you have

some advice to those people young professionals aiming to make a mark in the tech or you know investment world I would say as early as possible start building out your network and people are hesitant they're they're scared oh why would this person want to talk to me I'm a university student what can I offer well in reality you have a ton to offer you know the latest technology you're playing around with it you're you're learning about your you and your

friends are talking about the next things you want to build there's a lot of people that are pretty senior that want the knowledge that you have so don't underestimate your your capabilities of getting meetings with some of these people and then you know build out that network and build it Start out with people where you want to go, two steps above where you want to go, three steps above. Try to find a mentor that has that successful career that can give you some guidance on

how to get where they are, but have that mentor where it's not 20 steps from you. Have that mentor that's two or three steps from you, and then another that's 10 steps from you. Have different mentors for different stages of this path that you want to go to. Don't worry about if you pivot or change, but keep those relationships. Really follow up with people, block stuff off on the calendar months in advance, throw

little coffee gatherings or events where you can invite them to. Have a newsletter where you can update people on what you're working on. Try to stay top of mind with the network that you build out, and don't be scared to build this network now. So many things happen because of relationships, whether it's getting a job, whether it's getting funding, whether it's getting that co-founder, whether it's getting employees, whether it's

getting that meeting with a potential customer, who knows? Building relationships out early is what I wish I had done more. When I came back from China, I didn't have LinkedIn, I didn't use social media when I was there. I thought I was at such a disadvantage to people that had been using those tools for years that had built out a Silicon Valley network. And I just looked at it going, gosh, I really need to play catch up with all these people.

But if you're starting now, if you're starting while you're still in school or high school even, gosh, I mean, high school, if you're in the Bay Area, I remember this because I thought it was hilarious. I was asked to give a talk to a group of high schoolers in Mountain View. And at the very end, they said, how do I get an internship in tech? And I was like, okay, well, quick question. Who here has a parent that works at Microsoft?

And two hands went up. Okay, who here has a parent that works at Apple? One hand went up. Who here? And I just started listing all these companies. I went, okay, so guess what? Someone here has a parent at a company you'd like to intern at. So right now, there's your network. And people are like, oh, I never thought of that, I had no idea. I sat down with, I remember a founder from MIT and Stanford. Well, we have no access to angel investors.

Like really, where'd you go to college? I went to Stanford. How about you? I went to MIT. Are there MIT and Stanford alumni angel groups? Yes. Have you reached out to them? Well, I didn't even think of that. Really? There's so many of these built-out networks that are already existing that people are part of, but they just don't think about it. So they don't realize all the resources they currently have. But yeah, sit back, think about those resources, and then start executing on those resources

and taking advantage of them. Yeah. Yeah. Makes sense. And yeah, thank you for the advice. And before the last question, I was curious, you mentioned about the mentor, two-step-ahead mentor every time. Do you have mentors in your life? Did you have? I've always looked for mentors. I mean, currently I would say Mark, who's the founder of Global Capital, I would put him in the mentor class. Also Maya Toosing. Maya used to manage $200 billion at BlackRock.

She's a mentor of mine. I have a couple of mentors that I go to to kind of figure out either current problems or direction I want to go and have them give me feedback on their thoughts from their experience. They're all at different stages of their career. So it's great to get different insights from them. So no, I mean, I have, I'm a mentor to some, and I'm also a mentee to others. Let's say when you talk to several mentors and they sometimes give you different opinions,

right? Sometimes that just happens. And how would you handle this? I mean, I just kind of look at it as, okay, they're giving me advice based on their experience. So okay, looking through their eyes, what is their experience? This is where they grew up. This is where they work. This is their interaction. This is their, who knows, marital status with kids. This is where all these things you think, okay, if I'm seeing it from their eyes, what's

different than this other person who gave different advice? What was their experience that led to that advice? Okay, so I have that person experience that led to the advice. I have the other person experience that led to their advice. Now let's talk about my experience, my background, who I am, and take what fits me the best between these two. And that's probably the most suitable direction for me to go in.

This person maybe thinks more like me than that person. This person has similar ambitions as I was, that person to, okay, so their advice won't match up as good as this person's advice in this situation for this problem for this direction. So I mean, I try to, and I try to do this also when I'm working on deals in negotiations where I look at the conversation and as, okay, I could see this from my eyes.

I could see it from the person who's sitting across from me and I could sit, look at it from a third person who's looking at the conversation. And if I can see this conversation from all those different points of view, I have such a better idea of what's going on than if I'm just looking at it through my eyes or just looking at it through that person who's giving me advice or who's negotiating versus this

other person who's looking at these two people have this conversation. If you take all those points of view and then formulate your thought, your opinion of what's going on, you're in a lot stronger position. And I mean, if there's conflict in advice, just try to think of it more from, okay, different points of view, where is this information coming from? How far in the future is this advice going? If I do take this advice, what is the likelihood of this outcome versus the other?

And who knows, maybe at that point you have to go to some person who's not currently your mentor and go, hey, I need an additional opinion here, thought based on this information, or maybe it's time to sit down with ChatGPT and ask questions or, you know, who knows, but looking at it from different people's points of view and insight, or, you know, it puts you in a stronger position in most situations.

Yeah. Thank you. Thank you. Yeah. Thank you for the great advice too. And yeah. So, and this is the last question and thank you for answering, you know, almost, it's almost two hours, but yeah, thank you. And so since, you know, Glasp is a platform where people can share what they're reading, learning, and we see it as the digital legacy for future generations. And then we want to ask you this question. So what legacy or impact do you want to leave behind for future generations?

Good question. So, I mean, ultimately I just, I just kind of want everyone at the very end to go, hey, you know, knowing Shawn made my life a little bit better. Like that's, that's literally all I really want is just the very end for everyone, everyone that met me that knew me just go, hey, you know what? My life was better because I knew Shawn. That's my big win. Now, if you really want like that aspirational entrepreneur, it would be, you know, what

he did move GDPs of countries. Like that would be like the big picture of, wow, either his podcast or his investment banking or transactions or something I build later, move the economic landscape of a country like, or a reason that would be, you know, moonshot over here. But really, if I just get everyone at my funeral going, yeah, he was a good guy. I think I'd be pretty happy with that. Thank you. Yeah.

That's a beautiful. Yeah. I'm sorry. Thank you so much. And yeah. Thank you so much for joining today. And we learned a lot from you and we need to give it back to you in the future. You know, I would be glad to. I really enjoyed this conversation and I know if you, if you, if I have the opportunity to be back on the show, I'd, I'd greatly honor it. Thank you so much.

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How to Master M&A and Network Globally: Strategies for Tech Founders with Shawn Flynn

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