Episode 3

#3 The $1Tn Opportunity in B2B: Heidi Messer on Why You Shouldn’t Feel Like You Are Going from Indoor Plumbing at Home to an Outhouse at Work

Want to build a big, disruptive business that improves lives and make a lot of money in the process? Meet Heidi Messer, an extraordinary NYC entrepreneur who sold LinkShare, a decade ago for $425 million, but when she was pitching the buisness to investors in the mid-90s, she had to have a slide in her investor pitch deck, “what is the internet and why should you care.” Fast forward to today: Heidi is on her way to disrupting a whole new industry in enterprise sales. LinkShare was just a preview to “the main show”, Collective[i], her new company in big data, a $1 Tn market opportunity. You will hear why she thinks B2B is such an exciting place to be, where she describes the dichotomy that people experience going from home to work, where they spend the majority of their time, “it’s like you go from indoor plumbing at home to an outhouse at work.” You will also hear why she started what’s been described in the press as “New York’s most exclusive women-only poker game” (spoiler alert: to help women become better networkers). Heidi’s powerful insights into how networks are changing the world, will change the way you think about your business and social networks.

Notes

Open letter to the VC Who Can’t Find Any Women to Work at His Firm by Davida E. Arnold, She Knows

Inside a Poker Night for Female Power Brokers by Jaclyn Trop, Forbes

The Cost of Slow by Collective[i], Medium

If You’re Trying to Be “Data-Driven,” You’re Doing it Wrongby Collective[i] Medium

Why Sales Leaders Are the New Tech Moguls by Collective[i], Medium

Additional Reading

Are Big Data Career Paths Attracting More Women to Tech? by Rachel Wolfs, HuffPo

Madeleine Albright on Barriers Broken and Barriers that Remain Wall Street Journal

56% Of Enterprises Will Increase Their Investment In Big Data Over The Next Three Years by Louis Columbus, Forbes

Ready Player One by Ernest Cline

Big Data Baseball by Travis Sawchik

Superintelligence: Paths, Dangers, Strategies by Nick Bostrom

Guest bios & transcripts are available on www.broadmic.com.

Bio

HeidiMesser_headshot copy

HEIDI MESSER is Co-founder and Chairman of Collective[i], the first network using data and technology to provide business users on demand enterprise-wide analyses developed and curated by the world’s leading data scientists. Collective[i] takes essential questions about marketing, sales, service and support data and delivers answers.

Prior to Collective[i], Ms. Messer, along with her brother, Stephen Messer, founded, built and managed LinkShare Corporation until its sale in 2005 to Rakuten for $425m. Ms. Messer received her B.A. from Brown University, graduating Phi Beta Kappa and magna cum laude. She received her juris doctorate form Harvard Law School, graduating cum laude.

Ms. Messer is a frequent speaker on entrepreneurship, digital marketing, technology and the future of the Internet. She has been cited in various publications including, Inc. Magazine, The Nikkei, Vogue Magazine, Fortune Magazine, Women’s Wear Daily, Chief Executive Magazine and The New York Times. Ms. Messer has also appeared on NBC’s Today Show, Fox News, CNBC’s Power Lunch, CBS Morning News and the Fox Morning Show.

Ms. Messer has received several honors including most recently selected as one of the 100 Most Intriguing Entrepreneurs by Goldman Sachs in 2012. Ms. Messer serves on advisory boards for Dell Computers, NBC Universal and American Express OPEN. Additionally, she serves on the board of AllianceBernstein.

Heidi Messer:

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Collective[i]:

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http://www.collectivei.com/

 

Transcript

Heidi: When you put in to a network, and when you give something to a network, you get the power of all the other people who are in that network behind you when you need it.

Kelly: I'm Kelly Hoey, host of BroadMic. I speak with the most accomplished entrepreneurs, investors, and thought leaders about the issues that matter in building a business. You will get the inspiration, as well as the picks and shovels you need to become a better entrepreneur. Be inspired, take action, think broad.

Every entrepreneur's dream is to build a disruptive business that transforms lives for the better, and make a whole lot of money in the process. Meet Heidi Messer, an extraordinary New York City entrepreneurial who, when pitching her first company, LinkShare, in the late 1990s to investors, had to have a slide in her investor deck, "What is the Internet and why you should care." Fast-forward to today. After exiting LinkShare a decade ago for 425 million, she is on her way to disrupting a whole new industry with her second company, Collective[i], a technology solution that analyzes big data for Fortune 500 companies.

This is a trillion-dollar market opportunity. A bold and fearless thinker, Heidi compares her technology solution in big enterprise to the consumer solutions that Uber created to disrupt ridesharing, and Airbnb created to disrupt hotels. Heidi's powerful insights into how networks are changing the world will change the way you think about your business and social networks. Learn why she started what's been described as New York's most exclusive women-only poker game, where, by the way, the night's winnings are donated to charity. I can't wait for you to be inspired by her story.

All right, so we've got the two former lawyers in the studio. I have to ask Heidi, how did you go from being a Harvard law student working at Baker Botts, presenting a paper to Justice Stephen Breyer, to founding LinkShare.

