Episode 09 | Part One: The AI Guy

Gregory Shepard, an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, TEDx speaker, and Forbes author. This is The Boss Podcast with Gregory Shepard.

Thanks again for joining me for another episode of The Boss Podcast. Today I'm sitting down with Gary Fowler, the CEO and co-founder of GSD Venture Studios. He's a serial entrepreneur with dozens of startups and an IPO. Gary, we're connected on LinkedIn and the lead on your profile reads, global AI serial founder, co-founder, and billion-dollar company builder. The AI guy. Can you unpack that for us?

Yeah, sure, Greg. No problem. So I've done now 16 startups. I was on the original management team at Qlik Software. Which is a little company that came out of Haifa, Israel. And the company I was involved in the IPO of the company as a senior executive. That company was sold to Salesforce 13 months ago for a little over $1 billion. So learned a lot. I've also done Eva.ai, which is approaching unicorn status today. I started it 3 and a half, almost 4 years ago with David Yang, Globally recognized tech AI guru and serial entrepreneur. In terms of the AI side, I mean, I like to call myself a unicorn breeder now, Greg. I like to breed them.

Well, I mean, that's quite a track record. So I think you deserve that name.

I'll tell you, I've been doing this for over 30 years and I just love AI. I write a lot. I've written almost 80 articles in the last year about artificial intelligence. I'm just, enamored with it.

So what part of AI, you know, because AI is pretty broad, right? What do you, what do you focus on specifically in the AI world?

So what I like, what's really interesting for me personally, as a psychologist, is AI with emotions. What we're talking about is, you know, there's a lot of BS out there. People say it's artificial intelligence, but in reality, it's just algorithmic math.

Yeah, that's what you hear all the time. They go, it's AI, and it's just an algorithm. You're like, that's, that's not learning.

So I'm looking at really cool stuff like variational autoencoders, ladder networks, knowledge graphs, the real stuff. Because look at the amount of data, Greg, that's coming at each one of us every day. We're inundated. As Alvin Toffler said, it's infobesity.

Mm-hmm.

So, you know, you and I think about how many email addresses you have, 5 to 8, 5 to 10. Then you got Slack, Google Drive, WhatsApp, Telegram, WeChat, etc. And at the same time, the average person has about 300,000 items in their personal cloud. Well, in 1996, the entire World Wide Web was 257,000 websites. So each one of us, Greg, each one of us has more than the entire web. And that number is doubling every year. In 5 years with the Internet of Things, it's estimated that we each have 10 million items within our personal cloud. How in the world, with all this data, are we going to make sense of it? AI is the way to do it. And AI, as I've heard many times and I've said, is the new electricity.

Right. Yeah. I mean, I remember back in the day when you were looking at business analytics tool and everybody was talking about BI tools, BI tools and analytics and all that sort of stuff. And I was like, You know, right now, even right now, the amount of data that is in an average business and pulling analytics on that data requires a science, a data scientist. And AI is an automatic data scientist that learns from the things that you want to do and make sense of it. I think one of the big questions for people is, how is it learning and are we getting dumber as AI gets smarter?

Let's just, you know, I look at it this way. So I write about the positive aspects of AI as opposed to, Elon Musk. So what I say is that, you know, we need this. It's gonna inevitably happen and it is happening. It's like a lot of things in our lives that happen. It happens over time so we don't recognize it. You know, look at everybody's using Google.

Like boiling a frog.

Exactly. Look at Google, look at Facebook, look at all tools that you use in the day that are enhanced with AI. Look at the presentations. You look at something and all of a sudden you're getting ads, right? And you're starting to be tracked. So, it's happening. And what we have to be aware of is that in response to your question, are we going to get dumber? No. But what we're going to do is we're going to have assistants to help us work more efficiently.

And like computers did before computers, right? Computers came in and everybody was afraid and all of a sudden, hey, you know what? These things are great.

Exactly. And where would we be, right? Greg, in the beginning of the 20th century, when alternating current came out with Nikola Tesla, people were complaining it's not gonna work. You know, they were showing how bad it is. But look at how our lives changed 30 years after with the Industrial Revolution and the things that took— the advancements across the board, healthcare, manufacturing, et cetera, during that time. We're there today.

