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The Unicorn Parade with Jason Corsello

The world of venture capital is a mystery to most. Who gets funded and why? What's the math around valuations? And why is there so much "betting on the jockey"? So many questions with so few answers. That's why we invited Jason Corsello, founder and general partner at Acadian Ventures, on the podcast. He'll help us better understand the unicorn parade from a few years back, which resulted in a VC winter, which has led to the gradual thawing of capital into the world of work. What kind of companies are getting his attention, and wallet share, and what advice does he give to startups looking to raise that first seed round of capital. The veils are being lifted and the crystal balls are coming out on this one. Enjoy.


PODCSAS STRANSCRIPTION (blame AI for errors)


Joel Cheesman (00:26.967)

Oh, yeah, it's Warren Buffett's favorite podcast, aka the Chad and Cheese podcast. I'm your co-host, Joel Cheeseman. Joined as always, the Wayne to my Garth, Chad Sewash is in the house as we welcome Jason Corsello, founder and general partner at Acadian Ventures. Jason, welcome to HR's most dangerous podcast.


Chad (00:33.315)

Is that true?


Chad (00:47.374)

No.


Jason Corsello (00:50.953)

Gentlemen, it's great to be with you. First time, what is it? First time call or a long-time listener first time caller? Is that what I am? That's me. I screwed that up already.


Joel Cheesman (00:55.906)

Long time listener, first time caller. Yeah, yeah, we might have a pair of counting crows tickets for your efforts today. So Jason, a lot of our listeners probably do know who you are, some of them do not. Give us a little bit about you and then the company and we'll get into the Q&A.


Chad (00:57.642)

There it is. Oh, there it is. Yeah.


Jason Corsello (01:05.296)

Nice, I'll take them.


Jason Corsello (01:16.151)

Yeah, of course, Joel. So thanks for having me guys. My name is Jason Corsello. I'm the founder general partner of a venture capital firm called Acadian Ventures. We are a early stage venture capital firm focused exclusively on work technologies. Prior to launching the fund, I was at Cornerstone for a bunch of years and have been hanging around the hoop of this industry for over 25 years, or I guess almost 25 years. So yeah, here I am.


Chad (01:42.626)

Jason, you've been in this industry for a minute, okay? You know it takes HR forever to adopt anything. So how did you get into the startup game, right? Because I mean, it's like, you got the new stuff coming and there's the whole risk that's there for HR. And how did you get into that? And what made you jump into startup?


Joel Cheesman (02:01.378)

He loves getting kicked in the balls apparently.


Jason Corsello (02:05.067)

Jeez, man. Yeah, Chad, you know, I've been in this industry for long enough, and I've seen companies succeed. I've seen companies fail. And to me, what's so interesting about this industry is, to your point, it's really screwed up, right? The thing that we tell our investors is there's 3.3 billion workers in the world. Most of them don't like their job. Most of them are underpaid, and most of them don't like their employer, and they stick around for less than two years now, right?


Chad (02:26.402)

Hmm?


Chad (02:31.478)

Yeah. Mm-hmm.


Jason Corsello (02:33.799)

So the world of work as we know it is completely broken. And we think technology can fix a lot of that. So that's why I wake up every day thinking about where's the most interesting or newest technology that can solve some of these problems that after all these years still haven't been solved.


Chad (02:48.714)

So what level of startups are you funding? Is it seed, A, B and beyond? Where's your sweet spot?


Jason Corsello (02:55.647)

Yeah, we specialize predominantly in the seed stage, right? So that's typically, we're writing checks of a half a million to a million bucks. In some cases, we'll write a check where we've known the entrepreneurs and it's just an idea. Sometimes we'll invest a little bit later than that. But core seed is really where we invest our time and our money.


Joel Cheesman (03:14.222)

Jason, we love to talk about history on this show, mainly because we're two middle-aged white guys, but I'd love your perspective. It was so much fun around the 2021-22 period, the unicorn parade, every week, someone who's getting a hundred million dollars and a billion dollar valuation. Just what was your take in that golden era of venture capital and maybe where you guys fit in as mainly seed investors?


Chad (03:20.462)

Because we lived it.


Jason Corsello (03:42.931)

I mean, for other folks that have been on your show, there was irrational exuberance in the terms of other smarter investors, right? But it was crazy town. I mean, you know, checks were being written for companies that made no sense. And it was a product of the environment of just free flowing cash. And yeah.


