1 00:00:06,040 --> 00:00:08,840 Michael Thompson: Welcome to Fear and Greed Sunday feature. I'm Michael Thompson. 2 00:00:09,400 --> 00:00:12,200 Michael Thompson: This week we took a deep, deep dive into the 3 00:00:12,240 --> 00:00:14,840 Michael Thompson: Fear and Greed archives and came across this interview from 4 00:00:14,840 --> 00:00:19,560 Michael Thompson: October of twenty twenty one. Canadian Michelle Romano is a 5 00:00:19,600 --> 00:00:22,400 Michael Thompson: serial entrepreneur. You've got to say. She made her fortune 6 00:00:22,400 --> 00:00:25,480 Michael Thompson: through a number of businesses, mostly in e commerce. She's 7 00:00:25,520 --> 00:00:28,040 Michael Thompson: also a TV personality, the equivalent of one of the 8 00:00:28,040 --> 00:00:31,600 Michael Thompson: sharks on Shark Tank. It's dragons Den back in Canada. 9 00:00:31,680 --> 00:00:34,279 Michael Thompson: But Sean Aylmer spoke to her in twenty twenty one 10 00:00:34,360 --> 00:00:38,000 Michael Thompson: when Michelle was bringing another business to Australia, a company 11 00:00:38,000 --> 00:00:41,559 Michael Thompson: called clear coo with a new model for funding startups, 12 00:00:41,600 --> 00:00:44,560 Michael Thompson: and it all sounded really, really exciting. You're fast forward 13 00:00:44,640 --> 00:00:47,080 Michael Thompson: now to twenty twenty five, and it feels like a 14 00:00:47,120 --> 00:00:51,520 Michael Thompson: snapshot of a very optimistic time. Clearco got hammered by 15 00:00:51,640 --> 00:00:55,360 Michael Thompson: a slowdown in the tech startup industry. It shut down 16 00:00:55,600 --> 00:00:58,639 Michael Thompson: its Australian operations, in fact, pretty much all of its 17 00:00:58,640 --> 00:01:01,280 Michael Thompson: international operations to bring its focus back to the US 18 00:01:01,320 --> 00:01:04,520 Michael Thompson: and Canada. Still, this is a fascinating conversation about a 19 00:01:04,520 --> 00:01:09,200 Michael Thompson: different model of funding businesses and what a successful serial 20 00:01:09,440 --> 00:01:12,320 Michael Thompson: entrepreneur looks for in a startup. I hope you enjoy it. 21 00:01:15,360 --> 00:01:18,240 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Alma. 22 00:01:18,560 --> 00:01:20,679 Sean Aylmer: We're in the middle of a startup boom in Australia 23 00:01:20,760 --> 00:01:24,639 Sean Aylmer: and now an innovative international investor is bringing one hundred 24 00:01:24,680 --> 00:01:28,200 Sean Aylmer: million dollars onto the scene. Clearco is the world's largest 25 00:01:28,360 --> 00:01:31,000 Sean Aylmer: e commerce investor, having put more than two and a 26 00:01:31,040 --> 00:01:35,160 Sean Aylmer: half billion US dollars globally into five five hundred startups 27 00:01:35,160 --> 00:01:38,959 Sean Aylmer: across three continents. Australia will be the company's first Southern 28 00:01:38,959 --> 00:01:42,039 Sean Aylmer: Hemisphere launch market. One of the things that makes clear 29 00:01:42,080 --> 00:01:45,480 Sean Aylmer: cod different from conventional venture capital firms is that it 30 00:01:45,520 --> 00:01:48,400 Sean Aylmer: operates on a revenue based funding model, which means Clearco 31 00:01:48,600 --> 00:01:51,840 Sean Aylmer: doesn't take an equity stake in the startup. Michel Romano 32 00:01:52,120 --> 00:01:54,880 Sean Aylmer: is a co founder and president of Clearco. She's also 33 00:01:54,920 --> 00:01:58,360 Sean Aylmer: a serial entrepreneur, having started six companies before her thirty 34 00:01:58,400 --> 00:02:02,280 Sean Aylmer: fifth birthday, and appeared on Dragon's Den in her home 35 00:02:02,320 --> 00:02:05,800 Sean Aylmer: country of Canada. She joins me this morning from New York. Michelle, 36 00:02:05,840 --> 00:02:07,400 Sean Aylmer: Welcome to Fear and great Oh. 37 00:02:07,280 --> 00:02:09,840 Michele Romanow: It's wonderful to be here. Thank you for having me. 38 00:02:09,840 --> 00:02:12,320 Sean Aylmer: Michele, people like you make me exhausted. How can you 39 00:02:12,360 --> 00:02:14,840 Sean Aylmer: have six companies before your thirty fifth birthday? 40 00:02:15,160 --> 00:02:19,600 Michele Romanow: Oh, I didn't sleep very much. It's pretty simple, No, 41 00:02:19,840 --> 00:02:22,799 Michele Romanow: I mean, I think the biggest thing is I started early, right. 