An AI Entrepreneur Explains the Difference Between Being a Builder Versus a Sustainer

Intro: 00:06

Welcome to the Growth + Exit podcast, where owners of privately held middle market companies talk about founding, scaling, and exhibiting their businesses successfully. Learn how to maximize and monetize your business on your own terms. Let’s get started.

Heather Bennett: 00:30

Hello, I’m Heather Bennett, a business advisor, marketing strategist, and board director, and your host for the Growth + Exit podcast, featuring middle market owners and experts talking about founding, growing, and exiting their businesses on their own terms. Past guests include Lisa Mascolo, the CEO of Voyatek, Allison Cummins, founder and CEO of Blue Outcomes, and Aneesa Muthana, CEO of Pioneer Services and M&M Quality Grinding. This episode is brought to you by Newport LLC, a team of seasoned executives who help owners of privately held companies grow, de-risk, and exit their businesses successfully. Newport LLC is a winner of the prestigious Inc. Magazine Power Partner Award, a list of elite B2B companies from across the globe. To see the entire list, go to inc.com/Power-Partner-Awards. To learn more about Newport, visit us at Newportllc.com or find us on LinkedIn. Before introducing today’s guest, I would like to thank Kim Denney for introducing me. You can find Kim on LinkedIn or the Newport website. Today’s guest is Kathleen Perley.

Kathleen Perley is a repeat and successful founder of multiple tech companies, including AdaIR, an AI advisory firm helping companies cut through the noise and turn emerging technology into real business value. She built AdaIR to give founders and leadership teams practical revenue driving ways to adopt AI and stay ahead in a rapidly shifting market. Kathleen also serves as faculty and AI advisor at Rice University, where she teaches executives how to lead confidently in an AI driven economy. Her widely followed analysis translates complex AI breakthroughs into clear, actionable insights for operators and investors. Kathleen, welcome to the show.

Kathleen Perley: 02:25

Thank you. Appreciate it.

Heather Bennett: 02:27

So we’re talking growth and exit. So let’s get right into you as a founder of DECODE. How did that happen?

Kathleen Perley: 02:37

It’s interesting. And a couple of. So I started my background’s in linguistics. After college, I did a Fulbright on the impact of phonetics and phonology in second language acquisition. And I’m a native Texan and Houstonian, but my mom’s a New Yorker from Bayonne.

And so as soon as I moved home after my Fulbright, I had about seven months before my PhD program started, and my mom was like, do you think you’re living in this house without a job? Think again. Like, you need to have a job. I don’t care if you have a full ride, any of that stuff. And so I got a job at a startup, automotive, digital marketing advertising agency.

And that’s where I fell in love with not only the understanding that just like I was transcribing language is very similar to how you transcribe and work with coding languages, with schema propensity modeling within DMP and DSP and ad servers. But I fell in love with the entrepreneurship journey. So I was the first hire at the company. We that company grew to about 150 clients across the US. It was called local search Group, and I decided I maybe didn’t want to spend all my time with car salesmen and wanted to go into healthcare, and it was on a flight from Detroit to Houston.

I actually was sitting between two gentlemen and I was working on something and they were kind of looking at it and we started talking and they tried to hire me to run. They ended up being a CEO and chairman of a fortune 500 company, and they tried to hire me to lead their digital. And I thought to myself, if I can convince two people on a southwest flight for a couple hours to hire me on the spot, maybe I should do this on my own. And that was the birth of DECODE. And I had bootstrapped the company and I the early days.

I had a card table, a laptop. I remember my business card said executive director or account executive or some account director. I didn’t say CEO because I’d be like, oh, let me run that up the the pipeline and see if I can get you approval, not, you know, preferential pricing or things like that. I was 23 at the time and had the firm for about ten years, and we grew to about 17 million in annual revenue and over 75 employees and sold to private equity in like early spring of 2024.

Heather Bennett: 04:59

Wow. Okay. So that that’s quite a journey. So besides, you know, trying to find the perfect card table, what were some of the difficult things that happened during that early stage as an entrepreneur?

Kathleen Perley: 05:12

I think, you know.

Kathleen Perley: 05:14

Partnerships, right? I had a partner who was wonderful, Anne Lee. She’s an incredible thought leader in the space of traditional marketing and advertising and, and had a heavy focus in healthcare. And so we really partnered together. And I think one of the things we were, she was a co-owner of DECODE for the first 9 to 18 months of business.

