Latest / Breaking Precedent / Breaking the Bank: Aaron Holiday on 645 ventures' data-driven approach to sourcing deals and bringing the invisible to life [Replay]
Transcript
- # BP Aaron Holiday (Revisit) [00:00:00] Welcome back to Breaking Precedent. One of the themes I explore throughout this podcast is the idea that breaking precedent often starts long before anyone notices. [00:00:10] It begins with small decisions, personal risks, and the willingness to see yourself differently than the world sees you. That's why I wanted to revisit this [00:00:20] conversation with Erin Holiday. Erin's story touches on so many of these themes that have come up and become central to my own work: opportunity, access, [00:00:30] resilience, and what it takes to navigate systems that weren't necessarily designed with you in mind. It's a conversation about building, belonging, and creating [00:00:40] pathways for others as you move forward yourself. I think you'll find a lot to take away from this one. Here is my conversation with Erin [00:00:50] Holiday **Aaron:** I've consistently broken precedent. A lot of the things that I'm doing and have done are things that I either didn't know existed before [00:01:00] or was definitely a big goal or aspiration of my, that I kind of worked to pursue. **Leah:** Hi everyone. I'm Leah Sullivan, and this is Breaking Precedent, [00:01:10] the podcast where we dive deep into the stories of innovators who are pushing societal boundaries, challenging precedents, and setting new ones in their fields. Today, [00:01:20] I'm joined by Aaron Holliday, founder and managing director of 645 Ventures, a venture fund with an unprecedented model and a mission to bring the invisible to life. [00:01:30] **Aaron:** I think software is going to play a key role in creating growth for businesses, and I want to help. Companies adopt software to scale and grow. **Leah:** Aaron, alongside his co founder [00:01:40] Nnamdi, built from the ground up a data driven sourcing model to uncover promising startups and founders at the earliest stages. 645 Ventures just had its [00:01:50] 10 year anniversary. and has more than half a billion dollars under management. **Aaron:** We also started to have the software surface opportunities. We built a rubric and all of this [00:02:00] stuff and we started making investments. We invested in a company called fly labs. 11 months later, Google bought it. **Leah:** Aaron grew up in new Orleans and was the first student in his high school to go to [00:02:10] college out of state. He flourished at Morehouse college inspired by the footsteps of Dr. Martin Luther King and went on to get a second degree. His first job at Goldman Sachs as a software engineer, [00:02:20] building algorithms on the trading desk. He took this experience and knowledge and applied it to venture capital down the road. **Aaron:** As a child, I was imagining what the [00:02:30] world could be always, and how the laws of physics as we know them, or if the laws of physics can be broken, could change the reality. **Leah:** Aaron is a humble, funny, thoughtful, and [00:02:40] incredibly smart person. He does the work and doesn't do too many of these types of interviews. So I'm really excited to be able to share his inspiring story with you. [00:02:50] Aaron Holiday. Thank you so much for joining me here on Breaking Precedent. **Aaron:** Yeah, thank you for having me. I'm super excited to have this conversation with you. [00:03:00] **Leah:** Me too. I mean, for me personally, six, four, five ventures is an incredibly special firm, happy 10 year [00:03:10] anniversary. That's a huge, huge deal. And you guys have really built something that is unprecedented, particularly for early stage and quite unique. I want to get into all of it, [00:03:20] but I do want to start at the beginning. Cause I really want the audience to understand. What was your path that brought you here today? So to kick things [00:03:30] off, can we start by asking you, do you see yourself as someone who breaks precedent sets new precedents or someone [00:03:40] that maintains precedents in their life? **Aaron:** Well, I've consistently broken precedent, right? So a lot of the things that I'm doing [00:03:50] and have done are things that. I either didn't know existed before or was definitely a big goal or [00:04:00] aspiration of mine that I kind of worked to pursue. So yeah, I would say definitely a person who breaks precedent. **Leah:** That's awesome. Yeah. I love that perspective too [00:04:10] on being a precedent breaker because you didn't know things existed. That actually really resonates with me too and how I grew up. I want to take everyone back to where you grew [00:04:20] up. So you grew up in New Orleans. What was Aaron Holiday like as a child? What was your childhood like? **Aaron:** Wow. I mean, New Orleans is a really, really special [00:04:30] place. I think it's very different than most places in the country. I grew up as a quiet child who really enjoyed math and friends. [00:04:40] I grew up in an environment where I was always thinking about what the future might look like and envisioning myself in a different world than kind of what I [00:04:50] was from. **Leah:** Where do you think that came from? That motivation to kind of imagine and dream, did that come from somewhere in your childhood? **Aaron:** Wow. Where did the imagination and [00:05:00] dreaming come from? I've always liked physics and the world and how it works. And I would always try to understand [00:05:10] what can be done to kind of break our understanding of the world. Growing up in New Orleans, it was a tough environment, [00:05:20] It wasn't always the most pleasant place to be. And so in order to break free from that, it's almost like you have to imagine a new world. [00:05:30] And so as a child, I was imagining what the world could be. Always. And how the laws of physics, as we know [00:05:40] them or of the laws of physics can be broken to change the reality. And I think that was helpful for me as I kind of continue to explore math and science [00:05:50] as a mechanism to break down the world around me. **Leah:** That's super cool. What an interesting perspective. Were there role models or examples [00:06:00] or people that you saw that were doing interesting things and you were like, wow. I wonder what that would be like. Was there inspiration from somewhere? **Aaron:** [00:06:10] So to break precedent for me, it always required someone who was kind of tangential to the opportunity that I was [00:06:20] pursuing, who could share a little bit about. What it means to overcome the next barrier. And so at different [00:06:30] parts of my life and journey, I was blessed to have people who could show me what the world could be if I thought about it differently. So take as an example, [00:06:40] when I left New Orleans to go to Morehouse, I was the only kid in my high school class to leave the state. **Leah:** Wow. **Aaron:** We just grew up in [00:06:50] a place where many people didn't leave home. **Leah:** Right. **Aaron:** So my sister was already in Atlanta. And while I was applying to local [00:07:00] schools, she was encouraging me to think differently, to think about what would it be to exit New Orleans or even [00:07:10] Louisiana **Leah:** and **Aaron:** to go to a place where leaders have been known to come from and that's Morehouse. **Leah:** Yes. **Aaron:** So a lot of amazing people like Martin Luther King went to [00:07:20] Morehouse. It was one of the biggest selling points for me. Right. It's like, I want to be a leader. I want to kind of change the paradigm of how I live and how my family will [00:07:30] live in the future and let me go to a place where a person went who totally changed the paradigm of our country from a civil rights standpoint. **Leah:** Yeah. **Aaron:** So I ended up [00:07:40] at Morehouse. As a first generation college student, and I was there a week early as a part of this program called SSS student support services. [00:07:50] And I met another person who is again tangential to the new world that I was going into. **Leah:** And **Aaron:** one of my hacks is spending [00:08:00] time with people who understand a new world and listening and embracing them instead of being resistant and thinking I know it all. **Leah:** Yeah. So **Aaron:** any case. [00:08:10] Mr. Reese, who was my mentor, he asked me, what do you want to study at Morehouse? And I said, I want to study math. And he said, what do you want to do as a math major? I [00:08:20] said, I will be a mathematician. And then he said, what will you do as a mathematician? And I said, I don't know. I don't know what a mathematician does, I just know I [00:08:30] will teach, like, I will be a good mathematician. **Leah:** Right, right. **Aaron:** And he said, well, why don't you read the entire course handbook? And if you come back and you want to study math, [00:08:40] great, you've