Heidi: I actually think the foray into law was the detour, more than the other way around, going into entrepreneurship. I come from a long line of entrepreneurs in every branch of my family tree. And I always tell people that when you come from that kind of family, it's very hard to rebel. So virtually the only way to do it is actually go to law school, which is what happened. They didn't even go to my graduation, totally mortified that they would have a child that would go into law voluntarily.

Kelly: A child that would want to earn a paycheck, "What have we done? Where have we gone wrong?"

Heidi: So I went there thinking, "Oh, I seem to be much more in the box than the rest of my family." And when I got there, I found that actually I was more of an entrepreneur than I thought I was. It was an excellent education, it was an interesting experience. I wouldn't say it was the most pleasurable experience being in law school, but I learned a lot and I did get to meet one of the Supreme Court justices, which was a phenomenal experience. And from there, I actually tried practicing. I gave it a try for about a year and half, and just was pulled irresistibly back into entrepreneurship.

Kelly: Let's talk about LinkShare, and you are really a pioneer in affiliate marketing, monetizing traffic on the web. How did you see that? And as part of that, I want to understand when you and your brother started that company, did you see what the end game was going to be with it? Had you been building for an exit, or had you just seen an opportunity and said, "Where is this going to take us?"

Heidi: No, but I'm so glad you asked that. I don't build companies for the exit. I think that's a very challenging strategy. It's almost like saying, "I know exactly the point in the future that's going to happen, and all of these things are absolutely going to follow suit." What I think instead is a better strategy to say, "I know this is a good business. I'm not sure I'll get taken. I may take some side paths and I'll end up in the place I think I'm going to end up in, but I know I have a good business." And that was really the fundamentals behind LinkShare. The big assumption we had to make was, "Will this Internet thing take off?

Because, take yourself back to 1996. I just left this very stable, as you said, real job where there was a proven path, and that was a much less risky route. In my early 20s, and looked and said, "Hey, this Internet thing looks like it's going to be a big deal." And that was, at the time, a pretty startling assumption. There were many, many smart people I knew who, I said, "I'm going to give up this education, this solid profession, and start this company," when people were barely getting dial-up access to their Internet. And we looked at that and we said, "Okay, we really believe this is going to be a big deal. Now, the next thing is how do you actually make this a monetizeable medium?"

And that's really where LinkShare was born, because none of the aspects of traditional media applied to the Internet. And by that, I mean the distribution channel that was out there was completely different. It was 24/7 global, so you couldn't use time as a way to monetize traffic. You couldn't use location because it was ubiquitous. You couldn't use proprietary content because anyone in the world could publish. So how do you take that medium which offered so many benefits, and help those benefits be realized by attaching a monetization vehicle to it? And that was LinkShare. I look back at it now, and I see the sharing economy as we know it. That was really the first terms of that coming out, and LinkShare paved the way for a lot of other really, really exciting companies.

Kelly: For anyone who doesn't know, what is affiliate marketing?

Heidi: Sure, and it's so great that you think that there are people that know about it, because when we started it, we had to explain it over and over again. So I'm very comfortable telling you what it is. The idea behind affiliate marketing was that there were companies that were selling things on the web, we call them merchants or e-commerce companies, and they needed distribution. And the best way to get distribution was to look and say, "There are millions of websites that had incredible content," things like this podcast, and others, "and they had to have ways of monetizing it."

And so the best way for them to monetize it was to be able to either promote those commerce merchants through links, through banner advertisements, through any sort of medium, and then be paid a commission for doing that. So it was a huge commission-based network of websites that had content connecting with websites that had commerce.

Kelly: We're going get into what you're doing now with Collective[i], but you started LinkShare in 1996. You've lived through an experience, the.com bubble, you exited your company, you've started a new one. Besides the fact that this Internet thing has taken off, what's different with having a company now, with having started company in 1996? What are the lessons from earlier that you're like, "I'm glad I lived through it then, because this is what's making me a better entrepreneur this time"? Those two venture cycles to be building and creating through two of them, what are your observations and insights?

Heidi: Well, first of all, I'm so grateful to have gone through everything that we went through at LinkShare, and I would not have said to you in 2000 and 2001. But having seen one full cycle, you realize that that concept that I had referred to earlier of creating a good business, it almost doesn't matter what the cycles are if the business is solid, and if what you're creating, there's a real need for it. That said, I'll say the one thing that's different is nobody questions whether or not the Internet is a big deal. So the first five slides of our LinkShare presentation were, "What is the Internet, and why does it matter?" But what people question now is...and less and less so, it's actually becoming more mature, but when we started Collective[i], it was big data.

So the first five slides of my Collective[i] presentation were, "What is big data, and why should you care?" And so being a history major in college, you see history does, in fact, repeat itself. And as a repetitive entrepreneur, you start to see it doesn't necessarily play the same music over again. It might be a different verse of something that you've seen in the past, but it actually does have things that you can refer to and say, "Okay, I've seen something like this before. Now I know which way to pivot. I know what the timing should be."

Kelly: You see if something feels uncomfortable, or you're like, "All right, I think I've faced this fork before. Am I making the right decision?" What are your thoughts, too, in terms of the big differences between these two cycles? We've had a few crazy years with valuations and venture that wasn't before.

