This Venture Investor's Best Advice: "Sell the Wind, Not the Sailboat"

Are you an inch wide and a mile deep, or are you a mile wide and an inch deep in what you're gonna be u-utilizing the investment dollars for? When I sit down with a founder, a big red flag is who specifically is this product solution whatever for? And they go, "Everyone." And I go- Hmm ... "Then no one will want it."

Most great entre-entrepreneurs have some carnal knowledge, an endemic audience that they are trying to solve for. One of our portfolio companies just had a huge announcement today, uh, so I've been working on that all morning. Okay. Uh, so AI.io, we led their A round, and, uh, Humane, which is one of the largest AI companies- Yeah ... backed by the Public Investment Fund of Saudi Arabia, just came in and took the controlling stake in the company to build their sports tech division. Wow.

So huge, huge news. Um- Yeah ... I'm on the board of that company, uh, and it's a, it's a very, very big deal- Yeah ... for launching, uh, Humane Sport and, uh, bringing that to market. So more of just, uh, it's been something in the works for a while. Big, big news, and, uh, yeah.

Not necessarily pertains to the podcast, but that is, that is what has been on my mind, we'll say. Yeah, no. I, I get it. I'm-- I get it. Wow, that's fantastic.

Pretty cool, right? Yeah, super cool. Dude, the AI stu- I mean, this is... I mean, I feel like I'm, I'm probably preaching to the choir here, but this hu- this... I, I can't, I can't get over the AI.

I can't get over AI. I can't get over it. Like, I'm so deep in, you know, my own... You know, I'm, I'm at one time looking at the macro and, and where everything is going and at the same time trying to learn the, uh, the nuts and bolts and actually learn Claude Code and all these different things 'cause I'm not an engineer by nature. Because- Yeah ... you know, I don't-- If I'm gonna invest, if I'm gonna help, you know, my-- A lot of my work is, is helping, um, you know, leaders that are stuck with growth.

It's like revenue acceleration. Sure. And, you know, I feel like you have to, you have to understand how the, the, the ones and zeros work too. Um, a lot of the guys that I feel like are kinda missing the point with some of this stuff are super smart, been successful, but they, they s- they haven't opened up, uh, you know, beyond just a pro account on OpenAI and punched some prompts into it. You know, they're, they're not, they're not going beyond, like, how it, how all these things are actually piecing together.

And it just, it's moving so fast that I think anyone who even has a slight Luddite tendency is gonna get smoked. And, um, so I, I'm just, I'm fascinated by how fast this shit is moving. And the interesting part is this- Very fast ... the industry that I kinda grew up in, which is the insurance industry, they have survived a lot of these technology waves because of regulation, and they're-- it's very monopolistic. Um, and they've created a lot of disguised technology bugs that are actually features in order to keep, you know, the industry at a certain pace. And this is the first time, at least in my 20-plus years in the industry, that I've come across anything, technology or otherwise, that I think is actually gonna start to, to really create winners and losers.

I mean... And I don't know how much time you've spent or if you've done any investing or spent any time with any businesses in the insurance industry, but, um, health's a little different. I mostly spend time in property casualty. But it's mostly filled with, like, C players. So- Yeah ... it's very interesting space.

Um, and I guess that probably makes me a C player too, which is fine. Um, but you don't get-- Like, if you're, if you're a rockstar A player, you're an engineer, you're an investment banker, um, you're out, you know, doing entrepreneurial shit. So you get smart but, like, highly risk-averse, anti-ambitious people, and the business model is just so good that you can l- you can literally-- Like, I know this is thrown out as a cliché all the time. You can literally fail your way to massive success in the insurance industry once you, once you hit a certain volume. So, uh, I'm very interested to see where AI takes the insurance industry and how many of these, um, technological roadblocks that have purpo-purposely been put in place, how quickly the right people can jump past them and, and really change what happens.

So it's gonna be really interesting. Yeah, I mean, we've talked about applications for, you know, for AI a lot internally, right? Um, there's certainly very easy ones to look at if you look at a marketing team and cutting down FTEs, right? From a lead generation perspective, having agents do 80% of the pre-qual, right? Which might do something in P&C work, right?

Uh, certainly does in the mortgage industry, certainly does in others already, right? Or customer service for, for that matter. But there are some companies that are actually doing and leveraging it in a really, really meaningful way. You know, this is nothing that anyone is ambitiously doing, but you look at the VA, right? I didn't serve, but, uh, a few team members Of mine at Slyco did.

And if you think about the process of exiting your career in the military, it usually is a lot of figuring out h-how disabled you are, right? And so, uh, you would think that was a really dialed-in process. And, uh, watching someone go through it this year, it is not close to a refined and dialed-in process. And so you look at, uh, applications, you know, AI denial that I mentioned earlier is mapping human potential. Well, what does that really mean?

You know, at, at first we look at it in sport and say it can map someone, you know, running these drills against other players and who's, you know, the best of the best. But you can see a world where it's mapping how you were and how you are, and starting to understand what disability might be. Understanding, uh, can you ever do certain things anymore? And was that a byproduct of your time, right? Workers' comp, figuring out are you really...

Like, there's so much that can be done, uh, even on the physical reil- rehabilitation standpoint in medical that that's gonna be a very big game changer. You know, there's already companies where, you know, you're doing your physical therapy on a screen, and it's mapping whether or not you're doing it correctly, right? There's some really interesting things that, that are gonna happen and come out of this, I think change fundamentally some, some organizations and certainly some industries. Yeah. Some of the stuff that's coming out from biomechanics is crazy.

