#105 with Avlok Kohli and Xavier Helgesen - Leading AngelList Ventures and Buying Businesses Like Berkshire Hathaway

what's up guys sean here and no sam today he is out sick with one of the more painful sounding things that you can get i'll let him explain the all the details but we're wishing him well and so i got the message and i started texting people i said hey i need a guest for today and i actually got two and so two two two guests on this episode the first is av who is the ceo of angel venture angel is a badass company they're doing a lot of interesting things that just launched this rolling fund thing that i've been talking about that i think is very very cool and he tells a couple he tells a couple stories first he tells a story of how he sold his company to square really early on and why you know how acquisitions like that go down i i find that fascinating and then the second thing was he had i we brainstorm some ideas i put him on the hot seat and he he had some ideas around meeting tech because i think you know a ceo spends a lot of their day and meetings and you know eventually you sort of look around you say i think this could be better and one one of the ideas in particular i think is quite good very simple idea that you know i think has legs the second guest is xavier xavier a good friend who was one of the first guests on the podcast back you know in the first ten episodes he told his host you know he told about his past well today he's talking about his present which is what he's doing now with enduring ventures a company both me and sam invested in and it's a company that buys companies so if you like the episodes with andrew wilkinson or brent be sure then you probably will like this one xavier goes into a little bit of detail on a couple of the acquisitions that he's made and how how they went down and what do you what areas you think so there's still a lot of opportunity and you'll be seeing xavier around on the podcast i think a little more but but there's a good chance to to to say hello so two guests one episode i hope you guys enjoy it and i hope you liked the new intro music let's queue it up u yeah i feel like i could rule word i know i could be what i want to put at all in it like a day's off on a road travel never looking bad alright we're roland i have a guest here with me i'm excited i've we've never met so this will be our first you know conversation besides emails and so i have yep i'm av cole here he's the ceo of angel venture i don't know if you know this you probably don't care either but i've said for years i remember five six years ago i was mh somebody said you know if you had to be i think they were saying if you had to be acquired by any company but really what they were saying was like if you had to go work somewhere not run your own company where would you wanna go work and i was like you know i love what i'm doing but if i really if i was gonna go get a job somewhere and this was six years ago i was like i would go to angel i was like i think angel has probably the biggest opportunity of any company that i know of in a space that i care about which is like let's say the entrepreneurial space yep because i just thought man they have the at that time it was pre buying product hunt i think you had maybe i don't think syndicate even existed at that time it could've have made maybe existed but it basically was like angel platform connecting startups and angel investors roughly that was like kind of roughly it but i was like it's kinda like linkedin but it's full it's like linkedin that doesn't suck and the community who uses it actually really loves it and it's a vertical community that's like you know creating a ton of value which is like the tech sector and so i've always really my angela so now you work at angela you know yep how did you how did you end up there it looks like you had kind of like a entrepreneurial background so give us like two minutes of your story of kind of the bullet points how how'd you get here how how'd you get to this being the ceo of evangelist venture yeah for sure yeah so i'll do a really quick quick background i graduated from a university of waterloo university in canada and software engineering so that's my background i moved to san francisco eight years ago and actually no two thousand eight not eight years ago it's been much longer and i actually moved here right when the sequoia rip ip good times men would drop i didn't quite fully understand at the time because i don't really participated in the internet economy yet but i distinctly remember the the feeling around the valley first few years at work for a bunch of different companies as an engineer one of them is now the world's largest doctors network and other one was a company that was acquired by a stub up and then i just caught the founder bug started tinkering in a bunch of different companies and i launched a company in twenty fourteen this is in the food delivery craze i launched company call fast fight which was interestingly enough very quickly acquired by square and we i use fast bite was cool because you would bet you basically be like there's like four items available like you can get yep a burrito you can get butter chicken you can get like a salad and you'll get in fifteen minutes for ten dollars and i was like hey that's great i love burritos and fifteen minutes i've i'm hungry now and fifteen minutes is the closest thing to now that anyone will offer and like the guy's just driving around with these three items in his trunk basically or whatever and he would just like yep got you got the thing so you didn't have to stop at the restaurant was my understanding of it and i was like this is kinda exactly yeah and it was it was it was magical because back then the average delivery time was eighty minutes you know and our average recovery prospect was seven minutes so we're literally in order of would beat the fifteen minute estimate i remember i was like this is consistent faster than the estimate yeah and the food is like passable you know like cool i'm cool yeah exactly so did that really work and did the company work because i know it kinda went away with inside of caviar or square or whatever yeah so what happened was post acquisition caviar delivery times for still eighty minutes fast bite was still seven minutes and the thinking was over time as your network density blows up you have a bunch of drivers on the road you can actually bring your delivery times down and so the value of fast spike would go away over time and so the integration itself was you have your caviar experience you have a fast experience within the caviar piece and then over time you just transition into caviar as the main way to get delivery right so we we really had a an advantage a speed advantage when when compared against competitors that against other competitors exactly so i was driving that so fast itself as a name we retained it and then i was also part fee for caviar at one point was with square for two and a half years is pre ipo you know went through the ipo with them it's a special company i i love you know i love all the people there and when i left i started another company ran that for about a year and a half and we wrapped up an acquisition of that one in january twenty nineteen i basically decided to step back i wasn't gonna join the acquiring company i was i i'd operated for ten years straight so i'm like alright i'm gonna just you know retire and around that time naval who'd been a previous investor of mine he's one of the founders of evangelist angel approached and decided to ruin that formula and it was just like hey you wanna do you wanna consider stepping in at list and you know we actually spend the next five to six months like really dig in didn't really know much about the venture business and i definitely didn't know anything about the angeles venture business but about five five and a half months and i distinctly remember it all just clicked for me and i saw a lot of the making of what the square had built with its financial platform and a lot of those attributes existed with the angel venture financial platform and you got pretty excited that i've made the decision to to join and yeah i've been in the role now almost a year year and a month ma'am july twenty july fifteen twenty nineteen is when i officially joined so i wanna ask you actually a little bit about the acquisitions that you went through a ceo i similarly went through an acquisition i wasn't a mega mega acquisition or anything like that but it was good you know personally and financially and the team landed well and all that good stuff yeah so tell me how that happens what why did fast i get acquired so fast how did that happen and was that a good deal or a bad deal or what what happen yeah it you know ultimately acquisitions my view of it it'll happen if it is tied to a company's strategic priorities right so it has to always be tied to some executives priorities or the company's overall strategic priorities fast fight happened because to be competitive in the food delivery space we the the caveat needed to have a very fast delivery auction right it's something to stand out and we built something really small i actually built all of fast bite by myself in but and we were scaling just i'd only built it by myself and then some folks joined the team and so we were just starting to scale and it was clearly taking off because it was just so much faster than any of the traditional food food delivery services and so the acquisition really happened because it's tied to a core metric that square was optimizing of caviar and this was a way to get there if we break it down square wants to be in food delivery square knows that to be in food delivery you gotta do something different because there's so many food apps and now there's more but at the even at that time they knew it was competitive speed hey that's one way to to go okay there's we can either build this ourselves or we can buy it yep at the time how give us a sense of the traction do you have a bunch of users just a you know a few users one city many cities revenue you know where was the business at because i think yeah i so surprised i think people would be surprised like you know if you really fit into the strategic plan you could throw a lot of traditional traditional business metrics out the window yeah and not definitely it i think i think it it was definitely a combination of of the fact that it fit the street priority as well as a team that built it and how quickly would built it you know talent ultimately is the hardest thing to find especially talent i can truly launch new unique ideas into the market and we up just checking off all of those boxes and so that's how it fit in terms of where we were we just come out of beta and we had we did have users we had you we had folks repeat repeating we were only one city but the experience was just so magical that it was it really took the sort of like it really came from a product lens of like yes we need this and we need this team because this team executed on the super quickly and it always comes down to you know company can consider a a build approach right build internally but as you walk through the build approach you have to really consider okay who is this leader going to be internally that can truly go and do that and then from there who's the working team gonna be that can go and do that and then on top of that you have to also you you have to also bake in the cost that it takes for learning right so that's what ends up coming up and i've seen this now enough times of course at square when i was on the other side of looking at different acquisitions and of course now i'm running angela venture there's you're always capped by the team size and like really the leaders in the company that can fully drive new products and so but that's i don't think think that it's interesting this is a a certain perspective that hasn't been shared broadly but it's actually very very important to consider when companies start looking at acquisitions right at most of times it ends up being we just need the leader in the team so that we can speed up right time to market that's exactly how we got quirk literally the what you just said is a is a perfect articulation of it you know no revenue handful of users but nothing that you know it's not instagram and fundamentally it's hey we have the strategic priority we look around in our own company we don't have the right leader for it or we don't have enough leaders or our existing leaders that are capable of something like this are all occupied by today's problems and not able to build this okay do that my do you have does does this company have the talent to lead this have they already spent burned the one year learning curve to try to figure this thing out and then like cool they already have something in motion so you know we save twelve to eighteen months and we we have a higher shot of success cool like that that's worth it which i think is i think unless you've sat in that side of the table it's hard to understand why would you pay so much millions of millions of dollars for for nothing you for this yeah and it makes a lot of especially when the company is large right if you're a bit multi billion dollar company you're looking for things that can move the needle you know if you can move the needle five percent of your company value that's a pretty big payoff so so that's your that's your entrepreneurial that's one of your entrepreneurial stories i like that one a lot tell me a little bit about before we go and talk about rolling funds and all that stuff because we're gonna talk about that let's play the brainstorming me let's see how how how do you do so typically i give people advanced notice i didn't give you the advanced notice but typically i say hey come with one two or three ideas that are just things that you wrote on your napkin or if you in another life if you were twenty three years old you might go do this tell me what either ideas problems or business models have caught your eye you know or if you have it refined to a pitch of like hey somebody should build x i'd love to hear some ideas you have yeah so most of my ideas is these days are actually related to how we scale