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[00:00:00.240 --> 00:00:06.240] We are looking to invest in companies where the funding will accelerate the trajectory of the company.
[00:00:06.240 --> 00:00:14.480] We're typically investing 500K to $1.5 million, hoping that we can turn that into 100 times our money.
[00:00:14.480 --> 00:00:19.440] Brands we've invested in include Starfaith, Popskip Drive, Chief, Spring Health.
[00:00:19.440 --> 00:00:25.040] When you look at the founders that you've backed that have done really well, is there like a personality trait?
[00:00:25.040 --> 00:00:28.080] Successful founders will run through walls.
[00:00:28.080 --> 00:00:29.920] Are they a visionary storyteller?
[00:00:29.920 --> 00:00:31.680] Do I believe that they can execute?
[00:00:31.680 --> 00:00:34.560] And they're a little like annoying.
[00:00:34.560 --> 00:00:40.720] We like to back people who have world-changing ambition with a dose of humility.
[00:00:40.720 --> 00:00:43.440] How does someone convince you that they've got to look those things?
[00:00:43.440 --> 00:00:44.720] I start with the story.
[00:00:44.720 --> 00:00:45.520] Why now?
[00:00:45.520 --> 00:00:46.240] Why me?
[00:00:46.240 --> 00:00:47.360] How big is this market?
[00:00:47.360 --> 00:00:48.400] What have you done so far?
[00:00:48.560 --> 00:00:50.240] Seen a lot of influences in this space.
[00:00:50.240 --> 00:00:53.040] Young women wanting to get into like angel investing and branding.
[00:00:53.040 --> 00:00:56.480] Angel Church has been glamorized by Shark Tank and on social media.
[00:00:56.480 --> 00:00:57.760] I'm an asset manager.
[00:00:57.760 --> 00:01:01.680] I'm not like out here to just like write checks for cool people.
[00:01:01.680 --> 00:01:08.640] I am investing on behalf of the retirement savings of teachers in some cases.
[00:01:08.640 --> 00:01:10.320] So there's a real responsibility.
[00:01:10.320 --> 00:01:12.800] AI is going to completely change the workforce.
[00:01:12.800 --> 00:01:16.160] My best advice, I think you need to understand how these tools work.
[00:01:16.160 --> 00:01:18.720] The percentage of users.
[00:01:18.800 --> 00:01:19.920] 80% are men.
[00:01:19.920 --> 00:01:21.440] We are already behind.
[00:01:21.440 --> 00:01:26.000] The guys are leveraging their day in a way you couldn't even imagine.
[00:01:26.000 --> 00:01:29.040] We are sitting here going, I don't know if I trust AI.
[00:01:29.040 --> 00:01:31.520] Hey, Business Besties, welcome back to Female Founder World.
[00:01:31.520 --> 00:01:32.320] I'm Jasmine.
[00:01:32.320 --> 00:01:36.240] I'm the host of the show and the person behind all things Female Found World.
[00:01:36.240 --> 00:01:37.760] Today I'm chatting with Nisha Dewar.
[00:01:37.760 --> 00:01:40.800] She's the managing partner and co-founder at BBC Ventures.
[00:01:40.800 --> 00:01:42.160] Nisha, welcome to the show.
[00:01:42.160 --> 00:01:44.000] Hey Jazz, nice to see you again.
[00:01:44.000 --> 00:01:46.320] Okay, you were on the show ages, ages ago.
[00:01:46.320 --> 00:01:47.680] Before we did video, I think.
[00:01:47.680 --> 00:01:48.720] I think before we did video.
[00:01:48.720 --> 00:01:50.880] I mean, like, right when you were getting started.
[00:01:50.880 --> 00:01:52.640] Yeah, bland ago.
[00:01:51.800 --> 00:01:56.960] So, no, I mean, I feel honored to have been asked and to be back again.
[00:01:56.960 --> 00:02:00.760] I mean, the people you've had on the show recently, they're like a real deal, man.
[00:01:59.840 --> 00:02:05.320] Well, let's have a good conversation today and we'll see.
[00:02:05.560 --> 00:02:11.000] Tell me, for people that don't know BBG Ventures or what a VC is, what do you do?
[00:02:11.000 --> 00:02:11.320] Yeah.
[00:02:11.320 --> 00:02:20.040] So, I run a venture capital firm called BBG Ventures and we invest in female or diverse-led companies building for what we call the polycultural future.
[00:02:20.040 --> 00:02:29.080] So, we get really excited by founders who don't just have professional experiences that qualify them to win, but have personal experiences.
[00:02:29.080 --> 00:02:35.800] So, that's why we started with women back in 2014, because women building for women, they understand their target user.
[00:02:35.800 --> 00:02:44.120] And today, we've expanded that to a broader set of founders, but really thinking about where is the country going and what are the biggest solutions that need to be solved.
[00:02:44.120 --> 00:02:49.560] And so, we invest in both consumer businesses and enterprise or SaaS businesses.
[00:02:49.560 --> 00:02:53.240] We have a mixed portfolio, but what does that really mean?
[00:02:53.240 --> 00:02:59.080] So, in VC, we are looking, and a lot of your listeners might know this, but some of them might not.
[00:02:59.080 --> 00:03:12.520] We are looking to invest in most often technology companies, not always, but companies where the funding will accelerate the trajectory of the company and who want to have a fast growth business.
[00:03:12.520 --> 00:03:14.760] And that's a really important thing about VC.
[00:03:14.760 --> 00:03:39.480] So, we're typically investing, you know, 500K to $1.5 million in a very early stage of a company, pre-seed or seed, and hoping that we can turn that into 20 times our money, but really not just 20 times, actually, like a hundred times, because we'll make 25, 30 investments out of a fund, like a 50 or 60 million dollar fund.
[00:03:39.480 --> 00:03:50.000] And it's such a tough game that we need one, two, or three of those investments to triple the total amount of money that we invested.
[00:03:50.320 --> 00:03:57.600] So, I need to have one or two or three investments that make me like $150 or $180 million.
[00:03:57.600 --> 00:04:01.200] And that is the very tricky game of venture capital.
[00:04:01.200 --> 00:04:05.280] Okay, tell me some of the companies that you've invested in that people might know.
[00:04:05.280 --> 00:04:10.320] Yeah, so some of the consumer brands we've invested in include Starface.
[00:04:10.480 --> 00:04:19.120] You and I were talking about pimple patches earlier, and they have an extraordinary thesis around, I think, the rejection of perfection in beauty today for Gen Z.
[00:04:19.440 --> 00:04:24.240] We have invested in Hopskip Drive, which is a mobility company for kids.
[00:04:24.240 --> 00:04:29.520] They get kids to and from school in cities all across America.
[00:04:29.520 --> 00:04:33.120] We invested in Chief, the women's YPO network.
[00:04:33.120 --> 00:04:38.240] Probably our biggest winner, which not a lot of your listeners might know because it's a B2B company.
[00:04:38.240 --> 00:04:44.080] It's a company called Spring Health, April Co., youngest unicorn CEO.
[00:04:44.080 --> 00:04:49.760] Spring Health delivers mental health care benefits via companies as an employee benefit.
[00:04:49.760 --> 00:04:57.520] They raised their last round was a hundred million dollar Series E at the beginning of 2024 and they were valued at over $3 billion.
[00:04:57.520 --> 00:05:10.960] And I love talking about that company because we talk about consumer needs and there are a lot of important nice to have consumer needs, but there are a lot of must-solve consumer needs and mental health is one of the biggest challenges in the country right now.
[00:05:10.960 --> 00:05:14.960] So we love everything from CPG to technology to healthcare.
[00:05:14.960 --> 00:05:16.320] Okay, you've been in this space for a while now.
[00:05:16.400 --> 00:05:19.920] You said that the firm's been around since 2014.
[00:05:20.000 --> 00:05:21.280] More than 10 years.
[00:05:21.280 --> 00:05:28.640] When you look at the founders that you've backed, or the types of companies that you've backed that have done really well, is there a through line?
[00:05:28.640 --> 00:05:31.480] Is there like a personality trait?
[00:05:31.480 --> 00:05:33.880] Is there a kind of experience?
[00:05:33.880 --> 00:05:37.240] Like what makes these people so good or these ideas so good?
[00:05:37.240 --> 00:05:38.040] Yeah.
[00:05:38.360 --> 00:05:46.440] So if you go and read about VC and what makes a great founder online, you'll find like a list of like 10 attributes.
[00:05:46.440 --> 00:05:54.680] But I think the thing they all have in common is that successful founders will run through walls.
[00:05:54.680 --> 00:05:57.640] Like you cannot hold them back.
[00:05:57.640 --> 00:06:05.560] And so when you're thinking about backing a founder, you're looking for all of the traditional things like, are they a visionary storyteller, right?
[00:06:05.560 --> 00:06:13.160] Are they the question we ask is like, is this person charting a new path in their world?
[00:06:13.160 --> 00:06:19.000] So whatever industry they're building in, are they telling a story about how they're going to shift their paradigm?
[00:06:19.000 --> 00:06:23.160] And then you're looking at, do I believe that they can execute across this?
[00:06:23.160 --> 00:06:30.600] Because like storytelling is one thing, but like being able to bring that to life and do the work is a whole other issue.
[00:06:30.600 --> 00:06:34.200] So storytelling and execution, those are the key foundations.
[00:06:34.200 --> 00:06:38.040] And then you're looking at tactical things like, do I think they can hire a great team?
[00:06:38.040 --> 00:06:40.760] Can they convince people to come along for the ride?
[00:06:40.760 --> 00:06:42.280] Can they convince employees?
[00:06:42.280 --> 00:06:43.960] Can they convince customers?
[00:06:43.960 --> 00:06:45.720] Can they convince investors?
[00:06:45.720 --> 00:06:47.640] Like all of these things are at play.
[00:06:47.640 --> 00:06:52.600] And then you're looking for qualities like resilience, adaptability, are they flexible?
[00:06:52.600 --> 00:06:54.600] Can they take feedback?
[00:06:54.600 --> 00:07:04.360] But when you put all of those people side by side, it's the people who are like, I am not going to stop until I win at this.
[00:07:04.360 --> 00:07:10.120] And they are so high conviction and they're a little like annoying.
[00:07:10.120 --> 00:07:12.280] You wouldn't necessarily be best mates with them?
[00:07:12.280 --> 00:07:21.760] Not always, no, because they have such a high degree of belief in themselves and the vision to the point that it's like a little bit delusional.
[00:07:22.080 --> 00:07:29.440] And rightly so, because you have to be a little bit delusional to build a startup and try and build a billion-dollar business or any business today.
[00:07:29.440 --> 00:07:37.280] So it's, you know, there's a reason that like a ton of really successful founders and CEOs are actually narcissists.
[00:07:37.600 --> 00:07:39.600] We try not to back the narcissists.
[00:07:39.600 --> 00:07:45.760] We, I would say, actually, our, everyone's got like a brand of founder that we like to back.
[00:07:45.760 --> 00:07:54.400] And I think we like to back people who have world-changing ambition with a dose of humility.
[00:07:55.120 --> 00:07:55.920] I love that.
[00:07:55.920 --> 00:07:56.640] Yeah.
[00:07:57.280 --> 00:08:07.440] If I'm sitting here and I'm trying to convince you to invest in my company or someone's listening and they want to convince you, how does someone convince you that they've got all of those things?
[00:08:07.440 --> 00:08:07.920] Yeah.
[00:08:07.920 --> 00:08:10.000] I start with the story.
[00:08:10.000 --> 00:08:13.920] And there are three key parts of a story when you're trying to raise money.
[00:08:13.920 --> 00:08:14.880] Why now?
[00:08:15.200 --> 00:08:16.720] Why this product?
[00:08:16.720 --> 00:08:18.720] And why this team or why me?
[00:08:18.960 --> 00:08:23.120] And so the why now is about how big is the size of the opportunity?
[00:08:23.120 --> 00:08:24.480] How big is this market?
[00:08:24.480 --> 00:08:28.560] And what part of that market could I take hold of?
[00:08:28.560 --> 00:08:32.160] But more than that, it's what is happening in the market today?
[00:08:32.160 --> 00:08:36.000] What are the dynamics that mean this is the right time now?
[00:08:36.320 --> 00:08:40.080] Are there some like old legacy issues in this industry?
[00:08:40.080 --> 00:08:43.360] Is there something new about technology that is changing?
[00:08:43.360 --> 00:08:45.680] Is there a cultural movement?
[00:08:45.680 --> 00:08:48.800] And then, why this product is okay, why is my product going to win?
[00:08:48.800 --> 00:08:59.440] What is so different about it that is going to deliver a 10x better experience or it's going to stand out from the crowd of other me to's in this industry?
[00:08:59.440 --> 00:09:07.720] And then, why me is what is it about me and my team that makes us so qualified to win here?
[00:09:07.720 --> 00:09:13.240] So, we're really looking for that level of ingredients, and then we're digging into these other things.
[00:09:13.240 --> 00:09:22.200] So, on storytelling, is there a big vision, a clear narrative arc on how my company is going to change my part of the world, right?
[00:09:22.520 --> 00:09:25.720] And then on execution, like we want to see some examples.
[00:09:25.720 --> 00:09:27.400] So, what have you done so far?
[00:09:27.400 --> 00:09:29.400] It's okay if you haven't raised money yet.
[00:09:29.400 --> 00:09:36.840] You might not have had a ton of money to have so-called traction or numbers on the board, but you know, what have you done with what you've got?
