20VC One Question Founders Must Ask Themselves When Approaching Investor Selection, Why Series B Is One Of The Most Challenging Phases & What Makes For A Successful CEO Transition with Jeff Russakow, CEO @ Boosted

In this episode of "20 minutes VC," host Harry Stebings interviews Jeff Russikow, CEO of Boosted, a company revolutionizing transportation with electric skateboards. Russikow, with a background in big tech firms like Symantec, Adobe, and Yahoo, shares insights on transitioning to CEO at Boosted and the importance of proprietary thinking in venture capital. He discusses the nuances of hardware businesses, the "hardware is hard" cliché, and the need for Silicon Valley to diversify its investment portfolio beyond favored business models. Russikow also highlights the potential of light electric vehicles and Boosted's ambition to be a leader in this emerging market. Throughout, the conversation touches on the importance of EQ in leadership, investor selection based on trust, and learning from history to predict and shape the future.

• Jeff Russakow is the CEO of Boosted, a company producing electric skateboards.
• Boosted has raised $74 million from investors, including Coastal Adventures, Inovia Capital, Andreessen Horowitz, and Initialized Capital.
• Jeff's previous roles include CEO positions at Gimbal and Findley, and leadership roles at Symantec, Adobe, SAP, and Yahoo.

"And I'm very excited to welcome Jeff Russicow, CEO at Boosted, the startup producing vehicle grade electric skateboards rethinking how we travel."

The quote introduces Jeff Russakow and his company Boosted, highlighting the innovative nature of their product in the transportation sector.

• Jeff Russakow moved into the startup world after spending 15-20 years in Fortune 500 companies.
• His entrepreneurial spirit was present even in larger companies, where he pursued growth and scale opportunities.
• Jeff's decision to shift to startups was supported by his wife after ensuring financial stability for their family.

"I'm definitely a CEO that came into startups really mid career."

This quote summarizes Jeff's career trajectory, emphasizing his shift from established corporations to the startup environment.

• Jeff Russakow's transition to CEO at Boosted was a return to his roots in robotics and autonomous systems.
• He was introduced to Boosted through Coastal Ventures and felt an immediate connection due to shared academic backgrounds with the founders.
• His midlife career change was driven by a rekindling of his initial passion for technology and robotics.

"For me, it was actually a return home."

Jeff describes his move to Boosted as a natural progression back to his original field of interest, rather than a drastic career change.

• Russakow learned about entrepreneurship and leadership through his experiences at large, fast-growing companies.
• He believes that general management skills become crucial once a company achieves product-market fit.
• His exposure to various products, geographies, and business models in larger companies has been beneficial for scaling Boosted.

"It really does pay to have been in growth and scale many times before, and having seen the movie multiple times from different angles."

Jeff emphasizes the value of having diverse experiences in business growth, which has been instrumental in his role at Boosted.

• Russakow believes there is no one-size-fits-all answer to career paths for graduates.
• He suggests that larger companies can provide valuable learning experiences across different functions and business models.
• For those with entrepreneurial drive, starting in a startup may be more fulfilling.
• Growth companies offer a middle ground with established systems and mentorship opportunities, yet still maintain rapid growth.

"The middle ground, which I think people forget, is growth companies."

Jeff advises considering growth companies as a viable and often overlooked option for graduates seeking a balance between structure and entrepreneurial experience.

• The fundraising landscape has significantly changed over the past 25-30 years.
• Venture capitalists (VCs) used to have deep expertise in specific industries or technologies and conducted thorough diligence.
• Modern investors tend to be more generalist with a consensus mentality rather than developing a proprietary view.
• The investment strategy has shifted from expecting one success in ten to requiring each investment to have the potential to return the entire fund.
• This shift leads to a preference for ventures with potentially massive returns despite lower likelihood of success, often seeking network effects.
• There has been a decrease in investment in consumer hardware and fundamental technology companies.
• There is now a greater focus on business models like SaaS that align with VCs' preferences for recurring revenues and network effects.
• Coastal Ventures, as the lead investor in Boosted, still exhibits traditional VC characteristics, investing in fundamental technologies and adding value to portfolio companies.

"By contrast, back then, vcs tended to have very deep expertise in certain industries or technologies and could go very deep on diligence, whereas today's investors tend to be more generalists." "The math has also changed. Whereas maybe 25, 30 years ago a VC would tell you I'm looking to make ten investments and have one be a hit to a mindset of every investment I need to invest in needs to be able to be the one to return my entire fund."

The quotes explain the shift in VC expertise from specialized to generalist and the change in their investment strategy from seeking multiple modest successes to focusing on singular, potentially fund-returning hits.

• The right time to invest heavily in growth is when the company has a great product and market fit, media attention, and scalable unit economics.
• A company should consider scaling up when there is a proven demand and a working business model that can benefit from further capital investment.
• Boosted's decision to raise significant funding was influenced by strong market signals, including customers' deep engagement with the brand.

