SVB's Patrick Johnson on Startup Banking & Venture Debt

Patrick Johnson of Silicon Valley Bank - Podcast Transcript

Scott:	Welcome to founders and friends podcast with Scott Orn at Kruze Consulting. Before we get to a great podcast with Patrick of SVB, just want to give a quick shout out to Kruzetax.com. We built our own tax service. It’s easy. It’s online. It’s kind of like TurboTax but for start-ups. The best part is on the back end you actually have a CPA doing your taxes. You’re not doing yourself. The CPA is doing it. We have some very smart and handsome/beautiful CPS that love doing taxes. Go to Kruzetax.com. Check it out. I think you’re going to like it. Thanks so much. Now, onto a great podcast with Patrick Johnson of SVB. Thanks. Welcome to founders and friends podcast with Scott Orn at Kruze Consulting, and my very special guest today is Patrick Johnson from SVB, better known as Silicon Valley Bank. Welcome, Patrick.
Patrick:	Hey, thanks, Scott. Great to be here.
Scott:	This is a big moment. I think I made seven or eight requests at SVB to do a podcast. You stepped up to the plate. I really appreciate it.
Patrick:	This is my first time ever being featured on a podcast. Thanks for the opportunity.
Scott:	It’s fun. It’s awesome. Start off, why SVB? Why you want to join? And what do you do at SVB?
Patrick:	Sure. So, to give you a bit of context about my background and what brought me here, I actually started of on the management consulting side. I’d been with Booz, Allen, Hamilton initially based out of DC, later did a stint in Singapore. In between, spent some time working for clients in France. Founded a start-up over there, and ultimately landed in San Francisco as part of Booz Allen strategic ventures team looking at tech scouting, companies that we could invest in, strategic partnerships, tech commercialization options, and all of those types of things. The thing is that once you land in San Francisco, it’s hard not to get the start-up bug, and just want to spend all your time working with start-ups instead of Fortune 500s and big government clients.
Scott:	You had a start-up before this.
Patrick:	I did.
Scott:	We’ll get there, but I am super excited to talk about that. Yeah, did you catch the start-up flu?
Patrick:	Yeah, I caught the start-up bug, and so after I’d been on the ground for about six months or so was actually looking at joining a start-up, taking an operational role there. Had a couple opportunities trying to decide between, and then almost out of nowhere I learned about Silicon Valley Bank, and a good friend of my back from Paris, we were friends when we were both living there about four years ago, he had since joined SVB in a very similar role to the one that I’m in now. He kept raving and going on about what a great place to work it was. I progressively met the rest of the team that he’s a part of, and didn’t take long for me to totally drink the Kool-Aid and want to be a part of it too.
Scott:	Yeah, you guys have like huge market share. You are our recommended bank. We refer a lot of clients to you guys. You guys are just easy to work with. I think SVB has really over the years perfected the service, they perfected the technology. It’s like a pleasure to actually bank with SVB, as cheesy as that sounds.
Patrick:	Yeah, well this is one of the things that drew me to the bank. I was really surprised to just learn about SVB’s market share and the types of clients we work with. We’ve been around for 35 years, and we specialize with venture-backed tech start-ups, life sciences, and we also have a premium wine business. I think today we’re working with roughly two thirds of all venture-backed start-ups in the US. Expanding overseas has been a big initiative and focus area for us with operations in the UK, Israel, China. This year we’re opening in Frankfurt, Toronto, and Dublin.
Scott:	Oh my gosh, that’s awesome.
Patrick:	Basically going to wherever we see entrepreneurship happening and these emerging innovation hubs. By virtue of working with all these start-ups, and we also bank VC funds as well, including having our own fund and funds of fund. We just have a lot of visibility into things that are happening in the marketplace. We’re able to connect a lot of dots, and it gives us a really good perspective, and that’s value that we can pass along to our clients.
Scott:	Yeah. We were talking before we turned on the mics. There’s a bunch of things I want to cover, but you guys effectively invented the start-up lending world, or start-up banking and start-up lending. Who in their right mind would ever lend money to a money losing company, right? Can you talk about that a little bit?
