How to spot and join Rocketship companies with Andre Charoo from Get World Savvy Podcast

May 18, 2020

Welcome to the Get World Savvy Podcast. This is a business and tech podcast on business and tech ecosystems around the world, the startups innovating there, and predicting opportunities of the future.

We recently had the opportunity to chat with Andre Charoo. Andre was one of the first 20 employees at Uber and Hired. Between these two rocket ship tech companies, he launched the businesses into 18 cities and 10 countries. He is also the founder of Maple VC which is dedicated to investing in Canadian founders around the world.

He gave us an exclusive in-depth look into his career and what his decision-model is when choosing to join or invest in rocket ship startups.

This content is an abbreviated version of my interview with Andre Charoo on Episode 1 of the Get World Savvy Podcast. Check out the podcast for the full episode.


Q1. Have you found that being Canadian helped your career?

Absolutely!

It has helped all of my career! I was lucky that 3 of the four startups I jumped into happened to be founded by Canadians. I quickly realized the value of focusing on Canadians almost as a niche. This led me to become co-chair of the C100 and founder of Maple VC, where we primarily invest in Canadian founders.

I think it is important that people figure out what their niche is or what I like to call their "unfair advantage" and use that to impact the world. Me being Canadian is like an unfair advantage.

Q2. How did you move into tech?

After studying at the University of Toronto, there are 4 phases of my career that help tell the story.

First I started in investment banking. I gained a strong foundation in finance with a bank that was part of Wells Fargo. I had an offer on wall street but I turned it down for the MNA group opportunity. Then Reza Satchu taught me the economics of entrepreneurship at USC, and I didn’t know it at the time but that class was a precursor to his first set of The Next 36.

So there I was being chosen as one of the first 36 back in 2004. Where Reza always preached “put yourself in uncomfortable situations, but also go out and create value in the world.” He was the one that told me to get out of banking and I listened.

In 2007-2008, I was in California starting a company selling recruiting software. But because of the economy, I ultimately failed. However, through that experience, I gained a strong network of founders who were going through it alongside me.

Phase three is from 2009 until now, I essentially found my place as a utility player within companies. I wore any hats, especially in my scrappy early days. I joined 4 companies before they had 20 people because I could invest with my time and resume. I looked at those choices as bets if you will, two of them were right and two were wrong.

The two that worked out were Uber and Hired, I jumped on these two different rocket ships when they had about 10 people on their teams. It has been awesome to contrast them to who they were in their early days before they became household names.

So many people ridiculed me for joining a taxi company at the beginning of Uber. But, big outcomes look very non-obvious at the beginning, so you have to have your own convictions. You can’t ask others what they think.

During this phase, I gained an outlier operational skillset. I understood and learned how to pick talent, both from a founder's perspective and also just hiring with all the corporate key positions that I had to hire. I gained the skillset of launching markets, some of those businesses were very offline, online to offline businesses, and bringing it back to the non-technical individual, I think that the more businesses become tech-enabled versus pure software businesses, there's an increased demand for non-technical skillset.

If I didn't get to see those early days at Uber and Hired, I wouldn't be in the position to understand what outlier outcomes look like, what outlier founders feel like, and what outlier talent, you know, also looks like.

This expertise led me to phase four because I founded Maple VC on the idea that as I started looking at some of these other massive outcomes that, practically or almost went public recently, like Slack, Wish, Instacart, Cloudflare, Redhat, the founders were all Canadian.

I just started looking at all of that and I didn't find, at least from my research, there was no Canadian capital on any of their cap table, and so none of that capital or returns and value that was created will make its way back to Canada, where all these people are from, and where we're from. It just irks me in a way that it moved me to say, hey, I should create a vehicle to invest in the small stages in this Canadian diaspora. Maybe this is a way to impact Canada, where these people are not off the radar, off of the capital that is growing in Canada. For example, for whatever reason, if someone decides to start a company in China or wherever, it shouldn't preclude Canadian capital from making its way into their cap table, right?

Q3. What do you look for when you decide to join a company? What do you look for when you want to invest in a company if that’s any different?

I think at the time it would be much harder for me to articulate it right? So now I more so codified it as hindsight becomes 20/20. I kind of weave in the different patterns, so at the time I don't think, I would be able to answer this question of what I think is a little more eloquent now. There is a ruler that I use across a number of dimensions, in fact it is very inspired by Peter Thiel's Zero to One book.

I put these founders into three buckets:

  • Zeros: your inventor types
  • Ones: your builder types
  • Twos: your operator types

Zeros

I have found that when you ask an inventor type of founder the vision of the company, they can communicate a very compelling vision about step 5 in a process of 1-5, which often leaves you feeling like you can get behind this grand vision. However, when you ask them about step 1 or the starting point they are usually unclear.