the organization how do we improve communication in the organization and there you know there's just there there are just a ton what you know i'll i'll i'll kinda just rhyme them off with for you one of them is you know why why can't we get feedback on meetings right you have all of these super expensive meetings all hands to team meetings and what's missing today is that feedback loop and one of the ideas was and maybe it's zoom or it's active for someone to build is when you end the meeting it should just ask for feedback right so you can create this feedback loop and then you can actually build a information center around that the other idea is around asynchronous meetings right so you think about synchronous meetings that's what we're doing today right it's it's a live meeting it's really good for when you have to go through a bunch of context all at once it's amazing for that but most meetings you don't need that for example you're gonna do a design review product review you can actually do it asynchronously so i think i think there's space for someone to build a really great asynchronous meeting tool and really fasten anything about that as i was digging there was when you build an asynchronous meeting tool by definition everything is logged right because this is recorded because of course we're gonna do it's a podcast right but most team meetings we're never gonna record it's weird it's just odd but in asynchronous meeting where you have some form of like recording and and it maybe use loom but it's all in one center you then have this repository that anyone can look at in the company that is just so so valuable right yeah you don't have to take this extra work later to like capture it's like the capture will part of the way we communicate it so we don't have to do any extra work it's built in the style of the meeting yeah i knew documenting decisions and then all new employees coming in can get context so a lot of my ideas as you can it's a very general theme of how does the organization work better as we scale that all you know ultimately the the company can ship faster employees are happier so i have that clip because i'm thinking about this stuff all day long i'm like i wish this exists actually interestingly enough i'm i'm constantly talking to different founders of like please build those this and yeah i'll i'll like we will be customer number we're one for those right so yeah like the meeting feedback tool is a great one i actually one of the brainstorm storms you know a couple months ago i was like meeting tech now that i'm in a big company i see this exact thing which is i'm in my my my role of the company is to sit up meetings pretty much the whole day yep like as a founder you have like a meeting and then you like go work and it feels like that's the real work but in a big company the higher up you go the real work is meetings yeah and and so i was like man there's all these meetings and i was like meeting tech let's just create an umbrella called meeting tech what could we do to make our meetings better because this is something that's happening on in this office right now there's sixty meetings rooms you know on this side of the building and there's sixty on that side of the building and that happened eight hours a day like just multiply the number of meeting hours and numb and and then the the sort of dollar value of that time and if you can you know create even ten twenty percent gains and how effective those meetings are and again effectiveness not efficiency then that would be like worth a lot and so let's take the feedback i love that idea actually i think that's a that that that catches my my eye for sure because it's very simple and i think it could provide a lot of value like like i have this product right here have you ever heard those product levels oh i'm so i actually talked to the founder i'm like waiting for my my box ticket get here okay so my box is here i gotta un yeah open it i'm jealous i've used it before i've used it before and i i was kind of i actually i give the guy credit on the podcast i was like love this idea believe in this this is the future super fast feedback loop of i eat something and i get measurement of how it affected my body and then i used it and i kinda under overwhelmed and i was talking about and then he reached out was like we've made it better look try it again i'm gonna send you a box what's your address and yeah and i was like okay that's you know that's what a founder should do is is exactly that so i'm a big fan of feedback loops so what's the what what are the plot holes with this right i think of any pitch as a story the story is hey we spend a ton of times in meetings hey the way things get better is feedback loops isn't it weird that meetings have no feedback loop everybody walks away with a rating in their head of how that went and if whether there was a good use of time or they have a bunch of energy or if they feel drained and they feel like that was a waste of time and the people running the meetings don't get that information so that story makes sense to me what are the plot holes what would be the obstacles that as you map that out in your head how how you would go it or where might that fall over yeah i would say the obstacles on this one would be not all meetings will require a feedback loop right if you ever one on one it's kind of weird it's like hey rate for one on one it's awkward right so the question will then be what meetings is it feedback we've useful for and then i would say how do you define the questions right in all hands for like whenever we conduct into montreal all hands i always send out a a very simple feedback to because i we wanna get the feedback loop going but all other meetings will have different questions to ask so that's the other piece and i'd i'd say the third one actually is how do you get honest feedback right like really candid honest his feedback is people generally are nice they wanna keep you know they wanna keep a really solid relationship between people and their colleagues and so the question then comes out to do you have an anonymous or not anonymous and so they're all but then if you do anonymous and there's only three people in the meeting right now you're you can kinda figure that right exactly so these are all the i would say this is the this is true any feedback tool between colleagues or people that know each other yep have to sometimes just go past the kinda of the nice and just get to the raw feedback so i would say these are the plot holds it's more it's more behavioral related than it is like you know product related but that then being incorporated in into this alright today's episode is brought to you by tempo tempo dot fit is the website i actually use this i've used this for a few months now and it's this machine that has a touch screen in this three d sensor and what it does is they give you weight it's like a hundred and fifteen pounds of weights and it's for strength training so what it is is it measures your body and it sees how much weight you're lifting it sees how many reps you're doing and how much effort you're putting in what you're part rate is it's pretty amazing and then you have a coach on screen walking you through what to lift how many to lift what workout to do whether you wanna do a twenty minute ten minute fifty minute workout it's pretty amazing but the best part is the leader board the other stuff all the features that they have that's cool but i'm obsessed with the leader board because it measures how many reps you're doing and how much volume you're doing and you can compete with other people who have taken the same class so it's maybe wanna work harder or lift more weight or have more endurance it's is pretty freaking fun and the whole point of working hard is to have money so you can spend it on stuff that'll will make you live longer and this product tempo it checks that box for me so they're our sponsor today if you use the code tempo hustle you'll get a hundred dollars off so tempo dot fit is the url and tempo hustle one word you'll get a hundred dollars off so check it out i use it if you look me up on twitter you'll see i'm always filming videos where i'm talking to that company say i'm trying to crush their employee on the leader board because i actually love this thing and i and i use it all time so check it out if you're a seal of of angel venture you're probably seeing a bunch of cool startups ups all the time yeah give me a shout or two maybe it's a app on your phone maybe it's some a meeting you had last week yeah tell me about a cool business that you that you've seen that you're excited about that you think could be could be interesting could be big it's a good question so so most of the companies that come through angeles venture a lot of it is just through the a lot of it just actually through other funds and other syndicate that make the investments so i guess i'll i'll pull one i personally use that i think is just going to be huge i use roam research i think it's an amazing amazing product and you know it's interesting actually to get started i i i i had to take a step back really i i think i went through a i spent a weekend and i i actually watched a course on how to use it yeah and i can't remember who did it this is like many months ago and and i and i went through the whole course i'm like okay there's clearly there's a cult following or something here and i went through the whole course and as soon as i did and it just quick for me i haven't looked back i use it every single day it's actually my daily to do list now right because it's just so flexible it actually replaced the apple notes app which i i didn't think would ever happened so i'm just extremely excited about that company and we're we're big fans in notion at angela we of course have it across the company and the reason why find roam super interesting is because you know while notion does a really great job of being able to really create any sort of paid with database or tables and all of that rome i think has a very good shot at nailing the backlink so like being the single point of like anything you wanna find about something and just back and you just keep following that and and i really i'm fascinated about that because i spend a lot of my time thinking about context how do you give people context how do you give with the organization context and today the way people find contacts is go to a search bar and then they're typing but if you don't have context you don't know what to so yes yeah exactly but really the way people learn is they're learn through exploration right it's like oh what's this you click on and you go explore it and room research is built around all of that so the reason i'm super excited about that is one of course person i think the one the the personal use case is great but and by the i haven't i no idea how their you know what their product plans look like but i'm assuming they're gonna be doing something with companies and i'm really excited about them bringing a a company level tool which i think will actually change how employees find information in the company so just like super super excited about that yeah i i i've signed up i pay for it i need to take that course but i fundamentally believe in the premise too which is like you know ideas are linked together and your thoughts can link together and your notes which sort of represents you know the place you dump your brain should also have the ability to link you know you create a little web of ideas in the that you crawl those so so i think that's that's pretty great and in and a default like i think the beauty of it is it like as you're typing it'll just like default it can default linked to it right which is just fascinating to me and and and i think i think that's actually gonna change how companies are run i it's it seems very subtle but the biggest impediment in any company and any large company is context right everyone doesn't have the same level of context because it's just it's too the transaction cost that context are way too high right and roll think will like demolish that completely right you know companies would be worth more if everyone was making great decisions and you either assume that you've hired poor decision makers or the decision maker doesn't have context and so most people i would say we hired smart people and why is our why are these smart people people making bad decisions well maybe they didn't have the context for their own decision or how this affects other parts of the company or whatever that comes down to context and communication so i think that's a great you know any i forget forgot which company is very stripe or someone like that they have this phrase which is like every every problem in their company is a context problem and if if think it's if they could solve that that would solve their they would solve their problems and yeah of course you will never actually solve it but it's sort of at least it puts the blame on the context rather than the you know yep the human for being blah blah you know point fingers at each other which happens in big companies all the time yeah exactly it's it's like you know how do you in a how do you in a in a in a low transaction cost give everyone context and of course guys your company skills do you have a human coordination cost problem right and so that's the yeah i i i that's why i'm so excited about rome i i i think they can solve for this what's it like working with naval vault is he just like a buddhist monk now and he just meditate all day or what what's your interactions like with him as i'm a big fan of his i'm a huge fan of his like many many people right i think he's helping a ton of people but of course like you know i like the idea of neville i don't know who him personally and so i'm just curious what are your interactions like and what's he like yeah so i mean the the background there is i've known him for a while as he's been an investor in my previous company so we you know we built up a relationship over time you know once once i start as angeles venture ceo the areas where we really dig in our product strategy company strategy he of course has been in venture for a long time right he's has very deep go back to context