August 5, 2024 • 56 mins
Join us for an eye-opening discussion with seasoned VC founder and investor, Andrew Romans of 7BC Venture Capital. Andrew shares his remarkable journey from founding startups to raising significant funds, leading them to successful IPOs, and eventually creating an innovative venture capital equity exchange fund that allows top-tier founders to diversify their holdings.
Diversity is more than a buzzword; it's a strategic advantage in venture capital. Andrew highlights the richness brought by diverse Limited Partners (LPs) from various geographies and industries at 7BC Venture Capital, offering a stark contrast to the more homogeneous backgrounds found in traditional VCs. We delve into the transformative impact of AI technologies like ChatGPT on automating human workflows and improving efficiency across sectors. Discover why avoiding investments in companies that sell to governments remains a strategic decision for the firm and how this focus aligns with their broader investment strategy.
Innovation and unpredictability go hand-in-hand in the startup world. We shine a spotlight on groundbreaking companies like Superhuman and Prion, examining their potential to surpass industry giants. Andrew provides an in-depth overview of the evolving venture capital landscape, addressing challenges such as prolonged exit timelines and the impact of regulatory scrutiny on tech acquisitions. From the complexities of venture capital fundraising to the importance of building diverse investor relationships, our conversation wraps up with a fascinating story about Brock Pierce's entrepreneurial ventures. Don't miss this comprehensive exploration of venture capital and technology innovation.
To Learn More About Andrew Romans:
1. www.7bc.vc
2. https://www.amazon.com/stores/author/B00E1LNR6I/allbooks?ingress=0&visitId=40e7c706-ca9c-4e65-b8c0-1625271a6355&store
3. https://www.linkedin.com/in/romans/
To learn more about Jonathan's recession resilient mobile home park real estate Fund, as our next Fund raise is $50 million only for accredited investors: https://www.midwestparkcapital.com/
To learn more about Jonathan's highest level business growth consulting and fractional CMO services. And upcoming group zoom entrepreneur masterminds:
https://www.revenueascend.com/consulting/
Sign up to get on the list for the World's Most Exclusive Social Networking App: https://www.prestigesocialapp.com/
To those looking to potential exit or sell their business or talk about potential business roll up partnerships:
https://www.businesscashout.com/
https://linktr.ee/jonathantuttle
#privateequity #entreprenuer #venturecapital #sovereignwealthfund #capital #businessgrowth #startup #entreprenuership #accreditedinvestors #familyoffices #UHNW #billionaire #centimillionaire #VC #Business #AI #TECH
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Imagine if we could read every PDF at the Home Depot
with every supplier and getsoftware to automatically when
the contract's coming up forrenewal, with enough time to say
I want this FOP Bangkok, I wantthis FOB Montana, whatever, I
want this.
I want to sell all this crap onconsignment.
Why should I pay for your nails, bolts and power tools before I
(00:24):
get Jonathan to buy it and walkinto the store?
And how am I benchmarkingcompared to?
You know Le Roi Merlin inFrance, you know the French, you
know Carrefour and all this.
Speaker 2 (00:37):
Welcome to the Ultra High Net Worth Podcast, which is
a global community of the mostsuccessful and their insights.
We want our families toflourish, collaborate and create
a better world for all.
This podcast is a trustedresource to learn from each
other, navigate the mostimportant global issues and find
life-changing opportunities.
I'm the host, jonathan Tuttle,the founder at Midwest Park
(01:01):
Capital, a boutique mobile homepark real estate fund.
Revenue Sun, a leading digitalconsulting and fractional CMO
agency.
Business Cashout, a boutiqueM&A firm focused on
service-based businesses, and apart of the founding team at
Wally Pop, a mood-enhancingtop-up beverage.
This episode is sponsored byPrestige, the world's most
(01:22):
exclusive social networking app.
All links are in the show notesbelow.
Enjoy the show.
Please like, comment and sharethis podcast with your friends.
Thanks for listening.
Welcome back to the Ultra HighNet Worth Podcast and today I
have a fantastic VC guest,Andrew Romans from 7BC Venture
(01:42):
Capital and his distinguishedauthor.
Speaker 1 (01:44):
Welcome to the show.
Hey, jonathan, great to see youagain.
Thanks for having me.
Speaker 2 (01:49):
Yeah, thanks for having me.
We were talking and chatting alittle bit before.
I'll let you give yourbackstory, because if you look
at your bio it's pretty crazy.
You've done so many things inthe VC.
You're a thought leader, soI'll let you describe your
background in the space.
Speaker 1 (02:06):
Sure, I've always been in technology startups on
one side of the table or theother.
So I started off founding inthe tech world and then, pretty
young age, founded my ownstartup that raised angel
funding, then a $15 million fundring, then a $15 million
fundraising and then a pre-IPOand then it IPO'd on the NASDAQ
with Morgan Stanley.
So after you've kind of donethat, you know, before turning
(02:29):
kind of 32 years old orsomething, it's kind of hard to
get hired at Morgan Stanley orMicrosoft or anywhere.
So I felt almost orphaned,forced into the world of combat
that is startups.
And so I had a string ofstartups that were all
venture-backed, you know, somegood exits, some bad shutdowns,
uh, m&a and IPO.
(02:49):
So I kind of seen the good, thebad and the ugly from the
founder side and not everythingI touched was successful.
And when you're dealing withall these VCs on the way, you
know, on the way up or down, youknow, you kind of think maybe I
want to do their job and so Iwas somehow attracted to doing
their job and I I eventuallystarted my own VC fund and I'm
skipping over a lot of stuffbecause I don't want to waste
(03:11):
time on it but I started aventure capital equity exchange
fund, which was kind of a funkything, where in the dark days of
the 2000s after the dotcomcrash, it was stay private
forever and yet no liquidity.
And so you know you're worth ahundred million on paper but you
can hardly afford to pay forthe lift ticket to take your
(03:32):
kids to go skiing in Tahoe andyour former roommate from MBA
like owns the cabin and doesn'teven look like he should be
allowed to vote.
And you know, there you are.
So what I did was I said ifyou're a venture-backed CEO or
founder from top VC, you couldput up to 10% of your founder
stock into a limited partnershippool and I'll bring in together
(03:53):
25 other CEOs and then make youan owner of the other 25 guys.
So instead of being worth $30million, you're worth $27
million now of your company andyou got $3 million in a venture
capital equity exchange fund.
So you own shares in the other24 companies.
And then we all go out todinner.
We're talking about, like youknow, some of the places we've
(04:14):
hung out in these family officeevents.
This is a great dinner becauseeveryone introduces themselves
and you all own shares in eachother, so you're aligned to help
each other.
And so I did that for like 15years and met like every founder
that got funded from our tierone list, like even Elon Musk
when he raised from solar city,took a go to meeting call or a
meeting in our offices inSilicon Valley.
(04:35):
So we kind of got to meeteverybody and we had 42 VCs on
the advisory board of that and,and after that secondary started
to be a real thing Like DanielEk from Spotify was joining the
Founders Club with Spotifyshares, we had rejected him from
Stardoll, his previous company,and we kind of knew everybody
there.
And then Crandon and North Zonesaid give us a couple of weeks,
(04:57):
we'll spin up an SPV from ourLPs to buy it for cash.
And so I said we're dead.
Why would you swap paper forpaper when you could swap paper
for fiat, real cash?
And so I flipped into that andI was advising founders in
growth stage VC funds how to geta better price selling a small
percentage of their shares onthe secondary market for cash.
(05:20):
And then I found that to be anunrewarding business where
nobody cares about you and yournetwork.
I'm like, hey, man, I know,jonathan, I can introduce you.
Maybe we can get you on thispodcast, and people are like I
don't care, I just want onebasis point Whoever the dumbest
Russian is to overpay for this,I'm ready to work with Saddam
Hussein to buy my shares.
I don't care.
And so I was, like you know,let's go the get into early
(05:50):
stage VC funding, where they docare about the network and they
do care about all of ourexperience and ideas and attempt
to help them, and so we raisedmoney from actual founders.
So the cornerstone of our firstVC fund, and throughout all of
them, has been lots of venturebacked founders and just people
like you that are in theecosystem, that are excited to
be like hey, I know so I wasjust in Philippines, manila.
I can hook you up with thetelecom operator and like all
that network starts to turn intolike good results.
Speaker 2 (06:11):
I love it.
Yeah, it's pretty cool Becauseif they have skin in the game,
that means they obviouslybelieve in the product.
What is you mentioned?
Some like high profile founders, who's probably the most
impressive?
You matter.
Speaker 1 (06:26):
Who is the one that you're just like wow, I mean I,
I think I'd say elon musk is oneof the the most impressive
people I've ever reallyinteracted with and I would say
I'm giving you a very genuineanswer here.
You know, peter teal is.
You know, I've met him a numberof times and, um, yeah, he's
like a walking statistic,almanac of you know he's like a
walking statistic, almanac ofyou know he's like well, 18.6%
(06:47):
of women with red hair are notsuicidal.
It's like, wow, where does heget this from?
It's crazy.
But you know, I think thoseguys you know pretty damn sharp.
I mean, lonsdale is kind of ayounger up and comer who you
know is kind of a bit of a mindblower.
When you're hanging out withhim and talking to him about
startups or strategy and stufflike that, you know he's
(07:09):
covering a lot of surface area,you know, at a young age.
But I would say, when it comesto 7BC Venture Capital, our VC
fund today, I just believe thatthere's a lot of strength in
diversity.
So, you know, in the summeryou're having you just described
all these places that you'reliving in and nomadically
(07:29):
working out of, you know,picking up people along the way.
If you can get them excitedabout what's going on here, it
just adds more.
You know, like I jokingly say,a lot of VCs in Sand Hill Road,
silicon Valley, are five whitemen from Boston that probably
dated the same girl at ChodorDeerfield Academy in
(07:53):
Massachusetts and then theyjoined the board and they all
know oh, let's go to Londonbecause they speak English and I
know a guy.
What about Brazil?
What about Indonesia?
What about Japan?
What about Toronto?
So I like the idea of havingdiverse LPs from all walks of
life and geographies, and notonly just tech people.
We probably have more techworkers, tech executives, than
(08:16):
any other type of LP, butthere's a limit to the size
check they can write, and sothey're not our biggest
cross-section of the fund, butit's the biggest number, and so
if you get funded by us, you'llmeet a lot of different people,
which I think is good.
Speaker 2 (08:32):
Yeah, that's super cool.
Yeah, now, peter Thiel, was itZero to One, or I forgot the
name of the book.
Yeah, zero to One is his book.
Yeah, yeah, I was like thatone's.
Yeah, he.
Yeah, he's the old PayPal mafiabook.
I read that too.
That was actually really goodwith the original founders of
PayPal, yeah, so that's crazy.
What's kind of your thoughts?
What are you seeing as, likeyou know, the last year and a
(08:54):
half, obviously everything'sbeen all about AI, but where do
you do you still think there'slike, was that more just kind of
like the initial hype, or doyou still think there's gonna be
projects that have legs?
And where do you kind of see AIgoing forward for the average
consumer?
Speaker 1 (09:08):
Well, I think that when ShotGPT came out, it was
like you know, where were youwhen Steve Jobs died?
I remember when I was meetingwith Chris Gay in his office in
San Mateo, some guy came in in ascooter and said this happened.
So it was almost like wherewere you when Martin Luther King
Jr got shot for our elders?
I think that when ChatGPT cameout, everyone was like holy crap
(09:30):
, I can write like a poem to mywife on the anniversary and hip
hop rhyming and this is likeshe's crying in tears.
This is great and things willnever be the same.
And then you kind of realizelike well, it takes a lot of
(09:51):
time to do every email and chatGPT, even if I'm doing it in
superhuman, and is it really alife-changing for my business?
I think that we have been onthis path as a venture firm
before the chat GPT moment andas people lose interest and
maybe stop paying their 20 bucksa month for open AI or realize
they don't get to the gym muchand they don't use it a lot,
we're still on this trajectorythat we were on and the
(10:12):
trajectory we've been on andremain on, you know, even
further excited by open AI andall the other models that are
out there is automating humanworkflows and leveraging data
sets, and so, like I wouldn't,we try to avoid companies that
sell to governments.
You know, for the most part welike some military technologies,
(10:33):
but I wouldn't fund thiscompany.
But just to make a hyperbolepoint, the department of motor
vehicles, the DMV in the UnitedStates, is a horrible place and
in my view they shouldn't evenhave a building.
And what is like incrediblyobvious to me is just have an
app and have the app automatewhat these you know obese people
(10:54):
are doing in that building.
And you know, literally justsay, oh, click here if you have
clear.
You know, and I have clear, andso just looks in my eyes from
the phone and it zaps and itgoes we've biometric.
You, andrew, click here if youdon't have clear.
You know, and I have clear, andso it just looks in my eyes
from the phone and it zaps andit goes we biometric.
You, andrew, click here.
