20VC The 2 Types of Sexism & How They Play Out In Tech, Why You Should Not Always Get Customers To Pay For Your Product Immediately & Why You Must Ask Operator VCs Different Questions To NonOperator VCs with Jenna Brown, Founder & CEO, Shipamax

In this episode of "20 minutes VC," host Harry Stebbings interviews Jenna Brown, the founder and CEO of Shippermax, an early-stage, data-driven communications platform for brokers and operators. Jenna shares her journey from working in physical commodities trading to founding Shippermax, detailing the inefficiencies in ship booking that inspired the company's creation. She discusses the recent seed funding round led by FF Angel, Y Combinator, Cherubik Ventures, and prominent angels like Lee Linden and Andy Rankin. Jenna also contrasts U.S. and UK fundraising experiences, emphasizing the faster decision-making of U.S. investors. She addresses the challenges of raising capital as a female founder, advocating for the importance of confronting subtle biases and sexism. Additionally, Jenna explores the nuances of achieving product-market fit, the strategy behind customer acquisition, and the balance of customization in product development. She also touches on the considerations when choosing investors, especially regarding familiarity with B2B enterprise sales cycles.

• Jenna Brown is the founder and CEO of Shippermax, a data-driven communications platform for brokers and operators.
• Shippermax recently raised a seed round with investors including FF Angel, Y Combinator, Cherubik Ventures, and notable angels such as Lee Linden and Andy Rankin.
• Jenna's background includes being head of global expansion at Go Cardless and a trader at RWE Trading.
• Andy Rankin facilitated Jenna's introduction for the podcast episode.

"Well, today I'm delighted to be joined by one of those very special founders in the form of Jenna Brown, founder and CEO at Shippermax, a data driven communications platform for brokers and operators."

This quote introduces Jenna Brown and her company, Shippermax, highlighting the significance of her as a guest on the podcast, given her experience and recent success in raising a seed round.

• WePay helps online platforms increase revenue through integrated payments processing.
• WePay offers a balance between user experience and fraud protection.
• Pipedrive is a sales CRM and pipeline management software used by the 20 minutes VC team.
• Pipedrive is known for its visual pipeline interface and customizability.

"Wepay helps online platforms increase revenue through integrated payments processing... Pipedrive is the sales CRM and pipeline management software to use."

This quote explains the functions of WePay and Pipedrive, emphasizing their role in enhancing revenue and sales process management, respectively.

• Jenna and her co-founder Fabian both have backgrounds in physical commodities trading.
• Bulk shipping differs from container shipping, with bulk involving booking entire ships for non-containerized commodities.
• The price in bulk shipping is determined by supply and demand at a specific time and place, without set routes like container shipping.

"This is where you're moving, like huge quantities of non containerized commodities around the world... And actually, something I would just touch on is the difference between this kind of shipping, bulk shipping and containers."

This quote provides insight into the bulk shipping industry, explaining how it differs from container shipping and setting the stage for the founding of Shippermax.

• The process of booking a ship is inefficient and complex, involving many manual steps.
• Jenna and Fabian's initial idea was to create an online brokerage for ship booking.
• The Aha moment came when they started using software to improve the manual brokerage process and other brokers expressed interest in using it.
• They realized that by providing software to brokers and shipping companies, they could expedite the improvement of the entire ship booking industry.

"We kind of realized ultimately if our end goal is to fix that ship booking experience, if we teamed up with the brokers and the shipping companies to provide them with software, we could expedite that process of improving the whole industry."

This quote captures the pivotal realization that led to the creation of Shippermax, highlighting the founders' strategy to revolutionize the ship booking process through software.

• Jenna's experience with Y Combinator provided insights into US funding markets, despite being based in the UK.
• The podcast seeks to compare the experience of fundraising in the US with that in the UK and Europe.

"I'd love to hear how you compare fundraising in the US versus fundraising in the UK and Europe."

This quote sets up a discussion on the differences between fundraising in the US and the UK/Europe, reflecting the global nature of startup financing.## Experience with Investors

• Investors in more liquid markets tend to make decisions faster, which is valuable for founders.
• Time spent speaking to investors is time taken away from engaging with customers.
• A liquid market, characterized by more buyers and more sellers, tends to execute transactions more quickly.

"as a much better experience because investors tend to make decisions faster. That's incredibly valuable because every time, every day longer in speaking to investors, I have less time to speak to the people I care about, which is the customers."

This quote emphasizes the importance of a quick investment decision-making process, as it allows founders to focus on their customers.

"I think there's one single reason for that, and it's just because it's a more liquid market. There are more buyers and there are more sellers, and by definition, liquid markets execute faster."