Yeah, well, not long ago, Analytics Magazine named you one of the top 10 artificial intelligence executives. That says a lot right there. And how, when you look at analytics and AI and the combination of these 2 things benefiting people, how do you put those 2 together? Because a lot of people think of analytics as more of an algorithmic process, and machine learning sits on top of analytics, and I'd like to hear your perspective.

Yeah, Yeah, I mean, it does sit on top. And what I'm saying is, look at all the data streams coming at us today. Everything, right? Your car, my bike, my new electric bike, right?

Yeah.

It's across the board. We got data streams coming at us. So it's not about collecting the data. It's about making sense of what you collected, right? And then more importantly, how do we make future predictions of what we should do? So collecting is great. Being able to categorize it is great, but then being able to make some intelligent decisions— not smart, intelligent decisions— on the data and have that system in an unsupervised way do it for us because it understands us that well.

What do you mean by not smart but intelligent?

Well, smart from my standpoint, you know, if we talk about smart, we're talking about something that collects the data, Analyze the data, but doesn't really make decisions based on that data. Intelligent systems make decisions, and we're moving from a semi-supervised to an unsupervised way. By that, Greg, I mean they can make decisions because they understand us that well, that are for the benefit of us and humanity.

One of the things, just to shift gears a little bit, one of the things that I found interesting when I was looking back on your incredible— I mean, 16 companies is just nuts. But I want to talk about GSD Venture Studios because you guys basically travel all around the world looking for entrepreneurs with really good ideas. Can you tell us a little bit about that and about the process that you go through to find these businesses?

Yeah, absolutely. So, GSD is Get Shit Done Venture Studios, Greg. And I named it—

I love that.

Because a lot of people tell you a lot of BS, but I mean, the thing is all about the results, right? And what we do is, you know, I started the first accelerator in Russia. And when I started that, people said it couldn't be done. But we took them to a certain level and they went through their ideation. They did some type of customer development, didn't really have a lot of revenue. And I said, okay, so we've accomplished one goal, but still 9 outta 10 companies fail. The next level of it we look at is if people having regional success, let's say you're in Barcelona or in China, or in India. That's great. Now you've proven that you've got some product-market fit, you've generated some revenue, but how do you go global? And Greg, today with the digital transformation and the challenges with COVID it's really hard for people to travel. And as you know, as an investor and a serial entrepreneur, you need trust. People that you trust, you invest in. People that you trust, you work with. So GSD, what we did is based on my experiences. So Eva was a company that started out of Russia. It was a development team out of Russia. I brought it over to Silicon Valley and then created a US corporation, Silicon Valley based. Of course, I still do a lot of R&D work in Eastern Europe, but the business operations are located in the Valley. And we do that for a reason because What we see is Silicon Valley is a port to the rest of the world, right? It is a place where a lot of investors come. In fact, up to 50% of the world's money that's investing is located there.

Sand Hill Road, baby. Sand Hill Road.

Exactly, Greg.

I tell people Sand Hill Road is like the Vegas Strip of venture capital.

Exactly. You know, I'm a country boy from Pennsylvania. I grew up in a little town of 1,000— a village of 1,000 people. I mean, this is pretty simple. If you wanted to go fishing in a lake, you went to a lake where there are fish, right? It's like simple, you know, KISS. Remember the KISS principle?

Keep it simple, stupid. Keep it simple, stupid.

Yeah. That's the way it is. So, I said, okay, if a company wants to raise money, we go out there. And then what we do with GSD, which is a little bit different, I actually will take operational roles in those companies— executive chairman, CEO, My partner will take a COO role. My strategy guy, who's a bestselling author, you know, started banks, Gus Budaverta, he'll take an O of strategy officer. And what we do is we actually help that company get funded, help that company grow through a Series A, Series B, and then find people like yourself, Greg, a lot smarter than us that can come in and operationally run the company.