If you don't have clear, thenyou've done this on apps upload
your license and some stuff anda human will compare the two,
(11:14):
but you know you don't even needthe building, and then, and
then in the end it should saylike here's your driver's
license renewal and we're goingto send it to you for free
because you're an American andyou pay your taxes, and the more
data sets you tap into.
It should say like tap into thepolice department, do you have
any warrants for your arrest ortraffic violations?
Tap into the morgue Are youalive?
(11:35):
Oh, would you like to vote?
This is theoretically ademocracy, even if it's not Sign
up to vote.
And so the idea is like automatehuman workflows and tap into
more data sets.
And then the data goes into theautomated human workflows and
it's kind of like smart contractdecision tree stuff and it
thinks just get better andbetter and better.
So like, forget that company,because we'd never fund it,
(11:56):
because the DMV likes to staythere and sit in their chairs
and use the fax machine orhowever they do things.
But imagine this for insurance,imagine for this for banking,
imagine this for credit cards,and imagine this for like
education and school andeverything and healthcare.
So the idea that you writesoftware and if this, then that
now you're doing things thatwere humanly not even possible.
(12:20):
And so I know I'm doing a lotof talking, but like I'll kind
of shut up on this point.
Sometimes you can writesoftware that does the job of a
human and the startup can pricethe monthly or annual
subscription to the software ata price that's lower than the
cost of that one human to dothat work, either fractionally
or full-time.
Let's at least hope it's afull-time job so that you're
(12:41):
able to price something on andaround an average contract value
.
That is a real knowledgeworker's annual salary Good job,
not bad.
Maybe you'll get funded andbuild a business on that,
depending on the market size.
Now imagine that there's 12people reading this clinical
trial data, with all PhDs inBasel, switzerland, and to do
(13:05):
the work of 12 people.
With maybe a little humanoversight, freeze these people
to use their brains to dosomething else and provision it
to the organization somewhereelse.
They probably know a lot aboutNovartis if they've been there
getting paid 200,000 a year tointerpret clinical trial data.
So now you can price thesoftware that we're doing even
better.
We're doing high PhD level work, you know, and just to meeting
(13:27):
in 12 jobs and they don't go onstrike, they don't need lunch
breaks, they don't smokecigarettes and in fact it's
taking the data right into itand doing what those PhD ladies
could never have achieved.
That's pretty good.
You probably have a goodstartup company there.
Then look at, imagine if wecould read every PDF at the Home
(13:48):
Depot with every supplier andget software to automatically
when the contract's coming upfor renewal, with enough time to
say I want this FOP Bangkok, Iwant this FOB Montana, whatever
I want this.
I want to sell all this crap onconsignment Montana, whatever I
want this.
I want to sell all this crap onconsignment.
Why should I pay for your nails, bolts and power tools before I
(14:08):
get Jonathan to buy it and walkinto the store?
And how am I benchmarkingcompared to you know Le Roy
Merlin in France, you know theFrench, you know Carrefour and
all this.
So all of a sudden, it'simpossible for the human to be
tapping.
Is Laurent Merlin in Francecharging their vendors?
You know, upfront?
(14:29):
Do they pay it?
Net 90, net 365, consignment,whatever.
Like, just get more data, moredata into the business.
And I believe that the Fortune500, the Cap Caron in France,
the biggest companies in everycountry, if you are not on top
of this technological shift, youare going to be a victim of
(14:50):
technological change, not abeneficiary of technological
change.
So when you say AI, people arelike I squint my eyes, I can't
tell the difference of this VCand that VC.
Or this founder and thatfounder, like the LPs, say, oh,
we want to back climate change.
And then all the VCs putclimate change on their NASCAR
suits and then all the startupsrev up their motors and put
(15:12):
climate change stickers on theside of their car Buzzwords.
Right is the metaphor.
So everyone's got the buzzwordof AI and everyone's a little
bit, you know, limper excitedabout open AI and the other
competitors at the big techpeople and all the H100s being
deployed in clusters.
But if you go back to this, Ican just intermediate the one
(15:33):
job.
I can just intermediate the 12jobs and do it better than the
human could ever do.
Or I could do the job of 1,200Accenture consultants.
That would be so expensive topay for an army of 1,200 people
to do this work that it's simplynot commercially viable and
never going to happen, whereasnow we are incubating, funding
(15:55):
and founding and backing andsupporting companies that are
doing this work.
Where it's basically the worldis broken, let's fix it.
And if you think in terms ofnational interest of a country,
if your biggest companies thatmake up most of your GDP are
slow to adopt this, your countryis going to hell.
Speaker 2 (16:16):
Yeah, yeah, that's some great points there.
And the analogy with the TNBit's the government jobs.
They don't want to be efficient.
I remember hearing that kind ofgoing to this whole AI point
too, that 2022 is all about theblockchain.
So all the VCs were, everythingwas blockchain, web3, web3,
blockchain investments, and thenas soon as Yacht TTP came out,
it was like a complete, and thenright after everything crashed.
(16:38):
Everything went from blockchainto AI projects and then so
everyone's like it's funny tosee AI websites.
Speaker 1 (16:50):
It was funny, it was amusing to see.
I mean, I mean, like, the greatirony is that blockchain is the
great truth machine that makesit impossible for some guy South
of Rome to cook the books Rightand Sicily, and yet it was like
a magnet that pulled all theget-rich-quick grifters from
(17:13):
crowdfunding 1.0.
So, you know, the bigapplication of blockchain that
took off in 2017 was initialcoin offerings, icos and company
formation and capital formationand fundraising, and people
that were unfundable byprofessional angel and venture
(17:34):
capital investors were raisingmoney from a dumb crowd that was
not doing any due diligence,with no governance, no board of
directors, no oversight, and itwas like, hey, let's raise $11
million for my electric watch,electronic watch, and after a
little bit of effort, they giveup and they keep the company
yacht and the company boat andthey're in Miami.
And then, when blockchain camealong and you have these events
(17:57):
where you just sponsor and pitchand sell tokens, not even
shares, they were like, dude,I'm a grifter, I'm going to
grift up on this thing.
Shares they were like, dude,I'm a grifter, I'm going to
grift up on this thing.
And then, when that thing isinevitably going to crash
because it comes out thatthey're grifters and they kept
the company boat and the companycar and the company yacht and
they're just on the road,intoxicated in every one of
(18:18):
these events, with no anywhereor stability.
That same set of people saidwell, the word is out that my 10
projects have all failed to getto 100k of monthly reoccurring
revenue.
It's hard to justify this $150million pre-money valuation and
it's just a pump and dump scheme.
With, you know, telegram andWhatsApp.
(18:39):
Let's all dump now or let's allpromote here that they all
became attracted to ai as well.
And you know, I kind ofconsider it my job to
investigate the grifterblockchain con artist who's now
calling herself a ai person.
And what's a really easy way toget rid of those people off
(19:00):
your desk is, say, come back tome when you've got a hundred
thousand dollars of monthlyrecurring revenue, that you've
built something100,000 ofmonthly recurring revenue, that
you've built something thatanyone's willing to pay anything
for and the revenue is notbuying and selling NFTs.
Speaker 2 (19:16):
Yeah, I mean I just have that basic SaaS model and
they actually have consumers.
That was all Web3 thing.
There's no users, there's justpeople who end up in tokens.
Speaker 1 (19:26):
It's like the Paul Graham YC mantra of build
something people want.
Or going back to what I wastalking about a few minutes ago,
which is like if we could dothat person's job like a DMV, we
could sack the DMV and rush thecastle and write software to do
a better job of that, and thetaxpayer is better off and
everyone's better off.
(19:46):
I mean someone like me.
I should be able to just gorenew my driver's license.
Bink, it hits all the databasesand it comes.
It's literally that.
That's how broken the DMV is.
But you could argue the samething about health care.
You know why don't we pay $50for an aspirin for a soldier,
you know, in a combat zone.
(20:07):
That's not good, is it thatmuch?
Well, I don't know.
But it's bad.
I wouldn't doubt it.
I wouldn't doubt it withgovernment contracts.
I wouldn't doubt it.
With Citizens United, you candonate money.
So bribery is legal in theUnited States.
You know insider trading islegal for venture capitalists.
We have information rights andpro-rata equity rights.
We're not breaking the law andwe are the biggest insider
(20:29):
traders in the world.
It's totally legal.
They expect us to be hands-onand involved in making informed,
follow-on investment decisions.
But good money after you know,not put good money after bad.
With the U S government, youknow you donate enough money to
someone and they allow you to.
You know, sell aspirin to asoldier for $50.
(20:51):
Yeah, they should maybeconsider repealing citizens
United.
Speaker 2 (20:58):
Yeah, so you, uh, I looked online.
You've been a lead investor ofa lot of projects, haven't you?
We have over the years?
Yeah, yeah, and what's is there?
Like any one of your favoritestories or case studies, you say
, hey, we took this company andit went from here to here.
Speaker 1 (21:15):
I mean there's a lot and you know, I think, like you
know, no-transcript your book isjust full of tips and tricks of
(21:42):
how to be successful.
This is like bullshit, and Iwas like exactly that's like the
best review I've ever had,except for the fact that you
gave me one star.
That's exactly the purpose ofthe book.
I'm trying to tell yousomething that somebody did that
you could do yourself, not justbeat my chest of.
I invested in Google boom.
I invested in Amazon boom, so.
But I'll tell one.
I mean like, uh, we hadinvested in a company called
(22:02):
partender that was automating,uh, how you do bar inventory,
and like there's more money inthose bottles than there is in
the till.
Yeah, nick Kunder and Nick, nick, nick, we were, we, our network
was doing so much at one point,like we were looking after his
dog when he was traveling, likethrough the network in San
Francisco, and so we just becamefamily-type friends.
(22:22):
And then his cousin, raul Vora,was going to raise money for
Superhuman and he was thefounder of Reportive and so he
had founded Reportive with acouple other co-founders I was a
Reportive user but I didn'tknow Raul the founder and then
he sold it to LinkedIn for $15million and LinkedIn somehow
(22:43):
deep six ruined it after buyingit Like they should have bought
it and just like not touched it.
But anyway, he then all hisinvestors made money.
He had like Charles riverventures, you know CRV in there
and so he was oversubscribed forhis seed round launch of
superhuman.
But they made space for usbecause he heard we were cool
(23:03):
and, um, he came to my office inSan Francisco and pitched his
vision for superhuman and Ithought this is kind of like an
extension of where reportive wasgoing.
I mean, he basically said asmuch and so he is the technical
co-founder that can make thisand so I figured let's fund this
guy and he can on his own, makethe software to do what he
(23:26):
wants it to do, and he's socharismatic and charming and
electrified as a person thathe'll have no problem raising
more money With us makingintroductions.
He'll have absolutely noproblem raising money from
people we can make warm introsto and sell them on investing
before he even emails them, andhe'll be able to recruit people
(23:48):
out of places like Google, youknow, in a talent war where
they're offering dental to yourdog and to use and all that.
So we figure he can raise themoney, he can make the product.
He can then get into revenue.
He can raise more money, he canextend the product.
He can raise more money, he canmake the product and this
vision that he's got, which wecompletely share, will happen.
(24:09):
I think that that company willexit between two and a half and
10 billion and they'vecompletely fixed email.
Email was also a passionatething for me.
I respect that Barbie Dolls andMattel is a good, reliable
business, even though I'm not inthe peer group that wants to
pay $50 or $20 for a bit ofpolymer to play with.
But I am in the peer group thatwants my email fixed and making
(24:36):
email just 1,000 times betterand more efficient and
productive and he actually, likeyou know, you click like two
buttons and chat.
Gpt is in your email withmemory so I can write like the
person's name, terminate, andthey'll be like we're sorry to
let you know, we're going to letyou go and fire you, and I can
like put it more in my voicemake it more formal.
(24:56):
You know what I mean.
It's unbelievable how much timesuperhuman can save you, and so
it's been very rewarding toinvest in a founder that we
really like as a person.
The only time my kids have beenin a Lamborghini was in his.
We've developed a friendship.
You kind of feel like I've gotyour back.
It's almost a family type thing.
We're trying hard to influencethe roadmap and the functional
(25:20):
requirements of the product.
We were using the productheavily, like you know.
I just love that and the factthat you know the valuation is,
you know, approaching manybillions and we were in at 8
million on a price round.
It's all QSBS, so there'll beno tax for me or any of our US
taxpayers.
You know, it's just.
(25:41):
It's just.
You wish they all could besuperhumans, you know I mean
there's other ones like.
Igor Jablokov was a FoundersClub guy, so going back to the
Equity Exchange Fund and I'llstop with these two because this
just takes up too much time butIgor had founded YAP.
He was an IBM Watts guyresearcher and then he spun out,
(26:01):
founded Yap, so got VC back,joined the Founders Club and Yap
was.
People didn't know what to callit back then, but they called
it voice recognition, when infact it was natural language
processing NLP but that acronymdidn't exist at the time and it
was acquired by Amazon and itbecame the nucleus of Alexa and
(26:24):
Fire TV.
So there wouldn't be Alexawithout YAP, and Igor is the
brain behind it all who executedand made that happen, and so it
was a really good exit there.