42 00:02:22,840 --> 00:02:25,480 Michele Romanow: I started right out of of engineering school, started my first business, 43 00:02:25,520 --> 00:02:28,800 Michele Romanow: which was, you know, a caviar fishery, and then you know, 44 00:02:28,840 --> 00:02:30,520 Michele Romanow: the ball got rolling and just kind of took it 45 00:02:30,520 --> 00:02:30,880 Michele Romanow: from there. 46 00:02:31,080 --> 00:02:33,440 Sean Aylmer: Okay, so you're an engineer by training, is that right? 47 00:02:33,520 --> 00:02:36,399 Sean Aylmer: And what sort of businesses have you been involved in yourself? 48 00:02:36,919 --> 00:02:39,400 Michele Romanow: So I go to school for engineering. I figure out 49 00:02:39,440 --> 00:02:41,680 Michele Romanow: that I'm not going to be very good at building 50 00:02:41,680 --> 00:02:44,280 Michele Romanow: bridges and instead much better at building businesses. So I 51 00:02:44,280 --> 00:02:47,240 Michele Romanow: build a little coffee shop on campus as my first business. 52 00:02:47,440 --> 00:02:50,400 Michele Romanow: I graduate and figure out that worldwide supply of sturgeon 53 00:02:50,400 --> 00:02:53,160 Michele Romanow: caviar is down by ninety five percent because the world 54 00:02:53,240 --> 00:02:56,160 Michele Romanow: has overfished the Caspian Sea, and moved myself up to 55 00:02:56,200 --> 00:02:58,480 Michele Romanow: the East coast to build a fishery, which was a 56 00:02:58,480 --> 00:03:01,160 Michele Romanow: great business until the two thousand and eight recession, in 57 00:03:01,200 --> 00:03:04,040 Michele Romanow: which case it was a horrible business. And from there 58 00:03:04,080 --> 00:03:06,440 Michele Romanow: started an early e commerce company in Canada. So I 59 00:03:06,480 --> 00:03:10,160 Michele Romanow: deeply understand our customers. It's now a small publicly traded 60 00:03:10,160 --> 00:03:13,160 Michele Romanow: company in Canada. From there, built another app that was 61 00:03:13,200 --> 00:03:16,600 Michele Romanow: acquired by Groupon in twenty fourteen. And that really leads 62 00:03:16,639 --> 00:03:19,200 Michele Romanow: to the part of the story where I get asked 63 00:03:19,200 --> 00:03:20,720 Michele Romanow: to join the cast of Dragons Den. I think, you 64 00:03:20,720 --> 00:03:21,960 Michele Romanow: guys have the same show in Australia. 65 00:03:21,960 --> 00:03:24,200 Sean Aylmer: It's Shark Tank is how we call it. 66 00:03:24,200 --> 00:03:27,640 Michele Romanow: Yeah, exactly, but the same concept. Entrepreneurs come on the show. 67 00:03:28,320 --> 00:03:30,720 Michele Romanow: And it was a really unique opportunity that I got 68 00:03:30,760 --> 00:03:32,480 Michele Romanow: invited to join the show when I was quite young. 69 00:03:32,520 --> 00:03:35,400 Michele Romanow: I was twenty eight but you know, and everyone's like, wow, congrats, 70 00:03:35,400 --> 00:03:37,960 Michele Romanow: and I'm like, oh my goodness, I'm scared. I'm the 71 00:03:38,040 --> 00:03:40,840 Michele Romanow: youngest person here. I feel like the poorest person here. 72 00:03:41,520 --> 00:03:43,920 Michele Romanow: And I think as a result of that, I just 73 00:03:43,960 --> 00:03:46,800 Michele Romanow: saw these businesses a lot differently and what I saw 74 00:03:47,120 --> 00:03:49,120 Michele Romanow: because we filmed the whole show in three weeks, right, 75 00:03:49,120 --> 00:03:50,960 Michele Romanow: we two hundred and fifty pitches in those three weeks. 76 00:03:50,960 --> 00:03:53,520 Michele Romanow: It's the same way everywhere the show is made. And 77 00:03:53,600 --> 00:03:55,520 Michele Romanow: so you're starting to see these entrepreneurs come on the 78 00:03:55,520 --> 00:03:57,360 Michele Romanow: show and they have, you know, great e commerce products, 79 00:03:57,360 --> 00:03:59,120 Michele Romanow: and they're like, look, I'm looking for one hundred thousand 80 00:03:59,120 --> 00:04:01,960 Michele Romanow: dollars for ten percent of my business. And what's really 81 00:04:02,000 --> 00:04:04,000 Michele Romanow: interesting is you when you ask those founders what they 82 00:04:04,000 --> 00:04:06,680 Michele Romanow: needed the money for, it was always the same two things. 