Todd Merrill:

Hi, welcome to Tales from the Sky Lounge. It’s a podcast about business consulting and venture investing. We get out there in the world, we talk to people who are making it happen and we get their stories. And if you could like and subscribe, it really helps us get our message out.

Today’s guest in the Sky Lounge, Kathryn O’Day. Hi, Kathryn.

Kathryn O’Day:

Hey, Todd. It’s great to be here.

Todd Merrill:

Yeah, it’s awesome having you. I’m really looking forward to this. Why don’t you tell us a little bit about who you are and what you’re working on?

Kathryn O’Day:

Sure. So, I have been in the startup world for the last decade and a half, building companies, including multiple exits to large tech companies. And then I joined the dark side a few years ago as an investor. And now I’m a partner at Atlanta Ventures, where we do early-stage investing. And we also have a venture studio.

Todd Merrill:

Wow, very cool. So many things to kind of dig into there. But first, I know you’ve got a secret talent, that you are an athlete and can we talk about triathlon for just one second?

Kathryn O’Day:

Yeah, nerd to nerd, let’s try nerd out.

Todd Merrill:

Yeah, yeah. So, I’ve got my little like, you know, ringer bell here, it’s from the hills. You know, so triathlon is an awesome sport.

Kathryn O’Day:

Yeah

Todd Merrill:

It takes a lot of dedication and focus over a long period of time. Maybe talk to us about, you know, why do you do triathlon? What do you get out of it? How do you juggle the demands of a busy training schedule with real-world startup, you know, 80 hours a week kind of lifestyle?

Kathryn O’Day:

Yeah, so I love sports. I have loved sports since I was very young. I think sports are an awesome learning ground for the corporate world, especially for women because you learn so many skills about teamwork and competition and how to be tough and how to be resilient. And I played high school, college sports. And then I graduated from college and I was like, what do I do with all this energy?

Todd Merrill:

Okay

Kathryn O’Day:

And I was like where do I channel my type A personality, and I stumbled into triathlon. I started out running and I kept getting injured. And I had a few friends doing triathlon. And it was really just you start and it just escalates. And that’s a lot of how company building is like you start small.

Todd Merrill:

Yeah

Kathryn O’Day:

I did a sprint triathlon.

Todd Merrill:

Okay

Kathryn O’Day:

And then the next season, I did an Olympic triathlon and then I did a half Ironman and then I did an Ironman. And it was like once you start going, you keep going. And I actually think there’s a ton of crossover in building companies because you cannot train for an Ironman, you can’t cram. You have to do it consistently day after day for months and years. And it’s the same with a company, it doesn’t matter how hard you work, you can pull an all-nighter for a weekend, but it doesn’t build a company, you have to be consistent over time. And so that is one of the reasons why I love it. And it’s also like kind of the parallels, and so I’d learn stuff from triathlon and apply it to the business world, and you know, learn something in the business world and apply it to triathlon. Those two things work really well together.

Todd Merrill:

It’s kind of like, you know, mile 20 of a marathon, right? You’re kind of close, but it’s still a 10k left, you know, and it’s kind of like when you’re grinding through, you’re kind of successful, you know, but God, I don’t have any money in the bank. And you know, this hurts, and you do grid up and go and just kind of keep going through or do you stop and, you know. I think that entrepreneur mindset, I think you’re exactly right, is corresponds to a lot of endurance sports, for sure. You got to keep going. And you kind of lay a foundation and then, you know, keep moving forward, relentless motion forward.You mentioned you were an athlete in college. I was curious what was your sport in college and high school?

Kathryn O’Day:

I loved basketball.

Todd Merrill:

Okay

Kathryn O’Day:

I played basketball in high school. I played softball in college. So, I played that. I played softball coming up as a small kid, and I kind of got burned out on it. And I did play in college, my claim to fame in softball is that I was the super bench support player of the year, four years in a row, four years in a row.

Todd Merrill:

Ha ha ha!

Kathryn O’Day:

Most people, if they suck in riding the bench, they quit.

Todd Merrill:

Yeah

Kathryn O’Day:

But I was like, no, no, this is fun. I’ll just keep going.

Todd Merrill:

Oh, okay.

Kathryn O’Day:

But I also played a little rugby, which was really fun because there’s not a lot of women’s sports that are our contact sports.

Todd Merrill:

Yeah

Kathryn O’Day:

So I finally got to use my size and strength.

Todd Merrill:

Okay

Kathryn O’Day:

And I learned quickly that there were a lot of people bigger than me.

Todd Merrill:

Ha ha ha! Okay.

Kathryn O’Day:

And I like to have all my teeth and you know, like I, you know, so I stopped while I was ahead. And then I played a lot of pickup basketball in college, too. So…

Todd Merrill:

… yeah

Kathryn O’Day:

I just think sports are, they’re really fun. They’re really fun. You also learn how to push people, right? You’re like how I will support somebody, but also make it fun, even when it’s hard. And when do you push? Like, when are you “Come on, let’s go.” And when you’re like, “Hey, it’s okay.” You know, like, “You’re having a bad day, and that’s not a problem.” And so you kind of learn all those different pieces and every sport is different. But there’s a lot of … it’s kind of like every tech company, right? Every tech company, it’s different, different culture, but there are a lot of things that carry over across different companies.

