July 5, 2022

Brian O’Malley (Forerunner Ventures) - How he’s investing in the empowerment economy, the evolution of consumer venture capital and raising $1 billion fund

Brian O’Malley (Forerunner Ventures) - How he’s investing in the empowerment economy, the evolution of consumer venture capital and raising $1 billion fund

Our guest today is Brian O’Malley, Partner at Forerunner. Forerunner is one of the top consumer venture capital firms that tirelessly champions founders who deliver the innovation they demand. Some of Brian’s investments include Sunday, Canal and Dumpling. Recently they raised $1 billion for Fund 6. We discuss how Forerunner’s thesis has evolved over the past few years, what is the empowerment economy, and current valuation and venture climate today.

We discuss:

  1. How do you define investing in consumer today?
  2. It seems as though Forerunner’s thesis has evolved from only investing in pure consumer companies to ecommerce enablement/B2B, along with other funds that primarily focus on consumer. Can you talk about why the transition?
    1. Is part of the reason why because it’s harder than before to pick brands that could generate great returns?
  3. What is the empowerment economy?
  4. In your article “Empowering Main Street”, you mention how OpenTable and Yelp achieved massive local market share, but they weren’t embraced. What do you mean by that and how do identify if a company you’re looking at is being embraced? Partnering up with their customers
  5. Did COVID at all change your thesis when it came the your empowering economy thesis?
  6. When you’re looking at empowering SMBs or bringing them online, when does a white label option make sense vs. a standalone application?
  7. I certainly understand the push for consumers wanting to shop local, but isn’t partly what killed local stores that they couldn’t compete on price with the Walmarts / Targets? How do you think about consumer price sensitivity?
  8. When you and your conduct your consumer insights research, how do you make sure there’s alignment with what people say and how they act?
  9. Where customer
  10. What are some of the differences between investing and evaluating a business where an SMB is the customer rather than the customer?
  11. How do you also think about the current venture landscape when it comes to valuations?
  12. There’s been a lot of chatter about some of the more high-profile companies folding and there’s been a debate about who is responsible - could the board have guided the CEO to cut burn for example. After you invest, what do you think about a board’s role and board construction?
  13. What’s one thing you would change about VC?
  14. What’s one book that has inspired you personally and one book that has inspired you professionally?
    1. The Wright Brothers book
    2. Shoedog by Phil Knight
  15. What’s the best piece of advice that you’ve received?
Transcript
WEBVTT 1 00:00:02.399 --> 00:00:16.559 Oh, hello and welcome to the consumer VC. I am your host, 2 00:00:16.600 --> 00:00:19.800 Mike Gelb, and on this show we talked about the world of venture capital 3 00:00:20.039 --> 00:00:25.160 and innovation in both consumer technology and consumer products. If you're enjoying this content, 4 00:00:25.239 --> 00:00:29.480 you could subscribe to my newsletter, the consumer VC DOT sub stack dot 5 00:00:29.480 --> 00:00:33.159 com, to get each new episode and more consumer news delivered straight to your 6 00:00:33.200 --> 00:00:36.840 inbox. Our guest today is Brian o'malley, who is a partner at fore 7 00:00:36.920 --> 00:00:41.560 runner. For runner is one of the top consumer venture capital firms that tirelessly 8 00:00:41.679 --> 00:00:47.679 champions founders who delivered the innovation they demand. Some of Brian's investments include Sunday 9 00:00:47.840 --> 00:00:52.359 canal and dumpling. They last raised one billion dollars for their fund. Six 10 00:00:52.600 --> 00:00:56.399 we discussed how four runners thesis has evolved over the past few years, what 11 00:00:56.719 --> 00:01:00.520 is the empowerment economy, which Brian focuses a lot on, and how he 12 00:01:00.520 --> 00:01:03.879 thinks about valuation and the venture climate. Today, without further ADO, here's 13 00:01:03.920 --> 00:01:14.200 Brian. Brian, thank you so much for joining me today. How are 14 00:01:14.239 --> 00:01:17.040 You well, Mike? Thanks for having me. I appreciate the invite. 15 00:01:17.319 --> 00:01:19.879 No, I really appreciate you coming on. I've been trying to have someone 16 00:01:19.920 --> 00:01:22.280 from foreman to come on for the past two years. So I'm so excited 17 00:01:22.319 --> 00:01:25.799 to have you on it. So why did you want to invest in consumer 18 00:01:26.000 --> 00:01:29.680 and how do you define investing in consumer today? Sure so, for me, 19 00:01:29.799 --> 00:01:33.760 My background as an entrepreneur was much more in the enterprise space, and 20 00:01:34.239 --> 00:01:38.560 what that meant was that you would have these big deployments. You would be 21 00:01:38.599 --> 00:01:42.079 like taking people out to wind, you try to play golf with the right 22 00:01:42.120 --> 00:01:45.799 people, and it wasn't really about who had the best product. And so 23 00:01:45.799 --> 00:01:49.079 it was incredibly frustrating for me because there were sometimes where like we should have 24 00:01:49.400 --> 00:01:52.640 won the deal because we would have been an incredibly, you know, value 25 00:01:52.640 --> 00:01:56.400 add service and we lost because we didn't, you know, we didn't go 26 00:01:56.439 --> 00:01:59.920 to college with the right person, or other times where we won the deal 27 00:02:00.200 --> 00:02:02.319 and we're sitting there trying to implement the software and it's just totally the wrong 28 00:02:02.439 --> 00:02:07.599 fit. And so what initially pushed me over to consumer was just this idea 29 00:02:07.640 --> 00:02:09.960 that the best products one and I always loved the idea of like, let's 30 00:02:09.960 --> 00:02:14.840 evaluate the merits of the product, let's evaluate how well the teams understand the 31 00:02:14.879 --> 00:02:20.199 needs of the user, and that led me into consumer investing what's interesting is 32 00:02:20.199 --> 00:02:23.919 now, with SAS and with more of these bottoms up adoption models, that 33 00:02:23.000 --> 00:02:28.919 line is getting blurred a bit in terms of how people make decisions and enterprises, 34 00:02:29.400 --> 00:02:31.199 and so you know, we'll talk a little bit about our evolution over 35 00:02:31.319 --> 00:02:35.199 time, but we're ultimately seeing, at the end of the day, whether 36 00:02:35.199 --> 00:02:38.599 you're selling to a business where they're selling a consumer. There's an individual that's 37 00:02:38.639 --> 00:02:43.680 making that decision and some of their decision criteria are logical and based on facts 38 00:02:44.039 --> 00:02:46.479 and some of it's based on emotions and feelings, and you need to understand 39 00:02:46.520 --> 00:02:51.800 both those things to understand why anyone's gonna adopt any product. That's a really 40 00:02:51.840 --> 00:02:53.560 great point. Why did you decide to raise, you know, a billion 41 00:02:53.560 --> 00:02:58.400 dollar fund and just grow more and more? And obviously I know you still 42 00:02:58.759 --> 00:03:04.800 do invest in consumer brands, but think about different certain categories that are software 43 00:03:04.800 --> 00:03:07.400 in client. So I think part of it was a function of what our 44 00:03:07.439 --> 00:03:12.360 aspirations as a team are to be and the role we want to fill for 45 00:03:12.479 --> 00:03:15.120 our founders, and part of it is a reaction to a market where there's 46 00:03:15.120 --> 00:03:20.000 a lot more dollars floating around. So our goal is to be the partner 47 00:03:20.319 --> 00:03:23.840 for the most interesting series any companies. Sometimes we get them a little bit 48 00:03:23.840 --> 00:03:28.199 earlier at seed. Sometimes we miss it and we gotta Hustle and catch up 49 00:03:28.240 --> 00:03:30.840 at series B. But that's really where we want to intersect folks. And 50 00:03:30.879 --> 