Mm-hmm. The mapping movements and being able to, to make micro adjustments to how you walk, how you stand, how you move. And, you know, you think about... I, I spend a lot of time thinking about, uh, aging and longevity and, like, even simple things like the advancements that we're seeing in peptides and how AI is being used to find these little nuances and variants in these different peptides and how they can attack and, and be very specific in, you know, repairing cartilage or improving overall, um, you know, water re- you know, water retention in certain parts of your body. And it just is, it just is...

As much as I feel like there's an entire industrial complex trying to convince us that being alive right now sucks- Mm-hmm ... uh, I feel like if you can, if you can kind of swipe past that veil, it is such an absolutely fucking incredible time to be alive. Yeah, I agree wholeheartedly. Um, we have more access to more data. We have access to more ways of keeping healthy. Ultimately, that's a personal decision on what you want to, to do, right?

Or what you wanna believe. But it's a great time to be alive, right? It's a great time if you wanna be active to find things to help you repair, more so than we've ever had, right? I even go, you know, I'm forty-five, go back to when I was playing baseball, right? I played baseball in college.

They didn't have Velo training. They didn't have the type of, of, of companies like Hyperice or Therabody and others with, you know, compression legs and stim machines like they have now, or even a massage gun, right, for, for therapeutics. But we played the same game. And so, you know, twenty years from now, it'll be the best time to be healthy 'cause we'll have even more developments. But I couldn't agree more.

The, the idea of, of utilizing peptides, doing your research around it, and figuring out which ones can help you improve are huge. I mean, at the end of the day, the most or the fastest-growing drug that we've seen certainly in our lifetimes, Ryan, is GLP-1s, which is semaglutide, which is an peptide, right? So, like, at the end of the day, these things have been around. Now, I'm sure someone in pharma is going to yell at me for saying that because there is certain derivative differences in the antagonists for the two and three, right? The different types of GLP-1s.

But at its base, it, it's a semaglutide which has been used for a very long time, right? And so, you know, research and understanding around them, I think are really important. Um, but yeah, I mean, there's so much you can do to improve or maintain your health and longevity, um, than there ever has been, and I think it's fantastic. Yeah. Well, let's take a step back and, and you call yourself an accidental entrepreneur.

And I-- what I think a lot of us are, we may not articulate it necessarily that way, but I'm- Sure ... I think in, in getting deeper into the things that I really wanna discuss and, and share with the audience today, uh, let's kinda level set exactly what that means to you and kinda how you found yourself into this, into the entrepreneurial world as a whole, and then we can, we can dig into what you're doing today. Yeah, absolutely. Um, you know, like many, I, uh, graduated from college. I played baseball for the school until I got hurt.

Graduate college, college degree in economics, started into sales, worked for a real estate investment banking firm. Was a wholesaler selling growth and income funds and mezz debt, uh, products during two thousand and seven to two thousand and nine. So for your audience who knows what was going on in real estate back then, that was a very fun time to be working, uh, working there. Uh, came to California, uh, at the end of '09. And the company I came out for, I like to say restructured and restructured me out.

So my nice sales job, right, the thing I was supposed to do, uh, was no more. I was in California seventy-five days, so I didn't have a big network. But, you know, rent still has to get paid, car payment still has to be made, right? And so, uh, ended up starting a consulting firm, kinda leveraged that into, uh, a, a bigger media/marketing company. We did a lot in conversion rate optimization and media buying for a bunch of different companies here, uh, across the country, and had the opportunity to meet, meet some guys.

Uh, and we ended up creating what was the second-largest CBD brand in the world, and we sold that, uh, in twenty twenty-one, right? Second-largest at the time. Uh, also, you know, my, um, my wife and I created Uh, liquor distillery with another couple. We co-founded it, and we sold that in 2021 as well. Uh, and then sold a beauty care brand in '19, raised a couple funds in the cannabis space, and was doing some acting- active investment.

Um, and then had the opportunity to meet John Garcia, the founder of Slyco Capital, back in 2017, and, uh, and joined the firm in January of '22 as a senior, senior equity partner. And so it's been a great experience since then. Uh, love what I do now. But what I set out to do with my career was be in sales, if you will, not create companies. And, uh, that tipping point of having to pay your bills and that back-against-the-wall type feeling, uh, that every entrepreneur feels is where my journey began.

Do you think you need that pain to be successful? Um, entrepreneur porn has become so ubiquitous today. Yeah. And I know, I mean, you know probably more even than I do, but so many guys and, and gals, people have, have... They, they s- they see the, the blog posts, they hear the stories, they hear you go, "Oh, I had a, a, a CBD brand and a, and a liquor brand," and- Mm-hmm ...

"Wow, that sounds fun, and I have good ideas, and, you know, I, I hate my boss. You know, maybe I should get into this." And, and fail, fail. You know, maybe most of the time non-start, right? It's a, it's maybe six months of even, you know, basic...

Then nothing ever happens. It feels to me like you need, like, you need that pressure in some way. It's like, it's like, um, a thing you have to build so bad if you can't do anything else, or I can't pay my bills if I don't figure out a way to make money. Like, is that pressure mandatory, or can you limp into this? So, uh, I struggle to answer it because I see both.

Meaning for me, a great motivator is where am I going to be sleeping in two months, right? Certainly, unless I make some money. But I also, as part of my process when I evaluate companies as a professional now, right, who evaluates companies, does due diligence, and, you know, makes investments in companies, I like second- and third-time founders. Now, you could say I like second- and third-time founders 'cause they've felt that pain, and they know what they're getting themselves into, and I would completely agree, right? Similar to myself, they have some battle scars, right?

