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Forbes Books presents the Startup Science Podcast with Gregory Shepherd,
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brought to you by Startup Science dot Io. Greg is
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an entrepreneur who has built and sold twelve businesses. He's
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a recipient of four private equity awards and is a
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featured ten X speaker and Forbes author. Here's Gregory Shepherd.
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I'm back with Chris Van Dus and the senior partner
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at Salaco Capital. He's been giving us a fascinating inside
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look at the firm's differentiated model, where the firm's partners
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are actually former operators themselves who get deeply involved in
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helping portfolio companies execute scale. So, Chris, I have a
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question for those investors who got burned during the post
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COVID overvaluation bubble by investing into firms like Tiger Global
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that did bad deals. Obviously, how would you advise them
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in approaching investing in the startup ecosystem now that they're
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scared off after losing millions?
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So I think it's twofold one. I mean, this isn't
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new now, the pacing of free money to the pacing
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of extremely expensive capital. I won't say as new, but
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that the quickness of which it happened was was pretty abrupt.
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You know, you had companies in twenty one raising gobs
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and gobs of money at a huge valuation and then
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hitting high interest rates, focusing on revenue over yield, which
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I'll speak about here a second, and then they hit
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every single KPI they were supposed to hit during that period,
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and their value is nowhere close to what it would
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have been on an extension. And you know, the interesting
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thing is for investors, what I talked to them about
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today is understand, hey, this investment is a long term investment.
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Right.
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A lot of these companies will still be around and
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they'll have their opportunity to get back up.
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Right as long as.
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They capital in twenty two and twenty three, it had
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really good growth plans. Anytime you have cheap money, you're
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gonna have high value. And the problem is, if you
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look at the capital markets, you saw the exact same thing.
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Right.
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There was a focus on scale and revenue non no profitability, right,
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and those growth stocks the minute capital became more expensive plummeted, right, Like,
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we have to look at it, and we are very
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quick to forget. The early two thousands were very quick
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to forget.
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It's human nature, I say the bomb, Like we learned this,
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we learned those people.
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Yes this record has played before, right, but we forget
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about it. And so there becomes this race to just
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deploy capital, right because I need to be in the
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hot thing and nothing's gonna stop. And so you know,
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my vice is be conservative, look for value, make sure
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the valuations are prudent, right, And I think that there
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was a level of recklessness in twenty one where those
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valuations were prudent and they're not going to hold, right.
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And so if it's one of those where it feels
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too good and you think capital is gonna be free forever,
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like I don't know that that's the best assumption in
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the world.
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Right.
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So like that's usually when for me, my you know,
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my radar goes off and says, hey, this is a
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great company. But like you're doing a million dollars two
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million dollars in revenue and you have one hundred and
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fifty million dollar valuation, Like I don't know that that's actually.
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A pretty good thing.
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Like we're going to happen, right, And it's a little
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bit of my issue with AI in general today, right.
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And that's a bubble for sure.
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I mean people are.
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Raising money at one hundred million dollar pre or post
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with no revenue and an idea, and you're going like
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the totality of companies. And by the way, as early
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stage investors, we look on kind of you know, multiple
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investing capital h as much as we look at IRR.
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But we're not an IRR.
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Play, right.
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We don't go and say, here's here's our stated goal IRR.
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We look at it as our goal is to get
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you this multiple over x period of time. And so
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the quantum of company that go from one hundred million
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dollar seed round to a billion dollar exit versus ones
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that are in the twenty five to thirty million that
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may exit in the two fifty to three hundred and
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fifty million dollar range, it's a very different ratio of companies, right,
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very different totality of them, and so we want to
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be more early stage. So a lot of the reason
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we haven't spent a lot of time in AI. I
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am it twofold, right, and I'll talk only about myself,
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which is I don't know that I am smart enough
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to understand which model is going to win and then
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which middleware. These models just haven't gotten to in their
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product roadmap yet. Right, I'll be the first one to say,
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I just don't know that I'm able to understand that yet.
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So why would I go to a middleware company who's
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maybe building something wonderful, but as on one of these
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large models roadmaps, they get up, give me a nice
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you know three four x here quickly in six months.
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Then the model releases the product and they're done. No
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thank you, Right, I really want to return capital to
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my investors. So like for me, I'd rather let this
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the dust kind of settle and be able to pick
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different things that are doing something unique and not get
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on this gold rush. I mean, a lot of people
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made money during the during the dot com right, a
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lot of people lost a lot of money. And so
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there's this piece of you know, for us, we want
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to be good prudent fiduciaries, you know, investors, for our
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for our clients, and for our for our investors. And uh,
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we really other than this one one company that was
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doing something with AI but outside of what we're hearing
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kind of in the media today, doing it uniquely.
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That's really the only the only play we've done this far.
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Yeah, I mean I think, like I look at it,
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I think that industrial transformation, which obviously will include AI.