We invested during that period of time, we probably did deals where we probably paid too much and that was just the nature of the environment. I don't blame companies. A lot of people blame, oh, this company raised 200 million at a $3 billion valuation. Right. And I don't blame those companies where I think the biggest flaw over the last three years is those companies didn't hit the, I shouldn't say, many of those companies didn't hit the reset button. And what I mean by that is.


They didn't cut their staff. They didn't adjust their operating plans. They didn't reduce their burn. And those are the companies and there's a lot of them still that are going to be in a very hairy situation over the next one or two years. The ones that didn't make those hard decisions two years ago or one years ago are the ones that are in a really, are going to be in a really, really precarious position going forward.


Chad (04:56.566)

Well, they did the opposite. They exploded. They took the money. They exploded on staff. They exploded their tam. Their discipline and their focus went to shit in many cases. Right. So, I mean, as we sit back, hindsight's always 2020, as we sit back and watch, there are some unicorns that are out there that are that are doing well. And for


Joel Cheesman (05:08.162)

Mm-hmm.


Chad (05:22.058)

one just right out of the gate deal, right? They just said, Oh, hey, we just made 400 million in ARR. Then a week later, they're like, Oh, sorry, hold my beer. That was 500 million in ARR, right? Made a couple of, you know, acquisitions. And then you've got, you know, a competitor, which is you guys actually work with oyster. And they're in the same they're in the same line, right? So they're competitors. So what does that do to a company like oyster? And I believe they were unicorn status.


Jason Corsello (05:30.055)

Thank you.


Chad (05:51.786)

Now, they see this happening with deal, right? Does that crush dreams or does that just provide validation and say, okay, we need to refocus on this?


Jason Corsello (06:02.887)

Yeah, that's a really, really good question. I think the short answer is, I'm going to answer your question, not answer your question, but try to answer your question, which is just like venture capital, there's no right or wrong way of building a startup. I mean, deal is taking the ultra aggressive, we're going to growth at all costs. And that worked for a period of time for a lot of companies until it didn't. We like Oyster's strategy because


They are being very pragmatic about the market. They also are sitting on a lot of capital that they raised two years ago that they haven't spent. Right. So a lot of these companies, your point over the last few years, they raised a lot of capital, but they spent a lot of the capital where burn to that house came down. Right. Versus Oyster is being very pragmatic and they still are sitting on a lot of that capital that they raised even two years ago. So what happens in environments like this is the companies that weren't pragmatic were


Chad (06:42.498)

Burn burn burn.


Jason Corsello (06:59.907)

weren't building their business foundationally or fundamentally looking at product and profitability and loss and key fundamentals of operating a business are going to be in a really tough position to operate on a go forward basis. They're going to be limited in options. Either they sell, they do a down round, or they go out of business versus companies that are still hoarding some of their cash will get through this kind of period of uncertainty over the next one or two years and come out the other side in a much better position with less competition, with more opportunities for growth.


Joel Cheesman (07:16.11)

Mm-hmm.


Joel Cheesman (07:29.586)

Yeah. So you talk about this period.


Jason Corsello (07:30.355)

Thanks for your question.


Chad (07:32.926)

Yeah, in a roundabout way. Yeah, in a roundabout way. And just real quick, real quick, when you're talking about, when you're talking about something like that, there's a cycle that actually happens. And within that cycle, there's going to be a layoffs because you need, uh, in some cases, obviously, you've got the engineering, the engineering side of the house. You need to build product, build product, build product, get to MVP. And then you might have to dial down the engineering side of the house cause you're not focusing on product. You're focusing on revenue. And then that's where


Jason Corsello (07:35.428)

Okay.


Chad (08:02.134)

the sales engine sales and marketing engine should actually go into play. Um, that seems almost like a fine orchestrated type of movement, right? And it doesn't seem like a lot of startups get it right. How are you guys involved in, in at least advising how to get that very hard ballet move executed?


Jason Corsello (08:28.473)

Yeah, it's


Jason Corsello (08:54.995)

It is a delicate balance, right? And this is where what we've seen, you know, the transactions that we've seen over the last two years is management teams that weren't making, weren't willing to make those hard decisions to cut engineering, cut go to market, figuring out what wasn't working and didn't have boards that were providing the oversight, maybe they had board, but they didn't have active boards that were providing that oversight to say, Hey, your top line number went from a hundred percent growth to 50% to 25% growth, but yet you're still growing your head count at...


