Watch on Youtube.

Transcript by AI

Hello, welcome to Stack Genius, the podcast for data-driven investment professionals. I do hope you have a fabulous day wherever you are today. And I know that Ablordi Ashigbe also has a fabulous day in Chicago, I think today, right? Yeah, in Chicago, it's cold, but otherwise fabulous. Very good. Well, I mean, I'm glad that you joined us today. So you're the founder and CEO of Four Degrees, which is a venture scale CRM system that I think a lot of people in the venture industry use, but also in some other industries. So if you are describing what you do in 30 seconds over a beer at a bar in Chicago, what do you tell? Yeah, I typically tell people four degrees does two things. The first is very much what you've described, which is industry specific CRM primarily focused on the private markets. So think private equity, venture capital, other similar industries where the private market transaction process is at the forefront tends to be very different than that of your standard sales CRM and so needs a different set of tooling in order to be able to accomplish the goals of those firms. The second is what we call relationship intelligence. So essentially helping the team understand and maximize the network of the firm to accomplish its core goals, whether that's sourcing and raising from LPs to finding interesting investing opportunities to ultimately winning those deals and helping those companies grow and succeed. That's super helpful. I mean, can you make that a little more specific and explain to us, you know, what does your CRM do? And also, you know, how does relationship intelligence work with four degrees? yeah so in terms of the crm components of what we do most people would think of that in terms of being able to track and manage different sorts of distinct processes that these firms care about typically those are things like deal flow management so as companies come into the team's investing orbit how do they organize and collaborate on which investment opportunities they want to move further in the process with versus the ones that they want to pass on? How do they keep that institutional memory and history of the deals that they've looked at over time and be able to run analytics to better improve and understand their performance? Similarly, you can do that sort of work with fundraising activity as well. So as you are raising fund one, fund two, fund three, which LPs are where in the process of making investment commitments? How large might those commitments be? And being able to, again, run analytics to understand and improve that important performance as well is largely what I would consider to be in the industry specific CRM component of what we do. The relationship intelligence component of what we do takes also a few forms. One is identifying and uncovering connectivity to companies that are of interest. Oftentimes it's a sourcing component. So, hey, I heard about this company. I think it's interesting. How do I find a connection path to them that we can use to begin the conversation rather than firing off a ton of cold emails and hoping one converts? Similarly, you might do that to help a portfolio company that's trying to break into a prospective large customer. So, hey, I'm trying to sell to Procter & Gamble's marketing department. Does the venture firm that I operate with have some sort of connectivity to that organization? What is it? Who is that connection? How strong is it? Are there sorts of questions that 4Degrees can help answer? We also augment that by searching the world for news and information about people and companies. So think, for example, identifying that maybe the CMO you thought you knew at Procter & Gamble no longer is there. They actually moved to a different large CPG conglomerate. And so as soon as we detect that sort of information, we surface it up to our customers. So that way they're either A, able to use that as a mechanism to reconnect with that person, rebuild the relationship. Or B, potentially identify new opportunities to go work with new companies. Like, for example, the fact that that CMO moved to that new organization and there's a pre-existing relationship there might mean that that new company that they've moved to is now a potential prospect that wasn't there before. So a few different examples that hopefully ground those two components. I like what you're describing and I know that people like the enrichment part and the automation behind it or around it, but also there can mean very different things in different tools. Can you maybe show us a little bit how it would work within 4Degrees? Yeah, sure thing. We have a little bit of a presentation here. So maybe we can dive into that. We've talked a little bit about this, I'll give a little a very short preamble to maybe ground how this all looks in practice. So very high level, the way we think of the world is like the private markets are very much helped by great process. That's a lot of the CRM components we were just describing. So whether it's the ability to scale as the team grows, following through on opportunities, whether those be with LPs or with prospective investment opportunities and ensuring the great ones don't fall through the cracks, as well as just being efficient with your time. Most funds that we speak with tend to be understaffed relative to the amount of activity that's coming their way. And so without tools that help them be efficient, they tend to have to spend a lot of time on non-value add activities, which only increases that burden. And so we think great