Build your appetite for risk
Podcast transcription - 4th December
Alan Cowley: Hi. I'm your host Alan Cowley, and welcome to another Invested Investor Podcast. I'm delighted to invite Zoe Peden this week. Zoe is an award winning tech entrepreneur, Social Accelerator committee member, and venture capital investment manager. With a focus on transformational, ready to scale ventures, Zoe's work with Ananda Impact Ventures has transitioned her from founder to investor and also guest lecturer at Cass Business School.
There's your introduction. Thanks for joining us, Zoe. Let's start with your entrepreneurial stuff. What was your influence for getting into founding and the start-up life?
Zoe Peden: Thanks, Alan. That was a great intro. I like that one. I'm going to write that one down. God, how did it all start? I mean, my dad was an entrepreneur, so in the building trade, so everyone around me had always been self-employed, but they were very keen for me actually to get a job in a bank, or as a nurse, or something that was stable, because it was a very unstable environment to grow up in.
But I liked their freedom, I liked the fact that they were their own bosses, so I guess that was, at a young age, an influence, and then after uni I got a job in publishing, and after about 10 years doing that I was kind of getting an itch, and I thought, "Oh, it's that itch. I think I want to start my business. I want to do my own thing. I think I'm ready."
But I hadn't come up with the idea. I started to do a part time MBA hoping that it would influence me a little bit more. I started doing business models, coming up with ideas, and then by that point I was working in a charity, and the charity had this language program of sign language and symbols that we used on books and on VHS videos, and it was an amazing language program that over 100,000 people were using across the UK with learning disabilities to help them with their communication.
It was like 30 years old at the time, really well used. The BBC were using it, the most popular on CBeebies used this language program, with a character called Mr. Tumble, so if anybody's got any kids under the age of three, you'll know about Mr. Tumble and something special. It was amazing, the language program, that had a load of impact, but it wasn't digitized in any way.
I just saw this opportunity when the iPad was released. It was a bigger screen, and this would be great for the symbols to be used, and I thought, "I think this has got some legs to be digitized, digitize this language program, and I think I'm ready to do something for myself as well." And I got into the financial position where I could afford to do that, so I handed in my notice, which was a very long notice period.
I think I did four or five months’ notice, because I was a senior manager at the charity by then, and they kind of said, "Okay, you need to provide evidence that by digitizing our language program you're not going to damage any children," because the iPads were unknown entities at the time. Everybody thought, "Who is going to use an iPad? They're just like an overgrown phone."
Alan Cowley: Yeah, or a small laptop, as well.
Zoe Peden: Yeah, so it's like, "What's the point?" No one saw the point of an iPad, but I could see the use for these for children. They needed a bigger screen. They were already using touchscreen interfaces with assisted technology anyway, but these devices cost between five and 10,000 pound, so when the iPad came out and they were, I think, 329 in the UK, you are totally changing an entire industry to be able to put this assistive technology on a device that's like seven or eight percent of the price of everything else that's out there at the time.
And you could sell it as software, and you could sell it through iTunes, so I got on one of the first ... well, there was no actual iPads in the UK at the time, so I went to New York, got on a plane to get one of the first iPads, and spent the next 12 months demonstrating to the charity-
Alan Cowley: Sorry, you got on a plane to go buy one of the first iPads? Did you queue up and go inside the Apple Store?
Zoe Peden: Yeah, yeah, yeah. I was in the queue, actually. I remember being in that queue. I had never been to New York, so it was like my first time as well, so it was really exciting. I mean, this queue on Fifth Avenue at the store, and there was such a frenzy everywhere, and everyone was going, "How many are you buying?" And I paid for the flight, and there was the hotel. I could only afford to get one, you know? I was in the queue to get one, and everybody else was buying four, or five, or what was it, the maximum that you could do?
But I've got this photo somewhere of me going like this with the iPad, and kissing the box. You know, it was quite a special moment. Yeah, it was a really special moment, because I brought that iPad back, then got to build it with my co-founder who's software developer, and then once that had started to demonstrate, working with speech and language therapists, with teachers, and going out into schools and working with families.
I filmed a lot of families. I started filming right at the beginning, which was just totally the way to do it. I mean, YouTube wasn't as big then. This was like 2010, but I knew it was all about stories, and I wanted to create stories of these people. I thought it was about time that these families and these teachers and the social workers had their stories told about the work they were doing with these children, and adults with learning disabilities.
And the difference technology can make, but also people. It's very much about the people. Technology is the tool when you're working with people with disabilities, and it's very much about the people and how they decide to apply it, so I wanted their story, so it's very, very emotional. Did lots of interviews like this, trying to film the anger of the parents, the frustration around their everyday life, and how communication with their child was so important to them.
And the difference that a tool like this could make in their lives, and just when they've heard their child communicate, either through sign language or through speech, for the first time, using something that you've built is an absolutely incredible story, and to capture this on film was what I did, and I made all these different stories about different people, and showed them to the charity, and they're like, "Okay, you've got enough evidence now. We'll grant you the license."
