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Study Hall: Inside Venture Capital · Earn Your Leisure

0:00
Speaker 1: Behind those warm and cozy knights at home. Thousands of
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Speaker 1: and people delivering all of that power where it's needed.
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Speaker 1: They're part of almost three hundred thousand jobs VP supports
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Speaker 1: across the country. Learn more at VP dot com Slash
0:27
Speaker 1: Investing in America.
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Speaker 2: Megan Host of Alexander is Well. She's at one of
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Speaker 2: the most successful VC firms of all time, Treacan Harwitz,
0:38
Speaker 2: and she leads the firm's Cultural Leadership Fund CLF, which
0:43
Speaker 2: is actually a very big deal. A lot of high
0:46
Speaker 2: profile people are in there. Yeah, and you know, she's just,
0:53
Speaker 2: you know, it's very interesting because there's not a lot
0:55
Speaker 2: of black people in VC, and there's not a lot
0:57
Speaker 2: of women in VC, so she's obviously a black woman.
1:01
Speaker 2: So it's it's already, you know, a legendary situation just
1:04
Speaker 2: to even be in her position, but just you know,
1:08
Speaker 2: somebody that has killed in the game and is a
1:12
Speaker 2: rising star in the world of VC. So I feel
1:16
Speaker 2: like we haven't had a venture capital conversation in a
1:18
Speaker 2: while since John Henry was on. Shout to John, who
1:22
Speaker 2: always you know, gives so much great insight. These conversations
1:26
Speaker 2: are very needed because you know, it's high level conversation
1:30
Speaker 2: with my god nineteen keys will say yep, and it
1:33
Speaker 2: kind of you know, gets people a information, but also
1:36
Speaker 2: thinking outside the box where we're not just talking about
1:39
Speaker 2: the same thing every single week, where it's like now
1:41
Speaker 2: you can start to thinking on a much higher level
1:43
Speaker 2: with talking about you know, billions of dollars and things
1:45
Speaker 2: of that nature. So welcome, thank you for joining us, appreciate.
1:50
Speaker 3: It, thank you for having me. I'm this is a
1:52
Speaker 3: big deal. I got to call my mom and let
1:54
Speaker 3: her know where I am.
1:57
Speaker 2: That sixty mon on YouTube. She's watching it, no word,
2:01
Speaker 2: hit the like one and if you're on YouTube, hit
2:03
Speaker 2: the like one. Sixty three hundred people. This is all
2:06
Speaker 2: the biggest show ever created when it comes to investing, fantastic.
2:11
Speaker 3: I'm listen. I need to I need you to say
2:13
Speaker 3: that number again so I can try to get on
2:14
Speaker 3: the plane. I need to put in a.
2:21
Speaker 4: I mean, we will be honest if you could be
2:22
Speaker 4: an investors.
2:23
Speaker 2: So oh yeah, you gotta be an investment.
2:26
Speaker 3: I'm gonna try really really hard to make it. It's
2:29
Speaker 3: a crazy weekend for flying stuff I gotta do, but
2:33
Speaker 3: I'm gonna try to squeeze in one day. I promise,
2:35
Speaker 3: I'm gonna trying real hard.
2:37
Speaker 2: It would be I got a ticket.
2:38
Speaker 3: I bought a ticket, not even knowing if I could come.
2:40
Speaker 3: But I already have a ticket, and if I can't
2:43
Speaker 3: make it, I'm going to give it to somebody can
2:45
Speaker 3: come for sure.
2:46
Speaker 2: Appreciate thank you, appreciate that. Okay, let's get into this conversation.
2:52
Speaker 3: Let's do it.
2:53
Speaker 2: I'm gonna jump right into it because I think you heard.
2:57
Speaker 2: We was talking to Don Peebles, and one of the
2:59
Speaker 2: things that he's said was, I don't want to quote
3:02
Speaker 2: the wrong number, but it's something like sixty billion dollars
3:06
Speaker 2: something like that. Venture capital money out there flowing on
3:08
Speaker 2: a crazy amount of sixty six billion, less than point
3:16
Speaker 2: like seven percent of one percent, like less than seventy
3:19
Speaker 2: basis points. Yeah, one goes to black and women, minority
3:25
Speaker 2: and women businesses combined. It's not even the number is
3:29
Speaker 2: not even big enough to just say black businesses. So
3:31
Speaker 2: they got to put women in there combined.
3:33
Speaker 3: So it's a fraction of a percent, you are career.
3:36
Speaker 2: A fraction of a percent. When from my understanding, also,
3:41
Speaker 2: black women percentage wise started the most businesses last year
3:46
Speaker 2: in America.
3:48
Speaker 3: So what we do black women? We just do it
3:51
Speaker 3: all everybody.
3:54
Speaker 2: That's a fact. So that's a disturbing number. That's an
3:56
Speaker 2: extremely disturbing number that nobody's talking about, because, like he
3:59
Speaker 2: told us, he was like, imagine if it was even
4:01
Speaker 2: proportional to the population where it's like, I think we're
4:04
Speaker 2: like twenty percent of the population. So imagine if twenty
4:07
Speaker 2: percent of that sixty six billion went to black businesses, Like,
4:11
Speaker 2: imagine how that would change the landscape of things overnight.
4:14
Speaker 2: Like the money's there, it's in circulation, it's just not
4:17
Speaker 2: getting to us. But nobody's talking about that. But everybody's saying, like, well,
4:21
Speaker 2: black businesses fell and different things in that nature. But
4:24
Speaker 2: I mean there's underlying issues on why this is happening. So, okay,
4:29
Speaker 2: how do we solve this problem with venture capital?
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Speaker 3: So first, it's way more than sixty six billion and
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Speaker 3: venture money out there working. I couldn't even tell you,
4:41
Speaker 3: but you know, in Drees and Horwitz alone, we've got
4:44
Speaker 3: about thirty billion under management. We're just one firm that's
4:47
Speaker 3: only been in operation for the last ten to twelve years.
4:52
Speaker 3: And so we're just one firm. There's hundreds of firms
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Speaker 3: out there, multiple that are big kind of multi stage
5:00
Speaker 3: investment firms like ours. So so sixty six, I would say,
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Speaker 3: is a low a low number.
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Speaker 2: Maybe they think that every year, maybe sixty annually.
5:09
Speaker 3: But at work, there's a lot of dollars at work
5:13
Speaker 3: over time. But you're asking a big question and I
5:16
Speaker 3: think is really hard to solve. But one of the
5:18
Speaker 3: things that I've seen over the last few years is
5:21
Speaker 3: people just got to put the put the money out there,
5:24
Speaker 3: because you know, historically people have a way that they
5:27
Speaker 3: look at companies. It's like you have to have, you know,
5:30
Speaker 3: we want the founders to have a certain degree. We
5:31
Speaker 3: want the founders who have a certain amount of experience
5:34
Speaker 3: have worked at a certain set of companies. Right if
5:37
Speaker 3: we've worked at you know, X, Twitter, it's Facebook, it's
5:41
Speaker 3: you know, Yelp engineer, whatever the case may be. And
5:45
Speaker 3: the fact is that you don't need all those things
5:47
Speaker 3: to be a good founder. And so I think when
5:49
Speaker 3: we can open up the scope to who can be
5:51
Speaker 3: a good founder, we will likely get more dollars in
5:55
Speaker 3: the hands of black folks and black women specifically. At
5:59
Speaker 3: the same time, I think the other thing is really
6:01
Speaker 3: important is putting black investors in place so they can
6:07
Speaker 3: distribute the capital. Right because people a lot of times,
6:10
Speaker 3: like for our for kind of the industries that people
6:14
Speaker 3: like you usually can only like understand problems that like
6:19
Speaker 3: you know or that you've seen. And so when we
6:21
Speaker 3: ask white investors to understand black companies or black businesses,
6:25
Speaker 3: if they're in a particular space, they don't get it right.
6:28
Speaker 3: So then they get into the investment committee meeting and
6:31
Speaker 3: they got to do a vote, and they're like, well,
6:32
Speaker 3: I don't understand. I don't get it. And so if
6:35
Speaker 3: we have black investors that have dollars they can put
6:38
Speaker 3: into companies, that also, I think will increase the amount
6:41
Speaker 3: of dollars that go into black founders. At the same time,
6:45
Speaker 3: it's not like black founders only found black companies. We
6:49
Speaker 3: find you know, social media companies or consumer you know
6:53
Speaker 3: e commerce companies too. But we do need to have
6:57
Speaker 3: more folks in the room understand our community to make
7:00
Speaker 3: the decision. So I would say probably those two things.
