"A Keen Eye for Risk" with Jay DeVivo

Jay DeVivo’s angel investing ranges far from his insurance background. Here we discuss his involvement with startups such as Hubly Surgical, FleetNurse, and ApprentiScope. Fun chat with a lively guest.

Highlights:

• Sal Daher Introduces Jay DeVivo

• Hubly Surgical

• "... The advantage for Hubly is that doctors don't need to learn any new skills. It's pressing a button and in fact, there'll be a wider swath of clinicians that'll be able to use it than can use the current hand crank drill..."

• FleetNurse

• "... See, that's the thing with Angel investors. They may be new to Angel Investing, they're not new to business..."

• ApprentiScope

• How Jay DeVivo Came to Angel Investing

• "... It's really tough as an investor because you're not controlling things. You're along for the ride..."

• Jay's Career Journey

• "... Later on, I did some strategy work for larger companies as well. I started that business right before business school and then I consulted all through business school and things were good, so I did it for two years after business school..."

• "... It's like in the third ring out from there is where the jobs live. Basically, what you need to do is talk to a lot of people and do informational conversations, low pressure, just talk and you say, 'Hey, this is what I used to do. This is what I'm interested in'..."

• Advice to the Audience

ANGEL INVEST BOSTON IS SPONSORED BY:

• Purdue University entrepreneurship

• Peter Fasse, patent attorney at Fish & Richardson

Transcript of “A Keen Eye for Risk”

Guest: Jay DeVivo

Sal Daher: I'm really proud to say that the Angel Invest Boston podcast is sponsored by Purdue University entrepreneurship, and Peter Fasse, patent attorney at Fish & Richardson.

Purdue is exceptional in its support of its faculty of its top five engineering school in helping them get their technology from the lab, out to the market, out to industry, out to the clinic. Peter Fasse is also a great support to entrepreneurs. He is a patent attorney specializing in microfluidics and has been tremendously helpful to some of the startups, which I'm involved, including a startup, came out of Purdue, Savran Technologies. I'm proud to have these two sponsors for my podcast.

[music]

Sal Daher Introduces Jay DeVivo

Welcome to Angel Invest Boston, conversations to Boston's most interesting founders and angel investors. Today, we are pleased to have with us Jay DeVivo. Jay, say hi to our audience.

Jay DeVivo: Hey, everybody. It's great to be here. Thanks for having me on, Sal.

Sal Daher: Awesome. Now, Jay DeVivo is an angel investor. He is starting his career as an angel investor. I think it's very important for us to map out the career of angels in the beginning to end. We've had people like Michael Mark, who invested in hundreds of companies over decades and decades. Jay comes from the finance background, which is a little similar to me. He started out in merchant banking. It is a transactional business.

Then he went into the insurance business. He worked with Cigna, a very big insurance company, and so he has very developed ideas about risk and also, has a lot of experience with transactions. Jay now is beginning his career as an angel investor. It's really interesting because he reached out to me because he listened to the podcast, and I interviewed Casey Grage of Hubly Surgical, and it happens that he's an investor at Hubly via our friends at RVI, River Valley Investors, out in Springfield. Shout out to our RVI friends.

Jay DeVivo: Hey, Paul.

Sal Daher: Hey, Paul.

Jay DeVivo: [laughs]

Sal Daher: Hi. Paul's been in the podcast.

Jay DeVivo: Oh, I should go back and hear that one.

Sal Daher: Oh, yes. This is going to be empty there. I think this is a great opportunity for us to talk here about some really interesting startups and also about just like, what brought you to being an angel investor. Then, yes, just the whole half of insurance because insurtech is a really big area right now. I've-

Jay DeVivo: Absolutely.

Hubly Surgical

Sal Daher: -invested in a few companies, even though I'm focusing on life science. In the past, I have invested in a tremendous insurtech company. We talk about that later. Anyway, Jay, what attracted you to Hubly Surgical? By the way, listeners, you should listen to this rocketship interview with Casey Grage. [laughs] She's something else.

Jay DeVivo: Absolutely, turn this interview off and go back to listen-

Sal Daher: [laughs]

Jay DeVivo: -because it's that good. She's phenomenal. Casey came through RVI. It was stunning. They've been drilling holes in people's heads for a couple of thousand years. The technology's essentially been the same. It's been this hand crank drill. I think they do-- Yes, I think there's something like 200,000 procedures a year, and you got to hope that person operating the crank-

Sal Daher: Stops in time. [laughs]

Jay DeVivo: -stops in time. Sometimes they do.

Sal Daher: We drilled too much.

