What Makes a Founder Investable? Neil Grunberg on Building Companies and Raising Capital

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Welcome to Between Two Burnettes, a show dedicated to highlighting Canadian voices.
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Together, we're sharing authentic conversations with the people shaping the future of Canada.
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We hope you enjoy the show.
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Today we have with us Neil Grumberg, founder, investor, girl dad, and word on the street is you're also just an awesome, awesome human.
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Thanks.
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Thanks.
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We are so excited.
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You built your own fund called Storytime Capital.
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And under this thesis where you're backing entrepreneurs on the future of work.
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So we're excited to chat about it with you.
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Neil, are you ready for a conversation between two brunettes?
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I'm excited to chat with you both about this.
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Awesome.
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Well, maybe to kick us off, I would love to just start with what was the genesis of Storytime Capital?
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What made you feel like it needs to exist as a fund in Canada?
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Yeah.
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While I was at Eliacare and we started focusing after our series B or C on M&A, I learned a ton from our VCs.
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I built a playbook of post-M&A and how to find, source, negotiate, integrate after.
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And we were doing phenomenal work.
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And I was like, oh, crap.
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I learn a lot.
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You can learn a lot from a great VC.
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And we had these amazing investors around the table with us always, Inovia and Class Capital.
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So from day one, we had amazing investors around the table.
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That taught us.
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And even some of our angel investors that were phenomenal, who actually some of them are LPs of the fund.
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They were just great, great advisors.
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And I was like, that's what I want to do for the back half of my career.
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And so I was at AliaCare.
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We had made a bunch of acquisitions.
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I was focusing on strategy and markets, but at the same time, the market was shifting.
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And as much as I love everything about Alaya Care, my journey, I was starting to do a job.
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We were like 600 plus employees and it was turning.
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It was a little different than the beginning stages.
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And I'm very much like a zero to one person.
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Builder.
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Yeah.
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Builder.
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And from when I was a teenager, I love that.
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That is like building.
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And so I wanted, I thought like it's sort of just everything checked off in my mind.
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It was like an opportunity to teach.
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and learn, opportunity to invest in great founders, opportunity to learn different things and be a great VC for the very early stage.
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Because there's a lot of great ones in Canada, but there needs to be more.
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There needs to be more capital injected and there needs to be capital injected into Canada and...
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like venture specific, like operating experience, I think with founder, like from founders, like people like me to be able to really help.
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And there was a great Canadian operator who's not, doesn't run a VC, but is big in the ecosystem.
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Michael Hyatt, he early on identified that.
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We became friends by him saying like the difference or your special sauce is that when you look a founder in the eye,
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Early on, you know what it's like to be worried about payroll or product market fit or did I just mortgage my house for the wrong reasons?
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And so I think that empathy and that ability to understand what the founders are going through was needed in the market.
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Do you think that operator run funds at the early stage are better suited for the job or is it very case by case?
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I don't want to disparage other funds.
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I think we've got amazing funds across this country and around the world.
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I think operator, I would actually give more credit to my LPs, which are a lot of Canada's best founders, like legendary founders, like Clio and one of the founding CTO of Clio and obviously Alicare and Tractic and Dennis Benny.
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And so we've got some of Canada's best and brightest founders in history on our LP list.
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I think having a fund where I can understand what the problem is, and sometimes I have the right answer, but more often than not, I'll know someone who has the right answer.
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I'll bring Adrian in or Oleg in or Dennis in or Ryan in, and I'll be able to parachute someone in to help them with a major league problem.
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So I think having an ecosystem of operators and founders surrounding a startup is so important.
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Yeah.
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Yeah.
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I don't think it necessarily needs to be like the managing partner or the person writing the check.
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I think having like tremendous people around the table is the key.
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Would you support a founder in a business where you do not think you could, you or your LPs could help?
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So that's, we walked away from, yeah, we passed from great company.
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There's one, I mean, there's a company, it's an area that I actually find fascinating.
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It's a, it was a potential LP family.
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Yeah.
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Uh, those behind the company, I think it's going to be a super successful company, but my LPs and like our advisor network couldn't help, couldn't help them.
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Like we'd offer no value and it'd just be an empty check.
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I just, we don't have enough checks to write to waste a check on something where we can't
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like arbitrage a little bit by offering our value.
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And so if I only have 15 to 20 checks per fund to write, I got to make sure that each one of those isn't just a good investment, but a good investment where I can offer a little bit of fuel to that fire.
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I think it's super important for us.
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And we have passed.
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I'd rather someone else write a check if it's just going to be an empty check.
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Yeah.
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Because there's always that notion of like dumb money or like smart capital, dumb money.
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Yeah.
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Yeah.
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No, I'd rather be, I want to be, I only have some, like it's important to stay smart capital.
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For the context of our listeners, can you talk about your thesis for your fund?
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Yes.
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Thesis of four years ago when we started Storytime and like-
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Summer of 2022 when we were like writing the thesis and really figuring it all out.
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It's an interesting time to be starting again.
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Yeah, it was like right before like Chachipt dropped.
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And so our thesis was future of work.
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Future of work for a bunch of reasons.
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One, like coming out of like the COVID world we were all in.
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I had this really deep philosophical thinking.
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I still believe that like the workforce is forever changing.
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You've got like brilliant young entrepreneur, people building companies off the side of their desk.
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You've got four day of work week.
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I've got three daughters.
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I don't know if they'll all work traditional business like I did.
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Like it's just not, it's just the world has changed so much.
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So I saw and like looking back in history, one work tech and like not just work tech, but like the things that power work and output, they're all it's always a winner.
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It's always evolved and like indexing companies in that in those spaces are always great.
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But.
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In like the 40s during World War II, the workforce had a massive change and needed to adapt to like an entirely different workforce.
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Women working all of a sudden in factories versus because so many men were lost and were overseas fighting.
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So it's a huge change.
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And like there's so much like the history of it.
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There was so much evolution.
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And how people were working.
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And it was really interesting.
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Other than that one time, all of history of work tech, whether it's Uber or whether it's Slack, it was the technology changed.
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And then it led to people changing the way they were.
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So people weren't driving around in their cars waving people into their cars.
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You had taxes and that was it.
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Uber comes around and all of a sudden the gig economy takes off.
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They weren't sending one-line emails to people.
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They were emailing or calling and all of a sudden Slack gets invented and becomes part of our business repertoire.
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It's an entire avenue of communication changed.
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So all these changes has led to changes of the way people worked.
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We now are facing, I felt, I still feel that it was like the complete opposite.
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We were changing the way we worked and the technology had to catch up.
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Plus, I thought AI was going to be a good tailwind.
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I didn't think it was going to be like, I knew it would be big.
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Alicare was a big AI-based company.
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Yeah, very early.
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I didn't think it was going to be like,
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everything throw against the wall and change everything.
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So the thesis is great now, except it really could apply to anything because every bit of work is changing from how you edit a podcast to how you build a software company to how you plan patent IP search.
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So everything and anything sort of falls into it now.
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But at the time, the focus was really the thesis being anything to do with how work is planned, like the who, what, where, how, and why of work.
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Yeah.
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Why was it important to you to build a really strong thesis driven fund?
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And you also hear this notion of like the billion dollar PDF, the idea that you could mobilize huge amounts of capital off like a really well articulated mission or vision or thesis.
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So for me, the thesis very much lined up with my skill set and my network skill set, a lot of B2B SaaS.
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Like B2B SaaS kind of falls right into the middle of future work.
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It was the people we spoke about earlier, like these LPs that are phenomenal and talented.
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And I want to harness them.
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And I want to harness my expertise.
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WorkBrain was a workforce management company.
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Alyacare was not really a health tech company.
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It is a health tech company, but it's very much like workforce at its core and changing the way people worked.
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Forever.
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And it's like big moments in my career.
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And so it was my expertise and it was our LP's expertise.
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And I felt that it was like really going to be changing.
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Like I really still feel, and we were seeing it, like the entire world of work in the last four years has changed three times over and it's going to change 10 more times the next decade.
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And sort of being out front of that was, I thought it would be fascinating because it was a big difference.
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And you're on your second fund now or your third?
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Second fund.
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Second fund.
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And you said 15 to 20 checks per each.
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Pros and cons and like lessons you've taken from being a founder now looking at companies that you're investing in.
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So the con, I'll start with that, is like as a founder, I love marketing.
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And I've caught myself at conferences, like one, I'm hustling my butt off at a conference.
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I'm meeting with every founder and give every founder time, which drains my ability to like breathe sometimes because I'm meeting 40 founders in Saskatoon at United in the Prairies.
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Like every single founder there, I want to give them time, but that's a lot of time.
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And then the other part is, like, I love them and I love what they're doing and I adore their passion and their energy.
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And I've actually had to catch myself and be like, just so you know, like, my enthusiasm does not mean I'm writing a check.
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Please don't come to your, like, husband or wife or partner or whatever and be like, Neil, story time's in.
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Yeah.
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I've mistaken that excitement from an investor.
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And I really am enthusiastic when I see a great presentation, a great idea.
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I've had to catch myself and now warn founders.
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I'm enthusiastic because I actually genuinely think this is awesome.
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But we see 700, 800, 900 companies a year, we write five checks a year, four checks a year, and still only write five checks.
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We see 50 really good companies.
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So that's the biggest con is having to break hearts.
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It's like,
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I was the captain of the football team, so I didn't have this experience.
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We really hold a lot of people's future in our hands.
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I take that really seriously, but I also – it sometimes sucks.
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Like, it sucks to break someone's heart who really could use our capital and our expertise and our network, and we have to be like stories.
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I think that's the biggest con.
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Yeah.
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You're building their character.
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Yeah.
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Yeah.
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Do you connect them in opportunities where you can?
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We try to.
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Yeah, for sure.
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But there's nothing worse than like, I'll give you these three VCs to talk to.
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But like the VCs, if I'm passing it off most.
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That's what I've heard as advice.
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Like the worst person to ask for an intro is the VC that just said no to you.
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Because they're going to intro you as like, I've passed, but here's the value.
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Yeah.
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So I try to be really thoughtful, like in our, both in our rejection and intros.
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I wish I could write checks to everyone that like, I wish we had more capital, but also that would be, I'd make me a pretty bad.
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management part.
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Pros are, I get to work with, like the pros are so obvious.
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Like I've never enjoyed anything.
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I love Eliacare.
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I love the journey.
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I love Vortex.
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I loved being a part of the work brain story.
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I loved all of that.
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This is the best thing I've ever done.
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Like this is talking about like dopamine hits like every day, seeing in Slack, like on LinkedIn, one of my
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favorite investments just got like picked to go through to like the greatest round of like sf tech week and it's like it's incredible the nicest founder i really believed in it from day one it was the quickest cycle we ever had and it was like minuscule and he was so and now they have all the ingredients to be huge like they're going like like the a16z
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sf speed ramps like 10 best companies that went through some qualifying thing it's like holy crap like this these companies have really found their footing so it's awesome to see our founders succeed and have these big moments and these big emotional moments with like beyond just the growth of a revenue but like their big realization that they're building something they've got employees they've got in like they've got a community that they're building i think that's super cool so being part of that it's amazing
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You said like two minutes ago that you were out in the prairies and you're hustling and you're talking to founders and that gives you so much energy.
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Do you think we need to see more of that or do we have enough of that in Canada?
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Honest takes only.
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Yeah, honest take.
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I think there needs to be more.
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Like I, it's, it's disappointing when we, I go, like we found an amazing founder and we actually, I saw there was four companies out of that conference that I took a good long look at and I could have looked at eight.
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Easy.
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We made an investment in a company that I absolutely love.
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founders, founding teams, incredible, found them there would never found them.
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Otherwise at that conference, I, without talking about who wasn't there and who was there, they paid for my flight and hotel.
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And I thought, am I speaking at this conference?
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Like that's what my response on emails, like, why did I just get a flight and a hotel sent email to me?
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They're like,
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You're coming.
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We're so happy that you're coming, which is insane to me that like this is it was an hour and 30 minute flight.
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And I was one of two funds from east of Winnipeg at a conference for the middle of Canada.
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And I can tell you, like those founders, when you have a small ecosystem, when you have to work your butt off, when when.
