Being an Engineer
Being an Engineer
Axel Bichara | How to Work with VCs to Build An Engineering Business
Axel Bichara is co-Founder and General Partner at Baukunst, a venture capital firm focused on technology and design companies. In the past, Axel has been a first round lead investor/co-founder/or board member at SolidWorks, Onshape, Revit, GrabCAD, Simscale, Vention, Join, Dragon Innovation, Tempo Automation, and Premise.
Axel has been an entrepreneur, investor, and company builder his whole career. He helps founders, particularly of engineering software companies, realize their vision with capital, and more importantly with the company building expertise he has acquired from leading investments in more than 100 companies, more than 40 private and public boards of directors, and from the creation of many billions of dollars of enterprise value. Axel also has a masters degree in engineering from MIT.
Join our conversation to hear Axel’s recommendations for how to prepare for and work with VCs through the funding and company building process.
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I think in my whole life, I've been focused on doing what I find interesting without a big plan.
SPEAKER_03:I think in my whole life, I've been focused on doing what I find interesting without a big plan.
SPEAKER_02:Hello and welcome to another Tempo Automation and Premise. Some big names there that a lot of you, I'm sure, recognize. Axel has been an entrepreneur, investor and company builder his whole career. He helps founders, particularly of engineering software companies, realize their vision with capital and more importantly, with the company building expertise he has acquired from leading investments in more than 100 companies, more than 40 private and public boards of directors, and from the creation of many billions of dollars of enterprise value. Axel also has a master's degree in engineering from MIT. Axel, thank you so much for being on the show.
SPEAKER_03:Aaron, thank you for inviting me.
SPEAKER_02:Well, how
SPEAKER_03:did you first get into investing? I was a co-founder of a venture-backed company out of MIT called Premise and learned about the investing business as an entrepreneur. And after we sold the company, came to the conclusion that this is a very interesting business that I want to pursue, and that's what I did.
SPEAKER_02:And this was during your time as a student at MIT or directly following that? Yeah, I was
SPEAKER_03:still a student. We got some very nice venture financing very quickly while still being students, so I had to scramble to finish my degree and be able to really contribute to the company. It worked out fine for everybody. And And then got started. We're very young. I was 23 when we got started. And it was a very, very interesting journey. It was an incredibly steep learning curve. And I met some very interesting people and learning about their business really on the receiving end led me to think, maybe after we sold the company, maybe that's what I should be doing next. And that's what I did.
SPEAKER_02:Fascinating. So you were going to school to become an engineer. Was the intention ever to, yeah, I'll get a degree in engineering because it's going to prepare me for a lot of different things. It teaches me how to think, which is super valuable. But who knows if I'll actually be an engineer or were you, like your intention was to be an engineer and the investing VC thing just happened to come along and that seemed more interesting.
SPEAKER_03:I think in my whole life, I've been focused on doing what I find interesting without a big plan. And even going to MIT was a little bit of an accident. So it was really accidents of history piled on top of each other. What I know now is I would have probably never been a great passionate engineer. And, but, but having the engineering foundation, I mean, it's the best thing you'd possibly have to, to, to do what I ended up doing.
SPEAKER_02:Oh, that's, that's a very interesting thing to say. Can you speak a little bit more about that? How has a background in engineering helped you as a VC?
SPEAKER_03:Yeah. Well, you think rigorously about the world, right? You obviously have great depths of technology. Even today, I can evaluate technologies pretty well. Don't really need to rely on others. Having an understanding of what it really takes to bring products to market from an engineering standpoint, the complexity of teams, And when hardware is involved, you know, complexity of manufacturing, and I've had the privilege of having both engineering education in Germany and the U.S. Germany is very manufacturing focused. It's a very, very good, strong foundation. And And so even today, it's really a daily benefit in investing, but we consider ourselves not just investors, we're really company builders. And engineers are the leaders of the vast majority of our companies and having that depth of understanding cultural relationship with other engineers and knowing what it takes is a huge advantage.
