2 of 17 investments go for an IPO - how did Hoxton Ventures get to that rate? By Hussein Kanji

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They're releasing to fundraising
video a podcast about

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fundraising for early-stage
startups, the major rule that we

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follow here is no bullshit on
this podcast.

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No music to relax.
You know, advertisements of our

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sponsors.
We only talk about fundraising

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here and nothing else.
So let's jump into the episode.

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And today's guest speaker will
have to sit in koenji co-founder

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at hoxton ventures of which
Seven companies that they've

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invested in Sulphur to already I
peeled and in this episode,

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we'll talk about these high
investment to IPO ratio and how

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they managed to achieve.
It also will discuss how Hussein

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move to London from the United
States, and why he did that.

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And also we're going to talk a
lot about IPOs so saying, oh

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let's kick it out by you, giving
us some background on yourself

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and on hoxton Ventures.
Yeah, thanks for having me on

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the show.
So I'm an American as you can

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probably tell by the voice but
I've been living now in the UK

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for almost 15 16 years.
So so quite a bit of time and

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when I came out here, I joined
Venture Capital fund which is a

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reasonably well-known u.s. fund
called axelle kind of embedded

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into the tech ecosystem here as
a result realized that, you

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know, the UK and more broadly
speaking Europe were, were in a

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pretty Good position to actually
produce interesting, valuable

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tech companies, kind of in the,
in the next 10, 20, 50 years.

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Now a lot of it because, you
know, the Global Tech companies

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that we kind of take for granted
the Facebook's the Google's.

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The app stores are the iPhones
Etc.

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All made the world so much more
flat which means that Innovation

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can come from anywhere and you
know, you can scale from

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anywhere and so on the back of
that thesis I left xli formed a

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fund which is hoxton and we
began investing on the basis of

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that thesis and All of this is
you with the backdrop of, I

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spent the first kind of probably
15 years or so in the Bay Area

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in California, I grew up in New
York City and I moved across the

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California.
Largely to get away from

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everybody.
Who's in my high school, I went

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to this overly competitive, High
School in downtown New York and

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everyone was going to Harvard,
you know, Yale MIT, Etc.

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I wanted to go far away from
those people's.

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I went to a school that was not
on the radar at the time with

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this new, just a, but also, a
very good scored this since

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become, you know, her Dirty
kidding dude than Harvard in

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that sense.
Largely because it's a chemistry

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thing has been booming but it
moved across the California kind

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of, you know, ended up getting
embedded in the tech industry.

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Just as by virtue of going to
Stanford did a few startups and

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then moved across to Europe.
And so kind of a lot of our

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thesis is, you know, what can we
do?

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Really well in Europe that we've
already kind of seen happen in

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America and then how can we
connect the companies that we're

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seeing in Europe over to the
American ecosystem?

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And I think when you've been
around some of these

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interesting, These, you get a
much, you get a much better,

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feel for what's going to work,
what's not going to work and you

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have a lot more inside
information because you can call

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down a bunch of people to figure
out what's likely going to

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happen in the future and what's
not.

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I mean you never have perfect
information on any of these

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things.
I mean that's why Century people

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run a portfolio but but you do
get you do get good.

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If you do get good at these
things and there is a

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persistence effect in Venture
and so we were pretty confident.

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And I keep saying, week as I
started this with another

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American, right?
A very similar background.

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To me that we could kind of
replicate what we'd seen the

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Perry and Europe.
And there are some really good

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conditions to doing this and at
the time that we started kind of

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nobody was really doing this in
Europe.

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It was it was really tightly
numbers, so that, you know.

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Now there are a lot of
competitors in a sequoia, is on

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the ground here, as well.
So that we can't be sleepy as a

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firm that, you know, when we
started those almost nobody

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writes.
I used to joke that if you found

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an interesting company and you
gave him a term sheet, there

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really were no other term sheets
on the table right now.

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At that time.
So it was pretty easy to

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actually do this job and I think
that kind of explains a lot of

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why we ended up with something
interesting companies in the

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first fund because, you know,
companies need money.

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And if no one else is going to
give them the money, you just

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kind of have to wake up and go
to work, right?

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To be able to do well right.
Nice.

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That's the benefit of starting
early love it.

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So part before we go on to
disgusting major topic for

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discussion for this episode,
let's start with a simple Center

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question that I asked pretty
much every single investor that

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comes out on fundraising radio.
So, Through Hawks and Ventures

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for, do you like to invest in in
terms of stage industry and

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average check size that you're
right?

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Yeah, so we're a seed stage firm
and over the years seed rounds,

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have gotten a little bit bigger
as if we as because, because

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those who things are, kind of
linked artifical Jack is

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anywhere from kind of half a
million up to about side

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million.
Take your currency.

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They're all kind of the same
these days.

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USD GBP Euro doesn't really make
that much of a difference.

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And, you know, In terms of, in
terms of sector were software

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Centric.
But the software is so broad

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these days that, you know, we
kind of focus on all kinds of

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different things.
You know, my, you know, one of

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our kind of home run Investments
was with delivery, which is a

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food delivery company kind of
similar to doordash in the US

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for people are not familiar with
kind of the rest of you, what's

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going on, the rest of the world.
And in my last investment was a

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protein engineering company
that's able to simulate kind of

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disordered proteins and
hopefully be able to Create much

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more novel, Interesting Drug.
So you can see these two

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companies really have nothing to
do with each other.

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They're very, very, very
different ones.

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Very deep tech one is, you know,
one is much more of a consumer,

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a kind of marketplace.
We're pretty agnostic.

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I think what we look for is, you
know, what's new in the

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industry?
Why could that business be

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created today?
When it couldn't have been

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created, you know, six months a
year or two years ago, what's

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kind of changed that enables a
business to get built, and if

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the business does get built and
does turn out to be interesting,

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you know, will it turn out to
be, you know, a 5 10 50 billion

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dollar?
Then you know when it scales up

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so can it really truly get big,
you know, other than that

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everything else is kind of fair
game.

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And if for us as long as it's
you know as long as it kind of

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fits that parameters.
We're not so we're not so fussed

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about sector Etc.
Right?

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So let's talk about getting a
big lie for the first one that

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you've invested in 17 companies.
Two of them already IPOs.

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So can you tell us a little more
about that?

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I mean, that's a huge success
ratio, a lot of fast, don't get

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it in closer.
That's so one of the reasons as

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you re mention is that you were
one of the first people to start

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doing it.
Are there any other reasons for

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why you have such a high success
ratio?

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And by the way, on our preacher
people, you mentioned that there

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is probably third company out of
that first battle.

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They will IPO soon.
So can you tell us a little more

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about how you chose those
companies and what allowed them

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to grow so much?
As the first one, which is 1:43

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IPOs are ready?
The third ones announced that

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it's doing this back so it will
go public as well, but just be a

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snack.
This back is funded.

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Hopefully, that happens in the
next.

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Kind of several months usually
takes about three to four months

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from the announcement that.
So the first one is a food

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delivery company, which is,
which is deliver.

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Ooh, the second one was a cyber
security business, called Dark

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Trace.
And the third one was an AI

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Healthcare company called called
Babylon health.

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And then we're also shareholders
and epic games which makes

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Fortnight, but indirectly one of
our company's got acquired by

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epic and so, you know, for us,
it's a large fits, a large

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shareholding, but in the context
of Epic, which is a gigantic

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company now, you know, we're
pretty small shareholders and

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then I think we might have a
fifth and a sixth at could

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actually turn out to be pretty
big and whether they'll get it

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up to a billion or multi-billion
is still PVD.

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So you know, Reasonably High hit
rate, you know, and these are

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all very very different
companies from each other,

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right?
From the gaming company, you

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know, epic all the way up to
Babylon which is a I don't care.

