"At a certain point, you have to flip from startup mentality to a scaling mentality”
Adam Wells is the CEO of Golden Section, a founders studio and venture capital fund focused on product development and helping companies scale to a successful exit. Adam is a serial entrepreneur and previously founded a real estate development company before going into consulting where he started his own firm, EDB Consulting. Golden Section has over 75 employees now and five offices across the world.
You started in real estate development which is an unusual starting place for venture capital before later getting into consulting. Tell us about your background and what led you into venture capital?
Pointing back to Golden Section for a second, we highly value diversified backgrounds, so it’s not a prerequisite to have an MBA to come into the fold. A great number of our executive team and leadership team come from a variety of backgrounds. For me, I’ve always just absolutely enjoyed learning. I was a linguistics major in college, got a business minor, thought I was going to go into ministry for a while, and ended up being fascinated with land development, so I got into that. I’ve always loved architecture, so I’m kind of an autodidact when it comes to architecture. I started a design business as part of the real estate development business. I’ve always tried to pull in insights from extra-industry sources in order to benefit the industry that I’m in at the time. I got to a point, weathering a bunch of different market cycles, where I was a bit burned out, but thankfully, I had accomplished all of the things that I had set out to accomplish in that field. It was a good ride, it was a lot of fun, and I learned a ton.
Throughout that time in real estate development, I essentially started formulating other business units, trying to deliver more value to my target customer segment, trying to capture a bit more of that through different revenue service lines. I ended up developing quite a robust background in all things small business, whether it’s team cultivation, vendor and investor relations, sales and marketing, operations, all that stuff. And so moving over from real estate development to software development, a tight network connection that I had saw the benefit of my background in starting and scaling a couple of companies, albeit in a different industry, and was looking for a partner to come in and try to help continue to grow what at that point was more of a SPB and investment entity as well as a product development in-house execution capability. Over the last few years, we’ve really refined Golden Section to do a lot of what I was doing earlier on. That is, that are a number of ways that we can help founders on their journey, the specific centers of excellence that we can develop in-house, and who are the strategic partners that we value so highly that have skill sets that aren’t necessarily appropriate or relatively easy for us to develop in-house. We really consolidated under the Golden Section umbrella over the last year, maybe even eighteen months, and have developed a few different business units to help out those founders along their journeys in building, scaling, and getting to a meaningful exit.
As venture capital develops and changes, you’ve seen a lot of firms move toward providing a lot of services around the entrepreneurs they invest in. For Golden Section, there’s the Founders Studio and the actual capital you’re providing - What are the other ways that you’re really trying to help founders and how does your team think about that?
There are always a bunch of different ways to evaluate an endeavor or think about the opportunity costs and the return-on-investment timeline. In venture capital, we have the luxury of essentially fixing a time window. That helps us to . . . nominally think of the next five years for this company. So if we can fix the time window, if we can actually fix one of those variables, then it helps us make better decisions across the board. It helps us understand when we do an ROI analysis that sure, you could build it in-house, but the payoff period is ten years. Let’s not do that. It’s an incredible luxury to be able to do that.
On the founder journey - We have an incredible network of seasoned entrepreneurs, we call them our venture partners, that come in and advise under our studio’s model, scaling all aspects of the company. We have a playbook that’s about a hundred plays strong across executive, strategic, customers, vendors, sales and marketing, and operations. Then they have to build the product, so we have product strategy, we have product-execution capability, and we have five offices around the world, which help us to provide great value to our clients, but we do it in a full-stack, product-led, agile way. Our product teams are built up out of every single office, and they’re all strategically placed for a reason. Then we have human resources planning, which addresses that they’ve got to build a team. We look at that from an operational efficiency standpoint and going from breaking in to exit velocity. At a certain point, you have to flip from startup mentality to a scaling mentality.
Then we have our venture fund. We are investing in pre-seed to series A, B2B SaaS, and marketplace companies. We have an incredible team that is working together to evaluate these companies, diligence them, and provide as much value in terms of differentiated services and support and guidance as possible during that particular journey. On the more minimally dilutive side, we have a lending arm. We’ve seen that inevitably, our B2B SaaS founders are going to get into some sort of cash crunch. Instead of scrambling to try to raise a bridge round, which, could be dilutive. So we have a lending arm that not only helps on the bridge side but also provides capital to fuel sales and marketing. We’re very revenue focused. We feel, especially in a B2B setting, that revenue unlocks and helps the benchmark, what you should be spending on sales and marketing, what you should be spending on R&D. We try to wrap our arms around founders and provide as much support to them, their management teams, their advisers, and their in-house talent. Given the numerous mistakes that we’ve either made ourselves over the last twenty years or have seen made, we want our founders to be building their companies on the backs of people who’ve made mistakes so they don’t have to make those.
