Founder Readiness: Measuring the Leadership Risk Investors Miss | Logan Yonavjak | 716

And welcome, welcome, welcome. This is Peter Winick. I'm the founder and CEO at Thought Leadership Leverage, and you're joining us on the podcast, which is Leveraging Thought Leadership. Today my guest is Logan Yanovyak. She is a financial services professional. She's a social entrepreneur. She's an author. She's an angel investor. And has just a really interesting background, which we'll, we'll get into here. So welcome aboard, Logan. How are you?

Thanks so much, Peter. Great to be here.

Thank you. So how did, how did this happen? Because as one of the things I find in, in doing the work that I do is it's usually not linear, right? It, you know, you ask certain professions like, oh, how you got here, and you can kind of figure out the answer. But how did, how did all this happen? How'd we get to be here today?

Yeah, I think the story is actually a really interesting one. And to your point, not linear. And there's a through line, but I wouldn't say it's been linear. So my original career interest was actually being a psychotherapist when I was in high school. I was very interested in Jungian psychology and understanding human motivation and potentially doing the therapy route, maybe even clinical psychology. And I got really persuaded by the environmental movement, uh, early in my career. I was, I grew up in North Carolina and there's a lot of sprawl development where I grew up. And I was introduced to a lot of topics around climate change, et cetera. I did a wilderness, uh, 3-month wilderness course out of high school. So I was sort of exposed to conservation work and I decided to take my career in that direction because I felt that it was. It was an imperative for me. I felt very drawn to supporting those efforts. And so I took a financial route, basically thinking if I can help direct more capital to land conservation, to climate change efforts, then perhaps I can have more of an impact that way. So I learned how to be a financial professional, an investment professional. I went to business school. I worked for several private equity firms, and then kind of started making my way to earlier stage investing and, um, more startup work. I started finding that the technology, the innovation that was around climate, that was in climate tech or ag tech, forestry tech was more of my interest. And then it, a lot of where I'm at right now came from observation about people and teams. And so, I found that a lot of the teams I worked for were functional and some of them were dysfunctional. There was a variety of different leadership styles that I thought were useful or not aligned. And so, I kind of going back to my original like high school interest, I thought, is there a way that we could leverage leadership analytics and people analytics in a more effective way to create innovation teams, to create leadership, uh, constructs that would actually be more meaningful in seeing some of that.

But so say more about the analytics piece, because I think oftentimes when we're talking about sort of people analytics in HR, in the workplace, it's things like stack ranking or efficacy, or, or it's, it's, it's somewhat heartless, if you will, and a little like, eh.

That's an interesting word. Yeah.

But that's not the angle that, that you're taking at this, right? Like, so what is the lens by which you're looking through sort of the leadership analytics? Because yeah, team efficacy is typically a people issue, not a numbers issue.

Yes. And so I would say, well, our, our lens is leadership capacity and human development. Okay. So the body of work that we're drawing from is very much on adult, it's called vertical development. And so it, it shows patterns in how people evolve and how they think, behave, and act over time. And there's really an evolutionary process that happens within the psyche. And we're measuring where someone's at in that process. And it's a very holistic approach. And, um, we've honed it in for the context of business and leadership, primarily for executives to see how they're gonna think, behave, and act under pressure and with complexity over time. And we're making the case that, you know, AI is bringing in even more complexity into our, our system.

Sure.

And so by identifying leadership, uh, leaders that are, are really able to manage this level of complexity, we can have hopefully better leadership at the helm that can then drive better innovation outcomes.

Very cool. So then take me to the book then. Then there's a book. Like there's, 'cause you, you don't have enough going on here? Like how do you—

Oh, we, well, I have, I've been a published author in the past, but we, we, we would love to publish. We're at the begin, you know, more beginning stages of our startup. So, um, I think the thought leadership pieces are coming together, but we are, that'll be in the future.

