Mark Phillips: 11 Tribes

Join Mark Phillips from 11 Tribes Capital as he shares his journey from startup failures to founding a unique venture firm. Discover the insights behind Eleven Tribes Capital and the Cadence Group's support for entrepreneurs. Explore the evolving venture capital landscape, entrepreneurship's rise, and the great resignation. Mark offers advice on supporting entrepreneurs beyond capital, differences in fundraising, and the importance of verification. Gain tips on starting a venture firm, building an LP pipeline, and fostering community. Learn about skills for VC success, creative fund structuring, and building relationships with major VC firms.

Episode Transcript

(00:00):
It requires that motivation and it requiresthat sustainability.

(00:04):
If you're with a messy, you know, situation athome Mhmm.
If you're dealing with, you know, health of aloved one struggling, if you're dealing with
crippling depression, I'm pretty confident thatbusiness isn't gonna make it.
Yeah.
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the

(00:26):
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
So, yeah, that's that's fantastic.
That's a great it's a great leap leapspringboard, I should say, to get into venture.

(00:51):
So I think that's a great spot to be.
Thank you.
I'm just gonna go live now because we you know,it's a good tee up to just kinda kick things
off.
But, so I'll just kick this off.
So, Mark, thanks for popping in and glad we gotto do some intros real quick.
But Mark Phillips from eleven tribes capital, Ihave been getting to know each other the last
couple months and really grateful for all the,you know, just crossover and just cross intros

(01:17):
that have been complimentary.
So, know, I think it's really fun to kind ofbuild this community and have you be part of
it.
And thanks for, you know, your support tonightand just kind of as a whole, excited to have
you here, learn a little more about yourbackground.
But I know you started talking about it, butwhy don't we double click on that a little bit
further to talk about where you grew up?

(01:38):
I think you grew
up in Chicago.
You spent some time there.
But let's talk about where you grew up, yourcareer, and how that evolved to where you are
now.
And then we can just kind of take thediscussion as we go.
Yeah, it's great.
Thanks, Joel.
It's really good to be here and really fungetting to know you over the last couple
months.
Yeah, Chicago born and raised when the Cubs wonthe World Series.

(01:58):
That was a very emotional day in the Phillipshousehold.
Very, very exciting.
But yeah, my career was started in Chicago.
I graduated from school.
Was a mathematics major.
Didn't really know where I wanted to land, butknew I didn't want to do the same thing every
day.
So I inevitably moved into consulting.
It was consulting or investment banking.
That's what I was told.

(02:18):
I'm glad I chose the consulting route and endedup working with Accenture Strategy for about
five years.
So that was Monday to Friday on the road, kindof that travel life.
And it's really cool when you're 22, but it'samazing how old you feel even when you're 27,
when you're traveling 25

(02:40):
out of the month, I should say.
So it gets really busy.
But that experience was really good.
I was focused on mergers and acquisitions inthe technology space.
So we would help large corporations that wereinterested in acquiring innovative
technologies, go through the diligence process,then ultimately help with the post merger
integration.
And so that was really my first foray intotechnology, into mergers, into how do large

(03:04):
companies look at innovation and technology andwhat are they looking to acquire?
So it was really interesting for me.
From there, I moved into my MBA.
I went to the University of Chicago.
There's a theme here obviously.
I went to Booth to get my MBA and really movedaway from consulting.
And that's really when the entrepreneurial bugstruck, if you will.

(03:25):
So in my first year at Booth, I launched my ownstartup after taking a couple of
entrepreneurial classes.
And it was an IoT hardware device for type onediabetics to help them measure their A1C
levels.
And so most type ones, at least a smallmajority use what's called a continuous glucose
monitor.

(03:45):
But many type ones still prefer to use theprick of a finger and insulin and needle to
inject the insulin.
Well, we created an IoT hardware device and wewere securing funding and we were getting close
to going live.
And about two weeks before we were supposed tohit manufacturing, a large billion dollar
health tech company based out of Chicagoactually produced the exact same product.

(04:06):
Oh, wow.
I mean to a T, right?
And it was one of those things where being afast follower wasn't going to work in that sort
of market.
It was very niche and they a year and a halfahead of us.
So the
whole You built thing this while you were incollege?
So while while you were doing your MBA with theproject?
While I was doing yeah.
Oh, wow.
Yeah.
Booth you know, shout out to Booth.
I loved my time there.

(04:27):
They've got a lot of entrepreneurial classes.
Their entrepreneurial curriculum is, I'd argue,second to none at this point.
Mhmm.
And so I built I started it during a class.
Building a new venture was the name of theclass with doctor Lindsay Lyman.
And from there, really scaled it through mywhole first year.
But what I wanna share is really the lessonlearned there, Joel, because the whole thing

(04:48):
crumbled in thirty six hours.
No And I was left holding the ash and I was ashell of myself.
Like it really that hurt.
It stung really deeply and I was surprised athow incapacitated I felt frankly.
And so through, on a total transparency,through some counseling and some mentorship,

(05:10):
like I moved past that.
But what became very apparent to me was I hadvery easily tied my identity and my value as a
person and as an entrepreneur into theperformance of that company.
Yeah.
It's really easy to do.
And one of the things I think that is helping,you know, like a Silicon Valley created such a
unique ecosystem because I think folks therebecame convicted that failure is not fatal.

(05:34):
Mhmm.
But it's really hard when you're in the momentas an entrepreneur to truly believe that.
Yeah.
And I didn't have the right voices in my ownhead and around me to help me sort of think
about that going through the process.
So moving out of that, you know, it's kind ofwith hindsight being twenty twenty, I became
very passionate about changing sides of thetable and saying, shoot, I don't wanna see

(05:57):
another entrepreneur go through that sameexperience that I did.
And I can't help everyone, but I can help some.
So my whole second year of Booth, I worked realhard to get into venture.
A lot of the stories that were shared today, Iecho going through accelerator programs and
working with folks like Joel.
It's a great way to break in and we can talkabout that.
I ended up getting a job coming out of Boothwith a big fund out of Chicago.

(06:19):
And I gotta tell you, was there about a month.
And
I sat back and I asked myself, from what I'veseen, are these folks doing anything that I as
an entrepreneur really would have wanted helpwith?
And the answer was pretty resoundingly no.
They were deploying capital and they were, youknow, making introductions.
But none of the things that really mattered tome were being being talked about.

(06:42):
Yeah.
So I stayed there a little while but ultimatelymoved on.
I went back into consulting, back into mergersand acquisitions in the technology space with a
boutique firm.
But with an eye on this crazy idea of man, Ifelt such a profound pain of being an
entrepreneur and I really want to invest in away that focuses on that.
And that's really when the idea of 11 tribeswas nascent and it started to percolate, if you

(07:06):
will.
That was about five years ago.
Joel, you can attest to this, had thousands ofconversations and that's not an exaggeration.
So what was it?
So can we, you know, we don't have to gothrough any specific names or examples, but
what was it that, you know, was missing?
Right?
So I mean, you're a VC, you're deployingcapital.
I'm a product person.

(07:26):
So I you know, I fill that void by rolling upmy sleeves, I'll test that app, you know, I'll
give like a 20 page deck with with markups oflike an app, you know, and, and give a lot of
feedback so you can kind of lean into yourconsulting skill set and kind of like a
consultative VC, right?

