Join us this week as John Cerasani discusses how he helps entrepreneurs grow by infusing capital and providing the right guidance.
Carl Lewis: Welcome to The Connected Enterprise podcast. I’m Carl Lewis, your host from Vision33, and my guest today is John Cerasani. Welcome, John.
John Cerasani: Thank you.
Carl Lewis: John, you're what they call a serial entrepreneur. And a venture capitalist. You’ve started businesses, and now you help others start businesses. Please tell us about yourself, what you've done, where you came from, and where you are now.
John Cerasani: I've always had the entrepreneurial spirit in me. After college, I worked in corporate America, but I always knew I wanted to do my own thing. After I learned everything I thought I needed to know in corporate America, I left to do the job on my own.
John Cerasani: I started my own insurance company, grew it, and sold it to a private equity firm nine and a half years later. That put me in a cool position—it gave me the capital to not worry much about making money anymore, which led me to focus on helping other entrepreneurs grow. That's what I'm doing with the venture capital firm: infusing capital into companies when they need it and offering guidance.
Carl Lewis: What’s it like to transition from working for somebody else to working for yourself?
John Cerasani:cIt's incredible. I'm writing a book about how to do it. I focus on the nuts and bolts, like blocking and tackling the job. I played college football at Notre Dame, so I use football analogies.
John Cerasani: Do you know everything from A to Z in your occupation? Do you know what you’re doing—and what your colleagues, assistant, account manager, or any role you're not in are doing? Are you capable of bringing it all in under one umbrella? Achieving the same results you've achieved working for someone else?
John Cerasani: It's tough at first. I like praise. I like being told I'm doing a good job. When you start your own company, there's no one telling you're doing a good job except the balance in your checking account.
Carl Lewis: Yes.
John Cerasani: It's a challenge. Then you hire people, and everyone laughs at your jokes and says yes to you, but you're their boss. You're signing their paychecks. So, you never know what's real. That was a big challenge of going on my own: finding another way to channel my celebration. I'm not celebrating the big win at happy hour with the other office guys. I don't have a boss recognizing me at the weekly meeting for the big sale.
John Cerasani: Beyond that, the camaraderie of working with people is different. I’m a people person. I try to make friends with the people I work with. We have only one life to live, and if we're spending so much of our time—even more than our families, sometimes—with our coworkers, isn’t it nice to be friends with them? To know about them? When you open your own business, you leave all that. You must find other ways to fulfill yourself in that regard.
Carl Lewis: One of my friends owned a business, and he would say, “If you don't blow your own horn, you'll never hear the music.”
John Cerasani: I’m going to steal that.
Carl Lewis: People rarely walked into his office to say, "Hey boss, that was great."
John Cerasani: When you grow a team, it's almost an expectation. It's like Tom Brady. When he scores, he's not doing backflips in the end zone. Everyone expects him to score. Whereas if the seventh-round draft pick who barely made the team scores, people jump for joy. And as the boss, they're looking at you as a Tom Brady.
Carl Lewis: You played at one of my favorite universities. I don’t have many baseball caps, but I have a Notre Dame hat. I've been a fan since I was a little boy. I got up on Saturdays to watch the game from the previous week.
John Cerasani: Awesome.
Carl Lewis: What position did you play?
John Cerasani: I played tight end. I was the high school All-American and had scholarship offers practically everywhere. chose Notre Dame. I grew up in the suburbs of Chicago, so that was a kid's dream come true.
Carl Lewis: From a tight end at Notre Dame to a venture capitalist. What do you look for when investing in a company?
John Cerasani: I'm looking for a business model that could disrupt an industry or, more likely, exist within an industry and coexist with others there. What's going to make them special enough to stand out? Here’s an example. So many people trying to get into the clothing business want to get into retail and sell their cool clothes at Nordstrom. Join the club. Everybody wants that, so it’s not a business model. Consider the company MeUndies instead. They did everything online and built a brand around that.
John Cerasani: I'm not invested in MeUndies; it just came to mind as something different. I look at things from that regard, but I also look at the founders. Does the founder have grit? Are they scrappy to get things done? Because the last thing I want is someone who will spend money like it's water. I learned the hard way that some founders are reckless. I’ve even said to a few, "You’re borderline reckless with your behavior. You're taking other people's money and spending it like it's nothing." I'm not talking about people buying a Mercedes or making their car payments with the money—that’s borderline illegal, not borderline reckless.