They've felt what it means to get up every day, hear no more than you hear yes, and still have the P.T. Barnum-esque feelings in your heart that you need to go do this and scream it from the mountaintops and have everyone listen, that you are gonna change something. But if they're a second-time founder, chances are they probably had an exit, which means they don't have the same how do I pay my rent motivation as maybe I did at the time. But again, with that experience, they know what they're getting themselves into. I think that we, and similar to what you're saying, romanticize this idea of being an entrepreneur to the point where it's not that it looks easy, it's that it's celebrated so heavily.

But if we're gonna call a spade a spade, the majority of companies fail, right? And not to go too deep, but if you even look at how you get out of your company, unless you're building a lifestyle business, which I think are great businesses, right? Building something that pays you cash flow, that either you're the key person, right, and it won't survive without you, or meaning it can survive, but you, you are the thought leader, right, that, that does it. Or a business that just truly has no huge enterprise value that other people want to invest and eventually buy. Um, unless you're doing that, the majority of, of companies today find a hard place.

You can just look at the venture and PE industry, a hard place to find a home, right? Cost of capital being high, uh, IPO market being soft. Uh, I can give you a myriad of reasons, but right? Like, there are some great companies sitting at, you know, half a billion dollars in sales and positive EBITDA that have no acquisition and are too small-- no acquisition candidates and are too small to go public. So if you're an early-stage investor, what does that mean, right?

But you had to get money somewhere traditionally to get to that size. And so my whole point in saying this is as we keep romanticizing what it means to be an entrepreneur, I think more and more people are doing it, and that's great. More and more great and not great deal flow, right, to evaluate. But at the end of the day, it is a very, very difficult thing, and I don't know that, that people fully appreciate what it means to be the janitor, the CEO, and everything in between, especially if you've spent a good portion of your career pre-that, um, in corporate and understood how things work in that vertical box versus, uh, not being in any box as an entrepreneur. Yeah.

My, my biggest misses as a angel investor have been, um, corporates turned entrepreneurs. That's been my biggest misses. Um, super smart, successful in the corporate world, in the space, good idea. No, to your point, have never lived a life where they need to be up at two o'clock in the morning drinking coffee, stressed to the max with, you know, 'cause they have to push out, uh, this, you know, bug fix or the, literally the product doesn't work the next day. Like, that, that level-- And, and again, I'm not advocating for 20-hour days.

I, I don't think you need to do that. I actually-- That's actually a red flag for me, and- Mm-hmm ... and I'm not nearly the investor that you are. Um, you know, my, I tend to write 25 to $50,000 checks in the companies that I invest in. A lot of them are early stage. Um, oftentimes I play like a mercenary executive role in those companies to a, to a certain extent.

And, uh, and, but you, you have to be, you have to be willing to do that when the situation calls. And i- and that's, I think, one of the many things that, that you have to look at. But, you know, I- I think it was, Gary Vaynerchuk started to popularize this idea of there is ju- there is, there's no lack of respect, chutzpah that you get from being the best number three, the best number two- Yep ... right? W- why not be an incredible chief marketing officer for an awesome startup, right? 'Cause that person gets a l- maybe get a little bit of breathing room where the founder, founding team, CEO, et cetera, may not. And if your lifestyle demands that... 'Cause I think that's the other half of the conversation.

I think a lot of people, they get frustrated with the corporate world, so they, they see entrepreneurship as this sexy escape, right, to owning their own destiny, which, which it can be. Uh, you know, like, it certainly can be that. But they also then wanna pick their kids up at 3:00 PM from school, and they wanna be their coach of every team, and, and I am those things. I have set my life up in this. I'm 45 as well.

I've set my life up in the second half of it. Like, this podcast is a lifestyle business, right? I make money from the podcast. I love the podcast. It's one of the things that I do.

But no one is gonna come in and buy this show for, uh, e- any money because- Mm-hmm ... it's me, right? I mean, unless they're, unless they're paying me to stay on for some reason, which wouldn't make any sense anyways, and then I wouldn't wanna work for anybody. So, like, this is the definition of a lifestyle business. I love it, but it is. And I think we, there, I often, I just think there is, there's so much value in being the number three, the number five, the num- and just killing it and be part of an awesome company if you, if your lifestyle demands don't allow you to be what is absolutely necessary, which is, at least in the beginning years, on call all the time.

Couldn't agree more. Couldn't agree more. Um, you know, I look at my career, and we can call it entrepreneur, right? Started the m- media company, did all that. But, you know, CBD, I was the chief revenue officer, right?

When you look at the co-founding the distillery, I was kinda CFO, COO, helping, right, the visionary who came up with that idea for the distillery, right? So always that number two, three, right? Got to sit there and be part of, but not be sitting there doing, unfortunately, the things that it took from a CEO level to get things over the, over the hump, right? Being part of founding teams is great, understanding how you contribute, right? Um, with that said, though, you know, the CBD company was out of Denver, and so I left Sunday or Monday from Southern California and went to Denver till Thursday or Friday every week for four years.

So, you know, you do what it takes, right, back to that place. And so the question, you know, when you have a family and a young kid and all that is, you know, are you willing to do the things it takes to be, to have this company be successful? And, um, you know, to your point, you talk to some corporates that have turned and some other people who just think it's going to be very different and say, "If I only had money, this would be easier," right? And, uh, they put together big raises to live a different life and hire a bunch of people. And what you really learn is the really good, scrappy, uh, executive teams or founders, I should say, um, understand how to make it work without money or how to be really prudent with.

And you find, again, second and third time founders know, know how to do that 'cause they also learn, uh, the power of equity and how much they can retain if they don't, you know, build huge campuses and have ping pong tables, and they just do the work that needs to get done. I, I used to, um, you know, I used to say I, I like to invest or even just work with people who walk with a limp. Mm-hmm. Like, that's, that was like a, you know, you just see it. Like, you, you were talking, you know, just the, the, the battle scars of the business.

