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- [00:03]
A
Welcome to the Investor, a podcast where I, Joel Palo Thinkle, your host, dives deep into the minds of the world's most influential institutional investors. In each episode we sit down with an investor to hear about their journeys and how global markets are driving capital allocation. So join us on this journey as we explore these insights. All right, so live on another episode of the Investor podcast. Really excited for my guest. I've got Evan Schlossman from Surro Capitals. I'm going to give you guys a quick overview on Evan's background. He is at Zero Capital, as I mentioned, focused on AI infrastructure and innovative technology companies. He works on identifying high conviction opportunities, including focusing on the AI ecosystem, their frontier models, compute data centers and emerging applications. He received his MBA from Kellogg School of Management at Northwestern University. His background spans from venture backed operating experience, strategy and operations, and M and A. Before Kellogg, he worked at a later stage startup in New York City that operated as a holding company for several early stage brands in that role. And I think that's really interesting because a lot of these big tier 1 mega funds are now, you know, building up like a roll up strategy and a holding company strategy. So I think it'll be interesting to kind of see how those parallels are evolving. And you know, essentially in that role, when he was at the holding company, he helped launch a real estate technology product and supported the growth of multiple consumer businesses. And then prior to that he worked at Deloitte. So I feel like a lot of people that come from consulting backgrounds really have the superpower of diving into the data and the analytics and kind of really being strategic about things. And at Deloitte he was supporting post merger integrations, carve outs and private equity transactions and diligence on AI and robotic process automation. And he is also committed to community impact. So he co founded Stocking Hope, which is a nonprofit organization that provides quality goods to underserved communities by leveraging inefficiencies in traditional retail supply chains. And finally, he's also supported multiple sclerosis views and news for more than 10 years. So Evan, thanks for coming on and you know, just thanks for all the impact that you created.
- [02:30]
B
Absolutely, thank you for that intro. Great introduction, but really appreciate it. Happy to join you.
- [02:37]
A
Absolutely. Well, it was really easy. I just had to kind of, you know, review kind of your background and kind of reflect on that. But you know, we'd love to hear a little more, you know, on who Evan is. Would love to kind of hear more details on kind of where you grew up, what you thought you would do early in your career. Who are some of the influences that pushed you to get into finance? It looks like you, you didn't start immediately in finance. Right. You came from kind of a consulting background. And a lot of people. And it'd be interesting to riff on this because a lot of people that, you know, come out of business school don't obviously start out coming, you know, getting into private equity. They come from somewhere else. Right. So usually the, a lot of these business schools, they manufacture, you know, the Deloitte, the PWCs, the KPMG, Big Four consultants. So, you know, let's, let's take a step back and, you know, talk through your origin story and some of those influences that push you to get into consulting in the beginning.
- [03:32]
B
Yeah, absolutely. And I think with many people in venture, it's interesting. It's, it's kind of a winding, circuitous path that leads us here. But I started off actually pre med in undergrad. I was pre med for about three years, but always an econ major. And so I actually had wanted to go into practicing medicine, but then was always interested in sort of the administrative business side of medicine at the same time. And so they had done a whole bunch of internships kind of in that vein. Right. I'm more of the administrative side, a bit of research, but always kind of on the business econ side of it. And realized at some point that that's actually where I wanted to be. The medicine side was fun. I really enjoyed it, but for a whole host of reasons realized that I was spending more and more time sort of on that business and finance side versus the actual medicine. And so started after undergrad, as you mentioned, at Deloitte, doing consulting. I loved it. It was a great experience because you get to try a lot of things and you move around between divisions. You can choose or have influence over the projects that you want to delve into. Right. It's just a really good learning environment. It's pretty fast paced, but kind of forces you to ask questions, figure out what you enjoy, figure out what you're good at, and then you switch it up every few months. Right. And so you have to learn a whole host of new skills. And so especially right out of undergrad, I had a phenomenal experience there and really helped me in skills that I developed there throughout my career. That was kind of a little bit of my background there.
- [05:10]
A
No, that's awesome. And then tell me a little more about kind of your, you know, the skills that you refined to kind of evolve into a Venture investor, you know, maybe talk, maybe break down the soft skills and then the technical skills that have helped you.