SPEAKER_02:Yeah, that's wonderful. Great, well said. Well, you and I were introduced by John Herstick, who is the founder of SolidWorks and now Onshape, the world's first and only cloud-native CAD and PDM system. John was on the show a few weeks ago, and he suggested that you might be an interesting guest, and I quickly agreed with him on that. You were one of the first founders in SolidWorks. When you met John, I'm curious, what are some things that John did or made maybe didn't do that convinced you. He was worth backing. This guy, he's legit. He has a good idea here.
SPEAKER_03:The history goes back even further. John and I were at MIT together. And even the first company we co-founded out of MIT, the one I just referred to, that was pre-SolidWorks. So after we sold the company, And when I decided to become a venture capitalist, the alternative would have been to start another company, and it might have been SolarWorks with John. So we were already in business together when SolarWorks got started. So it was, for me, knowing John as well as I already did back then– he turned out to be one of the luminaries, maybe the luminary of the CAD industry in our generation. And I just knew he was a very special person back then. And that's where we started that company together and getting SolidWorks funded was not what, you know, took some effort. Me as a young, new venture capitalist, convincing my partners, took some work, but it was, I was super happy to do it. I had a lot of conviction and, well, and we did it, but it was really my understanding of the depths of, vision and smarts and leadership abilities and caring about people that I saw in John that made me want to do it.
SPEAKER_02:I imagine your ability to convince your clients partners back then that this was a good idea was at least partly based in the fact that you were an engineer yourself or you had the training of an engineer and you understood the value in a way that maybe other VCs without the engineering background might not have.
SPEAKER_03:Yeah, it's very interesting. So at the time, CAD, this is in the early 90s, this was in 93, actually 94. And CAD was viewed by VCs as a mature industry. You know, that's an old play. There's no more innovation. It's growing at 15% a year. Why would anybody want to invest there? And if you look at the total market cap of the industry at that time was probably less than a billion dollars or so. And you look at the value and impact the industry has had since, basically, whoever said this is not an interesting industry got it totally wrong. So me being out of that and sticking with it and saying this is something we need to do did help.
SPEAKER_02:That brings to mind a story I heard a while ago. This might be apocryphal, I don't know, but back in the early 1900s when someone who worked at the patent office said, everything has already been invented. We should just close down the patent office. There's nothing else to invent.
SPEAKER_03:Yeah, yeah, yeah. All the number of computers that are needed in the world, some quote from IBM or Bill Gates or something.
SPEAKER_02:Yeah, right. Well, you've been involved with over 100 companies and contributed to over 40 boards over the years. What are one or two of the habits or behaviors that you've seen the most successful companies embrace, and conversely, some of the worst habits that you've seen out there?
SPEAKER_03:Yeah. The most important thing a founding team does, and I've always invested at the earlier stages, so typically first money in when entrepreneurs get started, is is um it's all about building a great uh team great you know great founding team management team etc you're only as good as a team you're playing on and that includes the people you hire full-time but also the people you surround yourself with including advisors investors um and and so quality of team building has the biggest impact on company success um and uh so So getting that right, life as an investor, if the founders get that right, life is good. If they don't get it right, life is not so good. But part of my role is to help raise the founding team's game in recruiting, first of all.
SPEAKER_02:Yeah, that's an interesting piece of the puzzle that maybe... not everyone fully appreciates, I don't think I have, that the venture capitalist is not just bringing money to the table, but expertise and guidance and probably introductions to other experts as well.
SPEAKER_03:Yes, we picked the name of our firm, Baukunst, it's German, and stands for the art of building. And it was a very deliberate choice because we believe there's an art of building companies and we practice it. And we have a conviction that it can make a huge difference in building a great foundation for a high upside company. And now not everybody views the world through those lenses. Both investors and entrepreneurs are definitely entrepreneurs who just want to raise money and be left alone. And they're also investors who view themselves as stock pickers. are not stock pickers, we're company builders.
SPEAKER_02:That's a really good way to put it. Yeah. That helps frame it well. So generally speaking, when a founder approaches a VC, Baukunst or any firm for funding, what do you expect that founder to have prepared already, you know, before they even start talking with you?
