Kathryn O’Day With Atlanta Ventures

Intro: [00:00:04] Welcome back to the start of Showdown podcast where we discuss pitching, funding and scaling startups. Join us as we interview winners, mentors and judges of the monthly $120,000 pitch competition powered by Panoramic Ventures. We also discuss the latest updates in software Web3, Healthcare, Tech, FinTech, and more. Now sit tight as we interview this week’s guest and their journey through entrepreneurship.

Lee Kantor: [00:00:38] Lee Kantor here another episode of Startup Showdown podcast, and this is going to be a good one. But before we get started, it’s important to recognize our sponsor Panoramic Ventures. Without them, we couldn’t be sharing these important stories. Today on Startup Showdown, we have Catherine O’Dea with Atlanta Ventures. Welcome, Katherine.

Kathryn O’Day: [00:00:57] Lee. Thanks so much for having me. It’s great to be here.

Lee Kantor: [00:01:00] Well, I’m excited to be talking to you. For those who aren’t familiar, can you share a little bit about Atlanta Ventures and how you’re serving folks?

Kathryn O’Day: [00:01:06] Absolutely. At Atlanta Ventures, we empower entrepreneurs to start, grow and learn. We found companies out of our venture studio. We do early stage investment in tech subscription companies, and then we are passionate about paying it forward. So we do tons of events, blogs, podcasts, anything to help entrepreneurs grow amazing businesses.

Lee Kantor: [00:01:33] Now what is your back story? How did you get involved in this line of work?

Kathryn O’Day: [00:01:37] Yep. So I am a Spanish major who liberal arts degree who found her way into tech.

Lee Kantor: [00:01:45] So it was just a logical, logical path that other Spanish majors go through. Right.

Kathryn O’Day: [00:01:51] Exactly. Exactly. I stumbled into into the Atlanta tech scene a decade and a half ago, and the company that I joined was Pardot, which was an amazing story here in Atlanta, and it was acquired by Salesforce. And then I went on to be a CEO at another tech company acquired by Splunk. And and then I, I turn I guess they say turn to the dark side to join venture. But but throughout all of that, I had worked closely with David coming to founded Atlanta Ventures and his passion aligned with my passion, which is helping entrepreneurs. And so that’s how I ended up at Atlanta Ventures.

Lee Kantor: [00:02:37] Now you use the word dark side, and I know you were kidding around, but from a lot of startup founders. Listen to this. And can you give some insight into since you’ve been on both sides of the desk there, can you give some insights into maybe the mindset of a VC and how, you know, what you would have maybe done differently if you would have known that as you were an entrepreneur and startup founder? Not maybe not a founder, but at least that the earliest stages of a startup, you know, kind of give some empathetic perspective from the founders standpoint of of what a VC is looking for and and really kind of red flags, yellow flags and green lights when it comes to their pitch.

Kathryn O’Day: [00:03:24] Sure. So what VCs? Vcs have bosses. They have investors that they need to show returns to. And so VCs want to invest in something that’s going to show big returns. And the thing I think what sometimes people don’t understand is that there’s amazing companies of all shapes and sizes, but there’s only a small subset that is that hits the qualifications for VC investment. And what VCs look for is they look for really big markets, they look for really big opportunities. So people build amazing businesses in $10 million businesses or $15 million businesses, and those are amazing, but they don’t always have the scale that VCs are looking for. So I think the biggest learning from being on this side of the table is really to think about the market and the idea and how big the market is going to be. And also that competition isn’t scary. Competition validates that. It’s a great idea. And there’s a lot of people there’s a lot of room for winners in that space.

Lee Kantor: [00:04:40] Yeah, I think that kind of the managing of the expectations is important in this, that it forces are looking for kind of home runs or grand slams and your thing might be a great lifestyle business. It might be a great small midsize business, but it may not be appropriate for a VC. So don’t take it personally. It’s, you know, it, you know, just kind of be what you are rather than getting frustrated by the process or feeling like, you know, it’s, you know, they don’t get me or they don’t understand.

Kathryn O’Day: [00:05:12] Absolutely. That’s exactly it.

Lee Kantor: [00:05:14] So now when you are working with an entrepreneur, can you share a little bit about how I know you helped them by giving them funds? A lot of times. But really, I would think the more important aspect of the partnership with the VC is kind of the connections and the help to make their business the best it can be. Can you share a little bit about how you help an entrepreneur kind of bring out the most value from their startup?

Kathryn O’Day: [00:05:43] Yes, we like to ask a lot of questions. We think that. So first of all, every entrepreneur is different and we want to play to their strengths and we want them to be their best self. So we want to kind of there’s not a playbook that we use for everybody. It’s what’s right for based on this entrepreneur’s personality and their goals. So that’s the framework that we look at our anybody that we’re trying to help. And then what we’ve found also is it doesn’t help to tell people like people don’t want to be told, you know, so if people ask a question, we’ll always answer it honestly. And then we like to ask a lot of questions to help people think through things and make sure they see all sides of the problem or they are looking at all avenues for that. So we find it’s really every every investor is going to have good connections. Most investors have lots of experience themselves at Atlanta Ventures. We are all we all have a startup background. So we come from deep startup experience. We’re not the quote unquote spreadsheet jockeys, but the so that’s the the lens from which we look at things and how we try to help entrepreneurs.

