The Fourth Effect: Turning Boards into Growth Engines의 전체 녹취록

recognition, in order to leapfrog ahead and actually hit really important KPIs, ultimately not die as a startup. 00:05:08.420 --> 00:05:10.340 How do you fundraise successfully? 00:05:10.340 --> 00:05:18.579 So all of that, realizing that has been a big gaping hole because there has not been startup governance structure. 00:05:18.579 --> 00:05:22.420 There hasn't been that intelligent layer of, you know, that ecosystem layer. 00:05:22.420 --> 00:05:26.420 That is why startups oftentimes are not building these boards. 00:05:26.420 --> 00:05:30.500 They're not creating the seats, they don't know who to put in the seats at what time. 00:05:30.500 --> 00:05:50.819 And so on the other side of the marketplace, whether you're female, you're male, wherever you come from, without having that intelligent layer of infrastructure, the rules of engagement and that clarity, that ability to know where to slap yourself in to bring value, it's impossible to get started, to get that first seat, to get the subsequent seats. 00:05:50.819 --> 00:05:58.819 So we realized it was really much bigger than any one group that needed to get access to board service. 00:05:58.819 --> 00:06:01.139 This was really a systemic gap. 00:06:01.139 --> 00:06:05.220 And this was really about making sure the seats get created in the first place. 00:06:05.460 --> 00:06:16.500 And you know what's interesting about it is that as individuals, we take good care of our real estate governance or legal uh issues and so forth. 00:06:16.500 --> 00:06:20.019 We take care of our inheritance issues and so forth. 00:06:20.019 --> 00:06:31.220 We take care of a lot of different things that uh affect us as individuals, families, and yet companies, the founders and the companies, don't do the same exact thing for the companies, right? 00:06:31.220 --> 00:06:32.420 And for the employees. 00:06:32.420 --> 00:06:41.300 And what's amazing about it, I've spoken to so many startups and worked with so many startups globally, and the problem seems to repeat itself over and over again. 00:06:41.300 --> 00:06:49.860 The governance, the selection of the board, advisory board, and the governing board, that seems to be like um the last thing they think about or they even talk about. 00:06:49.860 --> 00:06:52.740 Yeah, sometimes they would put that into the deck. 00:06:52.740 --> 00:07:00.019 And, you know, here's our team, here's our, you know, governing board or advisory board, but yet not talk about it that much or too much. 00:07:00.019 --> 00:07:05.939 What have you learned from actually putting the board together for the fourth effect? 00:07:06.180 --> 00:07:22.740 I mean, honestly, I think the single most shocking thing that has become clear in the years of doing this is just how little most people know about advisory boards and governing boards. 00:07:22.740 --> 00:07:26.340 And this is really true across the map. 00:07:26.340 --> 00:07:40.819 You know, whether you're talking about founders and of course experienced founders where they've done this two, three, four times, they know the most because they've they've learned by doing, you know, through trial and error, through experience. 00:07:40.819 --> 00:07:51.460 And then VCs, you know, there are some VCs that are pretty knowledgeable because, you know, they're they're former founders, they've worked with so many founders, they've been at this, you know, for a long time. 00:07:51.460 --> 00:07:55.699 They've watched a lot of companies come into existence and then scale. 00:07:55.699 --> 00:08:05.939 But with the exception of small pockets of people, mostly this knowledge is not it is not widely known. 00:08:05.939 --> 00:08:08.340 It is, it's it has not been accessible. 00:08:08.340 --> 00:08:12.980 And and it really is more than anything else an education and semantic gap. 00:08:12.980 --> 00:08:16.100 And so I don't care how sophisticated somebody is. 00:08:16.100 --> 00:08:22.819 I have met thousands of extremely sophisticated and impressive people that just don't know about this. 00:08:22.819 --> 00:08:23.939 It's just a gap. 00:08:23.939 --> 00:08:24.980 It's opaque. 