WEBVTT
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So back then, the Midwest only had a handful of firms, and it was a rapidly growing as far as a percentage of the deals in the U.S.
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that were based outside of the Bay, outside of New York, outside of Boston.
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More and more companies were starting here, but they were still finding it really hard to find capital.
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Welcome to Partner Path, a podcast that unpacks the venture capital and growth equity ecosystem from a junior perspective.
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Young entrepreneurs and investors have already had a massive impact on the industry, having started unicorns and launched billion-dollar funds.
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We discuss these success stories and more by sharing perspectives and advice from some of the industry's most prominent role models.
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This podcast expresses our views as of the date published and does not represent the views of and is not endorsed by any company for which we work.
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Hello, hi Laura, hi Will.
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Thanks for having me.
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Thanks for being here.
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And let's dive right in with your first company, Scooter Versity.
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What was the impetus for starting a scooter company?
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It's kind of silly.
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I have always been all about efficiency and moving faster, getting things done faster.
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So when I went to uh college, I actually brought my like old Razor scooter with me because I wanted to get around campus faster and do more activities, be at more parties, whatever.
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I uh I quickly broke it because those things are not designed for you know grown adults.
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Um but then I I I you know I looked into what other options were there and I saw that there was more adult-sized scooters and thought this is maybe maybe I'm onto something.
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This was before bird in Lyme.
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This was before last mile mobility was really a thing.
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And I was, I kind of was convinced that this could be a category and this could be something that especially we might have an early uptick on college campuses.
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So I started to get a wholesale relationship and a brand around it, distributing, but I had a rental model, an ownership model.
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We didn't get it very far.
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I don't want to like overstate how naive we were and how early to this we that we were.
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We looked at like electrifying them, but we didn't have the the engineer on our team.
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It was kind of encouraging to see then that this category as a whole, like we were early to in some way, but as a whole, it really was just kind of a more of a formational experience and got me involved also with other entrepreneurs on campus, what I took away from it, except I still do use my scooter a lot.
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So I will say that.
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I'm a big fan still.
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And then fast forward, you were 23 years old when you started M25, which is younger than I am now.
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I think it would be hard for me to start a fund at 25, much less 23.
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So it'd be great to touch on how you started M25.
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What made you think of the idea to start a venture fund?
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I had been spending time with students on campus that had other businesses.
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Maybe somebody was launching a mobile app, somebody was launching a 3D printing company.
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So I had been spending time with those founders, and ultimately the university decided to encourage us and plant a seed of hey, do you guys want to start a venture fund, a student-run venture fund?
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And so they gave us an initial relatively small amount to start investing in other campus founders.
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So these were other students that also had ideas, maybe like me, and we would do run it like a venture firm.
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We had a due diligence process, we had a pitch process, kind of partner meetings.
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That was the first time I had really dove into what venture capital was.
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And it opened my eyes into this being a different path for your typical U Chicago econ major to take.
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There's investment banking and consulting were kind of the two default paths.
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And I wasn't necessarily passionate about either one.
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And so I started looking deeply into is venture capital a career path for me?
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And the short answer for most people coming out of undergrad is that it definitely isn't.
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Like there's not enough roles, there's not enough, like you need more experience to get into venture capital for most firms.
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It's a very small industry in the scheme of things.
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So I didn't have immediate access to go into venture capital.
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I did a couple years in corporate strategy as I was networking and talking to people and trying to discover what the opportunity for me in venture capital would be.
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And it wasn't entirely obvious how to get a job, but then I kept coming back to that there was this maybe more overlooked area of the market, the Midwest, which is where, as many people will know M25 now, that's where we invest.
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That's where we spend all of our time.
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We're based in Chicago and we focus on the broader Midwest.
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So back then, the Midwest only had a handful of firms, and it was a rapidly growing as far as a percentage of the deals in the US that were based outside of the Bay, outside of New York, outside of Boston.
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More and more companies were starting here, but they were still finding it really hard to find capital.
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I mean, yes, that's a market inefficiency or an arbitrage opportunity that, you know, I was clued into with my Chicago econ background.
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But more thought, it's also a place for somebody that lacks experience, lacks the pedigree of working at other venture funds to maybe get their start in venture capital.
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Because people knew that I had been digging in and had this entrepreneurial background and passion and done some stuff in venture capital, I was able to convince a handful of friends and family to back me on fund one.
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And that was in 2015.
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I was 23 years old, so I quit my corporate job and went full-time operating our huge fund one.
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It was$1 million.
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Okay, so not to overstate fund one.
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That's a half of a check for most funds.
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That's where we got our start, and then quickly leveraged that like initial angel type fund, size of fund, to start to raise our next fund, which in 2016 we raised$11 million, which a lot of people would call that like our first like real fund or our fund one.
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And where did the name come from?
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Myself and then who became my partner, Mike Assembl.
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We're both Christians.
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And so M25 is a biblical reference to a passage in Matthew 25, which just the quick Spark Notes version is that it's about a master giving his capital to a steward to his servants and to take care of while he's gone or traveling.
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And he comes back a year later, and two of those servants have taken the money and built like a small business and doubled their money by creating a business in the marketplace.
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Whereas one of them just buried it in the ground to keep it safe.
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And so the master blesses the servants that that use the money, took some risk, but also worked hard, used the talents that they were given and the skills, and created something, and ultimately made more with it.
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And he cursed the one that just kept it safe.
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Because myself and my partner are Christians, we could have viewed that as like a biblical example of adventure capital and doing what we're doing.
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So I thought that was a very inspirational name, kind of had our values up front when as we started this venture.
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And ultimately, I mean you raised a fund too.
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However, you know, going back to fund one, you still have to have a strategy in place and find the best deals to ultimately drive returns for your LPs to be able to raise hopefully a bigger fund too.
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So, I mean, what was your strategy going into fund one?
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And like, how did you start to build that track record with such a small amount of capital?
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It wasn't like it took off overnight.
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What happened was we had this million dollar fund one, and I was, we're we're nobody, nobody knows of us.
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There's no brand, there's no deal flow naturally flowing our way.
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I wasn't spinning out of like an early Google employee that had all this deal flow coming their way.
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I did a couple of things to like really accelerate.
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I joined a couple of angel groups early on, including Hyde Park Angels here in Chicago, which is like kind of a more larger and well-known one.
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And I led their consumer team.
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So I was became more of an expert because I had a little bit of a consumer background with also my corporate career too.
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I, the person that would go to every startup event across the whole Midwest.
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And I'd drive to from one night I'd be in Cincinnati, then I go to Columbus, then I go to Indianapolis, and I'd be at everything and be very accessible, which it was, I mean, it's hard to find, even though we were writing 25, 50k checks, it's hard to find that, uh, especially 2015 in the Midwest, to find somebody that would be willing to invest in a risky asset class like venture capital.
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I mean, this is where people in the Midwest have made their money on farmland or real estate or agriculture or manufacturing businesses, and they haven't, nobody's at cocktail parties with the golf, you know, the golf course talking about, oh, did you invest in that startup?
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I made a bunch of money on that exit and that sale to you know IBM.
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Nobody's saying that.
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Now they are, but but back then they weren't.
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And you know, so I was accessible.
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We had a brand and a website that was like very crisp and clear like here's what we do, here's the stage we invest, here's how to reach us.
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It was like this scrappy, but just also doing something that really hasn't hadn't been done a lot in that in our market.
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If you're in Silicon Valley, it's like, well, duh, that's what you do to source deals.
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Like that's because it's a lot more competitive an environment.
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Everybody's doing that.
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But I think in the Midwest, it hadn't really been done.
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Some people had even said, hey, you're bringing some of this coastal style to the Midwest, which I think had a lot of opportunity.
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We weren't leading rounds, we were trying to participate and get into high-quality rounds, which because we were so relatively aggressive compared to our peers on the coast, we weren't necessarily aggressive, but because we were so aggressive, we were thoughtful, transparent, we were able to get into these rounds that were raising a million, two million dollars because frankly, there wasn't a lot of that follow-on, or like it was hard to build a syndicate back then.
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It was hard to get the capital into these companies in the Midwest.
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Very, very helpful.
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And I want to move into how things have gone.
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But maybe before we touch on actual performance at a high level, could you maybe just explain for the audience how venture capital firms actually generate revenue, the concept of a management fee and carry and what that means?
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Of course, because I did hint we were a relatively small fund, which means that we also had relatively few management fees.
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Because so a management fee is you generally are taking 2% of your committed capital every year that you're during your active uh fund period.
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And that is going to pay for salaries and other expenses.
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Like salaries are usually the bigger one, but also it could be office, travel, you know, food, whatever to run a business, to run a company, the software we spend, you know, that type of stuff.
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You can imagine we might have had four people towards the end of fund two, all full-time, that were making two percent on$11 million.
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Actually, a lot of a lot of emerging managers, you'll front load, you'll do two and a half percent and then wind it down so it averages to 2%.
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So we did two and a half percent, but still, like it's not it's not that much money.
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I think that showed dedication from our to our LPs, you know, that we were like in it for the incentive of the long-term return, which is the other piece of it.
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So that's the 20%, you know.
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Usually people say two and 20.
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The 2% is the management fee, the 20 is the carried interest.
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And so we were heavily incentivized to draw significant returns for our investors by getting a 20% share of the profits, not of the all of the returns.
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First, you return all the capital to your investors, then you take a 20% share of the remaining money.
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And that, depending on how each firm is organized, you'll be splitting that amongst your team.
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And so that's the carried interest.
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That's what's often referred to as the carry or the carried interest.
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It looks kind of like if you're working at a tech startup, it works like your options or your option pool is how it's often described, how like this they're similar in a lot of ways.
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That's supposed to align incentives.