83 00:04:06,720 --> 00:04:08,760 Michele Romanow: It was I need it for user growth, which is 84 00:04:08,800 --> 00:04:11,640 Michele Romanow: Facebook and Google Ads, and I need it for inventory. 85 00:04:11,920 --> 00:04:14,840 Michele Romanow: And so I remember talking to my co founder Andrew 86 00:04:14,880 --> 00:04:16,479 Michele Romanow: and being like, you know, why are founders using the 87 00:04:16,480 --> 00:04:19,080 Michele Romanow: most expensive capital in the world, which is equity, to 88 00:04:19,120 --> 00:04:21,080 Michele Romanow: do something that really has a fixed return. And so 89 00:04:21,120 --> 00:04:23,000 Michele Romanow: we put our heads together and I actually remember I 90 00:04:23,040 --> 00:04:25,039 Michele Romanow: came back on the show and I was like, look, 91 00:04:25,240 --> 00:04:26,960 Michele Romanow: I'm just going to throw it at a different deal tape. 92 00:04:27,279 --> 00:04:29,039 Michele Romanow: I'm going to give you that one hundred thousand dollars 93 00:04:29,040 --> 00:04:31,400 Michele Romanow: you were looking for, but instead of taking ten percent 94 00:04:31,440 --> 00:04:33,839 Michele Romanow: of your company that I will own forever, I just 95 00:04:33,880 --> 00:04:36,360 Michele Romanow: want ten percent of your revenue, just until you pay 96 00:04:36,400 --> 00:04:39,599 Michele Romanow: me back my capital plus six percent. And the founder 97 00:04:39,600 --> 00:04:41,400 Michele Romanow: that day was really confused, like, well, isn't this alone, 98 00:04:41,400 --> 00:04:44,000 Michele Romanow: And I'm like, no, it's not alone. There's no personal guarantee, 99 00:04:44,160 --> 00:04:47,400 Michele Romanow: there's no fixed payment timeline, there's no compounding interest, and 100 00:04:48,120 --> 00:04:49,640 Michele Romanow: if you don't pay me back, I'm not going to 101 00:04:49,640 --> 00:04:51,880 Michele Romanow: take your business or put you into bankruptcy like normal 102 00:04:52,040 --> 00:04:54,520 Michele Romanow: debt does. I said, the only trick to my deal 103 00:04:54,600 --> 00:04:56,240 Michele Romanow: is that I really want to see your Facebook ad 104 00:04:56,279 --> 00:04:58,000 Michele Romanow: data because I'll understand, you know, if you have really 105 00:04:58,000 --> 00:05:00,680 Michele Romanow: good unit economics and so so it was actually on 106 00:05:00,720 --> 00:05:02,520 Michele Romanow: the show that day that the founder was like, yes, 107 00:05:02,560 --> 00:05:05,120 Michele Romanow: I want to take that deal, and you know, the 108 00:05:05,200 --> 00:05:07,080 Michele Romanow: rest is a little bit of history, and that's really 109 00:05:07,120 --> 00:05:08,920 Michele Romanow: become what Clearco is today. 110 00:05:09,279 --> 00:05:12,160 Sean Aylmer: Okay, so let me get this. So revenue based funding 111 00:05:12,800 --> 00:05:14,880 Sean Aylmer: is all about so it's not a loan because there 112 00:05:14,880 --> 00:05:18,000 Sean Aylmer: are no guarantees, but it is about Clearco providing one 113 00:05:18,040 --> 00:05:21,320 Sean Aylmer: hundred thousand in this example being paid back on the 114 00:05:21,360 --> 00:05:24,760 Sean Aylmer: basis of revenue plus whatever rate that is. Is that 115 00:05:24,920 --> 00:05:27,760 Sean Aylmer: over one year, two year, three year? Is there term involved? 116 00:05:27,760 --> 00:05:29,279 Sean Aylmer: How is that? And what are the guarantees? 117 00:05:29,960 --> 00:05:32,520 Michele Romanow: No, there's no guarantees. So we have no personal guarantees 118 00:05:32,520 --> 00:05:34,560 Michele Romanow: in your business. That's why we really have to understand 119 00:05:34,560 --> 00:05:36,640 Michele Romanow: your data. If we don't pay us back, we don't 120 00:05:36,640 --> 00:05:39,960 Michele Romanow: put you into bankruptcy. And typically we get our money 121 00:05:40,000 --> 00:05:42,440 Michele Romanow: back anywhere from eight to twelve months, I would say 122 00:05:42,640 --> 00:05:45,920 Michele Romanow: is usually typical. And there's some companies that we've funded, 123 00:05:46,000 --> 00:05:48,480 Michele Romanow: you know, twenty five times, and we've scaled them from 124 00:05:48,800 --> 00:05:50,960 Michele Romanow: you know, ten thousand dollars a month businesses all the 125 00:05:51,000 --> 00:05:53,040 Michele Romanow: way to one hundred million dollar businesses because we will 126 00:05:53,040 --> 00:05:56,480 Michele Romanow: give companies between ten thousand up to ten million dollars. 