 Community Matters. I'm Jay Fidel here on a given especially wet and power failure Tuesday here in Honolulu and we are talking with Aaron Solomon. He's with Esquire Digital and he's a lawyer and he's a what legal analyst, legal analyst manager, a Montreal for Esquire Digital. Hi Aaron. Hi Jay, thanks for having me. Really happy to have a chat today. Very exciting. I didn't realize that Esquire had gone so far as to become digital and I guess it's the Esquire that is to appeal to the entrepreneurs and the startups. Am I right? Well actually what we do at Esquire Digital is we basically help lawyers grow their businesses but I comment around the world on really important issues where the law intersects with other things in our society. Great important especially now and I guess my first question is you know if you're following startups and you're following entrepreneurial activities and development of new products of every kind of nature everywhere, how has the world changed in COVID? How is the world changing now? You know everything else is changing so this must be changing too. You know so it's a great question and I've really been surprised since 2020 as I was telling you before we started our broadcast. I was living in Berlin for a few years and in Berlin I was actually the head of growth with one of the big startup accelerators in Europe and I really was surprised from what I've seen since the beginning of COVID because I'm very surprised to see so much money out there chasing really early stage startups. It's really surprising. It's almost like COVID began and all this venture money and listen we all know the venture capital model, right? You've got to hit that grand slam and it's really no big deal if when you do so you get a fair amount of strikeouts. So everybody's chasing after that grand slam with in some ways I think just silly money that's out there so that's been surprising to me since let's say early 2020. You know I also wanted to ask you I know it's a digression but I asked you about the quality of entrepreneurship the quality of especially you know computer software entrepreneurship in Germany. You know I've always been impressed with how good they are and how much they come up with and how they work as teams and so forth and I am thinking by the way of a movie I saw recently called The Billion Dollar Code and it's the story of how Google stole I mean arguably allegedly stole Google Earth from a group of German programmers in Berlin and it portrayed you know the way they work together it also portrayed the way the American court system legal system worked in order to favor Google when they sued them in Delaware which was the you know state of incorporation for Google. What are your thoughts about the you know the creativity the quality of their entrepreneurial work? So I've got to I've got to answer this question by drawing a delineation. So I think that there's a big delineation between technical ability of developers and entrepreneurial culture so I'll answer the first part of the question first in which I totally agree with you. The quality of the developers who can you even founders who come from a tech background in places like Berlin again it's hard to say Germany as a whole because even though it's physically small country there's so many people but in a startup public Berlin the tech quality is very high it's also made even higher by the fact that Berlin is one hour from the Polish border and as we know in Eastern Europe and some of the former Soviet republics the you know inexpensive developer quality is fantastic. Then the second part of my answer is the entrepreneurial culture in Germany which is just horrible even in somewhere like Berlin. Germany as a whole is 20 years behind Silicon Valley when it comes to entrepreneurial culture. On my better days in Germany I'd like to think that they were 10 years behind and then the next day I'd have a bad day and I'd say it was 30 years but let's average it out to the fact that they're right around the turn of the century when it comes to the notion of entrepreneurial culture the idea of like hey kids let's go do a startup it's nowhere like it is you know that's apparent in the movie you know they were they were brilliant in the way they set it up they invented it but then when they got into trying to make it work they commercialized it that was that was where it got stuck and they lost it. Yeah I believe it's I could tell some some great Berlin stories but yeah we'll move on nonetheless. Yeah let's move on to MVP and IVP okay and this is you know maybe central in the whole notion of finding the way to present your product to I said I guess capital concentrations and to the public on the continuum of putting it out there commercializing it making making it successful so first let's talk about the classical MVP what is that and how does that play in the continuum? I'll answer that but let me just say just a little touch about my background first so the what kind of got me thinking a lot about MVPs and IVPs was the fact that I've been an entrepreneur had my own startups but also worked with a lot of entrepreneurs over the past 25 years I was actually one of Peter Teal's first mentors for the Teal Fellowship in San Francisco I designed and taught an entrepreneurship course in education technology at the University of Pennsylvania and most recently I taught a practical entrepreneurship course based on Alex Osterwalder's business model at McGill University so a lot of what I've been thinking about with the MVP and IVP is actually influenced by the