Latest / Earn Your Leisure / Inside the World of Venture Capital with Arlan Hamilton

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Inside the World of Venture Capital with Arlan Hamilton · Earn Your Leisure

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  Speaker 1: This episode is brought to you by P and C Bank,
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  Speaker 1: a lot of people think podcasts about work are boring,
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  Speaker 1: the PNC Financial Service Group, Inc. P and C Bank
• 1:47
  Speaker 1: National Association Member FDIC. Mark Cuban, Yeah, he invested five
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  Speaker 1: million dollars into your six six million dollars.
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  Speaker 2: Into your fund.
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  Speaker 1: Talk about how that relationship transpired his belief in you.
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  Speaker 3: Yeah, I mean again, probably have to ask him. I
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  Speaker 3: don't want to speak for him, but I'll tell you
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  Speaker 3: what happened. I grew up in Dallas, so I've known
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  Speaker 3: about Mark for twenty years. And I also watched Shark
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  Speaker 3: Tank when I was, you know, broke, and just always pretended.
• 2:18
  Speaker 3: I would pretend I was a fifth Shark or whatever.
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  Speaker 3: So I just really admired him and Twitter at the
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  Speaker 3: time before it was X. They asked us to speak
• 2:29
  Speaker 3: on a panel, like on a like fireside together at
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  Speaker 3: south By Southwest because we both used Twitter in an
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  Speaker 3: interesting way. So that was twenty nineteen. We went out
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  Speaker 3: and I was toe to toe with him. You know,
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  Speaker 3: I wasn't he doesn't like as you know, he didn't
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  Speaker 3: like anybody kiss his ass like he he likes to
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  Speaker 3: talk to you like normal. And that was that's how
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  Speaker 3: we roll. And you know, he got to meet my family,
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  Speaker 3: was very kind to them. And so after it went
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  Speaker 3: really well, I said, hey, will you invest in my fund?
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  Speaker 3: And he said no, And he said, I don't like
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  Speaker 3: to invest in other people's funds for the most part,
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  Speaker 3: because I like to invest directly into companies, having too
• 3:01
  Speaker 3: much fund doing that. So I said cool. You know,
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  Speaker 3: I've had multiple notes, so I was very respectful to him.
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  Speaker 3: A few weeks later, there was an article that came
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  Speaker 3: out in like Silicon Valley Press whatever tech Crunch, or
• 3:13
  Speaker 3: it wasn't tech Crunch, it was Axios actually, and it
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  Speaker 3: said it had like a really unflattering picture of me,
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  Speaker 3: as they do, and it said that my fund had
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  Speaker 3: failed because I wasn't able to raise it yet raise
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  Speaker 3: this certain fund I was raising, so thirty six million
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  Speaker 3: dollar fund that I went out to raise and I
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  Speaker 3: hadn't raised it yet. And then so for some reason,
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  Speaker 3: they just on this day decided to write that. And
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  Speaker 3: that article, it didn't really accuse me of anything. It
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  Speaker 3: just said that I was a failure and that people
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  Speaker 3: had lifted me too high, said I was too good
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  Speaker 3: before they should have. And because of that article, a
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  Speaker 3: couple of our main LPs pulled out because they were like,
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  Speaker 3: what's going on back there. I'm like, there's literally nothing
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  Speaker 3: I have. The DM of the guy who wrote me
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  Speaker 3: asked about this, and he was so nice to me,
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  Speaker 3: but I didn't know he's gonna write that, so I
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  Speaker 3: didn't do anything. Mark wrote to me. He sent me
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  Speaker 3: a DM and he said, I saw the article and
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  Speaker 3: he said, here's a million dollars, so you can just
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  Speaker 3: do whatever you need to do, like make whatever investment
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  Speaker 3: you want to make. And he said, what we need
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  Speaker 3: to do is make you independently wealthy so you don't
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  Speaker 3: have to deal with this shit. And it's like, you
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  Speaker 3: are right, You're right, you were correct, And I appreciated him,
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  Speaker 3: not only did he do that? He said, I said, okay,
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  Speaker 3: you want to do it like a press release. He's like, no,
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  Speaker 3: nobody needs to know this. It's cool. You do whatever
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  Speaker 3: you If you want a press release, do it.