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I think that's like the biggest thing. I mean, we
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have to redo all our everything has to be It's
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like the Industrial revolution again, right. And then you have
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these emerging markets like Africa and a lot of these
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other countries where they're doing it the first time and
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they need they want to do it the first time
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with the stuff we're transitioning to. And I think, I like,
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I was thinking what you were saying about AI and
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how you know it's the application of AI, right, So
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if you're doing AI as a general practitioner level of application,
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the big guys are going to do that. But if
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you're using AI inside of some existing play then you're
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going to benefit massively.
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You know.
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That's the kind of I see it that way, Like
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how are you applying it? You know, are you applying
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it to grow margin?
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Grow growth?
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Versus is this your entire business? And if it is,
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you're going to get on the radar of Microsoft, you know,
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and Apple and everybody else who's going to say and
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Google who's you know hasn't come out yet, but you
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know they're going to come out with teeth is just
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going to hurt a lot of these a lot of
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these places.
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You saw it in iOS eighteen. I don't know if
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you've seen that. Yeah, yeah, I mean if you look
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at a lot of the new features coming out in
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eighteen and having Siri actually a little smarter than it
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is today, a lot of things that people use today
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through these models, they'll be able to use in a
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form factor and in a very integrative native way in
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the device they carry around with them everywhere they go.
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And that becomes a very interesting thing.
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But I couldn't agree with you more on utilizing AI
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for operational efficiency and things like that. You know, our
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firm does a lot of that with our portfolio companies.
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Is work to look at how to you know, bring
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down burn utilizing AI and not just from an employee reduction,
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but like how can we be more efficient you know
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again using the how to go.
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Faster and less fuel?
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Right, can we do things that can allow us you know,
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more output for the same or less cost overall, which
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only helps the growth trajectory.
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So there's a lot of.
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That, you know, kind of utilizing it internally for the
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products that are already there, or being able to adapt
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something off the shelf to be unique for that company's
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data lake very different than going to invest in a
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company that's building something new.
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Yeah yeah, Like you know Tesla, I have a Rivian
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right and it's got Alexa built into it. I can
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drive to my house and say, turn on the lights,
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do whatever. Right, that's an application of AI that and
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an entrepreneur should stay away from because they're already either
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doing it or planning on do all this automotive stuff. Right.
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Yeah, So I I agree with you.
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I always I see a lot of deals from founders
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and they're like, all right, we're doing this AI, And
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I'm like, Okay, first of all, is it actually AI?
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Or are you just running an algorithm?
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Are you?
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Is it actually A Yeah?
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There was a there was a great one.
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I hate to just give Apple these props, but I
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was blown away by it, right being native in phone.
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So I actually downloaded the beta version because I'm one
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of those guys who likes to do it for my iPhone. Right,
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And you know, the woman's up on stage and goes,
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you know, hey, Siri, what time is my mom land
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that comes up? Can you give me directions to the airport? Like,
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and it's a natural conversation, all done by one prompt
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and You're like, do you know how much easier this
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is going to be than you know, fumbling through trying
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to find the email copying the address. And I realized
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maybe I'm on the backside, even though I outed myself
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downloading the beta right, but I'm still not that fluid
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and working through all the ways to you Siri. But
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if it's that easy and native in my phone, where
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my own data here with emails, texts, photos, everything else
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is the data.
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Leg well, that's a game changer.
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I don't have to load into a new app to
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do it.
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It's just in the phone.
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Yeah. Imagine in business, being able to talk to your machine,
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you know, and say, can you tell me the performance
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of the top five companies I have in this vertical
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over this time period and just do a whole paragraph
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and then have the machine go back and go, okay,
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here you go. I mean like yeah, I mean, like
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that's some amazing stuff. I always look at the AI
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thing and I tell that, you know, a lot of
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people are freaked out. You know, They're like, oh, it's good.
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You know, robotics attached the blue collar and AI is
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going to attach the white color, you know, workers, And
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I'm like, yeah, to a certain extent for sure, But
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it's more of an assistant than anything. It's a helper.
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It's like having a personal assistant. You're like, hey, go
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do this for me. Tell me what you come up with.
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What there was someone said, I didn't want to butcher
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it in totality, but it was around the idea it's
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going to make the really good employees better and expose
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the ones who aren't willing to do the things to
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get better. Meaning like it's not a back to the
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zero sum, right, like just because AI isn't just like
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fifty percent of the workforce is gone, right, It's more
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like I said before, the quantum of output will go
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up so much higher, right, which means they'll go faster.
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They're going to enjoy that kind of static overall cost.
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But if you're not able to get to that output
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utilizing these tools, that might then.
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Cause some some jeopardy.
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Yeah, top grading, right, it'll just top grade everything, which
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if you if if you're an entrepreneur, thank god, right,
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because sometimes good people can hide and sometimes really bad
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people can hide.
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Yep.
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Yeah, it's a fascinating space. I mean, I'm certainly paying
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attention to it, but I think Moreover, like I said,
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we're tiptoeing in.
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We do a lot internally with the companies.
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We've made that one placement and it's really doing AI
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scouting and it started in soccer. And so there's this
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technology where you can upload a video of yourself doing
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a drill and it compares you to benchmarks.