Heidi: I'm one of the few people who think there is not a bubble right now, and I think that for a number of reasons. I think you're seeing the entire world being reinvented, and so I think we're at the very beginning of that. Does that mean that I think there are certain companies that might be overvalued? Yes, absolutely. I think there are companies out there that perhaps may be either ahead of their time, and are getting the valuations for what the potential really will be in five years from now, or companies that people have just misvalued because there's so much hype behind them that they're getting promoted more and more.

But for the most part, the amount of venture investing, I think is incredibly small today, given what I think will be in the future. To get back to your earlier question about what I think is different, I think what's different now is the battle is on two fronts. It's on technology and talent. And on the one hand, the technology piece is getting easier because you have all these SaaS-based platforms that you can plug into that have done a lot of the heavy lifting to get you to the place where you're just building the last mile.

It's the question of finding the really creative, motivated, innovative thinkers to join your team and make that happen. That really is much, much different than it was when I started LinkShare. And that's not to say we didn't have talented people, we did. But we were inventing a future, and so there was a lot more room for error. And now the stakes are so much higher that you really need people that are not only incredibly gifted at the particular skills they have, but just gifted in terms of being able to scale into the next level, and fast. You don't have the luxury of time that...we didn't have a lot of time in the '90s, but we had a lot more time to make mistakes and to find our way than you do today.

Kelly: Because you've had a company before, does that help at all, in the attracting and locating talent?

Heidi: It does. For sure, it does. I think the most important thing is having a strong vision, and a vision that people can get behind, and understand, and feel that they are making a change in the way the world was, and the way it's becoming. But the fact of the matter is that we are in such a time of accelerated change. You almost can't find talent that's going to have the skillset that you need tomorrow, and by tomorrow I mean literally tomorrow. So it's finding people that scale. And that's different than saying, "Okay, I need an Oracle DBA." You need someone who's going to say, "I'm ready to learn the next five languages that come out, because I know that if there's one that will help me do this one thing that's going to make our model that much stronger, I want to be able to do that." And that kind of person, always curious, super-motivated, wants to learn, wants to expand themselves, that's a harder type of person to find and identify.

Kelly: Those visionaries.

Heidi: Visionaries.

Kelly: So let's talk Collective[i]. Why and how is it different than what you were doing before? Tell us about what is...because I can see it...if there is a video here, everyone else would be able to see. You're really excited about what you're building now. Talk us through it.

Heidi: I'm super-excited about what we're building. Collective[i] is short for collective intelligence. And once again, we started with a premise that was scary to a lot of people. So when we started LinkShare, the idea that websites would actually link to each other and pay each other something was profoundly radical. Today, our assumption is that enterprises, large companies, will actually pool data, so they'll contribute their data to a shared pool that generate intelligence for them. And that intelligence is meant to help them make more money, focus on the revenue side of their business. So we start with the area of sales, and the idea behind that is that if you look at sales today, you have a group of people who go to work every day and they're schizophrenic. What do I mean by that?

They open up their mobile phones. They say, "I'm going to regulate the temperature in my house. I'm going to call a taxi through an Uber. I'm going to go on vacation and make money through Airbnb." They've all these very sophisticated, what I would call, big data applications to make sure that their managing their time and their resources as efficiently as possible. Then they get to work and they open up Microsoft Office. So transported straight back to the 1980s, they're manually inputting data, they're using Excel to analyze their decisions, they're having PowerPoint meetings where people sit around and debate for hours what they should be doing. And then they go forth and try to conquer.

What Collective[i] says is, "Look, there's a better way. We'll take this pooled network of data, we'll take routine decisions that you make in the case of salespeople, who to call, when to call, what to say to them, and we'll actually just give you the answer through a finished application. The same way that you would get on your mobile phone for any of the activities that you were doing to manage your time or resources, you'll be able to do that at work."

Kelly: That's crazy.

Heidi: Crazy, right?

Kelly: Totally crazy. But you have some interesting stats on how much is being spent on sales. Was it a trillion in the U.S.?

Heidi: B2B sales is about $8 trillion worth of our economy, and about $1 trillion is spent in the United States alone on sales teams. The statistic that was stunning to me, is that a typical sales manager spends 80% of their time on administrative tasks. So they have roughly, let's say 50 days a year that they're actually out selling. And if you could actually just improve that statistic, cut that time in half, you'd double a salesforce without hiring a single person. And you start to think about those things, there's even more profound impacts. And it's sad to say, but most companies fire about 25% of their sales teams in a year, which means every four years they're turning people over. I think one in five workers in the United States has been laid off, and I see that as directly correlated to sales, because if you obviously don't have printable revenue targets, the only mechanism you have to manage revenue is layoffs.

So you see a lot of people losing their jobs, a lot of people wasting time, a lot of people related to those functions losing their jobs, unrelated to anything they might have done to contribute to a company. And if we can make our dent in reducing those downturns and making it more transparent and predictable for large enterprises, my hope is that we'll actually be able to help some people keep their jobs, we'll help people be successful, and help them be less frustrated in the profession they chose to go into because it wasn't administrative, because it was more interactive and fun.