made a great decision. But if you come back and you want to do something else, then it may have been well informed. **Leah:** Okay. **Aaron:** So I listened, right? So I went, I [00:08:50] read the entire course handbook and I came back and I said, Hey, I want to study computer science. **Leah:** Oh, wow. **Aaron:** And he said, why do you want to do that? I said, well, when I looked at the curriculum, the entire curriculum was [00:09:00] quantitative. I know I would do well. **Leah:** Right. **Aaron:** However, I also remember that when I was in middle school, we were typing on a typewriter. But by the time I [00:09:10] finished high school, it was a word processor. **Leah:** Right. **Aaron:** And I said, also, my aunt had a computer and I would go there every weekend to get on something [00:09:20] called Black Voices. Black Voices. which was a chat room that allowed me to connect with other Black people around the country, which I thought was phenomenal. Yeah. This is like the [00:09:30] late 1990s, late 90s, **Leah:** the 90s. Okay. It's like the **Aaron:** late 90s. **Leah:** Yeah. Yeah. **Aaron:** And so when I was at Morehouse that first week before school started and I was [00:09:40] reflecting on, okay, this computer science thing is highly quantitative, but it talked a lot about software. And it was very clear to me [00:09:50] that software would be very important for the future in that it would be tightly integrated with how the society worked.[00:10:00] And so I said, okay, like if this software is going to be tightly coupled to the fabric of the society **Leah:** and **Aaron:** it's highly quantitative and I should be able to do well at it, [00:10:10] maybe I shouldn't be a mathematician. Maybe I should be a computer scientist. **Leah:** Wow. Wow. **Aaron:** So I studied computer science at Morehouse. **Leah:** That's pretty incredible. [00:10:20] So I started, I was the first woman in my family to go to college and I started out as a math major and then I found my way to computer science because I realized the [00:10:30] same thing that you did, which was this was going to change the world. And I wanted to be a part of that. And the [00:10:40] math background, the math was like the easy part, right? It's like, it's all quantitative. Like I understand how to do the equations and numbers, but to be able to build something that [00:10:50] other people are going to interact with and use, like that for me was the big unlock as well. Yeah. Yeah, super cool. And so you [00:11:00] studied computer science. Now, when I was in college, the computer science program was actually kind of just emerging. Like it was fairly nascent at the time. I [00:11:10] mean, I was programming on assembly. And C plus plus like Java hadn't really been introduced yet. What was the program like at Morehouse at the [00:11:20] time? **Aaron:** Yeah, exactly the same. It was very early. We definitely learned Fortran assembly, but yet kind of the programming language of choice, it was C plus [00:11:30] plus. So yeah, I loved kind of building it in C plus plus. I remember using visual studios and being really excited. Yeah. to kind of create kind of graphical user [00:11:40] interfaces that could like really visualize some of the applications that we will be experimenting with. **Leah:** Yeah. **Aaron:** And one of the most fascinating things [00:11:50] about computer science as a curriculum is that in an academic environment, it's hard to keep up with the rapidly changing nature [00:12:00] of programming Right. as well as programming languages and databases. And so therefore, it's naturally almost like a social experience, [00:12:10] right? Because you have other peers who have been independently studying different programming languages and different things, and you come together and you build together. And so [00:12:20] that was also my first experience like co creating with people because I would have ideas and I would build parts of it. And I might ask a friend. [00:12:30] Who knows how to do something different, like how to do what I was doing more efficiently. So not only was I learning computer science in the classroom from a theoretical standpoint [00:12:40] and data structures and programming languages and all of the fun classes you take as a computer science student, but I was also co creating with my friends who also loved the program.[00:12:50] So I think that created a different, like, kind of dimension of my learning experience. **Leah:** Yeah, that's really neat. So it was the social component as well, and the ability to collaborate and [00:13:00] learn together. That was really appealing. I know that you had a nickname in college that you shared with me. Was it the hustle man? Hustle man. [00:13:10] I love this story. So much. So you get this nickname, what, within the first week that you're at? More House. Oh, this is in **Aaron:** that same week, . It's in the same week. So [00:13:20] we're there a week early, and you gotta imagine the other Morehouse brothers who are a part of this program are from all of the kind of urban centers [00:13:30] around the country. Okay. Brooklyn, Detroit, Chicago, Oakland, new Orleans. Like all of the major Yeah. Cities. And [00:13:40] I remember the dorm we were in didn't have a vending machine. However, when I was sent to college, my mom's gave me two things. She gave me [00:13:50] 200, had 200 cash. And I had this huge bin of goodies, you know, everything from cold drinks [00:14:00] or sodas, what normal people call it. People in the world call it cold drinks, you know, chips, honey buns, all of this stuff. Like junk food. And I got back to my dorm [00:14:10] room and people were looking for something to snack on. And I just started selling everything out of this bin. And so I sold everything out of the bin and I made an additional 200. So now I have [00:14:20] 400. And then I took the 400. My sister had a Sam's Club membership. So we went to Sam's Club and kind of stocked [00:14:30] up on everything again. And I turned 400 to eight. And so. **Leah:** Amazing. For my first **Aaron:** year at Morehouse, I ran in a store out of my dorm room and what my [00:14:40] dorm mates used to call me was Hustle Man. But that really funded everything for me. It funded the books that I bought. It funded going to the club. It funded clothes that I [00:14:50] wanted to buy, and it really just kind of allowed me to get off to a really good start. I'm going to talk to you a little bit about how I got into the business and how I ended up in college without really having to bother my mom too much, who was back at [00:15:00] home in New Orleans. **Leah:** That's amazing. You were an early venture capitalist from the beginning. You were already on the path. **Aaron:** Yeah. More house brothers who know me from back then. I'm [00:15:10] not surprised. Not **Leah:** surprised. **Aaron:** Yeah. **Leah:** It's so good. I had on a different episode, a woman named Alejandra Campo Verde, and she wrote [00:15:20] this book called First Gen. And the book is a memoir about. Her life and being a first gen college student and what her experience was [00:15:30] like, and she often talks about when you start in a new place for her, it was a series of costume changes. Like, she always felt like she was trying to [00:15:40] fit in and trying to figure things out. What strikes me about, you know, the story you just shared as well is your ability to be open. To this new environment [00:15:50] and your ability to kind of embrace use the word embrace right and kind of learn quickly. Do you feel like that for you is a skill, a [00:16:00] theme in your life that's been persistent? **Aaron:** Yeah, definitely. It's a huge theme and it's very much a recurring one **Leah:** and **Aaron:** it [00:16:10] allows me to. Evolve into who I am right now and continue to evolve into who I'm going to become, but the same story happened between [00:16:20] graduating as the top computer science student at Morehouse to going to Goldman. I remember 1st, I wanted to do research, by the way, so I'm studying computer science. I'm doing really well. [00:16:30] And I see a number of my friends were doing internships. And so I was doing distributed computing research. Okay. And **Leah:** at Goldman at the time. No. **Aaron:** So [00:16:40] going back. So my sophomore year, I'm doing distributed computing research, but my friends are doing internships. **Leah:** I see. Okay. **Aaron:** Like, man, like, what are you guys doing on those [00:16:50] internships? And people are like making good money and. Like the people who are computer scientists, who are studying computer science are building great applications. Some people are doing [00:17:00] business. **Leah:** Were they going to like tech companies for these internships or where were they going? **Aaron:** Some of them were at tech companies, some of them were at investment banks, and so many of them were