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September 19, 2023
Ihar Mahaniok

How to build unicorn startups?

How to build unicorn startups?

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Show Notes

Mudassir (00:02.277)
Okay, so please do a clap for me. This helps us in syncing the video and audio. So just so you know, okay? Awesome, awesome. Hey, Ihar, welcome to the show. How are you doing today?

Ihar Mahaniok (00:17.678)
Great, thank you Modestir, thank you for inviting me.

Mudassir (00:20.989)
Thank you so much. This is the best pronunciation that I've seen from any New Yorker in my life. So thank you so much for that. So I'm a big fan of, no problem at all. So I'm a big fan of context. I believe whoever we are today, whatever we are doing today, our entire personality, there has to be a context behind that, right? So if we think about context, who is Ihar, like what is your story?

Ihar Mahaniok (00:29.435)
Thank you for pronouncing my name right. Yeah.

Mudassir (00:48.657)
I want to learn from the earliest context that you have of your life and how you can how you eventually end up becoming whoever you are today.

Ihar Mahaniok (00:58.914)
That's a great way to phrase it, right? So in simple words, I'm an investor. I'm an investor and engineer. I'm a geek. I'm a tech guy, right? So I'm an immigrant. So I'm Belarusian, I'm American. So I'm a dad, I'm a partner. So yeah, all of these things, right? Obviously I'm a dad only recently, but I've been a geek and a guy that's interested in...

Mudassir (01:07.517)

Mudassir (01:11.145)

Mudassir (01:19.292)

Ihar Mahaniok (01:27.894)
technology from early ages, right? So I started coding when I was 12. It was obvious for me that I should go for computer science as a major. And I went from there to be a software engineer. And from there I moved to tech investing. That's very short.

Mudassir (01:47.774)
Okay, yeah, that's very helpful. So you have climbed up the corporate ladder, so to speak, pretty well. You started as an engineer and then you worked at Google, then you worked at Facebook, you led the teams there before becoming an investor. So what was the experience like for an immigrant climbing up that ladder so fast?

Ihar Mahaniok (02:10.702)
Yeah, first of all, I didn't feel that I climbed it fast. I saw a lot of people that climbed it faster. And I think the biggest challenge that I've seen was cultural differences, right? How people perceive me, how I perceive people, what they actually mean, right? So my journey was that I moved from Belarus, where I grew up in Eastern Europe, to Switzerland when I was what, like 23 years old. And it was a...

fairly significant cultural shock. Switzerland has first of by itself, very Western European culture, but also I worked at Google, which while the office was in Switzerland, the Google has very American cultural approach to everything. And the culture shock and like moving from very direct communication style to extremely indirect kind of sugar coated communication style of the US was significant. And I spent probably a few years

just adapting to it and figuring this out, while learning how to also adapt to a big company. I worked before in a much smaller company in Belarus, which was kind of like, you know, startup-ish family feel, while in Google I needed to learn how to not only, you know, do my job and fulfill the expectations of my manager, but like to understand how things are fitting into big picture. And that helped a lot, I think,

I had this experience early in my career.

Mudassir (03:44.085)
Okay, so somebody who has been in an engineering position and then become the investor. So how did you make the switch? How exactly that switch happened? There was one pivotal moment or that was a gradual evolution. So how did that eventually happen? Yeah.

Ihar Mahaniok (04:04.112)
It was extremely gradual, right? So I started investing probably about 12 years ago. And for about 10 years, I invested as an angel on the, as a basically as my side project or as a thing that I would do on the evenings and weekends. And while also

continuing my engineering career and engineering leadership career and learning a lot about leadership at my job while investing on the side. And just the amount of time and effort that I spent investing kept going up through the years and my interest in investing and my passion for working with startup founders kept increasing. So it started with, you know, few simple things, right? So I...

Thanks to Google, I had some money that I earned that I wanted to put somewhere, right? And I was not interested in like putting it in stocks or real estate or other boring stuff. But I also knew a lot of startup founders because I was already embedded somewhat in startup ecosystem. I attended a lot of conferences. I had a lot of my friends who started companies. And I also had a strong interest in the business side of things as opposed to just...

engineering technology side of things. And you know, when you work as an engineer in a large company, you're very insulated from business. So Google makes it so that software engineers almost never interact with like marketing people or finance people or sales people, right? So and I'm blacked all of that I was missing that. So working with startup founders and like hearing how they do have to wear all the hats and like be jacks of all trades and learn to

sell and market and be with the customers, what was extremely interesting for me was like, okay, I need to figure out how to get into it, into that side of things. And I started supporting the founders and I found that was extremely learning and humbling for me. Right. So I didn't feel at that time that, you know, that I have had it figured out to become a founder. So I rather wanted to learn from the founders and work with them and help them in a small way that I could.

Ihar Mahaniok (06:18.166)
both some money and some advice. And that's when it started, right? But over years, of course, I started to see a lot of patterns. I started to learn from what I've seen as good decisions and mistakes from the founders. And it helped me to be valuable for new first-time founders as well, when I could help them by transferring the knowledge that I gathered over the years. And that...

gradually got me to the point when a couple of years ago, I was considering a couple of offers for vice president of engineering in a very interesting companies. And I was like, okay, do I want to commit to be VP of engineering with like huge area of responsibility that's probably will take 80 or 100 hours a week? Or do I want to move to invest in full time and basically stop growing as an engineering leader?

And I decided to go full-time in investing and try to risk to this, to raise a fund, which is not an easy thing, right? It's not like I got an offer to be an investor, right? So I had to decline the burden hand, which was the couple offers I had for engineer leadership positions and try for something much more risky and more unclear. It's like, you know,

creative venture firm tries to raise a fund and see if it works. And thankfully it worked. Right. So I really thankful to my limited partners who believed in me and decided to invest with me and helped to make GeekVentures, you know, real thing and not just an idea and yeah, that's how we got.

to where we are.

Mudassir (08:17.653)
Amazing. What was the first check that you wrote? How much was that for? The first angel investment you ever made.

Ihar Mahaniok (08:24.166)
Um, the very first angel investment was probably like three or $4,000. That was through a syndicate. So, um, very, it was way before AngelList appeared where, you know, AngelList is the most famous way to do syndicates right now. The very first syndicate that I invested through was funders club. And, uh, yeah, so that's where the kind of first checks that I started writing.

