In the evolving world of entrepreneurship, few stories are as compelling as that of Stephen Bailey, a former lawyer who transitioned from the courtroom to the startup ecosystem. His journey is a testament to the power of leadership, reinvention, and adaptability.

Born and raised in New Orleans, Stephen’s path from a lawyer to a successful entrepreneur offers valuable insights for aspiring founders and seasoned professionals alike. In this exclusive interview, Stephen talks about navigating COVID and the pivots in the business model his company, ExecOnline, went through.

Listen to the full podcast episode and review the transcript here. [download_book]

From Law to Leadership: A Background in Brief

Stephen Bailey’s roots are firmly planted in the vibrant city of New Orleans, where his parents, both esteemed doctors, hoped their son would follow a medical career. However, Stephen charted a different course.

After excelling in debate during high school and college, he pursued law at Emory University and Yale Law School. His legal career began at WilmerHale, a prestigious firm known for its rigorous legal practice.

Despite his strong start, Bailey found himself yearning for something different. The intense environment of the legal world and a pivotal moment of self-reflection led him to reconsider his career trajectory.

Conversations with mentors and classmates exposed him to the dynamic field of entrepreneurship—a stark contrast to the structured world of law.

In retrospect, Stephen observes that Yale was just a really inspiring place with a great network of people who were doing really exciting and interesting things, both inside and outside of the law.

The first startup he joined was founded by a law school classmate and funded by another law school classmate, which points to the value of the connections he made. At Yale, Stephen also developed an understanding of how to think in a structured and rigorous way about complex problems.

These skills, combined with the debating he did in high school and college, taught Stephen to see both sides of an issue and understand how to make difficult decisions between competing options.

When working at WilmerHale in the Venture Capital and Private Equity Group, he gained a working knowledge of the legal side of deal-making. This knowledge would later come in handy when he built ExecOnline and raised more than $100M over several funding rounds. [my_form_shortcode]

The Shift from Lawyer to Entrepreneur

Stephen’s transition from law to entrepreneurship was not instantaneous but a gradual evolution. As he recalls, when he went to law school, he had no conception of a potential career in entrepreneurship. His plan was to join the WilmerHale law firm and work as an appellate litigator.

Stephen spent a summer as an associate at a law firm after his first year of law school, which is common among law students. While the experience was interesting, he realized he wanted to do more.

Initially, Stephen joined Frontier Strategy Group, a startup, where he began as a product head. Frontier is an Information Services Company that sells a subscription that helps organizations benchmark and improve their performance in international and emerging markets.

This role allowed Stephen to grow with the company, eventually leading him to the position of CEO. His journey from a small team to leading the organization taught him invaluable lessons about growth, adaptability, and leadership.

Stephen had the benefit of growing with the business as opposed to stepping into a business that was already large and established. He remembers making mistakes and learning from them since he was constantly pushed out of his comfort zone.

The real turning point came when Stephen decided to start his own company. This decision was influenced by a mix of his experiences at Frontier Strategy Group and a growing desire to build something from scratch.

Inspired by his mentor, David Sylvester, Stephen started on his entrepreneurial journey, which led to the creation of ExecOnline. This platform is designed to revolutionize leadership development by making high-quality executive education accessible online.

ExecOnline: Democratizing Leadership Development

ExecOnline was born from Stephen’s observation of a gap in leadership development. Traditional programs were often in-person and available only to a select few. The vast majority of folks were not really being invested in from a leadership development perspective by their companies.

Stephen envisioned a platform that could offer world-class leadership training online, partnering with top business schools like Berkeley, Columbia, MIT, and Wharton. This model not only democratized access to high-quality education but also addressed the evolving needs of leaders in a hybrid world.

ExecOnline’s business model involves collaborating with prestigious educational institutions to deliver non-degree certificate programs to corporate clients. The platform hosts and sells specific offerings to companies, which then buy the programs it offers on behalf of leaders within their organizations.

This approach ensures that leaders at all levels have access to top-tier training without the constraints of geographical limitations. ExecOnline works with hundreds of companies, developing tens of thousands of leaders every year.

Since then, the platform has expanded its offerings to include proprietary programs and coaching capabilities, positioning itself as a comprehensive solution for leadership development needs from frontline managers up to the most senior leaders in the organization.

Navigating the Funding Landscape

Raising capital is crucial to scaling a startup, and Stephen’s experience is a valuable lesson in understanding the funding lifecycle. He has successfully raised over $110M for ExecOnline, navigating various stages from seed funding to Series E rounds.

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Each stage of funding comes with distinct expectations and challenges. For seed funding, the focus is primarily on the founder and the vision rather than the specifics of the business model. As Stephen opines, this is both the most exciting time for the business and also the hardest capital to raise.

He views it as the classic chicken-and-egg situation. The first problem founders must solve is getting money to build something great, but to get that money, they must first sell someone on the vision to build it.

Investors are well aware that the business can change and pivot to adapt to evolving markets, so their focus is on the person navigating the changes. By the time a company reaches Series B and C, investors expect to see evidence of product-market fit and strong financial metrics.

Steophen’s legal background has been instrumental in understanding the complexities of deal-making and maintaining a clean capital structure, which is crucial for future rounds. He points out that the core mistake young entrepreneurs make is to go with the same pitch for subsequent rounds.