able to get these [00:17:10] internships through a program called En ROADS. And I remember asking one of my buddies, I'm like, okay, I want to do this internship so I can make money and also work [00:17:20] at a company and build cool software. And And my buddy was like, well, unfortunately you cannot do that because in order to do En ROADS, you had to start [00:17:30] as a freshman and we're going to our junior year at this point. **Leah:** Oh, wow. Okay. **Aaron:** So I said, okay, put me in touch with your En ROADS director person. And so he [00:17:40] put me in touch with her. I think her name was Ms. Carr. So I got on the phone with Ms. Carr and I said, Ms. Carr, I want one of these internships. I've been doing [00:17:50] research my first couple of years. I see my friends doing internships. I want one of those. She said, I'm sorry, Aaron, you have to be a part of the EnRoad program since freshman year. I said, well, [00:18:00] listen, just put me on an interview. If they don't want to hire me, then I'll go back and do research, but put me on an interview and I'll try my best. So she [00:18:10] laughed and she was like, all right, I'll see what we can do. So she put me on an interview with GE and I got the job. **Leah:** You crashed that interview. I'm sure. Yeah. **Aaron:** So that is what [00:18:20] started my shift from like, okay, not only do I want to build software, but maybe I want to do software in business. **Leah:** So **Aaron:** I ended up doing an [00:18:30] internship at GE did well there. And then similarly, I interviewed at Goldman Sachs. My senior year, I ended up getting that job. [00:18:40] And this is another one of those stories where you really have to think about the world in which you're going into and how it's different from the world that you're [00:18:50] coming from. So I remember driving, I got the call that I got this job offer at Goldman. So the top computer science students from Morehouse would go to Goldman. [00:19:00] **Leah:** Okay. **Aaron:** So I get this job offer and I call my mom and I say, Hey mom. I got a job, I'm going to New York to work at Goldman Sachs, got [00:19:10] this job offer to go to Goldman Sachs. She says, Oh, Saks like Saks Fifth Avenue. **Leah:** Yeah. **Aaron:** And I'm like, come on, mom. Like, you know what I'm talking about? I'm talking about Goldman [00:19:20] Sachs. **Leah:** Right. **Aaron:** And she said, let me ask you a question. She said, Do they have commercials? I said, no. She said, how am I supposed to know what that is? [00:19:30] She said, be careful. You're going into a new world **Leah:** and be **Aaron:** thoughtful, ask questions. And so it was a humbling reminder that I [00:19:40] was again, about to enter a world I had never been a part of. **Leah:** And very smart of your mother to, to react that way. I mean, she could have reacted a lot [00:19:50] of different ways. Right. But for her, To give you that advice, want to protect you, want to see you succeed. That's a smart mom. **Aaron:** Yeah. Just, [00:20:00] yeah. Very intuitive and understands how to be humble **Leah:** and **Aaron:** how humility can create entry points [00:20:10] for you and how arrogance can actually create roadblocks. **Leah:** Right. **Aaron:** And so. And I got to New York, I went in with an open mind, [00:20:20] seeking mentorship, seeking perspective, not moving too quickly. **Leah:** Yeah. **Aaron:** Yeah. And I ended up at Goldman on an equities program trading desk, building high frequency [00:20:30] trading algorithms. PhDs, some of which were PhDs in artificial intelligence. And this was 20 years ago and this was like before. This is not AI in the way we [00:20:40] think about AI right now. **Leah:** Right? It's **Aaron:** kind of AI in a sense of like big data, machine learning early, early thoughts of like how do you use software to do [00:20:50] things autonomously? **Leah:** I mean, you were at Goldman working on software that really, you know, we'll get to, it has really. Influenced your career, what you've [00:21:00] built at six, four, five. But I mean, early, early days of this big data machine learning, really taking a huge funnel of data, distilling it down, and then [00:21:10] being able to make decisions right for trading and banking on wall street with it. **Aaron:** Yeah, that's exactly right. Yeah. We were building algorithms that could [00:21:20] do what we call price arbitrage. So can you build a algorithms that can have a statistically high chance of buying a [00:21:30] thing at a price that is lower than what it's going to be priced at in the future? **Leah:** Yeah. **Aaron:** There's a book called When genius failed and one of the best [00:21:40] analogies I heard of this when I was reading that book back then was it was about this firm called long term capital management. And there was this like idea, this [00:21:50] analogy of kind of picking up nickels in front of a steamroller. **Leah:** Okay. **Aaron:** And so can you create a way to kind of run and do that back and forth, back and forth without [00:22:00] getting rolled over? **Leah:** And **Aaron:** so what we were doing at Goldman was building algorithms that could actually trade on behalf of humans [00:22:10] that had kind of statistical precision in a way that the trade would make money in the future. And not only were we doing this on individual names, stocks, [00:22:20] but we were doing it on baskets of stocks. Right. Like groups and bundles of stock. And so, yeah, it was just a fascinating time as a young person who [00:22:30] had learned how to program, who was really excited about math to kind of push my limits against both of those dimensions, both software [00:22:40] and investing. **Leah:** Yeah. And this again was really, really early days. I mean, I'm sure you all were. One of the first, if not the first, right. To be building this [00:22:50] type of software at Goldman. **Aaron:** Yeah. So there was other firms that were definitely building and kind of trading platforms. I think Goldman got something [00:23:00] really right. And what Goldman got right is something that we actually instituted it in six, four, five, when we started at six, four, five. But what that was, the [00:23:10] software engineers. We would sit with the traders. We spent time with the traders that on the trading desk. So we were kind of front office trading technology. [00:23:20] And a lot of my peers who were at other firms, they didn't really have that type of intimate relationship with their traders. **Leah:** Right. **Aaron:** But at Goldman. And we worked closely [00:23:30] with them. **Leah:** Yeah. **Aaron:** Right. And so again, we were able to co create. **Leah:** Yeah. **Aaron:** So the engineers with the business leaders were working in tandem together to [00:23:40] create a new way. **Leah:** Yeah. **Aaron:** And so that was really exciting for me as a young person to not only be building new advanced software. [00:23:50] But to be doing it with trading their products. **Leah:** Yeah, I think so many times engineering gets siloed, right? They're kind of put off to the side and it's like, Oh, go build X, [00:24:00] Y, and Z. But if you put them close to their customer, right, you put them close to the business case, then that ability to collaborate, learn, iterate so [00:24:10] powerful. **Aaron:** It was rapid. **Leah:** Yep. Very cool. So from Goldman, you kind of had your eye on business school. What was your thought there? **Aaron:** So I [00:24:20] spent about four years at Goldman and then I went to a firm called GFI Group, which is an interdealer broker that trades derivatives. So they brought me [00:24:30] over there to help design and create a product. That actually what changed the way foreign exchange option derivatives are traded. **Leah:** Oh, wow. **Aaron:** So at [00:24:40] Goldman, stocks were already traded at high frequency and software was kind of a major component of how that business was done. But by the time [00:24:50] I moved over to GFI Group, Foreign exchange option derivatives were still traded by voice and not like AI voice. I'm talking about pick up the [00:25:00] phone structure, exotic instrument by calling somebody voice, you know, and so they wanted to understand, like, could we actually check trade these [00:25:10] products electronically between banks? And so we created API standard that would allow you to facilitate these types of option [00:25:20] trades electronically. So I had done that and that was also a really fun and mind blowing experience as a young engineer. [00:25:30] But when I sat back and reflected on what was actually happening, a lot of the people who was making the decisions around how the business would embrace technology. [00:25:40] We're the business leaders. And some of these business leaders were not technical, **Leah:** right? **Aaron:** And so I started to think about software as a dominant force [00:25:50] of business in