Lee Kantor: [00:07:07] Now, when an entrepreneur is kind of going on this adventure, one of the most kind of foundational things that they have to do is to kind of pick a market and when they get started, right? So how do you help them hone in on maybe that ideal customer or that market that is ripe for a solution that they might be working on?

Kathryn O’Day: [00:07:32] We like to look at markets in terms of what is going to be really big a multibillion dollar market in the next 3 to 5 years. Some of those markets are not big markets yet, but they will be. An example of that is the creator economy. It’s getting bigger and bigger and bigger, but it’s still going to get even bigger. So what are tools that freelancers, people working remotely, people doing solo entrepreneurship? What are what does that ecosystem look like in 3 to 5 years? That’s an example of how we would think about a market. The other piece, of course, is founder market fit. So what things are is a founder passionate about because they’re going to be doing this business for the next decade of their life. So we want it to be interesting and exciting for them every day. And then the other piece is, once you identify a market to how do you find the authentic demand within the market? And we talk a lot about authentic demand. And that’s where people are pulling you. Customers are pulling you. They will pay you before you’ve built the product. They will pay you even when there’s a lot of bugs in your product. And so that’s the other piece that we’re always looking for is we think there’s a big market. What’s the right slice to start with in this market where the pain is most acute?

Lee Kantor: [00:09:09] But can we just kind of pause on that one for a second? When you’re talking about authentic demand and you’re using the words pay you. So you have to kind of discern between, oh, a lot of people are following me or liking me where there’s no skin in the game, where they’re just saying, Yeah, thumbs up. You’re I want that. And the difference between I pay for that. So it’s better to have people paying you, obviously, than just liking you. So is that kind of one of your signals that maybe you’re on to something when they are more more apt to pay rather than just, you know, just like or just say, yeah, that sounds good. When you get it built, then I’ll buy it.

Kathryn O’Day: [00:09:54] Exactly. We recommend a book called The Mom Test. And the idea behind the mom test is that. If you ask for feedback on your idea, everyone is going to tell you they like your idea. Everybody like your mom is going to say, Oh, that’s wonderful, honey. But what you really want to do is ask questions about people’s pain and what problems they have, and then see if it’s painful enough that they would pay you money to fix the pain. So one of the key criteria that we look at is do you have unaffiliated paying customers that love your product? One of the mistakes that we see people make is they have such optimism and belief and vision, which is amazing, but it leads them to a path where they say, I’m going to build it and then people will come. And the joke is like, What’s the best way to fund your company to get customers to pay you? And so if a customer is willing to pay you for your product, you know you’re onto something that should be your first test. Don’t build anything until somebody says that they will pay you and that they’ll give you that money upfront and then you can start building.

Lee Kantor: [00:11:09] Now, when you are kind of growing in that manner, that tends to be obviously slower in some respects because you’re kind of going out to the market and and having to find these early adopters, the people that are willing to take that kind of a risk without seeing something that’s real. How do you kind of go about identifying those early adopters? And then once you have that pool of them, how do you kind of adjust to get beyond the early adopters to get to more of a mass appeal?

Kathryn O’Day: [00:11:41] Yes. So your early adopters are hopefully the people that you have done customer discovery with that you’ve interviewed to understand what their pain is. And the pain again is so acute that they’re willing to take a chance on you or on an unproven product because it’s worth it to solve the problem. In terms of how do you how do you scale to the next level? Well, once you have customer case studies, enough customers that you have reference customers, then it becomes easier and easier to bring on some of the people in the middle who are not quite the early adopters. And we saw that a lot at Pardot, where I started part out when we had 80 customers and by the time I left, we had hundreds of customers. And so that that second wave of customers, you know, I think the key there is giving them an amazing customer experience. And then also always be listening to what your customers are asking for and what they need. And then to continue to build for the 80% of your customer base. If you get too sucked into doing one offs for edge cases, that can be a big distraction. But if you stay focused on your core customer and solving 80% of their problems, you are going to be in a great spot to be able to scale.

Lee Kantor: [00:13:09] And that tends to be kind of a trap for the technology driven founder where they like to add more like, Oh, it wouldn’t be great if it did this. Oh, wouldn’t it be great if it did this? And then all of a sudden the the scope of the project and the product is. So maybe it’s diminished from that 80% that you should be focusing in on.

