thanks so much for joining us. Marlin. Thanks for taking some time this morning.
Thanks for having me. I
was gonna start off by asking you a little bit of personal information as I was perusing your bio earlier. You know, it's got a lot of this sort of standard like VC signposts you see from a lot of investors, but one thing really jumped out at me, it says, You are a former professional athlete, and I feel like, I might be missing some steps along the way. So they can Can you can you take me through that journey, a little bit of how you got from being a professional athlete to becoming a VC is one thing naturally lead to another? No, there
are two separate two separate things. But, you know, I had early in my career, I had the opportunity to move to the UK to launch a seed stage enterprise software company over there and to service the UK, in Europe, and just kind of serendipitously walked into a gym to play some pickup ball basketball. And it happened to be the open gym for a semi pro team. And ultimately, the coach asked me to play on the team. So I ended up spending two and a half years, kind of moonlighting as a as a basketball player while building a company.
This may be overstated, but you know, you say there's sort of like inspirational team building lesson learning, when we talk about sports generally. Do you feel like you were able to sort of take any of those lessons that you learned being a part of a team and apply them to what you do now?
Absolutely. In sports, I think it's the the ultimate is the ultimate teacher in terms of teamwork, and you know, how to work in successfully in groups, you know, on a successful team, everyone has a role. You know, they're, they're different differentiated skill sets, and, you know, the, each each skill shows up in a different way at a different time. And, you know, being a part of, you know, successful teams, you really get a firsthand look at, you know, what it means to play your role at the right time in the right situation.
And I gotta ask you real quick, you got since since we're talking about this now, and you've got COVID, behind you, obviously, we've seen a ton of sports figures generally, but NBA players specifically getting involved with VC, what is the what's the connection there?
Well, I mean, I think it's, it's just, it's one of those things, right? ownership is, is becoming, as you say, it's in the mainstream now. Right? I think people understand that, and the way to generate wealth or mass wealth is to own and, you know, investing in startups is a is a is a risky proposition, but it's also a very, can be potentially a very rewarding proposition. And, you know, the, the concept of angel investing is becoming more and more accessible to those that have capital and professional athletes that they have is capital. And so it just makes sense that, you know, they're, they're dipping their toes, and trying to kind of diversify their wealth creation activities.
So you mentioned the riskiness and obviously, things are especially risky when we're talking about really early stage companies, this is something that I want to ask every single investor that I've talked to, because it's something that like, I am trying to wrap my brain around for my own work, a lot of startups come along, they make really big claims, many of which, I assume, ultimately proved to be, you know, a bit of BS. So ultimately, how do you weed out the snake oil and and how do you really assess efficacy at an early stage?
Yeah, so we are firm, we do a lot of things differently than that, I think most brands, but there are things that that we do that that other firms do as well. One of the things that's different about us is we have this this thesis, this underlying thesis that governs everything that we do, and it's called cultural investing. And for us, what that means is taking a look at emerging behavioral trends and shifts in culture. And so what we're, what we're looking for is or to understand is, you know, where are people going and in companies going to spend their time and their money. Not only Today, but in the future, so we try to pick up on these on these trends and then do a lot of research to see, you know, are there supporting factors for this thing, you know, sticking around and being successful? And if that the answer to that is yes, but then we can dig a little bit deeper. And you know, this, so then we know that this is a space we want to we want to look for, you know, who's going to be the category winner in? And then it's the all the typical things that you would do in venture, you know, what are the signs of, of early traction? You know, if this is a marketplace, like, Is there a community being built here? And whatever, whatever the key elements of any particular type of business is the traditional ways that you look at it, any venture investment, but we start with, how is the world changing? Do we believe this, this change is sustainable? And you know, are, are they're kind of white spaces, where, you know, if you add technology or investment dollars on this can really explode.
It trades is an interesting word. You know, I assume that every time anything sort of enters this ICT case, you probably get dozens of different companies like but take NF T's, for example, right? Everybody's talking about at t is right now, probably all of a sudden, you know, there are a ton of companies pitching you something in that space. What does it mean to work in trends? And how do you, I guess, Heidi sort of project down the road, right? You don't want to be chasing the things that are popular. Now, I assume you want to be going after things that are going to be these big movements on the horizon?
