A Deal-Making Magic 8-Ball and Other Surprises: Entrepreneurship and Investing with Robbie Hardy and Fred Hutchison
Robbie Hardy spent decades climbing the corporate ladder and being the only woman in the room. When she decided it was time to go out on her own, she sought the legal and business advice of Fred Hutchison, founder of Hutchison PLLC. Together they helped build CI Technologies, which eventually sold to Seagate – a deal that was sealed by a Magic 8-ball.
Hosted by Trevor Schmidt
Trevor Schmidt: Hello, and welcome to the Founder Shares podcast. We’re so happy that you’ve chosen to spend some time with us. I’m your host, Trevor Schmidt. I’m an attorney at Hutchison, a law firm in Raleigh, North Carolina. We work with founders and entrepreneurs as they fight, grind, stress and push to bring their visions to reality. We are inspired by their incredible stories of success, failure, reworking and trying again.
We at Hutchison get to see this every day through our work, helping technology and life sciences companies start up, operate, get funded and exit, but we want to share some of these stories with you. So whether you already are an entrepreneur, have an idea that someday you want to start a business or are just fascinated by the stories of how a business goes from idea to success — or not such a success — this podcast is for you.
On the Founder Shares podcast, we hear from founders and investors about the journeys, keys to their success, lessons they learned and their advice to others.
Today’s guests are two titans of the entrepreneurial community in the Triangle, Robbie Hardy, founder and chair of xElle Ventures, and our very own, Fred Hutchsion, founder of Hutchison PLLC.
As I said, our firm focuses on working with startup entrepreneurs, and that can be traced in no small part to Fred’s vision. Which as he tells it, can be traced back to 1984 when Fred became involved with the Council for Entrepreneurial Development.
Fred Hutchinson: I was the first president of CED and I enjoy doing it, but didn’t get any legal work out of it. I just enjoyed being around entrepreneurs. And then a few years into it, I started getting inquiries from mainly software entrepreneurs about helping them with deals. And I thought, ‘Wow, that’s pretty cool. So, I sorta made a pivot on my practice and started representing entrepreneurs.
Trevor Schmidt: And for Robbie, she had climbed the corporate ladder in the 70’s and 80’s, but she started to get that itch for more.
Robbie Hardy: I became an entrepreneur. I had been 25 years in the corporate world and thought, ‘Boy, there’s gotta be something more than this.’ You know, even when you’re successful in that world, when you just feel like a square peg in a round hole, and so I decided it was time to try – instead of complaining for all the things I hated about the corporate world and what I would do differently – well, I decided that maybe I should do it. So, I started a company, and Fred was my lawyer, very fortunately.
Trevor Schmidt: That was back in 1993, and the company was CI Technologies. On the show today, you’ll hear all about how Fred and Robbie started working together and the eventual sale of CI Technologies to Seagate. Along the way, we get an amazing view of what it’s like to be an entrepreneur (and represent young companies), and what advice these icons have for all of us.
To begin, I ask Robbie if she’s always wanted to start her own company.
Robbie Hardy: Well, I mean, I knew that I wanted more, I didn’t no how it would manifest itself.
And so, you know, you play the corporate game and you think, ‘Hmm, is this all there is?’ And, you know, I started burning myself out, which I’m pretty good at doing, getting home, you know, really intensely involved. And then *explosion noise.* So, it was one – after one of those that I thought, ‘I can’t do this corporate thing anymore.’
And so, I told them I was leaving and they were like, I was a woman in 1993 in a publicly traded company, so they did not want me to leave. But they said “Take a leave,” you know, figure out what’s wrong with you, and so I did, and so, that’s when I started, you know – and I had been doing software on the management side, you know, all that time.
And I always thought, you know, ‘If we ever could have just a product instead of chasing the billable hour,’ you know, we were, I was in the consulting business. And so, you know, the way you got rewarded was how many hours your – you and your team and whatever could bill. And so, there was no leverage and it just didn’t make sense to me.
So I always wanted something to leverage because we build these products, you know, for other companies. And so, I had seen some holes that I thought we kept building over and over again. And so, that was what the first product was.
Trevor Schmidt: Talk a little bit about that. Tell me about the transition from kind of corporate to running your own company and how you you guys started.
Robbie Hardy: Well, you know, I came from the corporate world back when you had staff, you know, I had a secretary, I had, you know, I didn’t do anything.
And so, you know, I get on an airplane, then I went to meetings. And so, I remember clearly I mean like, when I was trying to find space and I was nervous about a hot space, because of course there were no incubators or any kind of space like that then. And so, I needed to hire programmers. So I was hiring programmers at Brueggers’s Bagel Bakery in Chapel Hill, why anybody came to work for me when I didn’t have an office I never, to this day, I’ll never know. And then when I did finally rent space, I can remember standing in the empty space, on East Town Drive in Chapel Hill – the building’s probably gone now I was walking around and I saw an empty trashcan and above the trash can, was this – and the office I was going to use, and it was a small office. It was not a lot of space. Anyway, when I was looking down the trash can and I thought, wow, I didn’t ask the landlord what I do with trash. And then I looked up and there was a mirror and I thought. You better figure it out, ’cause there’s nobody else here.