Chad (09:05.57)

Mm-hmm.


Jason Corsello (09:23.955)

20%, 30%. They're terrible and unfortunate decisions that you have to make, but guess what? That allows you to fight another day to keep growing the business. And there's more companies than not that didn't make those hard decisions. Maybe they cut 10%, but the fact of the matter is they probably should have cut 40%, right? And this is the environment that's gonna play out over the next 12 months, is those companies that did make those hard decisions are gonna be the ones that live to fight another day.


Chad (09:33.358)

Mm-hmm.


Jason Corsello (09:54.275)

and the ones that didn't are going to be in a really, really tough position.


Joel Cheesman (09:57.854)

Yeah. So you talked about period of uncertainty. We've talked about the unicorn parade, uh, followed by what you call VC winter. Talk about the thaw. Uh, you, you more than any, as a seed investor, see those seeds being planted now for the next 12, you know, 48 months, 12, 36 months, whatever it is. You just recently, uh, announced, uh, a new fund.


uh, at Katie and ventures fund too, which I assume is in preparation for the oncoming onslaught of seed funded companies, uh, that we're, we're going to be talking about on the show. So talk about the thaw and what we can expect in the next 12, 24 months.


Jason Corsello (10:40.771)

Yeah. So Joel, we've been seeing about four, I should say actually probably closer to six quarters of that thought, right? So in our data, when you look at the cycles of the market, we really peaked venture capital in terms of the dollars invested in Q4 of 2021. And since Q4 of 2021, we've kind of seen this slow decline. And then over the last four to five quarters, it's kind of flattened out, right?


Jason Corsello (11:10.739)

I don't want to say I have a crystal ball and we predict this, right? But I think the way we articulate it with RLPs is we're going to bounce on the bottom for a while, right? We're probably halfway there. Maybe we're kind of beyond that halfway point, which is all good news. When we look at our data, a couple of things is seed is still very resilient, right? On any given quarter, there's about a hundred million bucks in our world that goes towards seed investing. And that's been relatively consistent over the last couple of quarters. So the seed market is still very, very healthy.


Early stage has dropped dramatically. It's slowly starting to recover, but it's really with the series A types of rounds, you know, getting that next and you know, in those types of rounds, you write a smaller check at smaller valuations. So a little bit easier, right. From the series B and series B rounds have been really, really challenging over the last couple of quarters. The late stages we've talked about has been really, really crushed. We're starting to see some signs of it's coming back, but it's off of a low volume. Right. There was like four in the last quarter, I think four late stage.


Chad (11:50.252)

Mm.


Jason Corsello (12:07.443)

kind of series C, series D, series E types of investments. And I think that's where it's going to be really, really choppy over the next couple of quarters. But to your point, Chad, I think we're starting to see that market slowly recover. It's going to be a long recovery in terms of the venture dollars being deployed. But the good news is it's happening. There's a lot of activity in venture land. We expect this year, we're going to increase our pace of investment.


Chad (12:11.822)

Mm-hmm.


Jason Corsello (12:35.355)

Typically, our goal is to do 10 deals plus or minus a year. Last year we did five, this year I think we'll do north of 12. So we ourselves are a bit more bullish on where the markets are. We're just in a more healthy environment. Valuations across all stages are much better than they have been. And you're just building realistic and it helps you build fundamentally better, stronger businesses, right? You don't...


Chad (12:39.694)

Hmm?


Joel Cheesman (12:52.354)

Mm-hmm.


Chad (12:56.458)

Yeah, they're realistic in some cases.


Joel Cheesman (13:03.041)

Mm-hmm.


Chad (13:03.179)

Yeah.


Jason Corsello (13:04.623)

When a venture capital, two years ago, venture capitalists gave you 100 million bucks, he wanted you to go and spend that. He or she wanted you to go and spend that 100 million dollars. They didn't want you to put it in the bank and draw 5% interest on it. So we're getting in much better company building environment, which to me is good.


Chad (13:14.114)

Yeah, yeah.


Chad (13:21.262)

I felt like we were kids in the candy store.


Joel Cheesman (13:21.444)

And by the way, Jason, Jason recommends that when you raise that money, you sponsor podcasts with all that money that you get from, from investors.