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Speaker 5: So VC is something that you know, it's not spoken
7:06
Speaker 5: about in a lot of our communities, and so I'm
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Speaker 5: interested And what led you to the path of VC,
7:14
Speaker 5: it's for sure.
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Speaker 3: So I just learned about VC in twenty sixteen, so
7:19
Speaker 3: about six years and I was on a completely different
7:22
Speaker 3: path in life. I went to Fark Atlanta undergrad shout.
7:24
Speaker 2: Out to the path.
7:26
Speaker 3: Shout out to the Panthers, and I was getting a
7:30
Speaker 3: sociology degree. I was like, ooh, I love learning about
7:33
Speaker 3: people and groups. And I had this idea that I
7:35
Speaker 3: wanted to be an academic. I wanted to do research
7:38
Speaker 3: full time and teach full time, dean of a school
7:40
Speaker 3: and the president of a college. And I went through
7:45
Speaker 3: this path, got my first masters, went to a PhD.
7:48
Speaker 3: Hated dropped out. I was like, I got to get
7:51
Speaker 3: out of here. This is this is not for me.
7:54
Speaker 3: Moved to California, and you know they say to be
7:57
Speaker 3: successful in Silicon Valley you got to have a good
7:58
Speaker 3: dropout store. So I got my drag out store, moved
8:02
Speaker 3: to Silicon Valley and it wasn't until I went to
8:05
Speaker 3: business school. So I went to business school at Stanford,
8:08
Speaker 3: and I didn't live on campus because by the time
8:12
Speaker 3: I went to business school, I was much older than
8:14
Speaker 3: you know, most of the people there, and I was like,
8:16
Speaker 3: I'm gonna save my house. I'm not gonna move on
8:18
Speaker 3: campus and all that stuff. So I was trying to
8:21
Speaker 3: be tracked. Okay, when I was picking my classes, I
8:24
Speaker 3: didn't want to be driving at nine o'clock in the morning.
8:26
Speaker 3: I'm the one I want. It is very hectic. And
8:29
Speaker 3: so there was a venture class that was like early afternoon.
8:34
Speaker 3: I said, perfect, sign me up and didn't know what
8:37
Speaker 3: it was. And so I get in there and it's
8:39
Speaker 3: actually with Eric Schmidt. So Eric Schmidt is former CEO
8:42
Speaker 3: of Google, former CEO chairman. Everybody calls to him, you know,
8:47
Speaker 3: the first adult in the room at Google, and I
8:51
Speaker 3: knew it. Got completely distracted by finance, that's the bottom line.
8:56
Speaker 3: Went into that class, read everything, just started doing extra stuff,
9:00
Speaker 3: extra reading. And one day we went for a walk
9:05
Speaker 3: with Eric after class and he may or may not
9:07
Speaker 3: remember this, but we did a little short walk around
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Speaker 3: the GSP and he's like, you know, maybe you're one
9:12
Speaker 3: of my best students. I think you should try venture
9:14
Speaker 3: for real. And I said, play people don't do that.
9:17
Speaker 3: I said, now, why would you try to set me
9:18
Speaker 3: up for failure? Knowing that there are not people who
9:21
Speaker 3: look like me in this industry, and so I kind
9:23
Speaker 3: of just brush it off. But after a while, I said,
9:26
Speaker 3: you know what, mayan if Eric Schmiz says you should
9:29
Speaker 3: try something, maybe you should try it. So then the
9:31
Speaker 3: rest is kind of history. I spent my time running
9:33
Speaker 3: up and down sand Hill Road the rest of my
9:36
Speaker 3: time at business school, started doing internships. You're supposed to
9:40
Speaker 3: do like one internship between year one and year two
9:43
Speaker 3: in business school, and I think I did a total
9:46
Speaker 3: of like four all throughout the year I was working
9:48
Speaker 3: during school turned into a full time role, and I've
9:52
Speaker 3: been doing it ever since.
9:54
Speaker 6: Cool question for you for those who are interested in
9:56
Speaker 6: getting into the VC space, what are some of the
9:59
Speaker 6: most innovative ways you've seen people that look like us
10:02
Speaker 6: breath into the industry.
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Speaker 3: Yep, So I would say that there's two ways, and honestly,
10:09
Speaker 3: the most innovative that I think most successful thing I've
10:13
Speaker 3: seen people do is start their own In the last
10:15
Speaker 3: two or three years, we've seen more black founded venture
10:19
Speaker 3: funds and firms than I've ever seen. It's been an
10:22
Speaker 3: explosion and I love it. If you're looking for the
10:25
Speaker 3: more traditional path, there's a couple of ways you can
10:28
Speaker 3: do it. So working at a startup, people love seeing
10:31
Speaker 3: that you've spent time on a product team, that you've
10:34
Speaker 3: spent time in engineering or spent time in marketing, because
10:37
Speaker 3: you have insight into what to look for in a founder,
10:40
Speaker 3: right you understand like, oh, they need to set up
10:42
Speaker 3: this piece of the company or this vertical. You have
10:45
Speaker 3: insight into kind of what the needs are in the space. Also,
10:50
Speaker 3: going to business school and kind of just getting an
10:51
Speaker 3: extra business edge and how to think about you know,
10:54
Speaker 3: technology and think about business and to think about startups
10:58
Speaker 3: is important. But I say one of the easy ways
11:00
Speaker 3: is going to a startup and actually spending some time
11:02
Speaker 3: in it because you get kind of an extra edge.
11:06
Speaker 3: And then actually probably the most important thing is having
11:10
Speaker 3: a perspective about the future. So VC is a long game.
11:15
Speaker 3: It is very different from the public market. It is
11:17
Speaker 3: not like oh, I'll buy some stocks and the next
11:20
Speaker 3: year I'm gonna cash out, or in two years I'm
11:22
Speaker 3: gonna cash out, or in five years I'm gonna catch
11:24
Speaker 3: cause I tell my I tell my investors in CLF.
11:27
Speaker 3: You know, venture is an eight to ten year game.
11:29
Speaker 3: Like it is a long view game. I say, if
11:32
Speaker 3: you're gonna come to me in two years and ask
11:34
Speaker 3: me where your money is, I don't have I don't
11:36
Speaker 3: have it. And so investors you have a perspective on
11:40
Speaker 3: what they think is going to happen in the future, like, oh,
11:42
Speaker 3: I think you know, people are going to want to
11:44
Speaker 3: start communicating through I don't know, bird calls it by
11:48
Speaker 3: you know, by twenty thirty, right, And so you start
11:51
Speaker 3: looking for companies in that space. You they just really
11:54
Speaker 3: want people who are kind of thinking beyond the way.
11:58
Speaker 3: So if you can kind of formulate, you know, an
12:00
Speaker 3: idea around that, I think you're likely setting yourself up
12:03
Speaker 3: for success.
12:05
Speaker 2: Let me let me ask you this, ask me this. Okay,
12:10
Speaker 2: how do you get the money? So if how do
12:14
Speaker 2: companies position themselves to attract venture capital money?
12:20
Speaker 3: Mm hmm. So different vcs like different things. All vcs
12:26
Speaker 3: are not the same. And the first thing is that
12:28
Speaker 3: people would You're gonna put yourself in a good position
12:32
Speaker 3: if you find the vcs that are looking for what
12:34
Speaker 3: you have. So, if you're building a consumer product, a
12:38
Speaker 3: social app, necessarily going to talk to enterprise investors or
12:43
Speaker 3: fintech investors or the biotech investors that's not going to
12:46
Speaker 3: serve you. You're gonna waste everybody's time, your time and
12:48
Speaker 3: their time, and neither you know, neither party is gonna
12:51
Speaker 3: like that. So identify who the investors are that are
12:55
Speaker 3: in your space and not just like your vertical, but
12:58
Speaker 3: you're your size range, right, So are you raising a
13:04
Speaker 3: pre c round?
13:04
Speaker 4: Right?
13:05
Speaker 3: Are you raising five hundred thousand dollars? You're raising five
13:07
Speaker 3: hundred thousand dollars. You don't want to go to a
13:09
Speaker 3: growth fund, right. They're looking for companies that are much later,
13:13
Speaker 3: have a ton of revenue. You have a ton of
13:15
Speaker 3: you know, staff already. So make sure you're not only
13:18
Speaker 3: in the right vertical, but also in the right size
13:20
Speaker 3: range of you know, what you're trying to raise. You know,
13:25
Speaker 3: early stage vcs tend to be looking for folks who
13:28
Speaker 3: great ideas. What it's you know, it's usually pre traction,
13:32
Speaker 3: sometimes pre products before you have anything. So if you're
13:36
Speaker 3: your early stage, it's really about the team that's building it, right,
13:39
Speaker 3: what is your background? Why are you the best person
13:42
Speaker 3: to build this particular company? And then as you grow
13:46
Speaker 3: it kind of changes, Right, how much traction do you
13:48
Speaker 3: have if you have an app? What's the engagement looking
13:51
Speaker 3: like you know, how often are people on your app
13:53
Speaker 3: and for how long? So whatever the kind of key
13:56
Speaker 3: performance indicators are for your business, that's really what you
13:59
Speaker 3: should lean named you.