Todd Merrill:

Yeah. And then you mentioned something I want to go back that and particularly for women, you know, sports is you learn a lot of really cool lessons. I know you’re just at Venture Atlanta. And there was a women’s breakfast, right? If I remember right.

Kathryn O’Day:

Yeah

Todd Merrill:

So, what, you know, I obviously wasn’t in that room. And actually, physically, so no, you can’t come in here.

Kathryn O’Day:

Ha ha ha

Todd Merrill:

It’s like, that’s, I’m sure. I’m sure. But what do you talk about to the next generation of women? I mean, you’re obviously very successful and kind of been through the wringer.

Kathryn O’Day:

Yeah

Todd Merrill:

What advice would you give to the next generation? Or what insights did you all uncover at that breakfast?

Kathryn O’Day:

Yeah, one thing I talk about a lot is confidence, and that you can just be confident starting now. And I think that that is so important, and I see that this is kind of a silly example. I’m just going to go with it. But like, little boys, somebody says like, “Oh, you can’t climb the jungle gym.” And they’re like, “Oh, yes, I can.” And they’ve never done it before. But they’re going to figure out how to climb the jungle gym. Or somebody’s like, “You don’t know how to do Pokemon card trading.” And you’re like, “I have a great Pokemon card at home.” And I think that little boys, just the culture like they grow up kind of like bluffing or like saying they can and figuring out on the back end. And the default mode for women is like, “Oh, I can’t do that. I’ve never done it before.”

And so I think there’s a lot of, like, we can spend a lot of energy and encouragement on pushing women to just say that you can do it and then figure it out on the back end. And you don’t have to, like, everybody is pretending. Everybody is pretending like, and I’ve seen that from top CEOs, who behind the scenes like they go on stage, they’re amazing, their company is totally successful. Behind the scenes, they’re like, we don’t know what we’re doing. And so I think that’s true from everybody. And everybody feels that way. And you just do it anyway and you figure it out. And that’s the thing that I see from women, I want women to know, I want the next generation to know, is that you don’t have to have it all figured out to show up in a room and belong there.

Todd Merrill:

Yeah. Well, and I think that’s true across the board, right? There’s a lot of founders that, you know, the imposter syndrome ….

Kathryn O’Day:

… oh yeah

Todd Merrill:

We always talk about where you go, man, I’m not sure who let me be CEO, founder, whatever. But like I got to figure this out, you need to figure it out, or you don’t. And guess what, you know, everybody is figuring it out. So may as well, you know, be you. And you’re in that seat for a reason. And just keep going forward, keep plowing through and you’ll get the help you need along the way. And there are a lot of people that will help you in business. I think that’s another tough lesson, too, is you don’t have to do it all, right? You can you can ask for help from your network.

Kathryn O’Day:

Yeah

Todd Merrill:

Let’s talk about Pardot for a second, like, what a fascinating story. So, you were very early in at Pardot when had a very successful exit or exits, I guess, I don’t know how you measure that. So, what were the early days like at Pardot? I guess, how did you come across that company and get recruited in? Did you know somebody or how did that work?

Kathryn O’Day:

Yes, I had come back to Atlanta. I was looking for a job. I had done nothing in technology. I was at a party and I ran into a high school classmate.

Todd Merrill:

Okay

Kathryn O’Day:

And he was at the parent company of Pardot. And I said, “Well, I don’t.” He’s like, “Send me your resume.” And I sent it over and I went in and I was like, “Listen, I don’t know about technology, but here’s the research I’ve done.” And they hired me. They hired me to do sales.

Todd Merrill:

Wow! Nice.

Kathryn O’Day:

And they were making a bet that somebody who had done fundraising for a nonprofit could transition into sales. And what I learned is that I was much better at customer success.

Todd Merrill:

Okay

Kathryn O’Day:

And I also learned that you didn’t need to know technology to be great at a tech company. There’s a funny story early on where I, number one, I was like, the Internet is out. And the head of engineering came over and plugged in my Ethernet cord.

Todd Merrill:

Oh, no. Ha ha ha!

Kathryn O’Day:

I was like, “No, the Internet is broken.” There’s another one where I had always been on Mac computers and I had some Dell laptop and I was like, “I don’t know how to turn on my computer.”

Todd Merrill:

Okay

Kathryn O’Day:

And so those are the early days. We, you know, Pardot is a tale of, you know, some of it on my definitely lucky, like, I’m not going to pretend I had the foresight to know what was going to happen at Pardot. But we had an amazing ride. So, I was employee number 9. Three or four years in, we were acquired by ExactTarget for 95 million. We’ve been largely bootstrapped up until that point and then nine months after that, Salesforce acquired ExactTarget for two and a half billion.

Todd Merrill:

Oh!

Kathryn O’Day:

I was on the customer success side.