the future. And if software is going to really monopolize how business is done and how alpha is [00:26:00] created, it would be powerful for a business leader to have both a business degree as well as a technical degree. And so thinking pragmatically about that. [00:26:10] I decided I would go to business school. And so I started to think about business school and apply to a program called MLT, [00:26:20] which stands for management leaders for tomorrow that helps people of color explore business school options for them. **Leah:** Oh, very cool. **Aaron:** Yeah. And so I was a part of the [00:26:30] MLT program going to different business schools to explore what those business schools had to offer. **Leah:** Okay. **Aaron:** And during that process. I [00:26:40] went to visit Harvard Business School **Leah:** and **Aaron:** I met this guy named Jose. We don't know each other. I remember his name, but his name was Jose and he was leading [00:26:50] the Latin American affinity group at Harvard Business School. Okay. So I'm talking to him and he said, you know, what do you want to do? I said, yeah, I [00:27:00] want to use software to drive businesses forward. I think software is going to play a key role in creating growth for businesses and I want to help [00:27:10] companies adopt software to scale and grow. He said, Oh, you want to be a venture capitalist. **Leah:** Oh, wow. He jumped right to it. **Aaron:** And I said, what is that? **Leah:** [00:27:20] Right. **Aaron:** Right. So, which is fascinating because if you think about where I started my career at one end of the spectrum, publicly traded companies, **Leah:** right. **Aaron:** Which is the, you know, the [00:27:30] jewel for venture capital. Right. I started my career building software that would kind of do those trades. **Leah:** Right. **Aaron:** But when I was first introduced to VC, which is the earliest [00:27:40] part of that continuum, I didn't even know what it was. And so I said, well, what is venture capital? He said, yeah, it like allows you to. It's people who invest in tech [00:27:50] companies that can become large, important businesses in the future. I said, okay, I think that's what I want to do. So I started reading profusely. I read the Vault [00:28:00] Guide to Venture Capital, which venture capitalists probably don't recommend. That was a like a Wall Street thing. By the way. **Leah:** Okay. Okay. **Aaron:** And when you were trying to get on wall street, you would read the [00:28:10] vault guide to whatever fault content, investment banking, vault guide to asset management. So I said, okay, I need to learn more about venture capital. So let me read the vault guide to venture capital. [00:28:20] So I read it cover to cover and really started to go deep into what venture capital was. **Leah:** And what did you think when you read that? **Aaron:** Yeah. I thought it was the perfect [00:28:30] blend of. What I could offer the world, you know, the combination of investing, which I learned at one of the best investment [00:28:40] institutions on the planet, **Leah:** right **Aaron:** with software and engineering, something that I love. So, I kind of felt passionate and convicted that this would [00:28:50] be it. And so I applied to different business schools. And Cornell at the time was the only school, or actually there was one other school, but that had a student [00:29:00] run venture capital fund. **Leah:** Oh, how interesting. **Aaron:** I believe the other school was, I think it was Michigan and it may have been called the Wolverine fund. I could be wrong. **Leah:** Okay. Okay. But **Aaron:** there was, [00:29:10] Cornell had a student run venture capital fund. And remember this is like, I'm applying in probably 2009. **Leah:** Okay. **Aaron:** I go to business school in 2010. **Leah:** Yeah. [00:29:20] So **Aaron:** it's still relatively early as it relates to the popularity of venture capital and kind of what we know that startup economy to be. **Leah:** Right. I mean, it's [00:29:30] like Josh Koppelman, Mike Maples, right? All these early, early, early stage funds that were kind of starting around that time, but it wasn't [00:29:40] proven yet that these early stage funds were something of a model that would be taken forward. **Aaron:** Exactly, exactly. And at Cornell, [00:29:50] Professor Ben Daniel, he's one of my late professors of venture capital and private equity, had the foresight to start the student run venture fund. And this fund had already been [00:30:00] running for like multiple years, even before I had gotten to Cornell. So I hear about this fund and I said, I'm going to run that fund. So I get into Cornell. **Leah:** [00:30:10] Nice. **Aaron:** I talked to the folks who were running the fund. Before I got to campus and **Leah:** there's students, students, students, **Aaron:** mind you, the guy who was running the [00:30:20] fund is Marlon Nichols, who runs a fund right now called Mac Ventures. Nice. So he has also started his own fund. **Leah:** Yeah. **Aaron:** So he was running that [00:30:30] fund and a woman named Shamus put me in touch with Marlon and said, you need to talk to him. **Leah:** Yeah. **Aaron:** So I talked to Marlon before I got to school and he gave me the rundown on like how to [00:30:40] prepare. To come into campus ready to participate in this. BR Venture Fund. And so I did that and I gave it my [00:30:50] all and I ultimately ran the fund after Marlon. Wow. And so for me, that was an apprenticeship in a venture capital business. During business school. [00:31:00] During business school. Which no one **Leah:** gets. Yeah. **Aaron:** Yeah. So it was phenomenal, right? So I'm in business school learning, you know, finance, building relationships, having fun at the [00:31:10] same time running this small seed stage venture capital fund. Which is also a calling card. You know, that's where I met Doug Leone. You know, I was able to go sit [00:31:20] down and talk to Doug Leone. I met Ben Horowitz and Scott Cooper, Howard Morgan, who went to Cornell. A number of people who have become really [00:31:30] important advisors and supporters of me and my career originated when I was in business school running this fund. **Leah:** Wow. Wow. And your ability, [00:31:40] again, to be open. Isn't it interesting to think about people that Change our lives in very odd ways. And you don't even stay in touch with them, but they're [00:31:50] such a big part of your story. Like Jose at HBS, you're like, we don't know each other, but what he said to me really resonated and set me on this new path.[00:32:00] That is so critical. It was a critical moment. **Aaron:** Yeah. And that has been the thread, right? Like really being able to listen and [00:32:10] **Leah:** spend **Aaron:** time and engage with folks and then also follow up on what you said you were going to do. If they asked me to read the course handbook, I did that, right? Like, you know, [00:32:20] Marlon told me to meet with every single person who was a part of the venture fund. I did that. **Leah:** Yeah. You put in the work. **Aaron:** You Uh, put in the work, you know? And so it really does pay [00:32:30] off. **Leah:** Wow. So you are at Cornell, you're running the fund, you graduate. Do you immediately go to a venture firm or [00:32:40] what happens next? **Aaron:** Yeah. So I, so the summer between business school, I was sitting down with a guy named Eric Young. He has [00:32:50] since passed away. He founded Canaan Partners. **Leah:** Yeah. **Aaron:** So I'm sitting down with Eric Young and I'm saying, Eric, you know, I want to come work for [00:33:00] Canaan. Okay. He said, you really need to spend time with founders. You need to be close to the CEO of a [00:33:10] company to understand the inner workings of what it takes to scale a business. So I told Eric, I said, okay. And so I went back to my normal life. [00:33:20] And came back to Eric and said, I want to work at one of your portfolio companies. Nice. So over my first summer between business school, I worked at one of Canaan Partners [00:33:30] portfolio companies called Blip TV. And this is kind of early like, you know, web series. **Leah:** Yeah. I remember. Yeah. **Aaron:** You're now at a [00:33:40] point where you're Distributing video more efficiently over the internet, **Leah:** right? **Aaron:** And so blip TV was one of the early companies kind of in the [00:33:50] YouTube era that was able to create this category around user generated content, like web series, content created almost [00:34:00] professionally produced content created by the prosumer, **Leah:** right? **Aaron:** One of the first web series I learned about was one called awkward black girl. **Leah:** [00:34:10] Okay. **Aaron:** And the person who started Awkward Black Girl is now Issa Rae, right? Oh my goodness. Yeah. It was amazing. You know, so I'm working at Blip TV right [00:34:20] before my last year of business school. And then to your point, when I finished business school, I went to work at a venture capital fund called DFJ Gotham. [00:34:30] So DFJ is a venture capital fund that was on the West coast that was, you know, a popular venture brand back then. [00:34:40] Yep. And they created these networks of venture funds, almost like franchises across the U. S. And in some instances, I think around the [00:34:50] globe and the DFJ franchise that was in New York was called DFJ Gotham. So I went to work there [00:35:00] right after business school. And that was my first It's a real job in venture capital. **Leah:** Do you feel like Eric's advice [00:35:10] of going to get some of that operational insight and experience was helpful to you as you stepped into a venture role? **Aaron:** Yeah, definitely. One of the things we [00:35:20] worked on was. The business model, and I remember we did two things. We kind of adjusted and changed the business model. And I remember using something called a linear program that we [00:35:30] learned in operations to kind of help figure out how to optimize. And so I was kind of actually able to see how the business models adjust and change up close and personal.