(07:48):
But I guess what really was still the gap?
What's the missing link?
Because you left.
I mean, you're like, screw this.
I don't even know if I want to, you didn'teven, the dream job for a lot of people, and
I'm not saying it should be the dream job, buta lot of people are really trying to get into
VC.
You finally got in.
So what specifically was missing?
I love that question.
I'll get really specific.

(08:09):
Was it that you just couldn't build?
Like you weren't building?
Is that what it was?
Of that, I think it was the entrepreneurialspirit that I've learned is inherent in who I
am.
But it's actually more, I'll get even morespecific for you.
So as we did research for the fund for eleventribes, and it's really our whole thesis is
what we're getting into here.
As we did research, we came across a reallyfascinating study by CB Insights.

(08:32):
It was a five year longitudinal study thatlooked at the failure rates of startups.
How often does it happen and why is
it happening?
And what they found is on average pre seed andseed stage startup will fail eighty to eighty
five percent of the time.
And when you actually dig into the data overthis five year study, what they found was about
sixty five percent of the time that failure wascompletely related and attributable to people.

(08:58):
It wasn't product.
That's on the list certainly.
But that aggregated with all of the otherbusiness and product reasons was a smaller
subset than the reasons that were like, wellthe founder had crippling depression.
The founder ended up having a substance abuseissue that killed the business.
The co founders no longer saw eye to eye.

(09:20):
They could no longer work together.
Bad investor on the cap table.
How many times have we heard that story?
Yeah.
And I would actually take it one step further,Joel.
I would argue that business that's wellcapitalised and well motivated can solve any of
the problems that we talk about.
Right?
Bad go to market strategy.

(09:41):
Well, as long as you have a well motivated teamthat wants to keep working hard, they're gonna
push through that.
Bad product.
Well, you just keep iterating.
But it requires that motivation and it requiresthat sustainability.
But if you're with a messy situation at home,if you're dealing with health of a loved one
struggling, if you're dealing with cripplingdepression, I'm pretty confident that business

(10:04):
isn't gonna make it.
Yeah.
So that's the thing I didn't see.
And there's specific stories I can share frommy time at the fund where, I I saw that
happening.
We knew that a founder was going through areally messy divorce.
And that's not a here nor there, but the thingwe had the opportunity to do, Joel, was ask the
question, how are you doing?

(10:26):
Messy though.
It's hard and I understand why most funds don'twanna get into that.
Well, that's why we built tribes.
So I got a story and I'm not going say anynames, but there was a founder that I'm like
one of the early investors in this company andI'm probably a smaller investor compared to the
lead investors.
And this founder actually dealt with some crazystuff like personal, serious stuff, like

(10:51):
medical issues, family problems.
But like what he was saying, this is probablywhat you would relate to is they kind of, there
was a point where they kind of saw him as anasset.
So like when he was saying, hey, I'm dealingwith some financial, some health issues, they
were kind of like, well, you know, you're, youknow, the way they treat them, they kind of got

(11:13):
pissed, you know, and for me, I was kind of asmaller investor.
Surprised if he wanted to like, because heactually wanted to talk to me about some
feedback on a deck.
I And was like, Yeah, sure.
Happy to talk
about the feedback.
And he just like, Hey,
I actually don't want to talk about the deck.
We talk about?
Can we just talk for
a while?
Can I vent for a little?
Gates opened, right?
Yeah, but I felt but I felt special, I guessflattered that he wanted to open up to me

(11:38):
because I'm not you know, at that time, waslike super early.
But you know, I guess that's probably somewhatrelated to maybe what you're feeling at some
point, right?
When you're deploying capital, it's assetallocation, you're allocating capital to
assets.
So then what happens is, those people, youknow, when you're investing in people, you're

(12:01):
actually not investing in people, you're anasset allocator, right?
So some assets do great, some assets do well,and you got to return capital.
If you don't, the LPs aren't gonna re up,right?
So I think that, I don't know if that's kind ofclose to kind of what I you were think
that story you shared is totally spot on.
And here's the kicker from our front.

(12:22):
So we're quick hitter on the fund itself,right?
So $10,000,000 funds.
We're just nearly closed the whole thing andwe're really excited about that.
$250,000 on average check size for the seedstage, not the biggest check.
Here's the thing.
That story you're telling me precisely isexactly why we're getting into some of the best
deals.
Right?

(12:42):
And that's if you're an allocator, you're anLP, you're asking, well, how does 11 times get
into a better deal than this person or thatperson?
Entrepreneurs are realizing they have a choice.
If you're a founder, there's a new generation.
There's this decentralization happening.
No one's all cooped up in Silicon Valleyanymore.
And if you're somewhere in the middle ofAmerica, you're realizing, well, I don't have
to go with this group that's just kind ofboring dead money.

(13:05):
I can find venture funds, VCs that are actuallyadding meaningful value.
So when we get into our pitch, a couple ofthings.
So what do we do to solve this problem?
Well, all the things you mentioned Joel arecritical, right?
Well, we help with product development and deckreview and all these things.
But we also have what we call our 2%commitment.
So what does that mean?
It means when we allocate $250,000 we take 2%on top of that.

(13:28):
So in that situation, it's 5 ks And we give itdirectly to the founder for them to put towards
their own mental and physical well-being.
Oh, wow.
And so
that can look like a lot of different things.
That could look like working with a coach.
Had folks work with therapists to kind of getthrough some unresolved trauma that they've
got.
We've had folks go and find a sleep specialistbecause they hadn't been sleeping well.
It could look like a thousand different things.

(13:50):
Mhmm.
When you so just so
I can understand how the the deployment processworks.
So it's $2.50, but you just deploy five kextra.
Is that coming out investable of capital?
Or is that just additional off the balancesheet or something from your Really management
important
question.
Yeah.

(14:10):
Different.
It's And I'll tell you what, it's us into dealsbecause when a founder hears that they're like
And even I'll tell you what, we've got somebigger funds that have met us and said, wow, if
I let you guys top this off, I get a reallyunique value add.
I'll answer your question really directly.
We've actually created an expense accountwithin the fund.
So let's say we commit 250 k.

(14:32):
We send the whole check.
$2.50 k.
That's your money.
I'm not asking you to touch into that because Iknow you care about the business.
Your baby.
Like, I'm not gonna try to take away from that.
But oh, by the way, when we did that, weactually put $5,000 over into this expense
account.
It's sitting there.
All you have to do is send me the receipt.
Send me the receipt.
Show me the bill from your coach.

(14:52):
Show me the bill from your sleep specialist andwe
will pay
up to $5,000
That holds them accountable to do it as well.
For you, I guess it could, you know, look, Imean, instead of spending $5,000 to go to Opal,
you can, you know, use that $5,000 to kindahelp a founder.
It's kinda and you don't have to travel as muchnow because you're mostly doing remote stuff.

(15:16):
So, I mean, it's Zoom pretty
has been an amazing differentiator for us.
So yeah, it's neat, Joel.
And so then the other component, when westarted
I've never heard that before.
I think that's a bright, really interesting andreally brilliant idea because it's to your
point, right?
If you can make people feel good and supportthem and get them on track for the right

(15:38):
mission, then they're going to be excited tobuild whatever they're building.
At the end, the dividends are going to pay outto everybody else.
Yeah, I hope so.
Listen, proof's in the pudding, but we're notleveraging the fund.
It's not like we're taking, we're talking aboutmaybe at the end of our portfolio, we're
talking $250,000 $300,000 that'll be allocated,right?
So we're talking two or 3% of total fund.

