Jenn Patterson: Janet and Bryn, we’re so excited to have you here on one of our inaugural NEXT Canada podcast episodes. Janet, I’m going to throw the first question your way. I think you’ve had a very impressive career thus far that has not necessarily followed a linear path. From transforming eBay from collectibles to a mainstream marketplace, to founding Kijiji and then pivoting to then be a partner at Real Ventures. I’m curious, why shift from running a business to investing in businesses?

Janet Bannister: VC was never something that I considered until I was contacted by one of the partners at Real Ventures, who was looking to hire a partner in Toronto. Until then, the entire Real Ventures team had been based in Montreal, so they wanted to increase their presence in Toronto. As I said, I was surprised at first when they contacted me about venture capital because I’d never thought about it. But, when I started reflecting on it and talking to JS, the other partners and other who knew the industry, I realized that being a VC is really about working with entrepreneurs and helping those entrepreneurs succeed. I realized that this opportunity was a great pairing between my operating background and my consulting background.I was also at a point in my life where I had had some operating success, which was great, but what I really cared about was helping other entrepreneurs. And I thought, you know, what could be better than working all day with people who are committed to building a business, who are passionate, who are high energy and hard working. If I can find a way to leverage my experience and help them in some way, what could be better? And so, that’s how I ended up joining Real Ventures five years ago.

Jenn Patterson: Amazing. So, speaking of leveraging your experience as an entrepreneur and founder yourself, how do you approach evaluating investment opportunities? Are you looking at the founder? Are you looking at the business? Or looking at a bit of both? And then, how does your past experience inform how you evaluate these opportunities?

Janet Bannister: So I think at a very high level, there’s two major things:

1. The vision.I ask, is this a huge vision? Do we believe that this could be a big business? Is this a big market? Do they have a unique insight that will enable this company to win? Do they have a competitive moat? And how are they going to win with their competitive moat?
2. The founding team. What I have learned over time is that success is actually not correlated with number of years in the industry or number of years experience. Success is more correlated with three things that I look at now. One is self-awareness. So as the founder aware of where their strengths are, where their weaknesses are? Are they aware of of where they need help? The next thing is a growth mindset.and I mean that in respect to a personal growth mindset. Are they somebody who is always looking to get better and learn? And then, the third thing is transparency. And by that I mean not just transparency with the board, but transparency, with themselves. And so being true, willing to look at the metrics and say, “OK, is this working or is it not working?” And, “What what do I need to do to improve?” And just being open, honest and transparent with where they stand and where they need to go.

Jenn Patterson: That’s a good segue way to introducing us to Bryn. When we first chatted about the podcast, I said, “Who do you want to have on with you?” Janet immediately said, well, I think Bryn is perfect. I think that he’ll be very honest about his path and how he’s gotten to the point that he’s currently at with PartnerStack. So, with everything you just shared about evaluating the founder versus the business, what was it about Bryn and PartnerStack that made you first think this might be something worth investing in?

Janet Bannister: In terms of the company. I immediately saw a huge vision here in terms of what they’re doing. Basically, they have developed a platform for companies to launch, manage and build channel partner programs. Where partners are reselling the company’s software or other products. I understood that this was a huge opportunity because through my experience at eBay, we had worked with a company called Commission Junction, which is in the affiliate space. So, I understood that business and the parallels. And then, there were two unique insights that Bryn had, which very much got my interest. One was the importance of the partners — which reminded me of my eBay days where whenever we had a tough decision to make between prioritizing the sellers and the buyers, we always said, hey, you’ve got to choose the buyers. At the end of the day, the sellers will go where the buyers are. The second insight from Bryn was that they were the first player to look at the market that way and say, it’s the partners that are going to make or break this and we need to build the product so that it works for the partners rather than just the large companies. And then they also had this marketplace element, which was unique. So, looking at those insights combined, that’s how I knew there was potential in the company.

On the founders side, from our first meeting, I could tell that Bryn was really authentic. He was very open about “here’s where we are, here’s what we’ve learned.” They had just finished Y Combinator and he was very transparent about what they had learned, what they tried that had worked and how they had pivoted their business. And so, I could immediately get behind somebody who understands where he is at, has a growth mindset and wants to personally grow.

