20VC How To Build Credibility with Investors, Employees and Customers, How To Determine When A Stretch VP is A Stretch Too Far and The Right Way For Founders To Think About Dilution with Amol Deshpande, Founder & CEO @ Farmers Business Network

Summary Notes


In a candid conversation on "20 minutes VC" with host Harry Stebbings, Amol Deshpande, CEO and founder of Farmers Business Network (FBN), shares his journey from being introduced to agriculture in graduate school to leading FBN, a farmer-to-farmer agronomic information network that has raised $193 million to empower farmers through data transparency. Deshpande reflects on his previous roles at Kleiner Perkins and Black River Asset Management, emphasizing the importance of pursuing big, transformative ideas and the critical role of a committed team in a company's success. He advises against losing nerve or vision when facing challenges and underscores the significance of maintaining credibility through consistent communication with investors, employees, and customers. Deshpande's vision for FBN is to become the most significant company in the agriculture sector, focusing on building a strong foundation and team to achieve this ambitious goal.

Summary Notes

Introduction to the Podcast Episode

  • Harry Stebbings hosts the 20 minutes VC podcast, with a personal interest in businesses that are not widely known but are highly successful within their niche.
  • Harry introduces Amol Deshpande, founder and CEO of Farmers Business Network (FBN), a data-driven agronomic network aimed at enhancing farmers' livelihoods.
  • FBN has raised significant funding from several notable investors.
  • Amol has a background in agriculture and venture capital, having worked previously at Kleiner Perkins and Black River Asset Management.

"Welcome back to the 20 minutes VC with your host Harry Stebings. It would be awesome to welcome you behind the scenes here at the 20 minutes VC, which mostly includes gym sessions and book recommendations, but you can do that on instagram at hstebbings 1996. But to the show today, and what many don't know is I have a super nerdy passion for businesses that, as I call it, submarine their way to success."

This quote introduces the host, Harry Stebbings, and his interest in under-the-radar successful businesses, setting the stage for the episode's focus on Amol Deshpande and FBN.

Amol Deshpande's Background and Founding of FBN

  • Amol's interest in agriculture stemmed from his father and an early venture into an indoor fish farm.
  • His career includes starting a plant breeding business, working at Cargill, and being a partner at Kleiner Perkins.
  • The idea for FBN originated from a desire to significantly impact agriculture by working with farmers and leveraging information transparency to empower them.
  • FBN was founded on the premise that farmers would share information if it benefited them, using anonymized data to create market transparency.

"Myself, Charles, a bunch of other people actually were researching topics that could change the game in this industry. Came up with this concept of information transparency because it's so lacking right now in the ag market."

Amol explains the founding concept of FBN, which was to bring transparency to the agricultural market through shared, anonymized farmer data.

Learnings from Kleiner Perkins

  • Amol's key takeaways from his time at Kleiner Perkins include focusing on big, world-changing ideas and avoiding small, incremental ones.
  • The importance of differentiating oneself as the best company in a sector to attract capital and increase the odds of success.
  • The significance of the entrepreneur's mindset in aiming high and the alignment of vision between the entrepreneur and investors.

"The number one thing that I took away is don't spend your time on small ideas. If you're going to take risk, then take real risk. Try to do something big, try to do something differentiated that'll change the world and go for it."

Amol emphasizes the lesson learned from Kleiner Perkins to pursue significant, risky, and world-changing ideas rather than small, incremental ones.

Strategy of Starting Small and Expanding

  • Starting small and iterating towards a big vision is a viable strategy, but the entrepreneur's ultimate goal is crucial.
  • The focus should be on building a substantial independent business, not on the potential for acquisition.
  • An entrepreneur's vision should be to create a significant, transformative company within their industry.

"I want to build a gigantic independent business in the sector I'm in, I want to change."

Amol discusses the importance of having a clear vision to build a large, independent company that can transform its industry, rather than aiming for acquisition.

Vision and Strategy in Business Growth

  • Vision and end goal are crucial for a business's strategy.
  • Strategies may vary but should align with the ultimate aim of building a large business.
  • Determination and adaptability are key to staying on track despite obstacles.
  • Niche markets can be starting points for expansion.