You know, it's, it's... I think unfortunately, you can read all the books that you want. You can listen to all the podcasts. You can have a mentor. You can go to all the entrepreneur meetings you want.

There are just certain lessons you gotta learn, you gotta learn the hard way, I feel like. I just, I think the u- I, I think, again, feature not bug. This is the way the universe is set up. There's just certain things that God was like, "Yep, th- you just gotta learn. If this is what you want, you just gotta learn the hard..."

It's like hitting a base. I played college baseball as well. Um, uh, you know, until you see a curveball or a three-two changeup on the outside corner, you, you could read about it all you want, but until you see it, you know, you don't know if you can hit it or not. It's just the way that it is. No, I think you're spot on.

You know, in our family, we call it mat time. Uh, and, you know, that came out of the fact that I've, uh, you know, for the last 10 years been training Brazilian jujitsu. Absolutely love it. Um, got my black belt back in '24. Uh, still train now.

And the reason I bring it up, the reason we call it mat time is, you know, you learn everything, meaning, like, you learn through what is essentially a purple belt how to do all the moves. Now, the difference between a purple belt and a black belt is literally just time on the mat, doing what it takes to understand when to do those things, to your point, when that three-two changeup's coming, right? Or when that, anticipating that curveball and seeing it break, right? Mat time, doing the work, putting yourself in the place to do the hard stuff is the thing that separates really good entrepreneurs, uh, from others that, that, that aren't going to be, right? Their willingness to stand in the pocket, we call it, right?

Or be on the mat and do the work. Um, that, there's a, I'm trying to remember the quote, so apologies here, but it's something along the lines of, um, everyone will celebrate the success but overlook because they would never wanna do what it took to get there or something along those lines, right? It is in many ways, whether or not it's the entrepreneurial journey or anything you wanna achieve in life at a high level, right, takes more work, you know, a 10-year overnight success. Yeah. It's kinda, kinda how I look at it.

Yeah. Hermosi popularized this idea, I don't think it's his, um, of it's kinda what you said. It's like they clap at the beginning, and they clap at the end, and in the middle everyone's dead silent, and that's when you need it the most. You don't need it at the beginning or the end. You need it in the middle.

Um, so, so when it comes to-- I love this idea of mat time, by the way. Love the idea. Mm-hmm. I have, I have toyed with, uh, I've toyed with jujitsu for a while and have not been able to mentally commit for a whole bunch of reasons. Uh, less the actual work and more just lifetime.

My kids are in the 10 and, 10 and 12. Sure. And, um, they're kind of in the golden years. They're fun and cool and still wanna hang out with me, so I'm trying to maximize that time 'cause I know in the not too distant future, um, I will no longer be cool. They will no longer wanna hang out with me, and they'll have their own lives.

So I'm trying to be there for them right now. But, uh, that all being said, with this idea of mat time, when you're, when you're doing due diligence or, or you meet a founder for the first time and you're-- What are some of maybe, and, and you can go as tactical as you want with this, but, like, what are some of the aspects of the business or them as individuals, et cetera, that you're looking for them to have put mat time into? You're like, "Ooh, I see they spent some time there. That's a green flag." Like, what are some of those areas for you?

Yeah. I mean, it, it depends on the type of company. Certainly technology, right? What are, what are they coming with initially? Um, did they do the work to understand if the market wants what they have, right?

It's when they have an idea. Uh, for us, I like investing on the A round plus, right? AB. Uh, it's not that we won't do seed as a firm, but I think there's certainly more risk as you go closer to origination. Um, and I think the, the value differential between seed and A, there's still a lot of pickup from a absolute return perspective.

I don't mean to jump in, but- Mm-hmm ... this, in the, in the second, the last, like, five years or so as I've gotten more into seed and, and A round stuff with some of the companies that I work with, et cetera, that has been a huge eye-opener for me, is I always thought, you know, hey, you get in angel or you get in seed, you know, yes, you're taking more and more risk, but there's much more upside. And one of the things that's really opened my eyes recently is that especially seed and A, they're like, uh, or, and maybe this is a recent trend, so if you, if you have insights on this, I'd love it. If it feels like the upside on those two rounds is condensing, and even though- Mm-hmm ... you're taking more risk on in seed, you're not getting as much additional upside if you wait for an A round. Is that, is that what you're seeing? Yeah.

So you're seeing bigger seeds and lower As, right? So you're, so the, there's compression happening, I would absolutely agree. Um, it also depends if you're in the echo chamber of the Valley or not, right? Silicon Valley. They have a v- more standardized, and you can look at Carta and a bunch of other places, standardized kind of what round value sh- should be, very focused on, you know, certain revenue metrics and others.

Uh, as you get out of that echo chamber, right? Uh, 'cause you really just need to conform to what the VCs there are going to give you, right? It's definitely run, run by them. Um, but point being, if you, if you get out of there, you'll see some w- wildly different types of values. Um, you know, we did a seed round a few years ago, um, that led that deal at a much higher valuation than you'd think a seed would be.

But when you looked at the founders, if you looked at what they had, you looked at the technology they built off the back of themselves, right? There was value to have the round being that high, but that would be very non-traditional. Um, in the same vein, you'll see As at 100 million, especially in AI and others, right? Or even seed rounds in, at that high, which is still could be a great value. Um, but yeah, when you look at a return mix, depending on what you're underwriting them for, right?

Whether or not it's a fund or a standalone, you know, single entity deal, um, you can still capture great value even if you're paying a little bit higher because of the execution risk, um, compressing, right? So if I can compress the execution risk and still get a good return, then adding possibly two years and a lot more execution risk for the absolute return is a little bit tougher. Yeah. It's a little tougher. And so for us, when we do deals, you know, we typically don't have a mandate.