SPEAKER_03:Yeah. So, yeah. it's less about what they've prepared and it's more about an authentic story. And often the amount of preparation is, the amount of preparation may actually go in the wrong direction. They want to answer all the questions, but if they get the essence of what we call founder market fit wrong, all the preparation doesn't matter. And so we look for an authentic story of why does this founder want to do it? And how are they thinking about the world? What are the personal motivations? And then also, are they thinking big? Do they want to make a few dollars or build a great company, change the world? So really understanding the motivations is usually more important than anything that's prepared. So we're super happy to have a conversation with somebody who has nothing prepared if some of those ingredients are there, actually.
SPEAKER_02:Wonderful. Okay. And once you've heard a little bit about the founder's story, their idea, how do you decide whether you want to take the next step and potentially invest?
SPEAKER_03:Yeah. So the two main criteria we look at are founder quality, or it's really founding team quality. And typically, a founding team of more than one person is better than just a single founder, but we've done plenty of single founder investments too. And number two is really attractiveness of market opportunity. These are the two main ingredients, right? Great team, and it needs to be, we call it sometimes, a good planet to land on, right? Is there money to be made in this market? Is it large? Is it growing? Is there not an overwhelming competitive landscape, et cetera? And then, so... These are sort of the must-have checkmarks. And then you peel layers of the onion. Is there– can this product be built? Can it be built in a reasonable timeframe? What's a competitive landscape? One thing we focus on very much is capital efficiency. Can you bring a product to market and establish product market fit on– within 12 to 18 months and a couple million dollars. It's a hugely more attractive investment for us than something that you need to spend five years and$50 million and maybe you have something you can bring to market. So as a relatively small fund, we look at capital efficiency, especially in the first few years of a company's life.
SPEAKER_02:Yeah, okay, great. What is it that You're typically investing in, you talked about the team, right? So how important is the idea versus the person versus the company that it can become? What is your mindset like as you're evaluating these things?
SPEAKER_03:Yeah. Again, team is by far the most important. And But if you go back to the earlier part of the conversation, when John and I started this first company out of MIT, we were, whatever, 23 and 24 years old. Whoever backed us at the time saw something in us that wasn't a big resume, obviously, we were just students. And so you need to see something special in the team. And We need to make the judgment call. Are these founders people who can just do the unnatural acts it almost takes to build a great company? It is crazy hard. You live 90% or 99% of the time in the first few years, you live with rejection because everybody's negative. Nobody wants to buy from you. Nobody wants to fund you. Nobody wants to join your company. And so can this team break through walls and and just somehow make it because it's definitely not for everybody. And then, but then other questions can, let's say you make it in the first few years, you get to a few million revenues. Do they have the potential to scale from there? Hire a team, let go of responsibilities, scale it up from here. And so the whole, the, the depths of conviction we need to have on management teams and founding teams is, is, is actually very important. And we get it often, we get it right, but we also get it wrong regularly. And so it's a betting average to some degree. And, and, and, and, We invest in the ability of that team to execute more than anything else, right? Technology, product, prototypes, demos, all good. And we love to see them. We love to get excited about them. But whatever you see when you invest early on is only a tiny bit of what needs to be built to build a real company. And that's where it comes back to quality of team.
SPEAKER_02:Yeah, okay. You had mentioned earlier that you prefer to invest in teams that have two founders or multiple founders versus just a single founder.
SPEAKER_03:Why is that? Being a founder is a very lonely job. It can be a very lonely job because you have your– let's say you're funded, you're off the ground, you're the CEO of the company. You're at the– Every problem starts and ends with you one way or another. And that's a very big burden to carry. And in my experience, most humans are better if they are in well-functioning partnerships of basically management teams where people make each other successful and challenge each other, have open communications. And we are actually fundamental non-believers in the Uber founder who knows everything, controls everything, the godfather-like figure. Vast majority of the companies, that's not the case. There's a team and an ecosystem behind it that's making huge contributions to the work. So we have this saying that this is often a one plus one equals five. If you get two founders together who complement each other, can make each other successful, easier to maneuver through difficult situations, easier to raise each other's games. We play the role of being coaches for these founders. But even as an active investor, a board member, you only spend so much time. If you have a mutual coach or mutual coaching with a team that's spending 60 hours a week together, it's just a better way to do it. So, yeah. Now, we have plenty of success stories where we back single founders, but then often the immediate task becomes to add to the team, not necessarily finding a co-founder-like person, but adding people who can raise that founder's game in the day-to-day of running the business.
