Today we're coming to you from the lovely Santa Monica offices of Luma Launch. And we've got lead investor Laurent Grill who has been here since the beginning. I think part of its founding when I came to know Luma Launch it was I thought of it as an accelerator. They've changed a bit. We're gonna hear about that today. And now they are a precinct fund. Laurent welcome. Thanks for having me.

Yeah. Usually we start off with a little bit of you know background on you and I'm super interested also in your founder experience we're just kind of comparing founders stories a little bit. Not really the glory days of founder but sort of the slog of it all. And always tell us not just about this lot but tell us about your background a little bit.

Absolutely. So I'm originally from Hawaii. Fun fact I moved to L.A. with my mom when my parents got divorced when I was 13 years old so I've been in L.A. for a long time now over half my life but my founder's story was really in part to following the footsteps of my brother who when I was in college at USC started a company called me so media me so back in 2010 it was one of the first companies here in L.A. that was going after the mobile market essentially you know the iPhone came out in 2007.

So we were going after a market that was really new but but budding and me media was was looking to really change the landscape of the music industry. And the idea was that. Through your iPhone iPad we could teach you how to play. At the time was based banjo ukulele mandolin guitar. It was a really cool product. So I think essentially think of Guitar Hero.

Got it right.

And it was real life. Guitar Hero So long story short I don't know what I was gonna do. My brother was like hey we started this business. Things are going well. We are going to raise capital in San Francisco. We'd love for you to join on. And that's how my tech career started catches up between music media and Luma. Yeah. So I'll just quickly run through it after me so I start a company called Tiki which was in the video streaming space. We saw an opportunity that was really continuing in education but there was still a need for this digital education market and we wanted to create an environment that was essentially a digital auditorium where a large group of people could engage with a single speaker or group of speakers in a more effective way and you know to look at going back to 2012 there was no Facebook Live.

There was very few platforms there's like you stream live stream. There was a company called spree cast which no longer exists but there was a few players in the space that were doing this which we thought in a poor way and wanted to reinvent the way that we we had engagements online and education being one of them. But it could be a lot of other things. Unfortunately I think through a combination of timing maybe lack of experience I don't know I was quite young at the time still. I had a very difficult time product sizing this.

So we ended up doing these one off events for companies larger companies almost like a digital agency and had a just a very very difficult time converting into a product that we could scale and turn into something that was more sustainable. And when we decided OK maybe we'll go into the consumer space. It was a chicken and egg situation where all the voices were asking me for traction and I didn't have the capital to be able to back traction myself because server costs were so high. And this is where timing comes in I'm AWOL.

Cloud services was just kind of taking effect we were on Rackspace which just was far more expensive. Our cost of streaming the actual video was extremely high. So I had a massive issue of I can't go to a consumer market without having the capital to back that.

And so ultimately was a chicken and egg situation which today I don't think I would face because the reality is I was young I didn't have the contacts I didn't have the traction or the track record for that matter and I really wish you know maybe if I look back it could have done it differently.

But yeah. So you think if you had men more experience you could have convince people to give you that money. Hundreds.

Yeah I look I mean we're not even going back that far or properly talking about this is seven years ago. The difference between me now and then is light years.

I mean I absolutely could I could raise capital for that idea back then if I was me today. Or I guess that's one way of looking at it but I don't know if I would be who I am today if it wasn't for that experience.

So I think going through the however many pitch meetings I went through and getting a bunch of soft no's which is the worst and we can talk about that later but has shaped me to be the investor I am today because then I went on and actually took the expansion manager role at each club which was a young company up in the Bay Area where I moved there and helped them expand wrote our playbook to launch different cities and ultimately helped grow that company to I believe were over 600 employees today.

And then I did that again for a company called zeal massage on demand based out of New York where I became our L.A. GM and ended up helping run the western region and expanding our B2B business and a variety of other things. So you know I sort of launched me into to my operational career to really understanding what growth looks like and joining zeal super early and growing to where we are today where we're raising our Series C to being an investor now investing in a bunch of businesses and being able to recognize some of the early pitfalls that I faced as a young entrepreneur.

But ultimately everyone faces them to hear more about what you have your entrepreneurial experiences affect the way you are an investor today. That's. No thing we should come back to it.

Yeah. Are you different. So with me so you know again I was very close to the founding team I was on the the first employees.

It was very difficult. We grew to I believe is about 25 people and many now we're talking about this before but we grew to you know a pretty sizable team. We were a golden child in the Silicon Beach environment. I believe you probably remember me so maybe my brother at the time I do.

And and we had you know we had again raised capital from some of the big names and to have this meteoric rise and a pretty devastating fall in the grand scheme of things was very very difficult less for me more for my my brother and watching you know and he's an incredibly empathetic person and an amazing leader.