We don't have a mandate when we do deals. We're very open and opportunistic, looking for great companies that we believe in. Um, so that's also... And I, I'll go through the original question on diligence, but, uh, we don't have the has to be an AI, and we have to take 5%, and we have to do this, and we retain money or, you know, part of our fund for continuation or, you know, follow on. Like, we find a great deal, and we do the diligence, which is a long process for our firm.

Uh, and then we're your capital partner. We're in, right? We're gonna give you capital then. We're gonna help you see around the, the corner or over the horizon, anticipate what needs are, help you structure the next round. Like, we're, we're in and committed.

That's really where Slyco's different. Um, but to the diligence part, from a green flag perspective, I kinda shared the, you know, second or third time founder being one. Um, have you done your homework around the market you're trying to attack? So let's say it's a SaaS-based play, right? In fintech.

Horrible example, but just follow me down the rabbit hole here, right? In a lot of ways, the, that SaaS could be used in healthcare, could be used in all these other markets. So are you an inch wide and a mile deep, or are you a mile wide and an inch deep in what you're gonna be u- utilizing the investment dollars for? Because, uh- I like making this, this, this joke, if you will. When I sit down with a founder, a big red flag is, like, who specifically is this product solution whatever for?

And they go, "Everyone." And I go, "Then no one will want it." Right? So go solve it for something you may know. Most great entre-entrepreneurs have some carnal knowledge, an endemic audience that they are trying to solve for.

It used to be, you know, solve your own problem. I bet you there are other people who have that problem as well, right? Well, that's almost an endemic audience of saying there's other people like me who need this solution. Great. Don't say-- Don't manufacture a problem for people that you're trying to solve, right?

So really focus in on the problem that you are trying to solve or what you're trying to reinvent or rework or create a new category for. But even in create a new category, it could work long term for everyone, but there's a specific use of people that you need to go after. Um, and if you've not done that work to truly understand or you're too wide on your, I'll call it your TAM, right, your total addressable market, that's a red flag for me. And then the last piece, and I take no credit for this, it was another, uh, another person in finance who mentioned this. I think they were at Benchmark.

I forget the partner's name. Um, but it was the idea of, of don't sell me the sailboat, sell me the wind. And the idea being a lot of entrepreneurs, and we used to call it back in the day in sales, sell you the speeds and feeds. They don't sell you the dream. Look at the difference between old computer companies, speeds and feeds, versus Apple, who made you feel what it's like to be part of this.

Um, I think it's a really important distinction 'cause if you don't understand the wind, right, doesn't matter what you build. You know, I've made the joke before, you can build a Ferrari, but the raise-- the, the roads aren't paved where there's nowhere to go, right? So don't build me a Ferrari, right? Show me why what you're going to build is going to work really well out there, right? And I think that's a big thing that, that is missed, right? 'Cause I, I do believe founders should have, and I mentioned earlier, a little bit of P.T.

Barnum in them, right? They're in charge of vision, culture, and fundraising. So tell me a story on why I should believe that this is going to be big and generate the type of returns for our investors. Don't tell me you invented the next biggest thing here 'cause you haven't told me anyone wants it yet. I had a mentor one time when I was first getting into angel stuff, and, um, he had been fairly successful.

And, and like anything with angel, right? You have a, you have a low hit rate, but you're hoping for big wins. And he s-- I asked him one time, kinda similar to one, to, to what I was asking you. I was like, "What's, like, your big... What's a big red flag for you?"

And he goes, "If they say the words, 'But they should.'" He goes, "Run. Get... Run away." He goes, "Stand up, run away, turn off the Zoom."

He goes, "'Cause if they say, 'But they should,' they're solving a problem that doesn't exist." To your point, that's why I'm sharing that. You know- Yeah ... to your point about solving problems that don't exist. He's like, "That means they have manufactured a problem for an audience that doesn't have the problem. And maybe it's real."

He goes, "But I don't like investing in maybe." So, um, I think that's a really good point. That's a great point. And, and I, and I... You know, one of the things I advocate a lot when I'm, especially when I'm talking to younger founders is to, to read copywriting books.

Not-- You don't have to wanna be a copywriter. That, that, that's not why. But copywriting books, one of the very first and core, um, functional messages you're gonna get out of them is sell the transformation, which is your sell the wind, not the, not the sailboat or whatever, um, and being a-able to articulate the transformation. And that part of it, I feel like we, we, we don't talk about that side enough. I think, I think people who've been in the game a lot, like yourself, who have, who've, who've had the wins, who've had the losses, who've felt, you know, both the, both the ups and downs, I think this becomes almost, like, intrinsic knowledge and, and intrinsic understanding.

But for those who haven't, the first-time founder mentality, um, it, it-- they wanna drop into features and benefits. "Well, I can make it go faster," or, "I can give it more, you know, tokenization," or, "I can bring the API cost down," or whatever. And you're like, "That's great, but," you know, "that is, that's not most people's problem." Um, and then someone-- And I think this is, and this is for the audience, obviously, because you know this, but it's like selling on price, right? Like, if you, if you're selling on the connectivity of your API or the, the, a reduction in token cost or something, someone can then just come in and go, "Yeah, well, we're 10% less."

Why would you stay with them? And you're just like, "Okay, well, why would I stay with these guys? These guys over here are 10% less." And now that entire problem that you thought you solved has just been wiped away, and someone else has taken it because I had no emotional connection. When you're talking to founders and advising them, and you, you've-- How do you-- If they're, if they're not there at the beginning or aren't all the way sold, or maybe this just isn't intrinsic to knowledge, then how do you coach them up on this idea?

