Building Systems for Business Growth with Gregg Bauer

Welcome to the B2B Growth Blueprint podcast, where we talk with entrepreneurs, founders, and leaders at B2B services, tech, and SaaS companies to learn the systems and processes they've used to create success for their business. We'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne, and the podcast is brought to you by Modern Revenue strategies and their 10x ROI B2B growth guarantee. Schedule a free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days. Hello and welcome to another episode of the B2B Growth Blueprint podcast. I'm your host, Mark Osborne, and today I'm very excited to welcome my guest, Greg Bauer. I'm gonna read his bio to make sure I get it right because he's done a lot of really exciting things. Greg is a co-founder and senior partner of Scale Up Labs. Scale Up Labs is an investment firm and venture builder headquartered in Boston, Massachusetts, but with offices in Colombia, Chile, and Italy. And actually, Greg is joining us from Colombia today. So we'll talk a little bit about what he's doing down there. Scale Up Labs focuses on AI-first companies in the advanced manufacturing, health tech, energy, and connected devices sectors. They identify and develop promising international tech companies through their Scale-Up LATAM and Scale-Up Europe acceleration programs. So we'll talk a little bit about those as well. The selected companies are further developed by their US-based Scale-Up Venture Studios to enhance enterprise value creation and exit potential thereby providing superior returns for their investors, founders, and stakeholders. Greg's a lifelong startup entrepreneur, having been a co-founder of 3 successful startups with 3 exits, one on IPO, getting prior to getting involved with the Scale-Up Labs. Greg serves on the Board of Visitors for the Russ College of Engineering and Technology at Ohio University, as well as the Advisory Board for the Department of Electrical Engineering and Computer Science. He holds a BS in electrical engineering from Ohio University and an MBA from the Wharton School at the University of Pennsylvania. His philanthropic work includes being named a longtime senior mentor of the Hult Prize in Social Entrepreneurship, which is very exciting. Hopefully we'll get a chance to talk about that, and a pilot for Angel Flights, which provides free private air transportation from remote areas to health centers in Boston. Greg's work has been highlighted in CNBC, NPR, the Boston Globe, the International Herald Tribune, Fortune, and numerous international outlets and conferences. And today on the B2B Growth Blueprint podcast. So Greg, I'm so excited to welcome you here today.

Thank you, Mike. It's really a pleasure to be here. And of all the publications and so forth that you mentioned, the B2B Growth Podcast is the epitome of that.

I'm sure it's a You can retire after this. You go out on a high note.

I'm counting on it. I'm counting on it.

So Greg, you've got obviously a super exciting background and lots of interesting stuff. Tell us a little more about Scale Up Labs. And it's such an interesting dynamic. You're in Colombia, but you're making investments as companies are moving into the US. And tell us all about that.

Well, it's— let me see if I can make it really succinct and try to simplify it down. Scale Up Labs is, as you said, is a venture firm investor. and a venture builder headquartered in Cambridge, Massachusetts, which is a suburb of Boston where MIT, Harvard, and so forth are. The Scale-Up Labs operates in 3 lines of business. The first line of business is our accelerators. As you mentioned, we have international accelerators operating here in Latin America, as well as in Europe, soon perhaps to be in Israel, where we take promising international technology companies and give them a path to scale their businesses internationally to the United States, which is very important for them and actually very important for the US economy and their local economies. That's our entrepreneurial community that we serve. That's one community, that's an innovation community. The second community we serve is the capital communities. Those are the capital investors that are looking for really exciting technology companies and other companies to invest in. and looking to— and don't have access to the sourcing directly that comes from these emerging or underserved markets in Latin America and in Europe. And we serve that through our venture fund, which is located in Chile, our venture operations located in Boston, and our broad community of investors that we support through our Venture Partners Network. So that's our second community. And the third community we serve is this community of corporations which are looking to access innovative technologies and have a difficult time developing them in the way they'd like to themselves because of the profile or the way that they approach risk, which is very different than the entrepreneurial capital communities do.

Uh-huh.