ideas of my students so what we teach students is you know the idea of an MVP is your minimum viable product just put together a minimum viable product and you can go raise money and you can take it to market the problem is MVPs are subjective right what might be minimum to you might not yet be minimum or minimal depending on how you define it to me there isn't like one practical working definition for every entrepreneur to understand whether their product is sufficiently built out sufficiently advanced to take it to market so the MVP is the first thing you would consider taking to market can we make a case study here yeah um can we you know let's pick a product and you can help me flesh it out I'll pick a great one because it's in the news all the time and I actually do a lot of legal commenting on NBC for this it's the Elizabeth Holmes trial and of course she was the founder and CEO of a company called Theros for those who don't remember Theranos they had this technology that was going to revolutionize how we drew blood instead of you know putting the needle in your arm and drawing a lot of blood it was going to be a fingerprint and take a little little bit so she invented this black box called Edison and her MVP one would think would be a functional black box that probably didn't look great but essentially took that little little bit of blood and was able to do the tests and the analysis that you wanted to do however her MVP didn't work so that's a good definition of an MVP that was not yet M it was pre-minimal so I think that's a good one that we could talk about is the Theranos box that analyzed their blood okay by the way just my reaction is if it didn't work and she was going out in public and showing her MVP that didn't work she was shooting herself in the foot and that was a burden to carry for the rest of the project no I mean this is this is really bad to have that happen and it is really bad which is why she may spend up to 20 years in prison but even though it was really bad you know this 18 year old Stanford dropout managed to raise hundreds of millions of dollars and trust me Jay I've seen people talk to me about their ideas and their MVPs and I was thinking I'm more wrong than right when it comes to startups I was thinking there's no way these guys are ever going to raise any money and six months later they're sending me a note they raised the five million dollar app so you know sometimes what do I know well who's the audience on this sort of thing so now you have an MVP you're presenting it as an MVP um and you know you're you're you're doing a pitch to somebody yeah who is that person so it's people who are involved in the game of risk capitals now we don't necessarily need to you know talk about all the stages of fundraising but really your first round that you should always raise would be friends and family that said friends and family round is also risk capital if you're going to your uncle moses and you say hey listen mo you know how do you feel about giving me 10 000 for this business he's expecting a return even though he may not be an accredited investor even though he may be an amateur you know uncle moses is thinking that he's going to give you 10 grand and he's going to end up with a million one day so no matter who gives you money and no matter how early it is risk capital and it's often money that people or even institutions can't afford to lose but if you already have some money of your own then maybe your MVP is for your seed round where you're going to try to raise I don't know 50 70 100 500 000 to get that product past the MVP stage I'm sure I'm sure that the uncle part of it is secondary to the making a return part of it I would think so especially when it comes to the next family picnic and he's talking you and you're running away from him like I've nothing to tell you so okay so talking you're talking to somebody who has some capital and you're talking in MVP what in the black box condition I mean the black box scenario I mean the black box that takes blood that black box what are you saying what are you saying to this person what's what's the what's the pitch at the MVP level so what it should be at the MVP level is okay listen we built this thing it's going to be this device called Addison and it's going to be a black box but right now honestly the box itself is kind of fake what I want to show you today is the fact that we can take a far less bit of blood than you would usually take in a blood test and I want to show you the test that can be performed on this bit of blood so what you're doing is you're proving that you've got at least a minimally viable technology that's going to do some of the things that you say it does so then as an investor I'm going to say okay this is cool so it shows it can show for example blood sugar what can your box do in the future so now we're going to talk about the stages that go beyond MVP and that's the point where you tell an investor well it's going to do these 19 other different tests that has never been done with this little bit of blood and you're going to say well can it do it right now no no no all it can do right now at the MVP stage is test blood sugar okay that's good to know but it does that right yes it does that well that would encourage me as an investor okay at least we have that at least we have that and if we have that then it's a matter of just copying the approach copying the research copying the whole technique and maybe doing other functionality as well yes okay so now now I change the scenario on you and I ask you to