SPEAKER_02:Yeah, I really appreciate what you're saying there. I started Pipeline in 2009, so we're coming up on 14 years now. And it's a long, lonely slog putting together a new company from scratch. I joined a group called Entrepreneur's Organization and did that for several years. I was also part of another organization called Strategic Coach for a few years. And I think that one of the biggest– Benefits to me, they taught me about business. That was helpful for sure. But just being around a group of other business owners and entrepreneurs who are going through the same struggles and understood what it meant to start a company and lead the company, that was hugely beneficial for me.
SPEAKER_03:Yes, we are huge believers in that. And plugging founders into our ecosystem, into our network is a huge part of what we do. But the network only goes so far. Having a lead investor board member who really cares and has experience, I mean, it's what we do, but we're total believers in that. But then also having it on the team every day around the clock is– we believe that– Enterprise value gets mostly built by the full-time, entrepreneurially committed team. And that's where getting this right early on is so important. And also adding team members who are strong enough to be a real part of the leadership and challenge the founders and raise each other's game is a term we use.
SPEAKER_02:Yeah. What are a few maybe changes or differences that founders should expect when building their business with an investment partner versus just bootstrapping it on their own? If I've just accepted funding, what should I be expecting from my VC
SPEAKER_03:partner? So the biggest... the biggest misperception or often raising money is triggered by, well, we need capital to build the product or sell it or whatever. But, and then, and then there's almost a fork in the road, right? Do you get investors who just provide the money and leave you alone? Or do you get an investor who actually actively gets involved and contributes to company building? And they're, different paths, right? And the analogy we sometimes use is you are a tennis player or a soccer team or football team. Do you want to play with a coach or without a coach, right? The just raise money and leave me alone is you play without a coach. You get an experienced company builder as a lead investor and board member, you have a coach. And Our view is that the best of the best tennis players, football players, soccer players have coaches. And that's what we do. And so if you want to be the best of the best, you probably want a good coach.
SPEAKER_02:I love that explanation. I have certainly found that to be true in my own career. I've had sales coaches. I've had business coaches. I was part of those two business coaching groups as well. And they've just been tremendously helpful, you know. Yeah. High-performing athletes have coaches, so why wouldn't we have coaches in business as well?
SPEAKER_03:Yeah, that is something we ask. But there are some very important rules also in how you coach. Probably rule number one is we as investors and board members are there to make the founders and the management team successful. We may have different opinions, actually, but in the end, we... Maybe state those opinions, try to convince founders, well, this would be a good idea. This may be not such a good idea. But in the end, we don't decide. We provide options, ask questions, provide information, but then get out of the way, let the founding team decide, and then back them up, even if we don't agree with the decision necessarily. Partly because it's never black and white. They may be right. We may be wrong. And somebody needs to decide and own the decision. And that must be the founders. It cannot possibly be the investors. And so now when investors violate that rule and it happens regularly, it It's the beginning of a huge mess because you end up with backseat driving of the company. And if you ever found it saying, well, I don't really want to do this, but I kind of have to for my investors, there's something very broken. And it's part of our jobs to build relationships and also behave and how we work with the companies to not end up there.
SPEAKER_02:That is very refreshing to hear and, frankly, kind of surprising. I had always assumed that if you bring a VC on, well, your freedom is over, right? You're going to be controlled by the VC. I just watched this Netflix series, We Crashed, the WeWork story with Adam Newsom, I think. Newman? Newsom? I can't remember now. But anyway, that story was so interesting to me of how this founder of WeWork built the company and– They were never profitable under his leadership, and he was making– arguably some questionable decisions throughout the many years that he was bringing in billions of dollars of funding. And one of the things I found so interesting was there were scenes in this series where the VC team would speak with Adam, the founder, and they would make suggestions, but they would explicitly say, this is your call. You need to make this decision. And I thought, wow, what a, I guess a paradigm shift. I always thought the VC is the one who It really controls things, but maybe that's just not how it is. It
SPEAKER_03:is not how it should be. Sometimes that's what people do, but a good, experienced investor will not do that, even if it's a fairly dysfunctional situation. They're not there every day. You then, in my job, need to do the best you can to support the founding team or the leadership of the company. But trying to micromanage it generally leads to failure.