It's, it's, it's tea leaves, right? And, you know, the one interesting thing about our partnership, right is that, you know, we have a former mayor of a major US city on Washington, DC, and Adrian Fenty, we have two former talent agents, one of which, you know, used to work with some of the biggest, or most famous talents in the world are Winfrey, Tyler Perry, Michael B, Jordan, etc. and then and then you have a technologist like myself, and then operators, right. And what that what this diverse group brings to the table is a super network, essentially, we are connected to, you know, the folks that are traveling around the globe, and witnessing different things. And we're in constant communication with with them, right, what are you seeing, and basically, when when you start to hear something, you know, from several different sources, it gives you, you know, it kind of signals to you that this is something that we should start to pay attention to. And that's when you start to do the research, right, you know, take things like, you know, short bite, audio, audio books, or something like that, right? You know, that that thing took off in, in South Korea in an amazing way. Right, everyone was reading these short bite, like stories, etc, on their public transportation rides, you know, etc. And so could Is that something that could be successful in the US? You know, do we have a lot of public transportation, you know, throughout throughout the country, or most people in their, in their cars, right? Did like our people traveling for, you know, short enough periods of time, where it makes sense to put, you know, short bytes of content in front of them, things like that. So, you know, so we get the, you know, the kind of the tea leaves from our network, which are, you know, these tastemakers and, you know, some of the largest brand agencies around the world. And then we do the research to understand like, are the elements that are necessary for this thing to succeed? And to stick around? Do they actually exist in the US and other major markets?
So I should mention that we're opening things up to questions from the audience as well throughout about a couple of years and some good ones. So you've had a number of successful exits within the past year, how do you differ from other funds in terms of how you support your founders?
Yeah, there are three three pillars that we that we stand on. The first goes back to what I was saying about having this, this, this really unique and diverse partnership with with these experiences, right. So that that affords us, you know, relationships at the highest levels within professional sports, within media and entertainment within you know, the fortune C suite of the Fortune 500 and, you know, any any startup founder and CEO that you know has been running one The top star wars of the last 20 years, right? And what we're able to do is to broker relationships between our portfolio companies and those organizations right to where it makes sense, right? So I'll give you an example. You know, gimlet media was one of those one of those exits that we're fortunate to be a part of our team essentially introduced gimlet to Spotify, who then became, you know, one of their most important partners, and then ultimately, their acquirer, right? And a more recent company, we're in a company named riff, which is doing kind of post production, product product placement, in in streaming platforms, and actually anything, tic Tock videos, etc. But we're able to broker relationship between them and W VP, which is the largest ad agency in the world, they have an exclusive agreement, both on the content and brand side. So you know, that that's one pillar. The other is what we call storytelling. So in our backgrounds are all in services. You know, we've all had services careers, essentially. And one of the things that we found is that whether you're talking about, you know, a movie a, you know, a talent, an actor, a singer, etc. The way that you tell your story initially has an outsized impact on how quickly you get to your end state, and how and how large that end state is. And we have a very unique ability to help our companies tell their stories in an amazing way early. So that's, those are the those are the primary two. And then the third is is not something that's necessarily unique to us. But, but as unique to some, some venture firms. We've all been operators, we've all run startups, one of my partner's ran a entire city, right? So it's, you know, it's one thing to sit across the table from a VC who's trying to be helpful that is never sat in this in the seat that you're sitting in, and take advice from them, it's a completely different thing to do that with someone that has sat in your seat, and does understand the stresses and, and the things that are keeping you up at night.
Great, got to go. Got a bunch of more from the audience here. So this person says you teach young people what comes across as priorities for them as they pursue entrepreneurial ism.
Independence, I think is the is what what generally drives a lot of folks to, to entrepreneurship, right, they have an idea of how they want to see something, be show up in the world, and they want the autonomy to be able to do that. I think that's the that's the primary primary driver behind that it's usually comes from a live experience, right? So you've lived through something, and it's a real problem for you and your family and your community. And you want to you want to build something to make that go away to kind of, you know, kill that pain, if you would?