14:02
Speaker 5: I think this conversation is extremely important. We all have children.
14:05
Speaker 5: I have a daughter, and Megan, obviously you are somebody
14:08
Speaker 5: that is extremely It's inspirational, right, And so I wonder
14:11
Speaker 5: what the experience is like coming into the space obviously
14:14
Speaker 5: that we're not familiar with in our community a lot
14:15
Speaker 5: of times as a black woman coming into the space,
14:18
Speaker 5: what has that experience been like for you over the
14:22
Speaker 5: past six or seven years?
14:24
Speaker 3: Totally? So first, I have two kids. You're you, You're
14:27
Speaker 3: getting mom life right now. Because here's a crib. You
14:31
Speaker 3: see the paw Patrol.
14:35
Speaker 2: Been there, Chase is on the case.
14:39
Speaker 3: Okay, in the chat, I need you to say something
14:43
Speaker 3: if paw Patrol has a choke hold on your child
14:47
Speaker 3: like it for two years for two right, it's a thing.
14:53
Speaker 3: But for me as a mom, I'll say And I
14:56
Speaker 3: think venture in general has a long way to go
14:58
Speaker 3: when it comes to women in our role in this industry.
15:03
Speaker 3: And I think there's a lot of learning to do
15:06
Speaker 3: and a lot of role to do. But what I
15:07
Speaker 3: can say is that you know, at Andres and Horwitz,
15:09
Speaker 3: I've had a really fantastic experience as my own. I'm
15:14
Speaker 3: actually on maternity right now. I have a two months
15:18
Speaker 3: those I have a two month hole, and I am
15:22
Speaker 3: a technically not you know, technically not working. But I
15:27
Speaker 3: really do love, you know, my role, and I love
15:32
Speaker 3: my firm so much that I'm happy to share about
15:36
Speaker 3: them any any chance I get. But I think the
15:38
Speaker 3: key is people making sure that they have really great
15:40
Speaker 3: maternity policies, people making sure that women feel supported in
15:44
Speaker 3: the workplace. And it's not like, oh, if you have
15:46
Speaker 3: kids and you can't work until two am and you
15:49
Speaker 3: can't drop everything and get on a flight in Whateur
15:53
Speaker 3: that that doesn't mean you're any less committed to your role.
15:56
Speaker 3: And I think one of the things, and I hope
15:58
Speaker 3: this is okay for me to share, one of my
16:01
Speaker 3: favorite things about our firm is our leadership has been
16:05
Speaker 3: really phenomenal from a maternity le perspective and just supporting
16:09
Speaker 3: women at work. And when the pandemic first started, you know,
16:14
Speaker 3: everybody was like, oh, we're going remote, but we think
16:17
Speaker 3: we're going to come back. We might do hybrid like no,
16:20
Speaker 3: like companies were really trying to figure her out what
16:22
Speaker 3: they were going to do. And I'll never forget Our
16:24
Speaker 3: founder Ben Horwitz got on our all hands and told us,
16:30
Speaker 3: you know, it just happens every Friday. And he says,
16:32
Speaker 3: you know, I was talking to lots of staff about
16:35
Speaker 3: what they want to do, and you know, trying to
16:37
Speaker 3: get opinions on like what should happened first. That's the
16:39
Speaker 3: first sign of a good leader, is like asking people
16:41
Speaker 3: what they actually want to do. And he said, I
16:45
Speaker 3: was speaking to a woman and she said, this pandemic
16:49
Speaker 3: has been the first time that I felt like I
16:50
Speaker 3: could be a good mom and a good employee. And
16:54
Speaker 3: he said, I'm not taking that away from people. I
16:56
Speaker 3: can't take it away. So he said, we're not going back,
16:59
Speaker 3: you know, no matter what we do, we're not going
17:00
Speaker 3: back to you know, fully in office culture because I
17:03
Speaker 3: can't do that to the moms. And I'm just like,
17:06
Speaker 3: sign me up, you know. So I really really appreciated that.
17:09
Speaker 3: But I think overall the industry does have a really
17:12
Speaker 3: really long way because it's not a lot of women.
17:15
Speaker 6: Yeah, to tell in to what you were talking about, Like,
17:17
Speaker 6: as a parent, I have won seven year old. He's
17:20
Speaker 6: in there playing Fortnite. Now, how do you balance everything?
17:23
Speaker 6: So being a woman, African American woman and the super
17:27
Speaker 6: competitive space, how do you manage that family life while
17:31
Speaker 6: trying to be the best at your craft in this
17:33
Speaker 6: VC space.
17:34
Speaker 4: I don't.
17:35
Speaker 3: I don't balance it here. I'm gonna be agree with you.
17:38
Speaker 3: I don't balance it here with I do my best,
17:39
Speaker 3: but I try to put like a couple of little
17:42
Speaker 3: rules in play. So for me with my first son
17:45
Speaker 3: was I have a three year old and two months old.
17:47
Speaker 3: I was like, he's he's coming everywhere with me. I
17:51
Speaker 3: don't care if it's work, I don't care if it's
17:53
Speaker 3: for play. Up until he's two, I'm gonna takehim with
17:57
Speaker 3: me because if I'm traveling for work, even if I'm
18:00
Speaker 3: on for two nights, I'm all stressed out, like I
18:01
Speaker 3: miss him and I gotta FaceTime. But if he's if
18:04
Speaker 3: he's with me, I can stay somewhere for two weeks
18:07
Speaker 3: and not be worried about it because whenever I get
18:09
Speaker 3: off for I'm going to be back with him. So
18:12
Speaker 3: that's kind of the first thing that I do. And
18:15
Speaker 3: I think that having women kind of food have been
18:22
Speaker 3: my superiors over time when they have children, they really
18:26
Speaker 3: lean into two women who are in the same position.
18:29
Speaker 3: So I try to provide that for people who are
18:31
Speaker 3: on my team as well as much as I can, Like,
18:34
Speaker 3: you need flexibility, your child is sick, un feel bad
18:36
Speaker 3: about your childhood and sick? Why should Why should be
18:39
Speaker 3: scared to tell your boss? Right? And so I try
18:40
Speaker 3: to create that type of environment for everybody around, and
18:44
Speaker 3: I hope that people try to do it for me too.
18:47
Speaker 3: And we just gotta stop explaining ourselves like, oh, I
18:51
Speaker 3: gotta leave early because I gotta take my kids to
18:53
Speaker 3: the you know, the they gotta basketball game, and just
18:57
Speaker 3: say I gotta go leave early, don't you know. We
19:00
Speaker 3: don't have to do all of explaining and hoping that
19:02
Speaker 3: people will like say, okay, it's all right saying what
19:05
Speaker 3: you never do.
19:06
Speaker 4: You think that's an African American thing or a woman thing?
19:09
Speaker 2: Yeah?
19:11
Speaker 4: Both?
19:12
Speaker 3: Both? Both?
19:16
Speaker 2: Yeah? Yeah, all right, So let's let's talk about this.
19:20
Speaker 2: How do you pitch yourself to companies with VC, Like
19:22
Speaker 2: if you if, what what should what should? Like, what's
19:25
Speaker 2: the uh one on one kit that somebody should have
19:29
Speaker 2: if they're interested in getting VC money? And at what
19:32
Speaker 2: point should somebody even entertain trying to get VC money.
19:37
Speaker 3: Yeah, so REASONA. People can disagree, but I think that
19:43
Speaker 3: it really just depends on how ready you want to be.
19:46
Speaker 3: But venture tech startups is very much a fail fast
19:52
Speaker 3: type of mentality. You rather try early figure out what
19:55
Speaker 3: you're doing wrong, and then come back again after you've
19:58
Speaker 3: fixed all your mistakes. If you're trying to get every
20:00
Speaker 3: being perfect, like, oh, my company has to be perfect
20:02
Speaker 3: and we have to have all these details right, et cetera,
20:05
Speaker 3: you're probably gonna spend too much time trying to get
20:08
Speaker 3: that right and actually not know what you need to
20:10
Speaker 3: fix because you haven't shown anybody right. You're building in
20:13
Speaker 3: secret and you're like, oh, this has to be perfect,
20:15
Speaker 3: and then at the end of the day you go
20:17
Speaker 3: do your pitch and they're like, oh, all these things
20:19
Speaker 3: are wrong and you could have fixed them far earlier.