Patrick:	For sure. That’s really our whole reason for existence. Honestly, some of this is just geographic luck in the fact that we’re based here in Silicon Valley, and have been since our founding, 35 years ago. It’s also why we also have the premium wine ventured that I had mentioned. But, on the venture debt side, it turns out that banks have a really difficult time lending money to companies that are losing money. By definition, a lot of early stage and growth stage start-ups are still burning cash. They’re investing a lot and building out their product and their teams and going to market. While these companies might have raised a lot of venture capital, have identified a really promising market opportunity, they didn’t really have options to look at debt financing options. This is really where SVB came in. Going back to our founding, we found ways to be comfortable lending money to these companies that were still burying cash. A lot of that came down to building relationships with the VCs who are backing them, really leaning on the VCs for an additional layer of due diligence and validating the business model and the plan, and then everything sprung from there.
Scott:	It’s amazing. I think what people don’t realize even though a start-up is losing money, they’re building enterprise value. By the way, you can’t just lend money to every start-up, or you’ll be out of business in six months. It’s really about picking, having good judgement, evaluating where they are in product development, market adoption, who their investors are, things like that. I think the big insight was, hey, even if things don’t go perfectly for this company, they’re building enterprise value. They should be able to raise more money. Or, if they have to, they can sell the company to a larger institution, and the loan will be good. There’s actually more cushion or more ability to lend or more enterprise value than people might think from the outside.
Patrick:	Yup, absolutely right.
Scott:	You guys pioneered this market. By the way, you were in San Francisco and Silicon Valley, but there’s a lot of banks that were in Silicon Valley. It’s actually really amazing if you pull up SVB’s stock chart, I think you guys are 5x over the last 10 years or something crazy. The bank has really, really grown.
Patrick:	Yeah, we have. We’ve got an amazing senior leadership team in place. I’ve had the opportunity to meet with our CEO, our president, some of the other senior leaders. They really have amazing vision in terms of the market that we operate in and the different products and services we build out to support our clients. Just last week actually we found out that our stock is being included in the S&P; 500.
Scott:	Oh my god, that’s amazing.
Patrick:	Which is awesome, and further external validation about the value we’re bringing to the table here.
Scott:	That’s incredible, wow. Now I feel stupid for not buying SVB’s stock like 5 years ago or 10 years ago. Well, talk about venture lending and general. We talked about how you conceptually underwrite it, like there’s enterprise value being built, and you lean on the investors for due diligence, but what are some of the specific things you look at, what are the specific things that make it seem like a really good loan opportunity for you, and what are some of the things kind of scare you away?
Patrick:	I’ll answer that, but first to provide some more context, I’ll just get into how we structure as a team at SVB.
Scott:	Perfect.
Patrick:	We do have market facing teams, they’re vertical, market specializations, but we’re largely grouped in an early stage practice, which deals with companies that have raised under five million, or have under five million in annual revenue, or ARR. We then have a growth stage practice, which deals with companies in the 5 to 75 million range, and then corporate finance practice for 75 million and above. We don’t do much lending at the early stage practice for seed stage companies or companies that would be doing friends and family money still. Venture debt really starts entering into the picture at the growth stage, which is the practice I’m a part of, focusing on enterprise software companies. The way it typically works is you have a company that’s closed, say for easy math, at 10 million series A round. We’ll want to understand what the company is doing, their reason for existence, who the founders are, the investors and whatnot. We don’t just look at the amount of money raised. Really the more important thing is figuring out the value that that company is building. But still, the amount that they’ve raised is a proxy for what sort of a debt burden they could look at, or how we can size a debt facility. Companies tend to think about debt in two different ways. You have some companies that are looking at venture debt as more of a bridge to tap into before their next equity raise. The rationale behind that is if we’re able to provide an extra two quarters of runway in venture debt, and the company continues growing at a fast clip, when they go up for their series B raise, they’re able to command a much higher evaluation, which means that the cost of capital ends up being super low. It’s cheap capital for them. Help them prevent further dilution on the cap table, and it’s just a good thing all around. On the venture debt, we get paid through typical interest rates. We generally take a warrant position in the companies as well, so that we can share in the up side. We’re big champions of the companies that we work with. That’s one use of venture debt. Other companies-
Scott:	Just to go back to that for one second. A bridge in the venture capital world, bridge is kind of a bad connotation because that usually means you’ve gone out to the market and can’t really raise money from outside investors, and so your investors do a bridge for you. I think it’s important for everyone to know, you guys are not in the bridge lending business either. When I was at Lighthouse, they would actually tell me this on the phone. They’d be like, “I couldn’t raise money for VC, so I’m hoping you can give me some money.” I’m like, “Actually, no. That’s actually not how it works.” You guys are looking to come in usually when the company’s done an equity round, everything is fresh, and my philosophy, and probably your philosophy is, you’re providing those incremental, one or two quarters. I almost think of it as like extra insurance or extra runway off of the VC run. Sometimes I’ll talk to founders, and they’ll be over thinking it. They’ll be like, “Well, instead of raising 10 in equity, I can raise 8 and do 2 million of debt.” My advice on those situations is always raise the 10 million of equity, raise whatever you really think it needs, and then raise a couple million dollars of debt to give you that added runway so that you’re not putting a ton of pressure on the lender. You’re not short-circuiting yourself at the time where you need capital the most. Does that makes sense?