Mudassir (08:31.816)

Mudassir (08:49.397)
Okay. Just purely thinking from business standpoint, a lot of people have this misunderstanding that VC firm is like not a business, it's more like a bank, right? So they just have like an endless pile of cash and somebody can come in and they'll just write the check or something like that. But from somebody who has actually been in these big companies before, working in the startups before and then building a VC company.

Ihar Mahaniok (09:03.662)

Mudassir (09:16.809)
So can you give us some insight, like what exactly looks like? How hard do you guys actually work? How big the team do you guys have? How do you manage? Like what's the operations look like?

Ihar Mahaniok (09:25.23)
So we are now five people and yeah, it's completely business, it's a company, right? So every venture firm is a company, starting from really big ones like, you know, Sequoia, Anderson Horowitz or SoftBank, SoftBank's vision fund I mean, or going all the way to small ones. I know quite a few venture firms that are one person operations. We are five people right now. And the big, it's in many ways, it's like a startup.

The difference is that venture firms typically don't grow in personnel, in number of people, as fast as the venture-backed startups do. But in many ways, it's very similar dynamic, right? So the venture firm, in order to exist, needs to raise money, right? So, and we did this, and in order to be able to invest, I need to go to investors and raise money. And typically, the big difference is that while early stage startups

raised from angels and professional VCs, like firms like ours, we raise, especially for the first fund, typically from angels or like from individuals, as they're called in H&W, like high net worth individuals. And typically the later funds like Fund 2 or Fund 3 are being raised from so-called like institutional LPs, like pension funds and endowments and so on.

Mudassir (10:52.169)
How hard is it actually to raise these funds?

Ihar Mahaniok (10:55.242)
Oh, it's a lot of work, right? So, and I'm actually, I'm actually quite surprised that there's very little information online on how to raise a venture fund. I remember when I was about to start and I was thinking, oh, maybe I should start my own VC. I realized that Amazon is full of books for first time founders, right? There's like hundreds and hundreds of books on how to start a company, how not to make mistakes, starting from like, you know, lean startup, you know, from zero to one and so on.

And like hard thing about hard things, for VCs, there's like nothing, right? Almost nothing. It's really difficult to learn as a first time VC. And I was lucky that I started my firm at a time when I was able to use the accelerator for VCs. It's like the whole thing just didn't exist until some point, the VC lab, where basically they taught

and they still do, by the way, they teach for free people how to build a VC firm. They don't teach how to invest, but they teach what it means to build a VC firm. Right. So, and it, it's basically a very interesting journey to raise a VC fund because every VC fund is somewhat similar in their goals. Right. Because it aims to return capital to investors with some multiple and some IRA.

And the main promise that every VC fund makes to an investor is that, hey, if you invest with us, you will likely get more money than you invest. And the main challenge that all VCs have is how to convince a potential LP that you are the right VC to invest with, as opposed to thousands and thousands of other investors that are out there.

So yeah, the biggest challenge in the beginning is to build a story that really clicks with LPs, that they really understand that you know what you're doing and you're different from other VCs and you're better than other VCs and you found some niche, some aspect of the market that's helpful. And besides just being financially interesting for LPs, you also need to be...

Ihar Mahaniok (13:23.494)
Interested in terms of interest in 12 peas in terms of mission and values and like what? How what impact will their money have right? So because the important thing that people individuals who invest in VC funds Never invest them like the money that they need for their daily Spending right then as the money that they have Set on a side and you know kind of like rainy day fund something that they can

keep illiquid for a long time. And what they often want is not to make like 10 or 20% on this money. What they often want is to make an impact on the world with this money while not losing it. So, and this is a very interesting journey is how to convince people, how to have come up with a story, how to actually stay true to the story that people, you know, feel comfortable investing in the future funds and so on.

So yeah, and in the end, I think I spoke to what? Like a thousand people in order to raise my first fund.

Mudassir (14:32.169)
So it's not as easy as people think. So raising, if I were to put it this way, so raising a VC fund is almost similar to raising it out for your startup. It's pretty much the same thing. It's the same kind of work, if not more.

Ihar Mahaniok (14:45.458)
Yeah, so it's definitely in some ways comparable, in some ways it's not, right? So, and every founder's journey is different and I don't want to claim that, you know, raising my fund is harder or, and I also don't want to say it's easier, right? It's different. And it's also longer. I think the biggest obvious differentiation is that when somebody invests in a startup, there is this concept as valuation.

Mudassir (14:51.195)

Mudassir (14:58.537)

Mudassir (15:02.163)

Ihar Mahaniok (15:15.626)
And when somebody invests in a startup today, they invest with a promise and expectation that sometime in the future, the valuation of a startup will go higher. So which means that they need to invest today in order not to be late, you know, on one hand and there is always like risk reward or you can wait a little bit and try to invest in the same startup later when the reward risk is lower, but the reward is higher. Oh, sorry. Reward is also lower. So with the

Mudassir (15:23.197)

Ihar Mahaniok (15:43.178)
Venture funds is never like that, right? So we don't have valuation. It's very like black and white. Do you believe in this particular fund and the strategy and the steam or you don't, right? And you never negotiate with the fund. Like you can, angels on early stage can negotiate with the startup, oh, I'll probably put money if we agree to lower valuation. With the funds, it doesn't work like that.

right? You either believe or you don't. There's nothing to negotiate about. There's no valuation. It's a very, very different kind of discussions. And also, the big difference is that when you talk about startup, you always solve typically one problem in one market. I mean, like you always have a very, very clear niche and often startup by itself because of the nature of the product is extremely exciting.

Right. So you might be investing in the spaceship construction, right. Or you might be investing in a, you know, in a new way to communicate, or you might be investing in a new like game, right. All of this are very exciting while it's really hard to make a venture fund sound, sound extremely exciting from that angle. So that's where again, coming back that mission and like, you know, impact come to form.

Mudassir (17:06.161)
Yeah, so what's the story behind GeekVentures? And more importantly, why focusing on immigrant founders? Like, yeah, like why just immigrant founders? Like what exactly, is it so important by, you know, from immigrant founders' standpoint that you have actually made the DNA of GeekVentures, you know, Ventures Fund?

