Chapter 1: What is the main topic discussed in this episode?
My guest today is Einar Volset with TinySeed. We talk about how TinySeed has deployed its first $4.5 million in capital across 23 companies and the returns that fund has made.
Chapter 2: What is TinySeed and how does it operate?
We talk about why him and founder Rob Walling decide to create TinySeed to put $120,000 into companies and take 10% to 12% equity as they help those companies scale. We talk about how Einar is thinking about raising fund to what IR he's promising to LPs, how much they're targeting to raise, and what they're going to do with the money.
But before that, we get into Anar's background, going all the way back to a northeast old mining town in England. We talk about how he then went on to co-found a company with a friend who was an ex-Googler. They built that company via YC and ultimately sold to Google. But that partner, for some reason, refuses to acknowledge that Anar was a co-founder. We'll talk more about that in the interview.
We cover all of it.
Chapter 3: What motivated Einar Volsett to co-found TinySeed?
This is really an interview on how TinySeed works. Enjoy. Hello everyone. My guest today is Einar Volset. Starting back in 98, he was studying at Newcastle university where he eventually in 2005 earned his PhD in computer science.
Between 2005 and 2007, he guest lectured at Cornell before jumping into 2008 and finding an app called Remail with his co-founder, which later went through Y Combinator and eventually a couple of years later sued, sold to Google. In 2009, he started a company called Left Coast R&D.
and since then he's worked on many different things including in 2014 launching an app called app aftercare which he eventually sold he now in 2018 uh launched a company called discretion capital which is helping with sas m a and also teamed up with robert walling to find tiny seed in 2018 an accelerator for b2b sas companies And are you ready to take us to the top? Yeah, let's do it. All right.
So take us back to a little bit of childhood history here. So where did you grow up? And was there like some sort of specific game that your parents bought you that got you addicted to development and coding?
Actually, no. So I grew up in Norway. And I think my first computer was like a Commodore 64. My first programming I ever did was making it make a machine gun noise.
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Chapter 4: How does Einar's background influence his investment strategies?
That was sort of the first thing I remember doing. But then honestly, I wasn't doing an awful lot of programming before I got to college. I was doing more sort of hanging out on BBSs, more sort of hacking phone freaking than anything else.
What is that? I don't know what phone freaking is.
Oh my God, I'm so old. Phone freaking is this notion where like, so it depends where you're going.
Chapter 5: What challenges did Einar face in his entrepreneurial journey?
It's like phone freaking is fooling the telephone system to give you free long distance and international calls by emulating the audio noises that the system plays. Just you basically play it over the phone line and it gives you free phone calls.
Wow.
So what year was that? Ah, this would have been, hopefully, statute of limitations ago. This would have been, oh, early 90s, I guess, something like that.
And you would have been about how old?
Oh, 13, something like that.
Okay, so that was your first kind of, you know, getting to code. You get free long distance. You go, wow, if I learn how all this stuff works, I can get more free stuff.
Yeah.
yeah pretty much it was like i didn't really get productive like in terms of coding until um until college that's really when i sort of it picked up kicked up for me and i i was interested in it in terms of like i i did very much the academic route like i did i did pretty well uh you both in high school and college and then um sort of the the you know you just i think when you're when you're younger you sort of get good at school and then you sort of just follow that path and then you
Some people aren't smart enough to stop, and so that was me who just ended up like, all right, what if I'm good at school? I'll take it to the extreme and do a PhD.
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Chapter 6: How does TinySeed differentiate itself from traditional VC funding?
And it was only really during my PhD, my master's PhD, that I actually started reading Paul Graham's work, his essays on startups, and it sort of opened my eyes to this notion that oh, this is not this abstract thing that people who went to business school with fancy business plans do. This is like people like me can go and build their own business and it can be a meaningful outcome.
So sort of a late bloomer in terms of entrepreneurship. I wasn't one of these kids who had a lemonade stand at five or whatever. That was never me.
So what you talk about, you know, these kids that go through and they get really good at school and they never turn their head up and go, wow, this could have practical applications outside of academia. Let me get out. Why didn't you have that moment? Why didn't you ever have a moment to pull your head up?
I think most of the time people do what everyone else does. You get praised for doing something, for going to school, getting good grades, and you think, well, you get good grades in middle school, what do you do? Well, you go to high school, you get good grades. Well, if you get good grades in high school, what do you do? You try to get into the most competitive college.
all right, you got into the best competitive college. You get amazing grades. Then that's when most people are like, you know, I'm going to go out and make some money and, and, and, you know, try a career. Whereas I was sort of just stuck on that. I was like, well, you know, I guess I needed to prove how smart I was.