[00:09:36.840 --> 00:09:40.280] Like, I love the story about Katrina Lake at Stitch Fix, right?
[00:09:40.280 --> 00:09:51.800] She went around when she was coming, like, validating the idea with an Excel spreadsheet, like with orders from her friends to show like there is interest here, there is appetite.
[00:09:51.800 --> 00:10:01.880] When we met Sarah Pagey at Blue Land, she had partnered up with her co-founder, one of the co-founders who had been a scientist at Method, right?
[00:10:01.880 --> 00:10:09.400] And she already had the formulation for her cleaning products, she already had the margin structure, she knew where she was going to manufacture.
[00:10:09.400 --> 00:10:15.160] So, what are all the things that show me this person is a doer, not just a storyteller?
[00:10:15.160 --> 00:10:17.000] And then we're going to push and prod.
[00:10:17.000 --> 00:10:20.120] Like, we're going to try and figure out, like, what have you thought of?
[00:10:20.120 --> 00:10:21.080] What haven't you thought of?
[00:10:21.080 --> 00:10:25.720] We're going to ask a lot of questions, and we're going to disagree with you on some things, right?
[00:10:25.720 --> 00:10:27.640] Like, how do you respond to that?
[00:10:27.640 --> 00:10:29.320] Have you thought ahead about this?
[00:10:29.320 --> 00:10:31.000] Can you take feedback?
[00:10:31.000 --> 00:10:38.920] Is this going to be a fun partnership along the way where we feel like we could work with you for the next 10 years?
[00:10:38.920 --> 00:10:39.880] Can you give me some examples?
[00:10:39.880 --> 00:10:41.560] So, you said, like, why now?
[00:10:41.560 --> 00:10:48.640] So, are there any companies that you've backed where you can think about the why now and why that made sense in the context?
[00:10:49.200 --> 00:11:08.080] Yeah, so well, I think Starface is a really good one, actually, because you know, we have a thesis like I think many of your listeners who work in CPG and building consumer businesses have, which is every generation wants different brands from their big brothers and sisters and their parents, right?
[00:11:08.080 --> 00:11:11.680] There is always going to be a redo and a re-opportunity.
[00:11:11.680 --> 00:11:21.600] And what you had with this company was a moment in time where, I mean, you and I have talked about sort of the differences between Gen Z and how they like to show up.
[00:11:21.920 --> 00:11:32.480] And what these founders have tapped into is, because they have a number of companies, like, what are the categories of shame that have held us back?
[00:11:32.480 --> 00:11:37.280] And where is an opportunity to flip that on its head?
[00:11:37.280 --> 00:11:46.480] And beauty is one of those categories where we have been made to feel like we must pursue perfection at all costs.
[00:11:46.480 --> 00:12:09.120] And what they saw with this product was both a product that would work, right, and would have sort of, you know, would be efficacious, which is so important in skincare, but an opportunity to speak to this customer who doesn't want to be perfect, wants to reject that, and in fact, wants to shine a light and celebrate their imperfections.
[00:12:09.120 --> 00:12:24.400] And so, this idea of the star came at the perfect time, but also, so think about this other market force: a time when people were willing to be messier on social media, right?
[00:12:24.400 --> 00:12:31.720] And show, like, Instagram started as only your perfect photos, and then they added stories because they were trying to compete with TikTok.
[00:12:32.040 --> 00:12:38.680] And so, what a perfect sort of distribution opportunity for your marketing strategy.
[00:12:38.680 --> 00:12:45.800] We've got this tiny compact of stars, we can send it to influencers and regular micro-influencers for free.
[00:12:45.800 --> 00:12:50.440] They try it on, they love it, they show them, they showcase themselves.
[00:12:50.440 --> 00:13:01.560] And so, you start to see that it's never just one factor, it's a confluence of factors that starts to get you that sort of momentum of why now.
[00:13:01.880 --> 00:13:06.760] I want to keep the conversation mostly around like what's helpful for business owners if they're raising money and all of that.
[00:13:06.760 --> 00:13:13.640] But I do have this very specific question that I think you're perfect to answer because I spend a lot, I'm very online, a lot of time on TikTok.
[00:13:13.640 --> 00:13:15.560] All the gals want to be investors now.
[00:13:15.560 --> 00:13:22.200] It's very like there's a real shift to women wanting to get into investing and young women, particularly.
[00:13:22.200 --> 00:13:31.160] And I think because we've seen a lot of influences in this space, like talk about it, we also see a lot of young women wanting to get into like angel investing and writing angel checks.
[00:13:31.160 --> 00:13:41.160] Yeah, my question is: first of all, talk me through what like the realities of day-to-day is like for someone who is like junior in a firm like yours.
[00:13:41.160 --> 00:13:42.520] Like, what are they doing?
[00:13:42.520 --> 00:13:44.280] And how does someone get a job like that?
[00:13:44.280 --> 00:13:46.440] Like, what kind of experience and skills do they need?
[00:13:46.440 --> 00:13:59.960] Yeah, it's a great question, and I think it's important to demystify venture a little bit first because it has been glamorized in the press, and it has been glamorized by Shark Tank and on social media.
[00:13:59.960 --> 00:14:07.480] As you said, like a lot of influencers, and you and I know some of them, they're starting their own firms, they've been angel investing.
[00:14:07.480 --> 00:14:10.760] It is a really sexy job and a really unsexy job.
[00:14:10.760 --> 00:14:16.560] It is the best job in the world because you are meeting really smart people all the time who want to change in the world.
[00:14:16.720 --> 00:14:18.480] Like, what could be better than that?
[00:14:18.480 --> 00:14:29.360] It is an unsexy job because 99% of what you look at, 99.98% of what you look at, you will not invest in, right?
[00:14:29.360 --> 00:14:34.880] If we look at our deal flow funnel, we're investing in like 0.2%.
[00:14:34.880 --> 00:14:35.920] So it's a risk.
[00:14:36.000 --> 00:14:38.400] I probably just did that math wrong, but you know what I did.
[00:14:39.040 --> 00:14:44.160] But like we are looking at a lot of companies that are not appropriate for venture capital.
[00:14:44.160 --> 00:14:47.360] So we have to say no to a lot of people.
[00:14:47.360 --> 00:14:51.120] And it is a constant hustle to find new companies.
[00:14:51.120 --> 00:14:56.480] And it's not just like, hey, I like this person or hey, I like this idea.
[00:14:56.480 --> 00:15:02.240] They have to surpass the bar on every one of those metrics that I listed.
[00:15:02.240 --> 00:15:07.760] But what's really important is I'm a money manager.
[00:15:07.760 --> 00:15:09.520] I'm an asset manager.
[00:15:09.520 --> 00:15:15.520] I'm not like out here to just like have fun for kicks and like write checks for cool people.
[00:15:15.520 --> 00:15:22.800] I do that, but I am responsible for a lot of money that is other people's money.
[00:15:22.800 --> 00:15:23.760] Can you explain that for a second?
[00:15:24.240 --> 00:15:26.320] Where do VCs get the money that they're spending?
[00:15:26.320 --> 00:15:27.680] Because this is important to say.
[00:15:27.840 --> 00:15:28.400] Yeah.
[00:15:28.400 --> 00:15:34.160] So I have to raise money from institutional investors who are called my limited partners or LPs.
[00:15:34.160 --> 00:15:36.240] That can come from a variety of sources.
[00:15:36.240 --> 00:15:46.480] So when you're a smaller fund, you might raise money from high net worth individuals or angels, people who've made some money by selling their own business or been really successful operators.
[00:15:46.480 --> 00:15:55.760] But as you go up the stack, and so we would be called an institutional firm, we've got $150 million under management across, you know, three or four vehicles.
[00:15:55.760 --> 00:15:57.680] Our last fund was $60 million.
[00:15:57.680 --> 00:16:00.760] You start moving into this more institutional space.
[00:15:59.920 --> 00:16:04.840] So that might mean family offices or people with foundations.
[00:16:05.160 --> 00:16:08.840] It might mean endowments of universities.
[00:16:08.840 --> 00:16:10.600] It might mean pensions.
[00:16:10.600 --> 00:16:19.880] So I am investing on behalf of the retirement savings of teachers or firemen in some cases.
[00:16:19.880 --> 00:16:21.960] So there's a real responsibility, right?
[00:16:21.960 --> 00:16:25.960] Like we have to deliver a return on that money.
[00:16:25.960 --> 00:16:35.080] So the second part of the job is really understanding how do I take this $50 or $60 million and triple it?
[00:16:35.080 --> 00:16:38.520] And what is the appropriate mix of companies?
[00:16:38.520 --> 00:16:41.080] And I have to make initial investments in those companies.
[00:16:41.080 --> 00:16:46.120] When they come back to me for more money, I can't just give them more money because I like them.
[00:16:46.440 --> 00:16:50.840] They have to, again, surpass the bar, surpass their milestones.
[00:16:50.840 --> 00:16:52.920] I have reserves maybe for that.
[00:16:52.920 --> 00:16:58.200] So it's a complicated portfolio analysis approach as well.
[00:16:58.200 --> 00:17:04.360] So when I say no to a company, it's not always because I'm saying no just to that person.
[00:17:04.360 --> 00:17:08.040] I'm saying no because of what else have I invested in?
[00:17:08.040 --> 00:17:09.880] What else do I need to invest in?
[00:17:09.880 --> 00:17:14.360] Like what should the appropriate mix in my portfolio be?
[00:17:14.360 --> 00:17:18.040] And then as a manager, I have to deal with like tax and audit.
[00:17:18.040 --> 00:17:20.600] Like I'm a startup founder, really, right?
[00:17:20.600 --> 00:17:27.000] So I am managing a team, I'm managing accounting, finance, audit, legal.
[00:17:27.000 --> 00:17:31.400] It is a heavy sort of administrative job on that side, too.
[00:17:31.400 --> 00:17:38.680] But if you're a junior investor or an associate at a firm, it depends on the size of the firm.
[00:17:38.680 --> 00:17:46.320] So, at a larger firm, you might just be meeting founders all day and sourcing companies and then doing a lot of diligence.
[00:17:44.760 --> 00:17:50.080] So, really understanding what a market looks like.
[00:17:50.400 --> 00:17:56.000] And you need a really healthy mix of quantitative and qualitative skills.
[00:17:56.000 --> 00:18:01.520] So, can I develop a hypothesis or an opinion on this arena?
[00:18:01.520 --> 00:18:02.800] Where do I think it's going?
[00:18:02.800 --> 00:18:03.840] Who's playing in it?
[00:18:03.840 --> 00:18:07.840] What are those market forces that mean this is ripe for opportunity?
[00:18:07.840 --> 00:18:10.240] But I need to understand the math behind it, too.
[00:18:10.240 --> 00:18:12.640] Like, how big could this market be?
[00:18:12.640 --> 00:18:15.520] How big a share could this founder take?
[00:18:15.520 --> 00:18:18.720] And then, what does it take for them to become a hundred million dollar business?
[00:18:18.720 --> 00:18:22.160] That's sort of like a, you know, the low bar and venture capital.
[00:18:22.160 --> 00:18:29.360] But at a smaller firm, you might be helping with more of the analysis that the partners are working on.
[00:18:29.360 --> 00:18:33.040] You might be helping host events so you meet more founders.
[00:18:33.040 --> 00:18:36.800] You might be helping write updates for the investors in the fund.
[00:18:36.800 --> 00:18:41.520] And it's really like, so if you work at our fund, it's like a full stack VC job.
[00:18:41.520 --> 00:18:47.200] You get insight into all the different parts of all the work that I do and my partner does.
[00:18:47.200 --> 00:18:58.400] So, it can be a really fulfilling job, but I think the job in and of itself is not just like I get to sit around and have opinions on people's businesses and make that decision.
[00:18:58.400 --> 00:19:02.240] There is a long path to making that decision.
[00:19:02.240 --> 00:19:05.440] And you asked about angel investing.
[00:19:05.440 --> 00:19:12.320] We can get into that if you want for your listeners, but that is another kettle of fish because you're using your own money.
[00:19:12.320 --> 00:19:17.840] And you really have to think about like what is my own financial worth?
[00:19:17.840 --> 00:19:23.360] And do I have the capital to allocate money to a set of investments?
[00:19:23.360 --> 00:19:28.080] Because you should really be thinking about what is an area I know?
[00:19:28.080 --> 00:19:34.040] Am I looking at enough things to compare them and pick things that feel like they're outliers?
[00:19:34.680 --> 00:19:39.320] And even with an angel portfolio, you should be thinking about it as a portfolio.
[00:19:39.320 --> 00:19:45.320] Like, I want to make five bets, 10 bets, 15 bets, you know, smaller amounts of money.
[00:19:45.320 --> 00:19:58.440] So it's a really interesting thing to add to your portfolio, but it should only be done in addition to like, I'm already in the stock market, I'm already in, you know, some conservative things.
