Founder Journey ft. Sally Daub

Speaker A: I was going to say something quick. The team I think we've now had this week, we've probably had 30 far sides throughout the week. When I looked at the lineup, we had some names that were very recognizable. Like, I think, was it Wednesday? We had Brad Feld, which naturally filled up a room because he's someone famous from the States. But the one that got me most excited when I saw the lineup was Sally, because I think Sally's been around the ecosystem. She's a builder and she does, and people don't know who she is. But one thing I'm, I'm looking for this conversation. I'm sure Sally's going to tell us exactly what she thinks and she's going to have lots of wisdom to share. So thank you for coming and joining us, Sally.

Speaker B: Yeah, thanks a lot, Alex.

Speaker C: Um, uh, yeah, so, um, for those of you just, um, before we get started, because we've. I know Sally's got a lot, a lot to share and I'm excited to hear about it and I'm sure you are too. This off the record series has been inspired by, um, a podcast series that Alex and myself co host called, called Founder Journey, where we go kind of really deep, um, into like the founder story and make sure that we're making it more educational so that there's lots of takeaways for those that are either early stage or currently kind of in the throes of building and entrepreneurship and just to make sure that they have the knowledge from those who've done it before and just kind of learn about the challenges and how to overcome them. So just to preface, kind of like what we're doing here and just how wonderful it's been to hear these, these stories. So, Sally, I'll kind of kick it off with, um, maybe more of like an overarching question and something to kind of bring you back to the early years. But I always like to find out, like, you have obviously built, scaled successfully and exited like a company already, and you're, you're currently doing amazing work with Border Pass, which we'll get into. But before all of that happened, um, what initially kind of made you curious about wanting to build and about entrepreneurship in general?

Speaker B: I really don't know. Um, but I will tell it a little closer. Okay. Um, even at a very early age, and I think if you talk to other entrepreneurs, this is the case, I was the person renting a bus for all the engineers at my school to go back and forth. Um, not something that you could do today, but I also Showed up early and I photocopied all the engineering books and resold them on campus and made a lot of money. Um, so I was always kind of looking at ways to build businesses. I think what I really liked about it was the challenge, the freedom and kind of like the ability that you could kind of benchmark yourself over time and see improvements. But how this why I'm doing this. And I have a very successful family and a lot of them have followed traditional routes. I don't know why. Uh, this is something I love to do and it's almost obsessive with me. Tinter building businesses.

Speaker C: No, go for it.

Speaker A: So you start off in university. You're, you're, you're doing the bus shuttles, you're doing the, you know, photocopying of the engineering books.

Speaker B: I also did rock concerts too.

Speaker A: But which, uh, which one's the most enjoyable? Now I got to ask that.

Speaker B: The one that made the most money on at any given time. Well, I actually made a lot of money on the photocopying, but then that kind of got. Wasn't really something you should do. And I became an intellectual property lawyer. So anyways.

Speaker A: But, uh, you were inspired.

Speaker B: And the bus rental was really great until everybody got really drunk and then the bus company came back. I had a lot of time, fun doing the. I did a lot of the concert promotion in high school during the period of time. But I also learned like we had a whole bunch, a bunch of concerts that were massive successes and we made tons of money like 16, 17 year olds. So we were selling and then we had one where we lost everything. So like, these are big learning lessons about what was happening, but I enjoyed them all. I did.

Speaker A: Interesting. I don't want to know what it would be like dealing with a bunch of drunk people on the bus. Um, that does not sound enjoyable.

Speaker B: No, it was not.

Speaker A: So. So it's interesting. You're doing a bunch of stuff, making a bunch of money. Why go be an IP lawyer?

Speaker B: Um, that's a really interesting. So I went into engineering. I did a chemical engineering degree at the time. Coming out of high school, um, I was really deciding, discouraged from doing engineering over and over again. It wasn't a common degree for females at that time, but I kind of, I was very methodical. I looked at where the most job opportunities were and chemical engineers there was the most opportunity. So when I finished that, mostly, um, somewhat due to personal issues, but I was going to go work for Procter and Gamble making diapers in Belleville. And, um, it just wasn't. And I just didn't know if I wanted to live in Belleville making diapers. And I ended up going out, um, east, um, with my spouse at the time. And I was going to go work in the oil industry. And I'm, um. No kidding. They wanted me to run the library there. And so I was like, okay, this is really bizarre. So I decided I wrote my LSATs and I got into law school. But even when I was at law school, I was teaching word perfect at night, making like, like, seriously at that time, like a hundred dollars an hour. And I already built the business and I didn't even know how to use it. So I was, I was doing law school. And I don't regret that because the one thing that I think, and this will get into Border Pass, is most people do not understand the law, and it's incredibly powerful. So when I was running my businesses, not only can I dive deep into the technology, but I can sit at the table and negotiate a contract. And I'm not, I don't have to wait for legal. Like, I already know. Even when I was doing my IPOs and the security, it's like, I know. And I do think it gives you a lot of ability to kind of understand, um, you know, how to move things forward faster when you understand the legal conditions. And because you're going to get a lot of people telling you, I was talking about this earlier, you can't do that because it's illegal. There's always a way.

Speaker A: So do you think you can't do it because it's illegal because people are lazy? Is this a lazy excuse or People are just.

Speaker B: And you have to remember, like, lawyers are not paid to, uh, give you advice that puts them at risk. They're always going to tell you that everything you do is going to be a problem, and they can't guarantee you that you won't get sued. And I actually do believe, like, if you're, you know, if you're successful, you're going to get sued a lot. So it's having the confidence and understanding how to manage that. And a lot of entrepreneurs don't know how to do that.

