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- [00:01]
Ben Gilbert
Hello acquired listeners. We have a great ACQ2 episode for you today. An interview with the one and only Joe Montana recorded live at Modern Treasury's Transfer conference. Before we dive in, if you are in San Francisco September 10th or you are thinking about being in San Francisco September 10th, we would love to see you at our Chase center show that we are partnering with our good friends at JP Morgan Payments to put together. It's going to be a great night. Mark Zuckerberg is joining us on stage.
- [00:32]
David Rosenthal
We have a few other surprises up.
- [00:34]
Ben Gilbert
Our sleeve and it's going to be an amazing evening of thousands and thousands of acquired fans getting together for the first time really at this scale for a night of fun and a live recording. So it's Acquired FM SF to join David and I and we hope to see you there. Now onto the interview.
- [00:53]
Joe Montana
Joe Montana needs literally no introduction, but as a refresher, Joe played college football at Notre Dame, leading the team to an national championship. He played 16 seasons in the NFL, which included leading the 49ers to four Super bowl victories. He was the Super Bowl MVP for three of those. He's a member of the Pro Football hall of Fame. And while there is a deep bench of impressive football stats that we can share, we only have 45 ticking down minutes today. So Joe has quite the post football career that we're gonna spend most of our time talking about. In 2015, Joe founded Liquid2 Ventures, a pre seed and seed investing firm. Liquid2 has been wildly successful in their six funds that have invested in 800 plus companies. Their aggregate portfolio value is now well over $100 billion. They invested at the earliest stages in companies like GitLab, Anduril, Rippling Rappi, Mercury.
- [01:48]
David Rosenthal
Retool, and of course Modern Treasury.
- [01:51]
Joe Montana
So we've got a great conversation today. From football to investing and everything in between, please welcome Joe Montana.
- [01:57]
Ben Gilbert
Our first question, I think it's fair to say you are like a top 1% venture capitalist at this point in time. You're obviously also a top 0.1% football player. It's weird to even say, I'm not.
- [02:14]
David Rosenthal
Sure how many zeros we have here.
- [02:15]
Ben Gilbert
But this isn't supposed to happen. To do this twice in a lifetime at two very competitive, very difficult professions. What's your secret? How do we do this?
- [02:25]
Joe Montana
I learned a lot of things from Bill Walsh, but the one thing I took to heart is I watched him put together the 49ers is how to build a good team. And right from the start, whether it's our advisory board, including Guys, people like Ron Conway and Paul Graham, Jessica Livingston from YC to two of the founders there. And then just assembling the team. It just came to, I look to we have a large team for the small or the size of our funds. Most funds our size are run by one or two people and we have five partners. But I just think the diversity behind everyone's background really allows us to invest kind of agnostically across all sectors. And as early as we possibly can, we try to. We try to get in and before sometimes there's even really a true idea. But you know, I just think that the guys do a great job in hunting down the deals these days. And we made a lot of good connections. And the nice thing about where we invest, it's not always super competitive. We're more of a friendly foe than anything.
- [03:47]
Ben Gilbert
A friendly foe?
- [03:48]
Joe Montana
Yeah. We don't try to run in and take and lead. We don't mind being the second biggest check. You know, nobody likes to say that. You see, a lot of times two of the big guys will come down and they'll fight over a deal and one wins and then the other one won't invest at all. Well, we don't really care. So we'll jump in there behind you. We're not proud. So we've had a lot of success doing it that way. And like I said, the guys are great at the areas that they specialize kind of in.
- [04:23]
David Rosenthal
I feel like we're going to go back to your football career here a little bit. To start, you said the phrase we're not proud. I feel like you built a whole career on not being too proud. And I want to go all the way back to your draft moment. Everyone knows you were far from the first overall pick in the draft and yet four time super bowl champion. So can you take us to that moment where the draft is going on? You're deeper and deeper in the draft. What is your psychology in that moment as you're thinking about your football career?