[00:19:58.440 --> 00:20:03.880] Like, what is your diversified set of like your financial approach?
[00:20:04.200 --> 00:20:05.640] That's really great advice.
[00:20:05.640 --> 00:20:12.760] So you're obviously looking at a lot of different businesses all the time and also speaking with a lot of investors, I'm guessing as well.
[00:20:12.760 --> 00:20:15.720] I'm curious about just like trends that you're seeing.
[00:20:15.720 --> 00:20:20.040] First of all, businesses you're seeing coming through and startups you're seeing coming through.
[00:20:20.200 --> 00:20:25.080] There's a certain thing that just feels like everyone's moving in this direction.
[00:20:25.080 --> 00:20:31.400] And then what you think is really interesting and what other VCs think are really interesting amongst those trends.
[00:20:31.400 --> 00:20:32.200] Yeah.
[00:20:32.520 --> 00:20:39.960] So the thing about venture capital is it's primarily focused on technology and software.
[00:20:39.960 --> 00:20:46.200] So as you can imagine, right now it is AI, AI, yeah.
[00:20:46.200 --> 00:20:48.280] And some of these valuations are blowing my mind.
[00:20:48.360 --> 00:20:48.760] They're wild.
[00:20:49.160 --> 00:20:58.840] So there's this huge bifurcation happening in the market, which is AI deals are being priced at probably a 30 to 40% premium than non-AI deals.
[00:20:58.840 --> 00:21:00.360] So that's the first thing you've got happening.
[00:21:00.680 --> 00:21:01.960] Throw AI into your deck.
[00:21:01.960 --> 00:21:03.560] Throw in any old way.
[00:21:03.560 --> 00:21:04.120] Yeah.
[00:21:04.120 --> 00:21:09.560] So probably about 80% of the deals that are coming through our pipeline would say they're an AI company.
[00:21:10.120 --> 00:21:20.800] I would say only about a third or half of those are AI native companies, by which I mean, and this is what VCs are really excited about, AI native companies.
[00:21:21.120 --> 00:21:34.640] So could this company have existed before AI or is it an existing product that is being optimized or improved because of AI?
[00:21:34.640 --> 00:21:37.920] And so ChatGPT is the obvious example.
[00:21:37.920 --> 00:21:48.080] Companies like Character AI or my favorite tool to use, Granola, which is so granola is probably the best note-taking tool for being in meetings.
[00:21:48.080 --> 00:21:56.960] Like you might use Zoom or Otter as sort of your transcript notes, but Granola is, I have it on in all of my meetings.
[00:21:56.960 --> 00:22:00.480] I never take pen and paper notes or typed notes anymore.
[00:22:00.480 --> 00:22:02.080] I'm so much more present.
[00:22:02.320 --> 00:22:06.240] So these are examples of companies that couldn't exist but for AI.
[00:22:06.240 --> 00:22:08.720] And I think that's where the interest is.
[00:22:08.720 --> 00:22:12.000] I would say consumer is having a moment.
[00:22:12.000 --> 00:22:16.320] We actually just did a big deep dive into this at our firm.
[00:22:16.320 --> 00:22:26.480] And if you think about the internet revolution and the mobile revolution, I mean, the mobile revolution was like 14 years ago.
[00:22:27.360 --> 00:22:28.480] That makes me feel old.
[00:22:28.480 --> 00:22:29.600] Yeah, me too.
[00:22:29.600 --> 00:22:37.440] So this is the first time that we have had a moment where every single consumer incumbent can be disrupted.
[00:22:37.440 --> 00:22:39.600] And that is really exciting.
[00:22:39.600 --> 00:22:47.920] From every category to music to storytelling to video to productivity, you name it, like it is up for grabs.
[00:22:47.920 --> 00:23:01.640] And the incumbents, like all these big companies, they're building, I think, incrementality into their platforms and counting on the fact that they have people sitting there already.
[00:22:59.680 --> 00:23:05.880] But there are going to be a ton of opportunities to win in consumer.
[00:23:06.040 --> 00:23:08.600] So I think that is really exciting.
[00:23:08.600 --> 00:23:17.960] On the business-to-business side, people are really excited by old, stodgy, unsexy, unglamorous industries.
[00:23:17.960 --> 00:23:28.920] Like, I just got really excited about a company that is automating the customs processing brokerage industry.
[00:23:28.920 --> 00:23:29.960] What does that mean?
[00:23:29.960 --> 00:23:41.320] So, like, all of you, like, a lot of your CPG founders who manufacture overseas, they have to go through a customs processing process every time they bring goods into the company.
[00:23:41.320 --> 00:23:45.240] Everything about that is done like very manually.
[00:23:45.240 --> 00:23:48.600] Baxes, like, they barely email these people.
[00:23:48.600 --> 00:23:50.840] They're super hard to get on the phone.
[00:23:50.840 --> 00:23:54.520] They have like two systems of software that are super old.
[00:23:54.520 --> 00:23:58.760] They don't even do API integrations, which is basically unheard of.
[00:23:58.760 --> 00:24:13.640] And so, I'm at a company that's amazing that is going to help automate this process to allow these customs brokers to process more forms and then look at them as the human in the loop and review it, right?
[00:24:13.640 --> 00:24:16.120] Like, not replacing the human.
[00:24:16.120 --> 00:24:17.960] So, it's a really interesting moment.
[00:24:17.960 --> 00:24:26.680] There's like a ton of opportunity in these really old, like, unglamorous, sexy industries, but also huge opportunity in like the shiny consumer things.
[00:24:26.680 --> 00:24:29.480] So, I think like that's why prices are so high.
[00:24:29.480 --> 00:24:35.000] Like, VCs are like falling over themselves because it's a new moment, a paradigm shift.
[00:24:35.000 --> 00:24:35.800] Yeah, wow.
[00:24:35.800 --> 00:24:36.360] Yeah.
[00:24:36.360 --> 00:24:45.000] As you're looking at all of these businesses in the AI space, and I'm sure you and your team are just like deep diving on this in general about what the opportunities are.
[00:24:45.360 --> 00:24:54.080] I'm curious about what your thesis is on how the world, the workforce, like what changes are coming because I am personally like quite terrified.
[00:24:54.400 --> 00:24:58.080] So you and I saw the same quote from Robert F.
[00:24:58.080 --> 00:25:00.720] Smith, the founder of Vista Equity.
[00:25:00.720 --> 00:25:09.440] I actually saw him speak at a conference about a month ago, and he said the same thing about how AI is going to completely change the workforce and the white collar workforce.
[00:25:09.680 --> 00:25:18.720] And he said, he said in this, the quote, it was something like he's speaking to his team and he said, half of you or 20% of you or something will be looking for a job next year.
[00:25:18.720 --> 00:25:19.760] It's pretty frightening.
[00:25:19.760 --> 00:25:20.640] Next year.
[00:25:20.640 --> 00:25:22.240] Yeah, it is frightening.
[00:25:22.240 --> 00:25:25.920] And listen, I'm seeing it happen already.
[00:25:25.920 --> 00:25:33.680] The amount of work that you can automate is really staggering if you understand prompt engineering and if you spend time on it.
[00:25:33.680 --> 00:25:34.400] And so...
[00:25:34.400 --> 00:25:36.080] But that's going to get easier too.
[00:25:36.080 --> 00:25:40.400] Right now you have to like spend time to understand it, but in a couple of years you won't.
[00:25:40.720 --> 00:25:44.240] So I will be honest with you.
[00:25:44.240 --> 00:25:46.720] I think he's directionally correct.
[00:25:46.720 --> 00:25:49.760] I don't know if it's a year or if it's five years.
[00:25:49.760 --> 00:25:57.920] My best advice is I think you really need to focus on building as an individual.
[00:25:57.920 --> 00:26:00.640] So I think you need to understand how these tools work.
[00:26:00.640 --> 00:26:02.800] I think you need to be using these tools.
[00:26:02.800 --> 00:26:07.040] And I think you need to be experimenting with building things with these tools.
[00:26:07.040 --> 00:26:09.600] You know, today they're calling it vibe coding, right?
[00:26:09.600 --> 00:26:25.440] But I think the people who have a building mindset and mentality and a creative approach and then who also have really great soft skills are going to be the people who continue to thrive and create new opportunities for themselves in organizations.
[00:26:25.440 --> 00:26:41.720] So, while I think it feels really scary, if you think about actually this generation and their desire to be their own bosses and their own business owners, in some ways it's actually a really unique opportunity for the upcoming generation.
[00:26:41.720 --> 00:26:51.160] And so, my counsel actually to people in our generation or even older folks is like be using these tools in your daily workflow today.
[00:26:51.160 --> 00:26:54.680] Understand how they're used, use them to give yourself leverage.
[00:26:54.680 --> 00:27:00.360] There is a staggering stat about the percentage of users.
[00:27:00.600 --> 00:27:01.160] 80%.
[00:27:01.160 --> 00:27:03.320] Yeah, 80% are men.
[00:27:03.320 --> 00:27:04.440] That is crazy.
[00:27:04.440 --> 00:27:06.600] Like, we are already behind.
[00:27:06.600 --> 00:27:11.640] The guys are leveraging their day in a way you couldn't even imagine.
[00:27:11.640 --> 00:27:15.240] They're getting so much more out of their day, they're getting so much more output.
[00:27:15.240 --> 00:27:19.560] And we are sitting here going, I don't know if I trust AI.
[00:27:19.880 --> 00:27:24.120] Like, okay, but then don't give it your private health information.
[00:27:24.120 --> 00:27:25.400] That's okay.
[00:27:25.400 --> 00:27:27.400] But make the time.
[00:27:28.040 --> 00:27:37.800] I would encourage everyone, take three days and muck around with how you can automate anything, everything in your life, because there is a way to do it.
[00:27:37.800 --> 00:27:43.960] Start with ChatGPT, use Notion LLM, play around with Claude, add granola.
[00:27:43.960 --> 00:27:46.840] Like, there are so many great tools out there.
[00:27:46.840 --> 00:27:54.360] And by the way, there's a dozen guys who created dumb lists on how to do all of this, and they've already done the work for you.
[00:27:54.360 --> 00:27:56.920] So, good luck to them for having been ahead.
[00:27:56.920 --> 00:28:01.080] Now, go and use all that information to your advantage.
[00:28:01.080 --> 00:28:01.880] Amazing.
[00:28:01.880 --> 00:28:07.800] If you were like a young entrepreneurial person, you wanted to start a business and you're kind of like looking for the idea.
[00:28:07.800 --> 00:28:18.800] When you see people come to you with these incredible businesses and big opportunities, is there any kind of like through line that you see in how they came to noticing those gaps?
[00:28:18.800 --> 00:28:23.920] I think it's most often about a personal pain point or a professional pain point, right?
[00:28:23.920 --> 00:28:24.960] That you observed at work.
[00:28:25.120 --> 00:28:28.800] Surely that customs situation is someone who has like worked in that space.
[00:28:28.800 --> 00:28:30.000] Exactly, right?
[00:28:30.320 --> 00:28:31.920] No, I think that's exactly right.
[00:28:31.920 --> 00:28:38.800] Like our founder of one of our other companies, Isabella Rafferty Isabella, she started Canela Media.
[00:28:38.800 --> 00:28:42.960] It's like the fastest growing streaming platform for the Hispanic population.
[00:28:42.960 --> 00:28:48.800] She built two ad tech businesses before this and she grew up watching telenovelas, right?
[00:28:48.800 --> 00:28:53.440] And she knew this community wanted their kids to grow up speaking Spanish, right?
[00:28:53.440 --> 00:28:59.280] So that is like the perfect example of professional meets personal insight.
[00:28:59.280 --> 00:29:11.360] So I really see like people who have experienced this pain point as that's the unlock because that's when you have passion as well about this to stick with this business idea.
[00:29:11.360 --> 00:29:18.960] Like Sarah Pagey, when she launched Blue Land, like she had had a baby and she started learning about all the microplastics.
[00:29:18.960 --> 00:29:23.200] Like this was in 2017, 2018.
[00:29:23.200 --> 00:29:32.000] Now we hear about microplastics every second day on Instagram, but she was just really uncovering like, what am I putting into my child?
[00:29:32.320 --> 00:29:38.720] And so she was like, I am on a mission to remove single-use plastic from this world.
[00:29:38.720 --> 00:29:46.000] And so if you want to talk about big vision inspired by personal pain point, that is a really great narrative arc.
[00:29:46.320 --> 00:29:58.560] So, what I would really say is like, I don't think there's any TAM or total addressable market that you can find on a spreadsheet that there's like a formula to find out to start a business.
[00:29:58.560 --> 00:30:09.640] I think you should think about in the pain point that I've experienced, are millions of other people experiencing the same issue?
[00:30:09.640 --> 00:30:12.760] And is there truly no good solution out there?
[00:30:13.080 --> 00:30:20.520] And is there a moment in time that says, like, something is happening that means this could be the moment?
[00:30:20.520 --> 00:30:24.760] I mean, there are businesses too that, like, we're too early.
[00:30:25.080 --> 00:30:31.160] So, I really think like if you're going to stick with something, you know, you've been at this for a long time.
