#191 The Unconventional Applications of Blockchain and AI With Kyle Sonlin

0:00:02 - Mehmet
Welcome back to a new episode of the CTO Show with Mehmet. Today I'm very pleased to have with me Kyle, joining me from sunny Miami in Florida. So, kyle, thank you very much for being on the show. Can you please tell us a little bit about yourself and what you do? 

0:00:17 - Kyle
Thanks, Mehmet. I'm happy to be here. I am an entrepreneur. I work in the blockchain industry. I've been working with the technology for about a decade. Most of my focus has been on the real world asset side of tokenization, so working on securities that's, equities, real estate, debt products bringing over $25 billion assets on chain using our market index through security token market. I also have a few other ventures in the industry and I'm an angel as well, so I invest in other companies and startups and do quite a few things in the tech scene here in Miami, and so I'm excited to dive into it today. 

0:00:56 - Mehmet
Yeah, that's great. Actually, kyle, you are in one of the hot topics, which is blockchain, right, so you mentioned a couple of use cases, like mainly about contracts and other stuff, but where you see the market going with all the noise that comes now and then about blockchain and because of the relationship with cryptocurrencies. I would love to hear your feedback about this. 

0:01:28 - Kyle
Yeah, yeah, no, I've been working in the blockchain crypto space since probably 2014 or so, and so it's been an interesting journey of watching this entire financial industry develop, and a lot of the ways that I kind of like to describe the crypto space is it's almost like they're trying to build the most advanced virtual video game economy ever, right? They invented a lot of fake assets cryptocurrencies in most cases but they're testing real world use cases which are lending, using these assets and transactions in decentralized exchanges and insurance and a lot of these different things that we see in the traditional industry. But you almost have to battle test a lot of that technology with no real consequences before you can actually layer on real assets that matter. And so when you look at DeFi, when you look at crypto, over the past six or seven years, they've built out some really interesting tools that prove the technology in a almost sandbox environment. Now, of course, they do translate the dollars in the end of the day, so a lot of people have gotten burned, but they all started from zero, right? 

And so what we've been working on and what I've spent a lot of my time on, is really trying to figure out which pieces of those innovations can actually be used in the traditional capital markets. 

So how do we take those different smart contracts to exchange real assets, equities or real estate internationally in the same way that crypto can be traded internationally or cost effectively? Because when you send, you could send a billion dollars in Bitcoin for a couple of cents, right, but it costs a whole lot more than that to send a couple billion real dollars or a couple billion dollars worth of stocks from one asset manager to another. So a lot of these large banks are trying to take note of a lot of these technological advancements to understand how can they reduce the costs that they're currently experiencing in their traditional business models. And that's where I think you're gonna continue to see that trend is billions and billions of dollars of real assets that are being leveraged using blockchain technology. The question will be whether it's open source for everyone or if they use the technology inside of their own more centralized networks. 

0:03:56 - Mehmet
Yeah, that's great, Kyle, and this is a good start. I would say I want to stay a little bit around the blockchain before moving to something else, and one of the things that you mentioned is like because people tie blockchain to cryptocurrencies, so people were a little bit like maybe hesitant to adapt this technology, and I explained multiple times, by the way, when I used to do like solo episodes, like about on the back end, if we forget, you know, the money side of it, it's amazing technology, right. So now to give a little bit sense of business model, and I'm asking you because I know, like you were involved in, for example, Web3 fashion. You know, and you did some work around that. Sure, Like if you can explain in a real use case, for example, let's say, where I can use the technology. Like I mean other than investing in real assets, like in our day-to-day life, like P as Mehmet or US Kyle, where I could benefit from blockchain. 

0:05:08 - Kyle
So I think that, with the, you know, with a lot of these technologies, and honestly, my hot take for you, mehmet, is that I think the biggest use cases, the biggest disruptors of blockchain actually are not going to be me and you interacting. I think that the biggest applications of this technology are actually the banks and businesses themselves that allow costs to be reduced, so that any individual you know, instead of paying 24% on credit card debt, perhaps they can offer less because of the fact that their back office costs, their compliance costs, are lower, so that they're able to give capital more efficiently, they're able to transact more effectively. More people are able to participate in the traditional markets. I think that one of the reasons why everyone's investing in cryptocurrencies or NFTs is because so much of the world does not have access to investing in real stocks, in real ownership in businesses. So I think that that increase in access could be the number one reason why people are going to get involved with this technology. On the flip side, as you mentioned, I do work in some of the other interesting applications of the technology that are more consumer, more commercial. 