- [04:54]
Joe Montana
What's kind of crazy, you don't really think about it or. I didn't really think about it, but what makes you think about it is that you have teams telling you they're going to take you in the first round, they're going to take you in the second round. Otherwise, I was just happy to get a chance to play in the NFL. And they put a lot of emphasis on a lot of things I think don't always make a lot of difference. Right. I mean, if you put £225 on my chest, I might still be laying there on that bench back then. But they're so into size. I mean if you look at the, look at the combine, right. Have you ever seen a lineman run a square in a game? I haven't. Unless you've been hit too hard. But other than that, I mean, he run, why you run the square? Just got to block that guy in front of you. That's all he needs you to do. And I just think that there's just no real method to it that they figured out. You can go through first rounds and see as many first round buses. You can go to the purdies of the world and see success stories from way down below. And I just don't think they have that out. But yeah, I was thinking, well, okay, everyone goes first round goes the second round. I'm going, oh no, it's going to get through the third and I'm going to be. But I got lucky and got snatched. I got a great opportunity, got with a great team, great organization and lucky to get with Bill Walsh as my first coach and didn't really want him to be anything other than only have one coach. But that didn't work out.
- [06:34]
Ben Gilbert
We're going to come back to Bill Walsh, but to stick with the draft for a minute. I've been thinking about this. I mean, we're living it again now with Brock here in San Francisco. But why is this so hard? I mean it's one thing, it shouldn't have been this hard back when you were drafted. But now the NFL is the biggest media business in the world. There's so many billions at stake. And how does Brock Purdy get picked last? How do teams get this so wrong? Despite investing so much money, so much time, so many resources, why is it so hard?
- [07:10]
Joe Montana
Well, if I knew that I could make you be a gm, I'd have a startup in reference for the NFL. But they just, sometimes they just lose sight of turning on the video and watch the video. You know, they want to interview you and talk to you. And I mean I played with guys who were lucky could speak, but they could play football. But it's just hard, it's hard to tell whether who's going to make that transition. If you look, you can do the same thing in high school. Go watch the guys they pick for what they had that elite 11 for the quarterbacks. Just watch how many of those guys make it in college and then you'll see that again happening for that transition. And there's just something about, I mean, I didn't get forced into playing early. A lot of these guys get forced into playing and they're not really ready for it. And especially in today's game, because if you watch. The thing that drives me crazy is they don't teach the kids today how to read defenses. And if. When you watch a college game and you see this happen and then back to the field, they're telling them everything from the sideline. And when you get to the NFL, you can't be trying to learn how to do that. You have to know how to do that. And if you look at a lot of the read option guys, they make it for a few years because they, they run around and people finally figure it out and that just make him run all the time. Make the quarterback run all the time, because he's not made for running all the time, you know, and that's what I would do. And I would even say, okay, make him run and then I'll pay the first fine for the late hit.
- [09:00]
Ben Gilbert
But that's why you're not a gm.
- [09:04]
Joe Montana
That's why I'm out of football. Yeah, but no, I just, you know, it's just hard, the transition that's there. I think some people get caught up in it mentally and they just think. Sometimes they think too much of themselves, especially up in the first round. And instead of just going out and playing football, they. I mean, like, I was hoping and hoping. I can't. The kid who was taken first from usc, I was hoping they passed on him just because he was so arrogant about. I'm only thinking about being the first quarterback taken. I just wanted him to go second.
- [09:42]
Ben Gilbert
Yeah, it'd probably be the best thing that could happen to him.
- [09:45]
Joe Montana
Yeah, but there's a lot of pressure on that, you know, when you get up there, because they're going to. He's going to play right away. They're going to make those guys.
- [09:52]
Ben Gilbert
I just watched the Netflix series Quarterback the Pressure. Tell us about the pressure. And you handled it better than anybody in history.
- [10:02]
Joe Montana
Well, I was fortunate because I didn't get forced into playing real early and I had a chance to understand, get an understanding what Bill's offense was all about. And he was kind of on the forefront of what they call the west coast offense, so. So to speak. But basically what it was.
- [10:19]
David Rosenthal
Why'd you just roll your eyes at that?
- [10:21]
Joe Montana
Because it. I don't know. It's more Bill Walsh's idea than the.
- [10:28]
David Rosenthal
West coast should be the Bill Walsh offense.
