# VC10X - Why VCs are struggling to return capital to LPs - Sean Byrnes, GP, Near Horizon

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 17 Jun 2025, 47 min.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/104267011/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2025-5-17%2F402333267-44100-2-ccf132830dbdb.mp3

Sean Byrnes is a co-founder & General Partner at Near Horizon. Sean has spent the past 20 years founding and scaling companies that have defined new categories, including Flurry—the world’s largest mobile analytics platform, acquired by Yahoo—and Outlier.ai, an automated data analysis leader. At Near Horizon, Sean partners hands-on with founders, combining deep operational expertise and capital to help launch the next generation of AI-powered startups. ⭐ Sponsored by Podcast10x - Podcasting agency for VCs - https://podcast10x.com Near Horizon website - https://www.nearhorizon.vc/ Breaking Point Newsletter - https://www.breakingpoint.tech/ Sean Byrnes on LinkedIn - https://www.linkedin.com/in/sbyrnes/ 🎙️ Hosted by Prashant Choubey Follow Prashant on X - https://x.com/ChoubeySahab Follow Prashant on LinkedIn - https://www.linkedin.com/in/choubeysahab In this episode, we talk about - - Why Sean thinks venture capital is the most risk averse asset class? - Why VCs are struggling to return capital to LPs? - His unique approach to investing at Near Horizon Ventures - What should founders focus on in the earliest stage of a startup? - Why founders need to think small to move faster at the early stage - How can founders be more outcome focused? & lots more Timestamps: (00:00) Introduction (04:13) Near Horizon's unique investment model of working with solo founders (08:28) Challenges of innovating in venture capital (09:15) Perspectives on LP (Limited Partner) resistance to new VC models (14:06) Discussing liquidity problems in venture capital (18:25) Strategies for early exits and secondary markets (22:26) Why venture capital is the most risk-averse asset class (27:03) Key focus areas when working with early-stage companies (31:26) Importance of customer research and distribution advantage (35:41) The concept of "thinking smaller" to grow faster (38:26) Why status meetings are ineffective (41:12) How founders can be more outcome-focused (43:33) Rapid fire round of questions about Near Horizon's investment approach (46:16) Closing remarks and ways to follow Sean Byrnes For sponsorship or guest appearance requests, write to prashantchoubey3@gmail.com Subscribe to VC10X on Youtube, Spotify, Apple Podcasts.

## Transcript

[0:00] There's an entire lost generation of venture funds who
[0:02] likely won't produce any form of return, may not even get to a
[0:05] DPI of 1. The average return of venture
[0:08] funds is not good as everybody knows.
[0:10] The fact that you have to get to the top quartile of venture
[0:13] funds just to match the S&P 500 is amazing to me.
[0:17] If you keep doing what other VCs are doing, there's a very herd
[0:20] mentality. So they all invest in Uber.
[0:22] You look for the Uber for XI want, the Uber for fishing and
[0:25] the Uber for hotels and the Uber for this.
[0:29] You're not really going to find the best returns because you're
[0:32] essentially just chasing something that already worked in
[0:34] the past. If you're not looking to the
[0:36] future and trying to really take some interesting risks, you're
[0:38] not going to produce these above average returns, which is one of
[0:41] the many reasons that the returns of venture capital are
[0:44] so low. Hey everyone, this is Prashant
[0:48] and I'll be host for the VC10X podcast.
[0:50] And today we have Sean Baroness with us.
[0:53] Sean is a Co founder and general partner at Near Horizon.
[0:56] Sean has spent the past 20 years founding and scaling companies
[1:00] that have defined new categories, including Flurry,
[1:03] the world's largest mobile analytics platform acquired by
[1:06] Yahoo and Outlier AI, an automated data analytics leader.
[1:11] At Near Horizon, Sean partners hands on with founders combining
[1:14] deep operational expertise and capital to help launch the next
[1:18] generation of AI powered startups.
[1:20] In this episode we talk about why Sean thinks venture capital
[1:24] is the most risk averse asset class, Why VCs are struggling to
[1:28] return capital to LP's, His unique approach to investing at
[1:31] Near Horizon ventures. What should founders focused on
[1:35] at the earliest stages of a startup?
[1:38] Why founders need to think small to move faster at the early
[1:41] stage. How can founders be more outcome
[1:44] focused and lots more. So without wasting any time,
[1:47] let's dive straight in. This episode is sponsored by my
[1:50] own podcasting agency called Podcast NX, where I help venture
[1:54] capitalists, asset managers, allocators and family offices
[1:57] and starting their own podcast and building a strong brand.
[2:00] Podcast NX is designed in a way to work well with the busy
[2:04] schedule of investors where we handle every aspect of podcast
[2:08] production so you can focus on investing.
[2:11] If you're looking to build a strong investor brand, starting
[2:14] a podcast should be right up your priority list.
[2:17] It's the only form of marketing where you can showcase your
[2:20] strong network. In other words, access to
[2:23] limited partners and founders and grow that network further.
[2:27] And contrary to what most people here, it's still very early to
[2:30] start a podcast. There are at least 10X more
[2:32] newsletters and thousand X more blogs than there are podcasts in
[2:37] this world. You can learn more about our
[2:39] podcasting services at Podcast ten-x.com.
[2:42] I'll make sure to add the link in the description below.
[2:46] Enjoy this episode. Hey, Sean, so good to have you
[2:48] on the VC10X podcast. How are you doing?
[2:50] Thanks for having me on. I'm doing well.
[2:52] Excited to be here. Yeah, it's a pleasure having you
[2:55] on. And to start things off, can you
[2:57] share some of your story and how you got into investing?
[3:01] Sure. So a little over 20 years ago, I
[3:03] went to Graduate School for artificial intelligence, which
[3:05] by the way, was a bad idea back then.
[3:07] We used to joke that the work we were doing was not going to be
[3:10] relevant in our lifetimes. And you pass forward 20 years,
[3:13] it turns out it was, We just didn't know that at the time.
[3:16] I spent the 1st 20 years of my career as ACEO and founder of
[3:19] companies. I started Flurry, which was one
[3:22] of the largest analytics and ads platform for mobile apps.
[3:25] We sold that in 2014. My most recent company is a
[3:28] company called Outlier. We use machine learning at scale
[3:31] to find insights in large data sets.
[3:33] So large brands like Nike, Capital One, Johnson, and
[3:36] Johnson didn't know what they didn't know about how consumer
[3:38] behavior was changing in the Outlier system found that for
[3:41] them automatically. And so I had a lot of fun with
[3:43] that. About two years ago, I pivoted
[3:46] over to the other side and started a firm called Near
[3:48] Horizon with two good friends of mine, also founders, to create a
[3:52] new model for venture capital where we partner with solo
[3:55] founders and help them build their businesses from the ground
[3:58] up by not just investing money but joining the team.