So, yeah, I plan on
that a little bit. How, at
this stage, you know, when you're really just dealing directly with founders, how important is it to have diversity among the people actually founding a startup?
Oh, super important. Because that that's going to, you know, that's going to determine how diverse the firm or the entity ultimately becomes, there have been a bunch of studies that shows that, you know, the first 10 people within an organization is going to basically represent what the organization is going to look like going forward. And if we believe all of the all of the research that has been done for decades that you know, diverse perspectives, experiences, backgrounds, racial makeup, gender, etc. Matter, when you're designing and building and growing products and companies, then you want to make sure that, you know, that originating team is pretty diverse.
Right, so this is actually something I was curious about myself, because obviously, you, you and your team made news recently closed a really big new Fund. The question is, what is the difference in how you plan to invest this capital compared to your strategy previously?
Yeah. So you know, in our private funds, you know, they were, you know, roughly 20 million funds, three of them, etc. And, you know, so we weren't able to to lead the majority of the deals that we participated in, even though we had the capacity and the interest from entrepreneurs to do so. So so that's probably the thing that, that has changed with with this vehicle, we've been investing this vehicle for 18 months now, actually. But that's the thing that changed, we lead the majority of the deals or co lead the majority of the deals that we that we invest in, and, and ownership, right, so we're able to write larger checks now. Right. So instead of a 250k, check, you know, we're writing close to 1.5 to 2 million, right, getting upwards of 10%, you know, ownership on a fully diluted basis and the companies that we work with, but other than that, the strategy is pretty much the same, right? We're investing in roughly 40 companies, you know, we we still follow on in our, in our winners, and we're going to support we're going to be the hardest working, you know, partners on your cap table, period.
Something really, I've always been curious about from the process perspective, you know, when it comes to a big round like this, so so it was a I think 103 million
110 100 10 million, sorry,
sec for under, I mean, you know, when you're past 100 million, what's what's, what's 7 million here and there.
But, you know, when you set out to raise a round like that,
are you going into it with a pretty good idea of all of the companies that you're going to invest in, down the road, or you know, how much of it is really, once this is out there, once this is in the news, and it's clear that you've got a lot of capital on your side, I assume people really start coming out of the woodwork.
Yeah, we try to be pretty pretty, by the way seven $7 million makes a difference. I have additional companies.
I'm a journalist, I you know, 7 million is? That's, that's a lot.
Yeah. No, all jokes aside, though, we try to be very thoughtful, and we were very thoughtful about portfolio composition going into this. And so you know, we had a target at the high end of 100 million, which would allow us to invest roughly 1.5 million and 40 companies and, and reserve about, you know, 40% of our, you know, a when to follow on and maintain our ownership and continue to support those those companies. And that that 40 you know, it's kind of a magic number, right, because this is a this is a game of homeruns. And but you're gonna you're gonna have some some strikeouts. And so we wanted to make sure that, you know, we have enough at bats, if you would, so that we give ourselves a, you know, a fighting chance to get some of those those home runs. So that's kind of how we thought about it, in addition to, you know, their their four general partners, you know, three of us are full time, you know, one of us as part time, Charles as he's running a media company, and so being able to support and manage those relationships is also important. We didn't want to, you know, have more companies in the portfolio, and we, you know, had the capacity to spend time with him really add value to
I do, I do appreciate the the the numerous baseball analogies on opening day. So thank you for that. Okay, so this is an interesting question. Yeah, take it in whatever direction you see fit. Does FOMO fear of missing out this FOMO work for early stage financing.
I think FOMO is a part of life, and it shows up in in every aspect. We try not to have that, you know, drive our decisions. I think fair is a terrible way to make decisions in any aspect of life. So it's something we try to avoid, we try to make the decision based on you know, what, what is the size of this the ultimate size of this opportunity? Are these founders, you know, uniquely positioned to build this company? Are they driven by something more than just making a lot of a lot of a lot of money? Does this product need to exist in the world does it you know, change something for in a significant way for either organizations or you know, a big slot of people. Those are the things that will drive us to to make those investment decisions as opposed to you know, x y z fund is marking it up, and they're excited about it. Because we're all human. And, you know, part of part of this this job, and this is practices is science. Part of it is art. And, you know, beauties in the eye of the beholder. So, no one is right 100% of the time. So, you know, taking our cues from you know, someone else without, you know, having, you know, our own, like level of conviction, I think is a recipe for disaster in failure.