- [10:30]
Joe Montana
Yeah, but he, he would. If you watch a lot of These games, these guys like I watched in the 49er game at one point on where I could see, I couldn't see one person in the screen on tv and you're, this is in the end of the game, this poor guy's standing back there and he's got everybody, 20, 30 yards down, feet, nothing to do with the ball. He's got those guys that he has on the team are sort of like what I had at the end of my career in San Francisco with John Taylor and Jerry Rice and Brent Jones and those guys, John and J. Well, Jerry could do it, but John Taylor was the only one of only two receivers ever in one game to go 90 plus yards for touchdowns in the same game. And they were very elusive. And so what Bill's offense was about is I'm going to give you somebody down there, but you know what, if it's first down or second down, I don't need you to force it down there. So I'm going to give you this guy and this guy down here too. And you have a progression to go through. And the offense was actually very fun and very easy to run. Not always did it always look that way, but it actually was. Everything was built in. There was a built in hot receiver for every blitz that was coming. And so your first thing you do, your eyes come up from the ball, you look for that hot guy and then back to your reads. And it was just fun, especially towards the end there. Like I said, when you got guys like John and Jerry made my job easy. Just get the ball. I was like a mailman. This doesn't belong to me. Put it in the slot. Here you go.
- [12:15]
David Rosenthal
Well, so I've heard you in previous interviews talk about how the play calling for the west coast offense was different than sort of especially how college ball typically plays were called. Can you walk us through sort of simple, straightforward play calls versus then what you had to learn in this new innovative system in the west coast offense?
- [12:34]
Joe Montana
Well, when I came out of Notre Dame, we were running a numbered system. So if we were running a pass, the number you would start on the left, you would say 789. So there's, you had a route tree and they were all numbered. So this guy would run seven, he'd run an eight, and that guy'd run a nine and so forth. When we got to San Francisco, Bill's offense was numbers and words. So the numbers really meant nothing. But the protection, how you were protected and where the tight end would basically what side of the ball he would Be on. And it also would tell you which guy was hot. The second number told you which guy was the hot guy and where you had to look first. And then the words came after it told you the play. So we would say 20 red ride, 20 halfback reed. So red was the formation. 20 was the type of protection halfback read. We only told the halfback what to do. So everybody else had to learn what when they hear halfback read you had. They all had to know what their route is because we didn't tell them. Well, sometimes I had to tell a lot of guys almost every play. And was this the beginning of really.
- [13:58]
Ben Gilbert
Again, if you watch the Netflix series, really making the quarterback like on the field, having to make executive decisions. Was this the beginning of that? With Bill.
- [14:12]
Joe Montana
The only time we really were put into position is when you would line up and there was just a blitz that you could not handle and you had to change your play. Otherwise he wanted you to go with the play he called. And the main reason is we had so many plays in our offense. We typically have 125 passes in a game plan, maybe 130, 35 more runs. And all those had two and three formations. And you had to know, you had to memorize the order of those and that he wanted them in and all them, all those. Because only thing you got signaled was the number, the play. So you got 20 half back greed. You didn't get all the rest of that stuff and didn't have time to tell you what the formation is because we didn't have the earpieces that they talk to them in now these days. So for me, it was from Monday till Saturday night. I was studying to learn and memorize those formations. But on top of that, I had to understand the play at the same time. And so it was very, very difficult from Monday to Saturday. I did not have time, or would I have had enough time to go on and study down in distance for what the other teams do during those periods? I mean, a perfect example where we lost to the Redskins in the championship game. So Bill back then, the losers coach coaches in the, in the Pro Bowl. So we're in the Pro bowl and Joe Theisman was there, who also, you know, I've known for a long time since he went to Notre Dame also. And first day of practice, Bill puts in 35 pass plays. And Joe looks at me and goes, oh, this is awesome. Bill gave us all our pass plays in one day. I go, you're crazy. This he's going to install till Saturday. And he goes, what do you mean? I go, I'm not even studying. I mean typically we get like 60 or 80 the first day of practice. And he continues to put in until install until Saturday. He goes, there's no way. Sure enough, he installed all the way till Saturday. And Joe goes, I don't know how you do it. I go, this is easy. I told you, I'm not even studying. So for me it was easy back because nowhere near the pressure.
- [16:49]
David Rosenthal
So your, your job was just as cerebral as a one of one as it was a physical one.
- [16:54]
Joe Montana
Yeah, I mean, and then on top of that, I had to watch video of the defense. Right. Because you had to understand, you had to find out there was always a little key one. Usually there was one player that would tell you and give away it's a blitz or it's a different defense than what they're lining up. And so it took hours and hours of film watch.