And then, with that exit, hebecame an investor in our fund
one and became a venture partner.
With that exit, he became aninvestor in our fund one and
became a venture partner.
And so you know he's actuallyhe's moved from Charlotte to
(26:47):
Durham but you know, so he'skind of in that kind of RTP
ecosystem but he's more globalecosystem guy.
Whenever he was in the Valleykind of every three months or
something I would always meethim.
You know, whether it was acoffee, a beer, dinner, whatever
we could get with him, and hewas always talking about the
next evolution of Amazon,basically of Alexa.
I mean, he's the guy who madeYAP and, just like Raul, didn't
(27:07):
stop with reportive, signed toLinkedIn, he went on and made
Superhuman and I probably,confidentially, shouldn't talk
about the roadmap, but it'skiller.
And when you go over to Igor,he's talking about what to do
with natural language processingand what to do with enterprise
data.
So long before there was OpenAI, there was Prion, and Prion was
(27:28):
the code name that Amazon hadon the acquisition of Yap.
So he used the code name of theYap acquisition to be the name
of his next company, prionP-R-Y-O-Ncom.
And so we felt like we werejust around Igor talking away,
and I was always saying to IgorIgor, you're boiling the ocean.
(27:49):
You see the application of NLPand accessing into datasets to
everything.
Could you please be morefocused on a little bit of a
point solution that second grademath, sandhill Road VCs can
understand?
That show like you do the jobof these people.
You sell them this much money,they pay you this much and they
got huge instant ROI, instantpayback and they're doing stuff
(28:12):
that was otherwise impossible.
And he's like, yeah, but I canliterally do everything from
military to healthcare toeducation.
I'm like, pick something, picka sport, but but we're, we're,
we're open.
Ai is like breaking things andasking for forgiveness later and
using people's data.
I mean, all right, we're notallowed to use Disney data, so
(28:33):
no more make me, jonathanholding a Jedi.
You know sword, you knowlightsaber.
Igor has been going into yourenterprise, and I'm sure OpenAI
does it too.
But he goes into the enterpriseand says, literally, let me
show you how I can drop all yourdata into this thing.
And now you can ask it anything.
So, like BMW can drop all theirdata into Prion.
(28:56):
And when you're driving your BMWjust hit that little microphone
button saying, hey, what kindof oil does this car take?
Because the alarm just went off.
Send it.
And it says, would you like meto send you that via WhatsApp or
to your phone via SMS?
I'm like, yeah, so you justwalk out of the car getting the
oil, as opposed to open theglove box and get the manual out
(29:16):
and that kind of nonsense.
And it and and it's all theirdata.
And you don't want your datagoing to Sam Altman, right, you
know, cause he might ask forforgiveness later, you know, so,
so, so Brian is potentiallygoing to be a bigger company by
market capitalization than openad, you know, and, and we were,
(29:38):
you know.
You know we have the braggingrights of saying we knew.
We knew Igor when he was justthinking about what to do and
you know, and he values our youknow brainstorming sessions, you
know, and even when he's hiringpeople, a million dollar
salaries with no revenue.
I'm like dude, you've got tofigure out how to charge
(30:02):
somebody for something here.
This is not IBM Watson labshere.
Speaker 2 (30:08):
That's some good stories there.
Let's talk about the your book,for you have a couple of books
right the entrepreneur Bible andjust kind of like.
I think that was a great pointyou mentioned, because that's
actually good.
Go ahead, Go ahead.
I was like that's greatmarketing.
Speaker 1 (30:27):
So the one star, but it's all like positive things,
it's my favorite.
Speaker 2 (30:28):
He's the one star, but it's like everything you
want to know my favorite review.
Speaker 1 (30:32):
I you know you can reply as an author to every you
know review.
You can be like hey, hey, bro,thanks.
Thanks, jonathan, for the good,for the love on the positive
ones.
But, um, that worst review.
I was like hey everybody, thisis the best review.
If there's any review to read,it's.
Avoid the fact that it's onestar.
But he basically says why youshould buy this book.
(30:52):
Right, it's not me braggingabout my great investments or my
amazing startup where I hit ahome run, but but where I
interrupted you and laughed isthat the original title for that
book was sex, drugs and venturecapital and I knew that title
would never stick.
And then, and then I even likecrowdsourced, you know, saying
I'll buy a case of champagne Ifanyone comes up with a title.
(31:13):
That is the one I go with andhere's the table of contents.
And that was like an insidioussales tactic to get like my
40,000 newsletter, to like seewhat the book, what the topics
are, to maybe sell some copiesor get it out there and seed it
into the system.
But McGraw Hill, I signed withthem and I was kind of like a
(31:34):
young teenage rock and roll bandthat doesn't realize what the
record label is going to do here.
And part of it is they own thebook and they basically buy the
book and they can give itwhatever title they want.
And I laugh because youstammered on pronouncing the
title, because the wordentrepreneurial it's the
entrepreneurial Bible to venturecapital inside secrets from
(31:56):
leaders in the startup game.
And I said, first of all, Idon't think I'll ever know how
to spell the wordentrepreneurial.
I'm a bad speller but like Idon't think a lot of people can
pronounce it and like you know,decade later, on a podcast,
people are like trying to, youknow, give me a shout out to
that book and you can't evenpronounce the word
entrepreneurial.
And then, and when they wentwith Bible, like you said, you
(32:17):
have a bit of an internetaudience, I'm an international
guy I was like I'm cool withthis, as long as you call it the
entrepreneurial Koran.
If we're going to, if we'regoing to, alienate half the
globe, let's at least go withKoran.
And they insisted on Bible.
I had no say in that title,like when I was led to believe,
let's talk about the title.
That was their way of sayingthis is the title, you know.
So it was kind of a badexperience on that when the
(32:40):
Chinese translated that book andit was published in China,
where more copies have been soldin Chinese language than five
other languages worldwidecombined.
They called it Masters ofVenture Capital and I have
interviews with like and I waslike that's a good title.
Like all this talk about whatare we going to call it?
And it's quite accurate becauseI have like, like, rather than
(33:01):
me, tell the John Kraft story ofhow he failed to meet payroll
22 times at Pandora before theIPO and how he navigated that
with actionable, repeatableadvice that someone else could
do.
I said, just let John Krafttell the story.
So, you know, I interviewedJohn and I read it up and then
we email it back and forth a fewtimes and so he fixes and adds
(33:22):
a little bit and then we, youknow, distill it down and put it
in the book.
So we did that with like TimDraper, brad Feld, you know Bill
Draper, tim's dad, like youknow over 50 masters.
So the Chinese were kind ofaccurate that it's like masters
of venture capital, so like getall this decades of experience
collapsed into 200 pages, and sothen I've used that for all my
books.
(33:42):
So masters of corporate venturecapital, masters of blockchain
and crypto, and I'm very closeto finishing book four, which is
masters of raising venturecapital funding, so I'm just
going straight to that one topic.
It's a big topic.
It really isn't a maker tobreak a topic, and so there's
just like every day, ifsomething happens, I'm like is
that good enough to get in thebook or not?
(34:04):
And it's kind of like a busynightclub in there, like studio
54.
We can't let you boys in untiltwo people come out.
That's how busy it is in there.
And you, you can't let yourself.
Be like napoleon and havevolumes and go on and on and on.
Since I'm excited about therelease of book number four,
yeah, that sounds good.
Speaker 2 (34:21):
I mean that's the hot topic right now.
Everyone's trying to raise,everyone's trying to.
It'll always be.
Speaker 1 (34:25):
It's Shakespeareanly timeless, Unless you know your
dad funds you or your mom does,and even if she does, you know
you want to get into theecosystem and get all these
aligned people with orthogonalnetworks and experience and
connections who know the head ofM&A at Google or something, or
Telkomsel in Indonesia.
Put that crypto app on 200million handsets in Indonesia
(34:47):
Great.
Speaker 2 (34:51):
Yeah, I mean that's.
I mean obviously, yeah, youwant to scale with the right
partners.
Where do you see venturecapital going in the next few
years?
Is there big changes coming orwhat's kind of where you see
your future going in the nextfew years?
Are there big changes coming orwhat's where you see your
future going in that?
Speaker 1 (35:03):
industry.
Well, there's ebbs and flows inthe economy and, although I had
a front row seat in the real ofsecondaries of founders selling
before the exit even a smallpercentage to where it is now, I
think that the secondaryselling of founders has been
(35:24):
amplifying a problem that we'rehaving of exits taking too long
and exits are taking too long tohappen.
In the dot-com days of the late90s, a know a company would get
funded and, like three monthslater would IPO on no revenue,
you know, and so the exit.
(35:45):
So the money was.
People were investing in theventure capital fund and getting
their money paid back in adistribution very quickly.
One of the reasons why Web3slash crypto blockchain, ico
token offerings was soattractive to people was that
you essentially list the tokenson a crypto exchange and get
(36:08):
liquid before you find out ifthis Bunsen science experiment,
bunsen burner science experimentworks or not and if you have.
Indeed, paul Graham, builtsomething that people want
willing to pay for.
So people were getting theirmoney back so fast.
It was hard for me, like I knowa lot of crypto people, and it
was hard for me to raise moneyfor my fund from like Brock
Pierce and all these people whenthey're like, dude, if I invest
(36:30):
in your fund, it'll be likeyears before I get the money
back.
Where, like, I architect myexit before I even commit to
wire funds and so that liquiditywas happening.
Now the music stopped, thatmusical chairs thing stopped,
and there's always some SamBankman-Fried.
You know, mount Gox, that'sgoing to screw things up.
When there's no adultsupervision and no board of
(36:51):
directors and governance inthese things, it's just
naturally going to allow forBernie Madoff to make off with
money.
But with where we are withventure capital and what's the
future?
To answer your question is thatwe're in a period of the exits
are not really happening.
Like the Biden administrationhas been pretty much on a
offensive war to stop big techfrom making acquisitions from
(37:14):
the antitrust regulatory side.
Like they're fightingeverything you have.
I just had Ken Goldman on mypodcast.
It was like the formerpresident of Eric Schmidt's
family office and former CFO ofSybase Oracle.
I mean Siebel, Yahoo.
He's crazy guy, knows everybody.
(37:35):
He's saying I don't think it'sthe investment banks that don't
want to IPO these venture-backedstartups that have billion plus
valuations.
It's the startups themselvesare enjoying being private.
If the founder can sell andstay in the secondary market.
Why should she ever IPO?
Why should she go M&A?
They've raised money atvaluations that are too big for
acquisitions.
It's going to be an antitrustscrutinized acquisition if the
(37:59):
pre-money valuation of the lastfunding round was $2.5 billion.
So we kind of have the system ofyou know you've got people
refer to all the private marketsas venture capital when the
company is selling a minorityslug of you know stock issuance
and so.
But I think of it as more Iwould segment it up.
You've got like pre-seed, but Ithink of it as more I would
(38:20):
segment it up.
You've got like pre-seed,late-stage seed series A, series
B, series C.
At a minimum let's make threecategories Seed investing it's
like really hairy back, hairychest.
Venture capital You've gotmeaning like maybe no revenue or
minimal revenue.
Then you've got late-seedseries A 100K to 500K of monthly
revenue.
That's where we play as ourentry point for the fund.
And then there's growth, wherewe only do SPVs with our
(38:41):
syndicate and our LPs and thenthere's publicly traded.
Then you go either M&A orthere's secondaries and M&A and
IPOs.
I think that the liquidity forthe growth guys has completely
stopped and they're just notgetting their money back the way
they used to from an IPO,surviving the lockup and being
(39:03):
able to sell some shares andthen distribute cash to their
LPs or even distribute thepublicly traded stock that the
LP can either hold and go longon or liquidate for cash.
And on the M&A side youtypically get like M&A of a
privately held company buys ourprivately held company, we get
stock in that and then they getbought by Amazon and then we get
(39:24):
liquid.
Or it's a combination of stockand cash, or it's all cash, with
payouts coming in escrow andholdbacks and we're lending
money to the PE buyer.
It's all weird and complicatedsometimes, but the point is the
industry is not receivingdistributions the way it
historically has, and so a lotof the institutional LPs like
(39:47):
endowments, pension funds,insurance companies, sovereign
wealth funds, multifamilyoffices or single family offices
are thinking like I don't knowabout investing in a fund.
If they said it was a 10-yearterm, that maybe goes to year 12
, and it's starting to look likea 15, 20-year ride.
Is the return, is the cash oncash multiple I'm making for
(40:07):
investing in that growth funddelivering enough alpha to
justify the lack of liquiditythat I'm not in a marketable
security?
Maybe I should just go to amutual fund that buys stock in
emerging market Indonesia,singapore, malaysia, thailand,
something like that.
(40:27):
So I think this is a problem thelack of liquidity for VC funds.
Our fund invests in late C&Aand we do the introductions, we
do the investment bankingintroductions to all of the next
VCs, not asking to be paidanything for that, and the
result is that these companiesraise a much bigger round after
(40:49):
us and we might double down intosome of those.