very very deep context and venture and so you know we do spend a lot of time talking about what the future adventure will look like what the trends are what products you know we should be looking at and so he's he's one of the best products you know company's strategy minds i've ever worked with so a lot of our interactions are there and he's also a force multiplier for the company he's probably one of the best sales salespeople people out there too you know with rolling funds you know a lot of the kind of initial folks that came in and came in because of naval nepal and he's really able to be our customer number one to customer number one for rolling funds and and from there help amplify it and and now it sort of created this massive movement and so it's been yeah it's been great so if i was to summarize like i think the areas where we work together a product strategy and then really him being a force multiplier in the company but something people who only consume his content wouldn't know about them it's a good question i try to only ask good questions yeah i would say he's he he he's very very very good at seeing like around corners and very good at just really think about what the future needs to look like right from a from a product perspective what needs to exist in the world and he's he's really really good at that and i don't think i he doesn't talk about that of course and you know in a twitter account but i would say that is something that most people probably don't know about him gotcha alright so let's talk about rolling funds i got excited about this i was like when i saw it i was like oh shit this solves my problem yep which is really what you want at you know as a founder of company building and your building products is for somebody to just hear about what it is and connect it to their problem and say this solves my problem and so let's tell people what it is but i'll let's tell them through my problem right and by the way these are for sure first world problems so like let's get that disclaimer out the way it's not like you know this is not a i don't have a food problem this is a first class problem so let's let's right rewind the clock so seven years ago i moved to silicon valley eight years ago maybe i moved to silicon valley i start meeting people i was really lucky that the first guy i worked with was already hyper connected guy named michael birch he i was running this ideal lab i joined him he'd been in the valley for you know ten years prior to that or or so maybe more mh and he he he owns the battery which is like the soho club for you know for for san francisco which is like of course you know the google guys and the elon musk and everybody else is a member so he's ultra connected so i start meeting people and i meet a bunch of founders who are building cool companies now these companies at the time don't look that cool right or like an example calm was one of the the early companies the founder alex used to work at the ideal lab he left dot com i took his job basically following his footsteps and we used to hang out you know once a month or so in a mastermind group and he used to we to all talk about our problems and he was talking about his about com's problems which were like it's hard to raise it's hard to grow blah blah blah i thought it was cool product i thought he was really smart but at the time i didn't think of myself as an investor and if i go back and i i actually looked at this i looked at if i just filtered for just my friends and if i had only bet on my friends with no judgment process if i if if i wasn't trying to good ideas from bad ideas if i just wrote blank checks of you know fifty thousand dollar checks to all these friends i believe there's like three or four unicorns that came out of that so three or four billion dollar companies that i would have been invested in at the like you know sub five million dollar valuation range mh which is you know a nice multiple if if you could do the math so back so first problem i wasn't thinking about myself like an investor i was like somebody should invest in this i didn't even think i should invest in i didn't think of myself as that i didn't have a huge amount of savings at the time okay and so it would have been pretty reckless for me to go do a bunch of risky start investing alright so that was with number one get to go watch my friends build awesome companies i helped them raise money and i didn't put in money myself then phase two of this is i start writing checks mh or sorry the very next thing i did i got a little smarter i was like oh shit even if i don't have the money i should find a way to get some skin in the game so i started either advising or scouting deals for guys who did have money so found found people had money i said hey i i made a bunch of interesting founders i'll introduce the best ones to you if you invest give me give me a piece and they're like yeah great is awesome and so i got into a company called lambda school that way which is like you know a a a really good a really great company doing a lot of good things they i think they just this week they raised another seventy something million dollars so they're they're doing well so i got a little smarter then i started then i made a little money we you know we sell the company and i i have money in my bank now and i start writing angel checks mh but i'm you know i'm writing twenty five k checks and even if i believe in the company like i wanna take a bigger position it would be again pretty reckless to write quarter million dollar checks into each one of these start so i thought about raising a fund i thought about doing a syndicate and they all had certain certain issues right if you wanna go raise a fund you know you're gonna have to go and you're gonna have to convince a large number of people to give you a large amount of money all up upfront and that's gonna take time it's gonna take effort and it might not work and you know you can't partially raise the fund you know if you get twenty percent of the way there you're zero percent of the way there so that doesn't help you syndicate seemed cool i started to syndicate got a bunch of people to say they would back it but on a deal by deal basis i'd have to go ring doorbell bills again and say hey you committed money you said you said you wanna back my syndicate now now's is the time i gotta write this check so are you you out and i didn't wanna have to go re raise money every single deal although some people did it so then this magical product from the heavens comes down called rolling funds and a rolling fund lets me do three things differently number one don't have to go raise all the money upfront so i can start a fund today it can just like any venture it can start small and it can get bigger over time and while even it can be viable even when it's sort of small and so i thought oh that's great i love that i don't have to take four months six months off my life to go raise a fund i can just start today and then i can raise it as i go and the second thing was i don't have to go re beg for money every time like a syndicate the money that they give me is in the bank account can write the check to the founder as soon as i have it as soon as they the money's committed and the last thing the best part about all all of it is i can publicly talk about my fund and solicit to get people to come invest in it you know i have this podcast right here that you know hundreds of thousands people listen to great can we i'm sure some of these people would love to be investing in intact they'd love to you piggyback back on my deal flow and do none of the work and get some of the upside they can write checks as small as i think a thousand dollars even if you wanted to but by minimum one would be a little bit higher but like let's say you can write checks as small as five thousand dollars per quarter you know so you committing twenty twenty five k a year and you're in the game you gotta see seat at the table baby and so this is why i love range the rolling funds how did i do is that is that a good story yeah i love it you know what i'm just gonna take this part of the recording and put it part part of our sales collateral so yeah i don't even know why but i'm so excited about it because i've wanted to do this but i never it was never gonna work the way things were structured before and that's fundamentally kinda like what innovation does right it makes the inaccessible accessible to more people and i think that's what you guys have done i think you've made investing accessible for for a gp like me but also yeah for for lps who who can you know invest small amounts of money into these funds so i i think that's a a pretty noble noble cause to be working on yeah how how does that come about yeah so you know taking a step back what we think deeply about is we think very deeply about what is the biggest area of friction for our customers right and everything you just described as a gp doing syndicate or even a traditional fund is exactly it it's the fundraising process right the fundraising process just has too many steps and it takes too long today and really a traditional fund fundraising processes one you probably need to know someone who's gonna write a large check right they're the anchor that have they they have to come in then you're gonna spend six to eighteen months depending on how much you're raising and then you lock the fund down and then you have to deploy and then go through the whole thing again and you know we were essentially looking at this and going alright we're gonna pick one thing to really focus on solving it should be reducing friction for fundraising and when we think about reduced friction what we're really saying is hey rather than going through all of these steps to raise capital can we remove these steps right what can we do to remove and by the way that is innovation right innovation is let's take away some of the steps and boom you've got something magical you know just using an example from square when square launched payments with a little dongle the real innovation there was that the removed all of the steps that merchant would have to go through to start accepting payments right in the previous world you actually had to get on a phone you had to do a credit check throughout these paper it was insane i remember i owned a restaurant and yeah my very first company was was trying to build the chipotle of sushi and we were like hey how do we take payments and there was like these archaic pos systems and then my cofounder founder was like hey you know we just use a square thing and he filled out a little form on the internet and then like yeah i don't know five days later the dongle appeared that we could take payments and i was like that's how they should be you know exactly and and the the the the interesting part is those steps that were removed didn't just magically go away forever right those steps just went to square so square took on that complexity and and use software to be able to innovate and there's actually this really good book called the innovation stack if it's by one of the founders of square jim mc where he talks about this exact thing where when you remove steps and you're innovating you then the company takes on the complexity but then when you're software company you build software to improve it and so you know similarly as we looked at the friction here for gps it was really around fundraising it's just like constant issues around that gps go through with fundraising and we took a step back and went alright how do we solve this and neville kinda of going back to know really really brilliant at product and product strategy was like well i i had this idea i had this idea a long time ago of like why like why do you have to go lock the fund down right why do you have to go through process lock the fund out and then do it again why can't you just keep accepting capital into a fund structure and so then we start looking at well that's actually a good point why is a venture fund structure this way why is a traditional fund structure this way and it turns out that the venture fund structure actually started in the world before software who's built in a world before software and rolling funds are what a venture fund structure would have looked like it was built in the age of software and so that's what we did we actually just took a look at it and we went wow we can actually make this infinitely flexible fund structure that you can now accept capital anytime and you can keep raising into it and so what that did was those characteristics caused us to be able to compress the number of steps that someone asked to as actually go through to raise capital and the rolling fund structure was born and and and so what's fascinating is if you wanna do a traditional fund you could actually add constraints on the rolling fund structure and voila you actually have a traditional fund but you don't need to anymore that's the beauty of it and so that that's what we you know as soon as all of those pieces click because we built such deep banking infrastructure accounting infrastructure at angeles venture we were able to go from idea to ship within months it was like very very fast again it's it's very complex because you have to build all the software automated most traditional funds are actually done two people right you hire lawyers accountants and then they have to sit there and do all this complex math who spreadsheet that's actually what happens to it we are able to do all of that new software right yeah like you know when you take money from someone there's the sort of ky y c am compliance know your customer right you guys handle that right that when you invest in a company if you're if you're creating sp of just these investors investing in just this company again you would need lawyers you need create the documents you need to figure out if this is right or wrong and you guys sort of made that not even a button you push essentially it just happens alright so so i've given the love letter and the the commercial for it what are the downsides what are the what are the fair criticisms of rolling funds today what what would you say are some of the downsides and or fair critiques yeah that's a good question