But but having to go through that sometimes you just don't you know you're not able to to find product market fit in terms of we had issues monetizing that was really our downfall. But that was a wake up moment for me to recognize how real this was. You know like every time as a CEO or a founder you bring someone onto your team you're taking not only them but you're taking their family your you're taking care of their kids their wife or husband.

And ultimately that responsibility weighs heavily on your shoulders as a founder. And so I think that created a certain level of empathy that for every company that we're investing at such early stages the risks are incredibly high for us.

No question in terms of our dollars but they're incredibly high for every single person on that team and recognizing that helps us really understand how to build and scale a team but also more importantly how to speak to the founders correctly so that they can work mentally and physically through these processes as well.

When we were talking before the podcast you said that your founder experience potentially made you a harsher critic or a more candid critic of startup ideas.

Well yeah with Tiki union raising capital is there's nothing worse than going to a meeting feeling like it went really well not hearing back for a while and then when you hear back it's one thing to not hear back for a while because we're all really busy. We all understand there's like it's not always a quick turnaround I think. I don't know when when we were talking about this we were talking about an hour at a panel at the panel where everyone was drinking a lot. Oh yeah it's a good time. But you know I think for me there's nothing worse than not hearing back for a while and then when you hear back you're not getting anything but I'm sorry this isn't for us or you know it was great to meet you but you know we're gonna pass on this round and I get it.

There's you know there's only a certain amount of time that the visas have and there's only a certain amount of mindshare that they have. But for me it was so incredibly it was painful because all I wanted was to know why or I wanted to know what I could do to improve. And I felt like most of the meetings I had walked out with nothing. And so it ended up being a massive waste of time not only for me but I assume for them as well. And that was that was just something that I didn't want to carry into my investment career.

So do you always when you passed you always give as much as I possibly can.

I mean it's especially if I've met with someone I mean frankly if I've spoken with someone on the phone or or met with them in person I do my best to I'd say ninety five percent of the time I'm sure there's someone or a couple of people out there that I maybe didn't give super helpful feedback so I don't want to say a hundred percent of the time but I do my best.

Yes absolutely.

And what what it's like it's more personality sort of fits. There are times where I find a reason if any raise.

Yeah I mean I think there's just that kind of goes back to the empathy concept right like the last thing I want to do is is hurt someone's feelings because I think that like they're like they don't vibe I don't think they're cool like that's not what this is about.

What if it's useful feedback like you pitched really aggressively so aggressively like I get it it's a turnoff or something like I think there's some there are times when I'll tell you in the meeting I wouldn't write an email though saying that probably if it was if it was like in the moment I'd say hey like this you know I'm not connecting on this right now. I think for me I try to be a little bit more constructive especially if I don't know the person construct around the business potentially the wave like what they're pitching not necessarily the way they're pitching.

It's not my job is a first impression to come back with harsh criticism around who they are as a person right away. But I think if I get to know them that's something I could do a little bit more. I have no problem doing that though and I think someone always asks like what if it's the the founder that you don't like. First of all I try to say I don't like them but it could be that I don't think that they're the right founder for that and I've said that multiple times where I felt hey you know this just doesn't feel like a business that you should be starting there.

There's someone that is way more equipped to start this business and that's one of the reasons why I'm passing. That's a hard thing to tell someone honestly that's it's not even and it's not even personal but it's it's definitely hard to say. I don't think that you are the person to build this business but that's probably the most valid pass I could have.

Should we hit the limit basics because I was trying to get the lemon basics up front as much as I can and then kind of go back to advice for entrepreneurs which I think is really interesting.

Go. Yeah. So lemme launch we are a precede fund here in Santa Monica focused on investing in mostly software businesses both B2C and B2B. We've made almost 30 investments I think we're at something like 27 or 28 investments to date in the last four years.

We you know I think the key here is we try to focus on storytelling and the reason for that is at our earliest stages one of the biggest things that companies can do is is position their product effectively not only to go and raise capital which is part of storytelling but when you're selling to a customer when you're selling to any sort of consumer. You have to be able to position your product effectively in the market. And that starts with your products you buy you x of your products user experience and interface of your products and design but also goes down to the messaging and why your product is valuable and how you're going to essentially impact their life in some some way.

So value is as a real word like a mate the main word that we try to focus on what is the value of not only your business but your product.

And so honing in on that at the pre seed stage is a really good time because obviously that sets the foundation for for the future and that can be done for a VR company that could be done for a B2B ensure tech company it doesn't matter what you're selling you have to create value for the consumer.

Can you talk about the transition away from thinking of yourself as an accelerator to knowing appreciate it.