Ones

When you ask a builder the same question, they have this clarity on step 1 and step 5. For example with Travis Callanik at Uber I asked him the vision of Uber he said: “We are going to deliver you anything, we are building a logistics engine for a city but it just so happens to be a black car that takes you from point A to point B.” And frankly, what he's working on with cloud kitchens is like he's still focused on delivering you anything. Now it just happens to be food.

Twos

The last bucket is the twos, and what I have found is that they can do the first two steps of a business but they have more spikes in steps 2, 3, and 4. They are very good at execution.

I believe the most valuable companies to be created on the planet are the ones that can attract the most zeros, ones, and twos. We attract the people who are the most like us, but 1s specifically have this special thing where they are able to attract the spectrum.

Ones are able to tell zeros “hey don’t worry about the starting point, go tinker on the future,” or “twos, you go handle operationalizing this thing.” They give their teams leadership and direction.

So I look for founders who are ones because they attract the twos and zeros in their early-stage employees.

Q4. Why did Uber need to start with limos and not with Uber X or Uber pool?

A company needs to target niche-obsessive early adopters first

Think about crossing the chasm, where there's different phases of early adopters, pragmatists, the conservatives, the laggers. If a company decides to go directly to its largest market, pragmatists, in this case, you skip the early adopters. I've found those companies to not necessarily hit mass adoption because they skipped this early community.

Founders like Travis know that pattern recognition tells us that you need to find your niche and early-adopting consumer base so you can build the customer experience you want to build. It will take a few mistakes to really figure it out and for Uber, using limos at the beginning is what got them there.

They eventually ran out of limos in an area and there was a need for regular car services. So they expanded wider within their niche.

Timing of Enabling Tech

The second piece is about timing. Google didn't release their maps API until 2010. You couldn't put a map on a phone. That was impossible. And so, ride-sharing became a thing. If it wasn't for Google Maps, then ride-sharing would not exist.

Timing of Economics

The second piece to timing is that I remember when pitching a limousine driver and I was saying, you can make money from this phone in your pocket for two hours that your car is idle each day. The sheer surprise and delight that their face lit up with that value proposition, I'm not sure would have happened if the 2008 financial crises didn't happen. It's coming out of that money-now-on-demand-fashion wouldn't have likely been, I think, interesting if it was a bull run, for example. I think those limousine drivers have been like, I have enough business. No, thank you. Not interested. Sounds crazy. But instead, they were actually open. And today we call that the gig-economy. Because the gig economy wasn't a thing, Uber X wouldn't have been possible.

Timing of Cultural Buy-in

The third from a cultural perspective and why X couldn't have happened is because in tech in Silicon Valley, sometimes one big success begets someone else's success.

If Facebook didn't have that many photos online globally, Snapchat wouldn't be a thing, because disappearing photos wouldn't be a need. And so when I look at Uber, thanks to Airbnb, I think founded in 2008, they put in all the hard work around this thing that we now call the sharing economy.

Q5. What about the industry and the bigger picture? What else do you look for when deciding what company to join or invest in?

I typically go through my own version of Peter Thiel’s seven questions in his book.

1. The Solution

Number one is what is the next solution to this problem that you are trying to solve?

2. Timing

The second one is timing which is split into three parts: Enabling tech, Economic persistence, and Cultural buy-in.

3. Monopoly

I believe most markets are adjacent to others. I actually argue that for things to work, and I experienced this personally, is that instead of operating in a big, big market, you have to ask how to get a large percentage of a small market first.

4. Distribution

I don’t believe the best products win, I think the most distributed products do. When you become the most distributed product then you get to invest in how to become the best product.

I look for creative ways, not paid channels. It really irks me if someone is using some form of paid channels to acquire customers, arguably it is not sustainable versus other folks who have been raised and especially in our environment continue to raise more capital than you.

My question here to the founders is, what intermediary can you make a hero that's going to publicize or sell your product on behalf of you? And it's something that doesn't put you off course as to what your product or service is.

5. Defensibility

What is the strategic access that the market is going to reward you for? For example with Hired, many job boards never set up a way to extract revenue from job listings and LinkedIn managed to extract $26B USD out of the market for digitalized resumes.

6. The Team

Framework with the zeros, ones, and twos that I referred to earlier

7. The Secret Question

What do you believe that others do not? What do you see that others do not? This is the underlying belief system that founders are on because while others see the similarities with competitors they see how it is different.

Q6. What do you look for when you hire that has led to determine success?

What I look for when hiring is:

  • Grit, can someone get up time and time again if they fail?
  • A growth mindset, can you see the trendlines and communicate them?
  • Self-awareness, do you know how you make someone feel?
  • Did they put themselves on the line for their company? As an early-stage employee, you need to show that you can go all in.

Andre is always looking to connect with Canadian founders or Canadians in emerging markets. If you are a founder or someone working abroad don’t hesitate to add him on Linkedin so you guys can connect.

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