00:03:36.400 if you're looking at round sizes for the best companies in the million dollar range, 51 00:03:36.719 --> 00:03:38.680 there's a certain amount of capital you need to have to be competitive in 52 00:03:38.719 --> 00:03:44.159 those deals as well as have enough reserves for those businesses over time. So 53 00:03:44.199 --> 00:03:46.719 if you look at the billion dollars, behind the scenes, it's really two 54 00:03:46.719 --> 00:03:50.280 funds. It's a five million dollar early stage fund and a five hundred million 55 00:03:50.280 --> 00:03:53.560 dollar growth stage fund. You know, we found that not only is it 56 00:03:53.560 --> 00:03:55.599 important to be a partner early on, but the best founders are looking for 57 00:03:55.680 --> 00:04:00.439 investors that have dry powder, that have conviction to double down on companies when 58 00:04:00.479 --> 00:04:04.719 they're not obvious to other investors, and so we thought our best investments we 59 00:04:04.759 --> 00:04:09.639 want to be able to have the option to put million dollars in those businesses, 60 00:04:10.159 --> 00:04:13.759 because that's how we can be less beholding too the outside market and really 61 00:04:14.319 --> 00:04:16.639 rest on our conviction that we have around the companies were investing in. If 62 00:04:16.680 --> 00:04:20.839 you do lead around Um like, whether it's Theater Series A. Will you 63 00:04:21.000 --> 00:04:27.480 still be interested in leading rounds for their thereafter with the company? Absolutely so. 64 00:04:27.560 --> 00:04:30.959 I've just had one recently where we lead the the a after leading the 65 00:04:31.000 --> 00:04:35.600 seed and that was because, you know, we have an information advantage versus 66 00:04:35.600 --> 00:04:40.079 all other investors looking at that company. We know how the team operates, 67 00:04:40.120 --> 00:04:44.720 we understand the metrics intrinsically, and so you should be able to be a 68 00:04:44.759 --> 00:04:47.720 better follow on investor than initial investor because, especially these days, a lot 69 00:04:47.759 --> 00:04:51.160 of rounds are happening really quickly. So you have imperfect information and those early 70 00:04:51.199 --> 00:04:55.240 decisions, but you have a lot better information over time. So that was 71 00:04:55.279 --> 00:04:59.800 one example. Another company that we lead the seed round in a little over 72 00:05:00.040 --> 00:05:02.480 year ago, they went out to raise a series a and it was a 73 00:05:02.480 --> 00:05:05.519 lot of like we love you butts, you know. It's like, Oh, 74 00:05:05.680 --> 00:05:08.959 we think you're the best founder in the world, we think of the 75 00:05:08.959 --> 00:05:12.360 best company, but like we're not going to write you a check. And 76 00:05:12.399 --> 00:05:15.879 in that case, like we thought the team was working on something really special. 77 00:05:15.199 --> 00:05:17.720 Maybe they were a little bit early for the A, and so we 78 00:05:17.800 --> 00:05:20.120 let a five, six million dollar, you know, kind of in between 79 00:05:20.199 --> 00:05:24.639 round, and then six months later they raised the series a from another firm, 80 00:05:24.839 --> 00:05:27.759 and so in that case we had enough ownership from those two initial ones 81 00:05:27.759 --> 00:05:30.680 that we were happy to bring in another partner to help them grow. So 82 00:05:30.920 --> 00:05:34.839 this is where you can leverage capital from an offensive perspective, where in the 83 00:05:34.839 --> 00:05:40.959 early days of four runner we were very beholden to third party investors uh to 84 00:05:41.040 --> 00:05:44.360 be able to follow onto our companies even if we had conviction, and now 85 00:05:44.399 --> 00:05:46.519 we love teaming up with other folks. We think that's one of the goldilocks 86 00:05:46.800 --> 00:05:49.879 things. That sounds sort of silly about a billion dollars saying that that's not 87 00:05:49.959 --> 00:05:54.480 like a massive fund, but like we feel like we're small enough that we 88 00:05:54.519 --> 00:05:58.680 can still partner with other firms and really think about what's the right fit for 89 00:05:58.879 --> 00:06:01.720 founders. At the same time, if we have conviction around something, we 90 00:06:01.759 --> 00:06:04.279 don't need to wait for someone else to invest in the business. We can 91 00:06:04.319 --> 00:06:08.560 go ahead write that check and help the founders get back to work that much 92 00:06:08.600 --> 00:06:12.279 faster. Yeah, I think your last point really resonates on if you have 93 00:06:12.360 --> 00:06:15.560 that much conviction, then you can actually then lead again in the round, 94 00:06:15.600 --> 00:06:18.360 because, I mean I remember speaking to an entrepreneur who's now an investor, 95 00:06:18.399 --> 00:06:21.959 but he was saying when he was an entrepreneur that the funds, even the 96 00:06:23.000 --> 00:06:27.480 business was doing well and and had great traction, the funds that led at 97 00:06:27.519 --> 00:06:30.839 the c stage, for example, they definitely wanted to exercise or pro rata 98 00:06:30.959 --> 00:06:32.839 rights but didn't want to leave the a. They wanted someone else to kind 99 00:06:32.839 --> 00:06:35.160 of step up and leave the A, and then that puts on a lot 100 00:06:35.199 --> 00:06:39.920 of pressure for the founders actually go out and actually get um the A. 101 00:06:40.040 --> 00:06:42.879 and it's funny because the actual offer that they wanted to do for the a 102 00:06:43.279 --> 00:06:46.639 for the current investor pool was a much better deal than actually for the investors 103 00:06:46.639 --> 00:06:50.000 than what they actually ended up getting, since they had to go out to 104 00:06:50.120 --> 00:06:54.639 outside capital, which I thought was also quite interesting. Yeah, it introduces 105 00:06:54.639 --> 00:06:58.000 a lot of external factors and if you think about it, any one of 106 00:06:58.000 --> 00:07:00.879 these businesses, there's a lot more in tras now, but you're still beholding 107 00:07:00.959 --> 00:07:04.519 too the opinion of like one to two dozen people, which is kind of 108 00:07:04.519 --> 00:07:08.959 crazy, right. You're you're looking at businesses that are ultimately going to serve 109 00:07:09.000 --> 00:07:14.399 millions of customers and whether one or two dozen people like you determines your ability 110 00:07:14.439 --> 00:07:16.639 to raise the next round. And so we wanted to take some of that 111 00:07:16.680 --> 00:07:20.560 ambiguity out of the frame. We wanted to set the metrics with our founders 112 00:07:20.600 --> 00:07:24.759 in terms of what was most important and if we can bring someone else into 113 00:07:24.759 --> 00:07:29.120 partner with us, great, but part of the fund objectives was being able 114 00:07:29.160 --> 00:07:31.439 to not be reliant on that third party source of capital over time. That 115 00:07:31.480 --> 00:07:34.079 makes sense, so tell us a bit. I know that one of the 116 00:07:34.160 --> 00:07:38.519 areas that you're very focused on is, as you describe it, the empowerment 117 00:07:38.560 --> 00:07:43.639 economy. What is the empowerment economy in your mind? One of the luxuries 118 00:07:43.639 --> 00:07:46.480 of being in this job is you get to pick where you spend your time 119 00:07:46.759 --> 00:07:49.680 and so, you know, while we're not like tree hugging double double bottom 120 00:07:49.680 --> 00:07:54.639 line investors, you know we do like to focus on areas where it is 121 00:07:54.680 --> 00:07:57.800 like helping the world, you know, be a little, maybe a little 122 00:07:57.839 --> 00:08:01.839 bit of a less horrible place. and Um, the empowerment economy is really 123 00:08:01.879 --> 00:08:05.160 this idea that technology can help people get back to the original ideas around the 124 00:08:05.160 --> 00:08:09.240 American dream. I think you have a lot of Americans that are feeling like 125 00:08:09.279 --> 00:08:11.759 the system is set up against them. You know, it's designed for rich 126 00:08:11.800 --> 00:08:16.199 people to get richer, big companies to take advantage of them and the government 127 00:08:16.240 --> 