How do you get them to start thinking in, in the wind, not the, not the sailboat? I, I love that analogy, by the way. I'm absolutely gonna steal that and use that again. Um, I will credit you, though, so in, in, in, in infinity, you'll have that. Well, we, we need to back credit the original partner who gave- Yeah, exactly ... who I heard it from, so We'll have to do some, uh, wide research on Manus or something.

Um, so, uh, h-how do you coach them up on this idea? How do you get them thinking about the business or the problem they're solving in that way? Yeah, it's, it's a, it's a good question. So, I mean, traditionally, if they ask, if, if I start asking these questions and we're part of the diligence process or in a first meet, that's my red flag. And in a lot of ways, then, uh, it's not that I won't see them again, but we're probably not gonna move forward past that, right?

So I would say they're, they're not gonna listen to my coaching at that moment, right? Um, but let's say post-investment, uh, it starts Working itself towards losing vision and getting really focused on something narrow, uh, pet projects we can call them, or things like that, or, uh, I think it's, it's reminding them of what the original vision was for the company and to go execute on that. You know, um, specifically when it comes to co-founders, right, y- I like having meetings together, and then I like having meetings separate, and I like doing things that aren't the dog and pony show, right? Let's meet for a drink. Let's, you know, go play nine holes of golf.

Let's go do something, uh, where the, the mask comes off, and you can learn a little bit more, especially during the diligence process, right? When you get them out of their, out of the boardroom, the pitch room, if you will. Um, and you can learn a lot about do they share the vision with each other 'cause one of the biggest ways that, that companies fail is, is not alignment in, in true vision for where things are going. And so, um, I think it's a lot of checking in. You know, I, I'm on a, a few of our boards here at the, at the company, and it's a lot of active discussions and active management on our part, aside from just being a board member, but truly being there, to your point, as a mentor in your own way to say, "Hey, that sounds good, but are we getting too far off track from where we were?"

Or, you know, in lieu of putting the hard work and time into executing that strategy, you pivot somewhere else 'cause it seems easier. Is it really easier, or is it a distraction, right? And that's really a lot of those discussions are, um, trying to stay focused on, on what you're achieving, and if there needs to be a big pivot, then let's make a big pivot, but don't be scattered. Um, and I think that's typically when you're trying to solve problems, you can sometimes, to your point, manufacture your own problems in your own company to go solve instead of doing the work that sometimes is the most painful but the most effective for the business. Another thing I've seen you talk about a lot is, um, when you see the market moving left, you wanna go right, right?

You wanna take that contrarian viewpoint and, and- Mm-hmm ... not everyone is comfortable with that. Some people like being fast followers, which is fine. Um, but I would probably say my own focus in life in general and also investing would probably be about the same. One, where did that come from? Is that just native to you, or is that a learned skill to kinda look at the world, you know, kind of watch where people are going and move the other way?

Why is that valuable, and what are you seeing in the market today that, that has your eye that, that, uh, you don't want, you know, I don't want you to give away the secret sauce or whatever, but, you know, what are some of those places today that you see, "Hey, everyone is looking over here, but there's some opportunity in these areas," um, uh, as, as a contrarian take? Yeah, and I think, uh, the contrarian thing, I mean, you could probably quote it down to, to Warren Buffett's, Warren Buffett and the capital markets, right? Uh, I used to make the joke, when your Uber driver's giving you stock tips, it's time to really question where your positions are, right? Uh, when you see everyone pouring in capital, um, to a certain industry, it's gonna be hot, but it's also gonna have a lot of loss. There's a, there's gonna be a bloodbath at some point traditionally, and being able to figure out which, which one's the good one or not.

You know, I've talked about before, if you look at the tech bubble, right, back in the early 2000s. You look at crypto and the IPO market or, uh, ICO market, right? Everyone was chasing, right? And the minute you start chasing is the minute- NFTs. NFTs.

I, I'm happy to say I never bought one NFT. Uh, so you know, specifically, and I won't go deep on crypto, but I've been a, just a retail buyer of crypto since 2017, um, and have a long-hold strategy. So when everyone's selling and saying how great they were to get out, I just look at the account and go, "Well, it's down. It'll be back." I've gone through enough of these over the past, you know, what, eight years, seven years, that it'll come.

And if you look at it as a linear investment over the last seven years, even where it's called bottom today, it's doing quite fine, right? I'm not a swing trader. I'm not trying to, to scalp yield. So while everyone else is, you know, fear, uncertainty, and, and doom, I'm just going, "This is fine," right? Um, when we look at our companies- Can I- I, okay ...

I, I just wanna ask you a fob question there because- Yeah, of course ... what I, what I hear in your voice in, in what you're saying, I, I, I so relate to you. Uh, I used to get made fun of 'cause I tell all my friends I have gold and silver buried all over Albany County. Which I live in Albany, New York. Yeah. And, um, and they'd, "Blah, blah, blah, blah, blah, blah, blah."

Well, I'm doing all right today. You know what I mean? I've just watched it creep along, and I, and I, you know, it's not like it's my entire portfolio, but isn't it... Same thing with Bit- okay. What I've heard throughout so much of our conversation is, like, a very pragmatic, n- not anti-emotional, but a controlled emotional response to investing.

Most retail investors in particular are all emotion. Um, how did you, how do you craft that? And if someone is finding themself looking at their, we'll just use crypto as an example, right? They're watching Bitcoin halve in the last four months and going, "Ho- you know, I'm an idiot. All my friends were right.

I should've never bought this crap." Like, how do you remove that emotion and, and reevaluate where you are, particularly when you're going down? And not move- Yeah ... out of positions that you o- that will be valuable in the future, I guess, is where I'm trying to go. Yeah. So, so I look at it a couple ways.

