The Founder's Journey: Risk, Resilience, and Rewards | Sam Silvey and Jonathan Bragdon - Spectruss Speakeasy Podcast

Episode Transcript
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Speaker 1 (00:00):
There's always risk early.
That's part of what you'regetting the multiples for.
We're not sure if this is goingto work or not, but we're going
to step in.
But what you do want to leaninto is the founder.
We have to be able to havediscourse, disagree and still be
friends.
Unless that remains, we'rescrewed If everyone is more and

(00:22):
more reliant on the AI, pickyour model, pick your LLM to
answer the questions, whocontinues the job of generating
the actual answers?
And we were flying.
Our costs were not level butthey were going up gradually,

(00:43):
but our revenue was just goingcrazy.
And then, when that that crashhappened, you lose half your
customers.
Then you're just chasing,trying to get.
It took nine months to get itback in the black.
Like it's easy to talk aboutwhat you know.
Like I've been talking likeyour ear off on some of this
stuff.
Yeah, but it's been great.
What am I missing?
You know what?
That?
That's a an amazing prompt foranybody.

(01:03):
I missing you know what?
That's an amazing prompt foranybody.
It should be more like we'rehaving a beer, lunch, coffee
yeah, the way we talk anyway.

Speaker 2 (01:13):
That's how.
As I say, that's how wenormally talk.
It's just before noon.
I felt bad having alcohol.
I mean, I don't personally feelI feel judged if I'm drinking a
whiskey right now.
But I would probably sip awhiskey, truth be told.

Speaker 1 (01:24):
But if I mean anybody watching a podcast, or maybe
it's just me, but I kind of wantto be sitting right there at
the table.
That's kind of the point.

Speaker 2 (01:34):
Yeah, let's hang out.
It's like a fly on the wall,you know sort of thing.
But I was looking before thisand I mentioned talking out
there, the LinkedIn and thinkingback to when we met and then
saw all the LinkedIn experienceand past and I didn't realize
one of the early things you didwas websites or marketing with
e-commerce, and then you exitedthat, right, and that was like a

(01:56):
couple of years.
And then you got into Tricycleand that was a long like what
nine years or something likethat yeah, eight years, and that
was a big exit.
What nine years or somethinglike that?
Yeah, eight, eight years, andthat was a big exit.
Though, was it shaw?

Speaker 1 (02:08):
or yeah, I, I was out before the exit, but it did.
It did exit to a berkshirehathaway company okay I had gone
up, moved on the next thing,but we had built it and it it
changed an industry.
You know, I think, uh, by thetime it it exited, I think all
the, you know, every founder waswas out doing other things at

(02:29):
that point, because it was, itwas just on its own, was going.

Speaker 2 (02:32):
So and what I still don't know.
I know it was part of carpetindustry, right?
Yeah, it was so carpet.

Speaker 1 (02:39):
The short summary of it is it was dematerializing a
lot of the physical nature ofthat industry, particularly in
selecting product right.
So now it just seems almostsilly as a concept.
But it really did change theindustry because now everything
can be digital and we weresimulating manufacturing

(03:01):
processes and fibers and colors,and so carpet and fabrics and
you know all kinds of floorcovering and you know you could
look at it online.
We had like these amazing papersimulations that were color
calibrated.
You could put them on top ofthe carpet and they would
disappear.
And what we were going afterwas interior designer,

(03:22):
specifically commercial interiordesigners.
Big buildings have this biglong specification process and
it was all physical.
Send me 40 samples, send me 60samples, it still happens.
Wow.
But this was a way to do alittle bit online, do a little
bit digital, do a little bitpaper and then come up with your
four or five final ones andthen that becomes physical.

(03:42):
So we were cutting a bunch ofwaste on that side, just being
able to visualize what was goingon.

Speaker 2 (03:51):
We had room scenes like all that.
This is what 20 years ago, yeah, so what?
2002 to 2003?
We started, yeah, man.
So that's like perfect timebecause that's right on the edge
of like the internet's gettingfast enough.
We've got what aol dial up.
We're probably getting intocable, like comcast is, is
probably.

Speaker 1 (04:04):
It was past AOL.
I mean this is, you know, theinternet was full bore, you know
, at that point.
So we really had we had the.
We had the advantage of thatkind of platform, but it was
still a lot of softwaredevelopment.
We actually there was a companyin the UK that had some real
hardcore technology companycalled Appso and their founder,
their founders and two of usfounders.

(04:26):
We got together and built a lotof this together.
So it was really, really cool.
But it was great timing untilit wasn't Because 2008, 2009.
Housing market crash yeah, welost half our customers, oh wow.
And we were flying.
Our costs were not level butthey were going up gradually,

(04:48):
but our revenue was just goingcrazy.
And then when that crashhappened, you lose half your
customers and you're justchasing trying to get it.
It took nine months to get itback in the black.
It was awful.
It's one of those anybody who'sbuilt a few businesses.
You go through a cycle whereyou end up having to do all the
really hard stuff Personalguarantees on the debt I'm

(05:12):
getting judgment on my headalmost seven figures.
I had to lay off half thecompany in a day and a half,
which was just gut-wrenching.
I still keep a couple textsfrom people that responded to
that in some really awful ways.
But I keep it just to kind ofremember, just to keep that yeah

(05:33):
, raw, it was an awful day, butbut then get it back in the
black and it kind of goes andmoves along and that was when a
lot of that shake-up happened.
But we ended up building itback and went up and it was all
right, it ended up okay.

Speaker 2 (05:46):
So the layoff thing happened to me with Spectris
during COVID because a lot ofthe customers couldn't keep
their doors open.
Same sort of thing, similarsort of thing.

Speaker 1 (05:55):
Definitely weren't the only one.

Speaker 2 (05:57):
Yeah, I remember having to and like that stuff
still haunts me.
You know, like having to laypeople off is one of my least
favorite things.
I couldn't think like I'drather sign up for like
waterboarding than have to gothrough that, you know, because
you think it's not just them,it's their families, it's the
people around them it affectseveryone.
I mean was that the first timeto ever have to do that.

Speaker 1 (06:19):
Yeah, at that kind of scale for sure, I mean, and
it's.
I know there are people who runbusinesses, build businesses,
who it doesn't affect as much.
I don't know whether they'rejust purely narcissistic.
Don't think about therelational side.
It's purely trans-actional,like we were talking about
before.
But if you have any kind ofrelational bone in your body or

(06:42):
you think people are the oneswho are actually building what
you're and solving the problemsyou're trying to solve and
getting to the next level, it ispersonal when that happens and
it's really, really difficult,especially when you're that
small.

Speaker 2 (06:54):
I mean, it's still a small business, you know, like,
how many employees did you haveat that time?
Yeah, there were.
I think there were 30, over 30.
Yeah, 30, over 30.
Yeah, yeah, so it's still smallenough to where it's intimate,
it's not like you're 500, 1,000people and they're in a
different city and you'resending them.

Speaker 1 (07:09):
Yeah, and it wasn't like a remote you know type of
business, like we knew everybodyknew everybody's family.
It was rough.

Speaker 2 (07:15):
And it's brutal.
Yeah, you guys bounced backfrom that and then wind up
selling it at some point.
Yeah, at some point.

Speaker 1 (07:22):
Yeah, so it kind of went.

Speaker 2 (07:25):
And so did you have background, because I saw e-com
and web design on the first one,so you have some background
like coding yourself.

Speaker 1 (07:31):
No, no, my background did math, physics and some
industrial engineering atGeorgia Tech.
I went to Covenant as well,okay, and then MBA at Owen, at
Vanderbilt, Okay.
So my background was, you know,technical in the sense of
industrial engineering, whichit's hardly a thing anymore yeah

(07:52):
um, but you know optimization,you know how do you make things
more efficient, how do you dobetter processes, and you can
apply that you know all the waydown the line.
One of my, my founders youprobably remember Michael, one
of my founders at Tricycle was avisual designer, okay, and he
ended up at IDEO running a lotof their global design stuff and

(08:15):
we were really good at coveringeach other's blind spots along
the way and so design thinkingand that whole process, even on
the design side, also affectedme.
So I was sort of theengineering type and he was the
designer type and that was apretty good.
That was a good pairing.

Speaker 2 (08:29):
You really need both, because that's kind of touching
on that user experience, userinterface, you know, and it's
not more than just programming.
You know, it could be justbringing logic to design.

Speaker 1 (08:37):
Yeah, and the company that helped us get that going,
the one out of the UK that weacquired and pulled in.
Those two founders were alsopaired the same way Designer
technical.
It was really interesting theway that and.
I see that pattern over andover again.