We might SPV, let RLPs accessthose rounds with lower
multiples, but the multiples arebig where we enter and we're
able to sell between 10%, 5%,maybe even as much as 50% of our
shares in the privately heldcompany because we're a small
fund and those big funds are notgetting the ownership target
(41:13):
percentages that they promisedtheir LPs.
So the big funds that are like3.5 billion billion, like NEA,
just raised six and a halfbillion.
Half of that is their earlystage VC fund.
They're coming in well after usand we know them.
They were on the board of myFounders Club Equity Exchange
Fund.
We know them real well and theywill fund our companies and the
(41:33):
company's only selling 10% ofthe share capital because if
they're raising $100 millionaround, why should they get
diluted for more than 10%?
With $100 million, they can putsome ads, bribe a US senator,
enjoy the legal corruption thatis the screwed up American
democracy and go build ashopping mall and a bird
sanctuary, whatever they'redoing, and then a year later
(41:57):
they've doubled revenue and nowthey can raise another $100
million at a $4 billionvaluation.
But when we're at $4 billion,we were in at $10, $8, $14, $20
million free money entry point.
It's vulgar to me to not returnmoney to LPs that maybe you're
helping me raise from, and so wereturn the money to the RLPs
(42:18):
faster than almost any VC isdoing.
It's honestly more of a cryptomindset.
It's a Brock Pierce cryptomindset of hey man, I bought
these tokens at a penny becauseI'm Brock Pierce and I have a
million followers and by Fridaythey'll be raising them at 99
cents and I'm going to doubledown and show conviction.
(42:39):
You know like it's a GameStopthing, and then within a month
it'll be on Kraken and I'm goingto pull my initial $250K of
cost out and enjoy Puerto Rico.
So we're investing in late C&Aand doing hard work to get these
companies into the hands ofSeries B, c, d and then we're
(43:03):
beginning to sell part of it.
But we let our LPs invest inthose growth rounds where they
might love 2x cash on cashwithin a year or 4x cash on cash
within three, four years.
But there ain't no way it'sgoing to be more than 4x.
If you 2x a billion, if you andI 2x a $1 billion fund, jonathan
, we raise a billion dollars.
(43:25):
We invest 800 million.
We took 200 million inmanagement fee.
That's 2% times 10 years.
We see big grifter saying twoand 20.
It's 20 and 20, if not 25 and20.
Years, we see big griftersaying two and 20.
It's 20 and 20, if not 25 and20.
So we invest 800 million and wemanaged to 2x that thing.
That is bad performanceconsidering the illiquidity of
how long it takes.
But you and I get 20%performance fee, carry 20% of
(43:46):
the $1 billion profit.
That's $200 million.
We have a new fund every twoyears.
Last fund was not $1 billion,it was $2.2.
If we could even $1.2x a $1billion fund, we get 20% of the
$200 million profit.
We get paid $40 million forlosing money to inflation on the
(44:08):
big end.
That's not what my firm does.
My firm is in late C&A and weget them into the hands of these
guys shooting for a singledouble hit.
To use American baseballmetaphor.
They're not trying to 10x thefund, we are.
If we put money in the samerounds with them from the fund
which is treasure, we'll end upwith a 2x-ing fund and they're
(44:30):
happy about that.
We're shooting for 10x for thefund, 7x at the worst, so that
treasure goes into late C&A.
And then we tell our LPs wehave a God-given legal right pro
rata equity right to maintainour ownership percentage so we
can fund all those BCDEs withour LPs and our syndicate that
(44:53):
want to access.
They like a 2x, 3x, 4x and thefund performs really well and we
sell to ourselves or we sellinto the round of some of those
big ones to make sure we returnthat fund very, very fast.
So a short answer to yourquestion you may find that VCs
that were on a cadence of a newfund every two or three years
(45:15):
are not raising that next fundbecause they've not delivered
money from the existing fund orthe previous fund or the
previous fund, and so you canonly ask the Harvard endowment
to keep sending you moneywithout sending them anything
back.
It's like a broken modem thatreceives cash doesn't send data,
so they need to send money back.
And if you're a huge fund, noone's letting you sell on the
(45:36):
secondary market.
That's what Ken Goldman said inmy podcast.
No one's letting you sell onthe secondary market when you're
benchmark.
When you're 7BC benchmark wantsto buy us out and I say I own
5% of the company.
I'm willing to go down toowning 4% of the company.
So we have our cake and eat ittoo.
We sell them 1% of the companythat we sell 25% of our position
(45:57):
.
We might've returned the entirefund from that, so it's stay
private longer, but we get oursoldiers off the beach and we
pay our LPs back.
So you may find that VCs arehitting the brakes because
they're trying to not become azombie and make the funding they
have in the current fund last afew years longer, and so
(46:19):
instead of deploying like crazyFOMA nuts a $2 billion fund in
24 months, they're holding backand they're doing more due
diligence, and a funding roundtakes longer to complete.
People are taking their time.
They're doing the due diligencenow, and so these are all
(46:39):
changes that affect founders, us, everybody, and the LPs are
saying don't, jerry Maguire,show me the money, wire me the
money.
And it's hard for them to wirethe money with Biden warfare on
M&A and the founders takingsecondaries.
And I figure, if she's selling,I'm going to sell too, because
(47:00):
I'm not going to suffer becausethe founder just bought a house
in East Hampton and a huge placein Santa Monica.
Speaker 2 (47:09):
Yeah, no, a lot of good points there, and you
mentioned Brock Pierce, the bigadvocate for Bitcoin.
I think he was the.
Was he like the foundation ofBitcoin, the founder of it or
the CEO?
I forgot.
Speaker 1 (47:23):
He's on the board of the Bitcoin Foundation.
They might've.
I mean, there've been somescandals that have never really
been proven.
I love the guy.
If that guy were my son, I'd beso proud of him.
Speaker 2 (47:29):
He's amazing, was he part of?
Speaker 1 (47:29):
Tether too.
He is, and a lot of people youknow.
I mean I mean, look, the thingwith these things is that
there's no real good governanceof Tether and so people say
things and you don't know ifit's true or not, like, are they
holding all Chinese commercialpaper for ghost towns in
Shangzhou, Hangzhou, I meanChina, you know, we just don't
(47:51):
really know.
A story I love about BrockPierce is when he was very young
.
He's a big video gamer.
He went to China as an Americanin early, early days of
Americans doing real businessthere and convinced the Chinese
Communist Party to allowprisoners that are in prison to
play Xbox games, to unlock gunsand skins as virtual goods that
(48:13):
he sold on a little cryptoexchange for the video game
items and the prisoners got paidnothing and he paid like 70% to
the Chinese Communist Party andkept 30% for himself.
So he had slave labor inChinese prisons playing Xbox.
I mean that's a brilliant ideaover one too many drinks in
(48:35):
someone's pool in the south ofFrance in August, but not
something you do.
He literally did that withsuccess.
Speaker 2 (48:45):
Yeah, I remember I heard some story about it.
It's funny.
Speaker 1 (48:48):
It's crazy.
He's a great guy.
I mean, he's been involved withsome projects, that he's been
involved in so many deals that alot of them probably turned out
to be really, really dodgy, youknow.
Speaker 2 (49:02):
He's doing the alternative medicine stuff right
now.
I saw his like he's doing afund for that, like psychedelics
and stuff.
Speaker 1 (49:09):
I mean he can.
I mean you know what.
Another thing I'll say acompliment on Brock.
You know who I consider a friendis that a lot of people are
like oh yeah, I work at Googleor I run a VC fund, but on
Burning man the real me comesout and I'm going to dress like
you know Lenny Kravitz on LSD,but but then for the other 360
(49:30):
days of the year, I wear poloshirts and tuck it in, or or
wear a hoodie to conform withMark Zuckerberg and I, you know,
I'm Brooks brothers all the way, and then and then again it's.
It's that time of year to doburning man and I'm out of the
closet, being the real me likeMike Pence, made a decision to
be straight, you know, and and Ithink they're basically fake
(49:52):
and phony like catcher in therye Rock Pierce is his true self
365 days of the year and he'srocking it like he's Lenny
Kravitz on psychedelics, beinghimself all 365 days of the year
.
He's not a closeted Mike Pence,he's the real him all the time,
and I applaud that.
(50:13):
I think everyone should begenuine and authentic in
business as much as possible andyou know so I just think he's a
great guy.
Speaker 2 (50:22):
Yeah, I love that being genuine and authentic.
Are you taking like right now?
Are you guys raising fundsright now for your fund?
Well, the SEC does a lot ofstupid things.
Speaker 1 (50:31):
Well, the SEC does a lot of stupid things, Like
they'll let a teenager invest inEnron stock, but they won't let
you invest in the privateplacement of OpenAI.
So they're just wrong.
But they're a mafia that is inpower and they're like hey, it's
a nice little shop you have.
I'd hate to see somethinghappen to it.
That's my view of these laws.
(50:59):
So I'm actually prohibited frommaking a public announcement in
the newspaper, and your podcastwould qualify as that on the
internet that we are insolicitation and we're not 506C,
so I'd be violating the ban ongeneral solicitation.
But I can say this and I'vewritten books as such venture
capital firms tend to raise anew fund every two years or so,
(51:21):
and so we don't believe insaying someone there's a really
short fuse invest now by Fridayor you'll miss the deal.
I don't like to rush anyoneinto anything.
We believe in strength anddiversity with the LP base and
both minnows and whales peoplethat can add value.
We have a scout program forpeople to work with us, even if
(51:43):
they're not liquid with capitalto invest in our fund right now.
We have ways of working withpeople to help us develop
relationships with people thatcan invest in our fund.
So there's ways for us to kindof use the force and work with
people to either invest in ourfund.
So there's ways for us to kindof use the force and work with
people to either invest in ourfund, help us raise capital,
help us find deals, help us addvalue to our portfolio companies
(52:03):
in a very open door.
We're not allowed to disclosewhen we open the window for
actual funding into the fund,but I especially working with
many cultures from South Americaand around the world.
You know you don't show up withan empty suitcase and ask
people to throw their cash intoit and I'm going to return
tonight back to Silicon Valleyand create jobs in California.
(52:25):
You need to develop arelationship.
So we're always open to meetingpeople and developing
relationships that can help usfurther diversify and grow the
strength and power of ournetwork to be able to add real
value to the startups and evenplay a role in the process.
We have people that are like aventure capitalist one day a
(52:46):
month or two days a month.
So some people help us sourcedeals.
They help us diligence and vetdeals.
They have their backgroundnetworks to say who knows this
person.
I love off-sheet referencechecks like send me a list of
references and we're going tofind our own references that you
didn't even give us and findout the former founder that quit
(53:06):
and you said you were a solarfounder.
We're going to palumbo, get tothe bottom of this investigation
and then we're going to addvalue, to fix problems and add
value all the way up toimpacting the exit.
So we have a very open door forpeople to come and work with us
in any capacity.
Speaker 2 (53:23):
Nice, yeah, I love your quick analogies,
quick-witted analogies.
You'll put them in there realquick.
Then I'm like, okay, now I getit.
It's pretty funny.
Thanks, it's pretty cool.
So where can people find moreabout you?
I know you mentioned, oralluded to a newsletter and you
have books.
What are some of the best waysfor people to kind of find more
information about you or connectwith you?
Speaker 1 (53:44):
Yeah, I mean.
So I guess I can send you anemail with, like you know, some
links and resources in the shownotes.
So you know our website in theshow notes.
So you know our website 7bcvc alink to join our newsletter,
maybe info on our podcast, andI'm happy to put my LinkedIn and
my email in there too.
(54:04):
We, you know we needed toinvest in superhuman because we
got a lot of inbound email andyou know a lot of VCs are like
oh, I only like to get deal flowthrough a warm intro.
A lot of the stuff we invest isjust cold emails.
Speaker 2 (54:21):
I was always wondering that.
Speaker 1 (54:23):
I mean, like most VCs that I know are like you know,
it used to be the khaki pantsand the blue button down shirt
in the 90s.
They're like, yeah, we were amulti billion dollar fund and I
don't want anyone to email methat is here in Silicon Valley
in the audience.
Get a warm intro throughsomeone that I went, you know,
to Stanford with.
(54:43):
That's ridiculous.
Are you in the business?
Are you afraid of work?
I mean, come on, aren't youtrying to find the top of the
needle in the haystack?
You know and like, you need afunnel and you need, you need
some sort of help to process allthe deals in the funnel.
So I say I mean if, if thecompany has a hundred K of
(55:04):
monthly reoccurring revenue andand you know, an under 500 K,
that's our band.
So a hundred K of monthlyreoccurring revenue is 1.2
million annualized revenue to500K, which will be 6 million If
it gets above that.
The valuations are too high.
The cash on cash multiple with50%, 60% dilution doesn't
(55:24):
satisfy the target returns forour fund.
We already talked about how thebillion dollar fund is
handsomely rewarded for 2X oreven 1.2Xing the fund, which is
not even justifying.
You're better off in the stockmarket or staying liquid somehow
, or get into fixed income withinterest rates are being up.