- [05:27]
B
Yeah, absolutely. There's a few things that are interesting parallels between the two. So in consulting, you jump between projects pretty frequently, right? And oftentimes, especially in the beginning of your career, you're jumping between more disparate things. And then sort of as you get more senior, you kind of hone in on natural sort of specialties, whether it be verticals or horizontals or technology, but you get a bit more specialized. One of the things that's interesting in venture in the same way is you have to be curious. And so there is in technology, just by its very nature, pretty rapidly evolving, changing environment, changing landscape, new trends that are emerging. And so that's one of the interesting kind of parallels. There is that in the same way in consulting, you often find yourselves, even if it's in with one specific area, jumping from client to client, there's new challenges, new problems to dive into. And I always love that about it, right, Because I got to focus on a new task, learn a new industry, learn about a new company, if it was in the same industry, a different vantage point. It's always phenomenal how quickly you can come up to speed when you have to, and to really dive into sort of new vantage points, new angles of an industry or technology landscapes. And so in venture, we do that too, right? I mean, I focus a lot on emerging technology within AI and AI infrastructure, but even within that, it is constantly evolving. And so you are always speaking to new founders and entrepreneurs or looking into even different parts of an ecosystem that may be emerging, that you could have spent the last year or two years looking at our firm. And so it's having that kind of curiosity to keep learning about what is the edge or a new vantage point or what's emerging in a space. And I think that's an interesting sort of parallel between the two. There is that continuous sort of need for almost curiosity to keep digging into what's next in a new trend. And so it's different than a lot of other fields where you may spend two decades right, in a specific area and go extremely deep. You have to want to keep changing and adapting a bit, which is, I think, uncomfortable at first, and then you sort of get more comfortable with that. But it's, at least for me, a fun position to be in. So I'm enjoying it a lot.
- [07:43]
A
Yeah, this is so timely because, you know, I'd say, look, I mean, we're heading into the end of the new Year, Sorry, we're heading into the end of the year, coming into the new year, and usually around this time, I kind of like reflect on some of my big learnings each year. And for the last couple years, I would always say the most important skill is sales. It's like, look, you gotta, you. If you're, if you're working in venture, you have to sell the LPs, you have to sell the founders, you have to sell your teammates. If you're trying to get a job, you're essentially selling yourself, right? If you're trying to find a life partner, you're essentially selling why you would be a good life partner, being a value. So I just feel like the DNA of life, you're always selling. If you're trying to build a community and you're trying to host an event. Right. Thanks for coming to the event. But what's the value in people dressing up and coming out to the event? So I used to think that was the most important thing, but recently I've kind of realized that after talking to a bunch of people, there's been a lot of changes that have happened in multiple organizations. And there's ecosystems, especially when we talk about AI. There's things that have changed in AI that, that have changed everything. There's engineers that now don't have jobs anymore. So, you know, some of my evolution of thought, which is also an important thing, is being able to learn quickly and jump into something and get up to speed and handle that change very quickly. So I feel like that's just as important as selling, because if you can't do that, then you can't really sell, right? Because you're not really adjusting to maybe difficult or new environments very quickly. So very timely. And you know, even for me, you know, some of the people in the audience may know about my career, but I've changed careers. I've had three different career pivots and each different pivot within that pivot. I think I changed in a couple different roles and some of them were in completely different industries. And then when I finally got into venture, I think a couple of the funds that I was working at, they were all to a degree, pretty generalist. So if you're at a generalist fund, you got to pick up all different types of industries, right? You got to, you know, if it's, if it's deep tech, if it's software, if it's a certain segment of software, whether it's like healthcare and software or fintech, you still have to kind of understand the industry. And the market very quickly or else you might lose out on the allocation or the deal. So I appreciate you sharing that and I totally agree with that. I think consulting is a great role to just jump into different industries and segments. I think project management is also great too, because you're essentially working on one project and then you're hopping on another one or managing like two to three different ones at the same time. What advice would you give for the career pivot person? We talk about AI. There's a bunch of people that work in AI on the technical side or the program side. So, you know, what, what kind of helped you, you know, make that shift from kind of, you know, being stuck as the consultant at Deloitte to now kind of rebranding yourself and kind of making you marketable, Especially when you're comparing yourself to other. When you're competing against other people that are already working in venture.
- [10:59]
B
No, it's hard. And I think one of the interesting things, and you hear advice of not to switch too many items. Right. And so what I think people mean by that, which applies in some situations and doesn't in other inventors, just so bespoke in what is needed. But depending on the fund, one of the things that you hear often is to try and keep one lane if you're switching the other. So if you are working in finance, you know, but maybe in a more legacy environment, so not venture at all, to try and parlay that finance experience into a fund that is deeper in sort of whatever type of model or structure that you're experienced with.
- [11:42]
A
Yeah.