Speaker C: Okay, so you, you now have sort of like the, uh, equipment now essentially to like, uh, go into these rooms and kind of have these very important, complex, complex conversations, I'll say, because for those who don't have the legal background, it is a complex conversation. So what kind of sparks now that you're like, well, yeah, this is great. And I have all this Knowledge. But, like, what makes you now want to go out and say, like, I want to go into the semiconductor business that you successfully built and scaled. So, like, why, why kind of go in that direction and say, I'm just going to start this now, or this was a really good idea to run

Speaker B: with the semi, um, is this on yet? The semiconductor business really was because I met first of all, my path took me into ati, um, I had no knowledge I'd come out of Nortel. Suddenly semiconductors, ATI went through a huge growth phase. I got introduced, like, I talked to Steve Jobs, I got to do all sorts of life. I understood the ecosystem very, very quickly and I met a partner and really I wouldn't. It was because of Hugh Chow and us combining up at that time. Time. And so I think if you look at a lot of founders when they start companies, it's not, oh, I, you know, as a little kid, I was going to grow up and be a semiconductor. I just knew I wanted to do something innovative. And then I met, you know, the factors came together and I met the right partner. And that's true of a lot of my other businesses today too.

Speaker A: So quick question. So you train as a lawyer. How do you get to Nortel and how do you get to ati?

Speaker B: So I was at a law firm. Um, and I'll be honest, they, I, I don't think they liked me very much there. They did keep me on for quite a while. Um, I just wasn't what they expected. And I was at Smart and Bigger and I was doing patent law, um, and doing a bunch of stuff. I was a very young associate at the time. And again, and I'm glad that this is changing, I was the only female in an entire office of males. And, um, I have a lot of bizarre stories from that time. And, um, one, um, a per individual who recently passed, who was a very good friend of mine, recruited me out of that, uh, Smart and Bigger and took me to Nortel. And I do say to a lot of people finding that one individual because he just. The next thing I knew, we were on flights and I was negotiating $100 million deals with companies at the time like Motorola, et cetera. And he just, he just really believed in my capabilities. And so that's how I ended up at Nortel. Um, and then I was recruited out of there to go into ATI at the time, um, and I was pretty young and I ran a lot of, like all of the business development and licensing. It was a very chaotic company that had Scaled. And there's a lot of hilarious stories there too. But I got an immense amount of knowledge about the industry and the entire ecosystem in the short period that I was there.

Speaker A: A couple things for context, because I don't think people realize that ATI is one of those early startups that really put. Was a successful Toronto company. They're now basically AMD headquarters. Uh, AMD in Canada was. Is ati. Another thing you mentioned about finding the right partner? I don't know if you. When I was talking about doing this Fireside, do you remember that you try to recruit, uh, Amar Varma at ati? Um, do you know who Amar Varma is? No.

Speaker B: Who's the.

Speaker A: So arm of Arma until now? Yeah, yeah. So no. Arm of ARMA is someone that went on to start Extreme Labs. He started and he's had two $400 million exits and he has a third company. So he remembers you trying to recruit him and he said no. And you try to recruit him again to ati. So you obviously had. You have an eye for talent.

Speaker B: Yeah, I do think I've gotten very good at hiring, um, and then realizing when things don't work out. Um, I'm sure he's a lot younger than me, but there was a lot of very talented. Even at Vixis, we had such a talented development team and engineering team there, and a lot of them have gone on to do all sorts of successful. Um, even if you look at a lot of the semiconductor groups within, you know, Apple, Amazon, all these different groups, there's a lot of Canadians throughout there. Um, we never really got our ecosystem right and that's a much longer conversation.

Speaker A: So I want to have that conversation another time and just want to go a bit deeper. How do you identify this talent? Because it's, it's. Everyone thinks they do, but like, just the people I've seen you work with, people I now hear you trying to recruit, you always seem to have that eye. So what is it?

Speaker B: Well, I think it's a combination. It's not just identifying talent, but it's when you bring them in, really fostering them and making sure that you're, you're, you're making those people even, you know, bringing their talent out. And I think a lot of the times that is lost, um, with a lot of people that are, that are moved into companies. So I, I, um, really have a technique of, you know, um, somebody that works with me is here today. Like, I, like, I'll give you a lot of rope, but I do fall on like, you know, if you hang yourself, I, like, I'm, I hold people very accountable for what they do, but I highly reward them and I allow them to move forward and make mistakes if they have to, but they have to clean them up and be accountable for what they're doing. Um, but I think, you know, there are some common things that I look for. I look for people that are very adaptable that like, I don't want to hear what you did in your old company. I want to know what's going to be new going forward. Anything that we did before doesn't mean you repeat it now. You have to be willing to move and change. You have to have good judgment. Um, um, you know, and it depends on the role that you're in. But you know, I'm a big believer it doesn't matter what AI is doing. I still think coders need to understand math and structure and like, it's like building a house and if you're not highly organized. And I have a way of kind of drilling through people and seeing how they respond. So, um, you know, I'm not, I'm always learning too as well and, but when I do bring people on, I will challenge them and um, their success obviously breeds my success. And if it doesn't work out, I've gotten much better at understanding it's in their best interest and my best interest

Speaker C: too as well to part aside from the hiring aspect and everything that you've just learned along the way from, from the teams that you've been building and how you've been managing in those early years of building, um, the semiconductor business, um, what's been, or maybe multiple, the biggest, um, outcomes or things that you have learned that you do still take with you. And those early lessons have helped you, um, kind of propel even what you're

Speaker B: doing now forward, I mean in a number of different groups. So let's talk about how I look at product. So in my semiconductor business I spent years fighting the system on the chip. And you guys might not know what that is, but what I really understood was, you know, the companies that hosted, um, all of the programming and everything else controlled the environment and everybody else was going to be a feature. And so when you look at the companies as I build them now, I really think a lot about um, how much work it takes to actually be like the center or the hub so that you can build on around it. And I do think, think that we're seeing today, um, in the semiconductor business we saw Companies go from 0 to 100 million very quickly. Because they were a small feature. They were an audio codec or a video or something small. And then, you know, next year, um, intel would integrate it in and that company would be gone. I think we're seeing that trend now as well. It's.