[4:00] So I jump in and join the founding team of these ideas
[4:03] that these CEO founders have and help them build their their
[4:07] vision. So this next stage in my career
[4:09] is less about me being the CEO and founder with my own vision
[4:11] and me helping other people realize their vision.
[4:14] Absolutely. That's quite an interesting
[4:16] model. How does that work in practice?
[4:18] So you say you are going to be as good as a Co founder, right?
[4:21] And but you have multiple portfolio companies, right,
[4:24] unlike the founders who are just focused on one company.
[4:26] So how's that going to work? Well, let's start off by near
[4:30] horizon. We focus on what I'll call mid
[4:31] career solo founders. So people like myself with
[4:34] decade, 2 decades of experience. We know our industry well.
[4:37] We have an idea. The current venture capital
[4:40] market expects everyone to have a Co founder, which if you're
[4:43] straight out of university can make a lot of sense.
[4:46] In fact, in a lot of cases, I think it's better to have a Co
[4:48] founder in those early stages of your career.
[4:49] I certainly did when I was getting started.
[4:51] When you're a mid career solo founder, the algebra is
[4:53] different. You already have a lot of what
[4:55] you need. You might have access to
[4:57] capital, you have a knowledge of your industry, you know your
[4:59] customers. But you might not know the
[5:02] perfect Co founder. And taking a risk on somebody
[5:04] you don't know very well is a huge risk, especially if you're
[5:07] going to give them a big portion of your company.
[5:10] And so a lot of mid career solo founders struggle that VCs look
[5:13] at them and say, where's your Co founder?
[5:14] But they don't have a logical Co founder, nor is it clear that
[5:17] that's the right solution for them if a Co founder might help
[5:21] them get from zero to 1. But this is somebody who wants
[5:23] to go from zero to 100. And so our model isn't, isn't a
[5:27] replacement for traditional BC, it's an alternative.
[5:29] And so if you're a mid career solo founder, you can partner
[5:32] with us. So instead of finding a Co
[5:33] founder and having BCS ask you where your Co founder is, to
[5:37] your point, we step in and become the Co founder.
[5:38] So our team jumps in, works full time with you for on average 12
[5:43] months. It's sometimes longer, sometimes
[5:45] less, but long enough to get to the point where you started from
[5:48] zero with an idea and now you have a product and customers and
[5:51] revenue and you made you've proven it out.
[5:54] And you can raise a much larger round from venture investors
[5:56] without them asking questions about where is your Co founder
[5:58] and how's that going? So it's, it's a new kind of
[6:01] model, doesn't replace traditional venture, but it's a
[6:03] new alternative that's resonating with this kind of
[6:05] segment of the market. We go after to your .1 of the
[6:09] big differences between US and a traditional venture investors,
[6:11] if they're just writing a check, they can do a lot of deals,
[6:14] right? I'm running a check here.
[6:16] I can write 3 checks a week. We are throttled by time.
[6:20] And so there's only three partners.
[6:22] We can work right now with three companies at a time.
[6:25] And so we had to be very careful about who we choose to work
[6:28] with. And so typically, at any time,
[6:30] we're engaged with three companies because our commitment
[6:33] to the company is at least one of us is working full time for
[6:36] that company at any given moment.
[6:38] Often it's more or less we may swap in our partnership is
[6:41] different skill sets. My partner Mike is a data
[6:43] science expert. Myself, I'm much more into
[6:46] customer research and product. My partner Mark is an expert in
[6:49] things like fundraising and go to market.
[6:51] So we may swap in who's working with a company based on what
[6:53] they need. But our commitment is we're
[6:56] we're working full time for the company.
[6:58] We're doing getting work done. This isn't just value add VC
[7:00] where we'll help here with some customer intros or whatever
[7:03] else. Like we're really there helping
[7:05] you build from zero to 1. So we are throttled.
[7:08] Our portfolio is smaller, more focused and we do something that
[7:11] we think is very important, which is evaluation period.
[7:14] So the founders don't always know is Near Horizon the best
[7:16] fit for me, which is a good question.
[7:18] They may not know us. And so we do what we call 30
[7:21] date evaluations where we work with them for 30 days, full
[7:24] engagement, working full time on it, getting work done.
[7:28] And then after 30 days, we can both step back and say, OK, does
[7:30] this work right? The founder can say, am I
[7:32] getting out of Near Horizon? What I want kind of try before
[7:35] you buy and we can say, OK, cool, Is this opportunity as big
[7:38] as we thought it was in the surface?
[7:40] Most investors have to make that decision before they write the
[7:42] check. We can pull up a month or two or
[7:46] even 3 or 4 later and say, you know what, turns out the thesis
[7:49] here isn't panning out. The market demand isn't as
[7:52] strong as we thought. The business here isn't as
[7:54] strong and and we have to pivot over to something else.
[7:56] And so it has very different characteristics in traditional
[7:59] venture. I think it's really interesting
[8:01] because the leverage is so high. So we spend our time, we end up
[8:03] getting a lot of equity in these companies at the same time that
[8:06] the average valuation of precede of AI companies is skyrocketing.
[8:10] You're seeing caps of 20, five, $30 million on these AI based
[8:14] companies. And while we focus on AI as
[8:16] well, we're coming in at the Co founding stage and getting par
[8:20] value shares as if we were a Co founder.
[8:22] So it's a very different model. Again, not a replacement, but an
[8:26] interesting alternative that I think has a lot of potential.
[8:29] Absolutely. That's quite interesting.
[8:30] And it's rare that we see innovation in VC, although VC's
[8:35] love innovation when it comes to backing startups.
[8:38] But. When it comes to sales, in
[8:40] theory, yeah. Yeah.
[8:43] But I think there is also some sort of resistance to innovation
[8:47] within venture capital as well from the LP side, because when
[8:50] you come up with newer models, I think it becomes harder for you
[8:54] to pitch that to limited partners that you have to
[8:57] explain the entire model. And when you explain the entire
[8:59] model, I think the risk return profile also somewhat changes
[9:03] with that. If it's a different model, it
[9:05] also shifts with that. So how does that fit in the LP's
[9:08] thesis, right? They might have a bucket for
[9:10] venture capital, which is a defined risk profile, right?
[9:15] But if it's a different model in venture capital, maybe you're
[9:17] trying to take take on more likely bets that are more likely
[9:22] to return your capital where where the risk potentially goes
[9:26] down. But still does that align with
[9:28] the thesis that the LP thinks of as venture capital, right.
[9:32] So what what do you think on that from the LP side that that
[9:35] resistance to the innovation venture capital?
[9:38] That you bring up a very good point, which is if you think
[9:40] about the people who invest in venture funds, the larger LP's,
[9:43] they do have alternatives. It's not like they're going to
[9:45] invest in my venture fund versus some other venture fund.
[9:48] They can invest in private credit, they can invest in
[9:50] private equity, they can invest in hedge funds.
[9:53] They typically, to your point, have an allocation for venture
[9:56] capital. And so they have some amount of
[9:57] money that I'm going to invest this in venture capital firms.
