“You’re also more fundamentally a service provider to entrepreneurs, and they are the center of the story. And they are the ones that are doing the hard stuff— solving the problems, building the companies etc. And so it's so fun to be a part of multiple stories.”
— Miles Lasater

Today’s guest is Miles Lasater, serial founder turned investor and the founding partner at Purpose Built Ventures. As a founder, he helped Higher One scale to over $200MM in revenue and eventually, a public offering.

Today, Miles’ VC fund is focused on investing very early (pre-seed or seed) in companies that improve human wellbeing, expand economic opportunity, and improve the public sphere— Atlas, Remix, Edvo, and Notable to name a few. In his words, “... companies that are purpose-driven, and that are solving key challenges facing all of us.”

In this interview, Miles shares his journey as a founder turned investor and illuminates insights from having experience on both sides of the venture capital marketplace!

As a human being, Miles is simply someone you feel you can trust— he is grounded, honest, and emotionally intelligent— experience him for yourself! :)

Key Themes

The long list of questions he asks before investing in an entrepreneur.
Why venture capital can be such a rewarding, existing career.
The art of customer success starts with employee success.
The founder practice of firing yourself a little bit every day.
How to adjust your mental model from founder to investor— not all founder behaviors are useful investor behaviors!
If you were a founder, how would you like a board member to behave?
VCs as builders, not just stock-pickers.

Transcript

Miles Lasater (Purpose Built Ventures) 2:12

Thanks for having me. I'm Myles Lasseter, as he said, and my journey of business started with starting a company. While I was in college, I grew that and had the opportunity to start a couple of other businesses and now transition to being an investor.

So, I'm a founder turned investor. I have created Purpose Built Ventures and we invest at the earliest stages in companies working to increase human wellbeing, expand economic opportunity, and improve the public sphere. So, that's pre seed or seed investments in companies that are purpose-driven, and that are solving key challenges facing all of us. They are largely software or their tech enabled, as my background is more in computer science and on the tech side. I've been lying learning more about healthcare and other fields and how we can apply it. So a lot of problems to solve and a lot of opportunities. Even more so it seems these days.

Jon Low 3:09

Nicely said. Curious when you made the pivot to investing, and as an investor, what drew you to get involved in venture? And more importantly, what keeps you engaged?

Miles Lasater 3:26

I found that the things I was doing for fun was helping friends, helping other people start businesses, whether it was through the Yale entrepreneurial society, or the yellow internal institute, I was mentoring.

First time founders, I was helping them find capital, think about who they wanted to hire, product, strategy, keeping their mental sanity, just, you know, dealing with the challenges of being a founder. And I thought, you know, this is what I'm doing as a hobby. Why don't I just focus this more full time and so I view the role as venture capital. One is making money for LPs in that you are investing and you do want to return the capital. But you're also more fundamentally a service provider to entrepreneurs. And they are the center of the story. And they're the ones that are doing the hard stuff, solving the problems building the companies. And so it's so fun to be a part of multiple stories.

When you're a founder, you get to be part of your own journey. And you may hear some about others. But when you're an investor, helping to build these companies and backing these companies, you do get the opportunity to be involved in more than one story. And that's pretty exciting.

Jon Low 4:41

Thank you. And just to give one of your initiatives a plug here, you are the owner and contributor to venture patterns. And so I was going to ask with respect to the fact that you know, a lot of personal bias does come into play. What are some of the traits or criteria you look for in early-stage founder talent?

Miles Lasater 5:10

There's a long list of questions I asked myself before making every investment. And I would say about half of them are about the team. It's a bit of a cliche in venture investing, but it certainly rings true for me, that team is so important to the eventual success.

I feel that the tools the general venture industry uses to evaluate teams are still inadequate. It still feels more art than science, and I keep looking for better ways of doing it. But at the very least I hold myself accountable to a checklist and a series of questions I asked myself about, you know, what is the motivation of this person?

Are they oriented towards being a king or being in control? Are they oriented towards being rich and making money? Are they oriented towards solving a particular problem? Some mix of the three? You know, where's their primary motivation? Is this someone who has the skills to sell to recruit, to raise further money? Does this still have someone who understands the problem, or the customer space well enough to have some empathy, which will help them tell the story, but also make strategic decisions about what their customers need?

Thinking about the team, not just, you know, single founder or co-founder, but that senior team, do they have the right mix of long term optimism and short term pessimism? And what I mean by that is, and it can be in one person, it can also be in a partnership. So, long term optimism says, we'll figure this out. This is worth doing. It's a big problem. Let's go solve it. We can do this team. And the short term pessimism is it's all going to fall apart if I don't do these 10 things today.