[00:30:31.160 --> 00:30:32.680] I've been at this for a long time.
[00:30:32.680 --> 00:30:36.840] Like, you really have to love it and feel so passionate about that.
[00:30:37.480 --> 00:30:44.600] I want to switch gears and talk about there have been a lot of headlines lately about some pretty big acquisitions in the consumer space.
[00:30:44.600 --> 00:30:48.200] We've seen Road, Touchland, Poppy, who else?
[00:30:48.200 --> 00:30:48.920] There's been a few.
[00:30:48.920 --> 00:30:49.480] Yeah.
[00:30:49.800 --> 00:31:03.400] And for those of us who are building businesses and nowhere near an acquisition, when a brand at that stage is looking to sell and looking to exit, what are some of those milestones that they need to be hitting?
[00:31:03.400 --> 00:31:09.880] Or like, where do you need to get a company to so that that is a realistic option for you?
[00:31:10.120 --> 00:31:13.000] I'm so curious about this, and I feel like it's a very hard thing to Google.
[00:31:13.000 --> 00:31:13.560] Yeah.
[00:31:13.880 --> 00:31:14.920] Yeah, it's a great question.
[00:31:14.920 --> 00:31:24.200] Well, firstly, I'll say I think it's a really exciting time because we've basically been in like an MA desert for the last, you know, four years and we've been in an IPO desert too.
[00:31:24.200 --> 00:31:26.680] And the tariff situation has not helped anyone.
[00:31:27.320 --> 00:31:38.680] But I think what's exciting about this moment is there are strategic acquirers out there and they're looking and they're on the hunt for businesses with good fundamentals.
[00:31:38.680 --> 00:31:49.280] So I think what is really true in all of these businesses that have been acquired is that they are pretty clear market leaders.
[00:31:49.600 --> 00:31:56.960] In some cases, or in many cases, they have very clear distribution advantage and they have really strong business fundamentals.
[00:31:56.960 --> 00:32:01.040] So profitability, inbuilt distribution.
[00:32:01.040 --> 00:32:11.200] So when we think about how you should think about the path to exit for CPG, we are really encouraging founders to get those fundamentals in place early.
[00:32:11.200 --> 00:32:22.880] So we actually won't even invest in a company that has to spend so much on customer acquisition that they're not profitable on first purchase.
[00:32:22.880 --> 00:32:26.640] And we want to see a very clear distribution advantage.
[00:32:26.640 --> 00:32:33.680] So often today that does look like being in retail nationwide, but there can be some other advantage.
[00:32:33.680 --> 00:32:36.640] And in the case of Rode, that advantage was Haley Bieber.
[00:32:37.920 --> 00:32:40.080] And that is fine, right?
[00:32:40.080 --> 00:32:43.600] Because not every celebrity has proved out that advantage.
[00:32:43.600 --> 00:32:45.680] So she had a special something.
[00:32:45.680 --> 00:32:48.560] And that's part of what ELF was buying, right?
[00:32:48.560 --> 00:32:56.720] So the other piece of this is there does have to be a complementary fit with the acquirer and the target.
[00:32:56.720 --> 00:33:00.240] And so often these relationships are built over time, too.
[00:33:00.240 --> 00:33:05.280] And so you actually want to spend time early getting to know some of these potential partners.
[00:33:05.280 --> 00:33:15.920] And I think, you know, in the case of ELF, who have been sort of genius marketers to Gen Z, this was then a very natural fit that could sort of really double down on that stronghold that they had.
[00:33:15.920 --> 00:33:26.960] And in the case of Touchland and Church and Dwight, Church and Dwight has a reputation for acquiring these very profitable market leaders, and then they know what to do with them to continue to scale them.
[00:33:26.960 --> 00:33:33.720] So that's that's not you know a full answer for how do you think about it if you're early.
[00:33:34.040 --> 00:35:04.320] But I think if you're early, the key is what is the sort of business I can be building where I raise less money and I get to profitability early and I have a strong so one of the things people are looking for is like is there clear momentum like month on month momentum or year on year growth so you feel like okay this hasn't stalled and this is a repeatable story people are still finding something they like about this brand this brand is staying relevant so I think you know being really thoughtful about like one-off moments aren't enough and you have to build something that feels lasting for people when you see a business get to the point where it it's exiting how much equity is normal for a founder to still have at that point is there a normal great question there's a range yeah everyone's like how much money do you actually make after yeah so it basically depends on how much money you've raised over how many rounds and a good way to think about it is at least in the venture model and if you don't take classic venture money but you take maybe some more strategic investors it might be a bit different but typically at every round you're taking like 20 or 25 percent dilution so you know if you're the founder and you take you know you've got 80% after your seed, and then that goes down and then that goes down.
[00:35:04.320 --> 00:35:12.560] So if you raise, or if you sell after your b or C, by that point the founders might be down to like 40%, for example.
[00:35:12.880 --> 00:35:22.240] So if you have raised a lot of money, you own less, but the valuation of the company might be higher.
[00:35:22.240 --> 00:35:28.000] And that is the very fine tension point in when is the right time to sell.
[00:35:28.320 --> 00:35:50.240] So for some consumer companies, you actually may be better off selling for $100 million while you still own a lot of the company versus getting over your skis, raising a lot of money at a very high like billion dollar valuation where actually there are less acquirers at that point.
[00:35:50.240 --> 00:35:57.360] So, you know, I don't know whether I should like name names on this podcast, but let me give you a comparative example.
[00:35:57.360 --> 00:36:05.280] There's one personal care brand that was acquired by PNG for like $100 million.
[00:36:05.280 --> 00:36:10.480] That founder, I think, raised like $500,000 to get off the ground.
[00:36:10.480 --> 00:36:15.360] And so he owned 95% of the company by the time it exited.
[00:36:15.360 --> 00:36:17.120] So that would be my advice, right?
[00:36:17.120 --> 00:36:23.760] If you're building a CPG company today, don't take a lot of money, build a profitable business from the outset.
[00:36:23.760 --> 00:36:31.040] On the other hand, I can think of a consumer goods company that took venture money, raised like up to a Series E.
[00:36:31.040 --> 00:36:33.200] That company had five founders.
[00:36:33.200 --> 00:36:41.840] It eventually, I think, IPO'd, and it IPO'd at a public valuation that was less than its last private valuation.
[00:36:41.840 --> 00:36:47.680] So while the original founders would have made some money, a lot of the later investors didn't.
[00:36:47.680 --> 00:36:49.920] And then they also had to split that five way.
[00:36:49.920 --> 00:37:01.480] So you really start to see, and you know, it's funny because I'm a VC, so I'm not like trying to trash the industry, but the dynamics for consumer, I think, are tough with venture capital.
[00:37:01.480 --> 00:37:12.200] And that's why you'll hear a lot of VCs steer away from CPG, actually, because it is hard to get those billion-dollar outcomes.
[00:37:12.200 --> 00:37:23.080] And it doesn't feel like that in the press today, you know, Touchland, 800 million, Poppy, 1.6 billion, Rode, 1 billion, including the earn out.
[00:37:23.080 --> 00:37:25.960] But those really are few and far between.
[00:37:26.280 --> 00:37:28.920] Let's talk about the Rode acquisition a little bit more.
[00:37:28.920 --> 00:37:33.640] I thought it was, when I saw it, and I, you know, look at the timeline, like three years.
[00:37:33.640 --> 00:37:33.880] Yeah.
[00:37:33.960 --> 00:37:35.240] Just wild.
[00:37:35.240 --> 00:37:35.800] Wild.
[00:37:35.800 --> 00:37:37.000] Touchland was 15.
[00:37:37.000 --> 00:37:37.240] Yeah.
[00:37:37.240 --> 00:37:38.280] She's been at that for 15 years.
[00:37:38.360 --> 00:37:39.640] And Poppy's been long too.
[00:37:39.640 --> 00:37:41.240] They've been around for a long time as well.
[00:37:41.240 --> 00:37:41.320] Yeah.
[00:37:41.480 --> 00:37:42.200] Maybe like eight.
[00:37:42.200 --> 00:37:42.680] Yeah, eight.
[00:37:42.680 --> 00:37:43.080] Okay.
[00:37:43.080 --> 00:37:43.400] Yeah.
[00:37:43.400 --> 00:37:49.720] But I looked at Rode and I was like, it's very, I don't know, it's cool to see a female-founded business.
[00:37:49.720 --> 00:37:51.240] And like, Haley's not the only founder.
[00:37:51.240 --> 00:37:52.440] There are other founders as well.
[00:37:52.440 --> 00:37:57.640] But female-founded business that like clearly went in with the idea of like, this is not my baby.
[00:37:57.800 --> 00:38:00.440] I'm building this to sell and we're going to exit.
[00:38:00.440 --> 00:38:01.800] And like, that's what they did.
[00:38:01.800 --> 00:38:05.960] And it was, and I don't, I don't, I don't hear many women talk about their businesses like that.
[00:38:05.960 --> 00:38:10.280] And I was just like, I think it's, I think it's cool to have an example out in the world of someone doing that.
[00:38:10.280 --> 00:38:11.800] Yeah, I think that's true.
[00:38:11.800 --> 00:38:13.240] I have this conversation a lot.
[00:38:13.240 --> 00:38:17.080] I think male founders tend to be more transactional about their businesses.
[00:38:17.160 --> 00:38:19.400] I don't know if it's because women feel like they can't be.
[00:38:19.400 --> 00:38:26.680] Like, I don't know if there's like a, we need women who are ambitious to be ambitious on behalf of the better good of the world or something.
[00:38:26.680 --> 00:38:27.080] You know what I mean?
[00:38:27.480 --> 00:38:29.000] I think that's 100% true.
[00:38:29.000 --> 00:38:32.440] I think women CEOs get tarred with a really difficult brush.
[00:38:32.600 --> 00:38:53.200] I think the expectations on them as CEOs and founders is that they're also mothers of the company and they have to hold the mission of the company and the care of the employeees in their hands like delicate birds, and that they are not allowed to be transactional and they're not allowed to be direct and to be tough leaders.
[00:38:53.200 --> 00:38:55.760] And I think we've seen that time and time and time again.
[00:38:55.920 --> 00:38:56.480] Sure have.
[00:38:56.480 --> 00:39:04.960] And I think it is completely okay to develop a business that you see has a huge opportunity to exit and to run at that.
[00:39:05.280 --> 00:39:05.920] I love that.
[00:39:06.000 --> 00:39:09.200] Nisha, the last question I want to ask you is for a resource recommendation.
[00:39:09.200 --> 00:39:14.480] Something that you can recommend to folks who are interested in building amazing businesses?
[00:39:14.800 --> 00:39:16.720] That is a great question.
[00:39:16.720 --> 00:39:25.360] So a few of the resources I love for founders is this book's a little old now and it's called Venture Deals.
[00:39:25.360 --> 00:39:27.440] It's by Brad Feld.
[00:39:27.440 --> 00:39:34.000] And I think the subtitle of the book is Know Your Deals like Better Than Your Lawyer or something.
[00:39:34.000 --> 00:39:38.720] And what I love about the book is he gives like the VC view and the founder view.
[00:39:38.720 --> 00:39:45.040] And so it gives you like a really great understanding of like what where is the VC coming from?
[00:39:45.360 --> 00:39:49.040] Why are they making these suggestions when they're trying to negotiate with you?
[00:39:49.040 --> 00:39:53.680] And so it sort of just gives you like an inside baseball into negotiating fundraising.
[00:39:53.680 --> 00:39:57.200] So I think that is one of my favorite all-time books.
[00:39:57.200 --> 00:40:08.080] I also love Fred Wilson's AVC, which is a really great insight into just how the VC business works and what people are looking for.
[00:40:08.080 --> 00:40:12.720] But I would say, like, honestly, the best tool today is ChatGPT.
[00:40:13.040 --> 00:40:27.600] I have never seen a moment in time where you have the capacity to learn so quickly and unlock the keys to a castle of something that has been held like really tight by the gatekeepers.
[00:40:27.600 --> 00:40:41.160] So, this is the first time like you could figure out like how to negotiate with someone, what is normal, what is not normal, what are they thinking about in a thing, a way just that hasn't been accessible before.
[00:40:41.160 --> 00:40:48.840] I just wanted to jump in and end the show with a quick thank you and shout out to all of our paid Business Bestie subscribers.
[00:40:48.840 --> 00:40:57.400] Business Besties bypass literally years of networking by getting access to all of the people that you need to build your dream business.
[00:40:57.400 --> 00:41:07.720] You also get invited to exclusive monthly group business coaching call sessions where you can speak to experts and founders and ask them all of those questions that you just can't Google.
[00:41:07.720 --> 00:41:09.160] You can cancel anytime.
[00:41:09.160 --> 00:41:14.200] Head to bestie.vimarfounderworld.com or click the link in the show notes for more.