[10:00] And they're typically used to invest in what's called 2 and 20
[10:03] funds where you have a 2% management fee per year and a
[10:06] 20% carry on the return, meaning 20% of all the money returned
[10:10] above what was invested goes to the partners.
[10:12] Everything else goes to the investors.
[10:14] They're very used to that structure. 2 and 20, by the way,
[10:17] is common across a few asset classes, not just venture
[10:20] capital. And so if you go to an LP with a
[10:22] different model, with different economics, they can struggle
[10:25] with it only simply because they're so used to analyzing one
[10:28] kind of investment. If you go to a real estate
[10:29] investor and try to start selling them factories or cars,
[10:33] they may not be able to process it because they're a real estate
[10:36] investor. They're used to understanding
[10:37] real estate and the value of real estate.
[10:39] And so investors specialize quite highly.
[10:42] At the same time, one thing that's in the favor of new
[10:44] alternative models like ours is that a lot of VCs are frustrated
[10:49] with the lack of returns from venture capital firms over the
[10:51] last decade. And there's a few reasons for
[10:53] that. One is valuations got so out of
[10:55] hand during the 2020 to 2023 era that there's an entire lost
[11:02] generation of venture funds who likely won't produce any form of
[11:05] return, may not even get to a DPI of 1, meaning they won't
[11:08] even return a dollar for every dollar invested, but just
[11:11] because the valuations they were investing on were so high.
[11:14] The second is we've seen a dearth of of exit opportunities.
[11:17] A lot of these funds are not liquid.
[11:19] I myself, I invested in about a dozen venture funds and they are
[11:23] largely behind on paying out to their investors that on paper
[11:28] their assets are worth a lot of money.
[11:30] But those assets aren't turning into cash.
[11:32] And so those LP's are frustrated that I invested in venture fund.
[11:35] Typically, I expected to hold my money for say, 10 years and then
[11:38] I'm done and move on to the next fund, maybe 12 years.
[11:42] You're looking at these funds that are getting into years
[11:44] 1314, sometimes 15, and they still haven't paid out.
[11:48] And so VC funds are getting frustrated by that.
[11:50] And the third thing they're getting frustrated at is a lot
[11:52] of these venture funds started out on a specific thesis of
[11:56] investment that hasn't held true.
[11:58] I'm going to invest a certain amount of money in a certain
[12:00] number of companies in an average, certain range of
[12:02] valuations. And as AI has driven up those
[12:06] valuations, a lot of these funds are are calling money from LP's
[12:10] faster and spending it faster and investing it faster than
[12:13] LP's expected. All that leads to frustration
[12:16] with the model. And what we've heard we, we
[12:18] don't have any external LP's in, in near horizon yet.
[12:21] That may change. But what we've heard from LP's
[12:24] is our sort of models refreshing in that it's much more like the
[12:27] venture they used to invest in. We're investing again our time,
[12:32] which is not, not meaningless, but it certainly is not the
[12:36] millions of dollars at a $30 million evaluation that most
[12:39] venture funds are. So our dollar, our equity
[12:41] dollars are the equity per dollar is much higher.
[12:44] And we're also doing a lot deeper diligence, right?
[12:46] We're working with these companies for months to really
[12:48] get in there. And so as a result, it looks a
[12:51] lot more like the VC they're familiar with, which is good for
[12:54] us. But to your point about the risk
[12:55] profile, what we do have to explain to them is we have a
[12:58] smaller portfolio. We won't have dozens of
[13:00] companies in our portfolio. We have, you know, a lot, but
[13:04] not as many because again, we're throttled by time, not capital.
[13:08] And so there are aspects we have to explain to them.
[13:09] It comes down to those VCs. Do they want to spend the time
[13:13] to understand a new model? Is that frustration with the
[13:15] traditional model high enough that they're willing to do that
[13:19] or not? And the answer varies by the
[13:21] LP's. Right now, we've seen a lot of
[13:23] larger LP's. The more sophisticated LP's
[13:27] definitely are open to new models because they are
[13:29] frustrated. The ones where VC is really just
[13:32] a check box for them may not care as much.
[13:35] And there's just a wide variety of that.
[13:36] I suspect if at any point you actually see liquidity in these
[13:41] venture funds that are getting a little bit old and and a little
[13:45] bit late to disperse and that money starts to flow, there's a
[13:48] very big open question. Will that money flow to new
[13:50] models like ours or will it flow into other capital classes like
[13:55] private equity, private credit or or will it go to the
[13:58] traditional venture funds? I don't think we know right now.
[14:00] I think my opinion is it probably doesn't go back into
[14:03] traditional venture funds. But where it goes?
[14:05] Otherwise, it's a good question. Absolutely, that makes complete
[14:08] sense. And the liquidity problem, I
[14:11] think that's a big one and that is the reason why so many LP's
[14:14] are thinking of maybe also considering newer options.
[14:18] How do you think that can be fixed, especially with the
[14:22] market conditions? I know there are some, some
[14:25] sectors or some trends that are on the hype like AI, but
[14:29] otherwise it's pretty, you know, the same as what it was in the
[14:34] last couple of years, right. So how, how do you think that
[14:37] maybe your model can solve that problem of liquidity or maybe
[14:41] get to a higher success rate in the time frame that's allotted
[14:45] to the VC asset class that is 10 years?
[14:48] Well, one of the differences in our model than traditional BCS
[14:51] is if you're, if you're a precede investor and you're
[14:53] investing in say AY Combinator company, and this is not a
[14:55] criticism, Y Combinator is fantastic, but you're investing
[14:58] in a company a $30 million cap at the beginning, they've been
[15:02] in market for a matter of weeks. You need a fairly high exit to
[15:08] produce a multiple that's worthy of the risk of early stage
[15:11] investment because even even coming out of Y Combinator, the
[15:13] success rate is still low. Our model being different than
[15:17] the fact that since we're essentially joining at the Co
[15:19] founder stage, our, our entry point is the par value of the
[15:23] shares, right? And our buy in prices is our
[15:26] time. And so unlike these investors
[15:29] where if I invest in a $30 million valuation, $100 million
[15:32] exit is still only a little more than a 3X return on my money.
[15:37] I need it much higher than that. I need a 30XA100X.
[15:40] And so you're looking at valuations and exits that are
[15:43] huge even today despite all these these these huge
[15:47] valuations. The thing you have to keep in
[15:48] mind is a number of exits that happen every year that are over
[15:50] $100 million are not a lot. I think that gets lost a lot in
[15:55] the noise of venture capital and huge valuations.
[15:58] Our model, since we're getting in so early, we can produce a
[16:01] huge multiple with a normal size exit, 50 million dollars, $75
[16:06] million, a $100 million exit for us isn't just a 3X, it's a huge
[16:10] multiple on our investment. And so that's one big
[16:13] difference. I think the second is a lot of
[16:15] funds are going to have to realize that the old way of,
[16:19] hey, we work for 10 years, a company goes public, they may
[16:21] not exist anymore. That may not be the life cycle
[16:24] of a company as they choose to stay private.