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Which means that's so cool.
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Democratize scouting across the world because you can be in Africa,
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you can be in India, you can be in Europe
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and just don't have exposure, and if the benchmark is
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close to being met, you may get a premier league deal.
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Meaning like a developmental deal.
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And if you think about that across baseball and football
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and cricket and all sports globalsketball, basketball, right like, you're
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building models against the best players in the world doing
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those same drills. And then you have a fourteen year
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old who's never played organized soccer, go do those drills
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and by raw athleticism benchmark really well you go, wait
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a second, I would never have seen you. You don't play soccer,
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but you what is that? And you bring them in right, So,
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and there's a lot more to the company than that.
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But my point is like, if you think about utilizing
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it for democratization, that's a very interesting concept. And it's
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all driven by AI and performance modeling and benchmarking, and
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it's a fascinating tool that is being used by a
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lot of the major sports.
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Across the globe today.
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So a couple more questions. I don't want to use
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too much of the time. I know you're a badass,
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and I want to respect that. How does your investor
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base of family offices, institutions, you know, networked individuals, celebrities,
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the investment criteria process in a syndicate format, you know,
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like you have where investors are investing in the specific
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deals that you raise.
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Yeah. I mean what's interesting is.
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When you do the fund right a traditional fund, they
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like the idea of what it's going to be, they
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have no clue what the assets are. And the problem
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is most investors want a touch, feel, see, visit, do
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something around it and when you can bring them there,
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and that's traditionally how I've done most of my private
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investing before they start to understand it truly, and so
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in my mind, it becomes a lot different, a lot.
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I don't want to say easier, right any.
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Reason, Capital or or you know, finding capital for deals
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is always a challenge, right.
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No matter what.
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But having them see and feel in touch and investment
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is very different. And so when you can go through
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the full model, when you can show them the vision,
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when it's not just a finger painting up in the
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sky that this is what we're endeavoring to do, you
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could actually show them something tangible. We find that process
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to be a lot a lot different. You know, family
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offices like it because you know, for them, they want
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to invest traditionally, and the ones that I work with
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certain one off deals, certain one off private venture deals,
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private equity deals, and they'll do some fund work.
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Right, but traditionally they want to.
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Have these assets that they have in their portfolio that
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they can see. And so for us, we have those
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assets those one off deals is what you call or
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considered independent sponsor, and so they very much.
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Like those type of deals.
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When you look at the athletes and celebrities and things
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like that, it's very much the same way. If you're
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and I mean no disrespect anywhere through this chain, but
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if you're focused on athletics, you're focused on being an
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amazing you know, actor or celebrity, chances are you're not
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really deep into understanding, you know, true industrial manufacturing optimizations downstream.
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But if you can see something whether or not it's
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a palette company, and you start to understand that palettes
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drive the entire world and that this is new in
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Novel and one of our other portfolio companies, we built
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their technology into the palette and here's how the ecosystem.
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They're like, oh, I see that now, Yeah, they get
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it yet, And so that.
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Has been a big differentiator for me as someone who
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did raise two and twenties. Right, So I'm not I'm
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not one hundred percent innocent, as I went through my
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conversation earlier. I did that in the eighteen nineteen in
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the cannabis funds, but that, again was a much harder
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sell to say, we're going to invest in companies who
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are doing these things instead of here is this one
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company doing this one thing, or here are these eight
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companies in a portfolio SBB, And here's how you're hedging
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against industry. Here's how you're hedging against seed versus B
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here's how you're getting hedged inside of the portfolio.
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And here's what we look.
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At as what we're expecting to be. You know a
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five to seven year blended return and they're like, oh,
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I see that now, and I see how they work together,
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and I see how that provides a natural hedge and
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how this one should exit earlier than that one if
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all things go towards where the forecast goes right, and
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that becomes a much again different I hate using the
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word easy, because nothing is easy, but easier thing when
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they can.
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Touch it and feel it.
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I totally one hundred percent understand that. I have a
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few celebrity investors, professional athletes, and although they are smart,
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they're not in that world right so, you know, it's
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like eboning them with some tech and they're like, what,
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how does this even happen?
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Like what? You know?
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They can't wrap their head around it, even though they're
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really smart investors, you know. They they're just like, look, man,
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I play football, you know.
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And ultimately it does come down to, uh, you know,
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do they trust the haircut in front of them? And
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that's a lot of this whole world and that people
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forget right, are you, you know, a trusted worth the
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honorable human who's going to do right by them? And
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you know, for us, we absolutely are and that's why
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we're out doing this is because we love these deals.
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We put our own money in the deals, and we
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want to have this great ecosystem of people that want
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to participate in helping this next generation of entrepreneurs build wonderful,
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amazing companies that could transform the world. And when they
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feel that and see it, I mean it all comes
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down to that relationship as well.
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Yeah, one hundred percent. So in closing, maybe we could
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close out with something that you guys are excited about.
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You personally were the companies excited about in terms of what,
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like what what exciting is happening this year?