And what we realized is we had very different goals and objectives for the business. Neither one of them was wrong, and she was towards the end of her career or kind of where she was focused on, we need to make sure we have this offering, But it’s not a. We’re not going to invest heavily in continuing to scale and grow that offering. Right. So it’s kind of a I’m at the stage of my life where I need to start pulling capital out of the business where I was 23, 24.

And I was like, no, I’ll eat ramen and peanut butter and jelly sandwiches for the next three years to grow a team that can do exceptional work and create things that haven’t been done before. And so neither of them was wrong. And they just had two different timeline horizons, two different goals and objectives. And so I ended up buying her out. At the 18 month mark.

And so I think, you know, the early days weren’t always easy. But, you know, I did learn a lot from an eye. She made some an incredible introductions for me along the way as well. And, but I think that’s one thing is you, you don’t know, going into it what your objectives are, you might not have as much clarity. I think I oftentimes I jump in and then I’m like, okay, do I stand up?

Do I tread water? Do I find a float versus really kind of having a little bit of time? And I think there’s a good balance between the two, because I don’t know if I would tell you to have everything completely organized before you jump, but, you know, having some forethought in terms of what are your goals and objectives and what are you looking for before you start really thinking about partnerships and how you go through that process?

Heather Bennett: 07:17

No, that’s all very consistent with the other founders that I’ve talked to is, is that you really should leap before you’re completely comfortable. And there’s, there’s something to that energy and that state of risk awareness, but still having that risk that’s important to successfully get a company off the ground. Okay. So 75 people, we’ll get to the money part later, but 75 people, you obviously didn’t hire them right away, especially if you’re eating ramen and jelly, I’m going to create a cookbook called The Entrepreneur’s Cookbook, and it’s going to be literally how to make ramen the Best way. But so think about those first few hires.

You know, you talked about buying out your partner, but what about everybody else who was there at the beginning, or at least for the first like 3 or 4 years?

Kathleen Perley: 08:10

Yeah. I mean, I think it’s interesting you tap into your network, right? There are people and I was 23, 24 when I started the company. So I had some work experience limited. But, you know, you tap into those folks that you’ve worked with before that you that you trust.

And I remember, I think it was our third hire. I called, we interviewed them. It was his name was Josh and Aguilar. He was an engineer, developer, design UX, UI designer. And we interviewed him.

He interviewed us and then he said yes. And I was like, oh my God, somebody is going to work for this company. And they don’t know who I am. They’ve never met me before. They don’t know any of us and they like are going to quit a job to come work at our firm.

And that was like a huge, like moment of excitement in the sense of like, we’re building something. And somebody once told me, being an entrepreneur is being a cult leader in a lot of ways. Like you, you convince people to follow you into something that hasn’t been done before. And then the other part was this immense amount of fear of, oh, no, I now feel even more responsible because I know like he doesn’t know me from Adam, and he’s taking this risk and putting his faith in me and my ability to lead the company. And now I actually have to make sure that I can deliver on that.

And so it is that that was my fourth hire. And I remember it vividly. And I still he actually is an entrepreneur now, and I’ve sent business his way since he, he was with the company for about five years.

Heather Bennett: 09:40

So and I love that you talk about the importance of that founder in being able to create the energy needed to inspire, especially those early hires, to believe in them. I always talk about an entrepreneur. Their personal brand being so important because they are the number one salesperson, not just to the end user or the customers or the clients, but also to everyone who’s starting to work in the firm or the company, and being able to bring them in and help have them believe in what you’re trying to accomplish. So that’s a really good example. Okay, so you’ve started growing talk about some of the real turning points because you obviously were not making 17 million from the beginning.

So what were some of those big like turning points or like reaching the peaks that helped you move the company forward?

Kathleen Perley: 10:34

So Janet and Janice was one of my good. She was the CMO of Saint Luke’s Health, and we did. We started off as a project with them and it was digitally, heavily focused about 18 months in. We became their digital agency of record. And I remember vividly in one of our meetings.

We would go in, it was the traditional agency, the media agency, and then us. And at one point she was like, Kathleen, I want to hear what you have to say, like, what’s your opinion? And I was like, kind of taken back. And then jokingly, she like, then followed up and was like, all right, repeat everything you said in one sentence because we don’t like get cut to the chase. But she was a huge advocate of mine.

And so I think, you know, you see your customers as, yes, their customers, but they are truly partners. And she took a chance on us at a very young age, at a very early stage of her company, and signed us as the digital agency of record. And I remember vividly, we, I, I was in her office and we were signing the contracts and she was like, oh, your your name’s on the signature. And I was like, oh, yeah. She’s like, oh, is is DECODE your company?

