Latest / Success Story with Scott Clary / Lessons - The Investor Behind Lyft, Pinterest, and Warby Parker | Courtney Reum - M13 Co-Founder

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Lessons - The Investor Behind Lyft, Pinterest, and Warby Parker | Courtney Reum - M13 Co-Founder · Success Story with Scott Clary

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  In this lessons episode, explore how successful startups are built through a blend of intuition,
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  pattern recognition, and strategic execution. Discover how to identify product
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  market fit through real demand signals, understand why building with an exit in mind creates
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  optionality and leverage, and uncover how a lining vision, momentum, and consumer insight
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  drives scalable and investable businesses.
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  So I'm assuming like we didn't even bring it up yet, but the book that you just wrote,
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  shortcut your startup, that's learnings from I'm assuming all the way back to Goldman Sachs,
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  all the way through to building V, all the way through to M3rd, like these are learnings along
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  every single function of an entrepreneur raising money, raising capital, selling a product,
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  product market fit. So I mean, it's interesting because you've done all of it. You've been
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  the advisory, you've been the operator, you've been the capital allocator. So the lens that you
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  see entrepreneurship through is super vast, which is awesome, right? It really is awesome. And
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  I think that when you build out like your first company, I'm also curious about one thing in your
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  first company because I think that if I read this correctly, this was one of the first companies
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  to ever, if I'm not mistaken, be a carbon neutral spirits company and you donated 1%
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  of all the sales environmental causes. So this now is not so abnormal. This is very common,
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  but back then this was sort of new, innovative. When you look at what you did there, I'm assuming you
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  still have the lens of looking for companies that are doing things differently, doing things in a
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  novel way, finding new ways to resonate with the audience in the market. How do you source out
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  that thing that could move the market, make the brand more trustworthy with who they're trying to
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  sell to, like ultimately create that evangelism because that's what brand is. Can you, can you
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  knight that evangelism in your customers, right? Yeah. Yeah, I think, you know, that is, it's
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  funny because our, for my current holding company called M13, which is you kind of point out,
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  I like to feel entrepreneurial. I like to also invest and I like to just build things and so
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  it kind of gives us a container where our, you know, the main thing we do is consumer tech focus
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  venture capital funds, but we've also launched a bunch of our brands, which I'm happy to talk about,
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  and I think for me and my brother, especially, it's a lot of fun to some days be more entrepreneurial,
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  someday have your investor had on, and certainly it's the virtuous cycle of being an investor has
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  made me a better entrepreneur and being an entrepreneur has made me a better investor. And to stay
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  entrepreneurial, iron sharpens iron, like when I'm talking to someone about a company we invested in
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  a lot of times I can say it from a place of like, I've tried this recently or I failed at this
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  recently, not just, oh, I hear everyone talk about this, but I'm pretty, you know, pretty hands
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  off and pretty removed. And I think that's kind of mindset we have for our whole firm, which is,
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  which is pretty unique and really important. And I think, you know, in terms of our, so our north
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  star, what we're looking to, to be the best at with what we're doing is future of consumer behavior.
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  And so there's not like one way to describe it, but I would say, you know, in the world we live in
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  the information is here, it's just not evenly distributed. And so to the extent I can have
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  some information, a symmetry on anything, you know, I see some trends myself. I talk to other
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  people, I'm lucky to know xyz person, you know, like, I mean, it used to be something where like,
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  you'd go to the athletes to get the latest supplements or take whatever it is, we try and do that
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  in a myriad of ways. But I do think just a little bit of that, I'll put it in hockey terms for,
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  you know, where the pump is going is, is really important, really hard to do, but really important.
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  Yeah, I love that because I think that, you know, whenever you see somebody that has multiple
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  successes and you're not just an investor now, now you spin up your own companies, like, I love
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  to ask about the playbook. And I want to understand like what the playbook is for a successful startup
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  because now it's not just grit. I mean, I mean, it will be a lot of grit, but hopefully it's not
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  great and a little bit more tactical execution after, after doing it a few times, but then there's
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  also nuances. So like, you know, in any industry, it's not going to be the exact same playbook.