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So you know I mentioned that AI company. We close
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that investment about two weeks ago I joined the board.
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I couldn't be more excited for this one. This is
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a really big opportunity. You know, we're evaluating different companies
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in different spaces right now. One of them, you know,
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doing think about building a network, sorry, a platform for
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alternative investments.
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If you think about the you know.
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The roab advisors of the world, they really only have
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a few different products they give you. Imagine if you
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could potentially work in the alternative space, right that becomes
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very interesting as you understand how investors are younger investors
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are investing and starting to take more control than the
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traditional kind of financial plan our wealth management market. We're
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looking at different things in logistics, which I find fascinating, right.
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Moving people, moving things.
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You know, we're closing our PORTFOLIOSPV one, which is a
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raise that we did. We've launched Portfolio SPB two in
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about three quarters of that is already filled, and so
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you start looking at that. We're evaluating six other companies
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to fall in there. We're excited a mostly right about momentum,
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and that momentum is coming off some great successes we've had,
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but moreover, things in the cap markets, things in our.
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Crads changing, right, it started warm up and finally it's
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like ice cold winter there for a while.
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And what's what's great is, you know we talked about
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a little earlier. You have these overvalued you know companies
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that have been i'll just say hurt a little bit
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over these past couple of years. But if they found
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a way to survive either by raising capital fine right,
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or putting operational rigor around their company, not focused on revenue,
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focused on yield right, focused on living off of actually
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what they're making, you actually have a stronger crop of
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companies at a better valuation than you had in twenty
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one to look at it.
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Yeah, I agree on percent.
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So there's a lot of value out in the marketplace
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to go grab. I would say, if you know where
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to look, just in general, and as you're evaluating companies,
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you're seeing some that just have unbelievable kind of four
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looking twelves, four looking eighteen's unbelievable kind of pacing that
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are at a reasonable value, something I would not say
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we have had in many years. And it's a good
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time to pick them up because if they've weathered, if
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they put an operational rigor if they've streamlined the company,
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they're ready for their next glide path of success. And
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we get to as professional investors, participate in that. And
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I think that's a really good time today to have
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capital to go deploy in these companies that are ready for,
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you know, to break through.
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Yeah, well, listen, I to tell you that this is
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probably that one of the top podcasts over the last
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almost four years that I've done because I'm a serial
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founder and also an investor too, right, so I have
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a very unique and it's so refreshing to talk to
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somebody else that understands both sides, you know, because you
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talk to academia, you get a picture. You talk to investors,
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you get a picture. You talk to founders, you get
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a picture.
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You know.
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But it's very rare that you have somebody that has
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actually built businesses and been a practitioner inside their operating
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and then went over to investing and understands the you know,
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the struggle and pain and stress and anxiety and you know,
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self doubt and all the stuff that goes into building
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a company. You know, as an investor, they just don't
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have any empathy. Yeah, you know, and you're sitting there going, dude,
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I'm doing the best I can, you know, and you know,
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but you have that perspective. So it's very very unusual
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and it's a real pleasure to talk to you. Thanks
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for being on the podcast.
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Thank you very much for having me. Greg appreciate it.
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This is wonderful.
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And that's it for another episode of the Startup Science Podcast.
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00:21:41.079 --> 00:21:44.079
If you leave a five star review on Apple or Spotify,
434
00:21:44.240 --> 00:21:47.920
I would sincerely appreciate it. And for founders, as a
435
00:21:48.000 --> 00:21:50.559
thank you for leading the changes in our world, I'm
436
00:21:50.599 --> 00:21:55.200
offering free access to the Startup Science platform called Visionaries,
437
00:21:55.519 --> 00:21:58.240
a one stop shop for founders. It has everything from
438
00:21:58.240 --> 00:22:02.400
a startup academy and investor match, brand finders, pitch finders,
439
00:22:02.440 --> 00:22:02.680
and a.
440
00:22:02.599 --> 00:22:03.319
Whole lot more.
441
00:22:04.000 --> 00:22:07.640
Go to Gregory shephard dot com, click on Visionaries and
442
00:22:07.799 --> 00:22:11.279
use the code Founders in all capitals. You'll be able
443
00:22:11.279 --> 00:22:14.960
to check it out for yourself. Until next time. Now misday,
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00:22:15.039 --> 00:22:15.559
my friends.
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00:22:16.640 --> 00:22:20.240
This startup science podcast with Gregory Shepherd is brought to
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00:22:20.240 --> 00:22:24.680
you by startupscience dot Io. Founders can log on to
447
00:22:24.960 --> 00:22:29.359
startupscience dot io and use code Forbes to get free
448
00:22:29.400 --> 00:22:33.160
access to connect and find out more about greg Go
449
00:22:33.240 --> 00:22:38.039
to Gregory Shepherd dot com. The Startup Science Podcast is
450
00:22:38.079 --> 00:22:40.079
a production of Forbes Books.