Kelly: You hear so many people who say exactly that, "We had to fire someone because they didn't meet their sales target." And what you're describing to me is how does anyone have a chance to do that in a short period of time, in terms of getting up to speed and make a sales target, when you don't have the tools?

Heidi: And it's actually miraculous to me that salespeople are as successful as they are because, in reality, today, we're asking them to be fortunetellers. So the way the sales processes is managed, it's almost managed the way people manage a supply chain. They say, "Here's a pipeline, and here's how many phone calls you should make. Here's how many emails you should send." It's sort of broken down under the ruse of being something scientific. But anyone who has ever done sales before, if you've ever made a cold call...I don't...have you ever made a cold call?

Kelly: Probably some scarring situation when I had a part-time job when I was in college, and I've run from it ever since, yes.

Heidi: Having made quite a few of them myself, you get very used to the fact that you actually are nothing but an influencer in the buying process. You do not make the decision. Your actions have an impact, but a much smaller impact than any person could be asked to have. So what we want to do is we want to be able to take that pooled network of data and actually provide intelligence about what buyers are doing. Because if I could help salespeople have insight into, "Here's a buyer who's really interested in the kind of product you're selling, you should call them today," what that stops is a hundred phone calls to get that one buyer. It helps that salesperson say, "Okay, now I can actually go and do my craft, which is selling, instead of trying to guess at what people are thinking, and then get to the point where I'm selling."

Kelly: You think in an era of big data, and an era of, we refer to it "the knowledge economy." Why isn't the information in the hands of salespeople intelligent?

Heidi: It's crazy, it's crazy. And they are the lifeblood of companies. They are the lifeblood of companies. And the thing that's astounding to me is, if you look at portrayals of them in media, you look at the Dwight Schrutes, you look at Glen Garry, Glen Ross, you think of a used car salesman, it's...there's a great New York Times article that was written about how parents are...it's abhorrent to them to think their child might come out with a college education and go into sales. Despite the fact that a good percentage of salespeople actually make more than the CEOs for whom they work. It all comes from this lack of buyer intelligence, and the actions that happen when you say to a group of people, "You're going to be judged on something that is completely out of your control. And not only that, I'm only going to pay you if that thing that is completely out of your control happens."

So it's an amazing, amazing feeling, and I'm so excited about it, because one of the things that was immensely gratifying for me about LinkShare is we paved the way. We used to get stories from people who were working out of their house, and were able to support their families. We had one great affiliate who was able to take care of his daughter who was sick with income that he was making from his affiliate practice. And now I look and say I have the opportunity to help this group of people that are such an important part of our economy be more successful, and kind of revamp their image.

I think when you start to see there's an art to sales, and that art becomes apparent because we've provided the science, and taken out a lot of the guesswork that leads to some of the activities that have given sales a bad reputation. You've just empowered this whole group of people to be that much more successful. And that is super exciting to me.

Kelly: I am getting emotional about it. I'm also thinking about a story I heard with...it's like when eBay did one of their first conferences where they invited the top stores on eBay, the top sellers on eBay, they invited them. And they realized that the top sellers, they had to clear out the chairs in the first rows, it was like you got ordered in this conference by who are the top sellers, backwards. And they realized they had to take all the chairs out of the front rows because these top sellers were people who were homebound, and they were in wheelchairs. And it's like, "You've given an income and prosperity to people that have been marginalized economically. How more powerful is that?"

Heidi: When you think about the families...I grew up in an entrepreneurial household, and you lived and died by the sales numbers every quarter. So you knew, "Okay, we're going to be okay, in terms of a family, based on how people were selling." And so it's a very similar idea when you think about how many households are dependent on companies being able to accurately predict results. And it's very directly correlated to sales, because if you fail at sales, you get fired. There's no way of sugarcoating it. But that also has a cascading effect because companies, as a whole, that fail at sales fail to innovate, end up having to cut their losses by getting rid of people, which means they continue to fail to innovate because they've stopped investing in their future, and it just impacts so many lives.

And this one problem, this problem of, "How do I know how to manage my revenue using science rather than gut?" And it's like what you said, I get emotional about it, too, because I feel like so much of the uncertainty that people have experienced, especially in times like now where you can get displaced so quickly, and sales is the front line, by the way, of showing you when your products are becoming obsolete. If you don't have the listening device, if you don't have the tools to very quickly become agile and adjust, entire companies start laying...when you hear about companies like IBM laying off thousands of people, size of whole towns, and you say, "Okay, it's a technology company in the fastest-growing age of technology. How does that happen?" That's what I want Collective[i], ultimately, our mission to be, to eliminate...or if we can't eliminate it, mitigate it to a point where it's not such a predominant risk for 20% of the population.

Kelly: Be able to have science to assist their gut and take that, and the nuances and their...because I'm with you, there is an art, and I put salespeople on a pedestal, because that is an incredible skill. But to be able to back it with the science to make better calls...

Heidi: I've never met a great entrepreneur who wasn't also a great salesperson. It's just, the two are so inextricably linked. To be able to sell an idea that no one believes in, to get people to believe in you to invest money with you, to get people to believe in you to be your first customer, you have to have great sales skills. And most of the great entrepreneurs that I've met are extraordinary salespeople. They're not just good salespeople, they're extraordinary.