- [11:42]
B
The other area we see really often is someone who's pretty deep in a technology or in some ecosystem. Right. Maybe has less of the investing experience. And so we spend a astronomical amount of time understanding sort of trends, both macro and micro, in competitive landscapes. What is one company doing that the next isn't? Or what should one company be doing? What kind of companies are we looking for? And so absolutely, operators with specific expertise in a sector. There are generalist funds and there are a lot of funds that are increasingly becoming more focused. And so figuring out what is the skill set that you have and what knowledge do you have that is valuable to the market and how do you leverage that to in really any career switch. Right. But in ventures specifically, you could say, okay, you know, maybe something really far away from investing appears is I'm a researcher of, you know, I don't know, chemical compounds. Right. Or in the bio industry. And so. But that could be extremely valuable if you're at a Venture fund that is looking at investing in biotech companies or in AI drug discovery. And so saying what is something that I know you know and how can that be useful to wherever I'm applying? That's always the key there. And the second is I think you just have to be interested in what you're pitching. At the same time it is probably more effective but so much easier to go and pitch a story. And I agree with you. I think sales is a critical component. The more, the more time I spend in venture. But in general, you know, in my professional career, so many things come down to sales. It's incredible how many things are boiled down to that, that key skill I'm at least still developing myself. But it's amazing how important it is. Couldn't agree more. But it's so much easier to when you fully understand a story or a narrative or a market because you enjoy it, you love waking up and reading about it. Right. And it is a real passion of yours. It's not just something you show up for, you know, at a 9 to 5 job. So figuring out what that is because that makes switching or transitioning a lot easier. If it's already something you care about, are passionate about and know about, it's going to give you a leg up on other people that may even have more direct sort of financial experience.
- [14:05]
A
Yeah, I totally agree. And then kind of double clicking on sourcing and screening, especially in AI. How are you looking at the different segments? So we talked about compute, we talked about kind of how that flows down to the infrastructure. Right. So how are you guys, you know, parsing through all the noise? Right. Because every crypto company is now an AI company and you know, gaming companies now are also turning into AI companies. Right. So how do you guys segment the market with how you view the world?
- [14:42]
B
It's amazing how prolific the technology and sort of nomenclatures becoming and fair or not fair, you know, saying everything is AI is hard and I think a misnomer, but it is true when you think about a fundamental shift of, of coding basis and how things are created, it really is using AI. And so it's hard on one sense. Like I don't want to call everything AI or it loses meaning in the name.
- [15:06]
A
Sure.
- [15:07]
B
In the other sense it's pretty rare that you could have a technology that lets you create, you know, fun images or sora, a fun, you know, bedtime story for your kid and at the same time is used, you know, across a back office to create efficiencies at, you know, a Call center. I mean, it's a pretty wide ranging technology. So it's really interesting how many things we can call AI and truly actually be impacted by it. But to get more direct to your question, I think we look at it from a high level in three kind of broader buckets. And so one, you have the application layer. And so these are the companies that are using AI to either augment or create something new, but that you would interface with from a consumer or an enterprise. So you could think about a if you call customer service and you get a chatbot, or if you are looking for a specific legal question and going on one of the services that is customer facing, how do we apply AI into a direct use case? Then we look at two sub layers below that you have more the models and the LLMs, the frontier models get the value like your OpenAI, your anthropic GROQ, et cetera. And then you have the infrastructure component, which is a combination of hardware and actually software because you need to run it. But you have everything from data storage to data centers to how are you actually going to structure a database. One of the things when we started investing in the space was the application layer is challenging because one, is extremely broad, as you mentioned, and two, there were a lot of players emerging, especially a year, two years ago in this space. And what's interesting is when you hear about the noise and the chatter, I think it's like any market where you're going to have some winners and you're going to have some consolidation, you're probably going to have some that don't win, but it doesn't mean there's not real value being created there. Sure, but so we looked first at that infrastructure layer, which I think we saw as kind of core to any application, no matter who won and figured out what was going on there. One of the things we saw that was fascinating and really just went back to first principles was such a supply demand imbalance in terms of compute. And it's amazing to think back to even the projections we were having two years ago on the compute side that seemed lofty at that time, they've been exceeded. And so there is just an insatiable amount of demand for AI computer. And seeing that imbalance, that was our largest investment at cost in the firm's history is a company called Core Weave, which is data centers for AI. And then the second was OpenAI, which is obviously on the model side. And we really tried to look at what are the core components that are going to power AI. No Matter what applications or no matter how people use it. And so that's how we were thinking about that market.
- [18:02]
A
Yeah. And I think an important thing to bring up is, you know, the way that, you know, serial capital is structured. Right. So I think, you know, understanding that there is a public type of structure for venture investing, you know, and, and we chatted about this in person. Right. I mean, I knew about this in the uk. I knew that there were a couple public public funds. And you know, typical structure that people are familiar with is just an LPGP structure. Right. So, you know, you know, Ciro Capital Essential is a, you know, if I were to kind of go a little deeper, it's essentially a publicly traded fund. And you know, you guys are, you know, the, the ticker is four S's, it's Sutter Rock Capital. But you know, as you guys are seeking to identify and invest in rapidly growth stage companies, you know, would love to kind of learn a little more about whatever you're allowed to share. I mean, it is public, right? But I mean, whatever you like to.