127 00:05:56,360 --> 00:05:58,320 Sean Aylmer: And is six per cent a typical interest rate or 128 00:05:58,320 --> 00:05:59,400 Sean Aylmer: does that move around a bit? 129 00:05:59,360 --> 00:06:01,760 Michele Romanow: So it's actually not interest rate. It's a flat fee. 130 00:06:01,880 --> 00:06:03,360 Michele Romanow: So if we give you one hundred grand, you ow 131 00:06:03,400 --> 00:06:05,400 Michele Romanow: US one hundred and six thousand dollars. If you take 132 00:06:05,480 --> 00:06:07,080 Michele Romanow: us two years to pay us back, you still owe 133 00:06:07,120 --> 00:06:09,599 Michele Romanow: us one hundred and six thousand dollars. Which is why 134 00:06:09,600 --> 00:06:11,599 Michele Romanow: it's very different than an interest rate because it doesn't 135 00:06:11,600 --> 00:06:14,280 Michele Romanow: compound or grow. You actually always know what it's going 136 00:06:14,320 --> 00:06:16,840 Michele Romanow: to cost you for that capital. And yeah, if you 137 00:06:16,880 --> 00:06:19,279 Michele Romanow: spend your money on inventory or ads, it's always six percent. 138 00:06:19,480 --> 00:06:23,600 Sean Aylmer: Wow, you must have very supportive shareholders of your business, Michele. 139 00:06:23,880 --> 00:06:27,920 Michele Romanow: We really started a new model. And I can tell 140 00:06:27,960 --> 00:06:30,200 Michele Romanow: you it's really funny being back in New York right now, 141 00:06:30,240 --> 00:06:32,320 Michele Romanow: because I mean this is where we went to get 142 00:06:32,320 --> 00:06:34,680 Michele Romanow: our original capital base. And I can tell you there 143 00:06:34,680 --> 00:06:37,000 Michele Romanow: was two hundred and forty nine people on Wall Street 144 00:06:37,000 --> 00:06:39,359 Michele Romanow: that said no to us. They said you know, you 145 00:06:39,400 --> 00:06:41,839 Michele Romanow: guys don't understand credit. You're going to lose all your money. 146 00:06:41,920 --> 00:06:44,840 Michele Romanow: You don't know what you're doing. And what we said is, look, 147 00:06:44,839 --> 00:06:47,560 Michele Romanow: I'd run an e commerce business before. The success of 148 00:06:47,640 --> 00:06:51,000 Michele Romanow: e commerce businesses is correlated to what your unit economics are, 149 00:06:51,080 --> 00:06:53,200 Michele Romanow: which means you know, after you make a sale and 150 00:06:53,200 --> 00:06:55,200 Michele Romanow: you subtract your product cost and your cost of ads, 151 00:06:55,200 --> 00:06:59,000 Michele Romanow: are you making money? And your growth rate and what 152 00:06:59,080 --> 00:07:01,880 Michele Romanow: audience sizes you'd penetrated. And so it took a long time, 153 00:07:01,920 --> 00:07:04,359 Michele Romanow: in many years. I mean, we were schlepping around in 154 00:07:04,360 --> 00:07:07,919 Michele Romanow: twenty sixteen and twenty seventeen asking for this money, and 155 00:07:08,240 --> 00:07:10,880 Michele Romanow: we were able to show investors that, in fact, we 156 00:07:10,960 --> 00:07:13,600 Michele Romanow: have way more businesses. I mean, we've put out two 157 00:07:13,640 --> 00:07:16,080 Michele Romanow: and a half billion dollars into founder's hands. 158 00:07:15,760 --> 00:07:17,440 Sean Aylmer: It's an incredible amount of money. 159 00:07:17,800 --> 00:07:20,040 Michele Romanow: It's an incredible amount of money, and I just want 160 00:07:20,040 --> 00:07:21,640 Michele Romanow: to put that as a sense of scale for you. 161 00:07:21,680 --> 00:07:24,600 Michele Romanow: Like a huge venture fund in the US, like one 162 00:07:24,640 --> 00:07:26,720 Michele Romanow: of the big ones is maybe a billion dollar fund, 163 00:07:26,880 --> 00:07:29,200 Michele Romanow: and they deploy that capital over seven years. I mean, 164 00:07:29,240 --> 00:07:31,120 Michele Romanow: we've done two and a half billion and six years. 