Kelly: And hopefully they'll have Collective[i] to give them even better sales skills. I like it. Well, I'm also thinking so many of these sales jobs that you're talking about, you think about a daily life for us out there as consumers, so many salespeople are women, we think retail and everywhere else. So thinking about that, and sort of going bigger in technology, and women, what do you think the opportunities are for women right now?

Heidi: In technology? Oh, my gosh, it's incredible. I think, look, there's so many things. You can focus a lot on the negative, and the statistics are pretty depressing when you see what has happened since, let's say, the mid-'90s when I started. And I actually thought that we had an opportunity to reinvent the world and have true 50-50. But I'm a positive person and I'm an optimist. And when I look now and I say, "I feel the sea change happening," and I see a lot of things coming together, the first is the reality which, whether or not people have fully accepted or digested yet, is that women control 85% of the purchases in this country, and that's another way of saying women control the economy.

So you have that trend. You have the big data trend which is basically train people to expect extreme personalization. So I want someone to sell to me based on me, not based on their estimation of my demographic, or their best guess. I want them to know things about me and sell directly to me. So if you take the combination of those two trends, 85% of the purchases in the United States, the training and personalization, I liken it to an opportunity similar to what people saw in China, where they saw China as this nascent market that suddenly boomed. Everybody had to understand Chinese culture, everyone had to understand, "How do I do business in China?"

I think there is no company that will be able to function without saying, "How do I do business without understanding women?" And that means you have to enlist more women. It means more women have to be on the boards, more women have to be starting the companies in order to realize that opportunity. And if you take the assumption that there is cultural difference, which I believe there is, you have to have more women involved. And I think as that economic reality becomes more and more apparent, the opportunities for women will become more and more apparent.

Kelly: And part of it is too, women have to realize we're not the minority. As you said, we are 85%. We are in the driver's seat, so what are we doing?

Heidi: I think you and I have talked about this. I think the missing piece, and this is the piece that I really see being solved much more rapidly than I even imagined it could, is the network piece, and having powerful networks where women help each other. Because any time you see a minority of the population that controls punches above their weight, controls the disproportionate amount of the resources, it's pretty much guaranteed that there is a strong network behind that that's operating, and functioning, and coordinating, and making that happen.

And what I see now are the creation of women's networks that are really strong and really powerful. I'm so excited about the things that you are doing, Kelly, because it's all furthering that last mile, "What gets you to the place where you start to realize all these opportunities that are just sitting there waiting to be had?"

Kelly: Also I'd like to say there's things we need to learn from the boys, and it's like, all right, having, and is, "I love the network you have," because like this is about business, and how and where we refer business to each other, and realizing we have the power to do that. And I think it's like not saying, "Oh, when we get the power." It's like, "No, no, we have it now." Why are we dissipating it? Let's jump in there and take it. And this is a topic we could go on for ages in terms of women's networks and the importance of them. Back to the intersection with Collective[i], on your view on the future with respect to big data, which we've alluded to, and personalization, and how you think that's going to affect networks.

Heidi: I think there's a counter intuitive trend that impacts big data, and it also impacts networks, which is that the more open you are and the more willing you are to share, whether it's data, power, opportunities, friendships, the more you win. So I think that the old industrialized world state of mind was you hoarded everything. If you were bigger, if your company was the biggest, if you had the most power and you kept it to yourself, that's how you won the game. In the world of networks, it operates exact opposite. The people who hoard, the people who don't participate, the people who don't share, are the ones who get left out of the winnings. And in both instances of Collective[i], which, Collective[i], by the way, is a network, which is a big distinguishing factor for us, from pure technology, and actual off-line networks with people who contribute, I always start off the conversation with, "How can I help you?"

And I don't expect an answer in return of, "What can you do for me?" And that has served me well in my business career. That has served me well in the kinds of technologies we've created, because what you realize is that when you put into a network, and when you give something to a network, you get the power of all the other people who are in that network behind you when you need it. And all you have to do is ask because people know you've made the deposits without asking anything in return. And that openness, that sense of sharing, that sense of community, to me that's the future. The people who get that are going to be the ones who win the biggest.

Kelly: You made the comment that Collective[i] is a network, explain that.

Heidi: There's two schools of thought. I would say there's almost two religions that exist right now. There's the one that sort of worships technology and says, "If I get the most cutting-edge technology and I implement it into either my company, my house, etc., I will then be part of this digital age. I will have made the leap from the analog to the digital. I think the second religion, which is more the one that I subscribe to, is it's being part of and plugging into something that's bigger than yourself, is what's going to make you more intelligent. And so Collective[i] is a network, very simply stated, because we don't just have technology. We've got machine learning, and I could go on, advance analytics, predictive analytics, I could give a litany of technologies that we use to accomplish what we accomplish, but none of the intelligence that we create would be possible without enterprises pooling data into a larger data pool.

So rather than us going in and saying, "Here's a piece of technology. I'm going to do predictive analytics on top of your dataset, and tell you what's going to happen with revenue in the next month, two months, three years, five years," I say, "Look, your data alone is worthless to me. I couldn't predict anything off it." Most companies, for example, win 2% of the time. So if I predicted a win rate off of that, I'd be able to predict the next 2%. If you want to actually predict more, I need to be able to pool all the times companies have won, and say, "Here's how buyers behave," and then I can give you the intelligence. So you give me your data, I pool it with everybody else's data, and then I give you an answer.