I think that one big thing with fashion is that there's so much fraud in the industry because there's just fakes everywhere, right? You go to New York City and Canal Street is full of all kinds of fakes. Or you can order online through an Asian country off the different warehouses Literally, it's the same Gucci bag or whatever off the same warehouse, but one is the real one and one is then sold on a fake market and so tracking the provenance of ownership of things, I think, is going to be really, really important, because it's so difficult to do that. If you have somebody manually trying to keep track, they're likely going to be overwhelmed and they maybe are not even incentivized to even do that. They may be paid under the table or something ends up happening along the way, whereas if we can just enforce these things programmatically, something that you're buying as a luxury good or as an item that's important to you, can be tracked over time in a digital way, as opposed to having, like, if you buy a nice watch right now, really the only way that you can resell it for normal price is if you keep the papers and the box that it comes in, and that's a pretty inefficient process. 

Maybe people still want that from a collector's perspective, but if we're using a piece of paper as the main way to tell if something's real or fake in 2023, that feels a little bit outdated and certainly at some point we're going to move past that. So I see that a lot of that anti-fraud tracking will be super, super relevant with this technology. So moral of the story that meant is that I think that a lot will just be improved. But the problem with blockchain, unlike AI or some of these other technologies, is that it's just not as consumer facing with respect to the actual application. It just makes existing applications much better. 

0:08:17 - Mehmet
Yeah, exactly, spot on. So it's something like which is, for example, if I want a little bit to go back, so, people knows the internet, which is the front end, but they don't know like in the back part of the internet there are switches, there are like routers. There are a lot of things that makes the internet what the internet is Exactly, you see. 

0:08:38 - Kyle
HTTPS right as the first thing on your website or every time you type in a URL. Nobody knows what that means. No one realizes that that's underlying infrastructure that's so important for the internet to work the way that we need it to work. Renewing SSL certificates for websites it's very important to maintaining the health of internet processes and yet nobody knows about it. But it makes me experience that much better for everyone. 

0:09:06 - Mehmet
Yeah, I had David the other day who joined me from the UK, and he did a survey and he found out that 50% of the websites, like they, missed the HTTPS, unfortunately. Yeah, I read an article and this is just to add also, blockchain, for example, can be used in supply chain to make sure that whatever you have ordered like no one have changed on the way, and this is why it has a lot of, I would say, applications which us as consumers, like Kyle and myself maybe it's not tangible for us, but it makes things much better, I would say, from a security perspective. Now let me jump to AI. All right, so I believe that when we do kind of joint technologies together, we get better results. And now, with all the hype we saw with the AI, although people are saying, yeah, the hype finished, I don't think so. 

You are on the close to startups as well. Being an angel investor yourself, Kyle, what are you seeing in that space, and are you seeing some interesting, I would say, combinations between, for example, AI and blockchain, or maybe AI and something else? What can you tell us about that? 

0:10:28 - Kyle
Totally, totally so. With artificial intelligence, I think there's a few different things that are important. Everybody got excited about the consumer applications. Like everyone was making their AI-generated profile pictures and using chat, gpt, which is pretty useful for drafting high-level copy or writing emails, things like that. But those are very surface-level applications of the technology because they're taking large data sets and then basically just compiling them. They're taking a huge amount of text and then trying to rationalize something out of it. Where we're seeing the unique applications is having more specific AI models that are trained on very rare data sets or very exotic data that is specific to a particular industry or to a particular company, and then making larger analysis. 

I see a lot of the AI today as a progression of machine learning from yesterday, where, instead of defining the variables and the conclusions you want to make which is what you would do in a machine learning algorithm where you're just giving it inputs and telling it the output you want instead you can give it inputs and then have it create its own outputs and its own conclusions behind a lot of these different variables. So that's a little bit complex. But to your point, mehmet, the problem with any type of AI is that you need verified data. It's only as valuable as the information that you're feeding the AI system or the large language model in most cases, and so blockchain at its core is really just verifying data. We're just proving that the information that we're getting from point A made it all the way to point Z and we tracked it all the way through, so we know that nobody messed with it somewhere in between. So if you're trying to use an AI model to make high level conclusions for your business that could be hundreds of millions or billions of dollars of impact on a company or an industry or a country you need to make sure that the data that you're feeding it is correct and is proper, and that's what the blockchain provides. So in a lot of ways, I don't think that we can have really strong AI models, at least on the financial side and on transactional systems. 

To your point with supply chain, which is very much about logistical data. If you're doing supply chain for farming, for example, you need to track where the lettuce, where the cocoa beans or the coffee was made in Peru, then it was shipped through Mexico, got into Texas and then was sent up to the Northeast and then sold in a grocery store in Massachusetts. Well, we need to know where it went, every step of the way, where the hands changed, make sure that it's organic, that it was refrigerated. All these different pieces on the supply chain process. Each one of those pieces is a data point that needs to be tracked programmatically. That's where the blockchain comes in. You then feed that info into an AI advanced large language model to then make the conclusions you need to make to improve that process, to reduce costs for the end up or end all grocer. 