1
00:00:01.280 --> 00:00:05.879
Forbes Books presents the Startup Science Podcast with Gregory Shepherd,
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00:00:06.320 --> 00:00:10.640
brought to you by Startup Science dot Io. Greg is
3
00:00:10.679 --> 00:00:14.400
an entrepreneur who has built and sold twelve businesses. He's
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00:00:14.400 --> 00:00:18.000
a recipient of four private equity awards and is a
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00:00:18.000 --> 00:00:22.679
featured ten X speaker and Forbes author. Here's Gregory Shepherd.
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I'm back with Chris Van Dus and the senior partner
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at Salaco Capital. He's been giving us a fascinating inside
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look at the firm's differentiated model, where the firm's partners
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are actually former operators themselves who get deeply involved in
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helping portfolio companies execute scale. So, Chris, I have a
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question for those investors who got burned during the post
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COVID overvaluation bubble by investing into firms like Tiger Global
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that did bad deals. Obviously, how would you advise them
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in approaching investing in the startup ecosystem now that they're
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scared off after losing millions?
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So I think it's twofold one. I mean, this isn't
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new now, the pacing of free money to the pacing
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of extremely expensive capital. I won't say as new, but
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that the quickness of which it happened was was pretty abrupt.
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You know, you had companies in twenty one raising gobs
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and gobs of money at a huge valuation and then
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hitting high interest rates, focusing on revenue over yield, which
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I'll speak about here a second, and then they hit
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every single KPI they were supposed to hit during that period,
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and their value is nowhere close to what it would
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have been on an extension. And you know, the interesting
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thing is for investors, what I talked to them about
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today is understand, hey, this investment is a long term investment.
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Right.
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A lot of these companies will still be around and
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they'll have their opportunity to get back up.
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Right as long as.
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They capital in twenty two and twenty three, it had
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really good growth plans. Anytime you have cheap money, you're
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gonna have high value. And the problem is, if you
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look at the capital markets, you saw the exact same thing.
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Right.
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There was a focus on scale and revenue non no profitability, right,
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and those growth stocks the minute capital became more expensive plummeted, right, Like,
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we have to look at it, and we are very
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quick to forget. The early two thousands were very quick
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to forget.
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It's human nature, I say the bomb, Like we learned this,
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we learned those people.
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Yes this record has played before, right, but we forget
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about it. And so there becomes this race to just
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deploy capital, right because I need to be in the
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hot thing and nothing's gonna stop. And so you know,
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my vice is be conservative, look for value, make sure
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the valuations are prudent, right, And I think that there
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was a level of recklessness in twenty one where those
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valuations were prudent and they're not going to hold, right.
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And so if it's one of those where it feels
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too good and you think capital is gonna be free forever,
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like I don't know that that's the best assumption in
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the world.
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Right.
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So like that's usually when for me, my you know,
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my radar goes off and says, hey, this is a
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great company. But like you're doing a million dollars two
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million dollars in revenue and you have one hundred and
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fifty million dollar valuation, Like I don't know that that's actually.
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A pretty good thing.
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Like we're going to happen, right, And it's a little
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bit of my issue with AI in general today, right.
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And that's a bubble for sure.
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I mean people are.
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Raising money at one hundred million dollar pre or post
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with no revenue and an idea, and you're going like
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the totality of companies. And by the way, as early
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stage investors, we look on kind of you know, multiple
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investing capital h as much as we look at IRR.
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But we're not an IRR.
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Play, right.
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We don't go and say, here's here's our stated goal IRR.
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We look at it as our goal is to get
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you this multiple over x period of time. And so
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the quantum of company that go from one hundred million
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dollar seed round to a billion dollar exit versus ones
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that are in the twenty five to thirty million that
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may exit in the two fifty to three hundred and
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fifty million dollar range, it's a very different ratio of companies, right,
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very different totality of them, and so we want to
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be more early stage. So a lot of the reason
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we haven't spent a lot of time in AI. I
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am it twofold, right, and I'll talk only about myself,
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which is I don't know that I am smart enough
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to understand which model is going to win and then
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which middleware. These models just haven't gotten to in their
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product roadmap yet. Right, I'll be the first one to say,
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I just don't know that I'm able to understand that yet.
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So why would I go to a middleware company who's
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maybe building something wonderful, but as on one of these
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large models roadmaps, they get up, give me a nice
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you know three four x here quickly in six months.
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Then the model releases the product and they're done. No
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thank you, Right, I really want to return capital to
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my investors. So like for me, I'd rather let this
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the dust kind of settle and be able to pick
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different things that are doing something unique and not get
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on this gold rush. I mean, a lot of people
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made money during the during the dot com right, a
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lot of people lost a lot of money. And so
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there's this piece of you know, for us, we want
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to be good prudent fiduciaries, you know, investors, for our
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for our clients, and for our for our investors. And uh,
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we really other than this one one company that was
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doing something with AI but outside of what we're hearing
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kind of in the media today, doing it uniquely.
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That's really the only the only play we've done this far.
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Yeah, I mean I think, like I look at it,
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I think that industrial transformation, which obviously will include AI.