Todd Merrill:

Okay

Kathryn O’Day:

So, I managed the integration between Pardot and ExactTarget customer success. And then the same thing for Salesforce. It was amazing because I got to see what a midsize public company looks like and how they were doing it. And then the enterprise-level public company within a year.

Todd Merrill:

Wow!

Kathryn O’Day:

So that was really…

Todd Merrill:

… dang man, talk about whiplash. Holy smokes. You have to shift through those gears fast.

Kathryn O’Day:

I was like, I don’t know if you can get that in an MBA.

Todd Merrill:

Yeah, yeah.

Kathryn O’Day:

That was once in a lifetime.

Todd Merrill:

Oh, for sure. Well, hopefully, you get to do it again at some point with one of these small companies you work with.

Kathryn O’Day:

Yeah

Todd Merrill:

I’m sure you will. Let’s talk about the kind of shifting of gears up through. So bootstrap startup, you’re running customer success. You probably laid down some … what you thought was pretty good process, procedure, infrastructure.

Kathryn O’Day:

Yeah

Todd Merrill:

Had a nice little team going. So, what happens when… first of all, what were you doing when you first heard, “Hey, we’re going to get sold?” Awesome. You know, what was that moment like?

Kathryn O’Day:

We met the ExactTarget team. There were a few of us that we went to a hotel.

Todd Merrill:

Okay

Kathryn O’Day:

It was offsite. We were like, “Hey, we’re going to do this offsite thing.” We met the ExactTarget team. We all went around. And let’s bring it back to Ironman. I was training to do Hawaii.

Todd Merrill:

Nice!

Kathryn O’Day:

So, it was a world championship. And I was a month out from doing Hawaii.

Todd Merrill:

Oh, men!

Kathryn O’Day:

And so I was like, “Hey, well, this is going to be announced. I’m going to be gone. So just so you guys know.” But when I was in Hawaii, I saw somebody in an ExactTarget kit.

Todd Merrill:

Okay

Kathryn O’Day:

Their race uniform was branded with ExactTarget, and he was an ExactTarget employee. And so it was just this amazing serendipity. And I was like, this is meant to be. This is incredible that we’re connecting out here in the middle of the Pacific Ocean while this acquisition is being announced.

Todd Merrill:

Isn’t that crazy?

Kathryn O’Day:

It was amazing. And so the thing that hit home was everybody was so nice. I mean, people were so nice, so down to earth. And it was really a great culture fit.

Todd Merrill:

Mm-hmm

Kathryn O’Day:

And so that was the first acquisition. And the ExactTarget team was absolutely wonderful. And they had a really strong culture just like Pardot. And so that was just a great fit for us. And then the next announcement, I had come into work early, probably coming from a workout. And I was in the office early. And Adam Blitzer, the COO and co-founder of Pardot, pulled us into his office and he said,  “Hey, remember that scenario where Marketo, who’s our largest competitor, got acquired by Salesforce?” And we were like, “Oh, shit.” He’s like, “Yeah, it’s us. It’s us instead.”

Todd Merrill:

Nice. Yeah.

Kathryn O’Day:

And so we were totally thrilled. The other thing that’s hilarious that happened in that moment, we had just been about to transition from Gmail to Outlook.

Todd Merrill:

Okay

Kathryn O’Day:

ExactTarget used Outlook. And everybody was like, this was the hardest part of the acquisition for people that you’re going to have to change to Outlook. And Salesforce used Gmail. And so we were like, “Oh, my God, we’re going to keep our Gmails.”

Todd Merrill:

Okay, okay. So you got whiplash from email.

Kathryn O’Day:

Yeah, email, we got it. And Salesforce was another amazing culture. They were a much bigger company.

Todd Merrill:

Right

Kathryn O’Day:

But in terms of values and how they treat employees and what they care about, it was just really fortunate that it… again, two awesome outcomes. And one of the things that was really interesting that I wouldn’t have thought, less than to other founders out there, one of the things that Salesforce said in the due diligence process was like, “Oh, we had looked in your space and we hadn’t found anybody that we thought would be a good fit.” Meaning they hadn’t found somebody who they thought would be a personality fit. And there were other good companies. But they really wanted somebody that they felt like they could work with and have a long-term partnership with. I think a lot of people think all business acquisition, all M&A is just a spreadsheet and do the numbers work. But really, business is about relationships and people and can you work with people and being able to work with people is what translates to business success. Big companies know this, too. And so never underestimate the power of being nice and how that can further your business outcomes.

Todd Merrill:

Absolutely. Well, culture is huge. And it is surprising how often it comes up in these success stories, you know, we talk about on podcasts. So maybe talk about… so, if you’re coaching some of these new companies, brand new companies, right? At some point, culture has got to come up. And then culture comes up whether you are intentional about it or not, right? It evolves.

Kathryn O’Day:

Yeah

Todd Merrill:

So, it’s better to get ahead of it. We all pull from our past experiences. So, you had a lot of very positive experiences, it sounds like at Pardot and subsequent companies. What cultural elements did you take away from Pardot that you would roll into the next one? You know, being nice sounds like a big one, be friendly. That’s why you’re great at customer success. But I think it’s across the board, right? Be friendly and be nice. What else culturally did Pardot honor and hold up as a cultural component?

