Nathan J. Anderson is the CEO of ScanTrust, an enterprise software scale-up that he founded in early 2014. After playing NCAA basketball and making a living from poker, the Vermont native joined a Chinese company as the only foreign employee and successfully took it public on the NASDAQ in his early twenties.
There are many reasons to start and build a successful startup. But there is one thing you need to do that will set you apart from your competition: adopt the Player’s mindset. Why? Players learn to champion their ideas, push beyond the barrier of comfort and learn from their losses.
In this episode of The Founder Spirit podcast, we are joined by Nathan J. Anderson, the CEO of Scantrust, an enterprise software scale-up that he founded in early 2014. In his early twenties, the Vermont native joined a Chinese company as the only foreign employee and successfully took it public on the NASDAQ. Not only did he play NCAA basketball all throughout college, he also made a living playing poker for a year after graduating from Middlebury College.
What lessons does he have to share on playing team sports, bluffing at the poker table and running an enterprise software startup? Let's ask him and find out!
Nathan J. Anderson is the Founder and CEO of Scantrust, an enterprise software scale-up, which he co-founded with Dr. Justin Picard in early 2014. Prior to Scantrust, Nathan served as the Vice President of Corporate Development at Fushi Copperweld, a Chinese-American wire and electrical cable company, where he drove its fundraising and cross-border acquisitions totaling over $350 million, including a successful listing on the NASDAQ.
Nathan is also the founder of a boutique investment and advisory firm focused on China's cleantech industry, a director at the Bruce J. Anderson Foundation in the United States, and an advisor to the CadaVida Foundation based in Colombia.
Nathan graduated from the Middlebury College in the United States where he played NCAA Basketball.
[00:01] Jennifer Wu: Hi, everyone. Thanks for listening to the Founder Spirit Podcast. I'm your host Jennifer Wu. In this podcast series, I'll be interviewing exceptional individuals with the founder spirit, ranging from social entrepreneurs, tech founders, to philanthropists, elite athletes and more. Together, we'll uncover not only how they managed to succeed in facing multiple challenges, but also who they are as people and their human story.
Joining us today is Nathan J. Anderson, Founder and CEO of Scantrust, an enterprise software scale-up, which he co-founded with Dr. Justin Picard in early 2014. Prior to Scantrust, Nathan served as the Vice President of Corporate Development at Fushi Copperweld, a Chinese-American wire and electrical cable company, where he drove its fundraising and cross-border acquisitions totaling over $350 million, including a successful listing on the Nasdaq.
Nathan is also the founder of a boutique investment and advisory firm focused on China's cleantech industry, a director at the Bruce J. Anderson Foundation in the United States, and an advisor to the CadaVida Foundation based in Colombia. Nathan graduated from the Middlebury College in the United States where he played NCAA Basketball.
Welcome, Nathan, welcome to the show!
[01:25] Nathan J. Anderson: Hey, Jennifer, great to be here. I've been really looking forward to this for some time now.
[01:28] Jennifer: Thank you for joining us.
[01:30] Jennifer: I believe you started playing basketball at the age of 12, and then you continued all throughout college at Middlebury. In 2014, you became the 14th player in the school's history to ever score over 1,000 points, and the first to do so since six years earlier. Maybe you were too young to realize at the time, but looking back now, how do you think basketball shaped you as a person?
[01:56] Nathan: Wow, sports have definitely been a big part of my life. It's a good question. I'm impressed you found the statistics on the 1,000 points. Well done there.
As long as I can remember, I've been playing competitive sports, basketball included, and funny enough, my first word was actually ball, so my parents tell me. My dad was a fanatic in terms of sports. No doubt, before I even have memory, I was constantly watching Boston Celtics games and Boston Red Sox game - all things Boston, I was raised on.
As long as I can remember, I've been part of team sports. I think even before 12 years old and specifically, basketball. Basketball was one of the earliest team sports I played and certainly the longest. I played team sports continuously, competitively through college. Even to this day, I still play pickup basketball. It's been a huge part of my life, from early ages even to now as an outlet. Without a doubt, consciously and subconsciously, especially when I was younger, (team sports) has shaped who I am.
And I think there was a dynamic about the team sports that I always liked. I'm a very extrovert person. I enjoy interactions with other people in any respect. With team sports, in basketball, you got 12 team members, on baseball, it's a little more, 20 plus members of the team. You have this community that you're part of, both during the game but certainly much more so, even outside of games, during practice, outside of practice that you spend a tremendous amount of time with and build really deep special relationships with. Reflecting back on it, I probably didn't think about as much at the time, but looking back at the type of person I am, I think that has ultimately what's driven me to team sports is that innate desire within me to be around other people and associate with them.
[04:19] Jennifer: How did the losses in sports contribute to building your resilience?
[04:25] Nathan: In sports, even when you're Michael Jordan, you have losses. I think that's one of the funny things about sports is that even a good team or a great team, you're winning 6 out of 10 times. In baseball, which I used to play in, a really good batting average, I would say is 300. That means you're only getting a hit 3 out of 10 times. You're failing 7 times (out of 10).
Sports have a really powerful lesson there in that, you will constantly be faced with failure on a daily basis, whether it's a missed shot that you're taking in basketball or certainly more impactful, a loss that you have, you're constantly faced with this adversity. At the end of the day, there's the next shot you have to take; there's the next game, you have to play. You have to be able to deal with those failures, with those losses, and learn from them, and essentially, wipe it out of your mind and start with this clean slate during that next game, that next shot you're going to take. It also, I think, builds a confidence that even when you lose or miss a shot, to quote a famous Sparky Anderson (an American baseball player) quote, "Each time you lose, you just get closer to your next win."