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Of course, when you become a really, really big firm, then the management fees become very big, and maybe that's more attractive than the carry, and that's a meme or a common uh complaint amongst investors and GPs alike.
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For smaller funds, the carry is much more interesting and definitely aligned with what we are hoping to drive long-term value for our investors.
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It's very, very common to do two and 20.
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Of course, you can deviate from that, but that's kind of the uh the rule of thumb.
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How do you think through price setting when it's not during around?
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If someone's looking to sell and someone's looking to buy, but it's not an official capital raise, like who sets the valuation there?
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The the easy and complicated answer is no, that it's a market, supply and demand.
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A lot of times people are looking at revenue multiples, and those have, as we all, as we all probably know, those have come down pretty significantly.
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So there was people that at some point for like some of the craziest companies, they were paying 100x or 200x revenue multiples in 2021.
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That's we're far, far from that now.
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Where most, except maybe the most hype AI companies, we're talking about multiples more like in the 10x range, sometimes below, sometimes above, depending on the growth profile and the type of company it is.
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We might look at it ourselves as, hey, where does this stand?
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What is the current revenue multiple?
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Does that seem high?
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Does that seem low?
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But we don't actively change our own valuation positions what we report to our investors, unless there's been a certain time since the last round, or unless we know that there needs to be marked down, depending on a situation, like the company's not doing well.
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Or I mean, sometimes we've looked at it when it's way overvalued.
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There are some other some edge cases here and there too.
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And you've touched on a little bit about providing access to potential portfolio companies as a sourcing strategy and kind of traveling a lot.
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I'm curious to hear now kind of what you feel like the M25 DNA is for sourcing.
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So here's the fun thing is when I first started, you know, we were nobody knew M25.
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We were brand new and we had very little network.
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So we're the most active investor in this 14 state region.
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We've done the most deals.
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We've had 130 something deals in the past eight years.
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And it's not just Chicago.
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Chicago's about a third of them, but it there's 25 cities we've invested in.
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Some of these cities we've invested in five, ten times.
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So at this point, if you go to Columbus, Ohio, or St.
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Louis, Missouri, or Omaha, Nebraska, we've made at least five investments, maybe 10 investments in that city.
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And some of those investments have now raised 10 million or 20 million or 50 million dollars.
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There's not that many companies in those cities that have done that.
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And so the M25 name has gotten out because they'll go to that founder, they'll look at that founder's cap table if they don't know that founder directly, and they'll ask, who did you take your first million from?
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Who's been your most helpful investor?
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Who should we pitch for our pre-seed or our seed round?
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I don't want to speak for every founder of ours, but we have done a lot to help our companies from the get-go try to be outsized value add compared to what people maybe expect from a check size like ours.
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And that has resulted in really, really great referrals, both from the founders we've backed, but also from our co-investors.
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Because I think we've tried to really be working collaboratively with co-investors in the region.
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That's paid off.
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And so we get great deal flow across the region from that.
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Not to say that we're not hungry, that we're not going to the events.
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We still have a very robust travel schedule.
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We have more people now that can go to events too.
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So we're really everywhere.
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It's something that we we're hearing about the deals before they're pitching at competitions.
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As soon as somebody's spinning out of a unicorn in Cincinnati, we're looking at that opportunity to see if we like to invest in it.
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That's taken a lot of groundwork.
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It's taken a lot of investment and time and building relationships.
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That was kind of what I was hoping we would get to when I started, but it's been really exciting to see it pan out more.
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And it seems like that's almost the way to win nowadays at the pre-seed and seed is really be at the inception of these companies as people are spinning off from unicorns or tech companies to start, you know, hopefully the next big thing.
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Additionally, when you're investing early, you're putting a lot of trust in the founder because you're essentially investing in the person and then hopefully the product and market as well.
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But sometimes, well, a lot of times they don't have product market fit and might not have any customers.
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So who knows if anyone will want to buy the product?
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And you've touched on in previous interviews and posts about your scorecard method.
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How do you at these early stages determine if a company will be successful?
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Given I don't even know if there's unit economics involved at this point.
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There's so much nuance and there's so much subjectivity.
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And when I first started, one of the goals was to try to you can't remove that, but you can try to make it more consistent, like trying to make consistent decision making and trying to add objectivity into the decision-making process.
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And so that's why we built the scorecard that we still use and it's like a continually enhanced, like we're always trying to improve our scorecard.
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The way also I think we operate with our deal meetings and stuff really helps to add and focus a more consistent and objective investment process.
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For example, there's a team category in our scorecard.
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And people might, in general, uh, when you're making early stage investment decisions, you might be like, well, that that's a great team.
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Or maybe you go one layer deeper and say, hey, that's a great team because they have experience at this startup or in this industry or whatever.
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We're trying to score what makes a great team across.
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There's probably like 15 different variables within the team category in our scorecard.
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And we're saying, okay, on the industry experience, how does this compare to the average startup we're reviewing?
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Is it plus or minus like a certain point range that we think of that's of how important that category is?
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And then we go to the next thing.
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How about for startup experience and track record?
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What about the variety of skill sets?
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Do they have everything they need or are we going to have to add people?
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And how does that compare?
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So everything's a comparison against like what our typical or average deal that we review is.
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And so that allows us to more consistently discuss this is 50% better on an industry experience than our typical deal.
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And then it ticks up the score.
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We're not going to make a decision entirely because the scorecard is 100% positive or 100% negative, but it definitely guides our decision making and it has helped to create way more consistent approach.
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And also, I would say our team is more aligned.
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We're more aligned during the conversations.
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So, hey, like what is going right with this company?
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What's what are we worried about?
00:18:49.359 --> 00:18:56.640
And then we can pinpoint, like, yeah, well, we saw on the market opportunity side, it's a really big opportunity, but it's not growing very much.
00:18:56.880 --> 00:19:02.400
Or it's a really big opportunity, but hey, there's actually like 15 startup entrants in the past three years in this.
00:19:02.480 --> 00:19:07.200
So it's going to be kind of a crowded space to get attention with lots of venture money that we're fighting against.
00:19:07.359 --> 00:19:14.480
So there's going to be aspects of that that we can be aligned and make a more hopefully a better decision in the long run.
00:19:15.200 --> 00:19:23.920
The next topic I want to talk about, which I think is fairly unique to pre-seed and seed investors, is valuation, something that that you've mentioned on a couple other podcasts.
00:19:24.480 --> 00:19:27.279
Specifically, you've mentioned the importance of entry valuation.
00:19:28.000 --> 00:19:34.000
You mentioned that the M25's biggest return or biggest mark to date isn't necessarily the highest valued company.
00:19:34.400 --> 00:19:40.880
And so I'd love to hear you just speak about your rationale for why entry valuation is important at the pre-seed stage.
00:19:40.960 --> 00:19:53.359
I think it's something that a lot of investors typically take a more binary view on and that entry valuation of the seed might not matter because at the end of the day, it's either going to be 100x or a zero.
00:19:53.440 --> 00:19:58.079
And so I'd love to hear you just kind of speak to your thoughts on entry valuation.
00:19:58.799 --> 00:20:00.640
I have a lot of opinions on this.
00:20:00.960 --> 00:20:13.599
And I also am cognizant that I invest in in a landscape that still has a pretty big arbitrage on valuation compared to like, you know, New York and San Francisco.
00:20:13.680 --> 00:20:16.160
So I it may in for different reasons.
00:20:16.240 --> 00:20:32.240
So I don't want to necessarily uh lead people to the wrong opinions here, but the most important aspect is when most of the people that are saying, hey, if you invest, it doesn't matter what price you invest at, because if it's a billion dollars, you'll it's gonna be a win.
00:20:32.559 --> 00:20:35.279
As long as it's it's a winner, you're gonna make a ton of money.
00:20:35.440 --> 00:20:36.960
It doesn't matter what point you get in at.
00:20:37.279 --> 00:20:43.920
Well, if we draw that to the extreme, if you invest at 1.1 billion and it sells for a billion, then yeah, you didn't really make any money.
00:20:44.240 --> 00:20:45.359
So it does.
00:20:45.440 --> 00:20:56.240
Um, but also if you invest at 10 million post money or five million post money, you've and it sells for a billion, you made half the money if you invested at 10.
00:20:56.400 --> 00:21:00.000
Now, maybe you wouldn't have been able to get it at five, so you have to make those decisions.
00:21:00.079 --> 00:21:11.599
I'm not saying that there aren't reasons to pay more or to increase what you're willing to pay, but you do need to think about it as especially because almost all of our investments we're investing below 10 million post money.
00:21:11.680 --> 00:21:13.519
We're truly a pre-seed investor.
00:21:13.839 --> 00:21:20.559
And to go from 4 million posts to 8 million posts, we know that we're having our potential return.
00:21:20.720 --> 00:21:28.240
And because we that million dollars, that 500k that we're writing now out of this the current fund, that's buying half the equity.
00:21:28.880 --> 00:21:37.039
So that is we negotiate every million dollar movement and valuation pretty strictly.
00:21:37.119 --> 00:21:45.920
Not that not to say that we we don't, well, we won't negotiate, but it's just saying that we factor that in and we look at it compared like to the quality of the other deals that we're looking at, too.
00:21:46.000 --> 00:21:50.640
So we try to like, okay, well, if this one, if we can invest in this one at this price, we'd like to do that.
00:21:50.720 --> 00:21:58.559
Otherwise, we'll do this one uh that's on our that we both think are really high potential companies, but everything's a risk reward for us too.
00:21:58.720 --> 00:22:02.160
So we will often say A meeting, we need to be compensated.
00:22:02.240 --> 00:22:03.839
It's a big opportunity, but it's a lot of risk.
00:22:03.920 --> 00:22:11.440
So we need to be compensated for that risk with a lesser valuation than maybe you might do for something at a similar stage or that looks similar.