Are you the CEO of DECODE? And I was like, yes. She’s like, do you mind if I ask how old you are? And I was like, at the time, I think I was 26 and I was like 26. She’s like, oh, she’s like, it’s really impressive.

I was like, yeah. I was like, are you going to change? Like, you’re still signing this, right? She’s like, yeah, I was like, okay, great. And then there were times where, you know, she expanded our digital contract to do full service.

So we ended up doing some traditional work for them as well. And at that point in time, they had another agency that came in that they hired. She wasn’t they weren’t in love with the product. And so they asked if we could step in. And I said, you know, give us a chance if you like the work, pay for it.

If you don’t, don’t pay for it. But don’t fire us for what we like our wheelhouse. Like don’t let you know, I don’t want the baby to get thrown out with the bathwater on this, but like really developing that partnership and that relationship to say like, hey, this is what we’re good at. Here are some things that we’re exploring. Give us a chance to kind of explore this.

If you like it, great. If not, no hard feelings. We’ll pretend this never happened. That was a huge part of our growth trajectory. And then really bringing in and expanding and finding our niche.

I think everyone oftentimes tries to be everything to everyone. And as an entrepreneur, you’re constantly worried about, you know, when the next paycheck is going to come in. So you can pay all of your, your teams and their families that depend on it. And so you say yes to like crazy things. Like we did marketing for a, we did packaging design for cookies.

We did oil and gas work. And we were a healthcare agency that was 90% of what we did. It’s what we loved. It’s what we were good at. And so as an entrepreneur and as a founder and CEO, there’s a lot of fear of saying no.

And what I found is once we identify that we were going to go 100% on health care. And not only just like because of the clients we serve, but like strictly say like, no, we are healthier advertising agency and digitally forward things of that nature tech led, we actually exponentially grew our customer base. We became a thought leader. We were being sought out across most of our customers from DECODE, I’m in Houston, but we only had one Houston based client. Most of our customers were outside of the state of Texas.

And so I think one thing that I find oftentimes CEOs and founders do is they try to be everything to everyone because they’re wanting to capture all the revenue they can in a way. And actually, there’s a lot of power in being focused and really serving that niche. It’s kind of like, I’ll use the healthcare example, but if I’m going to a GP, I oftentimes will go to a primary care doctor that’s closest, you know, but I’m willing to pay more. I’m willing to go further to get a neurologist because it’s a specialization. They understand this unique problem.

They have expertise in this problem. And so really, I think one of the things that really helped accelerate our growth was that big jump into. So the first time we moved into AOR and really developing that relationship, and the second one, when we focused on actually narrowing to grow.

Heather Bennett: 14:58

And that that’s such a hard concept to get past the idea that your target market is a very specific niche. It’s not everybody. And explaining that to an entrepreneur who is so passionate and loves their product and loves what they’re bringing their customers is difficult. But to your point, once you do that, it allows you to have that great high level growth, which is so important. So at what point in in D code did you not relax?

But but did you recognize you’re like, wow, we we have a company here. Like this isn’t just a startup anymore.

Kathleen Perley: 15:38

I don’t know. We used to always joking, like, oh, we were like, oh, in our toddler stage. And then like the awkward pre-teen and then like the teenage. So we were I don’t we never graduated from the teenage phase. I felt like in hindsight, I probably would argue against that.

I would say like, you know, we were definitely at least college or grad level company at some point. But I think you kind of see those components. And I think the big shift for me was around 20 or so employees when I really started implementing a really strong executive leadership team and then a middle level leadership team. And one feedback that I got was, you know, I as an entrepreneur and someone with ADHD and all those things, like I’m like a swirling dervish of chaos, but that’s how my brain works. But sometimes it actually, like causes anxiety in others.

And that was getting in the way of getting the work done. And so it became a little bit more lonely at that point, but it was what was right for the organization. And I joke with my new firm, I have a couple of people who’ve come from D code over and, you know, they used to give me a hard time occasionally on like, oh, like I found a typo in your internal presentation or you’re scatterbrained or you have like, you know, but after, you know, 2 or 3 years after, you know, leaving and before starting the next firm, they’re like, I miss it. Like that was fun. Like, I, I’ve never loved work more than when I worked with you.

Yes. It was chaos. Yes, there was a lot of things going on, but I missed that. And so I think that’s kind of where I felt like we grew up a bit, is when we started implementing, when I wasn’t involved in the decisions on a day to day basis, I still sold. I think people often think a CEO’s job like they.

The first thing they try to hire for is a. Like a VP of Business Development or Chief Growth officer. But I think that’s the wrong answer. I think this founder should always be focused on growth. You need to find somebody that can operate the business that you’ve already built.