20:21
Speaker 3: So again, if you want to raise at the pre
20:23
Speaker 3: seed level, a lot of people don't have a product.
20:27
Speaker 3: It's just an idea and a pitch dick and you're
20:30
Speaker 3: walking somebody through what you think it can be. A
20:32
Speaker 3: lot of investors on the VC side are just we
20:34
Speaker 3: care about magnitude, right. It's like how big can this
20:37
Speaker 3: idea get? Have you identified a really really big market?
20:40
Speaker 3: Is it a really really great team, and do I
20:42
Speaker 3: think that they can execute and you can get money
20:46
Speaker 3: with nothing?
20:47
Speaker 2: Well, so let's let's let's let's break this down a
20:49
Speaker 2: little bit. Yeah, So, because I want to talk to
20:52
Speaker 2: people that that's not really familiar with the space. So
20:54
Speaker 2: the team is the team is very important, right, So
20:57
Speaker 2: putting together a team like senior leadership, all the people
21:02
Speaker 2: that have already had success in the space, that's going
21:04
Speaker 2: to be helpful, right, And then like putting together like
21:09
Speaker 2: the pitch deck of the idea of kind of like
21:12
Speaker 2: you said, just even if it's not fully there yet,
21:16
Speaker 2: like yeap what it can potentially do, and convincing somebody
21:20
Speaker 2: that you have the capability of actually making this happen.
21:24
Speaker 3: Right for sure? For sure? And I would say even
21:28
Speaker 3: beyond getting to senior leadership, when you're at the really
21:31
Speaker 3: really early stage, it's about the founding team, right, who
21:35
Speaker 3: are the people who are founding this company.
21:37
Speaker 7: If it's like, oh, say it's an education tech company
21:42
Speaker 7: and it's about teaching kids how to xyz whatever, and
21:47
Speaker 7: you're a former teacher, right, that's really interesting to investors
21:51
Speaker 7: because you know the space, you understand what the need is,
21:54
Speaker 7: or you're a former principal or a school board member,
21:56
Speaker 7: and then you partner.
21:57
Speaker 3: Up with say an engineer who was at whatever other
22:01
Speaker 3: ed tech company. Right, we're looking at are these puzzle
22:04
Speaker 3: pieces in place for this idea and this team to
22:07
Speaker 3: actually work.
22:13
Speaker 5: So you're leading the Cultural Leadership Fund. Can you talk
22:17
Speaker 5: about what it is it's important and how unique it
22:20
Speaker 5: is to the tech space.
22:23
Speaker 3: I can, I can so Cultural Leadership Fund, So it
22:27
Speaker 3: probably starts. Let me started what Inreas and Horwitz is
22:29
Speaker 3: because that will make Cultural Leadership Fund make even more sense.
22:32
Speaker 2: So do it.
22:33
Speaker 3: In Treason Horowitz, we are a venture capital firm. We've
22:37
Speaker 3: got again about thirty billion dollars under management, and we
22:40
Speaker 3: do early stage and growth stage investing, so the full
22:43
Speaker 3: kind of scale of a venture capital h and we
22:46
Speaker 3: do so through a number of funds. So we've got
22:49
Speaker 3: a venture funds, We've got crypto fund, we've got growth
22:53
Speaker 3: we have a biotech fund. So all of those funds
22:58
Speaker 3: exist at our firm. And then Culturallyadership Fund is this
23:01
Speaker 3: other fund that is a strategic co investment vehicle inside
23:05
Speaker 3: of Injuries and World with so we invest alongside those
23:08
Speaker 3: other ones that I just mentioned. But the thing that
23:12
Speaker 3: is really interesting and really cool about what we do
23:14
Speaker 3: at CLEFT is that we do those co investments with
23:17
Speaker 3: two main missions in mind. So the first is connecting
23:21
Speaker 3: the world's greatest cultural leaders to the best new technology companies,
23:25
Speaker 3: and the second is getting more young African Americans into technology.
23:28
Speaker 3: So that first mission, you guys actually kind of talked
23:31
Speaker 3: about it earlier. When we say getting cultural leaders into
23:37
Speaker 3: technology companies, we mean the world's greatest athletes, entertainers, musicians,
23:41
Speaker 3: cea level executives, all of whom are excited about technology.
23:45
Speaker 3: They're interested in innovation, they want to play a role
23:48
Speaker 3: in the things that are being built across this industry.
23:51
Speaker 3: And c LEFT gets to be an on ramp for that.
23:53
Speaker 3: And I think for so many you know, we call
23:55
Speaker 3: them cultural leaders. You know, in the past it's been
23:59
Speaker 3: about like getting a sponsorship deal with a company after
24:03
Speaker 3: they've gotten big, or figuring out how to monetize on
24:06
Speaker 3: X platform. But for us, it's about getting ownership on
24:10
Speaker 3: the cap table of these companies. And again, these are
24:13
Speaker 3: companies kind of pre public, so before the average retail
24:17
Speaker 3: investor can get into a company, we're taking it back
24:19
Speaker 3: to the private space and making sure that we get
24:22
Speaker 3: black dollars onto the tables of these companies.
24:27
Speaker 6: Cool question for you, So what are like three or
24:29
Speaker 6: four key traits that an entrepreneur can have that will
24:33
Speaker 6: make your fund or one similar to it go crazy
24:37
Speaker 6: like once you see their pitch deck or presentation.
24:41
Speaker 2: Yep.
24:41
Speaker 3: So the important thing to know there's CLF is a
24:43
Speaker 3: co investment vehicle, so we don't do direct investments. We
24:46
Speaker 3: invest alongside the other fund. But I think that's an
24:51
Speaker 3: important piece to bring up though, because in this concept,
24:55
Speaker 3: I think about black generational wealth and I think there's
24:57
Speaker 3: a few really key ways to do it. When we
25:00
Speaker 3: think about technology and technology companies. The first is obviously
25:04
Speaker 3: investing in black founders, right, It's making sure you put
25:08
Speaker 3: dollars in their hands so they can put into their
25:10
Speaker 3: companies and grow. The second is getting black dollars on
25:13
Speaker 3: cap tables, so getting black investors into whatever tech companies
25:17
Speaker 3: that are out there. And then the third is getting
25:19
Speaker 3: black talent into tech companies, so being an employee at
25:24
Speaker 3: the seed or the Series A or the Series B stage,
25:26
Speaker 3: because that early employee equity can potentially be very very
25:30
Speaker 3: valuable down the road. Right, We've all heard the stories
25:32
Speaker 3: of Facebook or Twitter making people millionaires overnight, and so
25:37
Speaker 3: I think those are the three ways to really build
25:40
Speaker 3: generational wealth for the black community. I think technology has
25:42
Speaker 3: proven that time and time again. And see A Left
25:44
Speaker 3: focuses on those last two. We focus on black investor
25:47
Speaker 3: dollars on the cap table, and we focus on black
25:50
Speaker 3: talent into technology companies.
25:55
Speaker 2: Dame Dash on the FaceTime call during Mark on Monday,
26:00
Speaker 2: A man, A man, what's up? Bro? Look say what's up?
26:09
Speaker 4: Everybody?
26:09
Speaker 2: One of the most powerful people in in venture capital,
26:12
Speaker 2: this is Dame Dash. Say that we're only doing a
26:19
Speaker 2: live show right now.
26:20
Speaker 3: Bro, you're on the live show.
26:24
Speaker 2: What did you say? Is that the cara skills you're
26:26
Speaker 2: showing me as a curtain? Yo, We're on a live show.
26:30
Speaker 2: I'mnna call you. I'm gonna call you right back. Yeah, Man,
26:34
Speaker 2: Actually make an announcement.
26:35
Speaker 3: Actually, what do you think about? Bring him?
26:38
Speaker 2: Let's dang, dang. I wasn't you gotta break the good?
26:43
Speaker 2: I wasn't good. I wasn't planning on this. But everything
26:46
Speaker 2: happens for a reason. So Dame Dash is one of
26:49
Speaker 2: our favorite people on Earth. A cultural icon. He reminds
26:52
Speaker 2: us every single time he speaks to us how much
26:55
Speaker 2: he's helped our program, how important he is to us.
26:59
Speaker 4: Without I remind you.
27:01
Speaker 2: How much I have to help my program. That's too
27:06
Speaker 2: so so, Dame I called you the other day. I said, look,
27:10
Speaker 2: we got this big thing invest Fest. We need you there.
27:14
Speaker 2: And after about five minutes, Dame Dash will be out
27:19
Speaker 2: in Vestfest. Confirmed.
27:21
Speaker 4: You better not let me get around Dames. You think
27:23
Speaker 4: I am crazy?