This was when we built the app, poured everything into this for 12 months, and we still didn't have a license to use the language program, so that was one of the first challenges was like, "Oh my god, we spent all our money, all our time over the last 12 months, and we don't know whether we'll be able to release it."
Because the charity were holding off for some evidence, and we got the evidence. They were happy and they granted the license, so that was like the first hurdle, and the app was released in May, 2011, and I think by the September I was starting to run out of money. I started to apply for jobs. We'd sold-
Alan Cowley: This is just two of you still at this point.
Zoe Peden: Yeah, two of us. We'd sold apps from the first day, so the very first day of release we sold. That was because all of the parents that we'd filmed, they'd started talking about the project they were involved in, and how excited they were. We released these videos on YouTube. Everybody started to share them.
Yeah, and the moms did an amazing job of spreading the word, but yeah, I was still running out of money and then needed to be able to cover the bills, so I started applying for jobs, and I remember, I got down to the last two, for an executive CEO job of a big charity, so it was major, hard work to get there.
And I remember the day they told me I haven't got it, I was crestfallen. It was a part-time job, which would've been perfect, to earn some money while my choice pad got a bit bigger, and I didn't get it, and I was like, "What am I going to do? I don't know how I'm going to be able to afford to pay the rent." And I'd started to pitch at competitions.
TechHub had just been set up. I think I did the second product demo day, where you didn't pitch, you talked about your product, and Mike Butcher was compering. I'd been reading TechCrunch for the previous two years, so since about 2009, watching Seedcamp videos on how to pitch, because there were no other accelerators at the time in the UK.
Seedcamp had just started, and I'd watched how they did it, how they told their story, and I'd practice in the mirror with my hairbrush, just practicing doing these three minute pitches, and I got selected to pitch at the TechHub product demo evening, and that was the first time, and I was so nervous, dressed in a suit because I didn't know what else you wore coming into London, because I lived in the suburbs then.
And Mike Butcher was there, and he gave me the mic, but I didn't know how to hold one. And he said, "Stop. Zoe, we can't hear you." And so I had to stop, and I was so nervous anyway, doing this pitch, and he said, "Hold it like a rock star." I was literally holding it upside down, like this, just talking about what I was trying to do, and then I played one of my videos and showed this little boy Finn, who was three, at the time, I think, maybe two and a half, speaking in sign and speaking to his mom.
And his mom just explaining how important it is to be able to hear him speak like this, and how it's not fair, how frustrated he gets, even though his legs don't work properly, the most frustrated bit is not his movement, it's his inability to communicate, and how this is changing his life, and then afterwards, I put it down, and everybody was like, round of applause, and stuff.
And the amount of people that came up to me afterwards just to shake my hand and say, "This is what I think should be seen." And then I did a second one, a demo, like Tech Pitch 4.5, which I think is still running. It's an event, and there was no theme. They just accepted my pitch. I gave them my deck, and there was 10 of us, and I think I came second in the votes, and in that audience of that second pitch was a guy from Unlimited.
Alan Cowley: Oh, okay.
Zoe Peden: And he emailed me, two or three days after I got that no from that job that I wanted, to say, "Will you submit? We've got a new competition. It's called Big Event Challenge, and we haven't got anybody like you applying. We think tech is the future for impact, and we don't have anybody doing an app or anything like you're doing."
And I looked at the fund, it was massive, and they said, "Do you want three years of cashflow forecast?" My app's weeks old, this is going a bit far, and I don't have the time. It's 48 hours. And he said, "I know it's 48 hours. Don't worry about the cashflow forecast. Just put in your video, say what you're trying to do, and tell them how many sales that you've got so far."
And I did, and then they said, "Right, you're through to the next round." And I was like, "No way." You know, it was just like, "Okay, okay." And then had to be interviewed, and did a Dragon's Den type thing. The Dragon's Den type thing, it was so emotional.
Alan Cowley: Was this an investment committee for a Unlimited?
Zoe Peden: Yeah. It was for that program.
Alan Cowley: Which is full circle, and we'll get to that later, because you're now on that committee, but yeah, sorry. Carry on, carry on.
Zoe Peden: Yeah, yeah, yeah. They had some really big people on that investment committee, including one of the founders of Pret a Manger, and I think he must've had a long day, because he wasn't particularly in a good mood when he got to me, and the tech failed. The big projector that I was trying to hook my laptop in to show didn't work, so I had to get eight people looking at my laptop, and remember, videos were my power, my emotion.
And so it was really hard for them to see that the story that I was trying to tell, and the guy from Pret a Manger, I think his name's Sinclair, tore me to shreds, and he was correct, with hindsight, what he said. Because I was like, "I'm going to do the UK, then I'm going to go to the US." You know, it's all these numbers.
They were, the full hockey stick thing.
Alan Cowley: The hockey stick just shot up.
Zoe Peden: He shook it apart and said, "Hardly anything translates to the US. I think you need to remove all those numbers." And I was totally shot down, and I think it was just the whole nerves of it, but other people around the table could see I was just petrified of everything, and they were very encouraging to me, and very polite, and they were just very nice, but I thought I'd absolutely ruined it again.