[16:27] You're starting to see the rise of a lot of secondary offerings
[16:29] in later stages. That may be more normal.
[16:32] But in order to take advantage of a secondary again, you have
[16:35] to get in a loan of price point that the secondary has the
[16:37] multiple that your fund needs. If again, if I invested a $30
[16:41] million valuation and there's there's a secondary offering at
[16:44] 150 million, I'm not sure I can sell.
[16:47] That's only a 5X that may not produce enough to make my fund
[16:51] portfolio work considering the loss rate that I would expect.
[16:55] And so for us, we could very much do that.
[16:58] And then the final part is our loss.
[16:59] The loss rate is, is essentially the number of companies you
[17:02] invest in that fail and it's always high.
[17:05] I mean, startup companies are very risky, especially early
[17:07] stage startups. Our loss rate will be lower
[17:10] though, mostly because we have something we can do, something
[17:12] that traditional VCs can't do, which is we can spend a month,
[17:15] two months working with the company, really getting deep
[17:17] with them. And we're working full time on
[17:19] the company, going deep into it. But the thing about investing
[17:23] time is you can change your mind.
[17:24] You can't. If you write a check $1,000,000
[17:26] check to our precede company, they have your $1,000,000.
[17:29] You can't. You can ask for it back nicely.
[17:31] They can decide to give it back to you or not, but you're really
[17:33] kind of on on for the ride. If it turns out after 30 days,
[17:37] 60 days it's not working, we can pull that back and work with a
[17:40] different company time. You can reallocate money you
[17:43] typically can't as as efficiently.
[17:45] So our loss rate will be lower. That's good.
[17:49] The open question of course is a combination of those factors.
[17:52] Does it lead to better returns? Let me put it this way.
[17:57] The average return of venture funds is not good.
[18:00] As everybody knows, This has been talked about for eons.
[18:03] The fact that you have to get to the top quartile of venture
[18:05] funds just to match the S&P 500 is amazing to me.
[18:09] So can our model outperform and be in that top performing?
[18:12] I mean, we obviously are doing it so we have confidence, that's
[18:15] true. But a lot of the economics are
[18:17] in our favor. A lot of the things that keep
[18:19] venture funds from producing those high returns are
[18:21] structural, and we've designed a model that kind of avoids those
[18:24] structural issues. Yeah, absolutely.
[18:26] And when you, when you think about prioritizing early exits
[18:29] as AVC, do you get to that alignment with the founders
[18:33] early on that you work with that, OK, we are going to try to
[18:38] exit when we find maybe a local maxima of the company and think
[18:42] maybe for the next 3-4 years this is a good opportunity to
[18:46] maybe sell and maybe the founder doesn't align with that.
[18:49] They want to be in that for the long haul Bill that like 10-15
[18:53] years company. So then you can also explore the
[18:57] route of secondaries and sell your equity in the company and
[19:01] the secondary market. So how do you think about that?
[19:04] Well, I'll start off by saying when I got started my career in
[19:06] the early 2000s, secondaries were frowned upon.
[19:09] Investors hated them. In fact, there was these
[19:12] apocryphal stories when Facebook went public about people who
[19:15] bought shares of Facebook on the secondary market.
[19:17] And then we're calling Mark Zuckerberg and complaining about
[19:20] the performance of the Facebook IPO.
[19:23] I think that that shifted a lot in Silicon Valley.
[19:26] Most startup companies today have control provisions in their
[19:28] stock agreements that they did not have before the Facebook IPO
[19:31] that limit your ability to do secondary transfers without the
[19:34] approval of the board, which gives the company full control
[19:37] over secondary. So you can't just go do
[19:39] secondaries without the permission of the company
[19:41] anymore. You used to be able to.
[19:43] I have mixed feelings about whether or not this is progress.
[19:46] I think it's a little bit punitive to employees
[19:48] personally, but putting that aside for a second, that has led
[19:51] to a much more mature view of it.
[19:54] And so one of the problems that always existed previously before
[19:56] the rise of the secondary market, which has existed for a
[20:00] while, but it's much more mature today, was by the time you
[20:03] become a Series BA, Series C company, the investors have
[20:07] ownership targets. But it's very hard to make sure
[20:09] everybody hits their ownership target because there's only 100%
[20:13] of the company and your existing investors want to do some of
[20:17] their pro rata so they can maintain their ownership
[20:19] position. The new investors have ownership
[20:21] targets of how much they want to buy.
[20:24] You have as employees, targets of how much you want to own.
[20:27] And so secondaries have arisen as a way to kind of make sure
[20:30] everybody's a little bit happier with how it shakes out.
[20:32] It used to be somebody was the loser.
[20:34] Secondaries mean that not everybody has to be the loser.
[20:36] You might sell, for example, early investors or early
[20:39] employees of the founders might sell some companies so the
[20:41] investors can get closer, maybe not hit, but closer to their
[20:45] ownership targets. So it's become a much more
[20:47] natural part of the ecosystem. I'm more comfortable when it
[20:50] happens like series B and later when the company's really on a
[20:54] trajectory earlier than that, it's, it can be problematic just
[20:58] because the company is high risk.
[21:00] But if you get to like the Series B and later, it can be a
[21:03] good idea. And so I think it's generally
[21:05] accepted. We don't when we, when we talk
[21:07] to founders, I don't think that we feel a need to like set
[21:10] expectations around it. If anything, I think it's better
[21:13] first if the founders themselves get to do secondaries.
[21:17] A lot of founders are not independently wealthy that
[21:19] they've struggled for years to get to.
[21:21] For example, a Series B may take years, They may not have a lot
[21:26] of savings, they may not. I mean, I for all of my
[21:28] companies, I didn't get paid at all for the first few years of
[21:32] the business. And so a secondary can be a way
[21:35] to make sure they're financially stable enough to, to grow the
[21:37] company. That's the first thing.
[21:39] If that happens or that's not an issue, then the idea of early
[21:43] stage investors selling can come up.
[21:45] But I don't think it's that we, I don't think I'd be part of our
[21:48] plan going in. My point was more that that's an
[21:51] option that we have that other VCs likely don't have.
[21:53] And so our model has these sorts of flexible aspects that if you
[21:58] buy in again at a $30 million initial price, you may not have
[22:01] that kind of flexibility until you get to a evaluation that
[22:06] frankly is approaching 100 million billion dollars.
[22:09] Right, absolutely makes sense. And the last time we had a
[22:14] conversation, you said an interesting thing that venture
[22:17] capital is the most risk averse asset class, right, which is
[22:20] contrary to what most people believe that it's one of the
[22:23] most risky asset class. So to more light on that, why do
[22:26] you say that? And, and this isn't a criticism,
[22:29] it's just a reality. There's a few reasons why.