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There were all brand new
businesses and brand new markets

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and we really do look for this.
So, you know, we're looking for

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companies that we think are in
these brand new categories of

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companies, you know it could be
something as prosaic is you know

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it's delivery and Logistics and
there was a reason why deliver

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ooh to do Logistics in the early
days and those because you No

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smartphones became really
inexpensive.

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And, you know, one of the
benefits of having a smartphone

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is you get GPS and you kind of
get the blue dot.

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And if you're going to run a
delivery business where you have

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to deliver meals to people and
you need to have them deliver

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usually more than one meal in
our.

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The breakevens kind of somewhere
between two or three meals an

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hour, you really need to make
sure they're not getting lost

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and you know in places like
London where there are lots of

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small streets and some of the
streets to house numbers aren't

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very visible and they are not
always sequential like they are

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in the u.s. they kind of Like a
jump around kind of on one side

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of the street, from the other.
You need to make sure that the

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extra ten minutes that it might
take someone to, kind of find

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the door to the house is really
valuable time and so you really

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do need GPS to figure out if
they're getting lost out.

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There was a similar company to
deliver.

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Ooh, you know, almost almost 20
years ago in New York called

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called Cosmo.
And they're trying to do

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something very, very similar
though.

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Probably more like instacart
than, to live group.

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But you know, they were trying
to do this with two-way pagers

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and that was kind of the good
new innovation or with.

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I think it made Even one way
pagers.

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And, you know, with pagers you
can communicate with the driver

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who's kind of delivering, but,
you know, if they get lost at

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cetera, it's pretty hard to
figure out what's going on.

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You're kind of in the dark,
right?

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So, you just have a very basic
sense.

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And so I saw was that the
novelty was was that you could

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actually build that part of the
tech stack and it was kind of

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obvious to us in, in London, you
do you find and in Europe in

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general, Europe is probably more
risk averse than London and you

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find a lot of people asking
themselves, you know, all the,

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what can go wrong type questions
in a bit.

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In the kind of Target when you
when that's your frame of

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reference, you know, you talk
yourselves out of doing anything

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and you generally will take a
wait-and-see approach, you know,

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if that's how you think about
the world and you wait to see

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how the results are.
In fact, my old firm XL ended up

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writing the check into delivery,
but like about a year after we

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did and again, their frame of
reference was, you know, the

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sounds.
The sounds like it could be

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interesting, but let's kind of
see how it actually really

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happens.
They were much bigger.

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Check.
And we did, we were the seed

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investors, you know, there were
other 25 million dollar check

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Check.
So, you know, significantly

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bigger but and that helped the
company really, really grow.

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So you know, kudos to them for,
for writing the check.

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But, you know, they took a
wait-and-see approach and we

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generally don't ask the, what
can go wrong question.

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We asked them what if things go
really right, you know.

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And and and then how confident
are we that you know, that

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there's a good chance never a
perfect chance which is a good

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chance that the things can
actually go.

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Right.
And I think if you kind of have

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that frame of reference or
probably more more of an early

224
00:10:37,500 --> 00:10:40,300
stage investor, I think if
you're in a If you're in a

225
00:10:40,300 --> 00:10:43,100
business, kind of like Venture,
you're probably have a decently

226
00:10:43,100 --> 00:10:44,300
High failure rate, right?
New?

227
00:10:44,300 --> 00:10:46,800
We only anticipated.
One of our companies would kind

228
00:10:46,800 --> 00:10:48,700
of go public and become a
multi-billion dollar company.

229
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When we were forming the fund, I
think what we found is a lot

230
00:10:52,100 --> 00:10:54,400
more companies were being born
in Europe and there were almost

231
00:10:54,400 --> 00:10:57,700
no investors asking the what can
go, right type questions and so

232
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a lot of these businesses kind
of found their way to us and our

233
00:11:00,600 --> 00:11:03,000
biggest regret was we just
didn't have more Capital to

234
00:11:03,000 --> 00:11:04,600
invest into more of these
businesses.

235
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I mean, you know, it was It was
kind of free money for a while.

236
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It's no longer free.
You know, there are a lot of

237
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other very good Venture firms
now.

238
00:11:11,200 --> 00:11:15,000
So we actually every person died
And I think the other thing, you

239
00:11:15,000 --> 00:11:18,400
know, the one we met our trays,
which is a cybersecurity

240
00:11:18,400 --> 00:11:21,200
business and the guys behind our
Trace, had done this before.

241
00:11:21,200 --> 00:11:23,500
There were two were serial
entrepreneurs, you know, they've

242
00:11:23,500 --> 00:11:25,500
been around building a big
enterprise software company

243
00:11:25,500 --> 00:11:28,900
before and, you know, when I
first met them, they said it's

244
00:11:28,900 --> 00:11:31,000
very nice that you're building a
venture fund and, you know, kind

245
00:11:31,000 --> 00:11:34,100
of Europe, or London needs more
of these kinds of things, which

246
00:11:34,100 --> 00:11:36,100
is good.
But you know, you're not really

247
00:11:36,100 --> 00:11:37,600
right for us.
And, you know, we're going to

248
00:11:37,600 --> 00:11:40,300
fund this company ourselves.
And you know, with all due

249
00:11:40,300 --> 00:11:42,900
respect like we don't think
Venture people actually add all

250
00:11:42,900 --> 00:11:45,300
that much.
Value to the cap table, and we

251
00:11:45,300 --> 00:11:48,300
think they're kind of annoying
to boot, right?

252
00:11:48,600 --> 00:11:51,400
So they're very, they're very
yeah, they're very polite about

253
00:11:51,400 --> 00:11:53,100
it.
And they do have a point and we

254
00:11:53,100 --> 00:11:55,800
ended up kind of sharing notes
about the growth of a cyber

255
00:11:55,800 --> 00:11:57,300
security business.
That way.

256
00:11:57,300 --> 00:12:00,000
You really well in the Bay Area
in California, that was just

257
00:12:00,000 --> 00:12:03,100
about to go public at the time
now and we kind of passed on a

258
00:12:03,100 --> 00:12:05,900
bunch of our thoughts and kind
of learnings from that business

259
00:12:05,900 --> 00:12:07,400
and we were not investors in the
company.

260
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We just happen to know,
socially, a lot of the the angel

261
00:12:09,800 --> 00:12:14,400
investors in the early employees
and the founders were Under and

262
00:12:14,400 --> 00:12:16,700
so we passed a law in these
lessons and then they went back

263
00:12:16,700 --> 00:12:18,800
and actually double check.
The lot of the information that

264
00:12:18,800 --> 00:12:20,800
we told them and they call this
back two weeks later and they

265
00:12:20,800 --> 00:12:23,000
said, you know, you actually
have a lot more information

266
00:12:23,300 --> 00:12:26,000
about the growth of this company
than its kind of available in

267
00:12:26,008 --> 00:12:28,300
the public domain.
And so you must be more

268
00:12:28,300 --> 00:12:31,100
connected than we kind of gave
you credit for and they only

269
00:12:31,100 --> 00:12:33,800
took our check because they
wanted to kind of tap into that

270
00:12:33,900 --> 00:12:36,300
that wider Network and that
wider network was this network

271
00:12:36,300 --> 00:12:38,200
in Silicon Valley that we kind
of had.

272
00:12:38,800 --> 00:12:41,000
And so that's the other reason I
think that we've been able to do

273
00:12:41,000 --> 00:12:43,100
well, you know, for the there a
lot of European Foundation

274
00:12:43,300 --> 00:12:46,000
Daughters, who are probably kind
of fall into the let's make

275
00:12:46,000 --> 00:12:48,200
Europe.
Great again type mentality,

276
00:12:48,200 --> 00:12:50,200
which is are focused on the
national business.