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I think that's like the biggest thing. I mean, we
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have to redo all our everything has to be It's
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like the Industrial revolution again, right. And then you have
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these emerging markets like Africa and a lot of these
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other countries where they're doing it the first time and
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they need they want to do it the first time
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with the stuff we're transitioning to. And I think, I like,
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I was thinking what you were saying about AI and
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how you know it's the application of AI, right, So
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if you're doing AI as a general practitioner level of application,
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the big guys are going to do that. But if
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you're using AI inside of some existing play then you're
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going to benefit massively.
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You know.
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That's the kind of I see it that way, Like
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how are you applying it? You know, are you applying
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it to grow margin?
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Grow growth?
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Versus is this your entire business? And if it is,
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you're going to get on the radar of Microsoft, you know,
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and Apple and everybody else who's going to say and
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Google who's you know hasn't come out yet, but you
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know they're going to come out with teeth is just
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going to hurt a lot of these a lot of
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these places.
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You saw it in iOS eighteen. I don't know if
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you've seen that. Yeah, yeah, I mean if you look
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at a lot of the new features coming out in
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eighteen and having Siri actually a little smarter than it
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is today, a lot of things that people use today
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through these models, they'll be able to use in a
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form factor and in a very integrative native way in
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the device they carry around with them everywhere they go.
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And that becomes a very interesting thing.
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But I couldn't agree with you more on utilizing AI
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for operational efficiency and things like that. You know, our
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firm does a lot of that with our portfolio companies.
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Is work to look at how to you know, bring
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down burn utilizing AI and not just from an employee reduction,
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but like how can we be more efficient you know
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again using the how to go.
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Faster and less fuel?
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Right, can we do things that can allow us you know,
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more output for the same or less cost overall, which
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only helps the growth trajectory.
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So there's a lot of.
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That, you know, kind of utilizing it internally for the
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products that are already there, or being able to adapt
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something off the shelf to be unique for that company's
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data lake very different than going to invest in a
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company that's building something new.
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Yeah yeah, Like you know Tesla, I have a Rivian
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right and it's got Alexa built into it. I can
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drive to my house and say, turn on the lights,
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do whatever. Right, that's an application of AI that and
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an entrepreneur should stay away from because they're already either
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doing it or planning on do all this automotive stuff. Right.
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Yeah, So I I agree with you.
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I always I see a lot of deals from founders
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and they're like, all right, we're doing this AI, And
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I'm like, Okay, first of all, is it actually AI?
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Or are you just running an algorithm?
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Are you?
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Is it actually A Yeah?
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There was a there was a great one.
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I hate to just give Apple these props, but I
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was blown away by it, right being native in phone.
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So I actually downloaded the beta version because I'm one
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of those guys who likes to do it for my iPhone. Right,
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And you know, the woman's up on stage and goes,
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you know, hey, Siri, what time is my mom land
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that comes up? Can you give me directions to the airport? Like,
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and it's a natural conversation, all done by one prompt
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and You're like, do you know how much easier this
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is going to be than you know, fumbling through trying
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to find the email copying the address. And I realized
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maybe I'm on the backside, even though I outed myself
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downloading the beta right, but I'm still not that fluid
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and working through all the ways to you Siri. But
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if it's that easy and native in my phone, where
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my own data here with emails, texts, photos, everything else
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is the data.
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Leg well, that's a game changer.
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I don't have to load into a new app to
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do it.
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It's just in the phone.
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Yeah. Imagine in business, being able to talk to your machine,
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you know, and say, can you tell me the performance
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of the top five companies I have in this vertical
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over this time period and just do a whole paragraph
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and then have the machine go back and go, okay,
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here you go. I mean like yeah, I mean, like
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that's some amazing stuff. I always look at the AI
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thing and I tell that, you know, a lot of
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people are freaked out. You know, They're like, oh, it's good.
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You know, robotics attached the blue collar and AI is
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going to attach the white color, you know, workers, And
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I'm like, yeah, to a certain extent for sure, But
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it's more of an assistant than anything. It's a helper.
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It's like having a personal assistant. You're like, hey, go
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do this for me. Tell me what you come up with.
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What there was someone said, I didn't want to butcher
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it in totality, but it was around the idea it's
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going to make the really good employees better and expose
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the ones who aren't willing to do the things to
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get better. Meaning like it's not a back to the
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zero sum, right, like just because AI isn't just like
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fifty percent of the workforce is gone, right, It's more
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like I said before, the quantum of output will go
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up so much higher, right, which means they'll go faster.
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They're going to enjoy that kind of static overall cost.
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But if you're not able to get to that output
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utilizing these tools, that might then.
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Cause some some jeopardy.
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Yeah, top grading, right, it'll just top grade everything, which
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if you if if you're an entrepreneur, thank god, right,
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because sometimes good people can hide and sometimes really bad
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people can hide.
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Yep.
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Yeah, it's a fascinating space. I mean, I'm certainly paying
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attention to it, but I think Moreover, like I said,
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we're tiptoeing in.
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We do a lot internally with the companies.