Speaker 2 (08:54):
Yeah, computer programming school, which I
dropped out of.
But they were trying a newthing, and this was at UTC, and
it was pairing up programmers tomake them work in small groups,
mainly because they found thatprogrammers became kind of
socially inept.
They'd be, you know, theybasically hide behind the scenes
, you know and they wouldn'tcommunicate.
And so it became a real problemwhenever you try to scale

(09:16):
certain programs, build teamsand especially we're trying to
launch quickly.
The communication was terrible.
But I remember being part ofthose little groups and being
like I never thought I was acommunicator, but I think I'm a
communicator after working withthese other programmers, like
none of them really wanted totalk or like communicate or work
, and I had a real weird senseof arrogance too, even though
we're all in the same class inprogramming school.

(09:37):
It was like I don't know.
I just remember thinking likethey were real hardcore gamers
and I wasn't.
I was more like an outdoorsytype.
I see why this would makecommunication kind of a
challenge.

Speaker 1 (09:48):
I would call you a translator?
Yeah, maybe so, because and Ilearned this this is more of a
hiring thing.
When you're trying to put ateam together, you can hire
T-shaped people T-shaped meaning, and I think this may have come
out of IDEO as well.
I can't remember exactly whereI learned it, but somebody who
has a deep concentration, skillset, expertise, is the deep.

(10:13):
The top of the T, though, isbeing able to communicate and
understand all the other deepskill sets that are there.
So, having that, if you have ateam of T's, that communication
is there and it covers the blindspots.
If there is no top to the T,you're just a bunch of little
silos.

Speaker 2 (10:34):
Yeah.

Speaker 1 (10:35):
There's the blind spots don't go away, even if the
skill sets are there.
So you were T-shaped and you'reable to you know, communicate
and translate across all theskill sets, which is not common,
yeah, especially in developers,I would say.
With tech, it's really uncommon.

Speaker 2 (10:53):
Somehow, it could never get me a job, so I just
had to start my own thing.
That's it, unemployable.

Speaker 1 (10:57):
I'm the same way.
Yeah, unemployable.
I'd do the same thing.

Speaker 2 (11:01):
Well, I mean, according to the list, I
wouldn't say I guess just meantmore to be like a founder, a
co-founder, because I mean, soonafter that you went to what was
variable next, or I know it wassomewhere along there that one
stands out to me.
And then yeah, um, there aretwo v's variable.
And then very, yeah, and yeah,so, so variable.

Speaker 1 (11:19):
Um, a couple people that I knew were in and invested
in that company and very, verysmart he's a NASA engineer, he's
literally a rocket scientist,but in sensors and he did a
bunch of stuff there and he's inChattanooga and he built these

(11:39):
sensors that did all kinds ofamazing things and I came in
more on the business developmentside but also had some color
science background too becauseof the stuff we did, and so they
started going into color moreand I had a pleasure working
with George and his team forprobably a little over a year
and then jumped over SheldonGrizzle if you met him, I've met

(12:03):
him before.
It's been a long time.
He's part of the origin storyof CoLab here in town.
That Sheldon Grizzle if you methim I've met him before.
It's been a long time.
He's part of the origin storyof CoLab here in town.
That's right.
I was on the board of Createhere that helped get CoLab
started.
It was basically bringingtalented artists into town to
try to reanimate streetscapesand then that evolved into well,

(12:24):
can we teach people to buildbusinesses and start businesses?
And sheldon got involved atthat point.
Um, and I was just on the board.
I wasn't one of the you know wehad.
You know josh and helen canlook those that they're they're
the ones who drove that wholething way back in the day.
But sheldon and I known eachother since then because we
bonded around the you know ceCEOs and relationships and how

(12:47):
CEOs operate.
It's a very lonely place tobuild a business.
So we created CEO roundtablesand then started this thing
called Springboard.
I didn't but Colab did to train.
It, turned into Co-Starters andall that.
So Sheldon and I had alwayskept in touch and we bonded over

(13:07):
soccer too.

Speaker 2 (13:08):
That's right, I forgot about the soccer, yeah.

Speaker 1 (13:14):
But he told me about a little company in town that
was building.
There was basically four peoplethere and so I came over and
helped with that.
We built that out.
It was a services company.
It was doing web platform stuff, data stuff, and got into data
science stuff, got into IoT,which variable was product stuff

(13:36):
, hardware's hard, and sothere's some really, really
smart people in that.
That grew quite a bit and overtime, sheldon I I think we we
both had I shouldn't speak forsheldon, but I have vocational
add.
I just I'm admitting it yeah andso I like working on a bunch of

(13:59):
different problems, likefocused for and then being able
to switch.
That's ideal when you'rebuilding.
The ideal kind of way to fixthat is have a bunch of
different companies that thepeople are building but you get
to help work on the problems.
So the platform Sheldon and Istarted building what's

(14:19):
basically a studio inside thatcompany, so doing the Google 20%
time and pulling smart peopleonto problems, and then built
little products and so we did afew companies in that and then I
wanted to build a fund toaccelerate a lot of that out and
then we sold out before thatand I just couldn't get it out

(14:41):
of my head.
So that's what brought me tofiguring out capacity.
I mean, how hard could it be tobuild a venture firm Right?

Speaker 2 (14:50):
I mean, it seems like it's going well and I don't
know if I imagine websites up todate, but already had 17
companies it sounds likeinvested in, or is it more than
that now?

Speaker 1 (14:58):
Well, it keeps growing.
Yeah, but yeah, the first fundhad 14.
We, the first fund, had 14.
We were going to do 10.
And we ended up recyclingenough capital to do more out of
the same capital.

Speaker 2 (15:11):
So that worked 50 plus million right now right.

Speaker 1 (15:16):
No, well, so the way that we operate a very small
fund, one a dirty little secret,don't tell anyone.
It's a lot easier to multiply asmall fund than a big fund, and
we can get into the mechanicsof that because that's, that's
geeky.
But um, we also partner with awhole bunch of other types of

(15:36):
capital, so we'll stack othertypes of some non-dilutive or
types of debt grants, you know,short-term financing, all kinds
of things to help thesecompanies to grow quickly.
So the equity part coming outof the fund is a few million.
It's not $50 million, but themultiplier effect is pretty
massive.
So we're having fun with that.

(15:57):
Maybe we'll get to a $50million fund, like even this
fund, the next fund is not goingto be $50.
I want to keep it pretty smallGotcha, but the multiples you
know.
Next fund's not going to be 50.

Speaker 2 (16:05):
I want to keep it pretty small Gotcha, but the
multiples I imagine come fromsmaller companies.
And what's the sweet spot?
Like 500 to a million is whatyou're looking to start at.
Yeah, well, we'll do as far asinvestment-wise, yeah, like
where they're at.
Revenue-wise, like, at whatpoint do you want to jump in?
Typically, yeah.

Speaker 1 (16:20):
So we're going to start to get a little contrarian
.
I'll tell you a little bitabout what we're doing, because
and this was not cool at all in2021, when all valuations were
going crazy and everything wasgrow, grow, grow as much as you
possibly can, and we were likelet's find companies that are

(16:41):
capital efficient but can growreally, really fast.
So they've got options.
So you don't want to be raisingmoney the next round to survive
.
You want to have an option topotentially slow down if you
need to and then figure out howto kick into the next gear,
because growing a company isjust a series of S-curves, so we

(17:01):
want to invest in that firstS-curve, a little bit of revenue
10 to 20 grand a month, maybe,and that's less about having it
figured out than it is.
Two things One, somebody ispaying to solve the problem that
you're solving right, it's abusiness, not a hobby.

(17:24):
But the second thing is justmaking sure that you know
somebody's uncle isn'tsupporting someone's
entrepreneurial habit.
Not that that's terribly, youknow, it's not that that's super
common, but we do see a lot of.
There are a lot of foundersthat are just obsessed with, you
know, the product side or theidea of entrepreneurship, right,

(17:46):
and they read all theTechCrunch articles and get
mesmerized by that, and they'renot obsessed with the problem
itself, right, and so that'sjust one way to validate that
they're actually solving aproblem, even if they haven't
operationally figured out how toscale it yet.

Speaker 2 (18:03):
Yeah, Is there a certain type.
So I noticed that you're kindof focused geographically in the
Southeast.
So you kind of had some like asI was reading more about it,
like in some ways you kind ofniche down and be more focused,
which I imagine if you just lookfor businesses between 10 to
20,000 a month recurring revenueor revenue, it would be massive
amount of businesses you havethe opportunity to work with.

(18:25):
So imagine you're trying tofocus down to get it kind of
yeah, there's a lot.

Speaker 1 (18:29):
We have a lot of venture funds focus.
There's some kind of veryspecific focus.
Most of the time it's avertical, like we're just doing
health care or we're doingdual-use civilian military
device stuff or whatever we'redoing CPG we're focused tightly

(18:51):
on the business model itselfbecause we want, line of sight,
get a little bit of revenue.
12 to 18 months.
Could it break even?
Can you accelerate?
Can you get to a million inrevenue?
Could it break even?
Can you accelerate?
Can you get to a million inrevenue?
Whatever point that is,whatever that next point of
equilibrium is, they give yousome optionality.