Chad (13:28.226)

Well, duh, I mean, come on. Makes sense, that only makes sense. But so you talk about the focus. When you get some of these companies get all this money, it's like they're a kid in the candy store. A couple of things that are happening, obviously VCPE, they're going to say, look, we need more head count, expand the TAM, how are you actually going to give us our money back, right? You can't do that with this incredibly focused point solution, right? So we need you to, you know,


Jason Corsello (13:29.527)

as much as possible. That's right.


Chad (13:58.014)

expand. That's a big problem, not to mention when you get that kind of money, and I'm going to go ahead and throw it out there. When you're an eightfold and you're getting hundreds of millions of dollars and then you're spending money on buying half of HR tech space, right? It just doesn't make any sense. It's just so weird that we see that happening, but then obviously you know the cycle is going to switch and we're going to go into...


the winter session, right? But for you, kind of flipping the question, this is like the perfect opportunity for Acadian to be able to take a look at some great startups and not have to actually pay, you know, maybe that half million, maybe it's a quarter of a million, but still get the shares of what you might've paid for before.


Jason Corsello (14:51.155)

Chad, I think the way we think about it is the market has just been over fueled, right? It's been overfunded. There's been way too many companies that have been created, right? It's been easy to start a company and get venture capital back. I shouldn't say easy, but like, you know, there's way too many companies in the market today, right? And so we're in the middle of this shakeout, which is a lot of these companies probably that exist today probably shouldn't have existed, right? Either they were going after too small of a TAM or


Chad (15:18.946)

Yes.


Jason Corsello (15:20.967)

there's just way too much competition and there is like employee engagement or, you know, performance management. So.


Chad (15:26.966)

Or it's a product seeking a problem that doesn't exist that we see a lot of times.


Joel Cheesman (15:31.598)

Mm-hmm.


Jason Corsello (15:31.727)

It's that or it's just, you know, in our world, it's, you know, is it a feature as a product? Is it a company? Right. And those are three very different things, right? Or most of the things that have been invested may have been a feature or to some extent a product, but they weren't a company, right? They weren't a hundred million dollar ARR type of business. And so that's going to play out. So for us to see the investors right now, we think this is great news because we're going to see a clearing out of the market.


Chad (15:38.233)

Yeah, great point.


Chad (15:54.562)

Mm-hmm.


Jason Corsello (15:54.891)

And so


Chad (16:07.521)

Mm-hmm.


Joel Cheesman (16:20.84)

Mm-hmm.


Jason Corsello (16:23.675)

So, you know, as a C to the stage investor, I'm excited about what we're seeing. You know, we haven't, we, you know, we're, how, how long are we into this podcast? And we haven't even used the word AI, but you know, we've got this whole technology cycle. I know I broke it. I screwed it up.


Joel Cheesman (16:33.991)

Oh, it's coming.


Chad (16:35.066)

Oh, you broke it. Oh, you broke it.


Joel Cheesman (16:38.442)

All right. If you're going to go there, Jason, we might as well. So the new fund you've gone from 10 million to 30 million. Correct. What kind of companies, what kind of trends are you looking at? I know, you know, fora is one that you're in that we've talked about on the show. Compa combo with a K or some of the others. Is there a theme that you guys are looking to target? Something that's hot and trending, maybe something we haven't even seen yet that you're looking at.


Chad (16:41.933)

it is.


Jason Corsello (16:47.62)

Yep.


Joel Cheesman (17:08.034)

What's the future look like in terms of technologies and focus?


Jason Corsello (17:12.651)

Yeah, there's two big themes for us today. One is just AI, right? I mean, I went through the cloud cycle over the last 20 years. I was at Cornerstone On Demand and we were big beneficiaries of this move from on-premise to cloud. And we're going to see that same thing in AI. It's most likely going to be much bigger. So we're looking at companies right now that are doing something AI. You know, we don't get excited about the gen AI stuff that we're seeing out there today.


because I think it's very easy to replicate. What we're looking at stuff is, is there really deep foundational AI and language models that are being built that they can create a mode around. So AI is certainly a big theme because we think that a lot of incumbents today can or will be disrupted by building foundationally AI companies. So that's a big focus for us right now.


Chad (17:45.58)

Mm-hmm.


