Agile Businesses: Dan Conner Of Ascend Venture Capital On How Businesses Pivot and Stay Relevant In The Face of Disruptive Technologies
Employees and customers look at leaders differently if they follow a code of conduct and encourage others to do the same. They seem less like untrustworthy opportunists and more like principled actors eager to bring new fresh ideas to the market.
As part of my series about “How Businesses Pivot and Stay Relevant in the Face of Disruptive Technologies,” I had the pleasure of interviewing Dan Conner.
Dan Conner is the general partner at Ascend Venture Capital, a micro-VC in St. Louis that provides financial and operational support to startup founders looking to scale. Conner specializes in data-centric technologies that enable the future states of industries.
Thank you so much for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your “backstory” and how you got started?
In my life before finance, I thrived as a performance engineer in the field, mostly international and offshore. I then attended Washington University’s Olin Business School for a Master of Business Administration while simultaneously earning a master’s in advanced renewable technologies. In the chrysalis of business school, I emerged a finance moth who couldn’t resist the flame of venture capital.
Before founding Ascend Venture Capital, I earned a chartered financial analyst designation; founded two businesses; and worked on the operations side of high-growth startups, leading teams to build scalable operational and financial infrastructure. Within these experiences, I learned the enduring value of the hustle, which would carry through in my work forever thereafter. Combined with a strategic operations design and vision, a startup can quickly become a formidable entity that powers an entire industry.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or “takeaways” you learned from that?
Early in your career, some conversations go well. But some go incredibly and earth-shatteringly poorly, exposing you as the impostor that you are. Early in my venture capital career, I connected with another firm that was thematically focused on certain marketplaces, and I promised to share startups of that ilk as I encountered them. Soon after that — admittedly not fully understanding what my contact had meant by “marketplaces” — I happened across a company that worked with Chinese restaurants to standardize and aggregate their ordering, and I sent it to my contact as an interesting startup for him to consider. I received a phone call soon after that, during which I received a stern lecture on what constitutes a marketplace and how hokey the Asian restaurant market is. I was mortified and sheepishly passed on the investment opportunity as well. I haven’t heard a peep back from that firm ever since, despite continually sending relevant startups this whole time.
Well, that startup happened to be Chowbus, a Series A company that serves millions of happy customers and has now raised more than $68 million from some of the top investors in the industry.
From that experience, I learned to shrug off the conversations that go poorly. It’s inevitable that sometimes, personalities just won’t jive. I also learned that no one has a monopoly on being right. Investors make decisions based on the information they believe to be correct at that point in time — and if you arrive at a different conclusion based on the same information, you could be right.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful toward who helped get you to where you are? Can you share a story?
Before I raised fund 2.0, which allowed me to “go pro” and make Ascend Venture Capital my main hustle, I was considering a few different paths outside of venture capital.
At that point, I had a pivotal conversation with a trusted friend and now-advisor, Chris Holt. He helped me see the revolution I had identified in each of the investments I had made, and he shined a light on the rarity of that track record. He helped me believe in my talent and the future of Ascend before it was even established.
Extensive research suggests that “purpose-driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
When I established Ascend, I was guilty of the audacity of vision to build a firm that invests in startups better than any other, simply by bucking the standard practices that lead VCs to invest similarly in everyone else. The idea was that if you can pinpoint widespread trends, formulate an investment thesis to match, and execute a targeted strategy, your venture capital firm can surely outperform its peers.
Thank you for all of that. Let’s now turn to the main focus of our discussion. Can you tell our readers a bit about what your business does? How do you help people?
Ascend Venture Capital is a micro-VC firm that invests in pre-Series A startups that are positioned to power the data-centric future state of massive industries in widespread transformation. Upon investing, Ascend provides hands-on operational support to our founders in scaling their businesses without slowing down.
Which technological innovation has encroached on or disrupted your industry? Can you explain why this has been disruptive?
The industry has gathered massive databases that warehouse all the information available on startups in the world (PitchBook, Crunchbase, AngelList, CB Insights, Mattermark, etc.). These databases allow subscribers to source valuable information on any company, including industry, location, founding date, team members, financial backers, contact information, and more. This is disruptive to venture capital because a firm can have access to virtually every startup in the field at its fingertips. With this massive set of information, a firm can cover the entire universe of potential investments from the comfort of its offices.
What did you do to pivot as a result of this disruption?
With these databases, we can cover our entire universe of potential investment companies. We’re operationally geared to review a fresh list of 500 startups every month (a massive number of companies and data to crunch), which allows us to cover any startup that meets our search criteria. Strategically, we find that there is no substitute for this legwork — we can now draw on our encyclopedic knowledge of what spaces have multitudes of companies trying to solve the same problem.
Was there a specific “aha moment” that gave you the idea to start this new path? If yes, we’d love to hear the story.
The first time we heard a family office being dismayed by the huge number of companies we review, we knew we were on to something.
So, how are things going with this new direction?
Excellently! We couldn’t be happier with our encyclopedic deal flow. We have now reviewed more than 15,000 total companies, which has driven our ability to identify unique opportunities when we see them. And the results speak for themselves — we’ve maintained better than 30% net internal rate of return since 2015, along with an unprecedented hit rate of 90%.
Can you share the most interesting story that happened to you since you started this pivot?