Patrick:	Oh, totally. That’s how we think about it too. The reality is the best time to raise money is when you don’t really need it. We’re not really in the business of making bridge loans. We recognize that the video facilities we put out are sometimes used as a bridge loan, but the thing that makes us comfortable putting those proposals and term sheets in place is really the business model, the investor syndicate, who the founders are, what they’re building. Actually, just what you mentioned is the second big group, or the second main usage of venture debt, which is an insurance policy. A very surprising number of venture debt deals that we do, actually never get used, and they’re really just there in place if product market fit is taking longer than expected, or it takes longer to do the next round of fundraising, whatever that might be. It’s really just there as an insurance policy.
Scott:	Yeah, sometimes it’s really helpful when the product market fit is there, and the company … Venture capitalists read the balance sheet. They know exactly how much money is left in the company, and how much time. Sometimes they kind of slow roll the term sheet a little bit, and so having a couple extra million dollars or another quarter of runway so that you can actually be in a stronger position in negotiate your next round is really valuable. There’s times where the money doesn’t get drawn down, but does actually provide a ton of value.
Patrick:	Yup, you’re totally right. It’s clear that you’ve been in the game for a long time. I know that you guys are working with a lot of clients and giving them good advice and counsel in how to look at these types of things. You’re right. It’s all about have leverage. We want to put the companies we work with in a good position to command higher valuations, to keep investors involved, and ultimately our job is to help the companies we bank successful. That’s really how we should be judged as a bank.
Scott:	That’s an awesome point. It’s good that you guys take some warrants in the company. You’re actually participating in the upside. You actually have an incentive to help the company in a lot of situations. I think a lot of people don’t realize that as the company grows they’re raising more capital, there’s more deposits sitting in the bank that you can lend out to other people. Maybe they’re doing international stuff, and so there’s more wires, and things like that. Banks are the perfect business model. Banks make money in a lot of different ways, and so if the company is successful, it’s not like you need to make all the money on the loans. You can make a little bit of money on the loans, and a little bit of money on the deposits. It’s a really nice business model package that the start-up benefits from because you provide so many services.
Patrick:	Yup, that’s absolutely right. Going back to our founding and our heritage, while we might have started with venture debt, over the years we built out a whole host of services and offerings that cater to the tech ecosystem and to the entrepreneurs and investors we bank. Now we have, for instance, a private bank and wealth management service. We started SVB capital, which will make direct equity investments in some of the companies we work with. We bank a lot of funds and have a fund of funds our self. One of the initiatives I’m most excited about at the moment is called Silicon Foundry, which is effectively a corporate innovation platform that we’re marketing to Fortune 500 corporate venture teams, and effectively what we’re doing is we’re providing them access to our portfolio of clients. It’s a very cost effective way for these companies to tap into the innovation economy. We’re in a great position then to help these Fortune 500 partners of ours identify some of the most promising technologies or start-ups that they can then partner with, invest in, buy.
Scott:	Sounds like you want to be part of this program, if you’re an SVB client, or it’s a reason to come over to SVB if you are working on another bank. That’s pretty awesome. You don’t hear about that from other banks.