Lastly, I often look at is how quickly does the founding team go from having an idea, testing that idea, learning, iterating — the speed at which a founding team goes through that cycle is very indicative of how successful they will be, because regardless of where you are in your business life, you always need to test new things. So as I talked to Bryn about the history of the company and why they had gotten to where they are, it was evident to me that they were able to go through that cycle very quickly.

Jenn Patterson: Bryn, we’ve heard from Janet then on your vision and it sounds like you had all the right ingredients to realize that vision. But, how did you come up with the problem that you were going to solve? And then, how did you really set about realizing your vision? What were some of the lessons you learned along the way?

Bryn Jones: So, I always joke that we have no business being in the channel sales space, because what we do is sell enterprise software to other enterprise software companies. So explaining what we do is really challenging around the dinner table with family.

But, you can think of what we’re trying to do as is building the world’s largest sales team. We arrived at this solution from another company we were building back when I was in grad school. The company was effectively a worse version of Slack. And on top of it, we sold it to nonprofits, which poses its own set of challenges, but also brought great learning. We bootstrapped and got really good at raising grants, raising like five hundred thousand dollars in grants. But when we looked at our business and we were doing about fifteen thousand dollars a month in revenue, it wasn’t much to survive on. So, we went to all of our friends who were working at web development shops, marketing agencies, all before the big boom of tech in Toronto. And we just said to them, “If you send us business, we’ll send you a commission.” We were calling it a refer-a-friend program. And then something serendipitous happened-really big companies started reaching out to us, not to use our product but asking, “How do you build your channel program?” And to which we said, “What’s a channel program?” We had no idea.

It came down to that serendipitous moment, something that happens quite often in the Bay Area, but that you didn’t hear about a lot in Toronto at the time.

At the time, Shopify had really just started building out their office here, but was still small enough that you could cold email people and they would get back to you. So, we emailed someone named Travis Hines who was leading their partner program We went down to Shopify’s office, and showed him what we working on. He responded by saying “Yeah, we’re not going to buy your software if you build it. But, We have sixty-five people that manage something similar and it does 20 percent of our revenue and we’re making a big investment in the tech behind it.” But he also walked us through the problem they were working to solve and effectively built our product roadmap. I don’t even know if he’s aware of the impact that he had on the business. So, thank you, Travis. Immediately following that, we ran some quick experiments.and then, 60 days later, we got into Y Combinator on an idea.

Some key lessons along the way:

1. Your co-founders matter. And, I have four great co-founders. We all worked on the first company together and, after shutting that down, we moved to the Bay Area together. We’ve gone through ups and downs and we keep each other level headed.
2. It’s very hard to find and chase a massive market opportunity.I think you have to just solve problems that you understand or have key insights into. And you can help shape the market. Some of the biggest players in our space, like Salesforce, were never really funded by any of the major venture capital firms because no one ever understood the market opportunity inside of SAAS. So, I don’t think that you can pick your market, but I think that you can try to fix a market.
3. There is no silver bullet for finding and solving problems.I spent a lot of time early on looking for silver bullets, but I realized it’s more important to have a lot of willingness to battle through really hard problems.

Jenn Patterson: I think it’s really important for anyone who’s thinking of pursuing a career in entrepreneurship to recognize that it isn’t easy. I think what Janet spoke to earlier about what she saw in you and your personality is ringing very true. Your self-awareness, your willingness to learn from your mistakes and iterate. Would you say that your relationship with your co-founders is really that’s what’s kept you moving forward in terms of getting through some of those rougher patches? Has there been anyone else in your network who’s really supported you, other than Janet?

Bryn Jones: Co-founders are the bedrock for everything.

Ultimately, if you’re going to start a business there will be a lot of life changes along the way. Breakups, illness, loss. There are a lot of hard but also incredible good moments that are inevitable along the way. So, if you start a business, it’s very important that your co-founders are going to be there for you in good times and bad. One of the YC partners, Aaron Harris, told me that “If you’re going to build something of substance it’s going to take at least 10 years.” And there will be challenges for you personally throughout that period. So, you better surround yourself with people that can support you. My co-founders and early employees were the foundation to everything. And the ones that didn’t work, we got rid of very quickly. But our first two employees are still with us to this day. We treat them with a lot of respect. We give them responsibility and they get stuff done. And then, you know, Janet, Tim and our other advisors have been really, really great as well.