[22:32] The first is that again, we talked about it before.
[22:35] The LP's that invest in VCs are looking for specific things.
[22:39] And so they want a 2 and 20 fund.
[22:41] They want you to make a certain number of investments.
[22:43] And so out of the gate when you raise money from LP's, your
[22:46] hands are tied. You can only do certain kinds of
[22:48] deals in certain ways and the LP's are typically very strict
[22:52] about that. They don't want you as a small
[22:54] fund investing in later stage deals and vice versa.
[23:00] A lot of VCs also limit themselves further by being
[23:03] industry specific, vertical specific, which it makes for a
[23:08] good story. The problem is, like in the
[23:10] history of venture capital, the best performing firms have never
[23:12] been thesis driven firms because it's really hard to predict that
[23:16] the next breakout success is going to be in this specific
[23:19] vertical. At this moment.
[23:20] Again, a venture firm at the 10 year venture firm has a
[23:23] three-year investing period. So you're, if you invest in a
[23:26] venture fund, you have to believe that in these three
[23:28] years in this one vertical, that's where the best companies
[23:32] are going to come from. And it's a very hard needle to
[23:36] thread if you think about it that way.
[23:39] But the third part that I think is more problematic is a lot of
[23:41] venture funds exist in this world where their funding is
[23:45] not, is not secure. So their LP, they're not certain
[23:49] they can raise their next fund. It's not like their LP's are
[23:52] like, sure, we're good to go. Just do whatever you want and
[23:54] we'll be there when you need us. A little bit like a sort of
[23:57] company raising their next round of financing.
[23:58] You have to prove a lot. So what a lot of VCs do is try
[24:02] to do the things they think will look most attractive to LP's.
[24:06] And those are not very risky controversial ideas.
[24:09] You'll try to get access to the the deals that everybody knows
[24:12] are good deals or you'll buy into YC companies in verticals
[24:16] that are well understood. And it gets difficult to take
[24:20] risks on companies that are really out there that don't fit
[24:23] the norm because you're trying to build this portfolio that you
[24:26] can show to LP's and say, hey, look, this is a good portfolio
[24:30] based on whatever rubric you're used to using, which is not very
[24:33] risky. And so essentially you're
[24:35] reverting to the mean. You're creating a portfolio that
[24:37] looks like they think a portfolio should look with the
[24:39] kinds of companies they think there'd be there.
[24:42] As a result, you're not taking a lot of risks.
[24:44] You're not actually going out there and investing these things
[24:47] that are crazy. It is typically is the VCs that
[24:50] are later in their career or more secure in their career or
[24:52] have had a lot of success who feel the liberty to take those
[24:56] crazy risks and then they start. I mean, Chris Sacca's first fun
[25:00] vastly outperformed everybody else.
[25:02] But partly it was he was taking a ton of risks because he was
[25:04] very successful already. He was already very wealthy.
[25:07] And so he was taking risks that other people may not otherwise
[25:10] have taken. And that's true across the
[25:12] board. And so one of the things that
[25:15] you know, I've always found interesting, I've done Angel
[25:16] investing for for many years. I've, I don't know, over 100
[25:20] Angel investments out there. The best performing Angel
[25:22] investments I have made were very unpopular investments that
[25:26] VCs did not get at the early stages.
[25:29] They just didn't want to take the risk.
[25:30] It didn't look like the typical investment that might take off.
[25:35] And that taught me an important lesson, which is that if you
[25:37] keep doing what other VCs are doing, there's a very herd
[25:40] mentality. So they all invest in Uber.
[25:42] You look for the Uber for XI, want, the Uber for fishing, and
[25:46] the Uber for hotels and the Uber for this.
[25:49] You're not really going to find the best returns because you're
[25:52] essentially just chasing something that already worked in
[25:54] the past. If you're not looking to the
[25:56] future and trying to really take some interesting risks, you're
[25:58] not going to produce these above average returns.
[26:00] Which is one of the many reasons that the returns of venture
[26:03] capital are so low is that if you're not at some point on a
[26:07] risk adjusted basis, VC has to be able to produce high returns
[26:11] based on the risk. But if you if you have take on
[26:14] the risk of the capital class, but you don't actually have the
[26:17] chance of enough alpha to outperform you kind of trip and
[26:20] fall. Absolutely.
[26:22] Yeah. That's that's unique and a very
[26:24] interesting and valid perspective there.
[26:26] And talking about when you're working with these early stage
[26:30] companies with these, with this very hands on approach, being
[26:33] almost like a Co founder and you have a lot of time.
[26:38] You'd have you'd have a lot more experience than the founder
[26:40] who's with you or maybe not, but still.
[26:43] But what are the key things that you tried to focus on in those
[26:46] 12 months, which let's say it's the earliest journey of the
[26:50] company trying to, you know, assess the go to market approach
[26:54] and you know, try to figure out how to get to customers and so
[26:57] on. What are the key things that you
[26:59] try to focus on to give a solid foundation to the company to
[27:02] build on? Well, universally, the first
[27:05] thing is always customer research.
[27:08] While we might have more experience in starting companies
[27:10] than the founder we work with, they almost universally have
[27:13] more experience in this vertical, in this area where
[27:16] this problem exists that they know really well.
[27:18] But even though they have that, we have to validate, do the
[27:21] customers exist? Do they want this solution?
[27:23] Can they pay for it or is the business model behind it going
[27:26] to work? And so even in the 1st 30 days,
[27:29] we typically do 50 to 100 customer interviews, potential
[27:32] customer interviews across a wide swath of potential
[27:34] customers understanding how do they think about buying these
[27:38] products? How do they think about
[27:39] evaluating them? What would it need to have for
[27:42] it to be something they absolutely need tomorrow?
[27:45] And sometimes in doing that, you find out there really isn't a
[27:48] problem there. It sounded like a great problem
[27:50] in the abstract, but it wasn't there.
[27:51] In some cases it turns out the problem that you were thinking
[27:54] about was right and is deep. But in most cases what ends U
[27:57] happening is you have to tweak it a little bit.
[27:58] You realize that who you thought the customer would be is not the
[28:01] customer or how you thought that they might use it is different
[28:05] than you thought. And so you learn a lot and you
[28:07] kind of pivot down this and assuming that goes well and
[28:11] you're, you come out the other end saying, OK, there's just a
[28:13] real problem. There's real customers here,
[28:14] There's real ability to make money.
[28:16] We can grow fast. The second say, OK, cool, can
[28:19] you design a solution that fits into the shape of that problem?
[28:22] Because up to that point, I think the biggest mistake a lot
[28:24] of founders make that we coach our founders away from is you
[28:27] fall in love with the solution 1st and you look for a problem
[28:30] that it can fix. And that's dangerous.
[28:32] Like especially product people, we love building products.
[28:35] So we build a product like, OK, let's go find a problem that can
[28:37] fix that. I want this to be my product.