So they really like to have access to the entrepreneurial community, but very often don't have direct access. So that's our third community we serve. that through our advisory line of businesses. And together, if you picture those as a Venn diagram, right there in the center is the opportunity space where innovative technologies, capital, and corporations all come together, providing an opportunity for these companies to blossom, grow, gain in enterprise value. And that's the space we serve. And we service that space through our Venture Studios, where we take, as you said, very selected companies and provide them a— an opportunity to have experience, support from very knowledgeable entrepreneurs, access to capital, access to market, and most importantly for the investors and for the founders themselves, and access to exits. So that's the— where obviously you get a return from all these things that you do.

Yeah.

So that's what we do at Scale-Up Labs, and our differentiators, quite frankly, are The international sourcing that we do between the US— or I'm sorry, between Latin America and Europe— and the approach we use within the studios themselves in order to create value in the studios.

That's really interesting. It's such a sort of dynamic landscape to bring all of those, you know, as you said, that overlapping Venn diagram. You talked about sort of that unique approach. of how the studio helps these companies grow. And you and I chatted about that a little bit before. Tell us a little bit about specifically that approach and how you create that value by helping these companies expand in the US market.

Sure. Well, the companies that we would source and consider for inclusion in the studio come from 2 sources. The first source they come from is our acceleration programs, the ones that I mentioned, the Scale-Up LATAM and the Scale-Up Europe program, where we're finding companies in these underserved markets that are solving international problems, bringing really innovative solutions, have the potential to attract international capital, and have a desire to expand into the US market, which is a much larger market.

Uh-huh.

And where capital is applied very differently than is traditionally applied in these other markets. and put them through the acceleration program, which prepares them for that internationalization expansion that they look to do. The second place we source companies from for the studio is our own originations companies that we are founding ourselves because at our core, we are investors second, entrepreneurs first. So we still, all of us are lifelong startup entrepreneurs and founders. So we continue to found companies ourselves that we think are complementary to those 4 areas that we serve. And what makes the studio piece different than what would be in a traditional studio, not unique, but different, somewhat different, is the fact that most studios will take an origination, support it with experienced entrepreneurs and capital, and take it from ground zero to hopefully to finish and exit.

Right.

What we do is we use a method that we call catalytic combination, where we'll take a company that we've— let's use an example— a company that we would find here in Latin America that is really strong, really performing well in their home market, looking to expand, but nobody ever has everything that they completely need.

Right.

So we will— but it's a really solid performing company with performing solutions. We'll take that company And we'll find, perhaps find a company, and I'll use the example of Europe, maybe a company in Italy or maybe a company in the Netherlands or Spain. It doesn't matter where it comes from, who is doing something similar to Company A from Latin America, but not exactly the same, but not exactly the same thing, and has things that are within what Company A needs.

Hmm.

Doesn't have, and Company A has things that Company B let's use Spain as an example, has but needs. And both of them are aspiring to expand into the larger US market, which is the largest market in the world at this point in time for most things.

Sure.

And so we bring them into the studio and we strive to put them together in a catalytic combination where we'll take Company A and Company B, put them together, Form a new entity that emerges from those 2 that is the sum total of the 2, but more.

Right.

We don't want 1 plus 1 to equal 2. As investors, we want 1 plus 1 to equal 3 or 4 or whatever it can potentially equal. Apply some knowledge and experience to it, recap it under a new cap structure with money that comes from our own funds as well as synthesizing capital that comes from the capital markets. This is why our capital community that we serve is so important. Synthesize it and provide it the support it needs, we hope, to increase and to develop value faster than Company A or Company B could by themselves.

Right.

And that they can without some of the experience and knowledge they have. So in the investing business, of course, you're always driving to create enterprise value and create an exit in a time that was within the life of the fund and the expectations of the investors, otherwise known as the LPs, whose money they give us to manage on their behalf, which is what a venture firm does. So consequently, the startup of the studio is our value creation model. mechanism and the catalytic combinations is our value creation model that we use.

Wow, that's so interesting. And you also talked about that, you know, one of those communities that you serve are, you know, corporations that, you know, oftentimes are structured to risk a little differently than entrepreneurs are. Are there ever opportunities where those corporations are looking for innovation and will use scale-up labs as a way of sourcing that innovation from Other places?