Ihar Mahaniok (17:27.082)
Yeah, so I ended up, you know, fusing two of my own identities and two things that I really feel passionate about is geekiness and being an immigrant, right? In this, like, from geek perspective is that I really like looking at startups and businesses from perspective of, you know, the team and how people think about what they're solving and...

the best founders that I found are extremely passionate about what they do and also extremely knowledgeable about what they do. And this is where the geekiness comes in. And geekiness doesn't necessarily mean that they are like coding extremely well, right? Not every CEO can code, but geekiness means that the subject that they're working on, the market they're working on, the problem they're solving, they have this geekiness about it. They think about it all the time.

they can't stop thinking about it. This is something they're very passionate about and they can convert others to their passion. And this is something how I feel about a lot of subjects and a lot of subjects I just don't know, but I'm extremely uplifted when I see somebody talking in a very passionate manner about things they geek about. So like we recently invested in a space tech company, right? I know nothing about space tech, but that particular founder was talking with such a...

that's company TRL 11, with such passion and vigor about this. And like I see that he, he's like a complete geek about this, right? So it's not just numbers and business for him, it's life. And for immigrants, it's like I've been an immigrant. I moved to Switzerland first and then to the US. I've been in the US for 10 to half years already. And I've gone through this journey of, you know, figuring out how to

how to do things in a different way in a different country, how to build a new network, how to adapt. And what I found is that this is something I want to help other people do, but also there is this thing that I, why did I move to the US, right? Because there's more opportunity in the US. And here's the thing that we know that opportunity is very unequal in the world, right? So there is money in some pockets geographically or.

Ihar Mahaniok (19:49.078)
but talent is more or less spread equally, right? We see amazing talents crop up everywhere, but talents in many, many places on the earth just don't have opportunity for them. And especially it's about the angle that I'm looking at is business talents, right? People who can build business, build companies, and a lot of them in order to find opportunity try to move to the US. And what they...

What they find is that you know, you can be a brilliant businessman You can have a great team you can have a product But often if you don't have a right network if you don't have if you don't know the right names You just can't get through right? So, you know that it's extremely difficult to you know, call the Email like famous investors and try to get their attention because they get so much inbound. They're inundated. So what?

What I found is that this is basically a significant part of our mission, help those immigrants become completely embedded in the US venture ecosystem. So bring their vigor, bring their energy, bring their kind of take no prisoners approach, where they have no...

No other thing like, you know, occupying their mind rather than be successful as an immigrant founder and help them to basically get all the benefits that people who grew up in the US, who like grew up with the network in the US get.

Mudassir (21:31.509)
Totally agree to that. So one of the first guests that we have on the podcast was from Eastern Europe as well. He's living in the UK, has built multiple businesses, sold a couple of them. One of the things that I asked him, what makes immigrant founders so successful? Because in my relatively small career, or all the people that I know, every single immigrant founder that I have met, they're hugely successful. They're unbelievably successful. And then I asked him, I asked a couple of them,

Like what is it exactly about you guys that, you know, most people in the US are like not as compared to you, not as successful. And everybody said the same thing. It's just like, you know, we've been through so much already that when we get an opportunity, we just make sure that, you know, there's like nothing stopping us. So it's the grit, it's the determination, and they're just like, you know, there's like nothing stopping us. And then again, one of the things that you mentioned is if you multiply that with the right team, with the right names, networking or something like that.

they become unstoppable. Do you think immigrant founders face discrimination in the fundraising process? Do you believe that?

Ihar Mahaniok (22:39.834)
No, I don't think it's the discrimination. So I think they face difficulties, right? But these difficulties are not raised. I wouldn't say there is a difference. There is definitely the angle that immigrant founders are underfunded and they're underrepresented. This is true, right? So we see that in successful stories, more than half unicorns have an immigrant founder. This shows that

Mudassir (23:02.325)

Ihar Mahaniok (23:09.826)
the immigrant founders can't build results. Is it easy for immigrant founders to raise the first round? No, it's much harder for them than to somebody who's like, you know, dad was a golf buddy of an venture investor, right? So, but this is something that I found like has very real reasons that could be rectified, right? Starting from a network, right? And that's where we at Geek Ventures work really hard to introduce our founders.

our portfolio founders to investors, where we create and host events, where we get founders and both already successful and promising founders with investors together, and where we look a lot at the cultural aspects, right? So and help founders to figure out how to communicate better in terms of also what they say and also what they hear, right? So in order to get...

easier to understand it. But yeah, I think that in general it's harder, but with the right approach and with a lot of hustle and energy, immigrant founders can be more successful.

Mudassir (24:26.709)
Okay, that's very helpful. So one other thing that I'm talking to you, I just realized that you guys are very founder-centric, like most of the time, like most of the discussion that you and I have is about immigrant founders. So what exactly is the investment strategy that you guys have? So do you guys put the founders first, idea second, execution third? Like what's the investment strategy looks like?

Ihar Mahaniok (24:49.994)
Yeah, so we are investing early stage in precedence seed in about one to two companies a month. So compared to many VCs, we are actually much more active in number of companies and we already invested in more than 30 companies just in what year and a half or so. So, and...

Mudassir (25:10.602)
Sorry to interrupt, what's the average investment size looks like? How much do you invest in?

Ihar Mahaniok (25:15.138)
So we start with a check between 50 and 200K, but we are set up for follow-ons, right? And our approach is to invest more money in the future rounds or even between rounds in the best founder that we back. So what we are looking at is like, because we invest a lot and invest in early stage, we are focusing a lot on

what is in the future of the company. And that's where the team is extremely important, right? This is where the team is often more important than a product or attraction, right? So, but the way we look at it is that it's still important what area the team is working on, right? So, and this is where geekiness comes into play that I mentioned before. And the huge angle for us is founder market fit. That's the founding team.

know the market in and out in which they are doing. So it's like, I really don't like the stories when an MBA grad decides to do like a product for hospitals, when this MBA grad never worked in hospital sphere at all. But if somebody has been on a customer side for a while, for like five, 10 years, and now decides to switch to the other side of the table and create solution.

that his previous employer would buy, that's great. So founder market fit, we are looking a lot. And basically it's very important that the founding team chooses large market that's underserved and it's arrived for disruption. And their first product makes sense, right? So it's not like the idea is not important. The idea for the first product is important. And they should have...

a large vision that could be very unclear in a way. So we are looking both at what's their first product that they want to get to the market either right now or in six months, but we also look at where do they see their company in eight or 10 years. And we don't invest in founders that think small. So we only invest in founders that can come up with a large vision.