Patrick:	It’s really cool. That was one of the things that drew me into the role. My favorite part of my job is just meeting founders, really digging into the details of what they’re building and why they’re building it, and then basically becoming an advocate for them, helping them think through some of the strategic problems, challenges they are running into. Next week I’ll be traveling out to Hilton Head, South Carolina, for a financial services summit. One of the things I’m doing out there is effectively serving as an extension of the sale arm for two of the clients I’m working with. I’m just super excited about the technology and what they’re building. I know that they have some prospects out there. It’s all about connecting the dots.
Scott:	That’s really cool. Yeah, getting that kind of access and help from your bank, that’s unheard of. That’s a really amazing …
Patrick:	Well, in a way this goes back to our senior leadership team that we were talking about a few minutes ago. I think these guys have really good foresight that increasingly capital is becoming a commodity. For us to remain relevant and to maintain our place in the market and to have a compelling value proposition for all of the companies that we work with, we need to go above and beyond. We need to keep reinventing ourselves and figuring out additional ways for us to add value to these clients.
Scott:	I always joke. Sometimes the best stuff is when we’re off mic, but you guys are actually really able to grow with your clients now. I remember I was working at Lighthouse in 2002. It was when I started. That was 15 years ago. SVB was still kind of a regional bank, but now you guys have grown up with your customer base. It seem like that’s the incubator that you’re working with. That seems like something that you’re planning ahead, you’re planning forward, you’re helping the companies get bigger. You maybe used to didn’t have an incentive to do that because they might leave you, but now they’re sticking so long through IPOs, it’s really lucrative for you guys. It makes sense to make those investments.
Patrick:	Yeah, that’s a really good point. Our core finance practice, which is the group banking companies above 75 million, they’ve been doing a great job. We actually are behind five of the last six tech IPOs, four of the last five, but then DocuSign just announced they were filing today, another client of ours. Yeah, we want to continue growing with these companies as they get bigger. This is also one of the reasons why we’ve been aggressively expanding overseas. We want to be wherever these companies are growing, where their employees are, where their clients are, their customers, their investors. We want to ultimately build out a global footprint that can help support that.
Scott:	That’s amazing. I didn’t think about the overseas stuff in the context of like almost I would say 50% of the clients that we have, we have like 160 clients monthly reoccurring, they have an overseas software development team, or overseas engineering team that’s assembling whatever products they’re selling. Everyone is global these days, so it makes total sense for you guys to have all those global operations.
Patrick:	Yeah. Just a couple weeks ago I published a piece called The Globalization of the Start-up, which is looking at just this phenomenon. It was initially driven based on this survey that we do called the start-up outlook that we publish in January of each year. One of the findings that really jumped out to me in this last report was that 51% of start-up founders in US and UK are first generation immigrants. That got me thinking initially, huh, what will all of the current uncertainty around immigration policy and whatnot, how will that influence how these people, and where these people decide to go grow their businesses. It used to be that Silicon Valley was the only name in the game. Other cities and countries are really catching on, and they’re doing a lot to incentivize tech talent, entrepreneurship, and all the rest. While Silicon Valley is still the center of the ecosystem in a lot of ways, there’s a compelling case to be made to expand overseas. In a way, it’s kind of crazy to be based here, be a series A company, and have to compete with Facebook and Google and Salesforce and all the rest for engineering talent, when you could still start here, incubate your company here, raise money here, keep some operations, but then build an engineering hub in Budapest or Toronto or Dublin or Beijing, a host of other places. The reality is it’s never been easier to operate as a global company.
Scott:	Yeah, I totally am with you. We just hired a VP of engineering or VP of technology, and he’s based in Austin. This is so silly, but the best money I think we’ve spent is buying Zoom, the video conferencing service. It’s like you’re just in the same office with people. For these global tech development teams, or even for you guys, to be able to connect with your London office or I forget the other places you’re starting offices, but you guys can have a really cohesive strategy and share leads with each other. It’s getting easier and easier to have a global operation now.