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70% or whatever percent, it's like one degree separated from farming, which is really like a hell of a lot harder than my kids have it when you're being raised on a farm or your uncle's got a farm or your aunt's got a farm.
216
00:13:28.959 --> 00:13:35.862
Like it just teaches tremendous values, work ethic, but also like small tidy networks are actually really good to build companies.
217
00:13:35.882 --> 00:13:38.764
When you're building a transportation company and...
218
00:13:39.104 --> 00:13:44.869
Your aunt's friend is the minister of transportation's like deputy finance, whatever.
219
00:13:44.889 --> 00:13:47.011
Like that's actually there.
220
00:13:47.331 --> 00:13:48.592
Whereas like here, you don't have that.
221
00:13:48.612 --> 00:13:50.214
But there it's like everyone's connected.
222
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And so it's really amazing.
223
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There's no time for games.
224
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Every minute counts.
225
00:13:54.918 --> 00:13:56.479
And so I think the founders are amazing there.
226
00:13:56.539 --> 00:14:00.423
We need to spend more effort to get out there and meet those founders.
227
00:14:00.443 --> 00:14:02.865
I think there are some of the best in Canada, best in the world.
228
00:14:03.362 --> 00:14:11.593
We hear a lot, especially with the guests that come on this show who are founders, that VCs in Canada really don't operate like VCs.
229
00:14:11.753 --> 00:14:14.958
They are risk averse, but they want the returns.
230
00:14:15.098 --> 00:14:18.242
If they're going to make the big bets, they make it in U.S. companies.
231
00:14:18.543 --> 00:14:19.885
Do you think this is fair or unfair?
232
00:14:21.199 --> 00:14:22.500
I think it's a little unfair, to be honest.
233
00:14:22.520 --> 00:14:25.781
Like, I think it's – I understand the perspective.
234
00:14:25.841 --> 00:14:33.224
But, I mean, our Inovian class came in on us super early with big bets in an industry that was, like, home care industry.
235
00:14:33.244 --> 00:14:34.025
It's not sexy.
236
00:14:34.145 --> 00:14:34.385
Yeah.
237
00:14:34.425 --> 00:14:37.046
It's not a legacy one that needs disruption.
238
00:14:37.106 --> 00:14:37.626
Exactly.
239
00:14:37.666 --> 00:14:37.806
Yeah.
240
00:14:37.846 --> 00:14:38.747
So we were –
241
00:14:39.207 --> 00:14:40.128
Obviously, I know us.
242
00:14:40.188 --> 00:14:44.730
I can name six or seven VCs off the bat that take big swings.
243
00:14:46.170 --> 00:14:47.991
I'm an LP of one fund that does.
244
00:14:48.432 --> 00:14:53.454
So it's a bit of a cop out, to be honest, without insulting every founder that's been on.
245
00:14:53.474 --> 00:14:55.515
But I think it's, I don't know.
246
00:14:55.755 --> 00:14:59.196
No, but I get that point of view because it's like we hear a lot of that.
247
00:14:59.236 --> 00:15:03.898
But then when I think about some of the most extraordinary founders, like I work for two founders that are amazing.
248
00:15:03.918 --> 00:15:05.858
I have seen them had no trouble getting capital.
249
00:15:06.119 --> 00:15:06.559
Yeah.
250
00:15:06.579 --> 00:15:07.099
No trouble.
251
00:15:07.459 --> 00:15:09.780
Emma Stern from Felix was here earlier today.
252
00:15:09.800 --> 00:15:10.160
Oh, my gosh.
253
00:15:10.180 --> 00:15:10.600
No trouble.
254
00:15:10.620 --> 00:15:10.900
Amazing.
255
00:15:11.080 --> 00:15:14.021
Our friend, Ahmed, no trouble getting capital.
256
00:15:14.041 --> 00:15:18.883
So I'm like, okay, well, there's an underlying theme here of their great entrepreneurs are building great companies.
257
00:15:19.423 --> 00:15:20.324
they're not struggling.
258
00:15:20.344 --> 00:15:20.784
Yeah.
259
00:15:20.824 --> 00:15:32.669
I think that, I think there's, and to be honest, I think part of, part of the, what Canadian VCs don't love, which is a bit of a problem in Toronto specifically is, I use this expression all the time.
260
00:15:32.689 --> 00:15:37.591
And if I, if like, I don't want to offend anyone, but hopefully people are listening and actually be like, Oh crap, am I part of that?
261
00:15:37.811 --> 00:15:42.573
You can play founder in Toronto for four years that actually trying to having to build a business.
262
00:15:42.613 --> 00:15:43.393
You can jump from
263
00:15:43.693 --> 00:15:46.435
accelerator, accelerator, bootcamp to bootcamp.
264
00:15:46.495 --> 00:15:49.736
As a shred, you can sort of just float around, float through it.
265
00:15:49.796 --> 00:15:53.078
And there's enough grant money and never actually have to build a company.
266
00:15:53.098 --> 00:15:54.519
And so why would I invest in that?
267
00:15:54.759 --> 00:15:55.180
No, yeah.
268
00:15:55.220 --> 00:15:57.501
It's the reason why I love the prairies.
269
00:15:57.641 --> 00:15:58.601
They don't have time for that.
270
00:15:58.661 --> 00:16:00.062
And that's the reason why I love New York too.
271
00:16:00.082 --> 00:16:01.803
Like we've made a bunch of investments in New York.
272
00:16:01.963 --> 00:16:02.564
They don't have time.
273
00:16:02.844 --> 00:16:03.004
Yeah.
274
00:16:03.164 --> 00:16:03.504
for that.
275
00:16:03.804 --> 00:16:10.086
Like we've, I think made five investments over the last four years in specifically New York, one in DC and four in New York.
276
00:16:10.446 --> 00:16:11.167
It's that same attitude.
277
00:16:11.187 --> 00:16:19.689
Like they, they are, there's no time when you're paying that kind of rent and those kinds of salaries as a founder, you don't have time to like, I'm going to go to this bootcamp for the next 12 weeks.
278
00:16:19.709 --> 00:16:22.110
And then this, you've been to one that they're amazing.
279
00:16:22.370 --> 00:16:22.930
Yeah.
280
00:16:22.950 --> 00:16:23.890
You don't need to go to six.
281
00:16:24.071 --> 00:16:24.331
Yeah.
282
00:16:24.551 --> 00:16:30.913
And you don't like whenever I see a founder show up for the third or fourth round of one where I'm like, uh, why am I on the panel?
283
00:16:30.953 --> 00:16:31.813
I'm seeing the same, uh,
284
00:16:32.253 --> 00:16:33.534
person at the same pitch.
285
00:16:33.554 --> 00:16:34.915
Like, come on, let's move on.
286
00:16:34.955 --> 00:16:37.497
Let's dig in and start building your business, start hustling.
287
00:16:37.617 --> 00:16:41.941
And so that's, when you don't have hustle, it's easy to be like, oh, I can't believe the money's not coming to me.
288
00:16:41.981 --> 00:16:43.162
Well, hustle.
289
00:16:43.242 --> 00:16:45.283
I didn't get any institutional money with fund one.
290
00:16:45.303 --> 00:16:48.026
I worked my ass off to fundraise.
291
00:16:48.406 --> 00:16:50.087
I didn't just say like, oh, it's brutal.
292
00:16:50.127 --> 00:16:51.868
Institutions don't invest in, like they don't.
293
00:16:52.329 --> 00:16:53.830
It's hard to get institutions.
294
00:16:53.890 --> 00:16:56.272
For fund two, we have one institution in fund two.
295
00:16:56.512 --> 00:16:58.093
And the rest is just high net worth.
296
00:16:58.113 --> 00:17:00.254
All high net, like medium high net worth.
297
00:17:00.274 --> 00:17:13.081
Like a lot of the people that worked, like there's a lot of Alaya Care alumni, a lot of work brand alumni, Vortex alumni, people that worked with me, people that like other founders that I grew up with and then other founders that I've met since that I've mentioned before.
298
00:17:13.101 --> 00:17:14.842
Yeah, I could have easily been like, oh,
299
00:17:15.162 --> 00:17:16.423
Like, oh, woe is me.
300
00:17:16.483 --> 00:17:17.944
There's no money from institutions.
301
00:17:17.964 --> 00:17:20.306
They really don't love emerging managers.
302
00:17:20.486 --> 00:17:24.028
I assumed starting a fund that I'd be like, back the Brinks truck up.
303
00:17:24.088 --> 00:17:25.429
Like, I'm a Lyacare.
304
00:17:25.509 --> 00:17:26.530
I named a Lyacare.
305
00:17:26.550 --> 00:17:31.294
I was like, yeah, Adrian, CEO, like the main founder, like Brady and I co-founded this.
306
00:17:31.314 --> 00:17:32.895
Like, we were a big part of it.
307
00:17:33.375 --> 00:17:36.798
Vortex, WorkBrain, like a rare resume.
308
00:17:36.858 --> 00:17:38.879
I thought it was going to be like easy.
309
00:17:38.899 --> 00:17:39.119
Easy.
310
00:17:39.139 --> 00:17:40.580
The easiest ever.
311
00:17:40.680 --> 00:17:47.125
And Fun2, I thought it would be even easier because Fun1, we had really good – we don't have returns yet in Fun1, but we've got really great performing porticos.
312
00:17:47.145 --> 00:17:47.806
I was like, oh, my God.
313
00:17:47.826 --> 00:17:50.147
My background, now Fun1, boom.
314
00:17:50.187 --> 00:17:50.968
Like this is done.
315
00:17:50.988 --> 00:17:52.229
I thought it was going to be like –
316
00:17:52.749 --> 00:17:53.249
Oh my God.
317
00:17:53.349 --> 00:17:54.950
No, it's like hustling hard.
318
00:17:55.551 --> 00:17:58.092
So yeah, I think that it's a bit of a cop out.
319
00:17:58.152 --> 00:18:04.136
You say you need total conviction before writing a check and I think it's four to eight weeks that you take to do due diligence.
320
00:18:04.336 --> 00:18:06.517
Sometimes as quick as six days, but usually four to eight weeks.
321
00:18:06.537 --> 00:18:06.637
Okay.
322
00:18:06.657 --> 00:18:07.458
Sometimes as quick as six days.
323
00:18:07.718 --> 00:18:10.019
What does total conviction look like for you?
324
00:18:10.259 --> 00:18:10.880
It's evolved.
325
00:18:11.260 --> 00:18:11.480
Yeah.
326
00:18:11.700 --> 00:18:12.601
It's definitely evolved.
327
00:18:12.641 --> 00:18:18.084
I think early on now would be like part of it, I've really never thought through this or flushed this out.
328
00:18:18.124 --> 00:18:19.645
So I might be catching myself in my own
329
00:18:22.127 --> 00:18:24.068
with this company and for this company.
330
00:18:24.289 --> 00:18:26.790
Would I want a Liacare using this company?
331
00:18:27.211 --> 00:18:28.291
Like how important would it be?
332
00:18:28.311 --> 00:18:30.973
Like, do I want to shake it and be like, you got to use this company?
333
00:18:31.193 --> 00:18:36.597
Would I like love to talk about this company sitting on a patio with friends?
334
00:18:36.637 --> 00:18:37.998
Like, who's my latest investment?
335
00:18:38.018 --> 00:18:39.459
I'm like, I'm so excited about it.
336
00:18:39.479 --> 00:18:40.400
Yeah.
337
00:18:41.165 --> 00:18:45.166
For larger VCs, would I be like, am I passionate about this?
338
00:18:45.266 --> 00:18:48.206
It's not material in that we have like a checklist.
339
00:18:48.306 --> 00:18:54.008
Some funds have like very formal processes, even early stage where like it has to hit these simple criteria.
340
00:18:54.028 --> 00:18:55.668
Sometimes it's repeat founder.
341
00:18:55.728 --> 00:18:57.848
Sometimes for us, it's brand new founder.
342
00:18:57.908 --> 00:19:02.129
Sometimes it's we invested in these two guys and like they're mid to late 50s.
343
00:19:02.149 --> 00:19:05.270
And we've invested in like two women in their 20s.
344
00:19:05.330 --> 00:19:05.510
Mm-hmm.
345
00:19:06.130 --> 00:19:14.975
Like, so it's like everything and anything could be what we, which actually I think that is a lesson from like the Alaya Care, building your own company when you're an operator and founder.