165 00:07:31,120 --> 00:07:33,120 Michele Romanow: So what we believe is that our market size is 166 00:07:33,160 --> 00:07:36,200 Michele Romanow: so much bigger. We're incredibly excited about the Australian marketplace 167 00:07:36,240 --> 00:07:38,800 Michele Romanow: because we know it's super tech savvy, lots of e 168 00:07:38,840 --> 00:07:42,119 Michele Romanow: commerce companies, and really under served. 169 00:07:42,160 --> 00:07:43,120 Sean Aylmer: So why Australia. 170 00:07:43,440 --> 00:07:46,000 Michele Romanow: It's that it's we know there's tons of great ecommerce 171 00:07:46,000 --> 00:07:48,400 Michele Romanow: founders there. We don't think they're being served well by 172 00:07:48,440 --> 00:07:50,800 Michele Romanow: current options and we can see that in terms of 173 00:07:50,880 --> 00:07:53,000 Michele Romanow: like the way that banks have set up and they've 174 00:07:53,080 --> 00:07:56,280 Michele Romanow: charged for their capital and they've had guarantees associated with them, 175 00:07:56,280 --> 00:07:58,040 Michele Romanow: and so we think it's and we think there's just 176 00:07:58,080 --> 00:08:01,400 Michele Romanow: some incredible founders there deserve a better capital option. 177 00:08:01,520 --> 00:08:03,600 Sean Aylmer: And it's not necessarily what we always think of as 178 00:08:03,640 --> 00:08:06,320 Sean Aylmer: a digital company. You've also invested in like Beard Market 179 00:08:06,360 --> 00:08:10,280 Sean Aylmer: and Vegan Grocery Store already in Australia, which aren't pure 180 00:08:10,520 --> 00:08:12,120 Sean Aylmer: ecommerce players. Are they? Yeah? 181 00:08:12,160 --> 00:08:14,000 Michele Romanow: I mean they have an e commerce component right like 182 00:08:14,080 --> 00:08:16,920 Michele Romanow: Beard Market has an awesome e commerce part of it, 183 00:08:17,000 --> 00:08:19,720 Michele Romanow: so does Australia's Vegan Grocery Store. But a lot of these have 184 00:08:20,320 --> 00:08:22,960 Michele Romanow: offline revenue as well. But we're you know, as long 185 00:08:23,000 --> 00:08:24,880 Michele Romanow: as they have a digital component, we can get very 186 00:08:24,880 --> 00:08:25,840 Michele Romanow: excited about backing them. 187 00:08:26,000 --> 00:08:28,000 Sean Aylmer: Michelle, stay with me, we'll be back in a minute. 188 00:08:33,080 --> 00:08:36,400 Sean Aylmer: I'm speaking to Michele Romanow, the co founder and president 189 00:08:36,480 --> 00:08:40,200 Sean Aylmer: of Clearco. Okay, now, the use of artificial intelligence platforms 190 00:08:40,240 --> 00:08:42,760 Sean Aylmer: to help make funding decisions, I want to delve into 191 00:08:42,840 --> 00:08:45,360 Sean Aylmer: that a little bit. And I have seen you on 192 00:08:45,480 --> 00:08:47,920 Sean Aylmer: YouTube and read about you. And the idea that it 193 00:08:48,000 --> 00:08:51,840 Sean Aylmer: removes age, gender, race, and religion as factors influencing investments 194 00:08:52,200 --> 00:08:56,400 Sean Aylmer: is really, really interesting, particularly in a startup market where 195 00:08:56,640 --> 00:08:59,920 Sean Aylmer: a lot of traditional funders aren't meeting traditional companies. 196 00:09:01,440 --> 00:09:03,520 Michele Romanow: So let me explain to you how it works if 197 00:09:03,520 --> 00:09:05,680 Michele Romanow: you're a founder. So, if you're a founder that's looking 198 00:09:05,800 --> 00:09:09,160 Michele Romanow: to raise capital, you can come to Clearco. You can 199 00:09:09,240 --> 00:09:11,280 Michele Romanow: connect us to the apps that run your business. So 200 00:09:11,400 --> 00:09:13,400 Michele Romanow: these are things like your payment process or where you're 201 00:09:13,440 --> 00:09:16,000 Michele Romanow: spending money on ads and you're accounting data. That all 202 00:09:16,120 --> 00:09:18,559 Michele Romanow: takes you maybe ten minutes if you remember your passwords. 203 00:09:18,559 --> 00:09:20,800 Michele Romanow: If you don't remember your passwords, like me, it's twenty minutes. 