[28:39] It's much better to start with a problem, fall in love with the
[28:42] shape of the problem, and then try to think about what product
[28:44] might best fit into it. And so then we might design and
[28:47] build, I don't know, half dozen, dozen potential solutions and
[28:51] try them in the market. Try them and see, OK, cool.
[28:53] How does this work? How does that work?
[28:55] Which one has the best characteristics?
[28:57] And only then after you have a really strong shape of the
[29:01] problem that's worth solving and an idea of the solution that
[29:04] might work best, then you start thinking about everything else.
[29:07] Go to market, rolling up your design partners, starting to get
[29:11] them on board, all these sorts of things.
[29:12] And that that a lot of people think about that as the starting
[29:15] point, but that may come six months after you get started.
[29:18] It may take you that long to make sure what you've set up is
[29:22] worth solving. Too many people pick a bad
[29:24] problem and just run with it. Too many people create a
[29:26] solution, then look for a problem, and then waste years of
[29:29] their lives trying to make something work that really
[29:31] wasn't going to work. We spent a lot of time upfront
[29:35] making sure that if we can make this work, it's worth it, that
[29:38] there is high growth and success waiting on the other side.
[29:41] And it's it's slow, it's painful work a lot of people aren't used
[29:45] to doing. And a lot of people like
[29:46] building. It's fun, it's exciting, but
[29:49] there's nothing worse than building a product nobody uses.
[29:51] I've been there. And you learn that lesson too
[29:53] many times. You're like, OK, we're going to
[29:54] do the hard work ahead of time to make sure it's worth
[29:56] building. And then it does look a lot like
[29:59] people think about startup companies, finding your first 10
[30:01] customers, making sure that they're happy, learning from
[30:04] them, iterating, updating the product, potentially throwing
[30:08] that product away, creating a new one because your assumptions
[30:10] were wrong, and then eventually figuring out if you have a
[30:13] flywheel. One of the things that we do
[30:15] look for in the CE OS we work with are do they have a, a
[30:19] distribution advantage? Do they have an advantage to
[30:21] reach their customers in ways that some random person off the
[30:24] street does not have? I think you have to have one of
[30:27] those when you're getting started in today's market.
[30:29] If you're just, if you have an idea for a product, let's say I
[30:32] had a product idea for a product for real estate agents and I'm
[30:35] like this would be great, but I don't know any real estate
[30:37] agents. I have no real way of reaching
[30:39] them at scale. I don't really know how I would
[30:42] find 100 real estate agents. It's going to be very hard for
[30:46] me to get started and show the kind of growth trajectory that
[30:49] investors are looking for today. But if I started out in the real
[30:52] estate market, I already have relationships with a dozen
[30:55] different real estate firms. I know a lot of real estate
[30:57] agents personally, or maybe I'm an influencer in that market.
[31:01] I run a newsletter that has a few 1000 people reading it or
[31:05] whatever it might look like. That distribution advantage is
[31:08] huge because today VCs have very little patience.
[31:11] You want to show a lot of progress really quickly, and if
[31:13] you waste months and months trying to reach these people and
[31:16] find these people, it can be hard.
[31:18] You need to be able to have that that cheat code of reaching a
[31:21] lot of them very quickly in a way other people can't to show
[31:24] that kind of growth trajectory. Absolutely.
[31:27] Makes sense. So it's like super indexing on
[31:29] the early customer research and also having that distribution
[31:33] advantage that should be the core focus in those early days,
[31:36] right? Absolutely.
[31:39] Great. And what should be the mindset
[31:41] of the Super early stage founder?
[31:43] What should they be chasing? Are there any specific metrics
[31:47] that are relevant in those super early stage of the company?
[31:51] It's hard to say the, the, the guidance I give people is that
[31:54] you want to make sure your rate of learning is always
[31:56] accelerating. So are we learning more this
[31:58] week than we were in last week? Are we learning more this month
[32:01] than we did last month? If your rate of learning is
[32:03] always accelerating, then yes, you're doing a good job.
[32:06] Every other metric, number of pilot partners, number of LO is
[32:12] if you get focused on that too early, again, you fall into
[32:15] this, this problem of having a solution, looking for a problem.
[32:17] You want to force it to work because you think you're
[32:20] supposed to show these growth metrics.
[32:22] You focus on learning and if that learning is accelerating,
[32:26] you hopefully will identify this problem soon enough that then
[32:29] those metrics become worthwhile, right?
[32:31] Then it becomes a matter of measuring interest and demand.
[32:35] And demand might be measured by customers, might measure by
[32:39] dollars, it could be measured by almost anything.
[32:41] But in the beginning, it's about learning.
[32:43] And the problem a lot of people have is it's easy to say at the
[32:46] beginning, right? So you imagine you, you, we
[32:48] start a new company, we put up a Google Doc and every time we
[32:52] learn something new, we add to the Google Doc, for example.
[32:55] And so in the first week, we learned a lot of stuff and the
[32:57] document gets longer. The second week we learned even
[32:59] more. And so the document keeps any
[33:01] longer like, hey, we're learning more.
[33:02] This is great. At some point we learn, Start
[33:04] learning things that are contradictory.
[33:06] We Start learning things that revisit these assumptions, and
[33:09] so now we delete a paragraph because that turns out that
[33:11] wasn't true. And all of a sudden, instead of
[33:14] our document getting longer, our documents getting shorter.
[33:17] But it's more dense in the learnings.
[33:19] These learnings are more clear. How you measure how fast you're
[33:23] learning is hard. It's very hard.
[33:25] It requires you to be very introspective and very critical
[33:28] of your own understandings. And so it is the hardest part to
[33:32] maintain for not just a week or two, but months for most
[33:36] founders because you can get lost in the realm of ideas.
[33:39] You can start to think like everything is equivocation,
[33:43] Everything has pros and cons, everything is ups and downs.
[33:46] And so staying focused on on your learnings, the core truth
[33:50] of what you're pursuing, the problem that you're refining,
[33:53] One of the best ways to do that are, for example, let's say you
[33:55] have a problem you want to solve.
[33:58] Can you make sure that you're learning enough to know who
[34:00] definitely does not want your solution, who does not have this
[34:04] problem? If it turns out everybody you
[34:06] talk to is like, oh, yeah, that would be pretty useful for me.
[34:10] It doesn't mean you found a problem.
[34:11] It might mean you found a general ache, right?
[34:15] But if you can actually define enough, going back to our real
[34:17] estate agents, if it turns out the people who really want our
[34:19] solution, commercial real estate agents work in major
[34:22] metropolitan areas. If I talk to real estate agents
[34:24] outside of that, they don't want it.
[34:27] That gives us some clear edges, right?
[34:29] It gives us some clear boundaries as to the problem
[34:32] exists here with these people. That's an important learning
[34:34] that shows progress that we found people who don't want it,
[34:38] and it's given us more focus on who does want it.