346
00:19:14.995 --> 00:19:21.579
We've always said like there's no bias when you're a founder and you're hiring, or at least not maybe you're hiring there's bias, but quickly it disappears.
347
00:19:21.759 --> 00:19:27.462
Like I think the natural inclination is to like hire, you like basketball, you hire someone wants to talk hoops with you in an interview.
348
00:19:27.702 --> 00:19:31.264
But eventually you need to start building a real culture of a company and you realize that.
349
00:19:31.284 --> 00:19:31.544
Yeah.
350
00:19:31.624 --> 00:19:39.707
It's sort of the ridiculous analogy, but if like a robot or an alien came down from space and could actually do an amazing job at customer success, well, that's the person I want.
351
00:19:39.727 --> 00:19:47.810
If that's the best person for my company, when you're doing that, building a big international company that way, well, you certainly should think of that way for investing and sort of invest.
352
00:19:47.850 --> 00:19:50.752
We had someone early on was like, are you running a DI fund?
353
00:19:50.772 --> 00:19:54.173
Because it's like the most diverse fund for our first year.
354
00:19:54.373 --> 00:19:55.434
We at one point.
355
00:19:55.494 --> 00:19:56.554
It's also so sad.
356
00:19:56.714 --> 00:19:58.135
No, it is so sad.
357
00:19:58.195 --> 00:19:58.716
I know.
358
00:19:58.736 --> 00:20:05.719
No, we're hearing like 2% of all VC funding go to women, but half of our fund one CEOs are changing that, Neil.
359
00:20:05.860 --> 00:20:06.240
Thank you.
360
00:20:06.280 --> 00:20:09.662
But it wasn't like, it wasn't because I've got three girls.
361
00:20:09.742 --> 00:20:11.163
It was statistics.
362
00:20:11.423 --> 00:20:14.865
Like when you're seeing 800 companies and 410 are women and 390 are men.
363
00:20:17.686 --> 00:20:24.471
likely it's going to work out and it's going to like shake out that probably unless you're really biased, you should have about 50, 50.
364
00:20:24.511 --> 00:20:26.692
Maybe it's not, maybe it's like skewed right now.
365
00:20:26.712 --> 00:20:36.379
I think fun too, has more men, but I was, and I was a whole separate talk, but I actually have theories that base rooted from hockey and research I've done on like my daughters and, and,
366
00:20:36.759 --> 00:21:01.164
young girl athletes versus young boy athletes that I actually think that the the wiring of a young girl and maybe changing and evolving is actually better suited for founding a company that's we can we can have you heard me talk about this so I haven't heard it it's been a while since there was a report that I think Canadian Tire put out like years ago and I said I end up finding it when I think my oldest my middle daughter my oldest doesn't play hockey my middle daughter would have been about 13
367
00:21:01.884 --> 00:21:07.769
And it was like, someone gave it to me and I passed it on to our coaching staff who were like just dudes who coached dudes all their life.
368
00:21:07.809 --> 00:21:14.495
And like, there's a real big difference between what, like, and again, this is now about a 10-year-old study, so it might be different.
369
00:21:14.535 --> 00:21:20.040
But at the time, if you ranked, like kids were asked, like, what's the most important thing to you?
370
00:21:20.261 --> 00:21:21.722
But basically it was something along the lines of,
371
00:21:22.042 --> 00:21:28.364
Boy athletes, like elite boy athletes, they cared about personal stats, winning, and the reputation of their team.
372
00:21:28.384 --> 00:21:30.405
They wanted to play for a team that had the best reputation.
373
00:21:30.445 --> 00:21:32.745
They wanted to win, and they cared about personal stats.
374
00:21:33.106 --> 00:21:40.348
Girl athletes cared about their stakeholder relationships, how they related to their coaches, their teammates, and the team.
375
00:21:40.928 --> 00:21:43.629
They cared about personal growth and the shared experience.
376
00:21:44.269 --> 00:21:49.491
So based off of that, fast forward 12 years later, like woman and young man are running a company.
377
00:21:49.831 --> 00:21:55.093
Knowing what I know about what actually builds a winner, which is like, does this person care about all their stakeholders?
378
00:21:55.133 --> 00:21:57.294
Do they care about their experience?
379
00:21:57.434 --> 00:21:58.334
Are they coachable?
380
00:21:58.374 --> 00:21:59.494
Do they care about their growth?
381
00:21:59.954 --> 00:22:05.656
Versus someone who cares about personal statistics and like the reputation of the fund and winning.
382
00:22:05.736 --> 00:22:07.397
But like that's short term stuff.
383
00:22:07.417 --> 00:22:10.598
That isn't what builds a foundation of a company, a foundation of a startup.
384
00:22:11.018 --> 00:22:17.566
to really succeed, needs someone who all their employees will run through a wall for them, because it's not good enough for founder-led sales only.
385
00:22:17.606 --> 00:22:19.348
You need to be able to build a sales culture.
386
00:22:19.368 --> 00:22:28.979
You need to be able to do a customer success culture, development, all those things come from the leader that if you cared about, like shared experience, the growth of them, so all those things.
387
00:22:29.400 --> 00:22:30.941
I don't know if that correlates 100%.
388
00:22:31.522 --> 00:22:36.325
But there's definitely I've seen that correlate to great founders that are women.
389
00:22:36.345 --> 00:22:43.769
So when you're interviewing and talking to founders, obviously in your role, you are trying to pick winners and you're trying to read people really quickly.
390
00:22:44.089 --> 00:22:50.632
What are the few questions that you're asking to suss out some of those things or try to gauge if they have the right long term?
391
00:22:50.652 --> 00:22:53.574
I give this advice all the time at any like talk I've done.
392
00:22:53.614 --> 00:22:55.035
I just talked about this at Sass North.
393
00:22:55.215 --> 00:23:00.938
The actual like it's not a question, but I look for signals, which is like the empathy of the founders for each other.
394
00:23:01.238 --> 00:23:10.346
So how if let's say you two are pitching me, but you're cutting each other off and you're like you're rolling your eyes at her answer and you're like you're just not engaged with each other.
395
00:23:10.366 --> 00:23:12.488
And it's no different than like parenting.
396
00:23:12.668 --> 00:23:14.589
You're setting the foundation for the entire company.
397
00:23:14.649 --> 00:23:21.195
So if the employees see a broken team, even it could be a team of all stars, but if they don't have that connection.
398
00:23:21.775 --> 00:23:23.976
teamwork, chemistry, empathy, whatever you want to call it.
399
00:23:23.996 --> 00:23:28.257
But if they don't have that, if you guys don't have that, then your first employees won't have that.
400
00:23:28.397 --> 00:23:31.638
And then your next – and it's concentric circles.
401
00:23:31.698 --> 00:23:33.938
So it's each circle out, it cascades.
402
00:23:33.998 --> 00:23:34.418
Exactly.
403
00:23:34.438 --> 00:23:37.599
And so I think that – I don't ask a question, but I look for that.
404
00:23:38.159 --> 00:23:46.641
Then like the very typical – I think every VC does that – is really challenge someone to see if they push back, if they're willing – if they're coachable, but also if they push back.
405
00:23:46.661 --> 00:23:49.502
Like you don't want someone to roll over and be like, yeah, you're right, I should –
406
00:23:50.042 --> 00:23:52.225
The New Zealand market is the right market for me.
407
00:23:52.445 --> 00:23:58.454
So I'll sort of sometimes throw it like a stupid idea to see if they're going to agree, then that's not good.
408
00:23:58.474 --> 00:23:59.255
If they're too agreeable.
409
00:23:59.515 --> 00:24:04.602
But also then I'll – like if I push back and they – if I push on something and they push back a little bit, I like that too.
410
00:24:05.443 --> 00:24:07.124
So it's like it's the balancing act of it all.
411
00:24:07.144 --> 00:24:08.185
It's really like the.
412
00:24:08.485 --> 00:24:10.066
So I said there's not a we don't have a checklist.
413
00:24:10.106 --> 00:24:11.347
It's the chemistry of the room.
414
00:24:11.487 --> 00:24:19.951
And it's like how we read them in the room, how they talk about their co-founders, how they interact, how honest are they with themselves.
415
00:24:20.312 --> 00:24:26.155
You can catch a lie pretty quickly in a financial plan, like financial model in a deck.
416
00:24:26.635 --> 00:24:31.458
And whether it's a lie or it's just a complete absence of understanding what reality is,
417
00:24:32.018 --> 00:24:34.079
That's also like a big, big red flag for us.
418
00:24:34.299 --> 00:24:41.683
So if someone says something in the pitch, but it's like a complete clear lie, like we don't love that.
419
00:24:41.863 --> 00:24:45.845
And like that's it's a huge red flag and a good like an end of end of story.
420
00:24:45.905 --> 00:24:48.527
So there's zero strikes and zero tolerance for that.
421
00:24:49.070 --> 00:24:49.250
Yeah.
422
00:24:49.791 --> 00:25:04.473
So to kind of extend off of Trumana's question of what you can see before you're making the investment in portfolio companies in your fund today, what are the common traits that you see in successful companies and how they're operating?
423
00:25:05.064 --> 00:25:12.407
One common trait is like ridiculously talented, motivated founders that again, I would want to work for.
424
00:25:12.427 --> 00:25:17.590
I think that's part of it, not just work with, I would want to work for, I'd want to be their number two, their number three or number 10.
425
00:25:17.770 --> 00:25:20.131
So I think that's like one right off the bat.
426
00:25:20.251 --> 00:25:22.732
These are not great ideas with weak founders.
427
00:25:23.412 --> 00:25:23.852
no interest.
428
00:25:23.892 --> 00:25:27.414
I'd rather a great founder with like a weak idea that can pivot any day.
429
00:25:27.674 --> 00:25:32.535
Second, we're really leaning into now called like less traditional things.
430
00:25:32.916 --> 00:25:42.019
So I know that's so vague, but like we just invest in a company that's like focused on the unmonitoring the used cooking oil industry, which like I didn't know anything about.
431
00:25:42.039 --> 00:25:43.199
Sorry, unmonitoring the what?
432
00:25:43.239 --> 00:25:45.180
Used cooking oil industry.
433
00:25:45.200 --> 00:25:45.680
You're like, what?
434
00:25:45.780 --> 00:25:46.360
That's what I said.
435
00:25:46.500 --> 00:25:46.941
Sorry, what?
436
00:25:46.981 --> 00:25:47.401
What did you say?
437
00:25:47.421 --> 00:25:47.521
Yeah.
438
00:25:48.061 --> 00:25:50.002
That was a company we met in Saskatoon.
439
00:25:50.183 --> 00:25:51.804
And it's freaking fascinating.
440
00:25:52.084 --> 00:25:54.065
No one's like vibe coding that in their garage.
441
00:25:54.125 --> 00:25:57.127
Like we're just not like the three of us are not spending our weekend.
442
00:25:57.948 --> 00:25:59.529
You know, what we got to do is they use cooking oil.
443
00:26:00.029 --> 00:26:09.195
Another company we invested in fund two is focusing on the obsolete inventory in warehouses and 3PLs, like third-party logistic warehouses.
444
00:26:09.215 --> 00:26:10.957
There's like tons of obsolete inventory.
445
00:26:10.977 --> 00:26:11.317
There you go.
446
00:26:11.637 --> 00:26:12.197
It doesn't go anywhere.
447
00:26:12.358 --> 00:26:13.458
It wastes tons of money.
448
00:26:13.759 --> 00:26:14.739
And she's brilliant.
449
00:26:14.880 --> 00:26:22.866
And she was in that industry and knew that she was like the queen of connecting people to charities or wholesalers or liquidators.
450
00:26:23.286 --> 00:26:27.309
And it's sitting there in these 3PLs wasting so much capital.
451
00:26:27.329 --> 00:26:28.730
Like you have to refrigerate her.
452
00:26:28.770 --> 00:26:30.592
You have to keep it stock, whatever it is.
453
00:26:30.632 --> 00:26:31.993
You just have to keep it on your shelves.
454
00:26:32.013 --> 00:26:33.334
It's wasting your inventory space.
455
00:26:33.354 --> 00:26:33.554
Yeah.