so we've spent a very we spent a lot of time really thinking deeply about the rolling fund and comparing a into traditional fund structure and making sure that the way we built it was was pareto superior to traditional funds so with that in mind explain with that would say what is pareto superior how do i use that in my day to day lingo that will make everything you have super smart yeah it it's basically it goes back to us earlier where a rolling fund structure is actually a structure with infinite parameters and so you could create a traditional fund out of it and that's a subset of a rolling fund right but then you can actually get all the flexibility so because of that a rolling fund structure is a superior structure and that's the thing it's actually ultimately a venture fund structure so when when there are you when there are criticisms of it you know people are comparing it two traditional funds directly as like there are these trade offs but in reality actually you can do a traditional fund right and i think and i think we can do a better job explaining it and we're gonna be announcing something pretty soon at a confidential or annual conference and but we we can definitely do a better job of explaining this to to the industry now i will say that the drawback and this one is actually a very temporary drawback is just it's a new structure right so as you're talking to lps there is some additional explanation of exactly what a rolling fund is but that was true i would say four weeks ago but then this whole thing just blue wide open right it actually was on on the back of saw hill announcing his rolling fund and then from there it just sort of struck a court and what happened after was just fascinating i mean we have so many community posts that have come out of it so many people like you know looking at it creating analysis from every angle and and now i would say that a lot of people know what it is so this particular drawback is actually decreasing day by day right now but that is it is a new structure it's something that looked at when i looked at it and i was like do i wanna do this mh i told you all the things i loved about it the one thing i thought was a drawback was the fee structure so mh let's say i go and i it it seems to be like every quarter there's a a fee and there's a sort of a minimum fee which is either x i think it's one point five percent or something like that two percent and and or or twenty k and so let's say you let's say you create a rolling fund and you only have a hundred k per quarter of capital committed or or you know if you have a hundred k per quarter you know you're paying twenty percent as a fee just to to operate your rolling fund because there's operational overhead to actually do this every quarter and yeah so that seemed like the thing to me where to get to the to get to the low fee model this is you know it's it's it's gonna be you need like i don't know a million one point three million a a a quarter in order to be in that low fee tier so that was the only and i don't think of it as a gotcha but i what i did feel like oh that's the one area where this you know might be suboptimal what do think about am i thinking about this the right way yeah you are and actually i'm glad you brought that out because because you got you're gonna waive my fees thank you so much for waving my fees i really appreciate appreciate that so it is it's something we've been active monitoring like how is the like how are people understanding the fee structure and and what do we do here and so with respect to the minimums you know we definitely don't want we want anyone and everyone who wants to start rolling fund be able to access it right and you we are going to be depending on what you know where you're at as a fund manager we're gonna be w these minimums for multiple quarters right so you're not gonna have to worry about that moment where you know that moment where you have ten percent of your capital that's going you know going to fees and so we are making that change and we're about to launch that change and we're gonna blow that out at at a confidential or annual conference so very fair criticism and something we are actively actually already actively addressing right now and the fee structure is gonna be a lot simpler again we definitely don't want anyone to ever feel like you can't access a rolling fun and so that's gonna be very clear no one's gonna see this minimum as like you're gonna be charging a minimum one day one we're gonna get rid of that okay great love that yeah alright so so what are some of the like kind of if i might lp out there right mh because i'm i'm talking about this from the from the view of a gp in reality most of people list most of the people listeners are not gonna launch their own rolling fund some will yep but the idea is not that everybody has their own rolling fund and there's nobody left to invest in the funds it's at you know a handful of people who have access knowledge desire to to invest in start up companies and and they can actually you know return money they they have they can now go raise and then other people can cut checks and they could say great you go do the work for me i want my money to multiply you know i'll give you a dollar bring me back for and yeah so how do you think about like if i'm an lp i've never invested in a startup before i listened to this podcast and i i obviously believe in the of tech i believe that cool companies are getting built and that people are getting rich off them what is the right way to think about this as an lp how would you talk to an a potential lp just gonna write their first check into a rolling fund yeah that's a great it's a great question so the way to think about early stage venture and this is how it explained to lp nlp the way the they went early stage venture which really investing in technology companies when the first starting is you actually want to invest it in as many technology companies as possible and as many viable technology companies as possible and so you don't wanna be sitting there doing deal by deal picking unless you're prepared to do many of them and you have the judgment to do many of them and you have the access to many of them because interestingly enough early stage venture you should think about as a different asset class right just like public technology companies are different asset class so our early stage venture and by the way we've actually published data on this now we are quite possibly the number one source for data because we are seeing such a large percentage of all the deal flow now and what we see very clearly is that what you want in an early stage venture portfolio are as many investments as possible in in viable companies and so as an lp nlp as you're looking to grow your capital you want to first and foremost believe that the gp that you're investing in has access and has good judgment and if that if those two are accrued then you want to invest behind them because you're gonna get the diversification that you're looking for i meaning the many companies that you need to invest in your capitalist has go into from them and that's it right that's the beauty of of this and and the nice thing where the role in fund is as an lp nlp you get to up re up or kinda decrease if you want and as a gpu you can set minimum terms right so let's just say i'm an lp and you have your rolling fine and i say sean you know what i i'm willing to commit for a minimum of one year but i'm gonna commit fifty thousand dollars for the one year because i don't quite know what your deal flow is gonna look like so i'll come commit fifty thousand you have locked in capital for the next year and then you make a bunch of investments and you send an update for whatever you can share of course and i see it and i'm like whoa wow sean's amazing alright i'm gonna re up i'm actually gonna increase my commitment from fifty thousand now to to five hundred thousand right and that's a beauty of a rolling fun you can actually increase your commitment when you start seeing exactly you know how good the gps so you're essentially opening up the pool to many many more lps that they may not be ready to make a large decision yet or any decision yet but it's fine they can just come in the next quarter that's the beauty of this and by the way we're seeing this and and it's it's it's great when you see that you just see someone go from investing you know two hundred and fifty thousand to like seven hundred and fifty thousand and etcetera whoa alright and that's what's happening is they're building conviction in that gp in a traditional fund you'd have to wait the two years right and and then maybe you can get access to the next fund i'll i'll give you an example i'm actually now being a traditional fund where they've they've made some fantastic investments but i would i i wasn't i just didn't feel comfortable making a large bet because i i don't know who they are i don't know i have any contacts but they've just made fantastic investments i'm sitting here going please get on a rolling fund would love to give you more money right so that's a beauty of this for lps and what are like the you know you you said a couple things in there that i think would be helpful to give rules of thumb not even rules just like you know one man's opinion of what what these should look like so you said two things in there that i think are interesting one is many companies so mh a gp should be investing in about how many companies and again we should also just fine when we say lp that just means person given the money to the fund manager the gb is the fund manager who's decide going out and meeting startups and investing in the the good ones or as many as they want so what do you think is the right like let's say what what is the right number or or minimum bar around how big the portfolio should be yeah so i i would say you definitely want at least fifteen to twenty right would say that's a good number i would say one to five is way to especially when dealing with early stage right like pre seed companies you definitely want fifteen to twenty and ultimately as you get as you as you get invest more meaning if i'm investing for minimum one year i'm i'm actually hoping that the gp is actually to make a lot more those investments right right in fifteen twenty maybe it's gonna be twenty five or thirty right that's a good amount of exposure as an l right and then the second one is return so okay i i kinda know the stock market they say you know seven percent historical mh you know average return if i give you know let's say my my rolling fine my my funds called the all access sean's all access fund i give a hundred dollars or whatever whatever the number is but let's use a hundred for simple math i give a hundred dollars across the you know four quarters obviously i can't get that money back right away it's gonna be put into ill liquid startups so i can't go and just say hey tomorrow i wanna go buy a car give me the money back the second thing is you know what should i be thinking about is good what is winning and and you know what type of return am i looking to get give us kinda like the you know the the the bare case you know here's like the minimum of what worked here's base case and what's the like outstanding returns look like for for these types of funds yeah it's a good question i would say that the the bare case and again this is all dependent on on the gp of course the bear case is your money is locked up and you get you know you actually get below what you put in seven to ten years from now right one extra that's one extra below that's a complete bear case i would say the average case and again average is we're not talking about the math term we're talking about it your yeah you're just kinda trying to give somebody a ballpark to understand yeah just a ballpark yeah would say the average case in terms of you know just in terms of what we think will be good is you get it a little you won't definitely wanna beat the public market right otherwise you're comparing it against a highly liquid stock market versus an ill liquid you know a private market and so i would say looking at what the public market returns are and i'm being above that and then the bull case the bull case is and again at i'm sort of you know looking at some of the really outstanding firms but you start getting into you know seven x ten x fifteen x on your money it can even be higher right really depends on it really really depends on how many of the how many winners you have in the portfolio my winners i mean unicorns d corn and and by the unicorn just for everyone is company that's worth a billion or more d corn worth ten billion or more and i would say the interesting thing is right now at this moment in time tech is having its moment right because we're all just stuck at home and we're all well i'll start i'll talk at home we're essentially being pulled forward in the future by so many years that all of these needs have essentially been accelerated all the way from food delivery grocery delivery to you know working from home asynchronous technology there's so many things that have just been completely accelerated and what we're seeing in early stage adventure is just an explosion in startups just in may like all these founders they're just starting companies right now and they're amazing companies that they're starting and so what you as an lp nlp want and like what you should be thinking about is how do i get my dollar in a company that is going to become big right it's gonna be become become a future unicorn or d corn and if the gp in the rolling in fund that they're investing behind can get access to these companies you know i think you mentioned you know below five million valuation or ten this is like pre seed seed stage then your your your money will actually multiply very very quickly and so that's ultimately what matters right returns if you take all the winners out of a venture portfolio it's negative right so if you take any unicorn or d corn out of like any venture funds portfolio the returns are completely negative and what that really means is you're dealing with a power law here where you're making let's say twenty investments and you're really looking for two or