00:08:20.519 to squabble it somewhere in the middle. And so this is really about a 128 00:08:20.560 --> 00:08:24.639 set of tools and technologies that help people achieve financial independence. Right. So 129 00:08:24.680 --> 00:08:31.920 how can they take advantage of investment opportunities that were maybe only available to people 130 00:08:31.279 --> 00:08:37.480 who are very wealthy historically? It's around education, and education not just generically 131 00:08:37.519 --> 00:08:41.879 like going to school, but around skills and job training. How can you 132 00:08:41.480 --> 00:08:46.960 bet on yourself, invest in yourself and end up with more marketable skills along 133 00:08:48.000 --> 00:08:50.200 the way? How can you, as a small business owner, where you're 134 00:08:50.200 --> 00:08:56.240 competing against the walmarts and the Amazons of the world, you know, fight 135 00:08:56.279 --> 00:08:58.759 back and have an offering where people aren't shopping with you out of the kindness 136 00:08:58.799 --> 00:09:01.960 of are hard, they're shopping with you because you have a better selection, 137 00:09:03.080 --> 00:09:07.159 better offering for them as consumers. And so we lumped a bunch of things 138 00:09:07.159 --> 00:09:11.600 into this category around empowerment, but we think it's really the opportunity for people 139 00:09:11.600 --> 00:09:16.919 to get back to leveraging technology, to bet on themselves to make a brighter 140 00:09:16.000 --> 00:09:20.519 future for Um, you know, for their families and the people around them. 141 00:09:20.879 --> 00:09:26.639 So leveraging technologies for small businesses right where themselves being able to create, 142 00:09:26.000 --> 00:09:31.159 um a business in order for them to be to compete against that could be, 143 00:09:31.440 --> 00:09:35.039 you know, the major retailers out there or the big dogs per se 144 00:09:35.240 --> 00:09:39.240 in the market. People will talk about this like creator economy piece and like 145 00:09:39.279 --> 00:09:43.519 the word Creator. I think it's thrown around a lot right now. Every 146 00:09:43.559 --> 00:09:46.080 like two years ago or years ago, it was all influencer and now it's 147 00:09:46.120 --> 00:09:48.360 just like it's like find every place, just swap it out. Now it's 148 00:09:48.399 --> 00:09:50.960 creator, and so that's like a subset of this. But a lot of 149 00:09:52.000 --> 00:09:54.919 people have, you know, they've built an online brand, they've built online 150 00:09:54.919 --> 00:09:58.519 presence, but they're largely under monetized because the options they have for themselves are 151 00:09:58.559 --> 00:10:01.840 are like you tube ads or a patreon campaign. And so some of this 152 00:10:01.960 --> 00:10:07.559 is about online enablement, some of it about is about offline enablement. How 153 00:10:07.679 --> 00:10:09.399 do you think? What do you think about, like the pain point specifically 154 00:10:09.440 --> 00:10:15.200 for maybe a retail shop or Um, just a small business? How do 155 00:10:15.200 --> 00:10:18.519 you analyze, you know, the actual pain points for those businesses and where 156 00:10:18.559 --> 00:10:22.279 opportunities actually could lie? I mean it's it's funny because adventure smbs used to 157 00:10:22.279 --> 00:10:26.159 be like the category you wouldn't want to touch with the ten foot poll. 158 00:10:26.639 --> 00:10:30.200 You know, they made decisions like businesses, with all sorts of bureaucracy, 159 00:10:30.240 --> 00:10:31.879 and they spent like consumers. You know, it was it was hard and 160 00:10:31.919 --> 00:10:35.559 they were cheap, and so it was an area that, like, if 161 00:10:35.600 --> 00:10:39.440 you wanted along illustrious career adventure, you didn't, you didn't necessarily go there. 162 00:10:39.600 --> 00:10:43.480 But what's changed over time is not the attitude of the S mbs. 163 00:10:43.840 --> 00:10:48.240 You know, they still are cheap, you know it's still is complicated to 164 00:10:48.320 --> 00:10:52.799 deployment, to deploy technology. But what changes the way the startups approached them. 165 00:10:54.120 --> 00:10:56.159 And so we were early investors in a business called fair which is a 166 00:10:56.159 --> 00:11:01.240 wholesale supplier for main street us, a busines. This is and they didn't 167 00:11:01.240 --> 00:11:03.879 show up day one with this idea that like, Hey, we're gonna sell 168 00:11:03.919 --> 00:11:05.919 you a bunch of products and if you don't sell them, you're on your 169 00:11:05.919 --> 00:11:09.679 own tough luck, like buyer beware. They showed up and said, look, 170 00:11:09.720 --> 00:11:13.480 a lot of these small businesses they behave like consumers, and consumers have 171 00:11:13.519 --> 00:11:16.799 gotten used to the idea that if you buy something online and you don't like 172 00:11:16.919 --> 00:11:20.600 it, you send it back and you can return it and, by the 173 00:11:20.600 --> 00:11:22.519 way, that's free. And so fairs. Initial Hook was like, look, 174 00:11:22.559 --> 00:11:26.240 we're gonna send you products we think you can sell in your stores, 175 00:11:26.639 --> 00:11:28.879 but they don't sell through, send it back to us, we'll take it 176 00:11:28.919 --> 00:11:31.399 off and we want to keep you as a customer. And that was a 177 00:11:31.480 --> 00:11:35.159 very different approach that was much more collaborative, where they were on the same 178 00:11:35.200 --> 00:11:39.919 side, that they were leveraging to their technology to understand which products would sell 179 00:11:39.960 --> 00:11:43.480 in that particular store. They were doing it not to take advantage of that 180 00:11:43.559 --> 00:11:48.080 business, but they were doing it to partner with that business, and so 181 00:11:48.080 --> 00:11:50.200 we're seeing more and more attitudes like this. I think toast is a great 182 00:11:50.200 --> 00:11:54.919 example of a company where they were, you know, selling into these small 183 00:11:54.000 --> 00:12:00.559 restaurants and the restaurants just got absolutely hammered with covid and with the change behavior 184 00:12:00.600 --> 00:12:05.840 patterns. That happened almost overnight and they quickly revamped their product to be all 185 00:12:05.879 --> 00:12:09.480 about, you know, kind of touchless ordering, being more delivery friendly, 186 00:12:09.919 --> 00:12:13.200 and that was where it went from like kind of a grind, kind of 187 00:12:13.200 --> 00:12:18.080 a hard smb business to something that was really opening doors for incremental revenue for 188 00:12:18.240 --> 00:12:20.919 these companies, and that's when that business really really took off. And so 189 00:12:20.960 --> 00:12:26.720 we think like restaurants are almost the canary in the coal mine for SMB businesses. 190 00:12:26.120 --> 00:12:30.559 It's a little bit how like online travel was a category that adopted a 191 00:12:30.600 --> 00:12:35.759 lot of technologies earlier than other sectors. We think we can look at restaurants 192 00:12:35.759 --> 00:12:39.279 because there was a high frequency. There's a lot of people shopping a lot 193 00:12:39.279 --> 00:12:41.399 of different places. It naturally happens three times a day that you eat. 194 00:12:41.759 --> 00:12:45.639 We think we can look at some of the evolution that's happened there and then 195 00:12:45.639 --> 00:12:48.879 apply some of those proxies to other categories that maybe are less tech savvy but 196 00:12:48.960 --> 00:12:54.080 have similar pain points as local businesses. How do you also kind of maybe 197 00:12:54.120 --> 00:12:58.480 describe yourself as an investor? Like I've had investors on the show that maybe 198 00:12:58.480 --> 00:13:01.120 are a bit more, I like to say top down, where they are 199 00:13:01.480 --> 00:13:07.000 extremely thematic, thesis driven, thinking a lot, observing what's kind of going 200 00:13:07.000 --> 00:13:09.440 on in the present and kind of where they want to spend their time, 201 00:13:09.679 --> 00:13:13.200 where I have other investors that I think a bit more, I would say, 202 00:13:13.200 --> 00:13:18.039 bottoms up, where they really where the entrepreneur has to really is the 203 00:13:18.039 --> 00:13:20.519 one that actually brings that insight to them and then they kind of make that 204 00:13:20.559 --> 00:13:26.279 decision and they're maybe not as trend focused per se. Where do you kind 205 00:13:26.320 --> 00:13:28.919 of follow yourself in the line of those two things? Sure, I would 206 00:13:28.919 --> 00:13:33.960 say this is an area that I've I've like evolved in the eighteen or whatever 207 00:13:33.039 --> 00:13:37.200 years I've been doing this, and I would say early on I was like 208 00:13:37.399 --> 00:13:41.720 very market centric, right. My belief was that you have good enough market 209 00:13:41.720 --> 00:13:46.799 opportunities where even, you know, okay teams could rise to the occasion. 