So it was this really pivotal moment for me as an entrepreneur that I just needed to be able to do whatever needed to be done. And so, the trashcan and the mirror was sort of how I shifted from having everything done for me to doing it myself.
Trevor Schmidt: Yeah. So what is the key then? Once you realize that, you know, this is all on you and you have to do all these things yourself. So what’s the key that then kind of taking that next step and really starting to grow the business?
Robbie Hardy: Well, I think you – it’s a mistake to think that you have to do everything. I mean, and that, I mean, that’s, I didn’t do everything, obviously, you know, you do – and particularly in the early days you do what needs to be done.
I’m a fan of bootstrapping. And so, you know, it’s, you take it to a point where instead of hiring somebody to do, you know, some of the administrative stuff, you know, you just do it yourself you – and it’s good for you because you learn a lot about the business and you learn a lot about what you’re asking other people to do.
So I think that’s, you know – but knowing when it’s time to hire and delegate is really, really key. ‘Cause a lot of founder, and I was one of them, wait a long time. And I waited to, I should have hired an administrator months before I did, when I finally hired this woman, young woman, part time, it was like, I thought, ‘Wow.’
You know, it just made so much difference and then you can leverage other things. So I’m all about leverage. So it’s, you know, paying attention to being willing, to do anything, being willing to take up the trash, if that’s what needs to be done, being willing to go get the pizza, being willing to do those things.
But knowing when it’s time to pass it on to somebody else and then delegating it, you know, the authority and the response that’s ability to that person.
Fred Hutchinson: So now you, you, you and Fred both worked together, I guess as, as part of this company or the part of this first startup, is that correct?
Robbie Hardy: Yeah. Fred was, yeah, I felt like Fred was part of the team. I mean, I always felt like he and Tim were as integral as the developers.
Trevor Schmidt: So Fred, can you talk to about that a little bit about, you know, what is like to be kind of an outside counsel, but really trying to integrate yourself into the business team?
Fred Hutchinson: Well, it really depends on the entrepreneur you’re working with. Robbie was great to work with, and was very inclusive.
Robbie Hardy: He was very demanding of us.
Fred Hutchinson: And if they were, you know, you got included on strategic decisions – not that we had a vote per se, but at least Robbie would ask, you know, “What do you think? Should we do this or not do this?” You know, our job is to advise entrepreneurs about risk. And, you know, then you can go A or you can go B, but here’s the risk with A, and here’s the risks with B, and here are the rewards and they, they make the decision.
But as a lawyer, an entrepreneurial lawyer, you’re not doing your job unless you give your client some advice.
You know, some, sometimes it’s legal, sometimes it’s business, sometimes it’s just common sense advice, but that’s what you’re supposed to do. Unlike what they tell you in law school, which is you’d never give business advice. You’re there just to give legal advice.
Robbie Hardy: Yeah. I mean, it – what you don’t I think at first, when you’re working as an entrepreneur and working with your lawyer and accountant is, you know, at least, you know, Fred had – I wasn’t his only client, even though, of course, I thought I was, but I mean. So, he had all this other experience.
So that’s the beauty of it when you have, you know, the service provider, so to speak, partners, they just have experience that I think is pretty valuable. I mean, obviously you want them for their legal advice, but they’ve seen a lot of things happen. So in strategic discussions, bouncing ideas off of them is I think really valuable.
Trevor Schmidt: Now I understand that that first startup eventually led to an exit. Can you talk about that a little bit?
Robbie Hardy: It did. We did get – we were, you know, we bootstrapped probably too long, but I had investors and then we were getting ready to go for a venture round. And we had an offer from Seagate to buy the company. Seagate, the Hartford company. They wanted, they wanted to be treated the same way as software, they didn’t like how Wall Street treated hardware, so they wanted the same multiplier that software companies got and still do get. Anyway, so he was in this, you know, they had a billion dollars in cash.
They were just out buying companies, and we had a product that they needed to fulfill a suite that they were putting together. And they are in, not Santa Cruz, but down highway 17 in California, it doesn’t matter. And so, we had been on having conversations and Fred had been in the conversations, not with them, but with me and we were figuring it out.
And so, it was time to go have another meeting with them. And I did not ask Fred to join because I was being … fine. I was trying to be, I was being so, you know, financially responsible, which is really irresponsible. So I went on this, you know, journey to California to just talk to kind of finalize this deal by myself.
My CTO was with me, but he was going to be talking to their technology people. And, you know, I, you know, having been in the corporate world, I knew having somebody there, you know, to have the pause and a negotiation, I’d done other things, you know, where Fred and I could go outside the room and then come back in and I didn’t have that.
And so, I have no idea why I’m flying out there, starting to freak out that, you know, when you’re an entrepreneur and you’re doing this, you don’t stop to think until you’re on the plane. And it’s like, “Oh,” so I’m like, ‘I’m going to figure out something.’ So I have no idea to this day why, and Fred, and we know this is the truth.
We have the proof of it, but I thought I should get a Weegee board. Now, most people don’t even know what a Weegee board is. So I land too late, and the next morning I get up and I go to a Toys”R”Us and I walk and I ask them, do you have a Weegee board? And of course, I’m tight on time? And they’re like, “No,” but so I, you know, so I look around, so if somebody says to me back in the day, when they would take, you know, and they said, “Well, we have an 8 ball.”