software can help accomplish great process. But fundamentally, we think a lot of private market success is driven by relationships across all those dimensions we were describing before raising sources, picking and winning those opportunities and supporting those companies once the investments made. And so we think of our software as trying to help our customers accomplish these sorts of activities, both on the process side and on the relationship side. Now, how that operates or how that looks in practice. So first, our customers typically have us connected to their email and calendar. We have a few different options here. You don't necessarily have to have us be a continuous ongoing sync, although there's a lot of power there. But in short, we use that to pull emails, meetings, contacts, other kind of communications into the four degree system. We augment that with artificial intelligence, which I'm happy to dive more into. And out of that comes a fuller view of the firm's relationship network that we then use in the ways we were describing before. Maybe to show what that looks like in practice, on the CRM side, we enrich a lot of data about deals. So you get hours back every week. So in practice, as you have a deal that enters the system, we're able to pull in things, a company descriptions, locations, logos, historical funding rounds, and be able to augment and provide that data for you. So you don't have to spend that time doing it yourself. Can we double click on that for a second? So I assume, but you correct me that, you know, pitch book, you still need to have your own subscription too, but is there also something baked into four degrees already in terms of enrichment? Totally correct. So we have a set of enrichment providers that are already built into the 4Degrees subscription. That includes folks like Full Contact, Clearbit, and Crunchbase. And then we have a set of providers, primarily PitchBook, as you described, where you need to already have a PitchBook subscription. They have their own commercial arrangement around that, but we've already built the infrastructure in plumbing to turn on that integration into 4Degrees with a click. And so there's a conversation commercially that has to be had there, but from a technical standpoint, we just need to be told by the PitchBook team your team has access to it. That's cool. Thanks. Yeah. Cool. And so again, from a CRM side, as you can see here, easily allows you to visualize the current deals the team's actively looking at, where they are in process. All this is meant to be easily changeable. So the fields you see, the columns are ones that you can modify on your own. Doesn't require you to go to customer success to have to make modifications that fit your team's exact process. But we do come out of the box with a bunch of templates that are already prebuilt for the industry. So cool. As we go further down that path, as a result of being plugged into email and calendar, understanding who the team knows and is connected to, we also make it possible for you to stay on top of and maintain critical relationships with folks like referral sources. Primarily helps you source new opportunities from those referral sources. And so in a case like this, which you might say, we do oftentimes see this, particularly in the private equity domain, but also in venture, people might say, hey, we are tiering out the folks who send us great referrals and we want to make sure for those referral sources that we have a good coverage strategy in place. We want to say, hey, we want to make sure we're talking to our tier one referral sources once every three months or tier twos once every six months. Because our product is plugged into email and calendar, we know when the last point of communication was with those people. We can automatically track that, doesn't require any manual data entry. And so paired with that sort of cadencing strategy we just described, it allows us to automatically detect when you're overdue to reach out to those people, given the timeline that makes sense for them, and then flag that to whomever's running point in that relationship with the team to be able to go and build on that relationship, ensure that you're ultimately getting the deals you want from those folks. I like that. I think two slides back, you said you can tie it in with your email, but you also hinted at there's another option than just tying it into email. What's that about? Yeah, so we have different customers who have different levels of comfort as to having something continuously syncing into their inbox. We try to give our customers a lot of control as to what we pull and in what situations we pull. That goes everything from saying, hey, I don't want this continuously syncing at all, and I want to select individual emails to come into four degrees. That's possible via Chrome extension and not look at it to being more specific as to the kinds of emails that they want automatically synced in. So you might say, for example, any email that comes from these domains should not show up in four degrees, for example. Or it's fine if you pull the emails, but only pull the to, the from and the timestamps, not the underlying actual content of the communication. Those are also kind of settings we have in the system that allow you to get the right balance of automation and visibility while also privacy and control. I can imagine people like that, actually. So and can you configure that per user only on a tenant level or what's the granularity of that? Yeah, it depends on the specific setting in question. For things