[00:35:40] **Leah:** And then I **Aaron:** also, while I was there, I think they were in a process of raising either a series C or a series D round. So I was able to see a company that had also gotten a scale. **Leah:** [00:35:50] So I **Aaron:** knew what it was about, right? Like I kind of understood that this was not about funding cool technology, but how do you actually take [00:36:00] cool technology and evolve it into high growth businesses? And so that was a big takeaway. that I had from that experience so that when I went into seed [00:36:10] stage investing at DFJ Gotham, I was kind of on the hunt for amazing disruptive technologies going after known speculative markets [00:36:20] that could eventually evolve into a real business. **Leah:** Wow. And I know you helped found [00:36:30] Cornell Tech as well. I mean, a whole school and university. Can you share how that came about and when was that kind of around the same time or [00:36:40] when did that happen? **Aaron:** Well, I wouldn't go as far as to say I was one of the founders, but I was quite early in Cornell Tech. This is a really interesting turn of [00:36:50] events as well. So remember, I'm trying my best to get into venture capital. I'm working at this early stage venture capital fund. I'm also at the same time [00:37:00] noticing a number of structural changes that are happening in the industry that I thought could create a new type of venture fund. So that's kind of what's going on in my mind. [00:37:10] And I was introduced to a guy named Greg Pass, who was the former CTO at Twitter, who was moving from the West Coast to New York. And [00:37:20] I'm sitting down with Greg for coffee and he says to me, why don't you come over here? And help us build Cornell [00:37:30] tech. And I said, well, that doesn't make a lot of sense to me because I want to be a venture capitalist. **Leah:** Right. **Aaron:** I'm on my way [00:37:40] because I'm right at a venture firm doing **Leah:** the work. I'm **Aaron:** doing the work. I'm in the startup community in New York. And why would I jump off the ship **Leah:** with [00:37:50] **Aaron:** my longterm goal is to be a GP one day. Why would I jump off the ship and come and work on a school? Right. And Greg said two things, he said, [00:38:00] come learn how to build something that's going to be around for centuries. **Leah:** Oh, wow. That's compelling. **Aaron:** And then he said, and you have these ideas [00:38:10] around how venture could look. You should start your own firm. And if you do that, I'll be your first investor. **Leah:** Wow. **Aaron:** [00:38:20] So now I'm like, okay, like this guy speaking my language. Right. And I'll tell you another thing. So when I was in business school and I'm like talking to all of the VCs, there was a [00:38:30] guy from Kleiner. He was also a Cornell alum. **Leah:** Okay. **Aaron:** And when I was talking to him. He said, listen, it's hard to get into venture capital. So my [00:38:40] advice for you is to think about venture capital and entrepreneurship as one in the same and pursue both. So if you fast [00:38:50] forward, this might be a year later when I'm talking to Greg, he is describing somewhat of an entrepreneurial endeavor, right? [00:39:00] That is coupled together with venture capital. **Leah:** Yeah. **Aaron:** And so I thought back of what I learned from the guy from Kleiner. And I said, this is venture capital and [00:39:10] entrepreneurship one in the same. And so I took the leap. I joined Greg. Um, I was his first hire. Greg was the chief [00:39:20] entrepreneurial officer of the entire campus and was the managing entrepreneurial officer. And we worked with Dan Huttenlocher, who was the Dean. Wow. And we [00:39:30] invented the studio. at Cornell Tech and invented something called the Startup Awards, which really was a part of the [00:39:40] educational pedagogy around startup formation on the campus. Because when we were looking at other higher education institutions, you saw [00:39:50] really breakthrough companies formed in and around the campus. I **Leah:** bet. Yeah. **Aaron:** But the campuses were not really designed to accelerate. And foster [00:40:00] entrepreneurship. It was kind of happening tangential to the campus. **Leah:** Okay. **Aaron:** Okay. And so what we were saying is like, how do you actually create a pedagogy as a [00:40:10] part of the entrepreneurial curriculum where startup formation is embraced and companies can spin out of the campus? So we created that at Coin Out [00:40:20] Tech and we scaled Coin Out Tech. We used to be in the Google. Building and now it's like multiple acres on Roosevelt [00:40:30] Island. It's, you know, it's gorgeous. It's amazing. I'm on a board now, but in the beginning it was nascent. And so we [00:40:40] took this nascent concept and evolved it into a real institution. And so simultaneously I was in the lab. [00:40:50] You know, just cooking up six, four or five **Leah:** and **Aaron:** kind of thinking through the changing nature of the venture capital industry and what might a new venture capital firm [00:41:00] look like. And so in parallel to building Cornell tech, I ended up meeting my co founder Nnamdi, who was at Insight Partners and we together co [00:41:10] created. And I was 10 years ago. **Leah:** Wow. Well, let's get into six, four, five. And it seems like that time at Cornell [00:41:20] tech was really a time of seeding the idea and getting motivation around the idea. You saw a trend in venture that was shifting. Can you talk a little bit [00:41:30] more about what you saw there and how you and Nnamdi came together to create six, four, five? Sure. **Aaron:** Yeah. So when I got into the venture world [00:41:40] at DFJ Gotham, and then also started working with Greg at Cornell tech, there were these structural changes that I noticed happening. And [00:41:50] so one of the structural changes was the rate at which startup companies were being formed. We're outpacing the networks of general partners and their associate teams. So deal [00:42:00] volume was going up at an exponential rate. But these small early stage boutique venture capital firms were not historically designed for high [00:42:10] volume startup formation. Deal flow was primarily inbound through networks. The networks are constrained by where you went to school, where you [00:42:20] worked and where you lived. However, startup formation was happening rapidly everywhere. Yeah. So the first thought was that one, the [00:42:30] expected value of the traditional venture capital firm is going to go down if the sample space grows by order of magnitude. And those venture capital firms are not able to [00:42:40] identify and pull in the best companies that are outside of their network. So that was. a contrarian belief that I had around this growth and startup formation. **Leah:** [00:42:50] I love that because I think most VCs probably at the time, and even still today, feel like I have my boutique [00:43:00] firm, I have my high quality network, and maybe I don't even need to look elsewhere. Right. They're very comfortable. in their circles. [00:43:10] But what you're saying is, and I totally agree with these ideas and these companies can be formed anywhere. And if you really want to get access to the best of the best, [00:43:20] you've got to open yourself up. Again, this theme, I think from you of being open, right? And just opening up your network. **Aaron:** Yeah. I mean, you're hitting on something incredible, right? So, [00:43:30] and it's actually almost like a fundamental flaw of the design of venture capital that opened itself up to allow us to [00:43:40] create this new thing. So if you think about what you said is a lot of the firms that were