Mastering Resilience and Innovation

In this episode…

Nic Cary interviews Samuel and they discuss the lessons learned during his career journey including:

• The importance of aligning investments with values to create both financial returns and meaningful social impact.
• The value of resilience and adaptability in overcoming challenges and thriving in dynamic markets.
• The necessity of fostering collaboration and building strong networks to drive innovative solutions and long-term success.

Sponsor for this episode:

This episode is brought to you by Sky’s The Limit, one of the largest nonprofit programs for underrepresented young adult entrepreneurs in the US. Sky’s The Limit is a quick-growing digital platform that connects entrepreneurs with their peers, volunteer business mentors, training resources, and funding.

Our goal is to develop the social capital that founders need to chase their business dreams.

To learn more, please visit www.skysthelimit.org today.

Episode transcript

INTRO (00:05):

Welcome to the First Buck podcast where we feature stories about entrepreneurs and the people who support them. Now let's get started with the show.

Nic Cary (00:22):

Hello and welcome to The First Buck Podcast, brought to you by skysthelimit.org. We feature stories about entrepreneurs and the people that support them. And today we're joined by Sam Harrison, co-founder and managing partner of Faction, a blockchain venture capital fund. Sam is also an advisor to Lightspeed on crypto and a co-founder and venture partner at blockchain.com ventures. He previously led Nasper Ventures early stage investments. He has traveled all over the world. He's advised some of the most successful digital currency and technology companies the past decade. We're very lucky to have him. He's not usually in front of the camera. Sam, it's an absolute pleasure to have you on the podcast today, and I know we're going to learn a lot. The first question we always have here though is how did you earn your first buck pound your Euro. I need to hear this story because I don't think I know it.

Sam Harrison (01:10):

It's great. It's good to be here. Appreciate you having me. You don't. Actually, the last, I have answered this question once before and it was my first day at blockchain.com, but that was, I dunno when that was six years ago, something like that. So as a refresher, because you've done probably a thousand of these since I made it selling hot dogs at school. So our school, yes, hotdog salesman were terrible and there was a very high demand for anything that wasn't. The school catered lunch, so I got microwave hot dogs and sold them. It was a good business actually.

Nic Cary (01:53):

Okay, so we were a little bit about getting product market fit, working in a recession proof industry, which is people's stomachs and obviously delivering something that was tasty. Let's talk a little bit about how you sort of went from learning a little bit about earning money and then getting into a professional career. I'm actually not that familiar with your journey, so take us through maybe your early dabbling with entrepreneurship and then moving into the professional world of becoming an investor.

Sam Harrison (02:19):

Yeah, it all started think my first proper job was at Morgan Stanley and it took me a while to get the job, graduated in the banking crisis oh eight. It took me a full cycle, a full year to get an internship. I had kind of an interim job and then basically was just trying to figure out a way in and yeah, I mean it was really hard. It was a toss up between me and one other person for this job and they basically said, they only gave it to me because I harassed them more. It was kind of chasing every day and it took me a year to get the job, got in and really did, really did not like it, which was kind of underwhelming, but it just seemed like in that period, 2008, that's where the smart people were going. It seemed like a good starting point to launch pad to something else.

(03:12):

So went for it and yeah, that's actually serendipitously, there was this culture of you had to stay in the office and have this FaceTime. Even if you finished your work. I was an intern, you had to be around and then eventually became an analyst and you basically couldn't leave even if you finished your job and all the work was done, you had to still be there. Otherwise it was like a big no no big, what's this person doing? They don't care about their job, so just read. And they blocked the internet too, so just read every article and you could only visit certain websites. Classic big, maybe that's changed, but big companies back then for sure, you could only read news websites. I don't even think you could go on Twitter, but I read every news website and that is where I first read about Bitcoin. Weirdly enough, this was now, this is 2011 I think. Yeah, 2011 just Finn exhausted every article. And one of this random thing in The Economist was about Bitcoin and that was the first time I read about that and got intrigued.

Nic Cary (04:23):

So you start off selling hot dogs, you go into banking, you're getting work to the bone, and then this happens during the great financial crisis, which must've been very challenging and stressful to navigate. And then in early 2011 you'll hear about this emerging alternative asset called Bitcoin, which was sort of designed to be an alternative to the existing financial system. And so what did you think about it at the time? Did you believe in it or were you a skeptic? What brought you along that curve to switch your mindset from traditional finance to maybe something better?