456
00:26:33.834 --> 00:26:38.639
So, like, again, like that is a super unsexy space, but it's super interesting and no one's thinking about it.
457
00:26:38.659 --> 00:26:43.623
So we're trying to find things that are that like I don't want to find something that 10 other people are doing.
458
00:26:43.803 --> 00:26:45.445
And that's that's kind of that's another thing.
459
00:26:45.465 --> 00:26:45.765
I don't know.
460
00:26:45.785 --> 00:26:47.286
That's that doesn't really answer your question.
461
00:26:47.346 --> 00:26:49.548
But no, it's a fair point because it's really tough.
462
00:26:49.568 --> 00:26:53.632
Sometimes I was talking to Adrian about this, where you have a lot of these A.I.
463
00:26:53.692 --> 00:26:54.653
SaaS companies that.
464
00:26:55.033 --> 00:27:00.957
Like something in voice AI where people will invest in one and then there's like six others just like it in YC.
465
00:27:00.997 --> 00:27:02.537
And you're like, well, did I pick the right one?
466
00:27:02.557 --> 00:27:03.358
Yeah, exactly.
467
00:27:03.398 --> 00:27:05.819
And then it's terrifying because it's like which one?
468
00:27:05.839 --> 00:27:07.400
They all have different wrappers around them.
469
00:27:07.420 --> 00:27:10.702
They're like, what's the defensibility versus something like that?
470
00:27:10.722 --> 00:27:12.863
It's not getting replicated anytime soon.
471
00:27:13.003 --> 00:27:15.085
So I think that's really important for us.
472
00:27:15.105 --> 00:27:20.268
Like the last sort of like checkbox, I'd say, and it goes back to that.
473
00:27:20.348 --> 00:27:24.530
Like are they building a company because they want to build a company or is this something they love?
474
00:27:24.610 --> 00:27:27.993
And like the guys that are building the used cooking oil company, at first they didn't really know.
475
00:27:28.013 --> 00:27:30.075
It was just a job and then they sort of took over it.
476
00:27:30.396 --> 00:27:36.341
But they freaking like they get up in the morning, they think about this or like I want people that are waking up at 5 a.m.
477
00:27:37.267 --> 00:27:38.228
and writing notes down.
478
00:27:38.388 --> 00:27:41.350
And they're like, that's still the founder that's going to win in a space.
479
00:27:41.631 --> 00:27:47.816
When I started Storytime, there was like a mentor of mine who's probably one of Canada's most successful entrepreneurs.
480
00:27:47.936 --> 00:27:51.159
And he said to me, he's like, Neil, you don't make a lot of money as a VC.
481
00:27:51.319 --> 00:27:53.100
Like, why don't you start another software company?
482
00:27:53.120 --> 00:27:55.522
If you don't want to do a live account anymore, start another software company.
483
00:27:55.542 --> 00:28:01.307
You'll make so much from just your reputation, be able to raise so easily, which a hundred percent he's right.
484
00:28:01.407 --> 00:28:05.911
I would have been able to raise easily, but I sort of said, one, I didn't feel the need to, like, I don't,
485
00:28:06.051 --> 00:28:06.994
That's not my motivator.
486
00:28:07.014 --> 00:28:11.427
My motivator, we talked off the top, was like giving back something in the ecosystem to leave a legacy.
487
00:28:11.648 --> 00:28:13.273
But the other thing is, like I said to him, I was like...
488
00:28:13.629 --> 00:28:19.152
I don't have anything I want to, like, I don't have a widget or a, like, a company to build.
489
00:28:19.572 --> 00:28:20.512
This is what I want to build.
490
00:28:20.752 --> 00:28:21.953
And, like, this is what I'm passionate about.
491
00:28:21.993 --> 00:28:26.515
This is where I'm going to wake up and, like, dig in and research and learn about.
492
00:28:26.835 --> 00:28:33.999
So that, I think, is also really important is not to be, like, we do come across a lot, entrepreneurs that want to be entrepreneurs for the sake of it.
493
00:28:34.319 --> 00:28:35.359
Yeah, the wrong reason.
494
00:28:35.399 --> 00:28:38.541
Yeah, it's just not what we're, it's not what I want to invest in.
495
00:28:38.721 --> 00:28:38.901
Mm-hmm.
496
00:28:39.142 --> 00:28:43.206
You're invested in companies, Canada, the U.S., abroad.
497
00:28:43.306 --> 00:28:50.092
Do you notice any broad stroke differences between the founders that you're invested in across different geographies?
498
00:29:03.305 --> 00:29:08.771
Certainly the rest of Canada has a very different perspective, like a very different sort of attitude.
499
00:29:08.831 --> 00:29:11.714
And it's really like a not easy journey.
500
00:29:11.734 --> 00:29:14.296
There's not a million VCs to book meetings with.
501
00:29:14.617 --> 00:29:18.961
There's a really good healthy family office ecosystem, both in like the prairies.
502
00:29:18.981 --> 00:29:20.122
I think I've talked about Toronto.
503
00:29:20.142 --> 00:29:22.745
I think there's some Toronto founders that are like,
504
00:29:23.085 --> 00:29:24.647
heart and hustle all the time.
505
00:29:24.687 --> 00:29:27.190
Like Adrian was and we were and others are.
506
00:29:27.530 --> 00:29:34.739
New York is a totally different vibe where it's like, they are just, they just are like, it's like weird hustle.
507
00:29:34.759 --> 00:29:35.480
It's super cool.
508
00:29:35.980 --> 00:29:39.604
And the Tel Aviv, like they just, they got to get to the U S as quick as they can.
509
00:29:39.624 --> 00:29:39.784
They're,
510
00:29:40.485 --> 00:29:45.327
They work hours from their 11 o'clock till a midnight every day.
511
00:29:45.827 --> 00:29:52.169
And it's like the amount of, again, similar to the prairies, the network effect there is massive.
512
00:29:52.430 --> 00:29:58.312
And it's per capita the highest amount of unicorns than any other place in the world.
513
00:29:58.332 --> 00:30:00.853
There's a population of 9 or 10 million.
514
00:30:01.273 --> 00:30:03.214
And they've got like 43 unicorns.
515
00:30:03.254 --> 00:30:04.974
Canada's 35 million or 40.
516
00:30:05.014 --> 00:30:06.075
I don't know what our population is.
517
00:30:06.095 --> 00:30:07.615
We have 31 unicorns.
518
00:30:07.915 --> 00:30:09.156
What's the book about...
519
00:30:09.758 --> 00:30:11.280
Startup Nation.
520
00:30:11.400 --> 00:30:11.620
Yes.
521
00:30:11.660 --> 00:30:12.100
Thank you.
522
00:30:12.140 --> 00:30:12.861
It's phenomenal.
523
00:30:12.881 --> 00:30:14.443
Andrew was recommending that for me.
524
00:30:14.463 --> 00:30:15.264
Yeah, that's really good.
525
00:30:15.324 --> 00:30:24.473
When I was in Ivy, we ran a one-week-long program where we would take students to Tel Aviv and they'd go and review agritech and all the different – And just take all the learnings.
526
00:30:24.493 --> 00:30:25.494
And just take all the learnings, yeah.
527
00:30:25.514 --> 00:30:25.654
Yeah.
528
00:30:26.194 --> 00:30:27.155
Yeah, it's unreal.
529
00:30:27.815 --> 00:30:35.059
And that book's amazing because it really talks about why when you're really on an island, they've got nowhere to go from a market's perspective.
530
00:30:35.099 --> 00:30:35.619
It's fascinating.
531
00:30:35.639 --> 00:30:38.581
So it's a really interesting ecosystem.
532
00:30:38.621 --> 00:30:45.024
We brought a bunch of RLPs, Jewish and non-Jewish, last year there, and it was super eye-opening and interesting.
533
00:30:45.564 --> 00:30:51.567
It's exciting for them to see and hopefully valuable for like the world for people to see.
534
00:30:51.587 --> 00:30:52.267
Totally.
535
00:30:52.287 --> 00:30:53.448
For people's eyes to be open.
536
00:30:53.528 --> 00:31:01.831
When it comes to your own fund, do you think about building a fund and investing to support several strong outcomes?
537
00:31:02.192 --> 00:31:06.854
Or do you think about like needing the few extraordinary outcomes that are going to return the fund?
538
00:31:06.934 --> 00:31:10.855
So power law versus like concentration is like the big topic and debate.
539
00:31:11.096 --> 00:31:14.057
There's obviously a ton of data that backs up power law.
540
00:31:14.777 --> 00:31:19.763
Power law being like, I'm going to make 30 investments that are small.
541
00:31:19.883 --> 00:31:24.649
And as long as one is a monster shot, like moonshot, then it pays for everything.
542
00:31:24.949 --> 00:31:30.295
Again, going back to the very, very beginning of our conversation, our thesis and our skill set is helping people.
543
00:31:30.455 --> 00:31:32.556
So like, I don't want to just write 30 checks.
544
00:31:32.576 --> 00:31:34.496
So right off the bat, I want to help and dig in.
545
00:31:34.636 --> 00:31:39.318
We're a big fund in Canadian early stage, like history, I guess, but there's a lot of bigger ones.
546
00:31:39.558 --> 00:31:43.339
But we are a small fund compared to like the U.S., some of the big U.S. funds.
547
00:31:43.379 --> 00:31:47.680
You know, there's probably a hundred funds, 10 times bigger than ours in the U.S. in San Fran alone.
548
00:31:48.120 --> 00:31:48.861
that do what we do.
549
00:31:49.261 --> 00:31:55.609
Our strategy and our ability to help companies, I think our best approach is to look at stacked returns.
550
00:31:55.769 --> 00:32:02.658
I'm not counting on one of them to be the 33rd unicorn in Canada, but if 10 of them out of 16 are,
551
00:32:03.338 --> 00:32:20.097
survive and of those 10 to get acquired for like a 2x four get acquired for like a 6x and two more get acquired for a 10x and then the last two get acquired for like a 15x it's actually a really a proportionally phenomenal return and right now like knock on
552
00:32:20.638 --> 00:32:21.879
would, we're doing well.
553
00:32:21.979 --> 00:32:26.284
And like, we're, we've got really tremendous growth across most of our portfolio.
554
00:32:26.824 --> 00:32:36.393
And again, it's, it's a long, hard, painful journey for these founders, but I'd, I'd rather build for the stacked return for the, like the stacked returns and hope.
555
00:32:36.433 --> 00:32:45.362
And at the same time, if one of them does pop, well then, then really laughing, but yeah, I did, I just can't like the power law.
556
00:32:45.482 --> 00:32:48.024
I mean, it's still, it's still, power law still comes into play.
557
00:32:48.205 --> 00:32:52.649
But I think, and I don't think I use this analogy or like our pre-call and I use it probably way too much.
558
00:32:52.909 --> 00:32:56.832
I don't think you can get to the moon or to Mars if you can't get off the launch pad.
559
00:32:57.033 --> 00:33:00.236
And our goal as a fund is like, we want to get people into orbit.
560
00:33:00.396 --> 00:33:03.699
If we can get them into orbit, then they're like, it's sort of different than power law.
561
00:33:03.719 --> 00:33:11.526
Power law is like, you just give them fuel on the, on the, like, we're going to launch as many rockets as we can and hope some make it to the moon or Mars.
562
00:33:12.146 --> 00:33:14.147
our view is like, let's get them into space.
563
00:33:14.587 --> 00:33:15.467
Let's get them into orbit.
564
00:33:15.627 --> 00:33:16.728
And then we'll figure it out.
565
00:33:16.788 --> 00:33:23.871
Like, are they going to get to the moon or Mars, but from space, like once they're in orbit, which is the really the hardest single part of the journey is the beginning.
566
00:33:23.891 --> 00:33:30.413
So I think it's kind of, I call it like in my mind, a hybrid power law is like, we want to get them there to the first part of the first phase.
567
00:33:30.533 --> 00:33:31.814
And then let's see what happens.
568
00:33:31.834 --> 00:33:35.335
And if we can get, maybe it's not one out of 20, we need to succeed.
569
00:33:36.015 --> 00:33:37.616
But if we get 10, I think we have
570
00:33:41.217 --> 00:33:44.219
With the chances of like stacked returns if they don't make it.