Got it. Okay. So what does it look like in terms of, you know, we had, you've got the Founders Readiness Institute. So to me, that sounds somewhat self-explanatory, right? Because a founder goes out there and the typical path is a founder or two come up with ideas, concepts, minimum viable, then they go to shop the market. And usually the, you know, the investors are looking at probably more than two things, but if we simplify it, they're looking at like, wow, this is a cool idea. And do I trust these people? Do they have the capacity, the ability, the— to become what they don't know they need to become. If this thing is to work the way they'd like it to, right? Because I, I would argue that most people don't become a founder and say, and you know what, in 2 years I'll be a total jerk, or I'll be a raging narcissist, or whatever. But like, if you've been on the other side of it, you're like, okay, what are the things that we could look out for? So I love this concept of founder's readiness as a concept, right?

Yeah, it's like, um, risk flags and markers. Like any, you know, when you're forecasting any business plan or, or product go-to-market strategy, there's going to be risks involved. And so when someone's trying scale alongside their company, you know, they might start off at a certain level of development and they're gonna be asked and pressure tested over time. And there's gonna be cracks that, that show up that might have been more visible if you'd looked earlier on. And that's what we're making the argument you can do is actually see some of these patterns emerge through our transcript analysis, um, that you can watch over time. And then ultimately, if you wanna still make the investment in the team or, um, the team wants to work on themselves, there's a pathway, there's a roadmap, and I don't think most leadership analytical tools offer that roadmap as much.

It's really a, a, a risk management issue from the standpoint of the investors, right? Because too often the founder or the founders implode or just don't have what it takes to lead a 1,000-person team when they could lead a 7-person team or whatever, right? So it also sounds like it's not destiny, right? Like if you, if you pick up these things on the, uh, uh, assessments and stuff that you're doing, people could be aware of their weaknesses and work on those. Is that—

Yeah, that's the idea. I mean, I think it's also not that lower stages of development are necessarily bad. I think it's where people are and recognizing where they might sit in the trajectory of a company development too. Like those who are more execution focused, you know, and, and have, um, a certain level of development and coachability or purposeful agility, which are two things we measure, they might be fine at the very early stages, but then they need to be, um, you know, a new CEO or a new team needs to be brought in for that scaling portion. And so there's all sorts of ways to think about it, but we're, we're measuring 6 different dimensions just to love it, ground it a little bit. Yeah. We, we pulled these from the research. Um, my co-founder is a, a psychologist and data scientist. And so he's, he's been studying this, uh, work for 25 years. And with AI, we're now able to do a lot of automated analysis. But we, we culled the literature looking at, you know, which constructs are really identified as predictive, more predictive for future startup success, things like follow-on investment.

Stay, stay there for a minute. So you, from a validity standpoint, you know, there's science underneath this, right?

I'll just, oh yeah, absolutely.

Right. So there's, we know what the 6 are and we know why we pick those 6 as opposed to 66 others that we could have picked, et cetera. But now I want you to sort of— you're wearing two hats, right? You're the thought leader and you're the CEO in this entrepreneurial venture. So now you've got it. And I think oftentimes— not oftentimes, but there are times where someone comes out with something and it's a solution to a problem that nobody cares about. How are you validating it in the marketplace that actually you've got the science? But just because you have the science doesn't mean there's a market for it.

Oh yeah, absolutely.

I mean, how are you testing that to go, okay, I've got the goods, Is this a problem that needs to be solved that someone would pay money to be solved, that, that I need to position in a certain way just to have the conversations? 'Cause it's not like you're in a space where somebody's looking for, okay, I need a founder, a founder readiness assessment per se, right?

Yeah. Well, you do a couple things there. I, and I'm very transparent about these things. I appreciate the, you know, business side of this because yes, you can have, and this happens all the time, like founders fall in love with their product and it's like, well, Um, is it really solving a pain point?

And so, yeah, exactly.

We've, we've talked to over 125 VCs. Uh, that was our primary target initially was selling.

'Cause they're the buyers, right? Are they, they're either the buyers or they're gonna mandate that someone go through this, right?

So, yeah.

Okay.

So that we have an incentive for the founders to take it.