00:08:24.980 --> 00:08:31.139 And many founders are not very experienced three-time, four-time serial founders. 00:08:31.139 --> 00:08:33.139 Many founders don't know any of this. 00:08:33.139 --> 00:08:36.980 And the problem is that nobody even knows they don't know. 00:08:36.980 --> 00:08:38.980 And nobody will admit they don't know. 00:08:38.980 --> 00:08:41.059 So nobody knows where to go. 00:08:41.059 --> 00:08:43.779 And and even though, okay, now we have chat GPT. 00:08:43.779 --> 00:08:46.500 So why isn't everyone just asking chat GPT? 00:08:46.500 --> 00:08:50.100 They don't even know that they need to ask, they don't know what questions to ask. 00:08:50.100 --> 00:08:55.220 So this is why there's so much incredible opportunity here. 00:08:55.220 --> 00:09:14.820 Um a resource like the fourth effect needs to exist, because the startup failure rate is so high, it is 90%, which is not surprising if you've ever walked in these shoes, because every part of this journey is incredibly, incredibly challenging. 00:09:14.820 --> 00:09:29.539 So if you don't have the right people at the right time, if you can't lean on the right bench of informal and formal advisors as you navigate this incredibly challenging landscape, it is so much harder to be successful. 00:09:29.539 --> 00:09:31.940 And that's whether or not you have access to capital. 00:09:31.940 --> 00:09:36.019 That's whether or not, you know, that's whether or not you're incompetent or competent. 00:09:36.019 --> 00:09:38.500 This is just a big gaping hole. 00:09:38.740 --> 00:09:53.299 You know, it's amazing, is that a lot of folks don't realize that having the right board next to you or behind you not only solves the governance issues or gives you that knowledge, but it also opens a lot of opportunities in terms of business development, fundraising, marketing.

00:09:53.299 --> 00:09:57.299 It depends obviously on how you select the board, how you select the advisory board. 00:09:57.299 --> 00:10:10.740 But why wouldn't companies, why wouldn't startups and early stage companies recognize that that having the board around you is like having, you know, it's like you know, having uh success in, you know, in geometric progression. 00:10:10.740 --> 00:10:16.500 In, you know, it's like amplifying your capabilities by tenfold, by fivefold. 00:10:16.500 --> 00:10:20.100 Why, why are they not educated in something like that? 00:10:20.419 --> 00:10:22.980 I mean, honestly, so much of it is semantics. 00:10:22.980 --> 00:10:37.060 So I think a founder hears the word board and they immediately are thinking of a publicly traded company, Fortune 500, governing board with, you know, 12 angry men sitting around the table or whatever they're picturing. 00:10:37.060 --> 00:10:41.860 It's a boardroom, it's people in suits, you know, they they're gonna fire that CEO. 00:10:41.860 --> 00:10:44.740 It's scary, it's intimidating, it's unclear. 00:10:44.740 --> 00:10:49.860 Are we, you know, now we're in the realm of preferred shares, you know, everyone's nervous. 00:10:49.860 --> 00:11:12.019 What founders don't realize is that an advisory board, whether it ever assembles as a group or it's just a series of informal one-on-one relationships, sometimes those relationships aren't even compensated, although certainly the best practice is to compensate those relationships, at least with equity, you know, that matches the scale. 00:11:12.019 --> 00:11:15.139 So one of the accepted scales, there's a couple of frameworks. 00:11:15.139 --> 00:11:20.019 Um, and you want that because you want your advisors to be aligned, you want them to have skin in the game. 00:11:20.019 --> 00:11:24.820 Sometimes advisors are writing you a check as a founder, you know, they're also investing in you. 00:11:24.820 --> 00:11:43.379 But I think for founders to understand that the advisory landscape, all of these different relationships, or they are, you know, however they come to be, those are not a governing fiduciary board relationship that those advisors serve the founder. 00:11:43.379 --> 00:11:45.779 Those advisors serve the management team. 00:11:45.779 --> 00:11:47.460 It's a contractual relationship. 