Jenn Patterson: I’d like to shift gears a bit and talk about PartnerStack’s growth. At what point did you decide to fundraise and how did you go about finding the right investors?

Bryn Jones: I don’t know if we were as deliberate with it as we should have been. Going through Y Combinator, there’s a hundred other companies and the hundred other companies all just raise money. So, we just did what the other hundred companies did. And that’s kind of how we thought about it when we were in California. When we came back to Toronto, we realized it was very different. It was like, all of a sudden you’re outside of the YC bubble and you have some space to think. We reconnected with a network of people that were helping us beforehand. Specifically, my co-founder reached out to Mike Katchen, the CEO at Wealthsimple. And Mike said that he would help us by introducing us to Janet. It made sense right away. Janet knew marketplaces. And, you know, she went to the same university as I did and we both came from athletic backgrounds so we immediately had a lot in common.

Jenn Patterson: Janet, from your perspective, would you say there was that instant connection? I mean, you’ve already spoken of very fondly of Bryn, but, how do you recall that first meeting?

Janet Bannister: I remember we met at a Starbucks. And I remember sitting down with him and it was really his business that immediately resonated. I’ve already touched on the parallels, but PartnerStack really was doing something that nobody else was doing in this space. I was impressed by the insights he had around, the importance of the the partner side and around the importance of thinking through how you build a marketplace. And so, I immediately connected with it. I got it. I got what he was doing. I got why he was doing it. I saw why it was unique. I saw a competitive advantage. I saw where the business was going to be big. Then, we continued talking.

Jenn Patterson: Then, obviously a lot happened between that first conversation and then saying, “OK, let’s do this.” Was there anything that happened along the way that was really instrumental in finalizing the term sheet?

Bryn Jones: So, I can speak from our side. So it’s always easy to reflect and say, you had this meeting in a coffee shop and then you got the term sheet and you got your series A. But, that wasn’t the case for us. We had the meeting in the coffee shop and we worked with Janet and Sam to go through and prepare to pitch the other partners at Real. And our pitch really didn’t go well, it was not good. I flew up to Montreal for the day. My co-founders were here in Toronto. Ultimately, I don’t think we clearly communicated what the opportunity was. And more importantly, I don’t think we communicated why we were the right people to make the opportunity work. I remember coming back to Toronto and talking to Janet and she’s like, “So how do you think it went?” I was like, “It could have gone better.” But, these things are never as simple as they’re made to seem in a movie or on a lot of blog posts.

There are a lot of no’s to get to a yes. And even the people that ultimately say yes, may have some questions before they do.

So that was definitely like our experience in that in that early stage.

Janet Bannister: From our team, we felt they were building a SaaS based marketplace. So they had two revenue streams. One was the SaaS revenue and then the other was marketplace based. I think sometimes as a business, when you have a model like that, a lot of VC’s try to put you in a box. I noticed this with some of my other companies that sometimes foreign investors will say, oh, well, you know, “You don’t really fit in this box and you don’t really fit in this box so we don’t know what to do with you.” With PartnerStack, some of our partners struggled tying to put them in a box, but I remember saying, “How are they going to be big?” Is this a SaaS plan long term or is this a marketplace long term? And I always believed that it was going to be a marketplace. After a few more discussions, we we decided to invest. I think that I would just say, as a seed stage investor, “OK, what’s really there?”

Even if they aren’t polished and might not tell the best story, we need to look through that to see the potential.

But once we bring on a founder and founding team, we need to help them with some of those pitch skills so that they are ready for Series A.

Jenn Patterson: So, you invested in their potential. But, Bryn, would you say your interpretation of your business model was aligned with how Janet defined it? At the time, would you have called PartnerStack a marketplace play?

Bryn Jones: Yeah. We saw ourselves as a marketplace, but I don’t think we actually understood what a marketplace was. If you look at our pitch from Demo Day from Y Combinator, the business that we have today is the exact same business we had then.

It wasn’t a straight path to get from where we were then to where we are now.

But I think the term “marketplace” speaks to the idea and insights we identified early on. And then, the reason we are where we are today, is because of the people we surrounded ourselves with. Investors like Janet who really pushed us to own our potential and not become something we weren’t.. Deviating too far from your path or competitive advantage is the best way to fail.

