Perfect is the enemy of good. As a start-up, your most important advantage you have is speed. The reality is, every big company can do whatever you’re doing better, with more resources and with more capital. But they can’t move fast, because they have internal processes and politics to deal with. Great entrepreneurs often share, “If you’ve launched and you’re not embarrassed about your first product, you haven’t launched fast enough.”
As part of my series about “Lessons From Inspirational Women Leaders in Tech”, I had the pleasure of interviewing Michele Romanow, a Canadian tech entrepreneur, television personality, board director and venture capitalist. She co-founded Clearbanc, a San Francisco-based provider of revenue sharing solutions to fund new online businesses, and other e-businesses, and made the list of 100 Most Powerful Women in Canada in 2015. She was named as one of the Forbes’ Top 20 Most Disruptive “Millennials on a Mission” in 2013 and Canadian Innovation Awards’ Angel Investor of the Year in 2018. Michele joined the cast of CBC’s Dragons’ Den — the Canadian version of “Shark Tank” — in Season 10. In Fall 2020, she launched “The Revisionaries” — a new podcast on Audible, which features her conversations with start-up luminaries, discussing how they made it through tough times and the clever iterations that led to big breakthroughs. Candid, informative and fun, each episode reveals what it really takes to make it in business and life.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
My parents are Ukrainian and Slovak immigrants. They encouraged me to be an engineer (like good immigrant parents!) so I ended up in civil engineering at Queen’s. I figured out quicky, I was more interested in businesses than engineering, so I opened the first zero-waste café, today known as The Tea Room — it’s still there 14 years later! As one of the ways I tried to fundraise for the Tea Room, we entered a bunch of business plan competitions. Although I didn’t win, my classmate and now business partner, Anatoliy pulled me aside and said to me “next year, we can beat these guys.”
Anatoliy then introduced me to Ryan — known as the smartest guy in engineering chem who was a genius. Anatoliy was a master negotiator who did door-to-door sales during the summer and just refused to take no for an answer.
The three of us then spent countless overnights coming up with business ideas and cold-calling companies. One brainstorm, Anatoliy figured out there was a huge demand for sturgeon caviar but due to sturgeon overfishing, the entire world supply declined by 95%. Fast forward six months later, we had a 50-page business plan, a 20-tab Excel spreadsheet and entered multiple business pitch competitions. We ended up raising about 100,000 dollars. That was the moment I knew that I would be much better building businesses than bridges.
Can you share the most interesting story that happened to you since you began at your company?
I remember packing up Ryan’s Toyota Camry and we drove all the way to St John, New Brunswick, the one of the few places where there were a natural supply of Atlantic sturgeon.
The first thing we found out was that we needed a license to go sturgeon fishing. The problem was, there hasn’t been any available for 25 years. There were only five fishermen left with a sturgeon fishing license and the government couldn’t disclose their names. So, I called back every single day, using a different phone and a different accent each time until I got someone on the other line of the phone who gave me the names of the five people with licenses.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Starting Evandale Caviar was the most gruelling business. Not only did we have to drive two hours just to get the fish, but I physically had to have my hands and my knees deep in fish. We learnt how to make caviar through a series of YouTube videos which were all in Russian. It took quite a few fish to get it right but ultimately, we learned. The lesson here is just because we had a business plan, nothing in reality happened that way. We learned that through execution and perseverance. We pushed ourselves to stop planning and start executing.
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
After figuring out the names of the five fishermen who had sturgeon fishing licenses, I remember making hundreds of cold calls to every “Elmer Smith” I could find in the Yellow Pages. My whole career was a hearing “no” a lot — it was my co-founders who kept me going when things felt impossible.
There were multiple points in time where I felt like this was too hard and it just seemed like one problem after the other. That was when I learned that as an entrepreneur, you need to have an incredible amount of resilience, and not expect things to always work out as you thought they would. If there’s one characteristic of an entrepreneur, it’s never giving up…and you have to keep trying. What encouraged me to keep going was my co-founders Ryan & Anatoliy. It’s so important to surround yourselves with the right people, the ones that also have grit and resilience to push you to the next level.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Definitely my business partner Anatoliy. If it wasn’t for him, I don’t think I would’ve been an entrepreneur. He was the one who convinced me to be an entrepreneur and taught me all the traits of what makes a successful entrepreneur: taking risks, resilience, and how to sell (literally anything).
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Entrepreneurs don’t need an MBA; they need a GSD — a “Get Sh*t Done” Degree
As an entrepreneur, you learn by doing. No degree, course or education is going to teach you how to be a successful entrepreneur. In school we are taught that 95% is better than 90%, which is better than 80%. But as an entrepreneur it’s about executing 3x faster at 65% accuracy all the time. I had to unlearn a lot of what I was taught in school and had to give up the idea of perfection, and exchange that for pushing something out into the market faster than anyone else.