pitch um we maybe we should define this first pitch for an IVP that's different initial um what initial uh what's the term viable product viable product yeah so how does that differ so I thought of this term IVP again through a lot of work with my students and a lot of startups that I've seen and you know kind of along the startup continuum I really see an IVP as an MVP where you've had an opportunity to get feedback on it measure what the MVP does and continue to iterate so if you want to think of an MVP as a technology that's half baked let's say your IVP is you know three quarters or five sixth baked so if we want to stick to the black box idea now you've got something that is more saleable a lot more people a lot like pharmacies like Walgreens or CVS are going to want to work with your box it does a lot more tests than it did in the MVP the box probably looks more functional and Walgreens can imagine having it in their stores and just use the size of it it's not just like you know box that you put together to house your technical things on the inside it's not done yet because you know especially when it comes to hardware in our example hardware may never be done I say this is somebody who owns actually I own a watch company I have a watch startup that we did in 2017 and we're on our fourth watch model right now we're always thinking about different things that we want to build different technologies within it so we're never gonna be able to say we're done nor was fairness in our example ever going to be able to say they're done but the IVP is further along with the continuum from idea to finish product than the MVP is so you know the choice of those terms confuses me I would see let's see I would say initial comes before minimal but you're saying that minimal comes before initial right because minimal is like generally what you see in an MVP is not what if you want to call it a whole viable product it's like a piece of something that it can do and what I think of when I think of an IVP is an initial initial truly viable product so maybe I should have put it if I think of the MVP is something that's often the reality is as startups rush to this starting line they're putting together often MVPs that just aren't workable what I'm saying with an IVP is it's your initial really viable product so it's an initial of the final yeah it's an exactly you can see the outline of the final right because often what happens in an MVP is investors get approached and they ask a lot of questions they understand that the MVP doesn't do anything near what they needed to do and then they say okay well I guess come back to me in six months when you have like a real MVP what they're actually saying is come back to me in six months when you have an IVP what about come back to me in six months when you got some patent protection yeah or come back to me in six months when you have a revenue see here's the thing like there's always excuses for investors who don't want to invest there always will be and it's frustrating for startup founders especially first time startup founders who say I'm hearing I need to show X I show X they tell me I need to show Y I show Y they tell me I need to show Z and it goes on and on and on and on but again the people who have the money create the rules of the game sure they do and there's so many there's 57 ways to leave your lover keep thinking of these things well you know god you know this whole conversation sounds like shark tank have you have you you make a comparison with this kind of crucible with shark tank well I mean sometimes it is like I've been on both ends I've been on the investor end I've been on the venture partner end of people pitching to me I actually did a fair amount of work and helped set up an accelerator in Beijing for a large Chinese investment fund so I had a lot of companies come to us trying to get funding and trying to get their support and entry into the Chinese market I've also been a startup founder so I've been on the I'd like some risk capital end of things and sometimes it's kind of artificially shark tankish sometimes the you're you're in a very serious room with very serious investors and it feels a little bit shark tankish but the best investors know how to kind of de-stress and de-accelerate the situation and have a really honest open conversation with founders one of the things that founders get put in the position of and I don't think it's their fault is when investors want to know about revenue you know somebody's got an MVP the thing isn't even done yet and they're saying what do you project your revenues going to be in the next two years what's your exit strategy and what I don't really want yeah what founders really want to say is hey dude I don't even have this thing done yet but instead they come up with really horrible numbers and they bite back and forth and nobody believes anybody it's it's a strange game sometimes you gotta make you gotta make it up to answer the question and the question is really unfair so what once your advice to the venture capitalist or or Moses the uncle you know when when you know talking about an MVP where you ask a question like that you know you're going to get a well I said an unreliable answer I'll give the advice to Moses the uncle first go hug your nephew or your niece and say I love you and I'm not investing in the company and just keep family relations as far as the venture capitalist go I just think that the more honest the dialogue can be you wouldn't believe Jay how many VC funds I've seen lead early stage and first time