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  There's similarities, there's a checklist, but there's a lot of things that are like niche and
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  industry specific. So it's like the mindset of sourcing for the knowledge is going to give you
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  that advantage or give you insight into the consumer, build those feedback loops. I think that's like
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  a super, super valuable lesson for entrepreneurs because there isn't just one playbook that works for
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  everyone, but yeah, and I do want to clarify because you said, you specifically asked about
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  first company and to your point, I do think it was grit, you know, and I do think I want to
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  clarify something I said earlier, because I do think like some of the hustle culture stuff is a
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  little is is real good and bad. And I don't, I don't believe in kind of hustling for the sake of
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  hustle or busyness with a why, if you will. I believe in kind of velocity, which is like speed,
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  but with direction. And you asked specifically about the first company, which I don't think we had
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  any velocity because we didn't really know where we're going or what we were doing. So that was kind
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  of more like trying to will it and grit and a little more hustle. Now I think to your point, almost
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  everything we do has some ability, some, some element of like repeatability or pattern recognition
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  along with some newness because if we're starting or investing in something in the metaverse or
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  web three or AI, not many people have done much with it, right? So we're building the plan as we
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  find out. So we'll go into that in a second. I want to, I'm not going to spend too much time on
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  on, on, on the first startup, but I do want to just walk through that first startup was a success.
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  You, I mean, you, you eventually exited it. I wanted to speak about that journey. So as a first
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  time entrepreneur, building a company, first company, two, two exes, not common for most people.
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  So the process of building that up, when did you understand how you'd like to carry that company,
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  you know, what was the milestone or the revenue number where you're like, hey, this works,
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  we have product market fit. Let's continue to grow. We don't need to playbook for the entire cycle
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  of growth. But what's that product market fit point when idea is validated? And then also,
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  after that, walk me through the exit, the acquisition, and then pivot into M13.
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  Sure. I mean, I think the, you know, one thing that really attracts us to spirits on paper was
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  that because innovation was so hard, like I won't go into all the reasons it's really hard, but
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  it's, it's really hard for new incumbents. It's really hard to get distribution.
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  There's no pivoting to some other product. You've got something sitting in a bottle, you know,
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  I mean, and you're really at the best large, I mean, we did spirits, which is a little different
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  and wine, a little different than beer. So what I'm saying is, is pertains mostly spirits,
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  but you can't really sell direct to consumer. So I don't really, I don't really, it's harder to get
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  accurate data, especially then of whom I consumer was, what their purchase occasion was. I mean,
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  all kinds of things you have to really, I would say in many ways, do by hand. And so one of the things
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  that attracts us to spirits was there, there are companies that sold, you know, an average exit could
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  be easily like eight to 12 time sales, because it's that hard to do. So to the picture goes to
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  spoils and, you know, there's, of course, there's companies that sold for a couple of time sales,
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  but there was, you know, Gregus, I think, I think Bacardibach, Gregus, I haven't said this
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  stat out loud in a while, but I think something like 14 time sales, because it was that creative,
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  because it was growing so fast and they need a vodka. I think multiples have come down and things
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  have changed a little bit. That's what it was like then. So we saw that opportunity. Of course,
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  we should have known there's a catch that the reasons I can go for 10 time sales is because
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  it's hard to do. Still nothing, still in many ways, still nothing harder. I've tried to do with
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  lower, lower odds. If you start from a, you know, kind of a standing start, I think if you have
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  unfair advantages, which is what we're always looking for, or relationships. Thankfully, I do now,
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  so I'm put a gun to my head to start a spirits brand, which might be about what it takes.
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  But I think the point where we had something, it was, you know, we never had the total number of
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  distribution points of like an absolute or a Gregus, of course. But we had, we were in the very high
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  in places. We were in kind of like the trendier. We were very on-premise, which means we were in
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  bars, clubs, restaurants in like major metros, New York, Miami LA, you get it. So we had it
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  those places. And I think, I think the simple, simple metrics are stuff like reorder rates and
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  same store sales because if people are actually reordering Veeve or calling for it, that starts to
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  tell you have something. So that's kind of the anecdotal stuff. And then, you know, there's a whole
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  bunch of metrics in terms of like cases sold in revenue and reorder rates that kind of let you know
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  that, hey, you might, you might be in the ballpark of something that someone wants to acquire.