Jay DeVivo: Sometimes they don't. It's something like half of bedside procedures and 10% of OR or something like that. Of those inter-cranial procedures, you get a bad outcome, like an infection or stroke or neurological injury or death, and there's a high redrill rate using those hand cranks. Hubly's developed an FDA clearance-pending drill. It's great because it looks a lot like your cordless drill at home. It's simple to operate.

Sal Daher: [laughs]

Jay DeVivo: You press the trigger, and it stops when it's supposed to stop. As a layperson, I would have thought in the 21st century, we wouldn't be drilling into people's heads based on the feel of your hands on a crank. Soon, we won't have to be.

Sal Daher: That is fantastic. You should pitch that RVI and RVI backed her. Tell me about the data she pitched. Was she pitching in person or was--

"... The advantage for Hubly is that doctors don't need to learn any new skills. It's pressing a button and in fact, there'll be a wider swath of clinicians that'll be able to use it than can use the current hand crank drill..."

Jay DeVivo: It was virtual. It's funny, so I passed the first time. The first time, I think she was probably-- She might have been the first company I saw at RVI. I passed for a few reasons, but a year later, I saw the progress that she made, and I had a chance to spend some time with her. It was clear she's a superstar. What got me over the edge is I think that once the product is cleared by the FDA, they have some advantages that most other medical device products don't.

I think the big one is adoption because docs are a notoriously difficult group to change their behaviors, they have a process, it works for them. Their loath to change it is understandably so. The advantage for Hubly is that doctors don't need to learn any new skills. It's pressing a button and in fact, there'll be a wider swath of clinicians that'll be able to use it than can use the current hand crank drill.

We're going to get far superior outcomes, it'll be faster. I believe it's price comparable. I think that just points to adoption going very, very rapidly which a lot of innovations don't necessarily have because they represent a relatively profound shift from what folks were already doing and Hubly doesn't have that impediment.

Sal Daher: Interesting. It fits into the workflow of the surgeon easily. It's basically they're hand cranking it and they have something that similar form factor, except they just have to press a button. They don't actually have to turn her hand crank. Is it true that she basically just to show that her results are not any worse than the existing hand cracks?

Jay DeVivo: I don't want to speak on what the requirements are. That sounds familiar.

Sal Daher: I think I'm projecting that because I'm talking about the case of Ari, for example, these are catheters. Another really impressive founder, by the way. I don't know if I have seen him, but this is a reusable catheter that sterilizes itself and I know that the standard for the FDA really is, basically, you have to show that it's not any worse in terms of infections in the existing catheter. I suspect the same standard will be at play with this drill.

Jay DeVivo: I think that's correct. As far as I know, in all the studies that they've done, there've been no drill-throughs. In all of the testing that they've done flawlessly. I'm super excited about it.

Sal Daher: Yes, it's amazing how much she's gotten done.

Jay DeVivo: It is. Casey's, like I said, she's a superstar. I probably prefer to buy stock in her because this isn't going to be the first thing that she'll do. This will be the last thing that she'll do rather. She's really super impressive. I'm really excited about Hubly. They're doing something and it's great because you could feel good about it because they're really saving people's lives because there are people that are dying because they have to undergo this procedure and it doesn't always turn out well and they're going to be able to reduce that failure rate significantly.

Sal Daher: It's not as if she's employing massive amounts of computing power to create some new AI. Basically, what they've done is they've used existing technologies, but done a really good job of designing it.

Jay DeVivo: Yes.

Sal Daher: Very well-designed device. I'm sure there are innovations involved in it, but they're not things where hundreds of millions of dollars have been spent on it. It's basically kind of stuff that's pretty close to a state of the art, but really well thought through and well designed. It was funny, this is a Casey Grage story. I was attending a quinceañera, party for one of my wife's nieces down in Miami. For some reason, it was having a conversation, said, Casey, I'm going to be out that weekend because I'm going to be in Miami. Casey says, ''Oh, yes, I'm going to be Miami too." I said, "what, are you going to a quinceañera, party too?" She said, "no, I found a cadaver down there and I'm going to drill into the cadaver". This is how intense she is, that's her activities, her weekends are spent traveling to find a fresh cadaver to drill holes into. I just thought it was hilarious.

Jay DeVivo: I haven't been to a quinceañera, and I haven't drilled into a skull, so I think both would be a good way to spend a weekend.

Sal Daher: [laughs] I can pass on the skull. Maybe if I weren't a frat and I were 19 years old, that's a different story.

Jay DeVivo: That's my son age now.

Sal Daher: A quinceañera party,A Mexican wedding in general, or an Indian wedding, don't miss if you're ever invited to one. Highly recommend that.