like being able to select individual emails versus having email syncing as a whole, individual users can control that. Similarly, they can select if they want the metadata, the communication, or the full text to come in, something an individual user can control. Things like domain level settings around, I only want emails to come in from this domain versus not this domain, tend to be more on an organization. Yeah, understandable. Okay. Awesome. Thanks. For sure. Now, because we have this understanding of who the team knows and is connected to, we can also do things that help you surface warm connection paths to people and companies that are of interest. This is oftentimes very useful in a sourcing context. So you hear about a company that you think is potentially interesting through the network. and you don't have any direct connections you're aware of, you can run that search in four degrees or in the example we're showing here, go directly to the company's website and using our Chrome extension, we can surface to you all the people your team knows that either are at that company today or used to be at that company or investors in that business or seem to be otherwise related so that you can use that as a pathway to begin a conversation with that company and ultimately, hopefully add them to the pipeline of interesting opportunities to look at. I mentioned this was a Chrome extension. It's worth knowing that that works on any Chromium-based browser, so not just Chrome. If you're a Brave user, if you're a Microsoft Edge user, you're also included in that population. Not to get too operational, but this slide is showing a website and then it has the extension. It pulls the URL, it looks at what's your connection to there. The same, would that also work if you're on a LinkedIn profile or on Where would it work as well? So website and LinkedIn, I assume, right? Yeah. So technically three places. So first two you've already got. So company website here. Here is the example we're showing similar on a LinkedIn page. We can do that both for an individual person on LinkedIn as well as a company profile on LinkedIn. And then the third is actually for folks who are Gmail users within the Gmail inbox. So I think opening an email from a person, we're able to show you if you already know this person today kind of the history of your prior interactions role information if they're tied to any deals you're working on that sort of thing and if they're totally brand new just give you a profile of them with the ability to decide if you want to include them in your four degrees population or not check all right thanks sure Now, because we also have that view of who the team knows and is connected to, we go and search the world for news and information about those people and those companies and try to surface them to you. That includes everything from detecting that, hey, this person's been involved in a transaction, as described before, the job change case, person moved from company X to company Y. We even do things like detect from your calendar that you might be flying from one city to another and service people in the relationship network that live in the destination city that you can use this trip as an opportunity to connect with. So a few different ways we try to help you understand what's happening in that network and ways to help you source new opportunities or just engage with those people in an intelligent manner. need that for my friends not only for my business actually I always forget to you know get in contact with them yeah you're not the first person who said that for sure very good I like it great so hopefully that was at least from a screenshot and view perspective some of the things I wanted to highlight No, that's super helpful actually. And you know, I'm trying to, um, to determine the sweet spot for your solution. So is there any sort of, um, fund size or, you know, can you help people see where you really hit a nerf yeah it's a great question because we do have customers across the spectrum generally what I would say is because of the ease of use the ability to configure things very quickly the ability to get up and running really fast in our system I would say particularly on the kind of crm and deal flow management side of the house that we work really well with boutiques in that domain just because relative to others where you might need six months to get the implementation to even happen and need to spend tens of thousands of dollars to get up and running like The ability to basically turn this on and be up and running with four degrees over the course of a couple of days is a very meaningful difference. The relationship intelligence components are helpful for boutiques, but I argue are even more helpful for larger organizations because you tend to have the most robust relationship networks, right? You see benefits on both sides of the spectrum, but I'd probably put each of those as being particularly good. For the boutique side, deal flow management, I think we do quite well there. And for the relationship intelligence components, I'd say the bigger the organization, the more powerful it is. Nice. Now that helps me position it in my head at the very least. Awesome, Blorty. That definitely gives me and I hope everybody a good overview. We have a few minutes left, so only two topics. Where to get good deep dish pizza in Chicago and why did you found this company? Sheesh. The first, you feel like you're trying to get me in trouble with a bunch of Chicagoans. You can tell me in private afterwards. My answer to that question