- [17:17]
David Rosenthal
That feels like an AI opportunity. Just find the correlation between.
- [17:20]
Ben Gilbert
Find the tells.
- [17:21]
Joe Montana
Yeah, you know what, it probably will be if it isn't already.
- [17:25]
Ben Gilbert
The surface tablets on the sideline are all right.
- [17:28]
Joe Montana
Oh yeah, that's a great story. Tablets. You know what we had, we were in New Orleans and there was a wire that came from way up in the boxes and you know those metal paper clips, they would take a Polaroid of the play and a Polaroid right after the ball was snapped, pin it to that thing and slide it down.
- [17:50]
Ben Gilbert
The wire for us on the field above the fans.
- [17:55]
Joe Montana
And then it got down to us and then we got a chance to look at it. But I would have given anything for an iPad.
- [18:05]
Ben Gilbert
Oh, that's amazing.
- [18:07]
David Rosenthal
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- [18:30]
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- [18:59]
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- [19:25]
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- [19:34]
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- [20:02]
Ben Gilbert
We want to turn this in and talk about leadership and teams and investing, but maybe a good way to do that is just tell us a little bit about Bill. What was it about the team that he built? He was such a maverick. What was playing for him like?
- [20:16]
Joe Montana
It was great, honestly. I mean, yeah, you always have disagreements in the way things are done or the way you're being treated sometimes, but in most cases we had a blast. He was fun to work with. He had a crazy sense of humor, real dry and. But he was very ahead of his time. So guys would come up to us during the season and go, okay, seriously, you guys don't wear pads in two days? In training camp? Yeah. You don't wear pads during the week in practice? Yeah. Why? No way we wear. They would say we hit from Wednesday. They still tackle, have full pad practices all the way till Friday. And what Bill saw was that our linemen, you could watch, they never wore sleeves. Their arms were always just like a mess of bruises. So his philosophy was, if I see the effort from you guys that I want, we don't have to put pads on. And I want you fresh on Sunday. I don't need you fresh on Wednesday. And as long as you do that, I won't make you go back in and put the pads on. Of course, he made us go back and do that a couple times just to prove we could do it. And. But he was always ahead of his time and the things that he did. And it helped with Mr. DiMartalo too, because he was very generous for us. And as long as things were going the right way and working in that organization and the things that they do that don't seem like to make a big difference. Made a huge difference. Most of you probably don't remember the old DC8. They were like a big flying pencil, long skinny thing. But we were the most traveled team. And going there is never an issue. It's when you come back after the game because there's ice bags and IVs and everything. And we were our first away game in, I think it was 81. The DC8 broke down and we had a DC10 and everybody was so excited. We go to the game, we win, and Mr. Barlow comes in the locker room and everybody's happy. And then they see Eddie and they start going, D.C. 10, D.C. 10. He goes, make your deal. You keep winning. You can have the DC10. We went undefeated in the.
- [22:54]
David Rosenthal
You show. What is the Charlie Mungerism? You show me the outcome. You show me the incentives, I'll show you.
- [23:00]
Ben Gilbert
I'll tell you the outcome. Oh, that's amazing. Well, to transition over to your post football greatness, maybe. I mean, this is obvious. Maybe too obvious to even ask, but like, what role did playing in San Francisco have with you now, doing what you do now?
- [23:22]
Joe Montana
Well, I've done it. What I would call the Bill Walsh kind of way in. The guys won't agree with me, but this is kind of what Bill would do in the beginning of when? Back in 79, when I got there, we were 2 and 14. And I swear, every Saturday, it was like a revolving door. As soon as we left practice, like 50 more guys came in to work. And he was trying to build a culture that he knew he wanted and he knew he didn't have it. And even if didn't matter how good you were, if you mess with that culture, you would be gone. He didn't put up with the interfering in the locker room and making that a mess. And I kind of did the same type of thing. When I first found my first two partners, I made them work for almost three months without pay.
- [24:24]
David Rosenthal
You show me the incentives and I'll show you the outcome.
- [24:28]
Joe Montana
They laughed about it and now they laugh about it. But as things grew and I realized that, I mean, I warehoused 26 deals and then once we figured out we.