What was the environment like in Newcastle in 2003, 2004, 2005? And was there an entrepreneurship club? Was there a program for entrepreneurship? What was the innovation ecosystem like back then?
There really wasn't one. Although that being said, there's a couple of like, um, So Newcastle is an old mining town, like the northeast of England is quite economically depressed, or at least it was at the time.
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Chapter 7: What is the significance of IRR in TinySeed's investment model?
And so, you know, like there wasn't there wasn't a sort of a large amount of tech industries, although there were some and there was some stories about like, I think Sage, the big sort of tech accounting type firm got founded in Newcastle. And there's actually a story about I think when we were in undergrad, We had one of the founders come and talk to us. And that was, I remember that.
That was very interesting. But partly the most memorable part was one of the lecturers, one of the senior lecturers, or maybe he was a professor then. He was actually one of the co-founders of Sage and decided not to do that just because he wanted to, instead he wanted to remain a lecturer at the university.
So he turned down being a founder at Sage in order to become a lecturer at Newcastle University, which I think economically at least was a mistake.
When you're sitting there listening to one of the Sage co-founders give a lecture and they're obviously have some success at this point and they're talking about, you know, we potentially raise money or have this much in revenue and you're sitting there going, you don't know what your financial situation was, but I'm a college student trying to pay like college bills and get this damn PhD.
In your mind, I mean, I remember when I was still really cared about grades and I heard lecturers come in talking about like building a great company and money related things in my head, my excuse would be, oh, I don't care about money. I'm going to keep getting good grades and, you know, valedictorian, be the best. And then at some point...
I think there's some of that for sure. I mean, I think like to give you some more context, like it was pretty clear to me after I'd been at Cornell for a couple of years, I didn't want to, I didn't want to become a tenure track professor. Now, was I smart enough to do it? Probably not. But even if I was, I wasn't that interested simply because I didn't, you know, it just wasn't for me.
You know, there's, it's great for some people and, but there's an awful lot of academics who are pretty unhappy, put it that way. And also like, But anyway, once I decided to do that, then it's funny how people treat you because I almost got treated like I was like a death in the family.
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Chapter 8: How does Einar view the future of SaaS businesses?
You know, like if you're in CS academia, like, you know, high up and you decide to go to industry, even if you decide not to go to like pure industry, if you go into like industrial research, they almost feel people, you almost get the sense that people feel sorry for you. Like, Oh, you didn't quite make it, you know, not, not quite smart enough. So, okay, well good for you.
Like, you know, go do your thing. But, but you know, the real pinnacle of achievement is, is, you know, pure academic research. And that was one of the weirdest things about it. I was like, huh, okay, that's interesting. Is that dangerous? Dangerous in what way?
The pinnacle achievement of a system we've built is to get a degree that costs a lot of money that may or may not be tied to actual economic value in the world.
No, I don't think it's dangerous. I mean, I think it's just, it's funny how, to me, it speaks more to like, people will do pretty much what everyone else around them does. I mean, that's one of the key things. And I think people think that their little piece of the world is much more important than it is most of the time, or at least more impactful. I think if you look at...
And I think this is true in every industry. In every sort of subculture, niche, and industry, there are famous people. Everybody knows X, Y, Z. It doesn't matter which industry you're in.
There's always somebody who's- Who was that for you when you were guest lecturing in 2005 at Cornell?
Oh, there are a bunch of people. I'm really bad with names, but there are some people who are like, you know, there's that Stanford professor. There's a Stanford professor who gave up email and the only way to reach him is to send him a physical letter. Or if someone sends an email, then his assistant prints it out once a quarter and then he responds via something like that.
And there are a number of sort of sages in the academic world. And that's also true in startup land. Like, look, everybody knows who Paul Graham is. There's no doubt about that. But if you go outside the sort of software startup world and you go talk to the world's best lawyers, do they know who Paul Graham is? No idea. It doesn't matter.
Your relationship to Paul Graham or who he is or whatever doesn't matter at all. And I think that's true for every single industry. I'm sure it's true for lawyers too. I'm sure there are like superstar lawyers that every single lawyer knows and wants to become, but you wouldn't know who they are. I have no idea.
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