Sam Harrison (04:58):

I think there were two things. One, it's really easy to buy into an alternative way of doing things when you've worked. I'd also worked at Royal Bank of Scotland for a bit too. I skipped a couple of chapters, but just brevity when you've worked at a couple of banks and really not enjoyed it and seen the back end of the processes. Someone's like there's a different way to do this and it doesn't involve lots of intermediaries and can't be manipulated and code is law and we kind of understand supply from the very, very beginning. That's an easy concept to grasp when you're sat there. Why am I still at the office when I have absolutely nothing to do? And then the other piece that resonated was when I was younger, a friend of mine introduced me to this screensaver. This was like, I don't know, this was 10 years prior, but it would do some computation on the backend when you weren't using your computer to one was searching for extra terrestrial.

Nic Cary (06:01):

Oh, the SETI project. This was so cool. I did this too. Yeah,

Sam Harrison (06:05):

Thank you for breaking up. One was that, and there was one that was trying to cure cancer and it was just crunching, I don't really know, some medical data I guess in the background when you weren't using your computer and this was literally if people had like a hundred megahertz CPU back then,

Nic Cary (06:20):

Yeah, it was decentralizing all the compute for these things,

Sam Harrison (06:23):

Right? And so that was a concept that I had found interesting, but obviously there was no reward. It had the decentralized, we'll do this stuff at edge. We'll use idle compute for something productive like Bitcoin. So it's a concept that I had participated in, had been interested in, but it missed that kind of, okay, now we can reward people for providing that productivity, that idle capacity on their CPU. So that was a concept that was familiar and I'd weirdly thought about doing it but wasn't smart enough to think about how you'd actually network and incentivize and sync up all of these computers. So yeah, I mean that was basically two things that interested me at the same time. So it's pretty easy to wrap my head around. I wasn't fully bought in. I did try to mine it. I tried to buy some, I think you remember maybe when we flick back to the last podcast we did, I talked about this, I think my roommate in London was the one that had got the lease in his name. So I couldn't do the KYC for the exchanges because I didn't have a proof of address. He had the proof of address, he had the utilities, so he was buying bitcoin, paying me his share of the rent in Bitcoin. I was paying it in pounds and that was my way of getting Bitcoin where I didn't have proof of address. I had moved to London fairly recently.

Nic Cary (07:50):

Got it. So I think for especially young people, and this is a great example where you're flat sharing and you split a utility bill and then you don't realize that actually by not having it in your name, you can't get a bank account. You might struggle to actually access financial systems or other things. Young people frequently don't have a good place to start when it comes to coming up like the financial literacy curve, we barely learn accounting in school if we're lucky enough to go to business school. Maybe you pick up a bit more in terms of modern business finance education, but considering that so many young people don't know where to start, what kind of advice would you give young people in terms of where they can turn to understand someone more, the foundations of saving money, building up an economic vocabulary, especially if they want to maybe work one day as an entrepreneur or in finance or in crypto?

Sam Harrison (08:43):

That's a great question. I think it's one, maybe the education has got better these days. I don't know when you and I were probably in school certainly wasn't something that was taught, but definitely should have been. You learn a lot of theoretical concepts and for some reason managing finances is not something that comes up, which is crazy. It is extremely important.

Nic Cary (09:05):

I don't think that ever came up in my education by the way. Not once

Sam Harrison (09:08):

Until I went down the business and finance track in undergraduate and postgrad. So I ended up doing some formal education. I think you can, there's a lot of stuff in there that's not useful and you can shortcut that. There's probably some Udemy or YouTube courses honestly that do a better job than any formal education to just get the basics around accounting and how to get financing and borrow and consolidate debt if you'd have it. There's probably a bunch of very common mistakes that people make that are easily avoidable if you get some of that basic compounding interest and how it should be putting money to work and real wage growth against cap appreciation. There's a bunch of core concepts that are important. I'm sure it could be learned in a few days worth of online material. That's probably what I would do. I was lucky to get the finance education, but it took a couple of years when obviously it probably could have been a few days for the basics that are most important.