- [19:03]
B
Share makes us easy, right? Yeah, it's a, it's a fun structure and a look, it's a great, I love working here, it's a great place to work at. But it's really interesting too because venture is often thought of as kind of as a closed off, sort of gated, you know, ecosystem. It's hard to access some of these names both in venture. But then if you're outside of venture, I think a lot of individuals hear about some of these very exciting, right. Companies that are private and you can't invest in them, there's no good way to sort of get in there. And so the idea behind Sero Capital was the time how do we provide retail investors access to innovative late stage, you know, private companies? So you hear about, you know, these companies that are making waves in the market or in technology that aren't available, they're not publicly traded, they haven't IPO'd yet or gone public via another mechanism. And so if you want exposure, how do you get that it was difficult.
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A
Out in the market.
- [20:06]
B
It still is. And so Siro is an interesting vehicle because we're public, but we're just the same as any other traded stock. You could go on whatever platform you have in your brokerage account and buy us one minute and sell the stock 10 seconds later and then buy it back. There's no close dated funds or restrictions on liquidity. You can trade the stock just as you would anything else and you can See our portfolio, right. And so part of our job is to mark our portfolio, the valuations quarterly. We have earnings calls, we publish 10 Qs, 10 Ks. And so you can really follow what we are doing, what we're looking at, what our portfolio looks like. And it just provides an interesting access point for retail investors that may not have or want to, you know, have a large check. In venture, you can take a smaller bite size because you could buy one share, 10 shares, 100 shares, you know, whatever kind of you want to allot to that. And so it's, it's, yeah, as you said, a really unique way to structure a venture venture fund, like portfolio.
- [21:13]
A
Yeah. And you know, I guess the LPs is interesting. The LPs are pretty much the public investors. Right. I mean, kind of like when you're investing in QQQ or investing in like an etf, it's kind of the same structure. And then what, what would be interesting is, you know, obviously what I thought was cool, you know, I, I invested in Robinhood and it was nice to see Robinhood make one of the S P 500, you know, securities. So like what would make a company make the list for sero capital? I guess what is the criteria to be within your portfolio construction? Is there revenue metrics? Because that would be really, I'll be honest, this is a topic that after all the hundreds of podcast guests that I've had, I've never really had, you know, the insights into actually what it takes to join a public fund, you know, but you have kind of some of that, you know, insider insight.
- [22:06]
B
Yeah, we operate our fund like you would a late stage venture fund. Right, that's it. And so we are focused on generating returns for shareholders. I think we look at kind of a few key areas. We have portfolio, obviously in AI infrastructure is a bulk of our portfolio and really exciting given the time. We also have some investments in consumer companies like Canva and Liquid Death that people may know. And then fintech as well, just made a recent investment in a company called Plaid, which is a bit less visible, but powers a lot of sort of the payment ecosystem out there. Yeah. So what we really look for is, we look for, we tend to look for mid, but late, more later stage names that are market leaders in what we view is innovative technologies. And so Core was a great example of that.
- [23:00]
A
Right.
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B
When we invest in them, obviously before the ipo, they were private. You're looking at a company that was probably the leading data center provider for AI capabilities, that wasn't a hyperscaler OpenAI, obviously the leading LLM provider, certainly on the consumer side. I think they're well in sort of the pole position there. And so we are looking for companies that 1. The investment has to make sense from a financial standpoint. We're looking for return as any other sort of venture portfolio fund would look for. And so we analyze, you know, risk, reward, return portfolio, you know.
- [23:39]
A
But you guys are still getting in at the private stage, right? So you guys are getting in like.
- [23:43]
B
We only invest in private. Yeah, yeah.
- [23:44]
A
What stage do you guys get in at?
- [23:46]
B
Usually it's, it's really interesting because as you may know in the ecosystem AI has shifted all of the naming and nomenclature there. We are typically looking at companies a billion dollars plus in sort of enterprise value that used to be more Series BC and we'll invest all the way through pre ipo.
- [24:07]
A
Yeah, that's much more cut and dry when you, when you kind of, when you try to classify based on the letter stage, it just gets so nuanced now and confusing and you know, I mean someone's, someone's series A is someone else's pre seed, right?
- [24:25]
B
Yeah.
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A
But if you just kind of just focus on enterprise value or ebitda, then it makes it much more cut and dry.
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B
Right.
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A
So cool.
- [24:32]
B
And we have shifted down before because one of the things about being an evergreen portfolio obviously is, you know, we managed to serve a bell curve of liquidity events and timing and size. We want to kind of match our portfolio. And so we'll, we've shifted down to, you know, a few hundred million in sort of enterprise value. Especially if we, you know, confidence the company is going to grow and we'll continue to invest in it. But we really target that probably billion dollar plus is our, I would say standard typical investment.
- [25:00]
A
Sure. And then beyond the enterprise value, what are some other characteristics at that stage? I mean maybe from the fundamentals all the way to some of the more hard technical KPIs. Because what are some of the additional things beyond that that are critical to actually pass the investment committee?