Heather Bennett: 17:47

Absolutely. So grew G code. It’s functioning well. What was the trigger to cause you to think it’s time to sell this? I’m ready to let it go.

Kathleen Perley: 17:59

Yeah, I’ll be honest and a little candid. So I got like a, I’m sure many founders have gotten this at some point where you get like a LinkedIn message and they’re like, have you thought about selling your company? And I was like, what? And that I think was like the initial trigger in a way. And then also we would compete against McKinsey, Accenture for big dev, like middleware products and projects and things of that nature.

And we would get feedback like your firm is more strategic, your firm has the more technical chops, but like I don’t get fired. If I hire Accenture or McKinsey and something goes wrong, I will get fired if something. And there are times they. And I’d be like, but if you do that, like their approach, I think, is going to cause you to have to do more rework. And so like, we’re gonna have to charge you more than if you were to hire us today.

And they were like, yes. And many customers did just that and happily wrote me a check for, you know, 20% more than what I initially quoted because of the rework that we would have to do. But it was something I felt like I was limiting my team at that point and bootstrapped from ground up, never took on funding, and we were starting to get known on a more national stage. But we were constantly fighting against this like, but you’re only 70 people or you’re an unknown to a certain extent. And so that’s there was a little bit of imposter syndrome, you know, wanting to give the team access to a CEO and to funding and to an organization that could help really put them and allow them to compete on a national stage.

So there’s partial that was part of it. My husband had a aneurysm and so had to put a stent in his brain. And so that was another one where you’re just like, oh, and then my dad, who’s in his 70s at a family dinner, and I grew up with like all oil and gas folks. And one day was like, have you heard this like GP something or other? And as a linguist who every family dinner was like price per barrel and this shale, whatever, I was like, I’m finally relevant.

And if my dad is talking about like AI, ML models and ChatGPT and like, I saw the commoditization already occurring since 2017, we were using vertex AI and things of that nature. At DECODE, I was like, man, now’s our now’s my time like this. Like all the signals are showing, you know, it’s time for me to be able to focus on my true love. And I think certain CEOs and CFOs and founders are builders and others are stainers. And I am definitely a builder.

And at that point in time of T code, it needed a sustainer. And so that is what really kind of drove me to start really exploring that. And I literally like responded to a, like a cold email. It was like the initial trigger of like really starting down that process.

Heather Bennett: 20:54

Thank you for being so candid and sharing that, you know, the level of self-awareness you had to have at the time to make that decision. So what, what was the exit process like for you? You know, through due diligence and, and, and then post, was there an earnout or a workout?

Kathleen Perley: 21:13

Yeah. So I will say a couple of things. One, another founder, Allison Lamy, who’s a good friend of mine told me she’s like, just take the call. Like, what’s the worst that can happen? Right?

Like you learn more about your business, how people think about your business from people who do this every day and see so many businesses across the the spectrum in your industry. So lean into it and just take it and think of it as an intelligence kind of gathering. You don’t have to sell. And so I kind of went into it with that mindset. And the first time I went through the process, because I went through it twice, they we had 14 Lois.

It is a full time job, which went really well. I went with the highest bid within reason and was very excited. We made it past quality of earnings. So we went through the whole due diligence process, made it past quality of earnings. And the private equity firm actually had two partners.

One had been out of the country, the other one was leading it. This was actually not a part of their investment thesis. They focused on health care delivery and they were like potentially going to look at advertising marketing, kind of the the growth engine side of it. And it didn’t fit their risk profile, which is totally fair. And so they pulled out after quality of earnings, which I was kind of under the impression once you get to quality of earnings and that’s good, you’re home free.

And so that was a blow for sure. And you go like, are you going to go back to all the other ones? And in that whole process, I think one of the things you forget is that when you’re doing that, you’re not running your business like it takes you away. So we had a slump in our revenue, like things, you know, so you, you’re like, oh man, now I have to go back and then, you know, explain all that and which was a challenge. And so you go through a little bit of that.

And so at that point, I was like, okay, I have two paths I can either and this is like November 2023. I think probably I was like, I can either I’m in a hire CEO to run the day to day operations so I can focus on what I love doing and growing the business. And I’m gonna have somebody sustain it, or I’m going to sell and I’m going to do this one more time. But either way, I cannot continue doing what I’m doing today. And that manner.

And so actually, one of the individuals that when I was going through the due diligence process that I talked to and when the firm passed on us. She actually reached, I reached out to her because I was like, she’d be the perfect CEO. So I was like, I reached out to her and I was like, I’m going to, I want to hire you as our CEO. And she was like, well, it’s kind of awkward. But since they passed, we’re actually I’m working with another CEO and two private equity firms, and we’re looking to buy somebody in the health care digital advertising space.