And so, but wait, I wanna unpack when you, when you say talk to them, was it a structured interview? Was it like, okay. So, and, and how did, what was the gist of the interview and what were the outcomes of that process? 'Cause I, I love that.

Yeah. Well, I mean, to get a little bit in the weeds, I use a process called the Unbiased Interview. It's a prompt, okay. And AI prompt engineering where you like design questions that will really focus on getting to someone's pain point. And so that was the majority of the initial customer discovery, if you will. And the rest have been sales calls. So I use some of the same techniques, but I would say the, you know, the latter of the conversations have been more of a, let's, let me actually try to sell to you. What I found is that VCs actually aren't an ideal customer for us, and there's a couple reasons why.

Okay.

One is they have very informal decision-making processes. They have small teams, right?

Gut feel. Um, yeah.

And a lot of them pride themselves on the gut feel, and so it's just, it's just an informal decision-making by a lot of curiosity and a lot of like, oh, this would be really interesting.

But then when it comes to actually, you know, okay, but that's a good learning though. So if you have that hypothesis and the logic behind that was great, and then you go, okay, but the VCs, for whatever reason, good, bad, or ugly, they're just not it.

Okay. So they're just not it.

What's plan B?

Yeah. So we're, we're moving into private equity, uh, boards, like corporate boards and, um, middle market companies in the financial services industry to start, just because that's where I have, um, most of my network. But really with the idea being that we're solving execution risk as a pain point. Like 40% of middle market companies, when they make a promotional decision, it doesn't work out within 18 months. And working out is a variety of things. Doesn't mean they get fired, but they're not meeting their deadlines, they're not meeting their strategic execution needs. And so that costs like 1.5 times a base salary. So we found that was about $270K per, per hire or promotion. And so if you look at the numbers there, these companies have existing HR functions. They're, they're familiar sometimes with assessment tools, so much better buying buyer than, than what we initially started with. So some great learnings there as a founder, uh, on my end.

Got it. Cool. And what is the current go-to-market play now?

Yeah, so we're, we're focusing on private equity firms where they have done B2B SaaS or technology sales, usually like software. And so they have a familiarity with just the space and, and we can incorporate ourselves into their portfolio companies, and then some larger corporates and corporate boards are where we are focused right now.

So one of the risks I've seen thought leaders take on, sometimes willingly, sometimes unwillingly, is you've got something that's cutting edge, that's revolutionary potentially, that's, that's really, really cool.

That's what we have.

Yeah, yeah. Yes, yes.

I'm just— yeah, yeah.

But That means on the other side of it, right? Like if I'm selling something that people are used to buying, PR services, you know, payrolls or whatever, I don't need to spend a lot of the sales cycle educating people on what is it, why it is, why you need it, et cetera. And guess what? You're not getting paid for that. So how do you condense the sales cycle? Because somebody might engage with you and say, wow, that's really cool. Let me have another call and another call and another call because they're learning something, which is fine. But when you connect that to a sales cycle, because you have a buyer that's, I wouldn't say they're not sophisticated, but they're not educated in this domain. How do you, how do you thread that needle? Because that could be tough.

I think a lot of it's qualifying who you're, the lead that you're talking to more upfront. Like, are they the decision maker? Do they have budget? Are they in a position where they're actually in a sales a buying cycle for, for something like this. Those are just some of the key learnings from my own, my own experience. But I think working through trusted partners is how I'm finding the most traction. So people who take our assessment and then are champions for us and going to some of their colleagues who they know need this type of work. So I'm thinking of one individual in particular who has taken our assessment and now she's talking to 3 corporate boards and a very large corporation on the chief people officer side to get our technology embedded in, in their systems. So we found a lot of channels.

That's really cool. So a lot of folks go down the route of a strategic partner or distribution partner, 'cause I'm gonna guess that you're probably not a marketing whiz or didn't wake up one day and say, wow, golly gee, I can't wait to build this.

I wish, I wish it just, right, the downloads would come. But yeah, no, it's, there's a lot of different skill sets involved here. I've been, You know, there's cold email outreach and all the automation work and yeah, lead magnet. I mean, it's, it's dizzying for a founder in, in many ways.