[34:41] Maintaining that over time is very difficult.
[34:43] I think the other thing that's hard for founders is you need to
[34:46] have a vision. You start a company, you need a
[34:47] vision. I mean, nobody starts a company
[34:49] without a vision. At the same time, you have to be
[34:51] humble enough to learn from the market, learn from listening to
[34:54] customers, but you can't let go of that vision.
[34:57] And so you want a beginner's mindset to constantly listen and
[34:59] learn, but you need a North Star at the same time.
[35:02] And it's a hard balance. Sometimes founders fail because
[35:05] they start flailing around every time they hear something from a
[35:07] customer, they react to it. Or some fail because their their
[35:11] their vision is so clear to them.
[35:13] They don't. Everything else has to fit into
[35:14] that. So they ignore all the feedback
[35:16] that contradicts their vision. All these things become really
[35:20] challenging for founders. To balance those two things, we
[35:23] need a vision, but we also need a beginner's mindset.
[35:25] We have to learn and iterate, but we have to know where we're
[35:26] going. It's hard, it's not easy, and
[35:29] for every company is different. There is no playbook because
[35:32] every company succeeds in a unique way, if it does succeed
[35:35] at all. And so these are the things we
[35:38] help our founders with, but it's something that all founders end
[35:40] up dealing with at some point. Absolutely.
[35:42] Yeah, that's great perspective. It's going to be very helpful
[35:45] for a lot of founders. And there's a there's a post on
[35:47] your newsletter. By the way, I recommend people
[35:50] to go and follow Sean's newsletter.
[35:52] Some great learnings for especially if you're a founder,
[35:55] right. What do you mean by this post
[35:58] That goes to grow faster? Think smaller.
[36:02] My yeah, my my newsletter breaking point dot tech.
[36:05] Check it out. One of the most common failures
[36:08] I see in companies once you've gotten past these early stages
[36:10] we've talked about, you have a product and you're trying to
[36:12] grow faster is at some point your growth rate isn't as fast
[36:16] as you want it to be. Maybe it levels out or maybe it
[36:18] dips, but you're like, man, I need to grow faster and it's
[36:21] just not happening. The biggest mistake most people
[36:24] make, I find is they try to go big.
[36:25] They like, OK, we're to spend a lot of money on a conference or
[36:28] we're going to spend a lot of money hiring more salespeople or
[36:30] big blowout things to try to reignite growth.
[36:33] And they very rarely work because it means you're doing
[36:36] more of the same. And if what the same was
[36:39] working, you wouldn't have this problem in the first place.
[36:42] Going smaller means thinking about customers as individuals,
[36:45] right? Even if your growth rates are
[36:47] not accelerating, I am sure that if you got that far, there are
[36:50] people who love what you do. They're like really the the
[36:53] Super users people that in it all the time.
[36:55] They may be the ones who complain the most, but they also
[36:59] use your product all the time. It's part of how they work.
[37:03] Think about them. How do we find more of them?
[37:06] Maybe the problem with the growth strategy is not so much
[37:08] you're not doing enough of it or not spending enough money, but
[37:11] think about those segments of customers that really resonate
[37:14] with it and how do we reorient our growth strategy to find more
[37:17] of them if they exist. And so by thinking smaller,
[37:21] you're, you're going from thinking about your customers as
[37:23] this large BLOB that you need to grow and you start thinking
[37:25] about them as individuals and why an individual makes a
[37:27] decision. Why does an how does an
[37:29] individual learn about what you're doing?
[37:32] Maybe what's happened, this happens in a lot of companies is
[37:34] you may saturate your growth channels.
[37:36] So at my last company, one of our fastest growth channels was
[37:39] conferences because once they saw our product automatically
[37:42] finding these insights in their data sets are like, I need that.
[37:45] But there's only so many conferences.
[37:47] There's only so many people go to conferences.
[37:48] You can't turn that up to 11 if you want to grow faster, right?
[37:52] You can't just manifest more conferences that easily.
[37:56] So sometimes your growth rate slows because you've saturated
[37:59] the channels that are working. But a lot of times, actually,
[38:01] what's happened is that you've gotten past this early group of
[38:04] customers and you haven't rethought your growth strategy
[38:07] around the people you're reaching.
[38:09] Now you're doing content marketing, which is a huge net.
[38:12] You're pulling at a bunch of people, but some of them are
[38:15] your good customer profiles and some of them are not.
[38:18] So a lot of it means resetting, coming down, coming back to
[38:21] basics and thinking about your customers, an individual, how do
[38:23] they learn about your product? How do they make decisions and
[38:25] how can you find more of them? Absolutely.
[38:27] That's that's a great insight there.
[38:29] And why do you think status meetings are not great?
[38:35] Again, something that's here you've covered on the news.
[38:37] My my newsletter does have a lot of controversial opinions about
[38:40] leadership. My thinking about status
[38:43] meetings. If you go back in time 30 or 40
[38:45] years, they they served an important purpose, which is
[38:47] companies needed to disseminate information.
[38:49] People had to know what was going on.
[38:51] And in the era before the Internet, before software ruled
[38:55] our lives, status meetings were a very effective way of
[38:58] communicating information. You meet with your team, you
[39:00] talk about what was going on. Everybody would get level set.
[39:02] We go and do our work today. There are much better tools for
[39:06] for disseminating information. Everything from, you know,
[39:10] Notion sites and e-mail dashboards, all sorts of things.
[39:14] If your team is wasting time and meetings are the most expensive
[39:19] thing you can do both in terms of time and money to disseminate
[39:23] information when there's other ways to communicate much more
[39:25] effectively, you're wasting your time.
[39:28] Now, why do people do status meetings today?
[39:29] Largely they do them because they've always done them.
[39:31] It is, it is weird, inherited, you know, infectious habit, bad
[39:36] habit that's propagated. I started my career early enough
[39:39] in the early days of the Internet.
[39:41] The status meeting still had a function.
[39:43] And the problem is the people there learned status meetings.
[39:45] And so then they kept doing status meetings and people new
[39:47] to their career learned status meetings from them.
[39:49] And it kind of came the self perpetuating problem.
[39:53] If you think about it, almost anything you talk about at a
[39:55] status meeting is better communicated some other way and
[39:58] some referenceable resource that everybody can look at at any
[40:00] time to get their sense of the status.
[40:03] Meetings are much better spent now on the things that meetings
[40:06] have to do, which is making decisions, right?
[40:09] And so if we're going to bring everybody together and eat up
[40:12] all that money and time, let's focus on what we need to do in
[40:15] that form, which is make decisions and the status.
[40:17] Can happen elsewhere, and here's a great example.
[40:19] Many board meetings, especially if startup companies, are just
[40:22] big status meetings. You show up for three hours, you
[40:25] talk about how everything is going, show lots of charts and
[40:28] graphs, and then everybody goes home and it's a huge waste of
[40:31] time. What is a much better use of
[40:33] time is to send all the status in documents ahead of time.