277
00:12:50,900 --> 00:12:52,900
You know, they want to be a
French entrepreneur, focus on

278
00:12:52,900 --> 00:12:55,400
the French market or Spanish
entrepreneur focus on the

279
00:12:55,400 --> 00:12:58,400
Spanish market.
And you can, you can build scale

280
00:12:58,400 --> 00:13:00,800
in those markets where you
couldn't do that, maybe 20 30

281
00:13:00,800 --> 00:13:03,700
years ago.
But for the few folks, who want

282
00:13:03,700 --> 00:13:06,000
to build really truly Global
businesses, right?

283
00:13:06,000 --> 00:13:08,300
They got to want to build the
next and the next Amazon's of

284
00:13:08,300 --> 00:13:11,700
the world which you know, will
never will just never be a, just

285
00:13:11,700 --> 00:13:13,100
a US business you can't build
you.

286
00:13:13,300 --> 00:13:14,500
Shake.
If you're going to be really

287
00:13:14,500 --> 00:13:17,600
big, you're going to be able to
more Global in your mindset and

288
00:13:17,600 --> 00:13:20,000
Outlook.
So, you know, for those kind of

289
00:13:20,000 --> 00:13:22,900
businesses than kind of our
connections, the us, and our

290
00:13:22,900 --> 00:13:25,300
connections in Silicon Valley
matter, you know, for a lot of

291
00:13:25,300 --> 00:13:28,000
those kinds of businesses, they
probably want money from the US

292
00:13:28,200 --> 00:13:30,900
something.
Today, like 75%, maybe maybe

293
00:13:30,900 --> 00:13:35,300
like 65% of the Venture rounds
of the like the really top

294
00:13:35,300 --> 00:13:38,000
performing companies in Europe
at this series B series, C

295
00:13:38,000 --> 00:13:41,300
Series, d-type?
Stage are done by us firms and

296
00:13:41,700 --> 00:13:44,000
it's not surprising in my mind.
Because when you think about the

297
00:13:44,000 --> 00:13:46,600
Venture Community think that'd
be the greatest investors are in

298
00:13:46,600 --> 00:13:49,000
the world they primarily are in
the Bay Area.

299
00:13:49,000 --> 00:13:52,100
So if you're a you know founder
you know starting off in Latvia,

300
00:13:52,300 --> 00:13:54,800
you know, and you want to shoot
for greatness, you know.

301
00:13:54,800 --> 00:13:57,400
It would be nice if you put
hawkstone the near list like you

302
00:13:57,400 --> 00:13:59,600
know I'd be really pleased but
you know honestly you're

303
00:13:59,600 --> 00:14:03,200
probably going to put you know
Andre said and Excel and

304
00:14:03,200 --> 00:14:05,800
Founders fund and Sequoia on
your list and you're going to

305
00:14:05,800 --> 00:14:08,800
find the way to get to those
kinds of investors and have them

306
00:14:08,800 --> 00:14:12,700
on your cap table and we turn to
serve as a pretty useful bridge

307
00:14:12,800 --> 00:14:15,000
in between.
In those things, sometimes hard

308
00:14:15,000 --> 00:14:17,800
for someone from Latvia, I'm
mentioning Latvia one, because

309
00:14:18,000 --> 00:14:20,100
he happened to raise from one of
those firms or in the middle of

310
00:14:20,100 --> 00:14:22,600
closing documents right now.
So I can't really quite say who

311
00:14:22,600 --> 00:14:25,100
it is, but it's one of the great
funds and in the u.s. it's, you

312
00:14:25,108 --> 00:14:27,800
know, it's hard to go from
Latvia to one of the top firms

313
00:14:27,800 --> 00:14:30,200
in the world.
But hopefully, you know, if you

314
00:14:30,200 --> 00:14:32,700
come and take a seat check from
us, I guess a little bit easier.

315
00:14:32,700 --> 00:14:35,800
And so that's been a bit of a
value-add kind of thesis for us

316
00:14:35,800 --> 00:14:38,600
and it's been working for us in
terms of in terms of these

317
00:14:38,600 --> 00:14:40,500
companies.
That's awesome.

318
00:14:40,500 --> 00:14:43,100
Let's talk about that go.
Big.

319
00:14:43,200 --> 00:14:46,700
Go Global approach that you're
having what can go right kind of

320
00:14:46,700 --> 00:14:49,400
approach on our pre-interview
call you stressed.

321
00:14:49,400 --> 00:14:53,000
That while you're reading those
companies, you always look at

322
00:14:53,100 --> 00:14:55,700
their plans to go Global and
specifically to start expanding

323
00:14:55,700 --> 00:14:57,800
to the United States or
sometimes even China.

324
00:14:58,200 --> 00:14:59,800
So can you tell us a little more
about that?

325
00:14:59,800 --> 00:15:03,800
How do you view if the companies
actually Gonna Go Global?

326
00:15:03,800 --> 00:15:06,900
If it's possible for you to go
Global, are there any major

327
00:15:06,900 --> 00:15:09,400
green flags for you when you're
reviewing the term?

328
00:15:09,400 --> 00:15:13,100
Should I mean on surgery, but
teach Jack of a precede or seed?

329
00:15:14,200 --> 00:15:16,700
Are there any parts of the pitch
deck that can clearly tell you

330
00:15:16,700 --> 00:15:20,400
that I make these company has a
decent chance of going to the US

331
00:15:20,400 --> 00:15:22,300
and be successful in the United
States?

332
00:15:23,200 --> 00:15:27,000
Yeah I mean so you know in those
early days if you're a deep tech

333
00:15:27,000 --> 00:15:29,600
tech companies probably easier
if you're a deep have company

334
00:15:29,600 --> 00:15:32,200
and you're the first one, with
the Innovation may be the only

335
00:15:32,200 --> 00:15:34,700
one in the world with that
Innovation and your focus on the

336
00:15:34,700 --> 00:15:38,400
US market, you know, apart from
execution and getting there and

337
00:15:38,400 --> 00:15:40,000
kind of doing all the business
stuff, right?

338
00:15:40,000 --> 00:15:42,700
That you need to do to succeed,
you know, there's not that much

339
00:15:42,700 --> 00:15:44,500
risk.
If you know other than just X

340
00:15:44,500 --> 00:15:46,700
and you can, you can you can
kind of believe that these has,

341
00:15:47,000 --> 00:15:49,200
you know, when you're more of a
consumer company or you're more

342
00:15:49,200 --> 00:15:52,100
of an Enterprise company and
there might be like, five, ten,

343
00:15:52,100 --> 00:15:55,200
fifteen other companies kind of
in that field, you know, you

344
00:15:55,200 --> 00:15:58,000
really do have to believe that
the company that you're writing,

345
00:15:58,000 --> 00:16:02,300
the check to that, starting off
at in Europe, which is probably

346
00:16:02,300 --> 00:16:04,300
in to some degree.
Like, starting off with, you

347
00:16:04,300 --> 00:16:06,900
know, a bit of a the opposite of
an edge, right?

348
00:16:06,900 --> 00:16:08,700
It's being hampered a little
bit.

349
00:16:08,900 --> 00:16:11,300
You've got to believe that they
can actually scale in the US and

350
00:16:11,300 --> 00:16:13,100
kind of overtake everybody in
the US.

351
00:16:13,200 --> 00:16:15,600
Even if there are the first one
in the market or even if the

352
00:16:15,600 --> 00:16:20,400
best product market and you
know, that the stuff that really

353
00:16:20,400 --> 00:16:22,600
matters there is kind of
traction and, you know, being

354
00:16:22,600 --> 00:16:25,500
able to show that you can, you
can do this stuff, you know, a

355
00:16:25,500 --> 00:16:27,400
lot of our businesses even
though their seed stage

356
00:16:27,400 --> 00:16:31,100
businesses, you know they end up
end up with a bunch of customers

357
00:16:31,300 --> 00:16:33,300
in the u.s. from the earliest
days.

358
00:16:33,400 --> 00:16:36,800
You know something like 30. 40
50 percent of the revenue and

359
00:16:36,800 --> 00:16:39,100
the revenues like tiny, tiny
tiny numbers.