That's the mindset that I started to grow out of playing team sports, both in my individual performance and then the team performance. Creating that mindset, that positive mindset that no matter what the challenge or adversity you're facing, that you're going to be able to get through it. Whether you call it an insanity or not, that you're going to be able to succeed eventually. It certainly was instilled to me through sports.
[06:10] Jennifer: I really like that comparison with team sports, as you said, as an entrepreneur, you are constantly facing adversity, but somehow you’ve got to find that resolve to move forward, that drive to continue. But in team sports, there are other people involved. Even though you, yourself, are confident that you are going to get through it all, how do you motivate the other players to get on board and to potentially take back the game?
[06:40] Nathan: There's multiple dynamics to that. Of course, a team is made up of individuals, and each individual is unique. Whether it's a coach communicating to your teammates or a teammate communicating to your peer, you have to take into account the individual, as well in terms of how you might communicate something specific to an individual. Ultimately, I think this is something that builds across a team over time. In terms of that confidence, maybe the first time you're faced with such a situation, there's some uncertainty, even doubt that creeps in.
What happens over playing many years-- and I was lucky with the group that I was playing through high school, that we probably played in aggregate almost seven plus years together, both during high school and then during summers. We literally had hundreds, if not thousands, of games together. You're faced with these scenarios, and once you pull it off one time, it doesn't necessarily mean you're going to pull it off the next time, but you know it's possible, from doing it yourself, or even seeing that it's been done by other teams.
[07:56] Jennifer: What characteristic would you say a team must have in order to have that fighting spirit?
[08:03] Nathan: I find that the teams I've been on where there's strong confidence and trust within the teammates, when you're faced with a situation that looks perilous, that team has trust and confidence in each other, (it) makes a huge difference in the mindset that you have when faced with such adversity.
[08:23] Jennifer: To use another team sports analogy, how does building that trust and confidence in the team then translate into the startup culture?
[08:33] Nathan: I think my belief on startup culture is the same for any business or any environment, where you have multiple people trying to achieve goals together. Ultimately, you need to have relationships which are built off of trust, where you feel that other people have your back. Especially in a startup, a startup in many ways has parallels to a basketball team (that) we've been talking about - you're constantly facing highs and lows.
There's some days of a startup where you're like, "Wow, I feel like the king of the world. Wow, it's just so amazing what we're creating and what we've done." You just feel, wow, you can't be higher. Then you can have the lowest of lows, like, "why the F did we ever think we could do this?" You lose a customer in a project or something happens, there's a bug in the software, whatever it may be, there's a million things that can happen.
Sometimes those feelings can happen in the same hour, and so you have to build this resiliency in you. Ultimately yes, you, as an individual, can be resilient, but if the collective group and the team doesn't have that resilient mentality together, it's never going to get there, and so that all starts with trust in my book.
I think that's what we tried to create at Scantrust. I think we've done a pretty good job of it. We've been through some highs and lows. Certainly, you were there for some of them, Jennifer. Ultimately we were able to get through them, not because of any individual, but certainly because of the team.
[10:18] Jennifer: Nathan, speaking of collective resiliency as you call it, why do you think it's so important for a startup to have that strong bond?
[10:28] Nathan: I think most people join a startup not just because of the paycheck. Certainly, there's a paycheck there, and maybe even some stock options that you can dream about turning into a nice, big bonus one day. That's certainly there, we all need money to function in this society. I think people are joining a startup usually, because they believe in the mission and they believe in the goals that you're trying to accomplish, especially when it's just an idea and you don't even have revenue yet.
Things are far from perfect, and as I was saying before, you're constantly going to be faced with these challenges. If you don't have that feeling of camaraderie, where everyone feels aligned, and that everyone's pulling in the same direction, it's really easy to get down on yourself or down on what you're trying to accomplish, inevitably when the lows come, inevitably when the lows come.
[11:26] Jennifer: I think you are absolutely right about that, now switching to a slightly different topic. After you graduated from university, from Middlebury College, you made an unusual choice to make a living for a year by playing poker - I am very curious as to what brought you to that experience.
[11:48] Nathan: So after I graduated school, I had a friend who lived in California; I graduated from my school (which) was in Vermont, and I helped him drive across the country. During that time we did that, we stopped at a few casinos along the way in New Orleans first, and then certainly once we got out in Colorado, in Nevada. I made some money playing Texas HoldEm Poker.
You may not remember, but when I went to school from 2000, 2004, it was really the first time most people had really high speed Internet. At this time, the regulators weren't really in control of what was going on. Everyone had Napster on their computers, and you were just downloading music or Torrent for movies and songs for free. At that same time, online poker became a really big thing, specifically in college. I spent many hours playing online poker, it was really unregulated. Anyone could put in money, anyone could play at that time.
Then during this road trip, what ended up being a three-month long road trip, from Vermont to California, I started to play in person as well and was applying these skills and approach that I had taken online. It turned out I was pretty good at it, applying this technical, math-based skills that I was doing online, with being in person with people and observing them. I was making enough money, at least be like a quasi ski bum out in Truckee (California), and skiing and having fun. And whenever I needed money, just popping over to Reno (Nevada) to make some scratch playing poker.
[13:42] Jennifer: What is a day in a life as a poker player like? Did you play everyday?
[13:50] Nathan: I didn't play everyday. There are professionals, who, of course, do play, probably play every day and take it very much more seriously than I did as a craft and are making a living doing it. I was more doing it as a way to working for the weekend, if you will. I would go several days or even a week without playing and just skiing and having fun and traveling around. Then, once my bank account got low, I would go and play with these epic grinding out grinds at the casino.
[14:26] Jennifer: I’m curious, what was the longest that you’ve ever sat at a poker table?
[14:32] Nathan: I think the longest I went was I sat down at a table for something like 36 hours straight. When I went at it, I went at it really hard. It wasn't necessarily something I was doing every day.