You know, that's what keeps you motivated to actually act on it. If all you have is the optimism, then maybe there's less motivation to do work. So, those are some of the things certainly not an exhaustive list. But those are some of the things that I'm looking for in founding teams.

Jon Low 7:06

Thanks for sharing that internal process you have. And my understanding is when you were a founder yourself, you had a strong focus on team communications and culture. Was that because you identified that as an area that you needed some serious attention? Or was that something that you identified as, arguably, what would you say was your zone of genius? And that then, through experience, you ended up translating into your capacity as a venture investor— reviewing deals and identifying the best founder of talent...

Miles Lasater 7:47

Yeah, that's a good question. It's probably a bit of both. So, when I started Higher One, we analyzed the strategic situation as being very important to our long term success to provide high quality customer service.

And I believe that the best service comes externally to your customers when you have good service internally. And so the most important thing I could do as a founder and as a manager was to help set that tone, that I'm here to serve you and you serve the customers. And if people know when they're when they're interacting with a customer, if they know that when they turn inside the company to get help to solve a problem, that they're going to be backed up, that they know when they have human resources, issue a payroll, issue with a coworker, that they're going to get backed up, they are free to focus on solving the problem for the customer.

And you can keep you know, it's not going to be 100% focused, but it's going to be way more than otherwise, and more likely to go further for customers and to create that sense of a connection. And so with our university customers, we had extremely high marks on Net Promoter scores. We had our customer service personnel when they would go on campus, we'd get hugs, we would be told we were the best vendor of all in any area that they dealt with. And so those are the kind of relationships that we wanted to build and wanted to have with those University customers. Again, that had to do with each situation there.

And then it also lined up with my personal values and desires, which is to build a culture where employees came first, customers came second in our organization, and that's why we focused explicitly on what those cultural values were; we trained on them, we rewarded them, we in recognition programs, etc. And we were able to win multiple times placement on the top 50 great place to work Institute lists, that's a national list. So it was recognized by employees and it was very exciting to be able to do that.

Jon Low 9:53

Thank you. Looking back now, what were some of the most memorable learnings?

Miles Lasater 10:33

Oh, so many things, where to start? I think that as a founder, one of the key challenges is what I think of is to fire yourself a little bit every day. And I caught on to that. Maybe a little later than I should but you know, there's an impulse sometimes founders who really care about the business to stay involved in the details and you need to be delegating time.

It's not necessarily firing yourself, but it's the list of responsibilities that you have, you got to take some off, and some get added on as the company grows, and a company evolves. And if you're not taking things off, you won't have time for those new responsibilities. And some of those responsibilities, which will be impossible to delegate will grow in complexity.

And so a simple example of this, you know, part of our offering was putting ATMs on campus, at universities. Because we had a bank account that students were using to withdraw cash from it. So when we started off, you know, I had a little help from a consultant picking which ATMs to use, and then I was the project manager, you know, in getting the ATMs installed. Then we hired some more people and I was managing someone who was doing it then I was managing someone who was managing someone, but by the time we had grown, we had a team of multiple people dealing with these ATMs, who was reporting to someone who was reporting to someone, you know, into me.

So this is what I mean by like content delegation that's just in one area. But I think if you're not systematic about doing that, so that's one thing I learned.

I think another I learned was about engaging with the press and with policymakers. Early on, if you're going to build a truly influential company, either because of scale, or because of a truly new model, that those policymakers and press folks can feel blindsided if you grow faster than they realize, and they're not kept up to speed. So we definitely had some bumps in the road with regulators, policymakers, others, where they kind of turned around I think, and they were like, I've never heard of you. Where are you from? What are you doing? You know, and we could have done more to brief them, educate them. So that's, that's an issue if you truly do scale that's not for early early stage founders. But that was a painful lesson that I learned.

Jon Low 13:16

Thank you, thanks for being transparent and sharing that and, you know, and as you navigated like as you learn to become more seasoned as an entrepreneur, just before you transitioned into being more of an investor and a venture capitalist. What was it like recalibrating your approach to business as an entrepreneur into more of a venture model? You know, what were some of the personal biases you had to filter out?

Miles Lasater 13:48

I think that one of the things that makes for great founders is a bias towards action. Sometimes I talk about it as you can't steer unless you're in motion, trying to steer a car or a sailboat If it's stopped, you can't turn. So, you've got to start moving first and then of course, correct, and figure out where you're going that bias towards action. What's to do? Again, it doesn't have to be every single person in the team. But you've got to have got to have that strongly in the founding team in some way.

And as an investor, your orientation is longer term. And it is not always your role to take action. And so that certainly is a shift in mindset for me. In that, you know, sometimes the best quote on quote action is to do nothing. And that's a very different initial mindset than many founders have.