(16:00):
So it's not a serious number, right?
It's not enough to like reduce our number ofinvestments by five, anything like that.
So we did the math and we feel really confidentabout it.
I'll be transparent.
We've got 14 investments at this point.
A number of the founders we invested into lovedthe thesis, but you can lead a horse to water,
right?

(16:21):
Of them haven't taken opportunity.
That's okay.
And that's the beauty of the way we'vestructured it is that money will be there when
the time is fine.
But we certainly don't wanna force it onanyone.
We want it to be something that they know isavailable to them.
Yeah, that's great.
So the main services that they can get is itfitness or is it mostly mental?
So we actually

(16:41):
launched an organ.
So we were working through that whole questionand I met a woman named Doctor.
Melissa Malanic and she's a brilliant PhD ofclinical psychology based out of South Carolina
actually.
And I was saying, well, if I was hypothesizing?
Well, what if you became on as sort of like,we've all watched Succession, like Our Wendy
Roads, right?
You came on as Our Wendy Roads.
She was like,
no, you're thinking of billions, billions,right?

(17:03):
Succession, Billions.
Thank you.
They're both great shows.
They're like my two favorite shows.
Everyone's got me covered.
Manveer's got me covered.
Billions, it's it's exactly right.
Succession's probably a little bit better.
Gotta love, we all need Wendy.
That's right.
And so we were thinking about that.
And then she said, well, this idea is biggerthan just that, Mark.
This is something a lot of funds could workwith.
So Doctor.
Melanik is actually with the support of 11tribes launched an organization called the

(17:26):
Cadence Group.
And the Cadence Group is really kind of existsto do two things.
One, how do we bring world class well-beingpractitioners?
And that's what I call them, right?
It's not just sleep.
It's not just fitness.
It's mental health.
It's coaching.
It's leadership developments.
We've got about 35 well-being practitioners onthis platform of this group called Cadence.
And so when you're a founder coming from an 11tribes portfolio, we actually So we give you

(17:50):
that access to the 2% commitment and then youget sort of unfettered access to this Cadence
group platform.
But we also in the next couple of months have avision for saying, hey, if you're a fund in the
same space, this is not a competitive We wantto be collaborative.
And so to answer your question, Joel, it spansthe gambit, right?
I mean, fitness, nutrition, sleep, mentalhealth, therapy, leadership development.

(18:16):
Like we're bringing like I said, we've gotabout 35 practitioners on the platform today
and they span all of those different gambits.
So I think the truth is each of us hasdifferent strengths and each of us has
different weaknesses.
And if we can be honest with ourselves aboutwhat those are, those weaknesses are where we
need to take the opportunity to build ourselvesup.
Sure.
Okay.
So you're feeling all these things.

(18:37):
Let's just go back to the venture fund, Soyou're feeling all these things.
You're deploying capital, you're feeling alittle numb and you're like, what am I doing in
my life?
I miss building, I miss solving problems.
So you went back into consulting, which waskind of entrepreneurial, right?
When you're doing consulting, you're kind ofreally trying to optimize a problem and solve
it.

(18:57):
And that's essentially what a business does.
Right?
So you went back to the consulting firm and howwas that going?
And then what happened after that?
Yeah.
Joel, the bug had gotten to me.
It had burrowed deep, that entrepreneurial bug.
And so I was there.
Was a good opportunity for me to kind ofcontinue to build and iterate on this idea of

(19:21):
my own funds all while, frankly, continuing tolearn and grow my network and pay the bills.
Right.
But I knew the truth of it is I knew prettyearly on into that tenure with the consulting
firm that I was going go do my own thing.
I just didn't know what it was yet.
I think to
fund like what started, you know, I always loveto hear these kind of origin like, like trigger

(19:45):
effects, right?
So it's like, you know, you're working there,you want to do something like what did somebody
inspire you to start a fund?
Because now it's different, right?
I mean, you launched eleven Charge what, three,four years ago?
Yeah, I guess three years ago and quit my jobfull time on it too.
Yeah, two years ago.
Would you agree that like three, four years agois completely different than last I mean,

(20:08):
there's people spinning up funds like out ofnowhere.
And it's much easier too, but I don't think theyou know, obviously, you know, these these
programs have come out in the last year aswell, right?
But that I feel like everybody is launching afund and everybody's an LP these days,
especially within the last year.

(20:28):
So like, what resources did you have?
I mean, were those resources there at thattime?
And was it like how it is now or?
That's a phenomenal question.
I think a lot of what you're alluding to and Itotally agree is this SEC regulation shift from
the five zero six B to the five zero six C.
That's a six C.
Right?
The Twitter fees.
I mean, phenomenal.
Right?
It's unbelievable.
We didn't go that.

(20:49):
We're a 506B.
We can't raise in public.
And that is what it is.
We were able to get where we wanted to get.
So that's just fine.
No, it's an interesting question.
Looking back, it was more just out of my owncuriosity.
I've had such a passion to break into VC.
Like I've heard many of the folks on the callsaying, and that's, let me be really clear.
It's phenomenal, right?
And finding the right firm to work for, it's

(21:11):
a
very apprenticeship based business, Right?
So finding the right person, I'm looking atyou, Joel, work for guys, it makes all the
difference.
And so breaking into VC is a hard thing to do.
And once you do it, finding the right place isthe huge thing.
But knowing that I had sort of done thatexperience and wasn't satisfied with it, my

(21:32):
curiosity just kept feeding.
And so what I did to answer your question, whoI talked to, there wasn't one group that sort
of was like that, that's my North Star.
It was just conversation after conversation.
And all I would ask, and it was mostly withentrepreneurs.
Yeah.
That's really how our fund was developed.
Like what would you as an entrepreneur reallywant from a true venture investor?

(21:54):
And all I kept hearing was all it was all aboutpersonal stuff.
There would be, hey, I want help on Pitch Deckand with fundraising.
Most people don't really want a venture fundcoming in telling them what to do with their
own product.
But the common theme that I could pull on was,man, if a venture fund could support me as a
person, that would make all the difference.

(22:15):
So I kept hearing that repetitively.
And then I started shifting my conversationsand reaching out to other funds and saying,
well, what are you doing?
Tell me what you're doing.
Like how do you support your portfolio?
And I didn't hear this from anyone, I'll not asingle give some shout out to Alexis Ohanian.
He runs a firm called seven seventy sixVentures.
He and I launched literally within a month ofeach other.

(22:37):
His launch was a lot more impressive than mine.
He does the same thing.
They invest capital and they give this sort ofwell-being investment to their portfolio.
And people are just, I mean, just raised, Ithink $700,000,000 for fund two.
So it's awesome.
And I actually think in five years, give ortake, most if not all funds will have this sort
of allocation built into what they're doing.

(22:59):
Otherwise, think people go looking elsewhere.
I'm thinking three years ago, the mainresource, I mean, is what helped me, you know,
because the founders would tell you all of thatstuff, which is really important, but you don't
really understand how to build a firm or likehow to talk to LPs, what are LPs?
How do you build a pipeline, you know, to kindof think about portfolio, you know, how to put

(23:22):
how to build a pipeline of deal flow, how tothink about portfolio construction.
So I thought the business of venture capitalwas a pretty good book.
Was a resource that I used.
That was probably three years ago.
That was a really good resource because he goesthrough the LP side of it.
And then he actually has a lot of quotes fromLPs too.
So, I thought back then that was probably thebest resource to me and then just blogs and

(23:45):
stuff.
But now I feel that there's such an ecosystemand what's crazy, I don't know if you listen to
Mac the VCs podcast episode with twenty minuteVC, but he started going Yeah, really that was
a really good episode because he went reallydeep into the mechanics of how he kind of
engineered his own framework to collect capitalbecause he was under 506C.