00:22:11.599 --> 00:22:21.039
Yeah, I did a whole post on this relatively, I was going to be three or four years ago, but the math is way more important for a small and early stage VC on this.
00:22:21.200 --> 00:22:27.359
The later stage investors or the larger funds, first of all, at seed and pre-seed, they really don't care because they're just trying to get money to work.
00:22:27.440 --> 00:22:31.519
They also have to write a certain size of check to make it worth their time.
00:22:31.599 --> 00:22:34.400
So they can't invest$5 million at a five million post.
00:22:34.880 --> 00:22:36.720
That would be 100% of the company.
00:22:36.880 --> 00:22:43.039
They have to do a 20 million pre-money or maybe a 20 million post money at the lowest end if they're trying to put 5 million to work.
00:22:43.200 --> 00:22:57.680
And they're trying to put more the economics change to deploying raw amounts of capital versus getting the optimal return on the a relatively small amount of capital, which is what me and a lot of my other peer smaller funds are tasked to do.
00:22:57.920 --> 00:23:06.559
So a little bit long-winded there, but that's kind of why we have pretty relatively strict and valuation-sensitive policies.
00:23:07.279 --> 00:23:14.559
I'd love to hear the extrapolation of what the impact of kind of higher multiples today have meant in venture.
00:23:14.640 --> 00:23:24.000
Obviously, there's a ton of supply and some more demand on the West Coast and East Coast, as you mentioned, but there's still rounds happening at 100x multiples.
00:23:24.079 --> 00:23:31.440
I think Hugging Face announced last month that they raised it a 4 billion valuation, which I think was roughly 100 times multiple.
00:23:31.599 --> 00:23:34.559
And so, what are your views on the venture world?
00:23:34.720 --> 00:23:39.839
Will reconcile back to maybe valuations that historically were more prevalent?
00:23:40.079 --> 00:23:50.319
Or if this is something that's going to persist, is it going to require an impact to venture returns before we actually realize and bring down the multiple kind of valuation market?
00:23:50.799 --> 00:23:59.359
Also, I would caveat probably remove AI from your answer because as you saw, like the AI deals are impacting the valuations more than the other ones.
00:23:59.680 --> 00:24:03.279
Well, I mean, you could also just look at AI too, but yeah, just in general.
00:24:03.519 --> 00:24:06.480
But that's the hype right now, whereas it won't be the hype forever.
00:24:06.799 --> 00:24:16.960
I do think the interest rates sometimes it's understated how much of an impact they're going to have on venture capital because if they remain elevated, and we probably they're not necessarily elevated in the long, long run.
00:24:17.039 --> 00:24:18.960
They're maybe more kind of normal.
00:24:19.200 --> 00:24:25.839
We're investing in things that will be profitable and hopefully insanely profitable, but like further than 10 years down the line.
00:24:25.920 --> 00:24:35.759
Like Amazon went public super negative profits, and then it took them years, and now a lot of these big tech companies that are publicly traded are very profitable, but it took them a long time.
00:24:36.000 --> 00:24:42.480
And so everybody that's investing in the companies, it's in the long run, it all goes down to a DCF or a discounted cash flow.
00:24:42.640 --> 00:24:46.240
And the discounted cash flow, the interest rate is one of the major factors.
00:24:46.559 --> 00:25:00.400
When we've more than doubled interest rates, that has an insane effect on like what present value for a company should be and what the present multiples for something that isn't profitable now, but will should be profitable a long time in the future should be.
00:25:00.559 --> 00:25:13.359
We might not, for the majority of companies, might not see multiples consistently be well above, you know, 10x or 15x, even if they have really strong growth.
00:25:13.599 --> 00:25:15.680
There will always be outliers, there will always be extreme.
00:25:15.920 --> 00:25:23.039
So like it's AI this year, and it could be something else next year that will have people justify extreme valuations.
00:25:23.119 --> 00:25:24.160
And some of them will be right.
00:25:24.240 --> 00:25:26.240
Like I don't want to just throw those out.
00:25:26.480 --> 00:25:28.000
Some of those will be right.
00:25:28.240 --> 00:25:30.240
We've we've always been valuation sensitive.
00:25:30.319 --> 00:25:37.440
In 2021, we had to, in order to take the same valuation range, we had to compensate by taking less traction.
00:25:37.680 --> 00:25:40.720
The companies that weren't far there as far along.
00:25:41.119 --> 00:25:50.000
I think we had this insane stat where the two years prior to summer 2020 to summer 2022.
00:25:50.160 --> 00:25:52.319
There was that two-year run that really got heated.
00:25:52.480 --> 00:25:55.920
Before that, probably five percent of our deals had been pre-revenue.
00:25:56.079 --> 00:26:06.880
And then it went to like maybe 40 or 35%, I think, of our deals were pre-revenue in that hot period because we wanted to still maintain our entry point, our really low valuation entry point.
00:26:07.200 --> 00:26:11.119
So we had to give up revenue and other forms of traction.
00:26:11.279 --> 00:26:20.799
And now we're back to the point where there's going to be relatively few companies, at least in for a Midwest pre-seed, that don't have any revenue or any customer traction.
00:26:21.039 --> 00:26:30.960
Whereas our average valuation is basically stayed the same year over year over year, because we but we've just kind of throttled on what we're willing to accept based on what the market's having us.
00:26:31.200 --> 00:26:42.319
So we're probably, I think in the long run, that 2020, 2022 time period is going to be pretty much an outlier, but I don't think we're gonna lose a ton, a ton of momentum.
00:26:42.400 --> 00:26:46.640
And venture capital is still gonna be an exciting asset class and have lots of activity.
00:26:46.799 --> 00:26:53.039
It'll just be more 2017, 2016 type valuations is how I would predict it.
00:26:53.440 --> 00:27:01.839
And you've mentioned earlier that M25 has part of the differentiation allies or lies in the geography and your focus in the Midwest.
00:27:02.319 --> 00:27:10.160
How do you compare that to or how has that been impacted by the exodus of founders and tech firms from San Francisco?
00:27:10.319 --> 00:27:15.920
You're seeing just generally more globalization, but also decentralization across the US, right?
00:27:16.079 --> 00:27:21.759
Austin's becoming a hotspot, Miami's becoming a hotspot, New York, there's a huge fintech community.
00:27:22.079 --> 00:27:31.839
As founders and investors continue to spread, how has that impacted the relative advantage that you've seen in the Midwest and having your presence there?
00:27:32.319 --> 00:27:45.119
COVID was a major contributing factor to this where people on the coast could still invest in the Midwest or other non-regions that weren't like a direct flight or like right down the street from them.
00:27:45.599 --> 00:27:50.799
When I first started, I had countless venture capitalists be like, how can you build a big company out here?
00:27:50.960 --> 00:27:59.119
Or I don't want to sit on a board in Indianapolis or Des Moines because that's four times a year to go out there for a board meeting.
00:27:59.359 --> 00:28:01.039
I don't want to deal with that.
00:28:01.440 --> 00:28:09.440
Now, most board meetings are probably still held over Zoom, and then maybe once or twice a year they're gonna go to that market that they wouldn't have spent time in otherwise.
00:28:09.519 --> 00:28:20.079
But there's also more activity in those markets that they would have otherwise found because we have seen a huge uptick in activity and not just from an absolute basis, but from a relative basis as well.
00:28:20.240 --> 00:28:32.240
All of the like San Francisco has a percentage of US deals, it's still the dominant player, but it's gone down as a percentage of US venture activity, whereas all these other cities have increased as a percentage.
00:28:32.400 --> 00:28:38.640
Um, some of them have become really trendy, like Miami and Austin, but like every city has basically seen growth.
00:28:38.880 --> 00:28:51.279
Now those cities are also seeing flywheel effects where they have had major funding events and major exits that are recycling and starting new companies.
00:28:51.519 --> 00:28:58.720
So, two examples in our market are Ann Arbor has had two major unicorn exits, both in cybersecurity, Lamasoft and Duo Security.
00:28:58.799 --> 00:29:04.400
And we've actually backed two companies that have execs or leaders there that have spun out and started new companies.
00:29:04.480 --> 00:29:10.480
And there's others, there's probably like four or five that I know have gotten significant venture funding in that Michigan community.
00:29:10.640 --> 00:29:18.640
And then the same thing in Columbus, we have seen a lot of companies come from the Cover My Meds exit, which was the first unicorn exit in 2017.
00:29:19.039 --> 00:29:20.640
And that has started a lot.
00:29:20.799 --> 00:29:28.480
That's more in the healthcare, healthcare software space, but that has started a lot, and we've backed two of maybe like four or five that have come out of that ecosystem.
00:29:28.640 --> 00:29:30.960
That's attracting coastal capital.
00:29:31.039 --> 00:29:32.799
Like, oh, big exit's gonna happen here.
00:29:32.880 --> 00:29:37.759
That's attracting capital here, that's exactly uh attracting experienced teams and founders.
00:29:37.920 --> 00:29:39.920
I don't think the Midwest is the only place that that's happening.
00:29:40.000 --> 00:29:44.160
So I know it's happening in Atlanta and Austin and other places, Denver and stuff as well.
00:29:44.319 --> 00:29:55.039
So, but we're definitely seeing it here, and I think that's here to stay, even as we do still most of our companies still have offices and have headquarters where most of their employees are.
00:29:55.359 --> 00:30:06.160
They may not be five days a week, they may still have some remote workers, but in general, like place matters, and we're seeing a lot of exciting activity in the same ecosystems.
00:30:06.559 --> 00:30:10.799
And quickly, what advice would you give to someone looking to raise their own venture fund?
00:30:11.279 --> 00:30:19.279
I was pitching myself, maybe like Vincent Blue Schwein or something instead of Victor Gutwein, the younger version of me.