So we love to hear those andI'll send you some stuff.
(55:46):
If you want, you can put themin the show notes.
That's awesome.
There's a link to the books, ifanybody wants to see that, or
podcasts.
All that stuff is free.
Speaker 2 (55:57):
Perfect Cool.
Thank you for being on the showand I'll include all those
notes and show notes below.
Thank you again, Andrew, forbeing on the Ultra High Net
Worth podcast.
Speaker 1 (56:01):
Thanks for having me, man.
Have a great summer and hope tosee you in the real world again
soon.
Speaker 2 (56:05):
As well.
Thank you.
Speaker 1 (56:06):
Okay, bye for now, jonathan.
Speaker 2 (56:09):
Hey, it's Jonathan.
Make sure to download andlisten weekly as I bring the top
guests in the ultra high networth niche, sharing their best
insights and providing exclusiveresources.
Finally, I get a lot of peopleasking me to help them
one-on-one.
Yes, I can, but it's verylimited.
Go to a revenue ascend forbusiness and CMO consulting.
For real estate investing go tomidwestparkcapitalcom and those
(56:34):
looking to invest inservice-based business roll-ups
go to BusinessCashOutcom.
All links are included below.
Please like, comment and sharethis podcast with your friends.
Thanks for listening.
Imagine if we could read every PDF at the Home Depot
with every supplier and getsoftware to automatically when
the contract's coming up forrenewal, with enough time to say
I want this FOP Bangkok, I wantthis FOB Montana, whatever, I
want this.
I want to sell all this crap onconsignment.
Why should I pay for your nails, bolts and power tools before I
(00:24):
get Jonathan to buy it and walkinto the store?
And how am I benchmarkingcompared to?
You know Le Roi Merlin inFrance, you know the French, you
know Carrefour and all this.
Speaker 2 (00:37):
Welcome to the Ultra High Net Worth Podcast, which is
a global community of the mostsuccessful and their insights.
We want our families toflourish, collaborate and create
a better world for all.
This podcast is a trustedresource to learn from each
other, navigate the mostimportant global issues and find
life-changing opportunities.
I'm the host, jonathan Tuttle,the founder at Midwest Park
(01:01):
Capital, a boutique mobile homepark real estate fund.
Revenue Sun, a leading digitalconsulting and fractional CMO
agency.
Business Cashout, a boutiqueM&A firm focused on
service-based businesses, and apart of the founding team at
Wally Pop, a mood-enhancingtop-up beverage.
This episode is sponsored byPrestige, the world's most
(01:22):
exclusive social networking app.
All links are in the show notesbelow.
Enjoy the show.
Please like, comment and sharethis podcast with your friends.
Thanks for listening.
Welcome back to the Ultra HighNet Worth Podcast and today I
have a fantastic VC guest,Andrew Romans from 7BC Venture
(01:42):
Capital and his distinguishedauthor.
Speaker 1 (01:44):
Welcome to the show.
Hey, jonathan, great to see youagain.
Thanks for having me.
Speaker 2 (01:49):
Yeah, thanks for having me.
We were talking and chatting alittle bit before.
I'll let you give yourbackstory, because if you look
at your bio it's pretty crazy.
You've done so many things inthe VC.
You're a thought leader, soI'll let you describe your
background in the space.
Speaker 1 (02:06):
Sure, I've always been in technology startups on
one side of the table or theother.
So I started off founding inthe tech world and then, pretty
young age, founded my ownstartup that raised angel
funding, then a $15 million fundring, then a $15 million
fundraising and then a pre-IPOand then it IPO'd on the NASDAQ
with Morgan Stanley.
So after you've kind of donethat, you know, before turning
(02:29):
kind of 32 years old orsomething, it's kind of hard to
get hired at Morgan Stanley orMicrosoft or anywhere.
So I felt almost orphaned,forced into the world of combat
that is startups.
And so I had a string ofstartups that were all
venture-backed, you know, somegood exits, some bad shutdowns,
uh, m&a and IPO.
(02:49):
So I kind of seen the good, thebad and the ugly from the
founder side and not everythingI touched was successful.
And when you're dealing withall these VCs on the way, you
know, on the way up or down, youknow, you kind of think maybe I
want to do their job and so Iwas somehow attracted to doing
their job and I I eventuallystarted my own VC fund and I'm
skipping over a lot of stuffbecause I don't want to waste
(03:11):
time on it but I started aventure capital equity exchange
fund, which was kind of a funkything, where in the dark days of
the 2000s after the dotcomcrash, it was stay private
forever and yet no liquidity.
And so you know you're worth ahundred million on paper but you
can hardly afford to pay forthe lift ticket to take your
(03:32):
kids to go skiing in Tahoe andyour former roommate from MBA
like owns the cabin and doesn'teven look like he should be
allowed to vote.
And you know, there you are.
So what I did was I said ifyou're a venture-backed CEO or
founder from top VC, you couldput up to 10% of your founder
stock into a limited partnershippool and I'll bring in together
(03:53):
25 other CEOs and then make youan owner of the other 25 guys.
So instead of being worth $30million, you're worth $27
million now of your company andyou got $3 million in a venture
capital equity exchange fund.
So you own shares in the other24 companies.
And then we all go out todinner.
We're talking about, like youknow, some of the places we've
(04:14):
hung out in these family officeevents.
This is a great dinner becauseeveryone introduces themselves
and you all own shares in eachother, so you're aligned to help
each other.
And so I did that for like 15years and met like every founder
that got funded from our tierone list, like even Elon Musk
when he raised from solar city,took a go to meeting call or a
meeting in our offices inSilicon Valley.
(04:35):
So we kind of got to meeteverybody and we had 42 VCs on
the advisory board of that and,and after that secondary started
to be a real thing Like DanielEk from Spotify was joining the
Founders Club with Spotifyshares, we had rejected him from
Stardoll, his previous company,and we kind of knew everybody
there.
And then Crandon and North Zonesaid give us a couple of weeks,
(04:57):
we'll spin up an SPV from ourLPs to buy it for cash.
And so I said we're dead.
Why would you swap paper forpaper when you could swap paper
for fiat, real cash?
And so I flipped into that andI was advising founders in
growth stage VC funds how to geta better price selling a small
percentage of their shares onthe secondary market for cash.
(05:20):
And then I found that to be anunrewarding business where
nobody cares about you and yournetwork.
I'm like, hey, man, I know,jonathan, I can introduce you.
Maybe we can get you on thispodcast, and people are like I
don't care, I just want onebasis point Whoever the dumbest
Russian is to overpay for this,I'm ready to work with Saddam
Hussein to buy my shares.
I don't care.
And so I was, like you know,let's go the get into early
(05:50):
stage VC funding, where they docare about the network and they
do care about all of ourexperience and ideas and attempt
to help them, and so we raisedmoney from actual founders.
So the cornerstone of our firstVC fund, and throughout all of
them, has been lots of venturebacked founders and just people
like you that are in theecosystem, that are excited to
be like hey, I know so I wasjust in Philippines, manila.
I can hook you up with thetelecom operator and like all
that network starts to turn intolike good results.
Speaker 2 (06:11):
I love it.
Yeah, it's pretty cool Becauseif they have skin in the game,
that means they obviouslybelieve in the product.
What is you mentioned?
Some like high profile founders, who's probably the most
impressive?
You matter.
Speaker 1 (06:26):
Who is the one that you're just like wow, I mean I,
I think I'd say elon musk is oneof the the most impressive
people I've ever reallyinteracted with and I would say
I'm giving you a very genuineanswer here.
You know, peter teal is.
You know, I've met him a numberof times and, um, yeah, he's
like a walking statistic,almanac of you know he's like a
walking statistic, almanac ofyou know he's like well, 18.6%
(06:47):
of women with red hair are notsuicidal.
It's like, wow, where does heget this from?
It's crazy.
But you know, I think thoseguys you know pretty damn sharp.
I mean, lonsdale is kind of ayounger up and comer who you
know is kind of a bit of a mindblower.
When you're hanging out withhim and talking to him about
startups or strategy and stufflike that, you know he's
(07:09):
covering a lot of surface area,you know, at a young age.
But I would say, when it comesto 7BC Venture Capital, our VC
fund today, I just believe thatthere's a lot of strength in
diversity.
So, you know, in the summeryou're having you just described
all these places that you'reliving in and nomadically
(07:29):
working out of, you know,picking up people along the way.
If you can get them excitedabout what's going on here, it
just adds more.
You know, like I jokingly say,a lot of VCs in Sand Hill Road,
silicon Valley, are five whitemen from Boston that probably
dated the same girl at ChodorDeerfield Academy in
(07:53):
Massachusetts and then theyjoined the board and they all
know oh, let's go to Londonbecause they speak English and I
know a guy.
What about Brazil?
What about Indonesia?
What about Japan?
What about Toronto?
So I like the idea of havingdiverse LPs from all walks of
life and geographies, and notonly just tech people.
We probably have more techworkers, tech executives, than
(08:16):
any other type of LP, butthere's a limit to the size
check they can write, and sothey're not our biggest
cross-section of the fund, butit's the biggest number, and so
if you get funded by us, you'llmeet a lot of different people,
which I think is good.
Speaker 2 (08:32):
Yeah, that's super cool.
Yeah, now, peter Thiel, was itZero to One, or I forgot the
name of the book.
Yeah, zero to One is his book.
Yeah, yeah, I was like thatone's.
Yeah, he.
Yeah, he's the old PayPal mafiabook.
I read that too.
That was actually really goodwith the original founders of
PayPal, yeah, so that's crazy.
What's kind of your thoughts?
What are you seeing as, likeyou know, the last year and a
(08:54):
half, obviously everything'sbeen all about AI, but where do
you do you still think there'slike, was that more just kind of
like the initial hype, or doyou still think there's gonna be
projects that have legs?
And where do you kind of see AIgoing forward for the average
consumer?
Speaker 1 (09:08):
Well, I think that when ShotGPT came out, it was
like you know, where were youwhen Steve Jobs died?
I remember when I was meetingwith Chris Gay in his office in
San Mateo, some guy came in in ascooter and said this happened.
So it was almost like wherewere you when Martin Luther King
Jr got shot for our elders?
I think that when ChatGPT cameout, everyone was like holy crap
(09:30):
, I can write like a poem to mywife on the anniversary and hip
hop rhyming and this is likeshe's crying in tears.
This is great and things willnever be the same.
And then you kind of realizelike well, it takes a lot of
(09:51):
time to do every email and chatGPT, even if I'm doing it in
superhuman, and is it really alife-changing for my business?
I think that we have been onthis path as a venture firm
before the chat GPT moment andas people lose interest and
maybe stop paying their 20 bucksa month for open AI or realize
they don't get to the gym muchand they don't use it a lot,
we're still on this trajectorythat we were on and the
(10:12):
trajectory we've been on andremain on, you know, even
further excited by open AI andall the other models that are
out there is automating humanworkflows and leveraging data
sets, and so, like I wouldn't,we try to avoid companies that
sell to governments.
You know, for the most part welike some military technologies,
(10:33):
but I wouldn't fund thiscompany.
But just to make a hyperbolepoint, the department of motor
vehicles, the DMV in the UnitedStates, is a horrible place and
in my view they shouldn't evenhave a building.
And what is like incrediblyobvious to me is just have an
app and have the app automatewhat these you know obese people
(10:54):
are doing in that building.
And you know, literally justsay, oh, click here if you have
clear.
You know, and I have clear, andso just looks in my eyes from
the phone and it zaps and itgoes we've biometric.
You, andrew, click here if youdon't have clear.
You know, and I have clear, andso it just looks in my eyes
from the phone and it zaps andit goes we biometric.
You, andrew, click here.
If you don't have clear, thenyou've done this on apps upload
your license and some stuff anda human will compare the two,
(11:14):
but you know you don't even needthe building, and then, and
then in the end it should saylike here's your driver's
license renewal and we're goingto send it to you for free
because you're an American andyou pay your taxes, and the more
data sets you tap into.
It should say like tap into thepolice department, do you have
any warrants for your arrest ortraffic violations?
Tap into the morgue Are youalive?
(11:35):
Oh, would you like to vote?
This is theoretically ademocracy, even if it's not Sign
up to vote.
And so the idea is like automatehuman workflows and tap into
more data sets.
And then the data goes into theautomated human workflows and
it's kind of like smart contractdecision tree stuff and it
thinks just get better andbetter and better.
So like, forget that company,because we'd never fund it,
(11:56):
because the DMV likes to staythere and sit in their chairs
and use the fax machine orhowever they do things.
But imagine this for insurance,imagine for this for banking,
imagine this for credit cards,and imagine this for like
education and school andeverything and healthcare.
So the idea that you writesoftware and if this, then that
now you're doing things thatwere humanly not even possible.
(12:20):
And so I know I'm doing a lotof talking, but like I'll kind
of shut up on this point.
Sometimes you can writesoftware that does the job of a
human and the startup can pricethe monthly or annual
subscription to the software ata price that's lower than the
cost of that one human to dothat work, either fractionally
or full-time.