And I would love to put you forward as like a potential opportunity if you’re interested. And so it’s somebody that ran due diligence on us, ended up buying the company. And that’s what Unlock has become. And so I was like, it’s funny because she and I were talking and I was like, wait, so like, you would still run the day to day and we get funding. Like, I like, I can take chips off the table and I can focus on what I love.

I was like, this seems like a win, win win. And they were very wonderful in the sense that they’re like, just send us all the due diligence files you already have. Like you do not have to like recreate the wheel. Like we’ll dig through all of that and then we’ll ask for follow ups. And so, and that happened like, probably like end of November, December, January time frame is when it really January is when it really kicked off and we closed by April of 2024.

So it was not a straight path by any means. And it was a exhausting process. But I have zero regrets at all. And I had I moved into chief or head of innovation role, I had a burnout, a year earn out, and I stayed on for a year. And at that point, you realize that.

And I joke because I still am pretty close with some of the founders or the leadership at Unlock. And I was a terrible employee, like terrible. And so I stayed on for a year. I was great at innovating and building, but I also like cared too much about everything. I’d see a LinkedIn post go up and I’m like, why would you put like, I was like that?

Like, you know, just something like I’m like, why wouldn’t you do a dynamic countdown? Why are we doing a static countdown image? Like that seems silly. We’re a tech firm. Like, I could build this in 10s.

And so as a founder who built it and it’s your baby, it’s really hard. Like I, I had a lot of conversations with new leadership of like, they’re like care less. And I was like, I physically am incapable of caring less. Like I just couldn’t do it.

Heather Bennett: 26:12

So what would be your one piece of advice to a founder if they’re thinking about selling, like what should they do or think about before even starting the Loi process?

Kathleen Perley: 26:25

Implement EOS is what I would say the. Between the two. So I hadn’t implemented EOS between the first. After the that one that kind of fell apart after the quality of earnings and I called them afterwards the partner and I said, hey, you know, I really appreciate your feedback. I completely understand but would really appreciate your insight.

You’ve seen this, you’ve done this. What else can I like? What would be good for me to work on as a CEO? How can I get better? How can I improve?

And he recommended the book Traction in EOS. And it was, I know people are like, oh, it’s a like, it’s kind of a cult following in itself, but it is an amazing structure, especially for an ADHD entrepreneur to like build the process and the documentation and ten year growth plan and having numbers ready to have those conversations and clarity around that, which I didn’t necessarily have the first go around when I went through the 14 alloys and the quality of earnings, that kind of fell apart at the end. And I think if I would have had that in place, it would have been a much different conversation. I would have had a lot more awareness around it.

Heather Bennett: 27:33

That is great advice. I’m I am a big fan of the book Traction. I. It really does get you thinking about the things you should be thinking about when growing and strengthening a business. So great.

Great advice. Okay, so successfully exited from DECODE. Obviously you’re very proud of the work you did there. What are you working on now?

Kathleen Perley: 27:55

Yeah, well, I’ll say something before I go into what I’m working on now, because I think it’ll be good for anyone who goes through this process or is thinking about it. I remember I resigned, I was there for a year and I resigned like two weeks after my one year mark. And I was like, oh, I’ll work contract or I’ll, you know, and they were like, I think we, the team needs, right? Because who’s on first? Right?

And I was like, yeah, that makes sense. And I had this moment where I cried and I like, started an air, a Beyonce themed Airbnb that I was going to build out. I had a 1972 scout that my husband and I were restoring, and I was like, I had this thought of what if no one hires me again? What if I’ve peaked? You know?

And so I want to share that because those were things like that ran through my head at that moment in time. And in hindsight, it’s the most ridiculous thing I could ever think of. And my husband was like, you literally sat still for like maybe two weeks before you started something else. So like, it’s fine. And, but it’s not abnormal to feel those things.

So I just want to say that because it was something that caught me off guard because it was being a founder and owner and then having time, I was like, what do I do? It was very weird. But now I’ve I’ve started another company, AdaIR. And I think certain individuals. It’s a joke Like entrepreneurship is an addiction, right?

Like you see the world as like problems that can be solved by new businesses that you can build. And I took about a year after I sold where I did consulting, and I worked with businesses trying to figure out how to apply AI so that I could find the problem that I wanted to solve most. And so I had a mentor who I was talking to, and he was like, Kathleen, there’s 17,000 problems you could potentially solve. Which one do you actually want to solve? And I was like, I don’t know yet.