"When customers are literally tattooing your company logo on their body and your product is turning up as a cultural phenomena, it's definitely pretty easy to make the call to turn it up more broadly."

This quote illustrates the clear market signals and customer engagement that can indicate it is the right time to scale up investment for growth.

• Balancing excitement about market opportunities with running a capital-efficient business is crucial.
• During early stages (Seed and Series A), the focus is on establishing the vision and product-market fit.
• By Series C and beyond, the company should have a working model and be scaling up.
• Series B is a critical inflection point where financial and operational metrics become important to justify further investment.
• Investors are particularly attentive to a company's performance at Series B, making it a challenging fundraising stage.

"Around series B, you're at this really interesting inflection point where it catches a lot of management teams by surprise, where you're still maybe growing at hundreds of percent, but you need all of your financial metrics and operational metrics to start performing because you're kind of going from all vision in a to it's already working in c."

This quote highlights the challenges faced at the Series B stage, where a company must demonstrate that its financial and operational metrics are on track to justify further investment.

• The biggest challenge at Series B is bridging the gap between the company's vision and the proven metrics.
• Companies need to demonstrate leading indicators that suggest the business is scaling in the right direction.
• Transparency with investors is key to gaining their confidence for further funding.
• It's important to differentiate between operational challenges that can be addressed and fundamental issues with the business model.

"You have to be very transparent with your investors and help them understand and diagnose why what is working is working and why what is not is something that will work as opposed to what's a fundamental thing about your business."

The quote emphasizes the importance of transparency with investors about what aspects of the business are succeeding and which are in need of improvement, particularly at the Series B stage.

• The personal litmus test for investor selection involves assessing if the investor is trustworthy enough to care for one's family.
• Beyond capital, investors should add value through helping with talent acquisition and attracting valuable board members.
• Good character, integrity, and trust are essential qualities in investors, especially for long-term partnerships through challenging times.

"I have three daughters. And so when I meet investors, one of the first questions I ask is if my wife and I needed to go run off for the weekend and handle some terrible emergency and leave my three daughters with this person just for the weekend without a word said, would I even think twice about it?"

This quote reveals the speaker's personal approach to investor selection, emphasizing the importance of trust and character in forming a long-term investment partnership.

• Transparency and learning from challenges are crucial when dealing with setbacks or 'air pockets.'
• Startups and growth companies are more susceptible to market fluctuations compared to larger, more established companies.
• How a company analyzes and learns from these air pockets can strengthen the company and build credibility.

"If you're very transparent when you hit air pockets, when you do a really good job of analyzing what have you learned from it then? I actually think those are things that strengthen the company and build credibility."

The quote suggests that dealing with setbacks in a transparent and analytical manner can reinforce a company's strength and credibility.

• The initial reaction to sudden drops in a small plane can be alarming.
• With experience, one learns to differentiate between natural turbulence and serious problems.
• The key is to focus on real issues, like structural damage, rather than natural fluctuations.

"It's very natural to become alarmed or freaked out the first time you suddenly plunge 25ft. But after a while you get used to it because you realize that's just the nature of being in a small plane."

This quote explains the initial fear that comes with experiencing turbulence in a small plane and the eventual understanding and acclimatization to these occurrences.

"There's 25,000ft of air between me and the ground and so the wings will catch."

This quote provides reassurance that despite sudden drops, the plane's design and physics ensure safety, as there's ample distance for recovery.

"And so it's the ability to understand what's an air pocket versus what is a serious problem and to dial in on what's a natural amount of bouncing around versus what should alarm you."

The quote emphasizes the importance of distinguishing between routine turbulence and actual flight hazards, allowing for proper focus on genuine threats.

• Transparency and understanding the state of the plane are crucial for safe flying.
• Experience allows pilots to instinctively recognize when to be concerned.
• Instrument panels provide vital information, but experience is irreplaceable for contextual understanding.

"It is helpful if your plane is well instrumented and you know whether or not you can understand what's going on."

This quote highlights the importance of having a well-equipped plane with instruments that can inform the pilot about the plane's condition.

"If you've been in that plane 100 times, you know instinctively when to investigate versus when to not worry."

The quote emphasizes the value of experience in aviation, as it breeds familiarity and confidence in identifying when a situation is normal or requires attention.

• The phrase "hardware is hard" is often used to generalize the challenges of hardware businesses.
• There is a misconception that other types of businesses are easier than hardware.
• The difficulties in business can occur at different stages, whether in product launch or market entry.

"My first reaction is it's very glib and alliterative and so you might wince when you hear it, but oftentimes it's a little bit of an excuse or a shorthand to bypass actually thinking about different business models."

This quote suggests that the phrase "hardware is hard" is an oversimplification that can be used to avoid deeper analysis of business models.