[14:45] Jennifer: What was that like, sitting at the poker table for 36 hours straight?
[14:51] Nathan: A lot of patience. There are different styles to playing poker. Mine was one where I just knew the ratios, or tried to know as best as possible the ratios of any outcome that could happen, based off the cards I had in my hand, based off the cards that were showing on the table. I would play a very tight conservative game, which means you're not playing every hand, you're folding many different hands.
At least, the style that I was playing required a tremendous amount of discipline, an incredible amount of patience over a very long period of time. Then of course, a certain level of endurance, to be able to sit there for 36 hours straight. I didn't have a problem with it. It worked well for me and my personality.
When I started poker, I wasn't like this, I was much more impulsive. I'd make bets, feel like you're playing a game. but I definitely learned patience and the art of timing. You never know, anything can happen, the next card that flops over in poker could totally mess up the statistics, because nothing's 100%. But it taught me patience, it taught me in terms of variability of when to make the big bet.
[16:04] Jennifer: I think Kenny Rogers said, "know when to hold them and know when to fold them."
[16:09] Nathan: That he did that, that he did. There's a lot of truth in that statement. I think that also has seeped into how I run Scantrust in the business as well. You're constantly operating under imperfect data, you're trying to decrease the risk to as close to zero as possible, which of course is always the desired outcome. And if you wait to get perfect data, which maybe doesn't even exist, but to get there often you just spend too much time. One of the greatest strengths a startup has over its competition is speed. You need to be able to use that speed and agility to move faster than the others. There's a whole fail faster mantra, et cetera, and you're constantly making decisions with imperfect data, or data that's not 100%. You need to be comfortable with that, and have the confidence to double down on that bet. Depending on the bet if it's a failure or not, to be able to change course as quickly as possible.
[17:15] Jennifer: What about the skill to read people when you're playing poker?
[17:18] Nathan: I don't know if that was just an innate talent that I had with me that developed over the years from many things beyond other than poker, or something that I had developed while playing poker. Ultimately, I think one skill I've always had that's helped me both in poker but in business is more listening to people and really spending the time to listen to them, whether that listening be body language or their verbal language. And then trying to just put yourself in their shoes and understand where they're coming from.
[18:01] Jennifer: After you ended your amateur poker career, you continue your wanderlust, and went to China in 2005. Coming from the US and growing up in Vermont, what was it like for you when you first landed there? I guess this was your first trip to China.
[18:22] Nathan: It was my first trip outside of North America and Australia, it was about as distant as you can get from Vermont. There's probably more people in the Beijing airport than all of Vermont. [chuckles] Yes. It was definitely a shock, and it was definitely different. I honestly don't remember anything more than just being excited. I think I've always had a curiosity to learn things and sometimes maybe too many things, without enough focus.
Because it was so different, each and every day, each and every interaction that I had was something new. Something to be curious about, something to learn about and to experience. I think, ultimately, that is what really drew me into China probably, and it made me enjoy it so much. Originally, it was supposed to be six months, I ended up staying twelve years living in China. Yes, it was such a fascinating place, still is [chuckles]
[19:36] Jennifer: You were hired as the first foreign employee at Fushi. Fushi back then was a small company based in Dalian, which is a second-tier city in China, just a few hours by plane ride north of Beijing. How did you become involved with the company initially?
[19:58] Nathan: Maybe let's take a step back there before I get into, to give context. I went over to China to basically backpack and teach English. I did not get sent there on some expat package. I was not there seeking a career per se, opportunity more or less came my way.
I ended up in Beijing in 2005-2006 range. Beijing at that time, and for many years after that, it was the opposite of New York City. To quote the Frank Sinatra song where he says, "If you can make it here, you can make it anywhere," about New York City. Beijing, at that time, was the opposite in that, if you can't make it here, you can't make it anywhere.
At least that's how I looked at it becauseit was a few years after China had joined the World Trade (Organization), and it was just going through incredible growth, and there just was not enough people around across all these companies, both foreign and local Chinese companies that were growing at breakneck speed, and needed talented people to come in and to help them on their journey.
Very quickly when I saw this, and this happened to not just myself but many other expatriates in China, you constantly found yourself rubbing shoulders both with expatriates or local people who are doing very interesting things. I could be at a table in Beijing, I'll be with backpackers, English teachers or students, expats, the CEO of Caterpillar China, whatever. You can all just be around each other, and you were constantly getting exposed to opportunity, and that's really ultimately how just through personal connections that I was meeting by being in Beijing.
I got introduced to this company at the time, it was called Fushi Guoji, which was Fushi International. That was this fast-growing industrial technology company that was growing so fast and needed a lot of money for capital expenditures as well as buying copper and steel aluminum raw materials. They needed a tremendous amount of cash to grow the business.
At that time, it was really hard to find that level of cash for a local Chinese business. The bank loans were about a year. You have to pay them back in a year and there are high interest, which didn't work for this business. The waiting list to go public in Shanghai or Hong Kong was several years.
They decided on the path to go public in the US, and they needed an English speaker to help them on that journey to supplement their existing team, and that's how I originally, I was totally unqualified for the job that I got shoved into. I made a lot of mistakes, but ultimately, they brought me on board and trusted me to help them with that journey.
[23:02] Jennifer: What was the road to a NASDAQ IPO like for a local Chinese company back in the mid-2000s?
[23:09] Nathan: It was a very chaotic journey, I would say. We were the first company out of Dalian, and I think of all of Liaoning Province. Province in China is like a state in the US, and it's quite a large one, to ultimately successfully go public in the US and list on NASDAQ, and it was chaotic. At the time, I was the only non-Chinese employee in the company. There were probably close to 500 people in the company, a lot of those in manufacturing, in production.