Speaker A: It.

Speaker B: You can get very quickly to high revenue numbers, but if you really, I think you gotta do the work to build the complicated system to make sure that you have those strong moats going forward and that, you know, you can't be disrupted as quickly. Um, I think I also learned during the early days about confidence. Right. Um, and I think you can get some advice, but do not be somebody that walks around trying to get advice. You have to make decisions, make decisions constantly, every single day, move, make decisions. And I think early when I was young it was like I had all these older VCs and everybody had comments and it was just. It causes chaos and, and yeah, get, get some opinions quickly but then move forward.

Speaker C: When were there times that. Cause I know it's quite difficult, especially when like you're on a team and there's sort of a lot of people involved in the positioning and decision making that has to take place within a company. When were you making choices and saying, you know what, we have to move quickly and I don't really have opportunities to have everyone weigh in. So what were those moments where you just said I have to do this and when were the ones you chose to like really have people weigh in on them?

Speaker B: Anybody that's been in my teams will know that I weigh in quickly and I make decisions very quickly. There's no, there's no screwing around. Like we'll get together. I might listen a bit, and I do listen, but when I say this is what we're going to do, we're going to do it. And I do it very fast.

Speaker A: We had you present many years ago at Tech2 and you talked about at the semiconductor business something that happened in Japan. So maybe give that example of how you move fast.

Speaker B: Well, this is a case where we move fast but still didn't move fast enough. And today, um, so what happened is we, I had $100 million annual business in the semiconductors and but 90, uh, percent of that was selling into the Japanese market. And the tsunami hit in Japan and basically overnight took out about 75% of my revenue. So going from 100 million down to 25 million. In a case in the Canadian environment where we were already severely underfunded, so we were competing against US semiconductor chip companies. I think in total I'd raised for the company about 65 million competing with Intel Broadcom, and we were winning. But when that happened, we had to do some, you know, that's a big shift. And so we had to move pretty quickly. And the problem was, was the news just kept changing, right? Like, you know, how bad was it going to be, et cetera. So we were able to cut the company, unfortunately, and lost some momentum there. You have to make changes, you know, constant, you know, devs are not great at this. It's like, what programs are we going to succeed on? Which ones are we going to cut? All those things that time. You have to be really strong in leadership and make those decisions and just move through it as fast as possible. Um, and we did get through it. We probably didn't cut as fast in the first quarter. We had to come back in the second quarter. And everybody tells you not to do that, but they also, when you're doing it, like, you never know it's going to be enough.

Speaker A: Well, you, I think you were worried about nuclear. Japan was worried about nuclear radiation and stuff.

Speaker B: So we couldn't really go. And in today's environment, I think you would have had more support from your investors and everything else. It was very early stages in that kind of area, especially in Canada. So, um, we didn't have capital to reach out to help us through it

Speaker A: and so wanted to get to what you know. But fast forward today. So what happened with that business then? What did you do after?

Speaker B: So, um, Vixis was quite successful. We went public. We was operating for a period of time. Um, I didn't see eye to eye with the board. So I did leave. Um, and then I ended up, um, I ended up going down to San Francisco and I did a couple of turnarounds for a bunch of companies. I have a small investment fund that I've made early, um, stage investments in. But I was looking at the same time to start to get back as an operating business. And it took it like I ran Vixis for 16 years. It takes you a long time after you leave a company that you've built to try to figure out what the hell you're going to do with the rest of your life. But, um, unfortunately, that company, I think again, um, if you look at what all of the IP and the technology and everything that was developed there, it really is a lost Canadian opportunity because eventually they sold it to a US company at a free fraction of the value.

Speaker A: Just one, one more question about Vixis. You were there 16 years, founders get identified with their startups. So what was it like to leave and walk away? Like, how did that affect you personally from an ego perspective? Because I think most founders don't realize when they start their journey that they get entwined with their business. Yeah.

Speaker B: So first of all, it's, uh, a bit of an anomaly because a lot of, most, uh, founders do not stick around. And there was a number of challenges over time. When the company was raising, um, could I. You know, we did a. The last round was with nea and it was quite a successful round. Um, the company, we grew at 100% revenue. So we went from 1 to 2 to 4 to 8 to 16, like this. This was pretty significant. Um, but, um, you know, it was, it was very, very difficult because at the time it wasn't, it was, it wasn't my choice. The board had decided and I think history shows they made the wrong decision. And it wasn't the first time. My leadership was challenged as well. And so that's the one thing as a found when I did this because the VC market was very new. The dilution and everything else, the way the cap tables work, the understanding of the fact that the founder is the only one with really the grit. And you'll see that today, like, look at Facebook, look at Shopify. So it's not easy. And the understanding of the ups and downs, there was still kind of this mentality, well, you know, at some point we just need to bring in an outside person. But, um, you know, it was tough. Um, and it took me, I'd say several years to try to decide, like, do I want to go back? I made a decision not to go back into semis. Um, and I still have a lot of belief that that's still a very tough business. Um, and I started to get very interested in things that were coming up, legal tech being one of them. And so it took me on that journey where eventually Josh and I came together in 2021. I have another company called Altus that Felix has runs that I'm very, very proud of. Um, and then I have this weird manufacturing company in North Bay that I'm struggling to build where if you guys are looking for outdoor heated furniture, um, we're the only game in town. And the stuff is beautiful. So I started to try to combine things that I wanted to do with people that I wanted to do them with. Um, and Border Pass is the one that I, you know, really on an operational role that I'm heads down on and I love running things. I really do.