Jason Corsello (18:08.587)

There's a lot of, you know, we're looking at a lot of geeky stuff in compliance, in regulatory and compliance areas. You've had Guru from Fair Now on the show and love what he's doing. I just talked to him this morning. I think that's a huge market because it's a little bit of the wild, wild west in AI right now. No one knows how their models are governed. No one knows, you know, if and how they're being audited. And every company, whether you're, you know, big global enterprise or technology vendor has to...


to be able to validate what they're doing in AI. And certainly they don't want to, they need a rubber stamp of approval, if you will. So that's another area that we've been looking pretty closely at. So those are two, I guess the third one, Joel, is this area of just global workforce, right? Out of the gate, our goal was to invest in companies anywhere in the world. And even specifically half of our investments we wanted outside of the US.


Chad (18:41.462)

Mm-hmm.


Jason Corsello (19:04.667)

And we just think today you can build a company anywhere in the world and oh by the way you can hire and Employ and pay someone anywhere in the world So that's also a pretty big theme for us, and we've got a couple of companies today in that segment


Chad (19:17.77)

to those real quick. So AI, I see AI is pretty much being ubiquitous. Everybody's going to have it, but it's going to be one of the big companies that's actually supplying the large language models, right? The data piece is what really matters most, and that's going to be the hard part for a lot of these newer companies who just don't have the years of data or the data lakes that an ADP has, right? I mean, that's just ridiculous amount. So


How can a startup today who wants to be an AI startup, knowing that data is literally the secret sauce, how do you advise them to be able to have a product that's not gonna be dead in six months because somebody else creates something with Gemini that just blows it out of the water?


Jason Corsello (20:12.743)

Man, Chad, that's a way smarter question I could probably answer. But I think the way I think about it from a very simplistic perspective is data's all over the place, right? Yes, the incumbents do have an advantage because they're sitting on a tremendous amount of data. One of the things I learned as being an incumbent at Cornerstone is, and a lot of incumbents just don't know how to leverage their data, right? I mean, they have so much data, they don't know what to do with in some cases and they don't have to make sense of it.


Chad (20:42.38)

Mm-hmm.


Jason Corsello (20:42.671)

where startups can get access to data a lot easier than they historically could have. A couple of examples. Tech Wolf is doing skills at first. They're taking data from your existing systems and that can be anything from Workday to Slack. They're also pulling in public domain data from Census Bureau data anywhere in the world. They put on their pixie dust and secret sauce


Do they have a data advantage or disadvantage? I don't know. I think you could argue probably both cases, but I think there's lots of ways to get access to data more so than you ever have. And then our second company is this company Combo that you mentioned Joel, that is basically building the kind of integration layer to everything HR tech, right? So this was the biggest problem we had at Cornerstone. We'd have a customer that said,


our 80 other HR tech vendors that we have in our stack. And we'd be like, yeah, we could do that. And we'd have to ball bearings and duct tape these things together. And our developers internally hated it because we'd have to take them time away from stuff that they liked working on. And it was a pain in the butt. So now there's actually systems like Combo and there's others out there that provide that kind of infrastructure later to be able to get data anywhere that's residing within the enterprise.


Chad (21:43.094)

Yeah. Six years later.


Joel Cheesman (22:08.491)

Yeah.


Jason Corsello (22:09.403)

So, yeah, we're in a much different position even from three or five years ago. It's probably not the best answer to your question, Chad, but, you know, the data's out there, data's accessible. Certainly I do agree that the incumbents do have a built in advantage, but I also think that they're also incumbents that have a bunch of other things, you know, that they're worried about. And, and so it's harder to solve some of these problems because they're focused on other things.


Joel Cheesman (22:25.903)

Mm-hmm.


Joel Cheesman (22:35.887)

Yeah.


Chad (22:36.066)

Well, I mean, those incumbents like Cornerstone, they're also slow. They've got a shit ton of tech debt. And if you can create a startup that will help them actually take that data and do something with it that they care about, then you've got a great opportunity for acquisition, right?


Jason Corsello (22:56.751)

Yeah, there's also, you know, in the case of Cornerstone, I don't mean to bash private equity companies, but they also have very different incentives than startups, right? You know, their private equity owners really care about cash flow and they care about how much money can they produce. It's a very different incentive than a startup that really is trying to innovate and build a business for the next 10 years.


Joel Cheesman (23:03.938)

Mm-hmm.


Joel Cheesman (23:19.958)

Yeah. And in light of that, we have a lot of startups that listen to the show. A lot of people that are thinking about starting companies. You've probably heard our show firing squad where we, uh, take a startup to task. Give us, give us a sense from where you sit. How many pitches do you get on a, on a yearly or monthly basis? What are some good, you know, the best pitch decks that you've seen? And what kind of advice if I'm a startup or looking to start a company out there?