360
00:16:39,200 --> 00:16:42,000
So there's one that, you know,
we did in Latvia, you know that,

361
00:16:42,100 --> 00:16:45,100
you know started in Latvia
founder got out of Latvia and

362
00:16:45,100 --> 00:16:47,500
went to the UK.
And but, you know, some of his

363
00:16:47,500 --> 00:16:50,800
earliest customers were in the
US and in LA, and New York,

364
00:16:51,200 --> 00:16:53,800
because it was all Word of Mouth
driven, you know.

365
00:16:53,800 --> 00:16:57,300
So that kind of tells you that,
you know, that there's something

366
00:16:57,300 --> 00:17:00,600
there in the business, you know,
that the someone who's a

367
00:17:00,608 --> 00:17:05,000
customer's kind of seeing the
value, add it by picking a

368
00:17:05,000 --> 00:17:08,099
company by picking a product
that's built by, you know, a far

369
00:17:08,099 --> 00:17:11,099
away place right now and say,
they don't even know and they

370
00:17:11,099 --> 00:17:12,599
just kind of project really
valuable.

371
00:17:12,800 --> 00:17:15,700
So Look for those kinds of
things, you more than anything

372
00:17:15,700 --> 00:17:17,200
else.
I kind of tells us, you know, if

373
00:17:17,200 --> 00:17:20,000
the and we'd love to we'd love
to see more businesses kind of

374
00:17:20,000 --> 00:17:21,800
expand into China.
I mean, if you think about the

375
00:17:21,800 --> 00:17:25,200
two largest kind of homogeneous,
big markets in the world, there

376
00:17:25,300 --> 00:17:27,700
are America and China.
You know, that the challenge in

377
00:17:27,708 --> 00:17:30,600
China is I think even if your
Google, it's hard to penetrate

378
00:17:30,600 --> 00:17:33,100
China.
Oh yeah, it's not always a fair

379
00:17:33,100 --> 00:17:36,500
be it's not always a fair
economy for Outsiders but

380
00:17:36,500 --> 00:17:38,600
America is really fair.
I mean, it's hard, it's

381
00:17:38,600 --> 00:17:41,100
expensive.
You know, it's the no one said,

382
00:17:41,300 --> 00:17:44,400
this game was easy, but it is.
Is definitely open for business,

383
00:17:44,400 --> 00:17:47,200
and maybe in the pandemic it's
little bit harder to travel but

384
00:17:47,200 --> 00:17:49,700
you know, that's going to go
away at some point hopefully

385
00:17:49,700 --> 00:17:51,300
soon.
But you know, you can definitely

386
00:17:51,300 --> 00:17:53,800
get to the US and be able to
scale up in the US and there's

387
00:17:53,800 --> 00:17:56,400
no, there's nothing that stops
you from being able to do that.

388
00:17:57,000 --> 00:17:59,800
We've, you know, so that's kind
of, that's kind of how we

389
00:17:59,800 --> 00:18:02,400
thought about it, you know,
historically, we've been pretty

390
00:18:02,400 --> 00:18:05,900
an tied, you know, businesses
that only focus on the, on the,

391
00:18:05,900 --> 00:18:08,600
on the domestic Market in anyone
in European countries, because

392
00:18:09,000 --> 00:18:12,000
Europe is not one place, it's a
lot of different countries and

393
00:18:12,100 --> 00:18:14,400
you know none of those In the
aggregate, they're about the

394
00:18:14,400 --> 00:18:17,000
same size as the US and China,
but, you know, none of the none

395
00:18:17,000 --> 00:18:19,700
of the countries themselves are
that big compared to the US and

396
00:18:19,700 --> 00:18:21,300
China and Germany is a big
country.

397
00:18:21,600 --> 00:18:24,000
France is a big country is the
country but it's not, it's not

398
00:18:24,000 --> 00:18:26,400
as big as the us.
But, you know, over time is

399
00:18:26,400 --> 00:18:29,100
these Tech markets have just
gotten deeper and deeper, you

400
00:18:29,100 --> 00:18:31,400
know, I think you actually can
build ten billion dollar

401
00:18:31,400 --> 00:18:34,100
companies in these places and
we're starting to revisit,

402
00:18:34,100 --> 00:18:35,900
whether that might be useful.
You know what?

403
00:18:35,900 --> 00:18:39,000
We're just solving for scale,
the challenge with the domestic

404
00:18:39,000 --> 00:18:42,400
ones though is you know, you
could be building the insurance

405
00:18:42,400 --> 00:18:44,400
company over.
Record in France and then

406
00:18:44,400 --> 00:18:46,600
lemonade goes.
Public in the US and decide

407
00:18:46,600 --> 00:18:50,200
certain expand to France to, and
then, you know, it's hard,

408
00:18:50,200 --> 00:18:52,400
right?
Like you can see how the, the

409
00:18:52,400 --> 00:18:55,100
American one can compete with
the European one, you know?

410
00:18:55,200 --> 00:18:56,700
Because Europe is not
homogeneous.

411
00:18:56,700 --> 00:18:59,300
You, it's hard to see how the
French one can go into the US

412
00:18:59,300 --> 00:19:02,800
market, and then win in the US.
And you kind of get you kind of

413
00:19:02,800 --> 00:19:05,400
get put into a little bubble.
And that bubble isn't even

414
00:19:05,400 --> 00:19:08,100
always fully protected, because,
you know, you could have a

415
00:19:08,108 --> 00:19:10,700
threat from the outside, which
is, you know, which is the

416
00:19:10,700 --> 00:19:14,000
American company coming in and
you You're trying to do this

417
00:19:14,000 --> 00:19:16,100
job, really?
Really well as a venture person

418
00:19:16,100 --> 00:19:18,700
you want to find companies that
are going to ideally, you know,

419
00:19:18,700 --> 00:19:21,600
build themselves up to a hundred
billion dollar plus companies,

420
00:19:21,600 --> 00:19:24,200
any Market there, deep enough to
be able to do that these days.

421
00:19:25,100 --> 00:19:28,000
So you but you can still build,
I can go and our companies just

422
00:19:28,000 --> 00:19:30,500
focusing on the domestic Market
which ten years ago, you

423
00:19:30,500 --> 00:19:32,800
probably couldn't.
So we're trying to figure out

424
00:19:32,800 --> 00:19:35,500
like what our view is there.
But but in general I would say,

425
00:19:35,500 --> 00:19:39,100
like, 80% of our businesses have
this ambition to kind of scale

426
00:19:39,100 --> 00:19:42,600
up all over and scaling up in
all of these businesses.

427
00:19:42,600 --> 00:19:44,300
The Is the heart, the single
hardest thing.

428
00:19:44,300 --> 00:19:46,600
I mean these guys will have good
ideas and you guys could be

429
00:19:46,608 --> 00:19:49,000
girls, you know, if we can get
them a check.

430
00:19:49,000 --> 00:19:51,700
So you know then they have money
in the bank and then the hardest

431
00:19:51,700 --> 00:19:55,200
thing is, is hiring people and
building up your organization.

432
00:19:55,200 --> 00:19:57,000
I mean, you know that that's
where, you know, that's

433
00:19:57,000 --> 00:19:58,900
something that we can't do is
Avenge her person.

434
00:19:59,100 --> 00:20:01,100
We can help but you know, we
can't really solve that.

435
00:20:01,100 --> 00:20:04,200
I mean, you know that's what the
founders have been do and kind

436
00:20:04,200 --> 00:20:06,700
of build the teams that can kind
of take these companies to the

437
00:20:06,700 --> 00:20:08,700
to those kinds of levels, you
know.

438
00:20:08,900 --> 00:20:11,100
And it's hard, right?
If you have a distributed team,

439
00:20:11,100 --> 00:20:13,000
you have some people working in
the US on people.