0:13:37 - Mehmet
You nailed it, that guy actually and for people who are familiar or, let's say, cybersecurity enthusiasts, all of us, like when we learned about cybersecurity, they teach us the famous triad, the CIA triad, which is Confidatiality, integrity and Availability. And blockchain actually helps in the integrity part because you need, as Kyle said, to understand if I send a letter to Kyle like the old days, did someone open this letter on the way and change something in it? And blockchain actually what it does. It protect this message to make sure that whatever I have brought in my handwriting, my signature, reach Kyle as the moment I put it in the oven. 

Yeah, so I like this combination. I would say and I'm expecting and just to also highlight about the data, how much it should be also has integrity, because if you don't have integrity in the data, that might lead to bias, as we do in AI. So I'm just mentioning this, hopefully someone because, kyle, I want to ask you something interesting now Do you think having the combination of AI and blockchain can solve the issues that we are seeing because of AI, which is like deep fakes and all these things that are happening? We saw a couple of videos where the bad guys are using someone's voice to call their moms and say hey, your daughter is like we took her to hostel with us, and do you think this can be a? 

0:15:18 - Kyle
use case. I think it's a great point. I think it can in theory. There's a problem, I think, with society and trends, and a lot of times technology takes a long time to be adopted by people and it takes a long time to get accustomed to technology. And then, of course, when we're talking about AI and blockchain into any system, it's going to take a long time before anybody really adopts these things. I still have sign up forms for businesses where you have to put in your fax number I don't think anybody's used to fax machine in 20 years and yet we still have that line for that that you can enter for your business contact information in a lot of different financial platforms. So I think, in the same way, it's going to take a long time before we adopt all of these pieces together, and a lot of times you can't realize most of the benefit until the entire process is under that kind of blockchain system, or else if you've got chinks in the pathway, then how useful is the blockchain really? If we went offline for half of the time, then the half that we're on chain is only a little bit valuable, because now you've tainted the process a little bit. So I think that, in theory, though, you're totally correct, because when you look at something like an NFT, a non-fungible token, this is a great use case for that type of system. If I create content, if I create something, if my likeness is represented somewhere and it is verified to have come from me, I can attach a unique identifier to that to verify to people this came from me. So if you're a government representative, if you're a celebrity and you are endorsing something or you're putting your thoughts out there, being able to give it almost like a verified checkmark, like we see on the social media sites, that says here is a verified message from me. This is what I have put out there. 

I think it's totally a strong use case, because even today, the simulations of other people using deep fake technology is already really impressive. It's probably 90% of the way there. Have you showed somebody the deep fake stuff from today, even five years ago? They probably believe it. It's that good, right, and so now we're a little bit more trained on it because we're expecting it. But you have to expect that five or 10 years from now it's going to be pretty much flawless, if not even creating fake people altogether that don't even exist. That then it's impossible to tell because you didn't know them to begin with. So I think that, to your point, the blockchain being able to verify the ownership and the fidelity of someone's identity and of the content that they're creating, I think is paramount and will be very useful, whether it's front end facing where somebody actually owns the NFT or, more likely, it's a back end thing that just acts as a verification system to know what to trust. 

0:18:21 - Mehmet
Yeah, correct, that's 100%. Now let's shift gears a little bit and talk about something I'm passionate about, honestly, which is startups. So startups and the show part of it is like, yes, it's called the CTO Technical, but I like to talk about startups and how, everything about startups really. But because you have the experience in building multiple businesses Because I didn't touch on this, I think, yet so what is your process for helping other startups, including, of course, when you were doing it to yourself, establishing the business model that can scale Can you share some examples of things that you have done or achieved? 

0:19:09 - Kyle
That's a really interesting question because this is such an important focus that companies need to spend more time on. I think that so many founders are really excited about their vision or their idea or, maybe even more importantly, the impact that they may make on an industry or on an underserved group of people or a community, and those things are great, and you certainly need that narrative to drive the motivation for the company, to build culture within your company, to focus the direction and the vision of what you're trying to build. But, to your point, understanding that scale means building something that doesn't require an additional manpower hour per additional customer. How do you get to something that is a profitable business, especially in today's market, versus where we were three to five years ago? Money is much more expensive today for everyone, which means that investors are much less likely to give capital to something that doesn't seem like it's going to be returning a profit anytime soon. So having an idea of how you're going to get to profitability is really important. So what I like to focus on is there are so many companies right now that are doing one thing that has a negative connotation that I think that can work really well. It's just building something that makes a lot of cash up front. So when we look at AI companies, there's a lot of companies that are building profile picture generators and they're generating capital and they've built a business that that itself is hard to fund because that's not really defensible with respect to its competitive advantage. They're basically just building an API plug-in to open AI's underlying large language model, but the one good thing that they're doing is they're figuring out how to get customers right. They've built a email base, they've built a set of users and they've built a capital stack. So then they can take that initial capital and try to do something with it. Try to then launch a smaller proof of concept of a more defensible idea. 