Let's at least hope it's afull-time job so that you're
(12:41):
able to price something on andaround an average contract value
.
That is a real knowledgeworker's annual salary Good job,
not bad.
Maybe you'll get funded andbuild a business on that,
depending on the market size.
Now imagine that there's 12people reading this clinical
trial data, with all PhDs inBasel, switzerland, and to do
(13:05):
the work of 12 people.
With maybe a little humanoversight, freeze these people
to use their brains to dosomething else and provision it
to the organization somewhereelse.
They probably know a lot aboutNovartis if they've been there
getting paid 200,000 a year tointerpret clinical trial data.
So now you can price thesoftware that we're doing even
better.
We're doing high PhD level work, you know, and just to meeting
(13:27):
in 12 jobs and they don't go onstrike, they don't need lunch
breaks, they don't smokecigarettes and in fact it's
taking the data right into itand doing what those PhD ladies
could never have achieved.
That's pretty good.
You probably have a goodstartup company there.
Then look at, imagine if wecould read every PDF at the Home
(13:48):
Depot with every supplier andget software to automatically
when the contract's coming upfor renewal, with enough time to
say I want this FOP Bangkok, Iwant this FOB Montana, whatever
I want this.
I want to sell all this crap onconsignment Montana, whatever I
want this.
I want to sell all this crap onconsignment.
Why should I pay for your nails, bolts and power tools before I
(14:08):
get Jonathan to buy it and walkinto the store?
And how am I benchmarkingcompared to you know Le Roy
Merlin in France, you know theFrench, you know Carrefour and
all this.
So all of a sudden, it'simpossible for the human to be
tapping.
Is Laurent Merlin in Francecharging their vendors?
You know, upfront?
(14:29):
Do they pay it?
Net 90, net 365, consignment,whatever.
Like, just get more data, moredata into the business.
And I believe that the Fortune500, the Cap Caron in France,
the biggest companies in everycountry, if you are not on top
of this technological shift, youare going to be a victim of
(14:50):
technological change, not abeneficiary of technological
change.
So when you say AI, people arelike I squint my eyes, I can't
tell the difference of this VCand that VC.
Or this founder and thatfounder, like the LPs, say, oh,
we want to back climate change.
And then all the VCs putclimate change on their NASCAR
suits and then all the startupsrev up their motors and put
(15:12):
climate change stickers on theside of their car Buzzwords.
Right is the metaphor.
So everyone's got the buzzwordof AI and everyone's a little
bit, you know, limper excitedabout open AI and the other
competitors at the big techpeople and all the H100s being
deployed in clusters.
But if you go back to this, Ican just intermediate the one
(15:33):
job.
I can just intermediate the 12jobs and do it better than the
human could ever do.
Or I could do the job of 1,200Accenture consultants.
That would be so expensive topay for an army of 1,200 people
to do this work that it's simplynot commercially viable and
never going to happen, whereasnow we are incubating, funding
(15:55):
and founding and backing andsupporting companies that are
doing this work.
Where it's basically the worldis broken, let's fix it.
And if you think in terms ofnational interest of a country,
if your biggest companies thatmake up most of your GDP are
slow to adopt this, your countryis going to hell.
Speaker 2 (16:16):
Yeah, yeah, that's some great points there.
And the analogy with the TNBit's the government jobs.
They don't want to be efficient.
I remember hearing that kind ofgoing to this whole AI point
too, that 2022 is all about theblockchain.
So all the VCs were, everythingwas blockchain, web3, web3,
blockchain investments, and thenas soon as Yacht TTP came out,
it was like a complete, and thenright after everything crashed.
(16:38):
Everything went from blockchainto AI projects and then so
everyone's like it's funny tosee AI websites.
Speaker 1 (16:50):
It was funny, it was amusing to see.
I mean, I mean, like, the greatirony is that blockchain is the
great truth machine that makesit impossible for some guy South
of Rome to cook the books Rightand Sicily, and yet it was like
a magnet that pulled all theget-rich-quick grifters from
(17:13):
crowdfunding 1.0.
So, you know, the bigapplication of blockchain that
took off in 2017 was initialcoin offerings, icos and company
formation and capital formationand fundraising, and people
that were unfundable byprofessional angel and venture
(17:34):
capital investors were raisingmoney from a dumb crowd that was
not doing any due diligence,with no governance, no board of
directors, no oversight, and itwas like, hey, let's raise $11
million for my electric watch,electronic watch, and after a
little bit of effort, they giveup and they keep the company
yacht and the company boat andthey're in Miami.
And then, when blockchain camealong and you have these events
(17:57):
where you just sponsor and pitchand sell tokens, not even
shares, they were like, dude,I'm a grifter, I'm going to
grift up on this thing.
Shares they were like, dude,I'm a grifter, I'm going to
grift up on this thing.
And then, when that thing isinevitably going to crash
because it comes out thatthey're grifters and they kept
the company boat and the companycar and the company yacht and
they're just on the road,intoxicated in every one of
(18:18):
these events, with no anywhereor stability.
That same set of people saidwell, the word is out that my 10
projects have all failed to getto 100k of monthly reoccurring
revenue.
It's hard to justify this $150million pre-money valuation and
it's just a pump and dump scheme.
With, you know, telegram andWhatsApp.
(18:39):
Let's all dump now or let's allpromote here that they all
became attracted to ai as well.
And you know, I kind ofconsider it my job to
investigate the grifterblockchain con artist who's now
calling herself a ai person.
And what's a really easy way toget rid of those people off
(19:00):
your desk is, say, come back tome when you've got a hundred
thousand dollars of monthlyrecurring revenue, that you've
built something100,000 ofmonthly recurring revenue, that
you've built something thatanyone's willing to pay anything
for and the revenue is notbuying and selling NFTs.
Speaker 2 (19:16):
Yeah, I mean I just have that basic SaaS model and
they actually have consumers.
That was all Web3 thing.
There's no users, there's justpeople who end up in tokens.
Speaker 1 (19:26):
It's like the Paul Graham YC mantra of build
something people want.
Or going back to what I wastalking about a few minutes ago,
which is like if we could dothat person's job like a DMV, we
could sack the DMV and rush thecastle and write software to do
a better job of that, and thetaxpayer is better off and
everyone's better off.
(19:46):
I mean someone like me.
I should be able to just gorenew my driver's license.
Bink, it hits all the databasesand it comes.
It's literally that.
That's how broken the DMV is.
But you could argue the samething about health care.
You know why don't we pay $50for an aspirin for a soldier,
you know, in a combat zone.
(20:07):
That's not good, is it thatmuch?
Well, I don't know.
But it's bad.
I wouldn't doubt it.
I wouldn't doubt it withgovernment contracts.
I wouldn't doubt it.
With Citizens United, you candonate money.
So bribery is legal in theUnited States.
You know insider trading islegal for venture capitalists.
We have information rights andpro-rata equity rights.
We're not breaking the law andwe are the biggest insider
(20:29):
traders in the world.
It's totally legal.
They expect us to be hands-onand involved in making informed,
follow-on investment decisions.
But good money after you know,not put good money after bad.
With the U S government, youknow you donate enough money to
someone and they allow you to.
You know, sell aspirin to asoldier for $50.
(20:51):
Yeah, they should maybeconsider repealing citizens
United.
Speaker 2 (20:58):
Yeah, so you, uh, I looked online.
You've been a lead investor ofa lot of projects, haven't you?
We have over the years?
Yeah, yeah, and what's is there?
Like any one of your favoritestories or case studies, you say
, hey, we took this company andit went from here to here.
Speaker 1 (21:15):
I mean there's a lot and you know, I think, like you
know, no-transcript your book isjust full of tips and tricks of
(21:42):
how to be successful.
This is like bullshit, and Iwas like exactly that's like the
best review I've ever had,except for the fact that you
gave me one star.
That's exactly the purpose ofthe book.
I'm trying to tell yousomething that somebody did that
you could do yourself, not justbeat my chest of.
I invested in Google boom.
I invested in Amazon boom, so.
But I'll tell one.
I mean like, uh, we hadinvested in a company called
(22:02):
partender that was automating,uh, how you do bar inventory,
and like there's more money inthose bottles than there is in
the till.
Yeah, nick Kunder and Nick, nick, nick, we were, we, our network
was doing so much at one point,like we were looking after his
dog when he was traveling, likethrough the network in San
Francisco, and so we just becamefamily-type friends.
(22:22):
And then his cousin, raul Vora,was going to raise money for
Superhuman and he was thefounder of Reportive and so he
had founded Reportive with acouple other co-founders I was a
Reportive user but I didn'tknow Raul the founder and then
he sold it to LinkedIn for $15million and LinkedIn somehow
(22:43):
deep six ruined it after buyingit Like they should have bought
it and just like not touched it.
But anyway, he then all hisinvestors made money.
He had like Charles riverventures, you know CRV in there
and so he was oversubscribed forhis seed round launch of
superhuman.
But they made space for usbecause he heard we were cool
(23:03):
and, um, he came to my office inSan Francisco and pitched his
vision for superhuman and Ithought this is kind of like an
extension of where reportive wasgoing.
I mean, he basically said asmuch and so he is the technical
co-founder that can make thisand so I figured let's fund this
guy and he can on his own, makethe software to do what he
(23:26):
wants it to do, and he's socharismatic and charming and
electrified as a person thathe'll have no problem raising
more money With us makingintroductions.
He'll have absolutely noproblem raising money from
people we can make warm introsto and sell them on investing
before he even emails them, andhe'll be able to recruit people
(23:48):
out of places like Google, youknow, in a talent war where
they're offering dental to yourdog and to use and all that.
So we figure he can raise themoney, he can make the product.
He can then get into revenue.
He can raise more money, he canextend the product.
He can raise more money, he canmake the product and this
vision that he's got, which wecompletely share, will happen.
(24:09):
I think that that company willexit between two and a half and
10 billion and they'vecompletely fixed email.
Email was also a passionatething for me.
I respect that Barbie Dolls andMattel is a good, reliable
business, even though I'm not inthe peer group that wants to
pay $50 or $20 for a bit ofpolymer to play with.
But I am in the peer group thatwants my email fixed and making
(24:36):
email just 1,000 times betterand more efficient and
productive and he actually, likeyou know, you click like two
buttons and chat.
Gpt is in your email withmemory so I can write like the
person's name, terminate, andthey'll be like we're sorry to
let you know, we're going to letyou go and fire you, and I can
like put it more in my voicemake it more formal.
(24:56):
You know what I mean.
It's unbelievable how much timesuperhuman can save you, and so
it's been very rewarding toinvest in a founder that we
really like as a person.
The only time my kids have beenin a Lamborghini was in his.
We've developed a friendship.
You kind of feel like I've gotyour back.
It's almost a family type thing.
We're trying hard to influencethe roadmap and the functional
(25:20):
requirements of the product.
We were using the productheavily, like you know.
I just love that and the factthat you know the valuation is,
you know, approaching manybillions and we were in at 8
million on a price round.
It's all QSBS, so there'll beno tax for me or any of our US
taxpayers.
You know, it's just.
(25:41):
It's just.
You wish they all could besuperhumans, you know I mean
there's other ones like.
Igor Jablokov was a FoundersClub guy, so going back to the
Equity Exchange Fund and I'llstop with these two because this
just takes up too much time butIgor had founded YAP.
He was an IBM Watts guyresearcher and then he spun out,
(26:01):
founded Yap, so got VC back,joined the Founders Club and Yap
was.
People didn't know what to callit back then, but they called
it voice recognition, when infact it was natural language
processing NLP but that acronymdidn't exist at the time and it
was acquired by Amazon and itbecame the nucleus of Alexa and
(26:24):
Fire TV.
So there wouldn't be Alexawithout YAP, and Igor is the
brain behind it all who executedand made that happen, and so it
was a really good exit there.
And then, with that exit, hebecame an investor in our fund
one and became a venture partner.
With that exit, he became aninvestor in our fund one and
became a venture partner.
And so you know he's actuallyhe's moved from Charlotte to
(26:47):
Durham but you know, so he'skind of in that kind of RTP
ecosystem but he's more globalecosystem guy.
Whenever he was in the Valleykind of every three months or
something I would always meethim.
You know, whether it was acoffee, a beer, dinner, whatever
we could get with him, and hewas always talking about the
next evolution of Amazon,basically of Alexa.
I mean, he's the guy who madeYAP and, just like Raul, didn't
(27:07):
stop with reportive, signed toLinkedIn, he went on and made
Superhuman and I probably,confidentially, shouldn't talk
about the roadmap, but it'skiller.
And when you go over to Igor,he's talking about what to do
with natural language processingand what to do with enterprise
data.
So long before there was OpenAI, there was Prion, and Prion was
(27:28):
the code name that Amazon hadon the acquisition of Yap.
So he used the code name of theYap acquisition to be the name
of his next company, prionP-R-Y-O-Ncom.
And so we felt like we werejust around Igor talking away,
and I was always saying to IgorIgor, you're boiling the ocean.
(27:49):
You see the application of NLPand accessing into datasets to
everything.