Speaker C: What Was it about um, like Josh and maybe the concept that just was really like. Because again you said, you know, you, you take time in between and you're like what the heck am I going to do with, with, with the rest of my life and do I even want to build again? Because it's kind of like you peek behind the curtain, you know what it takes and how difficult it is. So what was it that just really like fueled you to join?

Speaker B: So there was a lot of ideas on the way. Um, um, I had, I looked at, I won't even go through some of them but I was trying to look at ones that I thought, you know, you're trying to find one with a big market but that also that you have a wedge in and all these different things. I was doing a medical AI company in San Francisco, saw what the doctors were doing and kind of their mode around that. I went through my own immigration process. I had been looking at legal tech and I made some investments in some early stage legal tech companies as well at the same time. Um, and I was looking at something that you know that I wanted to do it as well. Right. So um, I just saw in the legal market and you know things have moved and some of it is timing and a lot of things have moved in our favor. Definitely the way the LLM models um, have moved forward and some of the technology has really helped us. But I just, you know there was nobody in legal tech, um, it was being underfunded. I'm a contrarian. The investors didn't get it. They said we cannot, you cannot scale this, you cannot make it efficient. Uh, I love challenges like that and I believe that they were wrong. And so now, you know, Border Pass is you know, on the surface this highly integrated um, system with full case management and lawyers on the back end that take all applications and processes and funnels them through at 100 times efficiencies. And today it's immigration. But we expect that we'll be doing this with more and more legal processes on a go forward basis. And you know, the cost now makes this a much more accessible feature to a lot more businesses than individuals. And we also talk a lot and I think Josh was talking about this too as well as I do think, you know, it goes back to my semi days. You know we're kind of the, the center core. I believe legal tech is the gateway to a lot of other, it's the gateway to fintech. You can't do so many other areas you cannot get through because it's held up by legal. And so as we build that rail system in there and the ability to process it, there's a whole bunch of opportunities we see opening up. And are you excited?

Speaker C: Very much so.

Speaker A: Look, actually, sorry. So I know, I agree with you. Legal tech, four years ago when you started this, no one wanted to touch it. Now the funny thing is everyone's starting legal tech because it's hot.

Speaker B: That's just true. Um, and we look at what a lot of the companies are doing or the startups is, they're going into again, the co. Agent, they're doing the single, uh, again. Our model is very different and it comes from all the years of me building businesses and seeing, you know, how ecosystems work and how you want to try to be in control of, you know, how you can continue to build on and drive your base. I did not want to sell to law firms because I knew you're going to have the same issue where the law firms are like, well, I wanted to have a lot more control to take out a great new product and bring it into the market.

Speaker A: So just going back to doubling down on one thing. Riley asked, um, why, how, how do you find Josh? Why are you working with Josh?

Speaker B: So, um, I got asked to go into, um, Greenen, ah, Spiegel, which is Josh's family's law firm, um, because they were looking at sort of the startup Visa kind of thing. And so I, I, you know, I wasn't really interested in that space, but I did help them kind of understand what the structure would be. And Josh was in the room and Josh and I just started talking all the time and going through, and you could see, and I give Josh credit because Josh pursued it very heavily with me. And, and in the initial days was tough because Josh was mostly here in his condo by himself. I was somewhere else. Um, I kind of have this very like the, the, the early days of a startup. I think we have this idea that you've got to spin and do all this stuff, uh, like you kind of can't push on a rope. Some of it just takes time, right? And so it takes time to get the first product and start to test it out and all of these things. And I know there's a lot of discussion about, you know, getting out first and getting those initial indications maybe, but I do think it, you know, it takes a good year to start to understand where the market, at least for me, because this was a whole new industry and starting to understand and learn it. Um, so that's how I met Josh. He's been a fantastic partner. Um, I've told the story a number of times. We often slack the group and our message will be almost word for word identical. Um, and there's like completely different. I mean Josh is so much younger than me. He doesn't have an engineering or technical degree, hasn't started companies. He's completely different from the background. But, um, we are really strong partners

Speaker C: and I just want to go into um, the immigration portion that you mentioned so obviously comes with a lot of varying like opinions, associations around just like the topic of immigration. So how has it been received and what do you find is just really challenging about that aspect of, of the business?

Speaker B: Yeah. So one, um, of the things I didn't add, one of the reasons I went into immigration is because I'm a little bit of a macro investor. So I believe that mobility and immigration is going to grow worldwide going forward. It has to because of demographics, because of our growth requirements, just the ability for people to move. Looked a lot at companies like Deal and Rippling that built these on hiring foreign, um, individuals. But if you look in terms of countries, we'll talk a bit about what's going on in the press. Um, you know, human capital is incredibly important to power our industries and grow our markets. Okay. And so right now nobody is servicing that community at all from a business point of view or from an individual. So um, sorry, what was your question again?

Speaker C: How like. No, no, this is great.

Speaker B: It was just.

Speaker C: It more like I like the reception of it and uh, yeah, challenges.