founders on where they haven't even raised the fund yet they're not even honest saying listen I'm trying to line up 10 investments and then we're going to go to general partners so we're going to go to liberal limit partners and we're going to say hey you know we need to get this money from you so we can close the fund they basically say to early stage founders they speak in a way that they think they have the money so they say we want to invest in you and then two months past three months past six months past they haven't raised the fund yet and that company ends up going out of business I think that there should be more transparency and honesty on both sides of the table yeah wow amen to that that'd be great and you know it wouldn't have the kind of baggage that we have now in the entrepreneurial game so you know you've been teaching you've been writing and I was reading the list of publications in which you have appeared and I got a I got a case of eye strain so I stopped after like 27 of them you've been writing a lot you've been you've been sharing your experience in Germany and otherwise with the community and you've been trying I'm guessing here and asking for you to confirm trying to help the entrepreneurial community the startups make a better game of it um and that's that's really important to you I mean I know a guy in your you know position can get involved in these companies and make some money but but this seems to be an overarching interest in your pattern of activity that suggests you want to see entrepreneurs be better and make more progress and profit so there's a lot in there the first thing is I blame your eye strain on the fact that at Esquire Digital we've got an excellent PR team that gets us in the top publications in the world so I'll pass on your compliments there the second thing is yeah I want to make the system better I want to make it better for everybody but you know I also am somebody who startups know hands out a lot of tough love just like I've had a lot of tough love handed back to me I'll give you an example and I'm not saying this in any way to make fun of these students I'm just simply to point something out so it was you know the pandemic was about six months old and we were working on some student projects to actually go out and get funding and do real startups and one student group was determined that they were going to go out and start a co-working space here in Montreal and I said to them okay well we're six months into the startup nobody's working in person right now secondly you've got established startups that have raised hundreds of millions of dollars that are closing down companies like WeWork and Breather so tell me before I judge you basically why you think you can have a competitive and comparative advantage in maybe the worst time in the past 100 years to go set up a working space and they didn't have the answers but they decided to try to move forward with it and it kind of bogged my mind I mean like yeah there's sometimes as they say in China you know opportunity can be created out of crisis but there's other times not to and this was one of the times not to I really don't think that that was the great time to do co-working spaces where people physically co-work and I've actually seen co-working spaces in fact the one that I was working with in Berlin the startup accelerator they went out and declared bankruptcy because co-working is a tough business model anytime especially when there's a pandemic so again the long answer to your short question is I want both sides of the table investors and startups to work well with each other and I'd like startups that have products whether it's hardware or software that people can enjoy and can make the world a better place or at least not make the world a worse place succeed and that's why I think I've been you know reasonably generous in sharing my time and attention and a few decades of experience because like I'm super close to turning 60 and I think I'd like to do this kind of for the rest of my that's great you know we've been we've been studying some of the bizarre cases involving national action not to us so much but in Europe against companies corporations multinational corporations that engage and support and encourage atrocities and war crimes and what's interesting is you know I think there's enough of a hub of about this to suggest that maybe there's a new sort of impact an impact activity and thus an impact investment conscience coming into these multinationals you know you can't do that somebody is going to sue you and get big bucks from you if you do that if you if you if you encourage for example genocide in Sudan or or in you know Rwanda or anything like that if we catch you're doing that you're going to pay and so stockholders don't like that directors lose their jobs officers lose their jobs when when that judgment comes down this is a big case pending in Sweden so you know I'm thinking I'm thinking that part of what you're talking about the engagement between you the advisor and the students entrepreneurs startups maybe we're coming to a time where the impact is important the conscience the morality of what they're doing is important am I right so the good news jay is that this generation of really like the students I've worked with these universities I believe schools right are super elite they come from all over the world they've got this social responsibility thing them trust me they're usually coming at this with very very good hearts but I'll tell you the piece that I fear a lot of them think