And that's very similar to what Google did for search, it's what Amazon did for shopping, it's what Uber did for transportation, all these are networks, LinkedIn did for recruiting. They all operate on a network concept. For you, as the end-user, do you care what the technology is? Do you want to look under the hood with Google, or do you want just better search? That's the way it should be for companies.

Kelly: You're not asking them to give up their secret sauce, you're just asking them to give up...

Heidi: Data, very little value.

Kelly: Data that has no other value other than you maybe, as you said, predict the next 2%.

Heidi: Look, when you go on Facebook, you tell everyone everything about your whole life, everything, which some people would argue is immensely valuable data to you. But the amount of value that you get back is so overwhelming by plugging into this network that you wouldn't even think of not being a part of it to preserve the value of this one little piece, to you. It would be worthless if you didn't have a network behind you.

Kelly: Well, there's one time I thought of pooling my data.

Heidi: I'm sure everyone has one time.

Kelly: I always thought when Facebook went public and they had no women on the board, and everyone got an uproar, I said, "There's an easy answer, ladies. What is the value of Facebook if every woman stopped using it?

Heidi: Well, that's my point. If you had every woman do it, then you make a statement. If you do it on your own, you've just taken yourself off the grid, you're the Lone Ranger.

Kelly: Off on Gilligan's Island. Let's use some cultural references, no one knows, that Gen X will understand, but, and this maybe gets my thinking on it as women and understanding our power, even if we hadn't taken off-grid, if we all logged out of our Facebook accounts for 24 hours, or 72 hours...

Heidi: You would make a statement.

Kelly: But also what's the value of that company if women aren't active users?

Heidi: It's true, or if women didn't shop for one day, one day. Think about what that would do. Crazy.

Kelly: I think the last time that happened was after Lehman Brothers crashed, and we saw what happened.

Heidi: Wasn't good, not good.

Kelly: Not good, at all.

Heidi: That's the power of a network. You just described it so perfectly there. If you're one person and you're trying to make a statement with your own stuff, your own opinion, your own...whether it's your data or your credit card, or whatever, it doesn't have an impact. It's only when you have the network of people behind you and you're acting in sync, and you're acting in each other's interest, you contribute your part, and then the exponential value that comes back is so much better.

Kelly: Well, another way to maybe make money sometimes is playing poker. So let's talk poker.

Heidi: I would not recommend that as a primary vehicle.

Kelly: Well, as one entrepreneur said to me, she said she's made the same amount buying lottery tickets as she's invested in buying lottery...it was something along this because of the big Powerball, and basically she's never bought a lottery ticket. And I said to her, "Yeah, because you have a startup, because that's a really sensible way to make money." But you were talking poker and networks because you've combined the two of those things. Why poker, and what are you trying to accomplish with these poker events?

Heidi: When I started LinkShare in 1996, I really saw the industry that I was entering as an equalizer. I had worked in a law firm, and you can attest to this, that had a business framework that made it very hard to multitask, and have a family, and have a successful career, in addition to all the sort of unconscious biases that might have already existed. So the deck was totally stacked against you. And here I saw this industry where you can work from anywhere, the revenue models were built off of very, very scalable technologies and not human labor, and we had a time when 50% of the population who was graduating from the college was female. So I thought, "All right, clean slate. We've taken away all the roadblocks, and now it's going to turn out on the other end where we have true equality."

And when I came up for air after selling LinkShare, we were still at 17% in virtually everything. I think 18%, I heard a general say, was the magic number. It never gets above that in terms board participation, entrepreneurs who get funded, etc., etc. And I thought to myself, " I think I have certain talents, but I've met so many talented women entrepreneurs that there had to be something else that worked that was stopping that equality from coming to fruition." And the missing piece, I saw, was a really strong network. And I saw and I benefited from networks where men helped each other. So I had men who were in positions of extreme power, who, for whatever reason, gave me a break or invited me into their circle and give me opportunities that I wouldn't have had without those networks.

And I didn't see as much of that on the side for women, whether it was they were busy with families and couldn't do as much of the social thing, or it just wasn't as much culturally natural. I think there's a great quote from Madeleine Albright who says, "Women make wonderful friends but terrible networkers. Men make wonderful networkers but terrible friends." And I said, "I have to figure out a way to change this." So I invited some friends of mine, some women friends of mine over my house for a poker game. And I thought, "I want to learn how to play poker because it's such a good game for business. It's all about playing the odds, it's all about understanding your opponents. It's all about a lot of things that are out of your control, and how do you make educated bets in that setting?"

And they referred friends after we did that. They referred friends, and then suddenly I ended up with 1000 names on this list. And by the way, we do allow men in. They have to be dealers. They're not allowed to play. So we get some great men that show up. We had Shaquille O'Neal, was a great. Dick Parsons, Dick Costello, just an incredible group of guys who I think help other women very quietly and understand this concept. But what you do is you get a bunch in the room, you play poker for three to four hours, and some miraculous things happen. People get on boards, companies get funded, it starts to operate like a very functional network beyond just a friendship sense, and a pure, adding economic value to all the participants. So that's why I did it. And now it's turning...you've been in one of the games.