Today, more than anywhere before, it's about distribution. Traditionally, startups in Silicon Valley from 2010s to 2020 would do something where they build a fly trap. They build a model that they felt like was successful and then they would pump it with Facebook ads or they would pump it with Google ads to acquire customers and they would try to convert those customers. They would measure their churn, they would measure their retention, they'd measure their customer acquisition costs, the lifetime value of their customer. They have all these different pieces of data and they would just funnel as much traffic as possible, trying to optimize their landing page to convert more users. That's not really the case today, and the reason why is because Google ads are not as effective as they were because they're more expensive. Since everybody's doing it. People are clicking less ads because they just are a little bit more savvy to the process. Facebook's the same way. It's less effective because Apple has reduced the amount of data that they can capture, so it's harder to target people. People are using less Facebook, so there's less effective targeting there. 

So what we're looking for, what I look for in startups and what when I work with a bunch of different companies, it's all about identifying your distribution mechanic. How do you capture customers? Is it through your own social media? Is it through building a viral product that can capture email access? Or capture users? 

Is it working directly with influencers, which can work if you have the right group of people, if you're targeting the right audience and certainly if you have those natural based connections, as opposed to just throwing money at people on TikTok hoping that they're going to talk about your application. So for me, when I'm looking at it today, I'm looking at somebody who has a good idea for how they can build a business model that can make money and actually capture people's credit card information and charge people, as opposed to just getting users to sign up for free. The days of free signups and trying to convert that can be very difficult. And then, of course, it's the right distribution mechanic. How do you find the right audiences that are going to care about your product? Those are the two things that I spend a lot of my time trying to help founders understand and trying to help plan out. 

0:23:26 - Mehmet
What was kind, because you mentioned a couple of very important points like nowadays, what is the most successful, I would say way to acquire customers. 

0:23:36 - Kyle
We're seeing building in public is working really well through so many of these different channels. I've experienced it to some degree myself. I've watched a lot of other founders just being more transparent with the process. There are so many people that want to be entrepreneurs, that want to follow these journeys, that are interested in building their own audiences, building, interested in seeing new communities. I think the best thing to do for founders right now is to just start publicizing their journey. So many people are really afraid to talk about their idea because they think someone else is going to steal it or they think that somebody else is going to take it. The reality is that it's just an idea. The execution is the hard part, not the idea. That's not defensible in almost every case, unless you have some patentable product, which most software is not. So I think that for so many people, just building their own brand and capturing their own audience is such a great first step to begin capitalizing and growing the product from there. 

0:24:42 - Mehmet
I think you know this movement of building public. I am following it, people, although like it might be late for me, but because it's working actually, and you know, building public it's not only building software, by the way. So the way I did this podcast, it was like kind of built in public, so yeah, so. So LinkedIn is my, my community, I would say. So this is where I was most active. I never managed to actually I didn't put the time in Twitter, because for me, you know, like most of the building public people, they do it on Twitter. For me, twitter was always this you need to follow the algorithms and you need to be really really active, right. 

So you need commitment to that LinkedIn, maybe because I used it since, I think, 2009 or something, like the other day I was seeing when I first signed out. So this is where my community grew and even now, when I try to do something from software perspective, it's working actually, because I'm getting feedback. I'm validating ideas much faster actually, and you know if someone is not interested in the idea, maybe I find it cool. But you know what? No one even DM me. No one even sent me one single message, a like. We are interested in that, although, like I did the other way around in Twitter, like it's more. You find the people who are like us, right. So the people who are like, more into you know they are ready to be entrepreneurs or they are already entrepreneurs and you see them interacting with there. But advice for people you know, as Kyle said, try it. I know it's hard, but you're going to go and try it, like because you get very fast feedback. 

0:26:24 - Kyle
Just responding to people is such a great way to start, like just sharing other people's feedback, like asking questions, participating in more niche communities is a great way to start for someone that doesn't necessarily feel like they have all the answers and that they can just start here's growth hacks and here's this, and that instead just start by telling people that you really enjoy the content they're creating, asking them how they want to collaborate. If they want to do, you know, get on a quick call and figure out how to work together. I found so much great response from just telling people that they're doing an awesome job and I'd love to work together. You'd be surprised at how effective that can be at just building your personal rep, building your network, from doing small things like that, like sharing gratitude, being positive and optimistic. 