And he’s like, that’s okay. Do consulting, find the problem you want to solve? And that’s I was working with Hewlett Packard Enterprise and Marie Myers, their CFO, who is an incredible visionary. And she actually was just named one of the top changemakers. And her leaning in on AI has been incredible.

And so she and I were talking about this challenge their CEO was struggling with as a non-native English speaker on the earnings calls. And it’s something that resonated with me personally. And as somebody who struggled with dyslexia and ADHD and always feeling like, you know, my nonlinear thinking was sheer chaos sometimes when I communicated. And so the frustration of me personally feeling misunderstood happened often. But then I finally realized that their CEOs and CFOs and executives, where their miscommunication can erase billions in market cap.

And it’s really unfair. And so being able to lean back into the linguistic background of, you know, understanding the patterns and how those lead to misinterpretation, how auditory processing happens, how machine algorithms are parsing and trying to find arbitrage. Right, is really what drove AdaIR. And I’m doing it a little bit differently this go around based on what I learned in my past. So I just closed my seed funding.

Last week, which is great.

Heather Bennett: 31:17

Congratulations.

Kathleen Perley: 31:18

Yeah. Implementing EOS on day one, which is also helpful from that perspective. And and I think one of the things that I’ve been more cognizant of that I wish I would have done sooner at my first firm is spending time on the business, which sounds crazy. But like, literally like blocking out and pretending like I used to pretend like towards the end, I would be like, I have an all day meeting and it was just with myself so I could actually have time to think. And I just brought in an executive assistant who’s been a godsend in the four days she’s been here.

And I said, hey, I need like two, four hour blocks a week where like, no one interrupts me so that I can think for like five minutes. Because when you’re jumping from meeting to meeting or deliverable or ask like, you just don’t have time to think. And. And then I think you start making decisions that aren’t grounded in strategy. And so that’s been a huge relief.

Heather Bennett: 32:18

And that’s, that’s a lot of the work that Newport does is we as advisors, we’re helping the founders or the business owners to just stop and work on the business, because otherwise they get stuck in the day to day and are constantly working in the business. And it, it does take a, you know, it sounds like you have some really amazing mentors to get you to think that way. So yeah.

Kathleen Perley: 32:41

It hasn’t been an easy like they’re probably all listening to me. Like I’ve been telling her this for ten years and she’s finally doing it. It’s not easy to do. And it’s. But it’s the.

And funding makes me feel more comfortable doing it. And it’s something I didn’t have before.

Heather Bennett: 32:59

It’s a vote of confidence when you reach that that next, you know, C level and you achieve it. It’s it’s a vote of confidence that people believe that you are the right person to strategize how to build this business.

Kathleen Perley: 33:11

Yeah. And it’s like, and if you can say like, hey, I need a week to just think they’re like, yes, obviously. And you’re like, okay, so that might mean that like, we’re going to close one customer in Q two two and Q three. But now like it might be like one customer in q one two and q three, but it’ll probably be like August instead of July. And they’re like, okay, that’s fine.

Like they don’t, you know, it’s, it’s, it’s really shifting the focus to not winning every battle, but the war.

Heather Bennett: 33:47

So speaking of good advice, what’s some of the best advice that your mentors, you’ve already shared? Some, but some of the best advice that your mentors have given you.

Kathleen Perley: 33:59

So interesting. The one piece of advice that I’ve gotten recently and I’m so excited about is in my most recent fundraising round. I want to be really picky about who was on the cap table or I wasn’t sure. Right. So there’s obviously flashy names and things of that nature.

And you, you have some of those opportunities and you definitely with the right part, like the partners matter, like who’s going to be working on with you? And then, you know, this go round, like the funding wasn’t necessarily like a critical, like we had funding, we were cash flow positive, so we didn’t necessarily need funding. It helps for sure. And so I really saw it as like, who do I want as advisors? Who do I want to be able to pick up the phone and ask a question about whether it’s like the AI, ML technology side of things, the go to market strategy, like we’re wanting to focus on compliance and some of the components within that.

So like somebody who has a background in legal and corporate legal governance and things of that nature. And so really being able to build this cohort of incredible advisors. And I think, you know, I, I made that decision. Like it’s funny I fundraising we’ve gone like I felt like I had to fill my round three times because the first time, you know, if you go through this, you find you’re like, kind of decide which way you’re going to go on the lead. And then you find a lead and you’re like, okay, well, now I have to change because you know, everything that falls into place after that.