Patrick:	Yeah, totally. It actually makes me think we have a bit of a frenemy relationship with Stripe. Obviously, I’m a big advocate of Stripe. I’ve been a business user of Stripe with our start-up, and we partner with Stripe on a program called Atlas, which effectively helps companies all around the world and now in the US get registered and start-up as a corporation. Starting a business historically has been pretty hard, bureaucratic, it’s involved paperwork. When you’re founding a business it’s generally because you want to found the business. You don’t want to go through all the administrative and bureaucratic stuff back office. What Stripe Atlas does for something like $500 a company gets set up with an SVB bank account. You get registered as a Delaware C corp. Stripe sets up up with merchant services so you can start accepting payments from anywhere. There are other partnerships with Amazon to get you AWS credit and PWC to help with tax advisory and all the rest. That’s just led to an explosion as well where we’re seeing more and more, I think we’ve had accounts open from 124 different countries at last count.
Scott:	That’s amazing. Also, people don’t know this but Stripe runs on the SAV’s ACA trails. You guys enabled this company big time. I hope that every night when they’re counting their money after an IPO that they give a shout out to SVB because you guys have really done a lot for that company.
Patrick:	As a prior user of Stripe as well, I love the product they’ve built.
Scott:	We use it for all collections at Kruze Consulting. We used to have a really fragmented collection cycle and structure, and we just standardized everything on Stripe. Actually, remember, you don’t know this about me, but I have a nonprofit called Ben’s Friends, and 10 years ago when Stripe first came out, we were using PayPal to accept donations for Ben’s Friends. My buddy Ben, the co-founder was a developer. He’s like, “Hey, there’s a new thing called Stripe. Let’s just embed it in our website to accept.” We had to be one of the first people ever to use Stripe. It worked like a charm. It’s just a great service. That’s awesome. Stripe Atlas is a really good program. I’ve seen a lot from them. Those guys reach out to us all the time. It’s an interesting group. I’ll tell you more when we’re off mic, but what they do for entrepreneurs is really great.
Patrick:	Oh, and one of the things that I thought was interesting with that is the initial purpose of the program was just to help overseas entrepreneurs start their companies in the US. Last year they ended up expanding it to allow US based companies to do it because there was simply so much demand here for a streamlined way to get registered as a new company.
Scott:	Totally. I think any of our companies are using any kind of subscription or Sass business model are using Stripe. It’s universal. It’s awesome. There’s another cool SVB product that I’ve seen recently, which is I think it’s a credit to you guys. You’re always coming up with something new. There’s a new lending vehicle called robot as a service, and it’s effectively like equipment financing for companies that are building robots. Robot service is a really good tagline and great marketing, whoever thought of that deserves a raise, but maybe talk about how you guys think about equipment financing, and the difference between that and growth capital, and how much equipment financing you really like to do versus the normal growth capital loans, and AR loans.
Patrick:	Yeah, it’s really team and company dependent. On the enterprise software team, which is where I spend the bulk of my time, we generally don’t do equipment financing, just because these tend to be Sass companies, and it’s just not really relevant to their business model. Robot as a service is something that comes in the hardware side. We’ve got an amazing team over there, and they’re very in tune with the market. Actually, one of the shifts that would been making, I think as a bank and we look at the talent we’ve been bringing in. It used to just be that SVB would hire bankers or people with finance background. Increasingly we’ve been trying to hire operators, people who have actually right now start-ups, or who have technical depth, can credibly speak to things that are going on, to really understand the nuts and bolt of the business. I think that’s one of the things that has led to these new innovative lending products like robot as a service.
Scott:	Yeah, there’s also something called accounts receivable lending, which is actually pretty helpful in the Sass world. You have a smart marketing term for that for Sass companies, right? You want to talk about that a little bit?
Patrick:	Yeah, sure. Well, AR lending is super important and something a lot of businesses don’t even think about. Some of this, not to get wonky, but some of it depends on how a company invoices, how they do their accounting, it’s a cruel base. Obviously you know all this, and that’s why I refer.
Scott:	That’s okay. Explain to people, like people who when you invoice someone to be paid, like you provide a service. You invoice them. That becomes accounts receivable, money that the customer owes you.