(24:11):
John, I know you had the question here about506B versus 506C, but the main thing I'll say,
Mark, feel free to chime in, but five zero six,you can publicly fundraise.
There's a lot of regulations and rules aroundtalking about raising a fund publicly with a
traditional fund structure.
There's a lot of people that are on Twitterthat are sharing a lot of content, giving

(24:35):
updates on their fund publicly because they'reallowed to.
I would say some of the disadvantages for 506Cis there's a lot more reporting requirements.
So, I would say if you're raising capital fromsingle family offices, they don't really wanna
share all that info.
But those are some of the insights I have, but
I market agree is with that.
The only thing I'd add is, you know, reportingis spot on.

(24:58):
Five zero six c, you have to independentlyverify accreditation.
So when you've got a five zero six b, you sendthem a form through Carta and they check a box.
The SEC is comfortable with that.
Right?
When you do a c, you have to have anotherservice company that comes in and does that
independent verification, which require bankaccount statements.
It's it's pretty unpleasant by all accounts.

(25:18):
So yeah.
Listen.
Joel, the your the book you referenced isphenomenal.
I read venture deals as well.
That was a good one.
That was tougher for me to get through.
Yeah, that was
a good book.
But it was,
it was, you know, I felt that the business ofventure capital was just much more easier for
me to digest.
Kind of like, I lost my attention.
I lost attention after a while with venturedeals started going much more into like the

(25:41):
legal frameworks and terms.
I kind of tuned out a little bit.
Sure.
Yeah.
So we are a 506B.
A few folks came around what we were doing.
I have a couple partners in the fund as well.
They're not full time yet.
The economics of a $10,000,000 fund struggle tosupport three full time partners.

(26:02):
But the goal is for them to become full timeand they opened up their networks.
And so each person has you have to evaluate foryourself what are your strengths and what are
your weaknesses from a business perspective,right?
If you've got a platform and a loudspeaker likeMac, 506c is gonna be a great way for you to
go.
But that was not where I came from.
Right?
I didn't have that tool in my tool belt.

(26:26):
And so I had to ask myself, what do I have?
And so between these networks, among the peoplethat I had interacted with and got to meet just
through random interactions and cold reachouts, we felt like we could raise the fund.
And so just to share with the group, we'resitting at $9,500,000 of committed capital from
73 investors.
So average check size hovers right above 150.

(26:49):
And yeah, it is a 506B as we alluded to.
And so there's a lot less reporting.
We've got single family offices.
We've got some foundations and institutionalinvestors, but the majority of our investors
are what I would describe as high net worthindividuals.
Yeah, and then just kind of going back to you,you know, you were kind of brainstorming a lot
on building the firm.
And then what were some of the first steps tofinally starting the firm?

(27:14):
Guess you started doing research on theformation and then I guess you started any
advice that you have for you know, actually,there's a few people in here that have talked
about starting their own fund too.
So what are some strategies that you wouldrecommend for some people if they want to start
maybe building an LP pipeline?
And then also just thinking through the thesis,right?

(27:37):
So tell us about 11 tribes, like how you cameabout.
Like when I think about it, I'm like thinkingabout a tribe, right, like a close knit group
of people that you call like your own.
But tell me about kind of like how that cameabout, like the thesis and the story behind the
branding of the fun.

(27:58):
Yeah.
So let me touch on the first piece, which issuch a good question, right?
So what was step one?
I'll tell you exactly what it was.
I started to meet folks.
You have conversations and you realize thisperson actually has some interest in allocating
to venture.
So what can I do?
I don't have a fund yet.
I'll tell you exactly what you can do.
You can start helping them be an angel.

(28:21):
And so what I did is I started syndicatingdeals for a little mini angel network that I
had started to build in Chicago land broadly.
And so I had 15 or 20 names on an emaildistribution list.
And as I would come across deals at ecosystemareas like eighteen seventy one or other big
areas in Chicago where there are a lot ofcompanies, I would meet a founder.

(28:43):
I would diligence that founder.
I'd put together a deal memo.
I would do everything we do within the fundsall for free.
And I would share that deal memo and thefinancial model and the opportunity with my
angel syndicate.
And we ended up making, you know, I think weended up making three investments.
Small money.
Really, really small chips, but it doesn'tmatter.

(29:04):
So that's what I want everyone to hear is like,it doesn't matter the size.
You gotta get started.
Just have to get started.
And it feels really hard when you're at squareone, But little steps repeatedly done over time
end up being something meaningful.
And so we ended up syndicating a few deals.
And when I was able to point to that trackrecord and say, hey, these companies have

(29:25):
continued to evolve.
They've got early growth, etcetera, etcetera.
There were some really productive conversationswith LPs.
And again, it doesn't have to be this wholelike, I have to create an angel syndicate and
charge people.
I didn't charge anyone a dime.
I love the work.
You use AngelList?
Is that how you started?
No.
Just sourced them.
AngelList was still, you know, the wholerolling fund thing was still nascent.

(29:47):
I mean, this was five years ago, Joel.
And you know, it's changed a lot.
Yeah, because some people, I mean, back thenSPVs were really, they were just like LLCs.
And then it was like a combined bank account.
Yeah, exactly.
Was like a homemade SPV pretty much.
Exactly.
So that gave me confidence.

(30:08):
It gave me something to stand on.
Wasn't much, but it
was And you had a track record already becauseyou already invested in a couple of companies
and you also proved to yourself that you'reable to have people back your research and your
deal.
And that's kind of the beginning findings ofprivate equity and asset management, right?

(30:29):
You're having people kind of you're managingmoney at a very small scale.
Yeah.
And question every really good institutionalinvestor will ask is have you returned capital
for an institutional investor?
Have you done it?
And and I am we're getting close.
We've got a couple that are getting real close.
But, yeah, that's a huge thing that when whenyou wanna fund one, you raise $510,000,000.

(30:49):
You don't need a big institutional investor.
You can do it with high net individuals.
But as you talk about fund two and fund three,you're gonna need those big institutional
investors.
So the sooner you can start that clock, thebetter.
Right?
So don't overthink it.
Right?
It doesn't have to be perfect, but just getstarted.
So yeah, that would be my single piece ofadvice to kind of jumpstart the process.

(31:11):
Yeah.
We got John Robinson on the call.
He's buddies with the hustle fund.
And I just really love what they've done.
I mean, they've got like swag and they've got amassive community and they've got that whole
angel group.
And I think that's really cool too.
If you can build kind of a brand around that,that's really amazing as well.
Mean, just kind of building the communityfirst.

(31:32):
So what they're doing as well.
Hey, John, good to see you.
John and I got to talk last week.
Oh, you did.
That's right.
Yeah.
We had a blast.
We had a total blast.
On the thesis and the brand, you nailed it,right?
I mean, the ethos that we really wanna start torepresent, I think hustle fund is done.
We're still early.
We're going.
But it's really all about what I would describeas entrepreneurship being about something

(31:59):
bigger than yourself, right?
Like people use the term vocation, right?
Or vocational calling.
I'm so convicted that the work of anentrepreneur, you don't do this because you
want to get rich, right?
If you wanted to get rich, there's a lot.
I promise you, there's a lot easier ways to dothis.
But if you do this because you think that theworld should be better or different or improved

(32:20):
from the way that it is today, then what you'redoing is so much more than a nine to five.
Right?
And so it's this idea of how do we cometogether as a community and say, hey, you're
building this thing because you're deeplypassionate about this problem that exists.
And how do we support you in a way that honorsthat, that respects that, but also helps you do
that in a really excellent way?