00:11:47.460 --> 00:11:57.539 It is no different than a consultant, an independent contractor, which there's not a founder out there who's scared to enter into a 1099 relationship with a consultant. 00:11:57.539 --> 00:12:01.379 But I think that that's one big hurdle is just not knowing that. 00:12:01.379 --> 00:12:08.740 And then even if they do know that, having access to how do I, how do I paper these relationships? 00:12:08.740 --> 00:12:11.379 How do I structure them from a legal perspective? 00:12:11.379 --> 00:12:17.620 How do I make sure that I understand the ROI that I need out of this relationship as a founder? 00:12:17.620 --> 00:12:27.060 And then how do I effectively have that conversation with the advisor so that they, you know, so that there's clarity on both sides, which is of course the point of a contract. 00:12:27.060 --> 00:12:30.340 You know, they know what they're expected to provide, they know what they're getting. 00:12:30.340 --> 00:12:33.539 And then this can be incentives are aligned. 00:12:33.539 --> 00:12:35.620 It's a mutually beneficial relationship. 00:12:35.620 --> 00:12:40.659 So I think a lot of it is that founders just don't know that uh and they're intimidated and scared when they don't need to be. 00:12:40.659 --> 00:12:57.779 Um, I think also the very experienced founders who've done this a few times, they have, they tend to have kind of an arsenal of these different ways to structure relationships with these advisors in order to achieve, you know, myriad goals, right? 00:12:57.779 --> 00:13:00.740 So you mentioned business development, that's one. 00:13:00.740 --> 00:13:08.820 So, you know, having your ICP, having not even just your ICP, but your ICP who's going to get you that first major contract. 00:13:08.820 --> 00:13:20.659 That that's one example of a way that you can leverage and tap into advisors that is not immediately apparent to a founder and they don't, they might not know how to, you know, what would be in it for the ICP. 00:13:20.659 --> 00:13:23.460 How do I enter into that conversation with this person? 00:13:23.460 --> 00:13:24.980 How do I meet that person? 00:13:24.980 --> 00:13:29.060 How do I, you know, get that person to sign on the dotted line? 00:13:29.060 --> 00:13:30.740 So I think there's a whole lot of that. 00:13:30.740 --> 00:13:32.659 There's also that's one example. 00:13:32.659 --> 00:13:41.060 And, you know, one of the things that we have learned in the six years of doing this, we've identified at least 20 advisor archetypes. 00:13:41.060 --> 00:13:47.060 And, you know, the business development, your ideal customer profile, your ICP is one of them. 00:13:47.060 --> 00:14:04.340 But any one of those 20 can find value in the white space, can increase revenue, save money in many different places, help you avoid common pitfalls that could be devastating, help you fundraise directly write checks. 00:14:04.340 --> 00:14:23.460 There's so many things that these advisors can do for the founder if the founder is armed with knowing those advisor archetypes and then having a framework, understanding when they should tap those advisors, how they compensate those advisors, and make sure that they can stop vesting if they're not getting value from those advisors. 00:14:23.460 --> 00:14:25.940 So, you know, I think I answered your question. 00:14:25.940 --> 00:14:31.860 Governing board is sort of a bit of a different answer, but um, but there definitely is one there too. 00:14:32.180 --> 00:14:33.379 I totally agree with you. 00:14:33.379 --> 00:14:44.019 It's a it's a non-intimidating, not intruding, not conflicting body