That's exactly what happens, is the advisory business advises those corporations on approaches to innovation-driven growth. And so as a result, we've either helped them to develop their strategies or we know what's on their strategic roadmaps. And so many times what's on their strategic roadmaps may not actually exist yet. So by knowing what's on their roadmaps and sourcing from these international markets, which are less— which are unique to serve, take special knowledge to serve them, quite frankly, and the catalytic combinations, we can create things. And also by applying perhaps originations from ourselves, we can cause things to catalyze that we know are on the strategic roadmap for those corporations. So consequently, the corporations then have a means by which to affect an outcome within a risk profile that is acceptable to them. So they're not taking the heavy part of the risk. The venture capital and the entrepreneurs in the studio are taking the heavy part of the risk. The corporations can then be the benefactor of that of that combination over time. The corporations in the meantime can support that by applying capital to the fund— funds, which they do, by applying sometimes technology or know-how, which they have, and often by applying markets, which they have access to in a unique way that the entrepreneurial startups or early-stage companies wouldn't have access to. So it becomes a The 3 communities become a symbiotic relationship where everyone exists to the benefit of the others and the studios are that where that happens.

So such a, such a, like I say, such an interesting sort of ecosystem. So I'm gonna switch gears a little bit because you've got such an interesting perspective because you've, you know, worked with startups in lots of different markets and you've seen all these different challenges. You know, we work with, you know, companies that are, you know, trying to get, you know, from that kind of initial founding stage into sort of that growth stage. And oftentimes we see some of the similar kind of issues that sort of exist between different companies at a similar size. I'm wondering, as you look at, you know, companies in Latin America, those in Europe, those even in the US, Do you see similar challenges that companies are dealing with from that entrepreneurial journey or are there differences between the different markets? I'd be curious to know your perspective there.

How long do we have for this call? There are certainly similarities and there are very distinct differences. And that's why we spend as much time in the in the international markets as we do so that we can in fact integrate and understand those differences. And the international markets, the differences are twofold principally. One are cultural differences in terms of the way they approach business and an approach to risk and an approach to failure, interestingly enough, because failure is, failure is something that is ever-present when you're doing a startup business. And so it has to be accepted and you have to understand that failure is not a bad thing. Failure can actually be a good thing.

Right.

So cultural differences and so forth are important and the way capital is applied in the international markets tends to be somewhat different than the way capital is applied in the United States market, which has a much higher risk profile in general than the others do. The things that tend— that companies tend to struggle with, regardless of where they're coming from, companies tend to struggle with strength of management team and perhaps management team issues. That's why when we're considering an investment or we're considering a company for programming through one of the studios, management team is the first thing we look at and the last thing we look at.

Yeah.

way more important than the business plans. So particularly in these early-stage companies that we like to work with. So that's point number one that's often— they often tend to struggle. They all struggle with capital, of course, because there's never enough. There's hardly ever enough gas in the tank to get the car where it wants to go. So there's always a struggle with capital. There's struggles oftentimes with product-market fit. Fit and making sure and understanding that— and I'll use the United States for this example— a product that you build to fit into the California market could be very different than how it's going to fit into the market in Georgia. Because the United States, again, this is something that when you consider the United States from the international perspective, such as here, People tend to look at the United States as a monolith, and it's not. The United States is a series of many, many different markets. So understanding market and understanding product-market fit is critically important. And then the other thing is the hardest thing that entrepreneurs deal with everywhere, and it's really— it sounds simple, but it's super complex. And when we're talking to early-stage entrepreneurs, or when entrepreneurs are coming through our programs, our acceleration programs, the things that we will always ask these entrepreneurs that there's— what are the 2 hardest questions you can ask yourself as an entrepreneur? And there's only 2 questions that you have to ask, and there's only 4 words in the 2 questions. And the 4 words— and the 2 questions are So what? Who cares? And, and those— in order to be successful, you have to be able as an entrepreneur to look yourself in the mirror and honestly answer both those questions. Because just because you care doesn't mean that I'm gonna care, or doesn't mean that he or she is gonna care.