0:27:11 - Mehmet
Yeah, and let me give some hints also as well. Guys, ai is your friend there as well, because really it's amazing, you know, like when you get to know how to use it and I don't hear about chat, gpt, of course and you go out to the public, actually, you know, I get some signals. Of course they were not like that strong to be a full fledged, but you start to get some signals. I've validated a couple of ideas there and you know, like I think there's a huge potential in the building public. Now, of course, we talked about, you know, and this is something I believe, the built in public. Maybe it's for solo founders or maybe two friends that they can do this. But at some stage, kyle, and because you have raised previously like $5 million for you know your companies when do you think you know the moment is right for founders to go and seek for fundraising? 

0:28:10 - Kyle
It definitely depends on the market climate and the industry you're in and the experience that you have, but I think that having a clear idea of where you're going to spend it and how you're going to spend it is actually very underrated, for when it's time for you to raise money, I think that so many people think about it backwards, where they say I have an idea or I have a startup, so I need to raise money to make this happen. 

Whereas most of the people that actually are successful at raising money and pitching something that's more along the lines of I need $500,000 to bring this product to market because I need to hire this development team, and I got this quote to make that happen. When I'm able to launch this product, I have, you know, a system or a network of people that are ready to purchase, and I think it's going to get me to X amount of dollars, or I think I've thought through these things right. The founders I think that, especially in this market, raise money, are pitching to an investor. This is what I need, this is what I'm expecting to return from, and so, therefore, this is where my company is headed, and so I think that, for so many people, they don't do the what is essentially a little bit more, a deeper calculation of figuring out exactly what they're trying to pitch from an investment opportunity, because when you're an investor, it's not charity, right? So having somebody that comes to you and says give me $100,000 because I'm a really smart person, is not a super compelling pitch versus when I'm looking at traditional investments, like when I go to a bank or when I've got individuals that say you can get a 5% return. Okay, well, I'm thinking in my head if I put $100,000 into this, I'm going to get a 5% return on that. That's going to look like X, y and Z over time, right? So in the same way, when you're raising money, you need to pitch it the same way to an investor so they can actually figure out what their return might look like. So maybe you don't feel like you have the traction to be able to communicate that, and so that's where I think that the line is between somebody that is able to raise money for their business versus someone that's not. 

Risky startups, early stage businesses they raise money and that's okay. 

You're going to find the right investors that are willing to take those bets, as long as it makes it very clear that you know where you're going to spend that money, why you're going to spend that money, what are you trying to measure and what are your expected outcomes from raising that capital? 

I think that those things are underrated, that founders don't often think through, aren't totally prepared for that, make it really difficult to raise money, and so you could have a successful startup proof of concept going. If you don't know what you're going to do with the money, it may be still isn't time for you to raise capital, whereas if you have a clear plan, you know that you need to get to. You know you need to raise this money to launch this product that's going to bring you this amount of customers because of substantiated findings and research and due diligence that you've done and a brand that you've built or connections that you have or the network that you've acquired. Those are the types of things that I think an investor in this market is looking for to see. Is this founder, is this business ready to raise capital, or are they still in that kind of idea planning phase? Do you? 

0:31:38 - Mehmet
think this is because I would say, you know people think that raising money is because you know this startup, I'm going to sell it or I'm going to exit, sometimes on an IP or something, on an IPO. Do you think this is where it comes from? Do you think this is why people, the first thing they do is that they just go out and ask for for funds? 

0:32:05 - Kyle
I think that it's. You know. To be honest, I think probably a lot of. It is just an experience. A lot of people aren't totally familiar with the process. There's a reason why second time founders have a much easier job raising money because they've done it before. They've maybe made some mistakes, or they've they've misspent some funds that they've raised, or or maybe they've done it properly and then done it the other way. They've learned some good things to do. They understand what those next steps look like, whereas, you know, for somebody that's launching a business for the first time, they don't exactly realize those things. I think a lot of people just say like, yeah, if we can make this successful, then we'll reach exit. But of course it's a lot more involved than that. 

If you're trying to get acquired, are you building corporate relationships with companies in the industry that you would like to be acquired by? Have you identified the acquiring targets? What range of valuations do they traditionally buy companies in? How are you going to reach that valuation using industry standard multiples? What are the ways that you're going to build a competitive moat so that, if they like your product, they're more likely to acquire you than to copy that product Right? Those are the questions that, as a founder, you would want to have answers to, instead of, yeah, we just want to get acquired. Like, well, everybody wants to get acquired, but what? What steps are you taking to put your business in that position? And so if you have those answers and you say, look, I think I can answer all those questions If I had 500,000. Thank you. 