First of all, I didn't get the money to live, to get this job, and then I was at the final stage, and there was like 1,000 applicants, and 16 were going to be chosen, and you'd get a 25,000 pound grant, so it meant the difference to me like nothing on earth, and I thought I'd ruined it, so I went out in tears, called my co-founder, said, "I've messed it up. I was just absolutely crucified at the final stage."
And you know, my friend were great, but I was so, so very upset, because there was so much on the line, and then I remember maybe a week later I was in bed, feeling just rotten, and I got a phone call, and it was the director of ventures from Unlimited, and she rang me and she said, "Zoe, you've been selected. I wanted to call you."
And I was like, "What? What? What?" I can still remember where I was. I was still in bed, in my pyjamas, and yeah, it changed everything, because that money, that 25,000 pounds, was so much to me. It meant that I could afford to still do this, and I got a three year support program and a development manager, and my development manager actually works for Arnanda.
He's my boss where I work now, so this is like the full journey of many things here. Hopefully this makes some sense of how it all goes around in a circle. I've got this 25,000, got a development manager, and spent that money on a lot of fuel. Not very environmentally friendly, but I did 66 visits in six months to groups of minimum six teachers, parents, and social workers.
I went to schools, mostly, in lunchtimes, after school, in the breaks, pitching.
Alan Cowley: You were driving to, say, a town?
Zoe Peden: I drove to them all.
Alan Cowley: And then just pinpoint them, and then go to the town the next few days?
Zoe Peden: Yeah, 66 visits, and the reason I could do this, I had the charity that I licensed, the language program that I used to work for, the Makaton Charity have a network of 1,000 tutors of the language program, so through the charity I asked them to set up meetings with a minimum of six people that were relevant to be in there, and I spent my entire Christmas of that year, 2011, booking all these meetings in.
Until like May or June, so every week, I was going, doing two or three, up and down the motorways, in Scotland, went to Northern Ireland. I'd never been to Northern Ireland before. All over the Northwest, Wales, Southwest, one speeding ticket I remember. That was in the Southwest. I did that much mileage, but that's where it all went, and by that I managed to build up, all the revenue started coming to the company.
And then when that 25,000 was nearly spent at the end of May in 2012, I had to apply for this accelerated program called Wayra, which is Telefonica, and I thought, "Maybe they'll let me in, because it's telecommunications." And I did communications, so maybe there's some link, somewhere along those lines.
And I was getting pretty good at my pitch, now. Still extremely nervous. I remember applying, and I think 1,000 people applied again for that, and they only let 16 in again, so it was a similar ratio to Unlimited.
Alan Cowley: Is this the one, Piccadilly Circus?
Zoe Peden: Yeah, yeah. At that point, they were in Totteham Court Road and it was the first time they'd run it, so I was very good at firsts. I was the first of a lot of things, so and yeah, I got selected to pitch at the final day. Really nervous, and then they did this big ... it was a whole entire day of pitching, and then they had pumping music at the end, and we were all there, and they called out the names one by one of who'd got through.
Alan Cowley: Wow.
Zoe Peden: They said there was going to be, I think there was 20 places, and they said, "We've only found 16," and doing the maths and the probability.
Alan Cowley: Sounds a bit like X Factor, doesn't it?
Zoe Peden: It really was, and this pumping music, and then they start, "The first one is, the second one," by the time you'd got to the sixth or the seventh, the colour is draining out of your face because your probability of being selected has just gone right down, and I was either nine
Zoe Peden: ... nine or 11 but it was long enough to feel really sick and everyone around me was going, "Zoe, are you okay?" Particularly the people who knew was afterwards said, "God, you look really sick. I wanted to tell you not to worry because you were through but I couldn't." And when they called and me said, "Come up and get your prize and get your photo," I was just like just get me up and get me out. I just went up really quick, smile, photo, off. And after that it was just like a whirlwind. Wayra was incredible. I made some of the best friends that are still my best friends now.
Eventually they got another three companies in, so there was 19 of us in there for over eight months and it was like how I'd wished university had been. All the peer support, the ups and downs, the stresses. I mean at the end of it I managed to raise angel investment and then further investment from the VCs, but that was where I came out of a bedroom and then to like how a real start-up is run, being immersed into this environment at Wayra .
Alan Cowley: That's really interesting that you've brought that up actually. That you've talked about the stresses that you went through almost and then, obviously, the different accelerators that you went for and you went for that. But do you think that those realities that you've just been talking about are portrayed well in society about the start-up, like the journey that an entrepreneur or entrepreneurs need to go through to get to the point where you were at Wayra ? I know some people are very lucky and they have a great tech product or whatever. But do you think the realities of it, because that sounds pretty hard work, stressful.
Zoe Peden: Yeah, running out of money.
Alan Cowley: Exactly. Touching on the point of bankruptcy and not getting a job and all these kinds of things that play on your mindset, do you think that's understood?