dominant at the time at the seed stage were successful as a [00:43:50] result of work that they put in 10 years ago. Yeah. **Leah:** And the **Aaron:** fruit of labor of 10 years. So when it's time for them to raise their next fund, the likelihood of them [00:44:00] changing strategy is low because it takes 10 years to determine whether or not you're going to be successful or not. And you had just did a thing. That [00:44:10] is extraordinary. So, which is like get, you may have gotten into Snapchat, or you may have gotten into Uber, or you may have gotten into Seat Gee. And so what you're [00:44:20] likely to do the next time around is the same thing you did to get into those companies. **Leah:** And by the way, your LPs want you. To do that as well. Right. Because the [00:44:30] LPs are happy with these huge returns. They're like, don't change anything. **Aaron:** Don't change anything. And so when we were identifying these structural changes, we also understood that [00:44:40] we would have a 10 year headstart **Leah:** because of **Aaron:** the design of a venture capital firm and then, and how long it takes for you to prove results. And so we [00:44:50] started to see this like rapid growth and startup formation as a result of reduced complexity to code, reduced costs. to build a company with an accelerated pace [00:45:00] of putting software in the hands of a consumer or enterprise because of the cloud and mobile, right? So that was the reason you saw rapid startup formation around this [00:45:10] time period. The next thing that happened was proliferation of data on the internet, particularly proliferation of data on pre series A companies. [00:45:20] So pre series A companies, the information historically traveled through human networks. So people sharing information about deals and sharing information about how well a [00:45:30] company is doing. But at this point in time, you started to see more information on these early stage companies online. And remember these early stage companies were growing [00:45:40] faster than they had been before. So they're actually producing a lot more data. Information between seed and series a, and so this information was coming from multiple places. So it's [00:45:50] unstructured and fragmented across the internet. So everything ranging from web traffic to app store downloads to who the founder is, whether or [00:46:00] not they work together in the past, there's all of this information on these companies. And the URL effectively served as the unique key to use to gather [00:46:10] information on a daily basis about companies in high value. And so I started to say, well, what if you design an operating system that can collect information on these companies on [00:46:20] a daily basis and also augment your network, showing you rapidly growing companies that have high signals that are outside of your network? **Leah:** What **Aaron:** happens if you do that? [00:46:30] Well, you can actually have more coverage over this growing sample space. And if you have more coverage over this growing sample space and a protocol, like a way, both [00:46:40] human and software to kind of cover that, you might be able to see the next billion dollar company ahead of your peers. And so that was like the second [00:46:50] structural change. And then the third part was. Because this is a fundamental shift. No one believed this by the way. **Leah:** I know. How did LPs respond to this [00:47:00] initially? Oh, nobody believed it. **Aaron:** Like no one was like, there's no way, there's like no way, like they were like, look, early stage venture is like a art, you know, which it is like it [00:47:10] is. So even what we were describing was not what we were doing at Goldman, which is price arbitrage, right? Price arbitrage mean you have a algorithm that can execute a trade, **Leah:** but you were [00:47:20] using the data, right? Right. Right. **Aaron:** We were using data to do what we call information arbitrage so you can get in front of the information before anyone else. It's fundamentally different. [00:47:30] But nobody was like really believing that. And so that was also the big opportunity for us. And so the other thing that was different [00:47:40] is you remember in the early days when companies would get formed, there was just not a lot of work to do on those companies. Because it was like a couple of [00:47:50] people kind of in a garage with a big idea going after a large market. **Leah:** Mm hmm. **Aaron:** You got to remember because the pace. Of iteration on products and [00:48:00] deployment of software was going at such a rapid rate. You started to have post product revenue generating companies, pre series A. And so because of that, you can actually [00:48:10] start to do due diligence differently. And so my co founder came out of insight. NAMDI, where they had pioneered outbound deal sourcing at the growth stage [00:48:20] and had obviously very sophisticated ways of doing due diligence and finding companies using software. But by the time he and I joined forces, we [00:48:30] pioneered how to do outbound deal sourcing at the early stage using proprietary software and a different mentality around due diligence. And so that is kind of [00:48:40] how 645 came together and we kind of raised our first fund, which was. 7. 6 million is much more than we anticipated. But the whole idea was that [00:48:50] this was a proof of concept, **Leah:** right? Right. **Aaron:** We would prove that we could build the software. We would prove that we build a team and we will prove we would get into companies that have our peers. And then that would be [00:49:00] the springboard to actually. Invent this new way of doing early stage venture capital. **Leah:** So talk to me about that first fund. [00:49:10] Like, what did you have at that point? Had you built a version of the software and of the algorithm yet? And the pitch was kind of like, listen, trust us, let us test [00:49:20] it. It'll be a small fund. It's a proof of concept. We'll come back with results, but companies take so long, right. To prove results. So how did you kind [00:49:30] of balance that? We've got to wait 10 years to see if this works versus like, let's get to a fun too. **Aaron:** So, yep. So when we first got started, one of our first hires was [00:49:40] an engineer. So if you go back to my time at Goldman, where I sat on the trading desk, right next to the business, the first thing we wanted to do is hire a person [00:49:50] who. Co work alongside of us to build the software. His name is Blake Janelle. And then we also hired a designer. This is very unconventional by the way. So [00:50:00] we hired a designer who would help us really understand what our brand would be, but also help us build genuine relationships with [00:50:10] founders and figure out how do we kind of work closely with them? And her name was Dessie Levinson. **Leah:** And she was a designer from a software standpoint or more [00:50:20] organizational standpoint. **Aaron:** More like visual design and storytelling. **Leah:** In storytelling. Got it. Okay. Yeah. And **Aaron:** so [00:50:30] Dessie, Blake, Nnamdi and myself kind of came together to start to kind of figure out the design of the organization. And so the design of the [00:50:40] organization would have an engineering team, an investment and research team. Yeah. What has become what we call our success team, which is our value add platform and our [00:50:50] financial operation. So that was like the architecture of the organization. And then we started to build the software. We dumped every company, every founder [00:51:00] we had ever known. into it. And then we also started to have the software surface opportunities. We built the rubric and all of this stuff and we started making investments. Then here [00:51:10] comes to luck, We invested in a company called fly labs. 11 months later, Google bought it. Nice. You know, we invested in iterable. It grew [00:51:20] very rapidly. That company is now. **Leah:** Was it luck though? Or was it the software actually performing? Combination. So yeah. Yeah. Yeah. Yeah. **Aaron:** Yeah. So combination be so when you think about app store [00:51:30] downloads and like we called it bringing the aces to the top of the deck. **Leah:** So **Aaron:** the software we're surfacing opportunities, bringing them to the top of the deck, both opportunities we had [00:51:40] known because the software is looking at opportunities on a daily basis. So it kind of goes beyond human capacity and ability. **Leah:** Right. **Aaron:** And and so even if I met a company like. Three months [00:51:50] ago, if it's all of a sudden starting to pop off, like the software is saying to me, like, Hey, you need to look back at that. **Leah:** Yeah. **Aaron:** And so we were building a software, we were [00:52:00] building a portfolio. And so it took 18 months to raise the first fund and it