27:23
Speaker 8: Now, boy, Dave Dash, Ladies and Jail will be in
27:28
Speaker 8: Atlanta August seven.
27:33
Speaker 2: I'm gonna make sure you that I must. I'm gonna
27:36
Speaker 2: call you every single day to make sure you that
27:38
Speaker 2: that's a fact that.
27:42
Speaker 5: This episode is brought to you by P and C Bank.
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29:33
Speaker 9: Buying a car and Carvana was so easy. I was
29:35
Speaker 9: able to finance it through them.
29:36
Speaker 1: I just, oh, wait, you mean finance.
29:38
Speaker 9: Yeah, finance, got pre qualified for a Carvana auto loan,
29:41
Speaker 9: entered my terms and shot from thousands of great car options,
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Speaker 9: always in my budget.
29:45
Speaker 1: That's cool that financing through Carvana.
29:47
Speaker 9: Was so easy, financed, done, and I get to pick
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Speaker 9: up my car from their Carvana venue machine tomorrow by nanced.
29:53
Speaker 6: Right, That's what I said.
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Speaker 9: You can spend time trying to pronounce financing or you
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30:01
Speaker 3: Additional terms and conditions were apply.
30:03
Speaker 2: Fact yes, breaking bread, Dame, I'm gonna call you. I'm
30:06
Speaker 2: gonna call you after this is over. Brother, You got
30:09
Speaker 2: your bedline.
30:19
Speaker 6: Oh it's uh always always, always got jokes, jokes.
30:27
Speaker 2: Truth and true, challeng killing alright, Uh, Dame Dash will
30:34
Speaker 2: be at investments ladies and gentlemen. Yes, market Monday's exclusive.
30:38
Speaker 2: I was gonna wait till till next week to drop that, but.
30:41
Speaker 3: Yeah, I'm glad I'm on this episode because all the
30:44
Speaker 3: big announcements are coming in these episodes, is the fact,
30:48
Speaker 3: right At first, it's funny. I I think we were
30:53
Speaker 3: supposed to do a different day, but I ended up
30:55
Speaker 3: on the biggest announcement.
30:56
Speaker 2: That is true. That's true, Tyler Perry, ask it just
31:00
Speaker 2: it just keeps getting bigger and bigger, and we're not done.
31:02
Speaker 4: Yeah.
31:03
Speaker 2: I'm sorry. I'm sorry to interrupt, but I couldn't resist
31:06
Speaker 2: myself Dan. Anytime Dan calls that's what you know, that's
31:09
Speaker 2: a legendary moment we grew up on, like music like Rockefeller,
31:13
Speaker 2: like you know. So it's still kind of weird to
31:15
Speaker 2: me that Dan Dash calls me FaceTime like it's blessings.
31:19
Speaker 2: It's surreal. It's weird. Yeah, you know what I'm saying.
31:23
Speaker 5: Like the numbers that come through. I'm like, yeah, okay, yeah,
31:26
Speaker 5: this is our life now.
31:27
Speaker 6: Yeah, and ask any question real quick?
31:30
Speaker 2: Yes please.
31:32
Speaker 6: So Ben is one of my favorite entrepreneurs of all time.
31:36
Speaker 4: Can you share maybe like three or four big.
31:37
Speaker 6: Lessons you've learned from him since being there?
31:40
Speaker 3: Oh, take the time. Yes, that's a good question. You
31:46
Speaker 3: put me on the spot. I have learned actually a
31:48
Speaker 3: lot of lessons from being my favorite. I'll give you
31:53
Speaker 3: my favorite. So our firm is really active venture firm,
31:59
Speaker 3: doing a life of stuff all the time, and I
32:02
Speaker 3: think there are a lot of opportunities that come our
32:04
Speaker 3: way that could be quick and easy. But then as
32:09
Speaker 3: this phrase and we have this value at the firm
32:11
Speaker 3: that says we take the long view on relationships. And
32:15
Speaker 3: what that means is is we're we're in a relationship business.
32:19
Speaker 3: But what that means is that we don't sacrifice relationships
32:23
Speaker 3: for a quick book. You don't have to when people
32:26
Speaker 3: come into our firm. You don't have to worry about
32:27
Speaker 3: us going and running and tell somebody else about your
32:29
Speaker 3: business or all your secrets, or you know that we'll
32:33
Speaker 3: steal something or switch up something up like, we are
32:36
Speaker 3: very loyal to the relationships that we build, and that
32:40
Speaker 3: is just dangerously critical to me because I think that
32:43
Speaker 3: loyalty is really important, and I think trust is really important.
32:49
Speaker 3: But we take the long beyond relationships. Nobody had forever
32:52
Speaker 3: has to worry about us, you know, flipping and dipping
32:55
Speaker 3: for a million here or five million there or ten
32:57
Speaker 3: million here. We are we really try to be about it.
33:03
Speaker 2: Let me ask you that you spoke about the series
33:05
Speaker 2: a series BB here like seed round. We just spoke
33:07
Speaker 2: to Pinky from Floody Big and she just got twenty
33:10
Speaker 2: five million dollars in her seat.
33:12
Speaker 3: Pinky my heart. That is my bag.
33:16
Speaker 2: Oh yeah, yeah, thinky.
33:18
Speaker 3: That's my bag. We went to college together. She is
33:23
Speaker 3: my Sto Roars. She brought me into Delta. She was
33:27
Speaker 3: Miss the Au the year before me, and then I
33:30
Speaker 3: was Miss c Au but she was Miss Junior and
33:32
Speaker 3: I was missing. We've been living up on each other
33:34
Speaker 3: for a long time for a long time. She's everything
33:36
Speaker 3: and I'm always following in her footsteps. So this is.
33:40
Speaker 8: Old.
33:41
Speaker 2: She has a one week old.
33:43
Speaker 3: Yeah that is my sister for sure.
33:49
Speaker 2: Shout out to Pinky. But yeah, can you kind of
33:51
Speaker 2: talk about that like seed rounds, round a round, Like
33:54
Speaker 2: what does that mean?
33:56
Speaker 4: Yep.
33:56
Speaker 3: So that's just about the stage that you are in
33:59
Speaker 3: the company. And I tell people to think about fundraising
34:03
Speaker 3: rounds as like a step function. It's not like a
34:06
Speaker 3: lot a linear you know, relationship like this, it just
34:08
Speaker 3: goes to It's not like that where it's like you
34:10
Speaker 3: do your valuation grows and it doesn't work like that.
34:13
Speaker 3: It's like this right, And what that means is like
34:16
Speaker 3: if you're at a seed round, there's all the stuff
34:20
Speaker 3: that you need to do before you can raise a
34:22
Speaker 3: series series A, and then when you raise a series A,
34:26
Speaker 3: you just stay flat. There's all the stuff you need
34:28
Speaker 3: to do and accomplish and achieve from attraction and a
34:30
Speaker 3: profit and a revenue perspective before you can raise a
34:33
Speaker 3: series B, and then you jump up to the next round.
34:35
Speaker 3: It's not kind of this like constant ticking, but essentially
34:39
Speaker 3: usually like a seed round is maybe you've got a
34:43
Speaker 3: rough version of your product. You are, you know, working
34:47
Speaker 3: on a beta. Maybe you've got a couple of people
34:49
Speaker 3: testing it out. By series A, you you found a
34:53
Speaker 3: little bit of product market fit you're starting to think
34:55
Speaker 3: about you know, you've got a repeatable process for acquiring
34:59
Speaker 3: customer or users. Right, there's all these kind of uh
35:04
Speaker 3: T traction and benchmarks that that firms are looking for.
35:08
Speaker 3: And every firm is different. Right, Some firms might say, well, no,
35:11
Speaker 3: let seed that you said is more of a serious
35:13
Speaker 3: age to me, and for other people like, oh, that's
35:15
Speaker 3: totally a serious be So every firm is different. But
35:18
Speaker 3: the idea is that there's kind of these benchmarks that
35:21
Speaker 3: you have to meet to get to each ground.
35:25
Speaker 5: So obviously the fund, you've had a lot of people
35:28
Speaker 5: invest You've had obviously celebrities, you've had cultural leaders You've
35:33
Speaker 5: had athletes. I'm wondering from your side, how encouraging it
35:37
Speaker 5: is to see this type of diversity coming into the space,
35:40
Speaker 5: or if it's not at the pace that you you
35:43
Speaker 5: know that is fulfilling to you, What can we do
35:46
Speaker 5: to encourage people to look at this as a way
35:49
Speaker 5: to actually put into your portfolio as a way to
35:52
Speaker 5: generate generational wealth, Like, yeah, what are your thoughts on that?