SPEAKER_02:Yeah, very interesting. Well, when you're trying to determine the value of a company, is there a quick, simple rule of thumb? Just in the beginning, of course, I'm sure there's lots of due diligence that goes into this number later on. But in the beginning, is there a quick rule of thumb for how to value a company?
SPEAKER_03:It's mostly based on... experience and general market conditions. And it's fairly arbitrary actually. And there's also a question of, you know, is this a fashionable area to invest in or not so fashionable area to invest in? It's definitely not an efficient market where it's like a cow. It's in a fairly narrow range. There's a wide range of valuations you can come up with for a given company, especially early on. But if you live in those markets every day, you meet companies, you have conversations, how excited are you about it? Investors will develop an opinion about what they're willing to pay. And then there's a negotiation component. Sometimes it works, sometimes it doesn't. And somebody, one person may see a higher potential value than another one. But it's also a multidimensional game. Reputation of investor, quality of investor, quality of board member is the other dimensions other than just valuation. There are also terms that may be less, there may be a higher valuation, but less attractive terms from one investor versus another.
SPEAKER_02:Yeah. Well, I'm sure that there are plenty of frustrations for the VCs when they're dealing with founders. Looking at it from the opposite end, what are some frustrations that maybe founders sometimes have with their VC partners? Oh, yeah. I have a lot of
SPEAKER_03:those. A few come to mind. One is the VC just doesn't care and doesn't spend the time and is hard to reach and We used to call it the speakerphone board member, not the person that actually comes. It's a little different with Zoom now. But I think there's a social contract, almost implied social contract when you invest. You'll be there to help build that company, not just fair weather sailing, but especially when it gets difficult. And, um, and a lot of VCs, it's comes back to the, uh, you know, to the almost stock pickers. So they buy the stock and kind of see what happens. They don't, they don't try to improve the value of the stock necessarily. So it's a, it's a business you, I've, I believe the longer you do it, you always get better at it. I think every year I'm still getting, getting better at it.
SPEAKER_02:Of course. Yeah. Yeah. Always making progress. Um, uh, What level of return do you look for when making an investment and how long, you know, is that like a, you want, you want your return in a year or two years or five years?
SPEAKER_03:So we, like most early stage venture firms have funds that have a initial lifetime of 10 years with extensions. Realistically, even, 10 years after you start a fund, even 15 years after you start a fund, you're still likely to have some of the often best portfolio companies in there. So it's fairly long-term oriented, especially if you're an early stage investor, because it takes so long to get that initial product build, product market fit, scaling. And there are very few companies that end up being a perfect hockey stick. It's a much more, it goes up, down, up, down. And on average, hopefully it goes up quite a bit. So quite long time constants. And the return expectations are that every investment we make, we have a goal that if the styles line up, if things go great, we return our whole fund on that investment. So it's$100 million fund. If we invest a few million dollars in the company and things really work out 10 years later, that initial investment is worth$100 million. That's our goal. And in every fund, in most funds that we do, we actually have a few companies which achieve that. And then you have a great fund.
SPEAKER_02:Yeah, that's wonderful. I'm sure that this varies widely, so there might not be an easy answer or maybe any answer for this. But is there... a rule of thumb that a founder can keep in mind for how much of the company do they give up in terms of, you know, profit revenue once a VC comes in?