Now you put together a pretty interesting pitch, because now it's like look, I see a hole in the market. I think I can get it done If I get this money. I can put these three things in place that are going to be the key to getting my business acquired. And then here's my timeline to make it happen. That's why I'm raising capital. Here's my valuation, here's my business Done. That's a strong pitch, regardless of what phase you're in. They could have been pre-products or they could be post-products. I think that, likely, the further along you get with your own capital, with your own individual investment, the more likely you are to raise, because you are going to have real numbers behind the idea that you've been building. But there's still plenty of companies, still plenty of venture capital firms that invest in businesses that are very early stage. I just think that you need to be a little bit more detailed with the plan to bring that product to market, to justify that investment. 

0:34:27 - Mehmet
Do you think then, for first time founders it is better for them to go bootstrapping way to learn and then maybe the next time when they are second time founders, they go and seek? 

0:34:44 - Kyle
If you can raise the money, raise the money. I mean, like you know what I'm saying. I don't necessarily think that the only way to do it is bootstrap. That's certainly an easier way, because one thing that first time founders can get screwed by is that even when they raise money, the investors can put in terms in the investment contracts that do not favor the founders. They can get taken advantage of because they're just not familiar with the legal process, with structuring documents, with setting up a lot of these things, and they can find out much later down the line that things weren't the way that they thought they were for quite some time, and now it's too late to make those changes, to try to get out of those scenarios. So I do think that there's a lot that you learn over time, but I think you make a good point. 

I think that most people probably need to raise less money than they think they do in order to make things happen. I think that building a proof of concept, a minimum viable product, something small, with 50, 100, 250,000, is probably a better bet, especially for a first time founder, because it will force them to actually think very critically about how they spend their money. As a first time founder. You raise a million bucks, it feels like an infinite amount of money and the next thing you know you're out of money. So I think that for a lot of these early stage businesses, building a small, focused proof of concept that can acquire some users, can start generating a cash flow and then building on top of that to build a larger business, to get closer to the original vision, is probably a smarter and more sustainable idea again, especially in this current market. 

0:36:20 - Mehmet
Yeah, and just I want to add one thing and advice from my side and please, please, guys, don't spend hundreds of thousands on your proof of concept or MVP, please, right. 

0:36:31 - Kyle
Yeah, find traction and then follow those users. 

0:36:36 - Mehmet
Yeah, so like how do you approach yourself? You know how do you say oh, this is, for example, a good project, like I really want to invest in this. Like what, what catch your eyes? 

0:36:52 - Kyle
I'll say For me it's it's really, it's it's traction and it's it's the distribution, or go to market strategy. Those are the two things that I really focus on, and then the founders. So, for me, traction when we talk about traction, it's how do you quantify with numbers that people actually want this product and how do we do that? So, of course, a lot of people like to use market sizing slides as a way to try to show traction of of this is the opportunity, and this is where where, where the money's moving. But that's not as specific to the actual company. As I said, have you built a following? Have you tested customers? Have you built a waitlist? Do you? Do you have you know any real way to determine that people actually want this thing that you're trying to raise money for? And if the answer is no, how are you going to get there? And why is your hunch that people actually want this? Because there's so many solutions in search of a problem in the tech industry and in startups in general, where people have a great solution but there's the problem isn't there to fit the solution. So, yeah, maybe you built something cool, but if nobody actually wants it, then you're never really going to have that thing catch on. So making sure that that the traction is there, or at least that there's some plan to get that in place, is important to me. Distribution is kind of in line with that. But how are you going to go to market? How are you planning to grow this proof of concept past just your local network? We all have a small group of people that we can reach out to to try to get them to test out our product or try to try to capture that. How are you going to expand past that group of people into the broader, more mainstream market in order to to scale your revenue and to actually build a successful company behind your product? And then, finally, third, it's the founders. There's going to be a ton of problems. There's going to be a ton of of hurdles. You might have to pivot a few times. There's going to be issues all along the way and a lot of success are. 

The founding team is the person that I'm investing in, somebody that I know I can trust. When things go bad and when things go good, are they going to get their ego too inflated? Are they going to get too distracted? Or the other way around? Are they going to get bummed out? Can they not handle the pressure? Those things are really important to me. 

I try to find founders that have the secret sauce in some way. I don't want them to look like everybody else, so do you have something unique that most people that I run into don't? Are you an expert in the performing arts, for example, and your network there is strong and you're passionate about empowering creatives? If that answers yes to that, which one of the founders that I work with the answer was yes to that. She's amazing and it was like all right, we got to back this project. I want to get involved because your mission, your conviction on an industry that I think is underserved, really relevant and is great for culture. That was important to me and I saw a light in her I don't see from a lot of people. 

Are you an expert in quantitative, algorithmic trading? Have you been able to build your own brand, your own businesses? Are you a hustler? Are you scrappy, resourceful? What is your edge that the average person doesn't have? And I think that for a lot of people, it means that you don't look and act and are not the same as everybody else. I want people that look different, that fit into a different mold than what everybody else looks like. It's that hustle, it's that different way of looking things. So those are kind of my three factors that I look for is traction for your idea, for your model, is a strong distribution. Go to market strategy, how you're going to acquire customers and users and then making sure that the founders have that X factor. 