I was like, “Perfect. Why not?” So I unwrapped the 8 ball, I put it in my briefcase. I go into the meeting, we’re talking back and forth and we’re still pretty far apart. And they throw a number up, and I’m like, “Yeah, I don’t think so.” When I reached down in my brief by my foot, and I hold up this 8 ball and I said, “Well, let’s see what she thinks.”
At that moment, the CEO, NAME, grabs my hand and takes me down to his office. And I’m thinking this is not good. And in his office, he has like a 8 l. He has like a shwarmy swore me holding this beautiful. I meant the laugh. I have this, you know, $2 plastic, 8 ball, and he has this.
And so we go through this thing, and we go back and forth, and we ask -we each ask our 8 ball, is this a good deal? And it came back with, you know, not enough information or whatever. And we all laughed, and I was about to throw up, and they said, “Well, anybody that’s got the balls,” – they didn’t say that, but because I was a woman in 1995, and they said, you know, my bottom price and their top price.
And so, the deal was made. And so the 8 ball lives on, do you have your Fred?
Fred Hutchinson: Yeah, I went to the office this morning and I got it.
Robbie Hardy: Yeah. Mine’s over on the shelf.
Fred Hutchinson: Of course, I went in this morning and got it. You know, and you still got you. Can’t see, I don’t have you see that.
Robbie Hardy: Well, mine you know, you still have the liquid be careful. So mine, I have up there sitting on a cup because I came into my office one day and there was blue liquid dripping. I was like, and it was out of that 8 ball. Yeah.
And I don’t recommend it, and it was really a bad decision. I mean, I was not being, you know, fiduciary responsible to not have Fred in this deal, but.
Trevor Schmidt: When did you first learn about the eight ball?
Fred Hutchinson: Oh, she gave these tokens. Well,
Robbie Hardy: I called him. I mean, I told him, I think I told you, but yeah, that was the tunes. That was our tombstone or whatever you call them, at the deal there.
Trevor Schmidt: Fantastic. Certainly memorable is, certainly much more memorable than just the, you know, the glass tombstone that most people get, right?
Robbie Hardy: Yeah, but it, yeah. And so, I mean, yeah, we don’t want people listening to think that this was, you know, a brilliant idea.
I mean, it was just, it was, you know, right place, right time. And it worked.
Trevor Schmidt: You ever wonder what would have happened if the Toys”R”Us had the Weegee board?
Robbie Hardy: Well, and the funny I’m like, would I have known how to use it yet?
Trevor Schmidt: So now after your exit, you know, I understand that you’ve, you’ve really kind of plugged in and really mentored a number of other startups or other, you know, people in the entrepreneurial community.
Can you talk about what made you want to kind of give back in that way?
Robbie Hardy: Well, you know, I mean, Fred helped me. The, you know, people invested in me. And, you know, doing that first money raise and all of that, I mean, it’s hard , but it allowed me to build what I wanted to do. Yeah. And, you know, fulfill a lot of people’s, you know, sort of dreams and aspirations.
So I wanted to pay it forward. And Fred introduced me – I think this is right, Fred – he introduced me to another client who was raising money, or maybe wasn’t another client, maybe someone you – I don’t remember. And so I made my first investment in that company, he didn’t, and he just made the introduction he wasn’t recommending it . And so, that was the beginning. And it’s funny what you think you know, because I had raised money, so you think you kind of understand what both sides ask for. But, you know, I, you know, I can remember asking, “What are piggyback rights?” I mean, it’s like, who would even use those terms anyway?
So it was that kind of stuff. So, you know, I didn’t know what I didn’t know, but I wanted to try it, so I did. And so, I’ve been doing that since 1995.
Trevor Schmidt: OK. And played that role as it, as an investor and a mentor since that time?
Robbie Hardy: Yeah. I mean, I’ve sat up, you know, I’ve kind of sat on all sides of the entrepreneurial desk. You know, I was an investor in some boards and raised an Angel Fund in 2000, was supposed to be the all women. Well, there were, I could only get X at that time. I was a little naive. Yeah, so that was, so I’ve been doing angel investing full time, but.
Trevor Schmidt: So you both have worked with a number of different entrepreneurs over the years. Are there common themes that you see as to what makes a successful business leader or what is key to somebody really being able to thrive?
Fred Hutchinson: Yeah. I usually, I mean, they’re visionaries. They see how things can be done differently than what’s being done currently. I mean, they always are – they’re disruptors, in the economy. I mean, the key thing I usually see is perseverance, and Robbie courses got that in spades. I mean, it’s just, you’ve got to, you gotta stick with it and ’cause you’re gonna hear a lot of nos. A lot of people are going to turn you down for funding, and you’ve just got to plow ahead. Perseverance and persistence are the key.
I’d say the other thing is just someone willing to listen. I can think of Tim Huntley at Gainey B dropping, and Tim was a great listener. He’d come out of IBM and – with three, I think three or four other founders – but he was the CTO and he, he just soaked up things like a sponge. He would talk to people and sort of pick up things from different folks, and molded into strategy.
But being a good listener is important. You can’t do it on your own, and you don’t know it all, and you might as well listen to other people that have been there before you.