Kelly: I've had the privilege...

Heidi: You were a great poker player. I was very impressed by you.

Kelly: Very, very much the privilege of being in a couple of these. It's like you're networking but you're doing something. So there's not that...if you're saying it was a networking event, there's not that awkwardness of it. The other course, my cheeky remark running through my head is, "Guys, yeah, if you want to be in the room, you've got to be useful.

Heidi: Right. Well, you only get invited if you give more than you get. That's the one rule that I have that I live by. But you think about the golf course, how much business gets done on the golf course. And it's out of the sight of any sort of formal business meetings, and so this is our equivalent of the golf course. I always feature entrepreneurs.

Kelly: I love that.

Heidi: Because at our last one, we actually had a couple who got funded on the spot by angel investors who were sitting there. And that was super, super exciting to watch because you know what? That is how it happens in Silicon Valley. And it doesn't happen often. It's not, I don't want to mislead people and say, "Okay, you just walk into a room with a bunch great people and they're going to fund you." But if you have the right network in place with the right audience, and you remove some of the unconscious biases that I think happen when women pitch businesses, the path gets a lot shorter to success.

Kelly: Well, it's also people trust you, and you know who the audience is, and so picking the right entrepreneurs who are going to pitch at that event because their message, their product...because I think one of the...it was the poker event that Shaquille O'Neal was one of the dealers. There was a not-for-profit that was part of...and a cause that was part of the group of women who were pitching. And you're very cognizant of who is in the room, and getting the right people, the right people at the table so it's on a random free-for-all, and you are so intentional on that that there is such a high level of trust, that if Heidi's got that person up there pitching, there's something I want to listen to.

Heidi: We do that. We also spend a lot of time picking out the right entrepreneurs, and we spend a lot of time in the seating because who you are seated next to is meant to be someone that you can do business with, in addition to get along with and be friends with. So I'm so glad that you appreciate that because that is something that I spend a lot of time doing. I spend a lot of time curating a list of who comes to see what's the maximum benefit that this group can make of this? And then the second piece is, who are the right entrepreneurs to be in the room? Who have the highest potential, and who are the women that are going back them or lead them to someone else who will back them?

Kelly: Oh, they're incredible. Keep doing them.

Heidi: Thank you, thank you.

Kelly: Keep doing them, keep doing them.

Heidi: And all the money goes to charity, I should say. It's actually not a moneymaking exercise.

Kelly: That's the other part I love it, because it's also, too, the great lesson of in this day and age when we do want to give back, and we do write checks or make donations, but to do it in this really fun way of buying poker chips and betting big because we know it's going for charity.

Heidi: Once...last time it went to Taproot Foundation, which is run by Liz Hamburg. The charity that we pick is either helping women and girls, or run by an amazing woman. And so, from that perspective, the whole event is thought through to say, "How can we eat every ounce of value out of this network that we possibly can to make sure that we're advancing women and getting them forward?"

Kelly: It's awesome, absolutely awesome.

Heidi: Thank you.

Kelly: Before we get to our pay-it-forward questions, which is questions I ask everyone, wanted to ask you, since you're on your second company, any suggestions in resolving conflict with cofounders.

Heidi: I have a very unique situation because my cofounders are all related to me. It's my brother and my husband. So we have a different view on conflict. And I think the advice I would give would be more on the front end, making sure that you actually have the mechanism to resolve conflict, because for us, I believe conflict is incredibly healthy for our business. So we have this policy that we can say anything to each other, we can have any opinion out there, we fight vehemently for the battles that we believe are worth picking, which are fewer than you would think, but when they are there, we really pick them and hash it out. And then we have an agreement that when we reach an agreement, we all stand together.

So if something's decided, if a path forward's decided, and we had the conflict before, even if you are on the other side of that decision, even if it doesn't work out the way that you would have liked it to work out, or the person who is advocating for it, you never look back. You fight it hard, you go forward as a team, and then you never place blame on decisions that were made where everyone came to a consensus. So that would be my primary advice. And that exercise is something that you don't want to go through for the first time in the middle of a crisis. You want to test it out before you pick your cofounder, or you want to hash it out on things that are maybe less important than mission-critical, so that when you do get in that moment, whether it's, in our case, it was 2000, 2001, or others, that you don't end up having no mechanism to resolve that conflict in a productive way. That's my advice.

Kelly: It's outstanding advice, and I'm glad I asked the question. There we are. So let's do our pay-it-forward questions. This is supposed to be fast answers on some things, whatever comes top of mind. What are your go-to sources of information you use every day?

Heidi: We have an internal tool, which I realize is not very helpful for your listeners. But it actually analyzes information and gives me real-time insights, and I have to look at that every day. In addition to that, I will just read anything that is put in front of me that someone smart gave me to look at.

Kelly: I love referral networks. Got to love referral networks. How do you discover new information?

Heidi: Talking to entrepreneurs. So for anyone who's listening who is an entrepreneur in your community, I can guarantee you can find networking groups, talk to everyone. The more the insane the idea is, probably the better it is.