- [25:22]
B
Yeah, so it's interesting because we have a pretty wide range of stages. If you think about a billion dollar enterprise value versus a 10, $20 billion, it's very different in terms of the revenue that you would look for or the stage of KPIs. And so we definitely scale those. In general, we're looking for real traction.
- [25:40]
A
And product market fit.
- [25:42]
B
And so that may be different for a, you know, emerging AI company that is has accelerating growth rates versus a more stable consumer company. And we'll kind of adjust, you know, the KPIs in China there. But we're looking for, for a company that has real fit within the market and establish traction. And so that's how we think about sort of that later stage bucket. Usually we're looking at companies that are doing real revenue and then we're looking for growth because one of the key components is as I said, really market leading companies and sort of innovative spaces there. And so we want to see that the company is either growing or sometimes we'll look at companies, you know, their inflection point that are poised, we think are poised to grow in the future. And so that's one of the areas we focus on is how big is the market that a company is targeting, how are they able to grow into that? You know, what is the actual demand that they're capturing? They're just more fundamental economic questions.
- [26:44]
A
What are some of the characteristics of the founders that you've seen have been successful at that stage? Have you seen a lot of times the founders have been kind of replaced with or, or the CEO? I think at that point it may not even be that, you know, when you're getting in it might not even be the founder. But you know, there's, there's been some late stage companies that, that I've seen and also invested in that, that have just, you know, the founders definitely was not there at that stage. It was a, it was a seasoned CEO, but then they, they brought somebody in that had a little more expertise in kind of some of the growth metrics that they were looking for. So we'd love some, you know, some reactions or insights on just kind of the management team and what you've observed at that stage at the billion dollar enterprise value.
- [27:30]
B
Absolutely. And I am always oftentimes very, very impressed by the founders. I mean they, it is a really difficult job to run these companies to grow a company like that. And it is impressive what the management teams are able to do full stop. I mean I way more fun parts of my job is having conversations with some of these entrepreneurs that are. And the, you know, bleeding you see.
- [27:52]
A
In the magazines pretty much. Right?
- [27:54]
B
Yeah. I mean it's crazy, right? And so they, I think one of the characteristics, there are certainly some companies that have shifted over sort of management teams. I think you see especially as companies are gearing up to IPO or you know, want to get ipo, quote unquote ready or mature, they start to bring in teams or CFOs or other professional, you know, that have been around that process before. I think a lot of the, you know, leaders we see these companies are still founders. And one of the main things is they are really passionate about what they're doing. Being in a startup is hard. It's really hard. It takes a lot of time. It takes a commitment. And these founders are extremely passionate. They're extremely excited about what they're doing. You know, often is a phrase they live and breathe, these companies and the areas that they're working in. And so it's a privilege just getting to speak to them and hear their story and sort of what's motivating them, what's driving them. The backstories behind these companies are fascinating, but I think really that energy and passion about what they're working on is key to seeing these companies grow. Because it's not an easy endeavor at all to lead sort of the astronomical growth we're seeing in some of these spaces.
- [29:13]
A
No, it's totally fair. And then as far as kind of getting to the next stage beyond the entry point that you guys are interested in, what, what are some of the milestones that you think are going to be important to move to the next level for the fund to kind of hit their, their performance metrics. Because essentially, you know, you're in this stage not looking for a fund returner. Right. Because the company is already at a billion in enterprise value. But you're looking for some type of multiple or some type of, you know, performance indicators or ratios that are going to indicate success. Right. So what are some of the success metrics that you guys like to look at in this stage? Obviously, when you're doing, you know, precede to seed, it's like, look, you know what we're, we're looking at every deal it's going to return the fund, right?
- [30:05]
B
No, absolutely right. We are looking at a stage that hopefully has de risked a bit of that downside compared to certainly a seed pre seed. Right. You have a lot more maturity and sort of traction there. I think what we look for, it varies based on the stage of entry. And so it's very different if we are looking at a company that we expect to IPO in a year, 18 months versus one that might IPO or you know, have an M A activity in two, three years. And so we definitely titrate sort of our expectations around the company's maturity, the risk profile, the growth profile, etc. I think when we look at investments there, yeah, we are, because of our structure. What's interesting for our shareholders is that we actually distribute out, you know, substantially all of our net realized gains. And so, you know, we are always mindful when we enter a position of what our expectations are sort of around that exit and the returns there. And so I think they, the benchmarks sort of vary based on the risk and parameters, the initial investment. But we are very mindful of what are the timelines, you know, that we expect this portfolio company to mature in, whether it's an M and a activity, IPO, exit, etc. And then because we're investing later stage, one of the interesting things is we're looking a lot at the public markets both from a macro perspective to understand where things are going, but also from multiples and exit perspective because we'd be really mindful of this company could be doing extremely well in the private market. And we love where it's going, but the value we enter in at can they actually exit at a multiple in evaluation. That makes this investment exciting for us and our shareholders in terms of a return perspective. And so we're always pretty mindful of sort of potential exits, the exit valuation and the public markets, even though we're private market investors, which is an interesting kind of part of our job there.