Speaker B: So, you know, there are a lot of people still who read things and don't understand like they like. I'll just tell you, I do not believe students cause the housing market issue in Canada. Like, this is just ridiculous. I do not. Like all of these things come out. And so you meet VCs who I think should be more intelligent and they have these reactions like, you know, uh, suddenly, you know, you know, bringing, you know, Indian students on here is like the newest thing. Like they forget the fact that Canada brought in tons of, you know, Italians at one point and Irish and, and then, you know, we went through stages of Germans and all of those groups were, you know, denoted with certain, you know, comments and everything else. And you know, we went from, you know, China and then India and I think you're going to see large numbers of individuals coming now from Africa because they're the youngest and the most, you know, right now, vibrant economy. And what does that do for any other country that enables that? Well, now we have these connections. We've got, you know, educated, smart people coming to our country, just like we've done throughout history. But no, what the conversation goes is like, oh, you know, you're bringing over illegal aliens and we're taking. And this is like, you know, it was almost on the level of porn. I think they would have invested in porn. Not.

Speaker A: It depends who their LPs are. Because. Because that's a whole other conversation. But, yeah, so. But it's interesting because I think going back to 21, you probably had headwinds from these titles. Like, you know, we were. We were. This country was very open to immigration. Let's leave with Americans out because they always don't know what they want to do. Last decade, um, but Canada is probably. He was very pro immigrant now in the last election was. Or last 18 months, it's been very controversial. So I guess screw the VCs. If there's a market demand, how do you create those opportunities? How do you recruit? Because I guess, you know, because part of the things you have to do is get a team that's excited to build and, you know, so, like, how have you handled it? These, the press or the view over here?

Speaker B: Yeah, that's interesting. Well, I think the team is excited because they see the work and the customers. Every single day. We're signing another customer. Customer. We're increasing our relationship. Individual. We're a B2B 2C. So we're servicing not only individual consumers, but also we're signing large deals every day with, um, enterprise companies to manage what is becoming. You know, if you look at most businesses in Canada and in the US 30% of their workforce is newcomers. So there's compliance requirements and ongoing support, and nobody is providing the support. So I think our team is very excited about that. Um, and I don't think that they need a lot of encouragement. Um, I think the outside market, um, you know, you get the constant. Is the market big enough? Um, you know, we want to see more repeatable revenue. I think that these are a lot of Canadian VC isms that, um, to me, just are nonsensical. So I sometimes have a hard time. Like I just. I just want to leave the room or I do leave the room.

Speaker A: So I want to go. Maybe I shouldn't go down this rabbit hole, but I'll go down this rabbit hole a bit more. And Alex is giving me this little.

Speaker C: That's great.

Speaker A: You build a company doing 100 million revenue before you're building a company, which, from what I've heard, is growing really quick. Shouldn't it be easy to raise money? Is it ever easy raising money? And what do you think the unlock to raising money is?

Speaker B: So, you know, on, on, on the grand scheme, I've been actually quite successful at raising money. Right, but you're right, like at this stage with this company, in this history, It's a good question. Why is it so difficult? We, uh, get more interest from the US VCs. Um, I will tell you right now, the US VCs, we're in a weird spot because the revenue's grown so much. We're almost between a series A and a growth now. And a lot of them, you know, are, it's, it's easier for them to give a non revenue company a big check, um, than to look at ours and try to analyze it. And so the growth companies are, we're almost there. But then we're also in the Canadian market, so we're having all these weird things. And then, you know, in the Canadian VC market, I don't know, I don't know what it is they're looking for. What we hear is, you know, I want to see one more quarter. So we blow through that quarter, we'll see. But it's not, you know, I, I think the good thing about us is we are profitable. I've done this enough that um, you know, this company is going to be successful and it's, you know, whether we raise capital here or elsewhere, we're gonna, we're gonna move through this and continue to scale.

Speaker A: So just want to double down on this question. So if, if you find it, let's call it interesting to raise what's advice for a founder? Hasn't that before? Like, because, like, because I think what stole my question. Stole your question? Sorry. Because, like, because I think the big problem, like I find for founders is everything you read in beta kit or TechCrunch and read a podcast. It's all it is, right?

Speaker B: Like it's, it's, it can completely depress you. Every, every day somebody is just raising 100 million and so easy. I mean I've raised, I mean when I raised with NEA, and at the time, you know, NEA is one of the top VC firms and um, I probably met with 160 VCs. I flew around and when I walked out of that meeting I was shocked. And they called me the next day and they said, they actually said you had us on the, on the first slide. And I was just like unbelievable. So that, but you know, that was a lot of work. I don't think the work has changed. I think the good things that have happened is that there's more structure, deal structure, typically, like, we had a lot of, you know, weird terms put into term sheets back then and all sorts of different things, which I think really hurt the companies over the longer term. Um, but I think it's really, really hard to raise a, uh, seed round in Canada right now. And I think it's very, very hard to get that seed round to an A round. Um, and, you know, we, I had a. I was on another panel and I said, like, it's unfortunate, but it is easier to do it if you're more positioned, if you're down in the Valley or if you're in New York. So I don't know how to change that. Um, and I think investors are even more conservative right now because I think they've made a lot of investments that aren't getting the returns. They write these big checks based on questionable outcomes. And now, especially if you're trying to raise with a lot of the VCs and the ones California, you have to show to them that you, you know, it's not that you can get to 100 million or a billion valuation. You have to be show you can get to a $10 billion valuation. Like, that's hard.