You mentioned scaling earlier; What do companies need to do to get product-market fit, which sometimes, depending on the company, can be the hardest part, figuring that out before scaling?
Fantastic question. The founders that we look for have an incredible background and expertise in the area where there they identified a problem and want to solve it. So that can look a bunch of different ways. Were they a specialist who saw workflow issue, or were they an executive who saw that there had to be a better way to abstract the complexity that their entire team was dealing with? In any case, we want to help those highly experienced founders to really talk with the customers, identify their target customer segment, enrich that customer persona, and illicit feedback, even on proof of concepts initially, to then build out a supertargeted, high-value delivery, basic product. From there on, we continue to be problem focused, not necessarily solution focused, and focused on how we can continue to deliver value by making it easier to use the product or by making it easier for this particular product to seamlessly fit into the existing workflow and systems their target customers are already using. And so if I had to push it to one particular thing, it’s customer feedback. Sometimes that’s early stage interviews. Ultimately, it’s case studies. It’s client success, whether it’s a unique department or that role is being done by other roles in the company, but it’s listening to the customers. Making sure that they’re using the product and getting value out of the product is of the utmost importance. A lot of times it can take a back seat because founders really have this idea of “I know what our customers need because I am the target customer.” But it’s surprising in some instances how varied the ultimate use of the product could be. Getting as much feedback as humanly possible within the time constraints and capital constraints that the founder has is incredibly important.
A lot of times you want to come in with the solution vs listening to what the actual customer wants or what the problem really is. How do you get in that mindset of a really open mind and trying to truly understand what they need?
This is a relatively new learning for me, which unlocked a ton and just blew my mind. Clayton Christensen, who a lot of people know for The Innovator’s Dilemma, wrote a book, I think that preceded it by about ten years, called Competing Against Luck. In that book, he and his cowriters and partners expanded upon a framework called “jobs to be done.” That was just an amazing revelation to me, this jobs-to-be-done framework. It’s a cousin of customer feedback, but it’s on steroids almost because it’s thinking through, okay, what is a potential customer currently doing, and what are they going to hire my product to do for them. If they’re going to hire my product to do something for them, what are they going to fire and not let that do it anymore. And so a basic example that he uses in the book is that people don’t want a quarter-inch drill bit with a drill; they want a quarter-inch hole. They’re hiring the drill and the drill bit to be the easiest quickest, cheapest way to get that quarter-inch hole. It’s a lot more problem focused. That is a mindset: let’s not skip over or truncate our evaluation or analysis on what the problem is that we’re trying to solve. Let’s actually live and breathe it and absorb ourselves in it in order to make sure that we’re going to be using our capital in the best, most efficient way going forward.
I would love to talk about your role. As CEO, how do you see your role and what does success look like to you?
First and foremost, I work among an amazing executive team and leadership team, and they bring strengths that eclipse my many weaknesses. It’s fantastic to be working with such an awesome team. When I stepped out of the COO role a couple of years ago, it allowed me to keep one foot in Horizon and not have as much day-to-day cog in the machine. I still have a decent amount of that, of course; it’s necessary and beneficial. But to be able to focus on the higher-level strategy. But we have a tremendous focus on our people, and the most important thing to me is the job satisfaction of each of our employees. I’ve found as many ways as I’ve tried to think this through that there’s never a time where there are misaligned incentives or when one person’s job satisfaction is mutually exclusive from another’s. As our company continued to grow, I had moments of insecurity. How can I possibly care so much about our founders and our team and our vendors and our partners? And what I found is if I utterly focus and spend the majority of my time investing in our team, then all of those other constituencies will be accommodated. So our company is continuing to grow. We are mission driven in being able to help founders in major ways along their journey toward what we try to always have in the back of their heads, which is a meaningful exit. While they might not be the unicorn, we want them to have a balanced journey, an enjoyable journey, one that at the end of which, whether it’s a return on capital, a six-, seven-, eight-figure return, they had an incredible experience that can catapult them into the next phase of their careers.
I’m sure you get pulled into a lot of different directions every day and it’s difficult to discern what is actually important at a given moment. How do you stay focused on what you need to in a given day and not get distracted?