- [32:03]
A
Yeah, I mean I have a little bit of knowledge working with a couple institutions in the past on the portfolio theory when it comes to buy side investing for the public markets. Right. So there's essentially in the public markets there's portfolio weightings, there's usually like a portfolio manager and then there's a couple like buy side research analysts and they have those investment ideas. Right. But I would say that in my mind, and you're going to correct me here or give me more clarity, but on the, on the buy side for the public markets there's a, there's a waiting approach and you can rebalance, right. Your, your weightings depending on a lot of times like it's the news, right. What's happening in, in the earnings calls and the news for their holdings and they can kind of recalibrate that. But I'm assuming because you kind of have this basket of holdings that are private, I'm assuming the only way that you could rebalance is if there's some type of secondary transaction because you're kind of on the cap table. Right. So that would be the only way that you could probably do any kind of recalibration, right?
- [33:06]
B
Yeah, we have and that's a whole other discussion. It's interesting. You're starting to see, I think more and more activity in secondary markets which we actually participate in. We're both buyers. I'd say we sell less frequently, but we absolutely can. If we deem just from a portfolio construction that we want, you know, to exit or take some gains in a position or what have you, we can exit in the secondary market. We're seeing that mature, which is really interesting because as companies are staying private longer, I think there's just a need for more liquidity solutions outside, you know, the traditional IPO or direct listing. And so certainly that's an interesting option. But yeah, as you think about venture portfolio and venture construction, you naturally see your winners have outsized impact on the ratio they are in your portfolio, just given how venture works. And so that's interesting with us as well. We've had a few companies within the AI space that have done well. And so it's becoming a larger portion of our portfolio, which is, I think exciting for sort of the public markets and people we talk to. But that's kind of a natural, just progression within venture is. Right. These are less liquid securities. And so even though our fund itself may be liquid, you can trade it our portfolio balance. You tend to see outsized growth in a few names. And then you have, you know, the top five or ten names that of our holdings are a outsized portion of our fund. Interesting from an outside in perspective for retail investors because it's easier to look at our portfolio and say, okay, here's the, you know, the five or 10 names that make up the bulk of the value here. Do I like these names? What do I think about the portfolio? And you just see that in venture in general, I think it follows kind of a normal portfolio distribution.
- [34:53]
A
Yeah. And I'd say the other analogy is like, you know, instead of doing distributions where you have to wire money to a bank account, you can just kind of deliver that as a dividend.
- [35:03]
B
Yeah, so we have. Yeah, exactly. We distribute out exactly as you said.
- [35:08]
A
Yeah, yeah, no, that's, that's really cool. What career advice would you have for people that want to kind of build those skills and kind of enter in venture or private equity without the kind of pedigree or the, or the background, they're kind of making a hard pivot. That's the first part of the question. Then the second part of the question is probably even more difficult. Right. Because I think it's hard to get into the industry. But then I think it's even, it's a challenge also. Just continue to grow and, and evolve yourself in the industry. So what are some of the best practices to to, to stay relevant and stay, you know, being a high quality, you know, investor.
- [35:52]
B
Yeah, I think it's interesting, there's probably some parallels between the two, which is I guess a good thing. But for individuals looking to get into the space, there's two main things I would say and these will probably branch out into other ones. I try and parse through it, but I think the first is to just ask and to talk to people. And so it's, look, this is not easy for me at first, it's still not easy for me now. But people reach out all the time. Part of my job is reaching out cold to individuals or getting a warm intro or a semi warm introduction all the time. And I would say I am constantly surprised by if I have a valid reason for reaching out to someone, you know, there's a real impetus there. The response rate, and I would say the other side of that, the response rate that is negative and that is, you know, you shouldn't have reached out is very low. And so I think that fear and sort of the barrier to just asking, say, hey, I've read a whole bunch of news stories about this fund or this company and I looked up these three investors that invested in it. I want to get into this space, just email them or message them on LinkedIn or find someone who may know them and say, hey, look, I've been doing a lot of research. Here's three things I think about the space. I'm really curious about this investment you have. Do you have five, ten minutes to talk?
- [37:19]
A
Sure.
- [37:20]
B
There's very little downside to doing that. And I think you'd be surprised by the positive receptivity and response rate back and then follow up because I can't tell you the number of times that things get lost in my inbox or etc. And I'd love to respond or love to follow up and something happens, I jump to something else. Right. And so a follow up is always fine. I would say, you know, I wouldn't take it negatively if you don't get a response that first time. Just, you know, try and follow up or provide some value there and say, hey, look, here are my kind of thoughts on the space.