Zoe Peden: I don't think it's talked about often enough. I think it's talked about more now because everyone talks about mental health a lot more these days. But definitely, at the time it wasn't part of the narrative. I always used to wonder how is everyone affording to do this? Because if you had friends who would designers so they could do gigs, little bits of jobs. And software developers who could pick up additional money. I didn't know what I was, Alan. I was product developer. There were no part time jobs, I couldn't do anything. I didn't have anything. I couldn't articulate myself in a skill to be able to hire myself out for a few hours.
No consultancy, I wasn't a finance person, I couldn't do someone's accounts. So I didn't have any other income. And I think that's one of the most stressful things. And if I'd been able to talk to myself as a younger person, I would have said, "Okay, will you just build a skill, just anything where you can earn some money on the side because it's going to hold you in good stead." I mean, I've been able to do it now, but at that point I didn't feel like I had anything that I could sell. And that was one of the most difficult things.
Alan Cowley: That's an interesting point there, because some people say you should have come from a corporate background, maybe, so you understand that life before becoming an entrepreneur. But that's really interesting to say learn something that you can use as you're becoming an entrepreneur in those first few years. I haven't heard that before. That's really interesting.
Zoe Peden: Just have some income coming in to support you because, depending on your business model, but most businesses take a long time to take off the ground. So you're going to have to live off something in between time there.
Alan Cowley: So you talked about getting to the point of bootstrapping your life, let alone the business. The business has run out of money and you don't have a job. That risk at an appetite to keep on going, I know you managed to get onto an accelerator, but that's something that a lot of people don't have. And a lot of people aren't people to live off other money or whatever it is that they're living off. So one, why do you think you've got that risk appetite? And how would you suggest other people, that have a great idea but don't quite have the risk appetite, how would you suggest they push through that?
Zoe Peden: God, I mean, the reason why I think I did it is I felt, at that point, I had no alternative. I was hell-bent, hell-Bent is the word, on making this happen. I'd given up so much.
Alan Cowley: It's interesting. There are alternatives but that's-
Zoe Peden: I couldn't see it. I'd given up so much. I felt I had literally nothing left to lose. When you don't have anything to lose, then your risk appetite's very different. I had nothing left. Personal life was a shambles. It used to be good, I lost everything on that side and I had nothing left. So it was kamikaze, I guess you could call it.
Alan Cowley: Kamikaze?
Zoe Peden: Yeah, I had nothing left.
Alan Cowley: But some people would still retract from that and go back to the charity job and then settle back into that and try and build their personal life or the stuff they might have lost. But there's still a drive there and maybe that's just because you're very driven?
Zoe Peden: Yeah, I mean, I think my mom used to say, "Oh, she's very determined." And all the teachers would describe me as conscientious and determined at school. I don't know, bee in my bonnet. I am an extremely determined person. Yeah. When I look back it's like, "Oh God, how on earth did I do that?" So it's very hard for me to look back and comment on it, still. I still haven't taken it all in.
Alan Cowley: There you go. Here's a platform for it.
Zoe Peden: It's just I was relentless. I had nothing left to lose, so I was going to hit myself into a wall or whatever. This was it. But I could also feel around me, having the unlimited support, when you win things like that it's like you're not on your own anymore. So little tiny things of support where you win stuff you're like, "Okay, maybe I'm not mental."
And also doing, particularly what my MyChoicePad was, when I was really, really low and I'd be like, "What have I done to my life?" I'd get a phone call from parents asking about something, they didn't know how to do something on the app. And I'd swing it around and go, because they were frustrated and I'd listened to what the issue was and I said, "Okay, yeah we can start to rebuild that in a certain way. I just need to raise some more money first. But in the meantime, this is a work around that you can do." And I listened to what they actually wanted to do, which could be done more practically, not just with the technology. And then they tell me their story of their life and the problems that their kid has and what they were use MyChoicePad for and how it actually changed everything.
And that's why they were so frustrated. They couldn't do this one thing because they were using it every day and it was a godsend. And it's the first time that they're speaking to their kid. So they wanted it to do more. And I'd be like, "Oh whoa, okay. I'm doing something. We've started on this journey." I've got to keep doing this because people need it and there's no substitute. There was no alternative. So I guess it's that extra little bit and the speech and language therapists I was working with, they said don't pay me until you've got any monies, Zoe. I understand what it's like, but just keep going. I know it really, really hard. But they were older than me.
"It's going to get better," they'd say. But just knowing that I had these people who would ring me up and check on me. Family, friends, people I was working with, just to keep motivating me. But particularly the customers, just incredible. The moms particularly, just rallied round and would tell everyone about the product and just like, "This is Zoe, she's doing this, let's help her." And just that, I guess, that's the extra.
Alan Cowley: Determination.
Zoe Peden: But doesn't give you the money to pay the bills for this. The crazy determination to take it to depletion of all savings to right till the end.