Robbie? What do you think?
Robbie Hardy: No, I agree. Tim’s a great example. People who are willing to ask questions, you know, say they don’t know, put their sort of, you know, park their ego.
I mean, you have to have an ego to do this, but you don’t need to bronze it. And I felt like when people try to, you know, it’s like, we don’t – that’s not what we need. And it’s when you know, entrepreneurs have a vision, but the ability to articulate I think is really, really key. When entrepreneurs can’t tell you briefly what it is they’re doing or what their vision is. I mean, it, you start to glaze over or they start telling you how you’re going to do it in your life. So, you know, practicing, it’s the hardest thing to do. I mean, I think one of the hardest things for an entrepreneur.
I mean, they think raising money and all those things, but being able to have that, what we call an elevator pitch, but that ability to succinctly, you know, talk about what you’re trying to do is very hard. And it forces you to focus on things that you probably overlook because you know, you’re trying to barrel 5,000 miles an hour and, you know, stopping and being able to do that and breaking it down into pieces that are digestible to the audience I think is really valuable.
Fred Hutchinson: The other thing we see is, you know, some folks particularly coming out of universities, they think that great technology or great science makes a great business. And it really that – it’s a, it’s, it’s a piece of it. It’s one of the building blocks, but it doesn’t get you there. It doesn’t get you a successful company. It doesn’t get you an exit.
Robbie Hardy: No, I mean, you have to be solving a problem. You’ve gotta be, there’s gotta be a reason for it. You know, it’s that if they build it well, they come, kind of, field of dreams. It doesn’t really work in this space.
Trevor Schmidt: So, on a related note, how important is the kind of the that the entrepreneurs surround themselves with in kind of creating a successful company, and how do you see, especially young entrepreneurs kind of navigate from working either with people that know and their associates or their college roommates to, you know, people who can actually move the business forward. How important is that?
Fred Hutchinson: Yeah. I mean, you know, it’s hugely important, needless to say. I mean , it’s pretty, pretty easy to deal with one or two, two or three people. And going back to Robbie’s point you know, you can’t do it all at some point, you’ve got to delegate and as, as you grow, you got to bring in people that have. I mean, the CEO doesn’t need to know how the 401k retirement plan works. You know, they need to turn that over to someone. Robbie was talking about having that administrative assistant. I can think of one woman, Claudia Black, who’s done that a lot throughout Triangle, a number of companies, and she just – she’s a key person.
She let’s see engineers, the scientists, the software designers technicians focus on what they do well, and then she sort of takes, you know, I’m going to take care of your travel. We’re going to get the meeting booked. I’m talking to the lawyers, I’m talking to the accountants other way. By the way, I put coffee on this morning, ready to go.
And they’re incredibly important in running a business. So, I think that’s translated. I think some people don’t make it. And oftentimes with a company, we’ve seen with our clients, is a startup CEO, and then there’s sort of the CEO that can get you through a little funding, and then there’s the CEO that sort sorta can take it to an exit.
It’s, it’s pretty where you can get like Robbie, you can be the founder and the CEO at an exit. Most of the time, if it grows, there’ll be someone else in there. It’s just, it’s the way it is.
Robbie Hardy: Yeah. And hiring, you know,being friends sometimes. I mean, it’s, I think that you have to be careful. I mean, you know, there’s, you’ve got to figure out what’s your strength.
What’s their strength, you know, and figure out does he, does this make, you know, you have a hole? You have something you’re trying them to complete here, and what are all the elements? And, you know, you see a lot of friendships ruined in startups, because you know, it was, they were having fun and it’s fun until it’s not, you know. The highest are high, and the lows are low, and everybody’s gotta be rowing in the same direction. And so that’s, you know, like the chemistry between people and the skill sets where you do this, I do this you and that kind of piece, it really makes a big difference. And that’s what makes us successful team.
Trevor Schmidt: So Robbie, I wanted to go back to something that Fred said, you talked about how it’s rare to find a CEO who’s both good at kind of starting the company and then seeing it through to that asset. Are there aspects about your experience or just kind of your personality that made you suited for that? Or, you know, can you speak to that?
Robbie Hardy: Well, I mean, I don’t, I mean, we were, we were only two years . So. Let’s, you know, not give me too many kudos here. In my ability to run a, you know, a hundred billion dollar company, I think for me, partly is I had worked in the corporate world, in the consulting world, so I had seen a lot. You know, I’ve worked in the companies, so I’d seen M&A deals, I had seen. I’d worked with a lot of big companies. So I had seen, of course in my mind, it was like, “Oh, this isn’t how you do it.” But through that, you learn a lot, and so I think that would be very helpful of how you handle yourself, how you – and to be able to, not to bring this up, but.
And also I had been a woman and, kind of, always the only one from, and so you learn to let things roll off you in a different way, because part of making it through is that. And, and as Fred talked about before, and the ability to listen. And I think what happens is, you know, a lot of CEOs lose the ability to listen and then be able to, you know, and seek out and be collaborative.
They feel like, you know, It becomes, you know, their baby and it’s not.
Fred Hutchinson: And if you don’t, if you’re not the listener, the investors quickly figure that out and you’re not getting money. It’s, it’s one of the red flags for any, any major investor out there.