210 00:13:46.279 --> 00:13:48.919 And, by the way, as the company got better, you could bring 211 00:13:48.960 --> 00:13:52.200 on more talent, you could bring on better people, and a lot of 212 00:13:52.200 --> 00:13:56.240 those businesses worked pretty well early on. They get twenty million, fifty million 213 00:13:56.279 --> 00:14:01.799 revenue whatever, but like, they largely fell apart over time. And that 214 00:14:01.960 --> 00:14:07.440 was just the challenge that those those teams struggled to understand what great talent looked 215 00:14:07.480 --> 00:14:11.799 like and when they found great talent, they struggled bringing those people on board. 216 00:14:11.840 --> 00:14:13.919 And so they were very successful in act one, but when it got 217 00:14:13.960 --> 00:14:18.480 to be act two, act three, they had more challenges. And so 218 00:14:18.480 --> 00:14:22.639 I would say over time I've evolved to Um not just caring a lot about 219 00:14:22.679 --> 00:14:26.240 the team's ability to execute, but also whether the team is going to be 220 00:14:26.279 --> 00:14:30.960 a pleasure to work with. Like that's one of the luxuries we have that 221 00:14:31.000 --> 00:14:33.679 we get to pick the people we work with. Obviously they're picking us as 222 00:14:33.720 --> 00:14:39.039 well, but where you feel like you have a level of camaraderie that like 223 00:14:39.480 --> 00:14:43.360 one plus one equals three, like the interaction of you as an investor then 224 00:14:43.399 --> 00:14:46.200 as the founding team is going to be better than each of you operating alone. 225 00:14:46.600 --> 00:14:52.480 And so I still have like categories and markets where I'm very predetermined to 226 00:14:52.600 --> 00:14:56.159 want to do something in because I feel like there's just a gap, there's 227 00:14:56.200 --> 00:14:58.759 a pain point that's not being addressed, and so I'll be looking for companies 228 00:14:58.759 --> 00:15:03.480 in the as categories, but I'm much more reluctant to jump into something, 229 00:15:05.120 --> 00:15:07.480 uh, if it feels like it's going to be pulling teeth the whole way. 230 00:15:07.639 --> 00:15:13.440 To get alignment with the team. How do you analyze teams when you're 231 00:15:13.799 --> 00:15:18.600 conducting due diligence meeting with entrepreneurs? What are some of maybe tactics in order 232 00:15:18.679 --> 00:15:22.600 maybe to gain trust or really realized, because I mean especially, you know, 233 00:15:22.600 --> 00:15:24.679 the last few years the market has been going so fast. I'd imagine 234 00:15:24.879 --> 00:15:28.960 diligence is probably only for a few days and not a few hours. And 235 00:15:28.000 --> 00:15:31.799 so how do you kind of put this all together. Yeah, I mean 236 00:15:31.799 --> 00:15:33.480 it's one of these things that, like, on one hand is incredibly challenging 237 00:15:33.519 --> 00:15:39.639 to make a judgment call in these tight time frames, but incent of the 238 00:15:39.679 --> 00:15:43.240 cases it's actually shockingly easy, you know, and that and that's because a 239 00:15:43.279 --> 00:15:46.879 lot of people who, you know, risk everything in their life they go 240 00:15:46.919 --> 00:15:50.840 out to start a business, they don't do the fundamental work to really understand 241 00:15:50.840 --> 00:15:56.120 their customer right and so they might have they might have gone to business school 242 00:15:56.360 --> 00:16:00.279 and wanted to start a company and like maybe the net world need is one 243 00:16:00.279 --> 00:16:03.000 more pet insurance business, you know, or something along those lines. But 244 00:16:03.200 --> 00:16:07.639 when you talk to them you understand that their level of understanding of the real 245 00:16:07.679 --> 00:16:11.879 pain points, why people buy, how they make that decision, how do 246 00:16:11.919 --> 00:16:17.000 you build lifelong relationships with your customers, that level of understanding is skin deep. 247 00:16:17.120 --> 00:16:19.799 And so we're looking for folks who don't necessarily have like twenty years of 248 00:16:19.879 --> 00:16:23.879 experience doing something, but where they have a great level of understanding of who 249 00:16:23.919 --> 00:16:29.519 their customer is and they have a high level of precision around how to operate 250 00:16:29.519 --> 00:16:33.320 their business. They understand the might be earlier, but they understand the metrics 251 00:16:33.320 --> 00:16:37.240 that matter and they understand what questions they need to ask along the way, 252 00:16:37.320 --> 00:16:42.159 and so that's really just like does this person understand their business in an honest 253 00:16:42.240 --> 00:16:45.759 way? And then also you can, you can find out what the relationship 254 00:16:45.840 --> 00:16:49.679 will be like largely by the questions that they ask us. Right. So 255 00:16:49.759 --> 00:16:52.399 you'll have a lot of folks where it's like, you know, you turn 256 00:16:52.399 --> 00:16:53.879 it over and say, Hey, what do you want to know about me, 257 00:16:55.159 --> 00:16:59.759 and it's like what's your fund size? What's your decision process? It's 258 00:16:59.799 --> 00:17:03.559 on us, like they read a blog somewhere about what questions you should ask 259 00:17:03.600 --> 00:17:07.759 investors, versus really getting into the meat of it, of understanding like Hey, 260 00:17:07.799 --> 00:17:11.759 like where have you butted heads with the founder before? Why that happened? 261 00:17:11.759 --> 00:17:15.440 How to play out? You've fired someone before? Why did that come 262 00:17:15.480 --> 00:17:18.319 up? How did that play out? What happens when you've had to shut 263 00:17:18.359 --> 00:17:22.039 companies down? You know what happens when you know you have you know a 264 00:17:22.119 --> 00:17:26.799 crime happened at your your business that you invested in. Like you do this 265 00:17:26.920 --> 00:17:32.400 long enough and things happen right. And so those are the conversations I want 266 00:17:32.400 --> 00:17:37.559 to engage in because you can tell that they're actually spending their time to understand 267 00:17:37.599 --> 00:17:42.279 what sort of a partner you'll actually be. They're doing their research and so 268 00:17:42.359 --> 00:17:45.920 often you just find people where you know they kind of go through the motions, 269 00:17:47.079 --> 00:17:49.359 but it's clear they're collecting term sheets and they're just trying to optimize the 270 00:17:49.359 --> 00:17:53.400 deal. Those are, you know, excellent points. Now you recently wrote 271 00:17:53.480 --> 00:17:57.720 this article that I really enjoyed reading about empowering main street and there was one 272 00:17:57.799 --> 00:18:04.079 part early on you talk about how you mentioned how open table and yelp achieved 273 00:18:04.359 --> 00:18:10.160 massive local market share but they weren't embraced and you talked about how the market 274 00:18:10.160 --> 00:18:11.880 that they were targeting, it's like a trillion dollar market, but they are 275 00:18:11.960 --> 00:18:15.440 only valued, you know, at several billion. Sum Ability is still pretty 276 00:18:15.440 --> 00:18:19.200 good. But what did you mean by that term in terms of embrace, 277 00:18:19.559 --> 00:18:25.480 and how do you identify if a company, as you're looking at companies and 278 00:18:25.559 --> 00:18:27.160 investing and, you know, being on the board of some of these companies, 279 00:18:27.599 --> 00:18:32.200 how do you kind of think about the word embraced in in that context? 