440
00:20:13,200 --> 00:20:17,700
Mm, obviously working, you can,
I mean I've a lot, I give these

441
00:20:17,700 --> 00:20:20,200
guys a lot of credit because you
know, it's very, very difficult

442
00:20:20,200 --> 00:20:21,500
to build these kinds of
businesses.

443
00:20:21,700 --> 00:20:25,300
So if you're shooting for kind
of the number one prize, that's

444
00:20:25,300 --> 00:20:28,400
kind of what you have to do.
And you can tell when someone is

445
00:20:28,400 --> 00:20:31,400
shooting for for that kind of
success level or whether they'd

446
00:20:31,400 --> 00:20:35,200
just be happy, building a good
business, and good businesses

447
00:20:35,200 --> 00:20:37,400
are good, but they're not always
the greatest investments, from

448
00:20:37,400 --> 00:20:41,600
Adventure perspective, right?
Yeah, people keep in mind that

449
00:20:41,600 --> 00:20:43,500
even if you know, that your
business is going to be

450
00:20:43,500 --> 00:20:46,100
profitable for, like, 95% chance
of that.

451
00:20:46,100 --> 00:20:48,900
Being of that happening, if it's
not build your business, looks

452
00:20:48,900 --> 00:20:50,100
like the PCS are just not
interested.

453
00:20:50,100 --> 00:20:51,600
That's how the structure of
words.

454
00:20:52,100 --> 00:20:55,400
So let's talk about some of the
red flags that you might see

455
00:20:55,400 --> 00:20:57,300
while talking to an early stage
failures.

456
00:20:57,300 --> 00:20:59,900
Is there something besides, of
course, the found her straight

457
00:20:59,900 --> 00:21:02,100
up telling you that, you know,
I'm going to focus on friends,

458
00:21:02,100 --> 00:21:04,600
that's what my plan is.
I don't want to go to the United

459
00:21:04,600 --> 00:21:06,700
States.
Are there any other red flags?

460
00:21:06,700 --> 00:21:09,500
That's founded, might give off
while talking to you about the

461
00:21:09,500 --> 00:21:11,800
expansion to the s or
extensions?

462
00:21:11,800 --> 00:21:14,400
Pretty much any country?
Other than their homelands.

463
00:21:15,300 --> 00:21:18,800
Yeah I mean so you know Founders
who are not as focused on go to

464
00:21:18,800 --> 00:21:21,900
market so you know, classic kind
of enterprise software type

465
00:21:21,900 --> 00:21:24,000
businesses, you know, when you
when you think about the

466
00:21:24,000 --> 00:21:26,500
evolution of an Enterprise offer
business, you know, you come up

467
00:21:26,500 --> 00:21:29,200
with an idea.
You start with an idea you come

468
00:21:29,200 --> 00:21:31,500
up with a product, you kind of
get your product Market, fit

469
00:21:31,600 --> 00:21:33,500
working because you test that
with some customers and you

470
00:21:33,508 --> 00:21:35,600
realize you have customers
actually kind of like what I'm

471
00:21:35,600 --> 00:21:38,900
building, that probably takes
like a year, two, three.

472
00:21:39,000 --> 00:21:40,900
Like it takes a bit of time,
right, to going to build the

473
00:21:40,900 --> 00:21:43,500
right kind of product for folks
and to be able to Oh, that, you

474
00:21:43,500 --> 00:21:47,800
know, that actually is Market
fit the next probably five

475
00:21:47,800 --> 00:21:51,200
years, 27 years of your journey
as the entrepreneur.

476
00:21:51,200 --> 00:21:54,500
The CEO of that business is
building the go-to-market

477
00:21:54,800 --> 00:21:57,300
mechanism.
It's largely like an Enterprise

478
00:21:57,300 --> 00:21:58,600
software is very much of a
playbooks.

479
00:21:58,600 --> 00:22:01,200
It's actually easier to explain
it.

480
00:22:01,200 --> 00:22:03,800
A lot of it's like the blocking
and tackling of building like

481
00:22:03,800 --> 00:22:07,200
good sales teams on the ground
than being able to scale up

482
00:22:07,200 --> 00:22:10,800
those sales teams kind of said,
you know said said geographies

483
00:22:11,000 --> 00:22:14,200
kind of set motivation like said
And set quotas, Etc.

484
00:22:14,200 --> 00:22:16,700
I mean, there's a lot of
mechanics and there's lots of

485
00:22:16,700 --> 00:22:19,500
resources online to read about
these mechanics about how, to

486
00:22:19,500 --> 00:22:22,000
actually build a sales machine.
But, you know, probably for the

487
00:22:22,000 --> 00:22:24,800
next, you know, several years
probably five years of your

488
00:22:24,800 --> 00:22:27,300
life, it's going to be, like, in
the trenches, like Building

489
00:22:27,300 --> 00:22:28,900
Sales.
You could be the world's best

490
00:22:28,900 --> 00:22:32,800
product person or the world's
best engineer in terms of like,

491
00:22:32,800 --> 00:22:34,800
coming up with this stuff, but
if you're not prepared to do

492
00:22:34,800 --> 00:22:37,500
that hard work on the sale side,
which might feel a little bit

493
00:22:37,500 --> 00:22:39,200
beneath you.
If you're, if you're coming from

494
00:22:39,200 --> 00:22:42,000
product and Engineering, that's
a bit of a warning sign and it's

495
00:22:42,000 --> 00:22:45,500
not usually until like year 7,
your 8 year, 9 of that journey

496
00:22:45,500 --> 00:22:48,100
of the company that you start
turning into like a platform.

497
00:22:48,300 --> 00:22:50,500
A lot of people think platforms
going to start from day one.

498
00:22:50,500 --> 00:22:52,100
They don't usually start from
day one.

499
00:22:52,300 --> 00:22:54,600
You build your product, you
scale your product.

500
00:22:54,600 --> 00:22:58,100
You're now getting to scale and
you start finding other things

501
00:22:58,100 --> 00:23:00,900
to do with your customer base
and with your product Suite, to

502
00:23:00,900 --> 00:23:03,100
kind of expand out.
So you build a bigger and bigger

503
00:23:03,100 --> 00:23:04,900
moat?
You know, most product people

504
00:23:04,900 --> 00:23:06,900
want to go straight from product
to platform.

505
00:23:06,900 --> 00:23:08,900
What's he doing?
All that heavy messy, work of

506
00:23:08,900 --> 00:23:11,000
the sales side.
Someone's got to do it, you're

507
00:23:11,000 --> 00:23:12,900
not going to build your company
to several hundred million.

508
00:23:13,100 --> 00:23:15,700
Revenue without doing without
doing the sales stuff.

509
00:23:15,800 --> 00:23:18,600
So, people come in and aren't
thinking about go-to-market

510
00:23:18,600 --> 00:23:21,000
aren't thinking about sales kind
of scare us, right?

511
00:23:21,000 --> 00:23:24,600
Because you can easily just be
entirely focused on the, on the,

512
00:23:24,600 --> 00:23:27,100
on the product in the
engineering and not to worry

513
00:23:27,100 --> 00:23:28,900
about sales.
You consumer internet's a little

514
00:23:28,900 --> 00:23:30,100
bit.
It is a little bit different,

515
00:23:30,100 --> 00:23:31,400
right?
Because you ship a product and

516
00:23:31,400 --> 00:23:33,900
you'll see immediately, what the
active usage is going to be.

517
00:23:34,100 --> 00:23:36,600
But you know, if you're building
a consumer product, you know,

518
00:23:36,600 --> 00:23:39,400
and you're in your metrics and
it's a very metric oriented

519
00:23:39,400 --> 00:23:41,800
business in some respects
because so much of this stuff

520
00:23:41,800 --> 00:23:42,900
happens in real time, right?
Yeah.

521
00:23:43,000 --> 00:23:45,700
Can immediately see what people
are doing and you're not getting

522
00:23:45,700 --> 00:23:48,200
good engagement in.
Your attention is not good.