is Pequots. So it's not like the Lou Malnati's or the Giordano's or the Gino's that people probably know of even outside of Chicago. But my argument is Pequots is the best. I think there are a lot of Chicagoans that would say that too. I will put that into the bio of this video, the link. There we go. There we go. Pequod's, if you hear that and you hear me saying this, you should give me some sort of sponsorship or at least a couple of slices. They're going to give you your own little table, right? Yeah, own little table, maybe my own branded pizza, something. Hopefully they figure it out. And to the question as to why we started the company. So before building this, I actually sat in the seats of our customers. So I worked at a combination of private equity, venture capital fund here in Chicago, and firsthand felt some of the challenges I'm describing here. So at the time we were trying to use Salesforce, actually more specifically their Salesforce IQ product at the time to try to manage the deals and opportunities as well as the relationships the firm had. was built for sales and it felt like it was built for sales and so we were constantly trying to build tools of our own or working in excel to try to basically move around or kind of manage some of the challenges that trying to use a sales product to manage deals like has inherent in it and particularly the thing that became clear at that time where the lack of tooling what was the lack of tooling around how to understand and manage relationships I remember in our monday morning meetings every week like we would have at least a few requests either for, hey, this is company we find interesting. How do we go talk to them? Or from a portfolio company, we're trying to sell into this large corporation. Who do we know? And the way we tried to answer that question was either, hey, maybe we'll kind of sit and think about it for a little bit. And the answer that popped top of mind would be what we'd go with. Or they'd task an associate to go trawl through people's combined LinkedIn networks and what was in Salesforce IQ, try to pull out a list of all the people that seemed like we know, and they go person by person into the firm to say, how well do you know this person? How well do you know that person? How well do you know that person? To ultimately get down from a list of what could be 20 or 30 odd names to maybe the one or two that were actually viable, which not an incredibly efficient use of time, probably missing people that were weren't surfaced any of those surface any of those searches and so led to the opportunity led to the realization that there just had to be a better way and so that was the genesis and we've been at it and so far the market seems to agree Very nice, man. I'm glad that you guys started to build this. My mind just did a little bit of a left turn when I listened to you. When you look at the market in total, then I think such tools as exist, the SaaS vendors thus far, they are solving um the workflow engine with the enrichment and these type of things and now there's a new breed of like co-pilots coming out that help you with due diligence and looking at at investor decks for example I'm still undecided in my mind whether those will become features of for example workflow engines or Even those workflow engines will go away and everything will become a chat interface. So, I mean, super big loaded question, but I don't know if you have any thoughts on that. How you feel what the market is doing? Yeah, I mean, I think this is the best possible time to be asking that question, right? Because we are certainly undergoing a revolution. Every SaaS category certainly is, and ours is no exception to that rule. My belief is chat is a phenomenal, or at least the technologies that we're seeing through which they're being surfaced via chat are phenomenal. I don't believe chat is the right interface for everything. My intuition is that the underlying capability of LLMs applied to the sorts of either current UIs that we have or future UIs that we haven't maybe thought of or generated yet are going to likely be the answer. And my personal belief, and it could well be wrong, this could be one of those predictions somebody makes that someone listens back 20 or 30 years later and is like, do you believe this guy? My intuition is that chat is great for particular use cases, but there are so many others where the information kind of understanding density capture that you get from a user interface that we're all used to using is much more powerful. And so that's my intuition as to whether the current breed of co-pilots become features versus kind of independent products that are longstanding, I think is very kind of category and use case specific. My intuition in our space is that UIs and the ability to engage with a lot of data very quickly will be king. And so those products will need to find ways to integrate with or work with those. But naturally, I have a biased position there, so I have to be careful. No, I appreciate that. Nobody can see the future. And, you know, I think everybody's guessing at the moment anyway. So, yeah, I really appreciate the time that you spent with us, Blordy. Fabulous product. So if people are interested to learn more, they should get in contact with you folks on our website. And yeah, everything else we take from there um I'm gonna make dinner now it's not gonna be a deep dish pizza but a german uh bratwurst so equally good I hope and um I wish you all the best and speak too likewise thank you so much for the time all right bye now bye

‍

‍