35:56
Speaker 3: Yep, for sure, so I we The insight that kind
36:01
Speaker 3: of started Cultural Leadership Fund was this idea that when
36:05
Speaker 3: it came to the things that were cool, what people wore,
36:08
Speaker 3: what people liked to do, what they talked about, it
36:11
Speaker 3: was black Twitter and Instagram and in black TikTok. It
36:14
Speaker 3: was black people and what we were doing that everybody
36:17
Speaker 3: wanted to do. So but again, so often we weren't
36:21
Speaker 3: capturing any of the value of these companies right Again,
36:24
Speaker 3: we'd be real popping on there and then maybe get
36:27
Speaker 3: a sponsorship later or whatever the case is. It came
36:30
Speaker 3: to owning the company as they grew and your kind
36:33
Speaker 3: of relationship growing proportionately, you know, and your wealth growing
36:37
Speaker 3: proportionately to the company, it just didn't exist. So Cleft
36:40
Speaker 3: was created in order to kind of alleviate that, where
36:42
Speaker 3: it's like, Okay, these black culture creators, people shaping, shifting,
36:46
Speaker 3: creating culture. If we can get them on the cap
36:48
Speaker 3: tables early, then they can really truly capture the value
36:51
Speaker 3: of what it is that they're bringing to the platform.
36:54
Speaker 3: And so I love it because our investors have become
36:58
Speaker 3: some of the most savvy, thoughtful, you know, investment partners
37:04
Speaker 3: in these companies that that I've ever seen. So this
37:07
Speaker 3: whole concept of like a dumb athlete, this whole concept
37:10
Speaker 3: of like a spacey you know, actress or whoever business leader,
37:14
Speaker 3: it's those days are over. These are some of the
37:17
Speaker 3: most thoughtful and kind of intricate people that that I've
37:19
Speaker 3: ever met in portfolio company like working with them. They
37:22
Speaker 3: don't want to work with people who are just going
37:23
Speaker 3: to drop a couple of dollars and disappear. That's that's
37:26
Speaker 3: completely useless because money is abundant when it comes to
37:29
Speaker 3: the venture capital space. It's like they don't have to
37:31
Speaker 3: save your money. They don't have to take your money.
37:34
Speaker 3: They're getting money from you know, entries and Horrwitzer's choir
37:37
Speaker 3: or whoever else. If you're you know, when you're a
37:39
Speaker 3: coach or leader, it's not about your money. It's about
37:41
Speaker 3: the value that you can help bring to help the
37:43
Speaker 3: company succeed. And so I've seen people really come into that,
37:47
Speaker 3: you know, into their own as investors through through the cleft,
37:51
Speaker 3: and I think that's only going to grow. I think
37:53
Speaker 3: it's an insight that other people are starting to catch
37:55
Speaker 3: on to and try to create kind of similar similar vehicles.
37:59
Speaker 3: But we're really proud that we get to be the
38:02
Speaker 3: first you you.
38:04
Speaker 4: Talk about the impact is.
38:07
Speaker 3: It?
38:08
Speaker 6: Can you talk to us about the impact that attending
38:11
Speaker 6: c AU had in your life, because sometimes I think
38:14
Speaker 6: is after the Americans, we think HBCU isn't as good.
38:17
Speaker 6: But the guy who actually uh introduced me to investor
38:20
Speaker 6: went to Clark.
38:21
Speaker 2: You mentioned why would you not?
38:24
Speaker 3: Why would he go anywhere else?
38:25
Speaker 4: Shout at him? Doctor pleasant? Right?
38:27
Speaker 6: Can you talk about how important and what an impact
38:31
Speaker 6: Attendant Clark had on you in your career?
38:35
Speaker 3: Was everything? Again, I was from I'm from Alabama, Montgomery.
38:42
Speaker 4: Wow, I got a family in Midway.
38:44
Speaker 3: You've been over there, come on family in Bidway. Yeah, Okay,
38:51
Speaker 3: that's the.
38:51
Speaker 2: Country, country country, but it's okay.
38:54
Speaker 3: My people are from Pigeon Creek and Greenville and yeah,
38:59
Speaker 3: and people try to let me. I'm gonna come back
39:01
Speaker 3: to your question. But people try to play me because
39:04
Speaker 3: all the people from California and New York be like,
39:07
Speaker 3: I'm from New York, I'm from California, and like where
39:10
Speaker 3: do your grandma from? Where's your grandmother from? And they'd
39:12
Speaker 3: be like, Mississippi, Ala, all these othern states. You're welcome,
39:20
Speaker 3: You're welcome, drinking out of a mason jar, like it's
39:24
Speaker 3: my life, it's my life. But remind me really quickly,
39:29
Speaker 3: what was the question of Clark Atlanta. Yes, but I
39:31
Speaker 3: think when it came to experiencing people from lots of
39:34
Speaker 3: different places, it's I think places like Clark Atlanta that
39:39
Speaker 3: bring together students, particularly because it's it's a private aheb
39:44
Speaker 3: see you, it's really small, and so people come from
39:47
Speaker 3: different states, which I really enjoyed. Our whole model find
39:51
Speaker 3: a way or make one. It is on my whiteboard
39:54
Speaker 3: I live by every day. I learned that I have
39:56
Speaker 3: a choice in the way that I respond to things
40:00
Speaker 3: and when I want to give up and when I
40:01
Speaker 3: want to keep going, really really good at just figuring
40:05
Speaker 3: stuff out, figuring it out. And I think this concept that,
40:11
Speaker 3: like people say it all the time, so I don't
40:13
Speaker 3: mean to sound cliche, but like, it's a lot of
40:16
Speaker 3: types of black people out here. We are not all
40:19
Speaker 3: the same, we are not all We don't talk the same,
40:22
Speaker 3: we don't dress the same, we don't think the same.
40:26
Speaker 3: And I think I learned to appreciate the full diaspora
40:30
Speaker 3: of of black folks and who we are, you know,
40:33
Speaker 3: regardless of where we're from. But Park Atlanta is not
40:36
Speaker 3: We are hustlers also music, everybody's working on something. Listen,
40:41
Speaker 3: you can't go to Caalculanta. There's musician, somebody's producing, doing
40:45
Speaker 3: hair wrapping, it's popping, and everybody wants to come hang
40:51
Speaker 3: out on cak Atlanta's promenade and we we It just
40:56
Speaker 3: really is a beautiful space of community. And I'm so blessed.
40:59
Speaker 3: And I'm because I come from a family of just
41:02
Speaker 3: HBCU people and I'm I'm praying, I'm hopeful that my
41:05
Speaker 3: kids will go to an HBC they go wherever they
41:07
Speaker 3: want but it is a beautiful, beautiful experience.
41:12
Speaker 2: Shout all the HBCUs. We might have something social HBCUs
41:16
Speaker 2: to the city Atlanta. Let me ask you this as
41:18
Speaker 2: far as the VC world is concerned, Yeah, what is
41:22
Speaker 2: what's the rate of returns that you guys look for,
41:25
Speaker 2: like when you're investing, like in your portfolio, like what
41:29
Speaker 2: the you know ten years like down the line you say, okay, this,
41:32
Speaker 2: this was good. It's a two part question, but that's
41:35
Speaker 2: the first part.
41:36
Speaker 3: So first you're trying to get it go to jail.
41:40
Speaker 3: Then SEC is gonna be after me. I got about
41:43
Speaker 3: what I say. I don't want them knocking on my door.
41:46
Speaker 3: But I'll actually point to something that Steve Harvey said
41:50
Speaker 3: when he was on with you guys. He talked to
41:52
Speaker 3: you guys about banning average, and I remember y'all being like, ooh,
41:57
Speaker 3: that's the first time we heard that this, friends, Dang it.
42:00
Speaker 3: So I can't brand that is Like the VC metric
42:03
Speaker 3: that we love talking about is VC is about batting averages.
42:07
Speaker 3: But the piece that I would add to what Steve
42:11
Speaker 3: said was batting average is important, but also even more
42:14
Speaker 3: important is your slugging percentage. Right, So what is the
42:18
Speaker 3: magnitude of the hits that you're making, because your batting
42:22
Speaker 3: average could be X. Right, you hit three out of ten,
42:28
Speaker 3: But I think everybody would rather, you know, hit a
42:31
Speaker 3: home run with you know, bases loaded and knock it
42:34
Speaker 3: out of the park. And so we think a lot
42:36
Speaker 3: about what is the magnitude of the investments that we're making.
42:40
Speaker 3: We love, you know, we can hit a single or
42:43
Speaker 3: a double, but we really, really really love home runs,
42:46
Speaker 3: you know, whether we get ten X or fifty X
42:48
Speaker 3: or one hundred X or a thousand X. We really
42:51
Speaker 3: do try to make investments into companies that we think
42:54
Speaker 3: are we're going to return the fund.