Chad (23:20.01)

Yeah, good point.


Joel Cheesman (23:49.61)

How do I help you help me?


Jason Corsello (23:53.775)

So first of all, Joel, I think most of our companies have survived your firing squad, so thank you for that. I think to specifically answer your question.


Joel Cheesman (24:00.034)

And by the way, we don't know who are your companies or who aren't. Like we're not giving preferential treatment to Acadian venture companies.


Chad (24:02.943)

I'm sorry.


Jason Corsello (24:06.323)

Yeah, I'll try. I'll. Well, I've already talked my book a little bit, but I won't. I would talk about all of them. But to answer your question, on any given year, we'll look at 1200 companies. And that could come through a pitch deck that comes through inbox. And we do look at everything that crosses our desk. Now, sometimes we'll look at the pitch deck and it'll take one or two minutes and we'll brush it aside. It's just not a good fit for us.


Joel Cheesman (24:18.062)

God.


Jason Corsello (24:32.751)

But on any given year our pipeline looks like we'll look at call it 1200 companies. We'll deep dive into two to 300. We'll diligence, you know, another hundred and we'll invest into 10. Um, that's a typical year for us. So we do look at a lot of companies. Um, we find our best sources of deals don't come from inbound. They come from, from referrals. I just was writing an FAQ for our website and as much as I hate


the way the venture capital world works, warm referrals are good sources for us. Because someone is validating, in some cases, the founder or the idea, that helps. And warm referrals, whether through founders or other VCs or even some of our limited partners, our investors, tend to be our best sources of potential investment.


Joel Cheesman (25:26.426)

So you're Gordon Gekko basically. I look at 100 deals a day, Bud Fox. I pick one. I love it. 1200. That surprises me. I'm not sure most people would guess 1200 a year and you pick 10. Yeah.


Chad (25:27.009)

So.


Chad (25:38.532)

That's a lot.


Jason Corsello (25:39.971)

It's a lot. It's a lot. But again, we don't, you know, we don't meet with 1200 companies. We look at, you know, 1200 pitch decks and, you know, and it quickly funnels out from there. Yeah, it is a lot.


Chad (25:51.374)

Amazing. So within that pitch deck, those pitch decks, you're looking at global. As you were just talking about, you are also looking at global organizations, global startups. Currently it was at Olivia and TechWolf, at least there are a couple of the European startups that you guys have in your portfolio. How do you and the team evaluate a European startup differently than a US startup?


Jason Corsello (26:15.303)

I don't know, Chad, if we evaluate them differently, but what we care, I mean, there's two fundamental things that are the foundation for our investment. One is, is this a super unique team, right? Are these kind of 1% founders? And now 1% is obviously subjective, but do we think these are really, really special founders, based off of either their experience or their ideas or some combination thereof?


And the second is, is it a big market, right? Are they going after a big market? I mean, we've seen plenty of interesting businesses where we like the founder, but just we don't think the market is big enough. So those are the two foundations. And what we found is, you know, US founders or founders that we've invested across the world are very comparable to the skills and competencies and expertise of the US based founders. I mean, we invested in a company in Kenya.


And I'd put these two founders against any other founders in our portfolio in terms of their skills. They're, I mean, they probably have more hustle. Um, and today we've invested in founders across 13 countries. So. Definite. Yeah. You know, what we've learned in emerging markets is they run hot and cold, right? Which is in down markets, funding gets really, really tight. And then, you know, in, in up markets, funding gets pretty robust. So they're very cyclical in terms of the.


Chad (27:21.934)

Well Africa's hot right now, right?


Chad (27:28.654)

Okay. Huh?


Jason Corsello (27:38.643)

funding environments and those so that they access the capital. But it's certainly, I think it's probably one of the most interesting, exciting markets out there. Just based off of pure size, you know, it's eight times the size of the US market. So how can you not be excited about a market like that?


Joel Cheesman (27:51.962)

Sure.


Chad (27:54.67)

How deep do you guys dip into the economic landscape itself to be able to take a look at the prospect, not just today, but growth?


Joel Cheesman (28:06.094)

Going deep.


Jason Corsello (28:07.003)

I mean, it's...