One, never invest in anything you can't afford to lose, so let's start there, right? I am not a financial planner, don't have my Series 7 and 63. I manage no one's money. So this is not financial advice. This is the Chris Van Dusen strategy, right?

Uh, I just wanna make sure I say that out loud 'cause I don't want someone going to do something. But if you look at a portfolio mix, right, you're gonna have, you know, your capital markets, you're gonna have your fixed income, y- which is, you know, actually receiving cash. You're going to have your alternatives. And in your alternatives, you're gonna have maybe venture private equity, right? Some real estate, oil and natural gas, who knows, right?

Royalties. And then you might have a small little bucket called opportunistic. And within that, that is, at least for me, a place where I put money into something that is a loon shot, right? And again, this isn't-- I'm not speaking for Seleco Capital or anything. This is Chris Van Dusen, right?

And so back in 2017, I took a little bit of money and put it into crypto and said, "This could be zero, or this could be something." Now, over the past seven years, it's turned into something, and that's awesome, right? Also could have been zero. But the point was, I was in the idea of holding. And so if I were checking it every day, worried about the plus/minus 5% that it's goes all the time, right?

A, I'd give myself an ulcer, right? 'Cause this is the most volatile market I think we've seen in quite a while. But also, it was never to make money today off of, right? And so that was the thesis when we went in. Um, that's not to say people watching the market go down and up in the regular capital markets, and it's tied to your retirement, and your retirement's coming up, this could be meaningful, of course, right? But in the same way, it's really hard to beat, right, the S&P over a 15-year run, at least over the past historicals, right?

You know, on average, what, 13, 14%? So you wanna try and time it better than 13, 14% on trying to buy and sell in and out? Maybe. Good. Like, awesome.

I don't have that kind of time. Sounds exhausting, right? So you just know what it's going to do, and if you check every day or every hour or every week, I think you're gonna work yourself up more. And then what happens is you start selling, and you start listening to the news, and then you start getting out of position. And then the minute it starts going back up, you buy back into the position.

I mean, that is literally... You watch everyone. The minute things go down, everyone sells out, right? And you're going, "Well, wait a second. You should have bought a little bit more at that point."

It was free yield 'cause the fundamentals of XYZ company are so great, it's gonna be right back up to where it was, right? Uh, so on the capital market side, yes. On the pragmatism around investing in companies, um, if you get emotional is when things go wrong. So I used to make a, a joke: Never bet on the team you're a fan of. So if you're a Red Sox fan, a Patriots fan, right, and you do, you know, FanDuel or whatever those betting sites are, never bet on them 'cause you can't objectively look at it.

In the same way, it's really tough to invest in a friend 'cause you're not objectively looking at the opportunity. So if you're making a investment decision clouded by things that aren't how you evaluate the founders and how you evaluate the opportunity, you're going to end up making potentially a mistake. When you have a passion for the Patriots, you're not going to truly feel that that line is appropriate 'cause you're biased. So never bet on your, the teams you're a fan of, in my opinion. Doesn't mean you can't grow to be a fan of the company, right?

But the idea is you should be looking at it on the merits of the company and the merits of the founder and whether or not they can do what they need to do. So yeah, I think it's a highly pragmatic, uh, view on, on investing. And y- I think in a lot of ways you have to be. Yeah. I, I love that 'cause, um, you know, I have buddies who wanna fancy themselves as, you know, quasi traders and, you know, they love to regale you on the golf course or over beers of the s- stories of their wins.

And what they don't tell you is, you know, they had to take five moonshot, you know, go broke chances because they had traded their way to almost zero, you know. And, you know, you don't, you don't hear those sides of the stories when you're trying to time the market and all this crap. And I just... You know, i- the number of pe-- I mean, if you look at even trading firms, the number of algorithms on algorithms and, and the pace that they have to trade at and, you know, all the, the big losses and the movies that have been made about the big losses and you're like, but you sitting with your Ameritrade account while you're stamping TPS reports and signing across your desk, you're gonna time the market perfectly? Like, you know, that's the kinda stuff where I'm like, "We need to back up and live in reality."

Now, if what-- if that's your gambling account, like if that's how you like to gamble, right, or whatever, and it's not... Like you said, it's not gonna hurt you if you lose it and it's fun for you, more power to you. It's America. God bless you. Like, go get it.

But, like, it's worrisome, I think, when... It-- I, I wanna hit you with this question and I wanna be respectful of your time, but, but I think if I don't... I heard this the other day, and I wanna get your take on it from your seat. I was listening to, uh, I don't know if you're familiar with the podcast, Anthony Pompliano. Uh, he, he's got a podcast on Bitcoin, and he has, uh, this gentleman, Jordi Visseran, um, who I find to be fairly, fairly smart in the things that he does, and I like listening to him.

And he said, um, there is a, a cultural movement happening, particularly with people under the age of 40, where everything they're doing is, like, high-stakes gambling moonshots. It's Polymarket. It's, uh, uh, uh, meme coins on, you know, for crypto. It's, uh, you know, these, these big bets, these... Because they feel like they can't grind their way out, right?

Like, like this idea of like, "Hey, I'm gonna put 10,000 bucks in Bitcoin. I'm gonna let it sit there for a decade, and we'll see what it is when we get there," right? "And I'm just gonna emotionally detach from it, and it's gonna go up and down." You know, do you see that as a real cultural movement? Do you agree with that?

Have you seen that in some of the investing things? Do you actually-- This is the part that he did not touch on, and as I've thought about it, I've struggled. D- I just don't have a good, uh, feeling for it yet. Is that because of social media and how hard these things are marketed to them and the, the, you know, you're only hearing the big, huge stories. You're never hearing about all the losses, so they, they believe it's possible for them?