Let’s now shift to the main focus of our interview. We’d love to learn a bit about your company. What is the pain point that your company is helping to address?
After bootstrapping 5 companies, I saw how hard fundraising was as an entrepreneur. I had to run everything on a shoestring budget causing me to grow slower than I could. Traditionally, founders have the option to take bank loans that carry personal guarantees, compounding interest and maturity dates, or equity deals with private investors that take ownership of your business. It’s terribly stressful to have founders have their personal assets on the line if their business fails.
In 2015, I started Clearbanc with my co-founder and partner Andrew D’Souza, and today we’re the biggest ecommerce investor in the world. We give ecommerce companies the capital, data insights, and global network they need to fuel their growth and we’ve invested over 1B dollars into 3,300+ companies using AI to offer businesses a fast and fair alternative to venture capital with non-dilutive revenue-share agreements.
What do you think makes your company stand out? Can you share a story?
I’m an investor on the Canadian version of the Shark Tank television series, Dragons’ Den and one of the things that people don’t know is that when we film the show, we see 250 pitches back-to-back in 17 days.
I remember on the tenth pitch, there was a father-son team making wooden iPhone cases who were like ‘We make each case for 10 dollars, we have 10 dollars in ad spend, we sell it for 50 dollars, and we’re here on the show today looking for a 100,000 dollars for 20% of our company.’
I remember thinking to myself: this is a bad deal for both of us. For them, they’ll be resentful when I own 20% of their company but they did need the 100,000 dollars so I offered a totally different deal type.
Instead of taking 20% of their company, I had them pay me 6% of their revenue until they paid me back 106,000 dollars. This was not debt or a loan at all. There were no personal guarantees, no fixed payment timeline, or compounding interest. It was a true rev share deal and that’s how the first Clearbanc deal started six years ago on the show.
We’ve built an entirely new asset class and are looking to expand into more technologies that can help founders grow their businesses.
Are you working on any exciting new projects now? How do you think that will help people?
This has been a tough year for founders, every business owner has had to pivot. With founders focused on scaling their ecommerce businesses in such a massive way, we knew they needed help more than ever, so we accelerated our product launches to help them adapt and grow.
There’s demand for a few crucial things — inventory, a founder’s biggest expense and a major growth prohibitor if not handled properly. We launched Inventory Financing which has been a game-changer in helping founders buy their inventory without taking risk. Clearbanc buys the inventory and the founder only pays when the product sells off their website. We also launched Valuation, a data platform giving founders real time insights into what their company is worth and how it’s scaling. All part of giving founders the capital, data insights, and building the network they need to grow.
Let’s zoom out a bit and talk in more broad terms. Are you currently satisfied with the status quo regarding women in Tech? What specific changes do you think are needed to change the status quo?
I’m happy to see a ton of resources, networks and non-for-profits emerging to support women but there’s still a lot more work to do for women in tech and entrepreneurship. This is the best time to be a woman in tech or a female entrepreneur. Entrepreneurship is never easy, and there will continue to be setbacks. But this is the strongest spotlight we’ve ever had on the issues women face in tech and entrepreneurship, and it’s easier to start a company than ever before with the rise of technology.
In your opinion, what are the biggest challenges faced by women in Tech that aren’t typically faced by their male counterparts? What would you suggest to address this?
The biggest challenge for women in tech is access to funding. According to Pitchbook, venture funding for female founders has hit its lowest quarterly total in three years. Founders, especially female founders don’t always come from a specific circle nor have the network or connections to access funding.
Clearbanc offers a fundraising alternative. For fast-growing businesses with positive unit economics, we offer funding in exchange for a revenue share of a company’s earnings until it’s paid back. We’re able to back companies in a matter of days versus months or years through traditional venture capital or banks. By using data to make funding decisions, we’ve backed 8x more women founders than the venture capital industry average. We’re here to help millions of people with great ideas that didn’t go to the “right” schools or have the “right” connections to the VC world
What would you advise to another tech leader who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth or sales and “restart their engines”?
Never be comfortable. As soon as you’re comfortable, you stop growing. Push yourself out of your comfort zone. It can be scary for a second, terrifying for another second, and then it’s absolutely exhilarating and thrilling — you’ll quickly realize that you’ve grown a new skill set, a new set of ideas, and a new thing that you feel confident in doing. I find that process really rewarding, because it starts off as fear, and then gets into something real.