was a small fund. We called it building a plane in free fall. So we like building the [00:52:10] fund and investing out of it while we're raising it. Oh my **Leah:** gosh. Yeah. I **Aaron:** would not recommend that. Right. We had to do what we had to do. **Leah:** Yeah. You got to do what **Aaron:** you got to do. So we were doing that. So by [00:52:20] 18 months, when we finished the fundraise, we had already deployed a meaningful amount of it. And actually, We had several markups. We had several companies that had got marked [00:52:30] up. And so Ben Levin, who, um, started Labo Equity, he told Nnamdi and I, he was a mentor of Nnamdi and became an investor in a [00:52:40] fund. He was like, you guys need to go back to market. **Leah:** Okay. **Aaron:** It was actually 20 months. Like, so it took 18 months to raise and two months after that, Ben Levin's talking about go [00:52:50] back to market. I'm like, this is a disaster. **Leah:** And these LPs that came in in the first fund, they're high net worths. They're through your network. Yeah. All individuals [00:53:00] **Aaron:** pitched over 200 LPs. Everybody's institutional LPs. Everybody said no, but that's okay. Because we started to build a relationship. We started [00:53:10] to enter into a relationship with the institutional LPs. They needed to see that NAMDI and I would make a great long term partnership. They wanted to understand whether or not this hocus [00:53:20] pocus concept that we had around the importance of software being a core part of the venture operation was real or not. And so by the time we went back to market to [00:53:30] raise fund two, we had all of this evidence. And so we were talking to Robert Smith from Vista Equity and Robert said to us, you know, You should have all of your individuals double their [00:53:40] commitment because our fund was already marked that over like a two X. And he was saying like, look, have everybody double. And so that was really valuable because what [00:53:50] ended up happening was that we immediately kind of doubled our commitments for the fund too. And we got closer to our target. [00:54:00] And so the target was 30 million. A hard cap was 40. Okay. And the way we came up with that was we were talking to a [00:54:10] partner at Horsley Bridge and he asked if we had more capital, how big of a fund are we effectively managing? Okay. So what we did was we [00:54:20] went through every note document of all of the companies that we had invested in. figure out how much allocation we could have had for those rounds and how much [00:54:30] follow on we would have been able to invest. And then we kind of created a simulated portfolio that simulated portfolio was 40 million. So we're like, okay, we're effectively running a 40 [00:54:40] million fund right now. If we had the money, let's raise 30. So we went out to raise 30. We hit the 30 number with individuals. **Leah:** Okay. **Aaron:** And then a few institutions came in [00:54:50] and we ended up raising 40. 6 for our second fund. **Leah:** Wow. Now, the third fund is always the hardest because at that point you've had a [00:55:00] little bit of time to see more markups, LPs now can look at some history and track record. And so can you talk about that third fund was a [00:55:10] major jump for you guys, I feel like. **Aaron:** So the third fund was 160. **Leah:** Yeah. **Aaron:** Now, at that point, we were getting to what we call optimal fund size. Okay. So [00:55:20] we were always operating above our weight class, right? From the way the institution was run, the size of the team [00:55:30] and what we were effectively capable of. Both. From an investment standpoint, as well as a performance standpoint. And what we knew was that the optimal fund size for [00:55:40] us was in the 150 to 200 million range, based off this return to fund the exit framework that we learned from Mike Mabels. So when we ran out to raise fund [00:55:50] three, we had multiple exits. Multiple up rounds and in our fund too, was accelerating and growing from a underlying unit [00:56:00] economics standpoint, twice as fast as fund one. Because what we had learned from fund one was to kind of concentrate a large percentage of our [00:56:10] portfolio on. Infrastructure software and enterprise SAS based on kind of the performance of those deals. And so we kind of restructured [00:56:20] our portfolio construction in a way that if we kind of changed up the weights, you would see even greater results from a TVPI and DPI standpoint. So we [00:56:30] brought that case. To our LPs, there was a couple institutions in at the time and they just got really excited about what they had seen and they leaned in [00:56:40] and many other institutions started to lean in as well. **Leah:** Yeah. Yeah. So I'm going to fast forward here a little bit because I think that the impact that you've had with [00:56:50] 645 has been so tremendous and something that really resonated with me is something you said to me the other day is you bring the invisible to life. And I think for me as [00:57:00] an investor, something I've struggled with is I do feel like the venture capital industry as it is set up today, traditionally, not six, four, [00:57:10] five, but traditionally, it just doesn't work for most people. Doesn't work for most founders. It's very network based. I think your Insight [00:57:20] on this software approach removes a lot of bias from the industry as well, right? It gives you access to more founders and more companies. I'm curious that [00:57:30] what you think about this, because this is something I think a lot about and I struggle with, which is I think at the early stage, there's a lot more opportunities for founders and companies [00:57:40] because there's so many firms and there's. You know, a lot more funding at this stage, but when you get to a Series A or Series [00:57:50] B, I think Series A in particular, the amount of capital does dry up. There's just not as many firms to go to. There's not as many firms to pitch. And [00:58:00] so if you have a fund like 645 that's able to kind of get access to the invisible and invest in them early, how do you then make sure they still have [00:58:10] access in a path to later rounds? Because it's important to get them funded early on, but if they don't have that path to [00:58:20] success, you know, they end up being dead in the water kind of. I mean, you guys have been very successful, I think, in continuing to build your platform, build the brand, [00:58:30] raise more money. You know, you have an even bigger fund for now and an opportunity fund. So has that played into the strategy as well? **Aaron:** Yeah. So first, we have [00:58:40] to step back and understand, like, The physics of the entrepreneurial ecosystem, which is governed by the power law distribution. And so [00:58:50] in the power law distribution, like there's only a small handful of companies that are going to have majority of the returns, right? And so even for a firm like [00:59:00] 645 that has a relatively low loss ratio, the power law distribution still is the driving force of returning capital to LPs, [00:59:10] which is the business that we're in. And so. The unfortunate reality is that there will be a lot of losers, mostly losers, [00:59:20] mostly losers. Now the invisible is really about experimentation. **Leah:** Okay. **Aaron:** Right. And so we kind of get involved at [00:59:30] the experimentation phase, experimenting with products, experimenting with ideas, and how do we kind of work with founders to take those experiments. [00:59:40] Startup experiments to turn them into startup companies and take these startup companies to turn them to high growth businesses. Right? So if you think back to Eric Young's advice for me, like go work with [00:59:50] one of our portfolio founders, build the business model, raise the series D before I enter officially into like the venture capital world. I had [01:00:00] already seen what these experiments can evolve into that can not only have a broad impact on a societal [01:00:10] basis, meaning the number of hands the product touches, or the number of lives it changes through the efficiency of the software, but also from a business standpoint, you can [01:00:20] build something that can be valuable to the public market. **Leah:** Um, **Aaron:** you can build something that can be valuable for an **Leah:** acquirer. **Aaron:** And so [01:00:30] for us in the invisible, we're kind of really ideating with these founders and believing we say the founders can see the invisible, right? But they see [01:00:40] a world where. Their software or their company changes the order, which requires a lot of kind of experimentation. And some of those [01:00:50] experiments kind of won't work. But those that get to the series A and series B. Are no longer experiment, they are high [01:01:00] growth businesses. Reid Hoffman talks about blitz scaling. They're