Jon Low 14:48

Nicely said. My understanding is you've also taken board positions at a lot of companies that you've invested in. What do you think makes a good board member for a founder? And what boundaries do you have to be aware of not to cross to still be effective and supportive and responsive, but at the same time, not like overextending yourself into a zone where, arguably you don't have the richest context about the business.

Miles Lasater 15:31

I think that being a board member can change depending on a situation. So it's not a one size fit all answer. I think that if you're brought in as an independent board member, you may play a slightly different role than if you're the investor who represents investors on a board in a small private company board.

I would expect that you have a good relationship with the founder, that's why you invested right? And you want to keep that relationship strong, while still standing for proper governance and some sense of accountability and what I would call sort of an operational rhythm of reporting.

So I'm a believer in having regular communication about KPIs and about oversight of key, you know, executive hires and compensation, you know, having financial oversight, meeting audits at the right point. So that's sort of the fiduciary responsibility and that's an oversight role. That should come in a very friendly package, right? Like that doesn't have to be adversarial.

That's something you're all building together because if you demonstrate proper governance, it's going to attract other investors and attract the right talent. People will sense when a company is being run well.

I think that the other role you can take is asking questions and being a sounding board. If you have the right relationship with a founder, a lot of work can happen outside of the board meeting. The best is when the CEO feels comfortable calling you, sharing bad news, asking for some feedback, or, you know, not even wanting to make a decision. Just saying, “Hey, this is what's going on. I'm kind of stressed out, you know… “ Those kinds of conversations can be really helpful.

So I think, defaulting towards sounding board advocate questions rather than thinking, “Oh, I need to make the decisions. I need to have expertise, connections, expertise, in particular tactical things.” I'll tell you an example. When we were a public company, we had a public company CEO on our board. And we were talking about how to communicate certain information to public company investors around guidance and he spoke up. He didn't speak a lot in our board meetings, but he spoke up and he said, “You know, that's a self problem and this is how you do it.” It was a tactical question we were asking for help with. And it was so valuable. It's like, okay, we didn't know that. All right, that's what you say, Great, we'll do it. But he was always very respectful not to, you know, step in with a bunch of advice at the wrong time. So I think that's a valuable skill.

Jon Low 18:19

Thank you. And for you becoming more of a board member and advisor, having been an entrepreneur, did that transition to that stance come naturally for you? Or was there a bit of like, clunky transition where you have to be aware of your founder instinct coming up and trying to take control this year?

Miles Lasater 18:41

I'm sure I've made mistakes. I would say in general, that's something I've been very aware of in the transition. And what stays top of mind for me is thinking like, “What would I have wanted as a founder?” Just like, in a situation, if I were the founder, how would I want the board member to behave? That's fitting helpful for me and guiding me? I said, well, empathy and the importance of founder empathy.

Jon Low 19:08

And so I understand now with Purpose Built VC investing in early stage founders and companies. That is something you've started in the recent couple of years, correct? As as you grow out the Purpose Built VC team. Can you share a bit more about what the ethos you want to instill into Purpose Built VC looks like, what the culture is that you'd like for your firm, and how you'd like to be remembered?

Miles Lasater 19:47

Purpose Built Ventures is about building what's in the name right. So, I want to be seen as a partner who is not viewing the relationship as stock picking. You know, some investors are like, “I'm going to buy this stock.” And you know, that's where I add value. Yes, the decision to make a capital investment is a very important one and does drive returns for VCs. Yet, I think the best VCs have a mindset also of being in the trenches with founders and helping to build. And so that is one of the things I hope that founders remember about us.

Jon Low 20:23

Thank you. And in light of recent massive events, and having been a founder yourself any words of advice, or none, regarding the times that we as a collective are all navigating?

Miles Lasater 20:40

Many of us are, quote unquote, stuck at home, right? You have the opportunity to have so many things cancelled in our life, whether we were looking forward to them or not, and that creates a new kind of space which can be scary and can generate anxiety.

If you're not one of the people who is on the front lines with healthcare, or, you know, making sure people are fed or one of these other essential businesses, you may have a lot of time on your hands. And if you're someone who's dreamed about starting a company, particularly if it's software tech enabled, you can do that at home. And you now have your schedule completely cleared. And in some ways, what better time to start a software business, you can be heads down, building a product, you cannot be distracted.

And some of the best companies have been started when there's an economic downturn, you have less opportunity costs for your employees, you have a shake up and people are thinking about, well, maybe that other job isn't so secure anyway. Why don't I throw in my hat with this startup?

You have customers particularly in an environment like this, customers who are doing new things. There's new ways of behaving. And that will create new needs and opportunities. So I don't mean to say like, this is all good. There's a lot happening in the world. That's scary. That is sad. If you're lucky enough to be one of the ones stuck at home, and you've wanted to start a business anyway, go for it.