So, speaking of beauty being in the eye of the beholder, this person says that the problem that they're facing is that their tech their tech is not, quote unquote, sexy. What advice would you give them for attracting c funding, so I assume it's just sort of like, you know, perhaps something that's, that's necessary, but not necessarily super exciting.
You should, you should speak to my partner, Adrian, reach out to him on what you want to give his email,
his Twitter account, he loves what we call, you know, boring companies, that that is his bag 100% of the time, but but but seriously, it's, it's less about it being exciting and more about the the market opportunity, right. As a firm, we love these spaces that we call sleepy industries, right? As an example, logistics, you know, freight forward and receiving, you know, huge industries, that, you know, are slow to adopt technology. But if technology is adopted, it could, it could represent a massive shift, or a jumpstart for that for that industry. So it's large, it's growing slowly, right now, when you you inject some new blood into it, and all of a sudden, it starts to take off in terms of growth, again, we love looking at those faces. So this actually touches for that person. Sorry, I think for that, that person asked the question, it's a matter of finding, you know, firms that have invested in in similar types of companies and being really selective about who you spend your time on, pitching, pitching to and building relationships. Actually, so
let me follow up on that real quick. So do you find that for your own firm, that it's useful to kind of, to have the beat to have a hook to, to sort of focus on startups that are roughly within the same or similar categories?
To an extent, right, so we, I mentioned that this cultural investment thesis right earlier, and a part of that is we publish some of the of the themes that were that we're looking at, and we'll make a number of investments around those themes, right. One of the more recent ones was the conscious consumer. And this spoke to, you know, consumers, basically, you know, voting with their wallets, right, forcing large organizations to pay attention to the social issues that they care about. And one of those massive issues is like the health of the planet. Right. And so we've invested in just out of this fund alone, three companies and in the fashion tech space, that are trying to reverse the effects of, of fast fashion on you know, on the on the planet.
So, very basic, but I think super important question. You alluded to this a little bit earlier, how do you recommend communicating with VCs to begin talks for partnerships and investments? And and I guess I would add, like, is it simple as just just tweeting at somebody or, or sending an email?
Yeah, and I think that, I think rule number one is, follow follow the instructions, right? So you know, for us, you know, we're pretty public that, you know, if we don't know you, we would love to get to know you, if you're building, you know, a company that we think is important, but the right way to do that is to is to you know, go to our website, mag venture capital comm and click on the Contact Us, you know, link and send us your information. And we'll look at it and get back to you in 14 days and say, you know, either, you know, hey, this, we looked at this, this is not for us, or, hey, look at this, let's schedule a call and talk about it. And, you know, we actually one of our more recent investments, a company named rich bi, which is, you know, basically allowing applications like Twitter and Facebook COVID payment platforms to operate offline, right? They they played a huge part in the recent, my Mr. coup in allowing the citizens of you know, of that community to be able to continue to communicate, even though the internet was shut down. But that that's a company that came into us directly from our website. We that's how we met Jorge, and, you know, took the time to review his, you know, his application in the data, met with him several times, and then ultimately invested in I joined our board. So, you know, I think, follow the follow the instruction, that the venture firm, you know, is putting out there. But yeah, I don't think there's anything wrong with, you know, casually reaching out on on social platforms where, you know, we're spending time and, you know, and communicating, you know, getting into an interesting conversation, or something like that.
You bring up an interesting point, when assessing these companies, do you take into account whether or not it's speak really broadly, kind of just the net positive for the world? I mean, are you, you know, I guess, would you lean toward a company that you feel like, would have a positive benefit? Whether it's, whether we're talking like social justice or climate change, something like that? Does that? How much does that play into the math for you, ultimately?