523
00:23:48,200 --> 00:23:51,200
I mean that starts, getting that
becomes a warning sign because

524
00:23:51,400 --> 00:23:54,700
again, when you build a good
product you see exactly what the

525
00:23:54,700 --> 00:23:58,400
behavior is going to happen on
the user side with to that

526
00:23:58,400 --> 00:24:00,300
product and you can see that
stuff.

527
00:24:00,300 --> 00:24:02,100
And you have to really care
about that stuff and there's a

528
00:24:02,100 --> 00:24:03,900
whole bunch of little tweaks
that you have to make and

529
00:24:04,200 --> 00:24:07,100
retention them too often the the
red flag usually, you know, you

530
00:24:07,100 --> 00:24:09,600
get a product right, you get
people using it and then they

531
00:24:09,600 --> 00:24:12,700
don't get I stick around and
continue using it, we've got to

532
00:24:12,800 --> 00:24:14,200
you.
To be able to get that stuff

533
00:24:14,200 --> 00:24:17,400
working in order to be able to
be able to scale the business.

534
00:24:18,600 --> 00:24:22,400
Yeah but they're, you know where
again, we're Optimus right?

535
00:24:22,400 --> 00:24:25,000
So we're trying to figure out
all the things that are going

536
00:24:25,000 --> 00:24:27,000
right versus all the things that
are going wrong which is

537
00:24:27,008 --> 00:24:28,500
probably find struggling,
cancer.

538
00:24:28,500 --> 00:24:30,900
This me you often mean it's
weird.

539
00:24:31,000 --> 00:24:34,900
You often know when you see it
like you really do like you owe

540
00:24:34,900 --> 00:24:39,000
someone walks in the door and I
heard this about another venture

541
00:24:39,000 --> 00:24:42,100
set B of its kind of another
adventure person said it was

542
00:24:42,100 --> 00:24:44,400
Peter Fenton.
I'd like the person who walks

543
00:24:44,400 --> 00:24:47,300
through the door makes you think
about the world in a totally

544
00:24:47,300 --> 00:24:49,900
different way and you all of a
sudden what kind of the light

545
00:24:49,900 --> 00:24:53,400
bulb goes off in your like yes I
see why there's a need for x and

546
00:24:53,400 --> 00:24:56,600
I see exactly how this thing is
going to do not exactly.

547
00:24:56,600 --> 00:25:00,200
They see why this is going to
scale and then you got to write

548
00:25:00,200 --> 00:25:03,300
the check and you won't know the
rest of the details until you

549
00:25:03,300 --> 00:25:06,100
kind of write the check and
every investment that I think

550
00:25:06,100 --> 00:25:09,800
we've regretted doing as large
as it's largely been an on

551
00:25:09,800 --> 00:25:13,600
investment, it's people coming
through the door that you We

552
00:25:13,600 --> 00:25:17,200
kind of really wanted to write
the check to because the light

553
00:25:17,200 --> 00:25:18,800
bulb kind of went off.
And then we couldn't

554
00:25:18,800 --> 00:25:21,000
intellectually justify to
ourselves.

555
00:25:21,100 --> 00:25:23,100
Like for instance, we had a Neo
Bank on it.

556
00:25:23,100 --> 00:25:24,200
Come in.
I was mons.

557
00:25:24,200 --> 00:25:25,200
Oh no.
Manzo's.

558
00:25:25,200 --> 00:25:26,900
Now several billion dollar
company.

559
00:25:27,100 --> 00:25:28,900
You know, it's had some tough
times as well because the

560
00:25:28,900 --> 00:25:31,500
pandemic, it's gone, it's gone
from nothing to something really

561
00:25:31,500 --> 00:25:34,400
big.
And, you know, we saw it and

562
00:25:34,400 --> 00:25:36,800
then it was like a national
business focused on the UK.

563
00:25:36,800 --> 00:25:38,700
It's regulated, right?
Can you really build a

564
00:25:38,708 --> 00:25:41,200
next-generation bank and get to
scale?

565
00:25:41,200 --> 00:25:44,600
You know, we asked Tom this one
Question, which is like, how are

566
00:25:44,600 --> 00:25:47,400
you going to get customers?
And his answer was like, it was

567
00:25:47,400 --> 00:25:49,300
so contrived.
It was, it was like, I'm gonna

568
00:25:49,300 --> 00:25:51,400
hire an agency.
I've been at least marketing was

569
00:25:51,400 --> 00:25:54,200
like that, you know, all the
blocking, all the things that do

570
00:25:54,200 --> 00:25:56,400
it kind of, it was a totally
generic answer, it's all the

571
00:25:56,400 --> 00:25:58,500
things.
You expect someone to do without

572
00:25:58,500 --> 00:26:01,400
any insight Estelle.
Like the real customers, not the

573
00:26:01,400 --> 00:26:02,700
mechanics of, how are you going
to go?

574
00:26:02,700 --> 00:26:04,800
Get customers.
It's like why are people going

575
00:26:04,800 --> 00:26:06,300
to choose you?
And you could even really answer

576
00:26:06,300 --> 00:26:08,500
that it turns out like a year
later when they finally ship

577
00:26:08,500 --> 00:26:11,300
their product that you took him
a while to build a bank.

578
00:26:11,300 --> 00:26:14,100
If you go get regulated and
Setters a year, You know, they

579
00:26:14,100 --> 00:26:17,100
were in the market, they built a
card that was a particular

580
00:26:17,100 --> 00:26:20,100
color, and it became super
trendy among Millennials, and

581
00:26:20,100 --> 00:26:23,300
gen Z years.
I'm not so sure he knew the

582
00:26:23,300 --> 00:26:25,400
answer to that question, at the
times that we were asking you,

583
00:26:25,400 --> 00:26:28,400
which is why you gave us, you
could see that there was

584
00:26:28,400 --> 00:26:31,300
something special in this
company and they him like, kind

585
00:26:31,300 --> 00:26:32,800
of want to write the check.
You just can't paint it.

586
00:26:32,900 --> 00:26:34,700
Like, when you're writing your
investment, remind your like,

587
00:26:34,700 --> 00:26:37,100
they are biggest risk, you know,
getting a customer base, you

588
00:26:37,100 --> 00:26:39,100
know, people switching their
bank and they're going.

589
00:26:39,400 --> 00:26:42,200
Why are they going to do this?
Like, big question, mark, right?

590
00:26:42,200 --> 00:26:45,200
Like, you can't feel Get in.
Yeah, you can explain maybe how

591
00:26:45,200 --> 00:26:46,900
they're going to run their
marketing but you can't really

592
00:26:46,900 --> 00:26:49,800
explain why people are going to
switch it and we talked our way

593
00:26:49,800 --> 00:26:51,800
out of it.
And was it was a dumb decision,

594
00:26:51,800 --> 00:26:54,000
right then?
And I Insight, you know,

595
00:26:54,200 --> 00:26:55,500
everything that we've done like
this.

596
00:26:55,500 --> 00:26:57,800
We met another company in
France, they were building like

597
00:26:58,100 --> 00:27:00,600
tracking, like kind of a GPS
location.

598
00:27:00,600 --> 00:27:03,300
Think something very similar to
find my friends on your iPhone.

599
00:27:03,400 --> 00:27:06,400
But at the time the iPhone 5, my
friends feature was really

600
00:27:06,400 --> 00:27:08,400
battery consumptives.
He didn't want to let it run.

601
00:27:08,400 --> 00:27:10,200
They figure that make their
stuff non battery.

602
00:27:10,200 --> 00:27:13,400
Could something like, we really
like these guys like You know,

603
00:27:13,400 --> 00:27:15,900
you could see that they were
trying to build something that

604
00:27:15,900 --> 00:27:18,500
was really interesting and we
just couldn't see how that could

605
00:27:18,500 --> 00:27:20,400
turn into a billion-dollar
company like we thought.