"In hardware you've got a lot of pain up front... But once you launch it, if it's successful, it can be incredibly easy to hyperscale."

The quote points out that while hardware has significant upfront challenges, successful products can scale rapidly and create strong market positions.

"In software... you've got to sell the product. And now you can be in sales cycles that are nine and twelve months long."

This quote contrasts the challenges in hardware with those in software, highlighting that while software may be easier to launch, it has its own difficulties in sales and customer adoption.

• Successful CEO transitions often originate from the founders seeking help.
• Challenges arise when the transition is investor-driven rather than founder-initiated.
• A CEO must assess the company's true state, beyond optimistic projections.

"Are the founders genuinely asking for the help and the partnership and the change has been initiated by them?"

This quote identifies a key indicator of a healthy CEO transition, where founders actively seek and welcome new leadership.

"The company is growing like crazy and has this revenue... The founders and the management team by that point be somewhat fatigued."

The quote describes a common narrative presented to incoming CEOs, which may mask underlying issues such as strained relationships or financial instability.

• Understanding history is crucial for balancing innovation with economic realities and human nature.
• Historical patterns in vehicle ownership suggest that disruptive trends may not completely replace traditional behaviors.

"One of the challenges that we all have in the startup world... is how do you strike the right balance of being a disruptor... with not losing sight of basic economic principles or realities of human nature that are probably not going to change?"

This quote discusses the importance of considering historical precedents and human behavior when innovating in the startup space.

"99% of cars are owned... it's very easy to get caught up in that disruptive whirlwind."

The quote provides historical data on vehicle ownership to challenge the assumption that shared vehicles will entirely replace personal ownership, emphasizing the need to consider ingrained human behaviors.

• Historical data suggests that vehicle ownership remains prevalent despite the rise of rideshare and other shared mobility options.
• Recent business cases, such as bike shares in China, indicate challenges in the sustainability of shared mobility businesses.
• It is important for startups to consider the history of vehicle usage and ownership to gauge the level of market disruption that is feasible.
• Disregarding past business examples and market research can lead to an overestimation of disruption potential in the mobility sector.

"Chances are ownership is going to be around for a while."

This quote emphasizes the likelihood that vehicle ownership will continue to be the norm based on historical trends.

"99% of vehicles have been owned."

This statistic highlights the traditional dominance of vehicle ownership over other forms of mobility.

"Ofo and mobike going bankrupt or needing to get bailed out."

This example serves as a cautionary tale of the financial instability that can affect companies in the shared mobility space.

• New leaders should approach their roles with humility and a willingness to listen.
• Past successes do not guarantee future performance; leaders should rely on fundamental problem-solving principles.
• It is crucial to understand that different companies may require different approaches and strategies.

"Be humble and listen."

This advice underscores the importance of humility and active listening for anyone stepping into a leadership position for the first time.

"Don't assume that whatever worked for you in the past at a different company necessarily applies at the next company you go to."

This guidance points out the danger of relying solely on past experiences when facing new challenges in leadership.

• Mid-career reflections can lead to a shift in focus from technical skills to interpersonal skills such as leadership and relationship building.
• Emotional intelligence (EQ) is critical for effective leadership and fostering a collaborative work environment.
• Inviting input and prioritizing the agendas of others can lead to a more productive and positive workplace.

"Leadership, common sense, experience, the ability to influence others, relationship building, long trusted relationships."

Jeff Russakow identifies these qualities as equally, if not more, important than technical expertise for career advancement.

"My office is a living room."

This metaphor illustrates Jeff Russakow's approach to creating an inclusive and comfortable environment for collaboration and communication.

• There is a need for greater diversity in investment strategies and business models within Silicon Valley.
• Concerns exist over the outsourcing of consumer product development and fundamental technology research to other countries.
• Advocating for a return to more proprietary work and debate within the investor community could foster a healthier innovation ecosystem.

"We've become very consensus driven around certain business models, around certain themes."

Jeff Russakow criticizes the lack of diverse thinking and the tendency to follow trends in Silicon Valley.

"We've conceded a lot of fundamental technology research that used to be our hallmark to other countries."

This quote points to the outsourcing of innovation, which could undermine Silicon Valley's position as a global technology leader.

• The next mobile revolution may focus on light electric vehicles and efficient commuting options.
• Boosted aims to become the leading brand in the light electric vehicle space, similar to the status of Apple or Peloton in their respective markets.
• There is a vision for a future where a significant portion of the population utilizes various forms of light vehicles for transportation.

"Anywhere, anytime commuting with light vehicles."

Jeff Russakow forecasts a shift towards more sustainable and efficient forms of transportation in the near future.

"We would really love to be the Hallmark brand and benchmark for that range of class of vehicles the way we are in skateboard today."

This ambition reflects Boosted's goal to be at the forefront of the light electric vehicle market.