00:30:19.359 --> 00:30:28.799
Like, if I was pitching the same strategy to me, it would be like that time was eight years ago, nine years ago, ten years ago to pitch a story like M25.
00:30:29.039 --> 00:30:30.160
What's gonna work now?
00:30:30.319 --> 00:30:41.039
Whatever worked for somebody is not gonna work for you, you can learn from that, and you can, okay, so I need to chart this type of a course, and I can learn a few data points.
00:30:41.200 --> 00:30:47.680
I have this like saying that you should gather all the advice, like you should get a lot of advice, but don't take it.
00:30:47.920 --> 00:30:49.680
Don't just take what somebody says to do.
00:30:49.839 --> 00:30:57.039
You have to gather it all, but you have to and understand why they're saying it, but you shouldn't actually like take the advice, like if that makes sense.
00:30:57.440 --> 00:31:00.319
If you were gonna launch a venture fund, like where's the puck going?
00:31:00.480 --> 00:31:02.640
What's going to be interesting?
00:31:02.799 --> 00:31:13.759
And I was in the middle, or maybe even slightly early middle of this rise of from like a couple hundred micro VCs to 3,000 micro VCs in 2021.
00:31:14.000 --> 00:31:22.720
And now there's gonna be many that don't make it with kind of this downturn, but we will still have a lot of micro VCs and lots of strategies.
00:31:22.960 --> 00:31:28.720
And so, what will be something that you can excel at that there's an opportunity that's not super crowded?
00:31:28.799 --> 00:31:32.400
I mean, just like creating a startup in a sense to kind of go after that.
00:31:32.559 --> 00:31:40.319
So that's the advice I would tell Vincent Glushwein, my eight-year younger, 10-year younger aspiring VC.
00:31:40.640 --> 00:31:42.720
To wrap the episode, we have two questions.
00:31:42.799 --> 00:31:45.279
The first one is what motivates you to work hard?
00:31:45.599 --> 00:31:55.680
I do have like a very innate uh hardworking work ethic because I'm from a family of like farmers and small business owners in the Midwest with German roots.
00:31:55.839 --> 00:31:59.200
So like there's probably just some element of that.
00:31:59.599 --> 00:32:00.640
I'm so fortunate.
00:32:00.880 --> 00:32:06.319
I wanted to be a VC and I was able to do that and kind of strike out this path that I can do that.
00:32:06.480 --> 00:32:09.359
I figured out what I wanted to do early and was able to get into that.
00:32:09.440 --> 00:32:14.079
And most people, many people don't even know what they want to do, and then let alone get into that career path.
00:32:14.240 --> 00:32:19.279
And so it's more that it doesn't feel like I'm working hard all the time.
00:32:19.440 --> 00:32:23.200
It feels like I'm just doing what I love and it's sometimes it's hard to turn off.
00:32:23.279 --> 00:32:34.079
I mean, now I have a wife and a family of three children, and so that becomes a problem sometimes because I'm I'm so excited about my work and it can be hard to not work hard.
00:32:34.240 --> 00:32:39.839
If that's not the way it is, as you're looking at venture or like starting venture, it could be that that's not the career for you.
00:32:40.000 --> 00:32:45.920
Maybe there's something else that would give you more energy, or at least some people like me, it can be what makes you tick.
00:32:46.160 --> 00:32:51.119
And then for the second question, you already touched on a piece of advice for emerging managers.
00:32:51.200 --> 00:32:53.920
But what's a piece of advice you would give your younger self?
00:32:54.240 --> 00:32:59.920
Yeah, maybe I'll give something really tactical because I kind of already gave this idea of how to learn from others.
00:33:00.160 --> 00:33:11.839
But from a tactical sense, the value of compounding network, early in your career, you have a lot of time and you don't have a lot of people that actually want to meet with you like as much, you know, because you're less.
00:33:12.160 --> 00:33:21.519
And I think that was one of the most critical things I did early on was just meet a lot of people, establish a lot of relationships, get our story out there, get what I was doing out there.
00:33:21.839 --> 00:33:25.279
Because it's amazing how much that compounds in the future.
00:33:25.359 --> 00:33:29.599
If you can do that early, try to be helpful, but a lot of times you have hardly anything to offer people.
00:33:29.680 --> 00:33:33.039
But like you know, try to be helpful, you try to get that relationship to kick started.
00:33:33.200 --> 00:33:42.960
And then maybe it could be five years down the road or 10 years down the road that you need to call that person up and ask them about something or ask them a reference or get a data point or like ask for an intro.
00:33:43.440 --> 00:33:53.920
Early in your career, that's what you can really do well because you have relative to later, you have a lot of time and try to hustle to get to meetings and add value to people.
00:33:54.160 --> 00:34:00.000
I think that's a great piece of advice, something that all of us could certainly learn from, especially at the younger side of things.
00:34:00.160 --> 00:34:02.400
Victor, thanks so much for coming on the podcast.
00:34:02.480 --> 00:34:06.960
I think Laura and I were really looking forward to this one, and it's certainly been a really fun, interesting conversation.
00:34:07.039 --> 00:34:08.559
So we both appreciate your time.
00:34:08.880 --> 00:34:09.280
Awesome.
00:34:09.440 --> 00:34:10.800
Yeah, it was really fun.
00:34:11.440 --> 00:34:13.840
Great questions, and hope it helps.
00:34:14.000 --> 00:34:15.920
And thanks for having me on.
00:00:00.560 --> 00:00:09.039
So back then, the Midwest only had a handful of firms, and it was a rapidly growing as far as a percentage of the deals in the U.S.
00:00:09.119 --> 00:00:12.720
that were based outside of the Bay, outside of New York, outside of Boston.
00:00:12.960 --> 00:00:18.239
More and more companies were starting here, but they were still finding it really hard to find capital.
00:00:25.280 --> 00:00:32.240
Welcome to Partner Path, a podcast that unpacks the venture capital and growth equity ecosystem from a junior perspective.
00:00:32.399 --> 00:00:38.799
Young entrepreneurs and investors have already had a massive impact on the industry, having started unicorns and launched billion-dollar funds.
00:00:39.119 --> 00:00:45.439
We discuss these success stories and more by sharing perspectives and advice from some of the industry's most prominent role models.
00:00:45.679 --> 00:00:52.000
This podcast expresses our views as of the date published and does not represent the views of and is not endorsed by any company for which we work.
00:01:08.480 --> 00:01:10.239
Hello, hi Laura, hi Will.
00:01:10.319 --> 00:01:11.280
Thanks for having me.
00:01:11.599 --> 00:01:12.560
Thanks for being here.
00:01:12.719 --> 00:01:16.560
And let's dive right in with your first company, Scooter Versity.
00:01:16.719 --> 00:01:19.200
What was the impetus for starting a scooter company?
00:01:19.519 --> 00:01:20.480
It's kind of silly.
00:01:20.719 --> 00:01:26.319
I have always been all about efficiency and moving faster, getting things done faster.
00:01:26.480 --> 00:01:37.359
So when I went to uh college, I actually brought my like old Razor scooter with me because I wanted to get around campus faster and do more activities, be at more parties, whatever.
00:01:37.599 --> 00:01:42.319
I uh I quickly broke it because those things are not designed for you know grown adults.
00:01:42.480 --> 00:01:52.879
Um but then I I I you know I looked into what other options were there and I saw that there was more adult-sized scooters and thought this is maybe maybe I'm onto something.
00:01:52.959 --> 00:01:55.040
This was before bird in Lyme.
00:01:55.120 --> 00:01:59.280
This was before last mile mobility was really a thing.
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And I was, I kind of was convinced that this could be a category and this could be something that especially we might have an early uptick on college campuses.
00:02:07.519 --> 00:02:14.479
So I started to get a wholesale relationship and a brand around it, distributing, but I had a rental model, an ownership model.
00:02:14.719 --> 00:02:16.479
We didn't get it very far.
00:02:16.639 --> 00:02:22.800
I don't want to like overstate how naive we were and how early to this we that we were.
00:02:22.960 --> 00:02:28.080
We looked at like electrifying them, but we didn't have the the engineer on our team.
00:02:28.319 --> 00:02:44.960
It was kind of encouraging to see then that this category as a whole, like we were early to in some way, but as a whole, it really was just kind of a more of a formational experience and got me involved also with other entrepreneurs on campus, what I took away from it, except I still do use my scooter a lot.
00:02:45.120 --> 00:02:45.919
So I will say that.
00:02:46.080 --> 00:02:47.360
I'm a big fan still.
00:02:47.680 --> 00:02:54.000
And then fast forward, you were 23 years old when you started M25, which is younger than I am now.
00:02:54.159 --> 00:02:58.960
I think it would be hard for me to start a fund at 25, much less 23.
00:02:59.120 --> 00:03:02.800
So it'd be great to touch on how you started M25.
00:03:03.039 --> 00:03:05.360
What made you think of the idea to start a venture fund?
00:03:05.759 --> 00:03:10.080
I had been spending time with students on campus that had other businesses.
00:03:10.240 --> 00:03:14.879
Maybe somebody was launching a mobile app, somebody was launching a 3D printing company.
00:03:15.120 --> 00:03:27.199
So I had been spending time with those founders, and ultimately the university decided to encourage us and plant a seed of hey, do you guys want to start a venture fund, a student-run venture fund?
00:03:27.360 --> 00:03:35.120
And so they gave us an initial relatively small amount to start investing in other campus founders.
00:03:35.280 --> 00:03:41.599
So these were other students that also had ideas, maybe like me, and we would do run it like a venture firm.
00:03:41.759 --> 00:03:45.840
We had a due diligence process, we had a pitch process, kind of partner meetings.
00:03:46.080 --> 00:03:49.680
That was the first time I had really dove into what venture capital was.