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  Speaker 4: If you don't, don't.
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  Speaker 3: He wasn't trying to get the accolades on top of that. Usually,
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  Speaker 3: when you when you have a fund, especially a joint
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  Speaker 3: fincher like that or all the funds, you have two
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  Speaker 3: and twenty called so two percent management fee that you
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  Speaker 3: get every year. It's just like standard. It could be varied,
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  Speaker 3: but you get two percent management fee and then twenty
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  Speaker 3: percent carry which is carried interest short for carried interest,
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  Speaker 3: which is the profits you make off of your winnings.
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  Speaker 3: That's really standard, he said, management fee whatever, you know,
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  Speaker 3: UTU operated. But we'll be thirty percent profit share because
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  Speaker 3: this is a true JV. And I mean he offered that,
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  Speaker 3: and I just couldn't believe it because it's so it's
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  Speaker 3: the kind of management fee that Endries and Horowitz can
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  Speaker 3: command because it's so high. So I just thought that
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  Speaker 3: there was a lot of integrity on his part, and
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  Speaker 3: it was almost like that was the thing that told
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  Speaker 3: me this is in charity. I was like this is
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  Speaker 3: actually him, just like I don't know. It was just
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  Speaker 3: really interesting. So then a year later, a year some
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  Speaker 3: months later, George Floyd was murdered and I just got
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  Speaker 3: an email from Market. Of course that had been talking
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  Speaker 3: the whole year. We talk about deals, we talk about whatever.
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  Speaker 3: I got an email from him and it just said
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  Speaker 3: the subject said do you want to do? You want
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  Speaker 3: to do more? Opened up the email and said, I'm
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  Speaker 3: going to be transferring five million dollars into our GV
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  Speaker 3: so we can. You know, he was he was livid
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  Speaker 3: about George Floyd's murder and the and the way that
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  Speaker 3: it was handled, and he wanted that was his way
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  Speaker 3: of acting. That was one of his ways of acting
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  Speaker 3: because he knew I was you know, we were already there.
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  Speaker 3: We had the infrastructure to handle that. And let me
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  Speaker 3: be real clear, like Marcus, he's very blunt. So he
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  Speaker 3: he doesn't sit around. We don't sit around a giggle like,
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  Speaker 3: we don't sit around. And he's like, oh, you're doing
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  Speaker 3: such a great job. He's like, where is like, where's
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  Speaker 3: the where is the path to me getting an ROI
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  Speaker 3: on this return on investment?
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  Speaker 4: Right?
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  Speaker 3: He says that very he's very specific he treats me
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  Speaker 3: like he treats every other investment, which is, I'm investing
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  Speaker 3: in you so he can give me money back. It's
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  Speaker 3: not a charity, right, He just makes sure that he
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  Speaker 3: spends his dollars the way he wants the world to be,
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  Speaker 3: like he wants to put his dollars a certain way.