Prompt 2: Key Takeaways

Now please extract the key takeaways from the transcript content I provided.

Extract the most important key takeaways from this part of the conversation. Use a single sentence statement (the key takeaway) rather than milquetoast descriptions like "the hosts discuss...". 

Limit the key takeaways to a maximum of 3. The key takeaways should be insightful and knowledge-additive. 

IMPORTANT: Return ONLY valid JSON, no explanations or markdown. Ensure:
- All strings are properly quoted and escaped
- No trailing commas
- All braces and brackets are balanced
Format: {"key_takeaways": ["takeaway 1", "takeaway 2"]}

Prompt 3: Segments

Now identify 2-4 distinct topical segments from this part of the conversation.

For each segment, identify:
- Descriptive title (3-6 words)  
- START timestamp when this topic begins (HH:MM:SS format)
- Double check that the timestamp is accurate - a timestamp will NEVER be greater than the total length of the audio
- Most important Key takeaway from that segment. Key takeaway must be specific and knowledge-additive.
- Brief summary of the discussion

IMPORTANT: The timestamp should mark when the topic/segment STARTS, not a range. Look for topic transitions and conversation shifts.

Return ONLY valid JSON. Ensure all strings are properly quoted, no trailing commas:
{
  "segments": [
    {
      "segment_title": "Topic Discussion", 
      "timestamp": "01:15:30",
      "key_takeaway": "main point from this segment",
      "segment_summary": "brief description of what was discussed"
    }
  ]
}

Timestamp format: HH:MM:SS (e.g., 00:05:30, 01:22:45) marking the START of each segment.

Prompt 4: Media Mentions

Now scan the transcript content I provided for ACTUAL mentions of specific media titles:

Find explicit mentions of:
- Books (with specific titles)
- Movies (with specific titles)  
- TV Shows (with specific titles)
- Music/Songs (with specific titles)

DO NOT include:
- Websites, URLs, or web services
- Other podcasts or podcast names

IMPORTANT: 
- Only include items explicitly mentioned by name. Do not invent titles.
- Valid categories are: "Book", "Movie", "TV Show", "Music"
- Include the exact phrase where each item was mentioned
- Find the nearest proximate timestamp where it appears in the conversation
- THE TIMESTAMP OF THE MEDIA MENTION IS IMPORTANT - DO NOT INVENT TIMESTAMPS AND DO NOT MISATTRIBUTE TIMESTAMPS
- Double check that the timestamp is accurate - a timestamp will NEVER be greater than the total length of the audio
- Timestamps are given as ranges, e.g. 01:13:42.520 --> 01:13:46.720. Use the EARLIER of the 2 timestamps in the range.

Return ONLY valid JSON. Ensure all strings are properly quoted and escaped, no trailing commas:
{
  "media_mentions": [
    {
      "title": "Exact Title as Mentioned",
      "category": "Book",
      "author_artist": "N/A",
      "context": "Brief context of why it was mentioned",
      "context_phrase": "The exact sentence or phrase where it was mentioned",
      "timestamp": "estimated time like 01:15:30"
    }
  ]
}