(19:11):
So the model itself is whatmatters.
We don't really care what thevertical is.
Obviously it's a lot of tech,some SaaS.
That's the only way to get thescaling there.
We've done a couple packagedgoods companies that have some
really high margins that allowit to scale.
We did a services company thathad a platform behind it that
could scale.
So we've had some you know.

(19:33):
So we're agnostic on thevertical is what we say.
We are highly focused on thesoutheast, not just because we
love the southeast and we livehere, but because it just makes
more sense.
If you're focusing on earlymultiples like to get them,
because building a venture fundis about the multiples yeah
that's it's not.

(19:54):
Did you sell it to google?
You know it's well.
How much did you actually rightmultiply the money when you
sold it to google?
So that's just an equation ofentry point.
Get in earlier, you're going tohave a higher multiple.
It's also a function ofdilution.
How much money do they actuallyhave to raise to get all the

(20:18):
way through the cycle?
The more money they have toraise, the higher the bar is to
get the multiple that you need.
So we try to go into companiesthat aren't chasing the alphabet
.
They're literally hoping formaybe one more big round and
that's all it takes to go to themoon, and that's a little
different.

Speaker 2 (20:39):
Yeah, Now do you all bring any sort of like you know
board, help, advice, you know,maybe even systems, anything
like that, or is it more likemoney and they have a plan?
Or how hands-on are you workingwith them whenever you do that
investment?

Speaker 1 (20:53):
We like to invest in founders that they're going to
figure it out.
You know they're just whetherit's a chip on the shoulder.
They're just obsessed with theproblem.
We love there's these littlethe founders.
Most of it They've got to gobuilding a company.

(21:14):
It's a contact sport.
First of all, we talked aboutdamage right before this.
Like you are not going to builda business of any you know size
without taking some hits andgetting getting injured.
So you've got to be obsessedwith solving the problem, not
just the outcome.
So you can you can figure outthose founders pretty, pretty

(21:37):
quickly in the conversations andthere's some patterns to it.
Like you can go look at thedata and play it out.
Like you know, women tend toperform higher than men.
We've invested in, you know,founders of color and veterans.
It depends on what kind ofveteran too, like what their
service was.
An interesting one is collegeathletes.

(21:58):
We found college athletes alsolook at barriers and constraints
as a, as the potential.
You know a way to level up SureRight, which is fantastic for
an entrepreneur from a mindsetstandpoint.
Right, and they can.
You know there's a team butthere's also an individual
competitive piece and you've gotto have that as an entrepreneur

(22:20):
.
You're going to take the damagebecause you love the game, like
all that um and so.
So the founders really reallyfirst.
So, um, I lost where what youwere.
I got so excited about thefounder I forgot the original
question.

Speaker 2 (22:35):
You know it's a very important part.
Actually there's a random statI heard the other day in a
podcast where I guess it wasfrom title nine back in the 70s,
an initiative to get more womeninto college.
It wound up.
Now we're projecting by 2030there will be two women to every
man that gets a college degreein the United States and women
now make more than men do intheir 20s.
So in their 20s women are stillmaking more than men do, which

(22:57):
is kind of interesting.
And it led into a whole bunchof psychology behind men and
women and type A and type Bpersonalities and love and
relationship issues and thatsort of thing.

Speaker 1 (23:09):
I'm not.
I mean I'd love to dig intothose numbers because it's
probably.
It probably has a lot to dowith the vertical too, like what
line of business that they'rejumping into, Because that would
be a surprise to me if that wastrue now across the board so as
far as making money in their20s, yeah, so so but, but maybe

(23:31):
I mean, but I like, yeah, I'm adata person so, right, right,
yeah, and it was just somethingI heard from some people on a
podcast, so it could all becompletely fake.

Speaker 2 (23:39):
It may have been ai generated, for all I know, it's
true.
Yeah, possibly this could betoo.
This might just be assimilation.
I'm probably still sleeping in.
I'm still waiting to wake up.
Ever since they started tellingme about black holes, I'm like
nothing's real.
It's a black hole inside ablack hole and, yeah, that
causes some weird uh that was aphysics major man.

Speaker 1 (23:59):
Oh man, I love that stuff.

Speaker 2 (24:01):
There's a buddy of mine that had the dock space
behind mine when I had to slipdowntown and he also I guess
physics was one of his degreesand he went into something else.
He was one of the higher-ups atTVA and like I think he's like
one of the guys they call ifthere's like a major, major
issue and I can tell he's likeway out there, some of this
stuff.

(24:21):
So one time we're at Parkwayhaving drinks and we're only on
like maybe our third drink orsomething like that, and it's
about time to head home and he'sgoing to head back to his boats
where he stays when he comes intown.
Long story short, we startedtalking about atom bombs and
hydrogen bombs.
I was like, well, how would youhypothetically make one of
those?
And like five drinks laterwe're calling an Uber and he was

(24:41):
like been talking for an hourand a half just going through
the details of how you'd makeone.
I was like, well, I was kind ofkidding, but now I'm really
curious.
I want to see how far you cango.
That's a trigger question.
Yeah, he went down the rabbithole and I was like I'm along
for the ride now let's just seewhere it goes.
I love that.
It was pretty interesting.
So, yeah, I don't know if thatdata is real about women, men,

(25:03):
income and all that, but I thinkthe original question was any
sort of like do you think it'snecessary to bring systems?
Like, when you're in this 10 to20 range, do you often give
them guidance, like, okay, youreally need to invest in these
systems to bring efficiency foraccounting or project management
or operations for accounting orproject management, or
operations.

Speaker 1 (25:22):
So the philosophy we take founder drives everything.
We don't even take a board seatwhen we jump in, but we do
value transparency.
So we have online access to thebooks.
We have monthly connects.
Every venture fund will tellyou that they add value.

(25:44):
Most do not.
I would say what we do is helpcover blind spots, which is a
really common thing for afounder.
We also have a reallyinteresting bench of investors
and venture partners.
So, almost to a person, theinvestors in the fund have built

(26:09):
their own business or are stillrunning their own business and
they love this early stage andthey're familiar with it.
So we're not taking money frominstitutions and really just
transactional investors.
Some are but don't want to beinvolved.
But a lot of them love talkingto founders, and so that just

(26:30):
creates this amazing bench oftalent across the board One of
our venture partners.
Interesting talking about women, there's a group it's called
the product advisory collectiveand this is I don't know how
many there are now, but over 120tech execs that are all women.
And this is all over the.

(26:52):
You know all over the worldreally, but you know the bay,
new york, and they are prettyfocused on how do we get onto
boards at Series B, series A,and this is a good way to look
through into really early stagecompanies and for our founders
it's an unbelievable way tocover blind spots and have some

(27:14):
amazing technical excellence.

Speaker 2 (27:15):
Yeah.

Speaker 1 (27:16):
So that's one group.
I'm going to ask about thatdata.
Oh yeah, yeah.
Really, do women earn more atthis point?

Speaker 2 (27:22):
I'll look it up as well after this, I'm curious now
as well.
We'll see, yeah, very curiousabout it now.

Speaker 1 (27:28):
But I think founders trust other founders, yeah, and
so anytime you can get foundersin a room together, it's a win,
because they're always curious,they're going to learn from each
other, they're in the samebattle, very similar battle,
even if they're in differentverticals, and so we try to do
that as well.
Try to get founders together ina room, and some investors too.

Speaker 2 (27:49):
I mean it makes sense , because if you have someone
who's just been, say, a wealthmanager their whole life, I mean
no, I mean they're obviouslyextremely smart, gone through
all that.
But if you're asking them forhow to take your small business
to the next level, it's like,unless you're a founder that's
done that, or maybe an employeethat's been at a high level
through that, you know how dothey understand how you got to
beg, borrow, steal, pillage,burn, you know, to get to that

(28:12):
next level.
Because who's going to give youany ability to take their
business like no one's going toturn that over, like it's
straight up war or even have,even have an understanding of
understanding, takes empathy andrelationship.

Speaker 1 (28:26):
And I tell people I only went over to the dark side
five years ago.
So sitting on that side of thetable, the funding side, it is a
really different place, yourealize.
I look back, even back with allthe rough things that happened
in a couple of my companies.
Investors, venture funds,specifically, have a very

(28:48):
different incentive and I nowunderstand some of the actions
that they took that I did notunderstand as a founder when we
were battling the board level orover decisions and I just was
like I thought they were here todo this and this and they were
really here to do this and this.
But if they're justtransactional and they're just

(29:12):
doing that incentive, it'sreally hard to have empathy with
a founder.
The really good ones do, right,but a lot of the bigger funds
just don't.
It doesn't matter, it's atransaction, right, the
incentives are different.
It's a transaction Right, theincentives are different.

Speaker 2 (29:23):
And that's okay, you know, it's just.

Speaker 1 (29:26):
Founders need to be smart about where they take
their money.