Along with our encyclopedic deal review numbers, ever-growing is the Ascend “anti-portfolio,” reflecting all the times we’ve said, “pass.” Here are some of the frictions and pinch points that have resulted in a pass from Ascend:
Recurring concepts: Industries with an abundance of competing startups.
- Smart city data services.
- Satellite imagery analytics.
- Carbon footprint sniffers.
Well-funded competition: A deep roster of competitors with access to large cash stockpiles.
- Workplace culture management.
- Plant-based foods.
- Document insight extractors.
Large, but faltering markets.
- Bet-on-anything platforms.
- “Meme stock” tools.
- Food delivery companies.
What would you say is the most critical role of a leader during a disruptive period?
VCs need to stay strategically ahead of the markets they invest in. Thus, foresight is an essential skill for leaders in a disruptive period, and it stems from an in-depth understanding of an industry. Ideally, the team will catch a leader’s vision and coalesce around a pivot, animating everything the company does in that vision.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate, and engage their team?
Beyond setting the right strategy through a disruptive period, leaders must also be an example for the entire company to follow. In practice, that means setting a trajectory that people feel excited to achieve. It means imagining what the future looks like and engineering the company to thrive in tomorrow’s world. It also means adapting to the unexpected with bold, confident responses. Studies show that leaders are audacious by nature and more certain of their ability to control outcomes than others.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
The trajectory never plays out as planned. Your company has to be adaptable in the face of turbulent times. And adaptability doesn’t just appear, but is engineered. To build for adaptability:
- Design operations that approach problems systematically and that you can optimize for flexibility.
- Always criticize processes rather than people. It’s also a good idea to have several parallel strategies in place to insulate yourself from any single point of failure.
- For example, one of the startups I advise runs a barbell strategy for business development to ensure it is simultaneously working on prospects that will pay off in a few months and ones that will pay off in a few years. The team is lean, but it can manage a number of potential revenue outcomes by “proceduralizing” commonalities in the work so no single person is stretched too thin.
Many problems seem insurmountable, and especially those that many of us have faced in recent months. Leaders shouldn’t underestimate the obstacles in their path during turbulent times, but they shouldn’t see them as impassable, either. The best leaders don’t crumble in the face of adversity. They overcome it one step at a time.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make when faced with a disruptive technology? What should one keep in mind to avoid that?
People think they can’t learn the traits of successful leaders, and very few people (even famous leaders) learn these lessons without making mistakes. Every leader can retool for unforeseen market environments. And right now, they have to if they’re serious about staying competitive on their own schedule instead of one set by circumstances outside their control.
Ok. Thank you. Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to pivot and stay relevant in the face of disruptive technologies? Please share a story or an example for each.
1. Accept challenges when they arise.
Grappling with change in a business environment starts with your mindset. If disruption sparks fear in your mind, your team might not be able to think creatively enough to grab an opportunity and secure potential gains from it.
Today, disruptions come in many forms — perhaps via unexpected events within the market or less-than-stellar customer feedback. Be sure to use these opportunities to understand your weaknesses, shore them up, and reflect on where you’re going. As a leader, your responsibilities involve guiding your organization toward improvements and solutions. View negative feedback as a gift, and you can certainly reflect on it to make your organization stronger than ever before.
2. Pick apart processes instead of people.
When it comes to adaptability within a business, it doesn’t simply involve the ways you position or develop your products and services. It also involves taking time to criticize your processes rather than placing blame on the people that work with you. Mistakes are inevitable. When they happen, leaders should examine the processes that led to a mistake rather than chastise the person or teams involved in it.
Remember that employees’ routines are often created thanks to unintended incentives, which is simply their nature. With this in mind, fixing up problematic workflows or initiatives is enough to shift employees’ thinking to align better with your organizational strategy. Communicating openly with employees (rather than bogging them down with negativity and criticism) is the sole method of uncovering inefficiencies in routines.
3. Always return to your first principles.
As the changes from your company pivot impact your capacity to attend each meeting, dealing with threats to a business morphs into a shared responsibility. With this, it’s critical that your team grounds itself within what makes your company unique: its overarching mission and value proposition. When you lack this all-important foundation, operations can go into a tailspin — after all, it’s much more difficult to shape meaningful decisions.
In order to create a unified organizational vision, employees must be able to easily access the key results and objectives they can work toward and celebrate. Besides this, every member of your team should have no trouble conveying the organization’s strategic objectives and how they play a part individually.
4. Iterate and reiterate.
Overall, the secret behind strategic operations management in the face of disruption is constantly iterating your processes and systems. By paying attention to your changing industry, market activity, and your team’s actions, you’re better able to predict and deal with bottlenecks and roadblocks. With unforeseen obstacles and shifts, your organization’s people and systems should be primed to shift their workflows and stay agile during tough moments.
5. Stay committed to ethical practices.
Employees and customers look at leaders differently if they follow a code of conduct and encourage others to do the same. They seem less like untrustworthy opportunists and more like principled actors eager to bring new fresh ideas to the market.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“People are usually afraid of change because they fear the unknown. But the single greatest constant of history is that everything changes.” This quote is from “Homo Deus: A Brief History of Tomorrow” by Yuval Noah Harari.
How can our readers further follow your work?
You can check out articles I’ve written on my website, add me on LinkedIn, or follow me on Twitter.
Thank you so much for sharing these important insights. We wish you continued success and good health!
Agile Businesses: Dan Conner Of Ascend Venture Capital On How Businesses Pivot and Stay Relevant In… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.