Yeah, we, you know, one of our investors is free to image report, we've learned a lot from them over the years, they've been mentors and friends for 1010 plus years now. And they coined a phrase, gap closing. And that's something that, you know, we're going to look for an every single investment that we that we make, does this make this solution, bring more people into the into the fold, you know, this solves a massive problem for many as opposed to as opposed to a few, right? That's always something that that we're that we're going to look look for it, it will be very rare that we invest in a company that focuses on like, the top 1% earners in this country or something like that, we want to solve really big problems. And we think that by doing that, you know, we're gonna find those home runs.
This is something I think that you wanted to touch on a little bit. A question from the audience addresses it, do you work directly with incubators and accelerators?
Yeah, we have great relationships with 500, startups, tech stars, Y Combinator, excetera. And, you know, from time to time, we were introduced to, you know, terrific companies coming out of those, sometimes were invested in companies that then go into them, I think, in the most recent yc class, we had already invested in two companies that, that, you know, that went through the program. Yeah, they can be a great, a great source of deal flow. And they can also be a great, you know, kind of vehicle or channel for our companies to go into and, you know, and gain something, right, whether it's a network that that we don't have, or, you know, advice from more operators than, than just us, etc. So you have great relationships there love love those organizations.
So this is actually an interesting follow up, I think, to the last question, how I guess if at all, has COVID changed the way you invest?
Well, I think just like everyone else, right, you know, eliminated the, the need to, you know, have those those social in person, you know, meetings, right. But what that meant for us is that we did a lot more phone calls, text messaging, zoom calls, video calls, etc. to really get to know, the folks that we're investing in to make sure that, you know, we're values aligned. And that, you know, and then the other thing is, it led to a lot more kind of behind the scenes background checks, right. So, who do we know, that also knows is this entrepreneur you know, let's let's get some, some thoughts on them outside of the folks that that they that they are introducing us to as references, so it ends up being the end of doing more diligence then then you used to write to make up for the fact that you know, you can't meet someone out for a drink and see them with their, for lack of a better term with their hair let down like it etc.
So it's it's interesting the direction you took the answering because I think there's like this. There's actually two questions here. Right. So there's the end, there's the question of the process of meeting with these companies. And then there's sort of the broader long tail question of whether COVID will have a profound impact on the companies that you choose to invest it in terms of just generally, I guess, how the world is changing?
Yeah. So yeah, answer the former, not the latter. I think what we found is that our thesis works. Right. So I think it's been widely reported in spoken on that, you know, COVID, has proven to be an accelerator, right? Online groceries is taking off, and that's not going to stop after after COVID ends. Right. And, and there are many other other other trends. And so, you know, we've been fortunate that we've been following this thesis for a while now and in our companies, for the most part, have had benefited, you know, from this global from this pandemic, right? All these all these bad things happening, but these companies are actually doing well, from a business perspective. And that's not going to that's not going to change, right, because it just got them to a point where they were going to get to sooner.
So a couple of follow ups, I think from some earlier comments, this person says, hardest working partner in quotes, I think, you know, quoting directly from earlier, what value add can a startup expect outside of capital from an early investor?