606
00:27:20,400 --> 00:27:22,900
Well, it was going to happen is
going to get acquired by someone

607
00:27:22,900 --> 00:27:24,300
else.
Who's going to have this as a

608
00:27:24,300 --> 00:27:27,000
feature, you know, of their
products that, you know, two

609
00:27:27,000 --> 00:27:31,100
years later they got acquired by
Snapchat by snap or 250 million

610
00:27:31,100 --> 00:27:33,300
dollars.
You know, when you fire up snap

611
00:27:33,300 --> 00:27:36,200
today and like, you look at this
and like, you see the heat map

612
00:27:36,200 --> 00:27:39,300
of where people are, that's all
their stuff, right?

613
00:27:39,300 --> 00:27:42,800
And I, you know, that they
headed, you know, we wouldn't

614
00:27:42,900 --> 00:27:45,800
Have made of, it would not be
the same kind of investment for

615
00:27:45,800 --> 00:27:49,100
us as a delivery, or dark trays,
but like in two years, you know,

616
00:27:49,100 --> 00:27:51,300
at the price of we were probably
coming in at the seed round.

617
00:27:51,300 --> 00:27:54,300
We would have returned our
entire fund over and, you know,

618
00:27:54,500 --> 00:27:57,000
we again we just intellectually
talked our way out of it because

619
00:27:57,000 --> 00:27:58,200
we didn't think it would become
big enough.

620
00:27:58,200 --> 00:28:00,500
But we saw the light bulb, you
know, happened.

621
00:28:00,500 --> 00:28:03,600
We spent like weeks with these
guys trying to figure out why we

622
00:28:03,600 --> 00:28:05,400
should do it.
I think when the lightbulb kind

623
00:28:05,400 --> 00:28:07,900
of goes off like that and you
kind of yeah, the entrepreneur

624
00:28:07,900 --> 00:28:10,300
walks in, they kind of educate
you as to why this is gonna be

625
00:28:10,300 --> 00:28:13,300
interesting and you kind of
believe it, you know, You kind

626
00:28:13,300 --> 00:28:15,600
of want to write the check in
those kinds of scenarios.

627
00:28:16,900 --> 00:28:19,500
So yeah.
So, so hopefully hopefully that

628
00:28:19,500 --> 00:28:21,900
answered the question a little
bit and we're looking codes.

629
00:28:22,600 --> 00:28:25,400
It sure does.
Soap, on this note, we're moving

630
00:28:25,400 --> 00:28:28,000
on to the last question of
today's episode, which is a call

631
00:28:28,000 --> 00:28:30,200
to action.
So, is there something

632
00:28:30,200 --> 00:28:33,500
particular that's want to listen
to do as soon as this episode is

633
00:28:33,500 --> 00:28:35,500
over?
No.

634
00:28:35,500 --> 00:28:37,800
I mean if you're building a
company in Europe or, you know

635
00:28:37,800 --> 00:28:40,600
of a company in Europe, like
very selfishly like find your

636
00:28:40,600 --> 00:28:44,400
way to us and talk to us like we
love seeing fields of the we're

637
00:28:44,400 --> 00:28:46,900
only as good as you know the
next investment that we make.

638
00:28:46,900 --> 00:28:49,500
So we may have all this all this
success but we've got to think

639
00:28:49,500 --> 00:28:53,100
about the future, you know, if
you know if you're a founder or

640
00:28:53,100 --> 00:28:55,600
an engineer or product manager
or salesperson and you're in

641
00:28:55,600 --> 00:28:58,300
kind of in Europe and you want
to join one of our companies I

642
00:28:58,308 --> 00:29:00,900
come and talk to us and if we
can be helpful, you know, feel

643
00:29:00,900 --> 00:29:02,800
free to shoot me a note.
I'm very active on Twitter.

644
00:29:02,800 --> 00:29:06,500
It's just H kanji Kan jeg.
My emails really?

645
00:29:06,500 --> 00:29:09,100
This is my first name.
He's saying within eh.

646
00:29:09,100 --> 00:29:13,300
Guess this cin at hoxton h?
I XT o n.v see.

647
00:29:14,700 --> 00:29:18,500
Perfect 2 5 point, something
percent of our listeners in

648
00:29:18,500 --> 00:29:21,300
Europe people.
Definitely check it out American

649
00:29:21,300 --> 00:29:22,800
friends.
So check it out.

650
00:29:22,800 --> 00:29:29,800
Might be super useful anyways.
And One last question, actually,

651
00:29:29,800 --> 00:29:32,500
after a call to action, I don't
usually ask questions after

652
00:29:32,500 --> 00:29:34,200
cultivation but in this episode
I will.

653
00:29:34,300 --> 00:29:36,500
So what's up?
Just a little more about this

654
00:29:37,400 --> 00:29:40,000
light bulb.
So the founder who is just

655
00:29:40,000 --> 00:29:43,600
charismatic, you know, he or she
turns on your leg, both being

656
00:29:43,600 --> 00:29:46,200
know that he wants to invest in
them, but there's something

657
00:29:46,200 --> 00:29:49,600
missing, you know how
confounders figure out what is

658
00:29:49,600 --> 00:29:54,800
missing and I think fix it.
Are you telling them that right

659
00:29:54,800 --> 00:29:56,400
away?
Are you said making any

660
00:29:56,400 --> 00:29:58,300
suggestions or do you just you
know, tell him.

661
00:29:58,500 --> 00:30:01,900
Your go-to-market strategy is
complete doll should come back

662
00:30:01,900 --> 00:30:04,300
when you fix it.
How exactly does that work?

663
00:30:04,800 --> 00:30:07,300
We usually end up in a bit of a
dialogue, with their Founders.

664
00:30:07,300 --> 00:30:10,800
Almost all the Investments that
we made or via references.

665
00:30:10,800 --> 00:30:13,600
Usually, from Founders, usually
weirdly enough from Founders,

666
00:30:13,600 --> 00:30:17,300
we've turned down who then send
the stuff that feels more, like,

667
00:30:17,300 --> 00:30:19,500
it would fit with us or they
think it's going to fit more

668
00:30:19,500 --> 00:30:22,400
with us, which is surprising.
So like we tend to have good

669
00:30:22,400 --> 00:30:25,500
discussions with folks and you
know we recognize we're not were

670
00:30:25,500 --> 00:30:28,200
by no means the expert on this
stuff because you know, our in

671
00:30:28,200 --> 00:30:30,600
this He's basically in Industry
of exceptions.

672
00:30:30,700 --> 00:30:33,100
So, you know, people can make
one, you know, you all you need

673
00:30:33,100 --> 00:30:35,500
is one exception, right?
To kind of prove that the rule

674
00:30:35,500 --> 00:30:38,000
is actually not true in the
general.

675
00:30:38,900 --> 00:30:42,400
So you know so and in Charisma
isn't what we're necessarily

676
00:30:42,400 --> 00:30:44,800
looking for me, it's great to be
a charismatic founder, but it's

677
00:30:44,800 --> 00:30:47,300
this light bulb moment about
like how the world works.

678
00:30:47,500 --> 00:30:50,300
That it's a little it's a little
bit more intellectual, right?

679
00:30:50,300 --> 00:30:52,200
It's like this is why this thing
is broken in.

680
00:30:52,200 --> 00:30:54,400
This is why this solution is
actually the right thing.

681
00:30:54,500 --> 00:30:57,400
You know, the founders prism is
great but it's largely that by

682
00:30:57,400 --> 00:30:59,600
kind of the light.
All this largely on this.