Alan Cowley: Determination. Support. But it sounds like, as well, the social impact, which we'll get onto in a minute with Ananda. Before we do move on to the investment side, the last thing we heard Wayra , where you've just signed on to Wayra. Let's hear a little bit, obviously you grew the business, but there's really interesting part about you selling the business and then what happened in the subsequent years after that. Because we were chatting about this before and I don't want to ruin it for the listeners, so .
Zoe Peden: Yeah. So yeah, it grew to a certain point and I guess the issue is when you take venture capital money, it needs to grow fast and there's always going to be those that you put the money in and it doesn't grow fast enough for VC. And MyChoicePad was one of those, it didn't grow at the rate that was required for that amount of money but it was a good business. So it was sold on and then I managed to buy the assets back a couple of years ago and now it's being entirely rebuilt. It still grows. It will never be like a VC class type company, but it's a healthy company with a very steady set of customers that keep growing, that are extremely loyal. And yeah, I'm now plowing all my money back into it once again.
MyChoicePad feels like my first car, if you ever feel that way about a car. So you got to service it, it needs looking after, a piece of tech does. So some of this code that's in MyChoicePad, it's nearly 10 years old. So it needs to be rebuilt from the ground up because 10 years of code is a lot of mix in there. So it's being totally rebuilt at the moment. It's obviously still out there being sold, but I'm excited to see what it's going to look like in February, March when it comes out with its new look.
Alan Cowley: It's shiny.
Zoe Peden: It's all new and shiny under the hood. The customers will only notice a few tiny things, but for my peace of mind, the technical architecture will be brand shiny, new, ready and fit for the next 10 years as an app. And with some new features that I think the customers are going to fall in love with again and hopefully we'll get more customers as well. And it continues to be. So it's still mine. It's been through a whole cycle of being someone else's and then now it's back mine again. And I love MyChoicePad and it's my responsibility, probably for the rest of my life, as to what happens to it.
Alan Cowley: Like you say, it's your first car, it's your baby. The thing you have to keep it going. Exactly.
Zoe Peden: Yeah, yeah, got to look after it. And that's my steady state, MyChoicePad now, financially, that allows me to take risks with lots of other things. So other adventures, I've set up an Iris Speaks, which is online speech and language therapy. I have a team of speech and language therapists who provide out of hours support doing speech and language therapy. So that's fantastic. And yeah, it's enabled me to do more on the investment side. Giving you your segue there.
Alan Cowley: That was great timing. Didn't even need to talk about the others. Although there is ZOBI-WAN as well, isn't there?
Zoe Peden: ZOBI-WAN is like my holding company. So MyChoicePad's within there. I've worked with some other charities, including Autistica, to build an anxiety app for people with autism. So, little projects on the side that I can use my experiences to help other people.
Alan Cowley: And we won't talk, in too much detail, about Star Wars otherwise this podcast will just go in a completely different direction. All right, like you said let's move on to the investment side. You are the investment manager at Ananda Impact Ventures. What does Ananda do? What sort of businesses and what kind of impact are you trying to make?
Zoe Peden: Okay, the spiel on an Ananda. So Ananda is a pan European venture capital fund, 10 years old, on its third fund. So it does late seed in series A investments. Typical first ticket is one to two million and we can invest up to seven and a half million in any company. So most of the team's in Munich and there's 2.1 of us. So somebody works one day a week in the London office, which we're sat in now. Which is small but smart. My choice of design in this room, I was able to furnish it. So yeah, it kind of represents me. And it's been a gradual move over to Ananda. When I exited in Insane Logic, they asked me to become a venture partner. So that's the kind of job where somebody who's experienced running their own company, they ask them to come back, provide the network, help them source, help them with some of the companies in their portfolio.
So it's like a couple of days, a month, type thing. That grew from a couple of days a month to, last year, they asked me to do two days a week and now I'm almost full time from September. It's been both sides of us have been checking each other out, whether it's something they wanted to invest in me more, whether I could make that transition from entrepreneur to investor. And for me it was like venture capital was not on my career trajectory or plan. But I've always been interested in the financial side and so I've kind of come around to it and I think it suits me, where I am now. And I think everybody has different stages in their life for different things. The a hundred year life and all that. My first 10 years was product development and corporates. The next 10 years, entrepreneur. Perhaps the next 10 years are in venture capital. No idea what the next 30 or 40 beyond that.
Alan Cowley: What actually do you enjoy or excites you about VC then, the job you're in?
Zoe Peden: I enjoy the fact that it's not so long ago that I was an entrepreneur so I can still tap into my mentality, the why I'm making certain decisions, which for pure investors us sometimes entrepreneurs come across as quite crazy or unpredictable or erratic. I think if you understand what's going on in their life at that time and those pressures, like I described before, they are making decisions with a very different context to an investor. And it's understanding why they're making the decisions and putting that into play. And when there is negotiation to be had, to have that understanding. So I enjoy having that insight now. I know that's not always going to be the way. The more I am an investor, the more removed I will come from that.
Alan Cowley: I enjoy the buzz and the energy that you get when you meet entrepreneurs. Apparently I've still got lots of buzz and energy too. So when other investors meet me, they come away like buzzing.