00:03:49.759 --> 00:03:58.319
And it opened my eyes into this being a different path for your typical U Chicago econ major to take.
00:03:58.479 --> 00:04:02.080
There's investment banking and consulting were kind of the two default paths.
00:04:02.240 --> 00:04:04.800
And I wasn't necessarily passionate about either one.
00:04:04.960 --> 00:04:10.000
And so I started looking deeply into is venture capital a career path for me?
00:04:10.240 --> 00:04:13.680
And the short answer for most people coming out of undergrad is that it definitely isn't.
00:04:13.840 --> 00:04:19.120
Like there's not enough roles, there's not enough, like you need more experience to get into venture capital for most firms.
00:04:19.439 --> 00:04:21.839
It's a very small industry in the scheme of things.
00:04:22.000 --> 00:04:26.079
So I didn't have immediate access to go into venture capital.
00:04:26.160 --> 00:04:37.279
I did a couple years in corporate strategy as I was networking and talking to people and trying to discover what the opportunity for me in venture capital would be.
00:04:37.519 --> 00:04:51.839
And it wasn't entirely obvious how to get a job, but then I kept coming back to that there was this maybe more overlooked area of the market, the Midwest, which is where, as many people will know M25 now, that's where we invest.
00:04:51.920 --> 00:04:53.040
That's where we spend all of our time.
00:04:53.120 --> 00:04:55.839
We're based in Chicago and we focus on the broader Midwest.
00:04:56.079 --> 00:05:08.240
So back then, the Midwest only had a handful of firms, and it was a rapidly growing as far as a percentage of the deals in the US that were based outside of the Bay, outside of New York, outside of Boston.
00:05:08.560 --> 00:05:13.519
More and more companies were starting here, but they were still finding it really hard to find capital.
00:05:13.680 --> 00:05:21.920
I mean, yes, that's a market inefficiency or an arbitrage opportunity that, you know, I was clued into with my Chicago econ background.
00:05:22.160 --> 00:05:32.560
But more thought, it's also a place for somebody that lacks experience, lacks the pedigree of working at other venture funds to maybe get their start in venture capital.
00:05:33.040 --> 00:05:46.800
Because people knew that I had been digging in and had this entrepreneurial background and passion and done some stuff in venture capital, I was able to convince a handful of friends and family to back me on fund one.
00:05:47.040 --> 00:05:48.399
And that was in 2015.
00:05:48.639 --> 00:05:54.720
I was 23 years old, so I quit my corporate job and went full-time operating our huge fund one.
00:05:55.040 --> 00:05:56.639
It was$1 million.
00:05:57.600 --> 00:05:59.920
Okay, so not to overstate fund one.
00:06:00.480 --> 00:06:02.639
That's a half of a check for most funds.
00:06:02.800 --> 00:06:18.639
That's where we got our start, and then quickly leveraged that like initial angel type fund, size of fund, to start to raise our next fund, which in 2016 we raised$11 million, which a lot of people would call that like our first like real fund or our fund one.
00:06:19.040 --> 00:06:20.639
And where did the name come from?
00:06:21.040 --> 00:06:23.839
Myself and then who became my partner, Mike Assembl.
00:06:23.920 --> 00:06:24.959
We're both Christians.
00:06:25.120 --> 00:06:43.199
And so M25 is a biblical reference to a passage in Matthew 25, which just the quick Spark Notes version is that it's about a master giving his capital to a steward to his servants and to take care of while he's gone or traveling.
00:06:43.360 --> 00:06:54.079
And he comes back a year later, and two of those servants have taken the money and built like a small business and doubled their money by creating a business in the marketplace.
00:06:54.319 --> 00:06:57.199
Whereas one of them just buried it in the ground to keep it safe.
00:06:57.439 --> 00:07:10.800
And so the master blesses the servants that that use the money, took some risk, but also worked hard, used the talents that they were given and the skills, and created something, and ultimately made more with it.
00:07:10.959 --> 00:07:13.680
And he cursed the one that just kept it safe.
00:07:14.079 --> 00:07:20.639
Because myself and my partner are Christians, we could have viewed that as like a biblical example of adventure capital and doing what we're doing.
00:07:20.800 --> 00:07:27.120
So I thought that was a very inspirational name, kind of had our values up front when as we started this venture.
00:07:27.360 --> 00:07:29.439
And ultimately, I mean you raised a fund too.
00:07:29.600 --> 00:07:40.720
However, you know, going back to fund one, you still have to have a strategy in place and find the best deals to ultimately drive returns for your LPs to be able to raise hopefully a bigger fund too.
00:07:40.879 --> 00:07:43.279
So, I mean, what was your strategy going into fund one?
00:07:43.360 --> 00:07:47.519
And like, how did you start to build that track record with such a small amount of capital?
00:07:47.920 --> 00:07:49.920
It wasn't like it took off overnight.
00:07:50.079 --> 00:07:56.079
What happened was we had this million dollar fund one, and I was, we're we're nobody, nobody knows of us.
00:07:56.240 --> 00:08:00.000
There's no brand, there's no deal flow naturally flowing our way.
00:08:00.160 --> 00:08:05.680
I wasn't spinning out of like an early Google employee that had all this deal flow coming their way.
00:08:05.839 --> 00:08:08.639
I did a couple of things to like really accelerate.
00:08:08.800 --> 00:08:15.120
I joined a couple of angel groups early on, including Hyde Park Angels here in Chicago, which is like kind of a more larger and well-known one.
00:08:15.279 --> 00:08:16.720
And I led their consumer team.
00:08:16.800 --> 00:08:22.639
So I was became more of an expert because I had a little bit of a consumer background with also my corporate career too.
00:08:22.879 --> 00:08:28.160
I, the person that would go to every startup event across the whole Midwest.
00:08:28.240 --> 00:08:48.240
And I'd drive to from one night I'd be in Cincinnati, then I go to Columbus, then I go to Indianapolis, and I'd be at everything and be very accessible, which it was, I mean, it's hard to find, even though we were writing 25, 50k checks, it's hard to find that, uh, especially 2015 in the Midwest, to find somebody that would be willing to invest in a risky asset class like venture capital.
00:08:48.480 --> 00:09:02.559
I mean, this is where people in the Midwest have made their money on farmland or real estate or agriculture or manufacturing businesses, and they haven't, nobody's at cocktail parties with the golf, you know, the golf course talking about, oh, did you invest in that startup?
00:09:02.639 --> 00:09:05.759
I made a bunch of money on that exit and that sale to you know IBM.
00:09:06.159 --> 00:09:06.960
Nobody's saying that.
00:09:07.200 --> 00:09:09.440
Now they are, but but back then they weren't.
00:09:09.519 --> 00:09:11.120
And you know, so I was accessible.
00:09:11.279 --> 00:09:17.600
We had a brand and a website that was like very crisp and clear like here's what we do, here's the stage we invest, here's how to reach us.
00:09:17.759 --> 00:09:25.279
It was like this scrappy, but just also doing something that really hasn't hadn't been done a lot in that in our market.
00:09:25.440 --> 00:09:28.960
If you're in Silicon Valley, it's like, well, duh, that's what you do to source deals.
00:09:29.120 --> 00:09:30.879
Like that's because it's a lot more competitive an environment.
00:09:31.039 --> 00:09:31.679
Everybody's doing that.
00:09:31.759 --> 00:09:34.879
But I think in the Midwest, it hadn't really been done.
00:09:35.039 --> 00:09:42.399
Some people had even said, hey, you're bringing some of this coastal style to the Midwest, which I think had a lot of opportunity.
00:09:42.639 --> 00:10:09.120
We weren't leading rounds, we were trying to participate and get into high-quality rounds, which because we were so relatively aggressive compared to our peers on the coast, we weren't necessarily aggressive, but because we were so aggressive, we were thoughtful, transparent, we were able to get into these rounds that were raising a million, two million dollars because frankly, there wasn't a lot of that follow-on, or like it was hard to build a syndicate back then.
00:10:09.360 --> 00:10:12.879
It was hard to get the capital into these companies in the Midwest.
00:10:13.279 --> 00:10:14.399
Very, very helpful.
00:10:14.559 --> 00:10:17.519
And I want to move into how things have gone.
00:10:17.679 --> 00:10:30.720
But maybe before we touch on actual performance at a high level, could you maybe just explain for the audience how venture capital firms actually generate revenue, the concept of a management fee and carry and what that means?
00:10:31.519 --> 00:10:37.279
Of course, because I did hint we were a relatively small fund, which means that we also had relatively few management fees.
00:10:37.600 --> 00:10:49.360
Because so a management fee is you generally are taking 2% of your committed capital every year that you're during your active uh fund period.
00:10:49.600 --> 00:10:54.000
And that is going to pay for salaries and other expenses.
00:10:54.080 --> 00:11:03.120
Like salaries are usually the bigger one, but also it could be office, travel, you know, food, whatever to run a business, to run a company, the software we spend, you know, that type of stuff.
00:11:03.519 --> 00:11:13.600
You can imagine we might have had four people towards the end of fund two, all full-time, that were making two percent on$11 million.
00:11:14.080 --> 00:11:20.240
Actually, a lot of a lot of emerging managers, you'll front load, you'll do two and a half percent and then wind it down so it averages to 2%.
00:11:20.720 --> 00:11:24.559
So we did two and a half percent, but still, like it's not it's not that much money.
00:11:24.720 --> 00:11:32.080
I think that showed dedication from our to our LPs, you know, that we were like in it for the incentive of the long-term return, which is the other piece of it.
00:11:32.159 --> 00:11:33.519
So that's the 20%, you know.
00:11:33.600 --> 00:11:35.039
Usually people say two and 20.
00:11:35.120 --> 00:11:38.720
The 2% is the management fee, the 20 is the carried interest.