Kathryn O’Day:

Yeah. So we had three core values; positive, supportive, and self-starting.

Todd Merrill:

Okay

Kathryn O’Day:

And we hired on those values. We looked for people who embodied those values in the interview process. And we had specific questions that would help vet those qualities. And then we would also look at them in performance reviews. And then we would hold people to that standard. So, if somebody was not being positive, you know, there’s a correction there. And I think that knowing what the values are and then incorporating them throughout the process of the company is key. Every company will have different values because every founder is different. What they care about is different. The industry is different. But those things, that idea of identify your core values and then infuse them systematically into key points in your company can be applied everywhere. The other thing that Pardot did that was more of a philosophy was be the best place to be an employee, be the best place to be a customer.

Todd Merrill:

Okay

Kathryn O’Day:

And it was in that order intentionally. And you’ll hear this from Howard Schultz at Starbucks. You treat your employees well and they treat the customers well. And it starts with the employees. Yes, the customers are very, very important, but employees come first and everything else flows from there.

Todd Merrill:

Yeah. So, when you’re kind of midstream and you’re starting to hire and then you can’t touch everybody, you know, it becomes a little bit harder to hire because you’re going fast and you’re just picking up steam. Inevitably, you’re going to hire someone that’s suboptimal, right? And then so, do you find that the culture can kind of change people or steer them? You know, somebody that’s like on the border of grumpy and happy, you know, kind of steer them over into, hey, you know, you can be a little bit more happy about all this. It’s an oversimplification. Is a culture that is powerful that you can kind of mold people to the correct behaviors that you’re looking for? Do you have examples of that where that happened, where you kind of met somebody and went, “Oh, okay, we’re going to have to go to lunch on this one and talk about it?” You know, did you ever? I know you probably did. But what does that look like? And then at some point, maybe it doesn’t work, you know, and you have to go a different way, right? I don’t know if you want to talk about that or you have stories.

Kathryn O’Day:

Sure

Todd Merrill:

Painful

Kathryn O’Day:

No, no, no. So one of the things we implemented was a, we called it a cross-functional interview.

Todd Merrill:

Okay

Kathryn O’Day:

So that in the interview process, first hundred employees, the CEO and COO met with everybody and they were the final interview. That doesn’t scale. So, the scalable process was a cross-functional interview. And that was people from other departments who would be interviewing candidates based on core values. So basically, if you’re a salesperson and the engineers don’t like you, you’re not a fit.

Todd Merrill:

Okay

Kathryn O’Day:

Or if you’re an engineer and you are not personal enough that the sales folks like you, you’re not a fit. So that applies across the company, and I just picked two examples. But …

Todd Merrill:

…yeah

Kathryn O’Day:

I will say, I think culture can impact people both positively and negatively. There are people that will be positive everywhere. There are people that will be negative everywhere, but there are definitely like, it can bring out the best and it can bring out the worst. You know, we did, luckily when your company is growing really fast and you have a good culture, that can smooth over a lot of things. And occasionally there’d be somebody who didn’t work out, but if you are slow to hire or careful in your hiring, you can get ahead of a lot of it.

Todd Merrill:

Okay. So we call it shifting left, you know, in the software world, you find the bugs earlier in the process, right?

Kathryn O’Day:

Yeah

Todd Merrill:

I like that idea of cross-functional validation. You have a culture interview part. Do you have them sit in like say it’s an engineering interview and you bring in a marketing person to just kind of sit in and say, “Hey, she’s going to be here, just listening” or, you know, two on one or multiple on one.

Kathryn O’Day:

Yeah

Todd Merrill:

And then part of that is get a vibe for is this person, you know, compatible with our core values or just kind of weird.

Kathryn O’Day:

Yeah. And here’s the thin, like we sometimes would debrief after an interview and people would have differing opinions. And there were times that I was like, I’m not sure these are the things. And I was wrong because we hired the person and they were amazing.

Todd Merrill:

Okay

Kathryn O’Day:

But I will say it’s almost always better to pass. And we think about this in terms of deals now that we’re investing in it. You are going to say no to great deals and that just happens and it’s okay. And that happens. It’s better to say no to something good than to say yes when you’re not totally sure.

Todd Merrill:

So, a phrase, I’ve heard around TechVillage is hell yeah or no. I don’t know if you’ve run across that before or if you subscribe to that.

Kathryn O’Day:

Yes. I’m always trying to refine my hell yeah or no because I hate saying no.

Todd Merrill:

Right. Right.

Kathryn O’Day:

So, I’m like, “Hell, yeah.” And like, “Sure, that would be fun.” And so I’m not great at that, but it is such a good important thing. And I will say, kind of thinking about transitioning from small company to midsize company to larger company. One of the things I learned is at a small company, you’re just putting out the biggest fire and you go to the next level and you start to say, “Okay, what’s the plan? What are we prioritizing?” And so you get to be more strategic with your hell yes. And that you’re like planning out ahead of time what you’re saying hell yeah to.