280 00:18:32.720 --> 00:18:37.519 Yeah, absolutely, like we're really looking for companies where they're partnering up 281 00:18:37.559 --> 00:18:41.000 with their customers, and so in the case of of like yelp and open 282 00:18:41.000 --> 00:18:45.039 table, they had they were they were sort of a necessary evil for restaurants 283 00:18:45.079 --> 00:18:48.599 to to work with them, but they had this love hate relationship where they 284 00:18:48.599 --> 00:18:56.200 were largely extracting the toll from the ecosystem for what they're providing instead of opening 285 00:18:56.279 --> 00:19:00.160 up incremental value and charging for that. So I'll give you an example of 286 00:19:00.200 --> 00:19:03.000 something that's going on right now. Like you look at etc, for example, 287 00:19:03.359 --> 00:19:10.359 they've had these seller revolts and it's interesting because if you think about etc, 288 00:19:10.519 --> 00:19:15.200 they are enabling people's businesses, many of whose businesses did not exist before, 289 00:19:15.759 --> 00:19:18.920 and they're taking a relatively light take rate in the grand scheme of things 290 00:19:19.559 --> 00:19:26.359 for helping something go from nothing to a business. But the way that they 291 00:19:26.400 --> 00:19:30.720 phrase it, the way that they've increased prices over time and the way that 292 00:19:30.759 --> 00:19:34.559 they don't allow people to opt in or opt out of some of these programs 293 00:19:34.839 --> 00:19:40.440 has created this adversarial relationship with their sellers. And one of the decisions I 294 00:19:40.480 --> 00:19:44.119 was involved in the coming called hotel tonight early on. And so we're a 295 00:19:44.119 --> 00:19:47.799 marketplace right, we need to take a take rate, otherwise we can't attract 296 00:19:47.839 --> 00:19:51.240 customers. Bringing one of the platform and saw hotel rooms, but they did 297 00:19:51.279 --> 00:19:55.400 things along the way where it was like Hey, do you want to specifically 298 00:19:55.400 --> 00:20:00.480 target people through their, you know, area code or there zip, based 299 00:20:00.519 --> 00:20:03.960 on where their their phone actually is right now? Do you want to be 300 00:20:03.000 --> 00:20:07.519 promoted in this particular area around the top deal? These were all opt in 301 00:20:07.920 --> 00:20:12.680 options for people to give us a higher take rate by an exchange they were 302 00:20:12.680 --> 00:20:17.480 going to move more rooms. And so in a category like that where you 303 00:20:17.559 --> 00:20:19.599 had, you know, basically if they didn't sell the room that day, 304 00:20:19.759 --> 00:20:23.359 it was going to be completely lost revenue, if you showed up with a 305 00:20:25.039 --> 00:20:30.880 take rate, everyone would think that you had this like agregious level of intrusiveness. 306 00:20:30.319 --> 00:20:33.079 But if you show up with a fifteen percent take right and then let 307 00:20:33.119 --> 00:20:37.759 people opt in for programs that are going to move more rooms, it's just 308 00:20:37.799 --> 00:20:41.000 a very different conversation along the way. That makes a lot of sense. 309 00:20:41.119 --> 00:20:45.480 But if you were starting the next yelp or open table, what would the 310 00:20:45.599 --> 00:20:48.839 end you do differently. That'd be more parting with your customer, maybe more 311 00:20:48.880 --> 00:20:53.279 alignment as well, and and be embraced. Yeah, sure so. I 312 00:20:53.279 --> 00:20:57.279 mean we've got a company called table twenty two that we invested in, where 313 00:20:57.319 --> 00:21:00.599 they're not direct comps. We'll give it as an example, where what they 314 00:21:00.640 --> 00:21:07.640 do is they help interesting restaurants that have almost like a brand larger than the 315 00:21:07.640 --> 00:21:12.440 actual footprint of the store be able to launch subscription offerings where people can subscribe 316 00:21:12.440 --> 00:21:17.960 to to pro to food offerings at those restaurants. And this is really important 317 00:21:18.200 --> 00:21:21.640 during covid because a lot of those restaurants weren't open, they weren't seeing as 318 00:21:21.640 --> 00:21:26.079 many people. But that ideal around. What does being a subscriber or a 319 00:21:26.079 --> 00:21:30.480 member of a restaurant look like? That can evolve two interesting things over time. 320 00:21:30.519 --> 00:21:34.640 In a way where you're reserving certain tables for people last minute, you're 321 00:21:34.680 --> 00:21:41.119 giving them exclusive access to, you know, either special dishes or like a 322 00:21:41.359 --> 00:21:44.799 wine tasting or something like that, you know, in the back room. 323 00:21:44.880 --> 00:21:47.960 And so I think part of it is is the evolution we've seen in software 324 00:21:48.319 --> 00:21:51.519 where, instead of charging for every customer that's showing up, if you're on 325 00:21:51.640 --> 00:21:55.440 like a figma or something like that, the largely the sale is around an 326 00:21:55.519 --> 00:21:59.599 upsell premium version of that. And so, more specifically with open table, 327 00:22:00.240 --> 00:22:03.400 look, if you said, hey, it's it's completely free for anyone who's 328 00:22:03.400 --> 00:22:07.319 an existing customer who's been there before. We'll give you table management, we'll 329 00:22:07.319 --> 00:22:11.440 give you all the reservations on your site, but if we generate someone who's 330 00:22:11.440 --> 00:22:14.680 going to show up at your table, you know we're gonna we're gonna take 331 00:22:14.680 --> 00:22:18.440 a piece of that because that's a customer that we generated. Right. Hey, 332 00:22:18.480 --> 00:22:21.359 by the way, if we sell them up front, and restaurants have 333 00:22:21.400 --> 00:22:25.680 a huge problem with cancelations, especially during peak times, Friday Saturday night, 334 00:22:26.000 --> 00:22:29.839 we're gonna not just get them to reserve a table, but we're going to 335 00:22:29.880 --> 00:22:33.359 get them to prepay and we're going to get them to opt into some special, 336 00:22:33.640 --> 00:22:36.960 you know, pairing option, which is a higher revenue per table. 337 00:22:37.279 --> 00:22:42.039 Like there's upsell opportunities along the way where everyone is winning and where you're charging 338 00:22:42.039 --> 00:22:47.680 more from that incremental value. That's something that I think we've seen have a 339 00:22:47.720 --> 00:22:52.079 high degree of penetration in the software ecosystem of bottoms up adoption. You know, 340 00:22:52.079 --> 00:22:55.279 businesses like Canva or worth, you know tens of billions of dollars have 341 00:22:55.279 --> 00:23:00.079 have leveraged that and that's something that I think more companies can take advantage of 342 00:23:00.160 --> 00:23:03.319 in the SMB space as well, especially as the cost of distribution goes down 343 00:23:03.960 --> 00:23:08.200 um through, you know, through more bottoms of adoption models. Yeah, 344 00:23:08.279 --> 00:23:12.359 I mean I think that also, like one of the main points that I 345 00:23:12.119 --> 00:23:15.240 that I take it aware is also being able to charge when there's actually a 346 00:23:15.240 --> 00:23:21.799 transaction or assale and not just charge Um, you know, idoly right Um, 347 00:23:21.839 --> 00:23:25.680 as like a monthly subscription. So definitely understanding. There's definitely more alignment 348 00:23:25.680 --> 00:23:30.319 there, because then revenue is actually coming in through the piece of technology directly, 349 00:23:30.480 --> 00:23:32.640 which is pretty cool. I mean, you look at a company like 350 00:23:32.680 --> 00:23:36.799 group on which you know, on one hand was the fastest company ever to 351 00:23:36.799 --> 00:23:40.920 get to a billion dollars in revenue but on the other hand largely under delivered 352 00:23:41.160 --> 00:23:44.480 on the promise Um that was their value prop is like, look, you're 353 00:23:44.519 --> 00:23:48.680 not advertising. A lot of people don't understand advertising and cost of acquisition. 