Right. So if you could secure, if you could, if you could break that down and say, okay, well, to, to thrive as a company, we would need what I'm just making, you know, 100 clients a year in order to get there. Here's all that activity. I can do the math backwards and go, oh my God, that's a hell of a lot of emails and LinkedIn and whatever. But there's another way to do this. What if we got 2 or 3 or 4, a handful of strategic distribution partners that got who we are, that have already an installed user base. Maybe they're selling a suite of other product services and offerings, and this is either an upsell or an add-on, or you're riding that wave. We love that, you know, in terms of the work that I do, because it cuts the cost, it cuts the cycle. You're connecting with trust of another partner, and it's easy to manage 3 or 4 relationships other than dealing with the churn. So it seems like that's the route you're taking.

That's been the big light bulb moment for me. It's interesting because I come from institu— um, I've, a lot of my career I've sold, um, financial products to institutional buyers. And so the work is very much like these strategic partnerships, these long, longer, uh, bigger contracts. And so, yeah, in many ways I'm reverting back to my sales experience. I thought it would be more of this kind of like managing, you know, tons of leads. And I, I was doing that in the beginning, but then I reverted back to this approach because it is for an early stage company. It's been one of my biggest insights about sales. It's what you just, you just mentioned.

Got it. Love that. As we start to wrap here, any other thoughts, learnings, et cetera, that you would have, say, for you 2 years ago? There's someone out there now, may probably doing different IP or thought leadership, but could say, you know, are thinking right now like, wow, that's where I am now, or that's where I was a year ago. What would you, what, what's the wisdom you might share with them? No pressure, but it's gotta be life-changing for them.

It's gotta be life-changing. Well, I think, um, your own internal resilience is so important because your mind— mindset about where you're headed and these different perspectives that come in, being able to hold multiple levels of complexity and actually stay objective about what you're seeing from the market has been probably my biggest learning because in the beginning I really had this desire to change venture capital and to bring in these people analytics tools. And I realized that it just wasn't—

That's a small, that's a small feat. I'm just gonna change venture capital full stop.

Well, I wanted, I wanted to embed a layer of people analytics in and de-risk some of the, the investments. 'Cause I wanna see better innovation outcomes. I'm a systems thinker and I was like, oh, this is so cool. And then the reality of just the buyers themselves and how they function, I was like, I just had to step back and be like, this isn't the direction we need to go anymore. And of course you hear about pivots all the time. And then when it comes to you actually doing it, it's like, okay, well I have to stay objective here. This is what the market's telling me. And I think that it's the sobriety of that experience.

Well, and I think that's really the big one. Or one of the big ones from today is that you could think whatever you want and your friends could think whatever you want. Your advisors could think whatever they want. The only thing that matters is what does the market think? Right. And I think that's, it's hard to maintain, maintain objectivity relative to that, but 3, 4, 5, 6 types of buyers that make perfect sense for you to tell you, yeah, but no thanks. Time to rethink it. Right. So it doesn't mean that, you know, I love the way that you pivoted and you didn't do a total crazy pivot and now you're in the direct-to-consumer space, it's like, okay, I need to think about this piece of the process. How do I get to whom? Right?

Right.

And what does that look like? Because your instincts were right. I think it was just more of a slight directional shift as opposed to a radical pivot of, okay, now we're going to be in the, you know, packaged goods business or something silly.

Oh yeah. Well, I also think there's an art to letting go of a dream, you know, and just there's a knowing when you have enough information to make a decision. Like there are still VCs we're talking to who are excited about this, but they're not the place I should spend most of my time. And so there's always people who are gonna tell you, oh, get more information, get more information. It's like you have, I think the onus is on the CEO to be like, no, it's time to move. And so I think it's really, um, developed my own leadership abilities. I have more confidence in my own decision making.

And I love that.

Yeah.

Well, this has been great. I appreciate your time and thanks for sharing, uh, sharing your journey with us, Logan. Great, great.

Thank you.

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