(32:40):
And you can hear those things in our thesis,right, Joel?
I mean, it's this idea of investing into theperson and bringing an ecosystem of support
around our entrepreneurs.
So we wanna make work fantastic, right?
People are so disillusioned with day jobs.
And I think if you move into entrepreneurshipand you're truly passionate and can accept that
risk, you will totally change the way that youobserve work.

(33:03):
And it won't actually feel like you're workinga day in your life.
And I hope and wish that for everyone on thiscall and really everyone listening to this
recording.
Yeah.
And I don't know how the climate is now, but Iknow probably around the summertime, I mean,
there was the whole great resignation.
I don't really know how it is.
I got to get a pulse from other people.
But there was at a point, especially I thinkthis summer and probably early late spring, a

(33:28):
lot of people just leaving their jobs becausethey're like, you know what, I can probably
find some other way to replace my income.
I mean, there's a lot of people buildingdifferent brands.
I'm a big of My First Million with forgot hisname Sam Par.
But there was an episode recently and you seethis trend.

(33:49):
Mean, you know, if you're Kylie Jenner, youcould either, know, get a couple million
dollars to tweet about L'Oreal, or you can justbuild build L'Oreal and like build that.
Yeah.
Like, I mean, pretty much compete with L'Orealbecause you have that reach already, right?
So, people are paying you for your reach.
So, you might as well just use your own reachand you know, the way that you create that

(34:12):
generational wealth is like through that brand.
So that's just been really, know, so I get I'vebeen recently just getting really excited about
the stories that they've been covering on MyFirst Million because it's just so many people
just got there's a guy that was a enterprisesales, B2B enterprise salesperson.
I don't if you saw that episode, but he hadthese vending machines and he started But

(34:36):
buying some of he was such a good hustler insales that he would convince venues to not even
take a royalty.
Because a lot of times the deal is like, hey,can I put my vending machine in your gas
station and then the sell is the gas stationgets some revenue share?
Right.
She was able to sell like these older,underdeveloped motels and, you know, retirement

(34:59):
centers that like that, hey, we're improvingthe experience for your customers.
So good at sales that he was able, but he wasable to generate almost around $15,000 in
passive income from the vending machines.
And he was like, I'm actually really good at
this year.
All machines that he had at the time, recurringmonthly, so $1,515,000 monthly recurring

(35:22):
revenue off of vending machines.
You think any what he was saying is, you know,these vending machines that are at these older
kind of low income motels, people are staying,you know, some of them, I think some of them
are long term stay hotels, but these people arebuying like five to six, like Mountain Dew's
day.

(35:42):
It's like there's repeat customers, just kindof going through those drinks.
I mean, in America, people live on Mountain Dewand the big gold, right?
That is the truth.
So this guy quit his enterprise sales gigbecause he was like, I'm making much more money

(36:02):
doing this and I get to be moreentrepreneurial.
So why exchange my time for money, right?
When I can kind of build some type of businessthat can kind of give me some freedom?
Well, I think you touched on a really importantpoint.
Joel, was speaking with our mutual friendVishal last And he's got this amazing business

(36:23):
he's building.
And what struck me about the inspiration for itis it wasn't all that exciting.
You know, it was this experience he had in hisown personal life.
Someone needed him to put some money to buy aproduct that they could then sell for a markup.
And he said, well, why don't I do that atscale?
Right.
I mean, I think the same thing about what we'redoing for this fund to kind of go all the way

(36:43):
back to the start of the conversation.
I had a really poignant experience as an earlystage founder building a product, an IoT
hardware device business.
And through that experience, I saw a need.
And so you asked about sort of the inspiration.
I mean, the inspiration for me was just lookingat my own personal life and saying, what would

(37:03):
I have wanted?
And as it turned out, what I had wanted in thatmoment is what I think a lot of entrepreneurs
are looking for today, Which is that support.
Which Joel, as you experienced, was someone totalk to.
It's not profound.
It's not.
It's actually really simple.
Sometimes the simplest things can have thegreatest reach.
Yeah.
I agree.

(37:24):
Let's go a little into some of the tacticalskills for becoming a VC.
So I guess, one thing that would be interestingto the group is what do you think you did to
outperform in the interview to get that VC jobat the top fund?
And then how have you kind of evolved that tonow your own strategy to number one source

(37:45):
deals?
Then also to look for like, know, obviously,you're pretty early, but at some point, you
know, as you scale, you're gonna look for ananalyst.
Right?
So what what do you think helped you outperformto get that job offer?
And then kind of what are what are the criticalquestions for like analyst or associate?
Great questions.
Phenomenal.
I I will give an answer that I already sort ofgave, but I'll shift it.

(38:07):
As you're trying to break into a big fund, Ithink there's a really, really simple, tactful
little thing you can do to separate yourself.
Because everyone's gonna understand sort ofthe, have all the good questions, right?
It's an incredibly competitive space.
Here's what I started doing.
And this goes back to the angel syndicate.
What I started doing was putting together apipeline report for every venture fund that I

(38:31):
was interviewing with.
So what I would do is I'd go to their page.
So I was at University of Chicago.
I had access to Pitchpoint.
That is a unique differentiator.
You can still do it with Crunchbase andAngelList and the like.
But here's a really easy thing you can do.
Put together a three to five company report foreach venture fund that you're interviewing
with.
Do research on their portfolio.

(38:52):
What are they interested in?
Is it FinTech?
Is it healthcare?
Is it education?
And what I had is like a database of 15companies on sort of a rolling basis.
And when I figured out what the thesis of thefund was, what they were focused on investing
into, I would narrow that down to three to fivecompanies, have a little bit of analysis and
report out on what those companies were doing,what the opportunity for investment was, and

(39:12):
send that to the interviewing managing partnersof the fund.
Did that a whole bunch of times and I got awhole bunch of no's still.
So don't hear me as this is a silver bullet.
But in the interview that actually ended upbecoming a job offer, we talked about that more
than anything else.
Right?
So what they saw me doing, this is really themeat and potatoes of it.

(39:32):
What they saw me doing was I was doing the jobbefore I had
the job.
Yeah, I agree.
I'm sure you feel the same way, right?
If you can see some Interviewing is so hard.
We're all biased, right?
We all have these blind spots we don't evenknow.
And so when you can observe someone doing thejob before you actually have to hire them to do
the job, boy, level of conviction you haveskyrockets.

(39:53):
So that was the thing I did pre interview thatI found to be really effective.
The other two things that Well, I'll say two.
The other two big things that I've developedfrom a skill set perspective is not to toot my
own horn, I'm extremely capable in Excel.
And that came through consulting and then intoBooth.
And then even during Booth, I took classes inWall Street Oasis and all these programmes

(40:17):
available online to get really, really capable.
Because is early stage venture math is a littlebit squishy, but it still exists.
Right?
And you still have to be able to work throughthose models.
And then the third thing that I'll say, andthen we can kind of talk about it is this has
been more on the fund as a fund manager, Joel,as opposed to an associate within a fund.