Jay DeVivo: I'll be there.

Sal Daher: Yes, but stir your liver before you go. [laughs] Rest your liver.

Jay DeVivo: Pre-Tox.

Sal Daher: Yes, do a pre-Tox. Yes. [laughs] Awesome. Anyway, let's talk about some other startups that you're excited about, Jay.

FleetNurse

Jay DeVivo: Let's talk about FleetNurse. That's actually the first startup that I invested in.

Sal Daher: Fleets of nurse?

Jay DeVivo: FleetNurse. They're out of Portland, Oregon. Israel Angeles is the CEO there. They were introduced to me by a friend of mine, who had invested in them, and kind of similar to Hubly, I passed on FleetNurse the first go around, but it's a super interesting company. Everyone knows, given the pandemic, what a tremendous toll that has taken on the nursing profession. Yes, it's dreadful.

Lots of nurses are leaving. They're retiring earlier. The ones that are staying, want to work on their own terms. What FleetNurse does is they provide on-demand staffing for nursing. There's actually several companies that are in this space. Most of them are focused on traveling nurses or nurses that are looking to plan their schedules out maybe a week or two in advance. This is popular with long-term care and rehab facilities.

Where FleetNurse is unique is they're focusing on shifts that need to be filled between 2 and 48 hours and in critical areas, like ORs. Yes, so they have two ways to do this. The first is now, within most hospitals, if a nurse calls out, it's an old-fashioned call tree. They just start calling nurses. They replaced call trees with a SaaS platform that lets nurses swap shifts. Then secondly, which is actually how they went to market, they have an on-demand pool of nurses. They do all the credentialing, all of the tax work associated with paying them.

Sal Daher: It's a classic software-eating-the-world kind of startup applying a SaaS platform to an activity where human beings used to do it in a rickety way before, and the software can do it very effectively. Very minimal, very basic software can do it and have a huge impact.

Jay DeVivo: Yes, so I passed the first time around because I said, "There's other people doing this." I wasn't convinced, but a friend who's an executive in a large healthcare company brought me in. He's a really smart guy, and he spent a lot of time with the founder. He's local to him, so he can spend a lot of time there. One of the other reasons is, they beat all their quarterly revenue estimates from the previous year.

Sal Daher: The whole thing is execution. Execution is everything. It's a network effect business model. Meaning, the more people use it, the more valuable it is. Therefore, more people will use it. If they're executing well, yes, that sounds like it could be a goldmine.

Jay DeVivo: Yes, and that's the advantage of looking at things very early because you can pass, and then time could go by. This case, it was a year. Then they sent you a whole bunch of materials about here's all the wonderful stuff that they're going to do. Then you could see, well, how well do they execute against that? You have that advantage going in that you wouldn't have if you weren't looking at things at a super early stage. That gave me a lot of confidence. The other thing was that every startup has challenges, but there's runaround generating business. It was around dealing with all the demand, despite the fact that they did virtually no marketing.

"... See, that's the thing with Angel investors. They may be new to Angel Investing, they're not new to business..."

Sal Daher: Wow, this is really interesting because you are a beginning angel investor, but since you've had two successful careers behind you, you have a bit of experience in life. It's often said that the best due diligence is time. Just seeing how a startup progresses over time is extremely instructive. The other thing is, as angel investors, we mostly bet on the jockey. We don't bet on the horse. We don't bet on the business, the business model.

We're betting on the founders, and you manage to observe the founders over time and manage to get a really close read on the founders. That helped make the decision. That's a very important aspect of angel investing. See, that's the thing with Angel investors. They may be new to Angel Investing, they're not new to business. Common sense translates across different disciplines. It's just a thing that a lot of people who are thinking about becoming angel investors don't understand.

If you've been in business for 20, or 30 years, and you've been good at it, you've been successful at it. There's a combination of understanding people, understanding business models. You've seen a lot of stuff, and you have enough crystallized intelligence. You've seen enough patterns to be someone who can be helpful to a new business. The founders who are young, who have not had all that experience. This is what Angel Investing's about.

One of the conversations I'm always having with Angels is, "Oh, I'm afraid to invest in life sciences. I don't know anything about the life sciences." We're not asking Angels to help with life science knowledge. We're asking them to help with business knowledge, which, typically, there's a technical founder who has the scientific knowledge, and the Angels are making judgments about the motivation, and the drive of the founder.

They can bring people in to understand better if the technology can work, they understand better the industry and all this stuff. Basically, what Angels do in those circumstances is really the same stuff they've been doing in business before. Very common sensical things. The typical founders in the life sciences, typically, they know their ways around a lab, they know how to get samples and that stuff, but they don't know how to do that in the context of a private company, how to manage people, how to do this.