I appreciate the compliment, but especially coming from you. I want to talk a little bit about your co-founder, Derek Disenfield, and finding the right fit for a partner. One of the things— I actually had 2 phone calls today with companies that came to me and they're like, look, I'm having a really big problem with my partner. I can't get it to fit. I don't know how to make it work. Can you help me with that? And you have a long history of working with people very closely and having these relationships work. And so you have some sort of a Midas touch with the relationships. And I'd like to get your input for the listeners about how you choose and develop a partnership.

So, I look for people that have characteristics and qualities that are different than myself that'll enhance it. And Derek's a very special case. So, Derek, actually, he was a Bronze Star winner for the U.S. Army, 3 campaigns of war. He was in 2 in Iraq and also 1 in Afghanistan.

He's a hero. He's a hero.

And I look for somebody, you know, the thing, grit, right? Are they willing?

I totally love that. I totally love that. The whole idea of grit. There was, there was a TED Talk about it and I was like, this is amazing.

Exactly. I mean, and so, you know, grit's important. And then somebody, you know, that's going to have your back if you're working on something together, somebody that's got your back. There may be something you miss and they know you well enough that they can help do that. I wanted somebody flexible. And of course, we're going all over the world. I mean, he spent a lot of time in Moscow. He's going to Seoul. I mean, he's traveling all over. Right now, he's in— actually in Miami. We're working on a project. And so I wanted somebody that is daring enough to get this stuff done, but smart enough to understand what's the right thing and really complements my expertise. So I'm operations on one side. On the other side, I'm creative and a visionary. And what he does is he really, he goes down through and he's like, I don't wanna say a bull, but he's like a bull without the china closet. He just moves forward. And, you know, Greg, with him, I said to myself, you would want a partner that is smart and somebody that's been in war that has been able to dodge bullets and come back has to be really, really good. And he's one of those people.

Yeah, for sure, for sure. So basically, the takeaways then would be to get somebody that is intelligent in the areas where you're weak so that they level out the playing field on the ups and downs of people's specialties. I always think about, there's this idea of the visionary and the executor. And it seems like when I look at businesses, there's always the visionary and there's always an executor. Do you agree with that principle?

It works. There's visionary, executor, and from my standpoint, I always also want somebody that's got deep, deep technical expertise.

Yeah.

Because if you have them, then I can come up with a great idea, Derek can go down through and make sure it happens, but you need somebody that's got deep expertise in areas, in our case, artificial intelligence, to make sure we're not spinning our wheels, that it's right. So I like to have that third person also. as part of the team that can make the vision become real.

In September, you wrote a piece for Forbes entitled, What Is the Difference Between Deep Learning and Machine Learning? And what I wanted to ask you is, what was the inspiration behind that piece?

You know, Greg, it's really interesting 'cause that was the most viewed article I've ever had.

Really?

Yeah, I mean, I just like, I was on one of the podcasts And somebody mentioned it, and I just said I'd write about it just because. I didn't realize it was going to get that many views. The inspiration is we don't understand artificial intelligence. We don't understand the difference, and people use the terms loosely, and they better get up to speed because, Greg, I think in another couple years, the companies that don't know how to utilize artificial intelligence, machine learning, deep learning, neural nets, are gonna be close to being out of business.

Yeah, it's like robotics, you know, it's like deep code robotics. You know, these things are automating things like factories got automated through robotics. And these 2 things are blending together and creating an entire new world. In a lot of ways, I agree with you. It's really, really, really beautiful and it's changed things dramatically. And in your LinkedIn profile, it says your first job that you listed in 1986 was a sales job for HP. And you've often said that building a successful business is nothing like what it was in the past. I'm assuming that some of these things are related to the impact of AI and all of its siblings. With that said, what are some of the biggest changes you see today and how should entrepreneurs react to those changes?