- [24:40]
David Rosenthal
Could work together and just for non investors in the room, that means you personally invested in 26 companies that you then put into the fund I dropped.
- [24:50]
Joe Montana
Back into the fund at cost. As my wife reminds me, one of them was GitLab, so she's not real happy about that one.
- [24:59]
David Rosenthal
But do you recall the order of magnitude valuation that you invested in GitLab?
- [25:04]
Joe Montana
We were pretty close. First money in. Yeah.
- [25:08]
David Rosenthal
So not a bad early investor.
- [25:10]
Joe Montana
Not bad, no, still not a bad return. But it would have been better if it was all mine, but it was not.
- [25:16]
Ben Gilbert
So you're saying they got a good deal by working three months for free.
- [25:20]
Joe Montana
Yeah. And so, but eventually, you know, these guys, they had never invested before, Right. They both had started companies. One company was in mobile feedback space, got bought by Google.
- [25:33]
David Rosenthal
This is Michael, your partner.
- [25:34]
Joe Montana
Yeah, Michael Ma. He was a Yale undergrad, Harvard MBA guy. Mike Miller. I gave him a hard time because he's a Notre Dame, Michigan State. Always had this thing going. He's a Michigan State undergrad, but he's a PhD in experimental particle physics out of Yale, MIT fellow. His companies he started when both these guys went through yc. His company went through YC when it was still back in Boston and There were only 12 companies in the batch, unlike the 295.
- [26:04]
David Rosenthal
Reddit was probably his batch made or maybe Dropbox back then.
- [26:07]
Joe Montana
Yeah. And so his company ended up being bought by IBM and started basically started IBM's cloud service as it is today. And then my son, who Ron Conway, started taking myself and him to Y Combinator. When Ron spoke to the batches, we were doing individual investing together. And then Nathaniel caught on to a startup like real, real, real early. They went on a crazy run rate, got bought by Twitter, and he went to Twitter for a year and a half and then came back to the fund.
- [26:47]
David Rosenthal
So did your interest in startup investing come from Nathaniel's sort of plugged in ness in that world?
- [26:53]
Joe Montana
I think Nathaniel's the one that kind of got the idea going. And then because of our family relationship with Ron, he said, oh yeah, you guys can come with us. And so we followed the SV angel guys around, trying to figure out what their secret sauce was and, you know, listen to the questions they're asking and looking at the companies they're looking at. And he was happy once he left Twitter and he came back. And now we brought on one other partner who was one of the original investing partners at CO2 for. In the pre. In the pre seed area and then became a partner at Eclipse. And then he's been a real close friend to the family. So he and Nathaniel were both walk on quarterbacks at Notre Dame. And Matt had a Little different track than Nathaniel did to the fund.
- [27:48]
David Rosenthal
Wait, so how many. What percentage of your employees were quarterbacks at Notre Dame?
- [27:56]
Joe Montana
60.
- [27:57]
Ben Gilbert
Sounds like three of the five partners.
- [27:59]
David Rosenthal
Well, there's the answer. We figured out how to be a top point one percent investor.
- [28:04]
Ben Gilbert
How did you first meet Ron Conway?
- [28:07]
Joe Montana
Oh, that's. I don't. I can't even remember. It's been so long. Just by being in the Valley, you know, I originally got into. Into the venture space by Ronnie Lott and Harris Barton. We started a fund of funds in the venture. We basically, all our friends and neighbors were all guys who ran Sequoia, Kleiner, Excel, and we just leveraged our friendship into access into the funds.
- [28:30]
David Rosenthal
And you were. You raised a fund of funds that became an LP in those venture funds. That's what HRJ was.
- [28:36]
Joe Montana
Yeah. And so we. After a while it became. We had venture leverage, buyout hedge and real estate funds and all we did was raise money. So the fund of funds was no fun. And Ron's. That's when. I don't know, reconnect with Ron. He's going, oh, this is a lot more fun. And you get to meet with the founders, you get to see all the new technology and things that are coming up. And it was a lot more fun. He just forgot to tell me how much more work it was going to be on top of it. But yeah, I've known Ron. We actually travel with Ron almost every summer and his family together. So we have pretty.
- [29:18]
Ben Gilbert
Was it a. So staying in San Francisco after your playing career, what was that decision like?