(40:41):
Building slides matters.
Building slides matters.
Are our own little startup.
And when I reach an LP, they say, well, send meyour pitch deck for the fund.
I built that.
I built our pitch deck from the ground up.
And so you have to be able to communicate ideasthrough slides just like any entrepreneur is
doing with their own pitch deck.
So those are really the three biggest skillsthat I've observed in my experience of being

(41:05):
effective.
Yeah.
There's Have you heard of Miss Excel?
Yeah.
I don't use TikTok, but I've seen her videos.
So she's pretty phenomenal.
I think she's got like sponsorships withMicrosoft as well.
It's She's pretty bringing down like 150 ksthrough her TikTok videos.
I just posted the video.

(41:25):
So for those of you that don't know, there's awoman, I think she worked in consulting, but
she was really good at Excel.
So she started doing all these fun videos withmusic in the background, showing hacks on
Excel.
And she was able to really scale her brand.
I think she little tips or little tutorials.

(41:46):
Yeah, she's crushing it.
She's making like 100.
Totally crushing it.
And then getting sponsorships.
Insanity, man.
What a crazy time we live in.
I want to add one more thing, which is onExcel.
It's so important.
Listen, getting good at Excel is not hard.
It just takes time.
Okay.
But here's the other thing I'll tell you.
Diligence process now as a fund manager, decksare great.
I like decks.

(42:07):
You get the idea.
Where I really can tell an entrepreneur thatknows their stuff is in the financial model.
I mean, when you go into a financial model andyou can make your way through it and you
understand how they're formatting, what they'repulling from.
And then this also comes into likeunderstanding financial statements, frankly.
But once you can work through those, you canreally find an entrepreneur who understands the

(42:29):
levers of their business versus someone whokind of just threw something together.
And again, this isn't like our only decisionpoint, but it is another influential data point
to help us understand is this entrepreneur wellprepared to run this business?
So Excel will never be a skill that goes out ofstyle.
I promise you that.

(42:50):
Yeah.
No, I totally agree.
And I think and I tell people this all thetime, some of the people even in this, in this
call, it's like, you know, you don'tnecessarily, my point is like, you don't
necessarily have to always be the person thatbuilds the model completely from scratch.
You and you talked about this earlier, you gotto know what you're good at, right?
So if you're, if you're more of a relationshipsperson, and you're focused on closing capital,

(43:13):
you're focused on building the brand, you'rethe visionary, you're just not that you're just
not the person that wants to sit down for threehours and build a model.
But you're a leader, so you can find somebodythat can, but you still have to understand it
and speak to it and know every component of it.
So that's why they have outsourced CFOs, right?
So I have an outsourced CFO that helps me.
So I think I've seen amazing excels and some ofthe CEOs like, yeah, we have a great partner,

(43:39):
there are CFOs.
So it's also nice to have a second set of eyes,but they need to speak to it.
They need to understand, how the cogs cameabout, how does that feed into your operational
expenses, then, know, that, you know, all ofthe other, you know, expenses and how they
break out.
And, and I think just understanding thoselevers and then and then I think really

(44:01):
understanding the dynamics of how revenuetranslates to the valuation, right?
So, there a multiple in revenue that justifiesa certain valuation at a certain period of
time?
I think that's also interesting to see howthey're thinking through that.
Yeah.
Yeah, we got a couple more minutes.

(44:22):
I mean, you know, this was just so much fun.
Flew by.
A couple more questions I have is, you know,what advice would you have to new VCs for
sourcing and screening?
So like, what are some tips?
I mean, tips I've given is obviously go to goto demo days, go to startup events, you know,
message other VCs, you know, share deal flow.

(44:45):
But you know, I've also another interestinghack that I've seen is just really the power of
LinkedIn.
So if you actually just search on LinkedIn,building something new under people, like
there's actually some interesting, like, peoplethat have sold their company that are actually
building like a new company and stuff.
Fascinating.
Yeah.

(45:05):
We've gotten some literally in the last month,we've had five, ten companies reach out on
LinkedIn because they started to hear aboutwhat we're doing.
That's so helpful because people see this andit's that's an interesting thesis.
I wanna talk to that person.
Yeah.
It's an excellent question.
And my answer that I always share is deal flowis about relationships.

(45:33):
It absolutely is about relationships.
And at the stage we're investing, if I readabout a company on the Internet, I'm way too
late.
Right?
If they've already gotten an article aboutthem, their valuation's, you know, way beyond
where we wanna be putting money to work andit's way So what that means is we had to build
relational connections between the right dealflow sources.
Demo days is fantastic.

(45:54):
We've got a partnership with an acceleratoractually.
And so we worked out that we can get propriety.
It's called Ocean Accelerator based out ofSouthwest Ohio.
Cincinnati specifically.
They're very excited about the Bengals.
So they have a great once a year acceleratorprogram that they do and they get about, I
don't know, a couple 100 applications a yearand we get proprietary access to the companies

(46:15):
on the other end of the accelerator program.
So that gives us really great deal flow that'struly proprietary and as a fun one, that's been
phenomenal.
Especially if get them you when they start thecohort, if you can maybe work something out
where you can give them some extra feedbackthat gets you access before it gets like too
oversubscribed Yeah, at the demo

(46:36):
you gotta find ways to kind of break out of thenoise, right?
Non consensus is an overused term, but it's alittle bit right.
The other thing that we didn't get, we reallyhave flown through here.
The other thing I didn't get the chance to talkabout is what we call our Venture Partners
Programme.
So when we were building this fund and we werekind of focused on this sort of thesis around
the founder well-being, I got some very realand harsh feedback.

(46:58):
Helpful, harsh isn't a bad thing of, hey, ifyou can't help a founder build a business as
well, you're not gonna be that helpful to them.
Right?
And so what we did is we built the VenturePartners program.
This is the simple way to put it is these areex founders.
These are people who've had successful exitsand are at a point where they really wanna move
into helping influence the next generation.

(47:20):
And so what we have done is we've actuallyincentivized them through a portion of our
carried interest in the fund to bring us dealsand then to work with those companies as the
venture partner on the deal.
And so what does that it's been phenomenal inhelping the businesses grow.
But the other thing we didn't expect Joel, wasthey've been phenomenal sources of deal flow

(47:41):
because we have incentivized them to bring usthe best companies that they see in their own
ecosystem.
So they're in Boston and Washington DC andBoston, Texas, Denver and Nashville, etcetera.
The list goes on.
So what I would say is be creative.
Yeah.
We've tried really hard to do with our fund islet's not just do what everyone else has done.

(48:01):
Right?
Change the structure.
Figure out how you're gonna put money to workin different ways.
You know, it's not about just holding onto asmuch money as you possibly can.
If you do well, you know, even if you give someof that away to others who are supporting you,
you're still gonna be really happy financially.
But you have to create avenues and pipelinesthat are unique and creative.
So that venture partner deal flow source for ushas been through the roof.

(48:25):
Absolutely through the roof.
Be creative with it.
No, it's really helpful.
We got a couple of quick questions.
You got maybe a couple seconds, Mark, for oneor two questions.
Hi.
Hi, Mark.
Thanks for sharing.
I mean, was amazing to hear your story of goingfrom literally zero to 10.

(48:45):
You know, and the syndicates.
I'm kind of similar.
I have a consulting background.
And it's been on my back burner for a while.
And I you know, this is something it was soinspiring to hear you.
My question there, you know, was I looked and Ialso love this venture partner idea.
I think I might steal that.
Saw your team and you know, your team is fullof wonderful people.