Ihar Mahaniok (27:40.198)
Even if it's unclear, you know, it's a bit cloudy because obviously you never know exactly what you're going to do in 10 years. But we understand that when the team is smart, when the team has track record, when the team has founder market feed, they might pivot, especially when we invest early before product market feed, they might pivot the specific product. They might pivot whether they sell it, what kind of customer they sell it to. They might pivot pricing. They might pivot a lot of things. And we invest in a team that we feel capable.

of pivoting correctly in the future. And this is where customer centric approach is extremely important, right? So when we always grill that the team, we never invest in the team that feels like they know the solution and that builds a technology first and talks to customer second. We'd never do that. We never invest in teams that are like hunkering down to build the solution for two, three years without ever talking to customers. And...

We don't invest when I feel that the founding team has this like know it all attitude when they know exactly what they're building. I love investing in teams where the founders start with talking to customers. They, uh, and they continue talking to customers all the way when they do lean startup approach, when they have their first versions immediately with customers, when they have design partners, when they keep iterating after they launched and they keep understanding why they're.

customers might be churning or what to do for customers to spend more money on their product, things like that.

Mudassir (29:18.357)
Okay, that's helpful. So a couple of things on co-founder, and I recently wrote a blog on that. Like there's a thing called co-founder market fit because these are the people that you're probably gonna go with war, like in trenches or something, because it's gonna get bad, it's gonna get ugly with them. So it's not like, oh yeah, okay, so you know, I and you are just best friends, so we can just start a company together. This is not how it works. But one thing that I wanna know from a VC standpoint, especially when you invest in seed, pre-seed rounds, how much...

How much time do you actually spend with them in helping them find that product market? Do you actually build the company with them, build the product with them hands on? Or how do you manage the time? How do you manage the engagement with the founders of the company that you're investing

Ihar Mahaniok (30:02.53)
So we have to manage and find the right balance between supporting more founders and supporting founders deeper. Right? So as I said, we have more than 30 companies in the portfolio already, and we can only do it when our involvement is somewhat higher level. Right? So and we are definitely not trying to build a company with them. One of the important values for us is that we only invest when we believe...

Mudassir (30:11.698)

Ihar Mahaniok (30:30.754)
that this is the right founding team to build the right product. And as I mentioned before, this team will pivot at the right moments in order to find PMF and we are not like a product finding VC, we are not a venture studio. We are not helping people. We are not like a PM led venture fund, right? What we do is we find the teams that we believe are

right in terms of product and we talk with them and we advise them and we connect them to the right people. Right. So both me and a partner of the fund, Vadim, who is an entrepreneur and he's like struggling both his CEO job at the company, 3D Look and his partner job at Geek Ventures. Both me and him are talking to our founders regularly in order to

discuss with them all different aspects that we can help them with. And what we found is that given that we invest in founders in different sectors and in different areas of business, the main thing that they all have in common, they all need to fundraise and they all need to sell. So the biggest transferable knowledge that

we can do is help them to teach them how to fundraise successfully, properly, with the least effort and with the most results, and how to build the sales processes, how to build hiring processes. So all of these things that are very transferable between the companies, we spend a lot of time teaching them, right? While specific product is often extremely specific to an industry, right? So you know, space company.

has very different product than the medical software company or, you know, consumer app company and so on. So, yeah, we are trying to connect our companies to experts in their field. And thankfully the LP base is good in that, but also, you know, the people in my network and people in the network of our teammates. But we are not trying to be know at all and ourselves or like, and tell people how to do their product.

Mudassir (32:34.174)

Mudassir (32:46.299)

Yeah, so two questions actually I have. One of them is, you mentioned a couple of times that you look a lot into the founding team. How do you actually evaluate, like okay, so this is the founding team that you're probably gonna work with. The part two, you can say the follow up of that, the same question is, what exactly is it about know-it-alls? Like people which we call like know-it-alls, like what exactly is it about them? Like nobody wants to work with them, nobody wants to invest in them, because I had.

a couple of angels coming to the show, I had a couple of, quite a few of VCs and everybody said the same thing. It's like, when we say he's a know-it-all, the founder is a know-it-all, that's it for us. We're not interested in the idea. What exactly is it about these people?

Ihar Mahaniok (33:35.099)
So the thing is that you, as a venture fund, especially early stage venture fund, and angel investors have the same thing, you always invest for a long haul. So as an angel myself, I still hold investments that I made 12 years ago in my portfolio. And throughout all this time...

the investor has almost no control while founder has all the control. Right. So, and it's a very interesting, unequal partnership where you only want to enter into this partnership when you trust that this partnership will be good for you. And for both parties. Right. And one of the angles is, do you feel that this other person will be on your side? Right. So do you feel that this...

person would both speak to you, would listen to you, and would also be thoughtful in difficult situations. And I think the biggest thing is, you know, that there are several angles, right? So this, this just being able to communicate, right? And this is why a lot of VCs don't invest in founders that they find promising, but hard to work with because you know what, what's the...

value of having a founder that can grow, let's say business or ARR, if then they screw the investor on some dilution question on like liquidation preference question or like some, they will do some back early deal with the acquisition, with the acquirer that will screw the investors. Things like that are really bad. And this is what happens when

you feel that you cannot get to the right communication with the founder. But also another angle is like going through difficulties. So the founders that are know-it-alls or basically non-coachable or stubborn, it's all kind of same thing, they think they figured out a way to go. But in the reality, every single founder, including second time or third time founders, always...

Ihar Mahaniok (35:57.302)
get to some points in the life of their startup that they've never seen before. They always get to the points which are completely new, completely unusual for them. Yeah, the question is, what would they do if there is some hard point that they've never seen before? Would they just charge through it in exactly the same way that they did before? Or will they try to evaluate, be humble, ask people for advice, find others who has actually been in this situation before?

Mudassir (36:04.753)

Ihar Mahaniok (36:26.754)
And if an investor feels that the founder is not listening to what's happening around, is not trying to connect to people who have done similar or gone through similar journeys before and is really confident that what they're doing is right and never question themselves, yeah, there is a high expectation that when the going will be hard, this founder will go down in flames.