Patrick:	Yup, and there’s typically a lag between when the products or services or goods or what have you are delivered and sold, and then when that revenue is actually realized and shows up in your bank account. AR lending in its simplest form is I sell you a service for $100. You pay me that $100 30 or 60 or something 90 days after you receive it depending on whatever agreement or contract we have in place. That’s when I actually get paid. But, for companies that are growing, they don’t have the luxury oftentimes of waiting to get all of these accounts receivables checks coming in, or payments coming in. So, an AR line of credit is really useful because basically that will allow these companies to access the money that they’ve invoiced pretty much instantly as soon as they’ve invoiced it. There can be some restrictions in place, like for the most part with our AR lending, we want to make sure that the people who owe you money are actually credible and can be counted on to pay, but then from there we can put a facility in place that’s very inexpensive and provides you the capital right away that you can then reinvest in your business.
Scott:	Yeah, that’s the name of the game, reinvesting it faster. Then do you guys have any Sass vehicles like software as a service kind of loan vehicles? I remember this in the past. I remember there was some short hand. It was something like you’d be willing to loan three months without bookings or something like that and minus turn. Does that ring a bell at all?
Patrick:	A bit, but it’s one of these things where I think as a bank overall, we’ve moved away from just having one size fits all lending products. Instead we really try to customize it based on each client.
Scott:	That makes a lot of sense, yeah. Maybe sometimes it’s like a really smart banker knowing how to phrase something the right way to catch the client’s attention. When a Sass company is seeing customer Sass lending product, it’s probably pretty attractive to them. What’s next for SVB? You’re growing internationally. You’re developing all these new lending products, and your incubator sounds amazing. I wish Kruze Consulting could get into that. We could probably use that too. What are the other big things you’re excited about?
Patrick:	Well, the current initiative right now is around helping further build out our early stage bundle. What this is, we’re trying to put together all of the types of services that a start-up could really benefit from when they’re getting their operations off the ground. We already have a very competitive banking offering, so the early stage bundle includes fee waivers, free checking, credit card programs, all the rest, the nuts and bolts of what you would expect of corporate banking solution to be like targeted to a start-up delivered at no cost. We also then want to look at all these other services that a company would benefit from. This is where partnering with companies like yours is really useful because we want to bring in out sourced CFOs, CPA as a service, things of that nature. We want to work more with providers like Amazon and lining up AWS credits for our companies. We want to work with tax preparers. Basically, all of the back office solutions and products that a company would benefit from, let’s just bundle it all up and just offer it to these start-ups to help them get off the ground so that they don’t have to do the work of piecing things together one-by-one.
Scott:	It makes so much sense. We actually do that for you guys too, in the sense that they come to us and are like, “Who should I bank with?” I’m sure u see this a million times. They’ll be banking with City Group or Wells Fargo or Chase, some gigantic entity that has no customer service whatsoever, Bank of America, and they’re a start-up. They need some personalized service. They need personalized products for the start-up, and so they’ll ask us, and we’ll be like, “Yeah, go to SVB.” I think the other thing that people don’t quite realize about you guys is you have the best online banking services. Everything is very easy. I think your APIs are really good. You integrate with things like Plaid or QuickBooks online. It’s easy to pull the data out of QuickBooks, which actually makes our life a heck of a lot easier. In Kruze Consulting’s whole game is we are going to innovate and be super-efficient, automate as much as possible so that we can hit low price points. That’s why we have been able to take share. You guys actually enable that. Some of your competitors are like our team is spending an hour on the phone with their customer service team trying to get bank access. You guys make it so easy, which ends up saving the start-ups those of money, which means they can put more money which means they can put more money into technology development.
Patrick:	We’re help to hear the value that you see coming out of the platform. This is why we exist.
Scott:	I think kudos to you and your senior management of making those investments. It would be very easy to be a bank and be fat and happy and not make those technology investments because a lot of people don’t think of banks as like super technology oriented, but you guys actually are. It makes a difference in our lives.
Patrick:	We need to be. Think about it. It wouldn’t look good if we were the bank for entrepreneurs in the innovation economy, and we weren’t innovative or entrepreneurial our self.
Scott:	Well, it doesn’t stop some of your competitors, so kudos to you guys for doing it. Anything else that people should be aware of that SVB is coming out with soon or any other things that we can help promote?