Zoe Peden: You're still an entrepreneur though. It's not like VC.
Alan Cowley: Yeah, I guess I still do that too. Yeah. And I'm actually enjoying, because my background is health, education and social care. So 20 years in those sectors selling and building, they're hard sectors. So I enjoy having that background to fall upon but Ananda, they don't hold my reigns too tight, so how I get to look at cybersecurity, I get to look at FinTech, I get to look at earth science. All these things that I've read about, I touch upon. I get to research and then speak to people who are like this is their domain and their passion. And it becomes my passion as well.
I mean, yeah, construction. My dad used to work in that. Finding more about what's going on in that industry at the moment. Aviation and shipping, all these environmental impact things. What's going on in that world? I feel really lucky to be involved in Ananda because it feels a lot of the rest of the investment world is suddenly starting to pick up on impact investing. It's becoming more mainstream, it's becoming a factor in everyday life as to what food people eat, what clothes people buy and where people want to see their pensions being invested in as well. So I feel I'm in the thick of it, there can't be any better place, can there?
No, I think so. What about the actual process that you take as an investment manager? Spotting the gap in the market, the risk appetite of an entrepreneur, whether or not they’re the right fit, have they got the drive for it? Obviously you've been there, so you can hopefully spot it in yourself, but how do you spot it in people that aren't quite like you or anything like that? How would you kind of ...
Zoe Peden: Oh, it's a real mix. I mean, there's no one way, and I think all investors will say that. So I have multiple heads, different types. Hopefully I look for diversity. We'll probably over index
Zoe Peden: ... on socioeconomic background, the more someone has had to fight. Whether that's being an immigrant in this country or through being working class. I'm going to favour with them a little bit more, because I like a bit of grit in an entrepreneur. I think a lot of it's about resilience, as you just heard from my experience. If I didn't have that, I wouldn't be sat here now. So I like a fighter. Anyone who is going to fall over at the first hurdle, you don't want to put that money behind them, and someone else's money at that too, not just yours.
Alan Cowley: Yeah.
Zoe Peden: So a fighter, I'm going to over index on that. I will, obviously there's those that are coming at series A, you've kind of known them around for a while. With me being on the scene for 10 years, I will know most of those people coming through and around on the series A, or my network will. That tends to be you're looking at the metrics, looking at the team, they're more fully formed and what you can add to that. So that's a different kind of investing, the seeds and the late seed. It's a combination of that. One day I can be looking at the market, so I can have a thesis and I'm looking, okay, I want to find something in cybersecurity that's going to have some big social impact because we haven't got anything like that in the portfolio. I think it will really add something to it and diversify our risk as investors as well within the portfolio.
And so I'll go out and look for what's out there, and then I will look at what stage everyone's at and then decide upon which is the one I think is the better deal for the returns that I could possibly get. So that's more of a mechanical thesis driven approach, and then there's all my friends and network referring things to me, which totally throws the rest of it out the window. That's the spontaneity and how can you react to this and what's going on in the market. That's the bit where you need to be careful about the sheep thing as an investor, because you get in on it because other people are on it, and that in one way de-risks your investment. So that's the enticement and that's where the sheep mentality of investors comes in. "Oh, such and such is getting on. They've got 10 million to spend. That will match our seven and a half, so we won't be alone in the next round when things don't work out," which is the normal way.
So there's an element of truth in that, but it's almost factoring in the bit where you need to go beyond that. Just because someone else is going in, it doesn't necessarily mean that's the right thing to do. And that's a strength of your conviction as an individual investor and as a team if investors too, because remember, I'm not alone. I think there's seven of us all together and we'll all talk to each other even though they're in Munich and they'll take apart our sheep mentality. "So what? Have you looked at this?" And then that's why not being alone is good and why I prefer to work as a team when making these investment decisions.
Alan Cowley: I don't know how much you're allowed to give away, but when you put forward a company to be invested in, if one person out of the seven that you just spoke of says no, is that a concrete no?
Zoe Peden: Well, I haven't been involved in enough where it's been like there's only been one. In certain cases, yeah, it's going to be very difficult depending on who that is to get something over the line. It's rare-
Alan Cowley: But is that a good thing, though? That at least one person within your team is saying no?
Zoe Peden: Yeah, I mean, there's always a lot of no's, you have to do quite a lot. It starts with no, it never starts with yes, which is good because it makes you question everything that you're doing. And you know, I'm learning to be a good investor, so I need those no's, I need them to come back at me and say, "No, this is the reason no, unless you demonstrate this." So with the entrepreneur, if I can't work on a particular thing, like you see a lot of early ones coming out, spinning out products from consultancies. Are they just a consultancy or this is a product? Where's the product roadmap? Demonstrate that to me.
You know, absolutely sensible stuff, or for instance on the German deal, a lot of the time I'll go, "This is great for Germany, but this won't translate to the UK and the US," and that's where I'll come back on the German team, where your markets are entirely different to the way they're structured. Look at that valuation, is it a good valuation if it's just going to be Germany only? So you know, I've got my little bit too that I can give back on.