For me, at the time, I had never done this journey before. Like I said, I was completely unqualified for what was going on there. Also, it was completely new to the whole team and even new to NASDAQ in a way, to have these Chinese companies listing on the NASDAQ. Every step of the way was something new. Every step of the way was a challenge of trying to figure out how to go about this best, who to trust in terms of advisors, either paid or nonpaid mentors to make it happen.
You're constantly making, once again back to the theme of making decisions based off imperfect data to move things forward, and just trying to move along the best you can, and change course when you do make a misstep along the way. But it was absolutely exhilarating, the experience at the end of the day.
[24:49] Jennifer: You played an instrumental role in taking the company public, going on roadshows and talking to all the investors, and then eventually becoming its Director of Investor Relations, and driving subsequent secondary offerings. So not having had any related prior experience aside from grinding it out at the poker table for 36 hours straight, was it intimidating for to be representing a public company in your late twenties? Oh sorry, early twenties…
[25:22] Nathan: Well, early twenties. Yeah, without a doubt, and I remember to this day the first time I pitched Fushi International, it was probably a few weeks on the job, green behind the ears, didn't understand the game at all. And our CFO at the time, a Chinese national,who had previously been handling all the (Wall) Street things, said hey, I need you to go to Shanghai, there was some investment bank (who) was doing a road show there, and you're going to give a presentation about Fushi, and then sit there and answer questions, and he told me the day before.
So I showed up there, and I stayed up all night practicing the pitch and the template he gave, and I did a pretty good job of the presentation. But then the Q&A came about, and I totally flopped on the first question. And then all these investors, it was just like sharks with blood in the water, and I just really got beat up. And it was not a great showing, and I was quite frustrated, disappointed and embarrassed about it. And at the time, several shareholders of Fushi called up our C(F)O and was like, why the hell you got this young kid, totally inexperienced there doing that. And you know, I think I was fortunate enough where my boss at the time, he was reporting to the CFO had a belief in me, and he definitely gave me some shit for not performing, but at the same time gave me the confidence, the independence to go out there and improve.
Much like starting Scantrust, I made a lot mistakes. But I tried not to make a mistake twice, and I constantly reached out. I was never embarrassed to ask a question to someone that I didn't know the answer to, to try to figure out something.
And at that time I was so green behind the ears that I had a lot of things I needed to figure out, and you make your own luck in a way. And it was intimidating at times, but I also had the belief that if I put the time and effort in, I could succeed.
[27:36] Jennifer: Is that what it means to you, the Founder Spirit? Having the belief in yourself that you would ultimately succeed?
[27:42] Nathan: I think you have to be a little bit crazy, you have to be a little bit of not have a perfect grip on reality, because if you try to look at it too logically, you’d think about why would I ever start this? Why would I be in this position? How could I ever succeed? You have to look through different, tinted colored glasses.
China, I think, also helped shape me, because living in China, nothing was easy, nothing was impossible. I think that type of mindset, it can really help you get through these times, and ultimately, maybe you don't get out of those challenges and failures as fast as you would like, but it can help you get through to the other side.
The good times are never as good as you think they are, and the bad times are never as bad. Ultimately, we'll find a way through this.
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[30:07] Jennifer: You co-founded Scantrust in early 2014 with the inimitable Dr. Justin Picard, who is also the inventor of the core technology that is sitting behind the software platform. And your friendship, or shall I say the long distance love affair, began over a decade ago, when you were working as an American businessman based in China, and Justin a Canadian scientist based in Switzerland. Tell us how you met, how the courtship began, and what brought the two of you together.
[30:46] Nathan: well, as most good things in life start, it started in a bar in Jakarta.
[30:51] Jennifer: that's the best way to start a startup, in a bar
[30:54] Nathan: And it didn't start with anything related to Scantrust, we technically were working. We were at a conference, it was a World Economic Forum (South)east Asia event, I guess it was back in 2010, where we met, and we were at our former companies at the time and we initially had a discussion arguing about whose maple syrup is better, Vermont’s or Quebec’s.
Twelve years later, we still have not aligned on this particular point, although we all know Vermont maple syrup is lower in volume but better in quality. We hit it off pretty well on a personal level, and then we started to see each other on a conference circuit over the coming two years, and I started to learn more about the work he had been doing. He had been dedicated his whole life to stopping counterfeits and creating more transparency in the supply chain, which for me at that time as a resident in China, and you know Jennifer, you've lived there as well, so you know that as a consumer there, it doesn't matter if you are rich, poor, in the middle, foreigner, local, that you're very concerned about what the products you're buying. And there's a tremendous amount of opaqueness in the supply chain.
[32:05] Jennifer: absolutely.
[32:07] Nathan: And so I was really interested by now personally, by what he was doing. Then eventually over time, he left his his former company, that he had this wonderful idea for a secure QR code technology what we call a copy-sensitive, copy proof QR code, and at that point I was smitten.
[32:27] Jennifer: Oh, you fell in love
[32:29] Nathan: Yeah with QR codes, secure QR codes. Well I think without a doubt, you know the co-founder relationship is very much like a marriage, I wouldn't say love there, although that helps. But there certainly has to be mutual respect, I think that's the basis for any successful relationship. It's a marriage or co-founders, and without a doubt, Justin and I, we've had our disagreements at times that hasn't always been footloose and fancy free. But at the same time, even in those times where we've had our loads, there's been a strong level of mutual respect there and I think that's the cornerstone of any relationship and certainly what's allowed us to work together for so long successfully together, and then continue to do so to this day.
[33:13] Jennifer: So do you recall the moment when you first decided that you're going to do this? Was it like a tortured process for you?
[33:20] Nathan: It wasn't instantaneous, I mean what was instantaneous is when he described his idea for what he wanted to do and what he was working on. I was immediately saw that this could valuable, because I knew that I, as a consumer in China, I would use this technology everyday - if I could just take out my smartphone and instantly scan a product to understand the anthencity and the origin of that product - yes I would do that, absolutely.