But I’ve never been so sure of that decision of going with a, a more dynamic, maybe lesser, like flashy, if you will, VC firm, they’re incredible. Like they’re absolutely talented. I, but I’m so grateful for them. And like, I’ve been talking to some other founders and I’m like, oh yeah, like you can probably get away with like talking to them once a quarter if you want. And I was like, no, like, I love the, like, I love like, I text them and I’m like, hey, like I had this really crazy idea last night.

Like, can I like jump on the phone with you this week to like, just share my crazy thought? I’d love to get your read on it. And I think that’ll propel us so much further than any amount of funding ever could. And so I think that’s a piece of advice that somebody gave me and Ben Johnson out of scaffold. He has his own.

He’s gone in series. He’s very successful AI and construction space. And he was like, you know, you need to be mindful of who you put on your cap table and who you want to be a part of your growth and your business and your journey. Because it’s not, it might be ten plus years again. So make sure it’s people who you respect that who you like.

And it’s not that we didn’t, I didn’t like or respect all the amazing people I’ve met along that journey. It’s there were certain VCs where I felt like I didn’t have to have a mask where I could just be me, or they would ask a question. And I was like, honestly, I have no clue. Like, like they’d be like, what’s your go to? I’m like, here’s what we’re doing.

Here’s what our process, here’s what our assumptions are. We came out of stealth mode in January. I don’t know if this is going to be what we stay with. And I. And there was, I had one VC that I literally said that to because we are one of our meetings was like at 10 p.m. to 10 p.m. at night, my time.

And I was tired at that point. And I was just like, I was like, this is what we’re thinking. Who knows? And he was, he actually really respected it. And it was just being able to remove that mask, I think has created a much more authentic relationship.

And I think I’ll get so much more a, I’ll get so much more value out of it. I think they’ll have the company will be ten times more successful, so they’ll get more value out of it as well. But there isn’t this pretense that I feel like I have to come to. I can be like, hey, I have this real idea of doing like four deployed strategists and like, here’s my thesis on it, and it might be a terrible idea, but I don’t have any qualms of just being like throwing it out there and getting insights on it. So I think like finding the people and surrounding yourself with the people who you don’t have to mask for and who can provide perspective and value.

You’ve been told as a founder, oftentimes to surround yourself with people who are smarter than you in areas that you’re not as strong in. Think of it in the same way, whether it’s PE funding or seed funding or VC funding or anything like. Think about it from that perspective as well.

Heather Bennett: 38:16

And I find that’s a mistake that a lot of entrepreneurs, especially first time make, is that they don’t lean into reaching out and asking for advice or help from their advisors, from the VC, from the PE, from their board of directors, from whatever, you know, advisors they have available to them. They tend to hold back and not use them, you know, to the extent that they really should. So that’s, that’s a really good. So what are a few of your daily rituals that help you show up and be there for your employees, for your coworkers, for your partners?

Kathleen Perley: 38:57

So I would say one of the things that I really strive to do is we do iOS, we have our lens. So that helps kind of ground everyone. And I also follow the bullet journal method, which is another entrepreneur who has ADHD, who built this not technology platform methodology, but just how to think about your world. And so every day I start with what are, you know, what are the three things I have to get done today, both professionally and personally, because my world does, they’re intertwined. And I oftentimes will also identify, you know, what are the 2 or 3 things that I can say thank you for or share the win with, with the team.

And so we’ve implemented values and did a ton of work on values like very early on, because I felt like it was a very important part of building that culture. It is sheer exhaustion in terms of the rate at which we work at. And so there needs to be the recognition for it. And oftentimes, as a founder who’s so focused on solving the next problem, you know, trying to make sell, make sure that I actually have like calendar reminders that I’m now implementing to like, be like, don’t forget to do your outreach today or this week and to the team to say thank you or, you know, understand what they’re building.

Heather Bennett: 40:14

That’s a great idea. That’s a working on your business, not just in your business tip right there. I have one last question. I think this has been great. I we could continue for hours.

And before I ask it, I want to point people to your website at adair.ai or encourage them to reach out to you if they’re interested on LinkedIn. So the last question is, what is a hard lesson you learned while founding and growing your companies that you would love to share with future or current entrepreneurs and CEOs?

Kathleen Perley: 40:53

I would say two things. One, And take money off the table. Throughout the process, there was a point in time at DECODE where we had one client that owed us $4 million. They they’re they did a company wide audit. And so all of our invoices got.

And we were purchasing media on their behalf. So there was expenses that were going out. So. It made it really tough. And in that moment, because I hadn’t like, I kept all the money in the business.