I think it's gonna depend on on that investor, right? You know, earlier in this kind of detail to how, how we help, right, whether that be around, you know, helping a company figure out how to tell the world that you exist in a way that is easily consumed and understood. And, and resonates. We all, you know, shared examples of, you know, very important introductions that we that we made. That turned into, you know, I guess, company, company defining relationships, if you would, and then it's just the, the operations, right, it's the, it's the random, you know, text message that that will get at, like, midnight, from a founder, that's, that's struggling with, you know, with with a hard decision, and wanting to get, you know, another perspective, right, being able to answer that text message and pick up the phone. Like, that, that can be real value add right to, you know, just more traditional things, you know, we had a company that was recently thinking about rebuilding the technology. And so this company has both a consumer facing side and an enterprise facing side. And right now, the consumer facing side is growing like gangbusters, the enterprise facing side is doing well, but it needs to the product needs to be rebuilt. And, you know, there was a question around, well, do we just take the enterprise product offline altogether, as we're going through this through this rebuild? And, you know, so we had to have the hard conversation of Well, what does that mean, for the enterprise side of the business? If you just take it? Are you going to start from scratch? Or, you know, is it better to communicate that, you know, the enterprise product that's out there as a beta product, and it's going to change significantly, you know, in in a few months, you can go ahead and download it and use it, but know that, you know, the, the commercial product is going to be pretty significantly different, more robust, etc. And, you know, in four months or so, so it's being able to have those those conversations, you know, and, and communicate in a way that, you know, an entrepreneur is receptive to what to what to what you're saying, and, and that they also feel, feel heard. And
yeah, it's interesting is that define that that is kind of a hang up for founders, and especially when it comes to people launching their first company that they're perhaps too invested or too tied to that early pitch, that they're not willing to really grow and think outside. To the box,
it's definitely one of the things one of the character traits that we look for, is a deep level of humility, right? And curiosity. If you're not, if you're not super curious, and if you can't look around you and, and, and see what's happening and take on advice, and, and shift in strategy based on what you're learning, then you're going to fail. Because there's one thing that's true in this world is that change is always going to happen in everything. And if you're not flexible enough to well, if you're not flexible enough to accept that, and, and change courses needed, you're not going to win. And I want to, I want to, I want to work with folks that are, you know, positioning themselves to win.
So I really liked this question, one because of how its worded. And two, because I think it's it's funny, you know, obvious, for obvious reasons, we've been talking about funding. But I guess, I guess sort of the nature of the question is like, how to know when you're spending too much time worrying about funding versus actually, you know, like, running a company? So the question is, funding keeps me up at night? Is this a sign that I'm not thinking across the entire business? Or customers tell us we have a great product, but we need capital? So like, How much? How much time should a founder spend thinking about getting that funding versus actually like, big a founder and running a company?
It's one of those things, right? You can't actually compartmentalize this thing, right? Like, if you run out of money, like you're, you're done. So if, you know, if your company is at a point where, you know, you got to figure out where where the next payroll is coming from, etc, then that's got to be a big focus. You know, so it just depends on where you are as a company, you know, what's what's going on, and then also, who's around you, right? So if you have a terrific co founder, you know, that can really focus on, you know, on the product and growing and putting points on the board, while you're focusing on, you know, on raising the capital, well, you know, that that helps, right, but doesn't mean that you know, for that other crowd is working on the product, and not gonna think about the fact that we're running out of money, as well, like, that's a real, that's a real problem. I think at the end of the day, you just have to, you have to be a multitasker. And whatever is, is paramount at the time is paramount. And that's where you got to focus your attention and your time and solve that problem and move on to the next one.
Here's a big broad one free here. So take it in whatever direction you like, how do you know when a startup has a product to market fit?
It depends on what that what that product is. Right. So you know, we invest at the seed stage. And what that means for us is generally, there's a business solution that has been built. And there's some feedback, that's, that's coming from the marketplace. So if we're talking about a, you know, a b2b solution, well, it's going to be important for me to, you know, have a conversation with one or two beta customers to understand, you know, is the value proposition that you describe that, that, that we see, is that the same thing that they see? Is that why they're they're buying into this? And and how, and how do they view you? You know, they just kind of testing this out with a bunch of other things? Or is this something that they see as critical to the success of of an aspect of their business going forward? Right, what are their plans for you? You know, that's one way to think about it. On the, you know, on the consumer side, it's, you know, it's going to be the typical things, if it's like e commerce, well, how much of the products are you selling?
Right?
And how is that trending, you know, week over week, month over month, you know, if it's kind of a marketplace or community centric thing, you know, how much time are our people spending on on the platform as a and is that improving? You know, as the cohorts as later cohorts come on to the platform, there are a lot of different ways to, you know, decipher if something has the potential to succeed and it's not always about revenue, right? It's gonna vary based on, you know, what the, what the company is, what the product is, who they're selling to.
So unfortunately, we're button right up against time. I think we're about out of it. We touched on this a little bit before but having gained all of this knowledge now, where's the best place for people to bother you?
Twitter?
Yeah, I'm on Twitter a lot. Also Instagram Marlin seen Nicole's on both and then send us your stuff macro capital comm forward slash content.
Awesome. Marlon, thank you so much for taking the time.