So I was always a believer in the solution could solve a very big problem. That’s not just a China problem, it's a global problem. But initially, I was still at another company, and Justin's idea was at a very early stage, but I started to help him out by just giving some basic commercial advising. And over time, I started to get pulled in more and more, we found that we worked very well together. There was also a catalyst event, where the company that I was at got acquired, or taken private, which was a good time for me to exit.
I also got a little cash from it, no F U money, as people call it, but it was enough to take a chance on a startup. And so the stars aligned at that moment in late 2013, and then in early 2014, Scantrust was founded by Justin and myself.
[34:39] Jennifer: Both of you were first-time founders, and how do you think that may or may not have played out in your favor?
[34:48] Nathan: There's definitely pros and cons to it. On the pro side, I find that sometimes when you do things for the first time, you come with a blank canvas and no pre-conceived notions, especially when you're creating a solution that is new to the market, and doing something that hasn't been done before, I think that's very healthy, it forces you to develop a new playbook and and and that in a way I think helps breed innovation.
I think on the con side,although since day one, we have been moving forward up and to the right, and we've been making progressday in and day out, and we've reached a very successful level today, we definitely have, at times, moved slower than we could have. And that comes from I think some inexperience in realizing how important certain things are, for example focus.
As founders, very ambitious and dreamer type people, both Justin and I have a huge ambition for Scantrust, because we're also solving a large problem. You dream and think this is how it can be. There was many times where our focus was too broad, we were a mile wide an inch deep. And you know, you can read a lot of blogs about founding SaaS startups and everyone tells you focus focus focus, but it's like with your parents telling you something when you're younger. Sometimes, you just need to learn it the hard way yourselves.
I think if we had done a startup before, maybe we would kept the ambition long term, had a little more focus in the early stage, and maybe we would have moved a little faster and then grown into those other ambitions. But without a doubt looking back， there's some things that maybe I would have done slightly differently.
[36:33] Jennifer: Were there any pre-conceived notion about doing a startup that you had at the beginning?
[36:42] Nathan: If you read just the press releases out there, you think that startups are glorious, a one-way ticket to stardom, riches and spoil, and everything is wonderful, you’re your own boss. And I wouldn't say that I had that type of glittery view of startups.
I'm lucky enough in my network to have several other close friends and associates who had gone through themselves. My Dad, himself, was an entrepreneur, his whole life. Growing up, I don't remember my Dad ever having an office job. He constantly had his own businesses, and I knew that it's something that's hard.
And ultimately, I think that's the message I would have to any person who is thinking of becoming a founder who has not been a founder before, is (to) make sure you're really into what you're doing, and it’s going to take longer than you expect. There's no quick pass, it comes with hard work. There are perks, of course, to being the boss or a founder, but at the same time, especially early stage, the buck stops with you, because there's no one else to do something. So there's a lot of commitment, there's a lot of late nights, there's a lot of weekends that go into realizing your dream.
[37:55] Jennifer: So by this time, what were some of the important skills that you had brought to the company, whether it's from the baskeball court, or sitting at the poker table, or from your last job? [chuckle]
[38:07] Nathan: Without a doubt, for better or worse, I never think that I'm going to fail, I always have the belief that I will achieve success - the belief that I'm going to win. And even if sometimes when I fail or don't win, I have the belief that I'll get back and win the next time. I think that comes from my upbringing of playing sports from a very young age. Being involved in team sports and seeing that when you put your best foot forward that you have a great chance to win, very often you can win. But even when you do lose, there's learning that comes from it and (guess what) there's the next game and you can go and win that one. That resiliency I think certainly was instilled with me through my many years of sports, and that's one thing I definitely bring into my work life interest or elsewhere.
[39:00] Jennifer: Before you had raised the angel round, you worked without pay for almost nearly two years. It was also around this time that two other co-founders had decided to leave. Many (startups) fail at the beginning, never even get off the ground, because the founders leave - this is the classic scenario. There were some other major snags that came along that, which I'm not sure that you're okay to talk about due to the confidentiality. When the initial team that you put together fall apart, what was going through your mind at the time?
[39:39] Nathan: When you start off a journey with a group of people, you know you have a mindset that this is the the team that's going to be able to take you to the next stage and achieve success. So when someone decides to leave that journey, those two both happened within the first year, I think one of them was in the first few months, it deflates you a little, and you're at a low.
At the end the day, Justin and I we still had each other. Maybe if I'm on my own and all the other co-founders leave, it would have been a different scenario, but we still had each other, we still had the passion, the fire, the belief, and that support infrastructure was still there. What we also had (that was) very helpful during that time was we had already started to build up an advisory board. We had 2 or 3 really strong talented advisors， people who had been there, done that, had a little gray hair, it was not their first rodeo. And having that support network around, both from our advisor networks and then a personal support network, to be a bouncing wall and get some feedback really help put things in perspective. Because you're in the thick of it, it's really easy to have the blinders on. And having people around you who can put things in perspective makes a big difference.
We were lucky enough, but also had the foresight when we started this, we had an idea of a personal runway. The first almost two years as you mentioned, it was really self-funded, and some of these bumps along the road, which slowed us down in the beginning. If we hadn't taken that into account and had our own personal runway, it would have been really really rough, because we were not in a position to fundraise at that point when these events happened. Even though there was always a sense of urgency, we had enough time to be able to work through that and get to the milestones that allowed us to bring in some capital, to then really start to build out the team.
[41:33] Jennifer Wu: You eventually ended up raising the seed round led by SOSV. With your VP of Product, you basically ended up basing the software team out of China, and you were also based in China at the time. Was there a reason for you to choose China, and not Switzerland where the company is headquartered?