571
00:33:44.619 --> 00:33:48.542
Do you have any opinions on what we need to see differently in Canada?
572
00:33:48.602 --> 00:33:54.445
I don't have a ton of like hot take opinions other than everybody else has talked about in the last year or two.
573
00:33:54.885 --> 00:34:02.670
I think we're spending like the UE puts more into AI supporting founders in the UE in like a week than we do in Canada in a year.
574
00:34:02.930 --> 00:34:04.431
We have all the results.
575
00:34:04.451 --> 00:34:09.075
The people in Montreal that are doing AI are the best and smartest.
576
00:34:09.155 --> 00:34:11.697
And they freaking invented so much of it.
577
00:34:11.717 --> 00:34:12.797
I have one of our LPs.
578
00:34:13.098 --> 00:34:17.081
His family is literally the founders of optimization, root optimization.
579
00:34:17.281 --> 00:34:23.045
We have the best in this country, the most talent, original talent in this country, I think, than anywhere in the world.
580
00:34:23.485 --> 00:34:34.033
And yet our like just Google what the UAE puts in or Saudi put into their AI or like Israel, a country a third the size, what they invest and how they support.
581
00:34:34.353 --> 00:34:38.216
And our best, Shred is amazing and Shred's a phenomenal place like play.
582
00:34:38.256 --> 00:34:41.899
It's sort of vortex connect like a modern agents previous company.
583
00:34:42.379 --> 00:34:47.744
Our success was a lot determined because of Shred, but I think we can be putting a lot more in.
584
00:34:48.044 --> 00:34:50.966
So I think the government is, we're a fraction of where we need to be.
585
00:34:51.302 --> 00:34:57.530
What would be the policy changes that you think would move the needle the most when it comes to early stage funding in this country?
586
00:34:57.711 --> 00:35:09.226
Well, certainly seeing like emerging funds having more access to capital because it's like difficult for a BDC or like a large crown corporation or like a current like the funds need to flow, I think, through.
587
00:35:09.550 --> 00:35:12.911
So access to capital through government funding through emerging managers?
588
00:35:12.931 --> 00:35:13.131
Yeah.
589
00:35:13.211 --> 00:35:16.512
I mean, it's selfish, but I think that'd be a phenomenal, that'd be a smarter way.
590
00:35:16.532 --> 00:35:19.153
And I think there's definitely steps in the right direction.
591
00:35:19.173 --> 00:35:27.876
I think the Anovia North Leaf Fund is an amazing step in that direction for like fund-to-funds focusing on emerging managers.
592
00:35:28.096 --> 00:35:29.797
There needs to be just a lot more.
593
00:35:29.817 --> 00:35:30.477
It should be really...
594
00:35:31.118 --> 00:35:36.763
Looking back four years ago, I should have – as soon as I hung my shingle up, it should have been like here, here, here, here.
595
00:35:37.203 --> 00:35:38.084
Like go to town.
596
00:35:38.264 --> 00:35:45.571
You're going to bring like the founders I have on my LP list into this cycle of like the circle of life.
597
00:35:45.632 --> 00:35:45.812
Like –
598
00:35:46.232 --> 00:36:00.724
Seems to me like a no-brainer for how to get, instead of me writing 750 checks, 16 of them, if I could have been writing $2 million checks and 25 of them and be able to hire a couple of people, way to the moon.
599
00:36:01.164 --> 00:36:11.132
You also mentioned, and I think this was a BetaKit article, where you were constrained by the amount of follow-on capital that you could pour into some of these founders and that that was a huge point of frustration.
600
00:36:11.393 --> 00:36:15.276
You just elaborated a little bit as to why and are you seeing it different with Fund2?
601
00:36:15.663 --> 00:36:15.903
Yeah.
602
00:36:15.923 --> 00:36:16.945
So I think it's a big learning.
603
00:36:16.985 --> 00:36:20.470
Like I doing the first fund, I still, I mean, I'm in the second fund.
604
00:36:20.490 --> 00:36:24.435
I still don't know what I'm doing half the time and figuring it out to be totally transparent.
605
00:36:24.455 --> 00:36:27.359
Maybe that's why institutions were like, pass on this guy for now.
606
00:36:27.379 --> 00:36:30.503
Maybe I shouldn't admit that on a large podcast.
607
00:36:30.864 --> 00:36:31.364
Of large.
608
00:36:31.925 --> 00:36:33.087
But soon to be.
609
00:36:33.287 --> 00:36:34.929
Yeah, it seems to be manifesting.
610
00:36:35.009 --> 00:36:36.271
Manifested for you.
611
00:36:36.451 --> 00:36:44.341
But no, I am learning still, as I think all of us are, and understanding the different purposes of follow-on.
612
00:36:44.581 --> 00:36:48.106
Sometimes it's to keep a company going when they need to get over a bridge.
613
00:36:48.326 --> 00:36:52.391
Sometimes it's because this is a freaking winner and we should be getting more ownership.
614
00:36:52.551 --> 00:36:55.053
It's one of those things just like power law versus concentration.
615
00:36:55.073 --> 00:36:56.534
It's like heavily debated out there.
616
00:36:56.874 --> 00:36:58.996
We probably need to be smarter.
617
00:36:59.156 --> 00:37:00.797
At first, it's like, oh, you're raising your next round.
618
00:37:00.817 --> 00:37:02.178
Of course, we'll take our pro rata.
619
00:37:02.198 --> 00:37:10.063
But we had super pro rata rights with some, meaning like we can instead of owning 8% with the next round, we could have upped it to 10% and we didn't.
620
00:37:10.263 --> 00:37:13.446
And sometimes we should have passed and been like, yeah, this is not the best.
621
00:37:13.806 --> 00:37:14.767
So I think we're learning.
622
00:37:14.827 --> 00:37:19.270
I think our for my fun one LPs, don't worry, we're like overall all good decisions.
623
00:37:19.310 --> 00:37:19.530
Yeah.
624
00:37:19.930 --> 00:37:28.981
But I think we're certainly learning and again, having more capital to really support some of these like winners and super superstars would be available, would be great.
625
00:37:29.182 --> 00:37:36.811
What we've really leaned into actually, which is really interesting and our LPs have loved it in Fund 2 or since it's included some Fund 1 deals is when –
626
00:37:38.032 --> 00:37:41.737
Ever we've had the opportunity to follow on, we've extended to our LPs.
627
00:37:42.137 --> 00:37:45.721
So our investors have now invested in four additional companies.
628
00:37:45.761 --> 00:37:46.782
And it's not like everyone.
629
00:37:47.203 --> 00:37:48.965
So different people get to choose.
630
00:37:48.985 --> 00:37:51.708
They want to put $25,000 or $50,000 into this company.
631
00:37:52.069 --> 00:37:53.370
And we're presenting them.
632
00:37:53.490 --> 00:37:56.133
We're telling them why we're in, why we're continuing or not.
633
00:37:56.153 --> 00:37:56.334
Right.
634
00:37:57.054 --> 00:38:02.836
And it's been really awesome to see our investors get to personally invest in winners that we are finding.
635
00:38:03.216 --> 00:38:06.837
And if it works out, they're then getting like tremendous returns.
636
00:38:07.217 --> 00:38:11.139
Whereas like an angel investor, you're really at the mercy of like the unknown.
637
00:38:11.179 --> 00:38:21.982
Now they know they're kind of angel investing, but in stuff that they love, but in stuff that they know that I'm on the board or I'm working with or I'm with them day to day, which is very cool.
638
00:38:22.182 --> 00:38:32.491
Is there anything as a fund that you do differently in terms of how you operate or the requirements you have for founders and ex-founder to be like more founder friendly?
639
00:38:32.931 --> 00:38:35.513
I am more understanding of the struggles.
640
00:38:35.613 --> 00:38:42.138
I think a lot of board meetings sometimes are really heavily focused on like what's the numbers?
641
00:38:42.158 --> 00:38:43.079
What was the forecast?
642
00:38:43.139 --> 00:38:43.560
How did you do?
643
00:38:43.680 --> 00:38:44.180
And I get it.
644
00:38:44.260 --> 00:38:47.002
Like I first of all, I sat in that seat twice now.
645
00:38:47.323 --> 00:38:49.845
I was like a founder and operator.
646
00:38:51.386 --> 00:38:57.990
I think you need to like realize that I think a VC needs to realize this journey is really tough, really hard.
647
00:38:58.670 --> 00:39:00.411
And it's not all easy.
648
00:39:01.732 --> 00:39:05.314
Most of it's hard, like 95% of it's hard, maybe 99%.
649
00:39:05.394 --> 00:39:09.257
And so I think when I'm working with a founder, like I let them know.
650
00:39:10.138 --> 00:39:14.765
And this goes back to, I said this earlier, is like I understand how hard it is to worry.
651
00:39:15.586 --> 00:39:16.828
Do I have product market fit?
652
00:39:17.089 --> 00:39:18.391
Do we have enough capital?
653
00:39:18.651 --> 00:39:19.933
What's the future look like?
654
00:39:19.953 --> 00:39:24.420
So I think I give them like grace to be vulnerable and to be –
655
00:39:25.121 --> 00:39:33.528
like honest with me about their worries and fears because I'm not going to punish them for like, there's different, like the board meeting persona and then the real persona.
656
00:39:33.548 --> 00:39:39.954
And I usually, at least a half a dozen of our founders will usually call me either right before the board meeting or right after the board meeting.
657
00:39:40.014 --> 00:39:42.556
And probably that's the most real conversation.
658
00:39:43.036 --> 00:39:48.841
Whereas the board meeting, it's like a lot of like pony show, but then like, let's talk about the real, like what's really keeping you up at night.
659
00:39:49.041 --> 00:39:50.803
Like what's terrifying you right now.
660
00:39:51.383 --> 00:39:52.484
And like, what,
661
00:39:52.605 --> 00:39:53.913
What's making you cry?
662
00:39:53.933 --> 00:39:55.302
Like, it's okay.
663
00:39:55.322 --> 00:39:56.127
Like, I've been there.
664
00:39:56.689 --> 00:40:03.092
Have you ever had a founder, because that's a really interesting point that you bring up on vulnerability and when to drop the posture a little bit.
665
00:40:03.412 --> 00:40:07.233
Have you ever had a founder not be able to get there with you?
666
00:40:07.273 --> 00:40:13.176
Or is there anything in like the first 90 to 100 days where you can tell the way their relationship is going to go?
667
00:40:13.196 --> 00:40:18.978
I don't want to get too specific because I don't want them, if they're listening or watching, them to pick them out.
668
00:40:18.998 --> 00:40:23.980
But there's like a founder that I know is not there.
669
00:40:24.160 --> 00:40:25.321
And it's just it's a.
670
00:40:25.561 --> 00:40:25.861
It's tough.
671
00:40:25.881 --> 00:40:25.981
Yeah.
672
00:40:26.061 --> 00:40:27.562
Yeah, it's brutal.
673
00:40:27.622 --> 00:40:40.550
I'm so frustrated by it because there's all the reasons this company could be so successful, but if they would just sort of let us in and let me and let Lauren and Ryan in to be like, let's figure this out.
674
00:40:40.570 --> 00:40:41.451
Yeah, let's figure this out.
675
00:40:41.471 --> 00:40:42.391
But if they don't want to.
676
00:40:42.652 --> 00:40:42.952
Yeah.
677
00:40:42.992 --> 00:40:44.593
And so, yeah, it's a great question.
678
00:40:44.653 --> 00:40:46.894
It's frustrating, but there's nothing you can do about it.
679
00:40:47.195 --> 00:40:49.376
And at the time of investing, you couldn't tell.
680
00:40:49.656 --> 00:40:50.317
I didn't know that.
681
00:40:50.377 --> 00:40:52.258
In fact, I actually thought it would be the complete opposite.
682
00:40:52.298 --> 00:40:54.079
It caught me big time off guard.
683
00:40:54.219 --> 00:40:57.662
Just probably like time and the right conversations and you hope it'll work.
684
00:40:58.663 --> 00:41:07.389
I know that you were mentioning earlier, obviously, like the Canadian market is very, very different and we don't have the same crazy companies with valuation sizes.
685
00:41:07.790 --> 00:41:09.451
I and I feel like both of us, we talked.
686
00:41:09.451 --> 00:41:09.771
about this.