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We've made that one placement and it's really doing AI
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scouting and it started in soccer. And so there's this
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technology where you can upload a video of yourself doing
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a drill and it compares you to benchmarks.
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Which means that's so cool.
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Democratize scouting across the world because you can be in Africa,
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you can be in India, you can be in Europe
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and just don't have exposure, and if the benchmark is
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close to being met, you may get a premier league deal.
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Meaning like a developmental deal.
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And if you think about that across baseball and football
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and cricket and all sports globalsketball, basketball, right like, you're
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building models against the best players in the world doing
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those same drills. And then you have a fourteen year
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old who's never played organized soccer, go do those drills
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and by raw athleticism benchmark really well you go, wait
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a second, I would never have seen you. You don't play soccer,
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but you what is that? And you bring them in right, So,
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and there's a lot more to the company than that.
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But my point is like, if you think about utilizing
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it for democratization, that's a very interesting concept. And it's
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all driven by AI and performance modeling and benchmarking, and
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it's a fascinating tool that is being used by a
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lot of the major sports.
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Across the globe today.
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So a couple more questions. I don't want to use
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too much of the time. I know you're a badass,
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and I want to respect that. How does your investor
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base of family offices, institutions, you know, networked individuals, celebrities,
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the investment criteria process in a syndicate format, you know,
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like you have where investors are investing in the specific
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deals that you raise.
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Yeah. I mean what's interesting is.
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When you do the fund right a traditional fund, they
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like the idea of what it's going to be, they
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have no clue what the assets are. And the problem
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is most investors want a touch, feel, see, visit, do
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something around it and when you can bring them there,
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and that's traditionally how I've done most of my private
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investing before they start to understand it truly, and so
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in my mind, it becomes a lot different, a lot.
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I don't want to say easier, right any.
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Reason, Capital or or you know, finding capital for deals
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is always a challenge, right.
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No matter what.
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But having them see and feel in touch and investment
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is very different. And so when you can go through
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the full model, when you can show them the vision,
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when it's not just a finger painting up in the
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sky that this is what we're endeavoring to do, you
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could actually show them something tangible. We find that process
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to be a lot a lot different. You know, family
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offices like it because you know, for them, they want
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to invest traditionally, and the ones that I work with
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certain one off deals, certain one off private venture deals,
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private equity deals, and they'll do some fund work.
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Right, but traditionally they want to.
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Have these assets that they have in their portfolio that
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they can see. And so for us, we have those
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assets those one off deals is what you call or
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considered independent sponsor, and so they very much.
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Like those type of deals.
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When you look at the athletes and celebrities and things
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like that, it's very much the same way. If you're
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and I mean no disrespect anywhere through this chain, but
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if you're focused on athletics, you're focused on being an
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amazing you know, actor or celebrity, chances are you're not
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really deep into understanding, you know, true industrial manufacturing optimizations downstream.
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But if you can see something whether or not it's
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a palette company, and you start to understand that palettes
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drive the entire world and that this is new in
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Novel and one of our other portfolio companies, we built
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their technology into the palette and here's how the ecosystem.
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They're like, oh, I see that now, Yeah, they get
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it yet, And so that.
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Has been a big differentiator for me as someone who
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did raise two and twenties. Right, So I'm not I'm
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not one hundred percent innocent, as I went through my
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conversation earlier. I did that in the eighteen nineteen in
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the cannabis funds, but that, again was a much harder
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sell to say, we're going to invest in companies who
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are doing these things instead of here is this one
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company doing this one thing, or here are these eight
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companies in a portfolio SBB, And here's how you're hedging
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against industry. Here's how you're hedging against seed versus B
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here's how you're getting hedged inside of the portfolio.
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And here's what we look.
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At as what we're expecting to be. You know a
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five to seven year blended return and they're like, oh,
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I see that now, and I see how they work together,
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and I see how that provides a natural hedge and
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how this one should exit earlier than that one if
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all things go towards where the forecast goes right, and
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that becomes a much again different I hate using the
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word easy, because nothing is easy, but easier thing when
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they can.
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Touch it and feel it.
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I totally one hundred percent understand that. I have a
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few celebrity investors, professional athletes, and although they are smart,
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they're not in that world right so, you know, it's
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like eboning them with some tech and they're like, what,
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how does this even happen?
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Like what? You know?
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They can't wrap their head around it, even though they're
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really smart investors, you know. They they're just like, look, man,
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I play football, you know.
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And ultimately it does come down to, uh, you know,
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do they trust the haircut in front of them? And
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that's a lot of this whole world and that people
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forget right, are you, you know, a trusted worth the
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honorable human who's going to do right by them? And
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you know, for us, we absolutely are and that's why
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we're out doing this is because we love these deals.
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We put our own money in the deals, and we
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want to have this great ecosystem of people that want
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to participate in helping this next generation of entrepreneurs build wonderful,
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amazing companies that could transform the world. And when they
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feel that and see it, I mean it all comes
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down to that relationship as well.
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Yeah, one hundred percent. So in closing, maybe we could
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close out with something that you guys are excited about.