[41:56] Nathan Anderson: Yeah it's a simple philosophy called follow the money. Our company's headquarter is in Switzerland for those who are unaware. When we started to get Scantrust going, I was based in China at the time, but the idea was (that) I was going to move to Switzerland. I spent quite a bit of time there, still do to this day.
But what started happening as we started to talk to companies, not just companies based in Asia or the divisions of China, but companies in Europe, in the US, where multinational companies who had quality brands that were susceptible to counterfeits, had challenges and invisibility in their supply chain. Everyone was like, that's a really interesting solution but you know our China team would really like that, or our Southeast Asia team.
So constantly, everything was pushing me towards China, and it made sense since I was there already, had a network. And interestingly enough, our VP of Product was based in Shanghai as well, it made sense to to really build out and get off running there. And that, ultimately, ended up being the right decision even though China is probably only 20% of our revenue today, in the beginning it was 100%. But it really allowed us to move quickly, because it was a solution that was really needed in the market at that time. And because of my network living in China 10 years at that point, I had access to quite a number of companies and decision makers, and we were able to get off the ground very quickly with some pilots, which really proved the value of our solution.
[43:31] Jennifer Wu: Now I want to dig a little deeper into enterprise sales. Enterprise sales is really something that we don't normally talk about, or people are often unaware of just how difficult it really is. You have to be very much aware of the corporate politics at play, at the same time, you're pounding your chest and say “take a chance on us, and I promise I'm not going to screw up, I'm not going to embarrass or jeopardize people's career in that the company”, despite being a little dinky startup.
That's what my imagination (would be), I've been a couple of sales calls with you, that's my limited experience of what I think the process must have felt like at the beginning. Maybe tell us a little bit more like what was that process like for you, I'm really curious what happens when your little dinky startup and you step into a corporate world. At the end of the day you're selling to a company, but you're really selling to people at the end of the day,
[44:30] Nathan Anderson: you're absolutely right, it's b2b, but like anything, there's people involved. Enterprise sales, it has a lot of nuances without a doubt, and it's beyond just having a great product. It's not like, this is the best product out there to solve the problem and it just gets bought like hot cakes, it's not the case. What I've learned with enterprise selling over the years is, there is always multiple stakeholders that are involved, and it's super key to map out the process, and getting to know all the stakeholders that could be in the deal, from key influencers to decision makers to internal champion. Being responsive to all the key concerns - I recall a deal one time where we were arguing with people on the product side where we were selling to a Fortune 500 company, and they had a security concern. And honestly, this security concern really made no sense. But it didn't matter, that meant we needed to be concerned. You can't do everything, especially when you are a small company, but you need to be responsive to these concerns.
It's a process, you have to be organized, you have to be diligent, and then ultimately this was paused a little bit during Covid but it's also a lot of in-person time. It's a slightly different world now that there's still a lot of in-person, it's more intentional but you need to be dedicated to the process.
When you're starting off as a company where you have no revenue, I think it's really important to drill down on your ideal customer profile. Long term, there might be a group of customers that you can sell to, but initially you have to go to those early adopters, you have to find those companies that are looking to innovate.
And once you get those first few in, which are the hardest, it doesn't necessarily become easy, but it becomes easier. You have reference points, you have credibility, and you start to create a brand, you still need to run that enterprise sales process, and be organized and be diligent. Once you get those first few in the door, it does make that the initial knock on the door with new companies that much easier.
[46:46] Jennifer Wu: How long did it take you to get to your first paid client?
[46:49] Nathan Anderson: From when we technically founded Scantrust to when we had our first paid client, it was close to two years. From when we had a product we could actually sell, it was just a couple of months actually. We were doing a lot of evangelical work and outreach, and had delays on getting our initial product out there, our MVP. But once we did, we got our first client fairly quickly.
[47:14] Jennifer Wu: You said it took you two years to get to the first client, was that longer than you had thought it would take?
[47:20] Nathan Anderson: Oh yeah, hot cakes, who doesn't want a secure QR code, especially those facing counterfeit issues in Asia at the time? Part of that has to do with my naivete in thinking how easy it would be to build out a solution and MVP version, especially considering the complexity of what we were selling.
We're integrating secure digital identities into products, which means we're integrating into production processes, packaging and printing processes. It just takes time, and you need to build up a solution that allows for that to happen. We also reached delays on our development process along the way as I highlighted earlier.
Yeah, it was a lot longer than I expected. But once we got that first one, things really started to pick up steam.
[48:08] Jennifer Wu: The process to get to product market fit, this notion of ‘iterate-test-pivot’. It’s a constant loop of collecting information, listening to feedback, and then based on that, you respond by refining your sales pitch, evolve your solution, and then the next day you start the whole process over again. What was the process like for you at Scantrust?
[48:32] Nathan Anderson: I wouldn't say we went in with any dedicated process, although we've evolved into one. But what we did have had since day one at is a philosophy, and that philosophy is to listen.
We do have a solution that just on a very quick elevator pitch is attractive enough, interesting enough and compelling enough, it gets our foot in the door. That has been the case since day one, even before we had a product.
So we've been lucky enough where we've been able to have many discussions with customers and potential customers about not just our solution, but more so what are the challenges that they're trying to solve, (and) how ideally would they like solve it. One thing we've been incredibly good at Scantrust is listening to our customers, taking that feedback, and then having a process where really good communication flows internally, and then being able to actually act and design solutions that meet those problems.
That's one thing that I think that we've done exceptionally well at Scantrust, and continue to execute on, and ultimately allowed us to create a product that met the needs of the market.
[49:49] Jennifer Wu: I see on your website, you have a very impressive list of clients like Unilever, ExxonMobil, Dow Chemical, some sovereign governments like Argentina and Chile. Congratulations for getting there!