that if you just go out there and do good you're going to change the world and I tell them going out there and doing good without a business model isn't going to work if your idea is you're going to start a nonprofit and you're going to have your hand in everybody's pockets you're not going to get a lot of impact that way so yes there are more impact funds there are more companies who are thinking in a socially responsible way but I got to also argue the counterpoint why are we having the Beijing Olympics in 54 days in a country that's committing an internal genocide the u.s. yesterday says they're going to do it they're going to do a diplomatic boycott which is pointless either boycott the olympics or don't so I think that while we see a lot of positive things we also see a lot of governments and a lot of very big companies still behold into the doll yes we haven't really left that station yet the other the other thing I wanted to ask you is it's about you know worldliness you're talking about students you're talking about young startups you're talking about people who deal with their uncles you know sometimes they're just not worldly at the same time if you want to do an MVP or an IVP and pitch and not only pitch but really think it through think how your product is going to work in today's world you have to be somewhat worldly and you know the question is whether this generation we're talking about the generation maybe with the new conscience understands worldly think they understand how things are working how things are working in covid how things are working around the corner so they can predict if their product will work in not only in this time right now today but in the time that you can foresee so I think there's two points to that the first is I agree absolutely right I mean I've worked with students who have homes in you know the Middle East and Paris and London and Montreal and New York they're extremely worldly they travel from place to place they're fluent in multiple languages you know I've traveled close to four million miles in my life I've lived in China I've lived in Stockholm I've lived in Berlin I've lived in a lot of these places I speak multiple languages myself I get that piece of it however I think that in the United States the greatest places to do startups and to become successful and get the right things that you need from funding to advisory support are amazing places like Buffalo and Cleveland Pittsburgh that old kind of Rust Belt has such strong startup communities I think that a kid from Buffalo is much better off staying in Buffalo than going to Silicon Valley I tell them this every single week stay in Buffalo the community will support you if you have a good idea they'll get you your initial funding and they will help you test your theses stay there and get it done this idea 10 years ago that you know everybody from the whole world the best the brightest slogan to congregate in Menlo Park doesn't make any sense that includes Hawaii if you can talk about Buffalo we can talk about Honolulu can't we sure absolutely why not stay in Honolulu stay in Charlotte stay in you know Reno stay in these places where there is as Brad Feld wrote a decade ago that startup ecosystem the startup ecosystem will help you succeed and even if you fail once twice or three times in your startups if you give back to that community when you have that idea that's going to take off they're going to help get you there one of my favorite startups is a Buffalo startup called ACV Auctions they've done an IPO they're worth hundreds of millions of dollars they were done by a bunch of local entrepreneurs that decided that they had a great way to do car auctions they've been very successful and without their connections to the local funding system to the universities it wouldn't have got off the ground the way it did and now it's internationally known go to those local startup communities no matter where you are and build there if you need to you'll eventually get to Silicon Valley it will take care of itself don't start there it's more possible now with Zoom and all the telecommunications and sure the internet you can you can be anywhere and connect with everywhere I wanted to ask you also about you know the state the state of the state the state of entrepreneurial activity I get that you know you can have brilliant guide developing brilliant products anywhere in the world but the US has an edge for some reason it has a culture that allows you know better entrepreneurial environment for startups and two questions about that one am I right two is what's the state of it now is it changing you know when you come around and talk about IVP you're adding an idea to the whole entrepreneurial you know process is that kind of thing happening where we are in the culture of startups and entrepreneurial activity we're refining our thinking we're improving our thinking we're improving our chances and what you're doing is is that what you're trying to do to improve the chances of every entrepreneur you have contact with I tried to so the second part of the question first is that startups have become an academic thing you know even a decade ago there were people who thought you couldn't teach entrepreneurship but we know that we can teach entrepreneurship when we arm students with the right amount of knowledge and the right kind of knowledge it helps increase their chances of success in running a startup which is still of course remarkably long that's number one the second part of the question is about this kind of American ethos