Yeah. So you know initially when we built out launch part of it came you know going back to my days as an operator as well. Me and the team we're looking at the landscape of Los Angeles and the need for a fundamental sort of platform to help really entrepreneurs amplify MCR. You know tech stars there were other platforms accelerator types that exist launchpad at the time were they all I'm talking about in 2015. So a launch pad obviously going back to 2011 12 but right. Looking at the landscape when we were looking to position ourselves in the market there weren't a lot of players who were really creating a mentor first community built platform and there were a lot of not a lot of you know some seed funds and prestige funds like yourselves which bring a ton of value but felt a little bit later frankly in the in the pipeline.

And so and I don't want to leave out wonder if you see but he's again more like a traditional press fund as well. But the reality is we just saw an opportunity to to be a platform for great precede entrepreneurs to be able to come together and provide them resources like mentors and experts partners.

You know we have great partners in our our our program as well as the sort of the investor pipeline. Ultimately though the transition in the last year or so has been almost forced upon us because you know the ecosystem as a whole is changed. There's a lot more money there are higher valuations.

It's a lot harder to warrant the operational costs that comes with this housing of companies sort of in an accelerator type model than exists even four years ago. And so you're starting to see amplify moving towards more of a traditional price you'd find you're even looking at maker and they have their labs program for sure but their capital side is investing more of the seed stage and we're sort of forced to follow suit because there's just not enough great entrepreneurs who are willing to take the dilution. Peter Pham on here with science and they have a slightly different model as well but it's just really difficult to identify those amazing entrepreneurs and we don't have the bandwidth to actually be an incubator which is a totally different conversation.

So that's why we think a lot of the precede funds are not into the accelerator market. By any means but offering a lot of those same services. I think everybody not just pricey but I think a lot of funds are saying just to stay competitive. They're offering a lot more.

Well that's why the hell we have a head of platform who focuses on connecting our companies with great mentors you know connecting them with putting on amazing valuable events workshops connecting them with great partners and bringing the sort of external community of Los Angeles and San Francisco together to help build these businesses. But I think that again goes across the board.

I think all funds are starting to recognize this a little bit more and are starting to take a bit of a focus on how can we provide the value post investment that other funds are providing.

I think all of the accelerators here in town except for TechStars have dropped at least drop the class model where you have people coming in for an indeterminate amount of time with my daughter me and before I ever had a class. Right. And maybe at the very very beginning but not for it.

We didn't where we were. So one thing I will say is like I never wanted to build something that had batches classes demo days standard terms that he ripped on demo day is a little bit on the Demo Day I guess I know. Well I mean I have to stand by. I have to stand by what I've consistently said and the reality is I believe there is a place for accelerators and there are some that do it really really well.

I just know that we didn't have the capabilities and the bandwidth to do it the right way and so if we can't do it the right way we're not going to do it at all.

And that's kind of what that's why why we're here today and structurally the companies you invest in it as an exchange of equity for capital there's no common stock or any note that goes with it.

No there's no like funky terms or anything where they have to pay us back or anything like that so it's only some of the company again I will refer to Paul Oracle's podcast it's a great one. Well the L.A. venture podcast with Paul Oracle I guess is a better way to say it. He he talks about we offer this space and we offer this opportunity to come in as part of our investment but it is not a requirement by no means.

And how much do you invest. What are the what's the range of checks.

Our average check size is two hundred fifty thousand dollars.

What that you know in terms of ownership we're always looking to get anywhere between 3 and 8 percent depending on how early the businesses. But you know will we have written checks as low as actually 70. Well originally we wrote as low as 50 we're not doing that anymore. But like it's one hundred to two hundred fifty thousand dollars. You have to write a bigger check.

We have written half a million Yes I noticed that I referred to as Lumen you referred back as Luma launch. And so just remind me the relationship and maybe just clarify what the terms in terms of your investing off balance sheet or how how that works with Luma.

Absolutely.

So without over complicating it Luma our parent business is one of the largest independent creative studios in the world. We've had for the last 20 years been one of the Tier 1 visual effects houses for movies like Black Panther and a long list of other Marvel films as well as some other blockbusters. Luma the parent business is looking at other endeavors including original pictures and launches part of the expansion of the business itself.

But what's really different about us versus other corporate ventures which is technically what we are we are not a strategic corporate investor so we're not looking to invest in media. We're not looking to invest in things that effectively affect the bottom line of the business or could be an eminent opportunity. Instead we are using launch as a vehicle to.

Well I mean it's partly financial for sure but it's also just an interest by the leaders of our company to want to get involved with the tech community. And so that's how it all started.

If an entrepreneur is coming to Luma launch they're going to interact with you with your manager Matt and Daniel. OK. Let's stay on the advice on fedoras because it's every and you have good you tell it like it is you we're talking about time pressure and time pressure can be kind of a double edged sword. How do you think about life I'm an entrepreneur you know should I should I strap your fellow or not strap your fellow also from for us.