SPEAKER_03:Yeah. Well, they give up equity, right. Um, and yeah. And, um, so yes, there are good rules for, um, for pre-seed round, seed round, A round, et cetera. Um, And yes, they exist. And when we make an investment, we need to just make sure that the capital structure looks reasonable post-investment, also for the next investor, because if it's out of whack, it makes a company less attractive for follow-on investment. So those rules exist. It would probably be too much to get into them right now. And there are also ways to fix capital structures later. One of the classic one is a departed co-founder who owns a whole bunch who's not contributing anymore. We call it dead weight on a cap table. That's not good and often needs to be addressed. if the VCs own too much is a problem, but if they own too little, it's also a problem because if you have, let's say, you raise a few million dollars, you have three or four small investors, they each own two or 3%, nobody cares if anything goes sideways, right? You need your investors to care and be there to help. But if you have so little ownership that has no impact on the fund, people will just disappear the moment it gets difficult.
SPEAKER_02:Yeah, no skin in the game. Yeah. Okay. What do companies who accept investment funding often look like? Are they, you know, just brand new starting off or are they maybe established teams that they already have something put together and they're just looking to scale or is it all of the above?
SPEAKER_03:It's all of the above. We sometimes have a single founder. I mean, the extreme is a single founder with an idea. I want to do something. That's the extreme. And we've done this a whole bunch of times with success. There is maybe at the other end of the spectrum, a team which has worked together for a few years has been kind of stumbling along and are now finally getting it right. There are also situations where people have started as a services business, want to productize it now. That's often a difficult transition to make, but that sometimes happens. We sometimes see prototypes, whether it's hardware or software. We often see customers. We sometimes see customers, especially if it's software-only. It's pretty easy to get some initial customers, users. So it's actually a very wide spectrum. What we typically look for is to be the first significant professional investor And we look for an entrepreneur who looks for somebody who plays that role to help build the foundation for something that can be big.
SPEAKER_02:Yeah, okay. How about some red flags that you've seen working with founders in your career?
SPEAKER_03:Yeah. Probably the biggest red flag is not... not being willing to listen and learn. And it relates to the coaching, actually. Nobody knows everything, especially in tech. It's so hard. You need to be humble, willing to listen, ask questions, be willing to entertain that you're wrong when somebody asks a question and be open-minded. And the know-it-all, leave-me-alone, get-out-of-my-way attitude is a huge red flag. And It is not because, oh, we think we know it and the founder doesn't. It is if you behave that way, you're just not open to coaching. You will not build a team where people challenge each other and have the right level of respect to raise each other's game. But interestingly, in in how founders in our society often get glorified as the Uber founder who knows everything. It's almost the, you know, the popular image of founders is actually exactly the opposite of what works. And it's kind of ironic. So the, you know, the, the humble, well-listening founders were saying, if we don't, if we don't see that, or if we start to get, Poor communication, not being open to questions. That's a huge red flag, both pre- and post-investment. Obviously, pre-investment, we don't invest, but we sometimes get it wrong and it happens post-investment. And trying to fix that is important. And it may or may not work, but it's our problem that we need to improve the communication, make sure trust gets built if that was lost somehow. Trust is a very important thing. As an investor, the founders need to trust the investors. By the way, we love founders who do reference checks on us before we invest. We certainly do reference checks on the founders. You can't fire your investors. It's one of my sayings. So better do reference checks on them. And so... It's part of my job to make sure that open, honest communication and collaboration is there and that it doesn't– and if it gets lost, try to rekindle it. Other things are being driven by money ownership valuation instead of– accomplishing things for customers, for the world, for what they set out to do originally, that's typically a red flag when it's more about how much money do I make as a founder versus how do I build a truly great company. The best way to make a lot of money is to build a truly great company, generally speaking. Also being wasteful with capital is one that's a red flag when people, oh, I just raised a big round, high valuation, and you just start spending it inefficiently is very unfortunate because having a lot of money basically often brings bad habits.
SPEAKER_02:Have you found that it brings... new bad habits or exacerbates existing bad habits?