Alan Cowley: That must be fascinating to see that actually, the difference between the companies even, let alone the markets and the industries.
Zoe Peden: Yeah, but it's kind of nice to have that stretch across Europe as well. This understanding of the different markets, and is this a US play, or can this, because our strength is in Europe, can this play towards Europe and can the German team help? If we invested something in the UK, can they help them with the market in Germany? That's obviously one of our USPs as a Munich based VC spreading across Europe.
Alan Cowley: Well, let's not talk about Europe in the sense that everyone wants to probably not hear about it. But in terms of the government actually, so something that we had a chat about before and it'd be great to hear your view on it for the listeners, is scaling, and this government push to scale businesses and reach the heights of your tech giants in Silicon Valley and and whatnot. What are your thoughts on this and how do you think the pressure of scaling is kind of impacting start-ups in this country?
Zoe Peden: Well, there's different ways you can look at it. I understand the message to get more scaling from a market's perspective, because if you look at the stage that you see most of UK exits, it's before they become really big. So I think there's a frustration that the people acquiring us are Asian or American competitors coming in and we're not doing it the other way round. Because the bigger we are, the more taxation, the more corporation tax that we're paying, and the more people that we're employing as well. So it's definitely healthy from a government perspective to have some of these really big companies.
From an entrepreneur's perspective, it's going to be really unusual for you to survive as the CEO in a company like that. So it depends what kind of company you want to have. I think if you're okay with someone else coming in after five years or so as the CEO, and you can go off to the side and be the chief innovation officer, that's what normally happens to us, especially all the product ones, then that's fine. But what kind of journey do you want to have? I think there's different types of entrepreneurs out there for different kinds of companies, and that's all fine.
Alan Cowley: Do you think that there's a mentality difference, though? I presume the UK government is looking at these US companies and Asian companies that are scaling, do you think we have a mentality within our entrepreneurs and our start-up ecosystem whereby I don't actually really mind about being a hundred million pound company, I'm quite happy to settle at 20, 30 million and sell out. You know?
Zoe Peden: I think some of the older ones will want the really big ones. If you've been through it a few times, the crazy serial entrepreneurs, you keep doing it again and again and again. You're either going to go one way where you go, lifestyle, you know, I don't want to put this pressure on me, or you go the sociopath route where, and there's plenty of us, and I say U-S, it's us, that are on that, that want to go big and mega is the only way. So yeah, I think there's certainly people out there, there's the appetite.
Alan Cowley: A mixture.
Zoe Peden: Yeah, and I think it comes when you've done it a few times as well. You get a hunger, you've got the networks, there's always going to be those who will stick their neck out and do it. So yeah, I think it's just there's more Americans, you know, numbers wise.
Alan Cowley: There are. Yeah, yeah.
Zoe Peden: We can't fight that one. We'll try. There's more of them, but no, there's definitely the appetite here.
Alan Cowley: Yeah.
Zoe Peden: Yeah, there's definitely enough crazy people to want to be the next Elon Musk. Yeah. It's just, but think about his trajectory and what happened to him. He had a lot of money. We need some really big exits. So those people that do sell to the Chinese, to the Japanese, to the Americans, then need to go back in and do it again and risk it all, because that's how it's all done. You've got to be crazy enough and there's got to be enough of them and have their circles, so they all support each other in doing that and invest in each of as well. You know, PayPal mafia again over here, then it's going to work.
You've seen it a little bit in Scandinavia, the Klarna, the founders that are all putting their money into very interesting things. So it's starting to happen, and there's some of the Klarna founders are putting their money into impact stuff. So yeah, it can happen in many, many different ways. Big, big, massive ambitions, but it needs some billion pound exits and then you're going to see more of them doing it and not selling out. They'll stick, because they'll put their own money in and not rely on investors.
Alan Cowley: And then just keep that cycle going.
Zoe Peden: Yeah.
Alan Cowley: I guess the US just started maybe a little bit before us, and obviously are just bigger, with bigger pockets.
Zoe Peden: Yeah. We need some really, really big ones and the need to go back in and do it again.
Alan Cowley: Yeah. Okay, so let's just move on to talk about how you give back. So you are, like we said at the beginning, you're on the investment committee of Unlimited, and you're also a guest lecturer at the Cass Business School. What's driven you to want to spin it around and give back in that way?
Zoe Peden: Well, the Unlimited one is really obvious. I think I'm the biggest promoter of them. The amount of times I've told what Unlimited did for me, you know, to so many people, I mean they changed my life. That is the easiest way of looking at it, is a Sliding Doors moment. That phone call, in bed, in the pyjamas, it could have gone one way or the other, and it went the other and I'm here. So for that I will be forever grateful for, and I do talks a lot of the time and always mention Unlimited. When they asked me to be on the investment committee for Thrive, I was like, "Yeah." Because just the privilege of being on the other side when everything that they did, you know, they took a chance on me and it was a really difficult time. You know, those three years, they were there for me personally as well. The early stage of entrepreneurship is quite a fragile one, the ups and downs are quite horrendous, and they were there throughout that whole time. So yeah, easy, easy decision to spend time with Unlimited.