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  Speaker 3: So I asked him after that, first of all, I
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  Speaker 3: do want to do a press release? He said, okay,
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  Speaker 3: we could do a press release, only if you go
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  Speaker 3: through this black Woman. I'm sorry, no, a Woman of colors,
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  Speaker 3: very indie publication that I invested in. Only that's the
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  Speaker 3: only way. I don't want you to go to tech
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  Speaker 3: crime for anybody else USA today, which I could have,
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  Speaker 3: which again one more step of like, oh that's really
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  Speaker 3: that's just really doing it is intentional, right, because honestly,
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  Speaker 3: I know, six millions dollars a lot of money. But
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  Speaker 3: Mark could have if he wanted to, he could have
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  Speaker 3: like used that been on every like mentioned it every
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  Speaker 3: time he had an interview, and he would have made
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  Speaker 3: six million dollars back in some sort of marketing, you know,
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  Speaker 3: something that would have come back to him. I just
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  Speaker 3: think he really just wanted to do it. So finally
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  Speaker 3: I asked him why he did it, and he said,
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  Speaker 3: you're in rooms I'll never be in. So it's just
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  Speaker 3: the right play for me. And I you know, I
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  Speaker 3: get court sided. I mean I buy court side seats
• 7:58
  Speaker 3: and too Mavericks that's the only one because I love
• 8:00
  Speaker 3: Mavericks Now, I just I usually love Mavericks. I usually.
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  Speaker 3: I used to not know who Luka Doncik was. So
• 8:07
  Speaker 3: there's like a podcast episode from like two and a
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  Speaker 3: half years ago where we're talking about I'm with Mark
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  Speaker 3: talking about it, and he's like, do you know. I
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  Speaker 3: was like, I don't know who that is. So I
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  Speaker 3: started watching after so many years. I know people are
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  Speaker 3: killing me right now and I'm obsessed now, So like
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  Speaker 3: I'm I'm oh yeah, yeah, oh yeah. And I'm always
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  Speaker 3: you know, of course i'd or get a sweet or whatever.
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  Speaker 3: And anytime I say Marks, it's all it's all good.
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  Speaker 3: My brother just ran into him.
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  Speaker 4: At the NBA.
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  Speaker 3: We were there. I just was in a hotel room
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  Speaker 3: at the NBA All Star Game, and you know, there's
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  Speaker 3: love for my brother and my mom, and he's just
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  Speaker 3: really kind and there's some most of the companies he's
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  Speaker 3: invested in he's never met the person. So for him
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  Speaker 3: to like four or five six times make an effort
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  Speaker 3: to come over and hug me and just like say
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  Speaker 3: how you doing? In addition to all the emails that
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  Speaker 3: we do, just really appreciate that. I'm not intimidated by him,
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  Speaker 3: and I argue with him quite a bit because I
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  Speaker 3: don't think he's right about a lot of stuff he
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  Speaker 3: says to me. But you know, when someone argues with
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  Speaker 3: you and they do it respectfully, like you can tell
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  Speaker 3: like it's like a fair fight, you know, especially someone
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  Speaker 3: who has a little bit more power than you do.
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  Speaker 3: That's that's what it is.
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  Speaker 4: So where's what's the roadmap too? You said, you know,
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  Speaker 4: getting to where you want to go? Is it more pressed?
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  Speaker 4: Is it just bigger checks from wealthier investors? Are you
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  Speaker 4: targeting athletes when you go to the games? Now? So, like,
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  Speaker 4: what's the roadmap to get to that one hundred million dollar,
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  Speaker 4: three hundred million dollars? Whatever your goal is? To break
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  Speaker 4: break that ceiling?
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  Speaker 3: Yeah, we have been in great conversations with major banks,
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  Speaker 3: Goldman Sachs, JP, Morgan, Bank of America. Bank of America
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  Speaker 3: is already an investor of ours. Again, I'll say we're
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  Speaker 3: I get into arguments with them, so that's part of it, right,
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  Speaker 3: But I think Bank of America kind of broke the
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  Speaker 3: mold for us by investing seven figures because then Goldman
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  Speaker 3: Sachs and JP Morgan and SVB and the rest of them,
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  Speaker 3: can you know, understand what it is. So I think
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  Speaker 3: it's going to be that. I also think it's going
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  Speaker 3: to be a lot of family offices. So you know,
• 10:19
  Speaker 3: I think that that's where we play best because it
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  Speaker 3: isn't it isn't super traditional.
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  Speaker 4: Can you talk about that?