Yeah.

So what? Who cares? And in order to answer those questions honestly, Mike, you have to be willing to admit maybe that your baby is ugly.

Yeah.

And nobody wants to admit their baby is ugly. So that's, you know, that's usually a big hump that we have to get the entrepreneurial teams over because of course they care. They're doing it. They're devoting their lives to it. They're applying their savings to it. Their family lives are suffering as a result of it. So they better care. But it's really hard to admit that maybe somebody else doesn't.

So, you know what though, that's such a, it's very insightful because the so what like really gets to like their value proposition and, you know, really gets to the core of, you know, the value of their offering. And then the who cares, that also is very strategic in terms of, you know, you talked about that product market fit of identifying who are the people that care the most that are gonna be willing to pay. And, and sort of really defining that market niche is by understanding, well, who really cares about that? Like, both of those are very, you know, meaningful and, and powerful questions to answer.

That's why those are the 2 most important questions. And it's funny, you just have to answer them.

I actually thought you were gonna go with 4 other words. It's also 2 questions that one of my, you know, entrepreneurial mentors said, which was, and they're a little bit different. It was why you and why now? And so it kind of got to the same idea of You know, why you, what unique either capability or insight or ability to leverage a market, you know, condition do you have or your team or your solution have? And then why now? Like, what's the sort of precipitating event? Why doesn't it, if it's such a great idea, why doesn't it already exist? And what's changed in the landscape?

Those are 2, those also are very good questions. And you open 2 interesting points. If I can take us down those for a second, you open 2 interesting points. The why you, and you said unique, and that's one of the things that we struggle with, with particularly earlier entrepreneurs sometimes is they say we don't have any competitors.

Right.

And when somebody says, and so we're completely unique, that's why I was careful to say our studio is not unique. Our studio may be different, but it's not unique. We're not, because the fact of the matter is, is there's billions of people on this planet and many of them are smart. And you can guarantee that, or most of them are smart, but you can guarantee that if you have an idea, there's at least 1,000 other people out there that have had the same idea.

Yeah.

And some of them may have even tried it, and, or they may be trying it differently than you. So don't say that nobody's ever thought of this before because they have, right? And you can learn from them. So if you're willing to adjust your ego appropriately to learn from them.

That's right.

So that's point number one. Why now? That's another interesting point because as one of my business partners, one of the original founders of the precursor company that that one of the precursor companies became Scale-Up Labs, this company called Scale-Up or Spinnaker Venture Partners. Mark is also a serial entrepreneur. His name is Mark as well. He's also a serial entrepreneur. And Mark likes to say that he's got boxes in his garage of startups that he tried or we tried that didn't work.

Yeah.

And that is absolutely true. However, because not everything works. However, sometimes now isn't then, it's now. So we've found, interestingly enough, that sometimes we'll go back 4 years later, 5 years later, 3 years later, take the box out of the garage and find out, well, it works now. It didn't then because it's things that the situation has changed.

Exactly.

The world has changed, technology has changed. So Both those questions are also really important. Sorry to digress, but you— Oh, super interesting point.

Well, and that idea that, you know, an idea that was, you know, we've all heard of the idea ahead of its time, but to have sort of the forethought to think about putting it on, you know, in a box in the garage until it is the right time and then bringing it out is really interesting. So you talked about something earlier I wanna kind of click back into. So we do a lot of, you know, sort of helping our clients grow through systems and sort of like building systems and systems that help them, you know, kind of find their best selves or always bring their best selves. And one of the sort of areas that we work on systems a lot is around this product market fit idea. And you talked about, you know, working with companies, you know, coming into the US and finding that product market fit. And maybe it's different for California versus Georgia. And I might, you know, take that example and in a B2B context, you know, maybe it's different for large enterprise versus small. A lot of companies like they haven't thought about that. They're like, this is a business problem. We solve it for any business that has this problem. And then they struggle to find that fit until they say, well, actually, we're really designed for mid-sized enterprises as defined by this number of employees and this number of offices and this number of line of businesses or this number of revenue. Once they start to get really precise on that, then they start to customize their solution in a way that allows it to find a lot better product market fit. So I'm curious, what are some of the successful strategies or tools, processes that you've used and seen work really well As you're helping companies, you know, move into a new, you know, very large, widely defined market as the US, as they find that product market fit, what are tools that they can use to do a better job of, you know, drilling in on that exact fit?