204 00:09:21,160 --> 00:09:23,400 Michele Romanow: But in twenty minutes, we can give you a term 205 00:09:23,440 --> 00:09:25,120 Michele Romanow: sheet and we can say, look, based on the data 206 00:09:25,200 --> 00:09:27,080 Michele Romanow: in your business, this is how much capital we can 207 00:09:27,160 --> 00:09:28,880 Michele Romanow: give you. And you know this is the six percent 208 00:09:28,960 --> 00:09:31,120 Michele Romanow: of the terms of that capital. So first of all, 209 00:09:31,240 --> 00:09:35,000 Michele Romanow: that is way faster than any VC process. I mean, 210 00:09:35,040 --> 00:09:37,520 Michele Romanow: I've raised multiple rounds of VC money for this company. 211 00:09:37,600 --> 00:09:39,439 Michele Romanow: I wish we could have raised through Clearco, but we 212 00:09:39,720 --> 00:09:42,920 Michele Romanow: didn't have that option. And the fastest you can ever 213 00:09:42,960 --> 00:09:45,120 Michele Romanow: fundraise is really three to six months, and it is 214 00:09:45,160 --> 00:09:47,760 Michele Romanow: a grueling process that completely takes my eye off the business, 215 00:09:47,800 --> 00:09:50,520 Michele Romanow: and I just basically go fundraise. So we have a 216 00:09:50,600 --> 00:09:54,440 Michele Romanow: way faster option, and then think about the data we're using. 217 00:09:54,679 --> 00:09:56,439 Michele Romanow: We don't need your pitch deck, we don't need to 218 00:09:56,520 --> 00:09:58,760 Michele Romanow: meet you. We don't know who you are, or where 219 00:09:58,800 --> 00:10:01,560 Michele Romanow: you grew up, or which university you went to. In fact, 220 00:10:01,600 --> 00:10:04,480 Michele Romanow: in many cases, we don't even care what product you're selling. 221 00:10:04,920 --> 00:10:06,880 Michele Romanow: We care about the things I talked about earlier, which 222 00:10:06,920 --> 00:10:10,559 Michele Romanow: were unit economics, growth rate and your audience penetration sizes. 223 00:10:11,000 --> 00:10:13,480 Michele Romanow: And in that way, it's been really remarkable. So we 224 00:10:13,920 --> 00:10:15,960 Michele Romanow: when we built this, we just thought about building something 225 00:10:16,000 --> 00:10:17,439 Michele Romanow: that was better for founders, and so this was a 226 00:10:17,520 --> 00:10:19,120 Michele Romanow: faster way to do it, This where I didn't have 227 00:10:19,200 --> 00:10:20,680 Michele Romanow: to do all these pitch meetings and get all these 228 00:10:20,720 --> 00:10:23,199 Michele Romanow: custom spreadsheets and do all this diligence. So that was 229 00:10:23,240 --> 00:10:26,320 Michele Romanow: the original way, but we realized that we basically built 230 00:10:26,360 --> 00:10:28,480 Michele Romanow: an AI that took out a lot of the bias 231 00:10:28,559 --> 00:10:31,000 Michele Romanow: from these decision makings. And so when we look back 232 00:10:31,120 --> 00:10:34,640 Michele Romanow: at our portfolio Sean, we saw very different statistics. I mean, 233 00:10:34,720 --> 00:10:37,360 Michele Romanow: we had backed eight times more women than the venture 234 00:10:37,400 --> 00:10:40,160 Michele Romanow: capital industry average. We had backed founders in all fifty 235 00:10:40,200 --> 00:10:42,680 Michele Romanow: states in America and the UK. Seventy percent of our 236 00:10:42,720 --> 00:10:45,400 Michele Romanow: founders lived outside of the UK, and a much higher 237 00:10:45,440 --> 00:10:48,319 Michele Romanow: proportion of our founders were black, Indigenous and people of color, 238 00:10:48,480 --> 00:10:52,080 Michele Romanow: which to me means that there had just always been 239 00:10:52,160 --> 00:10:55,280 Michele Romanow: these very strong biases. And again I don't blame VC. 240 00:10:55,440 --> 00:10:57,240 Michele Romanow: It was a human to human business, right, So if 241 00:10:57,280 --> 00:10:59,120 Michele Romanow: you went to schools with other vcs and if you 242 00:10:59,200 --> 00:11:01,480 Michele Romanow: knew them, I mean the first litmus test of pitching 243 00:11:01,520 --> 00:11:03,692 Michele Romanow: a VC is that they don't take cold email intros. Sp 244 00:11:03,692 --> 00:11:06,240 Michele Romanow: you have to be in their network. And so we've 245 00:11:06,320 --> 00:11:10,160 Michele Romanow: gotten businesses that look like they're from a certain pedigree, 246 00:11:10,320 --> 00:11:13,280 Michele Romanow: from a certain background. And look, the reality is is, 247 00:11:13,360 --> 00:11:16,319 Michele Romanow: I've always believed that great businesses can come from anywhere. 