Speaker 2 (29:29):
I think the one thing that's probably hard to
quantify and maybe there is ametric for it, but it's the
emotional attachment to thefounder as well.
It becomes like their child, itbecomes their livelihood.
You mean the business, thefounders, oh yeah their baby?
Yeah, for sure.
It's kind of hard to quantifythat.
For another business that'sventure capital or however

(29:51):
they're raising money, they'reseeing it more as just a
non-emotional a lot of timesnon-emotional investment.
I can see it being challenging.

Speaker 1 (29:59):
It's different Founders.
Most of we go all in so wedon't see a ripcord or some kind
of escape hatch.
It's like this is going to workor it's not.
Right you know and I'm going todie trying let's go.
You know investors can be alittle bit more.
You know they can sit on theoutside and probably have a

(30:20):
little bit more.
You know better perspective.
I shouldn't say better, it's adifferent perspective.
They also couldn't step in andgo through some of the walls
that I think a lot of foundershave to go through.

Speaker 2 (30:30):
Yeah, that's true.
There's probably a sometimesprobably being your baby makes
you make bad decisions.
Like emotional decisions aren'talways the best ones, but it
does take emotion sometimes topush through to that next level.

Speaker 1 (30:45):
Perseverance.
One of my professors at Owenhe's passed away now, but he's
one of my heroes Jermaine Baerhe always said he would sign off
his emails.
Never give up, never give up.
I'm like, okay, that's prettysimple.
There's sort of a throwawayphrase, but over the years you
just hear it over and over andover again and as a founder, you

(31:07):
need that reminder Never giveup.
And then you also need theadvice of you know, don't, you
know, you know, you know, don'trun out of cash, don't kill the
company, never give up.
But then sometimes you have tomake some really hard decisions,
and I think founders tend to bemuch more optimistic about what

(31:32):
is actually happening in thepresent time because they have
to be optimistic about thefuture.
About the future and thepresent decisions that are made
on a daily basis need some kindof, they need some other
perspective on whether this is areally good decision or it's

(31:53):
not a good decision.
You're not going to make 100%right decisions.
You're going to fail all thetime.

Speaker 2 (31:57):
Sure.

Speaker 1 (31:57):
But always making the optimistic decision can kill
you in the short term, yeah, andbeing optimistic and persistent
in the long term is you've gotto have it.
That's where blind spots comein.

Speaker 2 (32:12):
I've thought about that exact thing a lot here
recently.
This last year Maybe it'sbecause of midlife crisis I
turned 40 here in three weeksand it's kind of fucking with my
head a little bit, I'll behonest.
Um, a lot of injuries racing, Itold you at covet.
I got back to racing andstarted racing motorcycles a
different type of racing for meand you know, supposed to have a
back operation, tore my kneemajorly for the third time last

(32:35):
year.
So all these operations I'mskipping and I'm still racing
and it's you know I'm hurtingevery day I get out of bed.
So I'm becoming a little morerisk adverse.
Now I don't really want to takeall the risk.
I can still go haul ass on amotorcycle and still compete at
a good level, but those treesand rocks and everything, I know
that they hurt.
You're starting to look at themand you're not supposed to look

(32:57):
at them.
You're not supposed to look atthem Exactly.
You look where you want to goand if you're looking at the
thing you don't want to hit,whether it's car racing, truck
racing, motor or even inbusiness I think it's the same
way.
Like that analogy I'm finding,and it's been hard for me, like
you know, since 13 years in thissmall business of mine.
Early on, like when we firstmet with the b wall app or hooch

(33:17):
app, you know, and hughhuffington and working together
and we had two other guysworking with Micah Rayburn and
Steve Burkett.
I haven't seen any one of thoseguys.
I heard Micah might be off likein like bricks tied to his
ankles off the coast of Miami.
It was a long story there buthe got in some deep shit from
what I heard from contractors,licenses and stuff.
It went kind of down south, butyou know we were in our mid-20s

(33:42):
to late 20s and it was likejust rolling the dice,
everything, everything was agreat idea.
And you're talking about theoptimism.
You have to be optimistic tothe point of read these stories
and watch movies that's made onlike almost sociopathic level of
optimism, right, like theycan't fail, and those are the
ones that we wind up kind ofmemorializing when you're idling

(34:03):
, and but then at the same timeit can be the nail in the coffin
.
It becomes the people that noone ever talks about, and it
could be the person on the sidecorner you know that's homeless
and they had all these sameoptimistic ideas.
And so now, long story short,I'm getting like I don't really
want to take that many chancesnow.
But if you stop taking chances,you also stop growing.
Because business evolves,industries change, markets

(34:25):
change, people's behaviorchanges.
You know how much marketing andadvertising has changed.
You have to always evolve andInternet of Things is changing.
You know technology's changing,it's always changing.

Speaker 1 (34:37):
And we need people to take risks.
Like the whole, like theindustries are changing, but in
order to actively change what'shappening and to improve things,
you've got to be taking risks.
Somebody's got to be takingrisks.
You're racing.
There's a different racinganalogy that I'd lean on, and
it's more rally car racing.

(34:58):
So the driver is like thefounder, who is absolutely nuts
and incredibly skilled and isdefinitely not looking at
anything other than where theywant to go, and they're
listening to the guy next tothem saying all this crazy
navigational stuff what's thecamber, what's the turn, I mean
degrees, how fast and so they'relooking at all the obstacles

(35:20):
and I think that's prettycritical with a really
fast-growth company, that you'vegot your hands on the wheel and
all you're thinking about isgoing as fast as you possibly
can and hitting your line, butyou're listening to help guide
what that is and that takes.
I mean one.

(35:40):
It takes somebody who can seesome of that.
Sometimes it takes a Pfizergroup, a really it takes
somebody who can see some ofthat.
Sometimes it takes you know,you know Pfizer group a really
good co-founder, a good investor, right, but I will tell you, I
mean I I hope we never get tothe point where, even as a
society, and certainly asAmericans, that we stop taking
risks because we're dead at thatpoint we just screeched to a

(36:03):
halt.
So that risk-taking has got tobe there, and I would even say
this goes into investment sideas well.
I wish we had more risk capitalinvestors and instead of
relying mostly on institutionsand you know really large banks,

(36:25):
who goes through a few layersand then eventually filters into
venture funds or debt funds andeventually filters into
founders?
There are so many ways for youknow somebody who's under 40 for
a couple of days Three weeks,now, three weeks All right.
Or 40 for a couple days Threeweeks, now, three weeks all
right.
If they've got some kind ofallocation, it doesn't have to

(36:47):
just be in the stock market.
Maybe they're thinking Bitcoinor crypto, but there's so many
companies that you can invest in.
You can do the crowdfundingthing, you could do angel
investing, you can be in funds.
There's all kinds of ways tohave this flywheel spin and
that's what made us who we areand there's some caveats to that

(37:11):
.
Like the same thing likedriving a rally car If you're
investing and you're by yourselfand you don't know, you're kind
of learning along the way.
You know, sometimes you canoverplayplay.
All of us probably overplayed alittle bit on something.
I see it a lot with investorswho only angel invest in one
company at a time If you're notwith another group who can like

(37:35):
an angel group who can sort oftemper some of those decisions.
You can really get off trackpretty quick some of those
decisions you can really get offtrack pretty quick.
But the bigger issue is you'remaking risky investments in a
way that you're not diversifiedenough to cover the risk that's
there.
You should be able to diversify.

(37:55):
So funds a lot of times are asmarter way to invest because
you put the same amount of moneyin three or four companies
directly.
Yeah, you put in 20 in a fund,right, and you get to play the
power law and you'rediversifying a little bit.
But to learn, take little bets,do little angel investments.
You know, learn from, you know,interact with founders.

(38:17):
We just need that times 100,right, what it is like.
We should, we should, we shouldhave 15 different angel groups
just in Chattanooga, just littlegroups of people who are like,
hey, let's bet together on this.
Let's figure this out, notnecessarily retirement money,
but something that you feel likeI'm okay without.

(38:38):
Whether it's $2,500 or $25,000or $250,000, whatever your
number is, put it to work andwatch it.
Let's figure out You're goingto lose some, but the wins are
usually bigger at that earlystage, but the bigger wins.
You end up having a riskculture so that really amazing

(39:00):
things start to happen.
And if you have founders thatare those kind of drivers and I
don't think everyone should bean entrepreneur.
That's horrible economic.
I mean should be a founder.
That's really bad economicdevelopment speak.
But not everybody's built to bea founder, but the ones that

(39:23):
are should be encouraged to tojust take the risks and go and
build and face plan a coupletimes and get up and go do the
next one, because there's not alot of great drivers.

Speaker 2 (39:36):
Yeah, company founders you kind of have to be
partly insane to even want to doit.
You knowolt's saying you leavea 40-hour-a-week job to go work
80 hours a week and not beguaranteed a paycheck.
You hope for one day to make abig return.
Even some books I've read thatI think one of them was Kawasaki
guy.
I say Kawasaki just because Ithink of the motorcycle.

(39:59):
Of course Guy Kawasaki, RichDad, Poor Dad, yeah.
Kawasaki just because I thinkof the motorcycle.
Of course Guy Kawasaki, RichDad, Poor Dad, yeah.