Speaker A: 10 billion is a number. Because last yesterday we did. I did a fireside with Avlock, who's the head of Angellist, and he says you have to build big. I go, what's big? He goes, it has to be leased. You know, a decacorn public company, that's. That's where people get excited, which I think the Canadian market, Canadian founders still don't realize.

Speaker B: Yeah. And. Well, because you get contrary advice. Right. Like, you know, they're like, they're so focused on you getting this repeatable revenue, and then at the same time they're telling you, you know, go big, and then, you know, not worry about the revenue. But, you know, you have to get that revenue. Get like they're, they're all over the place. If, if your investment strategy is, we're just going to go after a big market and write a big check and just, you know, put the team and see what happens, and that's fine. But then, you know, you have to realize for a lot of those companies, the first couple of years, it's going to take them time to go into that and build the, the revenue base that they need. So I don't know, it's, um. And it's not just, you know, it's not just a Canadian issue. I was telling you before, you know, that, you know, if you look at what the Valley has, and I was, you know, Adreessen just did a great interview where they were talking about when they make an investment, they bring power to their companies. Power I don't think we have they so much power that it opens up Washington, opens up every other top VC and they, you know, they, they pyramid stack their investments going forward. So I've done this a number of times in Canada. Um, Vixis was successful at raising. We did compete, but it is a lot harder.

Speaker C: And we were kind of talking about this before, um, like when you first arrived, just the narrative around, like there's a need and a want for people to be building here. And as you said, like you might not have the answer or the, the immediate solution. You have been building for a long time and you have been building in this ecosystem for a long time. But it's true there is such a level of feeling stuck and just that there's not really as great of a future as there is to go perhaps across the border. But what needs to happen in the ecosystem? What needs to happen actionably right now, um, to just really set the future of entrepreneurs up for success? If you could even just give a quick answer.

Speaker B: Honestly, I really don't know. I mean I've done, I've worked with so many industries in here to try to establish ecosystems and support and all of those things. Um, I think we still don't really know. I mean this kind of thing, it does definitely help because the networking is really, really important. Um, for sure, um, capital is important. We just don't have as much of it. Um, I've thought about it and one of the things that I do do and I talk to my companies about a lot of is, um, we, you have to realize you might not have the luxury that the valet companies do. And I do think like operational efficiency. Like one of the reasons Vixis was so successful was because we figured out how to do a, uh, tape out which cost, you know, could cost you $40 million per tape out in a single spin. You know, Nvidia and all these other companies would just, you know, do 10 or 15 of them. So maybe we have to get really, really smart with our operational efficiency. And, and I have seen in the ecosystem for a long time people just take money and just grow, grow at all costs. I don't, I'm not a huge advocate for that in this environment.

Speaker A: Um, want to open up to audience questions, but I Have a couple, hopefully two quick questions. One, bring it back to border pass and you know, LLMs. So one of the things about going back to efficiency and LLMs, everyone's saying, okay, LLMs just make it easier to code, make it easier to build businesses. Thoughts on that? What do you think the real impact on a startup generative AI has?

Speaker B: Yeah, so you know I believe everything comes from semiconductors. So uh, any look like a cell phone business, the laptop business, like even what we're seeing. And so I think it actually gives me a kind of a unique advantage. Um, I think that there are going to be some big winners in here. But I do think we're going to constantly see the cost of using these AI tools consistently go down. And I think companies that understand how to integrate them, it's not just about integrating them in one area of your stack. There's, it's in the co developers, it's how you do sales, it's how you do the onboarding of all the documents, the manipulation of the documents and building those complex systems to use all of those so that you can drive efficiency. I do think it opens up um, abilities to build businesses and um, drive revenue optimally in places that didn't exist before. And it's figuring out where those are. Um, I think you're going to see a lot of um, the companies that have gone very quickly to 100 million also disappear. You're going to see OpenAI could be competing with companies like Harvey that are doing legal co. So what I think about is, you know, how am I going to be different and involved and survive in that environment against those companies and how are those companies as they continuously get more and more efficient and lower and lower cost, uh, are going to allow me to go from 100 times efficiency today to a thousand times efficiency and drive my revenue. So I think you have to think about it in that sense. Um, but I do think that there's like lots of opportunities to draw businesses. But if you're just you know, parsing documents or you're just a co agent, I don't know, I don't think that that's enough.

Speaker A: Cool. And then last question before you open the audience. Like, see you, you're building a company, you built many. Well, you're building three companies. You're active at coru, you're active in the ecosystem. What does success look like for you? Like, well, you know what, you know what?

Speaker B: Uh, it'll never be enough for me.

Speaker A: Okay, so that's what I thought.

Speaker C: You forgot the furniture too.

Speaker A: The startups.

Speaker C: Yeah.

Speaker A: Well. And you know, Riley, I think. Do you have a cottage? You should be.

Speaker D: I do.

Speaker C: We've already discussed this. Yes, very interested.

Speaker A: If I had a cottage, I'd be buying some.

Speaker B: We should have had hot seats up here. Next year we should have hot seats and we put people in the hot seats. We've talked about that.

Speaker A: So cool. Let's open up the audience. Any questions? Wow.

Speaker B: Okay, good.

Speaker E: Testing 1, 2, 3.

Speaker C: Okay, we'll just run the mic to you. Thank you so much.

Speaker B: This was so amazing.

Speaker C: Um, my name is Tofumi. Or you call me Toffee. Uh, question for you, Sally. I'm wondering, for your first venture that you ever, um, worked on, what was your journey like raising your pre.

Speaker A: Seat?