248 00:11:16,679 --> 00:11:19,079 Michele Romanow: I believe that actually founders that have had probably a 249 00:11:19,160 --> 00:11:21,839 Michele Romanow: tougher card in life are often better founders than ones 250 00:11:21,840 --> 00:11:23,959 Michele Romanow: that had a silver spoon in life. Yeah, and so 251 00:11:24,160 --> 00:11:26,679 Michele Romanow: we just think it's going to be pretty incredible to 252 00:11:26,760 --> 00:11:29,600 Michele Romanow: think about the world we can live in when everyone 253 00:11:29,720 --> 00:11:32,160 Michele Romanow: with a great idea has the ability to get that 254 00:11:32,520 --> 00:11:33,200 Michele Romanow: business funded. 255 00:11:33,520 --> 00:11:35,760 Sean Aylmer: The thing gnawing at me about everything you've just said. 256 00:11:35,840 --> 00:11:38,959 Sean Aylmer: It's fantastic. Total agreement. But every time you talk to a 257 00:11:39,000 --> 00:11:41,959 Sean Aylmer: big investor, they always talk about how important management is, 258 00:11:42,040 --> 00:11:44,360 Sean Aylmer: how important the person running the show is. 259 00:11:44,600 --> 00:11:44,960 Michele Romanow: Totally. 260 00:11:45,120 --> 00:11:47,320 Sean Aylmer: And in some ways you're... is it just that if 261 00:11:47,360 --> 00:11:49,880 Sean Aylmer: you've got the financial results and the cultural results you gain, 262 00:11:49,960 --> 00:11:51,440 Sean Aylmer: have a good manager, so you don't need to worry 263 00:11:51,440 --> 00:11:53,319 Sean Aylmer: about that. And I'm just interested in whether you have 264 00:11:53,400 --> 00:11:55,599 Sean Aylmer: much to do with the CEO of these companies. 265 00:11:55,640 --> 00:11:57,199 Michele Romanow: We have nothing to do with who the CEOs and 266 00:11:57,280 --> 00:11:59,120 Michele Romanow: managements are. I think it's one of the unique parts 267 00:11:59,120 --> 00:12:02,160 Michele Romanow: of our model. And look, of course I would believe 268 00:12:02,160 --> 00:12:03,760 Michele Romanow: that management makes a difference in the team, but I 269 00:12:03,840 --> 00:12:07,040 Michele Romanow: also believe that's reflected in their numbers. And you know, 270 00:12:07,440 --> 00:12:10,200 Michele Romanow: vcs get to play this, you know, kingmaking game where 271 00:12:10,200 --> 00:12:12,800 Michele Romanow: they get to annoint certain companies winners and certain companies 272 00:12:12,920 --> 00:12:16,160 Michele Romanow: losers based on whatever criteria that you know is either 273 00:12:16,240 --> 00:12:19,160 Michele Romanow: intuitive in their minds, and we think that there's probably 274 00:12:19,200 --> 00:12:21,200 Michele Romanow: a better way, and we've seen a lot of people 275 00:12:21,240 --> 00:12:24,520 Michele Romanow: that don't look like traditional founders that have built incredibly 276 00:12:25,120 --> 00:12:26,679 Michele Romanow: successful companies because of that. 277 00:12:26,920 --> 00:12:28,920 Sean Aylmer: Okay, so the sixty four dollar question, of course is 278 00:12:29,000 --> 00:12:33,360 Sean Aylmer: how has Clearco gone in its investments, because if it works, 279 00:12:33,440 --> 00:12:35,640 Sean Aylmer: Clearco should be doing reasonably well out of it, as 280 00:12:35,640 --> 00:12:38,200 Sean Aylmer: should all the people you've invested in, well some of them. 281 00:12:38,120 --> 00:12:40,959 Michele Romanow: Anyway, Yeah, exactly. I mean, we know that companies that 282 00:12:41,000 --> 00:12:43,360 Michele Romanow: take our capital grow at double the rate of the 283 00:12:43,440 --> 00:12:45,439 Michele Romanow: companies that don't take our capital. So I can tell 284 00:12:45,480 --> 00:12:48,120 Michele Romanow: you that our founders are more successful they when they 285 00:12:48,240 --> 00:12:50,880 Michele Romanow: join the Clearco family. We not only give founders capital, 286 00:12:50,920 --> 00:12:53,040 Michele Romanow: we also give them access to an enormous network of 287 00:12:53,080 --> 00:12:55,440 Michele Romanow: other founders and a lot of advice to go along 288 00:12:55,520 --> 00:12:58,080 Michele Romanow: with how to spend that money and how to grow efficiently. 