354 00:23:48.680 --> 00:23:51.839 As a small, small business, you know you were paying for someone to 355 00:23:51.880 --> 00:23:55.599 walk through that door with an existing transaction and people were willing to give a 356 00:23:55.640 --> 00:23:59.640 really high percent to do that. Ultimately, the challenge there is that business 357 00:23:59.640 --> 00:24:04.079 became or a sales lad versus product lad, where the incentives originally were aligned 358 00:24:04.200 --> 00:24:07.720 with their business partners and that got to be a point where the sales comp 359 00:24:07.759 --> 00:24:11.160 structure was set up in a way where it wasn't as aligned and you had 360 00:24:11.160 --> 00:24:15.319 more merchants ultimately to satisfied partnering with them. But if you look at that 361 00:24:15.359 --> 00:24:18.839 point of that value prop that they had, someone will fill that gap at 362 00:24:18.920 --> 00:24:25.279 some point where you're delivering customers prepaid in a way where the cost of sales 363 00:24:25.319 --> 00:24:29.720 goes to nothing for the business and it's purely incremental margin. Yeah, no, 364 00:24:29.839 --> 00:24:33.839 that's a really good recap of like how group on was so successful for 365 00:24:33.880 --> 00:24:37.559 a few years and then the reason why they weren't. Ye, in your 366 00:24:37.680 --> 00:24:41.599 article you mentioned how a lot of people want to shop local. I think 367 00:24:41.599 --> 00:24:45.519 this mentioned the article that there was maybe a bit of a disconnect of what 368 00:24:45.559 --> 00:24:48.359 people actually wanted to do and then how they're actually spending when it wasn't the 369 00:24:48.440 --> 00:24:52.799 case they were shopping, you know, very local. When you kind of 370 00:24:52.839 --> 00:24:56.240 do your research and you generate these insights, how do you think about the 371 00:24:56.240 --> 00:25:00.680 differences between what maybe consumers say and have, you know, maybe like the 372 00:25:00.680 --> 00:25:03.000 best intentions at heart, if shopping local is the best intention, which I 373 00:25:03.039 --> 00:25:08.319 believe it is, versus maybe how they're actually spending their dollars? This is 374 00:25:08.400 --> 00:25:14.119 the willing in all our question here, because there's this big gap between people. 375 00:25:14.160 --> 00:25:15.200 What people say they're going to do and what they're actually gonna do, 376 00:25:15.319 --> 00:25:21.240 and so we see it as our job not to sit in our venture capitalist 377 00:25:21.519 --> 00:25:26.039 does your office and pontificate about what people are doing. We see it as 378 00:25:26.079 --> 00:25:29.759 our job to listen. So we do a lot of primary research around what 379 00:25:29.839 --> 00:25:33.319 consumers are actually wanting and what's important to them right now, but we also 380 00:25:33.359 --> 00:25:38.000 do a fair amount of verifying and looking at actual purchase data to see whether 381 00:25:38.000 --> 00:25:42.039 they're following through on those intentions. And there's been no category, I would 382 00:25:42.039 --> 00:25:47.119 say, that's been like more obvious of a you know, suspect in this 383 00:25:47.279 --> 00:25:51.759 regard than the sustainability one, where, like, if you listen to everyone, 384 00:25:52.079 --> 00:25:56.359 they would be driving their Prius is around and everything is recyclable and then 385 00:25:56.400 --> 00:25:59.880 you go to the park and the trash cans overflowing with stuff, and so 386 00:26:00.680 --> 00:26:03.839 we we've really had to look hard at that category because it's strategically important to 387 00:26:03.960 --> 00:26:07.920 us. It is something that's important to the consumer. But what people really 388 00:26:07.920 --> 00:26:11.839 want is they want just as good of a product and just as good of 389 00:26:11.880 --> 00:26:15.880 a price with some sustainability benefit on top of that. They don't want the 390 00:26:15.880 --> 00:26:18.599 trade offs necessarily, and so I think the same as the case when it 391 00:26:18.640 --> 00:26:22.559 comes to shopping locally. Look, you want to support that business, you 392 00:26:22.599 --> 00:26:26.599 want to be able to have a local affinity where you go in, they 393 00:26:26.599 --> 00:26:29.799 know, it's like cheers, right, they go in, they know your 394 00:26:29.880 --> 00:26:33.359 name. You get that level of service. But you don't want to pay 395 00:26:33.400 --> 00:26:38.119 more to get that product. You don't want to be faced with different return 396 00:26:38.319 --> 00:26:41.680 expectations for when things you know, if it doesn't work out, how they 397 00:26:41.680 --> 00:26:47.359 get sent back. You don't want to be faced with less inventory that's available. 398 00:26:47.720 --> 00:26:52.359 And so that's where I think there's an opportunity for technology and for startups 399 00:26:52.400 --> 00:26:56.720 that are like well funded to be able to fill some of those gaps between 400 00:26:56.759 --> 00:27:03.000 the experience people have gotten accustomed to form big box retailers with massive technology arms 401 00:27:03.079 --> 00:27:08.519 and massive ability to invest in operations, and the local person that they like, 402 00:27:08.720 --> 00:27:11.319 are cheering for and want to support. How, then, do you, 403 00:27:11.359 --> 00:27:15.359 though, think about, maybe it's the elephant in the room, but, 404 00:27:15.359 --> 00:27:18.400 but, but, price sensitivity. Right, when you have, you 405 00:27:18.440 --> 00:27:22.720 know, small shops probably tend I'd imagine that for some of these products, 406 00:27:22.759 --> 00:27:27.119 it probably is more expensive than you know, say it like the Walmart or 407 00:27:27.119 --> 00:27:32.680 targets that they're going to going to do, going to which I mean that's 408 00:27:32.880 --> 00:27:36.440 part of why, I'd imagine, Walmart wiped out a whole bunch of small 409 00:27:36.480 --> 00:27:40.720 businesses right just due to like price sensitivity. As investor, is someone that 410 00:27:40.960 --> 00:27:45.000 is very bullish on small medium businesses. How do you also think about that, 411 00:27:45.039 --> 00:27:48.079 that consumer perspective on price sensitivity, to make sure that these businesses survive? 412 00:27:48.599 --> 00:27:52.799 I think bookstores is a great place to look, right like Amazon. 413 00:27:52.920 --> 00:27:56.319 That's the category they started and you can find any book you'd ever want to 414 00:27:56.359 --> 00:28:00.559 read on Amazon. But what's interesting and maybe non obvious is that over the 415 00:28:00.680 --> 00:28:06.279 last decade the amount of independent bookstores has almost doubled. So it's not this 416 00:28:06.440 --> 00:28:10.960 like declining trend. If you look at that and correlated it's really when borders 417 00:28:10.960 --> 00:28:15.000 went out of business. So there's there's been this whole wave of like targeted 418 00:28:15.119 --> 00:28:18.880 specialty retail, the sports authorities, toys R us is of the world, 419 00:28:19.519 --> 00:28:25.359 and those businesses have largely failed, very frequently because investors and getting too much 420 00:28:25.400 --> 00:28:27.759 debt and, you know, not having management teams innovate. But as that 421 00:28:27.839 --> 00:28:32.519 wave has gone away, you end up with like one of two things. 