of people that can really open doors and provide a lot of assistance and and so forth. 00:14:44.019 --> 00:14:50.419 Now let's talk about probably the most uh talked-about topic of these times, artificial intelligence. 00:14:50.419 --> 00:15:04.340 That's now capable of so many different things, developing content, matching one with the other based on profiles, uh you know, uh predicting things, doing research and so forth. 00:15:04.340 --> 00:15:07.060 How is Forth Effect leveraging AI? 00:15:07.060 --> 00:15:16.500 And what do you think is the future of platforms like yours with these technologies where matching is going to be like the most basic thing that they will do? 00:15:16.500 --> 00:15:19.460 And there's just so much more to do with AI. 00:15:19.779 --> 00:15:20.419 Oh, there is. 00:15:20.419 --> 00:15:22.180 And it's so exciting. 00:15:22.180 --> 00:15:29.700 I think what AI is making possible is the ability to solve these deeply, deeply human problems. 00:15:29.700 --> 00:15:38.820 Because when you when you talk about our example, so we want to help startups find just the right person at the right moment. 00:15:38.820 --> 00:15:42.980 That is a deeply human solution, deeply human problem. 00:15:42.980 --> 00:15:45.220 It's it's rooted in relationships. 00:15:45.220 --> 00:15:48.259 I don't think we could have solved that without AI. 00:15:48.259 --> 00:15:51.460 I think AI is the key that makes that possible. 00:15:51.460 --> 00:15:54.100 And, you know, that is what we are very excited about. 00:15:54.100 --> 00:15:55.860 That's what we're building right now. 00:15:55.860 --> 00:16:02.019 And it will be the kind of new iteration of our platform is built to this spec. 00:16:02.019 --> 00:16:07.299 Um, we're actually patenting the underlying technology around it, which is all AI driven. 00:16:07.299 --> 00:16:24.659 But long story short, like essentially what we can do is create an incredible model, you know, an optimized model that can determine for every startup, as idiosyncratic as that startup is, what exactly is the right recipe for success for that startup. 00:16:24.659 --> 00:16:24.899 Right. 00:16:24.899 --> 00:16:34.340 And that has a lot to do with not just hard skills, skill set, and network experience, but also soft skills, characteristic, leadership styles. 00:16:34.340 --> 00:16:50.180 All of this is something that, you know, over time, as our model is experiencing more and more successes and you know, learning from its users, it optimizes and get better, it gets better and better. 00:16:50.180 --> 00:17:13.299 So I think, I think like I know there's uh, you know, some people have have observed, you know, have talked about how the AI companies of tomorrow, they will be the companies that learn from their customers and then they're able to serve back to the customer exactly what the customer needs because of the customer using the product or the service. 00:17:13.299 --> 00:17:23.139 And and I think that that is exactly why

now instead of using AI to automate something, we can use AI to create infrastructure. 00:17:23.139 --> 00:17:25.619 Like we can create board seats. 00:17:25.619 --> 00:17:31.059 We can create, you know, we can create the opportunity and the infrastructure because of AI. 00:17:31.380 --> 00:17:36.259 Are you suggesting that one of the board members could be the AI avatar? 00:17:36.259 --> 00:17:37.779 If you will. 00:17:37.779 --> 00:17:38.819 Is that possible? 00:17:38.819 --> 00:17:40.740 Is that something that's in the that's in the works? 00:17:40.740 --> 00:17:41.620 Can you tell us? 00:17:41.940 --> 00:18:00.980 So not not exactly that, no, but if I understand your question correctly, but definitely um agentic AI and enabling the facilitation of this deeply human relationship that the founders have with the advisors. 00:18:00.980 --> 00:18:02.339 That that's right there. 00:18:02.339 --> 00:18:04.579 I mean, that's what we're actively building that. 00:18:04.579 --> 00:18:29.140 And and another thing that we are that we're very excited about is our ability to analyze the personal characteristics and leadership styles and skills and traits of our members in a way that can also find synchronicity with these scaling startup teams because it's it's not it's not enough just to provide access. 00:18:29.140 --> 00:18:31.779 It's not enough just to be transactional. 00:18:31.779 --> 00:18:34.180 There it really is four dimensions. 00:18:34.180 --> 00:18:45.620 You know, there's, you know, of course, timing is a really important part of that fourth dimension, but there's also our psychology and our personal characteristics in our traits. 00:18:45.620 --> 00:18:52.819 Because at the end of the day, relationships, just human relationships, are at the center of everything that we are doing. 