Speaker B: Um, so, because I came out of ATI and I met. The reality was, is I raised probably a very large round at the time. I raised a $10 million first round for the semi. Now semiconductors are very capital intensive. So that sounds great. But at the time we did it in a way that I think set us up for other issues going longer term because of just the way the deal was structured. And the VCs were very, um, you know, predatory in terms of how they did things. And there just wasn't the experience or the knowledge about how to do that at the time. So, um, you know, I went around and we ended up raising it primarily because, um, you know, it came out of ati and so it was kind of one of those same things. Um, and uh, actually that was actually one of my easier raises. But some of the things that we did probably we didn't do properly in that race.

Speaker C: Oh, just uh, a couple of sec there. Um.

Speaker A: Oh, hello. Thanks, uh, for running the session. Um, just another question for Sally here. Um, so I kind of have a background in quantitative finance and sociology and was kind of interested in more the legal tech applications of that since I'm working on synthetic social data. Just wondering if you kind of had specific, um, wedge theses about kind of like that kind of intersection.

Speaker B: Sorry, say, what was the. I didn't hear the three.

Speaker A: Oh, yeah. Um, so existing background quant, finance, sociology and wanting to tack on kind of like technology law to that.

Speaker B: I mean, I think that there are a lot of areas, um, if you step back and maybe start that laws put in place to create structure, to deal with society, to stop, you know, to make sure that we can go around safely, etc. To operate. It's not necessarily fair. Um, it's not necessarily, um, correct. We send lots of innocent people to jail, etc. I actually think there's a lots of areas, and I think it's full of biases. Like, do any of you guys even know who are our judges are or what their backgrounds are? Like, you'd be shocked. Okay.

Speaker E: Shocked.

Speaker B: Um, you know, there's no timeliness, any of these things. So when you start to look at technology around the world, we want, like, law is important because rules are put in place so that, you know, it might not be fair, but I know what the rule is. But the reality is for most people, you can't. If the rule is broken, you have no way of enforcing it. The timeliness is not there. And we still have these arbitrary systems with people in the systems making decisions. Um, and most of you don't even know how the law affects you. Everything from, you know, rules that are made in your community on how things are changed or not, to, uh, how you can, you know, renovate your cottage or not, and who has the decisions and the powers on that. So there is a ton of opportunity in there. And I think there are a lot of people, especially as we're moving, who would like to have more. More control or at least more like the law is supposed to provide us with that structure. But I don't think a lot of the times we feel like the law is really fair and giving us. We know what it is or what we can and cannot do.

Speaker E: Hi, Sally. We have number three in common. You build three companies. I immigrated in three different countries. Um, one question about your company, about how you are trying to de Risk, especially in the face of AI it feels that there's going to be less need for human capital. And that would actually. I think this thing with immigration is actually that we are seeing drop down is because I think there is a forecast where there's going to be less need for human capital and how you're thinking about that. I've seen this in Canada. I've seen this in Europe as well. It's the same thing. And 20 to 24, there was immigration, Europe, really huge demand. And now that is kind of changing.

Speaker B: Well, again, I think you got to be careful in the press. Like, we still are going to have, you know, over a million study permit applications processed in Canada. And I think in terms of all the other visa applications, temporarily, it's 8 to 10 million a year. And we keep seeing in the oats, but they're really going back to numbers. There was a big blip during COVID like. Like, don't believe the press. Like, we're still bringing, like, Canada is still importing a lot of newcomers into the country. I'd like to think using a system like Border Pass, we can be fairer on the individuals we're bringing in, set them up for success and help businesses here and our economy at the same time. Because now we can connect everything. So, um, I think that market is still growing. How do I think AI affects this? I mean, I'm a lot older than almost everybody in the room here. And I will tell you, I've heard over and over again about how technology, I think it's going to drive productivity. Um, look, AI is not going to build houses, do healthcare, uh, taking care of individuals. There's a lot of other. We might change what we're doing. We might need, I think, less accountants, maybe less lawyers, or maybe the legal market's going to balloon because, like, if you guys have an issue, you have no way of hiring a lawyer, doing and getting any kind of free recourse. Like, let's be honest, most of the legal system is only for the very rich and they use it to their advantage. So I'd be very, very careful at making. Because I've heard this with technology over and over again, and to me it hasn't played out. Um, and at the same time, you have to look at the demographics. Even if we bring in all this additional, Our population is aging so much. We still need somebody here to do the work. We do not have a large working population. Right. Right now it's like, you got to start looking.

Speaker A: It's.

Speaker B: It, it's actually crossing over. Right. So you have, you know, very small proportion of the, of the population is actually working every day. The rest are either retired or like, what? Like, you know, so, um, it's important.

Speaker D: Thank you, Sal. Thank you, Sally, for being so candid. Uh, one of the questions that we've also internally debated, we're. We're building like a factory assembly AI company. Uh, and we've been doing it for

Speaker A: almost like a year.

Speaker D: One of the things that we've been sort of internally debating is like, what's the. When should we start sort of raising. And as we've talked to like, all the VCs, the traction milestone keeps changing. Uh, it used to be like, you know, see if there's a product market fit. Now numbers that we're seeing are like, you know, hit some sort of growth multiples, hit some.

Speaker B: What does your company do again?

Speaker D: Yeah, so our intention is to sort of like, help you figure, uh, out what a factory would look like. Uh, in a 3D, sort of a visual view, you can take an image, you can take a process flow CAD and we'll kind of like show you what the factory should look like.

Speaker E: Um.

Speaker B: What the factory should look like?