Mudassir (36:58.905)
Yeah, thank you for that. Appreciate the answer here. When it comes to founders, and especially first time founders, second time, so I've been in that position before. Started the first company, pretty much failed it in three months. Started another one, had weird problems never seen before, and then started the third one. I was like, what the hell is this thing? Every single time you start a new company, there's a new problem. So exactly to that.

One thing I want to know is most founders, even they're like serial entrepreneurs, you can say that. So they're building something one after the other, one after the other. They keep making the same mistakes again, again and again. Like, you know, maybe they're like over-hiding. Maybe they're scaling way too much, raising too much amount of money. So what's your opinion on that? Like, you know, given that there's like so much knowledge out there, there's so many people you can talk to, you can reach out to them, you can just ask for help. And then there's so much information, books.

media, blogs, whatever you want to call that, like available, but people are still making the same mistakes over and over and over again. So what do you think about that?

Ihar Mahaniok (38:06.69)
So first of all, if everybody was efficient, everybody was extremely successful and there were no mistakes, there will be no standouts, right? Everybody would be an equal result. There will be no like unicorns that we are talking about because every company would have been successful, right? So, but it's like, it's not gonna happen. It's not good. It is important that we live in the world where mistakes...

are actually costly and people who are thinking in some more creative ways or maybe make less mistakes or even maybe more likely, they get some results and others don't get. Because this result, it's good to have opportunity quality, as I mentioned before, but results are different. And this is important because this is what drives people. So we look at successful people, we look at successful companies, and you want to get there.

If it was easy to get there, it wouldn't drive us, right? It would be boring to live, right? So, and that's important thing. And the humans are limited and every human is limited, absolutely, right? Even the most successful, the smartest people on earth are limited in some ways, but most important is that most people are limited in many ways, including me, including, you know, probably...

all the brilliant founders that I've had a chance to communicate with or invest with. So from that perspective, what I think is that when I see that the founder is able to learn from others and keeps growing, that's where I feel that this is the right founder to back. And you're right, not every second time founder or third time founder makes fewer mistakes, but some do. Right?

Some people really learn mistakes. And this is typically what I also ask when I talk to a founder that I might invest in, if they've done companies before, it's like, okay, obviously you didn't build a unicorn before, like, you know, it's like, um, you built something that was either moderately successful or completely unsuccessful and now you're starting a new company. What did you learn from your previous venture? What did you, uh, what lessons you are bringing here? And I always listen because.

Ihar Mahaniok (40:31.186)
Everybody says they learn something, but when you get into details on what they actually learned and what they're going to do differently, that's very interesting. Because you can do very simple thing, do the same, or you can do opposite. Or, but both of these are too simplistic, right? You need to understand where to focus on, what were your weaknesses in the last time around, what were your strengths, continue utilizing your strengths and...

try to figure out how to mitigate your weaknesses and also keep growing, right? The best people are the ones, the best, the most successful people are the ones that never stop growing even when everybody tells them you're successful. Our world is programmed in such a way that almost at any level you achieve, somebody, a lot of people around are telling you you're successful, right? So I was like, when I...

got to be a manager at Facebook. I remember everybody like, you know, I knew it's like, wow, you got to this position at Facebook, you're very successful. I'm like, you know, you cannot think like this because if you ever think that you are very successful, you'll never achieve the next point, right? So, and it's very important to always see, to always have some other step in front of you that you are aiming for, some other milestone. And...

not only like numeric, like, oh, I want to get to new valuation, your revenue, something like that, but also in terms of internal, right? So what skills I can grow internally, what strength I can grow inside of me, what weaknesses I can mitigate in order to be better and more successful. And only people that can think like that and can improve will be successful.

And this is why it's very interesting that, sorry if it's too long, right? That I'm thinking is like, there is this whole debate about what age is the right age for entrepreneur. And I find that it's really, really good and promising to both back extremely young entrepreneurs and people who have had a lot of experience, right? Because people who are extremely young often have unlimited...

Ihar Mahaniok (42:47.938)
Potential because it's very, very difficult to grow, to like basically predict where they will end up as long as you see that they have had really, you know, explosive growth in some ways, like dynamic approach and they're trying to do things, then yeah, you want to back them early because maybe it will be a new, you know, Mark Zuckerberg or somebody. But also when I see a founder who's raising a pre-seed,

And the founder has been around the block with like 20, 30 years of experience. I always look deeper into, did they learn a lot during that time? And are they continuing to grow? Because now they're bringing all this experience, all this learnings, all this new strength that they didn't have when they were 20, and now they will be building a company, right? So it's, it's really exciting.

Mudassir (43:44.117)
Okay, amazing. So just wanna be careful of your time. So I think we have about 30 minutes left. So I just want to get into the good part of the questions. Okay, so, okay, rolling again.

So this is, there are a few questions that, you know, our audience is kind enough to send them. So most of our audience, like probably 80% of them, are aspiring entrepreneurs, founders first time, second up founders. Most of them are like those people who are trying to learn all these things, like they haven't had that level of success, like they haven't had, I don't know, 50 million dollar exit or 100 million dollar exit or something like that, okay? And then this is the question from them. So there's a few of them, so I'll just try to go through all of them as quickly as I can.

Let me start with this thing. What specific thing you guys look for, or what do you think that stands out when you're reviewing a startup pitch deck? And what do you think, in your opinion, are the do's and don'ts of a pitch deck? Because that's like a million dollar question. Everybody is just like on their own, and they're just talking about that. Like, okay, this is how you create a billion dollar pitch deck. So talking to somebody who has actually been there, who reviews pitch decks all the time, so in your opinion,

What exactly is the perfect way to create a pitch deck?

Ihar Mahaniok (44:58.654)
Yeah, obviously there's no perfect way to create a pitch deck. Right? So there is no way to create a pitch deck that's like everybody can replicate and I will invest in all of them. Right? Because as I said, it's like I want everybody to do better pitch decks. I want everybody to have better ideas, better vision and better approach to customers. And I still will invest in about 1% of the companies that I see.