"Then there's multiple strategies to getting there, including starting in niche markets and expanding to bigger ones."

This quote emphasizes the flexibility in business strategies and the potential of starting small to achieve larger goals. It underscores the importance of having a clear end vision that guides strategic choices.

Market Centrality and Entrepreneurship

  • The market's importance is highlighted in Andy Ratcliffe's law.
  • Definitions of a "great team" and "poor market" are subjective.
  • A good team in a small market is limited by market size.
  • A big market with a good team has potential for success.
  • A great team is crucial, but market size can constrain business growth.

"Great team, poor market, market wins, and then poor market, great team, team wins in terms of kind of the market being central to success..."

This quote reflects on Ratcliffe's law, which suggests that the market's characteristics often outweigh the team's capabilities in determining a business's success. It highlights the debate over the relative importance of market size and team quality.

The Importance of Team in Investment Decisions

  • Personal character and mental makeup are key in hiring for startups.
  • High IQ is not as valuable as adaptability and focus in a startup environment.
  • Success in a candidate's background can indicate resilience in tough times.
  • Candidates should ask meaningful questions about the business and their role.

"I would most definitely bet first on the team. I would absolutely focus all of my energy on who am I investing in and do I believe that they can figure this out?"

This quote stresses the speaker's investment philosophy, prioritizing the team's capabilities and mindset over other factors. It underscores the belief that the right team is critical to navigating the unpredictable path of a startup.

Hiring the Best CEOs and Executives

  • Personal character and readiness for startup challenges are paramount.
  • Previous success can indicate financial stability and resilience.
  • Candidates should be inquisitive about the business, team, and potential challenges.
  • Commitment to the business's mission is non-negotiable.

"The very first thing is the personal character of the people that you hire."

The speaker emphasizes the importance of character in potential hires, suggesting that the right mindset and dedication are essential for success in a startup environment. This highlights the need for resilience and focus in leadership roles.

Mission Alignment and Employee Commitment

  • Employees must be fully committed to the company's mission.
  • Financial stability should not lead to complacency but reinforce dedication.
  • The mission is the core driver for working through challenges and achieving success.

"The people you hire, they have to be completely and totally bought into the mission of the business."

This quote underscores the critical importance of mission alignment in hiring decisions. It suggests that true commitment to the company's goals is a prerequisite for sustained effort and success, especially in leadership positions.

Identifying Overstretched Executives

  • Ability to build a team and attract talent is a sign of a capable executive.
  • Internal credibility and respect from peers and subordinates are indicators of leadership effectiveness.
  • Inability to build a team or gain internal credibility may signal an overstretched executive.

"Well, the number one is not being able to build a team of their own or gain credibility internally in a non capital sort of way."

This quote points to the importance of team-building and internal credibility as key indicators of an executive's capacity to scale with the company. It highlights the need for executives to be magnets for talent and respected leaders within the organization.

Team Building and Peer Respect

  • Successful leaders must be able to build a team and attract talent.
  • Respect from peers within the company is crucial and noticeable in meetings.
  • The ability to work cross-functionally is a key indicator of a leader's respect among peers.

"Easy to tell when you're in a meeting with someone whether they have the respect of their peers."

The quote emphasizes the importance of peer respect as an observable trait during meetings.

Developing Credibility

  • Credibility is built through consistency in vision, thinking, and approach.
  • High growth companies will have varying performances, but maintaining a consistent vision is vital.
  • Investors, employees, and customers seek assurance in the stability and reliability of the company's direction.
  • Credibility is established over time and through actions, not just words or short-term communication.

"The key to credibility is consistency."

This quote underlines that consistency is the foundation for building credibility with all stakeholders.

Challenges in Maintaining Credibility

  • Losing nerve and changing the company's mission can damage credibility quickly.
  • Being present, accountable, and responsive is essential for maintaining trust.
  • Lack of transparency and communication can result in a swift loss of credibility.

"One big way to lose credibility is to lose your nerve."

This quote highlights that deviating from the company's mission or vision can erode trust and credibility.