00:11:38.879 --> 00:11:50.799
And so we were heavily incentivized to draw significant returns for our investors by getting a 20% share of the profits, not of the all of the returns.
00:11:50.960 --> 00:11:57.440
First, you return all the capital to your investors, then you take a 20% share of the remaining money.
00:11:57.679 --> 00:12:02.320
And that, depending on how each firm is organized, you'll be splitting that amongst your team.
00:12:02.480 --> 00:12:04.399
And so that's the carried interest.
00:12:04.480 --> 00:12:07.279
That's what's often referred to as the carry or the carried interest.
00:12:07.360 --> 00:12:16.159
It looks kind of like if you're working at a tech startup, it works like your options or your option pool is how it's often described, how like this they're similar in a lot of ways.
00:12:16.320 --> 00:12:17.919
That's supposed to align incentives.
00:12:18.000 --> 00:12:29.840
Of course, when you become a really, really big firm, then the management fees become very big, and maybe that's more attractive than the carry, and that's a meme or a common uh complaint amongst investors and GPs alike.
00:12:30.000 --> 00:12:38.480
For smaller funds, the carry is much more interesting and definitely aligned with what we are hoping to drive long-term value for our investors.
00:12:38.799 --> 00:12:40.480
It's very, very common to do two and 20.
00:12:40.559 --> 00:12:44.000
Of course, you can deviate from that, but that's kind of the uh the rule of thumb.
00:12:44.320 --> 00:12:47.919
How do you think through price setting when it's not during around?
00:12:48.159 --> 00:12:53.679
If someone's looking to sell and someone's looking to buy, but it's not an official capital raise, like who sets the valuation there?
00:12:54.000 --> 00:12:58.000
The the easy and complicated answer is no, that it's a market, supply and demand.
00:12:58.159 --> 00:13:05.279
A lot of times people are looking at revenue multiples, and those have, as we all, as we all probably know, those have come down pretty significantly.
00:13:05.440 --> 00:13:13.120
So there was people that at some point for like some of the craziest companies, they were paying 100x or 200x revenue multiples in 2021.
00:13:13.360 --> 00:13:15.279
That's we're far, far from that now.
00:13:15.440 --> 00:13:26.960
Where most, except maybe the most hype AI companies, we're talking about multiples more like in the 10x range, sometimes below, sometimes above, depending on the growth profile and the type of company it is.
00:13:27.200 --> 00:13:30.320
We might look at it ourselves as, hey, where does this stand?
00:13:30.480 --> 00:13:31.679
What is the current revenue multiple?
00:13:31.840 --> 00:13:32.480
Does that seem high?
00:13:32.559 --> 00:13:33.600
Does that seem low?
00:13:33.840 --> 00:13:48.080
But we don't actively change our own valuation positions what we report to our investors, unless there's been a certain time since the last round, or unless we know that there needs to be marked down, depending on a situation, like the company's not doing well.
00:13:48.159 --> 00:13:50.879
Or I mean, sometimes we've looked at it when it's way overvalued.
00:13:51.120 --> 00:13:53.440
There are some other some edge cases here and there too.
00:13:54.000 --> 00:14:01.200
And you've touched on a little bit about providing access to potential portfolio companies as a sourcing strategy and kind of traveling a lot.
00:14:01.519 --> 00:14:07.200
I'm curious to hear now kind of what you feel like the M25 DNA is for sourcing.
00:14:07.679 --> 00:14:12.399
So here's the fun thing is when I first started, you know, we were nobody knew M25.
00:14:12.480 --> 00:14:15.360
We were brand new and we had very little network.
00:14:15.759 --> 00:14:19.039
So we're the most active investor in this 14 state region.
00:14:19.519 --> 00:14:20.639
We've done the most deals.
00:14:20.720 --> 00:14:24.559
We've had 130 something deals in the past eight years.
00:14:25.120 --> 00:14:26.159
And it's not just Chicago.
00:14:26.320 --> 00:14:30.720
Chicago's about a third of them, but it there's 25 cities we've invested in.
00:14:30.960 --> 00:14:35.919
Some of these cities we've invested in five, ten times.
00:14:36.320 --> 00:14:39.519
So at this point, if you go to Columbus, Ohio, or St.
00:14:39.600 --> 00:14:46.240
Louis, Missouri, or Omaha, Nebraska, we've made at least five investments, maybe 10 investments in that city.
00:14:46.480 --> 00:14:51.600
And some of those investments have now raised 10 million or 20 million or 50 million dollars.
00:14:51.679 --> 00:14:54.159
There's not that many companies in those cities that have done that.
00:14:54.399 --> 00:15:06.399
And so the M25 name has gotten out because they'll go to that founder, they'll look at that founder's cap table if they don't know that founder directly, and they'll ask, who did you take your first million from?
00:15:06.559 --> 00:15:07.919
Who's been your most helpful investor?
00:15:08.080 --> 00:15:10.799
Who should we pitch for our pre-seed or our seed round?
00:15:10.960 --> 00:15:21.039
I don't want to speak for every founder of ours, but we have done a lot to help our companies from the get-go try to be outsized value add compared to what people maybe expect from a check size like ours.
00:15:21.360 --> 00:15:28.080
And that has resulted in really, really great referrals, both from the founders we've backed, but also from our co-investors.
00:15:28.159 --> 00:15:32.320
Because I think we've tried to really be working collaboratively with co-investors in the region.
00:15:32.639 --> 00:15:33.519
That's paid off.
00:15:33.679 --> 00:15:37.360
And so we get great deal flow across the region from that.
00:15:37.519 --> 00:15:40.000
Not to say that we're not hungry, that we're not going to the events.
00:15:40.240 --> 00:15:42.320
We still have a very robust travel schedule.
00:15:42.559 --> 00:15:44.960
We have more people now that can go to events too.
00:15:45.039 --> 00:15:46.480
So we're really everywhere.
00:15:46.720 --> 00:15:51.440
It's something that we we're hearing about the deals before they're pitching at competitions.
00:15:51.600 --> 00:15:58.399
As soon as somebody's spinning out of a unicorn in Cincinnati, we're looking at that opportunity to see if we like to invest in it.
00:15:58.559 --> 00:15:59.679
That's taken a lot of groundwork.
00:15:59.759 --> 00:16:02.879
It's taken a lot of investment and time and building relationships.
00:16:03.120 --> 00:16:08.320
That was kind of what I was hoping we would get to when I started, but it's been really exciting to see it pan out more.
00:16:08.720 --> 00:16:20.000
And it seems like that's almost the way to win nowadays at the pre-seed and seed is really be at the inception of these companies as people are spinning off from unicorns or tech companies to start, you know, hopefully the next big thing.
00:16:20.399 --> 00:16:28.320
Additionally, when you're investing early, you're putting a lot of trust in the founder because you're essentially investing in the person and then hopefully the product and market as well.
00:16:28.399 --> 00:16:33.120
But sometimes, well, a lot of times they don't have product market fit and might not have any customers.
00:16:33.279 --> 00:16:36.000
So who knows if anyone will want to buy the product?
00:16:36.159 --> 00:16:40.960
And you've touched on in previous interviews and posts about your scorecard method.
00:16:41.200 --> 00:16:45.120
How do you at these early stages determine if a company will be successful?
00:16:45.279 --> 00:16:48.720
Given I don't even know if there's unit economics involved at this point.
00:16:49.279 --> 00:16:51.919
There's so much nuance and there's so much subjectivity.
00:16:52.159 --> 00:17:05.920
And when I first started, one of the goals was to try to you can't remove that, but you can try to make it more consistent, like trying to make consistent decision making and trying to add objectivity into the decision-making process.
00:17:06.400 --> 00:17:12.960
And so that's why we built the scorecard that we still use and it's like a continually enhanced, like we're always trying to improve our scorecard.
00:17:13.279 --> 00:17:20.960
The way also I think we operate with our deal meetings and stuff really helps to add and focus a more consistent and objective investment process.
00:17:21.359 --> 00:17:24.960
For example, there's a team category in our scorecard.
00:17:25.200 --> 00:17:32.000
And people might, in general, uh, when you're making early stage investment decisions, you might be like, well, that that's a great team.
00:17:32.079 --> 00:17:40.079
Or maybe you go one layer deeper and say, hey, that's a great team because they have experience at this startup or in this industry or whatever.
00:17:40.480 --> 00:17:44.319
We're trying to score what makes a great team across.
00:17:44.400 --> 00:17:48.799
There's probably like 15 different variables within the team category in our scorecard.
00:17:49.359 --> 00:17:57.839
And we're saying, okay, on the industry experience, how does this compare to the average startup we're reviewing?
00:17:57.920 --> 00:18:02.640
Is it plus or minus like a certain point range that we think of that's of how important that category is?
00:18:03.039 --> 00:18:04.559
And then we go to the next thing.
00:18:04.640 --> 00:18:07.039
How about for startup experience and track record?
00:18:07.279 --> 00:18:09.519
What about the variety of skill sets?
00:18:09.680 --> 00:18:12.160
Do they have everything they need or are we going to have to add people?
00:18:12.319 --> 00:18:13.279
And how does that compare?
00:18:13.519 --> 00:18:18.160
So everything's a comparison against like what our typical or average deal that we review is.
00:18:18.319 --> 00:18:25.839
And so that allows us to more consistently discuss this is 50% better on an industry experience than our typical deal.
00:18:25.920 --> 00:18:27.279
And then it ticks up the score.
00:18:27.440 --> 00:18:37.359
We're not going to make a decision entirely because the scorecard is 100% positive or 100% negative, but it definitely guides our decision making and it has helped to create way more consistent approach.
00:18:37.519 --> 00:18:41.039
And also, I would say our team is more aligned.
00:18:43.759 --> 00:18:45.680
We're more aligned during the conversations.