683
00:30:59,900 --> 00:31:02,500
Here's why this problem is so
interesting, here is why the

684
00:31:02,500 --> 00:31:06,700
solution is so interesting.
Give you another anecdote way to

685
00:31:06,700 --> 00:31:09,200
Foundry come in and she was
super bright, she came out of an

686
00:31:09,200 --> 00:31:12,100
augmented reality start of those
a unicorn and she's like, one of

687
00:31:12,100 --> 00:31:14,300
the lead product managers there.
And she teamed up with on the

688
00:31:14,300 --> 00:31:16,300
lead Engineers.
That kind of worked as a Duo and

689
00:31:16,300 --> 00:31:18,300
shipped.
A lot of the products inside of

690
00:31:18,300 --> 00:31:21,300
that particular company and she
came to us and she wanted to

691
00:31:21,300 --> 00:31:25,300
raise kind of a 234 million
dollar seed round and they had

692
00:31:25,300 --> 00:31:27,700
no traction, no confirm like
they're building a gaming

693
00:31:27,700 --> 00:31:28,300
company.
No, no.

694
00:31:28,500 --> 00:31:30,500
Nothing in the market.
No metrics.

695
00:31:30,500 --> 00:31:33,000
Not even like an early
prototype, build of the of the

696
00:31:33,000 --> 00:31:37,100
game and I was I was convinced
that like it was going to be

697
00:31:37,400 --> 00:31:41,300
pretty impossible for her to be
able to raise this money and I

698
00:31:41,300 --> 00:31:44,200
told her and she's not told me
like that first meeting was like

699
00:31:44,200 --> 00:31:46,400
a hard meeting.
She's like I now realized that

700
00:31:46,400 --> 00:31:50,000
you're very direct but you know
you don't sugarcoat the pill.

701
00:31:50,300 --> 00:31:52,700
Oh like you know it was it was a
bit of a punch to the face like

702
00:31:52,700 --> 00:31:55,900
when you told me that but I
really liked her so like like in

703
00:31:55,900 --> 00:32:00,100
terms of like I thought she was
working on and Her like it was

704
00:32:00,100 --> 00:32:02,700
it was again, I'd like bold type
moments, I had her meet my

705
00:32:02,700 --> 00:32:05,800
partner like a few days later.
I said there an email saying it

706
00:32:05,800 --> 00:32:07,800
like, I'm sorry for giving you
any hard feedback, right?

707
00:32:07,800 --> 00:32:10,500
But like come in and we're not
the right kind of fun for you

708
00:32:10,500 --> 00:32:12,000
because we're not going to write
the two, three, four million

709
00:32:12,000 --> 00:32:14,200
dollar check, but you don't
think it's a waste of time come

710
00:32:14,200 --> 00:32:18,500
and meet my partner and I'm
using this selfishly to see what

711
00:32:18,500 --> 00:32:22,200
we think and he ended up having
the same reaction I did to her

712
00:32:22,200 --> 00:32:24,400
and kind of what she was
building and we went back to her

713
00:32:24,400 --> 00:32:26,600
and said, look, what I don't
think you're ready for like the

714
00:32:26,600 --> 00:32:29,500
big type round.
I mean, For is actually not big

715
00:32:29,500 --> 00:32:32,000
but like yeah, I just think you
need to prove that you can at

716
00:32:32,000 --> 00:32:34,300
least have to build a prototype
into like what is it cost to

717
00:32:34,308 --> 00:32:36,500
build the Prototype?
It turns out it's like a little

718
00:32:36,500 --> 00:32:38,100
bit under a million.
It's like in the hundreds of

719
00:32:38,100 --> 00:32:41,300
thousands and we said we'd write
a check and kind of wrote that

720
00:32:41,300 --> 00:32:44,100
check you know, six months or
eight months later as she had a

721
00:32:44,100 --> 00:32:47,400
prototype index which is a
really large Venture fund both

722
00:32:47,400 --> 00:32:49,000
in Europe as well as in the u.s.
ended up.

723
00:32:49,000 --> 00:32:51,800
Writing her seed round, we kind
of doubled down alongside of

724
00:32:51,800 --> 00:32:53,300
her.
She's like a you know hopefully

725
00:32:53,300 --> 00:32:56,000
a couple of months away.
Now, from from launching, her

726
00:32:56,000 --> 00:32:58,000
first game, it's almost ready to
go.

727
00:32:58,100 --> 00:33:02,100
And I know, you know, you know
that was one where I can like I

728
00:33:02,108 --> 00:33:04,500
can tell you exactly like you
know that we were we were

729
00:33:04,500 --> 00:33:06,600
turning are downright different,
kind of doubled down.

730
00:33:06,700 --> 00:33:09,700
We doubled back to her and said
like take a small check instead

731
00:33:09,700 --> 00:33:13,300
and and taking the small check
our first thing was like, you

732
00:33:13,300 --> 00:33:15,400
know, I don't want you to not
succeed.

733
00:33:15,400 --> 00:33:17,900
I just think what the the bar
that you're setting yourself up

734
00:33:17,900 --> 00:33:20,500
for is more likely to fail.
But I think if you went and

735
00:33:20,500 --> 00:33:24,200
asked people for like 500 case,
150k etcetera, you would get it

736
00:33:24,200 --> 00:33:26,400
in a heartbeat and then you
could actually go prove the

737
00:33:26,400 --> 00:33:30,000
metrics that you kind of want to
prove and Be able to build and,

738
00:33:30,200 --> 00:33:32,200
you know, we do stuff like that
all the time in that case, it

739
00:33:32,208 --> 00:33:34,500
was a fundraising type thing,
but sometimes it's go-to-market

740
00:33:34,500 --> 00:33:35,800
type thing.
You know, we have these

741
00:33:35,800 --> 00:33:37,800
conversations, hopefully, their
constructive.

742
00:33:37,800 --> 00:33:40,000
I think that's a reason why we
get so much referral business.

743
00:33:40,000 --> 00:33:41,500
From Founders that we've turned
down.

744
00:33:41,800 --> 00:33:44,400
But, you know, sadly, our
business is trying to find new

745
00:33:44,400 --> 00:33:46,000
businesses that are going to be
great.

746
00:33:46,000 --> 00:33:48,700
And we have, you know, our ratio
right now is kind of

747
00:33:48,700 --> 00:33:50,600
ridiculously high.
We don't need to preserve that

748
00:33:50,600 --> 00:33:53,400
but we do want to build a.
We do want to, we do want to

749
00:33:53,408 --> 00:33:55,500
build big companies like there.
And we don't have a lot of

750
00:33:55,508 --> 00:33:58,700
capital to spend on things like
we could invest in On the

751
00:33:58,700 --> 00:34:01,100
companies we could we would but
like, you know, where we have an

752
00:34:01,100 --> 00:34:04,700
obligation on our, on our
investor side to kind of get

753
00:34:04,700 --> 00:34:07,100
their returns as high as
possible, but we try to be

754
00:34:07,100 --> 00:34:11,300
constructive in that process.
Absolutely.

755
00:34:11,699 --> 00:34:16,300
On this really optimistic note.
We're going to wrap it up again,

756
00:34:16,300 --> 00:34:20,000
repeating cultivation.
There's going to be a links to

757
00:34:20,199 --> 00:34:23,300
things, LinkedIn, and Twitter in
the description of this episode.

758
00:34:23,300 --> 00:34:26,500
There is also course, can be a
link to the hoxton ventures.

759
00:34:26,699 --> 00:34:28,300
So you're paying people,
definitely check it.

760
00:34:28,400 --> 00:34:30,000
It out.
And my call to action is going

761
00:34:30,000 --> 00:34:31,900
to be check out the description
of this episode's.

762
00:34:31,900 --> 00:34:35,300
Also, I'm going to leave a link
to first base taught bio for

763
00:34:35,300 --> 00:34:37,699
those people who are in Europe
and want to expand to.

764
00:34:37,699 --> 00:34:40,500
Yes, check it out.
I recently started working for

765
00:34:40,500 --> 00:34:42,000
them.
So there's also going to be a

766
00:34:42,000 --> 00:34:46,600
15% discount code for you guys
and yeah, check out the

767
00:34:46,607 --> 00:34:48,900
descriptions of though, as
usually have a good day.