- [37:52]
A
I mean, I think, I mean persistence is a good, good continuation that, because I think it reminds me, I think there was a story about Vinod Khosla and how he got into Stanford. I think he just went to the school like every day until they let him in or something like that. So persistence and you know, talking about follow but also showing up Right, Yeah. Just don't just keep following up until, until you get to where you need to be. Now there's borderline now. I mean back then, I think when benode was doing this, they didn't have, you know, they didn't have cell phones. Right. I think you would literally just show up to the office and I don't even know if they had email back then. So things have changed. You know, I think being thoughtful in terms of like the, the media and method of touch points is important too.
- [38:38]
B
Absolutely.
- [38:39]
A
Sometimes I've noticed where if you send a really, you know, one thing that I try to do is like cut my emails in half. So I think your communication style, if you send somebody like a, you know, over throw over the fence, a massive four paragraph monologue, they're probably not going to read it. So you may want to kind of trim that down to like, you know, three impactful sentences. I don't know what your thoughts are on that in terms of like just best practice because you talked about follow up. Like what's the, what's the cadence? Should you do like LinkedIn and email or should you, you know, if you have their cell phone, like should you hit all of them at once or you know, I guess what, what are.
- [39:17]
B
Yeah, that, that's fair. I would definitely agree with you. I agree. Be direct and be direct with what you're asking for also. Right. If you want a 5 minute, 10 minute phone call them, just say that. Just put it in bold and say, hey, here are the three thoughts I have. Would love to grab you on a phone call for five minutes. Here's my number. Also phone calls over zoom calls, much easier to schedule.
- [39:36]
A
Yeah.
- [39:37]
B
And to slot in people's calendar. So that's another thing. But yeah, look, you need to be careful with sort of the follow up. There's persistence and then I think if you send a message and then send a LinkedIn message a week later and don't hear anything back, maybe wait a few more weeks and follow up one more time. But certainly no one wants spam in their inbox and you don't want to be that person that's spamming someone's inbox. And so yeah, definitely there's a fine line there, but I would be careful about.
- [40:06]
A
So you know, a couple things that you know. So one of my good friends is like, I consider him like the best networker on the planet. You know, he's gotten a lot of goodwill from people and one thing that he told me, which has like the highest conversion rate is especially on LinkedIn, is if you just give them a video, like if you just post a minute, like you know, 20 second video. Think about it, right? You got a thumbnail of someone, it's just sitting there. It's like so irresistible to like just the curiosity out of you. It's like, what does this person have to tell me? So I think the videos convert really well. I also think if you're raising a fund or now if you're also interviewing, sending your personality to them, sending them a loom video, you know, of some relevant things that are super personalized to their investment firm, I think that'll definitely grab their attention. Just shows that you made the additional effort versus like I for some reason get mass emails from all these students and it sounds so templated and it's like, hey, I'm studying at, I'm studying at this university and would love to pick your brain. And it literally, I feel like these kids like they, they just like got that template from like maybe the university or, or from the something. But I don't know if you ever get any of those. But I get them from like, I get them at least like eight times a week, you know, Definitely do.
- [41:25]
B
And I think AI has been good and bad with that. Right. It makes it a little bit easier. I don't know. I, I have a good amount of leeway because I know it's even hard to write that email and send it down. So, so I, especially someone in undergrad or et cetera, you know, it's, it's, I get it, it makes sense. But I think if you have, say there, look, if you have a point of view, even if it's wrong, that's interesting to me. And so take a point of view on something like if, you know, we're investing or someone's investing in XYZ or you want to get into a space, take a point of view on it. I would say that's less risky than sending, you know, a generic news clipping in an email because I don't care if it's wrong, I'll find it interesting or not wrong. You know, if it has a different opinion than I do, that's still interesting to me and I'd love to hear it. And so I think that becomes harder and maybe the next layer from that template. But take a stance, take an opinion, say, I don't know. I agree with this news clipping. I don't agree. I thought this would be interesting for you for XYZ reason and it becomes kind of an Easier way to inject some value into the communication.
- [42:25]
A
So LinkedIn has a feature where you can just wish happy birthday to people. And I just kind of. I was. There was someone that I didn't talk to in a long time and I was like, wow, it was his birthday. So I just kind of wished, you know, a happy birthday. And then we ended up just like getting coffee. But it's just. So I think maybe it doesn't even need to be an ask. It's just like, you know, kindness costs. This was something that I heard from a previous podcast a couple weeks ago. You know, it costs nothing to be a kind person, right? So just wishing somebody happy birthday, that means a lot to someone because they just think, you know, obviously they may not know that you use that button to, to wish them that maybe they were like, amazed that you, you knew their birthday or you, you know, took note of that. But that personalization that's, you know, just outside of just the, the job, I think definitely goes really far because. No, and think about it, right? How many other people are going to go out of the way on LinkedIn to kind of wish somebody happy birthday when their priorities are to kind of like get a job or, or, you know, solicit some fundraising or something? Right?