John Cerasani: Borderline reckless is people raising capital without having the business smarts to walk the walk. They can only talk the talk, in circles, to convince people to write them checks. They don't have a plan, just the gift of gab. Or they know someone who knows someone, which gives them credibility. But when it comes down to it, they don't know what they're doing. And if you don’t have a plan, talked a bunch of nonsense that won’t come to fruition, and took 800K from three investors, you’re reckless.
John Cerasani: I learned that the hard way. Now I’m laser-focused on evaluating the individual. Can this person get things done? Can they do a lot with a little? I want them to make a mountain out of a molehill in a good way.
Carl Lewis: That's interesting. I’m sure you see businesses that have been around for a long time, reached their peak 20 years ago, and haven't moved since. But it's a family-owned business, and the second generation is coming in. Is that an opportunity because the younger generation has more energy and desire to grow?
John Cerasani: I'm mostly involved in the earlier stage venture capital, and a lot of that isn’t family businesses. You might get people from well-off families with generational wealth trying to branch off and do their own thing. That’s when they look for partners like me to help them.
John Cerasani: They bring enough to the table themselves, but they're smart to find strategic partners to walk in with. What's interesting about those folks is that they have their own money. They’re in the fourth or fifth generation of wealth because their family invented the question mark, and they get residuals every time anyone uses it. They don't need venture capital money, but they know they might not have it in them to take this where it needs to go. So, they slice 10% off their company, put some valuation on it, and have investors put skin in the game. They want someone on their side—a colleague or even an advisor.
Carl Lewis: Do a lot of venture capitalists take a board member type of role? Where they’re actively involved and give advice, etc.
John Cerasani: There are actually two boards. There's the board of directors, which is a legal governing body that appears in the operating agreement. There are voting rights and extremely specific jobs, responsibilities, and authority those people have. There's also the board of advisors. Two very different, separate things, but people use the terms interchangeably.
Carl Lewis: Right.
John Cerasani: The board of advisors is typically where you want to involve people. Usually, they're throwing money in as some type of investor. And they're bringing more to the table—maybe their network, other resources, introductions to influential people. For the people on that advisory board, there's usually some compensation in the form of advisory shares. It might be a quarter of 1% to do this, this, and this, and it's vested over the next two or three years. That's common. What’s not common is to be asked to do that. The entrepreneur must see something in you if they want to get you on the advisory board. I'm fortunate—and proud—to be on many advisory boards.
John Cerasani: The board of directors is usually people with a lot of skin in the game. If a venture capitalist is on the board of directors, they led a round. It’s like Shark Tank—they get seed money, then series A round, series B round, etc. There are lead investors in each round, and the checks from that venture capital firm are typically well into the seven figures.
John Cerasani: If I'm going to fund your company $5 million, part of the criteria is that I have a board seat. Often, what you get is venture capital funds in that mix. Usually, it's not just one person's money. When it's one person's money, it's considered a family office. Glencrest Global is my money, so we're a family office. We don’t pull other people's money in. We won’t write checks in later rounds. Those are usually the much larger venture capitalists that are pooled—multiple people’s money.
Carl Lewis: You learned a lot about being part of a team in college. What has that taught you about looking for founders?
John Cerasani: When I went into the workforce after college, I worked in sales. Sales managers always wanted former athletes because “once an athlete, always an athlete." They’re going to work hard. There’s something to playing a sport in college. Not if you quit your freshman year, but if you stick it out, work your rear end off, and get a college degree simultaneously. I'm biased toward football, but it can be any sport. Plus, if you're at a more prestigious university like I was, you're competing in the classroom against the best of the best.
John Cerasani: I think it speaks volumes when you pull that off. Whenever I see an entrepreneur who did that, I’m interested. I'm invested with a woman who played volleyball at Columbia University in the Ivy League. Intelligent. And I'm listening to her give a talk, thinking, "She believes in her product. She knows what she's talking about. She's got the brains." And I already know she has the heart to take this to the next level. That's what I'm looking for.
Carl Lewis: Sounds like discipline is a big part of it.