289 00:12:58,120 --> 00:12:59,360 Michele Romanow: And so there's a lot of products. I mean, you 290 00:12:59,360 --> 00:13:01,280 Michele Romanow: can see your own deashboard, you can see you know 291 00:13:01,640 --> 00:13:03,439 Michele Romanow: what your benchmarks are, you can see how your pack 292 00:13:03,520 --> 00:13:05,839 Michele Romanow: is comparing to other people in your category, and so 293 00:13:06,000 --> 00:13:08,319 Michele Romanow: all of those are very useful pieces of software that 294 00:13:08,360 --> 00:13:10,440 Michele Romanow: we built on top. And then I mean it's been 295 00:13:10,480 --> 00:13:12,760 Michele Romanow: one of the reasons that Clearco has been able to expand. 296 00:13:12,840 --> 00:13:15,160 Michele Romanow: I mean we were, you know, the first deal that 297 00:13:15,240 --> 00:13:18,000 Michele Romanow: SoftBank has ever invested in Canada was Clearco and so 298 00:13:18,080 --> 00:13:20,920 Michele Romanow: there's people that are clearly very excited about the model today. 299 00:13:21,280 --> 00:13:23,600 Sean Aylmer: Michelle, you obviously like entrepreneurs and startups. 300 00:13:23,679 --> 00:13:26,560 Michele Romanow: Why because I think they're are best bet to change 301 00:13:26,600 --> 00:13:28,480 Michele Romanow: the future and build the world that we want to 302 00:13:28,520 --> 00:13:30,760 Michele Romanow: live in. I look at all the solutioning we have, 303 00:13:31,400 --> 00:13:33,920 Michele Romanow: and you know, I think about even a big problem 304 00:13:34,080 --> 00:13:36,559 Michele Romanow: like you know, climate change for example, right governments have 305 00:13:36,640 --> 00:13:38,760 Michele Romanow: spent trillions of dollars trying to make a dent on this, 306 00:13:39,000 --> 00:13:40,880 Michele Romanow: and the real people that have made a difference are 307 00:13:41,240 --> 00:13:44,120 Michele Romanow: you know, the entrepreneurs that built electric cars and trucks 308 00:13:44,160 --> 00:13:47,079 Michele Romanow: that people wanted to drive. The nest thermostat made a 309 00:13:47,160 --> 00:13:51,440 Michele Romanow: meaningful difference in the US, and so they're just such 310 00:13:51,480 --> 00:13:53,800 Michele Romanow: a good channel to back and I think that that's 311 00:13:53,800 --> 00:13:55,559 Michele Romanow: what I spent my career doing. I was not only 312 00:13:55,640 --> 00:13:57,520 Michele Romanow: a founder, so I understand that part of the journey 313 00:13:57,520 --> 00:14:00,280 Michele Romanow: and understand how hard this is and how the cards 314 00:14:00,280 --> 00:14:03,439 Michele Romanow: are really stacked against you. But then inevitably, if you 315 00:14:03,559 --> 00:14:06,319 Michele Romanow: want to help founders, when you have to solve the 316 00:14:06,360 --> 00:14:09,640 Michele Romanow: capital problem, because the capital is still unfairly distributed today 317 00:14:10,080 --> 00:14:12,400 Michele Romanow: and so this is our attempt to make a little 318 00:14:12,480 --> 00:14:13,800 Michele Romanow: drop in that bucket and we think we can have 319 00:14:13,880 --> 00:14:14,760 Michele Romanow: a meaningful impact. 320 00:14:14,960 --> 00:14:17,240 Sean Aylmer: Well, what I think is exciting for Australian businesses is 321 00:14:17,320 --> 00:14:20,600 Sean Aylmer: the cost of capital with Clearco is far less than 322 00:14:20,760 --> 00:14:23,080 Sean Aylmer: many other alternates. So good luck. It's launching this week 323 00:14:23,120 --> 00:14:24,880 Sean Aylmer: in Australia. Thank you very much for talking to Fear 324 00:14:24,920 --> 00:14:25,160 Sean Aylmer: and Greed. 325 00:14:25,200 --> 00:14:27,240 Michele Romanow: Michelle, Oh, it was amazing to be here. Thank you 326 00:14:27,320 --> 00:14:27,720 Michele Romanow: for having me. 327 00:14:28,080 --> 00:14:31,280 Sean Aylmer: That was Michelle Romano, the co founder and president of Clearco. 328 00:14:31,520 --> 00:14:33,800 Sean Aylmer: This is the Fear and Greed Daily Interview. Join me 329 00:14:33,920 --> 00:14:36,200 Sean Aylmer: every morning for the full Fear and Greed podcast with 330 00:14:36,320 --> 00:14:38,920 Sean Aylmer: all the business news you need to know. I'm Sean Aylmer. 331 00:14:39,320 --> 00:14:39,880 Sean Aylmer: Enjoy your day.