If no media is mentioned, return: {"media_mentions": []}

Full Transcript

[00:00:00.240 --> 00:00:06.240] We are looking to invest in companies where the funding will accelerate the trajectory of the company.
[00:00:06.240 --> 00:00:14.480] We're typically investing 500K to $1.5 million, hoping that we can turn that into 100 times our money.
[00:00:14.480 --> 00:00:19.440] Brands we've invested in include Starfaith, Popskip Drive, Chief, Spring Health.
[00:00:19.440 --> 00:00:25.040] When you look at the founders that you've backed that have done really well, is there like a personality trait?
[00:00:25.040 --> 00:00:28.080] Successful founders will run through walls.
[00:00:28.080 --> 00:00:29.920] Are they a visionary storyteller?
[00:00:29.920 --> 00:00:31.680] Do I believe that they can execute?
[00:00:31.680 --> 00:00:34.560] And they're a little like annoying.
[00:00:34.560 --> 00:00:40.720] We like to back people who have world-changing ambition with a dose of humility.
[00:00:40.720 --> 00:00:43.440] How does someone convince you that they've got to look those things?
[00:00:43.440 --> 00:00:44.720] I start with the story.
[00:00:44.720 --> 00:00:45.520] Why now?
[00:00:45.520 --> 00:00:46.240] Why me?
[00:00:46.240 --> 00:00:47.360] How big is this market?
[00:00:47.360 --> 00:00:48.400] What have you done so far?
[00:00:48.560 --> 00:00:50.240] Seen a lot of influences in this space.
[00:00:50.240 --> 00:00:53.040] Young women wanting to get into like angel investing and branding.
[00:00:53.040 --> 00:00:56.480] Angel Church has been glamorized by Shark Tank and on social media.
[00:00:56.480 --> 00:00:57.760] I'm an asset manager.
[00:00:57.760 --> 00:01:01.680] I'm not like out here to just like write checks for cool people.
[00:01:01.680 --> 00:01:08.640] I am investing on behalf of the retirement savings of teachers in some cases.
[00:01:08.640 --> 00:01:10.320] So there's a real responsibility.
[00:01:10.320 --> 00:01:12.800] AI is going to completely change the workforce.
[00:01:12.800 --> 00:01:16.160] My best advice, I think you need to understand how these tools work.
[00:01:16.160 --> 00:01:18.720] The percentage of users.
[00:01:18.800 --> 00:01:19.920] 80% are men.
[00:01:19.920 --> 00:01:21.440] We are already behind.
[00:01:21.440 --> 00:01:26.000] The guys are leveraging their day in a way you couldn't even imagine.
[00:01:26.000 --> 00:01:29.040] We are sitting here going, I don't know if I trust AI.
[00:01:29.040 --> 00:01:31.520] Hey, Business Besties, welcome back to Female Founder World.
[00:01:31.520 --> 00:01:32.320] I'm Jasmine.
[00:01:32.320 --> 00:01:36.240] I'm the host of the show and the person behind all things Female Found World.
[00:01:36.240 --> 00:01:37.760] Today I'm chatting with Nisha Dewar.
[00:01:37.760 --> 00:01:40.800] She's the managing partner and co-founder at BBC Ventures.
[00:01:40.800 --> 00:01:42.160] Nisha, welcome to the show.
[00:01:42.160 --> 00:01:44.000] Hey Jazz, nice to see you again.
[00:01:44.000 --> 00:01:46.320] Okay, you were on the show ages, ages ago.
[00:01:46.320 --> 00:01:47.680] Before we did video, I think.
[00:01:47.680 --> 00:01:48.720] I think before we did video.
[00:01:48.720 --> 00:01:50.880] I mean, like, right when you were getting started.
[00:01:50.880 --> 00:01:52.640] Yeah, bland ago.
[00:01:51.800 --> 00:01:56.960] So, no, I mean, I feel honored to have been asked and to be back again.
[00:01:56.960 --> 00:02:00.760] I mean, the people you've had on the show recently, they're like a real deal, man.
[00:01:59.840 --> 00:02:05.320] Well, let's have a good conversation today and we'll see.
[00:02:05.560 --> 00:02:11.000] Tell me, for people that don't know BBG Ventures or what a VC is, what do you do?
[00:02:11.000 --> 00:02:11.320] Yeah.
[00:02:11.320 --> 00:02:20.040] So, I run a venture capital firm called BBG Ventures and we invest in female or diverse-led companies building for what we call the polycultural future.
[00:02:20.040 --> 00:02:29.080] So, we get really excited by founders who don't just have professional experiences that qualify them to win, but have personal experiences.
[00:02:29.080 --> 00:02:35.800] So, that's why we started with women back in 2014, because women building for women, they understand their target user.
[00:02:35.800 --> 00:02:44.120] And today, we've expanded that to a broader set of founders, but really thinking about where is the country going and what are the biggest solutions that need to be solved.
[00:02:44.120 --> 00:02:49.560] And so, we invest in both consumer businesses and enterprise or SaaS businesses.
[00:02:49.560 --> 00:02:53.240] We have a mixed portfolio, but what does that really mean?
[00:02:53.240 --> 00:02:59.080] So, in VC, we are looking, and a lot of your listeners might know this, but some of them might not.
[00:02:59.080 --> 00:03:12.520] We are looking to invest in most often technology companies, not always, but companies where the funding will accelerate the trajectory of the company and who want to have a fast growth business.
[00:03:12.520 --> 00:03:14.760] And that's a really important thing about VC.
[00:03:14.760 --> 00:03:39.480] So, we're typically investing, you know, 500K to $1.5 million in a very early stage of a company, pre-seed or seed, and hoping that we can turn that into 20 times our money, but really not just 20 times, actually, like a hundred times, because we'll make 25, 30 investments out of a fund, like a 50 or 60 million dollar fund.
[00:03:39.480 --> 00:03:50.000] And it's such a tough game that we need one, two, or three of those investments to triple the total amount of money that we invested.
[00:03:50.320 --> 00:03:57.600] So, I need to have one or two or three investments that make me like $150 or $180 million.
[00:03:57.600 --> 00:04:01.200] And that is the very tricky game of venture capital.
[00:04:01.200 --> 00:04:05.280] Okay, tell me some of the companies that you've invested in that people might know.
[00:04:05.280 --> 00:04:10.320] Yeah, so some of the consumer brands we've invested in include Starface.
[00:04:10.480 --> 00:04:19.120] You and I were talking about pimple patches earlier, and they have an extraordinary thesis around, I think, the rejection of perfection in beauty today for Gen Z.
[00:04:19.440 --> 00:04:24.240] We have invested in Hopskip Drive, which is a mobility company for kids.
[00:04:24.240 --> 00:04:29.520] They get kids to and from school in cities all across America.
[00:04:29.520 --> 00:04:33.120] We invested in Chief, the women's YPO network.
[00:04:33.120 --> 00:04:38.240] Probably our biggest winner, which not a lot of your listeners might know because it's a B2B company.
[00:04:38.240 --> 00:04:44.080] It's a company called Spring Health, April Co., youngest unicorn CEO.
[00:04:44.080 --> 00:04:49.760] Spring Health delivers mental health care benefits via companies as an employee benefit.
[00:04:49.760 --> 00:04:57.520] They raised their last round was a hundred million dollar Series E at the beginning of 2024 and they were valued at over $3 billion.
[00:04:57.520 --> 00:05:10.960] And I love talking about that company because we talk about consumer needs and there are a lot of important nice to have consumer needs, but there are a lot of must-solve consumer needs and mental health is one of the biggest challenges in the country right now.
[00:05:10.960 --> 00:05:14.960] So we love everything from CPG to technology to healthcare.
[00:05:14.960 --> 00:05:16.320] Okay, you've been in this space for a while now.
[00:05:16.400 --> 00:05:19.920] You said that the firm's been around since 2014.
[00:05:20.000 --> 00:05:21.280] More than 10 years.
[00:05:21.280 --> 00:05:28.640] When you look at the founders that you've backed, or the types of companies that you've backed that have done really well, is there a through line?
[00:05:28.640 --> 00:05:31.480] Is there like a personality trait?
[00:05:31.480 --> 00:05:33.880] Is there a kind of experience?
[00:05:33.880 --> 00:05:37.240] Like what makes these people so good or these ideas so good?
[00:05:37.240 --> 00:05:38.040] Yeah.
[00:05:38.360 --> 00:05:46.440] So if you go and read about VC and what makes a great founder online, you'll find like a list of like 10 attributes.
[00:05:46.440 --> 00:05:54.680] But I think the thing they all have in common is that successful founders will run through walls.
[00:05:54.680 --> 00:05:57.640] Like you cannot hold them back.
[00:05:57.640 --> 00:06:05.560] And so when you're thinking about backing a founder, you're looking for all of the traditional things like, are they a visionary storyteller, right?
[00:06:05.560 --> 00:06:13.160] Are they the question we ask is like, is this person charting a new path in their world?
[00:06:13.160 --> 00:06:19.000] So whatever industry they're building in, are they telling a story about how they're going to shift their paradigm?
[00:06:19.000 --> 00:06:23.160] And then you're looking at, do I believe that they can execute across this?
[00:06:23.160 --> 00:06:30.600] Because like storytelling is one thing, but like being able to bring that to life and do the work is a whole other issue.
[00:06:30.600 --> 00:06:34.200] So storytelling and execution, those are the key foundations.
[00:06:34.200 --> 00:06:38.040] And then you're looking at tactical things like, do I think they can hire a great team?
[00:06:38.040 --> 00:06:40.760] Can they convince people to come along for the ride?
[00:06:40.760 --> 00:06:42.280] Can they convince employees?
[00:06:42.280 --> 00:06:43.960] Can they convince customers?
[00:06:43.960 --> 00:06:45.720] Can they convince investors?
[00:06:45.720 --> 00:06:47.640] Like all of these things are at play.
[00:06:47.640 --> 00:06:52.600] And then you're looking for qualities like resilience, adaptability, are they flexible?
[00:06:52.600 --> 00:06:54.600] Can they take feedback?
[00:06:54.600 --> 00:07:04.360] But when you put all of those people side by side, it's the people who are like, I am not going to stop until I win at this.
[00:07:04.360 --> 00:07:10.120] And they are so high conviction and they're a little like annoying.
[00:07:10.120 --> 00:07:12.280] You wouldn't necessarily be best mates with them?
[00:07:12.280 --> 00:07:21.760] Not always, no, because they have such a high degree of belief in themselves and the vision to the point that it's like a little bit delusional.
[00:07:22.080 --> 00:07:29.440] And rightly so, because you have to be a little bit delusional to build a startup and try and build a billion-dollar business or any business today.
[00:07:29.440 --> 00:07:37.280] So it's, you know, there's a reason that like a ton of really successful founders and CEOs are actually narcissists.
[00:07:37.600 --> 00:07:39.600] We try not to back the narcissists.
[00:07:39.600 --> 00:07:45.760] We, I would say, actually, our, everyone's got like a brand of founder that we like to back.
[00:07:45.760 --> 00:07:54.400] And I think we like to back people who have world-changing ambition with a dose of humility.
[00:07:55.120 --> 00:07:55.920] I love that.
[00:07:55.920 --> 00:07:56.640] Yeah.
[00:07:57.280 --> 00:08:07.440] If I'm sitting here and I'm trying to convince you to invest in my company or someone's listening and they want to convince you, how does someone convince you that they've got all of those things?
[00:08:07.440 --> 00:08:07.920] Yeah.
[00:08:07.920 --> 00:08:10.000] I start with the story.
[00:08:10.000 --> 00:08:13.920] And there are three key parts of a story when you're trying to raise money.
[00:08:13.920 --> 00:08:14.880] Why now?
[00:08:15.200 --> 00:08:16.720] Why this product?
[00:08:16.720 --> 00:08:18.720] And why this team or why me?
[00:08:18.960 --> 00:08:23.120] And so the why now is about how big is the size of the opportunity?
[00:08:23.120 --> 00:08:24.480] How big is this market?
[00:08:24.480 --> 00:08:28.560] And what part of that market could I take hold of?
[00:08:28.560 --> 00:08:32.160] But more than that, it's what is happening in the market today?
[00:08:32.160 --> 00:08:36.000] What are the dynamics that mean this is the right time now?
[00:08:36.320 --> 00:08:40.080] Are there some like old legacy issues in this industry?
[00:08:40.080 --> 00:08:43.360] Is there something new about technology that is changing?
[00:08:43.360 --> 00:08:45.680] Is there a cultural movement?
[00:08:45.680 --> 00:08:48.800] And then, why this product is okay, why is my product going to win?
[00:08:48.800 --> 00:08:59.440] What is so different about it that is going to deliver a 10x better experience or it's going to stand out from the crowd of other me to's in this industry?
[00:08:59.440 --> 00:09:07.720] And then, why me is what is it about me and my team that makes us so qualified to win here?
[00:09:07.720 --> 00:09:13.240] So, we're really looking for that level of ingredients, and then we're digging into these other things.
[00:09:13.240 --> 00:09:22.200] So, on storytelling, is there a big vision, a clear narrative arc on how my company is going to change my part of the world, right?
[00:09:22.520 --> 00:09:25.720] And then on execution, like we want to see some examples.
[00:09:25.720 --> 00:09:27.400] So, what have you done so far?
[00:09:27.400 --> 00:09:29.400] It's okay if you haven't raised money yet.
[00:09:29.400 --> 00:09:36.840] You might not have had a ton of money to have so-called traction or numbers on the board, but you know, what have you done with what you've got?
[00:09:36.840 --> 00:09:40.280] Like, I love the story about Katrina Lake at Stitch Fix, right?
[00:09:40.280 --> 00:09:51.800] She went around when she was coming, like, validating the idea with an Excel spreadsheet, like with orders from her friends to show like there is interest here, there is appetite.
[00:09:51.800 --> 00:10:01.880] When we met Sarah Pagey at Blue Land, she had partnered up with her co-founder, one of the co-founders who had been a scientist at Method, right?
[00:10:01.880 --> 00:10:09.400] And she already had the formulation for her cleaning products, she already had the margin structure, she knew where she was going to manufacture.
[00:10:09.400 --> 00:10:15.160] So, what are all the things that show me this person is a doer, not just a storyteller?
[00:10:15.160 --> 00:10:17.000] And then we're going to push and prod.
[00:10:17.000 --> 00:10:20.120] Like, we're going to try and figure out, like, what have you thought of?
[00:10:20.120 --> 00:10:21.080] What haven't you thought of?
[00:10:21.080 --> 00:10:25.720] We're going to ask a lot of questions, and we're going to disagree with you on some things, right?
[00:10:25.720 --> 00:10:27.640] Like, how do you respond to that?
[00:10:27.640 --> 00:10:29.320] Have you thought ahead about this?
[00:10:29.320 --> 00:10:31.000] Can you take feedback?
[00:10:31.000 --> 00:10:38.920] Is this going to be a fun partnership along the way where we feel like we could work with you for the next 10 years?
[00:10:38.920 --> 00:10:39.880] Can you give me some examples?
[00:10:39.880 --> 00:10:41.560] So, you said, like, why now?
[00:10:41.560 --> 00:10:48.640] So, are there any companies that you've backed where you can think about the why now and why that made sense in the context?
[00:10:49.200 --> 00:11:08.080] Yeah, so well, I think Starface is a really good one, actually, because you know, we have a thesis like I think many of your listeners who work in CPG and building consumer businesses have, which is every generation wants different brands from their big brothers and sisters and their parents, right?
[00:11:08.080 --> 00:11:11.680] There is always going to be a redo and a re-opportunity.
[00:11:11.680 --> 00:11:21.600] And what you had with this company was a moment in time where, I mean, you and I have talked about sort of the differences between Gen Z and how they like to show up.
[00:11:21.920 --> 00:11:32.480] And what these founders have tapped into is, because they have a number of companies, like, what are the categories of shame that have held us back?
[00:11:32.480 --> 00:11:37.280] And where is an opportunity to flip that on its head?
[00:11:37.280 --> 00:11:46.480] And beauty is one of those categories where we have been made to feel like we must pursue perfection at all costs.
[00:11:46.480 --> 00:12:09.120] And what they saw with this product was both a product that would work, right, and would have sort of, you know, would be efficacious, which is so important in skincare, but an opportunity to speak to this customer who doesn't want to be perfect, wants to reject that, and in fact, wants to shine a light and celebrate their imperfections.
[00:12:09.120 --> 00:12:24.400] And so, this idea of the star came at the perfect time, but also, so think about this other market force: a time when people were willing to be messier on social media, right?
[00:12:24.400 --> 00:12:31.720] And show, like, Instagram started as only your perfect photos, and then they added stories because they were trying to compete with TikTok.
[00:12:32.040 --> 00:12:38.680] And so, what a perfect sort of distribution opportunity for your marketing strategy.
[00:12:38.680 --> 00:12:45.800] We've got this tiny compact of stars, we can send it to influencers and regular micro-influencers for free.
[00:12:45.800 --> 00:12:50.440] They try it on, they love it, they show them, they showcase themselves.
[00:12:50.440 --> 00:13:01.560] And so, you start to see that it's never just one factor, it's a confluence of factors that starts to get you that sort of momentum of why now.
[00:13:01.880 --> 00:13:06.760] I want to keep the conversation mostly around like what's helpful for business owners if they're raising money and all of that.