There's a lot of stuff that Angels can help with. I think it's particularly valuable to be talking to you early in your Angel Investing Career because it creates a model for Angels, other people who are thinking of stepping in from different disciplines. I cannot imagine when you were an executive at Cigna, worrying about losses, reinsurance rates, and the systems, and all that stuff that you'd someday be investing in the drill to someone's head.

Jay DeVivo: [laughs] I was thinking about drilling into people's heads, but for different reasons [laughs]

Sal Daher: Usually, with a firearm. [laughter] I understand. Very good. Is there another startup that you want to talk about?

ApprentiScope

Jay DeVivo: Yes, there's one more. I've got a couple more, but there's one more that I think is interesting, and it's timely. It's a company called ApprentiScope, Will Lippolis. I think I've got Will's last name right. It's L-I-P-P-0-L-I-S. I'm better with vowels and consonants.

Sal Daher: [laughter] Yes, It's an ancient Hebrew [laughs] because they wrote only the consonants, no vowels.

Jay DeVivo: I belong, yes. [laughs]

Sal Daher: [laughs] You can go the other way around.

Jay DeVivo: Yes, with Italian, you just pronounce all the vowels. It's pretty easy [laughs]

Sal Daher: Anyway, so tell me what they're doing, and what problem they're solving.

Jay DeVivo: The problem is the huge shortage of skilled workers facing companies of all stripes, and because folks aren't coming out of high school, or even post-secondary education with the skills that they need, workforce development is increasingly falling on the backs of employers. More employers are taking advantage of registered apprenticeships.

These are industry-led programs, and they provide a paid job structured on-the-job training, and education, and apprentices earn a portable nationally recognized credential. Because there's generally tax credits and access to other federal resources, that means there's also a lot of rules to follow, and a lot of activities that need to be tracked. ApprentiScope has developed a platform for employers, sponsors, and governments to manage apprenticeship programs.

Sal Daher: Brilliant.

Jay DeVivo: Before ApprentiScope, it was pretty much Word, and Excel, and Paper.

Sal Daher: I love those kinds of businesses, where you're competing with Microsoft Word, and Excel, and Paper. Brings to mind a company I invest in called RockStep Solutions, they're up in Maine, and what they're doing is they're providing a SaaS platform to keep track of data from preclinical trials, which right now, all the data is kept in spreadsheets, and it's very, very mundane stuff. They're doing it just like a SaaS platform. You can scan QR codes and all this stuff, Keep track of information in a highly developed environment, instead of just each scientist developing her or his own spreadsheet.

[laughter]

Jay DeVivo: What could possibly go wrong?

Sal Daher: What could possibly go wrong? The data that's secured, shareable and all that stuff, and they're doing really well. How did you connect with AppprentiScope?

Jay DeVivo: ApprentiScope also came through RVI.

Sal Daher: RVI has interesting companies.

Jay DeVivo: Yes, they do.

Sal Daher: Shoutout to Paul Silva.

Jay DeVivo: Go, Paul. It's funny, because my dad worked for the Labor Department for the State of Connecticut. One of the roles that he had was auditing programs that received state funds for worker training, including apprenticeship programs. I had a little insight in there through him. You never know what life experiences are going to be helpful.

Sal Daher: All of the background, it's amazing. How many investors does ApprentiScope have?

Jay DeVivo: That's an excellent question.

Sal Daher: How many children of training program instructors did Will find?

Jay DeVivo: He found enough to close the round.

Sal Daher: I know. That's a goldmine business that people just don't understand. It's so weird and foreign.

Jay DeVivo: They're pretty price-insensitive. Everybody is renewing. He's a young founder, but he's really doing a fantastic job. He's had a lot of good support from folks at RVI.

Sal Daher: I'd love to talk to him. This is really fascinating. If you want to have him on.

Jay DeVivo: No, absolutely. I'll definitely connect you.

Sal Daher: Curious how a young fellow got into this field. It's the most unlikely field, because dealing with those regulatory state and all that stuff, it implies some experience with a regulatory state to understand the intricacies involved.

Jay DeVivo: That's something a lot of college kids are spending time on.

Sal Daher: Interesting. That's interesting. Burlington, Vermont, I can imagine.

Jay DeVivo: Although, there's a lot going on in Burlington, Vermont.

Sal Daher: I know.

Jay DeVivo: Lauren Bass runs LaunchVT. She's doing an awesome job there. She's turned me on to a couple of really interesting companies that are in Burlington. Oviya Technologies is another one. This is not a company I invested in or of a relationship with other than I've had some conversations with the founders, but they're digitizing scent.