Todd Merrill:

Yeah. I mean, let’s go, go to Chicago.

Kathryn O’Day:

Hell, yeah.

Todd Merrill:

So, I have this kind of speech I give to certain clients. This can be a little bit of a curve ball, but bear with me for a second.

Kathryn O’Day:

Yeah

Todd Merrill:

So your unique perspective on this is going to be interesting. So there’s an old, old, old book from, I don’t know, 2000s, the Dot.Com era, right? It’s called Accidental Empires. And there’s been subsequent books that add onto this, but what does success look like? What does high growth look like? You know, why can’t we keep engineers a high growth startup? That kind of thing, stock options, you know? So, what these folks studied were early Oracle or Microsoft, you know, that gang Cisco. And then what they figured out was there’s kind of three gears you go through, three quantum phases of development. It’s analogous to an army in this book. 

So, it’s commandos and then army of invasion and then, army of occupation. So, the commandos is very small, four-person hit squad, very focused goal. Don’t ask me questions, pour a bunch of resources in. It’s going to be messy. Any one goal, we’re going to knock it out. And then, and at some point, you kind of start taking market, you’ve got product market fit evolving. It’s a shooting war. You’re invading the market, taking, so that’s about 50 to a hundred, 200 people. The HR starts showing up. Legal starts showing up. What the heck is a sock to start showing up? And then, you know, you start to have more infrastructure. You’re still creating things. You’re still moving forward and just going like heck, can be a little messy, but now you have that infrastructure, but the commandos tend to hate that because, hey, I just want to go shoot stuff. And don’t ask, you know, why are you bringing down my neck? Why do I have to write status TPS reports?

And then at some point, you win right? Into your AT&T and just take the bullets out of the guns, you know, deliver the pizza, keep the hospital going. Right? Do not fire the weapon. Like it’s the defense we want. Right? So, it kind of strikes me. And then that’s a different personality that just doesn’t want to screw up. Right? And they just, no, we’re not doing anything weird here. We’re not going to change anything, you know, without like a big committee, something. It’s kind of fun because you … the research said, everybody neatly falls into one of those three quant right? So, you’re very comfortable in one of the three, but not two. And then it’s the weird oddball that can go from one to two or two to three. And those are your managers that you need to hire to transition you grow up the growth curve. So kind of in that context, you hit all three of those, right? At what point did you go I’m going to wait on my options. And, you know, at some point like, okay, I’m sitting worth it for me. Like, everybody hits that point at some point.

Kathryn O’Day:

Yeah

Todd Merrill:

How far up that chain did you make it in, you know, usually with compensation packages, you know, you’re incented to stay beyond where you naturally would have punted, but did you see that? And then kind of like, what was your … did you feel yourself mapping into one or more of those states?

Kathryn O’Day:

Yeah. I like all three stages. I will say that it was really fun during the early stages of both acquisitions and, you know, Salesforce, I was there for a year post-acquisition. It was really fun. All the learnings and the like figuring stuff out. Cause that’s like a startup, right? Like just a little bit of your guerilla warfare. Everybody’s a cowboy. You’re just figuring stuff out. And then I got to a point where it was a lot of, and this is a very startup perspective.

Todd Merrill:

Yeah

Kathryn O’Day:

There are tons of amazing corporate jobs, but I was like, I feel like I’m talking more about the work than actually doing the work. I have to do a presentation about what I’m going to do to multiple people and then I can do the thing, but then the priorities have changed. And so actually that project is going to be sidelined and it’s this project. And so that was a point where I was like I want to go back and do it again.

Todd Merrill:

Yeah

Kathryn O’Day:

And I know more now and I can bring it and learn new things. And so that’s when I left and went to Rigor.

Todd Merrill:

Okay

Kathryn O’Day:

And I was head of customer success at Rigor for a year and then I moved into the COO role, and it was at the commando stage when I joined and we morphed into the invading army stage over time. And so that was another awesome journey.

Todd Merrill:

Yeah. So, let’s talk about that. So, Rigor was … let’s talk about what Rigor does and then you sold to…?

Kathryn O’Day:

…Splunk

Todd Merrill:

Splunk. Okay.

Kathryn O’Day:

Yeah

Todd Merrill:

All right. Great company.

Kathryn O’Day:

Yeah. Great company and just acquired by Cisco.

Todd Merrill:

Yeah. Okay.

Kathryn O’Day:

So another double acquisition.

Todd Merrill:

Yeah, yeah.

Kathryn O’Day:

Rigor is web performance software, which means it helps companies keep their websites fast. If you’re an e-commerce company and you know, if it’s slow, when you check out, you’re going somewhere else. So, it’s very important for e-commerce companies and media companies to have a fast website. And so that’s what Rigor monitored and helped you make your website faster. And what was amazing at Rigor, and I tell this story all the time. We had capital initially to get started and different points, we went out to raise money and we got term sheets and at each point we said, “You know what? We’re just about to hit the next milestone. Let’s just keep going.”