Jenn Patterson: So, since your seed round with Real Ventures in 2016, how would you say your business has evolved?How have Janet and the Real network helped you grown your business?

Bryn Jones: In 2016 we realized , wow, we have to build a real business. It has to generate real revenue, it has to drive real value for our customers. 2016 was really tough for us as a business. I think we met every two weeks or so fo three months. And I kept telling Janet that we were like going to the dentist — that no one wants to go but everyone has to go… At that time we were building the value into our product and were making really hard decisions. And kudos to Janet for recognizing that it wasn’t actually about growing at that time, it was about building the product. If you’re an investor, that’s a really hard update to hear. To say, thank you for your investment, now wait patiently as we build. But that’s what we had to do and we were really methodical in the way that we did it. For us, the really important piece was time for on-boarding. We realized that that was a huge barrier for our customers when they’re coming onto our platform. Our time to on-boarding at one point in time, I think was like 45 to 60 days. So, we looked at that metric and we just hit it over and over and over every single week. How do we take it from 60 days to 45? How do you take it from 45 to 30? Some of the experiments we ran did not work, but that was a pivotal point in our company because we could have done the “let’s just grow and let’s figure it out after the fact” thing. But, we decided to heavy-down on building value. We only really started going to market at the end of 2016, early 2017. So, that’s when we started generating revenue. 2017 was about figuring out how to sell. Product-market fit is not just building a product, it’s actually figuring out who to sell that product to. And 2018 was learning how to scale. We we are very fortunate to work with Janet, to go through it and figure out those moments because there’s a lot of points during that period where it was certainly very tough.We’re now at a stage where it’s about growth and building off the processes we’ve put in place. So even if it works 100 times, how do we make it work a thousand times?

Jenn Patterson: OK, so definitely not a straight line to growth. Janet, what was your take on PartnerStack’s post seed-stage journey?

Janet Bannister: I have so many great memories of working with Bryn and I’m sure they will continue. Thinking about the challenges with time to onboard, I remember that very vividly. For me, as an investor, what it meant was that they were not hitting the revenue targets that they had said that they would hit. But it actually didn’t fuss me too much, because the way I look at it is, we are investing in this business to be a huge business. So, is this the right thing for the company to do now? Yes, absolutely. And you go back to this cycle that I talked about in terms of, hey, how quickly are they testing, learning, iterating? And so to me, I wasn’t disappointed when I heard “we don’t have more revenue, but here’s what we’ve done in terms of improving the on-boarding.” We had agreed that that was the most important thing to focus on and we showed progress around that priority. In leu of revenue, we did a couple of bridge rounds as a result. Even though they weren’t hitting their revenue targets, we invested more and other investors invested more.

When a company isn’t hitting their milestones, as an investor, I ask two things:

1. Do I still believe in the vision — do I still believe that this is going to be a huge company?
2. Do I still believe in the team?

With Bryn, when I asked myself these two questions, I would say “100 percent I still believe in that vision, 100 percent I think this team is great.” Yeah, they taken a little bit longer, but they’re doing the right things. That patience paid off recently as they are now able to scale efficiently. And so that when, you know, and as we’ve seen more recently, now they’re able to scale.

As Bryn alluded to, he was a competitive swimmer, I was a competitive runner. We often talked about competitive athletic analogies and just the other day Bryn and I were talking about his experience as a competitive swimmer. He said that he was quite small when he was younger and, as a result, he had to work really hard because he had his growth spurt later. But then, once he had his growth spurt, he took off. And I said, that’s a little bit like your business, right?

Jenn Patterson: I like that analogy. We talk a lot about the need to walk before running, but I think a lot of entrepreneurs probably do think “I need to hit those more traditional KPIs to demonstrate growth.” It’s fantastic that you didn’t underestimate the importance of building a strong foundation. And, Bryn, thank you for being so candid about the lessons you’ve learned along the way, because it seems that, with strong support, you’ve now seen great success — PartnerStack just hit a million in annual recurring revenue in 2018 and, in 2019, you closed Intuit and another round of financing. Congrats!

Looking at your success now, was there a moment in time when you said “This could this could really be a rocket ship. This business could be really huge”?