Sal Daher: Oh, I've heard about this. This is interesting. Digitizing scents. Once again, it's probably the only ones doing it, probably not a lot of other people in this field. I think Paul mentioned Oviya. That is really fascinating. Jay, let's talk about how you decided to pick up a pen and your checkbook and write that first angel check?

How Jay DeVivo Came to Angel Investing

Jay DeVivo: Before I wrote my first angel check, I spent a lot of time talking to founders. I started out in early-stage investing, and at one point, I had my own consulting business where I was working primarily with startups for about four years. After that, I had a corporate job for 18 years. I had been out of the game, so to speak, for a while. Before I started writing checks, I started doing a lot of mentoring. I got involved with several accelerators and I talked to hundreds of founders over a few years before I started writing checks. It's too early to know if that will lower my failure rate, but at least I got more comfortable.

Sal Daher: I think you're doing another good thing. You're not rushing into it. You're starting slowly. Start small, start slow, and don't invest alone. I think you're following all those three dicta.

Jay DeVivo: It really depends where you're coming from. If you're a startup employee who's on their third startup, you know what? It's going to be a lot easier for you to start investing in startups because you have that network, you know that world, and it's easy enough to do. If you've never been there, or you had an extended absence like I have, it's tough because things change so quickly. Doing the mentoring work and the advising work was really helpful to me in terms of understanding trends and technologies and getting a lay of the land.

The other thing that was really challenging for me is there's so much exciting stuff going on across so many different industries. You could spend all your time talking to founders and learning about their business and their technology because it's all super interesting. What I had to learn was to try to narrow down all this exciting stuff to a few areas where I thought there were both compelling opportunities and where perhaps it could be useful.

Sal Daher: Really took the starting slowly to heart. You just did your homework, I suspect, from your background in the insurance business where you got to do a lot of homework.

Jay DeVivo: Risk mitigation, risk mitigation.

[laughter]

Sal Daher: Let's talk a little bit about risk, angel investing risk. I had a meeting yesterday with an impressive founder, really tremendous founder, who was involved in a startup that was very high flying, but they made a couple of rookie mistakes and they just blew up. It happens. It happens even to highly developed operating companies but with startups, they exist to go from zero to one. Then you have professional management takes over to go from 1 to 10. These guys have done a tremendous job, going from zero to one to zero and then to one again, and the thing blew up.

The overwhelming majority of the investors in the company understood. Made mistakes, you can grumble, and so forth. At the end of the day, human beings make mistakes. You can't really blame them. Except that there was one investor that really took it very hard. I think this is where it's really important to remind angel investors that risk control in angel investing is essential. We're not investing in traded stocks. Even traded stocks you can have significant losses. You need to have a diversified portfolio. It goes even more for angel investing. You need to diversify risk.

You should be thinking about whenever you're investing divide by at least 20, the amount of money that you're willing to invest in the angel space to tie up possibly 10, 15 years. It could even entail losses, then divide that amount by 20. That's what you invest in each company. Eventually, you plan to have 20 companies so that if any one of these companies goes under, in the long-term statistics that I've seen from the Angel Capital Association, is that two-thirds of companies do not return the original capital but invest. Keep that in mind. Okay.

Two-thirds of your angel investments are going to be losses. The reason you're investing is for the other third that some of them might be 100x might be a 10x, a bunch of 2 or 3xs, that will float the boat. Therefore, you've got to manage your risk. In the light of 18-year career managing risk, do you have any thoughts on this?

"... It's really tough as an investor because you're not controlling things. You're along for the ride..."

Jay DeVivo: It's really tough as an investor because you're not controlling things. You're along for the ride. You have to shift your mindset that you're along for the ride and that you're not controlling things. You're right and what's particularly a big element of risk is, every single company regardless of the size makes lots of mistakes. The challenge with startups is they're so thinly capitalized even ones that are relatively well-funded, they can't necessarily afford to recover from their mistakes the same way much larger companies can.

The margin of error they have is so much smaller than publicly traded companies. When I'm looking at companies and I'm thinking about, gee, how do I mitigate my risk? Yes, you look to the management team but beyond a management team, I look at customer demand. Are they having a hard time finding customers or are customers beating a path to their door, and they're having a hard time dealing with demand?

Sal Daher: Well said. That is really very important. There's a lot of room for error. If people were banging your doors down, they'll put up with a less-than-perfect product, as long as you're helping them somewhat.

Jay DeVivo: Exactly. There are brilliant people coming up with amazing impressive technologies and businesses, but they're are searching for a use and if they're not very clearly solving a particularly ornery problem or opening up a new market.