Mudassir (45:01.461)

Ihar Mahaniok (45:24.534)
Right? So it's just raising the bar for everybody. It makes it better for everybody. Right? But it's still right. So we invest in about 1% of companies that we see. So, you know, 99% of founders get the rejection from us, unfortunately. But yeah, so there's no other way. Right? So that's the only way to build an enduring and successful venture firm. So, but yeah, in short, what are the extremely important things that you have to put in your pitch deck? And if you don't,

Mudassir (45:28.562)

Mudassir (45:48.061)

Ihar Mahaniok (45:54.418)
it's a big miss, right? So one is why this team for this problem, right? So it's like, the team is extremely important. It doesn't mean it's the first slide, but it's the thing that I look as the most important. The team, and by team, I typically mean two or three faces, right, don't put 10 faces in the pitch deck. And two or three people at most, and what these people achieved.

And I'm not saying like, you know, name of the university. I rarely care about that, but what they really achieved in terms of achievements and also how their previous experience connects them to this market or the problem they're solving. Right, so, and the easiest reason for me to reject the company if I don't see a connection between the founder's experience and the problem they're solving. That's one.

Mudassir (46:31.527)
Yeah, care about that.

Ihar Mahaniok (46:53.574)
Second, describe the problem. And I've seen so many pitch decks that go on to describing a solution without describing the problem. It's such a rookie mistake. Or they assume that it's obvious what the problem is. So they assume, oh, just an idea that came to mind that I heard recently, that

Oh, we are building a Chrome extension that will help you to find similar close to the one that you are looking at. Okay. That's technology. What's the problem you're trying to solve? Right. So why do people want this? Right. So, and like, and people like miss it, right? So like, oh, here's an idea. And we, and they assume that an investor understands why people would use it. No, make it a separate slide to have. Here's the problem that our customers have. It's a pain point. Make sure that it sounds like a pain point.

Make sure that they need a painkiller for this pain. By the way, look up painkiller versus vitamin approach. And also clarifying the deck, is like how do you know it's a pain? Maybe you were this customer before yourself. Maybe you spoke to a hundred customers. Maybe a thousand customers already paying for your product. By the way, traction is also a good way to validate the problem. But make sure it's clear what the problem is. And then...

Mudassir (47:57.109)

Ihar Mahaniok (48:17.33)
Make sure that you clarify your approach to a solution to the problem. But also, as I mentioned before, not only a salute, uh, make it the guy really like to see two kind of sides of the barbell birth, both your early stage first product idea that you are actually working on right now that will solve the pain immediately, but also a very like kind of vague, but high level.

Ihar Mahaniok (48:48.966)
vision for the next eight, 10 years. The decks which don't have high level vision are also not a proper venture startup decks, right? If you tell me that, you know, our product will be this little thing that will live on the, you know, corner of your screen and they'll do this one thing and you'll pay five dollars a month for it, that immediately sounds too small. But if it becomes like, you know, a platform,

in your vision where other companies will build upon or it will have lots of features that you will be able to charge like you know much higher things like that right so and market size market size is extremely important part of that because before we invest we always do market analysis ourselves we always double check whether the market is big enough but if you don't even try to analyze the market or your analysis shows that the market is small

then it's a very easy way to like to assume from a VC that market is too small. I'm not interested. Right. Let's say, you know, you want to sell, uh, shoes for, uh, you know, for, uh, corgis, you know, things like that. Just coming up with a stupid idea. Right. And you don't include the market size. I'm like, eh, probably too small. But right. But if you clarify that, you know, in your vision, it will be like a much bigger, like, you know,

Mudassir (50:01.622)

Ihar Mahaniok (50:12.042)
pet company and there is so much, this is a market, right? So size, then, oh, okay, maybe it's worth it. Don't forget that, especially early stage VCs, look for like 50, X, 100, X returns like us, and they need to see large market that you're playing. And probably the last, but not least, is the traction or if you don't have traction.

Mudassir (50:28.645)

Ihar Mahaniok (50:41.903)
clarity on your stage, like, we already have an MVP, or we are about to build an MVP. Things like that.

Mudassir (50:51.413)
Okay, that's a good one. I'm pretty sure that a lot of people are gonna find this helpful. So the next one is, that's my favorite one. So what's the vanity metric that everyone talks about when it comes to investing that you don't agree with?

Ihar Mahaniok (51:07.732)
Okay, let's try to go to find what to go against the vanity metric. So

Ihar Mahaniok (51:17.31)
It's so here the thing, right? So amount raised is a vanity metric in a way, right? And it's obviously a metric that's public, right? So unlike valuations, which are until some level are always private. And it's important that companies and founders don't compare themselves on just money raised. But at the same time, it is in some way

makes it clear, right? That this is a company that raised several million dollars is more real, let's say, than the company that just started and they didn't raise anything from anybody. So yeah, that's one metric that is really, really... But another, I think, metric that I don't agree at all is ability to raise short round from a large VC's...

and not fundraise again. So basically some entrepreneurs or founders, they boast, maybe that's, or like they speak up about their success in raising, I don't know, $2 million from one VC or like two VCs quickly, like this quickness of the round. Like, oh, I was able to get an oversubscribed round in a week and that's it.

Mudassir (52:20.053)

Ihar Mahaniok (52:44.034)
So I disagree with that completely, right? So if you had an oversubscribed round in a week and then you stopped fundraising, you mean it means that you made it extremely inefficient, that you ended up probably selling the wrong amount percentage of your company for the wrong price instead of doing the proper communication. And most importantly, you have too few of investors, right? So yeah, I strongly disagree with founders that try to keep their cap table as small as possible.

like one, two investors and say like, Oh, I don't want to accept more angels or like small funds because it's more hustle than it's, it's not the right help. Right. So what I found is that the most successful founders are the founders that never stop fundraising, that are always open to take a call with the VC and are open to add the

angels with small checks, I wouldn't recommend going below 20k, but like that can take 20k checks from angels that understand the value of syndicates because syndicates are often bring a lot of small but interested investors and that understand that the best thing you can do for your round is to squeeze down your largest VCs to allow more investors be part of the round.

So because the more people you have that are invested in your success, the more successful you will become.