00:18:52.819 --> 00:18:58.420 No one's putting you on their board, no one's writing you a check if this isn't a real, authentic connection. 00:18:58.420 --> 00:19:00.019 And so it's fundamental. 00:19:00.019 --> 00:19:09.140 And also you you cannot assemble a good team without relationships being what decides whether this is a good team or not. 00:19:09.140 --> 00:19:11.380 I mean, relationship is is everything. 00:19:11.380 --> 00:19:13.460 And that is what AI makes possible. 00:19:13.700 --> 00:19:14.579 Yeah, absolutely. 00:19:14.579 --> 00:19:21.220 Let's talk about something that's near and dear to me at Global Edge Markets, and that's global and being global and going global. 00:19:21.220 --> 00:19:24.579 Now, your co-founder is from Switzerland, I believe, right? 00:19:24.579 --> 00:19:28.019 And you have members in over 50 countries worldwide. 00:19:28.019 --> 00:19:34.740 How do you see that developing in the near future where different parts of the world have different needs? 00:19:34.740 --> 00:19:44.579 Startups and early stage companies and even scale-ups in different parts of the world have different attitudes, may have different um approaches, if you

will. 00:19:44.579 --> 00:19:50.660 Investors obviously may have different uh requirements in those different parts of the world. 00:19:50.660 --> 00:19:56.180 How do you see the fourth effect unifying this huge global community? 00:19:56.500 --> 00:20:09.620 Well, okay, so immediately, well, I guess, okay, the a few different answers, but the first is that the reason why we have members in over 50 countries, this actually happened organically. 00:20:09.620 --> 00:20:18.660 And at first it was really because startups in these different cities and different parts of the world want to scale into adjacent markets. 00:20:18.660 --> 00:20:35.299 And it was obvious to you know scrappy, resilient startup founders that if I can line up the right informal and formal advisors at the right time in my target market, it's going to be much easier for me to penetrate and scale in that market. 00:20:35.299 --> 00:20:38.180 Also, how do I fundraise in another market? 00:20:38.180 --> 00:20:46.180 How do I do, you know, a Delaware flip and you know, become a Delaware C Corp, have a subsidiary that can do that, that can then get venture funding. 00:20:46.180 --> 00:20:52.099 How do I, how do I negotiate what scaling in a global world means? 00:20:52.099 --> 00:20:57.779 Advisors are probably your single best route to do that effectively. 00:20:57.779 --> 00:21:02.500 So founders all over the world already knew this and and they came to us. 00:21:02.500 --> 00:21:05.779 So, you know, this is why, you know, this is how that happened. 00:21:05.779 --> 00:21:13.059 And then, of course, having advisors in other markets is so important because startups don't just scale one direction. 00:21:13.059 --> 00:21:14.819 So, you know, everyone's scaling everywhere. 00:21:14.819 --> 00:21:26.579 So I think that is that is one very exciting part of this intelligent layer of infrastructure that we're building, that I think it unifies, like it really helps to facilitate global markets. 00:21:26.579 --> 00:21:31.940 And because innovation is innovation wherever it's coming from in any part of the world. 00:21:31.940 --> 00:21:40.980 There are differences, you know, from a compliance perspective, when you're especially when you get into the realm of governing and fiduciary boards and fundraising. 00:21:40.980 --> 00:21:41.779 That's true. 00:21:41.779 --> 00:21:54.579 That being said, there's no reason why you can't leverage technology to help to bridge some of those gaps, you know, to help turn pears and nectarines into apples. 00:21:54.579 --> 00:22:06.259 You know, like there is a common startup language that, you know, you can mostly get to apples to apples in order to help the constituents in our marketplace work together. 00:22:06.259 --> 00:22:08.900 So I think there's there's huge opportunity there. 00:22:08.900 --> 00:22:12.819 You know, there's also a lot of nuance with international companies. 