- [43:21]
B
So, yeah, or commenting on something, right? You see someone in the area, post something or do something thing that is exciting. Comment that you like it, that's exciting. Congratulations. Sure. Someone will, you know, click on your profile and say, who is this? Who wrote this? What's going on there? So that's always.
- [43:41]
A
I'm trying to think of one other maybe industry question. So what are some, you know, so I'd love to know kind of some best practices or things that you've learned in terms of running the investment practice. So I think this is really important for people that are, number one, trying to get into venture, but then also refining their process at their firm. So if you think about it, right, there's the Monday partners meeting, there's the first level or second level of either just passing or learning more. And then obviously there's the couple layers of diligence. And then obviously all the work that it takes to actually take something to an investment committee, right? Writing that memo and then running the investment committee efficiently and making sure that you're doing that in the right way. Any kind of learnings or tips or best practices that you've picked up over the years in terms of just kind of running that process more smoothly to balance, I guess, making sure that you're doing the thorough enough effort to diligence it without also just doing it so thoroughly that it's taken three months now to actually make a decision. So kind of balancing the speed versus the, the attention to detail.
- [45:01]
B
It's always a question. It's really interesting. I think there's a few things that come to mind. I guess the first is know what you're looking for and that is, you know, it's very easy adventure. We see a bunch of amazing, really just cool things. I don't know. Better word than that, right?
- [45:15]
A
Yeah.
- [45:15]
B
And so one of the things is we take a very top down approach and say, okay, here are the areas in the sectors and macros that we think are interesting. Here's our kind of thesis behind that. So we do a lot of that macro thesis work kind of upfront which helps with that and then identify players or sectors or trends that we want to target. And so we, we know and have a good idea of what we're looking for as things come over to us or as we're reaching out or having conversations. I think that's one of the key ones. And then there's obviously opportunistic items that are going to come at the same time instead of making some room for them. But really understanding does this fit my thesis, does this fit my query? Does this fit what my fund should and is going to invest in and spending time there? I think there's also a constant adventure. I mean a lot of the companies you end up speaking to for quite some time even if you don't make an initial investment decision. And so clearly communicating what's going on, keeping people informed is always really helpful and I would say a key part of that process. Right. We can talk to a company through diligence. We let them know, look, here's our timeline, here's what's going on. If something slipped, here's where it slipped, here's where the timeline slipped, here's where you think it's going to. Just keeping people up to date on what's going on in the process is always helpful because it's more confusing on the other side when there's a black box and you don't know the process and you don't know where things are at. And you'd be surprised the amount of companies that we pass on who then we end up talking to either for in the future for a funding round or introduction to another founder, or know more about the space and vice versa. You know, we certainly are a helpful resource to companies in that regard. And so Just being, I would say, kind with sort of your timing and touch points and letting people know the process and what's going on is always pretty helpful in that process. And then staying focused on what you're looking for helps cut down on a bunch of the noise.
- [47:19]
A
Yeah, that's amazing. Well, I know we're up at time, but as I alluded to earlier, I always appreciate wisdom from mentors. You know, we wouldn't get to where we are now without a big brother, a big sister, and a mentor. So, you know, Evan would love to have you leave us with a piece of wisdom. It could be from a family member, it could be from a mentor. You know, I guess to kind of wrap up 2025.
- [47:48]
B
That's. That's a big pitch there. But I guess I'll give two things that are, that are always interesting to hear about. And you mentioned in your last question about speed is, you know, momentum is critical in all processes and certainly in financial processes and investments and deals. And so that speed and the cadence is one of the things you don't think about as often, but really is important in sort of that execution and getting things to that final step of actually writing a check and making an investment. And the other thing I would say is, look, it's easy, especially as you get pretty far down the weeds on a process or a company or an investment, to get kind of in the weeds, but to make sure to ground yourself and take a step back in sort of the macros and the news, what's going on. Read multiple news sources, understand, you know, general themes and then broader markets, because it's amazing how easy it is to get sort of in the weeds on something and to this sort of broader trends or contextual swells that are happening. And it's really hard to fight against broader macro movements. And so it's, it's key to kind of understand what's going on at a, at a broader level, even if you end up sort of hyper zooming in in any particular moment. And those are two things that I always try and remember as kind of going through processes and day to day, so.
- [49:06]
A
Sure. Well, hey, this was amazing, Evan. I really appreciate you taking time out. I love all of the impactful initiatives that you've been doing for the community as well. So I think that's just, you know, really making a change. And thanks for all your time and it's been hanging out in person as well.
- [49:25]
B
Thank you. Absolutely. Perfect.
- [49:26]
A
All right, take care. Have a great one. Bye. It.