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  Speaker 1: So a lot of people, even in some of the
• 10:28
  Speaker 1: conversations we've been have over the past since twelve months,
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  Speaker 1: the words family offices have come up in conversation, but
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  Speaker 1: for a lot of population, they have no idea what
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  Speaker 1: it is.
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  Speaker 4: Just break that down.
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  Speaker 3: Family office is essentially like a fund within a family
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  Speaker 3: or a group of families is treated as a company
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  Speaker 3: or an entity, a funding entity. And so you might
• 10:50
  Speaker 3: have like jay Z, for instance, he's he's making investments
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  Speaker 3: out of his venture fund and that's kind of specific,
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  Speaker 3: but he has people working there and that it's very specific.
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  Speaker 3: LPs are in but he probably also has the Jay
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  Speaker 3: Z and Beyonce family office where they make their own
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  Speaker 3: investments and they have somebody at least one person, if
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  Speaker 3: not seven, people running that, running the numbers on that,
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  Speaker 3: and treating it, and it's it's just your own allocation.
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  Speaker 3: Like for instance, one of my major one of my
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  Speaker 3: major goals, and you know maybe by the time I'm
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  Speaker 3: forty five, I only have a couple of years, is
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  Speaker 3: to have a family office. Is it's just it's different
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  Speaker 3: from angel investing because we're talking usually millions of dollars.
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  Speaker 3: You can't have a family office with like five hundred
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  Speaker 3: k talking millions of dollars, if not tens or hundreds
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  Speaker 3: of millions of dollars, and you're investing directly out of
• 11:43
  Speaker 3: that and it's productized and has organization around it. And
• 11:49
  Speaker 3: so those are the reason we don't know about them
• 11:52
  Speaker 3: is because they're real stealth. They're a purpose. They're meant
• 11:56
  Speaker 3: to you know, if somebody knew that a certain it
• 11:58
  Speaker 3: doesn't have to be like a celebrity. If anybody you
• 12:01
  Speaker 3: have a family office that can deploy fifty million dollars
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  Speaker 3: a year or twenty million dollars a year, they're going
• 12:10
  Speaker 3: to be hounded because they don't have that shield of
• 12:14
  Speaker 3: this is an entity of business over here. So like
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  Speaker 3: family office sounds very intimate and accessible, so they don't
• 12:20
  Speaker 3: want it to be. So they're not going to put
• 12:22
  Speaker 3: up a website. Most likely they're not going to do that.
• 12:25
  Speaker 3: And what a lot of times a family office is too,
• 12:27
  Speaker 3: is like the they'll realize that they can only do
• 12:31
  Speaker 3: so much as a philanthropist, you know, they can only
• 12:34
  Speaker 3: do move the needle so much. But if they instead
• 12:37
  Speaker 3: of putting or in addition to putting their money as
• 12:40
  Speaker 3: you know, into charity, if they put it into companies,
• 12:44
  Speaker 3: it can be evergreen. So if a family has you know,
• 12:48
  Speaker 3: a big family has one hundred million dollars that they
• 12:50
  Speaker 3: want to spend over time, and they're used to putting
• 12:53
  Speaker 3: eighty million of that into charity, that goes away because
• 12:57
  Speaker 3: it's spent and they just and it's just kind of
• 12:59
  Speaker 3: goes away. They have to refill the coffers. But if
• 13:02
  Speaker 3: they have a family office that's making a return on
• 13:04
  Speaker 3: an investment over five, seven, fifteen years, they never have
• 13:09
  Speaker 3: to replenish that if they play it right. So that's
• 13:11
  Speaker 3: what they're going after. And a lot of times you'll
• 13:13
  Speaker 3: see these rich families combine their family offices so that
• 13:17
  Speaker 3: it's one group like five to ten people who are
• 13:21
  Speaker 3: hired by them to run four or five ten family
• 13:26
  Speaker 3: offices at once.
• 13:27
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