Speaker 1 (40:05):
Guy Kawasaki.

Speaker 2 (40:06):
I think it was in his book.
He said later in the book maybeit was the second or third one
on the Rich Dad, poor Dad, butif you're okay, making $250,000,
don't even take the risk ofbeing an entrepreneur.
Just work your way up theC-suite and get a job and you'll
make that money and you'll havea much better life.
When it comes to all thevolatility you're going to face,

(40:27):
absolutely.

Speaker 1 (40:28):
A hundred percent.
I mean this is when founderscome to me.
Usually they're, you know, I'mraising a million or I'm raising
$500, or I'm raising $2 million.
Usually the very first part ofthe conversation is me trying to
talk them out of starting acompany.
Because, you see it prettyquick, are you obsessed with the

(40:48):
problem you're trying to solve?
And the best founders areincredibly curious and just
can't help themselves.
They've got to take action tosolve something.
And it's not because they'rechasing, you know, wealth in the
future.
It's that they're chasing asolution to a problem that they
can turn into a business, andmaybe they can make a living,

(41:09):
you know, and maybe in in mycase, maybe my wife gives me
just enough leash when themoney's all going out instead of
coming in, that I can get towhere it turns back the other
way before she loses patiencewith me.
So but but that's that's whyit's easier.
When you're single too, like inyoung, it takes some risks, but
you need that co-pilot.

(41:29):
That's pricing a lot of thisstuff too.
So there's this reallyinteresting.
I've seen a couple funds thatwill match an older founder,
older like me 50, with a 20ssomebody and put them together
on a team, and it's crazy.
I mean, there's some data behindit Works well.
Yeah, I could see that.

(41:50):
Yeah, in blind spots, you'vegot to cover the blind spots.

Speaker 2 (41:52):
Yeah, kind of bring the strengths of both together.

Speaker 1 (41:56):
Yeah, as long as they're T-shaped.
Yeah, as long as they can talkto each other.

Speaker 2 (42:01):
Across the decades.
I'm going to remember theT-shaped thing.

Speaker 1 (42:05):
Jonathan told me today I was T-shaped.

Speaker 2 (42:06):
I'm going to write it down in my journal.
You are T-shaped.
I love how the end of Is RobertKawasaki?
Was it Robert or is it Guy?

Speaker 1 (42:14):
Oh yeah, that's right .
Robert Kawasaki who's GuyKawasaki?
I don't, I had Kawasaki to cutthis out.

Speaker 2 (42:21):
Anyways, it is Robert Kawasaki, is it Robert?

Speaker 1 (42:24):
Yeah, I haven't read his stuff in a long time.

Speaker 2 (42:26):
I remember on his second or third book and usually
each year at New Year's I'll gosomewhere and just listen to it
, because I don't read very well, so I'll listen to a bunch of
books.
Add, adhd, I don't know, neverlearned to read, head trauma or
something, but I found it funny.
I finally just quit listeningto it because it was like his
books got longer on audio andlike the last one I was like 14

(42:50):
hours in.
I'm like there's like six morehours left.
This is killing me and it waskind of like repeating itself.
I did find that I think theywould try to take up space and
he must have hired a writer forhim, maybe on all three of them,
you know.
But because that's definitely aservice, you know, writing for
as a service and hiring authors,that's trending right now
marketing agencies, everyone'scoming up to be an author right,
and they have to get a book.

Speaker 1 (43:10):
Just wrote a book last night and, claude, it was
great, sweet, nice.
So anyways, at the end of it.

Speaker 2 (43:19):
finally, what it came down to is like, basically, if
you want to be super wealthy,you need to take a company
public as the founder.
And I'm like, well, let's juststart a whole new book series
called how to Be a Founder.
Because at first, when it waslike Rich Dad, poor Dad, and it
was all about like smartinvesting anyone can do.
And then it kind of got to thegrand point of like, well, you

(43:39):
need to be a founder of acompany, I'm like all right.
So we really narrowed that downto a roll of the dice to take
it.
I mean, how many founders takea company public?
I don't know what that data is,but it's small.

Speaker 1 (43:48):
I think it's terrible advice.
Yeah, the probabilities are solow and I think you this is
something we try to do, even atCapacity is encourage
optionality along the way,because if you think about end
of the day, the question is,what's the finish line for a
founder?
So you're thinking about that,financially too, solving a

(44:14):
problem, but what makes itworthwhile?
Because it's a very stressfulthing.
There needs to be a payoff, butwhat is a life-changing outcome
?
So life-changing outcome isn'tnecessarily and this is where I
do agree with, you know, withKawasaki is it's not necessarily
the dollar amount in the bankaccount, it's the freedom to not

(44:37):
worry about your bills and likeis there cashflow or you know
all that?
So there's different versionsof that bills.
And like is there cash flow oryou know all that?
So there's different versionsof that.
But I would say the thresholdfor life changing is a whole lot
closer to a 5, 10, 20 milliondollar exit than it is going
public, right, like after acertain point.
It's just, it's just more moneyNow.

(44:57):
So a lot of the optionalitymath is, if you let's stay on
the venture side, if you start acompany and you're
venture-backed and you raisearound A, then a B and then a C
and then a D, your ownership inthat company goes down, down,

(45:19):
down, down, down, down down.
The number that that's got toexit at is going through the
roof for it to be life-changing,right, right.
And so why can't you just getto the same number?
Less dilution, raising, lessmoney and a higher probability
exit, less volatility, I'm suretoo, yeah, and less time too.

(45:44):
So raising it's not a I know wetalk about it like a badge of
honor you did your raise, youraised three million dollars,
you raised ten million dollars.
You raised your Series B, youraised your Series C.
You must be incredible.
That's like we don't have pressreleases for getting a bank

(46:06):
loan, but that's just finance,right, certain type of finance,
but it should be milestones,like we got our first big
customer.
First time we went over$100,000 a year.
First time we went over amillion a year, first time
started making money.
We broke.
Even those should be pressworthy announcements.
Finance and talent that helpsget there, like that is all and

(46:29):
the you know growth servicesaround it, those are helping
make those numbers actually workright and that's what needs to
get celebrated, because if thatworks, the outcomes are going to
show up and the life-changingoutcomes will be a lot closer
than certainly going public.
I don't think it's the goal.

Speaker 2 (46:46):
Even for a venture fund.

Speaker 1 (46:48):
As a venture fund most venture funds the big win
is we're going to have all thesecompanies go public and then
we're going to be a successfulventure fund and we can go raise
more money for the next fund.
That's not actually true.
That could be true, but theactual KPI, the number that
you're going after on a fund, isthe multiple, which means less

(47:12):
dilution.
It means growing really fast.
It means creating a bunch ofoptionality along the way, the
ability to put other types ofcapital in and exit at a
multiple, whatever the multiplehappens to be, not the actual
exit number.
It doesn't have to be massiveto be a big multiple.
If you step in when it's worth$3 million, you sell it at $30,

(47:32):
that's a 10x.
Sell it at $300 million, that'sa 100x.
If you can get diluted, thefounder and the investor are
fully aligned.
At that point you know dilution.

Speaker 2 (47:43):
so, anyway, I, that's my, that's part of my soapbox
yeah, I mean it's a change, it'sa good soapbox, I guess.
I mean it's definitely stuffthat, uh, I mean I'd want to
look for for sure.
You know, and the more raises,the more potential chefs you
have in the kitchen too, youknow that's right and and and
the more raises.

Speaker 1 (48:03):
This is contrarian too is you know a lot of funds?
Uh, talk a lot about you knowthe other big funds that they
invested alongside?
It's called the logo sheet.
When they go raise, it's like Iinvested with sequoia.
I got an allocation into andthat's part of the game, that's
part of vc, but again, that'spretty much vanity metric.
Okay, great, you have somerelationships there.

(48:24):
Maybe you get in some deals,others don't, but it doesn't
necessarily help your outcomes.
So why couldn't you, when youstep into these companies and
you do create the multiple, whydon't you focus on not investing
with a bunch of other investorsthat are really, with a bunch
of other investors that arereally really big, that are

(48:44):
bigger and bigger checks?
Can you focus on investingalongside smaller checks earlier
on, which means you candemocratize a lot of the
investment sides?
Can you do an venture roundalongside a crowdfunding round?
Can you do a venture roundalongside debt, purchase order
finance, whatever it happens tobe?

(49:05):
We have so many companies thathave their mind.
When they step in, their mindis set on we're going to raise a
million dollars in equity ortwo, because that's all they've
ever been heard and they learnhow to do a pitch competition
and they learn how to join anaccelerator.
And equity is the way.
When it's really one out of 100companies should be taking

(49:26):
equity, and so it's a win for usif we can talk a founder out of
a $2 million equity round intoa.
I mean bootstrap a little bitat the beginning, go kill it for
six months, get into a betterposition and then do a capital
stack A little bit of equity, alittle bit of debt, a little bit
of purchase, or know, purchaseor finance or some other kind of

(49:48):
creative stack and own more ofyour company, yeah, and have
more options along the way.
It's a win for us too.
We put a little bit of money in.
It multiplies.