42:58
Speaker 2: So let me let me ask you this if I can.
43:00
Speaker 2: The second part of that question is the harsh reality.
43:02
Speaker 2: Chris Lyon, somebody who you're familiar with.
43:04
Speaker 8: Y if I know that guy, shout out to our guy.
43:08
Speaker 2: So I was talking to him in l A. Mike went, low,
43:20
Speaker 2: you hear me? Now? Yes here you are back in business,
43:25
Speaker 2: all right? So he was talking. I was talking to
43:27
Speaker 2: him in l A a few a few a while ago,
43:29
Speaker 2: and he was saying that the greatest wealth opportunity in
43:37
Speaker 2: history is happening right now and will be happening for
43:40
Speaker 2: like the next decade in tech startups, and he was like,
43:45
Speaker 2: the vast majority of black people is not going to
43:48
Speaker 2: be able to benefit from it and then not going
43:49
Speaker 2: to be able to make any money from it. And
43:52
Speaker 2: we talked about this show is about stock market investing
43:55
Speaker 2: right public trumpets, but we understand that massive amounts of
44:00
Speaker 2: wealth is made on the private side VC before companies
44:05
Speaker 2: go public yep. So like that's where you get a
44:09
Speaker 2: ten thousand x return and that's when you can turn
44:12
Speaker 2: fifty thousand to five million. Of course those that doesn't
44:17
Speaker 2: happen every day, but it's possible, yeh's. But you need access,
44:22
Speaker 2: you need relationships, you need money. So that's something that
44:26
Speaker 2: nobody's talking about because billions of dollars are being generated
44:30
Speaker 2: with these tech startup companies and it's going to continue
44:33
Speaker 2: to be generated. But not only do black people hardly
44:37
Speaker 2: get any money from venture capital, they don't really they
44:41
Speaker 2: don't have the opportunity or the resources actually invest in
44:44
Speaker 2: venture capital. So that's a whole another set of problems.
44:46
Speaker 2: So how do we get more people into actually the
44:49
Speaker 2: opportunity to invest in the private market as opposed to
44:53
Speaker 2: only investing in public markets.
44:56
Speaker 3: Yep, so who there's a lot there. So, first, private
45:01
Speaker 3: market investing and specifically venture capital is dangerously risky. It
45:07
Speaker 3: is the riskiest asset class that you can get involved in.
45:11
Speaker 3: And I say that knowing that in the public market,
45:14
Speaker 3: by the time a company goes public, let me just
45:16
Speaker 3: tell you what going public means. Going public means that
45:19
Speaker 3: you've already got a board in place. It means you've
45:22
Speaker 3: got a certain amount of revenue, you've got compliance things,
45:25
Speaker 3: but you've got all these systems in place in order
45:28
Speaker 3: to go public and sell your stock to a retail investor.
45:31
Speaker 3: That it's already been adjusted for risk. It's already been
45:35
Speaker 3: checked for risk. When you are betting on two guys
45:39
Speaker 3: in a garage and I'm gonna say Montgomery, Obama. Just
45:44
Speaker 3: from two guys in garage and Montgomery, you know they
45:47
Speaker 3: could be complete total clowns, right, there's a huge amount
45:50
Speaker 3: of risk that you're taking that is just simply not
45:55
Speaker 3: there in the public market. And so, and the reason
45:59
Speaker 3: why it's so risky again, it's because venture is a
46:02
Speaker 3: long game and it's eight to ten years before a
46:03
Speaker 3: company will go public or be bought. So that's ten
46:07
Speaker 3: years of risk you're taking up front, and we all
46:11
Speaker 3: know and investing, the people who take the biggest risks
46:14
Speaker 3: are the ones that are going to get the biggest reward.
46:16
Speaker 3: And so that's why venture returns are so huge or
46:19
Speaker 3: can be really huge, because we're paying pennies on the
46:22
Speaker 3: dollar for you know, a stock that's you know, thirty
46:25
Speaker 3: dollars when it goes public. Most VC firms you know,
46:29
Speaker 3: six years later, seven years later before, sorry, sixty seven
46:32
Speaker 3: years before paid a dollar and fifty cents for sure, right,
46:36
Speaker 3: So but we had to wait you know, ten years
46:40
Speaker 3: for it to go public and to actually get liquidity,
46:43
Speaker 3: so your money is locked up for a really, really
46:45
Speaker 3: long time. So with that being said, it's very, very risky,
46:50
Speaker 3: and the government doesn't want people taking that kind of
46:52
Speaker 3: risk as individuals, right because you know, that's why we
46:56
Speaker 3: got those classifications of accredited and and unaccredited investor, And
47:02
Speaker 3: that's because they don't want people to spend in their
47:04
Speaker 3: you know, retirement on some random idea that they heard
47:08
Speaker 3: from a person to be an investor. So it started
47:11
Speaker 3: as a means of protection, but I do think it
47:14
Speaker 3: needs to be loose in because I think there's a
47:15
Speaker 3: lot of you know, well qualified, very able people who
47:20
Speaker 3: can make investment decisions, but it's really tough and people
47:23
Speaker 3: need to be protected from that. So there has to
47:25
Speaker 3: be some balance around private and public investing. And the
47:29
Speaker 3: last thing I'll say is, yes, black people haven't historically
47:33
Speaker 3: been involved, but like the firms that are coming up
47:35
Speaker 3: the last couple of years with these black general partners.
47:38
Speaker 3: I know you mentioned John Henry earlier and the guys
47:41
Speaker 3: that he works with there are I mean, I've known
47:43
Speaker 3: of at least twenty to thirty, you know, black lead
47:48
Speaker 3: or black GP funds in the last two years. So
47:51
Speaker 3: I'm really really optimistic about it. And like I said,
47:54
Speaker 3: the other way that I think people are going so
47:56
Speaker 3: black black people investing is one way to get money.
47:59
Speaker 3: And I'll actually talk about like how we make money
48:01
Speaker 3: because I think that's probably important to describe to people
48:05
Speaker 3: black people investing the dollars is when you invest the dollars,
48:07
Speaker 3: you get the money back. Black people on the cat
48:11
Speaker 3: tables at either as the GP or as an investor
48:14
Speaker 3: in a GP, and then black people working at the
48:17
Speaker 3: tech companies. Right, Entrepreneurship is not for everybody. I say
48:21
Speaker 3: that all the time, and I have one thing that
48:23
Speaker 3: I'm trying to get people to stop saying, is that,
48:25
Speaker 3: like people who work at companies aren't betting on themselves.
48:29
Speaker 3: What that's crazy, Like that's ridiculous, Like just to leave
48:33
Speaker 3: the company and bet on yourself. I don't want to
48:35
Speaker 3: be an entrepreneur, Like I have no desire to build
48:39
Speaker 3: a company, right, So for the people who are interested
48:42
Speaker 3: in a particular you know, problem that they want to
48:44
Speaker 3: work on or company they want to be a part of,
48:46
Speaker 3: getting in at the early stage is really important. How
48:48
Speaker 3: you can cash in on that that will.
48:52
Speaker 5: Yeah, so one of the I'll just add to well
48:54
Speaker 5: what what Shad said from it, that's from an investment standpoint,
48:57
Speaker 5: but sometimes you know, having the educational process is even
49:01
Speaker 5: more beneficial when your hands on you're actually in the space.
49:04
Speaker 5: And so what are some of the opportunities and roles
49:07
Speaker 5: that come within being in a VC firm, Like how
49:10
Speaker 5: do people even apply or what are the qualifications that
49:13
Speaker 5: they need to even be in a firm right, and
49:15
Speaker 5: what are the roles because like obviously you're you're leading
49:17
Speaker 5: a role, but there's other opportunities for people to be
49:20
Speaker 5: employed inside of it, right where they can get hands
49:22
Speaker 5: on knowledge.
49:24
Speaker 3: So there's space for employing and inventure and employee intake.
49:27
Speaker 3: So inventure, if you're you know, firms like Indres and Horowitz,
49:32
Speaker 3: you know, we we need all kinds of people, right,
49:35
Speaker 3: We need investors, we need marketing people and Dreas and
49:39
Speaker 3: Horowitz has been a huge kind of marketing and content
49:42
Speaker 3: you know machine for the last several years. One of
49:44
Speaker 3: the things where most is our content, right, so editors,
49:48
Speaker 3: podcast people. We have to go to market folks. So
49:51
Speaker 3: if you've done sales and customer success, we support our
49:56
Speaker 3: portfolio companies with those things. So we need folks who
49:59
Speaker 3: have those those skill sets. And so I think at
50:03
Speaker 3: the larger stage firms or the larger you know size firms,
50:06
Speaker 3: there's like a range of jobs that you could do,
50:10
Speaker 3: similar to tech. To be in tech, you don't need
50:12
Speaker 3: to be technical, you don't need to know how to code.