422 00:28:32.880 --> 00:28:36.880 I either already know what I want, I wanted delivered and I wanted easy 423 00:28:37.200 --> 00:28:41.319 and the Amazons are going to do great for you on that behalf. or 424 00:28:41.319 --> 00:28:44.279 in the bookcase, it's like, Hey, I don't know what book I 425 00:28:44.319 --> 00:28:47.799 want to read. Right. I'm interested in X. Do you have a 426 00:28:47.880 --> 00:28:51.119 recommendation of a good mystery novel? I want to go on the store and 427 00:28:51.160 --> 00:28:53.359 I want to flip through some pages and see, you know, see what 428 00:28:53.359 --> 00:28:57.279 it looks like before I buy the book, because that's ultimately like saving a 429 00:28:57.400 --> 00:29:03.720 dollar or two here and there. Is less valuable to people than wasting their 430 00:29:03.720 --> 00:29:06.759 time on a book that's not relevant. I'll give you another example. My 431 00:29:06.799 --> 00:29:08.160 son, of one of my both my kids actually, but my younger son, 432 00:29:08.200 --> 00:29:11.319 play soccer. He needed some new cleats, you know. So what 433 00:29:11.359 --> 00:29:15.039 do we do? We go online to the Nike Dot Com and, like 434 00:29:15.119 --> 00:29:18.720 we buy some cleats and they look awesome, right. They show up and 435 00:29:18.799 --> 00:29:22.160 like they're just not comfortable period, right. And if you think about soccer 436 00:29:22.160 --> 00:29:23.839 cleats, like they've got to be comfortable because you're gonna be wearing them running 437 00:29:23.839 --> 00:29:26.599 around trying to kick ball. And so we went down to the local, 438 00:29:26.720 --> 00:29:30.559 like specialty soccer store, which, by the way, is doing a lot 439 00:29:30.599 --> 00:29:34.799 better now that there's no like sports authority to compete with them. They had 440 00:29:34.880 --> 00:29:38.519 much broader inventory, they had a guy there who like knew how to fit 441 00:29:38.599 --> 00:29:41.279 them. They've got balls in the store that you can kick around and play 442 00:29:41.319 --> 00:29:45.319 around with and like we weren't going to leave the store, you know, 443 00:29:45.519 --> 00:29:48.640 without him buying something. Now, on the flip side, will say, 444 00:29:48.640 --> 00:29:52.279 like their inventory was pretty poor, and so that's the kind of thing if 445 00:29:52.319 --> 00:29:56.240 you think about, like, what have ghost kitchens enabled for restaurants? Well, 446 00:29:56.240 --> 00:30:00.680 why isn't there like ghost warehouses? You know, they are able to 447 00:30:00.680 --> 00:30:03.440 work with these local stores where the local store sells the stuff but the right 448 00:30:03.440 --> 00:30:07.359 product is shipped to you along the way. And so I think there are 449 00:30:07.440 --> 00:30:11.000 blends, you know, both the online type business with partnering up with the 450 00:30:11.079 --> 00:30:15.799 Local Specialty store. That's going to create opportunity for entrepreneurs. But where, 451 00:30:15.839 --> 00:30:19.359 like there are some products where you want advice, you want to try it 452 00:30:19.400 --> 00:30:26.079 out. Um, those are are better locally than getting delivered via, you 453 00:30:26.160 --> 00:30:30.519 know, via fed extrack or via Amazon prime vehicle. I really like how 454 00:30:30.640 --> 00:30:36.200 you phrase that and positioned it, especially with the Amazon example with books, 455 00:30:36.200 --> 00:30:41.039 how Amazon replaced the big box stores the borders, the Barnes and nobles where 456 00:30:41.079 --> 00:30:47.880 almost those are like a combination of having not infinite but almost a lot of 457 00:30:47.920 --> 00:30:52.519 skews right, and a lot of variety and probably great prices, combined with, 458 00:30:52.720 --> 00:30:55.559 you know, actually being able to actually go into the store and actually 459 00:30:55.640 --> 00:30:57.880 go kind of be able to wander and see which book you want to actually 460 00:30:57.880 --> 00:31:00.880 purchase. That's now split where. Now if you want to like, if 461 00:31:00.920 --> 00:31:03.599 you know what you want to buy, you can just go online Amazon and 462 00:31:03.640 --> 00:31:07.279 maybe buy it, or you want, you know, do on price and 463 00:31:07.359 --> 00:31:08.799 you know it's convenient, easy, and then it's like hey, if I 464 00:31:08.799 --> 00:31:14.079 want to actually browse somewhere or go then, I or actually or you know, 465 00:31:14.160 --> 00:31:17.880 in your example about cleats, go and actually try on choose, you 466 00:31:17.920 --> 00:31:21.359 actually go then to your local store in order to actually try it on. 467 00:31:21.519 --> 00:31:23.599 That's really cool. That's really cool. Yeah, it's it's interesting because you 468 00:31:23.599 --> 00:31:26.559 look at like a sports authority and in a lot of ways, I think 469 00:31:26.599 --> 00:31:30.920 there they were like solving for nothing, right, like you either want to 470 00:31:30.960 --> 00:31:36.960 have like kind of infinite inventory, infinite convenience, or you want to have 471 00:31:37.039 --> 00:31:41.480 someone where it's like curated and where their opinion it matters, and those stories. 472 00:31:41.519 --> 00:31:44.920 You went in there and they would be out of stock of some things. 473 00:31:44.920 --> 00:31:48.279 They weren't necessarily the best price and like, God help you if you 474 00:31:48.319 --> 00:31:51.839 want someone to open the little like dressing room and actually try something on, 475 00:31:52.079 --> 00:31:53.599 you know, like you couldn't find anyone. And so it's like no, 476 00:31:55.000 --> 00:31:56.880 people talk about the death of retail. It's like what's kind of the death 477 00:31:56.920 --> 00:32:01.920 of crappy retail? Like, you know, it's not well run businesses where 478 00:32:01.960 --> 00:32:06.559 the consumer is top of mind to everyone in the store. Those companies are 479 00:32:06.559 --> 00:32:09.640 actually doing quite well. Like people love shopping. It's just shopping sucked for 480 00:32:09.680 --> 00:32:14.079 a while. So how do how do we return back to a great experience 481 00:32:14.119 --> 00:32:17.000 for people, especially under the backdrop of all the supply chain challenges we're having 482 00:32:17.079 --> 00:32:22.960 right now? Yeah, we're actually customer service actually matters again. That's cool. 483 00:32:22.000 --> 00:32:27.759 That's cool. Have you made any changes to your thesis or just maybe 484 00:32:27.839 --> 00:32:32.720 how you invest during covid or maybe what was your reaction or, you know, 485 00:32:32.960 --> 00:32:37.279 as a result of covid in terms of how you think about your thesis, 486 00:32:37.279 --> 00:32:39.759 in terms of where you're where you actually invest? I mean, I 487 00:32:39.759 --> 00:32:45.039 think a lot of investors early covid had this like the world has forever changed. 488 00:32:45.200 --> 00:32:49.799 You know, thesis and we're all going to sit on our houses forever 489 00:32:50.039 --> 00:32:52.400 and like hang out with our friends over resume and and all that kind of 490 00:32:52.400 --> 00:32:57.000 stuff. And so you know, we definitely saw the shift of e commerce 491 00:32:57.000 --> 00:33:00.960 purchasing. We saw, you know, new technology around education, around grocer 492 00:33:01.079 --> 00:33:06.839 delivery, being adopted and we we made some investments along the way. Now 493 00:33:06.880 --> 00:33:09.880 we will say part of our conversation with those founders was like look, covid 494 00:33:09.920 --> 00:33:13.519 is gonna go away at some point. Just taken longer than a lot of 495 00:33:13.599 --> 00:33:15.720 us thought. But it's like how do you build a durable business leveraging the 496 00:33:15.759 --> 00:33:21.759 audience you generated during covid but in a post covid world where things will likely 497 00:33:21.839 --> 00:33:24.599 return back to some sense of normal? And so I think largely, if 498 00:33:24.640 --> 00:33:29.880 I were to summarize it, I would say our thesis hasn't changed that much 499 00:33:30.240 --> 00:33:35.200 due to covid Um. But you know, there are behavior patterns that are 500 00:33:35.279 --> 00:33:37.079 much more familiar today than they were a few years ago. Like if I 501 00:33:37.119 --> 00:33:43.559 were to tell myself three years ago that my my son and I keep bringing 502 00:33:43.720 --> 00:33:46.839 up, but like I would want to phone predominantly so he could use the 503 00:33:46.960 --> 00:33:51.720 Qr code to read Menus at a restaurant I told you you're crazy, right, 504 00:33:51.759 --> 00:33:55.039 like r codes, like nobody uses qr codes, but I think the 505 00:33:55.160 --> 00:34:00.119 Qr code was kind of like the dark horse winner of covid where even my 506 00:34:00.200 --> 00:34:02.119 parents are like pulling out their phone, uh, you know, looking at 507 00:34:02.160 --> 00:34:06.000 qr codes and they don't know how to do anything on the phone. Right. 