SPEAKER_03:We've actually seen both. We've seen founders who were, who already had the bad habit and, uh, And well, now it's getting worse. When we invest early on, we try to not let these bad habits get too established. But again, we don't control things. We just try to bring our perspective to the table. But we've definitely seen founders being very frugal and then raise a lot of money. And actually, sometimes it's driven by the later stage investors who say, well, you've got to hire the sales team, be incredibly aggressive. And so it's not just the founders themselves, it's also the environment they end up with. And so even follow-on investors being capital efficient is something we look for. So yes, we've definitely seen that go sideways in later stages of the company. Now, sometimes you actually do need to ramp up the burn quite a bit to just play to win in a market, or if you have figured out the arbitrage of customer acquisition relative to lifetime value, you just want to put fuel on the fire because you're making money, you have a profitable business. But finding the right balance between doing that right and wrong is tricky.
SPEAKER_02:Yeah. You mentioned that pre-investment, a red flag, and post-investment both, a red flag you see is founders not being willing to listen to their VC partners, not being open-minded. Going back to pre-investment, are there other mistakes that you commonly see founders making when seeking that investment capital?
UNKNOWN:Yeah.
SPEAKER_03:Sometimes founders want to come with a more complete team, but don't quite get the team right. So we prefer a founding team of, let's say, two people who are really good to one with five people that's, quote, complete. But it's really not that good. It's also... Pretending or representing to know things that you don't know yet in terms of operating plans, profitability, and time to market and bring a product to market. It's totally okay to say, I don't know. I don't know the answer, but here are the metrics to watch. Here's how I plan to mitigate. Things take longer. Things go sideways. And so the process and getting, we call it getting into the founder's heads, understanding how they think is much more important than the result that comes out at the other end, right? The operating plan of the company for the next 18 months is something we always work on, but how you got there is actually the interesting part. What thoughts went into how quickly you hire, how you build that product, how quickly you bring it to which market segment, how quickly you scale that. And so anyway, that may give you a little bit of a
SPEAKER_02:sense. Yeah, absolutely. Okay, well, just maybe one or two more questions here, and then we'll wrap things up. What expectations should founders be aware of that an investment partner will have of that founder?
SPEAKER_03:It's very important to have an agreement about what is everybody going for in building a company, right? And having a mismatch of expectation of what people want to go for. It's a little bit the underlying expectation, the underlying motivation for building the company. It's very important to have an explicit conversation. And when we have a sense that somebody doesn't have the dream of conquering the world and will actually go for it, we probably shouldn't invest. But also a founder... who raises venture money and brings people like us in who have the ambition to build a great big company, the advice you give for somebody who's shooting for$50,$100 million exit is different from a billion dollar exit. And so there needs to be a match and objectives. Very, very important. The open... and honest communication, a lot of things go sideways every day when you start a company, and we know that. And being open about it, communicating well, asking for help, going in with the expectation that there's an experienced person who cares, to help with those problems that's that's the expectation you you would have of a good investor also always being available you know somebody
SPEAKER_01:yeah
SPEAKER_03:one of my companies calls any time of day weekend uh and there's a problem you need to you need to be there it's totally an expectation oh wait that's the expectation of the founders but actually it goes the other way around too right if something goes sideways the founders need to be there
SPEAKER_02:yeah yeah for sure All right. Well, Axel, that was so interesting. I really did not know much at all about the VC world. So this was fascinating for me. And I'm sure there are a lot of engineering founders to be out there listening to this that find this just hugely valuable information. So thank you so much for sharing all this. If there are founders out there listening to this thinking, wow, this guy, Axel and his firm Baukunz, that sounds perfect for me. How can they get in touch with you?
SPEAKER_03:They can email me. It's axel, A-X-E-L at baukunst.co.
SPEAKER_02:And that's B-A-U-K-U-N-S-T. Dot C-O. Yeah. Dot C-O. Great. Okay. Well, wonderful. Again, thank you so much. I really appreciate you being here. What an interesting and delightful conversation this has been. Thank you, Axel.
SPEAKER_03:Aaron, thank you very much for having me. Really appreciate it.
SPEAKER_02:I'm Aaron Moncur, founder of Pipeline Design and Engineering. If you like what you heard today, please share the episode. To learn how your team can leverage our team's expertise developing turnkey equipment, custom fixtures and automated machines and with product design, visit us at teampipeline.us. Thanks for listening.