Trevor Schmidt: So Robbie, when you were founding your company, were there other, you know, women CEOs that you knew or that you had networked with before?
Or was it –
Robbie Hardy: No. You know, I was coming out of, so this was in 1993 and I was coming out of the corporate world where I, you know, there were more women around me, but I was still almost always the only woman in the room, you know, or at the table , so I did not personally know any other women CEOs, but I was so naive.
I mean, I thought “I can do this,” you know, you know, I just didn’t know any better. And I think that’s, and it’s that entrepreneur in you is like, “Yeah, I can, you know, if I can see this, then I can do it.” And if you really thought about being the CEO of a company, you know, other than that, you like that title beside your name it is – yeah, I think it would be daunting. I mean, I don’t know. I mean, I don’t know if that’s what you were looking for, but I don’t think you start out in with that.
Trevor Schmidt: I guess a part of my thinking was, you know, did you, did you have people that you were looking up to as, as far as role models, or were you aware that you were being a trailblazer or were you just doing what you wanted?
Robbie Hardy: No, I was not aware I was a trailblazer until after the company exit, and Fred may remember this, and I’ve used to complain about it ’cause people and say, what does it feel like to be a female, successful female CEO a technology company? I’m like, I dunno, what does it I feel like being a man, I don’t know anything other than who I am, you know?
So it was just to me, like I don’t think people were, some people were trying to be mean, but most people were just, you know, curious. And you didn’t, I don’t think when you’re in it, you think about it or at least, you know, you’re too busy. I mean, when you’re at a software company and you’re trying to grow it and all that, you don’t have time to think about those things.
Fred Hutchinson: You know, it’s, it’s hard to believe. I mean, 25 years ago, there just were not many women CEOs. I can think of one in the life science space. Okay.
Robbie Hardy: She was early. I mean she, yeah.
Fred Hutchinson: She was, yeah. And she raised a lot of venture capital, but she had a tough time because unfortunately, venture capital in those days and still is for white males.
Yeah. That’s the way it goes
Trevor Schmidt: Well, I mean, that leads right into it. So, I mean, there’s a lot that’s been discussed recently kind of about representation issues, both with regard to women and racial minorities in the venture and entrepreneurial communities. So I’d be interested in your thoughts from both of you about how do we change this?
How do we get more voices to the table? What’s holding us back right now?
Fred Hutchinson: I was on a call last night, Ideal Fund, which is here in the Rriangle, a tech focus fund. They had a call with their limited partners, and they discussed that, and they can see you’re right. This is a white male dominated industry, venture capital. And unfortunately, people tend to invest in folks they’re comfortable with and familiar with, which means you end up investing in white male CEOs. And they just say, “We’re going to have to look harder where, you know, there their deals out there.” They had just invested in a company, a media company led by a very dynamic Hispanic woman.
But they, you know, they’re, they recognize they they’ve got to look harder, that there are deals there. I’ve heard it said that Durham and Atlanta are two of the five largest Black entrepreneurial centers in the country. And you think about how much money is not going into those companies.
The other statistic I heard is women-led entrepreneurial companies are only getting 2% of the venture money that’s invested each year. I mean, minuscule amounts.
So, something has to change. I think the funds are beginning to recognize that. But, you’ve got to change the complexion of what the funds are to, you know, they’ve got to be made up of a diverse and inclusive group of, investors.
So, and that’s not the sole solution, but it certainly, certainly one,
Robbie Hardy: Well, you know, I’m obviously very passionate about this subject. Y ou know, when I back in 2000, when I was starting the, angel fund, and I really thought that I was sort of tired of being the only woman or one of a handful . And, I really thought that, that it was, it would happen. And I – there just weren’t enough women here, I didn’t have a big enough network, whatever. And so from 2000 until last year, when, we launched xElle, I had been focused on this whole issue of why are there not, why do women only get such a small amount of the investor pot. And I think my salute or my answer is, is that women have to women, you know, women of color, all women need to take care of this problem. And one of the passions of mine, and one of them missions of xElle is to increase the number of women angel investors.
And until we have enough women angel investors – so for example, half of 1% of high net worth women are angel or venture investors, 30% of men. So we have this huge issue, so how do we solve that? Why is it that women are not angel investors? I think women, their risk tolerance is lower , they want to understand what they’re doing, they need to have more education about it. Men do too, but they’ll just jump in. I mean, they don’t know any more than anybody else, but they’re more willing to jump in and do that.
So, you know, increasing the number of people of color and women investors is key to that. And you know, to the idea fund issue, when women look at, you know, you go look at a venture capital website and it’s all white men, why would you, why would you even go? I mean, you know, because, you know, you feel like the odds are against you now.
I’d probably go anyway, but you know, not everybody will. And so they’ve got to, you know, increase the diversity of their teams and they find that very hard to do. and I think there is some implicit – there’s something there that doesn’t quite mean. It makes sense because there are a lot of smart women, they are a lot of smart people of color that could be there. And so there’s this clubish thing. I don’t know what goes on, but we need to change that. So I’m on a mission, big mission, to increase the number of women angel investors here in and around the country. So xElle is just kind of a, you know, a little piece of that, but that’s, what it’s all about.