Speaker 2 (49:58):
Right.

Speaker 1 (49:58):
A dollar in a little fund multiplies a lot faster
than a dollar in a big fund.

Speaker 2 (50:03):
Yeah.

Speaker 1 (50:03):
And a dollar in a little company early multiplies
a lot faster than a dollar in abig company later, probably less
exposure for you too.

Speaker 2 (50:10):
Yeah, I would imagine .
If the company has their shittogether more basically that's
what you're saying, right theyspend six months establishing
themselves a little more and notjust rolling the dice hoping
that $100 million or $5 millionor whatever equity raise does
the trick.

Speaker 1 (50:26):
I mean, there's always risk early.
Yeah, that's part of whatyou're getting the multiples for
.
It's like we're not sure if thisis going to work or not, but
we're going to step in.
But what you do want to leaninto is the founder, and so that
part what you're talking about,do they?
What do they do for six months?
Can they change their mindsetfrom what they've read on

(50:48):
TechCrunch?
Change their mindset from whatthey've read on tech crunch,
like where they have to raise,or what they've learned in an
accelerator you've got to raiseto.
Oh, there might be another wayto capitalize what we're doing
right, can they?
That's a really good signal foran excellent you know, an
outlier founder, because theycan adapt what's going on yep,
and so it's good diligence onthe founder as well, and that

(51:11):
does reduce the risk, rightright Now.

Speaker 2 (51:14):
have you I know you said service, one type of
service business that youinvested in, but have you looked
at all into like any sort oftraditional blue collar, you
know, like home services,anything like that?

Speaker 1 (51:25):
Yeah.
So my thought on that we havenot, because I don't think a
venture fund is is the optimaltype of capital for that, Gotcha
, Until it gets a lot, untilsomebody like, if you're doing a
consolidation of those services, there's.
There's other ways to fund.
You know, buying in a bunch ofsmall, you know landscape or

(51:46):
plumbing or, and there's a lotof.
Obviously there's a lot of thatgoing on.
But as that happens, once thatstarts moving, it can start to
fit more venture along.
There's some other ways to putsome capital in, but early on,
with those 7A SBA type loanstuff where you get a lot of it
guaranteed.
It's actually built.

(52:06):
Those type of vehicles arebuilt for acquiring businesses,
especially the owner.
Like an owner, you know, buyanother business.
So there's ways to stack thatup with some debt, Especially if
they're already sort of cashflowing or getting close.
Every single one of those, infact I would say every business
ever, will have some.
You've got room for improvementso you can step into little

(52:28):
business or big business.
There's gonna be ways to makeit better, yeah, um, but I think
the biggest thing for you know,if, if your philosophy is, I
want to acquire a company or Iwant to roll up a bunch of
companies or I'm building acompany that really needs some
rocket fuel.
The biggest question you've gotto ask yourself is what kind of

(52:51):
funding fits what I'm trying todo?
Because, as a founder, you'rehiring money and this gets lost
a lot.
It is a tool to help you buildwhat you're building right.
It's something outside thecompany that you need to bring
in.
You're hiring money.
Basically, Different skill sets, different expectations.

(53:15):
You know venture capital.
When you hire venture capital,you are bringing on a partner
who will be there for the lifeof the company.
They might even be there longerthan you.
Yeah, In a lot of cases that'strue.
Yeah, so that's hiring apartner.
Other end of the spectrum, likepurchase order financing, a

(53:36):
real short-term cycle, that'slike hiring a temp.
It's different.
So how do you hire money?
How do you measure what's agood hire for your company?
You run a process.

Speaker 2 (53:47):
So I just saw where was it OpenAI raised what 43
billion is what it was?
40?
.
And I also saw just a week, youknow, a couple weeks ago, where
they were projected tohopefully be cash flow positive
by 2030.
Hmm, that'd be amazing.
I mean that just seems likewild numbers.
I mean that just seems likewild numbers and of course I'm

(54:09):
small business minded and thatthere's so many zeros beyond
what I can even comprehend.
But then what blows my mind isto have someone open AI.
That's practically on.
I don't know what, but Iimagine probably one out of
every 10 people in America'sphone right now or on their
computer.
I could be, I'm just guessing,but it's got to be close to 30
million people in America.

Speaker 1 (54:30):
Yeah.

Speaker 2 (54:30):
So how does a company like that not project cash flow
to 2030?
For me it's like how are we notmaking money?
And it's got to be so complexdown the pipeline of when they
finally start generating revenue, because I know our pro account
is only $29 a month right, andI don't know how many
subscribers they have at thatlevel but, um, that seems like a

(54:50):
wild risk, especially when youhave a what's?
The one that was just spun upin a fraction of the time, with
only five million dollars raisedcame out of china?
Um, oh just oh, the competitoroh, yeah, yeah um

Speaker 1 (55:05):
just just launched recently and blew everyone away
yeah, they just like 40 milliondollars they competed with uh, I
gotta look it up.
So that's embarrassing, I can'tremember.
So it was a big, that was a bigthing zach, you know who I'm
talking about, dude I alsoforgot the name of it.

Speaker 2 (55:21):
That's not good.
They need to change the nameyeah, that's right.
So that would scare the shitout of me, because Deep seek,
that's it.
Deep seek, thank you.
Clearly I haven't used it yet,but a lot of people have and are
saying it's blowing the wheelsoff of it.
Would that not be scary as hellto put $40 billion into a
company that someone justbootstrapped?

(55:43):
Basically?

Speaker 1 (55:45):
So that's a great example of that's a moonshot,
that's a winner take all rightand that's the bet.
You need venture, you need bigmoney venture to go after those.
We have to have that too.
We need a little tiny fund anda medium-sized fund and a really
big fund.

(56:05):
Those are completely differentbusinesses, Like at funds as
funds, and so certainly targetsize are different, check sizes
are different, but the businessitself is very different.
We need those massive, you knowventure funds to pool together
to do winner-take-all moonshottype stuff.
We need it.

(56:26):
But it is at the, you know, veryrisky side of the ledger.
Because if, if you think about,you know, how do you, how do
you diversify when you're doinginvestments?
Well, at that level, you don't.
They're not enough massivemoonshots like that to to to
really diversify.
So you're, you're, you'reputting on a lot of risk.

(56:48):
Now they're going to be bettingin a bunch of companies they
hope turn into those moonshots,the really big ones, and will
only invest in those.
So it might turn out okay.
But man, that's not a game Ican play.
I just want to focus in onmultiples.
Let's go multiples.
Yeah, do that, and I wantfounders to make better

(57:08):
decisions on capital too.
We're even doing events aroundthis stuff.
We're helping teach founders tojust just hire money.
You know, make good decisions,how you get capital in the
company yeah, um we do a lot ofair traffic control like it's,
it's.
Yeah, this is definitely not afit for for what we're doing and
really you shouldn't be doingventure.
But, by the way, revenue isyour first choice.

(57:30):
Venture should be your lastchoice.
Maybe the mob is probably thelast choice, but the venture is
close.
And then all these flavors inbetween.
How do you stack those togetherto actually get what you really
want to be able to do out ofthis, instead of just following
the herd?

Speaker 2 (57:51):
What about trending?
Right now I know one of thetrends is uh, tariffs.
Does that affect you guys atall and the type of businesses
you're doing?

Speaker 1 (57:58):
I mean I think it's going to affect everybody.
I mean it's it's a, you know,I've I've opinions on that for
sure.
Um, but from a pure economics,it's going to affect early stage
companies a lot less,especially tech, a lot less than
physical manufacturing andlarger companies.

(58:20):
It's going to affect the autoindustry way more than it would
affect somebody doing a littleAI build on financial software.
It's just not going to have asmuch of an effect.
I do think there's a macrodynamic here that I think is
important, where we talked aboutwhen the economy got hurt

(58:44):
pretty badly in 08, 09, mostlycommercial real estate that hurt
my company back then.
But there's a silver lining inall of these economic arcs, like
in the crash, you know 99-2000,08-09, you know there's the.
You know.
Now things are feel likethey're tipping a little bit.

(59:05):
We don't have a stagflation orrecession or hey, it's just a
little bump down, it's going togo up, it doesn't matter.
In those time periods there area ton of.
There's a bunch of uncertainty,there's volatility, there are a
lot of layoffs.
You get incredibly smart peoplelaid off and what they tend to
do is I'm going to go startsomething, or we're going to

(59:27):
band together and startsomething, and most of the
highly successful biggestcompanies, especially in tech,
that are out there now you cantrack to those downturns in the
economy, and so my belief isthere's never going to be a
better time or at least in along time to be investing in and

(59:48):
starting companies than likethis past six months to probably
another year and a half outLike we'll look back in 10 years
on this time period as just amind-blowing startup time period
, and the value that's createdout of this will be just
absolutely massive.
And it's also because itcoincides a little bit with a

(01:00:09):
lot of the tooling, the ai toolsand all that that make
everything more productive andeasier to start yeah because
that happened with, obviouslywith.
You know apps, you know the, youknow the, you know all the, you
know when you, whenevereverything went mobile and hey,
that's a way to be moreaccessible to customers you know
the internet before that andyou just kind of go back
computers and like all that.
So this is one of those timeswhere both of those things are

(01:00:31):
together right 08, 09, samething.
Iphone came out in 08, right 07, 08, downturn.
A whole bunch of companies cameout of that.
You're seeing that right nowthis is happening and AI, I
think, is just way bigger thanmobile, was I?