0:40:41 - Mehmet
Great, you answered actually the next question, because I wanted to ask you about what are the characteristics I would say for an entrepreneur in general, and I think you answered this Now. But someone might say does it mean entrepreneurship is not for everyone? What you can say, Kai? 

0:41:00 - Kyle
So I think that the answer is yes and no. So entrepreneurship is different than being a founder, and so being a founder is definitely not for everyone. When you're starting the company from scratch, it's very difficult. It can take a long time, you're gonna fail a lot, you may let a lot of people down. If you raise money or if you have a team and you gotta fire them or you have to, you know it doesn't work out, which most businesses don't work out and a lot of people struggle to handle that pressure of having to be a failure and then rebounding from it. On top of that, what no one talks about is that as a founder, a lot of times you're not getting paid. You're the last one to eat because you're trying to feed your team, you're trying to keep your business alive and then when your business dies, you're not making any money when your business is dead because it's dead. So you gotta find a new thing to start and a new project to build and start all these things over. So I think being a founder is definitely not for everybody. It's very high risk, it's very high in adrenaline and it's a lonely lifestyle because you're just constantly having to fend for yourself against the wolves. It can be glamorous if things work, but for most founders it's very long of a grind and then finally it pops for you, which is nice, but nobody realizes the 10 plus years that it takes to get there in terms of slugging through a lot of tough times, and so I think that for many people, they don't want quite that much risk and for most people it's probably not worth it. You have to be cut from a different cloth, I think, to want and actively seek out those challenges. That being said, I think everyone to some degree is an entrepreneur, and being an early employee of a startup, being a creative or a musician or an artist that creates your own products, those people are entrepreneurs. I say this to my friends in the music and performing industries all the time If you're a DJ that's successful, going on tour and stuff, you're an entrepreneur, right, you're building your own brand, your own business, and you're, you know, like. 

There are so many different forms of entrepreneurship and being a leader that I think that I think that most people do have that to some degree, or should. I would encourage most people to take leadership roles in the different areas of their own expertise or where they're passionate about. It doesn't necessarily have to be their main job, but maybe they have a hobby or maybe they have a community or a nonprofit or something that they're passionate about they want to take a leadership role in. I believe that that is an entrepreneurial quality that I think a lot more people have than they give themselves credit for. So a lot of people equate you have to be, you have to start your own company in order to be an entrepreneur. That is not the case. 

I've employed dozens of people and I've told all of them you're all entrepreneurs because you're all building this company with me, taking your own product lines, building your own different processes, running your own side hustles, doing all these different things. That's what it means to be an entrepreneur is being a leader and finding new opportunities to succeed in new markets and new things. So my answer is kind of yes and no, but I think that not everybody needs to be a founder. It's a much more thankless job than it gets credit for. But I think that almost everybody would benefit from being an entrepreneur in some way in their own life, even if it's being the entrepreneur of your own family. That's when you build a family. That's kind of a business. It takes a lot of time, a lot of effort, certainly a lot of money. 

0:44:48 - Mehmet
So I think there's a lot of ways to be an entrepreneur, even in your own circles 100% right, kyle, and you know, like you know, this is what I used to believe always that you don't have to be a founder to be an entrepreneur. And for me, honestly, an entrepreneur. One of the characteristics of an entrepreneur is someone who is either creating something new not necessarily a software right or someone who doesn't accept the status quo or who always, let's say, question the status quo. For me, I always question, I ask okay, why this is here, right, why this pen is? Who put it here? I want to understand. And they ask me why you want to understand. Because I say I want to see if we put it on the left side instead of the right side, are we going to save some time. 

Maybe on the time when I want to pick it up, I'm gonna have like more, I would say, pleasure, I think when I picked up from you know. So I always, you know, when I was working as a client and in corporate world, I was always asking you know why we are doing this? Like, okay, I would do it, but I need to understand first. And this is why I was. Everyone was telling me like you act like a. You know, like always, you reject things. I say no, I'm not rejecting, I just always seek if we can do it better. And one of the things I can add from my side you need to be resilient of people telling you no or not arguing with you. 

0:46:21 - Kyle
It's hard after a thousand no's, it's hard to take that thousand and first no, but you have to yeah it's kind of like really. 

0:46:29 - Mehmet
You know, I didn't even feel the time it passed so fast. 

0:46:33 - Kyle
But that's right. This is so much fun. Thanks for having me on Two things. 

0:46:38 - Mehmet
Let me start first where people can find more about you. 