687
00:41:09.811 --> 00:41:14.735
We cannot wrap our head around some of the valuation sizes as two people not being in venture.
688
00:41:15.195 --> 00:41:20.099
I feel like a decade ago, the big story was, can you spot the next billion dollar company?
689
00:41:20.199 --> 00:41:28.485
And now you have these companies valued at a billion dollars no revenue or all these companies at trillions of dollars, which my brain can't even conceptualize.
690
00:41:28.905 --> 00:41:31.927
What are your thoughts on just where this is going?
691
00:41:32.067 --> 00:41:32.588
How to...
692
00:41:33.188 --> 00:41:40.572
So think about it all being part of a small fund where we write small checks in companies that are worth like less than $10 million at the time.
693
00:41:40.592 --> 00:41:47.076
Like I sort of interrupted you a little bit on the question, but like $100 million or $75 million exit is still really good.
694
00:41:48.557 --> 00:41:50.898
$150 million, $250 million exit is amazing.
695
00:41:51.179 --> 00:41:53.040
I mean, look, as a VC, I want to spot.
696
00:41:53.926 --> 00:41:55.987
three unicorns in every fund.
697
00:41:56.007 --> 00:41:56.887
I would love that.
698
00:41:57.027 --> 00:42:02.848
I think if a founder's hung up on that, then they're going to be really, they're not going to enjoy the journey.
699
00:42:02.949 --> 00:42:13.291
I think a, we were just talking on before we started with like Adrian about a, a friend of ours who just exited and made a, an incredible return for his investors.
700
00:42:13.471 --> 00:42:15.192
I was one of them, an angel investor at,
701
00:42:15.852 --> 00:42:19.496
His family, his team, and I was having breakfast with him this week.
702
00:42:19.516 --> 00:42:25.121
He was talking about how every single team member, and he gave me the minimum all the way up to the maximum, and he was so proud of that.
703
00:42:25.141 --> 00:42:26.182
I was like, that's amazing.
704
00:42:26.242 --> 00:42:28.184
That's not from a unicorn exit.
705
00:42:28.204 --> 00:42:40.275
So I think that the hangup of the trillion dollar or $10 billion exit, especially if you're in a pocket like SF where everyone aims for that.
706
00:42:40.735 --> 00:42:43.197
I think that's going to set you up for failure.
707
00:42:43.498 --> 00:42:44.719
Well, like this podcast.
708
00:42:44.979 --> 00:42:49.002
I mean, do you guys need to be the next Alex Earl for it to be successful?
709
00:42:49.222 --> 00:43:00.612
No, but if thousands and thousands of people across Canada and the U.S. and around the world listen to this podcast and learn a lot and get a lot of value and maybe from it you get some revenue and that's a huge success.
710
00:43:00.632 --> 00:43:02.313
Like that's a game changer.
711
00:43:02.333 --> 00:43:03.715
It's like a legacy success.
712
00:43:03.735 --> 00:43:05.196
I think same thing with the founder.
713
00:43:05.476 --> 00:43:10.477
You sell your company for $400 million and you have 250 employees that all had options.
714
00:43:10.877 --> 00:43:15.298
And now, like, 75 employees just paid for their kids' universities.
715
00:43:15.338 --> 00:43:18.719
Another 50 were able to take their family on an amazing vacation.
716
00:43:19.079 --> 00:43:20.919
Some just paid off their family's mortgage.
717
00:43:21.400 --> 00:43:23.920
And you walked away with $25 million.
718
00:43:24.000 --> 00:43:27.001
Like, who couldn't use $25 million the rest of their life?
719
00:43:27.021 --> 00:43:27.121
Yeah.
720
00:43:28.041 --> 00:43:35.547
Maybe you're not buying the New York Jets or Paramount films, but it's still unbelievable and it's amazing.
721
00:43:35.567 --> 00:43:43.894
So I think we need to appreciate what a $200 million or $150 million exit looks like and how amazing that is for a founder.
722
00:43:43.934 --> 00:43:47.797
And that, if a founder can get there, hell yeah, amazing.
723
00:43:47.837 --> 00:43:48.698
Congrats.
724
00:43:49.238 --> 00:43:52.320
You should be celebrated just as much as a unicorn founder.
725
00:43:52.681 --> 00:43:53.842
Obviously, what I like
726
00:43:54.502 --> 00:43:59.067
Shopify or Clio for every one of our, or AlayaCare for every one of our investments, for sure.
727
00:43:59.147 --> 00:43:59.627
That's a good thought.
728
00:43:59.647 --> 00:44:07.015
It's just, yeah, I bring it up because this idea of like what a appropriate venture style business or venture style return, it's changing so much.
729
00:44:07.235 --> 00:44:17.725
And like you hear so many VCs talk about like, well, there's a big opportunity cost to not spending the time on like the little companies where you don't know where they end up and just trying to just find those unicorns.
730
00:44:17.765 --> 00:44:19.006
You're probably right.
731
00:44:19.506 --> 00:44:21.547
And I'm probably too old school.
732
00:44:21.687 --> 00:44:22.248
No, I'm not.
733
00:44:22.268 --> 00:44:23.308
I think I like your approach.
734
00:44:23.328 --> 00:44:23.468
No, no.
735
00:44:23.489 --> 00:44:28.452
I actually think – I think like I read so much on this topic and I research so much on this topic.
736
00:44:28.852 --> 00:44:34.996
And probably the most profitable funds, to be honest, will do that.
737
00:44:35.396 --> 00:44:42.180
But I also think that no different than the founder that builds a $3 billion company or a quarter of a billion dollar company –
738
00:44:42.620 --> 00:44:45.221
Like, I still think story time is going to be a tremendous success.
739
00:44:45.361 --> 00:44:49.442
All of our LPs are going to be, are going to see really, really phenomenal returns.
740
00:44:49.982 --> 00:45:02.505
I'd rather build phenomenal returns at whatever, let's call it four and a half X with the chance of more for the way we're doing it and the style and the community that we're building versus like.
741
00:45:03.165 --> 00:45:09.869
blindly taking a bunch of bets on big AI swings and hope that one turns into the trillion-dollar company.
742
00:45:09.889 --> 00:45:13.791
If it does, then the fund kills it and it's so much more valuable.
743
00:45:14.271 --> 00:45:16.473
But I was just – there's like a VC I'm buddies with.
744
00:45:16.513 --> 00:45:19.975
He was telling me, I made this amazing investment in this AI sector.
745
00:45:20.015 --> 00:45:22.736
I didn't even meet the founder, but like this big fund is in.
746
00:45:23.256 --> 00:45:26.798
So we came in under them and it's like Andreessen, so I got to jump in.
747
00:45:26.818 --> 00:45:32.442
I was like, that's like – for me, that's not – he's probably right and he's probably going to be super successful.
748
00:45:33.142 --> 00:45:38.028
for me, this is part of it's the journey, like part of it's the community we're building and the opportunity we're building for,
749
00:45:39.022 --> 00:45:40.362
as like as a network.
750
00:45:40.542 --> 00:45:44.703
And I'd rather do it my way, even if it doesn't maybe have the same top line.
751
00:45:44.983 --> 00:45:52.285
I also think these founders that build companies that may not have these huge exits are also the pipeline for bigger exits.
752
00:45:52.325 --> 00:45:58.867
Like they do those startups and then they go on to build bigger ones once they've had one under their belt, had two under their belt.
753
00:45:58.927 --> 00:46:06.949
So to completely ignore that subset of the market, I also don't think is in our long-term best interest.
754
00:46:07.109 --> 00:46:07.829
A hundred percent.
755
00:46:07.870 --> 00:46:11.672
Like the teaching and the learning along that way of like, what does it take to look?
756
00:46:12.433 --> 00:46:14.154
Adrian's a great example, right?
757
00:46:14.194 --> 00:46:20.358
He had built Vortex Mobile with Brady and it was like good exit, spun that out to Vortex Connect.
758
00:46:20.418 --> 00:46:30.465
I jumped in right then and we built Vortex Connect early exit, like good exit, but not like generational wealth for anyone, but a good exit, great return for angel investors.
759
00:46:31.061 --> 00:46:35.405
And then took that experience and we really learned from those experiences.
760
00:46:35.445 --> 00:46:42.771
And Adrian Brady and I got together and like, how can we build a company that is venture backable, that has the potential to grow?
761
00:46:42.791 --> 00:46:44.872
And we wanted to build that venture backable story.
762
00:46:45.233 --> 00:46:46.514
And it was a great journey.
763
00:46:46.534 --> 00:46:49.716
And we learned so much from the early companies.
764
00:46:49.736 --> 00:46:54.420
And I took work brain learnings and we took it all and mashed it into one big opportunity.
765
00:46:54.571 --> 00:46:54.751
Yeah.
766
00:46:55.251 --> 00:47:02.694
I have a question on profile, founder profile, when it comes to raising from, let's say, institutional like VC money.
767
00:47:03.095 --> 00:47:09.237
Obviously, a lot of it, the decision of whether to raise versus bootstrap is just like business specific.
768
00:47:09.257 --> 00:47:11.198
What you need the money for is a capital intensive.
769
00:47:11.738 --> 00:47:21.302
Do you also think that there is a personality type that works and does not work with having institutional capital?
770
00:47:21.462 --> 00:47:22.443
Yeah, I do.
771
00:47:23.076 --> 00:47:31.235
So the best advice I got in the first few months of starting the fund was from Daniel Klaas, Klaas Capital, managing partner.
772
00:47:31.415 --> 00:47:32.898
And he said, invest in...
773
00:47:33.701 --> 00:47:36.542
founders that will rise up to any room they're in.
774
00:47:36.842 --> 00:47:40.344
And I was like, oh, you mean like Adrian and me and Brady?
775
00:47:40.364 --> 00:47:41.104
He's like, just Adrian.
776
00:47:41.604 --> 00:47:42.204
For you guys.
777
00:47:42.224 --> 00:47:43.325
I was like, no, we all co-fans.
778
00:47:43.345 --> 00:47:44.945
He's like, Adrian's the one I was worried about for that.
779
00:47:45.366 --> 00:47:56.230
But no, the reality is, is Adrian did that so well and still does it, that he can be in any room with any CEOs, the biggest CEOs in the world or the biggest investors in the world, series A, B, C, D, E.
780
00:47:57.230 --> 00:48:00.853
whatever, and he can handle himself composed.
781
00:48:01.334 --> 00:48:02.875
And so we think about this all the time.
782
00:48:02.895 --> 00:48:05.237
You asked about profile early on of what we look for.
783
00:48:05.257 --> 00:48:08.039
And one of the things we look for is the empathy, all that good stuff.
784
00:48:08.079 --> 00:48:10.461
But also, will this person be able to raise a Series A?
785
00:48:10.601 --> 00:48:15.965
Like, we're fun and chilled and laid back, but are they cerebral enough?
786
00:48:16.165 --> 00:48:19.408
Are they confident enough to be able to sit in a tough room?
787
00:48:19.528 --> 00:48:19.848
Like, okay.
788
00:48:19.968 --> 00:48:22.889
When we raised our A and our B and our C, everything was shifting.
789
00:48:22.909 --> 00:48:25.870
And it was like much more intentional and intense meetings.
790
00:48:26.390 --> 00:48:29.831
They were like, the rigor for those rounds are intense.
791
00:48:29.871 --> 00:48:31.832
And if you're going to crack, it's not a good sign.
792
00:48:32.272 --> 00:48:35.913
And so I think that characteristic of being able to rise up in a room is
793
00:48:36.433 --> 00:48:46.977
And be able to put them in any room with any either tough founder or a client or the biggest customer in the world or the smallest customer in the world or whoever is really important.
794
00:48:47.257 --> 00:48:49.198
And so you can't raise your series B or C.
795
00:48:50.539 --> 00:48:52.160
If you can't raise your series A. Yeah.
796
00:48:52.360 --> 00:48:53.040
So if that makes sense.
797
00:48:53.060 --> 00:48:57.842
Like it's seed and pre-seed is like the story and the dream, the story time capital.
798
00:48:58.223 --> 00:49:01.284
But like A, it's like, how are you at running a company?
799
00:49:01.324 --> 00:49:07.467
And will you be able to handle that, the heat of a tough room in New York or San Fran or like downtown Toronto?