John Cerasani: Definitely. And her company is called Lightning Fit. If it sells for a billion dollars in 10 years, remember you heard it here first.
Carl Lewis: I’ll remember. John, in some of your writing, you said part of society hasn't caught up with the times in terms of career paths, etc. Can you explain that?
John Cerasani: Expectations have evolved, including about professional behavior and career paths. In the 1950s, you were supposed to work for someone else, climb the corporate ladder, retire, get your pension. But companies don't even have pensions anymore—except maybe if you’re a schoolteacher or a police officer. We replaced pensions with 401(k)s, and you can take them to your next job.
John Cerasani: But being an entrepreneur, taking risks, starting your own company. No one's talking about that. In the early 2000s, I worked as an area vice president at Arthur J. Gallagher, a big insurance giant. I was 27. My parents said, "You're leaving that job? Are you crazy?" I almost gave them both strokes.
John Cerasani: If I’d stayed on that path, I wouldn’t have what I have today. I wouldn’t have the capital I have today to be helping people. And I probably wouldn’t be invited to podcasts like yours, Carl. That’s something we’re way behind the times on.
Carl Lewis: Some college interns once asked me how many jobs I'd had. Apparently, I've moved around a lot, because the answer was 27.
Maybe industries that stayed the same for about 10 years, then move on 10 years. But within those, I was constantly growing, changing, and taking on new roles. Young people seem much more comfortable with that. They don’t want to bury their skills somewhere for 30 years. They want to constantly learn and change. They want to be challenged. They want life to be more exciting. And I agree that the typical corporate atmosphere doesn't allow for that much change and flexibility.
John Cerasani: I love what you said. Maybe it's a benefit of these millennials who are used to getting whatever they want right away. Maybe they're switching jobs because of that. And the benefit of that, which wasn’t their intention, is that it's maybe changing the landscape of everything I talked about.
Carl Lewis: There’s no school to become an entrepreneur or start your own business. But you're writing a book, 2000% Raise, right? Tell us about that.
John Cerasani: You might be shocked, Carl—there are a lot of colleges across the country now that have majors in entrepreneurship.
Carl Lewis: Interesting.
John Cerasani: I always thought that was kind of backward, but I assume the classes teach you about raising money, venture capitalism, etc. But my book isn’t about that. It’s about enlightening readers to look in the mirror. To evaluate which part of the system they're playing a role in right now.
John Cerasani: That system is corporate America. I talk about people being loyal to companies that could fire them tomorrow. Most people are employed at-will, and they don't understand what that means. In the book, I call it “employed at-ill” instead of “employed at-will.” Because you have no power. It doesn't matter if you're the best sales rep who developed the best territory. If you get a new manager, or rub someone the wrong way, they could take that from you. And then, "If you don't like it, you're employed at-will, so you don't have to work here." I discuss that in the book and then talk about embracing what you're learning while working for someone else.
John Cerasani: Ultimately, you’ll prepare yourself to do the same job you're doing today, but you’ll put yourself on top of the org chart instead of the CEO where you work now. If you do what I did, you’ll give yourself a 2000% raise. I explain what I sold my company for and how that played out. I use myself as a guide, but it's about the reader. I reflect on observations I've made about corporate America.
John Cerasani: I don't use this analogy in the book, but I should go back and add it. It's the Wizard of Oz. You pull back the curtain, and there's just some little guy back there. Controlling things, making the lights go on, making smoke come out of its ears. Corporate America has created this illusion for employees: We need them to succeed. We must be part of this massive formula to give the clients the deliverables they deserve.
John Cerasani: I call it the micro-brainwash. Look past it and see things for what they are. Then evaluate yourself. Can you give clients these same deliverables? If you can, here are the steps to go out on your own. If you can't, why can't you? Now, if you're Motorola, and you're inventing technology, and you don't have the wherewithal within you to do that or billions of dollars to raise behind you, okay. Maybe not. But is there a consulting job you could use your experience to go out on your own and do? Is there something in an ancillary industry you could bring to the table? Readers will walk away with their eyes opened wider and confidence they didn’t have before.
Carl Lewis: That's great. John, thank you for being on the podcast. It was fun. And for everyone out there, until we meet again, stay connected.