[40:36] Everyone reads them. And that three hours is focused
[40:40] on making real strategic decisions about the future of
[40:42] the company. Every company that I work with
[40:46] that started out making with status meeting, board meetings
[40:49] and move to this new model is much happier, much more
[40:51] productive, and so that's really all there is to it.
[40:54] Is that status meetings mean that somewhere along the line
[40:56] there was a better way to communicate everything that you
[40:58] just haven't done. Make that decision today, do it
[41:02] tomorrow. Communicate status via e-mail,
[41:04] use internal sites, use dashboards, and make sure your
[41:07] meetings are spent discussing the key issues, not just
[41:10] updating everybody and trying to convey information.
[41:12] Yeah, makes perfect sense. Great.
[41:16] Last question before we move to the rapid fire round.
[41:19] How can founders be more outcome focused?
[41:24] Well, I think a lot of times it's very easy to confuse motion
[41:26] with progress at startup companies and that I'm doing a
[41:29] lot of stuff. I'm really busy all the time.
[41:31] That must mean I'm working really hard.
[41:32] That must mean I'm doing well. And it's often not true, right?
[41:35] A lot of times it's a lot of what these companies do is
[41:38] theater that you're running around doing a lot of stuff.
[41:41] I want my favorite. One of my favorite newsletter
[41:43] posts I've ever wrote was essentially about how nobody
[41:46] ever got acquired for paying their bills on time.
[41:48] But founders will spend a lot of time on things that don't
[41:51] matter, right? They'll spend a lot of time
[41:52] rushing around trying to make sure we do XY and Z.
[41:55] Here's what matters is at some point, everything in a startup
[41:59] company boils down to this. You're doing something different
[42:03] than everyone else, and then whatever you're doing that's
[42:05] different. Maybe it's your product works
[42:08] differently, or maybe your business model is different.
[42:10] There is one thing about your company that is fundamentally
[42:12] different than everyone else, and that's why you will succeed
[42:16] if you do succeed, is that one thing.
[42:19] Everything else doesn't matter. So you should be spending all of
[42:23] your time on that one thing, making it better, emphasizing
[42:27] it, leaning into it. You're not going to get acquired
[42:30] because you are really diligent about going in and paying all
[42:33] your bills on time, and you're not going to get acquired
[42:36] because your HR system has all the best information in it.
[42:39] What you're going to get acquired for is that one thing
[42:41] that your business does is different than everybody else.
[42:43] So you spend your time on that one differentiation.
[42:46] You don't spend a lot of time on, well, we have to Add all
[42:49] these features because everybody else has them.
[42:52] Nope, Nope. You focus on the one thing that
[42:56] makes you different and you just lean into it as hard as you can
[42:59] because if you will succeed, it will be because of that.
[43:02] Yeah, absolutely. That's that's a great point
[43:05] there. And I think a lot of founders
[43:07] get stuck in exactly what you said, running around doing a lot
[43:10] of things, but also losing focus while doing that, right.
[43:15] And another good point that, OK, doing the basics right, like
[43:18] paying your bills in time will not get you the outcomes that
[43:22] you want. Of course you need to do that,
[43:24] but there's something more that's required for you to get
[43:27] those positive outcomes, right? All right, now let's do the
[43:31] rapid fire questions right. OK, hold on.
[43:33] I have to brace myself. OK, I'm ready.
[43:35] I'm good. All good, awesome. 6 questions
[43:38] here. So the first one goes, what are
[43:40] the sectors and regions you invest in?
[43:43] We invest in US based companies. Typically AI is not the product,
[43:48] but AI is part of what makes the the business possible and our
[43:53] typically B to B companies, although we don't have any
[43:55] specific thesis on that. So if you're a mid career
[43:57] founder who has an idea about how AI will disrupt your
[43:59] industry, that's us right there. Got it.
[44:04] What's the typical stage of where you come in and invest?
[44:08] Most of our companies we engage at the company formation stage.
[44:11] So we're actually helping them incorporate the company and get
[44:13] started. But we've, we've, we work with
[44:16] companies everywhere from that stage all the way up past their
[44:19] seed round. Awesome new lead rounds.
[44:24] We don't participate in rounds because our model is so
[44:26] different. And so it's, it's a very
[44:29] different model than you're describing.
[44:31] It is typical that when we engage, we're the only investor
[44:34] engaging. So in that way we leave, but
[44:36] we're not running a large check into a multi $1,000,000 round
[44:40] because again, a lot of our our help is the fact that we're
[44:43] jumping and enjoying the team. Absolutely.
[44:46] What's the typical check size you put in?
[44:48] I mean that depends too over time.
[44:52] It also depends I guess on how much you think our time is worth
[44:55] over the course of the company. So it depends on the company as
[45:00] well. It depends.
[45:01] It depends wildly depending on the business, depending on the
[45:03] founder, depending on the characteristics.
[45:05] We are not writing many millions of dollars of checks unless you
[45:09] think of my time as being worth millions of dollars, which I
[45:11] don't. So again, we're we're engaging
[45:15] at the promotial ooze phase of businesses and typically working
[45:19] with them for up to 12 months, however much you think that
[45:21] might be worth. Right where you can founders get
[45:25] in touch in case there's a direct way.
[45:27] Oh absolutely. So near horizon dot VC is our
[45:30] website. We love talking.
[45:32] A lot of the founders we work with we did not know ahead of
[45:34] time they approached us because they had ideas they want to work
[45:37] with. You can find my newsletter,
[45:39] Breaking Point dot Tech. It's free newsletter based on
[45:43] lessons I've learned over leadership over the many years.
[45:46] You can also find me on LinkedIn.
[45:47] I used to be on Twitter, although I'm not a huge Twitter
[45:49] user anymore. All those places.
[45:52] Yeah, I'm on Blue Sky, all the social medias.
[45:55] I'd love to talk to people. I also run a podcast myself
[45:58] called the Startup Help Desk, where listeners submit questions
[46:01] about it. And we have a panel of founders
[46:03] like myself who answer those questions.
[46:05] And we we make sure you get two or three perspectives in every
[46:08] question because there are no right answers.
[46:09] And so our panel, for every question, you get a bunch of
[46:12] perspectives and you can choose where to listen to it.
[46:15] That's just the Startup helpdesk.com.
[46:18] That's awesome. I'll try to put as many of those
[46:20] links in the show notes below so our listeners can get there
[46:23] easily. And you've already answered the
[46:25] last question, which is where can listeners follow you?
[46:27] So we're good. Thanks so much for making time
[46:30] for this, Sean. It's been a pleasure having you
[46:33] on. And I loved all the insights,
[46:35] which are really practical and really hands on coming from
[46:38] someone who's been in those roles.
[46:40] So thank you so much for making time for this and I wish you
[46:42] happy investing. Yeah, thanks for having me.
[46:45] Yeah, it's a pleasure.

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