508 00:34:06.039 --> 00:34:07.199 They know what to call, call my brother, and maybe that's about 509 00:34:07.199 --> 00:34:12.599 it. So I think there are some technologies that become more prominent. I 510 00:34:12.639 --> 00:34:19.800 think people became a much wider demographic, became comfortable ordering things with their phone. 511 00:34:20.239 --> 00:34:23.119 But at the end of the day, the objective around human connection, 512 00:34:23.599 --> 00:34:27.760 the objective of people wanting to get out and do things, I don't think 513 00:34:27.760 --> 00:34:30.800 that's changed that much because I think that's more intrinsic. There's are really great 514 00:34:30.800 --> 00:34:35.679 points. I also wanted to ask what is one book that's inspired you personally? 515 00:34:35.679 --> 00:34:38.119 In one book that's inspired you professionally? Sure, I mean my personal 516 00:34:38.119 --> 00:34:42.599 and professional lives are kind of intertwined, so this might be this might be 517 00:34:42.599 --> 00:34:46.000 a cop out, but like, I recently read the Wright Brothers Book by 518 00:34:46.159 --> 00:34:51.079 David McCullough, and I don't know if you've read that one, but it 519 00:34:51.199 --> 00:34:53.920 was just really refreshing right. I think we're living in a time right now 520 00:34:54.199 --> 00:34:59.639 where there's a lot of founders, ventro capitalists, whoever, that talk a 521 00:34:59.719 --> 00:35:04.440 big game on twitter and uh, you know, don't really put the work 522 00:35:04.440 --> 00:35:07.719 in and don't really deliver in reality. And if you look at the study 523 00:35:07.880 --> 00:35:13.079 of the rights, I mean these guys were just cranking right like. They 524 00:35:13.079 --> 00:35:15.360 were largely dismissed. A lot of people told them what they were doing. 525 00:35:15.400 --> 00:35:21.599 That just wasn't possible and they just like stuck to the facts, they grinded 526 00:35:22.199 --> 00:35:27.079 and, you know, they ultimately, we were successful propelling man forward and 527 00:35:27.199 --> 00:35:30.599 it really got back to you know, some of like feeling good about America, 528 00:35:31.079 --> 00:35:34.280 you know, at a time when that's harder, and just like that 529 00:35:34.519 --> 00:35:37.960 ingenuity that was their turn of the century that we see in so many of 530 00:35:37.960 --> 00:35:42.079 the founders that we back, but we don't see as much more broadly in 531 00:35:42.159 --> 00:35:45.719 society. And so that was like a really refreshing book that I just read. 532 00:35:45.039 --> 00:35:47.519 And then, professionally, the book that I always love that if people 533 00:35:47.599 --> 00:35:51.559 haven't read that would definitely check it out. It's called shoot dog and that's 534 00:35:51.559 --> 00:35:54.880 really the story around Nikes founding and like one of the privileges we have in 535 00:35:54.880 --> 00:36:00.599 this industry is just being able to shadow and be alongside amazing founders as they 536 00:36:00.639 --> 00:36:07.559 go from solving these niche small needs to building transformational brands and transformational businesses. 537 00:36:07.960 --> 00:36:09.880 And that was just a great story about how, you know, someone who 538 00:36:09.920 --> 00:36:15.440 loved running, who wasn't getting the right shoes, started working with a Japanese 539 00:36:15.440 --> 00:36:19.840 company and then just you know, the rest is history, but incredibly inspiring, 540 00:36:20.000 --> 00:36:22.639 very easy to read and just helps you understand the plight of the entrepreneur 541 00:36:22.719 --> 00:36:27.880 where it's like a one hand you're raising millions of dollars from investors but the 542 00:36:27.920 --> 00:36:31.119 next hand you're picking up paper towels at Costco and like just this like job 543 00:36:31.199 --> 00:36:36.360 that is basically everything that needs to get done at any given moment in order 544 00:36:36.400 --> 00:36:38.840 to push the business forward. It was very refreshing on that fun and I 545 00:36:38.880 --> 00:36:43.159 would recommend people check it out. No, totally, totally. Shoe Doog 546 00:36:43.280 --> 00:36:46.440 is definitely a number one rated book here on the PODCAST. Yeah, but 547 00:36:46.480 --> 00:36:49.119 no, no, no, no, no, no, no, but 548 00:36:49.239 --> 00:36:51.920 the right brothers book. You're only the second person that brought up the right 549 00:36:51.960 --> 00:36:54.639 brothers book. So okay, that's awesome. That's awesome. Yeah, my 550 00:36:54.679 --> 00:36:59.039 final question to you is, what's the best piece of advice that you've received? 551 00:36:59.639 --> 00:37:02.440 It's it justine. I would say that you get a variety of advice. 552 00:37:02.519 --> 00:37:07.840 Like the thing that resonates with me that I will tell others is is 553 00:37:07.880 --> 00:37:13.000 really to focus on who you're partnering with in Your Career, not the what 554 00:37:13.679 --> 00:37:15.599 as much. And so a lot of times you'll have people that will say, 555 00:37:15.639 --> 00:37:19.519 Hey, I'm gonna go work at the startup because it's really hot, 556 00:37:20.159 --> 00:37:22.960 or hey, this you know, venture firm is offering me a job, 557 00:37:22.039 --> 00:37:24.840 maybe I should go check it out. And I tend to think that the 558 00:37:24.880 --> 00:37:30.960 people you work with tend to be more important to opening doors in the future 559 00:37:30.400 --> 00:37:34.480 than than the what. Right. So my last startup I worked at, 560 00:37:34.480 --> 00:37:37.000 I talked about some of the drama earlier on, but like that business ultimately 561 00:37:37.039 --> 00:37:40.000 failed. Like we sold the IBM, but it was like a far cry 562 00:37:40.079 --> 00:37:44.800 from our ambitions much earlier in the life of the company. But the person 563 00:37:44.920 --> 00:37:47.199 who I worked for, this guy any Palmer, he took a liking to 564 00:37:47.280 --> 00:37:52.159 me. He really cared about relationships and he ultimately opened the door for me 565 00:37:52.280 --> 00:37:57.119 to to get an adventure which was transformative for me from a career perspective. 566 00:37:57.400 --> 00:38:00.440 And so it wasn't that that company was successful, but the people I worked 567 00:38:00.440 --> 00:38:04.440 with. I learned a ton from them and they ultimately opened interesting doors. 568 00:38:04.519 --> 00:38:07.760 Other folks from that company went on to work at salesforce, went on to 569 00:38:07.760 --> 00:38:10.559 work at dropbox, went on to work at other interesting venture firms, and 570 00:38:10.639 --> 00:38:15.480 so you look at these you know people will talk about the paypal mafia right 571 00:38:15.480 --> 00:38:19.519 that's sort of the most prominent example, but there are these little pockets of 572 00:38:19.599 --> 00:38:23.440 networks of great people that go from one company to the next where not only 573 00:38:23.480 --> 00:38:28.559 are you working with folks where they understand what excellent actually looks like, but 574 00:38:28.639 --> 00:38:32.199 the level of training insight you get just by shadowing those people is kint a 575 00:38:32.320 --> 00:38:36.800 much more beneficial than, you know, just showing up and being at facebook 576 00:38:36.800 --> 00:38:38.559 at the right time. I really like that. Well, Brian, thank 577 00:38:38.599 --> 00:38:40.440 you so much for your time. This has been a lot of fun chatting. 578 00:38:40.800 --> 00:38:43.800 Happy to do it. Thanks for having me. Appreciate it. Thank 579 00:38:43.840 --> 00:38:46.800 you and there you have it. It was such a pleasure having Brian on 580 00:38:46.840 --> 00:38:51.639 the show. was really a treat. Follow him on twitter for more insights 581 00:38:51.760 --> 00:38:54.960 at O m a l. If you enjoyed this episode, I love it 582 00:38:54.960 --> 00:38:59.199 if you write a review on the apple podcast. You're also welcome to follow 583 00:38:59.239 --> 00:39:01.639 me, your host, on twitter at Mike Gelb, and also follow for 584 00:39:01.679 --> 00:39:15.760 episode announcements at Consumer VC. Thanks for listening, everyone. Oh Oh, 585 00:39:17.679 --> 00:39:29.119 Oh, oh,