00:18:45.839 --> 00:18:47.759
So, hey, like what is going right with this company?
00:18:47.839 --> 00:18:49.200
What's what are we worried about?
00:18:49.359 --> 00:18:56.640
And then we can pinpoint, like, yeah, well, we saw on the market opportunity side, it's a really big opportunity, but it's not growing very much.
00:18:56.880 --> 00:19:02.400
Or it's a really big opportunity, but hey, there's actually like 15 startup entrants in the past three years in this.
00:19:02.480 --> 00:19:07.200
So it's going to be kind of a crowded space to get attention with lots of venture money that we're fighting against.
00:19:07.359 --> 00:19:14.480
So there's going to be aspects of that that we can be aligned and make a more hopefully a better decision in the long run.
00:19:15.200 --> 00:19:23.920
The next topic I want to talk about, which I think is fairly unique to pre-seed and seed investors, is valuation, something that that you've mentioned on a couple other podcasts.
00:19:24.480 --> 00:19:27.279
Specifically, you've mentioned the importance of entry valuation.
00:19:28.000 --> 00:19:34.000
You mentioned that the M25's biggest return or biggest mark to date isn't necessarily the highest valued company.
00:19:34.400 --> 00:19:40.880
And so I'd love to hear you just speak about your rationale for why entry valuation is important at the pre-seed stage.
00:19:40.960 --> 00:19:53.359
I think it's something that a lot of investors typically take a more binary view on and that entry valuation of the seed might not matter because at the end of the day, it's either going to be 100x or a zero.
00:19:53.440 --> 00:19:58.079
And so I'd love to hear you just kind of speak to your thoughts on entry valuation.
00:19:58.799 --> 00:20:00.640
I have a lot of opinions on this.
00:20:00.960 --> 00:20:13.599
And I also am cognizant that I invest in in a landscape that still has a pretty big arbitrage on valuation compared to like, you know, New York and San Francisco.
00:20:13.680 --> 00:20:16.160
So I it may in for different reasons.
00:20:16.240 --> 00:20:32.240
So I don't want to necessarily uh lead people to the wrong opinions here, but the most important aspect is when most of the people that are saying, hey, if you invest, it doesn't matter what price you invest at, because if it's a billion dollars, you'll it's gonna be a win.
00:20:32.559 --> 00:20:35.279
As long as it's it's a winner, you're gonna make a ton of money.
00:20:35.440 --> 00:20:36.960
It doesn't matter what point you get in at.
00:20:37.279 --> 00:20:43.920
Well, if we draw that to the extreme, if you invest at 1.1 billion and it sells for a billion, then yeah, you didn't really make any money.
00:20:44.240 --> 00:20:45.359
So it does.
00:20:45.440 --> 00:20:56.240
Um, but also if you invest at 10 million post money or five million post money, you've and it sells for a billion, you made half the money if you invested at 10.
00:20:56.400 --> 00:21:00.000
Now, maybe you wouldn't have been able to get it at five, so you have to make those decisions.
00:21:00.079 --> 00:21:11.599
I'm not saying that there aren't reasons to pay more or to increase what you're willing to pay, but you do need to think about it as especially because almost all of our investments we're investing below 10 million post money.
00:21:11.680 --> 00:21:13.519
We're truly a pre-seed investor.
00:21:13.839 --> 00:21:20.559
And to go from 4 million posts to 8 million posts, we know that we're having our potential return.
00:21:20.720 --> 00:21:28.240
And because we that million dollars, that 500k that we're writing now out of this the current fund, that's buying half the equity.
00:21:28.880 --> 00:21:37.039
So that is we negotiate every million dollar movement and valuation pretty strictly.
00:21:37.119 --> 00:21:45.920
Not that not to say that we we don't, well, we won't negotiate, but it's just saying that we factor that in and we look at it compared like to the quality of the other deals that we're looking at, too.
00:21:46.000 --> 00:21:50.640
So we try to like, okay, well, if this one, if we can invest in this one at this price, we'd like to do that.
00:21:50.720 --> 00:21:58.559
Otherwise, we'll do this one uh that's on our that we both think are really high potential companies, but everything's a risk reward for us too.
00:21:58.720 --> 00:22:02.160
So we will often say A meeting, we need to be compensated.
00:22:02.240 --> 00:22:03.839
It's a big opportunity, but it's a lot of risk.
00:22:03.920 --> 00:22:11.440
So we need to be compensated for that risk with a lesser valuation than maybe you might do for something at a similar stage or that looks similar.
00:22:11.599 --> 00:22:21.039
Yeah, I did a whole post on this relatively, I was going to be three or four years ago, but the math is way more important for a small and early stage VC on this.
00:22:21.200 --> 00:22:27.359
The later stage investors or the larger funds, first of all, at seed and pre-seed, they really don't care because they're just trying to get money to work.
00:22:27.440 --> 00:22:31.519
They also have to write a certain size of check to make it worth their time.
00:22:31.599 --> 00:22:34.400
So they can't invest$5 million at a five million post.
00:22:34.880 --> 00:22:36.720
That would be 100% of the company.
00:22:36.880 --> 00:22:43.039
They have to do a 20 million pre-money or maybe a 20 million post money at the lowest end if they're trying to put 5 million to work.
00:22:43.200 --> 00:22:57.680
And they're trying to put more the economics change to deploying raw amounts of capital versus getting the optimal return on the a relatively small amount of capital, which is what me and a lot of my other peer smaller funds are tasked to do.
00:22:57.920 --> 00:23:06.559
So a little bit long-winded there, but that's kind of why we have pretty relatively strict and valuation-sensitive policies.
00:23:07.279 --> 00:23:14.559
I'd love to hear the extrapolation of what the impact of kind of higher multiples today have meant in venture.
00:23:14.640 --> 00:23:24.000
Obviously, there's a ton of supply and some more demand on the West Coast and East Coast, as you mentioned, but there's still rounds happening at 100x multiples.
00:23:24.079 --> 00:23:31.440
I think Hugging Face announced last month that they raised it a 4 billion valuation, which I think was roughly 100 times multiple.
00:23:31.599 --> 00:23:34.559
And so, what are your views on the venture world?
00:23:34.720 --> 00:23:39.839
Will reconcile back to maybe valuations that historically were more prevalent?
00:23:40.079 --> 00:23:50.319
Or if this is something that's going to persist, is it going to require an impact to venture returns before we actually realize and bring down the multiple kind of valuation market?
00:23:50.799 --> 00:23:59.359
Also, I would caveat probably remove AI from your answer because as you saw, like the AI deals are impacting the valuations more than the other ones.
00:23:59.680 --> 00:24:03.279
Well, I mean, you could also just look at AI too, but yeah, just in general.
00:24:03.519 --> 00:24:06.480
But that's the hype right now, whereas it won't be the hype forever.
00:24:06.799 --> 00:24:16.960
I do think the interest rates sometimes it's understated how much of an impact they're going to have on venture capital because if they remain elevated, and we probably they're not necessarily elevated in the long, long run.
00:24:17.039 --> 00:24:18.960
They're maybe more kind of normal.
00:24:19.200 --> 00:24:25.839
We're investing in things that will be profitable and hopefully insanely profitable, but like further than 10 years down the line.
00:24:25.920 --> 00:24:35.759
Like Amazon went public super negative profits, and then it took them years, and now a lot of these big tech companies that are publicly traded are very profitable, but it took them a long time.
00:24:36.000 --> 00:24:42.480
And so everybody that's investing in the companies, it's in the long run, it all goes down to a DCF or a discounted cash flow.
00:24:42.640 --> 00:24:46.240
And the discounted cash flow, the interest rate is one of the major factors.
00:24:46.559 --> 00:25:00.400
When we've more than doubled interest rates, that has an insane effect on like what present value for a company should be and what the present multiples for something that isn't profitable now, but will should be profitable a long time in the future should be.
00:25:00.559 --> 00:25:13.359
We might not, for the majority of companies, might not see multiples consistently be well above, you know, 10x or 15x, even if they have really strong growth.
00:25:13.599 --> 00:25:15.680
There will always be outliers, there will always be extreme.
00:25:15.920 --> 00:25:23.039
So like it's AI this year, and it could be something else next year that will have people justify extreme valuations.
00:25:23.119 --> 00:25:24.160
And some of them will be right.
00:25:24.240 --> 00:25:26.240
Like I don't want to just throw those out.
00:25:26.480 --> 00:25:28.000
Some of those will be right.
00:25:28.240 --> 00:25:30.240
We've we've always been valuation sensitive.
00:25:30.319 --> 00:25:37.440
In 2021, we had to, in order to take the same valuation range, we had to compensate by taking less traction.
00:25:37.680 --> 00:25:40.720
The companies that weren't far there as far along.
00:25:41.119 --> 00:25:50.000
I think we had this insane stat where the two years prior to summer 2020 to summer 2022.
00:25:50.160 --> 00:25:52.319
There was that two-year run that really got heated.
00:25:52.480 --> 00:25:55.920
Before that, probably five percent of our deals had been pre-revenue.
00:25:56.079 --> 00:26:06.880
And then it went to like maybe 40 or 35%, I think, of our deals were pre-revenue in that hot period because we wanted to still maintain our entry point, our really low valuation entry point.
00:26:07.200 --> 00:26:11.119
So we had to give up revenue and other forms of traction.
00:26:11.279 --> 00:26:20.799
And now we're back to the point where there's going to be relatively few companies, at least in for a Midwest pre-seed, that don't have any revenue or any customer traction.
00:26:21.039 --> 00:26:30.960
Whereas our average valuation is basically stayed the same year over year over year, because we but we've just kind of throttled on what we're willing to accept based on what the market's having us.