kind of ready to be dominant category players, right? [01:01:10] And that is kind of where. We work with our companies to reach that scale. And our success team works very closely with all of them. The experiments or experiments that don't go [01:01:20] right. How do we transition and pivot and how do we protect the people? Even if that experiment doesn't go right, how do we enable the people to go on to their next experiment? **Leah:** Yeah. [01:01:30] Yeah. **Aaron:** And I think Silicon Valley has done a phenomenal job creating the ecosystem that allows that type of fluidity around experimentation to a point where some of these [01:01:40] experiments evolve art. Into like these really impactful, groundbreaking companies. **Leah:** Absolutely. Absolutely. Another [01:01:50] sort of, I would call it a flaw in the venture industry, I'm curious to get your take on is I think it's very difficult for a brand new firm to [01:02:00] get started. I mean, we heard your story of raising fund one and pitching 200 LPs. You had a very unique, very clear thesis. Right. But I think [01:02:10] LPs. Want to see that proven out and that takes time, but we have seen I think in the last five even ten years sort of this plethora [01:02:20] of smaller early stage firms getting started we saw a lot of programs run by Corporate [01:02:30] LP is particularly in 2020 during COVID George Floyd happened. We saw a lot of women, people of color [01:02:40] starting firms or getting funding to start firms because everyone wanted to do something, right? Everyone wanted to have an impact and do something fast [01:02:50] forward where four or five years out. So these funds have started. They have sort of that maybe first fund under their belt. They've [01:03:00] now invested that fund at kind of the height of the market. And I think a lot of those LPs have dried up. I think a lot of them have gone [01:03:10] away. I have major concerns about what happens to those fund managers. What happens to those firms? That got going that I feel like didn't have that support [01:03:20] foundation to continue to prove themselves because of market dynamics because of fund cycles. I'd be really curious to understand how you see that [01:03:30] dynamic. **Aaron:** You know, it won't be the first time there are firms that existed when I started 10 years ago that don't exist today. **Leah:** Right? **Aaron:** And [01:03:40] so this is a hyper competitive market. Not only that, it is the most high risk alternative asset class. So if you [01:03:50] think about institutional LPs, you know, they have to put their capital in places that can work for their asset allocation. Right. And so [01:04:00] the reality is, Some allocators will not only pull out of, you know, underperforming funds. [01:04:10] Mm-Hmm. , but some of them will substantially reduce their allocation to the asset class. **Leah:** Right. **Aaron:** And so I think it's just kind of [01:04:20] the natural ebb and flow of. **Leah:** Yep. **Aaron:** Now, I believe a lot of the new managers that have gotten [01:04:30] started over the last five years, particularly women and people of color are going to do well because they're resilient. True. And [01:04:40] I don't think that new class of managers that have entered the ecosystem are going to give up easily. Right. And so I [01:04:50] believe that you're going to see. Maybe some consolidation. You may see some funds shrink their fund size, which is not exclusive to them. [01:05:00] Like even some of the larger funds cut their fund size. I remember reading months ago, Founders Fund, like cut their fund size and what were they doing? Responding to the market. **Leah:** Absolutely. Yep. **Aaron:** And [01:05:10] so I'm not too concerned about like the new class of entrepreneurial managers who have entered the ecosystem kind of being wiped out immediately, because these are [01:05:20] very resilient folks. And they're going to kind of find a way and continue to kind of prove results. And as the results come in, I think they're going to start to build new [01:05:30] institutions. **Leah:** It's great. I love that optimism. You have to be optimistic as an investor too. That is for sure. And as an entrepreneur. **Aaron:** [01:05:40] Absolutely. **Leah:** Okay. So final few questions here, we're going to shift gears a bit. Aaron, what is something that people underestimate you about or what are you [01:05:50] misjudged on? **Aaron:** Yeah. We're quiet. You know, little Wayne said, real G's move in silence. So yeah, we don't make a lot of fuss. **Leah:** Yeah. You **Aaron:** know, we are [01:06:00] heads down. We're working really hard for our founders. That's why you don't hear from us a lot. And so I think sometimes people take quietness for weakness, our quietness for [01:06:10] inactivity. But in fact, we're focused on a craft. We're focused on building companies. We're focused on helping our founders. So if you don't hear from us, don't think we've [01:06:20] gone away. We're just in the lab. **Leah:** You're doing the work. I love that. Do you follow your mind, your gut, or your heart? And how has that [01:06:30] changed over time? **Aaron:** I follow my heart. There's a saying at 645, we call it purity of motivation. And so we look for purity and [01:06:40] motivation in our founders and our people. And so When you find people who are motivated intrinsically by the things that [01:06:50] matter most, the rest will follow. So that's why I kind of pay very close attention to my heart and kind of what am I doing this for really? [01:07:00] And then I kind of try to navigate myself down that path. **Leah:** Okay, if you could wave a magic [01:07:10] wand and break any precedent, And you didn't need to build consensus or do the work or just wave your wand and set a new precedent on [01:07:20] something. What would that be? **Aaron:** So if I can wave a magic wand and set a new precedent, it would be kind of Equal [01:07:30] access to education at the formative years, because particularly in this country there is like a real [01:07:40] disparity around training and access. And so there are talented people in all parts of the country, right?[01:07:50] So remember, if we go back to Morehouse, right, and I was a part of the SSS program and we were all there a week early, we had young guys [01:08:00] from the roughest parts of this country, but cultivated, right? Guess what we have? We had a Rhodes Scholar in that group. We have [01:08:10] doctors, we have cinematographers, we have investment bankers, we have a venture capitalist. And that was because Morehouse and that program understood it didn't matter [01:08:20] where we came from, like, let's give people a shot. And access to information, knowledge, and resources. And that happened to us [01:08:30] when we were 17, 18 years old. So what happens if that type of access and resources. are given to kids who are [01:08:40] three, four, five, six years old. So if I could raise a magic wand, I would kind of distribute that type of access. And I think it would make our [01:08:50] country even more powerful. **Leah:** Yeah. Huge impact. I love that. Well, Aaron Holiday, you have broken so many precedents and set new [01:09:00] precedents, not just in the venture industry, which, you know, I'm personally very interested in both as a founder and investor, but just hearing your story of the path that [01:09:10] brought you to 645 and how much impact. You are making on a daily basis to founders, entrepreneurs, and you're just such an inspiration and [01:09:20] such a good human too. I just value so much as a friend. **Aaron:** Yeah, I really value our friendship as well. And yeah, thank you so much for, you know, encouraging me to come on [01:09:30] and to have this conversation and to share more about the 645 story and my story. **Leah:** I know you don't do it often. So I consider myself very lucky. **Aaron:** No [01:09:40] worries. **Leah:** Thanks, Aaron. That was Aaron Holliday of 645 Ventures with his incredible story of growing up in New Orleans to working on Wall Street and eventually [01:09:50] starting his own venture capital firm. Having software as the core part of the venture operation has made a huge difference to the returns and their impact. There's a [01:10:00] striking connection to his story and the value of giving people a shot as a venture capitalist that I think is so powerful and inspiring. As a founder myself, I can tell you. [01:10:10] Aaron is the type of partner you want in your corner. Thank you for listening to breaking precedent. Remember to click the follow button on your favorite podcast app so you never miss one of these [01:10:20] exciting conversations that challenges the status quo and inspires change. And if you know someone who is trailblazing a unique path, I want to hear their story. You can send [01:10:30] a note to me on my website, breaking precedent. com until next time, I'm Leah Sullivan.