Bryn Jones: Yeah, there was. There’s a few moments. But, the biggest moment came when we were negotiating a contract with a very big customer and the customer wanted us to do something that was outside the vision of what we wanted. When I say very big contract, I mean, you know, well over six figures and we could have said yes to their request. But, we made the decision to say no. We said no because It’s very important for us to actually own the partners in the platform. And our customer wanted to own the partners, which meant we would’ve been limited in our capacity to grow the network. I remember the conversation I had with my co-founders — if we say yes, we’re just going to become their development shop. They’re going to tell us how to build our product and our roadmap. Ultimately, they came back and said, “No, you’re right.”And in realizing that we had that type of leverage was the moment where we realized wow, we’d really built something that was very valuable. That was the most tangible point where we realized that what we had built was was very big.

Janet Bannister: I remember Bryn calling me throughout this process when this is happening. He’s like, here’s what’s happening and here’s what we think. I mean, I just think it’s another example of what we talked about before.

I believe the objective of the early stage founder isn’t to maximize revenue in the short term. It is to build the foundation for an amazing business.

With the PartnerStack team willing to say “We are going to do what’s in the long term interests of the business, we are building a big business and we will not violate our principles in order to close one big contract in the short term”, that was very pivotal in establishing who they are today.

Jenn Patterson: So in terms of understanding the potential for the business, was that a big moment for you as well?

Janet Bannister: Well, actually, I don’t know. You know, I don’t think there was one moment per say., Frankly, I think that there’s no such thing as a rocket ship.. It’s a lot of ups and downs. Maybe it’s more like a roller coaster, but even a roller coaster makes it seem so easy. Just get on and go. And, it’s never that way. I think too many times that founders will read an article about a company that just got a big contract or they just raised a huge round. And they sort of look at that and say, “Why is it so easy for them and why is it so hard for me?” The reality is, it is so hard for everybody. They just don’t publicize that. Doing what I do, I get to see how hard it is. I remember, in the early days of Kijiji, it was really hard. We struggled and we had lots of setbacks.Somebody, a few years ago said, you know, “Kijiji was so amazing. It was just like it wasn’t there and then the next thing you knew, it was everywhere. It just came from nowhere.” And I thought “it really just didn’t feel like that.” One of the key things I would say to any entrepreneur is if it’s really hard, if you feel like you’re taking two steps forward and one step back, that’s the way it’s supposed to be. And that’s OK. And you just need to keep going, keep learning and keep growing.

Jenn Patterson: So, even if there is no such thing as a rocket ship, do you think that like most of the companies you’ve worked t have some kind of inflection point?

Janet Bannister: I think it depends. Maybe when they feel they’ve hit product-market fit.

But, I don’t think it ever gets to a point where a founder can say, “Oh, now it’s smooth sailing.” There’s always going to be challenges. And it doesn’t matter who you are. There’s always going to be challenges.

And yes, you may hit an inflection point and then you’ll go along and then you’ll hit another inflection point and then you’ll hit another inflection point. Then you figure out how to maybe expand internationally and that’s another inflection point. Instead of a rocket ship, I guess it’s a lot of different inflection points as you go through your journey and you need to just keep working and learning and getting better.

Jenn Patterson: So, Bryn, where are you on your journey now? Where do you think you want to take PartnerStack next?

Bryn Jones: I think it’s really just doubling down on what we’re doing and telling that story.

A lot of people emphasize storytelling externally, whereas they should probably focus on storytelling internally.

If you focus on storytelling internally, you have incredible employee retention. If everyone is bought into the mission then everyone feels empowered to to do their job

As we build our plan for 2020, the theme is frictionless — how do we make the experience frictionless for our employees and our customers. We’ll continue to focus on prioritization and not chasing things that might help our egos but does nothing for the business.

Jenn Patterson: And Janet, what advice would you give Bryn at this stage of PartnerStack’s growth?

Janet Bannister: I love frictionless as a theme.

But, I think at the end of the day, business comes down to two things:

1. Setting the right priorities
2. Executing against those priorities.It’s really about figuring out what you’re going to do and then doing it. This sounds simply in theory, but it’s hard in practice.

Jenn Patterson: So, when thinking about growth and prioritization, where does local vs. global come in? Bryn, when you look at your roadmap, how far can you take your business in Canada and when, if needed, would you think about international expansion?