0:46:42 - Kyle
You can find me on LinkedIn or Twitter, youtube as well. I'm a venture coach so I work with a bunch of founders, a bunch of startups, help them get through their process, and the further along you get, the more that we can do together because I have a pretty big network on all different sides of building businesses. So I love working with new companies, I love interviewing new companies and doing the whole thing. So you can certainly find me, kyle Sondland, twitter, linkedin, youtube, instagram Threads anywhere you wanna find me. 

0:47:12 - Mehmet
I would put all these things but this next, you know. And then my final question is there anything that you wished? I asked you and how you would answer that. 

0:47:24 - Kyle
So one of my life missions is to try to make giving back to charity a cool thing to do. I think that, like, my thesis is that people don't mind giving back. They just don't like paying taxes because they don't see where the money goes right. So, like if you knew the impact you were making on your community, you'd have no problem paying taxes, you'd have no problem, you know, contributing a portion of the income that you make, and people would spend less time trying to dodge taxes if they saw the direct impact that they were making. So I don't know the exact question, but perhaps a question along the lines of if you you know what nonprofits or what foundations or what causes are you really passionate about that don't have a direct monetary reward for you is, I think, something that would be an interesting question that I don't think people talk about enough in business, because everyone talks about being capitalist and making money and building businesses, whereas I think the really fun part of being capitalist, making money and building businesses is actually being able to then give back without expecting a monetary reward, because you know that you're already taken care of. So that's probably the type of question that I would be interested in talking about, and if you want me to answer it, I can give you a couple of calls. Yes, please, I want you to answer that, so I'm really passionate. 

I'm from Philadelphia but I live here in Miami, so you know I love both areas. But I've consistently donated to the Philly Startup Leaders Charity, which is a foundation that focuses on empowering the next generation of entrepreneurs in communities that don't have the resources in order to make that happen. So I love the Philly Startup Leaders Charity. Also, the Children's Hospital of Philadelphia saved my sister's life when she was born, and so you know we've seen the impact that great care can give and just the pain that a family has to go through when their children are hit by really tough circumstances, and it's just so sad to see children that are in those tough scenarios. 

So those are two causes that are really, really important to me that we do all kinds of active donations, whether it's through contributing time or, you know, toy drives and gift drives, as well as capital, when you can. You know I'm actually, within this month, going to begin volunteering at the library here in South Florida because I want to contribute more of my time to the culture. I think that nobody pays attention to libraries enough. So I wanna try to make that an interesting thing, a cool spot, to try to help out and add value. So I think that public works are really important to me. Helping others is really important to me and always keeping God first is important to me. 

0:50:26 - Mehmet
That's awesome, kyle, and you know I agree with you we as founders, as entrepreneurs, as a human being, I think, yeah, you're right, we need to think, yes, we need to get money, but we need to help others also as well. And this is to me. Maybe I didn't reach that level yet, but I try to do it in different ways, right? 

0:50:49 - Kyle
It's not too late to start, don't wait until you're retiring, Like you can go now. 

0:50:55 - Mehmet
And I want to just add from my side and it's not always because you mentioned, like you're gonna go to the library, for example, it's not always just financial aspect, like when you share something useful with people. This is, in my opinion, like it's kind of doing charity, like when you help someone who's stuck, you know, in something. It's kind of helping other people. So 100%, and I'm really glad to hear about you know all your contributions, kyle. It's like really amazing. And thank you for answering the questions also as well. Like I really enjoyed the discussion and time fly literally. I would say I didn't even feel it was very amazing discussion with you, kyle, today, and as we come to an end, you know, as usual, you know now I have made my job easier, that I put all my hand in. 

0:51:51 - Kyle
Yeah, I can see that Make sure you follow them, because the show is awesome. I had a great conversation with you today and I'm definitely gonna check out more of your podcast episodes as well. Thank you. 

0:52:02 - Mehmet
And you know this is for the audience, guys, I really enjoy the feedback that you send me sometimes, so keep them coming. If you are interested also to be like Kyle today he was a guest you can also reach out to me. You know how to reach out to me and we can discuss. Time zone is not a problem. Kyle is in Florida, I'm in Dubai, so no problem. I had a guy in New Zealand before and it was like, again, a huge time difference. We made it so. 

Wherever you are in the world North Pole, south Pole, equator, it doesn't matter, I can come to you as well. Guys promise just to try to get inspiring stories, inspiring discussions, same as we had today with Kyle, to make you know everyone successful, whether you are a founder, to be founder entrepreneur. Maybe you're still stuck in your corporate job and you're thinking what can I do next? So this is why the show is here and to give you the insights about what's happening from technology perspective. I really hope that you enjoyed today's episode and we're gonna meet again very soon. Thank you very much. Bye-bye, ciao. 

Transcribed by https://hello.podium.page/?via=mehmet