Do you have any advice about how companies can create very high performing sales teams?
You have to treat employees like owners. When you treat people as responsible adults and give them access to good data, they can make really good decisions. When you don’t give them access to that information, it’s really hard to explain some of your decisions, which then leads to this circle of not trusting management and not trusting leadership. This has to also be coupled with high accountability — at a start-up unfortunately performance is only things that matters, you have nothing else to fall back on. Build an entrepreneurial culture of trust, and transparency and you’ll be amazed at the performance of your team when they have a founder mentality.
In your specific industry what methods have you found to be most effective in order to find and attract the right customers? Can you share any stories or examples?
My second start up was a competitor in the daily deal space called Buytopia . I remember we had no money to buy TV ads as we were a completely self-funded company, so instead we bought a box of sidewalk chalk and we went outside every big building in downtown Toronto and we would write in massive letters ‘The deal of the day is 20 dollars for a mani-pedi.’
And every night around 7pm, we would go out and chalk our deals everywhere. We had a few angry landlords, but mostly we found a ton of new customers. Plus, the only thing we spent was 25 dollars we spent on chalk and our time.
And so, I think the lesson of this story is you’ve got to be incredibly creative and understand where your customers are.
Based on your experience, can you share 3 or 4 strategies to give your customers the best possible user experience and customer service?
- The best businesses come from a fundamental understanding of the customer, but customer research alone does not work. You need to test, fail, iterate and then test again.
- When building new product features, ask yourself “are we making a difference in the lives of the customers?” A customer-centric mindset is what is going to help you to retain new customers and build a loyal following. The best way to do that is to walk a day in their shoe — and this is a whole lot easier when you’ve been your customer yourself.
- Pretend to be your customer. I call Clearbanc all the time from aliases to see what happens! You’ll be surprised.
As you likely know, this HBR article demonstrates that studies have shown that retaining customers can be far more lucrative than finding new ones. Do you use any specific initiatives to limit customer attrition or customer churn? Can you share some of your advice from your experience about how to limit customer churn?
Retention is the most important metric you need to be paying attention to your business. With the right sales team and a good promo offer, you can get almost anyone to do anything once. You only have a truly valuable product if customers want to do something twice. Provide a great customer experience the first time so customers are inclined to come back to you because they have already built that relationship with your business. Listen to your customers and value their feedback. Understand the reasons why they don’t want to come back and iterate on that feedback.
Based on your experience and success, what are the five most important things one should know in order to create a very successful tech company? Please share a story or an example for each.
- Innovation comes through Iteration. Many businesses don’t take one or two iterations. They take eight or ten iterations to really get right, even with Clearbanc.
- The first 100 customers are always the hardest. Start by doing whatever you can to get their attention. Get scrappy and creative. Our first product at Clearbanc was for Uber drivers so we took Uber rides and pitched the driver during the ride.
- Successful business is built by 95% execution and 5% great ideas. All the planning in the world wouldn’t make me successful and wouldn’t prevent me from failure.
- Perfect is the enemy of good. As a start-up, your most important advantage you have is speed. The reality is, every big company can do whatever you’re doing better, with more resources and with more capital. But they can’t move fast, because they have internal processes and politics to deal with. Great entrepreneurs often share, “If you’ve launched and you’re not embarrassed about your first product, you haven’t launched fast enough.”
- Throw away your ideas that aren’t working and listen to the market. When we started SnapSaves, we started different iterations on how to build a company that digitized consumer-packaged goods coupons. We had a print-at-home website. We had a subscription box company. We tried all sorts of things. We would try something to see if it worked. We would test it with 10,000 dollars and three months of work — if it didn’t work, we move on and try the next thing.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
The movement to help world-changing founders globally. I think entrepreneurs have the best ability to solve the world’s problems. Empowering founders is the absolute best and most effective way to do that. Look at the billions, if not trillions of dollars that the world’s governments have spent on climate change and environmental initiatives. Many of those dollars haven’t resulted in real change. But compare that to the entrepreneurs trying to help the environment, like the folks that started Nest or built electric cars and trucks that people wanted to drive — they have both made a true reduction in carbon footprints
We are very blessed that very prominent leaders read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why?
Definitely Bill and Melinda Gates. At Clearbanc, a huge motivator for us is giving the ownership and power back to founders. To me, Bill and Melinda are the ideal example of this. Bill owned almost 50% of MSFT stock at IPO. Since then, he’s built one of the most impactful non-profits in the world. As for drive and ambition, I have a huge admiration for Selena Williams and Ariana Huffington.
Thank you so much for this. This was very inspirational, and we wish you only continued success!