Todd Merrill:

Okay

Kathryn O’Day:

And so, you know, we got to a million in ARR and that unlocked, you know, that now you’re like, okay, we can get a line of credit from Silicon Valley Bank, and then you go a little further and you’re like, okay, our line of credit is a little bigger. We actually, now we can get profitable and we can just grow organically. And it was really interesting when in the sales process for Rigor, Splunk was looking at other people in the space.

Todd Merrill:

Right

Kathryn O’Day:

And other people in the space had raised a lot more capital.

Todd Merrill:

Okay

Kathryn O’Day:

And so Splunk did the analysis of like, this is the technology that we would like to offer our customers. We can get it at, you know, five X the price, or we can get it with Rigor. And because we had stayed lean and scrappy, Rigor was a home run and it was a great outcome for everybody. And I always share that story because I think it’s important for people to know that raising a lot of money can be amazing and do great things. There are many wonderful stories where that’s exactly right and it works out great for everybody, but you can also have great outcomes without raising a lot of money. And so it’s always about what’s right for your company, run the numbers. What’s a good fit for your personality? What is the market looking like to just give yourself a lot of options.

Todd Merrill:

Yeah. Okay. So that kind of brings us into what you’re doing now. Right? So Atlanta ventures. Sounds like you love the commando, you know, early, mix it up, let’s create a bunch of stuff really quick on a shoestring.

Kathryn O’Day:

Yeah

Todd Merrill:

And my passion lies there, too. There’s nothing like it from going from napkin to a million dollars is, is amazing. It’s not for everybody and it’s gut-wrenching and it’s hard and gritty, right? But it’s very rewarding when you can figure it out.

I feel like, you know, talking to a bunch of people at Venture Atlanta, no secret, you know, venture capital is having a tough time right now, with valuations and exits, like pipelines, kind of a little bit gummed up. A lot of people are having a hard time getting that second round of funding. So, you know, you’ve had great experience bootstrapping on minimal money, and I feel like right now that’s the play, you know. There’s a lot of early money available to start, but in some ways, you create a healthier company figuring it out, becoming ramen profitable before you really turn on the gas and getting a product market fit. Let me back up. So, what is Atlanta Ventures? And it’s a little bit different, right? It’s how would you describe what you do or what your company does?

Kathryn O’Day:

Yeah. We do early-stage tech investing, and then we also have a venture studio. So, the way we explain it, we empower entrepreneurs to start, grow, and learn. And the overarching mission is to help entrepreneurs. So, I spend 99% of my time having meetings with entrepreneurs, writing blogs, trying to be helpful to entrepreneurs, just put the information out there in the world. The greatest thing of all time is if you … if somebody builds a company and they don’t need us, right?

Todd Merrill:

Yeah

Kathryn O’Day:

Like, that’s the best. Great. Do it. And you know, I would say like the best way to raise money is to not need it. Well, actually the best way to raise money is to have your customers pay you.

Todd Merrill:

Yeah

Kathryn O’Day:

This is the most old-fashioned way to raise money.

Todd Merrill:

Right

Kathryn O’Day:

And from that the thing that investors love is like if you don’t need their money. So that’s the message that I always like to put out in the world. And that’s the learn piece that we’re always trying to just be helpful, share our lessons. The start piece is that we found companies, we co-found companies with amazing founders from the idea market stage. So, we’re looking at looking for awesome founders that are looking for an idea. They’ve had some experience, they’ve done it before and they’re crazy enough to want to do it again.

Todd Merrill:

Ha ha ha!

Kathryn O’Day:

They know what they’re in for and they want to start something else.

Todd Merrill:

Right

Kathryn O’Day:

And so some examples that have come out of the venture studio are Greenzie, which does autonomous software for commercial lawnmowers in town golf club, which is a private social club for golfers. Salesloft came out of studio before it was called studio.

Todd Merrill:

Okay

Kathryn O’Day:

In the early days of Pardot, other companies were incubating at Pardot. And it was very funny because when Pardot was acquired, they were like, who are these other people who are here? And it was Salesloft. It was Rigor.

Todd Merrill:

Okay

Kathryn O’Day:

That was already happening in the very early days. And then we have some early companies right now, Zinnia on daunted security. We’re looking at what are big markets that we think are going to be big in three to five years and then matching an amazing entrepreneur with that market.

Todd Merrill:

Okay

Kathryn O’Day:

And we have, you know, marketing, financial resources, we help with payroll. We do all the logistics so that you can just focus on customer discovery and building. And then on the grow piece is that we do early stage. So, seed series, investing in subscription technology companies, mostly B2B SaaS.

Todd Merrill:

Okay. Yeah. Do you have a staff that, you know, I could just see the brain trust, you know, like a couple of margaritas go, okay, let’s kind of noodle through what’s going on or how formal are you with okay, we’re going to go out there in the world. We’re going to pay for subscriptions. We’re going to get research. We’re going to talk to as many people as we can. Where do those ideas come from? Or you’re down there next to, Georgia Tech. So, I imagine like a ton of ideas come from, you know, Klaus and all those, you know types.

Kathryn O’Day:

Yeah. Ideas come from everywhere.