Sal Daher: That's called blockchain. [laughter] It goes by another name. It's called blockchain. A brilliant technology looking for a use case that actually, it just cannot be met in any other way. Please, Jay, it's my bias. I remain open to be convinced, but they have to find a compelling use case for blockchain that can't be done any other way.

Jay DeVivo: I think DeFi could be interesting, but we'll--

Sal Daher: Okay.

Jay DeVivo: I think there's some interesting opportunities to facilitate private market transactions.

Sal Daher: I want to see one that's people are beating down the doors for those opportunities.

Jay DeVivo: Well, maybe they're walking by the doors and poking their heads in. [laughter] Because I think where they are at this point.

Sal Daher: Anyway, please continue. You're saying if there's massive demand.

Jay DeVivo: Massive demand gives lots of room for error and how unique are they? Are they doing something super unique? I think that's, in some ways, more important than the size of the market, which is a bit of a controversial statement I know because everyone looks at what's the total addressable market. If you're looking to mitigate risk on the downside, if there is a well-defined market that is particularly hungry for the solution, and it may not be enormous.

That will protect your downside to a certain extent and perhaps if there's a line of sight into something bigger, then it becomes really compelling. If that line of sight ends up being a dead end, then perhaps they get acquired and it's a single and there's nothing wrong with singles.

Sal Daher: No. They get your money back. You get to try again. I see that expressed in your investing in FleetNurse and ApprentiScope, particularly FleetNurse, where they're beating their estimates all the time because they've got so much business. The customers are just breaking down the doors looking for their service.

Jay DeVivo: An incredible demand for nurses to get on the platform. Early on credentialing was a big bottleneck for them, which they've solved, but they had thousands of nurses queued up trying to get on the platform because it was so compelling to them, which is tricky in what's a marketplace type of business where you need to get demand from two sides. Those are tricky businesses and that's what stood out to me on FleetNurse is they had such demand from both sides of the marketplace.

Sal Daher: Great. Listeners who were finding this conversation with Jay DeVivo interesting, could help other people discover this conversation by first, following us on whatever app you listen to podcasts on, but in particular, you could upvote the conversation with Jay by going, for example, in the Apple podcast site rating us, we ask for five-star ratings. If they had six, we'd ask for six, but you can be very candid and also do a written review. The algorithm doesn't interpret what you're saying, it just sees that somebody cared enough to write.

You can say, oh, that's Sal, he's such a blowhard and so forth and so on. As long as you give it five stars, it's perfectly okay. You can go to town with that irony or you can say stuff that my sainted mother who's in heaven would like to hear, but either way, give us a review, give us a rating, and that'll help more people discover this podcast because really we're up about learning how to build better technology companies. Anyway, Jay, so let's get to the topic of how you discovered your direction in life. You got out of college. What was the first thing that you did? The first job that you did?

Jay's Career Journey

Jay DeVivo: My first job out of college was working for MFS in their beautiful building on 500 Boylston Street.

Sal Daher: Wow. Oh, you know, that building was in a late episode in the last season of Peaky Blinders.

Jay DeVivo: No, kidding.

Sal Daher: Yes.

Jay DeVivo: Ah. [laughs]

Sal Daher: It was supposed to be like an old building back in the 1930s. Of course, it's a building from the '90s or something, imitating an old building and I recognized the building because they were dealing with some Boston mobsters loosely modeled on a famous family here in Boston that was involved in bootlegging during Prohibition. There's a few scenes there where they show the building they're walking in. They show that building. I was like, "500 Boylston Street," yeah!

[laughter]

Jay DeVivo: I loved that place. It was fantastic.

Sal Daher: Watch Peaky Blinders. You got to go through the whole grueling six to seven seasons of the thing.

Jay DeVivo: Seven seasons to get a shot of my old stomping ground.

Sal Daher: It's bloody and vicious and murderous and interesting. It's also an interesting show.

Jay DeVivo: Oh, that's good. All right, I like that.

Sal Daher: It's an interesting show. No kids around, but I think you'll enjoy it. Pretty good acting.

Jay DeVivo: No, I've actually heard great things about it, so. All right, I'll check that out.

Sal Daher: 500 Boylston street.

Jay DeVivo: 500 Boylston street. I don't think I was there for two years when I got introduced to startup investing. It was from my then girlfriend current wife's brother who was working in a merchant bank and he was telling me about what he was doing. I'm like, "This is fantastic."

Sal Daher: Explain to the audience what a merchant bank does.