Now I'm going to take you back a little bit to just a few years into Scantrust. When you first started, you were the Chief Revenue Officer, you were not the CEO, Justin was the CEO. Then after three years, you stepped up to the CEO role, Justin transitioned into his current role as the Chief Technology Officer. By no means uncommon for startups, but it's still a really delicate and tricky situation, it's the type of things that would pull companies apart, or at least (see) one of the founders leave. I'm curious, did you always know that you wanted to be the CEO from the beginning, or was it something that came about after a few years?
[50:47] Nathan Anderson: Justin did start out with the CEO and I was the CRO as you mentioned, but we also had also very clear understandings of what our roles and responsibilities were, that's not to say my role did not change from when I was the Chief Revenue Officer to the CEO, it certainly did.
But at the same time, Justin and I understood are our circles of competencies, to use a famous Buffet and Charlie Munger phrase. We've never been far off that. Justin was initial one who was driving this idea, and I joined him on this journey at the beginning. The idea behind a secure QR code was his, and he also had some really personal goals that he wanted to accomplish in terms of getting out of his comfort zone, which I think was very healthy and has made him a better CTO to Scantrust. He had primarily been in research and technical roles his whole career.
As we went along in the journey, there was never a moment where there was a threat from the board. I think there was a natural progression, and Justin was the one who came to me with the idea. It was a pretty simple and easy conversation, and we both agreed and it comes back to really knowing what your circle of competency is and where you add most value to the company. I don't think we ever really got off of that, there was never any rocky part of this journey for us, which speaks volumes to the relationship Justin and I have.
[52:20] Jennifer Wu: You’re on the road fundraising again, what qualities are you looking for in your investor?
[52:28] Nathan Anderson: I've always looked at this, there are two aspects of this. One is related to the specific stage of company that you were at, and where you will be. Ultimately, you want to have investors and shareholders who have experience and can provide value for the challenges you're facing, and those challenges will evolve over time.
I think the second one is to come back to a recurring theme, things always take a lot longer than you think. You're getting into a very long relationship, especially when you're starting off the early stage, so you definitely want someone who has strong conviction in what you are doing and the problem you're trying to solve, beyond financial potential of this company. I mean investors need to get a financial return, so you can't avoid that, I think it's healthy to have. For b2b companies, especially b2b companies that are selling into enterprise, it’s very healthy to have people with a much longer term view. We had great initial lead to our seed round which was SOSV.
SOSV is one of the most active seed investors in the world, typically usually only after Y Combinator in size. For many years, it was and still is to a degree, operating as an Evergreen fund. They're in for the long haul, having investors who have the right time horizon, in terms of when they need to exit, andit's a very fair question to ask, to understand really what type of pressure they might be on that rolls down to you from their LP's or partners.
We're coming into a growth stage of our journey, where we've achieved product market fit, we're scaling up our venture so obviously having investors who have deep pockets will be able to potentially add more beyond this initial investment, as we move forward and deploy more capital as we grow. Having you investors who have portfolio companies that have gone through a similar journey and experience to us, and we can get access to that is very important to our consideration.
There's one other aspect that has really changed a lot. Over the last few years, there was just a tremendous amount of capital that got deployed into SaaS businesses. Valuations were pretty high, and I think there was a point where both founders and investors were starting to think, “oh, this is easy what we're doing. We throw a little money in now, and a few months later we're doing another round and valuations on paper going well.”
And of course there's a tremendous amount of more spend on the cloud in general by enterprises big and small, there emerged quite a number of investors over the last few years who maybe threw out playbooks that were previously in place. Right now, founders need to do to really understand what type of fund (it) is investing in them, especially those who are looking for investors that will be with them along for the journey, whether it's leading or contributing to the next round, or being there when they might need a bridge before they get to the next round. You need to do a little bit more due diligence (on) what happened to them with the huge correction in the market over the past six to nine months.
[55:43] Jennifer Wu: Yeah I think that's a really good point there because you want to make sure that they can they will support you or they're able to support you in the follow-up rounds as well, because when you have meetings with VCs, they all want to know who's on your cap table, so having the right cap table is really really important.
Let's talk about building up a team. In a world where everybody is trying to attract talent, how do you make your startup stand out?
[56:12] Nathan Anderson: It's hard, the talent wars, especially over the past few years, as we just talked about where all this capital was deployed, a lot of companies with a lot of money in their coffers looking to hire talent.
For me, it always starts with our mission. We, since day one, have been a very mission-driven company (for) nearly everyone that we've hired. What are you trying to solve? I we are successful in our journey here, what is the outcome? What I found is that trying to bring more safety, security and integrity to the products in our lives really resonates with potential hires, and certainly our employees. And if you're not authentic about it, people realize that pretty quickly, especially when you go through an interview process where they're not just talking to me, they're talking to different people within the company during that process.If a company that is not aligned, people can can pick up on that, and I think that's a strong aspect we have.
Hiring is just like fundraising, where you just got to put time into it. I wouldn't call it a chore, because you know it's the most impactful thing you can do, is the people that you bring into your company. Sometimes you find a great candidate very easily, but most of the time you really need to run a dedicated process, you need to put out word through various channels, and you need the time to thoroughly go through and vet the candidates.
[57:36] Jennifer Wu: Are you still interviewing every single candidate that the company hires?
[57:40] Nathan Anderson: I do, some of them it's just the final interview, it's more of just culture interview. The sales organization - I'm involved much earlier in the process. But yes I interview every single person, we'll see how long I can continue to do this but now I love being able to have contact with future Scantrusters as early as possible.
[58:00] Jennifer Wu: What are some of the specific qualities that you're looking for in the interview process?
[58:05] Nathan Anderson: I think it's different for each role, what you're hiring for and what you need out of it, but there certainly are, at least for me, a few constants in any type of hire.