Trevor Schmidt: So with xElle, do you target kind of women who are outside of the entrepreneurial community already to kind of expand that network?
Robbie Hardy: Yeah. Because you can’t just rely on the entrepreneurial community. I mean, cause we just, because we don’t, because women only get 2.2% of the money, then we don’t have as many women entrepreneurs, so you’ve got to go outside there.
So in xElle, we, we invite women who have not had, you know, who are accredited, but are not part of the entrepreneurial community. So there is a bigger learning curve ’cause they really, I mean, some of the people, you know, I’ve given talks and people are like “Now what’s an angel?” You know, so that’s what we have to do.
So, I think, I think we can whine that it doesn’t happen or we can do something about it.
Trevor Schmidt: And so for xElle, have you started interviewing companies. Are you starting to invest or are you still kind of –
Robbie Hardy: Yeah, so we have, we’re actually in the process of our first investment. We started, I mean, we put it together in 2019, we launched it late last year and our last in person meeting was in February. So we went virtual, and figuring out, you know, we’re doing straight debt. We’re not doing your typical angel investing or venture investing. We’re not doing equity. It’s partially ’cause it’s more straight forward, we don’t have to deal with valuation. There’s a lot of issues that go away if you just deal with that. The data tells you that the first $50,000 that – for women – is the hardest money for them to get. And when you see these women, and I don’t know if Fred agrees with this or not, or, or, and it may be minorities in general, even the women aren’t minorities, because we’re the largest part of the population.
However, is that when they come for the money, they are much further along. I mean, they have figured out how to do more with less because they’ve had to, so that’s another interesting piece. So xElle is, you know, we’re trying to, we get them going, you know, there are, there will be, xElle is designed sort of to go to the, from the crawl walk, run, stage.
And so will it get into equity? Will it just do revenue share? I mean, what’s the right answer, chasing the unicorns isn’t really, you know, I don’t think that gets us what we need to go to increase the world, but you know, there’s nothing wrong with that either.
Trevor Schmidt: And do you think part of that, you talk about women owned businesses being further along when they start to apply for money, is that part of this symptom of having to be better in order to get access to that 2% of capital?
Robbie Hardy: I believe so. Absolutely you – yeah. I mean, it’s in a lot of things. And, they’re – women are, you know, if they decide they want to do it, then they’re not gonna let something get in their way, like money. So they have to find another way.
And so, there’s that part of it. I think there’s a lot of things that contribute to it. Now that’s not obviously a hundred percent true, I’ve certainly had worked with or talked to women entrepreneurs who have just an idea and no clue anyway, and are out there raising money, but the majority that I see ,and what we see, come into xElle, it’s like, wow. You know, they’ve done a lot with very little. Right now, xElle only does North Carolina. We may expand that since now we’re in this virtual world. We never actually see or actually touch anybody. So we’ll see, we’re working on what 2021 xElle will look like.
Trevor Schmidt: So I don’t know the answer to this, you know, what does it look like in our kind of business schools and in undergrad, do we see more kind of women led businesses? Are we incubating at that young of an age for women owned businesses? Or is it only once they get out kind of into the workplace that we’re starting to encourage these types of businesses to be formed. And I’m just wondering, again, kind of this broader question of how we are bringing more people to the table. Can we start younger or is that already starting to fix itself?
Fred Hutchinson: I don’t know, I’m not seeing many women entrepreneurs right out of the university. These days, I do a lot more probably in the life science area, and the women we see have been in industry, they’ve been with a pharma company or a device company before they start the company.
So they’ve got, they’ve had some big corporation experience and so they’re further along, but, I don’t know. Robbie, what do you think, are you seeing –
Robbie Hardy: When I think about, you know, Launch Chapel Hill or any of these, you know, a university incubators, it depends on the cohort. I’ve seen cohorts that have been mostly women, and then I’ve seen other cohorts that have been mostly men.
But, yeah, a lot of the incubators, big incubators are run by white men, so there’s some of that, but there’s also a lot of women in that space.
Trevor Schmidt: So this may be a related topic but what do you both see as kind of the biggest challenges and opportunities for kind of our local startup community for the next one year and maybe five years out?
Fred Hutchinson: The next one year, the challenge is recovering from COVID and getting back to a normal economy is probably something that affects everyone.
And, but you know, the good news we’re, we’re still seeing people raising money, M&A deals have slowed down, there are fewer exits, but venture funds that are raised money have still got to spend it, they’re not going to sit on it.
And historically, the venture funds that have invested in a down economic cycles have had their best returns on those investments. So, you know, I think for companies looking to grow and be back by angels and venture capitals, I see that continuing I think with better stability in the economy and in the stock market, we’ll see a lot of angel investors jump back in.
Robbie Hardy: Yeah. I think one of the things that we’ve seen with COVID, and I’m fine. You know, I’m always, my cup is always half full.
So I mean, I think you see people who have pivoted and innovated to keep their company going. And hopefully without, you know, sometimes changing completely to survive, but you know, finding other ways to go about delivering their goods or services or product. And so I think this is, I mean, this is very telling too.