Mudassir (54:19.729)
Yeah, one thing just to add here, and I've experienced that firsthand, so most founder have this false narrative in their mind, that's what I would like to call that. They don't want to dilute at all. So they have this idea like, okay, we're just gonna dilute this percent, and we're just gonna erase it like once, and not gonna erase it, because they just want to hold on to that cap table thing. So they don't grow that big. And somebody told me like a few years ago, he was like, Steve Jobs was like,

He had like 1% of Apple, which is a trillion dollar company. 1% of a trillion dollar company is a lot more than 60% of a $5 million company. You could do the comparison. And he was like, they were able to get big is because they were like open enough to have more people on the cap table so they can grow together. That was a fun question. Yeah, the next question that I have is, you're gonna find it funny. So how long, like what's the VC attention span is like?

Ihar Mahaniok (55:08.631)
I agree.

Mudassir (55:18.581)
How long do you actually look at the application or you look at the pitch deck before you say, okay, pass or reject? How long does it take for you to make your mind up?

Ihar Mahaniok (55:29.654)
Good question. It's an interesting balance because I actually, you know, sometimes the pitch deck is very interesting and it could be engrossing, but I actually have to force myself to spend less time on it, right? Because, you know, just I see at least 150 decks a month, sometimes 200. And there is other stuff to do beyond looking at the decks, right? And

So I try to never spend more than like three to five minutes at the deck. One more likely two to three minutes is more likely, but I spend more time talking with people who can say something about the team. So this is important thing. You cannot really put it in the deck, but the most important thing that I can, that can help me to, um, uh, decide to talk to the company is when somebody I know and I trust tells me that this founder is something special.

Mudassir (56:11.221)

Mudassir (56:25.557)
Mm-hmm. Okay.

Ihar Mahaniok (56:26.282)
You know, and at that point, so here to think if somebody I trust, tell me, talk to this founder, if they are something special, I don't even need to look at the deck. I'm always taking the call.

Mudassir (56:34.002)

Mudassir (56:38.229)
Okay, amazing. That was pretty helpful. And this is the last of that particular segment. So what was the worst investment you have made during, you know, geek ventures when you were like, when you were doing your own angel investment? So what was the worst investment? So tell us a little bit about like, why that was the worst one.

Ihar Mahaniok (57:00.162)
So, Geek Ventures is young enough and we are on one hand lucky enough, but maybe it was also a selection that we don't have any companies that went out of business, right? So, we started investing in late 2021. We kept investing throughout 2022, so, and 2023. And you know that especially 2023, second quarter, third quarter are the...

Mudassir (57:16.701)

Ihar Mahaniok (57:28.882)
largest by amount of companies that are dissolving and going out of business. And we have a model where we expect that over the life of the fund, more than half of our companies should go out of business. It's normal, it's expected. And here the thing, out of 30-something companies, not a single one went out of business yet. So no...

And when some of them will, yeah, that's formally a failed investment, but it doesn't mean that it's a bad investment, right? So here's the important thing. There is a big difference between a failed investment and a bad investment. Bad investment means typically for me, it's like if I went back to the moment I invested, I would, with my new knowledge, I would have not invested. Failed investment that is not bad is like, yeah, I should have made this investment, but things didn't work out for the company.

Mudassir (58:04.511)

Ihar Mahaniok (58:25.718)
But it doesn't mean that the investment decision was bad. And in the early stage investment, it is expected a lot of good investment decisions will turn out to return zero because that particular company will get to the point in their life where they just cannot go any longer. And there is a big difference. Anybody who invested in Theranos made bad investment decisions. But there are lots of other companies that dissolved and...

didn't return money that were not bad investment decisions. They just were unlucky in some ways, right? And especially, or there was something that they grew too fast and things like that. So out of my investment track record, I think I have about 20 companies that actually went out of business. And there were like a couple exits.

that were small, right? So, and I think, yeah. One of the companies that I feel I really remember as probably a wrong decision back then was the company MoveLoot, that was about seven, eight years ago, that tried to create a marketplace for reused furniture. So people would sell their furniture and the company would pick it up, bring it to their warehouse and so on. So it was...

extremely. So the decision I think was wrong, right? So because in hindsight, I can see that market was too small, the capital intensiveness of this business is too high, and the margins, the price point is too low. And with the, yeah, so with basically the whole world becoming more efficient producing goods, it's really, really difficult.

Mudassir (01:00:12.073)
to look.

Ihar Mahaniok (01:00:21.342)
And the goods keep going down in price, right? It's really difficult to make a good business like reselling used furniture.

Mudassir (01:00:30.405)
Okay, how much exactly time do you have left?

Ihar Mahaniok (01:00:34.683)
let's say in 15 minutes.

Mudassir (01:00:36.681)
15 minutes, okay, that's fine. Okay, rolling again. That was a very good one.

Mudassir (01:00:48.157)
One personal question, and it's a very personal question that I want to ask you, and the reason why I want to ask you is because I'm very new to this angel investment space, and I always say that I've been a lifelong learner. I learn a lot of things, but I still think that I don't know anything. So that's coming from a person who know nothing about this particular topic. So if we were to exclude this particular year, like 2023, raising around, or maybe two rounds, was considered a success for a founder, right?

So anyone who raised a couple million dollars, five million dollars, like that's a lot, but a lot of founders were raising like 10 million, 15 million, you know, Series B, Series C, or something like that, those people would be dubbed as the next big thing, right? Mostly focusing on the early stage investors who were like, early stage founders who were raising some bit close to one, one and a half, maybe two, two and a half million dollars. So that's a question pertaining to.

Why venture capital, so the question is like, why venture capital is like kind of losing its charm on social media now? And all of a sudden, it's like people are clapping their hands like for bootstrap companies. And bootstrap companies are like, everybody's just giving the example, so these people didn't raise any money, they're still successful, and the people you used to think were successful, they were actually called a fluke or like whatever, like because everybody was investing money and then they raised a big round.

So two questions actually. So why venture capital is losing the charm now and people are like more leaning towards bootstrapping? And the other question is, what is your opinion on people who were considered successful just because they were raising a lot of rounds? They didn't do anything, they just raised a lot of rounds.