And the first and foremost for me is curiosity, I really like to dive in someone's professional life or their personal life, that they have shown interest in something, maybe it's just one thing, something where they really dive into and it shows that they like to challenge themselves that they're looking to learn more, to expand their horizon. I find if someone has curiosity and a desire to continue to learn, that even if they don't have all of the aspects that we're looking for, they will make things happen.
Second thing that I look for, and I think this is so important in early stage companies where it's a roller coaster, is resiliency or some people might call it grit. This can be a little bit more difficult to interview for. We have so many ups and downs, even though we've historically been going up and to the right, it's not linear, it's ups and downs. Sometimes in the same hour I feel like “oh my gosh this is the most amazing thing I've ever done, and also like my god I'm so stupid, why did I start this”, sometimes happens in the same hour. So you're going to need people who have that resiliency and that grit when times are tough, to be like let's just roll up our sleeves and get shit done. And ultimately, I find that you get out of those lows pretty quickly, and so I always want that type of mindset on the team and no matter what role we have.
[59:42] Jennifer Wu: And is that the magic of Scantrust?
[59:44] Nathan Anderson: The magic of Scantrust is our people. We have a really cool secure QR code and great technology platform, but that was built by our people, and those are the ones who are passionate about it, going out and sharing it with the world, working with our customers to make them successful. So the people are, without a doubt, the magic.
[01:00:04] Jennifer Wu: Where can people find Scantrust?
[01:00:06] Nathan Anderson: Well to start off with Scantrust.com, if you don’t know us, go check us out if you're working for a company or have a company that has a physical product, I guarantee you, it's worth checking us out. We are pretty strong on LinkedIn as well, we put out a lot of content there. I'm on LinkedIn for anyone listening out there who wants to talk more or have some questions about running a b2b SaaS business, I’m more than happy to share my experiences, just go ahead on LinkedIn, look up Nathan J. Anderson.
[01:00:40] Jennifer: We're coming now to the end of our interview, and we always end every podcast with a quote. For this episode, I have a quote by John Wooden, the American basketball coach, The Wizard of Westwood.
"Success is never final, failure is never fatal. It's courage that counts."
[01:01:02] Nathan: Wow, fantastic quote. I love that quote and words to live by for sure. Thanks, Jennifer, really, really enjoyed this, and thanks for having me on.
[01:01:18] Jennifer: Thank you for coming on the show, thank you for taking the time.
Good luck to you Nathan, to Scantrust, and to continuing of your entrepreneurial journey! Thanks for joining us today.
[01:01:25] Jennifer: What was the craziest thing that happened to you in China?
[01:01:27] Nathan: Okay. My craziest moment in China. Oh man, there's so many crazy moments in China [chuckles] over the years that I could choose from but I guess since this is a business podcast, I'll make it a crazy business moment. And it goes back to when I was working at Fushi Copperweld which was, at the time, a public company on NASDAQ, and I was serving as secretary to the board of directors as one of my roles, and we were having our annual shareholder meeting and we decided to have it in Hainan, which is a southern tropical island, as you know, of China, the southern-most point of China. A beautiful place to visit.
And we'd decided to have the annual meeting there, and as secretary to the board I went and did some advance scouting to make sure the hotel and the set-up was proper for all the attendees. And the morning that I was taking my flight out, my chairman and CEO, the big boss, the Lǎobǎn, as they call it in China, Mr. Foo, called me and said, I need to meet a business associate while I'm there as well and made it seem like it was related to Fushi Copperweld and gave me the contact. I said, "Sure. No problem. I'll have time. I'lll meet them on Tuesday."
Ended up being the business associate was a mayor of a small village in the center, up in the mountains of Hainan who was setting up a spider farm. So, they had poisonous spiders, really big spiders, and they were basically harvesting the venom from these spiders to then take and put into medicines and various chemicals. It's very - just a small amount is worth a lot. And Mr. Foo was contemplating a personal investment, so what his by "go talk to a business associate," he basically had meant for me to go kick the tires of this investment.
And I was out at this spider farm in the middle of nowhere up in the mountains of Hainan and, uh, you know, it wasn't really well organized, let's say. It wasn't an efficient operation, I could see. I didn't know at the time the spiders were poisonous but they showed me the farm. It kind of looked like a chicken coop and there were spiders running in cages, out of cages, all around us. Nobody seemed to be so concerned so I wasn't that concerned. But then after lunch when there was quite a bit of drinking Chinese baijiu going on, they said, "Oh. You wanna see what these spiders really do?"
I'm like, "Yeah sure." And they brought up a cow and put a spider on it, and the spider eventually bit the cow and within 30 minutes, the cow was dead [chuckles]. And you know, I don't know. There's a lot more details in this and I could go on. It's a hilarious story, but it really summarizes China in one simple phrase for me - expect the unexpected.
[01:04:36] [END OF AUDIO]
(01:56) How Basketball Shaped Nathan as a Person
(04:19) How did the Losses in Sports Help Him Build His Resilience?
(06:40) How to Motivate Your Team
(08:33) How does Building Trust and Confidence in the Team Translate into Startup Culture?
(10:28) The Importance of Strong Bond for a Startup
(11:48) On Being a Poker Player
(16:04) How does Nathan run ScanTrust?
(18:22) His Journey to China & How He Ended Up Taking the Company Public on the NASDAQ
(30:07) Behind the Making of ScanTrust
(34:39) Pros & Cons of Being a First-Time Founders
(36:33) Nathans's Message For Anyone who's Thinking of Becoming a Founder
(39:39) What To Do When the Initial Team that You Put Together Falls Apart?
(44:28) Things You Should Learn About Enterprise Sales
(48:08) ScanTrust’s Product Market Fit Process
(52:21) Qualities You Should Look For in Investors
(56:12) Building Up a Team: How to Make Your Startup Stand Out
(59:44) The Magic of Scantrust
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