Instead, pitches should outline information like the model economics, retention rates, lifetime value of your customer, and LTV to CAC. These things start to create a long-term view of how the business’s economics is likely to trend.

Investors focus on growth rates, profitability, and, in the later stages, exit paths via an acquisition or IPO. The returns they can hope to get are also a top priority. Accordingly, Stephen has been able to tailor their message at critical moments, given the expectations of particular investors.

Key Legal Insights for Founders

Stephen’s legal training has provided him with a unique perspective on fundraising and deal-making. Here are three key legal insights for founders based on his experience:

Valuation vs. Terms

Founders should be cautious about overindexing on headline valuation. While headline valuation is important, the terms of the deal, such as liquidation preferences and rights, can significantly impact the true value of the investment.

Founders should negotiate favorable terms to protect their economic interests and future funding opportunities. For instance, if investors have a heavy liquidity preference for a $200M pre-money valuation, the high value is meaningless.

Capital Stack Cleanliness

The complexity of a company’s capital stack can affect future funding rounds. Founders should aim to keep their capital structure as clean as possible to facilitate smoother negotiations with new investors.

If investors enter a messy capital stack, they will want certain rights and preferences, which just makes it more complex and results in attempts to snowball round to round.

Maintaining Control

Founders should think proactively about ways to retain control over their business. Implementing mechanisms like super-voting rights early on can help preserve control as the company grows and raises additional capital, even if the founders don’t have a majority.

Ensuring 10x voting rights for common shares in the incorporation documents is always advisable. Most seed investors don’t care about that because they’re essentially investing in the founder and not in the business.

Once voting rights are secure, if the business is doing well and things continue to progress, most investors aren’t going to eliminate voting rights to finalize the deal.

Vision for the Future Business Landscape

Stephen foresees a future business landscape with much higher leadership mobility in organizations.

People who enter organizations should feel like they have a real path to leadership, regardless of their background, whether they went to an elite school, whether they’re in the right networks, whether they’re male or female, what their race is, and all the different axes of diversity.

People should have the opportunity to advance in organizations because high-quality leadership development is available to them at scale, a benefit that every leader comes to expect and has access to. This evolution is the opposite of what leadership development has been traditionally.

Traditionally, only a handful of people are selected because they’re seen as high potential. Then, 95% of people who aren’t categorized that way have to fend for themselves.

This creates self-fulfilling prophecies that they aren’t good for companies because they tend to have thinner leadership benches than they need in a world of significant change. It obviously has a huge impact on the careers of really talented folk.

With a little support, these professionals could advance and accelerate to increasingly higher levels of leadership. However, they are often trapped and hit glass ceilings because they don’t have access to the development they need to push their careers forward.

Leadership in a Post-COVID World

The COVID-19 pandemic has accelerated changes in leadership and organizational dynamics.

Leaders now face the challenge of adapting to hybrid work environments and making agile decisions in a rapidly changing world–changes that arise from conditions like COVID-19, global wars, and economic uncertainty.

ExecOnline’s focus on providing leadership development resources online has proven essential in this new landscape. The COVID highlighted that success is increasingly determined by the ability to learn fast in the pace of change.

Stephen has also noted the need for leaders to be able to communicate and align through different hybrid environments than they’re used to in the past. Formerly, leaders could do everything in person since they had their teams around them and could run international businesses.

Although leaders did work virtually, most had the luxury of being co-located with the teams they managed. However, the world is now a hybrid where teams are virtual and in-person, which necessitates different communication approaches.

Leaders must figure out how to lead a team that’s co-located rather than a team that’s brought together all over the world, making communication the key piece.

Stephen also stresses the importance of the ability to make complex strategic decisions effectively, particularly when so many shifts have been occurring in the world. His vision for a learning economy underscores the importance of continuous learning and adaptability.

In Stephen’s opinion. a decade of progress occurred in that one to two year period with COVID. This has resulted in taking the market from an in-person leadership development market to what is now primarily an online and hybrid leadership development market.

The Art of Entrepreneurship

Reflecting on his journey, Stephen likens entrepreneurship to whitewater rafting—knowing the destination but navigating through unpredictable currents. His experiences highlight the importance of having a clear vision while remaining agile and open to change.

Stephen’s story is an inspiring example of how skills from one field can translate into success in another.

His transition from law to entrepreneurship, coupled with his insights into leadership and funding, offers valuable lessons for anyone looking to make a significant career shift or lead a startup to success.

Listen to the full podcast episode to know more, including:

• Shifting from law to entrepreneurship can leverage skills like structured thinking and rigorous problem-solving.
• Early-stage investors bet on the founder’s potential and adaptability, not just the idea.
• Headline valuations matter, but investor rights and preferences can significantly affect your true value.
• Keeping investment rounds simple and transparent facilitates smoother future funding.
• Implementing founder-friendly provisions, like super-voting rights early on, helps retain control in later funding rounds.
• The pace of change demands continuous learning and adaptation in leadership capabilities, accelerated by recent global events.
• Successful entrepreneurship combines a clear vision with the agility to navigate unexpected challenges.

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For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).  [download_book]

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

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