[00:13:06.760 --> 00:13:13.640] But I do have this very specific question that I think you're perfect to answer because I spend a lot, I'm very online, a lot of time on TikTok.
[00:13:13.640 --> 00:13:15.560] All the gals want to be investors now.
[00:13:15.560 --> 00:13:22.200] It's very like there's a real shift to women wanting to get into investing and young women, particularly.
[00:13:22.200 --> 00:13:31.160] And I think because we've seen a lot of influences in this space, like talk about it, we also see a lot of young women wanting to get into like angel investing and writing angel checks.
[00:13:31.160 --> 00:13:41.160] Yeah, my question is: first of all, talk me through what like the realities of day-to-day is like for someone who is like junior in a firm like yours.
[00:13:41.160 --> 00:13:42.520] Like, what are they doing?
[00:13:42.520 --> 00:13:44.280] And how does someone get a job like that?
[00:13:44.280 --> 00:13:46.440] Like, what kind of experience and skills do they need?
[00:13:46.440 --> 00:13:59.960] Yeah, it's a great question, and I think it's important to demystify venture a little bit first because it has been glamorized in the press, and it has been glamorized by Shark Tank and on social media.
[00:13:59.960 --> 00:14:07.480] As you said, like a lot of influencers, and you and I know some of them, they're starting their own firms, they've been angel investing.
[00:14:07.480 --> 00:14:10.760] It is a really sexy job and a really unsexy job.
[00:14:10.760 --> 00:14:16.560] It is the best job in the world because you are meeting really smart people all the time who want to change in the world.
[00:14:16.720 --> 00:14:18.480] Like, what could be better than that?
[00:14:18.480 --> 00:14:29.360] It is an unsexy job because 99% of what you look at, 99.98% of what you look at, you will not invest in, right?
[00:14:29.360 --> 00:14:34.880] If we look at our deal flow funnel, we're investing in like 0.2%.
[00:14:34.880 --> 00:14:35.920] So it's a risk.
[00:14:36.000 --> 00:14:38.400] I probably just did that math wrong, but you know what I did.
[00:14:39.040 --> 00:14:44.160] But like we are looking at a lot of companies that are not appropriate for venture capital.
[00:14:44.160 --> 00:14:47.360] So we have to say no to a lot of people.
[00:14:47.360 --> 00:14:51.120] And it is a constant hustle to find new companies.
[00:14:51.120 --> 00:14:56.480] And it's not just like, hey, I like this person or hey, I like this idea.
[00:14:56.480 --> 00:15:02.240] They have to surpass the bar on every one of those metrics that I listed.
[00:15:02.240 --> 00:15:07.760] But what's really important is I'm a money manager.
[00:15:07.760 --> 00:15:09.520] I'm an asset manager.
[00:15:09.520 --> 00:15:15.520] I'm not like out here to just like have fun for kicks and like write checks for cool people.
[00:15:15.520 --> 00:15:22.800] I do that, but I am responsible for a lot of money that is other people's money.
[00:15:22.800 --> 00:15:23.760] Can you explain that for a second?
[00:15:24.240 --> 00:15:26.320] Where do VCs get the money that they're spending?
[00:15:26.320 --> 00:15:27.680] Because this is important to say.
[00:15:27.840 --> 00:15:28.400] Yeah.
[00:15:28.400 --> 00:15:34.160] So I have to raise money from institutional investors who are called my limited partners or LPs.
[00:15:34.160 --> 00:15:36.240] That can come from a variety of sources.
[00:15:36.240 --> 00:15:46.480] So when you're a smaller fund, you might raise money from high net worth individuals or angels, people who've made some money by selling their own business or been really successful operators.
[00:15:46.480 --> 00:15:55.760] But as you go up the stack, and so we would be called an institutional firm, we've got $150 million under management across, you know, three or four vehicles.
[00:15:55.760 --> 00:15:57.680] Our last fund was $60 million.
[00:15:57.680 --> 00:16:00.760] You start moving into this more institutional space.
[00:15:59.920 --> 00:16:04.840] So that might mean family offices or people with foundations.
[00:16:05.160 --> 00:16:08.840] It might mean endowments of universities.
[00:16:08.840 --> 00:16:10.600] It might mean pensions.
[00:16:10.600 --> 00:16:19.880] So I am investing on behalf of the retirement savings of teachers or firemen in some cases.
[00:16:19.880 --> 00:16:21.960] So there's a real responsibility, right?
[00:16:21.960 --> 00:16:25.960] Like we have to deliver a return on that money.
[00:16:25.960 --> 00:16:35.080] So the second part of the job is really understanding how do I take this $50 or $60 million and triple it?
[00:16:35.080 --> 00:16:38.520] And what is the appropriate mix of companies?
[00:16:38.520 --> 00:16:41.080] And I have to make initial investments in those companies.
[00:16:41.080 --> 00:16:46.120] When they come back to me for more money, I can't just give them more money because I like them.
[00:16:46.440 --> 00:16:50.840] They have to, again, surpass the bar, surpass their milestones.
[00:16:50.840 --> 00:16:52.920] I have reserves maybe for that.
[00:16:52.920 --> 00:16:58.200] So it's a complicated portfolio analysis approach as well.
[00:16:58.200 --> 00:17:04.360] So when I say no to a company, it's not always because I'm saying no just to that person.
[00:17:04.360 --> 00:17:08.040] I'm saying no because of what else have I invested in?
[00:17:08.040 --> 00:17:09.880] What else do I need to invest in?
[00:17:09.880 --> 00:17:14.360] Like what should the appropriate mix in my portfolio be?
[00:17:14.360 --> 00:17:18.040] And then as a manager, I have to deal with like tax and audit.
[00:17:18.040 --> 00:17:20.600] Like I'm a startup founder, really, right?
[00:17:20.600 --> 00:17:27.000] So I am managing a team, I'm managing accounting, finance, audit, legal.
[00:17:27.000 --> 00:17:31.400] It is a heavy sort of administrative job on that side, too.
[00:17:31.400 --> 00:17:38.680] But if you're a junior investor or an associate at a firm, it depends on the size of the firm.
[00:17:38.680 --> 00:17:46.320] So, at a larger firm, you might just be meeting founders all day and sourcing companies and then doing a lot of diligence.
[00:17:44.760 --> 00:17:50.080] So, really understanding what a market looks like.
[00:17:50.400 --> 00:17:56.000] And you need a really healthy mix of quantitative and qualitative skills.
[00:17:56.000 --> 00:18:01.520] So, can I develop a hypothesis or an opinion on this arena?
[00:18:01.520 --> 00:18:02.800] Where do I think it's going?
[00:18:02.800 --> 00:18:03.840] Who's playing in it?
[00:18:03.840 --> 00:18:07.840] What are those market forces that mean this is ripe for opportunity?
[00:18:07.840 --> 00:18:10.240] But I need to understand the math behind it, too.
[00:18:10.240 --> 00:18:12.640] Like, how big could this market be?
[00:18:12.640 --> 00:18:15.520] How big a share could this founder take?
[00:18:15.520 --> 00:18:18.720] And then, what does it take for them to become a hundred million dollar business?
[00:18:18.720 --> 00:18:22.160] That's sort of like a, you know, the low bar and venture capital.
[00:18:22.160 --> 00:18:29.360] But at a smaller firm, you might be helping with more of the analysis that the partners are working on.
[00:18:29.360 --> 00:18:33.040] You might be helping host events so you meet more founders.
[00:18:33.040 --> 00:18:36.800] You might be helping write updates for the investors in the fund.
[00:18:36.800 --> 00:18:41.520] And it's really like, so if you work at our fund, it's like a full stack VC job.
[00:18:41.520 --> 00:18:47.200] You get insight into all the different parts of all the work that I do and my partner does.
[00:18:47.200 --> 00:18:58.400] So, it can be a really fulfilling job, but I think the job in and of itself is not just like I get to sit around and have opinions on people's businesses and make that decision.
[00:18:58.400 --> 00:19:02.240] There is a long path to making that decision.
[00:19:02.240 --> 00:19:05.440] And you asked about angel investing.
[00:19:05.440 --> 00:19:12.320] We can get into that if you want for your listeners, but that is another kettle of fish because you're using your own money.
[00:19:12.320 --> 00:19:17.840] And you really have to think about like what is my own financial worth?
[00:19:17.840 --> 00:19:23.360] And do I have the capital to allocate money to a set of investments?
[00:19:23.360 --> 00:19:28.080] Because you should really be thinking about what is an area I know?
[00:19:28.080 --> 00:19:34.040] Am I looking at enough things to compare them and pick things that feel like they're outliers?
[00:19:34.680 --> 00:19:39.320] And even with an angel portfolio, you should be thinking about it as a portfolio.
[00:19:39.320 --> 00:19:45.320] Like, I want to make five bets, 10 bets, 15 bets, you know, smaller amounts of money.
[00:19:45.320 --> 00:19:58.440] So it's a really interesting thing to add to your portfolio, but it should only be done in addition to like, I'm already in the stock market, I'm already in, you know, some conservative things.
[00:19:58.440 --> 00:20:03.880] Like, what is your diversified set of like your financial approach?
[00:20:04.200 --> 00:20:05.640] That's really great advice.
[00:20:05.640 --> 00:20:12.760] So you're obviously looking at a lot of different businesses all the time and also speaking with a lot of investors, I'm guessing as well.
[00:20:12.760 --> 00:20:15.720] I'm curious about just like trends that you're seeing.
[00:20:15.720 --> 00:20:20.040] First of all, businesses you're seeing coming through and startups you're seeing coming through.
[00:20:20.200 --> 00:20:25.080] There's a certain thing that just feels like everyone's moving in this direction.
[00:20:25.080 --> 00:20:31.400] And then what you think is really interesting and what other VCs think are really interesting amongst those trends.
[00:20:31.400 --> 00:20:32.200] Yeah.
[00:20:32.520 --> 00:20:39.960] So the thing about venture capital is it's primarily focused on technology and software.
[00:20:39.960 --> 00:20:46.200] So as you can imagine, right now it is AI, AI, yeah.
[00:20:46.200 --> 00:20:48.280] And some of these valuations are blowing my mind.
[00:20:48.360 --> 00:20:48.760] They're wild.
[00:20:49.160 --> 00:20:58.840] So there's this huge bifurcation happening in the market, which is AI deals are being priced at probably a 30 to 40% premium than non-AI deals.
[00:20:58.840 --> 00:21:00.360] So that's the first thing you've got happening.
[00:21:00.680 --> 00:21:01.960] Throw AI into your deck.
[00:21:01.960 --> 00:21:03.560] Throw in any old way.
[00:21:03.560 --> 00:21:04.120] Yeah.
[00:21:04.120 --> 00:21:09.560] So probably about 80% of the deals that are coming through our pipeline would say they're an AI company.
[00:21:10.120 --> 00:21:20.800] I would say only about a third or half of those are AI native companies, by which I mean, and this is what VCs are really excited about, AI native companies.
[00:21:21.120 --> 00:21:34.640] So could this company have existed before AI or is it an existing product that is being optimized or improved because of AI?
[00:21:34.640 --> 00:21:37.920] And so ChatGPT is the obvious example.
[00:21:37.920 --> 00:21:48.080] Companies like Character AI or my favorite tool to use, Granola, which is so granola is probably the best note-taking tool for being in meetings.
[00:21:48.080 --> 00:21:56.960] Like you might use Zoom or Otter as sort of your transcript notes, but Granola is, I have it on in all of my meetings.
[00:21:56.960 --> 00:22:00.480] I never take pen and paper notes or typed notes anymore.
[00:22:00.480 --> 00:22:02.080] I'm so much more present.
[00:22:02.320 --> 00:22:06.240] So these are examples of companies that couldn't exist but for AI.
[00:22:06.240 --> 00:22:08.720] And I think that's where the interest is.
[00:22:08.720 --> 00:22:12.000] I would say consumer is having a moment.
[00:22:12.000 --> 00:22:16.320] We actually just did a big deep dive into this at our firm.
[00:22:16.320 --> 00:22:26.480] And if you think about the internet revolution and the mobile revolution, I mean, the mobile revolution was like 14 years ago.
[00:22:27.360 --> 00:22:28.480] That makes me feel old.
[00:22:28.480 --> 00:22:29.600] Yeah, me too.
[00:22:29.600 --> 00:22:37.440] So this is the first time that we have had a moment where every single consumer incumbent can be disrupted.
[00:22:37.440 --> 00:22:39.600] And that is really exciting.
[00:22:39.600 --> 00:22:47.920] From every category to music to storytelling to video to productivity, you name it, like it is up for grabs.
[00:22:47.920 --> 00:23:01.640] And the incumbents, like all these big companies, they're building, I think, incrementality into their platforms and counting on the fact that they have people sitting there already.
[00:22:59.680 --> 00:23:05.880] But there are going to be a ton of opportunities to win in consumer.
[00:23:06.040 --> 00:23:08.600] So I think that is really exciting.
[00:23:08.600 --> 00:23:17.960] On the business-to-business side, people are really excited by old, stodgy, unsexy, unglamorous industries.
[00:23:17.960 --> 00:23:28.920] Like, I just got really excited about a company that is automating the customs processing brokerage industry.
[00:23:28.920 --> 00:23:29.960] What does that mean?
[00:23:29.960 --> 00:23:41.320] So, like, all of you, like, a lot of your CPG founders who manufacture overseas, they have to go through a customs processing process every time they bring goods into the company.
[00:23:41.320 --> 00:23:45.240] Everything about that is done like very manually.
[00:23:45.240 --> 00:23:48.600] Baxes, like, they barely email these people.
[00:23:48.600 --> 00:23:50.840] They're super hard to get on the phone.
[00:23:50.840 --> 00:23:54.520] They have like two systems of software that are super old.
[00:23:54.520 --> 00:23:58.760] They don't even do API integrations, which is basically unheard of.
[00:23:58.760 --> 00:24:13.640] And so, I'm at a company that's amazing that is going to help automate this process to allow these customs brokers to process more forms and then look at them as the human in the loop and review it, right?
[00:24:13.640 --> 00:24:16.120] Like, not replacing the human.
[00:24:16.120 --> 00:24:17.960] So, it's a really interesting moment.
[00:24:17.960 --> 00:24:26.680] There's like a ton of opportunity in these really old, like, unglamorous, sexy industries, but also huge opportunity in like the shiny consumer things.
[00:24:26.680 --> 00:24:29.480] So, I think like that's why prices are so high.
[00:24:29.480 --> 00:24:35.000] Like, VCs are like falling over themselves because it's a new moment, a paradigm shift.
[00:24:35.000 --> 00:24:35.800] Yeah, wow.
[00:24:35.800 --> 00:24:36.360] Yeah.
[00:24:36.360 --> 00:24:45.000] As you're looking at all of these businesses in the AI space, and I'm sure you and your team are just like deep diving on this in general about what the opportunities are.
[00:24:45.360 --> 00:24:54.080] I'm curious about what your thesis is on how the world, the workforce, like what changes are coming because I am personally like quite terrified.
[00:24:54.400 --> 00:24:58.080] So you and I saw the same quote from Robert F.
[00:24:58.080 --> 00:25:00.720] Smith, the founder of Vista Equity.
[00:25:00.720 --> 00:25:09.440] I actually saw him speak at a conference about a month ago, and he said the same thing about how AI is going to completely change the workforce and the white collar workforce.
[00:25:09.680 --> 00:25:18.720] And he said, he said in this, the quote, it was something like he's speaking to his team and he said, half of you or 20% of you or something will be looking for a job next year.
[00:25:18.720 --> 00:25:19.760] It's pretty frightening.
[00:25:19.760 --> 00:25:20.640] Next year.
[00:25:20.640 --> 00:25:22.240] Yeah, it is frightening.
[00:25:22.240 --> 00:25:25.920] And listen, I'm seeing it happen already.
[00:25:25.920 --> 00:25:33.680] The amount of work that you can automate is really staggering if you understand prompt engineering and if you spend time on it.
[00:25:33.680 --> 00:25:34.400] And so...
[00:25:34.400 --> 00:25:36.080] But that's going to get easier too.
[00:25:36.080 --> 00:25:40.400] Right now you have to like spend time to understand it, but in a couple of years you won't.
[00:25:40.720 --> 00:25:44.240] So I will be honest with you.
[00:25:44.240 --> 00:25:46.720] I think he's directionally correct.
[00:25:46.720 --> 00:25:49.760] I don't know if it's a year or if it's five years.
[00:25:49.760 --> 00:25:57.920] My best advice is I think you really need to focus on building as an individual.
[00:25:57.920 --> 00:26:00.640] So I think you need to understand how these tools work.
[00:26:00.640 --> 00:26:02.800] I think you need to be using these tools.
[00:26:02.800 --> 00:26:07.040] And I think you need to be experimenting with building things with these tools.
[00:26:07.040 --> 00:26:09.600] You know, today they're calling it vibe coding, right?
[00:26:09.600 --> 00:26:25.440] But I think the people who have a building mindset and mentality and a creative approach and then who also have really great soft skills are going to be the people who continue to thrive and create new opportunities for themselves in organizations.
[00:26:25.440 --> 00:26:41.720] So, while I think it feels really scary, if you think about actually this generation and their desire to be their own bosses and their own business owners, in some ways it's actually a really unique opportunity for the upcoming generation.