Patrick:	I really go back to the Silicon Foundry Initiative. I’m just so excited about this. I don’t think there is another more compelling offering on the market or could be, frankly, because the real value of the Foundry comes from the relationships we have, and the fact that we’re able to tap into this huge portfolio of clients, and the rest in our ecosystem. I think we’re going to be seeing a lot more of that. The other thing that I am excited about is we just get more founders as a bank, building out a lot of sector expertise within our various banking teams. I think the entrepreneurs that we work with will find a lot of value because we’re going to be dealing with people who actually understand their business at a much deeper level, understanding the technology behind it, the business models and all the rest.
Scott:	Totally. I see it in action all the time. Your bankers understand the business models of the companies perfectly. It’s a very quick conversation. They can make a yay or nay go really quickly. We got to wrap up because we’re over time, but we forgot to talk about your Parisian business, so do the one minute on this. By the way, everyone is going to be jealous. They’re going to be like, “Why’d you come back to the United States?” Give the quick skinny on that.
Patrick:	All right, so to set the scene my wife and I are living in Paris. I’m working for CIO over there, a financial institution, really having a great time. On the side, my wife and I had come up with this idea for basically doing gourmet picnic deliveries as a service for tourists around the city. We helped launch a company along with two co-founders called Paris Picnic. We launched the company in 2013. We ended up spending most of the next four years as the number one ranked restaurant in Paris, which was kind of amazing because for the first half we weren’t even a restaurant. There’s actually a bit of a saga with us getting D-listed from Trip Advisor after hitting number one the first time. Fortunately, it was during winter, so we could seamlessly close up operations, and then we re-launched the next spring having also opened a brick and mortar shop in the Moray that could qualify us as a restaurant, and then we re-rose to number one after starting from scratch. Learned a ton of lessons. Have a lot of bruises as well from that. In a way you learn more from messing things up. I feel I can relate to a lot of the founders I’m dealing with out here. That was also a very difficult thing to do with a partner. For me it was nights and weekends. It was my wife’s full-time job. When the opportunity came up for me to re-locate to Singapore to re-join Booz Allen and help them stand up this new commercial consulting office over there, one of the reasons we wanted to take the jump is that it would put some real physical distance between us in the business, and would enable us to go back to having just a normal relationship. Fortunately we had a co-founding team in place who was able to pick up the reigns from there.
Scott:	Yeah. You and I hit it off partly because of that because Vanessa and I worked together, and you and your wife worked together. It’s actually really fun to work with your wife or husband. There’s also some downsides. You have to create barriers and things like that. A Parisian picnic restaurant just sounds like the thing that would be in a novel like the greatest job of all time.
Patrick:	In hindsight, well not even in hindsight, at the time we kept talking about how these really needed to be a reality show because we had about a dozen people working for us, all for the most part very cool, young Parisians, musicians, what have you, who needed some extra money. It would be super chaotic as we were getting all of the deliveries and orders ready for the day. Then we had this little three-wheeled piagio named Pepe that would go out and make these deliveries around the city. Then we had literally hundreds of surprise wedding proposals and birthdays and anniversaries. Over the years, we built out a bunch of ancillary services, vertically integrate what we were doing on the picnic side to provide additional services to tourists who were coming to the city, but yeah. It was a lot of fun, and made us very customer centric, customer focused because we would get instant feedback from people, and it really helped us build a quality company and product.
Scott:	I think the other point is it helps you relate to all the founders you work with. You know what it’s like to try to scale something and work out the problems. When I was at Lighthouse, I never had a job like that. I didn’t really understand. Now that we’re like 36 people, I really understand. I can empathize at a very base level with our founders. It just makes you more empathetic person. You understand. You’re a great partner because of that. It really helps quite a bit.
Patrick:	Yeah, for sure. You learn a lot.
Scott:	Patrick, thank you so much. Maybe you can tell everyone where they can find you and how to reach out.
Patrick:	Yeah, I tend to keep a pretty low profile on social media, but I’d love for people to connect with me on LinkedIn. You can find me under D. Patrick Johnson. That’s probably the best place. Otherwise, I’ll include my contact info in the show notes. Reach out if I can be helpful. Love meeting with entrepreneurs, learning about new businesses, and just seeing where I can help.
Scott:	Awesome. All right, it was a pleasure, man. Thank you so much.
Patrick:	Thank you.
Scott:	Bye.

Patrick Johnson of Silicon Valley Bank on Startup Banking & Venture Debt

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