so there's something unique about being American no matter what so this idea of that kind of Silicon Valley startup work ethic the idea that you're going to succeed no matter what that's all great I'm seeing it in other parts of the world as well you know there have been some very big startups that have come out of Sweden and there have been some startups that have done very well in Europe that we might not have heard of in North America that have come out of Sweden but there's one thing the United States doesn't have that these other countries like Canada and Sweden and Germany do have and that's the proper government funding for these early stage startups now you can make an argument as I have many times in the past that a lot of this government funding in the grant form just kind of keeps startups alive longer than they should be but there are also startups who stay alive and turn the corner at the last minute and become very successful because of government funding that just doesn't exist in the United States we should do something about that we have to stay we have to stay ahead I mean to the extent that we're ahead now good but we have to stay ahead because everybody's going to try to emulate us about these very things now yeah but that's not good in my opinion at least to somebody who watches politics pretty closely that won't happen in the next let's say six years because I think that you know no matter what your politics are the reality is there's going to be I think a little bit of a red wave during the midterm elections and maybe 2024 as well and public opinion has turned against a lot of the big tech companies and the republicans are going to get a lot of leverage out of that so making things friendlier for startups and friendlier for tech companies isn't in the immediate future for the united states huh you anticipated my next question the whole zuckerberg thing you know zuckerberg arguably isn't interested in making the world a better place he's interested in improving his own profit position uh and but but it has what he's doing has enormous effect on the world by the billions of his of his followers members you know um and so the question is I mean is is government doing what it has to do should government be doing more and I suppose that the secondary question to that is the relationship between the startup industry in in the US as lawyers sorry sorry I said that lawyers in general are we over legalizing things uh are we you know going back to the case of that German cell of programmers who lost it because they couldn't deal with the legal manipulations of of google um the US has a tremendous culture of lawyering uh especially around startups there's a lot of money in it so have we messed ourselves up that way well we're never going to get away from that right I mean I comment a lot on a lot of these big cases like the tinder case that's going on right now the apple versus epic appeal that's just the reality that's the lay of the land the lawyers are going to go away I agree that we've made entrepreneurship and the startup world much more complicated than it needs to be but I don't think that more government intervention is necessarily the way to go I'm also not saying that you know it should be a total laissez-faire startup economy where people can get away with whatever they should get away with startups were supposed to do no harm hasn't worked out that way I mean google google was supposed to do no evil remember exactly that's I'm saying you know but it hasn't worked out that way so is the correct antidote that you know partisan government infighting over which startups we should focus on but the reality is there's a lot of people who don't like the persona that Mark Zuckerberg has developed as a person and as a result they don't like the company and as a result there's more legal and governmental involvement in that company I don't know that that's necessarily a good thing you know if you don't like facebook there's something very simple that you can do you can delete the app right absolutely and some people are but yeah I don't you know I think most people don't even get to this conversation because they stand there on the street corner with the phone and they spend the whole day you know having gratification on facebook what can we do about that not a lot anyway I wanted to ask you one last question because we're kind of out of time and that is how can I read more about what you're thinking and doing going forward I know I can probably if I google you I'll probably get you know 27 pages of material but where's the best place to study this to study what you're doing with Esquire and the other all the academic organizations you're involved in so we actually have our own online newspaper today's Esquire.com that's certainly a good place to start and then yeah if you google Aaron Solomon it's funny you know I had this conversation with a professor years ago who was saying that you know nobody should be on the internet and I said when it comes to the startup world if you can't google somebody and get a pretty good sense of who they are and who they're what their persona is then I think you should probably not trust them if you google Aaron Solomon you're going to find mostly me with 1a and you're going to find like at least 27 pages of stuff Aaron Solomon Esquire digital so great to talk to you thank you so much for joining us today I see you as a leader in a very important process that is increasingly important as we go forward. You're far too kind thanks for your time. Thank you Aaron. Aloha.