Nic Cary (10:11):

Yep, I think that's good. There's a book I recommend to some people called the Richest Man in Babylon, and it's very simple tales about how to build savings and then compound interest and what happens over the long duration of basically saving more money than one spends. And then it goes into sort of these principles from an investment perspective, but it's a very foundational set of axioms basically. So earlier you talked about working in the financial old world of financial services and banking and I think there's a misconception among entrepreneurs that they have to come up with something that no one else has ever thought of, but in reality a lot of these big industries are very ripe for meaningful disruption and that's whether that's bringing digital efficiencies in or taking care of customers in a smarter way or whatever. So talk to us a little bit about what you've learned as an investor in your professional career. What are you looking for a little bit when entrepreneurs are coming to you with an idea and how are you assessing the potential of that idea? In the business itself, it is complicated and as a professional investor you obviously get vantage into loads of different opportunities and eventually you have to make a thoughtful investment decision. So walk us through that a little bit.

Sam Harrison (11:33):

Yeah, I mean it's also lots of thoughts there. I think the idea is important, but the execution is more important. So I think that's the biggest thing. So people do get hung up on an idea or they get hung up that someone else is doing it in some way and therefore they can't. But ultimately it comes and all the idea itself is valuable. I think generally that is not true and people are afraid to share their idea. And when it comes to friends or family or getting financing, and I think those are common mistakes. The idea itself, someone has definitely had it before, it comes down to almost certainly no matter what the idea is, everything has been thought of very few things get executed upon. So it comes down to do you have the right skillset and the ability to recruit the right talent to get the people involved that can do this in a better way than someone else's doing it.

(12:25):

And that's probably at the crux of it. And then when we invest, we kind of take a bit of a barbell strategy in terms of how frontier the idea is some things are best tackled by a series of PhDs in computer science that really it's a cutting edge idea. For example, building the first types of layer one blockchains is a difficult cryptography, computer science, game theory, economic problem. Other ideas are say things that use blockchains, but to do something better or more efficiently come down to more simple blocking and tackling. Can you do a better service, a better product, a better user experience, better onboarding, acquire customers for less? All of those things that are slightly different from a technical perspective, there is already you are utilizing a technology, you're just servicing it to a different customer set in a better way or just offering a net new set of clientele exposure to this technology.

(13:29):

So depending on your technical skillset, some things are better than others. Others you'd go down that path. And generally our advice is take the idea as far as you can before you come to friends and family and people in network and then try and get financing via that route. And again, when you come to maybe get debt financing or venture financing, you want to be as far along as you can take this idea before you explore those options. And therefore the closer the idea is to home for you, eg your independent skillset or those of your co-founders, the further you can typically take that before you need outside help.

Nic Cary (14:13):

I think that's really wise. One is basically focus a lot on the execution and get good at doing all of the real work and then playing to your strengths I think is key. If you're not a PhD in computer science, don't chase a problem that can only be solved by that specific skillset. And then building your team out is obviously crucial. And then finally, if you're going to go pursue outside financing, your position will be vastly strengthened and the business opportunity will be improved by finding real market adoption, real fit growth and hopefully revenue. I think those are all really good points.

Sam Harrison (14:47):

And it could be that your superpower is raising money. You could be extremely compelling, charismatic, and great at raising money and at that point you can hire all the computer science PhDs you want and ultimately tackle a more difficult problem. And we see that less. But that is also to play to your strengths as strength can be. You're just better at fundraising than everyone else. You're going to have $10 to every other competitor's one, you have the ability to raise at good terms, minimal dilution and you'll just win that way. And it's kind of like Uber versus Lyft, right? Uber was better funded, was it better products? I don't know. But it was definitely better funded and you just have such a better chance in market if you're able to attract capital at favorable terms. So it doesn't necessarily mean to be mean. You need to not go down that path if that's authentically what you truly believe in that you're going to do this pioneering computer science problem that no one else has solved. But hopefully you've got either the talent around you or the ability to raise the capital to go do that.

Nic Cary (15:47):

But at some point you got to recruit that team and you actually have to build it. And so that execution point really hits home. So I know it can be hard for early stage founders to know where to turn to. I was wondering if anyone in your career has sort of played an important role for you as a mentor or an advisor? Who did you learn from in your career? And maybe talk a little bit about that relationship. Not always easy to find people to turn to when you don't dunno the answer to something. But I'd be interested to hear in your personal journey what that looked like.

Sam Harrison (16:20):

Really for me, I don't have a mentor. Yeah, my dad's probably the closest I've got and I learned business from him when I was younger. I'd say just sitting in the car, listening to him on business calls, haven't had a mentor. His career tracks a little bit different to mine, but I'd say that was the foundation. Haven't had a mentor, but I definitely had some bad bosses and I think I learned a lot of what not to do from people that were just not capable of managing other people. They didn't have empathy, they weren't able to unleash. Ultimately management's like unleash the potential of your team. You're not trying to do everything. You're not trying to have too strong of opinion unless it's a reserve matter so to speak, that there's some things that you are going to have to be very protective of. But generally speaking, you just want to enable your team to be the best version of themselves.