Kathryn O’Day: [00:13:29] It’s a it’s a trap for for technologists and everyone, especially people who care about their customers. And they want to say yes and they want to help people. So it’s really a trap for everyone. And it takes a ton of discipline to say no. And you have to keep your eye on the prize to be able to understand what to say yes to and what to say no to. We we talk a lot about if it doesn’t if 80% of your customers won’t use this feature, if you need at least 80% of your customers to use the feature to build it. So if only 20% will use it, then you better have a really, really, really important business justification to do it.

Lee Kantor: [00:14:13] Now for you, what’s the most rewarding part about working with these kind of early stage founders and entrepreneurs like in Your Job Now? I’m sure you were dealing with lots of them, whereas when you were in a startup it was just heads down like a laser, just focusing on the task at hand. And so these are different, I guess, different types of skills, maybe in different types of rewards that you’re getting. At the end of the day.

Kathryn O’Day: [00:14:40] I, I absolutely love my work. It is so fun to talk to people who are insanely smart, insanely optimistic, they’re passionate about changing the world. And that’s who I interact with all day, every day. And so I love being on the building side, too. Like building, there’s nothing more rewarding than building a company. And now on a side where there’s nothing more rewarding than talking to amazing people changing the world every day. So my favorite part is, is literally just being surrounded in a in a world of people who are building the future.

Lee Kantor: [00:15:21] And then when you’re around those people, it’s hard to be kind of cynical and pessimistic. Right. These people are, you know, let’s run through the wall every day. So you get kind of caught up in the emotion of that. That’s every day. You probably feel like, wow, this was a good day.

Kathryn O’Day: [00:15:40] Yes. Every day I come home and I’m so fired up, and then I have to. Well, I was going to do that. And then I’m then I have crying kids and.

Lee Kantor: [00:15:55] The other.

Kathryn O’Day: [00:15:56] Interrupts.

Lee Kantor: [00:15:58] So do you tend to look at your children as a start up?

Kathryn O’Day: [00:16:02] Yeah, actually there’s a lot of lessons in both situations where it’s about a lot of patience, a lot of longevity and looking towards be, looking towards the future and letting that drive you and keep you focused. You’ve been through the ups and downs. So there’s there’s a ton of parallels there.

Lee Kantor: [00:16:21] So now how did you get involved with Start Up Showdown and the Panoramic?

Kathryn O’Day: [00:16:26] I love this story because I think it speaks to the connected nature of the startups of Atlanta especially. And I knew Tammy McQueen when she worked at Sales Loft and I was working at Pardot and Rigger, and so we were all part of the Atlanta Ventures family of portfolio companies. And so I knew Tammy really well through her marketing efforts. She was fantastic, and then it was really fun once we both ended up in the investing world to reconnect. And I mean, what she was what they’re doing with sort of showdown is just tremendous. And it’s an amazing program.

Lee Kantor: [00:17:10] And then for founders that are getting involved in start ups showdown across the country. Any advice for them to get the most out of the experience?

Kathryn O’Day: [00:17:23] That’s a great question. I think, you know, asking putting your best foot forward. So being prepared and everyone is and then getting the feedback from the judges and taking that to heart. And then funders do get a lot of feedback from everywhere. So it’s important to listen and then see what works for your company.

Lee Kantor: [00:17:52] And for for you at Atlanta Ventures. What’s next? What do you need more of and how can we help?

Kathryn O’Day: [00:18:01] I love that. Thank you. What I am passionate about is helping entrepreneurs. We’re always looking to partner with entrepreneurs in our venture studio. So if there’s any entrepreneurs listening that are looking for their next company idea, they’ve started something before. They know they want to start something else, but they’re trying to find an idea or a market that matches. We’d love to talk to them.

Lee Kantor: [00:18:30] And then if they want to learn more and connect with you or Atlanta Ventures, what’s the website or best coordinates.

Kathryn O’Day: [00:18:37] Atlanta Ventures dot com and connect with me on LinkedIn I’m also on Twitter and I’m also at Katherine O’Dea dot substack dot com. It’s called the OA Daily the very, very punny.

Lee Kantor: [00:18:53] And what do you talk about on that?

Kathryn O’Day: [00:18:55] I talk about practical advice for startups and sometimes some life advice mixed in because startups in life are very intertwined.

Lee Kantor: [00:19:03] Absolutely. Well, Katherine, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Kathryn O’Day: [00:19:09] Awesome. Thank you so much, Leigh. It was wonderful to be on the show. And what Startup Showdown in Panoramic is doing is just amazing.

Lee Kantor: [00:19:18] All right. This is Lee Kantor. We’ll see you next time on Startup Showdown.

Intro: [00:19:23] As always, thanks for joining us. And don’t forget to follow and subscribe to the Startup Showdown podcast. So you get the latest episode as it drops wherever you listen to podcasts to learn more and apply to our next startup Showdown Pitch Competition Visit Showdown Dot VC. That’s Showdown Dot VC. All right, that’s all for this week. Goodbye for now.