Well, again, there's a whole series of tools that are used in order to do that. And some of the tools that we have used ourselves and used in the program would be things like persona, is identifying the persona of your buyer and/or potential buyer and defining that persona really, really well, or personas. There's usually more than one.

That's right.

And depending upon what you're trying to sell, as a startup, whether it's a simple sale or a complex sale. If it's simple, if it's a simple sale, if it's a, if it's a B2C or B2SB, that persona may only be one persona because that's— if you're producing something that's an enterprise-level type product, you'll have many personas that are involved in that. And all of those personas have to be addressed and satisfied. So that's tool number 1. Another tool that we like to use is something called jobs to be done or jobs and outcomes. It came out of Clay Christensen's research at Harvard, and you may be familiar with jobs and outcomes or jobs to be done. And that's an analytical approach to understanding why does somebody buy your product?

What are they—

What are they hiring? I think the best way of putting it is What are they hiring your product to do?

Yep.

Because they're hiring your product for a job. So why are they going to hire it? So understanding jobs to be done is another framework that we really like to use in that sense. And then as you're entering a market, once you understand some of those things, there's other things. And again, we don't have the time to talk about them all, but the The other thing that we like to use when you're entering a market is what we call beachheads. What was that?

Beachheads.

Okay, beachheads.

So like establishing a beachhead.

Yeah, establishing a beachhead like they did when they took Normandy. That's right, that's right. That was storming a beachhead. Well, this name comes from that concept, but many things in business actually do come from war theory.

That's right.

That's right. But it's, it's, it's who— where is your beachhead? If you're looking to enter a large market, where does your product fit best? Where are, where are your potential customers likely to aggregate? Who are the people that you can engage with or organizations that you can engage with in that beachhead that are going to help you to establish that? So it can be a partnership, it can be a distribution relationship, it can be a corporation that says I need this in order to complete my solution. So they become a B-chain. It could be a corporation in and of itself where you sold your solution. Let's assume you're using— you've got a large enterprise solution.

Yeah.

And you sold your solution to a division of— we actually have a couple of these, and I'll use one that I won't name names, but I'll use one sector. They sold their solution. It's an artificial intelligence solution to a division of AB InBev.

And that's—

Here in Latin America. And as you know, AB InBev is the largest alcoholic beverage manufacturers in the world. And the, the AB InBev here in Latin America became very loyal and very much loved the solution that, that the company was providing. And so they used AB InBev Latin America as their beachhead to enter AB InBev in other parts of the world. So AB InBev has been their beachhead market. And it carried them to the US and it carried them to Europe and it carried them to Turkey and it carried them to South Africa and it's carried them all these different places in the world as AB InBev. So a customer can actually also be a beachhead. Yeah. So there are so many different ways to approach this, but those are the ones that, as we're sitting here within the time we have, come to mind that I would talk about.

Sure. That reminds me of the concept from Geoffrey Moore's, you know, Crossing the Chasm where he talks about like a bowling pin strategy. And we use this a lot for, you know, again, niching down really small, but thinking about, well, what are the sort of ancillary or tangential markets, niches that you can, once you conquer this one, you can then move into the next ones and then expand out so that you're constantly sort of increasing your influence. That's more of a kind of market definition, but I love the concept of beachheads as, you know, like a partner or an organization or a way of defining that. And also so great to hear you talk about the, the jobs to be done framework. We use the, the value proposition canvas you're probably familiar with from, you know, sort of agile models where it talks about both the jobs to be done, but then also like the, you know, pains relieved and gains created. And helping companies really understand not only what are the most important jobs to be done, but what are those most salient, you know, pain relievers and gain creators that are unique or at least different about a particular company as they craft that positioning.