The speaker explains that the speed of investment decisions is largely due to the liquidity of the market, which facilitates faster execution of transactions.

• The concept of "fast" in investment can mean a decision made within a 30-minute phone call.

"What is fast can be a 30 minutes phone call and ready to sign."

This quote defines "fast" in the context of investment decisions, indicating that some investors may be ready to commit after just a short conversation.

• Valley investors generally prefer founders to be based in the Valley, but this is not always necessary depending on the industry.
• Being transparent about the decision to remain based in the UK may deter some investors but not the majority who focus on the fundamentals of the opportunity.

"Valley investors do have a preference for founders to be based in the valley. For our industry, this didn't make sense. We were just honest and open about that."

The speaker discusses the geographical preferences of Valley investors and how being upfront about their location strategy affected their fundraising process.

• Female founders face obvious sexism and non-obvious biases during fundraising.
• Questions about future family plans and appearance are examples of sexism.
• Non-obvious biases can cause female founders to question their own abilities.
• Supportive investors can have a significant positive impact by expressing belief in the founder's potential.

"The who will be CEO when you get married and have babies. Have you thought about dressing in a certain way for invested meetings?"

This quote illustrates the type of obvious sexism female founders may encounter when interacting with potential investors.

"And for me, when 70% to 80% of those investors ask me, how will you win this male dominated industry? As a woman, it's very, very hard not to think there might be something wrong with you."

The speaker describes how frequent questioning about her ability to succeed in a male-dominated industry led to self-doubt.

• The speaker suggests that it's important to call out discrimination when it occurs.
• Reflecting on past experiences, the speaker would now address such issues more directly.

"Yeah, I think I'd call it out. I think at the time, I didn't really think about it enough because I just hadn't even thought that that was a problem."

The speaker reflects on past experiences with discrimination and expresses the intention to confront it more openly in the future.

• The speaker's strategy involved setting a clear and short deadline before demo day to secure initial investments.
• Targeting investors who are willing to make independent decisions, such as angels and micro VCs, was key to getting the first commitments.
• The first commit came from Ian Roundtree of Cantos Ventures.

"Yes, we went out about a week before demo day from Y combinator and with a clear and short deadline to get a handful of checks on the table."

This quote outlines the strategy used to secure initial funding commitments by creating urgency with a clear deadline.

"For us it was about finding the people who are actually willing to make that decision by themselves. And typically I'd say that's angels and a subset of micro vcs."

The speaker shares their approach to identifying and targeting specific types of investors who are likely to make independent investment decisions.

• The speaker is not overly concerned about early-stage investors' ability to follow on because if the startup's numbers are good, later stage investors will be available.
• They prefer to avoid larger funds unless there's a strong fit, focusing instead on the startup's performance.

"Not really, because if the numbers are good, you're going to find later stage investors and usually they're still connected to those later stage investors anyway."

The speaker explains why they are not worried about early-stage investors' ability to follow on, emphasizing the importance of the startup's performance metrics.

"Not too much. I'd say that generally we try to avoid the larger funds unless there was a good reason why we thought they would be a fit."

This quote indicates a strategic approach to selecting investors, prioritizing compatibility over the size of the fund.## Operator VC vs. Investor VC

• Founders often face the decision of taking money from operator VCs (ex-founders) or investor VCs.
• Operator VCs typically provide practical advice based on their hands-on experience.
• Investor VCs offer a more numbers-oriented perspective, focusing on financial investment and growth metrics.
• It's important to be cautious with advice from those who haven't run a small company, as it can lack necessary context.

"We love taking money from ex founders because typically they're great at practical advice...non former founders, they also can be incredibly valuable."

This quote by Jenna Brown emphasizes the value of having ex-founders as investors because of their ability to offer practical, experience-based advice.

"What is not good is when you have someone who hasn't worked or run in a very small company heavily giving you that practical advice."

Jenna Brown warns against taking practical advice from individuals who lack experience in running a small company, as it may not be applicable or accurate.

• The types of questions posed to an operator VC differ from those asked of an investor VC.
• Questions for investor VCs are more focused on financial metrics and less on the emotional aspects of the business.

"Investor VC... They're looking at it from a less emotional what do the numbers look like?"

Jenna Brown describes the perspective of an investor VC as being more analytical, focusing on the company's performance numbers and financial health.

• Product-market fit is indicated by a consistent value derived from the product by early customers.
• It's important that customers use the product consistently for its intended purpose.
• A repeatable sales process is based on a sales message that aligns with the product's value proposition.