Speaker 2 (01:00:46):
think part of that also is the weaker companies
usually follow the wayside, soit opens up opportunity for new
companies coming in.
Because companies that hadn'tcleaned their books in a while,
their debt was too heavy.
For them, interest rates go up.
I mean, I know I have a line ofcredit that I don't like the
interest rate it's at Four yearsago it was all right, and so a

(01:01:07):
lot of that is companies thathave been around that haven't
been running the cleanest andthe best.
They get called out and thenyou're exactly right, people go
off and start their own thingand they can start with clean
books and um yeah, funding isgoing to be a constraint, which
is why I'm doing what I'm doing.

Speaker 1 (01:01:24):
You know at the time that I'm doing it like, like,
that's where those things cometogether.
I also, I think we're going tosee we've talked about this a
little bit before, but it'sgoing to be hard to see who's
really good and who's not inthis age of everybody's starting

(01:01:44):
something up and everybody'sgot all these amazing tools that
, on the surface, what they'rebuilding looks amazing.
Right, right, yeah.
It's very fast and everybody'sgot all these amazing tools that
on the surface, what they'rebuilding looks amazing, right,
right, yeah, it's very fast andit's really difficult to see.
Are they really solving theproblem?
How do you validate that?
And then, how do you validatethe durability of what they're
building?
And that gets forgotten a lot.
Look, we can.

(01:02:04):
We can make it do this right,and this is for the eternity of
product development.
There's a big, huge differencebetween hey, it does the thing
to solve the problem, mvp versusproduct that we can actually
scale and build on and createrobust business around and

(01:02:24):
create adjacencies off of.
But it's going to be moredifficult, I think, to delineate
between what's real and what'snot.
That's almost a pun now for theAI, but in business, I think
that's going to be a.
We're going to have to figureout how to.
What's the litmus test onwhat's quality, what's not,

(01:02:46):
what's really solving theproblem, what's just saying
they're solving the problem?
We're all getting told allkinds of things and we have no
idea what the truth is.
So a business tends to turninto something that bears into
being true or false.
Like it works, or it's notSolving the problem, somebody's

(01:03:07):
paying for it or it looked likeit did.
So it started, but nobody'sreally buying it, so it's false.
It's a pretty good litmus testfor truth most of the time, but
it takes a while.

Speaker 2 (01:03:21):
Yeah, yeah, it does.
I saw the other day there arenow white-label companies for
AI-generated, generated onlyfans models.
Wow, and so it's now amiddleman.
They generate your AI avatar,they help perfect him or her.
They then give you all themarketing collateral that you
need to start up your likeInstagram, facebook, tik TOK,

(01:03:44):
whatever is like your feederprogram to your only fans or
whatever site you're using, andit's all fake and they're now
like that's how much like thatalready exists, so much that
they're now white labeling it inthe middle just to catch money
as the middleman.
A lot of people do it.
Yeah, just getting the flow.
Yeah, actually, one of myemployees that works for us
she's out of Columbia, southAmerica, and out of Bogota, and

(01:04:07):
one of the people that used tobe a roommate she was telling us
this a few weeks ago.
He was one of four people thatanswered messages and
communicated for an OnlyFansmodel.
He made $800 a week, which is agood amount of money down there
of a four-person team tobasically 24-7, keep
communicating with this OnlyFansmodel and as a dude, he was
sitting there responding thesechat messages.

(01:04:29):
I'm like that's wild, you know,like that, that underground
scene is pretty fascinating, theamount of money that's
circulating in there that youknow, that one I can't remember
the chick's name, but she, justshe made more than all the nba
players last year, I think,combined as their salary from
the nba and she retiredapparently made like 64

(01:04:49):
million64 million as an OnlyFansstar.

Speaker 1 (01:04:52):
Goodness and retired.

Speaker 2 (01:04:53):
My God, that's crazy.
Is that your next gig.

Speaker 1 (01:04:57):
Man.

Speaker 2 (01:04:57):
I'm working on it.
Yeah, I got about 20 years offof me.
Some gray hair is gone.
Beautiful A little more chapped.
I don't know if dudes reallymake it like chicks do do chicks
are, just they're betterspecies for it.
I think I don't know.

Speaker 1 (01:05:09):
I don't I don't really invest in this kind of in
that I can honestly say I neverhave, but I'm curious at the
money they're making.

Speaker 2 (01:05:16):
That's for sure.
But that same thing applies onyour marketing advertising we're
talking about before that.
There's so many companies thatcan pop up, you know, with
little or no barrier to entry,like you're mentioning before.
Like identifying barrier toentry can be good because you
eliminate competition right offthe bat.
It's one of the challengeswe're seeing and so many
companies have no proof of ROI,they're just providing one
little service.

(01:05:36):
I think it's starting to take aswing, because before it was
like you niched down in industry, and that's still prevalent.
Then you niche down in service,maybe service and industry.
So whether you're website onlyor CRM only or, you know, get
down into the little minutedetails.
But now I feel like even withAI, especially in small business

(01:05:56):
owners, they don't really havethe time to manage all these
different assets, to tie themall together.

Speaker 1 (01:06:05):
Do you think that's a trend or kind of rebundling all
of those services together?

Speaker 2 (01:06:11):
I think, even though with AI, I think there still
needs to be someone who'strained in prompts, at least for
the time being, and I thinkthat will go away too I think it
will all just become at somepoint, maybe connected to your
link in your head by 2030 orsomething.
But, in the interim.
I think you still need someonethat can see the whole thing,
kind of that T person you'retalking about.
Translate it.
Build the strategy for thecompany where they are

(01:06:33):
financially to help them get tothe next level, considering
weaknesses in operations,because one size doesn't fit all
for helping a company grow withmarketing and advertising.
If they can't fulfill the workthey don't need to spend that
dollars that month, for instance.
That's just one thing we seecommonly.
It's like, well, we got theseleads, but then we couldn't even
answer the call.
It's like, well, you don'treally have a lead problem, you

(01:06:54):
have a close the lead problem.
You don't have a CRM tool, forinstance, and among that you
don't have someone actually usea CRM tool that's trained and
follow up.
And so a lot of especially inhome services, we see they get
leads and companies are open toget those, and then they just go
nowhere.
No one's following up five toseven times in the first 15

(01:07:15):
minutes in various ways.
I think a person's still neededfor that.
That will probably go away soontoo, in the next five to 10
years, maybe less, maybe nextyear, I don't know.

Speaker 1 (01:07:26):
Yeah, I mean it's hard to tell right Like and
years, maybe less, maybe nextyear, I don't know.
Yeah, I mean it's hard to tellright like and.
And the people that I guesstake advantage of this crazy
spike in I guess you'd call itproductivity are the ones that
can recognize what's reallyvaluable, what's not, because
you can ask one of my favoriteprompts is what am I missing?
I can do something and kind ofget a deal like what am I

(01:07:47):
missing?
What am I not thinking about?
Because I think that's anincredibly valuable way to get
anybody's advice is like it'seasy to talk about what you know
, like I've been talking likeyour ear off on some of this
stuff.
Yeah, but it's been great.
What am I missing?
You know what?
That that's a an amazing promptfor anybody.
So somebody that can that canunderstand.

(01:08:07):
You know, chat, chat, gpt canlist out what a lot of the gaps
are, accurately or not, whatever.
But somebody who's got a deepknowledge in that space, that T
part of somebody's skill setthey're going to know not just
the gaps but which ones shouldreally be focused on first.
And that discernment I think isreally difficult to do from an

(01:08:32):
AI standpoint, like what's themost important.
You can do calculations on ROIand all that stuff, but some of
this is experience.
It's going to be hard toreplicate that.

Speaker 2 (01:08:45):
I think I think there is an experience part.
It's bothered me some I meanmarketing and advertising will
go away Because because already,like one advice I saw I forgot
who it was recently, but a major, um, you know figure in web
development programming I forgotwho was it said this but said
he's now suggesting no one go toschool for computer science
because ai will take the placeof that completely.

(01:09:07):
Now I don't completely agreewith that because I do think
there needs to be fundamentallevels of understanding how
computers work, especially whenyou get into quantum computing
and that sort of stuff.
There has to be true scientistsand computation.