three to become really really big and all of your returns are dictated by that the rest of them will likely either go to zero or they'll just be a zombie company and that's just that is just how venture works and that's just the the type of industry in the type of asset class it is and which is why again as an lp nlp you actually shouldn't do deal deal picking right it it seems like it's great but unless you have access to the best companies and you have judgment on which companies to invest in it is actually just better to put your money behind someone like you for example has access right and it's like you know warren buffett has this thing oh hey warren buffett you know what's the what are the the rules of investing what are the basic principles he's like rule number one you know don't lose money rule number two don't don't forget rule number one in it's like the exact opposite it's like be prepared to lose money you know eighty to ninety percent of the time and then when you win win so big that it's a hundred x or more return and it's such a foreign thing to a lot of people a lot i know a lot of people who have i've reached out being like hey wanna invest your thing and they may do real estate and they're not used to losing money on eight out of ten deals that sounds crazy that sounds like doing a bad job but like you know they're also not used to a a project returning a thousand x and so that's yeah when you when you blend it all together you end up with this thing where you're getting maybe twenty percent irr or a thirty percent irr or even a forty fifty percent irr depending on how the fund did and so you're outperforming the public market by three four x and you know average person's gonna go by kind of you know put their funny the money their money in a mutual fund and that's you know one of the probably personal opinion one of the worst things you could go do and you know you you don't wanna be that and so find a find a blend that works for you with an amount of money that is sort of your your fun money it's kinda the advice i give i don't want anybody to put any money into my fund that's not their fun money this should be a small percentage of your net worth should be the money that you're gonna be learning about technology from you're gonna have the potential for very high returns but also you're comfortable with it being locked up for seven ten years because again these are private ill liquid companies that are meant to grow really faster or die and yeah you you you wanna know the game you're playing and i think that's the game that that we're we're talking about here yeah exactly and and you know for just just for your audience the the way to think about it is when when gp is making an investment into a company at the and that company becomes a unicorn or d corn you're talking about in some cases a thousand x ten thousand x return on that capital and that's how to think about it it's complete power log dynamics here where you have one investment or a couple of investments that scale up so quickly that it actually doesn't matter like all of your other investments literally do not matter and that's really what you have to believe is this gp gonna have the access and judgment to find these companies if the answer is yes write the check if the answer is no don't write the check right that's it love it when is my phone gonna be live the most important question yeah was ready it sounds like you you yeah it sounds like you you've pretty much called out everything that's needed so we're excited to go live with it and yeah i'm super excited to see you is see you see the fun page it's how you promote yeah me too alright cool man i appreciate you coming on and where can people find you find more information you know plug whatever you wanna plug to send people your way sure i mean you can find me on twitter i'm i'm usually talking we're responding to people about rolling funds twitter dot com slash ad walk to find out more about angel where we're up to you can go to angel dot c a n g e l dot c o slash awesome alright man thank you so much great thank you cool yeah i feel like i could rule where i know i could be what i want to from at all in it like a day's off on a goal travel never looking back lie okay what's up guys sam is out today with a painful kidney stone so you know pour one out for sam i think that's probably one of the most painful things but i got got a guest who's gonna pinch hit for us and he's amazing he was actually on the podcast i don't know how many months ago now but i think you were in the first ten episodes maybe is that right yeah i'm in the deep cuts so i'm in the the back of the record shop right only the og no so xavier xavier hug is here i think you shared your full story a long time ago goes so if you ever wanna kinda go back to that you can find it in one of the first few episodes i'll i'll find the episode number but great buddy of mind done a whole bunch of interesting things so let's let's brag a little so people know kinda who you are so this is the you're super humble guys we gotta go non humble for thirty seconds so that people know that they should pay attention to you give us your story okay so not so non humble version i really hate this a group fault time in minnesota i he's like holding a stress just to do this this is really so bootstrap better world books from zero dollars in the back of a community center to seventy million in revenue our initial capital was thirty five bucks which you can hear about on the right old podcast got a skull scholarship to oxford to get my mba so i spent a year there and then spent the past well about eight years before i started their ventures trying to bring solar to mass market in africa so start a company that serves about a million people investors included tesla general drake db partners he partners a hundred million in equity raised fifty million debt raised really revolutionary products probably the the most revolutionary actually is just rolling now now so that was a lot i did before i and is it is it accurate when i say because i say this all time and i'd have no idea if it's accurate that you are the largest solar player in africa is that correct yeah to my knowledge great my knowledge like the analogy is sort of like a you know you guys have this power wall sort of thing like if you've seen the tesla power wall i saw the one you guys have in your office and it's like a slick better technology better looking you know unit that that goes into you know people's homes and is kind of revolutionary yeah no it's really it's really democrat the ability to generate and store your own energy and especially i'm sure a lot of your listeners are in the developing world i actually got a message one of your listeners is nigeria mess me on linkedin amazing it was it was it was awesome and she had some marketing ideas for our affinity product so i was so all the three things i think you're super unique at one the two two big ventures that you started one was better world books and the other one z electric is they're both social impact but they were they're not so they both had an amazing sort of benefit humanity while still being really good businesses and you're like a total business minded person i asked find that you know folks that come really from the social impact world i i sometimes find it hard to connect because i just have you know more like a ruthless capitalist mindset but i feel like your brain has both both chambers and its head well i think the ruthless capitalist is really the fundamental part of it to sad it's it's like i'm like a catholic ruthless capitalist you know so i i've just got this kinda like cap social justice bone in my body and it's always been always been a thing for me right and so what we'll we'll talk more about some of the other interesting bets i think one other interesting one is you're the first ceo ever met who's was like i feel like in another life i should have been a cfo you're like love like finance you love structuring deals you love all of the bits that i know most ceos even really great ceos building great companies we are totally oblivious to this stuff and you know you like you said it with your previous company a hundred million in equity raise fifty million in debt raised and now with what you're doing within enduring ventures where you're buying you know profitable companies you're buying beautiful businesses and you're plan to hold them for for a long long long time you are tapping into that in a bigger way and so without even talking about that i'm just gonna plant that seed and i think as you tell certain stories people will realize oh that's cool that's a superpower when you have this sort of cfo brain living in a ceo body i think that that's that's kind of a hallmark for you and if there's anybody else out there who relates to that or wants to get good at that i think you're a pretty good model i know for myself i've dug in and learn more because when i hear you talk i'm like oh shit i don't know any of this is like a foreign language to me but i can see kind of the amazing results he's getting with this i need to get stronger at this thing i used to kinda brush off and try to delegate as much as possible yeah you know was it was the fundamental thing i went so i struck a few deals with better world books that were just not you know they're just not great financing deals because i was kind of naive and it really it kinda put a chip on my shoulder in a way i was like okay well i can be as good at technology or as good at like starting e commerce or whatever but like it's if some finance guys gonna make all the money right if he gets you know if he gets a better you know if i don't understand the deal he's gonna gonna be you know the gets better at me on that and and and also i realized that a lot of stuff i wanna do in the world needed money in it and and i needed to just be able to understand how that works so part of it was the nba but then a bunch of it was just honestly just just learning from some real a good cfo that that worked for me or worked with me over the years too and so let's talk about let's talk about ideas or businesses so i'll let you pick which direction you wanna go so we either we can talk about some interesting opportunities ideas or spaces that like you've been n on or you think hey somebody should go do that or you can talk about maybe some of the companies that you either looked at or bought recently you know pick a path it's choose your own adventure oh man so many place to go on okay so we'll we'll talk you and i before we got on we're talking a little bit about up counsel so i just wanna tell this story is what i just wanna tell a story because it's it's really cool it's really cool and it i think it tells what we do it in our adventures a bit and so you know i'm a big warren buffett geek i'm sure that's many of your listeners are and and so you know i had this i had a little bit of a walk in the wilderness in the past past kind of it really before i would say twelve months ago where i knew i was gonna transition as out of an operating role at z i'm still a board member and i was gonna say well what do i wanna work on next do i wanna go try to you know be the cfo to help some somebody take their brilliant product public do i wanna you start something new myself and i i i got very very into the world of of acquiring profitable businesses actually had a had a great lunch with andrew from tiny c we were talking about better books of all things santa a look at it where did you have this yeah i went up in saw victoria you know you go see the oracle where he sits right right so the oracle of victoria he is and grits is so cool and they're just hanging out in victoria having their coffees you know doing making acquisitions it's really i actually have some friends up there they're slight d tour but there was a company called ab b book or eight books that amazon bottle on time ago that's the leading an aquarium marketplace for books on the internet and it's still run out of victoria and so i used to go there all the time and see those guys and victoria's is like one of the nicest places in the world like i can see why it doesn't move right so so anyway i got i got i get into this world i got i got an understanding and i think it's it's totally you know you you take that pill and you can't see the world the the same way i think once you once you take it so okay what do i wanna do i wanna i wanna have a long term holding company because that's the fundamental arbitrage buffet buffet says nobody wants to get rich slow that's why nobody's done what a you know and so i kinda feel bad like i've already you know i'm in my early forties so i gotta start my compounding career now so i gotta eat eat well i got i gotta exercise make sure no just eat really off dude just eat m and m's and drink coats all day yeah well that somehow that got he's still going strong just eating mcdonald so i mean there's there's something there probably about loving your job to be honest yeah i think i think it's literally i think he doesn't stress and i think that stress kills you much much faster than nutrition poor nutrition will it's it's so true a fundamental thing i imagine my life is is not never stressed about about anything right and yeah so i so i had this vision and and my partner c abe and i we i think once i realized that he might be open to work together that was like oh wow i don't get you just don't get to work hit your wagon and do a world class person like this very often so i better like we better really see if there's something we can do and and and so we came up with this something during ventures saying okay we wanna be we wanna be the buyer choice for you know for business owners who wanna sell and wanna be sure that they're especially if they have something they care about other than just the bottom one so that they wanna see their employees are taken care of maybe employee ownership is important to them we're talking to one company that's a hundred percent employee out and they they wanna sell employees wanna sell part of their share but they wanna they wanna keep doing what they do so that so innovating in those sort of areas but then also just bringing i would say a kind of modern