Todd Merrill:

Okay

Kathryn O’Day:

And so it’s really important to be in the world. Pardot came from solving a business problem for another company. They were trying to figure out how to do lead generation and lead management. And so they built their own internal tool. Markets that we like right now are the creator economy. Like everybody wants to work for themselves. People want fractional jobs. Businesses want that, too. So fast forward three to five years, people are going to need even more tools to run their own business. We love robotics.

Todd Merrill:

Okay

Kathryn O’Day:

Healthcare at home, right? Like people want to age in place. How do we do remote monitoring? How do we let people age in place? So those are just snapshots. We’ve had some crazy ideas that are now probably a little late, like a smart toilet.

Todd Merrill:

Ha ha ha!

Kathryn O’Day:

I don’t know if that one is good for a podcast but those are existing in the world. Like people are already pretty far along on some of those. So those are some of the markets that we like. Those ideas come from everywhere. I mean, everybody is reading all the time, looking ahead. Those can come from everywhere. And then the other thing I will say is that we do a lot of … we love The Mom Test, which is written by, I think, a Georgia Tech grad.

Todd Merrill:

Okay

Kathryn O’Day:

And the idea is if you tell somebody your idea, everybody doesn’t say they love your idea, right? Great idea. So, what you have to do is you have to ask questions about people’s problems and you have to see what people are willing to pay for.

Todd Merrill:

Okay

Kathryn O’Day:

And so in the studio, we wait to build technology, even though we’re building tech companies, we do a lot of like, let’s spin up a website and see who signs up. Let’s see if somebody will pay for us to solve it manually and just tons of iteration on the learning. And then from there, we just keep stepping it up, until all of a sudden, you know, you’re forming a company and you’re kicked out of the nest.

Todd Merrill:

Yeah. So you have an interesting, I am fascinated by culture. So you just reminded me, you have the little gong, right?

Kathryn O’Day:

Yeah

Todd Merrill:

Can you talk about the gong? What that’s all about?

Kathryn O’Day:

Yeah. The gong started at Pardot and every time there was a deal, we used to get to ring the gong and it was very funny because at first you’d be like, “Oh my God, there’s the gong.” It’s so amazing. And then it started to happen so much, but then we had to have like a gong ceremony every Friday and it’d be a specific point in time so that it wouldn’t disturb people on their calls.

Todd Merrill:

Ha ha ha. Okay.

Kathryn O’Day:

Yeah. It’s just a very, you know, I think every, you always want to look for ways to infuse fun and celebration into every startup culture because startups are hard and there’s always more problems. People are always looking ahead at the next thing. And so you just have to take a moment to celebrate the wins. And so the gong is a great example. We used to have parties.

Todd Merrill:

Right

Kathryn O’Day:

We had a million-dollar party and a $10 million party. And those were awesome. We had somebody who was amazing. She used to write a limerick for every deal that was closed.

Todd Merrill:

No kidding. Okay.

Kathryn O’Day:

And that was scalable for like the first, you know, that would scale when you were closing like a few deals a week and then it got to be that scalable. But there’s all different fun stories. And those are the stories that you remember.

Todd Merrill:

You need GPT to keep up.

Kathryn O’Day:

Sorry, Jennifer, you’ve been replaced.

Todd Merrill:

Yeah. Aw. And then there was some ritual too, right? And maybe it’s TechVillage, but you know, when you get to be a certain size, you get kicked out of the nest, right? And then you get to ring the gong, right?

Kathryn O’Day:

Yeah, yeah, yeah.

Todd Merrill:

You have to move out.

Kathryn O’Day:

Yeah. At the TechVillage, you get a party when you graduate and it’s amazing. For the venture studio, you know, we have after you’ve raised a million dollars of external capital, or you have this many employees, or you have an office space that you need to move into cause you’re like building robotic mowers. And then at the TechVillage, once you have about 30 to 50 people range, ain’t no more office space for you. You got to go find your own place.

Todd Merrill:

Okay

Kathryn O’Day:

And I always joke that it’s like you got to move out of your parents’ basement. You got to find your own internet. You got to buy your own snacks. You got to do your own events.

Todd Merrill:

Yeah. Yeah. Well, yeah. So that sounds like that. It’s funny how that corresponds into that second phase of, okay, you figured it out. There’s a little bit of product market fit. You have customers probably have like a millionaire or at least no line of sight to it. Right. And then you’re building infrastructure.

Kathryn O’Day:

Yeah

Todd Merrill:

Hey, go use somebody else’s Wi-Fi. Right? How do you find things to invest in? You know, Venture Atlanta is great. All these little companies, not so little companies, big companies are growing, there’s probably way too many meetings to keep up with how do you stay sane? What does your, I guess, pipeline look like? And then kind of, how do you, you know, deals can come from anywhere, right? At some point, they got to come through the funnel and then you got to, you know, make sure you don’t drop them as much as possible and then give everybody a fair shot, but you have to cut quick and then get to the ones who, you know, are going to have legs. What does that thought process look like?