"The first illustration [of product-market fit] is when we have the first set of customers who love the product... and the sales message which you're using is consistently reconciling with future prospects."

Jenna Brown defines the first sign of product-market fit as having a group of customers who consistently find value in the product and where the sales message resonates with potential customers.

• The process of acquiring the first customers lacks support compared to other business segments.
• It is crucial to get customers to use the product quickly and to build the product with their feedback in mind.
• Understanding the "buttons to push" for a repeatable sale is a part of this early stage.

"Getting them to use the products as quickly as possible and building it with them where you can."

Jenna Brown highlights the importance of rapid product adoption and incorporating customer feedback in the product development process.

• Customization can become a burden if it doesn't align with the needs of the majority of customers.
• It's important to assess whether feature requests are widely desired and worth the development resources.

"I definitely stay away from too much customization."

Jenna Brown advises against over-customizing the product, suggesting that it's better to focus on features that benefit a larger customer base.

• Some believe it's essential to charge customers from the beginning, but there can be an alternative approach.
• Initially, the focus can be on learning and removing friction, followed by a more structured sales process.
• Free pilots with defined goals can lead to payment upon achieving those goals.

"We didn't even mention paying... we wanted to remove all friction in understanding those things."

Jenna Brown explains their strategy of not charging customers at the outset in order to better understand customer needs and reduce barriers to adoption.

• The discovery phase should be as short as possible to gather necessary data and learn about user behavior.
• An ideal timeframe might be one to two months, but extending to three months can be acceptable if needed.

"Ideally, you'd probably want to push out in like one, two months, I'd say."

Jenna Brown suggests a rapid discovery phase to quickly validate the product and start the sales process.## Investor Selection in B2B Enterprise

• Choose investors familiar with early-stage B2B enterprise due to the unique challenges and sales cycles.
• Avoid investors who ask questions more suited for an e-commerce business.
• Chemistry and understanding between the founder and investors are crucial.
• Too much early focus on metrics or lack of excitement about market dynamics can be a red flag.

"Yeah, I'd say definitely choose investors that are familiar with early stage b, two b enterprise." This quote emphasizes the importance of selecting investors with expertise in the early-stage B2B enterprise sector.

"And sometimes we'd go into meetings and we'd get questions which felt very suitable for an ecommerce business." The quote illustrates the mismatch between investor expertise and the company's industry, which can lead to difficulties in securing investment.

• Raise enough funds to achieve certain milestones and prove business viability.
• Balance the amount of capital raised with concerns about dilution and valuation.

"We just had a certain amount of things we wanted to prove, and we picked that Runway." This quote explains the strategic planning behind the amount of funding raised, aligning it with business goals.

"We also took a little bit more just because the demand was there, but wanted to limit it just to balance dilution and valuation issues." The quote highlights the delicate balance between taking advantage of available funding and managing the impact on company ownership and valuation.

• Chemistry is an intangible yet critical aspect of investor-founder relationships.
• A conversation that is too checklist-focused or lacks excitement can indicate a lack of chemistry.
• Genuine interest and excitement about the market and technology are positive signs.

"I think just in a conversation, you can tell sometimes there's just chemistry and sometimes there's not." This quote suggests that the interpersonal dynamic between investors and founders can be a significant factor in investment decisions.

• Jenna Brown's favorite book is "The Hard Thing About Hard Things" due to its practical advice.
• She emphasizes due diligence when dealing with corporate innovation groups.
• From YC (Y Combinator), the key takeaway was the importance of focusing on making the first few users happy.
• She reads the SaaStr newsletter but wishes for more pre-product market advice.
• She wants to see a change in the startup and VC world where gender is not seen as a challenge.
• For Shippermax, the focus for the next five years is on gaining more happy customers.

"I love hard things about hard things, just because it's great advice based on real experience." This quote highlights the value of practical, experience-based advice in entrepreneurship.

"Due diligence. You need to understand, have the end users actually signed up for that kind of full access discovery." The quote underlines the importance of thorough evaluation when engaging with corporate innovation initiatives.

"It's just focus on making the first few users happy." This quote captures the essence of Y Combinator's advice, emphasizing early user satisfaction as a foundation for success.

"I would have to also say Sasta, but I would like to see more pre product market advice." Jenna Brown expresses her preference for SaaStr as a resource but identifies a gap in the content for pre-product market fit stages.

"Yeah, stop seeing gender as a challenge." The quote conveys a desire for the startup and VC community to overcome gender biases.

"Just one thing. More happy customers." The quote succinctly states the primary goal for Shippermax over the next five years, indicating customer satisfaction as a key metric for success.