Cass, that actually, that opportunity came through a friend that I met in Wayra, so that group of mates that are going to be my start-up mates forever, they went on to build start-ups that's still going strong now. Some of them didn't work out. Then other people got jobs, and one of them got a job as, she's Head of Entrepreneurship at Cass Business School, and she said, "I'd like to get some real entrepreneurs teaching to level up the academics that we've got on our new program, a Master's in entrepreneurship. Will you come in and speak to the professor who's designing the course?"
I said, "I can, but I've got no teaching experience. All I can talk about is what I don't like, because I've done an MBA and I know how I didn't like being taught, and what I found useless on an MBA and what I found useful, and the things that I think should be taught if you're going to be an entrepreneur." So I said that and they said yeah, and they just threw me in a classroom. I had to write my own program. I was terrified. 70 kids. Well, not kids, they're like mid-twenties, and you know, I almost did it like a start-up. I kind of planned it out, but at the end of each lesson I'd get feedback and so I'd adjust the program for the next week based on that feedback. So it was almost like you had a full iteration cycle to find out what people want to be taught or how, and the techniques that they want. Don't want to do groups, did they want to do presentations?
It was like finding out everything. So the first year was really quite tricky. Second year was more polished. Third year, that was good.
Alan Cowley: Nailed it.
Zoe Peden: Yeah. Nailed it, nailed it. And so I've been teaching customer development, so getting your first sales, market research for the last three years, and this year I'm teaching raising finance now that it fits with my new role as an investor. But I said, if I'm going to teach this one, I don't want it just to be all about VC, because I think that's an unhealthy approach. I think that you can have different types of business, and all the different types are fine, but there's different financing for different, you know, those businesses.
So it's being aware of what those are and listening, getting other entrepreneurs and to talk about their stories crowdfunding and getting some angel investors in, what they look for. I can obviously cover the venture capital stuff personally, and then about having side businesses and how you can actually earn money while building a business so that you can maintain the lifestyle of an entrepreneur beyond Ramen noodles, and paid rent and actually live healthily.
Alan Cowley: The best story I heard about this is actually a couple of podcasts ago, a guy in Ireland, Ronan, his company is to do with salons, but he needed to go back and find some money like yourself, needed to get to that point. So he went and worked at a salon, earned his money, did his market research, earned his money at the same time.
Zoe Peden: That's good.
Alan Cowley: Let's talk about the future. What excites you about the future, and what's the plan? You talked about your 10 year cycles, you're in the middle of a VC at the moment. What's next?
Zoe Peden: Yeah, I only just really started the VC one.
Alan Cowley: Only just started, sorry.
Zoe Peden: Yeah, I'm not that old, yet. I think I've still got a lot to learn about the venture capital industry. I think itself, it's going through a lot of change. So I'm kind of glad to be on that wave of change. The impact investing world too is rapidly moving. Lots of mainstream investors are moving into that space. It's fantastic. Fantastic as an impact investor and for the entrepreneurs, and I feel like I'm seeing, you know, talking to lots of other investors, meeting them, seeing where their appetites are, you can start to feel how you can whip up a round between you when you see a good entrepreneur. I could say, "Okay, I want to go in on this one," get on the phone, start to bring other investors in, shorten that time span for them to raise, because it takes them off sales.
I'm starting to understand how this industry works and what it can be, and I think VCs get a lot of criticism. It's very easy to criticize one, and because there's lots of pompous people out there, you know, it's all very power play, but I actually see how they can be a positive thing too in society. I want to be in that circle of people, the new breed of VC, where we think ethically about where we invest and how we invest. How we treat founders, how those founders treat their teams, and just think about the full externalities of venture capital and funding to have less negative externalities in what it does and look at it as a more holistic approach.
That's a load of mumbo jumbo, that sounds like, but I think there's a lot of negative things that have come out of venture capital in the past and I don't think it necessarily needs to be that way. I think we don't need to compromise on returns, but I think a more balanced approach to how we invest needs to be looked at, rather than just these billion dollar exits.
Alan Cowley: Yeah.
Zoe Peden: I think some more, and I think Ananda are not the only ones who are taking a more balanced approach. I think a lot of the people are looking at that portfolio and what they invest in a lot more carefully now. So, I think that's going to be a lot more healthy VC coming in the future, which I'm really happy to be involved in and see where it all goes. It's all change.
Alan Cowley: All change. Well, there's change, but there's also MyChoicePad, which you're still keeping on going and growing.
Zoe Peden: Yeah, yeah.
Alan Cowley: In the show notes of this, we'll let the listeners be able to go and have a look at MyChoicePad and follow you into next year. Zoe, it's been absolutely fascinating, and it's something that, you touched on a few points in this podcast that you we haven’t had touched on before on these podcasts.
Zoe Peden: Thanks Alan.