- [29:26]
Joe Montana
Well, I. We keep trying to think we want to go somewhere else and we just can't figure out where we'd go that would match kind of where we are and. But it helped by staying here because what a lot of guys tried to take advantage of it while that. While we were playing. I just didn't have that where for all and time in my. I had too many things that I had to work on.
- [29:51]
Ben Gilbert
You're spending seven days a week with the west coast offense.
- [29:55]
Joe Montana
Yeah, I wanted to play football and I knew that eventually I was going to retire and I could find another way to do something that would be fun and maybe as exciting but maybe not quite the next best. Except on ipo.
- [30:12]
David Rosenthal
You got to humor the audience a.
- [30:13]
Joe Montana
Little bit that we might be IPO days are good. So. But yeah, I just. And then I realized that I'd missed a lot of stuff growing while I was playing. And when Ronnie and Harris. I really wasn't looking for another Job wasn't a full time job at that point because I really had just retired. And I said, okay, why not? And off we went and just kind of grew into where we are today. And I've done like, I think I've done one of the things that drive a lot of people crazy. And I love the team I have. So I made everybody equal. So we all get paid the same. We all get the same carry. I make them buy lunch and breakfast, but I just, I just don't. I don't. Can they make more salary somewhere? Probably. Can they get the carry I'm giving them? No, they can't get that as at another fund.
- [31:11]
David Rosenthal
Wait, let me.
- [31:12]
Joe Montana
Unless they start their own. Unless they start their own.
- [31:15]
Ben Gilbert
We've spent a lot of time doing acquired episodes on the big venture firms. This is always the big topic is how do you split up the carry? Yeah, how.
- [31:23]
David Rosenthal
Wait, wait, wait. So fund.
- [31:26]
Joe Montana
Fund one and fund two. I made them earn. I gave them a certain amount of carry and then I made them earn more fund from fund three on. I said, you know what, I think we're doing a great job. We're working well together. I want to make everybody equal. You guys have a problem with that? No, I didn't think so. And so off we go. Actually, I make less than they do because I pay two other people ahead of finance and ahead of operations. So I took the money from me and not from them.
- [32:02]
David Rosenthal
What are the trade offs? Give us the pros and cons because it sounds great, but in practice, what do you actually see that do to the organization?
- [32:11]
Joe Montana
Well, that's the one thing that Bill said from the right, in the beginning, he said, I just want to tell you guys, because there's no rookie hazing here. He says, when somebody walks in that door in that locker room, they're part of the 49er team and organization. You treat them and you treat the people upstairs. No matter people who work on the field, you treat them with the same respect you treat everybody in the locker room with. And you know, I just, I just think that he had the hammer though, right? So I had to find a way to get the hammer because I gave up a lot of the things. So I just owned the management company. That's all. I controlled where all the money goes.
- [32:55]
David Rosenthal
But separating economics and control is a great structure for that.
- [32:58]
Joe Montana
Yeah, I mean, and we do majority kind of rules on things and we try to get at least two partners on every deal and usually try to get as many as we can get. Eyes on deals and there's no bickering over, well, I brought in more capital. Well, I brought in more companies. What's more, I mean, how do you weigh those? I couldn't figure that out and how you put a price on either one. So I just said it just makes more sense to me just to say, look, it doesn't matter if I bring a deal in and it's not really what Mike Miller should see. I just give it to Mike Miller and there's not an issue of okay, it's my deal or is it your deal? It's our deal. And so that's the way we operate. And so far we haven't had any issues with it and everybody's still off and running.
- [34:00]
Ben Gilbert
It's really, I mean it's so rare in venture firms, period that there's this model. We've done several episodes on Benchmark. They famously have this model and very few others do. I imagine you must be the only venture firm of a provenance like yours. There are many other athletes, celebrities, et cetera, former athletes who have venture firms now that have an equal partnership model.
- [34:28]
Joe Montana
I think a lot, but I think one of the things that the other athletes didn't realize is that it's a day to day world. It's not put your name on something and let somebody else run it. I just can't. I don't operate that way. Do I stick my face in there and say, hey, this isn't right when it's time? Yes. Other than that I just let them operate and I just kind of oversee that right now. I mean, I mean if you look at success fund 1 was 28 million and we returned the fund 1.8 time X and we still have 21 unicorns in the fund.