Kelly: I love it. What book are you reading?

Heidi: Reading couple right now. "Ready Player One," which I would argue is the reason that Facebook bought Oculus. "Big Data Baseball" is another one which is a book that takes the "Moneyball" concept and explains how it actually got implemented and changed the whole field of baseball. And then "Superintelligence," a book about machine learning. I'm totally a geek.

Kelly: If we were wondering if any women are geeks, we just have to look at Heidi's reading list.

Heidi: I was in the high school band. I admit it, I will admit it. Losers in high school are winners in life. I've had many good lectures growing up.

Kelly: I like it. So what's the conversation we should be having in tech that we aren't having?

Heidi: It's really interesting when you look at it, we were talking about Facebook earlier, and the power that social network has in the world. And what few people remember is when Facebook first came out, there was an uproar about privacy relating to it, and what it would mean to have this network, or to have this whole medium, social medium, where you were sharing everything about yourself and your family and your friends. And I have a tremendous amount of respect for Mark Zuckerberg because he fought the fight. He went head-on into it and said, "This is too important for humanity to sacrifice it." And so what would I would like to see is more people talking about, I would say, the cost-benefit analysis around privacy.

So instead of putting it up there as this sort of binary value, saying, "What would society be like if we lost a Facebook? What would society be like if we didn't have the sharing economy where everyone contributed their own data to bigger pools, and open pools of data, and then derived either intelligence from it, in Collective[i]'s case, or connections to people around the world that help you achieve amazing things?" That, to me, is a more real conversation. And I'm not saying there aren't costs to it. Certainly technology, for the most part, is an enabler, and networks are an enabler for great things and not so great things. But you can't just hold up this privacy flag and say, like Europe did, they said, "Okay, we're just going to regulate these companies out of business."

I actually believe if Facebook had been launched in Europe, there would be no social media. And that, to me, is a very important thing. And I find it sort of ironic when I hear people kind of punch this whole discussion and say, "Well, the government needs to do something about it," when really that's probably the biggest threat to progress that there is if regulation that's done in the absence of really thinking of the costs that are there. That's more of the conversation I would like to see being discussed. What does it mean? What does progress mean?

Kelly: Yeah, and understand, as you said, cost-benefit analysis. I think I know the answer to this one. Who were the people that most influenced you in your career?

Heidi: Who would you guess?

Kelly: Mom and dad.

Heidi: Yeah, I would you say family is in my case, certainly my father who is an entrepreneur, my mother who is a tremendous entrepreneur and an incredible woman ahead of her time, who works the full-time, raised a family, put us through school. My father passed away very young, so she was sort of forced into that role, and rose to the challenge and exceeded it. My brother, my husband, and there's been...

Kelly: Whole lot of entrepreneurs.

Heidi: Whole lot of entrepreneurs. Everyone that was involved in either raising me or is related to me deeply intimately, has influenced me.

Kelly: What's the best advice you ever received?

Heidi: Well, you have two choices. You can work hard when you're young and have it easier when you're older, or you can have it easy when you're younger, and work a lot harder when you're older. So I chose the path of working really, really hard in my 20s and 30s. And I say this, and this is what any entrepreneur will say, "I work harder now than I have ever worked before, but it's out of passion." And that's because I laid the framework when I was younger.

Kelly: Outstanding advice. What makes your work fun and rewarding?

Heidi: Every day is different, not always in a positive way, but for the most part, you feel like you're moving towards something that is progress, and building something that didn't exist, and you're leaving a mark in the world, and changing it in some meaningful way.

Kelly: So if you were to reach in your wardrobe for something to kick butt in, what do you grab?

Heidi: I guess I have these amazing boots I just bought that are...I'm obsessed with shoes, obsessed with them.

Kelly: Oh, you're talking to me. I get it.

Heidi: It's an easy one. I'm picturing them in my mind and I'm starting to drift off.

Kelly: Okay, all right, we've got to get you back here for one more question, and you do so much, but I'm going to ask it anyway. How do you pay it forward for women?

Heidi: I think the poker game is a good example. For me, it's mainly things that are behind the scenes, making sure that women get connected to the people that will give them the shortest path to success, and doing something that has no immediate benefit to me or even no long-term benefit, but I know will make someone get to where they're going to get to, but in a much easier fashion.

Kelly: Thank you.

Heidi: You're welcome, thank you.

Kelly: On the next episode of BroadMic, we have a panel of three product experts, Tami Reiss, creator of the new Gmail plug-in, Just Not Sorry, that's been making news, Nikki Kuritsky, Product Manager at Shutterstock, and Allessandra McGinnis, Product Manager at Autodesk. If you have questions about the lean startup approach, how to build a world-class product, or how to hire and manage top technical talent, learn from the experts who do it every single day.

Thank you for listening to BroadMic. We welcome your feedback. Find us on Facebook where you will have show notes and additional references for a deeper dive into today's topic. Subscribe on iTunes so you never miss an episode. Please review our podcast on iTunes, which will help other listeners discover BroadMic and grow the BroadMic community. BroadMic is produced by Christy Mirabal, with editing by John Marshall Media. Our executive producer is Sara Weinheimer. Think broad.

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