Jay DeVivo: I'm dating myself here. I'm going back to the mid-1990s. There were not a lot of what we would call seed-stage funds in Boston in the 1990s. As a merchant bank, we raised money on a deal-by-deal basis. We'd go out. We'd sign a deal with a company, and then we would go find investors and we'd raise the money. We were tiny.

Sal Daher: Instead of a venture fundraising money and then investing in different companies, the merchant bank would assist the company that mandated them to raise the funding.

Jay DeVivo: Exactly, so the screening process was very similar to a venture capital fund in terms of you go, you do all the due diligence, you put the private placement memorandums together, and then you say, "Okay, now we got to go find $4,000,000," and you go out to your investors and raise the money. Because we were so small, I got to do a little bit of everything. I started out cold calling on investors trying to get meetings to pitch companies, and I eventually, was able to get more deeply involved in the due diligence process and putting the PPMs together. It was really a fantastic education.

Sal Daher: PPMs.

Jay DeVivo: Private placement memorandums.

Sal Daher: Yes, it's like something that enumerates all the risks and explains to people in impossible language why you shouldn't invest in it so that if you ever get sued, the lawyers can point this, oh, we talked about this risk here. We talk about this risk there.

Jay DeVivo: If people read PPMs, they would never invest.

Sal Daher: They're so thick, and so complicated. Nobody reads them. Every risk in the book is in there.

Jay DeVivo: They're written by lawyers purposely so that you won't read them.

Sal Daher: In completely twisted and impossible-to-understand language.

"... Later on, I did some strategy work for larger companies as well. I started that business right before business school and then I consulted all through business school and things were good, so I did it for two years after business school..."

Jay DeVivo: Exactly, so I was only there a couple of years, but I was fortunate enough to be involved with some great companies. We had Boston Duck Tours that everybody knows and loves, FreeMarkets, which IPO'd, there was AquaBounty IPO'd. It was AF Protein, and then I don't know if they changed names or spun out. There was probably a 20-year gap between when we raised money and when they went public. Then another local Massachusetts company was Marathon Technologies that was acquired by Stratus. It was a short time, but there are some clunkers in there too to be sure, but I was fortunate enough to get to meet some super interesting, really bright entrepreneurs.

From there, I started a consulting business. Most of my clients were startups, and I worked primarily on product development, go-to-market strategy, fundraising, and partnerships.

Later on, I did some strategy work for larger companies as well. I started that business right before business school and then I consulted all through business school and things were good, so I did it for two years after business school. Then my wife and I got married in 2001 and the bottom fell out of everything while we were on our honeymoon in Italy.

[crosstalk]

Well, actually, yes, so we were in our honeymoon in Italy in September of 2001 and that's when the bottom fell out of--

Sal Daher: Yes. The stock market already collapsed.

Jay DeVivo: The stock market had collapsed--

Sal Daher: Didn't know about it yet.

Jay DeVivo: Yes, the stock market collapsed. With everything that happened that September that had a lot of implications, broader inflations as well. I decided I had to get a real job and we moved back to the East Coast. That's when I joined Cigna and I spent 18 years there and I ended up running client risk management for their variable annuity reinsurance business.

Sal Daher: That's tremendous. I think that's really important to talk about career paths because it helps people process the different directions to go in and that things will happen along the way that at the moment will make it seem like I'm sure that when you came back from your honeymoon in September of 2001, you were like, "Oh, what am I going to do?"

Jay DeVivo: Oh, yes, absolutely. We were the first transatlantic flight after September 11th.

Sal Daher: Yes.

Jay DeVivo: At the time I was consulting for a large entertainment company and they said, "Well, while you were gone, we didn't run very many ads for two weeks. The first thing we did was we laid off all of our consultants," and I was talking to them about coming on full-time for a role in a specific project that they're going to launch and they canceled that too. It was like very quickly. It's like, wow, things changed pretty drastically overnight and you've got to pivot and figure out what your next plan is.

Sal Daher: Yes. This takes me back to late 1988, it was the summer of '88 when the group that I was in at Bank of Boston got restructured and I was laid off, my boss left the bank and the whole group was expanded and I had a mortgage and I had a little baby at home and a wife and job prospects and the markets were pretty bad, some months of the wilderness. Then I ran into someone that I knew from Citibank days.

September of '88, I was starting my work at Turan Corporation, which turned out to be a phenomenal collaboration of 24 years with my late business partner, Robert B. Smith, rest in peace, Smitty. We had a lot of fun together, made a lot of money and so it was catastrophe. It was very gloomy period. Then some very sunny decades ahead. That's how life is. If you're somebody who's lost a position recently in one of these high-flying tech companies and so forth, there will be a second act or third and fourth act to your life.