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You personally were the companies excited about in terms of what,
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like what what exciting is happening this year?
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So you know I mentioned that AI company. We close
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that investment about two weeks ago I joined the board.
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I couldn't be more excited for this one. This is
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a really big opportunity. You know, we're evaluating different companies
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in different spaces right now. One of them, you know,
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doing think about building a network, sorry, a platform for
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alternative investments.
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If you think about the you know.
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The roab advisors of the world, they really only have
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a few different products they give you. Imagine if you
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could potentially work in the alternative space, right that becomes
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very interesting as you understand how investors are younger investors
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are investing and starting to take more control than the
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traditional kind of financial plan our wealth management market. We're
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looking at different things in logistics, which I find fascinating, right.
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Moving people, moving things.
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You know, we're closing our PORTFOLIOSPV one, which is a
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raise that we did. We've launched Portfolio SPB two in
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about three quarters of that is already filled, and so
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you start looking at that. We're evaluating six other companies
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to fall in there. We're excited a mostly right about momentum,
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and that momentum is coming off some great successes we've had,
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but moreover, things in the cap markets, things in our.
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Crads changing, right, it started warm up and finally it's
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like ice cold winter there for a while.
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And what's what's great is, you know we talked about
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a little earlier. You have these overvalued you know companies
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that have been i'll just say hurt a little bit
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over these past couple of years. But if they found
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a way to survive either by raising capital fine right,
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or putting operational rigor around their company, not focused on revenue,
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focused on yield right, focused on living off of actually
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what they're making, you actually have a stronger crop of
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companies at a better valuation than you had in twenty
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one to look at it.
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Yeah, I agree on percent.
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So there's a lot of value out in the marketplace
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to go grab. I would say, if you know where
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to look, just in general, and as you're evaluating companies,
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you're seeing some that just have unbelievable kind of four
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looking twelves, four looking eighteen's unbelievable kind of pacing that
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are at a reasonable value, something I would not say
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we have had in many years. And it's a good
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time to pick them up because if they've weathered, if
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they put an operational rigor if they've streamlined the company,
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they're ready for their next glide path of success. And
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we get to as professional investors, participate in that. And
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I think that's a really good time today to have
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capital to go deploy in these companies that are ready for,
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you know, to break through.
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Yeah, well, listen, I to tell you that this is
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probably that one of the top podcasts over the last
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almost four years that I've done because I'm a serial
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founder and also an investor too, right, so I have
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a very unique and it's so refreshing to talk to
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somebody else that understands both sides, you know, because you
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talk to academia, you get a picture. You talk to investors,
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you get a picture. You talk to founders, you get
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a picture.
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You know.
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But it's very rare that you have somebody that has
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actually built businesses and been a practitioner inside their operating
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and then went over to investing and understands the you know,
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the struggle and pain and stress and anxiety and you know,
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self doubt and all the stuff that goes into building
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a company. You know, as an investor, they just don't
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00:21:20.920 --> 00:21:23.680
have any empathy. Yeah, you know, and you're sitting there going, dude,
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I'm doing the best I can, you know, and you know,
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but you have that perspective. So it's very very unusual
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00:21:30.799 --> 00:21:32.920
and it's a real pleasure to talk to you. Thanks
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00:21:32.920 --> 00:21:34.000
for being on the podcast.
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00:21:34.240 --> 00:21:36.440
Thank you very much for having me. Greg appreciate it.
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00:21:36.480 --> 00:21:37.160
This is wonderful.
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00:21:37.440 --> 00:21:40.680
And that's it for another episode of the Startup Science Podcast.
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00:21:41.079 --> 00:21:44.079
If you leave a five star review on Apple or Spotify,
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00:21:44.240 --> 00:21:47.920
I would sincerely appreciate it. And for founders, as a
435
00:21:48.000 --> 00:21:50.559
thank you for leading the changes in our world, I'm
436
00:21:50.599 --> 00:21:55.200
offering free access to the Startup Science platform called Visionaries,
437
00:21:55.519 --> 00:21:58.240
a one stop shop for founders. It has everything from
438
00:21:58.240 --> 00:22:02.400
a startup academy and investor match, brand finders, pitch finders,
439
00:22:02.440 --> 00:22:02.680
and a.
440
00:22:02.599 --> 00:22:03.319
Whole lot more.
441
00:22:04.000 --> 00:22:07.640
Go to Gregory shephard dot com, click on Visionaries and
442
00:22:07.799 --> 00:22:11.279
use the code Founders in all capitals. You'll be able
443
00:22:11.279 --> 00:22:14.960
to check it out for yourself. Until next time. Now misday,
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00:22:15.039 --> 00:22:15.559
my friends.
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00:22:16.640 --> 00:22:20.240
This startup science podcast with Gregory Shepherd is brought to
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you by startupscience dot Io. Founders can log on to
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startupscience dot io and use code Forbes to get free
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access to connect and find out more about greg Go
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to Gregory Shepherd dot com. The Startup Science Podcast is
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a production of Forbes Books.