digital growth tool set you know c i have this you know we have the tools set that many of entrepreneurs on this call have but then we also i think have the more traditional business acquisition finance you know building a more proper corporate machine if if that's what's needed and i think the real nuance is is you know a lot of businesses when they're when there's small as we call them yeah they need to kinda get over built right so they get bought by a you know a private equity firm and there's a vp of marketing and a vp of sales and a vp of finance and it doesn't make any money because the business hasn't grown into it you know and a lot of these businesses have just been kinda run by their own or as as a small business the money just goes to the bank account in the end of the month and that's that's sort of how they how they run it and so i think we we know what that's like because we've done it ourselves and we've started it started zero but then we also know like what it what it can can turn into so so anyway that's what we do we've we bought what we we bought four businesses started one and we've made made a minority investment in one in yeah i think six months since opening the the doors so so it's been it's been we've been active and the first first acquisition we made was up counsel so yes so talk about this so this is so for those who don't know up counsel i remember it because up counts at one point it was like a it was a hot company it was like a pretty it was a smart idea they were bringing sort of in some ways like a marketplace where they had lawyers from all around and you if you needed legal services you could go to up counsel you would get a price you know why pay a san francisco lawyer you know three times as much when you can go to up counsel for this kind of you know there's just these pretty stock situations that are like i need to incorporate or i need this or i need that and you want something better than just a legal zoom template where you're like okay i i i don't know if this is legit or not i don't wanna bet my company on this but you don't need a manhattan lawyer either and so i remember up council raised money they were exciting they were a good company i used the service and then i didn't hear about it for a bit until you were like hey we're gonna i think we're gonna acquire up counsel and tell me why you like that business and how that went down absolutely so you know so i love it as a customer i mean if i'm a customer or something that and and i actually really love it then that that for me says a lot because i i do think you know i'm i i like to think of myself as a discerning discerning customer for these sort of things and i i ran into this again and again where i didn't wanna just rack up eight hundred dollars an hour legal work where there's an associate on the call and you know there's three people on the call and they're all billing right right it's like is is that my nephew who's actually doing the work over there he's to you know he's twenty three so what's going on here oh yeah and then and then they wanna talk about sports for the first five minutes i'm like that's like four hundred dollars of legal time you spent just talking about the rangers let's get to work so anyway so up counsel i mean i got pat done on there really affordable really high quality patent work i got trademarks done and i incorporated companies on it i was i was total up accounts of power user for years and i also knew the company so it's cto and c cofounder i hired him out of south dakota two thousand three to come to san francisco he had dread locks down to his waist and he was the only decent developer would come work thirty six thousand dollars a year in san francisco because he wanted to get out of south dakota is so bad right and and he was great he was one of our he was one of our key developers in the early days of better old books and then i knew he he's gonna go do his own thing eventually and so so he started it with another with guy named matt really founded lawyer legal entrepreneurs so he like he he's a lawyer and the two of them started it i i kind of had my eye on the business from the early days and so i grow they raised you know they raised a big vc round from men and you know men is in uber and other other sort of marketplaces and so you know they they did you know in some ways they did exactly what the vcs told him to do they ramped up the burn rate they had forty employees you know and the business group but it just didn't grow at the pace that that vc would would want to and so so then they got in a situation where the vcs wouldn't fund it anymore there was some there was this this sort of weird lawsuit situation that didn't end up being anything but it would kind of stared people and and so so there was just it was just a hairy situation and as a result they had to start laying people off and then it kind of you know created this i think when you have a venture fund of company you're not venture funded anymore like everybody's lost a reflex for how to make a profit you know and and i haven't fed myself in years yeah i know it's true you don't know how to hunt anymore it's like you you order uber eats three years you're not gonna be able to go hunt honda squirrel right and and sometimes making a profits a little more like hunting the squirrel so anyway they they had you know the the team by the time we got there the team had largely transitioned verb to work at linkedin so that's where the founders were working in the engineers they they were down to kind of a skeleton crew just keeping the lights on and then they announced their shutdown out of the blue and it was really weird because i had used a service like two months for so i knew that people were still doing business on it and so so i i i texted mason the the the founder was the cto then he became the ceo when they were kind of in wind down phase and and just said hey like you know can can can we do something here like let's let's not have this thing guy and so i gotta i gotta look at the financials and it was total it was not fancy financial engineering it was literally like i mean mason what's that number what's that number what's that number okay i think i know this business can pay like four people to work on it and still make a profit and so you know we we worked out what do what did you look for in the financial so what are the what are the kpis that you that you you were like okay i need to know this this isn't this yeah so a lot of people look at revenue you gotta just look at the gross margin line like that's that's where all the action is and then you gotta understand like are there any like embedded costs like amazon web services hosting or other expensive saas contracts or products like so to me it's like okay what what is the gross margin dollars that you have to play with to either make a profit pay employees or or lose money right and and so you know looking at the business like it did about the same in twenty nineteen as it's in twenty eighteen and in twenty eighteen it had forty employees and was running full speed against you know you know for for a billion dollar exit and in twenty nineteen you know the staff was being laid off and you know it was on a skeleton crew and did about sam about revenue because it was useful and so so you're like okay you i i could do that so you look at the gross margins what else did you really care about when you were analyzing the deal so i cared about does it have any like is it just arbitrage traffic or doesn't have any real like long term assets and so in this case we had an amazing organic seo so mason is one of the best seo guys in the valley and so we had a million high intent legal page views coming to us every month that like if you google safe note up console is number one and or it's like in endless snippet box like for right and you can like go you can do that for you know a bunch of different things i mean there's over ten thousand you know ranked high quality content pages so so we had that and then we had a really good code base there wasn't a bunch of repair that needed to be done because i and that was a little unfair advantage right because i knew mason was good technically i knew he wasn't he wasn't gonna mess around with that so right so the code base was really solid the the the traffic was coming organically and then course there's was a huge email list so there's everybody's used up counsel including you and me and our cousins and everyone else is is on it and so i knew if we probably just could start communicating with them again and tell them hey up counts back and that are never then then we might get somewhere work love it and so so you you strike a deal and you structured it in a very high i thought kind of like high upside low downside way i don't know if you could talk about the structure of the deal or than any of the numbers but we'll share what you can share yeah so i can't i can't really i can't really share any details i can just say that one thing we did is we abide by the founders code which is that we don't wipe out founders and so so that's we made contingency in our offer that our offer would be void if the venture capitalists just took the money because we were you know if you just read the legal docs literally they could take the money they could they have a liquidation prep right so there were twenty six million dollars of liquidation preferences on the company and i can tell you that we paid less than that so so so we we put it in there where we said look the we're gonna give you something better than zero but the number you know but it's absolutely they it already announced a shutdown right so at this point yeah zero is the default outcome yeah so negotiate upward from zero is way actually ty lopez is kinda doing the same thing right he's like i gonna be more than i gonna it more than zero for pier one right exactly so yeah so so we were negotiating that from zero which is a nice place but it it's it's not an uncommon situation at all that there's there has needs to be a recap reconciliation and you can either do it in a way that completely screws the founders you can do it in a way that you know recognizing the work they've done you know is not gonna like make them you know sent to millionaires but but we'll we'll give them some real money for their work yeah and and so so we did that in a way that basically part of that was if we can actually make this you know successful like we can't you know we can't make a giant down payment on this business because it needs some work but we can you know we can we can work some out where you get some now some later and and and and it's it's a lot better outcome than than the other thing you were looking right and okay that's so i i like like the up council story it's a little bit different so i invested in enduring ventures it's i think my biggest my it's the biggest check i've ever written i think because i believe in you and i believe in and i believe in the model as well but even if i didn't really fully believe in the model i would have invested you guys anyways you know i was just looking for an excuse but you guys have done a bunch of stuff in a very short amount of time i'm already feeling very good about my investment because i think like like i know would you we would would it be fair to say that you didn't start with a whole bunch of companies already identified that you were gonna after you had some you know some things you were looking for accounts actually wasn't in the profile of what you were looking at which was like let's say a a venture backed company that wasn't gonna you know achieve its venture outcomes but still had assets and revenues and you know just needed to be scaled and become a profitable company that was one model but you've also been doing other models so so talk to me about some of the other acquisitions or other models that you're looking at yeah absolutely so and you know i before we leave up counsel so i think there's one there's one more important thing to say to to that story yeah which is that you do have to bet a little bit on luck so i am just go smack by the amount of good luck we had after we made that acquisition we literally got so atrium chief revenue officer atrium justin con start up with forty million dollars they also went out of business around the same time and so he called us up and was like guys like i have the playbook here i really wanna work on something you know i saw you guys bought up counsel like let's talk i mean and paul is one of i mean one of the best revenue leaders in silicon valley like you know top top percentile and and so we we struck another unique arrangement where our management team are actually partners with us on this business so it's not like they get stock options that are worth something there's a big exit like no they actually our partners and they share in the profits every year in the form of like a distribution just like you own a investment part right so it's just cutting out all the middle man there's no lp lps invest in venture capital funds investing in the company it's just the people doing the work you know sharing and sharing in the upside and then paige by the way how do you i've i brought this up on a podcast before and other people said hey i've had the same issue so i'm curious how did you structure your profit sharing plan not structure but like how do you actually implement it so is there like a go to legal doc is there go to software is there best practices of knowing what how much of your profits to dividend versus reinvest like if somebody wants to implement a profit sharing program like i do for example what do you recommend we gotta start that company sean because there's it's it's it's all it's all over the place and and it's not really standard i would say there's i would say there's two fundamental models i believe in so one is like a small group of super high leverage people being true partners in the business and that means to me either they have they own stock and you find a way to get them there so they have restricted stock if it's a corporation and there's some plan for how that corporation pays out its dividends if it's profitable or you structure it as a a partnership taxation model where