(17:16):

And then they themselves go and recruit amazing people as everything grows. And yeah, a lot of people don't do that. They're better as individual contributors that get promoted at the org. They're good at sales or they're good at some particular function, not actually good at management. So I'd say probably the best thing for me was just having a bunch of bad experiences that I've then vowed I'm not going to be like that. I'm going to try and empower people that work within our organization to do the best possible thing that they can do versus just hamstring them the whole way.

Nic Cary (17:55):

And I think it's a true lesson, which is that obstacles and challenges frequently are there to teach us things. And if you can get the right lesson out of those really difficult problems are difficult things that happen, you are able to really achieve your full potential. And I think it's one of the things that's really painful for most business owners and entrepreneurs. They'll struggle with this at various times in their careers, but I love that sort of expression, which is like the obstacles are the way, the problems are basically challenges to be overcome and to learn from and to use those down moments as opportunities to try and draw some lessons from for the next time you witness things like that. So that makes a ton of sense. Well, I know we're coming up a bit on time here and you've been very generous with yours. A lot of entrepreneurs we talk with, they don't, taking those first steps can feel really scary. They don't know when to go all in or whether or not they should keep working on something on the side. I'd love to hear from your perspective and your own journey, when do you know when to take the risks? When do you know when to pause and how do you deal with the stress that comes with running your own business?

Sam Harrison (19:08):

That is an amazing question. That's probably one of the biggest things. Some, yeah, I just think about that a little bit, I think deep down. But it's probably helpful to get some validation points before you take the leap. And it depends on your financial situation that of your dependents and how many other responsibilities you have when you can take that risk. Much easier to take that risk when you are just graduating college versus have a family and bunch of people to support. So some of it comes down to life stage and where you're at on the risk tolerance curve. But I'd say the general rule for me would probably be, yeah, keep going with the idea. You jam on it with your friends and family and if you have mentors or whatever, great. Get some validation points that people want this idea that you have.

(20:04):

And it's not just echo chamber stuff of your closest people telling you it's a great idea, really go out there and test it. And then I think deep down you'll probably know this is the time to start something and it's always going to be uncomfortable, but that's kind of part of the journey I guess. There's never an easy time to do it unless there's a natural break. Sometimes there's a natural break in your career and you're looking for something new to do and you just can't do whatever it is anymore. You're not interested. You've been let go, being made redundant, whatever. Those are natural pauses that are often catalyst for people to go down the entrepreneurial journey. Otherwise, the hardest thing is you're fairly comfortable or you're stable, you're in the groove of the existing thing. That's obviously the status quo is harder to give up when that's a situation. But I do think the more points of validation you can seek to give yourself confidence and the comfort that this is going to go, okay, it's going to be a journey. It's going to be more stressful than you ever imagined and it's going to be more work, but ultimately there's something at the other end of it for you. That's probably what I would do.

Nic Cary (21:14):

I think that's some real wisdom in all of that. So Sam, thank you so much for spending time with us today. I didn't realize you had started off as a hotdog salesman and I like that version so much. But from there to the becoming a titan of venture and helping build your own firm, you've seen a lot and it's been so exciting watching your career and all your success. So thank you for spending time with us today. I think you landed on some things I wanted to reiterate to our listeners today, which is really focused on the execution. There are a billion ideas out there, but your customers are going to be your best teachers, build a great team around you, take care of them. It's so important to you as a manager and as a leader, help your team fulfill their potential and then trusting your instincts.

(21:57):

I think you sort of concluded with that. And there'll be moments in time when you're going to have strong instincts to maybe double down. And at some point you're going to need to start to trust some of those. And then when things aren't going well, that's going to happen to everybody. But again, try and draw lessons from those things so you don't repeat those mistakes and you can basically improve on them. So appreciate your time so much today and in conclusion here at skysthelimit.org, we connect underserved entrepreneurs with volunteer business professionals for free. one-on-one mentoring. We also provide business guides to all of our mentors monthly funding opportunities. So you can sign up for free today. And if you like what you heard today, please subscribe and share this podcast. Cheers.

OUTRO (22:40):

Thanks for listening to the First Buck podcast. Don't forget to join the community of underrepresented entrepreneurs and their supporters by signing up at skysthelimit.org. Click subscribe and we'll see you next time.