Speaker D: Yeah, the full factory machines, everything else. Um, but every time we sort of

Speaker B: like, okay, so I think, you know, and there's a lot more advice out there now today, by the way. This is true, it's worth what you pay for it. But, but you know, there's a lot of commentary and a lot of people are talking now about do you, you know, what are founders, um, exit outcomes based on raises? One of the things I, I've never seen a report and I would love to see this is the outcomes of founders based by VCs. We've never seen that. Like, which, which VCs do you get the best outcome on?

Speaker A: I've got some data, but if I could publicly share it.

Speaker B: Um, so the reality is the more you're going to get these contradictory and you have to take a look at your competition and everything else. Like, do you need capital? I have this question asked to me all the time and it's not a black and white answer. Uh, raising money is a huge marketing event. It can help fuel you, but at the same time, if your revenue isn't going to grow, it can also block you into this, you know, scenario where you have other challenges. Right. So, um, VCs right now, it's still a little bit cool and they're playing their odds. Um, and so yeah, they're gonna, they're gonna look at you and keep moving you through those metrics. One thing I do say, and I'm cautious, like I caution founders on this is uh, and Alex, I'd be interested in your position on this. Going out and fostering relationships I think usually works to your disadvantage because all they do is keep benchmarking you month after month after month and you never ever close.

Speaker A: So I'm going to jump in here because I do have a pre seed fund. I say what you need to raise depends, um, on your background, the idea you're going after and what you could validate. So when you're getting an answer, we need to see more. That's because no VC likes saying no. They're buying optionality unless your idea is absolutely horrible and the team looks absolutely horrible and people say don't bug me, um, you're going to get come back because they're curious and that no one wants to ever miss a good deal. So I think lots of Founders get trapped in this soft passes and but you know I've you know like if I know the founders well or the background well and I know the space well, I've written a check just based on the, you know, here's an idea I've you know sketch out last week. I've also invested in 100,000. So I think the fact that you're getting this feedback means um, that you have an interesting team or an interesting idea but people want to de risk it a bit and so they'll keep on getting that free optionality come and talk to you. I think what you need to determine is how much money do you need to push this forward, if any. And you have to find a way to raise that because what you need to do is find the true believers, either the team or the idea, hopefully the ID and team and you'll find the money unlocked. The problem is there's probably, I think in the last number I looked at there's 6000 BCs in North America now probably a thousand do early stage. But to find the one there's a big matching cost and transaction costs and that's a hard thing. Right. So funny enough, when uh, Sally started Border Pass to find anyone that wanted to do legal was almost impossible. Now if you have a legal AI company, maybe it's a bit late but 2012 months ago, if you were an incredible team, there's a white space you could raise money off an idea.

Speaker E: Yeah.

Speaker D: And honestly that's what we've been doing. We've been like putting our own capital. We know what bench that we, we, we know the traction milestones we want to hit and then we want to

Speaker A: go, then hit them like, like, like I'm going to say the VCs, right. Like, like and then going and going to go and ask some and answer something Sally said. I think building a relationship could be detrimental. It could be also good because it's much easier for someone to invest in someone they've seen act. Right. Um, one thing I do with my portfolio companies after we invest because we invest really early and usually we want a seat or a round after us. What we'll do is if the company is doing well or even if the company's making progress six months before we need money, we'll go talk to 10 or 20 VCs. We're not necessarily looking to raise but we're looking at build that relationship and we know what we're going to accomplish over the next four months. And when we go out there, they've now got, you know, they've got two data points saying okay, my company met, they were interesting. Oh, and they've accomplished this over the last four months, five months. So we feel a lot more confident that their crazy projections are going to 10x in the next 18 months are real. But like if you meet with someone like there's also downsides to that too. And it depends on the vc, depends on you. But build, I think there's two things you have to decide. If you want to build something massively scale, you need the capital, there's some games you have to play and how you de risk it. If you're trying to build, if you want control and just want to find a way to finance it, um, you're going to build a different company than the VC wants because normal business is improving 100 things by 1%. Um, uh, every month. And building a business, a venture backed company is actually pulling out a specific risk to validate what they can go build something massive.

Speaker B: It's true.

Speaker A: Do we have time for one more question? I'm looking at uh,

Speaker C: or Phoenix.

Speaker A: Are we one more question or no, one last question.

Speaker C: Okay, one more.

Speaker E: Sally. Um, it's truly inspiring like your journeys and your serial ventures. One question I want to ask is um, so I was listening to Neil Kos from uh, the founder of geotab yesterday. He was saying that build as if there are no borders and consider us as your market. Uh, my question is uh, if your target audience, like your target market is North America, why is it difficult to raise from US capital? And I really like your edit show.

Speaker B: Yeah. So um, Vixis was 100% like we didn't sell anything into Canada so I export it. Border pass is very different because all my sales right now are currently in Canada. Um, and I believe that we created a wedge or found an opportunity to scale our company to you know, we think we can easily get it to 50 million in the next couple years, um, just on that Canadian market. Now the problem with that is some of the US VCs are like, well, can you be worth $10 billion? And what is the challenge of going into the US and so that is something we're trying to figure and it's always the case because you know, you can solidify the market that you're in or you can start to outreach. And besides it's not just us. Like when I was at Vixis, most of my sales were in Japan at the time. And then we started to sell to Comcast and EchoStar and a number of other things. So, um, in our case, for border paths, it's because right now, we don't have revenue in the US Right now, but the platform we built, we believe, can easily be used for the same market down there. It's just a kind of a. It's a bit of a chaotic market right now there.

Speaker C: Awesome. Uh, so much, uh, gratitude, Sally, just for your honesty, enthusiasm, and I know there's a lot of great takeaways for the founders here. Uh, so round of applause, please, again for Sally. Thank you.