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  The funny thing is, I would say, you know, we all read about these companies that like everyone's
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  following all ourselves to buy and this and that. But the reality is, even most things that get
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  sold and we talk about this in our book is like, most things are a nice to have not a need to have.
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  And Veeve in all-candidance was very much that. Like, people were interested, but no one was willing
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  to like, you know, give up their firstborn for it. So now it's a dance of like,
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  making sure you, we, our last chapter of our book, shortcut, your startups talks about how
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  assuming you think you might want to sell, if there's even a chance you might want to sell your
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  company, you need to build it with that in mind so that you have the option, but not the obligation.
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  And I think what a lot of people do is go, I don't think I want to sell it. And even if it's
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  less than 50-50, then one day you decide you want to. It doesn't mean all is lost, but it means
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  you have some work to do because there is a whole, you know, art to the, what I'll call kind of like,
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  you know, we did some things to get noticed. We left the breadcrumbs one time. We bought a billboard
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  right by our biggest distributor so that people saw, you know, stuff like that to kind of give the
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  the appearance that we were doing well, even though we were, but if a tree falls in the woods. So
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  it's a lot of, it is a lot of those breadcrumbs and it's a lot of, you know, I joined some industry
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  groups and went to a couple conferences with people that I'd never met to try to build that
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  relationship just so it wasn't like a thirsty cold email saying, hey, want to buy me a slide of
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  number across the table, right? And there's, there's a whole, um, art to that which I don't think I've
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  mastered, but I've mastered enough that they've been able to sell some stuff. But I think that's a huge,
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  you know, some people I talk to get really, no one's called me to buy my company. I'm like,
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  and no one probably ever will, but that doesn't mean it's not a good company. It doesn't mean
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  someone won't buy it for a number that makes you very, very happy. You just have to put on the
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  radar and make them, um, you know, it, it, Goldman, we always always say something the fact of
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  momentum or the appearance of momentum. And, uh, you know, you just have to kind of create your
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  unlock and create your own momentum so that people all of a sudden go, wait, I'm here about V of
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  everywhere. Maybe I should, should call them and find out more, you know, that was, that was kind
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  of the, the goal. Is that something that you look for now? Like when you put money into companies,
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  do you look for owners that are building to sell that have that mindset from yesterday? Is that
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  something you train over because they're just logging through like that? Well, I think what we do,
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  you know, adventure, the goal in general is not to, um, with some exceptions like your, you know,
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  I have a fund with a finite life expectancy. So it's not great if someone holds it for 20 years,
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  something they built, um, even if it's, you know, even if it's a great company. So yeah, we,
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  you know, we have to look for the quiddy, but I think the flip side is what, what we do look for is
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  we want someone who has a big vision, someone who, as I said, we want to be at the, the, the,
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  the forefront of consumer behavior. So those companies can be big. So I want someone with a big vision,
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  um, and don't get me wrong. I've, I've sold companies in the tens of millions and the hundreds of
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  millions that I've started, but I'm not, you know, for it to be a venture back company, like, I can't
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  say, like, if it took one check and sold for 25 million, a lot of people will probably be happy.
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  That's not how venture capital works. So it's, it's power laws. We have to, um, you know,
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  back people who, who tell us they want to build something big, but we have to believe it because
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  occasionally the person who says they want to build something big, they've got a little lightning
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  of bottle and the first offer that comes across the table, then they want to take and you're like,
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  wait, that's a lot. That's not, that's not as much. It's a lot for somebody who's never gotten the
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  check before, but yeah, I got you. And that is attention. And look, we always want with best for
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  the founders, but that's why we just try to be upfront about, like, what are, what are both
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  our, our, our objectives, like, no one's trying to hang on too long. No one's trying to get you to do
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  something that we can't do. But if you want to build something there, you know, there are those
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  things that, who knows how big they can get like an open AI. Yeah. Thanks for tuning in. If you found
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  this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you
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  want to dive deeper into this conversation, check out the links in the description to watch the
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  full episode. See you in the next one.