Speaker 1 (01:09:19):
I had this conversation the other day
because I can't figure out howwe're going to solve this.
This is a much bigger topic.
But if everyone is more andmore reliant on the AI, pick
your model, pick your LLM toanswer the questions, who

(01:09:40):
continues the job of generatingthe actual answers, or at least
the theory behind it?
A good basic example is justmath, like why would you ever
learn addition or subtraction ifyou can always get the answer?
What happens in 50 years whennobody's learned?
That's too simplistic.

(01:10:01):
But addition and subtraction,like yeah, what?
Like?
Does that knowledge just goaway?
Or it's only in the LLM?
And so all we do as humans isjust learn how to ask questions
Right, and there's no realknowledge.
We're just a vessel and that'sit.

Speaker 2 (01:10:19):
And who created the knowledge you know, and who's
orchestrating that?
Because that is one of the bigtheoretical it's not even a
theory at this point, but that'sone of the.
We're seeing it in OpenAI andsome of these programs come out
where, you know, there's alreadysome biased yeah, and that's
scary as hell, you know, becausepeople will start taking this
as almost like the Bible forknowledge.
You know, when it comes to likehow do I do?

(01:10:39):
Now we're using like marketingand business side and that sort
of, but at some point it willprobably be like how do I raise
my children?

Speaker 1 (01:10:45):
That's terrifying, that's scary, I mean.
And now you know internet,source of knowledge, internet,
so, which I've always beencurious enough to go look stuff
up, right, and but that I don'tfeel like very many people do,

(01:11:05):
that you just kind of learn it,but go to the next step with
this AI and it's more the look.
I believe this is the truth.
That's different than I'mseeing what somebody is putting
on the Internet, right, but ifyou move into I believe this is
the source of truth and nobodyquestions that then whoever's

(01:11:28):
like driving the bias wins theentire game and everybody I
think everybody loses.
Humanity loses Because we losethe chase.
We believe every conspiracytheory that comes out.

Speaker 2 (01:11:44):
It just came out of there.
It's truth and the scary thingis most of these are crawling
public information out there onwebsites, right and it's yeah,
bring that together and thentaking the best answer and copy
yeah, computing that based on,imagine the volume of what
answers are given, and then itprobably rate ranks it.
So I don't know, I'm not a yeah, I know very little yeah that.

Speaker 1 (01:12:04):
so if you have populist truth, like, like, what
do most people believe?
So that's the truth.
That's not truth, that's justpopularity.

Speaker 2 (01:12:14):
I mean, we see it in search engines every day,
because one of the things we dois I'm not going to say we trick
the search engine, but we knowwhat they look for to have
authority and have trust forGoogle, and so reviews are in
your Google business profile andyou need backlinks and you need
lots of articles and keywordsand all this stuff you know, and
what do we do?
We wind up returning the top ofthe search.
There could be a great companydown there that doesn't know the

(01:12:34):
tricks like we do, but theydon't get returned to that.
That same idea, I think, isgoing to happen, if it's not
already, in open AI and deepseek and all that.
I think it's definitelyhappening.
People are going to be trickingthe system.

Speaker 1 (01:12:44):
to be like this is the answer that's given to you
and then it, and then itmultiplies, because the problem
is problem is okay if truth is,if in that frame and in llm,
truth is based on some kind ofyou know popularity or just some
kind of rubric that it's,that's covering to spit out a

(01:13:04):
truth.
Yeah, you combine that withwhere we are now as a society,
where disagreement means hateright you, you have a bomb going
off, because anything youdisagree with you either become
an enemy if you say it, or youdon't say it and you're just

(01:13:25):
complacent and you're you.
You're just.
You know it's a feudal state,right so?
So that is that's got to change.
We have to be able to havediscourse, disagree and still be
friends.
Yeah, unless, unless thatremains, we're screwed.
Yeah, and and I think it will Ithink some of that rationality

(01:13:47):
will come back, but I think thattype of the technology that
doesn't help, that is, that it'sgoing to be a source of truth.

Speaker 2 (01:13:59):
That does not help yeah, especially, it's a source
of truth at a global level whichis a little different from our.
I don't know, whenever you takeit out of local state and we
like to.
We don't want to talk aboutthere being a global power, but
we get into conspiracy theories.
I won't dive into this, but itseems like there is.
It connects everything.
It just seems to cause moreproblems.
So many things.

(01:14:19):
Things is not a great word todescribe, but issues occur when
it gets into that global state.
There's a reason we look atanimals that only live in the
rockies or only live in southamerica or only live in the
sahara, like they're different,because they are different to
where they live.
You know there's geography toit.
Everything about it's different.
You know they were built forthat yeah, this even goes back

(01:14:41):
to like our microbiomes in ourstomach and they say, like if
your dna was originally by thesea, you're predisposed to
actually process fish betterthan others, and people can tell
some of where they were fromoriginally or where their
ancestors spent a large chunk oftime by what they're
predisposed, whether it's redmeat or vegetarian.
And so it's in us and we talkabout this global solution to

(01:15:02):
everything and taking out likewhere we are as a city, you know
, like Chattanooga's, differentthan L, different than LA or
Chicago or even Cleveland.
Tennessee is different thanChattanooga, you know.

Speaker 1 (01:15:13):
This went philosophical fast.
Oh, by the way, that reminds me, did you take your date off at
23andMe?
Yeah?

Speaker 2 (01:15:23):
Luckily I never did that.
I don't think, I don't know whoknows.
Maybe one of my doctorssubmitted it, I don't know.
You know probably.
Luckily, I never did that.

Speaker 1 (01:15:29):
I don't think.
I don't know.
Who knows, maybe one of mydoctors submitted it.
I don't even know.
It probably got paid.
Yeah, there's an LLM that'ssucking all the genetic material
in.

Speaker 2 (01:15:35):
I'm sure one of my doctors sold that information to
one of the pharmaceutical repsat a side gig.
It's like, hey, you sold methat DNA, I'll hook you up Some
free donuts.
That's all it takes.
Well, I think conspiracy theoryis probably a good place for it
to end it.

Speaker 1 (01:15:51):
To stop or we'll go another hour on nonsense.
It's good, it's been fun,thanks for coming and chatting.

Speaker 2 (01:15:59):
It's really good to hear about capacity you're doing
well and all the businesses andI think it's a good.
I don't know if moral is a goodword to use to describe, but I
like the idea of helping smallbusinesses in the way you're
doing it and it seems lesspeople say venture capital a lot
and helping businesses.
You know it tends to be likepotential for negative
connotation, but it feels likeyou're doing it the right way.

(01:16:21):
You truly want to help people.
You know and obviously you'vebeen through the good times and
bad times being a founderyourself, so I think that means
a lot.
It's a good part of your storyto tell.

Speaker 1 (01:16:31):
Yeah, I've got plenty of scars.
I'd like to help other peopleavoid.

Speaker 2 (01:16:36):
Yeah.

Speaker 1 (01:16:37):
If you're in Atlanta in not next week, but the next
week, 17th we're doing an eventthat we're pulling together a
couple different types ofcapital.
We're speaking like it's a likea 11 to happy hour kind of deal
, like WeFunder my friends atWeFunder they're RevUp Capital

(01:16:59):
out of Boston.
I've got a couple differentplayers coming in just talking
about different types of fundingand it's just.
If anybody is on this thinkingyou know they're in Atlanta, I
don't know when this comes out,hopefully early this next week.

Speaker 2 (01:17:13):
We're getting faster and faster.
All right, yeah, we're workingon our SOPs here.
Very cool.
So it's next.
Let's see 17th.
You said Yep.
Is that a Friday or Saturday?
I think it's a.
Or during the week?
I think it's a Thursday, oh,okay, perfect.
Or during the week?
I think it's a Thursday, oh,okay, perfect.
It gives me an excuse to ride amotorcycle, although Atlanta
traffic in a motorcycle isprobably.

Speaker 1 (01:17:32):
White line baby.
Oh, that's right, You're almost40.

Speaker 2 (01:17:38):
Hey, I still do stupid shit all the time.
I like to come down for that,it'd be fun.
I need to get out of townanyway.
I don't know if that was anopen invite to me, yeah for sure
.

Speaker 1 (01:17:47):
You help businesses, you run a business, you're a
founder.

Speaker 2 (01:17:52):
I like to learn.
That'd be good.
We'll post about that and shareas well.
If you're alright with that,maybe a link to a website.

Speaker 1 (01:17:59):
Yeah, there's a website, especially if it's
really geared toward people thatwant to figure out how to
allocate investment into certainand how to do it in different
ways, instead of just, oh yeah,be an angel, go, cut a check and
hope for the best.
There's a lot of ways to dothis.

(01:18:19):
There will be some foundersthere, too, because they need to
learn this as well.

Speaker 2 (01:18:24):
Perfect All right, I'll plan on seeing you there.
Okay, cool man.
Thanks, perfect, all right,I'll plan on seeing you there.
Okay cool man.
Thanks, Jonathan, Appreciate it.

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}The Founder's Journey: Risk, Resilience, and Rewards | Sam Silvey and Jonathan Bragdon