It’s kind of a, maybe not fair, but there is sort of a weeding out process that’s occurring of those who can innovate and who can look and “OK.” Instead of sort of sucking their thumb or freaking out, they start saying, “What can I do? How do I do,” you know, and being willing to ask. I do these one on one sessions and you know, and people sign up for it.
And as you know, I love it when they’re, like, “I was supposed to be doing this, but obviously that’s not going to happen. But so, now I’m thinking about doing this, it’s kind of in the same, what do you think?” And so it’s that, you know, kind of thinking that I think is just pretty impressive. And I think we, and it makes them stand out.
So I think as we go through and come out the other side, someday, then I think, you know, it’s those who have really innovated, have, or, you know, found a way to, you know, get, are the job done are the ones who will survive and thrive.
Trevor Schmidt: So then after we get past COVID, after that, you know, we’re looking a little bit further out, you know, what do you see five years from now? Is there something, some big drag on, on the entrepreneurial community here that we can overcome or do you see just us continuing to grow?
Fred Hutchinson: I think we’ll continue to grow. There’s a lot going on here. I mean, there really is. I think of one industry alone, ag tech, this is going to be, it is and will continue to be a major hub in the U.S. For ag tech.
We’ve got some big companies here. We’ve got an ag tech incubator. We’ve got the, plant science department at NC State, the forestry school at NC State. Ag tech is, is going to be a big part of the economy going forward as we try to figure out how to feed the world. So I think that’s one area. I mean, we’re the center of the hub for the CRO industry worldwide, we’ve got more big ones here than anywhere else in the world. I think the technology practice will continue. The technology companies, the life science. I mean, we’re becoming a huge hub for gene therapy.
So I think things are good. I, I wish we had more venture capital based here, but, you know, the good entrepreneurs can get on a plane or get on a Zoom call and talk to people all over the country, all over the world. And they really good one’s will raise money regardless of whether there’s a lot of venture money in North Carolina or not.
Robbie Hardy: I think the Triangle will grow. I mean, for me in five years, I want to see this large number – a number I can’t count – of women angel investors and venture investors, and, you know, seeing that change. And I think that, you know, the – this world we’re in today, this Zoom that we’re on, you know, there’s top technology coming in being – ’cause that’s a lot of investors are investing in as the next zone, but there’s a lot of time and money and energy being, being dedicated to make the world smaller, so that getting on an airplane isn’t as important. Or, you know, you won’t have to travel as much. So as we shrink the world and the access to lots of things becomes easier, and you go when you need to go, but you don’t have to go, you know, the way that we had been prior to this, I think will be very beneficial for the Triangle, because I think we have a lot of people here, so the money is easier to come by. I shouldn’t say easier because money is never easy to come by, but you’ll have access to money that you might not otherwise, and getting on a plane is expensive and yada, yada, yada. So I think that there’s a lot of innovation in that space. And of course I still, you know, my heart is still in software.
I look at, I look at lots of things, but I can see a lot of interesting things coming down the line that will make our lives easier. Not at first, we’ll be like, what is this? But, it’ll make it easier to, to get together with people from around the world. When we launched xElle. I mean, it was insane.
I had, I was, had gotten on a plane after we, the press release went out and I landed in Portland, Oregon. I had 1,250 emails and they were from all over the world, you know, and people in Milan and in France and Russia and all of us, you know, going let’s do deals together.
So it was just sort of this funny thing. And so I think we’ll start to see not to that extent, but I think we’ll start to see that globalization that we talk about come to be, as we’re able to do this from anywhere.
Trevor Schmidt: Now, Robbie, you had mentioned that, you know, part of what you do is you’d have these one on one meetings with folks.
How did that get started? And, you know, can you tell us something about how it’s been for you? Has it been an interesting, do you find it –
Robbie Hardy: I find that just, I love to, you know, work with entrepreneurs. Young, old, I don’t really care. And I mostly, you know, I have this passion for empowering women, but I have a – I a lot some time every week and on my website, there’s a, you know, you can sign up and, you know, I just ask that you give me a, at first, 30 minute session to kind of, you know, talk about it. I just ask you to give me a paragraph to tell me what you want to talk about.
A lot of these people, I don’t, most of these people, I don’t know. And, you know, we get on and, you know, and they’re, they tend to be pretty well prepared and they’re not all here. I’ve met with people from all over the country. And yeah, it’s really fun. I mean, I I’m, you know, as classic Robbie Hardy, I put, I, you know, a lot in – too much time to it.
And so suddenly I was, you know, in these back to back to back to back to back to back, and I was finally like woopsie, that’s a mistake. So I, once I pared it back then, you know, I was, it was good. I enjoy it a lot. And I feel like it’s, you know, the payback and I also learn, so that’s the other piece and it kind of, you know, connects.
What’s the what’s one surprising thing that’s come out of those meetings for you, or kind of an interesting story that’s happened in your one on one meetings?
I mean, it is a lot of. I think, I, I guess my thing, I seen a lot of people who have a lot of ideas, and want to start a business and they have no experience in the industry, you know, and I say to them, so what’s your domain expertise or, you know, why would you think you should, you know, start a new Uber?
And what do you think about, you know, as you get experienced in the transportation industry and it’s tends to, “Well, no, I had a bad experience,” or so there’s some of that now and actually, generally, when you start peeling back the onion, there’s actually something there, that, you know, they’re not able to tell the story.