- [35:16]
David Rosenthal
Do you want to share what the current multiple is sitting around?
- [35:20]
Joe Montana
It's sitting somewhere between 8 and 10.
- [35:26]
Ben Gilbert
That's pretty good.
- [35:28]
Joe Montana
And Funtoos was we raised 53 and we have, we returned about, I think it's 0.8 of that and we have 13 unicorns sitting in that. And fund three we just kind of closed and we already just closed less than a year ago and we have one sitting in there. So I think we've been fairly successful with the model and our ability to pick companies. And part of that reason is that our guys are so good and understand the growth pattern from what we call zero to one. Right. Because they've all been there and understand that they've had exits to large corporations and they understand what's necessary and what needs to look like and from there, we've gotten so many accolades from our portfolio companies saying, hey, you guys punch way above your check size. And our check sizes now are between 250 and 500. But I just think that we're onto something good and I want to try to keep it that way as long as yes.
- [36:50]
David Rosenthal
So you have this new problem. The initial problem for any startup or fund one is does our idea work? And you've now proven with the numbers that you just shared with us, okay, it works. So your new problem is we have this magic thing in our hands. What do we do with it? How do we harness it? So what things are different as you look forward to make sure that you don't a kill the golden goose, but you can lean into it as much as you can can.
- [37:17]
Joe Montana
We've solved that problem, but because of the sec, I can't talk about it.
- [37:25]
Ben Gilbert
Understood, Understood.
- [37:28]
David Rosenthal
We won't push you.
- [37:30]
Joe Montana
We'll be able to follow on.
- [37:31]
David Rosenthal
Let's put it great. Completely different question in a completely different vein. Your fund is not called Joe Montana ventures. It's called Liquid 2. What was the logic there and where did that come from?
- [37:46]
Joe Montana
To me, when I first was trying to figure out a name, I was going came up with all these ideas, and then I was going, a liquid. It's like an oxymoron, right? It's not liquid at all.
- [37:58]
David Rosenthal
It's one of the most complicated asset classes in the world.
- [38:01]
Ben Gilbert
Pre seed is about as far away as you can get.
- [38:03]
Joe Montana
And it's funny how things fall together because I said it was liquid and it was taken. Liquid one was taken. Liquid two wasn't taken. So I got Liquid two and then I was sitting around and I drew up the.
- [38:17]
Ben Gilbert
I was like, was this a play call or something? Like, where did this go?
- [38:20]
Joe Montana
And so I drew up the logo and it was just an L&A2 like that. And so Mike Miller, our resident PhD, says, How'd you come up with that? I go, I just playing around with Bell and the two and it looked good. I go, why? He goes, well, because I did a thesis on that and it's someplace in outer space that is trackable, but it's hard to find. I go, wow, perfect. Sounds like Venture to me. So things have kind of fallen in place so far.
- [38:59]
David Rosenthal
It's also named after the L2 cache on a processor. You're really into the deep tech investing.
- [39:07]
Joe Montana
Yeah. Everybody keeps trying to get the guys wanted, kept for the longest time, wanted to change the name. I go, okay, so here's the problem. Right now everybody knows us as liquid or L2. Why do you want to mess with that? And then you're going to change the name and then no one's going to remember. I said they already know. It sounds like a crazy name, but we've built something behind it. So we've been trying to, we've been going through some exercises to try to update it a little bit, but we'll probably stick with the name. I think I got him convinced that it's not worth the effort of changing it.
- [39:48]
Ben Gilbert
Was there other than the obvious Ron Conway connection and learning from him and this is what he did. This type of investing, was there any draw to be like, well, hey, maybe you should pick a little easier style of investing? I mean, all the jokes about the anti liquidity early on. I mean, pre seed and seed is hard. You're talking to two former seed and pre seed investors here. It's hard.
- [40:12]
Joe Montana
It is hard. But I think one of the things we looked for is obviously you guys understand that when you get down to that down there, you're looking at people. In a lot of cases, you're betting on people. And because of our portfolio so large, we get repeat founders now and we get, hey, my head of IT is leaving and he's starting something new. You should look at it. So our deal flow comes from almost within our universe that we kind of put together and it helps us get in earlier. And so getting those types of returns. If you're in pre seed or in some cases friends and family, you're trying to get the we aim. Everybody says if you can get to 3x, you're doing well. If you can get to 5x, you're doing extremely well. We try to aim for 5x, but in real honesty, the thing that sticks in my mind was from Doug Leone from Sequoia, if it's not 10x, we don't want to look at it.