Ihar Mahaniok (01:02:31.106)
So here's the thing, the questions about charm on social media or in general in press has absolutely nothing to do with the real business, right? So it's driven by press, it's driven by clicks and readers, or mostly not really founders, right? So it's, and there is obvious drivers to change of charm because the stories that are in focus in the last several years are a lot of stories of failures. Until the...

the changes that happened in 2022. A lot of stories were stories of successes, right? There will be always a founder that's the company was more successful, created this like massive IPO and so on. And recently there are stories of failures. When you see stories of failures, then you start like, you know, generalizing. But to me, this has absolutely no connection to real business, right? So in real business, it was always...

the dichotomy in a way, the businesses that bootstrap versus businesses that raise money from venture funds. And these are two different approaches. There are, of course, mixed approaches. There are companies that bootstrap for several years and then raise first round at high valuation. I've seen that as well. But the other thing that as we see, it's important to invest in all environments, mainly, and by environments, I mean, most of all, financial environment, not like

press environment, not like what's in vogue in social media. I don't care what's in social media. What I what I care is that the companies that I invest in are companies that are companies that can become extremely successful and can return and can grow really high and can return the capital. Right. So and typically in most cases, though not at all.

Companies that raise venture capital are able to grow faster, basically grow faster at top line, grow faster at bottom line and get to the significant revenue numbers, not the significant round raised numbers, but more like revenue numbers or profit numbers faster. And that's typically this like magic number, 100 million annual revenue is something that makes a company.

Ihar Mahaniok (01:04:54.538)
very successful, most likely it's become a unicorn, most likely it's like IPO ready company and so on. While when you're bootstrapped, it's just much more difficult, right? So because bootstrapped means you have to be near break given all the time because you cannot take somebody else's money to invest in longterm, like to hire people that are extremely promising, extremely helpful, but cost a lot in the beginning, right? So, and it...

There are cases when bootstrap companies become very successful. I think that MailChimp Exit was a really good example, right? But there are others as well. And it's important that of course, bootstrap companies are just out of VCS focus, right? So because they're bootstrapped, I don't invest in them. It doesn't mean that they're bad companies, but they're great companies, right? But they're the same for me, it's the same like out of my focus thing as like companies that do something completely different. For example,

companies that do hotels, right? So it's not a tech startup, it's a proper company. It's just like, I don't really know how their thing works, right, because it's not an hour focus. So, and for startup founders, my recommendation is always understand that not every business should be venture backed. Understand that you need to figure out for yourself in depth whether it makes sense for you to raise venture capital. Because some of the mistakes I've seen,

And I see a lot of applications to geek ventures that some people want funding when it makes zero sense for them to get venture funding, right? And they spend time. They will never get venture funding, but they will spend a lot of time talking to or applying to hundreds of VCs and not get any venture funding. So what I think you say is that if it makes sense for you to be bootstrapped, be bootstrapped, then don't spend time on trying to raise funds.

Mudassir (01:06:50.201)
And the other question was, what's your opinion on founders that were dubbed as successful just because they raised a lot of money?

Ihar Mahaniok (01:06:58.014)
Yeah, again, it's press, right? So, and I, you know, one of our founders recently posted that they raised what, five or six million seed round. It's a company called New Homes Made and they posted and everybody was congratulating the founder, Dan, on LinkedIn, right? So, and the co-founder, Sofia. And great, I was part of congratulating crowd because, and our fund was part of the, like,

the largest check of this seed round. And what it helps is that it's important that this press around this helps the company to actually be more successful, right? That's important. So, because in this case, this, I always recommend founders make a press event out of your fundraise because press loves it and it will help your company brand to be more significant. And that will help with sales. That's what's important.

Mudassir (01:07:52.889)

Ihar Mahaniok (01:07:57.734)
I don't care about this angle of the founder being just, you know, time person of the year or something like this. But what I care is that their company will be more well known and it will be easier for the company to attract customers and grow top-line. And that's great. That's absolutely great. I totally think it's great. But at the same time, everybody in VC understands that the founder who raised $5 million is far from a success, extremely far. Right?

Mudassir (01:08:13.629)
Health and brand identity, yeah.

Ihar Mahaniok (01:08:26.394)
From VC perspective the founders that IPO'd are a success because that's when VC gets their liquidity But it's still not a final success, right? Because they after IPO they need to deal with the fact that they need to work with their stock price And we see so many especially in the last two years so many founders that IPO their company and then the stock price went like 99% down, right? So, you know

Mudassir (01:08:36.592)

Mudassir (01:08:53.045)
Okay, yeah, a lot of company comes to mind, we're just like running out of time. So, okay, so we have this ritual on the podcast. So what we do is we ask all our guests a question for our next guest without telling them like who the next guest is gonna be. So we obviously have a question for you and I'm gonna take a question for our next guest as well. So the question that I have for you, the last guest left for you was, if you were to give your older self an advice, what would that be?

Ihar Mahaniok (01:09:22.058)
My orders are in the future, Remy.

Mudassir (01:09:23.941)
in the future, like not the younger self, but the older self. If you were to give your... Yeah, okay. Yeah, if you were to...

Ihar Mahaniok (01:09:27.278)
never heard this question before.

If I were to give my older self an advice is I think always find energy, always value your time and never forget that you're as young as you feel. And you can actually, you know, feel even younger. Right. So that's the thing. And you can achieve a lot. Right. So I think the one advice that you, no matter how old you are, you still have a lot of time.

to achieve stuff and be impactful.

Mudassir (01:10:04.117)
Amazing. Let me pause the recording, and then I'll take the question, and then we can turn it off. OK? All right. So thank you so much, Ihar. Really love talking to you. It's a shame that we're just at the end of our time, but lovely talking to you. Thank you for the time. Appreciate it.

Ihar Mahaniok (01:10:09.399)

Ihar Mahaniok (01:10:20.806)
Okay, thank you. And wait a second, you're not recording right now, right? So you want to eat...

Mudassir (01:10:24.181)
Okay, no, I'll pause the recording. So I want us to say goodbye, blah, and then I'll take the question after the recording is stopped. So it doesn't become a part of the recording, so that's why, it's because of that, okay? So, mm-hmm.

Ihar Mahaniok (01:10:39.444)
Okay, so.

Thank you, Mudatir. Thank you. It's really, really interesting discussion. Your questions are great. The questions from your audience are great. I really hope it was useful for people who are listening. And yeah, feel free to reach out to me. You can find our contacts there.

Mudassir (01:11:02.501)
Awesome. Thank you so much.

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