I took a okay salary, but I was always just like focused on growing. And it created this whole fear of I spent ten years and this could all be erased right in this moment if I for the first time couldn’t make payroll. Right. And it’s not like I’ve had a nest egg, right? Like I’ve been investing all the money back into the company.

So it was so don’t leave all the money in the company. I think also when you don’t leave all the money in the company, you think about decisions differently. And so I started, I had three I shifted after that experience. We got we they got us paid. It all worked out, but it was stressful.

And then I stopped. I only kept three months of runway and the bank account I looked at on a regular basis and there was like just a separate account that we just moved it to. Because I think you think differently about the decisions that you make. If you think about it in that sense versus what happened for us is I didn’t push on them on the back pay or the lack of payment because I was like, oh, we have plenty of money in the bank. We can fund it.

Until it got to the point where there was like nothing left to continue to kind of offset their cost. And so, so that would be one piece of advice I learned the hard way. The second is QSBS status. It’s so funny. I was in an entrepreneurship class with Al Dante, who’s a professor at rice in the business school with me, and came up at one point where he talked about Ucsb’s status, and he asked me to share my experience in terms of selling.

And I was like, oh, we have stock and you have asset sale, you know, things. And then there’s different tax implications for this. And he’s like, well, yeah. And then you have SBS. And I was like, excuse me.

And then he explained it to me and I was like, oh my gosh, I didn’t, I had no idea that that was a thing. So if you are starting a business and you’re thinking about an exit, it’s a way to when you do exit to get your kind of money out tax free or with less taxes up to a certain threshold. And it changes depending on who’s in office. But it’s a methodology to invest to ensure investment in small businesses, small to medium sized businesses. And so I wish I would have known that because I would have saved a good, healthy chunk of money.

And then I found out as I dug into it, that there’s actually. You can when you sell a business or you exit if you invest it immediately, or if you invest it within a certain time period into another business, that’s another like you don’t pay taxes on that as much. And, and I did that, but I didn’t know that was a thing. And so I paid like double taxes on all of it. But so AdaIR is a SBS business now.

We are a Delaware company and got all that in place. So that would be something else that like I would look at and I had tax advisors and I had lawyers and no one brought it up and I didn’t know it was a thing. And I am surprised. I talked to a lot of entrepreneurs and a lot of it’s something that depend if you’re not, maybe you’re not going the VC route because VCs require it, because they want that status too. But it was something I didn’t know existed, and it would have saved me over $1 million and tax payments.

So it would have been good to know.

Heather Bennett: 44:48

Yeah, that’s it’s, it’s one of those things is there’s, so many details like that, like donor advised funding, like being able to do that right away, like people just, if you haven’t been made aware of that or even with, you know, buying and selling property, the real estate, you know, capital avoiding capital gains and the timing of all of that and what you talked about. And there’s a couple of other, you know, real estate tricks that I’ve been learning, that it’s just one of those where methodically paying attention to how the money is coming in and going out, where it’s going, the timing, the forms you need to fill out, it can make a massive difference. So, you know, it’s always advised to have, you know, a private wealth advisor, you know, somebody who could provide exit plan, like people involved who really have done this, like you said a number of times. And so they know what to look out for and how to really be there for the founder, for the business owners as they exit this. This has been so good.

Kathleen Perley: 45:48

And there’s been tax advising. Somebody that does your taxes like book files. All your company taxes. Yeah. And having somebody that they’re just very different.

Heather Bennett: 46:00

And it’s oh two totally different tax advisors completely absolutely agree.

Kathleen Perley: 46:04

And I was like, oh, I have is I have somebody that does my taxes. They know what to do and they do, they file taxes as they’re given and stuff of that nature. But there’s the law changes constantly. And so having somebody that’s like that is their core focus, whether it’s through your wealth advisory or through somebody else. I mean, that’s something I should have gotten on board earlier.

Heather Bennett: 46:26

So for your next company, right? Exactly. Exactly.

Kathleen Perley: 46:29

The more, you know, I think is what they say. Yes.

Heather Bennett: 46:31

Exactly. I’ve been talking with Kathleen Perley, founder of AdaIR, and just an outstanding entrepreneur. Kathleen, thank you so much for sharing your experiences, your story. I just so very grateful for this conversation.

Kathleen Perley: 46:47

Well, thank you so much for letting me share. And I, I think there’s so many there’s so much value in being an entrepreneur, and there’s so many people who are afraid to take that leap. And so knowing that people like me who did it, who didn’t have any answers, have no clue what they were doing, been able to do it and make it out on the other side, and hopefully takes away some of the fear of what’s holding back some individuals.

Outro: 47:16

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