Could you please be morefocused on a little bit of a
point solution that second grademath, sandhill Road VCs can
understand?
That show like you do the jobof these people.
You sell them this much money,they pay you this much and they
got huge instant ROI, instantpayback and they're doing stuff
(28:12):
that was otherwise impossible.
And he's like, yeah, but I canliterally do everything from
military to healthcare toeducation.
I'm like, pick something, picka sport, but but we're, we're,
we're open.
Ai is like breaking things andasking for forgiveness later and
using people's data.
I mean, all right, we're notallowed to use Disney data, so
(28:33):
no more make me, jonathanholding a Jedi.
You know sword, you knowlightsaber.
Igor has been going into yourenterprise, and I'm sure OpenAI
does it too.
But he goes into the enterpriseand says, literally, let me
show you how I can drop all yourdata into this thing.
And now you can ask it anything.
So, like BMW can drop all theirdata into Prion.
(28:56):
And when you're driving your BMWjust hit that little microphone
button saying, hey, what kindof oil does this car take?
Because the alarm just went off.
Send it.
And it says, would you like meto send you that via WhatsApp or
to your phone via SMS?
I'm like, yeah, so you justwalk out of the car getting the
oil, as opposed to open theglove box and get the manual out
(29:16):
and that kind of nonsense.
And it and and it's all theirdata.
And you don't want your datagoing to Sam Altman, right, you
know, cause he might ask forforgiveness later, you know, so,
so, so Brian is potentiallygoing to be a bigger company by
market capitalization than openad, you know, and, and we were,
(29:38):
you know.
You know we have the braggingrights of saying we knew.
We knew Igor when he was justthinking about what to do and
you know, and he values our youknow brainstorming sessions, you
know, and even when he's hiringpeople, a million dollar
salaries with no revenue.
I'm like dude, you've got tofigure out how to charge
(30:02):
somebody for something here.
This is not IBM Watson labshere.
Speaker 2 (30:08):
That's some good stories there.
Let's talk about the your book,for you have a couple of books
right the entrepreneur Bible andjust kind of like.
I think that was a great pointyou mentioned, because that's
actually good.
Go ahead, Go ahead.
I was like that's greatmarketing.
Speaker 1 (30:27):
So the one star, but it's all like positive things,
it's my favorite.
Speaker 2 (30:28):
He's the one star, but it's like everything you
want to know my favorite review.
Speaker 1 (30:32):
I you know you can reply as an author to every you
know review.
You can be like hey, hey, bro,thanks.
Thanks, jonathan, for the good,for the love on the positive
ones.
But, um, that worst review.
I was like hey everybody, thisis the best review.
If there's any review to read,it's.
Avoid the fact that it's onestar.
But he basically says why youshould buy this book.
(30:52):
Right, it's not me braggingabout my great investments or my
amazing startup where I hit ahome run, but but where I
interrupted you and laughed isthat the original title for that
book was sex, drugs and venturecapital and I knew that title
would never stick.
And then, and then I even likecrowdsourced, you know, saying
I'll buy a case of champagne Ifanyone comes up with a title.
(31:13):
That is the one I go with andhere's the table of contents.
And that was like an insidioussales tactic to get like my
40,000 newsletter, to like seewhat the book, what the topics
are, to maybe sell some copiesor get it out there and seed it
into the system.
But McGraw Hill, I signed withthem and I was kind of like a
(31:34):
young teenage rock and roll bandthat doesn't realize what the
record label is going to do here.
And part of it is they own thebook and they basically buy the
book and they can give itwhatever title they want.
And I laugh because youstammered on pronouncing the
title, because the wordentrepreneurial it's the
entrepreneurial Bible to venturecapital inside secrets from
(31:56):
leaders in the startup game.
And I said, first of all, Idon't think I'll ever know how
to spell the wordentrepreneurial.
I'm a bad speller but like Idon't think a lot of people can
pronounce it and like you know,decade later, on a podcast,
people are like trying to, youknow, give me a shout out to
that book and you can't evenpronounce the word
entrepreneurial.
And then, and when they wentwith Bible, like you said, you
(32:17):
have a bit of an internetaudience, I'm an international
guy I was like I'm cool withthis, as long as you call it the
entrepreneurial Koran.
If we're going to, if we'regoing to, alienate half the
globe, let's at least go withKoran.
And they insisted on Bible.
I had no say in that title,like when I was led to believe,
let's talk about the title.
That was their way of sayingthis is the title, you know.
So it was kind of a badexperience on that when the
(32:40):
Chinese translated that book andit was published in China,
where more copies have been soldin Chinese language than five
other languages worldwidecombined.
They called it Masters ofVenture Capital and I have
interviews with like and I waslike that's a good title.
Like all this talk about whatare we going to call it?
And it's quite accurate becauseI have like, like, rather than
(33:01):
me, tell the John Kraft story ofhow he failed to meet payroll
22 times at Pandora before theIPO and how he navigated that
with actionable, repeatableadvice that someone else could
do.
I said, just let John Krafttell the story.
So, you know, I interviewedJohn and I read it up and then
we email it back and forth a fewtimes and so he fixes and adds
(33:22):
a little bit and then we, youknow, distill it down and put it
in the book.
So we did that with like TimDraper, brad Feld, you know Bill
Draper, tim's dad, like youknow over 50 masters.
So the Chinese were kind ofaccurate that it's like masters
of venture capital, so like getall this decades of experience
collapsed into 200 pages, and sothen I've used that for all my
books.
(33:42):
So masters of corporate venturecapital, masters of blockchain
and crypto, and I'm very closeto finishing book four, which is
masters of raising venturecapital funding, so I'm just
going straight to that one topic.
It's a big topic.
It really isn't a maker tobreak a topic, and so there's
just like every day, ifsomething happens, I'm like is
that good enough to get in thebook or not?
(34:04):
And it's kind of like a busynightclub in there, like studio
54.
We can't let you boys in untiltwo people come out.
That's how busy it is in there.
And you, you can't let yourself.
Be like napoleon and havevolumes and go on and on and on.
Since I'm excited about therelease of book number four,
yeah, that sounds good.
Speaker 2 (34:21):
I mean that's the hot topic right now.
Everyone's trying to raise,everyone's trying to.
It'll always be.
Speaker 1 (34:25):
It's Shakespeareanly timeless, Unless you know your
dad funds you or your mom does,and even if she does, you know
you want to get into theecosystem and get all these
aligned people with orthogonalnetworks and experience and
connections who know the head ofM&A at Google or something, or
Telkomsel in Indonesia.
Put that crypto app on 200million handsets in Indonesia
(34:47):
Great.
Speaker 2 (34:51):
Yeah, I mean that's.
I mean obviously, yeah, youwant to scale with the right
partners.
Where do you see venturecapital going in the next few
years?
Is there big changes coming orwhat's kind of where you see
your future going in the nextfew years?
Are there big changes coming orwhat's where you see your
future going in that?
Speaker 1 (35:03):
industry.
Well, there's ebbs and flows inthe economy and, although I had
a front row seat in the real ofsecondaries of founders selling
before the exit even a smallpercentage to where it is now, I
think that the secondaryselling of founders has been
(35:24):
amplifying a problem that we'rehaving of exits taking too long
and exits are taking too long tohappen.
In the dot-com days of the late90s, a know a company would get
funded and, like three monthslater would IPO on no revenue,
you know, and so the exit.
(35:45):
So the money was.
People were investing in theventure capital fund and getting
their money paid back in adistribution very quickly.
One of the reasons why Web3slash crypto blockchain, ico
token offerings was soattractive to people was that
you essentially list the tokenson a crypto exchange and get
(36:08):
liquid before you find out ifthis Bunsen science experiment,
bunsen burner science experimentworks or not and if you have.
Indeed, paul Graham, builtsomething that people want
willing to pay for.
So people were getting theirmoney back so fast.
It was hard for me, like I knowa lot of crypto people, and it
was hard for me to raise moneyfor my fund from like Brock
Pierce and all these people whenthey're like, dude, if I invest
(36:30):
in your fund, it'll be likeyears before I get the money
back.
Where, like, I architect myexit before I even commit to
wire funds and so that liquiditywas happening.
Now the music stopped, thatmusical chairs thing stopped,
and there's always some SamBankman-Fried.
You know, mount Gox, that'sgoing to screw things up.
When there's no adultsupervision and no board of
(36:51):
directors and governance inthese things, it's just
naturally going to allow forBernie Madoff to make off with
money.
But with where we are withventure capital and what's the
future?
To answer your question is thatwe're in a period of the exits
are not really happening.
Like the Biden administrationhas been pretty much on a
offensive war to stop big techfrom making acquisitions from
(37:14):
the antitrust regulatory side.
Like they're fightingeverything you have.
I just had Ken Goldman on mypodcast.
It was like the formerpresident of Eric Schmidt's
family office and former CFO ofSybase Oracle.
I mean Siebel, Yahoo.
He's crazy guy, knows everybody.
(37:35):
He's saying I don't think it'sthe investment banks that don't
want to IPO these venture-backedstartups that have billion plus
valuations.
It's the startups themselvesare enjoying being private.
If the founder can sell andstay in the secondary market.
Why should she ever IPO?
Why should she go M&A?
They've raised money atvaluations that are too big for
acquisitions.
It's going to be an antitrustscrutinized acquisition if the
(37:59):
pre-money valuation of the lastfunding round was $2.5 billion.
So we kind of have the system ofyou know you've got people
refer to all the private marketsas venture capital when the
company is selling a minorityslug of you know stock issuance
and so.
But I think of it as more Iwould segment it up.
You've got like pre-seed, but Ithink of it as more I would
(38:20):
segment it up.
You've got like pre-seed,late-stage seed series A, series
B, series C.
At a minimum let's make threecategories Seed investing it's
like really hairy back, hairychest.
Venture capital You've gotmeaning like maybe no revenue or
minimal revenue.
Then you've got late-seedseries A 100K to 500K of monthly
revenue.
That's where we play as ourentry point for the fund.
And then there's growth, wherewe only do SPVs with our
(38:41):
syndicate and our LPs and thenthere's publicly traded.
Then you go either M&A orthere's secondaries and M&A and
IPOs.
I think that the liquidity forthe growth guys has completely
stopped and they're just notgetting their money back the way
they used to from an IPO,surviving the lockup and being
(39:03):
able to sell some shares andthen distribute cash to their
LPs or even distribute thepublicly traded stock that the
LP can either hold and go longon or liquidate for cash.
And on the M&A side youtypically get like M&A of a
privately held company buys ourprivately held company, we get
stock in that and then they getbought by Amazon and then we get
(39:24):
liquid.
Or it's a combination of stockand cash, or it's all cash, with
payouts coming in escrow andholdbacks and we're lending
money to the PE buyer.
It's all weird and complicatedsometimes, but the point is the
industry is not receivingdistributions the way it
historically has, and so a lotof the institutional LPs like
(39:47):
endowments, pension funds,insurance companies, sovereign
wealth funds, multifamilyoffices or single family offices
are thinking like I don't knowabout investing in a fund.
If they said it was a 10-yearterm, that maybe goes to year 12
, and it's starting to look likea 15, 20-year ride.
Is the return, is the cash oncash multiple I'm making for
(40:07):
investing in that growth funddelivering enough alpha to
justify the lack of liquiditythat I'm not in a marketable
security?
Maybe I should just go to amutual fund that buys stock in
emerging market Indonesia,singapore, malaysia, thailand,
something like that.
(40:27):
So I think this is a problem thelack of liquidity for VC funds.
Our fund invests in late C&Aand we do the introductions, we
do the investment bankingintroductions to all of the next
VCs, not asking to be paidanything for that, and the
result is that these companiesraise a much bigger round after
(40:49):
us and we might double down intosome of those.
We might SPV, let RLPs accessthose rounds with lower
multiples, but the multiples arebig where we enter and we're
able to sell between 10%, 5%,maybe even as much as 50% of our
shares in the privately heldcompany because we're a small
fund and those big funds are notgetting the ownership target
(41:13):
percentages that they promisedtheir LPs.
So the big funds that are like3.5 billion billion, like NEA,
just raised six and a halfbillion.
Half of that is their earlystage VC fund.
They're coming in well after usand we know them.
They were on the board of myFounders Club Equity Exchange
Fund.
We know them real well and theywill fund our companies and the
(41:33):
company's only selling 10% ofthe share capital because if
they're raising $100 millionaround, why should they get
diluted for more than 10%?
With $100 million, they can putsome ads, bribe a US senator,
enjoy the legal corruption thatis the screwed up American
democracy and go build ashopping mall and a bird
sanctuary, whatever they'redoing, and then a year later
(41:57):
they've doubled revenue and nowthey can raise another $100
million at a $4 billionvaluation.
But when we're at $4 billion,we were in at $10, $8, $14, $20
million free money entry point.
It's vulgar to me to not returnmoney to LPs that maybe you're
helping me raise from, and so wereturn the money to the RLPs
(42:18):
faster than almost any VC isdoing.