Bryn Jones: We’ve already started growing globally. In Q2, we hired our first international employee who is based in L.A. (Hi, Stephanie). So, while we think of ourselves as a Canadian company, we’re building a global business. We made the decision to come back to Canada in 2015 even though, had we stayed in the Bay Area, we would have raised a lot more money. But, we came back to Toronto because it’s the best place to build our business globally.

Jenn Patterson: Janet, from an investment perspective, what’s your take or advice around local versus global growth?

Janet Bannister: I think every business in Canada needs to be thinking globally. That being said, I think that Canada is a fantastic place to grow a company.

When I think about growing a business, I think there are three main things: talent, ambition and capital.

Canada has great talent, great engineering talent and increasingly great talent for product management and sales. Historically, Canadian entrepreneurs were criticized for not having enough ambition. I’m definitely seeing a change in ambition, where Canadian entrepreneurs today want to build huge businesses. They want to build globally recognized companies.

Jenn Patterson: What do you think is driving that increase in ambition?

Janet Bannister: I think part of it, frankly, was Shopify. I think that was part of it. And people said, “Hey, if they can do it, I can do it, too.” I think you also have repeat entrepreneurs who are coming back into the market who have said, “Hey, you know what, I sold a business for X and now I want to take on another business and do 10 X. And then, I think the other thing is capital. We’re seeing more and more capital, from Canadian VCs as well as foreign equity capita, coming in to support the companies. And I think in terms of an ecosystem, it’s very much a network or snowball or a flywheel where all of those three things — the talent, the ambition and the capital — it builds on each other. So, a rising tide lifts all boats. I am super excited about the state of the Canadian ecosystem. I was in San Francisco a few weeks ago talking to a set of Japanese investors and in London last week talking to a bunch of European investors. I can tell you from an international perspective, Canada is on the radar and people are saying, “Wow, you guys have a great tech ecosystem and we want to spend more time there.”

Jenn Patterson: That’s fantastic. Do you think there’s anything, though, that we could be doing differently to attract more foreign investment or to grow more Canadian entrepreneurs?

Janet Bannister: I mean, I think that we have the right ingredients. As I mentioned, I think that we need to continue to build on this strong community. So many of our entrepreneurs really develop strong bonds with other entrepreneurs in similar situations and learn from them. And so, I think it’s important that, as we grow, that we continue to have a very strong community.

Jenn Patterson: So, what about you? Do you think you’re done with your entrepreneurial journey?

Janet Bannister: I absolutely love what I do. I feel so lucky to get to do what I’m doing. And some people in VC say “I miss the satisfaction of being an operator.” Personally, I don’t find that. I find seeing entrepreneurs grow and have success gives me so much joyI just I just love it.

Jenn Patterson: Just in closing, thinking on where you’ve been and all of your experiences, what advice would you offer to someone who’s thinking of setting out on an entrepreneurial path?

Bryn Jones: On my side of things, be skeptical of anybody that’s providing advice on an entrepreneurial path. Really, I think for a while, we chased frameworks or looked for people to validate things that we were doing, but I have learned that that’s actually not how you become a good entrepreneur.

You become a good entrepreneur by making decisions very quickly. Learning from those decisions and being able to then move forward very fast.

Like you really need to have a short memory on your failures. I get really frustrated when people come to me over and over and over and over and over with opinions without knowing a lot about our business. At the end of the day, you have to make the decisions. If you’re going down this path, you own your destiny and don’t put that on anyone else. Be proud that you have the capacity to go down this path.

Jenn Patterson: Awesome. Janet?

Janet Bannister: So I have to three things that I thought about sharing.

1. Always be learning.Both in terms of how you can be a better leader and how you can be a better entrepreneur.
2. Develop strong bonds with people who make you a better person— who you learn from, who give you energy, who support you — because you will need those people and they will help you. But also, you can help them. And this is a community, so give back.
3. Listen to your heart and follow your passions.Bryn talked about listening to yourself. and I 100 percent agree with that.Ask yourself. what do you want to do in your career? What type of business do you want to operate? Do you want to be an entrepreneur or do you want to be something else? Really listen to what your heart is saying, because if you are not doing something that you’re passionate about, I don’t think you will ever achieve the fullest success that you could realize.