50:15
Speaker 3: You could be in HR, you can be in marketing,
50:18
Speaker 3: you can be in sales. So it really is just
50:21
Speaker 3: about making that transition into the technology space because like
50:24
Speaker 3: you said, I agree with Chris one thousand, technology is
50:27
Speaker 3: the biggest wealth driver that we have today. And so
50:32
Speaker 3: we were very very like hardcore about it. And I'll
50:36
Speaker 3: say it over and over again that it is one
50:39
Speaker 3: of the clearest largest ways to build wealth over a
50:44
Speaker 3: period of time.
50:46
Speaker 6: What are the three books and three conferences you think
50:49
Speaker 6: people should attend or read to learn more about angel
50:52
Speaker 6: or venture capital?
50:57
Speaker 3: So our founder Ben Horwitz has a book called The
51:01
Speaker 3: Hard Thing About Hard Things. I think it was a
51:04
Speaker 3: great book about company building and the whole space. And
51:09
Speaker 3: actually Scott Cooper, Scott Cooper does not get the shine
51:13
Speaker 3: you know he deserves. Scott Cooper is one of the
51:15
Speaker 3: four managing directors at Injuries and Horwitz, and he has
51:19
Speaker 3: a book called The Secrets of sand Hill Road. And
51:22
Speaker 3: for the folks who don't know, sand Hill Road is
51:24
Speaker 3: considered kind of VC land, right, All of the largest,
51:29
Speaker 3: kind of most active VC firms at least from years past,
51:34
Speaker 3: are on sand Hill Road. It's in Menlo Park. All
51:38
Speaker 3: of them are, you know, kind of side by side
51:41
Speaker 3: all down this road. And it's called Secrets of sand
51:43
Speaker 3: Hill Road. And you can get the insight into what
51:48
Speaker 3: it's like, how people think about investing in companies, how
51:51
Speaker 3: the firm thinks about it. It's one of my favorite books.
51:54
Speaker 3: That's a solid one. And then one of the first
51:58
Speaker 3: ones that I read it's like a little sin book.
52:00
Speaker 3: It's called breaking the VC. And I'm sure y'all can
52:03
Speaker 3: agree one of the when it comes to things you
52:05
Speaker 3: don't know about, if you get the vocabulary downpack, you're
52:08
Speaker 3: probably seventy to eighty percent there if you just learn
52:10
Speaker 3: the language that people are speaking and it breaks down
52:13
Speaker 3: the words like investment and like carried interest and you know, arr,
52:21
Speaker 3: whatever the case may be, just so you can get
52:23
Speaker 3: knowledgeable about about the space and how it works. And actually,
52:29
Speaker 3: can I go back? I mean, I sorry, go head
52:31
Speaker 3: a shot. I was gonna say, I brought up careed
52:35
Speaker 3: interest again, and I feel like I should probably tell
52:37
Speaker 3: people about what that is and how vcs make money,
52:40
Speaker 3: because I think this show is about how it all
52:43
Speaker 3: works and how to get people to make more money.
52:47
Speaker 3: So the way that venture firms make money is we
52:52
Speaker 3: take money from outside investors. They're call it limited partners,
52:55
Speaker 3: and their hope essentially is that will flip it. They
52:57
Speaker 3: hope to give us money and then we'll flip it.
53:00
Speaker 3: And you know, we have feed carried interest. And I
53:04
Speaker 3: think it actually comes from like old schools like shipping,
53:07
Speaker 3: like actual ships, where it's like, well, carry your load
53:10
Speaker 3: from one place to the next. But we're going to
53:12
Speaker 3: keep twenty percent of either whatever it is you're shipping
53:15
Speaker 3: or the money that you make off of shipping or
53:17
Speaker 3: get carried over to venture capital and investing. And essentially,
53:22
Speaker 3: so say we raised, you know, get one hundred million
53:24
Speaker 3: dollars from outside investors, and we three exits, So three
53:31
Speaker 3: hundred million dollars we've made from the investments that we
53:33
Speaker 3: made with that original hundred million. One hundred million dollars
53:37
Speaker 3: is going to go back to the investors, right, you
53:39
Speaker 3: get your money back first, and then at the two
53:42
Speaker 3: hundred million dollars it's left, we're going to divide that out.
53:45
Speaker 3: Some firms take as little as twenty percent. Some firms
53:49
Speaker 3: take thirty percent if they you know, at least three exit.
53:53
Speaker 3: Like if there's a range, let's just say thirty percent,
53:57
Speaker 3: So one hundred goes back to you, and then the
53:59
Speaker 3: two hundred million you get to keep seventy percent, and
54:03
Speaker 3: then the venture capitalist keep thirty percent. So if there's
54:06
Speaker 3: two hundred million dollars of profit, will keep sixty million.
54:09
Speaker 3: And that's how we make money.
54:12
Speaker 2: Yes, very important.
54:13
Speaker 3: So when we get when we get our black investors
54:16
Speaker 3: on the cap table, that one was it one additional
54:20
Speaker 3: goes to.
54:20
Speaker 2: Them And I think I had to ask you this before,
54:26
Speaker 2: but the ultimate goal for you guys is investing in
54:30
Speaker 2: a company, and the company either has to go public
54:34
Speaker 2: on a stock market like Uber or one of these,
54:39
Speaker 2: or it has to be purchased acquired like Ring which
54:44
Speaker 2: got acquired by Amazon.
54:45
Speaker 3: Ye.
54:45
Speaker 2: Those are like the two way two main ways that
54:51
Speaker 2: you guys would make money, right.
54:52
Speaker 3: Yeah, those are called liquidity events, So our money is
54:55
Speaker 3: locked up until the company goes through a liquidity event
55:00
Speaker 3: of going public or being purchased. And like when you
55:06
Speaker 3: when you think about like the batting average, slugging percentage,
55:09
Speaker 3: et cetera, when it comes to like how many companies
55:13
Speaker 3: really do fail? Right you said earlier like, oh, I've
55:15
Speaker 3: heard or a lot of people, a lot of other
55:18
Speaker 3: people were saying that black women companies fail or black
55:21
Speaker 3: companies sail. Most companies fail. You don't have any lack,
55:25
Speaker 3: you know, like I want to say, like eighty to
55:27
Speaker 3: ninety percent of startups fail because it's a tough it's
55:31
Speaker 3: a tough industry. It's a really tough thing to do,
55:35
Speaker 3: and founders have to be really resilient and have a
55:37
Speaker 3: great idea and build the right team and get the
55:40
Speaker 3: right coade. Like there's all these pieces that need to work,
55:43
Speaker 3: and so it venture a lot of times. If you
55:45
Speaker 3: invest in ten companies, maybe you know, probably seven of
55:49
Speaker 3: them are going to go to zero and then two
55:52
Speaker 3: might be singles or doubles, but you're praying that one
55:55
Speaker 3: of them. Right. Is that one hundred x that you
55:57
Speaker 3: talked about with shy yea or more?
56:02
Speaker 2: Yeah? I like that percentage? Yeah yeah, yeah, let's go
56:07
Speaker 2: before go ahead. Yeah yeah.
56:09
Speaker 6: My final question, what's the one piece of advice that
56:11
Speaker 6: you wish you would have known sex years prior when
56:15
Speaker 6: you entered into the venture space.
56:18
Speaker 3: The power of relationships. I didn't know if that was
56:21
Speaker 3: as important as it is, and it's probably more important
56:25
Speaker 3: than it should be. So even from applying to jobs
56:29
Speaker 3: to you know, building your house to what get it
56:34
Speaker 3: sending your kids to school, like who you know and
56:37
Speaker 3: and the relationship that you can build is just really important.
56:40
Speaker 3: And when it comes to like finding new companies and
56:42
Speaker 3: sharing deals and spending time with each other, like networks
56:46
Speaker 3: are just really really important. And I learned that the
56:50
Speaker 3: hard way because I used to you know, really think
56:53
Speaker 3: that like if I just I used to think I
56:56
Speaker 3: could do everything on my own, and you just can't.
56:59
Speaker 3: You cannot, And that is into so many different ways,
57:01
Speaker 3: in different parts of life that you just can't do
57:04
Speaker 3: it all on your own. So building networks is really
57:07
Speaker 3: really important.
57:08
Speaker 2: It's the most it's actually the most important thing in
57:10
Speaker 2: the world. Relationships is I agree to everything.
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