(49:07):
I mean, I haven't gone into their backgrounds,but amazing, amazing on the venture partners.
I think that's a great way to kind of spreadyour network.
Question is, you know, your portfolio is verydiverse.
So what is your connecting thread or what iskind of the you know, how do you unify that
portfolio?
Yeah.
Wonderful question.
And this is gonna come back to our venturepartners.

(49:27):
Please do steal the idea.
I think it's phenomenal.
I can't believe everyone does it.
Yeah.
So the threads are stage.
So we're really intentional about where wewanna invest and targeting a specific ownership
percentage.
So we really like to hit about 5% at a seedstage.
And so with a $250,000 check, that means wedon't wanna go much over $5,000,000 pre money

(49:49):
valuation.
So we're really intentional about the stage.
We're very intentional about the geography.
Listen, I think there's a huge decentralizationhappening right now.
I think the number I saw was five years ago,Silicon Valley represented north of 80% of
capital deployed.
That number is down below 35% today.
Right?
You can go look for a deal in Silicon Valleyand you might believe that's where you're gonna

(50:11):
find the next unicorn.
You probably will, you're gonna pay probablyfive x to what you're gonna pay here.
Right.
You you pay premium right from, you know, thepre seat and seat.
People talk in two digits and they're like backof the napkin.
And I'm like, I'm not sure I see the value.
Pre revenue, using $25,000,000 pre money preseed.

(50:31):
Yes.
I couldn't believe it.
I mean, I could not believe it.
And so wonderful business, wonderful founder.
It's just not a match for us.
So geographically, that's the other component.
But here's the kicker, right?
Again, how do you support an ecosystem?
We want to be very agnostic and very diverse.
We wanna provide our LPs an extremely diverseallocation to a number of different industries.

(50:53):
So we don't say no to any companies coming inbut what we do is we use our venture partners.
So if you don't know the venture partners aswell as I do but they span different
industries, agriculture, healthcare, education,financial services, the list goes on.
And so we've specifically curated this list ofventure partners to help us as a diligence

(51:14):
component.
So when we look at a company that's in thefinancial services industry, we've got a guy
named Myers DePuy who has founded two andsuccessfully exited two financial services
companies.
So we'll bring the business to him and say,Myers, does this make sense?
Here's our diligence.
Here's our memo.
Here's our financial analysis.
What are we missing?
And so it allows us to be experts, Anu, in away that we don't have to know the industry

(51:37):
really intimately because we can tell partnersto be that industry expert for us.
Right.
I I can see that diverse.
I can see that you've been a consultant.
That's totally the consulting mindset.
You know, I used to be with AX.
I mean, you always bring in the SME.
Right?
And that that's what you're doing.
You got it.
You got it.
She she got me, Joel.
She she You rock on.

(51:58):
You rock on, Mark.
Thanks, Anuj.
That's great.
Appreciate the question.
Mark, you got a second for one more questionfrom John?
Absolutely.
I got plenty of time.
Alright.
John, do you want to shoot?
Yep.
Thank you for your time in advance.
Right?
So as I mentioned, I'm I'm looking into deeptech and specifically on the space industry.
By chance, recently, I'm getting involved in avery organic way of communication and

(52:24):
engagement with very senior folks who areworking on very big deals.
Okay?
They're serial entrepreneurs.
They have broad companies to to to the public,you know, 15 or 16 companies to the public.
People that have discussions with Elon Musk andand, you know, the likes of him.

(52:44):
Right?
How do I reach so there's a challenge here.
I don't have much experience on the VCecosystem.
I'm learning because of Joel's program.
How do I reach VCs, venture capitalists, orfamily offices that have deep pockets and they

(53:05):
can write substantial checks?
Right?
I don't know if I can reach Tiger Global.
I can I don't know if I can reach Sequoia?
But I'm getting involved with some seniorpeople, and I have to be very careful because
every step that I take has to be credible andreputable.
And I cannot make mistakes.

(53:27):
Right?
I cannot have to show that I'm knowledgeable,and I have to educate myself as much as I can
so I can provide added value.
They're trusting me now because it's donethrough reference, and they like my personality
and how I speak to them and how I engage them.
But then again, to in order for me to addvalue, I have to showcase, you know, what I can

(53:49):
do for them.
Right?
So Yeah.
How would you approach that?
Or if you have you ever come across a big
deal I'm like stressed out, Mark.
You can't handle within your your yourportfolio and you you reached out somewhere
else.
Yeah, man.
Wow.
It's a phenomenal question.
I would contend it's the question that reallyevery investor is trying to answer for

(54:11):
themselves.
Right?
I mean, Joe, I saw you nodding along.
Right?
It's like, I would love to be doing deals withsome of the largest funds in the world.
Right?
So, John, I don't have I'm not the sort ofperson who pretends to have an answer to every
question.
I don't have the answer.
I'm working on it each and every day.
A couple of things I wanna echo that you saidthat I deeply resonate with.
Taking each step and doing it in an excellentway, that is the single one thing you can

(54:36):
control, John.
Doing every action you're taking, doing it in away that's honest and forthright and excellent.
And if you continue to do that, it sounds likeyou're already catching the attention of some
really serious players.
Yes.
Those serious players
And by chance, it's not really I don't havethat experience, but it's just by chance, my

(54:56):
personality.
Well, just don't know
what to call them.
But yeah, by chance.
I don't really believe in coincidence all thatmuch.
I think it's just, John, you're puttingyourself in a position where you're saying it's
by chance, but it's because you've put yourselfin that position.
It's because you've done XYZ.
I don't know your whole story, but you've putyourself in that position to be successful.

(55:18):
So keep taking those steps forward.
We just had, listen, I love to do a deal withAndreessen Horowitz.
Three years ago, I had no idea.
I don't know how to get ahold of him.
One of our portfolio companies we just investedinto a year ago, one of our very first
investments just got contacted by AndreessenHorowitz.
And so now they're going to raise a series Aand we're going to participate in that

(55:42):
hopefully.
And he's going make room for us because heloves us as an investor.
And Andreessen's going do it.
So I've now got a direct line of communicationinto a really big venture capital fund, right?
That was nothing that I did But we justcontinue to do the thing that we know we can do
which is invest in entrepreneurs in a reallygreat way.
So there's no silver bullet here.
And I think that's a message to everyone,right?

(56:04):
Like none of these things happen overnight.
It's just continuing to do the little thingsreally, really well.
And then as those culminate, they turn intoreally exciting things.
So I'm sorry that's not a great answer, butit's kind of the best thing that I got.
So what would be a persuasive tactic to reachout to Horowitz or I don't know if I'm even

(56:24):
pronouncing it correctly or to Sequoia or TIGOGlobal?
What would be a persuasive tactic to reach out?
Joel, I'll let you answer.
I'll go first.
Phenomenal investment opportunity.
Yeah.
Okay.
I mean, so you get judged on your deal flow,right?
And I think two things that have helped me ismaybe not focus on Tiger Global right now.

(56:49):
Focus on, you know, investors that you know,you know, and people that you have good
relationship with good relationships with,because those people that you know, probably
also done the same thing.
They've also just tried to build a lot ofgoodwill.
And two things that have worked for me istrying to figure out what somebody needs,
right?
So maybe somebody that knows Tiger Global,intros away, maybe four degrees farther away,

(57:18):
they need help with something, right?
And then you can identify what they need helpwith.
Maybe they're looking for some type ofinteresting deal and you have that subject
matter expertise and you've been able to kindof attract that type of deal.
So when you identify what somebody needs, ifyou can provide that solution, that's a first

(57:39):
step of building goodwill.
And then I think if you can do that with enoughpeople, you've built some friendships.
And then I think what you can do and I've donethis with Mark as an example, right?
Like I try to just connect people and I thinkthat is a huge undervalued currency because
then when you can connect to people thatreally, really get a lot of value from meeting

(58:00):
each other, those people feel that they want toconnect you with someone else.
And recently there's been a very, very highprofile investor that I got introduced to.
And I met them, we had a good call, but I knewsomebody that really, really could add value to
that investor.
So I just put those two people together.