- [41:23]
David Rosenthal
Your fun one is like just barely.
- [41:26]
Joe Montana
Bill's philosophy always was, hey, if you aim to be perfect and you miss, you can still be pretty good. And if you aim to just be mediocre and get by and you miss, you won't be on this team very long. And so you know our bar, we do, we set high for ourselves and if we miss down there, we're still in the, in the top tier. I mean, I think our, all of our funds are either top 5%, top 25% of venture.
- [42:00]
David Rosenthal
That's awesome. Well, David, you've got the closing question.
- [42:03]
Ben Gilbert
Yeah. So we have one. I don't Think, you know, we're going to ask this fun question to. To wrap up here and transition back to Dimitri from Modern Treasury. We had to look. We were looking up. We do a lot of research on acquired and like, okay, we go all through Joe's history and we found this one thing and we're like, okay, you can't make this up. Before, after football, but before Liquid 2, you co founded a bank called Modern Bank.
- [42:38]
Joe Montana
I had a friend of mine who I met when I was at HRJ Capital and we stayed friends for a long time and he just came to me one day and said, hey, I want to start this bank. And actually we were trying to do what First Republic did. As you know, they got have offices into where Sequoia and all they were, but we could only get a charter in New York. We couldn't get one out here in California. And we just, we ended up finally giving up. And at that point in time, it's still there. It went from a personal bank to a commercial bank now and mostly on the east coast. And I left the board, I said, I can't help you back here. Coming back and forth to New York, you know, every month and it just makes sense for me to get off the board. But yeah, it was, we were having fun. It was. I was only on our board. I was only out banked by. I think it was 250 years to 300 years of expertise.
- [43:52]
Ben Gilbert
Yeah.
- [43:53]
Joe Montana
In our board. And well, it's fun.
- [43:56]
Ben Gilbert
Clearly it predestined you to finding Modern Treasury.
- [44:00]
Joe Montana
Yeah, but it's crazy. It was fun to do while we were working on it. I totally forgot we had found it still there. I get checks. I guess that's good, right?
- [44:17]
Ben Gilbert
Well, that's great.
- [44:19]
David Rosenthal
All right, Joe. Well, any. There's going to be, I'm sure on the live stream and here in the room and for any acquired listeners, a lot of founders. Any advice after working with so many founders over your venture career?
- [44:39]
Joe Montana
I think one of the. A lot of things you have to go with like your instinct and your gut and a lot of people are afraid to ask for help. And I think that's where the problems always seem to arise, is that when you know there are issues and you let them simmer too long, you have people who are invested in you early that are there that you let invest early because most of the cases they decide who gets to invest in the startup. Lean on them as much as you can and they'll help you through it. Our approach is we're not Sequoia we're not Excel. We don't come in there and try to run your company. But you have an issue on your monthly statement to us, just put an ask section. And as soon as we see that, we go to work as fast as we can. And if there's 10 of them, we'll pick the top three or four that we know we can go after and we can help on and we'll try to do. I always say we're. We're in the boat together. You're driving. If you need help, just let us know. We'll help you steer and get to the right place that you need. And if we can't do it, we'll help you find the right people to help you do it. And it's just, you know, most and almost all founders are really proud of what they're doing and what that. And sometimes you just get afraid to really say, hey, I need some help. Right. Until it's too late, and then help can't come fast enough.
- [46:23]
Ben Gilbert
Yeah. Well, Joe, this has been a great conversation. Thank you so much. Thank you, Modern Treasury. Thank all of you for being here and to close out the day. Please welcome Dimitri back to the stage.
- [46:37]
Joe Montana
Thank you. Great. Thank you.
- [46:42]
David Rosenthal
Thanks so much.
- [46:42]
Joe Montana
Thank you so much.
- [46:45]
Ben Gilbert
All right, listeners, that is our show for today. We hope to see you at the Chase Center September 10th. If you can make it acquired FM SF is the link, or you can click the link in the show notes and I'd say we'll see you next time, but for many of you, we will see you very soon.