people have a partnership interest which isn't that hard to do and then you know they get a k one at the end of the year and then they can literally get distributed to share of the profits and and so in that model you have to sure that you can pay their taxes because you don't wanna say you have a four hundred thousand dollar profit and here's here's no money because we're reinvest it at all so you have a hundred thousand dollar tax bill or two hundred thousand dollar tax bill right so you have to you have to be confident in the profitability but i think that the key to all of it and this is gonna be my cfo hat is a real financial plan that everybody believes in and then you look at that and you say okay well what what would be fair if we did better than this because the baseline it shouldn't be like you get a bonus for just going from point a to point b right for for for the ex for the expected outcome yeah for the expected outcome right so problem that a lot of entrepreneurs do is they build a business plan that's like oh my financial model says all five this year right optimistic right but like what is an actual financial plan like with known metrics known conservative assumption contingencies for things to go wrong and then that's your baseline okay company gonna make a million bucks here okay well what if it makes a million five is it fair that the management team gets half of that extra it's it's you know do they get some base bonus that they hit if we hit plan like that's that's the stuff like bigger companies do all day long and and i think you know there's there's other creative things like you can fund people's four zero one k with profit share there's a so a little bit depends on the culture too right okay fair enough you you were i don't know if you had anything else on or you were talking about luck a little bit i don't know if anything else yeah so the so then our our our ceo so she she ran a y comb backed start up for years and is kind of a product and so just happened that like both she and and paul our chief revenue officer and danny our our chief operating officer all wanted a flexible lifestyle and they wanted autonomy and so danny lives in barcelona right now most of the operations team is in the philippines for up council and sometimes is completely virtual it's been profitable and cash flow positive from day one and that and they've really reinvented the revenue model in a way that reduce the price for our customers so if you go back on up counsel now you'll be amazed both number of new like high quality attorneys charging super low prices and we switched the model where before was the customers like you and me pain essentially a large platform fee and we we cut that down dramatically and said you know what the real benefit here or is the attorneys building their long term client base so we're gonna ask them pay for that and that's and that's that's gone really well and it's actually made them more committed to a platform the ones the ones because they're paying for rather than get free pay a subscription for it yeah for customers which any any attorney would take you know it's like if you're gonna give me customers i'm happy to pay you because customers are gonna pay me yeah oh oh and i had one last random thing about up counts which i think is so cool so with the we actually had new investors who we never would have met before come to us over the internet because they saw we bought up counts and i thought that was so cool and and the amount they've invested during ventures is actually greater than the amount that we invested to buy the company right so you you net raised more money than you pay off counsel yeah which which is which again i could not have anticipated a million years yeah do cool shit and cool things happen to you is a is a general life philosophy alright talk about a different a different style of business that you guys are either interested in or you're acquiring companies or you're looking at that you think the listeners would be interested in in hearing about our understanding yeah so does this one i'll talk about a general category of businesses that i love and it's been a big thought experiment for me which is local monopoly or local oli so you know you think about think about the glow the national mono monopoly or national auto gobble of google and search and facebook and social media right right and like those are giant super profitable businesses well how do you get something that actually produces outs outside returns that's small that that new or can actually afford to acquire right well turns out that being the best best barbecue joint into peak of kansas is you that can be a local we believe it or not because it has the same you know it has the same characteristics of a real monopoly maybe not quite as much protection but you know everybody knows you so it's expensive it it's expensive and unattractive for competitor to set up shop because you're already well established you have the best product to best service in a constrained area and for one reason or another it's not easy to arbitrage outside that i'm not gonna go get my barbecue from lawrence kansas if i live in pi right i'm gonna i'm gonna get my barbecue from the best barbecue place in top pe and so so then kind of thinking about you know what are what are local monopoly that can ask actually command premium prices and you can think about you know you can think about basic services there's you can you can look at the online reputation of these services and so if i'm you know if i'm the best air conditioner servicing top in ogden utah and i have a sterling reputation online then you know i may i may be approaching a local monopoly and you may start to see that into numbers be like wow this thing's super profitable wow how did that happen yeah it's like everybody goes to the local in fact when andrew was on the last podcast he was talking about this little side project he did i actually found pretty fascinating which was he was saying the local newspaper a new the newspaper is a great example of oh i i love that one right and and the best on newsletter he started yeah no and you can see how he could quickly become like the best digital source for news and you know in a whole bunch of location every town yeah and that would be useful and valuable so and like it reminded me of sort of like what next door is trying to do right next door is trying to go the facebook path but what they did was they were like look your neighborhood what's going on in neighborhood is really relevant to you and there's no great source for that information they're trying to build kind of a social network that will produce that information but i liked his model which was very simple and i think could be very profitable and if i was somebody out there listening to this i would hit them up to go work work for them and be like hey let's spread this thing in my area i i can handle all the east coast or whatever or i just go build this myself which is he was saying you know i can let's say let's take you know ogden utah i can build the best sort of local newsletter of what's going on in ogden the new the news you gotta hear about in ogden it could probably be run by two writers maybe mh three maybe and could probably make a lot of money off local classified local business to business sort of advertising and you could you can acquire a bunch of bunch of users through paid either search or or facebook traffic using local targeting and being really relevant thing like find out what's going on in you know i live in lafayette now lafayette at california right so you know should i subscribe to the lafayette daily and like can you build like you know a little version of rupert murdoch empire by owning the daily news newsletter for every single town that to me sounded like that wasn't just one of andrew andrew's kinda of pet ideas it has sent to me sounded like potentially a very big idea what do you think about that yeah i i think so too and you know it you and sam were talking about affiliate and lead gen businesses and that's kind of you can quickly see how that can become a lead gen business too right so you can you can go to people who are advertising local businesses and rather than say hey pay me five hundred dollars per newsletter then they're like well what do i get for that like hey local auto deal or local mortgage broker would you like would you like leads people need a mortgage in lafayette like what is that worth you right oh worth five hundred dollars a lead cool good to know yeah good to know right and and i think that i think you can also have really interesting compensation models i think a lot of people are looking for a side hustle and don't need it to be the full time job with benefits and four one k and they already have that somewhere else or their spouse has it or you know and they or they're they're they're young and flexible and and really what they want is like an opportunity where they can just plug in and kind of do this thing that's prescribed but do it well and have the infrastructure around them to to make that a profitable endeavor right and and you guys have a different local monopoly or oli monopoly type of business i know we're not gonna talk about it too much we don't wanna give away the goose but i love that one i've been super super excited in fact probably over three different phone calls with you guys i was like hey ditch everything else just do this this thing is this thing is cool so so that's cool but what what about you know what are some other things you've looked at that you haven't acted on yet but you're like oh that's cool and maybe you know who knows maybe somebody listening to this knows of a business like that or has a business like that and we'll we'll reach out to you saying hey i fit that profile like what's the profile that you're looking for what what types of business are you interested besides this oh you know there's so some one things i i always look for is it's like just high margin just pure pure you know i i think the gross the gross margin number is always the it's where my eyes go first it doesn't go to the revenue number it goes the gross margin line and then i wanna work up from that and say well because if i'm selling you know if i'm selling you know a dollar worth the services that cost me ninety cents then i'm not actually adding a lot of value but if i'm selling a dollar with the service the cost me ten cents right i got a lot of options for how to spend that other ninety and even if it's not super profitable today it it in may you know maybe in the future so you know this this business i mentioned we've we've made a number of acquisitions in it it's gross margin lines usually ninety percent and it's eb lines usually forty or fifty if if if even run at small scale and so you know it's it's it's not perfect but it's it's it's a good it's a good business to be in and so you know one thing i i say is like go to the small and midsize towns of america or wherever you are belgium wherever you are like go there because all the smart ambitious people go to the city and a lot of them trying to solve city problems how do i get my thousand dollar mattress delivered in a box right and you know go into these small and sized towns it's like there's there's all the basic needs are there there's an economy there there's there's real real money being spent and so like for example we haven't acquired managed service provider i'm very that's something i'd be very interested in explain what that means what's a managed service provider so in ms p there's there's a bunch of different versions but basically they're your outsourced it so i run a dentist office and i don't have an it person on staff i don't even know i turn our computer but i mean know i need i need my networking to work i i need to make sure my files are backed up maybe you have some fancy equipment that needs to be network in a certain way and so you know i need some way to call when wifi f doesn't work and and when my printer doesn't work and and so and it goes all the way up to like pretty you know i'm a two hundred person company and i still maybe i have one it guy who's really overworked and i need you know all these different services i need someone to manage our phone tree and i need someone to know to manage you sign up email accounts and you know run the email server or whatever and so so i think that that's that's already a huge industry there's a lot of opportunity for recurring revenue because you can you know you somebody can be charged the dentist office five hundred bucks a month or three hundred bucks a month or whatever go pay layer on a bunch of services hey we can you know provide your phone line etcetera right so i think i think those are really interesting i've been looking to either acquire one of those or partner with one of those so that's that's that's one area and i think there's a lot of efficiencies because a lot of these are small shops with one or two really talented it guys in some local area usually guys sometimes girls and you know truth be told some of that work could be could be sent to much lower cost local calls and probably also provide better better response in this better service to people right and what about what are the type of businesses you would steer clear of that you see other people getting excited about that to you just doesn't make sense why why what's all the fuss about oh yeah so there was a few of those i mean so one is there's whole industries that trade on revenue multiples right and so like natural foods industries good so i i love you know i love natural foods companies people made a lot of money natural foods so i started poking around there like are there companies buy and everybody's like what revenue multiple do you buy on like i don't buy on revenue models brother like i buy i profit like we don't we don't make profits so that's a negative number that's that's whole playing a negative number and and so i think what happened in natural foods is that the buyers are all big conglomerate who have their own departments who do all the things that the company they're literally just buy the brand and then everything else they will do and so i think that you know that that obviously is