So I guess the thing that I find is that when people tell me what their issue is, what they’re trying to solve, they don’t tell their story, they tell what they think I want to hear. And so I, and so I always, you know, just tell me your story. Don’t tell me what you think I want to hear, because sometimes there is, there is a reason why they want to start an Uber, and they do have expertise, but they’re not able to, you know, they did not articulate that. And that of course gets in the way of moving.
Trevor Schmidt: It goes back to your earlier point about having to have that polished elevator pitch to be able to communicate to people what it is your vision is.
Robbie Hardy: Right. And, and, and you know, and it’s your story. It’s not my story. It’s not Freds. Don’t tell us what you think – you don’t know what we want to hear. We don’t know what we want to hear. We want to hear what you have to say and what you’re trying to do. And that’s, and I think that I can’t emphasize that enough.
Trevor Schmidt: So I’ll ask this to both of you. What’s the fastest you’ve knon, either in a client meeting or betting somebody or having one of these one on one meetings that, you know, this, this person or this company is going to be successful, and what was it about that interaction?
Fred Hutchinson: I just had one, probably we started and we had hardly had time to think before they had raised a small round and then been sold. So they started raised money and got sold in six months. Yeah, it was a spinoff from GSK, so some GSK technologies. So it wasn’t a pure startup. But I told the guys, don’t think this is because the way it happens. Normally it takes these companies, it’s 10 to 15 years before you’re going to see an exit.
Robbie Hardy: But I think a big haul. Yeah, I think those spin up kind of things are ones that happen like that. Yes. I don’t know any, you know, instant, but there were, there have been a few, you know, bad that I don’t know what the years were, but you know, where you could raise money on the back of a napkin, literally.
And unfortunately, I think a lot of those quick things did not pan out as expected.
Trevor Schmidt: So, you know, we are the Founder Shares podcast, so I always like to ask our guests kind of one question, if you could, if you could provide one piece of advice to a new founder or somebody who’s thinking about starting a business, what would be that advice that you’d share with them? Robbie, let’s start with you.
Robbie Hardy: Boy. One piece of, can it be a long?
Trevor Schmidt: It can be six pieces of advice, I asked for one.
Robbie Hardy: I think it’s, I think it’s, you know, you know, do your homework. This doesn’t happen overnight, you know, really, you know, dig in, be willing to ask lots of people, lots of questions, listen to what people tell you and what you learn, figure out, you know, how to dissect and analyze and parse through the data that you received, so you don’t necessarily fall in love with something before it actually makes sense. You know, learn how to tell your story. Don’t bronze your ego, you know, get it out there and yeah, you need to have it to stand out there and do it, but you need a lot of people.
It is not a solo journey and, and anybody who says I did it, you know, there’s no, I in team, I hate that saying, but it’s true. And so, you know, I think that’s, I think that’s the, you know, knowing your stuff, being able to listen and not bronzing your ego, I think are pretty key for me.
Fred Hutchinson: Yeah. And I would say, do something you’re passionate about.
I mean, we’ve found the people successful throughout the years that are really passionate, they believe in what they’re doing. They believe it’s going to make a difference. Sure, they’d like to make some money, but that’s not why they started it. Back in the.com era, I don’t know, 70% of the people that were doing something were doing it just for the money for quick hit, you know, thinking they could start a company flip it in a year and then move to Hawaii.
But the one we see now, I mean, it’s something, they they’ve got a vision. They’re passionate about it. They love what they’re doing. I think those are the ones that really are going to be the most successful.
Robbie Hardy: Yeah. I mean, I second that, I mean, I don’t know any successful entrepreneur that started it for the money.
I mean, it’s because there’s a passion, there’s something they want to do, there’s something they want to do it’s a long journey from starting that to when there might be money. So you can’t get up every day and push through the highs and the lows of starting a company, when you’re focused on a payday, you know, 10 years down the road.
Trevor Schmidt: That’s all great. And speaking of things that we’re passionate about, Robbie, I wanted to ask you before we leave, whether there’s anything our listeners can do for xElle ventures, or if there’s anything
Robbie Hardy: xElle Ventures, yes, they can. Yes. All the women of, accredited women out there, I want you to join and, understand what it’s like to be an angel investor and join our fund. And women entrepreneurs who are looking to raise money, they can go to xElle ventures.com and apply. We’d love to hear what you have been up to. Thank you.
Trevor Schmidt: Fantastic. I can’t wait to see what happens with them.
Robbie Hardy: Yeah, I’m excited.
Trevor Schmidt: Yeah. Well thank you both for coming on. I really appreciate it. I thank you for your time.
Fred Hutchinson: Thanks, Trevor.
Robbie Hardy: Thanks, Trevor.
Trevor Schmidt: That was Robbie Hardy and Fred Hutchison. It was a thrill for me to have a chance to speak with them together and we are so grateful they made the time.
You can find more on Robbie by going to RobbieHardy.com or xElleVentures.com, that’s X E L L E Ventures dot com, and of course we’ll put all of this in the show notes.
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This show was edited and produced by Earfluence.
I’m Trevor Schmidt, and we’ll talk to you next time on the Founder Shares podcast!
Founder Shares is edited and produced by Earfluence.