Kathryn O’Day:

Yeah. We love to meet founders early. So, we love to meet people, you know. If you have an idea, great, we’ll meet with you. We have office hours where we just do an open session. We’ll share all our advice. We’ll give you all the insider information, how we make decisions. So, we share openly on how we make decisions and what we care about. So, we love to meet people early and we think about lines, not dots. So, this is a Mark Suster. We got this from Mark Suster. He probably got it from someone else, but the idea is like we meet you once. We want to meet you again to know did you do what you say?

Todd Merrill:

Okay

Kathryn O’Day:

Like, are you still working on your idea? How much progress did you make? And so we’re always looking for lines and that means we want to meet you early and we want to get to know you over time. So, we always say don’t come to us when you’re raising, come to us before you’re raising money. And then our investment threshold for a seed stage investment, which would be a check of, you know, $500,000 up to like 1 to 2 million, is 10 passionate paying unaffiliated customers.

Todd Merrill:

Okay

Kathryn O’Day:

So, what that means is like, they love you. They’re paying you money at some kind of somewhat market rate and that they’re not just your mom’s friends. And the theory is that when you have that, you have something.

Todd Merrill:

Right

Kathryn O’Day:

And obviously, it’s not like 10 customers over 10 years, right? There’s a certain amount of timeframe and you know, we’re also looking at how big is the market, how big could it get. And do we love the founder? Do we want to work with the founder for the next 10 years? Do they want to work with us for the next 10 years? But that is some of the like meet with us early and think about getting 10 passionate paying unaffiliated customers.

Todd Merrill:

Yeah. I always felt like when you start a company, you’re always embarrassed about the first three deals and then the first 10 are, you know, you start to kind of get a pattern for, okay, what is it we’re selling that people want to buy? And they always come from relationships, you know, and it’s kind of, for me, it’s a proof point that the entrepreneur or entrepreneurs are in the market. They’re not solving some weird problem they’ve never seen before to have people, you know, customers or relationships, they can turn into customers. And that’s such an important point to get going. If you can’t sell 10 of something to somebody, you know, how are you going to get to a million?

Kathryn O’Day:

Yeah. You haven’t figured it out yet. And it’s not to say if you haven’t sold 10, you could sell 10 next month, right? Like it, it could be coming, but that’s how you know that it’s repeatable. You’ve started to figure out who your ideal customer is, you know what problem you’re solving.

Todd Merrill:

Right. You don’t have to sell for, you know, a bunch of money, right? These don’t have to be superstar deals. They can be just deals, but somebody said yes. And it’s parted with dollars or Bitcoin or something. I don’t know what. Oh man. Yeah. Bitcoin’s a whole nother show, I guess.

Kathryn O’Day:

That’s a different topic.

Todd Merrill:

Yeah. Yeah. That’s kind of wild. Okay. Well, you know, it’s been great having you here. It’s all about travel and getting out there in the world. You got any great travel stories you want to share with us?

Kathryn O’Day:

Yes. I have a very funny travel story. And I will say I spent my whole career. I love supporting founders, right? I’ve always been in support of a founder or CEO, like as a COO, as an investor, it’s like I understand founders and what makes them great. And I want them to do more of that. And so this was probably the first month I worked at Rigor and we were traveling to Memphis to meet with our largest customer. And I’m sure we were flying Southwest Airlines. Like maybe it was a shitty Delta flight. I don’t know. The CEO, Craig Hyde, just is the ultimate founder. He’s just like, “Yeah, I’m going to do the thing. I’m going to figure it out.” Totally confident. And he was like, “Let’s board.” And I’m like, “No, I don’t have, no, no, no. I’m in the B boarding section. It’s calling for A. I’m in the B.” And he’s like, “No, come on. Don’t be such a rule follower. It’s no big deal. Just walk through. Be confident.” And so he hands his ticket in and he just strolls right through, and I hand my ticket and they say, “Ma’am, this this is not your section. Please step aside.”

Todd Merrill:

Tag a line.

Kathryn O’Day:

And he just turns around and smirks at me. And I’m like, “This is why you’re a great founder. And this is why I’m the COO because I love rules.” And so that was like a quintessential travel story of founders. So, I learned my lesson. I’ll never cut in the airport line again.

Todd Merrill:

No. Okay. Well, you’re a real follower. That’s important, I think. Well, how can people get in touch with you after this if they want to follow up and they got the next great idea for you?

Kathryn O’Day:

Yeah. I would love that. So, you can find me on LinkedIn. I am sharing, trying to share helpful information about events or advice to founders. I have a weekly newsletter at Substack. So, https://substack.com/@kathrynoday. And then if you like videos and want to see me doing some running and making jokes about my kids and husband, I’m on Instagram at KathrynODay. And then Atlanta Ventures, we have a great newsletter, lots of advice, information about events. You can go to our event page. You can see we have an in-person meetup coming up. We have a virtual meetup. So, we’d love to connect with people in all of those ways.

Todd Merrill:

Great. Well, it’s been great having you here.

Kathryn O’Day:

Todd, thank you for having me. Thank you.

Todd Merrill:

Bye for now.