a problem for a business seller who doesn't you know doesn't want to give that up but i found i found the multiple expectations in that business in that industry to be really really out of whack and same thing in like you know saas right so like there's saas is a lovely business but not if you're buying an eight times revenue right unless you unless you're buying with someone else's money i mean if you're speculating with someone else's money than cool but you better already have like the next ten customers lined up to be by to be paying big revenue multiples on on saas and so i definitely i also think that like people have a really smart friend of mine devin who i i'm also gonna get podcast he has done a lot of digital business acquisition and he says there's almost always one single point of failure in a digital business which is rarely true to physical one mh right so you might get ninety percent of your customers from instagram ads right and so when those get more crowded than the sc ads don't work anymore right right or you might get ninety percent of your monetization from one affiliate and then they change their rates and so there's there's it's harder to have a stable durable business internet land because internet land is so dynamic it changes so much it's so competitive you know unless you have a moat like organic seo i big email list my recurring revenue customer base i think i think that some of the businesses i've seen being sold in that space are sold on these growth expectations that require a lot of things to go right for them for them to be achieved gotcha yeah that that makes sense the durability is obviously where a lot of value comes from versus you know there's there's growth but then there's durability and you need to find businesses that have both if you're on if your plan is to buy and hold right like you you you you need both you'd rather take durability than growth because you can sort of solve growth it's very hard to solve durability problems no it it's really really hard it's almost possible right and you know a lot of these four traditional businesses we are looking at hvac businesses they they've been around since nineteen eighty one they've been through inflation they've been through nine eleven they've been through the great you know financial crisis and people still wanted their buildings competed and cooled and so you know they're they're they're still in business since you're a cfo guy guide curious have you looked at what's going on with specs and do you we you have an opinion on that oh yeah i mean i think it's i think a bunch of people gonna make a bunch of money because i think it's i think it's a you know we have a bubble in the public equity markets right but first we should we should explain can you can you give the tl what is sorry we sorry i so it's a spa is essentially it's a blank check come so traditional model going public is i build the great company for ten years and then i take it to you know an ipo it and i ring the bell a spa it says i'm a credible person or a team of people that know how to acquire businesses that's the main skill required i'm gonna raise money and i'm gonna give some incentives to the people who give me my first money on the public markets so i'm gonna raise there's smallest forty million dollars up to billion right and they go to the public markets they say hey pitch money in my coffers i'm a go look for a company to buy when i find that company to buy i'm an merge into it which means that that company will become the the public companies right so virgin galactic went public on a spa so they didn't have a traditional ipo this spa struck a deal with them for and then that's back transformed from something nobody ever heard of in into virgin galactic which you can now buy stock market right and why why is this a good thing for why is where's is the value created here and why do you need this back versus let's say the traditional model of going public well so the the main value is actually created by because the public markets are so overpriced right now in my view so they're priced in about twenty times earnings right so that means essentially if i'm buying the stock of a company and i'm expecting it to be just the same i'm yielding five percent on that right whereas a small business can typically be acquired from maybe four times earnings and maybe a middle market business for like eight times earnings right i'm right and so you know at four times earnings i'm earning twenty five percent on every dollar of equity even if i don't have any debt on eight times earnings i'm earning twelve percent and so you know it it's it's an arbitrage where you're taking very cheap public equity dollars and you're using that use using those as the equity to acquire a business that for one reason or another doesn't fully have usually doesn't fully have the strength to go public on their own and so you know if virgin actually can just go public on its own there would have been lots a scrutiny me at oh how good are their financials sorry how good their technology and maybe it would have flopped maybe it would have done great but this actually d risks virgin a bit because it's already gone public alright so they're so as long as they and the spa owners work out deal i think it actually allows some discretion that the market's kind of emotional erratic swings don't always allow and of course the stock can go up and down once it goes public but that's kind of on the spa investors but you know that ships already sailed the money is and the coffers and and that is a public entity with access public stock markets and it did get some combination of liquidity for its investors and maybe some growth capital depending how the deal is structured so yeah i mean if people won't trust me with the money i risk back so well in a way you did right like we gave you money as you know we're gonna become a holding company that's gonna acquire great profitable business if you trust my judgment if you trust trust my me to spend your money at at your discretion you know just give you the money now and i'll go find companies later but a little bit different and that you're not taking in public right away and you're creating a portfolio versus kind of a spa i think can specs do multiple or there it can only this back can only do one company you don't i've been probing into this question it looks like it can basically do it can do multiple right so it can be pretty or it can acquire one company whose job at is to acquire other companies needs right or or hold other companies right so they have a lot of flexibility in their prospect perspectives typically they'll just say we're gonna acquire a control position but that's it you know from and and not even all of them do that some of them acquire minority position so spa might acquire twenty percent of company but then issue a bunch of new shares and then the company's is now public right like so bill act i think is he's raised a five billion dollar back so a five billion dollar blank check to go find a company and he does a good job explaining it you know when he goes on cnbc or whatever he's like you know we're just looking for that unicorn company the per you know we're looking for you know the best company we're looking for the best private company that has this this isn't this characteristic and we are the best back you know we have the biggest this the biggest back ever raised and he's like it's a unicorn mating dance where we're trying to you know we're we're both hoarding each other and and you know the idea would be they go find airbnb b or they go find some awesome company that's private today and they go take a thirty forty percent i believe he's willing to take minority i'm not sure but i think he's he's willing to take minority share of airbnb for example and boom airbnb goes public and you know bill ackerman a genius and everybody makes money and nobody understands how that that that's i think what what's gonna happen here yeah bill bill admin is like the smartest occasionally dumb guy on wall street i mean he right these guys guy's so smart and at one point he like bet the whole house on target for wondering reason like he literally bet like his entire fun on on target and he like i think i couldn't done that right right yeah i went back and watched a whole bunch of his talks at the zone conference like and then just sorta track the price of those stocks like you know he's talking about howard hughes you know company and then you go see what they did they're they're flat for three years later and it's like he's at a lot of wi but when he's hit he's hit quite large i think he recently had a huge huge shape right before the covid drop happened yeah yeah no that hundred x deal he did where he bad bet on covid was what that that was a good act move right there so yeah i i mean you know when you think people don't realize how much of an elephant gun that gives them right so if he has whatever a five billion dollars back yeah i know five that's five billion in equity so that means you know he can vary conservatively if it's a profitable business you know get you know five or six times leverage on that he could have he could buy a twenty or thirty billion dollar private company if you could find one right now i think that someone like airbnb b i'd be like i don't need bill ac to go public right exactly and and so i think i think there's a there's a natural like large size constraint where ac gonna have to take he's gonna have to be a bit speculative and even with that huge amount of money and you know who knows maybe to buy we work or something take that point who knows right alright so we we'll only a couple minutes left i wanna i want you to help people who wanna get smarter about this type of stuff and we'll have you back on again and we'll we'll talk more about different companies because i think you're always seeing you're seeing on a weekly basis you know dozens of companies maybe and then you're sort of looking into into a fewer amount of those but so i think you're always gonna have interesting stories to share but i wanna know what give people either books podcasts what is your information or education diet that gets you smart about this type of stuff yes it's good good question so i mean the bible of this stuff is buying a small business by it's by harvard business view right if you haven't read that book and you don't actually understand everything that's in it you're not rated by business in my in my view and so you know it's not to say that everything they say is right but it's all the fundamental buying buying a small business buying a small business or buying a a business i think it's actually called buying a small business it's actually i the book it's a harvard business book and that's your do not pass do not collect a hundred two hundred dollars unless you've read this book yeah it's just it's just fundamentals like i i don't i really don't agree like those guys are very very end into buying us cash cow business and so they're very it they don't even think about gross they don't contemplate growth in the whole book right they're just saying they're just like i wanna buy something that no matter what will not make less money than than you know that than it made when i bought it and fair enough there's there's another there's another one build and buy we we can look i forget the author's name but it's it's a little more growth focused also about acquisition entrepreneurship i would say that the things that i've had to learn the most i mean fundamentally acquisition entrepreneurship is a financing exercise and you know so there's several key tools available one being sba loans one being seller financing one being racing equity and i've seen everything from a hundred percent equity deal to to a five percent equity deal so you know there's there's really a very very wide range a lot of people really don't understand that they could buy they could buy a business i mean just you know i see this stuff all the times you could buy a business for about two million dollars that would produce roughly five hundred thousand dollars in profits a year and you could probably buy that for a hundred thousand dollars down so you know half of those profits will go to paying back the loan that you used to buy it but it's almost like once you learn about that every single person should own some sort of business even if it's super boring business just for the financial freedom and flexibility that it that it affords and and the you know the real key is to not screw that up right because if you that's that's the big risk with these things because if you buy five hundred thousand dollars profits and through some combination if you're mismanagement your lack of diligence your external factors that goes zero then that's not great right you still owe the you still owe the money yeah still owe the money so so i think that it's yeah you know the heart probably the biggest risk is actually people who like to seek risk in you know the learning how to mitigate risk and and and i think that's why you need these sort of books and these tools and you actually need to you need to follow them very cool alright xavier this is dope also i i've right after this i'm gonna record with the ceo of angel list venture they're just launched this rolling phones product and stuff like that i'm curious do you have anything what would you ask the ceo of evangelist venture do you have any any anything that you would wanna know from him oh boy that's a that's a good question put you on spot oh man put on the spot i think that i would be i would be curious if angel list is ever gonna start publishing their turns in a more systematic manner right to the extent they have visibility to them and if that like micro vcs is ever gonna get more institutional rather than more more artists you know i've i've made a few angela angel bets over the years i don't really do it anymore i i'd i figured my money's better put to work better advising companies and then putting my money to work and things that are profitable right but like you just just my two cents on that one very cool alright man i will catch up with you later thanks for coming on good to see you shot alright thank thank you see you