Fundraising and Thinking Big

  • Fundraising should reflect the ambition of the company's vision.
  • Experience as an investor can influence an entrepreneur's approach to fundraising.
  • The idea of changing an entire market justifies significant fundraising efforts.
  • It's important not to settle for less when hiring or raising funds to build a great company.

"If you're going to think big, you have to also scale that thinking across other elements of what you do, including things like raising money."

This quote suggests that a grand vision should be matched by equally ambitious actions in fundraising and talent acquisition.

Deciding When to Scale

  • The right time to scale is not solely based on financial metrics.
  • Unanimity in the company's direction and confidence in the path forward are key indicators.
  • Industry, technology, market, team, and customer sentiment all factor into the decision to scale.

"The time to pour the fuel on the fire is when there's unanimity or certainty into what it is you're trying to become and that you feel you're on the path to get there."

This quote advises that strategic scaling decisions should be based on a comprehensive understanding of the company's progress and direction, not just financial milestones.

Favorite Book Recommendation

  • Amol Deshpande recommends "A Team of Rivals" as a profound book on leadership.
  • The book discusses Abraham Lincoln's ability to collaborate with political adversaries for the nation's benefit during war.
  • It provides insights into navigating challenges, valuing others' talents, and treating people well.

"The book that I read a couple years ago that I really like was a team of rivals. It was a book about Abraham Lincoln and how he was able to work with people who are political adversaries of his and others for the betterment of the country in a time of war."

This quote emphasizes the significance of the book "A Team of Rivals" in teaching leadership and collaboration in difficult times.

Personal Beliefs in Entrepreneurship

  • Amol believes success doesn't require being flashy or constantly in the media.
  • He challenges the stereotype of a typical Silicon Valley entrepreneur, affirming that anyone can succeed regardless of their personal circumstances.
  • Amol's perspective includes the potential of older entrepreneurs and those with family commitments.

"I believe that you don't have to be flashy or talk a lot or be in the news media a lot to be successful."

Amol is expressing his belief that success in entrepreneurship is not contingent on high visibility or conforming to a specific image.

The Benefits of Experience in Entrepreneurship

  • Amol reflects on his growth from early entrepreneurial ventures to his current capabilities.
  • He acknowledges the value of experience in business and the ability to handle issues more effectively over time.
  • Amol promotes the idea that entrepreneurship is compatible with various life stages and responsibilities.

"I think it's a huge benefit. And I think it's also misguided thinking to believe that people who are say in their whatever can't start a business or that people who have kids or whatever is going to be harder."

Amol is advocating for the advantages of experience in entrepreneurship and dispelling myths that certain personal circumstances are barriers to starting a business.

Secrets to Successful Board Management

  • Effective communication with the board is crucial to prevent surprises and manage expectations.
  • A good board member adds value without micromanaging the business operations.
  • Amol praises his board at FBN for their experience and clear understanding of their role.

"Without a shadow of a doubt, it's communication."

This quote highlights communication as the fundamental element in successful board management according to Amol.

Future Goals for FBN

  • Amol aims to make FBN the largest and most impactful company in the agriculture industry.
  • He does not set a specific timeframe but is focused on making significant progress towards this goal in the next five years.
  • The vision for FBN includes reaching a substantial market cap as a private or public company.

"I would like us in the next five years to have made the progress towards that being the biggest and most impactful company in the agriculture sector."

Amol shares his ambitious goal for FBN's growth and impact in the agricultural sector within the next five years.

Show Closing and Promotions

  • Harry Stebbings expresses his anticipation for FBN's future and invites listeners to follow behind-the-scenes content.
  • The podcast promotes various companies and platforms, including Fusebill, Wepay, Casper, and Lattice.
  • These companies offer services ranging from billing management to mattresses, and from integrated payments to people management solutions.

"And if you'd like to see more from us behind the scenes on Instagram, you can. We're at H. Debbings 1996 with two B's."

Harry Stebbings encourages listeners to engage with the show's Instagram for additional content.

"Fusebill is a subscription billing management platform designed for rapid growth businesses."

This quote is part of a promotion for Fusebill, highlighting its utility for businesses with fast-paced growth.

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