(58:20):
And I didn't really, you know, expect anythingor get anything out of it.
But I was just happy that like those people gotto talk because then there is a lot of
electricity there.
So I think two things is, you know,understanding what problems people have and
like what they need help with.
And then if you can connect them with someone,even if it's not yourself, that will build a
lot of goodwill.
It just takes time.

(58:41):
But I wouldn't focus on Tiger Global, trying totrying to, you know, get on the call with
Tiger.
Because if you don't have a really hot deal,then it wouldn't matter.
But you can you can work towards that throughjust the the the relationships compounding over
time.
Well, let's say if you do have a hot deal andyou don't have the experience, you need a

(59:01):
support system or a syndicate of people thatcan actually push forward that deal.
Because obviously, they're not going to take myword for it.
But they're going to be actually, we canactually leverage our network or the people
that we know and we trust to push it forward.
Is that really the best approach?

(59:22):
Because that coincides with your the ability tobuild the relationships and connect the right
people together and kind of push thingsthrough.
Yeah.
Is that what you mean, Joel, I think that'swhat you were intending to say, right?
Yeah, I think Mark had a really good examplewhen he was starting out, know, when he had a
couple small syndicates and built a smallcommunity, maybe do a couple small deals and

(59:45):
build a little bit of a track record.
And I think that's a good way to kinda havethat slowly compound over time.
So I think, yeah, if you have an interestingdeal, even if you don't invest or if it's not a
huge investment, maybe you write a memotogether with a few friends you guys all chip
in together and do a deal together.
So I think that can kind of slowly build thetrack record because maybe word will get around

(01:00:07):
at some point to
a more
seasoned investor that, oh, wow, that was you,John, like you did that deal, That's actually a
pretty good deal, you know, and then that'skind of how you can open up those discussions.
So it goes back again to the deals, right?
They're like, what did you And invest in?
I feel what Joel said, which is, you know,John, I get a sense that, know, you've got some
big names on your mind and that's awesome.

(01:00:28):
But you can't go outside of what your currentnetwork has.
Right?
And so I wouldn't be so hyper focused on I haveto get to x y z.
I'd be focused on what you have.
And Joel, I'm gonna just I gotta give Joel justhuge props right now.
I have never met another investor that is moregenerous with their network and relationship
than Joel.
And what it does to create network effect andgoodwill and frankly more benefit because

(01:00:55):
people know Joel and they're like, well, Iwanna introduce people to him because he does
So the same don't hold I try to operate in thesame way and use Joel as aspiration here.
But John, don't hold your networks tightly.
Right?
Use them broadly and generously.
And what I think you'll start to see is thosenetworks, those introductions to bigger firms

(01:01:15):
that you wanna get ahold of, those will startcoming back to you many times over.
So be generous with that.
No, I can see that Joel has been extremelygenerous and that's why he has such a, you
know, such a success of bringing in the rightpeople into the cohort and teaching us, know,
what what, you know, all their, you know, howthey they move from one place to the other and

(01:01:38):
how they became very successful as as asventure capitalists.
So I think that he's been doing a great job onthis.
One last question that I have and it's a yes orno.
Do you have and it resonates what Joe wasmentioning before.
It was like he was doing my pitch I waspitching an entity company.

(01:01:58):
And I was explaining exactly the the you know,the VC method of valuing a company, right and
it required a PE ratio and it also requiredthe, the EBITDA and all that stuff.
So, there something that you have beenleveraging in the past that has been extremely
successful in order for you to value a companybecause we're getting so many pitch decks, and

(01:02:22):
everybody has a crazy valuations.
So how can we narrow it down, we have to do ourwork on our own and figure out does this
valuation make sense?
Right?
And there's a formula for that.
Did you leverage your formula like that?
Or
You lied.
This is a yes, no question, but I don't think ayes or no is sufficient
to Do you have an Excel spreadsheet that thatdoes that?
Yes or no?

(01:02:43):
Yes.
Okay.
End of the conversation.
All
right.
I love this topic because like I said early on,I was a math major.
I'm a finance guy kind of at my core.
Yeah.
So this is really what I focused on in mysecond year at Booth.
I took some of the most comprehensiveentrepreneurial finance classes in the world.
I use a financial model.

(01:03:04):
I'm happy to share it with you actually.
Please.
Please.
Absolutely.
I don't wanna share too broadly but this groupI think is we're fast friends now.
It's a probability adjusted present valuecalculation.
Excellent.
So you can probably parse through what thatmeans but when you get the EBITDA projections
over a five, seven year period, obviously eachof those cash flows are worth something today.

(01:03:25):
The probability adjusted component says, well,what's my probability of success or my chances
of failure?
And so even if I did a present valuecalculation to present day for those cash
flows, I still have to give that an adjustmentbased on the chances of success.
Correct.
And so what we do is it's very comprehensiveand I'm right there you.
We do our own assessment of every company weinvest into.

(01:03:46):
And if they're raising on a, you know, a$20,000,000 pre money series a or seed for
example and we really value them at 8,000,000,we're not gonna invest in that company.
And we've had a number of examples where weshare this information with our potential
investments and they adjust their investmentvehicle accordingly.
There's a lot of made up numbers going on outthere.

(01:04:08):
So the more we can use formulas and actualmath, I think the better.
So get your email from Joel and I'll send itover to you and happy to jump on a call to walk
through it as well.
I think you'd find it interesting.
Oh, that will be perfect.
Thank you so much, Mark.
I really appreciate it.
I'm looking for something like that so I canassist very quickly whether the ask makes sense

(01:04:31):
and, you know, based on the valuation thatthey're they're coming up with.
Right?
So and then then I can actually decision.
No.
This doesn't make sense.
You wanna work those numbers better so we cancome back to the table and discuss it further.
Yeah, let's do that.
This way I have some kind of justification, youknow, as to why I'm pushing back and saying
okay this valuation does not make sense for me.
Cool.
All right, great.

(01:04:52):
Well,
Mark, would you share would you share yourspreadsheet with me too?
I'll send my email to Joel.
I love it.
Yeah.
Joel, give me Joel, if you can give me tell mewho I should send it to, I will send it.
Probably, need a call to go through it, team.
So we'll And we'd love
to have you back so you can walk us through it.
It'd be awesome if you would come back.

(01:05:12):
Oh, man.
Want We didn't if we didn't drive you crazyyet, you know, we would love to.
You
know, I'm saying we very much appreciate yourtime.
Very, very much.
We know that you're taking a lot of time out ofyour workday, and it's very busy, and we
really, really appreciate it.
Thank you so much, Mark.
That's great.
That's great.
Alright.
I love you, Joel.
Time
for time for time to go to bed, guys.

(01:05:33):
But hey, Mark.
Thank you so much, man.
Really appreciate it.
Sorry for holding you up late, but we'll catchup soon.
Hey, I'll see you, a lot of you actually in thenext few weeks too.
Love it, Joel.
Great to see you.
Hi, Wonderful to meet the team.
It sounds like we're going to talk again soon.