Well, look at what's happening to us. I mean, 8 months ago, if people would've said that we would be using Zoom as much as we are today, We would have said they were crazy. And this digital transformation and COVID has impacted us, and it's not over, Greg. We probably got a year, year and a half, maybe more to go through this. So utilizing that technology to be able to help us run our businesses better is critically important today. So things like VR and AR and all the technologies that can help make things like Zoom better, are really important for us. And also, how do you manage your remote workforce? When I co-founded Eeva 3 and a half, almost 4 years ago now, we looked at it. First, we were Google-like search for the personal cloud. Then, we're a task assistant. And then, I took the company and migrated to remote workforce management. But Greg, this is over 2 years.

Wow, 3 pivots. Wow, that's fantastic.

Well, I mean, the thing is people want it. You know, they don't understand their data in their personal cloud, but they're not willing to pay for it because Google gives them stuff for free. Didn't work. Second was, is we had a smart task assistant. Well, companies like Google were starting to move that direction. I figured I couldn't compete. So I took the same kind of things that I call these transportable AI models, moved it from a Google-like search for the personal cloud task assistant to remote workforce management. Who would have known, Greg, that the business was up, you know, 38 times more inbound inquiries once COVID started? It's crazy.

That's amazing. I mean, 3 pivots too. That's, that's a, that's, that's a lot. I mean, it, and it says a lot about the speed of business today, right? If you have to go through 3 pivots just because things are just coming on so fast and you have to, you know, sort of dodge the bullets along the path, that says a lot. How did you actually go through the pivots? This is a question I get a lot from listeners in terms of, you know, what do I do when something happens and I need to pivot? How do I think through the pivot itself and how do I educate my investors on why this is happening? What did I miss and why should they go along with me on the pivot?

You know, I was really fortunate because my partner is a serial entrepreneur billionaire, yet he's down to earth. And so what happened is we went down through pivot number 1, We understood that we weren't going to be able to. We had about 157,000 clients, but we couldn't get them to convert to pay. So, you know, I'll never forget 25 years ago I met Bob Dorf, who wrote the book The Startup Owner's Manual with Steve Blank. He talked about customer development, and in the business school in Russia, Skolkovo, I used to go down through and teach the startups that you need to use that. You need to figure out, are the customers really willing to pay for it? And if they are, how much are they willing to pay? So with First Pivot, we just went out. I literally went down to Palo Alto. I would meet people in cafes. I took my iPhone, a little stand. I would show them a presentation. Remember, fake it till you make it. And they would look at it and I would say, what do you think? And I would get their feedback. And I took that feedback and I gave it back to my engineers over in Russia. And in the US and let them say, hey, listen, this is what the customer's talking about. So I did that. You know, use customer development. Don't spend all your money because if you start to believe your own BS, then you're wrong. You may think—

Yeah, for sure. Right. You can't drink your own Kool-Aid.

Exactly. And so customer development is key. At the point that the customers are talking about you and willing to grab it out of your hands, you know you nailed it. But if that's not happening, not only willing to grab it outta your hands, but pay money, pay money.

So the customer feedback, this is a huge thing. I think a lot of people forget that in the end, the customer is the ultimate decision maker. You have to be able to present it to the customer and have them convert. This freemium model has revealed a lot of flawed models. And so you just gave everybody some advice on how to fix that by going directly to the customer and ask them.

Yeah, I mean, you gotta ask, are you willing to pay? This is like Sales 101, right?

Yeah.

Are you willing to take money out of your pocket to pay for it? Yes or no? If they say yes, then you got something. Then the other key is, are you charging them enough? Have you gotten to the point, you know, is it $5 a month? Is it $20? Is it $40? What kind of features are they looking for? So that's where it starts getting really interesting and you iterate and iterate to get to the point where you've really figured out I've got product market fit. This is what I've got for this audience and they're willing to Yeah, that's pretty awesome.

I can keep going, but I have to take a break. Coming up in part 2 of my interview with Gary Fowler, the CEO and co-founder of GSD Venture Studios, Gary talks about what he thinks entrepreneurs need to succeed.

Do your customer development and do it before you invest a lot of money, because if you don't, you could go out of business.

Thanks for checking out The Boss Podcast, with Gregory Shepard. Get more on Greg's Business Operating Support System, BOSS, at GregoryShepard.com. This has been a production of Forbes Books Radio.