800
00:49:07.487 --> 00:49:14.170
So that I think is the biggest thing is can this person cut it in the heat of the tough kitchen?
801
00:49:14.448 --> 00:49:21.536
Are there any characteristics or what people would call red flags in founders that you actually would think is a green flag?
802
00:49:22.316 --> 00:49:28.283
We've invested in more than a handful of companies that have been rejected by everyone.
803
00:49:28.543 --> 00:49:35.330
Part of the AlliCare story is that we were sort of challenged on our TAM early on, and we ended up
804
00:49:35.862 --> 00:49:42.010
and were passed on by a VC and far surpassed the TAM with our current revenue.
805
00:49:42.271 --> 00:49:47.438
So yeah, no, I love the story of a founder that gets rejected a ton for whatever reason.
806
00:49:47.478 --> 00:49:48.800
Oh, like a big red flag.
807
00:49:49.080 --> 00:49:50.242
Sorry to that exact point.
808
00:49:50.262 --> 00:49:51.143
So I've got a great one.
809
00:49:51.690 --> 00:49:57.371
And it's like it's such a stereotype and it's gross, but like a young mom founder.
810
00:49:57.931 --> 00:50:01.192
We've invested, I think, in five now with like babies.
811
00:50:01.472 --> 00:50:02.552
And people don't typically.
812
00:50:02.693 --> 00:50:12.315
No, there's a lot of – in fact, one of our founders said to us after our first AGM, after she was an investor, like part of our portfolio, she like messaged us.
813
00:50:12.335 --> 00:50:13.775
She's like, I've got a baby at home.
814
00:50:13.855 --> 00:50:14.315
We're like, what?
815
00:50:14.395 --> 00:50:14.636
You do?
816
00:50:14.656 --> 00:50:17.859
She's like, I didn't tell you because I thought that'd be like a big red flag.
817
00:50:18.159 --> 00:50:32.672
And after hearing your AGM where you're like talking about so-and-so's baby and this baby and babies are flying around and we had a, instead of like a traditional Christmas, like dinner downtown at like High Steakhouse, we had just like everyone over to my house with all their kids and my daughters, like running, like.
818
00:50:32.932 --> 00:50:40.655
Hanukkah cookies and Christmas cookies and dreidel and like all these different like multicultural holiday party for families.
819
00:50:41.136 --> 00:50:46.578
And this like the founder was like, I can't believe I like I didn't tell you about it because I thought you wouldn't want to invest.
820
00:50:46.958 --> 00:50:49.419
I don't know if other VCs don't invest because of that.
821
00:50:49.739 --> 00:50:52.101
But it's certainly an interesting thing that I got for me.
822
00:50:52.281 --> 00:50:55.082
I actually think it goes back to like the same thing with the prairies.
823
00:50:55.482 --> 00:50:59.604
I started Vortex when my middle daughter was born.
824
00:50:59.764 --> 00:51:00.864
I joined Adrian right then.
825
00:51:01.004 --> 00:51:02.085
I started Eliacare.
826
00:51:02.445 --> 00:51:04.546
pretty much when my youngest, Goldie, was born.
827
00:51:04.947 --> 00:51:12.252
I think a founder with newborns at home cares more about every second of their day than anyone else in the world.
828
00:51:12.352 --> 00:51:16.254
Like when you have a newborn, every single minute of your day counts.
829
00:51:16.615 --> 00:51:19.116
You're not wasting time because you can't waste time.
830
00:51:19.236 --> 00:51:28.643
And so I think I actually love, so I think probably half of our founders have like whether men or women have like young children, more than more than half have young like babies at home.
831
00:51:29.503 --> 00:51:33.065
And then we also have like four sets of siblings, one married couple.
832
00:51:33.085 --> 00:51:34.006
Wow.
833
00:51:34.166 --> 00:51:36.467
Those are traditional like red flags.
834
00:51:36.487 --> 00:51:39.189
Like no one invested in Canva because it was like a married couple.
835
00:51:39.209 --> 00:51:41.430
I think that worked out okay for them.
836
00:51:41.450 --> 00:51:41.990
Yeah, jokes.
837
00:51:42.091 --> 00:51:44.532
So we – Yeah, that was a big challenge for my parents.
838
00:51:44.552 --> 00:51:47.794
My parents were co-founders of the company and had a really hard time.
839
00:51:48.254 --> 00:51:54.278
So my mom actually wouldn't introduce herself at first with her – this is more – Like Mary name.
840
00:51:54.798 --> 00:51:55.458
Not with investors.
841
00:51:55.478 --> 00:51:56.719
This was more with clients.
842
00:51:56.899 --> 00:51:59.342
potential customers, she would use her maiden name.
843
00:51:59.362 --> 00:51:59.902
Yeah.
844
00:52:00.043 --> 00:52:00.803
Yeah.
845
00:52:00.884 --> 00:52:02.906
So I think that's like, those are stigmas.
846
00:52:03.026 --> 00:52:10.634
I don't know if anyone else, I don't actually couldn't care less of other people to invest in them, but we, I actually love the idea of investing in, in siblings.
847
00:52:10.694 --> 00:52:12.396
Cause like, there's no one that's going to go.
848
00:52:12.496 --> 00:52:14.999
I view like Adrian as like one of my oldest best friends.
849
00:52:15.019 --> 00:52:15.720
It's still like, I would,
850
00:52:16.195 --> 00:52:17.598
I would run through a wall for him.
851
00:52:17.638 --> 00:52:19.643
I'd jump in front of a bus for him and vice versa.
852
00:52:19.663 --> 00:52:20.364
Same with Brady.
853
00:52:20.384 --> 00:52:23.992
And so I love that idea of siblings or a married couple.
854
00:52:24.272 --> 00:52:25.054
That's amazing.
855
00:52:25.475 --> 00:52:26.537
And so we, yeah,
856
00:52:27.140 --> 00:52:28.141
No, I like that take a lot.
857
00:52:28.381 --> 00:52:29.802
How many people are at Storytime Capital?
858
00:52:29.822 --> 00:52:30.582
Is it three of you guys?
859
00:52:30.662 --> 00:52:31.223
Three of us, yeah.
860
00:52:31.623 --> 00:52:35.766
When it comes to decisions, does it need to be consensus-driven?
861
00:52:36.006 --> 00:52:40.529
Do you guys debate and argue a lot when it comes to investing?
862
00:52:40.829 --> 00:52:44.992
Obviously, you know, like the venture style, Monday IC with some of the big...
863
00:52:45.152 --> 00:52:46.573
I know you guys are probably not...
864
00:52:47.293 --> 00:52:52.235
We have like a reverse IC where we right off the bat will bring it to everyone before we dig in.
865
00:52:52.775 --> 00:52:54.736
Like by the time we've dug in, it's done.
866
00:52:54.796 --> 00:52:55.577
It's done.
867
00:52:55.657 --> 00:52:58.198
Like we don't need everyone to agree at the very beginning.
868
00:52:58.398 --> 00:52:59.358
There's a lot of trust.
869
00:52:59.718 --> 00:53:02.920
But no, we – I say like we have kind of a reverse IC.
870
00:53:03.580 --> 00:53:04.520
We're right off the bat.
871
00:53:04.560 --> 00:53:06.801
If someone finds something they love, we bring it to everyone.
872
00:53:07.061 --> 00:53:07.721
And then we dig in.
873
00:53:07.741 --> 00:53:18.325
And there's been a like, there has been some of our, I mentioned before, there's one that I was introduced to the company on a Friday and over the weekend it was due diligence.
874
00:53:18.585 --> 00:53:27.568
And by Sunday afternoon, spoke to the founder and was like, I need to get my founders on my like co-GPs on board because I love this and what you're doing.
875
00:53:27.648 --> 00:53:28.228
I just knew
876
00:53:28.708 --> 00:53:29.429
It was incredible.
877
00:53:29.489 --> 00:53:30.770
And it was going to be a runaway train.
878
00:53:31.470 --> 00:53:36.594
And like the message to Lauren and Ryan was like, you have to get on board.
879
00:53:36.634 --> 00:53:37.295
This is a winner.
880
00:53:37.315 --> 00:53:38.956
I don't want to waste time.
881
00:53:38.976 --> 00:53:40.818
I don't want to waste a month on diligence.
882
00:53:40.858 --> 00:53:41.958
Like, let's just do this.
883
00:53:42.439 --> 00:53:42.919
Dig in.
884
00:53:43.279 --> 00:53:44.620
And they dug in and out for like three days.
885
00:53:44.680 --> 00:53:45.341
Everyone agreed.
886
00:53:45.681 --> 00:53:48.163
And then others, it's been like a longer and a little bit more.
887
00:53:48.203 --> 00:53:49.544
Sometimes there's a bit more of a battle.
888
00:53:49.624 --> 00:53:56.930
If someone is, we kind of have like a veto card, but also if your conviction is crazy high, well, let's ignore our.
889
00:53:57.050 --> 00:54:02.854
Well, yeah, I'll ignore my veto because I believe in you as a partner to that.
890
00:54:02.874 --> 00:54:05.216
Whatever you see in this, I can see through your eyes.
891
00:54:05.336 --> 00:54:13.262
Like we've done a lot of, I would say like the not like we're not like a co-executive coach on this, but trying to see everything through each other's eyes.
892
00:54:13.402 --> 00:54:16.084
I would say like Ryan, I'll look at it through Lauren's eyes.
893
00:54:16.124 --> 00:54:18.465
Lauren will look at it through my eyes and understand why.
894
00:54:18.485 --> 00:54:21.948
And I think in through conversational will be like, I get why you love this.
895
00:54:22.388 --> 00:54:25.110
But let's like, and then I might say, but like, have you thought about this?
896
00:54:25.250 --> 00:54:26.271
And then we talk through it.
897
00:54:26.291 --> 00:54:39.940
So there's been easily about a dozen that one of us really loved, but someone else sort of vetoed and we were able to debate it through to no, and probably easily a half a dozen where one of us loved and someone wanted to veto, but we talked it through to a yes.
898
00:54:40.401 --> 00:54:44.863
What is harder, being an investor or being a founder, given you've done both?
899
00:54:45.063 --> 00:54:46.483
Oh, founder is way harder.
900
00:54:46.563 --> 00:54:46.783
Really?
901
00:54:46.803 --> 00:54:47.444
It's not even a question.
902
00:54:47.464 --> 00:54:48.224
It's not even a question?
903
00:54:48.344 --> 00:54:48.644
Yeah.
904
00:54:48.684 --> 00:54:56.947
Founder is like, so in our genius, starting at Lycare, we in our fiscal year end October 31st, like November 1st is our fiscal year start.
905
00:54:57.007 --> 00:54:59.268
You know what that meant for the first- All of the holidays.
906
00:54:59.308 --> 00:54:59.948
Yeah.
907
00:55:00.028 --> 00:55:07.571
No, well, every single Halloween, we're trying to close end of year deals, trick-or-treating with my kid with like one hand on my phone, like-
908
00:55:08.171 --> 00:55:11.033
Working with Brady and Adrian to close a deal, it sucked.
909
00:55:12.054 --> 00:55:15.376
Now, like if it's Halloween, my kids are a little old now.
910
00:55:15.436 --> 00:55:17.938
But like if I want to go trick-or-treating, I'm going trick-or-treating.
911
00:55:17.998 --> 00:55:21.780
Like when you're writing the check, it's a little bit easier.
912
00:55:21.820 --> 00:55:22.621
I still do.
913
00:55:22.661 --> 00:55:25.723
Like I live through the pains that my founders are living through.
914
00:55:26.163 --> 00:55:37.374
But when we were at Eliacare and I remember I was like in Australia once and our reporting engine was down for the weekend and our team was in manually doing every report for every one of our Australian clients, I was there with them.
915
00:55:37.454 --> 00:55:40.977
Like I spent a weekend in Australia, which sucked because I love being there and I'm like,
916
00:55:41.270 --> 00:55:48.072
you know, go for so little time when you're there for business, spent a weekend in offices doing reporting, like not fun.
917
00:55:48.213 --> 00:55:51.174
But I don't think you do that as a VC that often.
918
00:55:51.454 --> 00:55:55.715
Like there's sometimes like all an institutional investor that's interested will be like, can you get this done?