00:22:12.819 --> 00:22:19.940 Sometimes there's more opportunity for, say, American executives, or vice versa, even at the larger scale. 00:22:20.259 --> 00:22:21.859 Um, a couple of final questions. 00:22:21.859 --> 00:22:24.500 It's been a fascinating conversation, by the way. 00:22:24.500 --> 00:22:32.740 So you're um walking on the street and you uh run into Breen Sullivan of, let's say, 10, 15 years ago. 00:22:32.740 --> 00:22:34.180 You sit down for a cup of coffee. 00:22:34.180 --> 00:22:34.900 What do you tell her? 00:22:35.140 --> 00:22:36.259 Life's a journey. 00:22:36.259 --> 00:22:42.660 I mean, I think I think it's uh I think what is the most important is to just be scaling the mountains. 00:22:42.660 --> 00:22:44.579 And the mountain's a moving target. 00:22:44.579 --> 00:22:50.099 And uh and for me, I mean, as hard as this is, I'm so grateful, truly. 00:22:50.099 --> 00:23:01.539 I'm grateful every day that I get to uh work so hard, that like that I am like I am on Kilimanjaro or whatever I'm on, you know, and that that's the point, I think. 00:23:01.539 --> 00:23:03.620 You know, so I'm really grateful for it. 00:23:03.620 --> 00:23:08.579 And and I think is if as long as you're climbing, you keep climbing, what else is there? 00:23:08.819 --> 00:23:09.620 Totally agree. 00:23:09.620 --> 00:23:18.500 So, what is your in conclusion, what is your advice to the uh new members of the Fourth Effect platform and the entrepreneurs everywhere? 00:23:18.740 --> 00:23:34.579 Well, for entrepreneurs, so new members who are founders, for entrepreneurs, I think like uh probably the biggest lesson I've learned as an entrepreneur is that you always overestimate what you can do in any given day, and you are going to really disappoint yourself. 00:23:34.579 --> 00:23:40.579 So if there are 20 like do or die items on your list, you're only gonna get through like three. 00:23:40.579 --> 00:23:42.339 And and it's soul crushing. 00:23:42.339 --> 00:23:51.460 But we also really underestimate what we're able to achieve if you string together a bunch of those disappointing days. 00:23:51.460 --> 00:24:12.660 So you really feel this as an entrepreneur, at least I've really had this experience where even if so, if you find yourself discouraged or you're drinking out of a fire hose, if you stop and you look back 90 days, it is mind-blowing and is deeply satisfying and so invigorating and so inspirational what you've managed to accomplish in that 90 days, as long as you just do it every single day. 00:24:12.660 --> 00:24:14.660 You show up every single day, you just keep climbing. 00:24:14.660 --> 00:24:17.059 And that that's amazing. 00:24:17.059 --> 00:24:24.259 And that makes me feel like, you know, we can be like that Shell Silverstein poem, and we can be that 98-year-old woman who eats the entire well. 00:24:24.259 --> 00:24:28.019 I think all things are possible if you approach it that way. 00:24:28.339 --> 00:24:30.180 Brian, thank you so much for being with us. 00:24:30.180 --> 00:24:32.019 It's been a fascinating conversation. 00:24:32.019 --> 00:24:37.859 Lots of luck to you with the fourth effect and other endeavors, to you and your partners, obviously. 00:24:37.859 --> 00:24:44.099 And we'd love to have you back to uh to look at your progress, maybe in the near future. 00:24:44.099 --> 00:24:45.700 I'm sure it's gonna be successful. 00:24:45.700 --> 00:24:49.380 I'm sure it's gonna be amazing, and wish you all the luck in the world. 00:24:49.700 --> 00:24:50.819 Well, thank you so much. 00:24:50.819 --> 00:24:52.900 I've really enjoyed this conversation. 00:24:52.900 --> 00:24:54.819 I hope it was indeed fascinating. 00:24:54.819 --> 00:25:04.819 And yes, for all of your listeners that want to enjoy and join and become a part of the Fourth Effect, the easiest way to find us is our website, thefortheffect.com. 00:25:04.819 --> 00:25:06.579 We do platform tours twice a week. 00:25:06.579 --> 00:25:11.700 It's a wonderful way to get a private introduction and really see what we're doing. 00:25:11.700 --> 00:25:16.420 See, see for yourself or platform or community, see it next, and um and get started. 00:25:16.660 --> 00:25:17.220 Thanks so much. 00:25:17.460 --> 00:25:17.940 You're welcome.