Jason Corsello (28:11.439)

You had to go there. I love it. So it really varies, Chad. I think it depends on, you know, when I think about the big market, we look at like macros of the market, right? So I mentioned Africa. You know, the simple, we invested in a company called WorkPay that's doing HR payroll in sub Saharan Africa. And the math was pretty simple, right? We think that market's eight times the size of the US market. Well, the US market now has $12 billion plus HR payroll companies.


Yet Africa doesn't have one and it's eight times the size. So those are kind of the simple ways that we think about some of these markets, whether it's Latin America or Africa or Southeast Asia. So it's, you know, that's the robustness of just, we do some simple back of the envelope math. We try to understand the dynamics of the market, which is a lot of those markets, you know, it's, um, you know, services and oriented businesses that haven't fully embraced technology. And so we think.


Obviously, technology can accelerate those markets or at least replace a lot of the services based models out there. But like I said, what we've learned is some of these markets just take longer to develop. So what we need to do is have pretty patient capital in LPs that say, we don't want our money back next year or two years. We know that these are 10 year funds and that's how we think about the investments.


Joel Cheesman (29:21.154)

Mm-hmm.


Joel Cheesman (29:34.894)

Yeah. Looking at some of, uh, more, the more established companies, uh, smart recruiters is one that's in your portfolio. And Chad and I regularly, uh, I won't say bash, but are fairly critical of the future of the ATS business. Give us a reason to be bullish on the ATS business.


Chad (29:55.322)

on the ATS.


Jason Corsello (29:59.495)

Wow, good question. So one is it's a established category that as much as you know, we all think it's broken. It's still a very, very large market today. The other thing which is I've been frustrated about the ATS market over the last five years is there's no real dominant vendor, right? I mean, probably the most interesting vendor in the ATS market over the last five years has been who?


Chad (30:10.442)

Mm-hmm.


Jason Corsello (30:25.359)

Workday, right? And we all know that trials and tribulations of customers that have implemented Workday recruiting. Now, I'm not saying it's a terrible product. I don't think I've ever actually used it, but it's a big market that needs innovation. Now, the question I think more Joel, of what you're getting at, is where's the disruption happening? And I wish I knew that answer because, you know, I think we've kind of just, we've been disrupting around the edges, but we haven't kind of disrupted the core


Joel Cheesman (30:28.758)

Everyone loves them.


Chad (30:52.758)

Mm-hmm.


Jason Corsello (30:55.251)

And I wish I knew that answer of why it hasn't been disrupted. I think part of it is if you really want to disrupt the, not just the ATS market, but the recruiting market, it actually probably takes a bit of capital out of the gate to start, right? Instead of raising a $3 million seed round, you need to go raise 20 million bucks out of the gate, like what kind of what Workday did 15 years ago. So you raise a lot more money so you can build everything faster and try to disrupt it in that way.


Joel Cheesman (31:16.011)

Yeah.


Chad (31:24.578)

But smart recruiters, I mean, they're actually in, you could say the catbird seat with regard to data because they're an applicant tracking system. They have huge data lakes. If they pivoted and they started to use these large language models to actually focus on efficiency. And I mean, all the way down the funnel, I mean, they could literally change the old style ATS that they modeled themselves off of and become something new. So, I mean, it looks like they're


there are some opportunities there. The hardest part for them though, is that they were going through acquisition and that didn't happen. And then they just lost their CEO who was there. Yeah, supposedly, sure. And then the CEO just left after over a little over a year. Rebecca's been at the company for a while. She went away and she came back. But I mean, it's just like, it seems like a perfect opportunity for a new CEO, whether she gets it or not.


Jason Corsello (32:03.539)

Supposedly.


Chad (32:22.082)

to be able to pivot into something new and cool.


Jason Corsello (32:25.999)

Yeah, I think you're spot on chat. And I so I don't think the full story on smart recruiters has been written yet. And I do think they do have still one advantage has been kind of lurking behind the scenes. And that's Jerome, right? Jerome knows this market better than any executive CEO chairman in this market, right? So I think that's the one to watch is, you know, do we see? Do we get to roam back?


Joel Cheesman (32:40.747)

Hmm.


Chad (32:50.626)

Do we get Jerome back? Should we start that chant? Do we get Jerome back? Does Jerome get back into the CEO position? Jerome, Jerome.


Joel Cheesman (32:53.659)

Ehh...