Or is it, is it a reality of where our economy is and where our society is today that they simply can't grind their way out, and if they don't hit some sort of moonshot, they're gonna be eating ramen, you know, driving a, a '95 Acura and not getting laid? Y- you, you get what I'm asking you there? I do. Um, so there's a few things at play in, in my mind, right? I have an 11-year-old daughter.

We work really hard to make sure she's not on devices, uh, to the level that, you know, many others are, and no judgment, just that's our values. And even still, culturally, you know, she's in fifth grade, the dopamine fixes that all these kids have of constant, right, need this, the next activity, the next, the next, the next, the next, the next. Is an interesting way of looking how these generations that grew up with screens. You know, I grew up, you're 45, I'm 45. I grew up with one television, right, in the family room that was used at night and maybe Saturday morning cartoons.

And other than that, screen-free, right? I get an email address. It looked like a, it looked like an air conditioner outside of your house. Yeah, it was huge. Uh, and so if it wasn't, uh, if you weren't on that one screen, you were out, right?

And now everything is a screen. I mean, down to all kids, right, wearing Apple Watches. Sorry, but that's a screen, right? It is giving you feedback, and you are doing something with it. And so if you've spent all your life getting dings and bings, the idea of being patient just isn't a skill that you've learned.

And whether or not it's what you did for your career, what I did my f- career, there's a patience in spending the time on the mat to get where you need to go, right? I remember even sitting there, and I'm, you know, at 45, we're both on the cusp of being what would be called millennial versus a Gen X, right? I spend a lot more of my, I guess, personality would be more akin to a Gen X than millennials. And I remember- Mm-hmm ... so much complaining about millennials being they think they know it all. "I've got a 22-year-old yelling at me that he doesn't, that I don't know what I'm doing," right?

I'd hear this from managers. And you'd go, "Okay, maybe they're right, maybe they're not." No judgment. However, that generation was the know-it-all generation. And I think this generation that we're referencing here, right, that's really spending the money, this, these younger, I don't call them kids, but right, in their early 20s and, and teens, are the f- dopamine fix generation.

So the idea of taking $10,000 and putting it in a, in an account to buy Bitcoin and checking it in a decade, what? Right? Like, they're not gonna do that. The idea of going and doing a career to a point where you know enough to go start a new company, they'll say, "I'll start it now. I know everything I need to know.

I, ChatGPT all my info." Right? Like, there's a abundance of information for them to have, and that's wonderful, right? I wish I had all this opportunity when I was back in high school and college, right? But you still need to spend the time learning the nuances and complexity of what life is.

And so I look at it from not only a career perspective, right, the idea I can dig myself out, right? I can go get a job to do things. And, and with AI, it's I'm sure gonna get even harder to find certain jobs, so I wanna be sensitive to that. But the idea of, of being patient, I think is, is tough for this generation. And so I think it goes to, uh, Robinhood accounts and GME and, you know, uh, being marketed to on social 100%, right?

When we were growing up on the USA Network at midnight, you could see a get rich quick in real estate infomercial, but you weren't hit with these type of things, right? The idea of coaching, not good or bad, just wasn't as much of a thing you saw every single day. And so there wasn't people telling you that you can do it. All you have to do is take my class, and you can do it, right? And so I guess the, the idea that I don't wanna call it get rich quick, but the idea of get rich quicker than normal, um, was never as pervasive when we were growing up, and I think now it's extremely.

And there's always another coin. There's always another strategy. There's always another person to follow, uh, as long as you pay them for it to get there. Yeah, no, I, I agree. The, the concept of paying your dues simply, it doesn't exist.

I mean, it's not even something that's discussed. And, you know, I, uh, I coach, um, uh, different seasons, both of my kids in different sports. You know, one's on basketball, one's on baseball. And like, some of the things, again, it's just some of the things that intrinsically- You know, I would believe, and I'm assuming you would, and, or, or you wouldn't have played baseball- Mm-hmm ... in college, et cetera, like this idea of like, "I'm a freshman, so I'm gonna keep working on my game because I don't necessarily deserve to be on varsity yet. I need to pay my dues to get there."

And kids today are like, "Well, you know, I hit .300 in eighth grade, so if I'm not on varsity, I'm just gonna change schools." And then I'm gonna, uh, we have this-- I don't know if you guys have this where you are, but, uh, New York State has a rule where kids can, um, re- re- refactor themselves, regrade themselves, so if they're, if they're in this window, they can actually h- hold themselves back a year to, to then ... Now, now like you have adults playing varsity basketball against children because they refactored their grade, you know, what grade they're in. You know, to, to, to be the star instead of, I don't know, just putting in the work and the time to actually become a true master. It's all about gaming the system to put yourself in a situation where you feel like you're the star.

You know, you see this in travel sports. I don't know if your daughter plays travel sports, but holy shit. Like, the number of games that are played, shell games that are played so that Dad's son can be on the fourth travel team, but he gets to start at shortstop and hit number three. You know what I mean? It's like it is bananas to me, and I don't think any of it leads to success down the road.

Um, Chris, I, dude, I could talk to you all day, man. I love it. This has been fantastic. I wanna be respectful of your time and that of the audience. Uh, I know there are people that are gonna wanna, uh, follow along with you and what you do.

Where are the best places to go deeper into your world? Yeah, uh, LinkedIn, it's Chris M. as in Michael Van Dusen. Same exact thing on Instagram as well. Pretty active on both. Uh, anyone wants to reach out, it's cvandusen@psycho capital.com.

Would love to chat. Appreciate you, man. Guys, I'll have, uh, those links, uh, in the show notes, whether you're watching on YouTube or listening wherever you do, just scroll down. I appreciate you guys for being here. I love you for being here.

We're out of here. Peace.