Jay DeVivo: Absolutely. Everybody has catastrophes. They just look different for everybody.

Sal Daher: At the moment, they all look really dark. You think that, oh, my gosh, this never happened to anybody. What did I do? You'll live through it.

Jay DeVivo: Absolutely.

Sal Daher: Any advice that you have for someone in that situation?

Jay DeVivo: I guess two things. One is what everybody tells you is you have to network. Everyone tells you two things. They tell you to network and they tell you to stay positive. Both of those things are very difficult to do. Your network is only so large, you reach out and if the first wave doesn't work, then you're like, well, gee, I reached out to everybody that's close to me, nothing really panned out. What do I do now and--

Sal Daher: I'm doomed? Guess what the hundred 50 people chances are they don't have a job for you.

Jay DeVivo: Exactly.

"... It's like in the third ring out from there is where the jobs live. Basically, what you need to do is talk to a lot of people and do informational conversations, low pressure, just talk and you say, 'Hey, this is what I used to do. This is what I'm interested in'..."

Sal Daher: Maybe 150 people at times 150 that those people know. It's like in the third ring out from there is where the jobs live. Basically, what you need to do is talk to a lot of people and do informational conversations, low pressure, just talk and you say, "Hey, this is what I used to do. This is what I'm interested in." Then the person will listen. Most of the time those conversations will get nowhere, but there will be a time when something says you got to talk to this person that I know. Then that person connects you to somebody else and then bingo, a job might pop up.

Jay DeVivo: Yes. Get involved in something. It doesn't really matter what. That could be something charitable, that could be spending time with startups and doing some mentoring and some advising. It keeps you focused on something else.

Sal Daher: Get out and talk to people.

Jay DeVivo: Talking to people is so critical because otherwise, you can get stuck in these doom spirals. If you're going out and you're talking to people and you're being helpful to other people, you'll be in a better head space. Just simply by virtue of interacting with other people, things will happen.

Sal Daher: Yes, that's just amazing how that happens. If you just turn inwards and sit in your house and just brood, it's not going to happen.

Jay DeVivo: It'll never change.

Sal Daher: You got to get out and interact with people, particularly post-COVID now. It's really a good time to be interacting with people in person.

Jay DeVivo: Go outside to get your coffee and get to know your baristas.

Sal Daher: Early morning sunshine. I'm a big proponent of early morning sunshine because it lifts your mood, especially in this gloomy weather that we have here. Months of very little sun.

Jay DeVivo: Oh, in five more months, we'll have some sunshine.

Sal Daher: Oh yes, five more months. [laughs] It's guaranteed.

Jay DeVivo: If you're in New England just wait five more months.

[crosstalk]

Sal Daher: Five more months we'll have blazing sunshine, high humidity, heat, and everything. It'll be awesome and bugs. Great, Jay, any further thoughts as we think about wrapping up our very, very compelling interview?

Advice to the Audience

Jay DeVivo: No, just thank you for having me on. I think I told you this when we first met that I've always listened to your podcast in my basement while I was working out so you could have go from you being a disembodied voice on my speaker to--

Sal Daher: To be a disembodied voice on the screen. [laughs]

Jay DeVivo: At least I could see you.

Sal Daher: We did meet in person in real life.

Jay DeVivo: At least I could see you. Now I get to be the disembodied voice in someone else's speaker. It's been super fun and if you're interested in getting involved in angel investing and you're like, well, gee, where do I go? What do I do? Find a group. There are tons of groups. If you're in the southern New England or really New England area in general, I'm an RVI. There's tons in Boston.

Sal Daher: If you're out in West Massachusetts, go to RVI. If you're in the Metro West area, check out Walnut, check out Boston Harbor, launch fad if you want to invest later stage. If you live on Beacon Hill, checkup, Beacon Angels. It's such [laughs] a rich environment, terrible weather, but we have lots and lots of these volunteer groups get together and do tremendous stuff.

Jay DeVivo: We need to do stuff because we can't go outside and play

Sal Daher: [laughs] Or golf, right, with an umbrella and lots of layers and GORE-TEX. GORE-TEX is used a lot here. Great. Jay DeVivo, angel investor, executive and insurance, and merchant banker, and listener. Oh, by the way, it's like every time I talk to a listener one-on-one, I'm really impressed such people listen to the podcast like Jay. Thanks for making the time for being on the podcast.

Jay DeVivo: Well, thanks so much for having me, Sal, and thanks for all the great work you do because it's super interesting and it's super helpful to me and I know to so many other people as well.

Sal Daher: Tremendous. This is Angel Invest Boston. Thanks for listening. I'm Sal Daher.

[music]

Sal Daher: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.