Jason Corsello (32:54.007)

Let's do it. Let's go. Let's start the, should we start it here? But yeah, I mean, you guys have known him for, for the evolutions of this industry and he's, he's probably the biggest thought leader and for us as investors, I would love to have that guy take a much more active role in, and reposition smart recruiters for the next five years, because I think that opportunity absolutely exists.


Joel Cheesman (32:56.226)

There you go.


Joel Cheesman (33:04.494)

Yeah?


Chad (33:06.315)

Yeah?


Joel Cheesman (33:19.77)

Mm-hmm. So who doesn't love a good game of Mary fucker kill Jason? I'm gonna spin it a little bit differently for you though. Okay, your best bet Your worst mistake and the one that got away


Jason Corsello (33:25.112)

Oh, jeez.


Jason Corsello (33:34.603)

Okay. Ooh, okay. So our best bet on paper, should I start? Am I going for this here?


Chad (33:43.094)

Yeah. Hit it, hit it.


Joel Cheesman (33:43.342)

Yeah, go ahead. I could see the wheels churning and I was entertained. Okay.


Jason Corsello (33:49.983)

So our best bet is this company called Nomi Health that many people don't know about, but it was founded by Mark Newman. Many of your listeners know and love Mark Newman. He was a founder and CEO of HireVue in most cases. They love Mark. You know, if you take out the AI kind of facial recognition stuff to the side. So Mark started this company called Nomi Health. It's disrupting healthcare.


Chad (34:02.825)

Newman!


Jason Corsello (34:18.503)

favorite business because I want someone to disrupt healthcare. And Mark's the right guy to do it. So on paper, that's been our best investment to date. It was our third investment. So Mark's made us look really, really smart with our own LP investors. Our worst investment, I don't know if we know that answer yet. And the reason being is that our fund is still five years old. You know, I wasn't going to answer this directly. But the thing, Joel, with seed investing is, you're going to be wrong.


probably 70% of the time, right? So there's probably not one that takes the winner. I'd probably put three or four in that category. And I think more so the lessons that we learn is that startups are freaking hard, right? And you get punched in the face all the time and you gotta get back up. And it's the ones that just didn't have that resilience that we can sniff out at that time of investment that have proven to be the worst. So I purposely dodged your question and...


Joel Cheesman (35:14.202)

I appreciate that.


Jason Corsello (35:15.583)

Yeah, we're going to be wrong a lot.


Joel Cheesman (35:16.974)

So give me one that got away. At least give me the one that got away that you said no to that hit it big.


Jason Corsello (35:23.464)

The one that got away. Well, there's actually two that got away, but this is before we started the fund. So before I started the fund, I was doing corporate venture at Cornerstone On Demand. And we launched a CVC and there's two investments that we missed. There's actually three investments that we missed. One was DeGreed. The second was Culture App and the third was Vizier.


Chad (35:24.062)

You know you wake up in cold sweat some night. You-


Chad (35:36.834)

Hmm?


Jason Corsello (35:50.579)

And I think in every three of those cases, I got outvoted because of the belief that we could build the products instead of investing into them. So another lesson that I've learned, right? Most incumbents do a pretty shitty job of trying to replicate or steal someone else's idea. So those are the three that kind of got away. Yeah. All right.


Joel Cheesman (36:03.103)

Interesting.


Chad (36:08.647)

Yes.


Joel Cheesman (36:13.45)

Not bad. A little bit of dancing, but not bad, Jason. That was pretty good.


Chad (36:15.298)

Very nice, very nice.


Jason Corse everybody. So Jason, if somebody wants to connect with you or I don't know have a conversation about how where they can send their deck Where can they do that?


Jason Corsello (36:31.171)

Yeah, so on our website, there's a buried link, but you can email it to hello at Akka Um, we tried to make it completely explicit or I wouldn't be able to, you know, go home at night because I'd be looking at so many pitch decks. Um, LinkedIn is always a good spot too. So we, you know, anything that comes in through LinkedIn, we'd look at it. May take us some time to get back, but those are probably the two easiest spots or, you know, have these founders go to you and you send on the warm leads to us. And then, you know,


Chad (36:44.142)

Breathe.


Jason Corsello (36:59.94)

We'll look at it much closer.


Joel Cheesman (37:01.346)

Nobody loves a juicy deck like Chad and cheese. That is another one in the can. Chad, we out.


Chad (37:01.484)

You got it.


Chad (37:05.715)

Oh yeah!

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