You know, there's so many frameworks that you can use and that one, I'm very familiar with that. We use the Business Model Canvas sometimes, which comes from The Lean Startup or The Lean Business Model. But there's many canvases that you can use. They all have their own, you know, pluses and minuses and so forth. There's one thing that runs common across all of them and in their application, and that is you're doing your homework. Yeah, doing your homework and you're systematizing. You're not saying I'm just gonna run into a market.

I'm gonna figure it out. Yeah.

I'm gonna Throw it out in the air, you know, it's this, it's, I call it the ready, fire, aim.

Oh yeah.

Is ready, fire, aim guaranteed you're always gonna shoot behind the duck. You gotta hit in front of the duck. And the only way to understand where the duck is gonna be is to do your homework. So this is where I often will, we will often talk about failing fast is wrong. I said we need to talk about failure. Failing fast is wrong. Failing fast is catchy and it sells books.

Sure.

And failure is a key part of building a business, but failing fast is not what you want to do. You want to what I refer to as fail simply, fail efficiently. What does that mean?

Yeah.

That means that you fail, that you do your homework, you make a hypothesis, And you try to execute that hypothesis and you see what worked and you see what doesn't work and you come back and you refine your hypothesis and you take it through again. It's almost like the spiral business model for software development except for business and you don't consider it failures.

That's right.

Because you are failing, you're failing, but you're learning from each one of those failures and you're not failing catastrophically. If you fail fast, you're likely to fail catastrophically. And almost always because you didn't do your homework. So this old adage of start slow to finish fast is really a true adage that I think is an important thing to apply when you're doing it. And also recognizing that, particularly here in Latin America and Europe, failure is considered bad. And if you fail, you want to go hide. You don't want anybody to know you failed. I mean, there are venture firms, and particularly in California, that won't fund a founding group unless the founder has failed at least once because they know they won't make the same mistakes again.

Right.

So recognize that failure, as I said earlier in my opening remarks, failure isn't a bad thing. Failure is a fact.

Yeah.

And accept it and relish it. And, you know, I call it, you know, you have a hypothesis for dog food. Well, first of all, walk around and see if any of the dogs are hungry.

That's right.

Dog food, walk around and see if the dogs are hungry and kind of look at what the dogs like to eat. And then you say, oh, that's interesting. Okay, I've learned something. Then you make a batch of the dog food and you see if the dogs eat it. And if the dogs eat it, you know you got something right. If they don't eat it, you say, well, I must not have gotten that formula quite right. So they make a new batch of dog food, but at least you know the dogs are hungry and at least you know the dogs eat and you'll eventually hit on the right formula for the dog food and that forms the basis of your business. So that's my dog food analogy for doing your homework.

That's great. So much great wisdom you've dropped on us here today, Greg. And, you know, we could talk all day, but I gotta be respectful of your time. For folks that have been, you know, sort of listening to this and, you know, are super interested in Scale Up Labs and wanna know how to get in touch with you, what would be the best way for them to get in touch?

Well, the best way is, well, you can get in touch via our website, which is scaleuplabs.bc. You can reach me through LinkedIn. My LinkedIn profile is Greg I don't know what my profile is. Whatever it is, I can share my LinkedIn profile and you can put it in the podcast or put it in the show notes. Yeah. And/or my email, which is gvauer@scaleuplabs.bc.

Fantastic. Well, Greg, thank you so much for your time with us today. I learned a lot and really enjoyed our conversation. I'm sure our audience did too.

Mike, thank you. I really enjoyed our conversation too. It's been a lot of fun and certainly wish your audience all the success as they're forming their businesses and taking them forward. Entrepreneuring, startup entrepreneurship particularly, is a very exciting journey, not for the faint of heart, but it's a very exciting journey and I wish you all the very, very best of luck. Luck and good fortune.

Thanks again, Greg. Hasta luego.

Hasta luego. Hasta pronto.

Thank you for joining this episode of the B2B Growth Blueprint podcast. We hope you've gained insights to grow your business. If you enjoyed this discussion, please rate, comment, like on your favorite platform, and share to others who will find it useful. Do you know a If you know a CEO, founder, or leader at an early-stage B2B services, tech, or SaaS company who would like to be a guest and share their story, send us a note. Let's schedule a conversation.