919
00:55:55.755 --> 00:55:58.716
Or I'll be doing our quarterly report and it'll be over the weekend.
920
00:55:58.736 --> 00:56:00.457
I'm working on it, but it's very different.
921
00:56:00.877 --> 00:56:03.479
So I have way more time and control.
922
00:56:03.719 --> 00:56:08.323
And while I am very stressed a lot of the time about the success, like they are living it.
923
00:56:08.443 --> 00:56:14.288
Like it is, it is in their bloodstream and it's one degree separated and probably a healthy degree.
924
00:56:14.328 --> 00:56:16.069
Like I'm 49 years old.
925
00:56:16.570 --> 00:56:19.993
So it's probably healthy for me to be one degree separated from that.
926
00:56:20.013 --> 00:56:23.235
I remember doing like a payroll file for a company on new year's Eve once.
927
00:56:23.435 --> 00:56:25.317
And I was like, kids, I'll be back out in a second.
928
00:56:25.337 --> 00:56:29.120
But like the file wasn't working and I was trying to help them get their payroll file
929
00:56:29.320 --> 00:56:35.102
If a founder calls you and tells you they have to shut down their company, it didn't work out, yada, yada.
930
00:56:35.302 --> 00:56:36.303
What's your first response?
931
00:56:36.323 --> 00:56:37.483
Like, what do you do as a VC?
932
00:56:37.683 --> 00:56:41.104
I think that's where, well, first, it should never come out of the blue.
933
00:56:41.244 --> 00:56:43.445
It should be like, we're in rough shape.
934
00:56:43.645 --> 00:56:47.147
I really, like, it's happened twice now for our whole portfolio.
935
00:56:47.307 --> 00:56:48.247
And I hope...
936
00:56:48.667 --> 00:56:59.896
That when the founders look back on it, I think they hopefully will understand that before I worried about the financial impact of the fund, I worry about them as people and the impact like failing.
937
00:56:59.936 --> 00:57:00.777
I hate using the word.
938
00:57:00.797 --> 00:57:03.259
And if they are listening, I don't want them to think they failed.
939
00:57:03.299 --> 00:57:04.840
I know that is essentially what happened.
940
00:57:05.080 --> 00:57:06.922
I know that is very difficult.
941
00:57:07.002 --> 00:57:09.544
It's like it's brutal for someone to live with.
942
00:57:09.564 --> 00:57:09.704
Yeah.
943
00:57:09.824 --> 00:57:17.666
I can't, I actually can't imagine it because I have thankfully not yet failed in an entrepreneurial capacity, failed in some things along the way.
944
00:57:18.126 --> 00:57:28.188
But I have a ton of worry about them as the people that are failing before I worry about the business and their team and what the impact is to the people.
945
00:57:28.388 --> 00:57:28.548
Yeah.
946
00:57:28.768 --> 00:57:29.708
So, yeah.
947
00:57:29.768 --> 00:57:32.949
Grief and loss before the lessons and the judgment.
948
00:57:32.969 --> 00:57:33.109
Yeah.
949
00:57:33.129 --> 00:57:33.269
Yeah.
950
00:57:33.609 --> 00:57:36.312
You're talking about Halloween earlier and your kids.
951
00:57:36.572 --> 00:57:39.215
You're a father of three daughters.
952
00:57:39.736 --> 00:57:45.602
Is there anything, any lessons that you can share that you're leaving them with or ways in which you're steering them that could be helpful?
953
00:57:45.929 --> 00:57:46.129
Yeah.
954
00:57:46.309 --> 00:57:48.370
Treat everyone really well.
955
00:57:48.710 --> 00:57:54.972
One of the coolest experiences, one of my first LPs in the fund was a guy I worked with 20 years ago at Workbrain.
956
00:57:55.312 --> 00:58:02.155
And he actually, he found, saw on LinkedIn and I posted that I launched the fund, came over, asked to be pitched.
957
00:58:02.595 --> 00:58:03.495
He lived close by.
958
00:58:03.535 --> 00:58:07.696
So I'll come over after work, like around your kitchen table, pitch me.
959
00:58:08.197 --> 00:58:10.497
I pitched him and my daughters were like, it's open concept house.
960
00:58:10.517 --> 00:58:11.978
They were just like hanging out close by.
961
00:58:12.558 --> 00:58:15.400
And I said, like, why are you like, can I be honest?
962
00:58:15.420 --> 00:58:16.901
Like, it's super curious.
963
00:58:16.921 --> 00:58:18.702
Like, we haven't really been in touch that much.
964
00:58:18.742 --> 00:58:22.785
We kind of know each other, but haven't like had talked business in almost two decades.
965
00:58:23.025 --> 00:58:25.126
And he said you were awesome to work with at Workbrain.
966
00:58:25.166 --> 00:58:27.208
You were a great team member.
967
00:58:27.268 --> 00:58:28.208
I came in after you.
968
00:58:28.248 --> 00:58:29.249
You always helped.
969
00:58:29.269 --> 00:58:33.032
You were funny, like easy to work with, never made anyone feel stupid.
970
00:58:33.052 --> 00:58:35.153
And I followed your career and you've only succeeded.
971
00:58:35.173 --> 00:58:41.117
And so I think without the first part of that, like the career of success would have meant nothing if not for...
972
00:58:41.417 --> 00:58:46.941
I didn't treat him great as a coworker 20 years earlier because I thought one day I'm going to ask him for money.
973
00:58:47.182 --> 00:58:49.223
I treated him great because just treat everyone great.
974
00:58:49.443 --> 00:58:50.784
And you never know when.
975
00:58:51.145 --> 00:58:54.027
Yeah, you never know when someone's going to come back.
976
00:58:54.187 --> 00:58:55.508
And we just got one of.
977
00:58:55.668 --> 00:58:55.989
Yeah.
978
00:58:56.009 --> 00:58:56.289
Yeah.
979
00:58:56.749 --> 00:59:07.317
Our last investment we just made, we got from, I talked about rejection earlier, like rejected founders from a fund, from a founder that we rejected passed us an amazing startup.
980
00:59:07.417 --> 00:59:12.381
Like, which is crazy that a guy that I turned down ended up passing me one of his good friends.
981
00:59:12.421 --> 00:59:13.582
Like, you have to talk to Neil.
982
00:59:13.602 --> 00:59:15.603
You have to talk to Storytime, which is so cool.
983
00:59:15.783 --> 00:59:24.229
So I think that's, I think treat everyone really well, not because you want something from them, but because that's just a good way of living life and usually comes back to benefit you.
984
00:59:24.470 --> 00:59:24.630
Yeah.
985
00:59:24.730 --> 00:59:24.910
Yeah.
986
00:59:25.771 --> 00:59:26.273
Great, love.
987
00:59:26.554 --> 00:59:27.035
Rapid fire.
988
00:59:27.196 --> 00:59:28.460
Yeah, let's go to it.
989
00:59:28.660 --> 00:59:32.692
What would you tell your younger self to stop doing sooner?
990
00:59:33.152 --> 00:59:55.237
scrolling on social media like instagram doom scrolling yeah doom scrolling are you on tiktok no no no tiktok i think i'd be arrested if i was on tiktok well i only thought because like the creator economy like no i know i follow tiktok i'm not on tiktok no i have an account only three years yeah yeah i don't i don't log into it ever do you agree or disagree with the statement you're
991
00:59:57.497 --> 00:59:57.977
Disagree.
992
00:59:58.377 --> 00:59:58.797
Disagree.
993
00:59:58.937 --> 00:59:59.237
Why?
994
01:00:00.017 --> 01:00:06.119
Because I think I've created a lot of value for this world well beyond just one investment or my next investment.
995
01:00:06.359 --> 01:00:08.599
What founder quality is overrated?
996
01:00:08.619 --> 01:00:14.980
So I don't want to contradict something you said earlier, but I think having had experience isn't a must have.
997
01:00:15.160 --> 01:00:18.141
I think a lot of people think that that's like the be all and end all.
998
01:00:18.341 --> 01:00:23.522
Ronan Harari, who started Spin Master, just released a book about like starting something in your 20s.
999
01:00:23.842 --> 01:00:25.122
And it's a phenomenal book.
1000
01:00:25.502 --> 01:00:31.045
So I think having – you can also be a great founder at 18 years old or 25 years old.
1001
01:00:31.085 --> 01:00:35.288
Probably will make a lot of mistakes, but I think that's overrated is experience.
1002
01:00:35.448 --> 01:00:35.968
Experience.
1003
01:00:35.988 --> 01:00:38.130
Not that I invested – Experience and age, yeah.
1004
01:00:38.410 --> 01:00:43.513
Our last investment was three guys in like I think their early 40s or late 30s.
1005
01:00:43.553 --> 01:00:51.978
Like they're experienced and they've been through the ringer, but I also would invest in two 17-year-olds if they had the best idea and I thought that they could rise up to every occasion.
1006
01:00:52.519 --> 01:00:53.900
What's your information diet?
1007
01:00:53.960 --> 01:00:55.001
How do you stay informed?
1008
01:00:55.281 --> 01:00:56.262
Not social media.
1009
01:00:56.302 --> 01:00:56.922
Not social media.
1010
01:00:57.082 --> 01:00:59.704
Podcasts and digging in and researching things.
1011
01:01:00.084 --> 01:01:01.945
Usually if I triangulating news.
1012
01:01:01.965 --> 01:01:09.731
So I'll listen to like the far left, the far right, the left, the right, the middle and try to triangulate everything and really like research.
1013
01:01:09.851 --> 01:01:17.276
Because I think that most of society today is now insanely and painfully partisan from business media.
1014
01:01:17.596 --> 01:01:18.857
It's impacting everything now.
1015
01:01:19.357 --> 01:01:21.098
And the partisanship of everything.
1016
01:01:21.118 --> 01:01:23.019
Like, I think we need to form our own opinions.
1017
01:01:23.259 --> 01:01:24.919
So that means you need to research the source.
1018
01:01:25.260 --> 01:01:26.180
And so I do a lot of that.
1019
01:01:26.300 --> 01:01:32.543
If I read a news article or I see something, I'll dig in and really try to research it and do and learn.
1020
01:01:32.963 --> 01:01:33.683
Solid advice.
1021
01:01:33.943 --> 01:01:37.225
What's your favorite AI tool for personal use right now?
1022
01:01:37.538 --> 01:01:42.361
So just because I'm old and I use Google for so long, Gemini has just become so easy.
1023
01:01:42.761 --> 01:01:46.523
I love obviously like I'm playing with Claude like a hobbyist would.
1024
01:01:46.783 --> 01:01:48.044
I'm not giving you an answer.
1025
01:01:48.284 --> 01:01:48.624
Sorry.
1026
01:01:49.004 --> 01:01:50.345
But I also like Chachipiti.
1027
01:01:50.365 --> 01:01:54.927
Like we went to Japan in the summer, Chachipiti and like helping my daughter figure out university.
1028
01:01:55.107 --> 01:01:57.388
Like Chachipiti is like a big, I lean on that a lot.
1029
01:01:57.408 --> 01:02:05.833
So I'd say all three from like the intense world of Claude where I'm like building things to the, for like the business and for personal stuff to the,
1030
01:02:06.513 --> 01:02:15.964
just like on my phone, researching something quickly using like Gemini just within the Chrome experience to chat GPT for like more thoughtful planning stuff.
1031
01:02:16.144 --> 01:02:16.345
Yeah.
1032
01:02:17.066 --> 01:02:17.406
Awesome.
1033
01:02:17.586 --> 01:02:17.867
Great.
1034
01:02:18.067 --> 01:02:18.667
Thank you, Neil.
1035
01:02:18.687 --> 01:02:20.409
Thank you so much for coming on.
1036
01:02:20.469 --> 01:02:23.651
Thanks for listening to this week's episode of Between Two Burnets.
1037
01:02:24.311 --> 01:02:28.334
If you enjoy the show, please hit follow or subscribe wherever you listen to your podcast.
1038
01:02:28.835 --> 01:02:31.777
We love to hear your feedback and do our best to get back to everyone.
1039
01:02:31.877 --> 01:02:35.780
So feel free to leave your comments or reach out to us on any of our socials.
1040
01:02:36.200 --> 01:02:36.841
See you next time.