[00:26:41.720 --> 00:26:51.160] And so, my counsel actually to people in our generation or even older folks is like be using these tools in your daily workflow today.
[00:26:51.160 --> 00:26:54.680] Understand how they're used, use them to give yourself leverage.
[00:26:54.680 --> 00:27:00.360] There is a staggering stat about the percentage of users.
[00:27:00.600 --> 00:27:01.160] 80%.
[00:27:01.160 --> 00:27:03.320] Yeah, 80% are men.
[00:27:03.320 --> 00:27:04.440] That is crazy.
[00:27:04.440 --> 00:27:06.600] Like, we are already behind.
[00:27:06.600 --> 00:27:11.640] The guys are leveraging their day in a way you couldn't even imagine.
[00:27:11.640 --> 00:27:15.240] They're getting so much more out of their day, they're getting so much more output.
[00:27:15.240 --> 00:27:19.560] And we are sitting here going, I don't know if I trust AI.
[00:27:19.880 --> 00:27:24.120] Like, okay, but then don't give it your private health information.
[00:27:24.120 --> 00:27:25.400] That's okay.
[00:27:25.400 --> 00:27:27.400] But make the time.
[00:27:28.040 --> 00:27:37.800] I would encourage everyone, take three days and muck around with how you can automate anything, everything in your life, because there is a way to do it.
[00:27:37.800 --> 00:27:43.960] Start with ChatGPT, use Notion LLM, play around with Claude, add granola.
[00:27:43.960 --> 00:27:46.840] Like, there are so many great tools out there.
[00:27:46.840 --> 00:27:54.360] And by the way, there's a dozen guys who created dumb lists on how to do all of this, and they've already done the work for you.
[00:27:54.360 --> 00:27:56.920] So, good luck to them for having been ahead.
[00:27:56.920 --> 00:28:01.080] Now, go and use all that information to your advantage.
[00:28:01.080 --> 00:28:01.880] Amazing.
[00:28:01.880 --> 00:28:07.800] If you were like a young entrepreneurial person, you wanted to start a business and you're kind of like looking for the idea.
[00:28:07.800 --> 00:28:18.800] When you see people come to you with these incredible businesses and big opportunities, is there any kind of like through line that you see in how they came to noticing those gaps?
[00:28:18.800 --> 00:28:23.920] I think it's most often about a personal pain point or a professional pain point, right?
[00:28:23.920 --> 00:28:24.960] That you observed at work.
[00:28:25.120 --> 00:28:28.800] Surely that customs situation is someone who has like worked in that space.
[00:28:28.800 --> 00:28:30.000] Exactly, right?
[00:28:30.320 --> 00:28:31.920] No, I think that's exactly right.
[00:28:31.920 --> 00:28:38.800] Like our founder of one of our other companies, Isabella Rafferty Isabella, she started Canela Media.
[00:28:38.800 --> 00:28:42.960] It's like the fastest growing streaming platform for the Hispanic population.
[00:28:42.960 --> 00:28:48.800] She built two ad tech businesses before this and she grew up watching telenovelas, right?
[00:28:48.800 --> 00:28:53.440] And she knew this community wanted their kids to grow up speaking Spanish, right?
[00:28:53.440 --> 00:28:59.280] So that is like the perfect example of professional meets personal insight.
[00:28:59.280 --> 00:29:11.360] So I really see like people who have experienced this pain point as that's the unlock because that's when you have passion as well about this to stick with this business idea.
[00:29:11.360 --> 00:29:18.960] Like Sarah Pagey, when she launched Blue Land, like she had had a baby and she started learning about all the microplastics.
[00:29:18.960 --> 00:29:23.200] Like this was in 2017, 2018.
[00:29:23.200 --> 00:29:32.000] Now we hear about microplastics every second day on Instagram, but she was just really uncovering like, what am I putting into my child?
[00:29:32.320 --> 00:29:38.720] And so she was like, I am on a mission to remove single-use plastic from this world.
[00:29:38.720 --> 00:29:46.000] And so if you want to talk about big vision inspired by personal pain point, that is a really great narrative arc.
[00:29:46.320 --> 00:29:58.560] So, what I would really say is like, I don't think there's any TAM or total addressable market that you can find on a spreadsheet that there's like a formula to find out to start a business.
[00:29:58.560 --> 00:30:09.640] I think you should think about in the pain point that I've experienced, are millions of other people experiencing the same issue?
[00:30:09.640 --> 00:30:12.760] And is there truly no good solution out there?
[00:30:13.080 --> 00:30:20.520] And is there a moment in time that says, like, something is happening that means this could be the moment?
[00:30:20.520 --> 00:30:24.760] I mean, there are businesses too that, like, we're too early.
[00:30:25.080 --> 00:30:31.160] So, I really think like if you're going to stick with something, you know, you've been at this for a long time.
[00:30:31.160 --> 00:30:32.680] I've been at this for a long time.
[00:30:32.680 --> 00:30:36.840] Like, you really have to love it and feel so passionate about that.
[00:30:37.480 --> 00:30:44.600] I want to switch gears and talk about there have been a lot of headlines lately about some pretty big acquisitions in the consumer space.
[00:30:44.600 --> 00:30:48.200] We've seen Road, Touchland, Poppy, who else?
[00:30:48.200 --> 00:30:48.920] There's been a few.
[00:30:48.920 --> 00:30:49.480] Yeah.
[00:30:49.800 --> 00:31:03.400] And for those of us who are building businesses and nowhere near an acquisition, when a brand at that stage is looking to sell and looking to exit, what are some of those milestones that they need to be hitting?
[00:31:03.400 --> 00:31:09.880] Or like, where do you need to get a company to so that that is a realistic option for you?
[00:31:10.120 --> 00:31:13.000] I'm so curious about this, and I feel like it's a very hard thing to Google.
[00:31:13.000 --> 00:31:13.560] Yeah.
[00:31:13.880 --> 00:31:14.920] Yeah, it's a great question.
[00:31:14.920 --> 00:31:24.200] Well, firstly, I'll say I think it's a really exciting time because we've basically been in like an MA desert for the last, you know, four years and we've been in an IPO desert too.
[00:31:24.200 --> 00:31:26.680] And the tariff situation has not helped anyone.
[00:31:27.320 --> 00:31:38.680] But I think what's exciting about this moment is there are strategic acquirers out there and they're looking and they're on the hunt for businesses with good fundamentals.
[00:31:38.680 --> 00:31:49.280] So I think what is really true in all of these businesses that have been acquired is that they are pretty clear market leaders.
[00:31:49.600 --> 00:31:56.960] In some cases, or in many cases, they have very clear distribution advantage and they have really strong business fundamentals.
[00:31:56.960 --> 00:32:01.040] So profitability, inbuilt distribution.
[00:32:01.040 --> 00:32:11.200] So when we think about how you should think about the path to exit for CPG, we are really encouraging founders to get those fundamentals in place early.
[00:32:11.200 --> 00:32:22.880] So we actually won't even invest in a company that has to spend so much on customer acquisition that they're not profitable on first purchase.
[00:32:22.880 --> 00:32:26.640] And we want to see a very clear distribution advantage.
[00:32:26.640 --> 00:32:33.680] So often today that does look like being in retail nationwide, but there can be some other advantage.
[00:32:33.680 --> 00:32:36.640] And in the case of Rode, that advantage was Haley Bieber.
[00:32:37.920 --> 00:32:40.080] And that is fine, right?
[00:32:40.080 --> 00:32:43.600] Because not every celebrity has proved out that advantage.
[00:32:43.600 --> 00:32:45.680] So she had a special something.
[00:32:45.680 --> 00:32:48.560] And that's part of what ELF was buying, right?
[00:32:48.560 --> 00:32:56.720] So the other piece of this is there does have to be a complementary fit with the acquirer and the target.
[00:32:56.720 --> 00:33:00.240] And so often these relationships are built over time, too.
[00:33:00.240 --> 00:33:05.280] And so you actually want to spend time early getting to know some of these potential partners.
[00:33:05.280 --> 00:33:15.920] And I think, you know, in the case of ELF, who have been sort of genius marketers to Gen Z, this was then a very natural fit that could sort of really double down on that stronghold that they had.
[00:33:15.920 --> 00:33:26.960] And in the case of Touchland and Church and Dwight, Church and Dwight has a reputation for acquiring these very profitable market leaders, and then they know what to do with them to continue to scale them.
[00:33:26.960 --> 00:33:33.720] So that's that's not you know a full answer for how do you think about it if you're early.
[00:33:34.040 --> 00:35:04.320] But I think if you're early, the key is what is the sort of business I can be building where I raise less money and I get to profitability early and I have a strong so one of the things people are looking for is like is there clear momentum like month on month momentum or year on year growth so you feel like okay this hasn't stalled and this is a repeatable story people are still finding something they like about this brand this brand is staying relevant so I think you know being really thoughtful about like one-off moments aren't enough and you have to build something that feels lasting for people when you see a business get to the point where it it's exiting how much equity is normal for a founder to still have at that point is there a normal great question there's a range yeah everyone's like how much money do you actually make after yeah so it basically depends on how much money you've raised over how many rounds and a good way to think about it is at least in the venture model and if you don't take classic venture money but you take maybe some more strategic investors it might be a bit different but typically at every round you're taking like 20 or 25 percent dilution so you know if you're the founder and you take you know you've got 80% after your seed, and then that goes down and then that goes down.
[00:35:04.320 --> 00:35:12.560] So if you raise, or if you sell after your b or C, by that point the founders might be down to like 40%, for example.
[00:35:12.880 --> 00:35:22.240] So if you have raised a lot of money, you own less, but the valuation of the company might be higher.
[00:35:22.240 --> 00:35:28.000] And that is the very fine tension point in when is the right time to sell.
[00:35:28.320 --> 00:35:50.240] So for some consumer companies, you actually may be better off selling for $100 million while you still own a lot of the company versus getting over your skis, raising a lot of money at a very high like billion dollar valuation where actually there are less acquirers at that point.
[00:35:50.240 --> 00:35:57.360] So, you know, I don't know whether I should like name names on this podcast, but let me give you a comparative example.
[00:35:57.360 --> 00:36:05.280] There's one personal care brand that was acquired by PNG for like $100 million.
[00:36:05.280 --> 00:36:10.480] That founder, I think, raised like $500,000 to get off the ground.
[00:36:10.480 --> 00:36:15.360] And so he owned 95% of the company by the time it exited.
[00:36:15.360 --> 00:36:17.120] So that would be my advice, right?
[00:36:17.120 --> 00:36:23.760] If you're building a CPG company today, don't take a lot of money, build a profitable business from the outset.
[00:36:23.760 --> 00:36:31.040] On the other hand, I can think of a consumer goods company that took venture money, raised like up to a Series E.
[00:36:31.040 --> 00:36:33.200] That company had five founders.
[00:36:33.200 --> 00:36:41.840] It eventually, I think, IPO'd, and it IPO'd at a public valuation that was less than its last private valuation.
[00:36:41.840 --> 00:36:47.680] So while the original founders would have made some money, a lot of the later investors didn't.
[00:36:47.680 --> 00:36:49.920] And then they also had to split that five way.
[00:36:49.920 --> 00:37:01.480] So you really start to see, and you know, it's funny because I'm a VC, so I'm not like trying to trash the industry, but the dynamics for consumer, I think, are tough with venture capital.
[00:37:01.480 --> 00:37:12.200] And that's why you'll hear a lot of VCs steer away from CPG, actually, because it is hard to get those billion-dollar outcomes.
[00:37:12.200 --> 00:37:23.080] And it doesn't feel like that in the press today, you know, Touchland, 800 million, Poppy, 1.6 billion, Rode, 1 billion, including the earn out.
[00:37:23.080 --> 00:37:25.960] But those really are few and far between.
[00:37:26.280 --> 00:37:28.920] Let's talk about the Rode acquisition a little bit more.
[00:37:28.920 --> 00:37:33.640] I thought it was, when I saw it, and I, you know, look at the timeline, like three years.
[00:37:33.640 --> 00:37:33.880] Yeah.
[00:37:33.960 --> 00:37:35.240] Just wild.
[00:37:35.240 --> 00:37:35.800] Wild.
[00:37:35.800 --> 00:37:37.000] Touchland was 15.
[00:37:37.000 --> 00:37:37.240] Yeah.
[00:37:37.240 --> 00:37:38.280] She's been at that for 15 years.
[00:37:38.360 --> 00:37:39.640] And Poppy's been long too.
[00:37:39.640 --> 00:37:41.240] They've been around for a long time as well.
[00:37:41.240 --> 00:37:41.320] Yeah.
[00:37:41.480 --> 00:37:42.200] Maybe like eight.
[00:37:42.200 --> 00:37:42.680] Yeah, eight.
[00:37:42.680 --> 00:37:43.080] Okay.
[00:37:43.080 --> 00:37:43.400] Yeah.
[00:37:43.400 --> 00:37:49.720] But I looked at Rode and I was like, it's very, I don't know, it's cool to see a female-founded business.
[00:37:49.720 --> 00:37:51.240] And like, Haley's not the only founder.
[00:37:51.240 --> 00:37:52.440] There are other founders as well.
[00:37:52.440 --> 00:37:57.640] But female-founded business that like clearly went in with the idea of like, this is not my baby.
[00:37:57.800 --> 00:38:00.440] I'm building this to sell and we're going to exit.
[00:38:00.440 --> 00:38:01.800] And like, that's what they did.
[00:38:01.800 --> 00:38:05.960] And it was, and I don't, I don't, I don't hear many women talk about their businesses like that.
[00:38:05.960 --> 00:38:10.280] And I was just like, I think it's, I think it's cool to have an example out in the world of someone doing that.
[00:38:10.280 --> 00:38:11.800] Yeah, I think that's true.
[00:38:11.800 --> 00:38:13.240] I have this conversation a lot.
[00:38:13.240 --> 00:38:17.080] I think male founders tend to be more transactional about their businesses.
[00:38:17.160 --> 00:38:19.400] I don't know if it's because women feel like they can't be.
[00:38:19.400 --> 00:38:26.680] Like, I don't know if there's like a, we need women who are ambitious to be ambitious on behalf of the better good of the world or something.
[00:38:26.680 --> 00:38:27.080] You know what I mean?
[00:38:27.480 --> 00:38:29.000] I think that's 100% true.
[00:38:29.000 --> 00:38:32.440] I think women CEOs get tarred with a really difficult brush.
[00:38:32.600 --> 00:38:53.200] I think the expectations on them as CEOs and founders is that they're also mothers of the company and they have to hold the mission of the company and the care of the employeees in their hands like delicate birds, and that they are not allowed to be transactional and they're not allowed to be direct and to be tough leaders.
[00:38:53.200 --> 00:38:55.760] And I think we've seen that time and time and time again.
[00:38:55.920 --> 00:38:56.480] Sure have.
[00:38:56.480 --> 00:39:04.960] And I think it is completely okay to develop a business that you see has a huge opportunity to exit and to run at that.
[00:39:05.280 --> 00:39:05.920] I love that.
[00:39:06.000 --> 00:39:09.200] Nisha, the last question I want to ask you is for a resource recommendation.
[00:39:09.200 --> 00:39:14.480] Something that you can recommend to folks who are interested in building amazing businesses?
[00:39:14.800 --> 00:39:16.720] That is a great question.
[00:39:16.720 --> 00:39:25.360] So a few of the resources I love for founders is this book's a little old now and it's called Venture Deals.
[00:39:25.360 --> 00:39:27.440] It's by Brad Feld.
[00:39:27.440 --> 00:39:34.000] And I think the subtitle of the book is Know Your Deals like Better Than Your Lawyer or something.
[00:39:34.000 --> 00:39:38.720] And what I love about the book is he gives like the VC view and the founder view.
[00:39:38.720 --> 00:39:45.040] And so it gives you like a really great understanding of like what where is the VC coming from?
[00:39:45.360 --> 00:39:49.040] Why are they making these suggestions when they're trying to negotiate with you?
[00:39:49.040 --> 00:39:53.680] And so it sort of just gives you like an inside baseball into negotiating fundraising.
[00:39:53.680 --> 00:39:57.200] So I think that is one of my favorite all-time books.
[00:39:57.200 --> 00:40:08.080] I also love Fred Wilson's AVC, which is a really great insight into just how the VC business works and what people are looking for.
[00:40:08.080 --> 00:40:12.720] But I would say, like, honestly, the best tool today is ChatGPT.
[00:40:13.040 --> 00:40:27.600] I have never seen a moment in time where you have the capacity to learn so quickly and unlock the keys to a castle of something that has been held like really tight by the gatekeepers.
[00:40:27.600 --> 00:40:41.160] So, this is the first time like you could figure out like how to negotiate with someone, what is normal, what is not normal, what are they thinking about in a thing, a way just that hasn't been accessible before.
[00:40:41.160 --> 00:40:48.840] I just wanted to jump in and end the show with a quick thank you and shout out to all of our paid Business Bestie subscribers.
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