It's honestly more of a cryptomindset.
It's a Brock Pierce cryptomindset of hey man, I bought
these tokens at a penny becauseI'm Brock Pierce and I have a
million followers and by Fridaythey'll be raising them at 99
cents and I'm going to doubledown and show conviction.
(42:39):
You know like it's a GameStopthing, and then within a month
it'll be on Kraken and I'm goingto pull my initial $250K of
cost out and enjoy Puerto Rico.
So we're investing in late C&Aand doing hard work to get these
companies into the hands ofSeries B, c, d and then we're
(43:03):
beginning to sell part of it.
But we let our LPs invest inthose growth rounds where they
might love 2x cash on cashwithin a year or 4x cash on cash
within three, four years.
But there ain't no way it'sgoing to be more than 4x.
If you 2x a billion, if you andI 2x a $1 billion fund, jonathan
, we raise a billion dollars.
(43:25):
We invest 800 million.
We took 200 million inmanagement fee.
That's 2% times 10 years.
We see big grifter saying twoand 20.
It's 20 and 20, if not 25 and20.
Years, we see big griftersaying two and 20.
It's 20 and 20, if not 25 and20.
So we invest 800 million and wemanaged to 2x that thing.
That is bad performanceconsidering the illiquidity of
how long it takes.
But you and I get 20%performance fee, carry 20% of
(43:46):
the $1 billion profit.
That's $200 million.
We have a new fund every twoyears.
Last fund was not $1 billion,it was $2.2.
If we could even $1.2x a $1billion fund, we get 20% of the
$200 million profit.
We get paid $40 million forlosing money to inflation on the
(44:08):
big end.
That's not what my firm does.
My firm is in late C&A and weget them into the hands of these
guys shooting for a singledouble hit.
To use American baseballmetaphor.
They're not trying to 10x thefund, we are.
If we put money in the samerounds with them from the fund
which is treasure, we'll end upwith a 2x-ing fund and they're
(44:30):
happy about that.
We're shooting for 10x for thefund, 7x at the worst, so that
treasure goes into late C&A.
And then we tell our LPs wehave a God-given legal right pro
rata equity right to maintainour ownership percentage so we
can fund all those BCDEs withour LPs and our syndicate that
(44:53):
want to access.
They like a 2x, 3x, 4x and thefund performs really well and we
sell to ourselves or we sellinto the round of some of those
big ones to make sure we returnthat fund very, very fast.
So a short answer to yourquestion you may find that VCs
that were on a cadence of a newfund every two or three years
(45:15):
are not raising that next fundbecause they've not delivered
money from the existing fund orthe previous fund or the
previous fund, and so you canonly ask the Harvard endowment
to keep sending you moneywithout sending them anything
back.
It's like a broken modem thatreceives cash doesn't send data,
so they need to send money back.
And if you're a huge fund, noone's letting you sell on the
(45:36):
secondary market.
That's what Ken Goldman said inmy podcast.
No one's letting you sell onthe secondary market when you're
benchmark.
When you're 7BC benchmark wantsto buy us out and I say I own
5% of the company.
I'm willing to go down toowning 4% of the company.
So we have our cake and eat ittoo.
We sell them 1% of the companythat we sell 25% of our position
(45:57):
.
We might've returned the entirefund from that, so it's stay
private longer, but we get oursoldiers off the beach and we
pay our LPs back.
So you may find that VCs arehitting the brakes because
they're trying to not become azombie and make the funding they
have in the current fund last afew years longer, and so
(46:19):
instead of deploying like crazyFOMA nuts a $2 billion fund in
24 months, they're holding backand they're doing more due
diligence, and a funding roundtakes longer to complete.
People are taking their time.
They're doing the due diligencenow, and so these are all
(46:39):
changes that affect founders, us, everybody, and the LPs are
saying don't, jerry Maguire,show me the money, wire me the
money.
And it's hard for them to wirethe money with Biden warfare on
M&A and the founders takingsecondaries.
And I figure, if she's selling,I'm going to sell too, because
(47:00):
I'm not going to suffer becausethe founder just bought a house
in East Hampton and a huge placein Santa Monica.
Speaker 2 (47:09):
Yeah, no, a lot of good points there, and you
mentioned Brock Pierce, the bigadvocate for Bitcoin.
I think he was the.
Was he like the foundation ofBitcoin, the founder of it or
the CEO?
I forgot.
Speaker 1 (47:23):
He's on the board of the Bitcoin Foundation.
They might've.
I mean, there've been somescandals that have never really
been proven.
I love the guy.
If that guy were my son, I'd beso proud of him.
Speaker 2 (47:29):
He's amazing, was he part of?
Speaker 1 (47:29):
Tether too.
He is, and a lot of people youknow.
I mean I mean, look, the thingwith these things is that
there's no real good governanceof Tether and so people say
things and you don't know ifit's true or not, like, are they
holding all Chinese commercialpaper for ghost towns in
Shangzhou, Hangzhou, I meanChina, you know, we just don't
(47:51):
really know.
A story I love about BrockPierce is when he was very young
.
He's a big video gamer.
He went to China as an Americanin early, early days of
Americans doing real businessthere and convinced the Chinese
Communist Party to allowprisoners that are in prison to
play Xbox games, to unlock gunsand skins as virtual goods that
(48:13):
he sold on a little cryptoexchange for the video game
items and the prisoners got paidnothing and he paid like 70% to
the Chinese Communist Party andkept 30% for himself.
So he had slave labor inChinese prisons playing Xbox.
I mean that's a brilliant ideaover one too many drinks in
(48:35):
someone's pool in the south ofFrance in August, but not
something you do.
He literally did that withsuccess.
Speaker 2 (48:45):
Yeah, I remember I heard some story about it.
It's funny.
Speaker 1 (48:48):
It's crazy.
He's a great guy.
I mean, he's been involved withsome projects, that he's been
involved in so many deals that alot of them probably turned out
to be really, really dodgy, youknow.
Speaker 2 (49:02):
He's doing the alternative medicine stuff right
now.
I saw his like he's doing afund for that, like psychedelics
and stuff.
Speaker 1 (49:09):
I mean he can.
I mean you know what.
Another thing I'll say acompliment on Brock.
You know who I consider a friendis that a lot of people are
like oh yeah, I work at Googleor I run a VC fund, but on
Burning man the real me comesout and I'm going to dress like
you know Lenny Kravitz on LSD,but but then for the other 360
(49:30):
days of the year, I wear poloshirts and tuck it in, or or
wear a hoodie to conform withMark Zuckerberg and I, you know,
I'm Brooks brothers all the way, and then and then again it's.
It's that time of year to doburning man and I'm out of the
closet, being the real me likeMike Pence, made a decision to
be straight, you know, and and Ithink they're basically fake
(49:52):
and phony like catcher in therye Rock Pierce is his true self
365 days of the year and he'srocking it like he's Lenny
Kravitz on psychedelics, beinghimself all 365 days of the year
.
He's not a closeted Mike Pence,he's the real him all the time,
and I applaud that.
(50:13):
I think everyone should begenuine and authentic in
business as much as possible andyou know so I just think he's a
great guy.
Speaker 2 (50:22):
Yeah, I love that being genuine and authentic.
Are you taking like right now?
Are you guys raising fundsright now for your fund?
Well, the SEC does a lot ofstupid things.
Speaker 1 (50:31):
Well, the SEC does a lot of stupid things, Like
they'll let a teenager invest inEnron stock, but they won't let
you invest in the privateplacement of OpenAI.
So they're just wrong.
But they're a mafia that is inpower and they're like hey, it's
a nice little shop you have.
I'd hate to see somethinghappen to it.
That's my view of these laws.
(50:59):
So I'm actually prohibited frommaking a public announcement in
the newspaper, and your podcastwould qualify as that on the
internet that we are insolicitation and we're not 506C,
so I'd be violating the ban ongeneral solicitation.
But I can say this and I'vewritten books as such venture
capital firms tend to raise anew fund every two years or so,
(51:21):
and so we don't believe insaying someone there's a really
short fuse invest now by Fridayor you'll miss the deal.
I don't like to rush anyoneinto anything.
We believe in strength anddiversity with the LP base and
both minnows and whales peoplethat can add value.
We have a scout program forpeople to work with us, even if
(51:43):
they're not liquid with capitalto invest in our fund right now.
We have ways of working withpeople to help us develop
relationships with people thatcan invest in our fund.
So there's ways for us to kindof use the force and work with
people to either invest in ourfund.
So there's ways for us to kindof use the force and work with
people to either invest in ourfund, help us raise capital,
help us find deals, help us addvalue to our portfolio companies
(52:03):
in a very open door.
We're not allowed to disclosewhen we open the window for
actual funding into the fund,but I especially working with
many cultures from South Americaand around the world.
You know you don't show up withan empty suitcase and ask
people to throw their cash intoit and I'm going to return
tonight back to Silicon Valleyand create jobs in California.
(52:25):
You need to develop arelationship.
So we're always open to meetingpeople and developing
relationships that can help usfurther diversify and grow the
strength and power of ournetwork to be able to add real
value to the startups and evenplay a role in the process.
We have people that are like aventure capitalist one day a
(52:46):
month or two days a month.
So some people help us sourcedeals.
They help us diligence and vetdeals.
They have their backgroundnetworks to say who knows this
person.
I love off-sheet referencechecks like send me a list of
references and we're going tofind our own references that you
didn't even give us and findout the former founder that quit
(53:06):
and you said you were a solarfounder.
We're going to palumbo, get tothe bottom of this investigation
and then we're going to addvalue, to fix problems and add
value all the way up toimpacting the exit.
So we have a very open door forpeople to come and work with us
in any capacity.
Speaker 2 (53:23):
Nice, yeah, I love your quick analogies,
quick-witted analogies.
You'll put them in there realquick.
Then I'm like, okay, now I getit.
It's pretty funny.
Thanks, it's pretty cool.
So where can people find moreabout you?
I know you mentioned, oralluded to a newsletter and you
have books.
What are some of the best waysfor people to kind of find more
information about you or connectwith you?
Speaker 1 (53:44):
Yeah, I mean.
So I guess I can send you anemail with, like you know, some
links and resources in the shownotes.
So you know our website in theshow notes.
So you know our website 7bcvc alink to join our newsletter,
maybe info on our podcast, andI'm happy to put my LinkedIn and
my email in there too.
(54:04):
We, you know we needed toinvest in superhuman because we
got a lot of inbound email andyou know a lot of VCs are like
oh, I only like to get deal flowthrough a warm intro.
A lot of the stuff we invest isjust cold emails.
Speaker 2 (54:21):
I was always wondering that.
Speaker 1 (54:23):
I mean, like most VCs that I know are like you know,
it used to be the khaki pantsand the blue button down shirt
in the 90s.
They're like, yeah, we were amulti billion dollar fund and I
don't want anyone to email methat is here in Silicon Valley
in the audience.
Get a warm intro throughsomeone that I went, you know,
to Stanford with.
(54:43):
That's ridiculous.
Are you in the business?
Are you afraid of work?
I mean, come on, aren't youtrying to find the top of the
needle in the haystack?
You know and like, you need afunnel and you need, you need
some sort of help to process allthe deals in the funnel.
So I say I mean if, if thecompany has a hundred K of
(55:04):
monthly reoccurring revenue andand you know, an under 500 K,
that's our band.
So a hundred K of monthlyreoccurring revenue is 1.2
million annualized revenue to500K, which will be 6 million If
it gets above that.
The valuations are too high.
The cash on cash multiple with50%, 60% dilution doesn't
(55:24):
satisfy the target returns forour fund.
We already talked about how thebillion dollar fund is
handsomely rewarded for 2X oreven 1.2Xing the fund, which is
not even justifying.
You're better off in the stockmarket or staying liquid somehow
, or get into fixed income withinterest rates are being up.
So we love to hear those andI'll send you some stuff.
(55:46):
If you want, you can put themin the show notes.
That's awesome.
There's a link to the books, ifanybody wants to see that, or
podcasts.
All that stuff is free.
Speaker 2 (55:57):
Perfect Cool.
Thank you for being on the showand I'll include all those
notes and show notes below.
Thank you again, Andrew, forbeing on the Ultra High Net
Worth podcast.
Speaker 1 (56:01):
Thanks for having me, man.
Have a great summer and hope tosee you in the real world again
soon.
Speaker 2 (56:05):
As well.
Thank you.
Speaker 1 (56:06):
Okay, bye for now, jonathan.
Speaker 2 (56:09):
Hey, it's Jonathan.
Make sure to download andlisten weekly as I bring the top
guests in the ultra high networth niche, sharing their best
insights and providing exclusiveresources.
Finally, I get a lot of peopleasking me to help them
one-on-one.
Yes, I can, but it's verylimited.
Go to a revenue ascend forbusiness and CMO consulting.
For real estate investing go tomidwestparkcapitalcom and those
(56:34):
looking to invest inservice-based business roll-ups
go to BusinessCashOutcom.
All links are included below.
Please like, comment and sharethis podcast with your friends.
Thanks for listening.
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