00:26:31.200 --> 00:26:42.319
So we're probably, I think in the long run, that 2020, 2022 time period is going to be pretty much an outlier, but I don't think we're gonna lose a ton, a ton of momentum.
00:26:42.400 --> 00:26:46.640
And venture capital is still gonna be an exciting asset class and have lots of activity.
00:26:46.799 --> 00:26:53.039
It'll just be more 2017, 2016 type valuations is how I would predict it.
00:26:53.440 --> 00:27:01.839
And you've mentioned earlier that M25 has part of the differentiation allies or lies in the geography and your focus in the Midwest.
00:27:02.319 --> 00:27:10.160
How do you compare that to or how has that been impacted by the exodus of founders and tech firms from San Francisco?
00:27:10.319 --> 00:27:15.920
You're seeing just generally more globalization, but also decentralization across the US, right?
00:27:16.079 --> 00:27:21.759
Austin's becoming a hotspot, Miami's becoming a hotspot, New York, there's a huge fintech community.
00:27:22.079 --> 00:27:31.839
As founders and investors continue to spread, how has that impacted the relative advantage that you've seen in the Midwest and having your presence there?
00:27:32.319 --> 00:27:45.119
COVID was a major contributing factor to this where people on the coast could still invest in the Midwest or other non-regions that weren't like a direct flight or like right down the street from them.
00:27:45.599 --> 00:27:50.799
When I first started, I had countless venture capitalists be like, how can you build a big company out here?
00:27:50.960 --> 00:27:59.119
Or I don't want to sit on a board in Indianapolis or Des Moines because that's four times a year to go out there for a board meeting.
00:27:59.359 --> 00:28:01.039
I don't want to deal with that.
00:28:01.440 --> 00:28:09.440
Now, most board meetings are probably still held over Zoom, and then maybe once or twice a year they're gonna go to that market that they wouldn't have spent time in otherwise.
00:28:09.519 --> 00:28:20.079
But there's also more activity in those markets that they would have otherwise found because we have seen a huge uptick in activity and not just from an absolute basis, but from a relative basis as well.
00:28:20.240 --> 00:28:32.240
All of the like San Francisco has a percentage of US deals, it's still the dominant player, but it's gone down as a percentage of US venture activity, whereas all these other cities have increased as a percentage.
00:28:32.400 --> 00:28:38.640
Um, some of them have become really trendy, like Miami and Austin, but like every city has basically seen growth.
00:28:38.880 --> 00:28:51.279
Now those cities are also seeing flywheel effects where they have had major funding events and major exits that are recycling and starting new companies.
00:28:51.519 --> 00:28:58.720
So, two examples in our market are Ann Arbor has had two major unicorn exits, both in cybersecurity, Lamasoft and Duo Security.
00:28:58.799 --> 00:29:04.400
And we've actually backed two companies that have execs or leaders there that have spun out and started new companies.
00:29:04.480 --> 00:29:10.480
And there's others, there's probably like four or five that I know have gotten significant venture funding in that Michigan community.
00:29:10.640 --> 00:29:18.640
And then the same thing in Columbus, we have seen a lot of companies come from the Cover My Meds exit, which was the first unicorn exit in 2017.
00:29:19.039 --> 00:29:20.640
And that has started a lot.
00:29:20.799 --> 00:29:28.480
That's more in the healthcare, healthcare software space, but that has started a lot, and we've backed two of maybe like four or five that have come out of that ecosystem.
00:29:28.640 --> 00:29:30.960
That's attracting coastal capital.
00:29:31.039 --> 00:29:32.799
Like, oh, big exit's gonna happen here.
00:29:32.880 --> 00:29:37.759
That's attracting capital here, that's exactly uh attracting experienced teams and founders.
00:29:37.920 --> 00:29:39.920
I don't think the Midwest is the only place that that's happening.
00:29:40.000 --> 00:29:44.160
So I know it's happening in Atlanta and Austin and other places, Denver and stuff as well.
00:29:44.319 --> 00:29:55.039
So, but we're definitely seeing it here, and I think that's here to stay, even as we do still most of our companies still have offices and have headquarters where most of their employees are.
00:29:55.359 --> 00:30:06.160
They may not be five days a week, they may still have some remote workers, but in general, like place matters, and we're seeing a lot of exciting activity in the same ecosystems.
00:30:06.559 --> 00:30:10.799
And quickly, what advice would you give to someone looking to raise their own venture fund?
00:30:11.279 --> 00:30:19.279
I was pitching myself, maybe like Vincent Blue Schwein or something instead of Victor Gutwein, the younger version of me.
00:30:19.359 --> 00:30:28.799
Like, if I was pitching the same strategy to me, it would be like that time was eight years ago, nine years ago, ten years ago to pitch a story like M25.
00:30:29.039 --> 00:30:30.160
What's gonna work now?
00:30:30.319 --> 00:30:41.039
Whatever worked for somebody is not gonna work for you, you can learn from that, and you can, okay, so I need to chart this type of a course, and I can learn a few data points.
00:30:41.200 --> 00:30:47.680
I have this like saying that you should gather all the advice, like you should get a lot of advice, but don't take it.
00:30:47.920 --> 00:30:49.680
Don't just take what somebody says to do.
00:30:49.839 --> 00:30:57.039
You have to gather it all, but you have to and understand why they're saying it, but you shouldn't actually like take the advice, like if that makes sense.
00:30:57.440 --> 00:31:00.319
If you were gonna launch a venture fund, like where's the puck going?
00:31:00.480 --> 00:31:02.640
What's going to be interesting?
00:31:02.799 --> 00:31:13.759
And I was in the middle, or maybe even slightly early middle of this rise of from like a couple hundred micro VCs to 3,000 micro VCs in 2021.
00:31:14.000 --> 00:31:22.720
And now there's gonna be many that don't make it with kind of this downturn, but we will still have a lot of micro VCs and lots of strategies.
00:31:22.960 --> 00:31:28.720
And so, what will be something that you can excel at that there's an opportunity that's not super crowded?
00:31:28.799 --> 00:31:32.400
I mean, just like creating a startup in a sense to kind of go after that.
00:31:32.559 --> 00:31:40.319
So that's the advice I would tell Vincent Glushwein, my eight-year younger, 10-year younger aspiring VC.
00:31:40.640 --> 00:31:42.720
To wrap the episode, we have two questions.
00:31:42.799 --> 00:31:45.279
The first one is what motivates you to work hard?
00:31:45.599 --> 00:31:55.680
I do have like a very innate uh hardworking work ethic because I'm from a family of like farmers and small business owners in the Midwest with German roots.
00:31:55.839 --> 00:31:59.200
So like there's probably just some element of that.
00:31:59.599 --> 00:32:00.640
I'm so fortunate.
00:32:00.880 --> 00:32:06.319
I wanted to be a VC and I was able to do that and kind of strike out this path that I can do that.
00:32:06.480 --> 00:32:09.359
I figured out what I wanted to do early and was able to get into that.
00:32:09.440 --> 00:32:14.079
And most people, many people don't even know what they want to do, and then let alone get into that career path.
00:32:14.240 --> 00:32:19.279
And so it's more that it doesn't feel like I'm working hard all the time.
00:32:19.440 --> 00:32:23.200
It feels like I'm just doing what I love and it's sometimes it's hard to turn off.
00:32:23.279 --> 00:32:34.079
I mean, now I have a wife and a family of three children, and so that becomes a problem sometimes because I'm I'm so excited about my work and it can be hard to not work hard.
00:32:34.240 --> 00:32:39.839
If that's not the way it is, as you're looking at venture or like starting venture, it could be that that's not the career for you.
00:32:40.000 --> 00:32:45.920
Maybe there's something else that would give you more energy, or at least some people like me, it can be what makes you tick.
00:32:46.160 --> 00:32:51.119
And then for the second question, you already touched on a piece of advice for emerging managers.
00:32:51.200 --> 00:32:53.920
But what's a piece of advice you would give your younger self?
00:32:54.240 --> 00:32:59.920
Yeah, maybe I'll give something really tactical because I kind of already gave this idea of how to learn from others.
00:33:00.160 --> 00:33:11.839
But from a tactical sense, the value of compounding network, early in your career, you have a lot of time and you don't have a lot of people that actually want to meet with you like as much, you know, because you're less.
00:33:12.160 --> 00:33:21.519
And I think that was one of the most critical things I did early on was just meet a lot of people, establish a lot of relationships, get our story out there, get what I was doing out there.
00:33:21.839 --> 00:33:25.279
Because it's amazing how much that compounds in the future.
00:33:25.359 --> 00:33:29.599
If you can do that early, try to be helpful, but a lot of times you have hardly anything to offer people.
00:33:29.680 --> 00:33:33.039
But like you know, try to be helpful, you try to get that relationship to kick started.
00:33:33.200 --> 00:33:42.960
And then maybe it could be five years down the road or 10 years down the road that you need to call that person up and ask them about something or ask them a reference or get a data point or like ask for an intro.
00:33:43.440 --> 00:33:53.920
Early in your career, that's what you can really do well because you have relative to later, you have a lot of time and try to hustle to get to meetings and add value to people.
00:33:54.160 --> 00:34:00.000
I think that's a great piece of advice, something that all of us could certainly learn from, especially at the younger side of things.
00:34:00.160 --> 00:34:02.400
Victor, thanks so much for coming on the podcast.
00:34:02.480 --> 00:34:06.960
I think Laura and I were really looking forward to this one, and it's certainly been a really fun, interesting conversation.
00:34:07.039 --> 00:34:08.559
So we both appreciate your time.
00:34:08.880 --> 00:34:09.280
Awesome.
00:34:09.440 --> 00:34:10.800
Yeah, it was really fun.
00:34:11.440 --> 00:34:13.840
Great questions, and hope it helps.
00:34:14.000 --> 00:34:15.920
And thanks for having me on.