I think I’ll have to give credit to Frank Slootman, who’s the CEO of Snowflake. He just wrote a book called Amp It Up, and he addresses this question very well, which is be mission driven. Have that top of mind all the time. What that points to for me is the whole quadrant representation of urgency and importance. What we try to do as an executive team is think through; we’ve got a ton of fantastic ideas, and we want to be doing a lot of different things, but prioritizing in terms of what’s urgent and important, and what’s important and not urgent. Those are really the only two quadrants that we want to be playing in, so it’s very difficult. I am somebody who’s wired to just want to have everything done today. I have to temper my own expectations of myself to say, “Yes, that’s important, but it’s not urgent.” It’s probably going to keep getting pushed off, which is incredibly frustrating for me. I feel like I’m not meeting the bar, but at the end of the day, I think it’s the right triage of activities.
We talk about strategy a lot on this podcast and how it’s about choices and where you are choosing to invest your assets. Where are you investing your assets, and what’s your strategy in that?
People, plain and simple. We value the team so much, our internal team. We’re spending a ton of time and money to bring in the right talent, the best talent for the company, and derivatively the best talent to advise and work with our founders. We invest in the founding teams, especially. That’s one of the major things that we’re investing in, in early stages as well as the later stages. But we find that great strategy can be ruined by poor execution, and so there’s always a balance between focus on strategy and focus on execution. What we want to do is bring in great thought leaders, very creative people. I mentioned earlier that we highly value a diversity of backgrounds coming in from other industries. I think Shane Parrish talks about the mental model of alloying, which is that you can bring a couple of different pure metals together in order to form a stronger piece. I just do that as a matter of my ongoing learnings, but I think our entire team embodies that as well. They’re bringing experiences from other industries into how we can take the risk and ensure the best journey for our founders.
That’s a great analogy. Talking about unconventional wisdom, I’m curious if there’s anything that may be seen as unconventional by a lot of people, or even wrong, that you do or believe to be right?
I think I’ll have to double down on what you mentioned earlier as your friend’s realization, where he can think clearly outside of the office. I absolutely love to learn. I’m inwardly driven. I have an internal critic that I’m still so far behind. I switched industries in the middle of my career, so I am constantly pulling in information from a ton of sources. But I think the vast majority of us are knowledge workers, and as such, we need to have margin in our schedule to be able to think creatively. How that manifests is we’re having an increased focus on balance, mental respite days, having that margin in your schedule to be able to think creatively because historically, I have been very dedicated to work—I think the street term is a workaholic—and I’ve only unplugged whenever I thought it was socially acceptable, which is between Christmas and New Year’s. Ultimately, it’s a disservice to my drive to learn, to anybody that’s around me, including, perhaps, my family, if I only take about a week a year to try to think creatively about what I’m doing.
What’s been the most helpful book for you, in either your life or your career?
One of the ones that I often find myself recommending to other people is a book by Greg McKeown called Essentialism. As people progress in their careers, and even in their early days, this idea of essentialism is it’s not minimalism. It’s not do the least amount possible. It’s do what’s most important, and then say no, actively, to things that aren’t important. I think it kind of wraps up a bunch of what we’re bombarded with in terms of distractions. But also, it’s good advice to a founder who is incredibly constrained when it comes to capital and time and bandwidth to really focus on what’s essential. What is going to be the highest and best use of the time?
One other quick one that I found to be inspiring is The Ride of a Lifetime by Bob Iger. It’s been inspiring to see the acquisitions that he made and how he thought about the media, the parks, and all of that.
As we wrap up, Is there any parting advice that you’d love to share?
I think there’s a temptation for those starting out to have to feel like they’ve got it all figured out. Any podcasts that we listen to, there’s ultimately an interview with somebody who you think, “Oh my gosh, they’re really articulate,” or “Wow, in hindsight, it looks like they had this thing figured out from day one.” I don’t think that’s ever the case.
For founders - don’t be afraid to ask for help. One of the things that’s really inspiring to me about the entire venture capital and startup founder community is this teamwork, this almost altruism for like, “Hey, I want to help you brainstorm this. I’ve been there or here. This is what I would do.” It’s not a self-indulgent practice. There’s a lot of focus on how somebody can help the other person. Being transparent and being honest about what bad news looks like makes celebrating the wins that much better. I think it’s that, and then I think also, it’s a slight kind of pushback against this idea of grow the startup at all costs. We want to work with founders on their journey toward a meaningful exit, where they can have a solid commitment to balance, and that’s going to look different for everybody. We don’t prescribe a seven-and-a-half-hour workday or something ridiculous like that, but it’s more like don’t forsake the relationships that you have. Or don’t be so focused on what you’re doing that you’re not willing to help somebody else along the way. I think it will make for a much richer experience as you’re building your startup than otherwise.