You know we've done a pretty good job of investing in businesses with high conviction in the sense that like we didn't invest alongside other investors and every one of our investments is that in fact some of our best investments and I won't name them but some of our best investments. We were the only institutional investor. And so you know I think that when I of founders coming to me saying Hey I got a bunch of other term sheets or I have a bunch of people who are circling and you have to move you know make a decision by Friday for me if anything that just makes me sort of brush them off because I find that like let me go through my process because I'm gonna make a decision regardless of what other investors feel.

And if you don't let me go through my decision I'm not going to I'm not going to just because someone else invested even if they're as amazing as 10 110. Right. Like I'm not going to make that investment just because someone else felt like it's a great investment we're gonna make an investment because we feel like it's a good investment. So if you come at me with some kind of artificial time crunch that needs to be hit most likely it's going to end up poorly in terms of a decision.

What if it's not an artificial time crunch.

They really are trying to then I'll big allocation. We always try to go as fast as we can. So I'm not going to say that we're going to drag our feet. We don't. We actually quite fast in our process but the reality is like I'm gonna go through our process so as long as we can do that effectively then great and we're gonna do it as fast as we can.

If it's a great investment we're gonna try to get involved but I just I think that it's more about if I feel the pressure sometimes it actually makes me feel a little bit more hesitant to do the deal when someone pitches me unfortunately I'm constantly and we talked about this on the panel I'm constantly in a pessimistic sort of hamster wheel of trying to figure out all of the reasons why the company is going to fail which is shitty because we live in a world. Let me rephrase that we live in an industry where we are ideally optimistic.

Yeah right. As soon as we make an investment we're extremely optimistic that this is a business that can be a multi-billion dollar business. That is the idea. Generally when you make an investment in venture but ninety nine point nine percent of the time we come to a pessimistic outcome of this is not going to work or at least we don't think that it's going to work and thus it's not for us. And so I'm consciously going on this hamster wheel. Well this is why it's going to fail and this is why it's going to fail and this is why it's going to fail or for some reason or this doesn't work.

For some reason and ultimately have to come to the conclusion that I'll check the box. Okay maybe it or maybe it or we may and then eventually jump to the right right. Swipe right swipe left unfortunately were swiping left ninety nine point X percent of the time. And so I don't I think it's your job to try to poke at the things that will make you essentially not check the box of okay. I think it could work.

I've been trying to spend more time thinking about what the business looks like if everything goes right. Because I've found that you're an optimistic one. Well I'm sometimes I'm optimistic sometimes and pessimistic but the I've gotten into trouble looking for those gotcha kind of. This won't work features of a business. There's several look I could name businesses that I've passed on for really sound reasons only to find that the business pivoted or found a way around those to get around those things that I objected to in another completely different way and become very successful.

So there may be right. Imagine how use would have to be able to like I would never rent my room to some stranger for a night. It's very easy to say no right. It's very easy to say no. So we start talking more about.

Not just advice for entrepreneurs but just like in their tactics. But more things you're seeing a lot of things you're excited by. Sure we talk a little tiny bit about marketplaces because you know I've been building a marketplace you like marketplaces. What do you see in marketplaces.

I know I. I've obviously been involved with marketplaces both both as an operator and an investor in a few different capacities. I think that the marketplace business model is something that we're very comfortable with as a consumer demographic. The problem is that I think we're running out of ideas. I think that we're starting to see on the marketplace side is very non sexy marketplaces that are starting to pop up and look again marketplace dynamics are very different than like what we consider to be like consumer marketplaces which is Uber or Airbnb B and there's different types of marketplaces like Uber being more of a service or zeal.

Like my previous company being a service where you have a specific set of people who are then deployed to you know to the consumer's request but then there's Airbnb B where where you actually have to consumers right you have one which is the hosts and you have one which is the the person who is at home the guest you are now. We're using marketplace dynamics in a variety of different industries you're seeing it. I think there was one that was recently in roofing that just raised some some funding. Yeah yeah there is.

There was one in shipping and a big big marketplace opportunities that aren't necessarily micro transactions so there's definitely opportunities in the space. I'm just concerned that we're sort of grasping at straws when it comes to starting a bunch of new marketplaces for consumer businesses. I'm sure there are some great ones that can that can exist but it's been pretty saturated over the last few years.

I remember thinking in nineteen ninety nine that e-commerce was already you know fully thought right.

So yeah I thought you were interested in marketplaces kind of for a social good aspect to it which is almost at producing less and taking advantage of the assets that exists and looking to shadow one of your companies.

I think what you enjoy most is doing is awesome right. I think that we need less. I think we need less shit. Yeah I think we need to be. I mean look space is only becoming harder and harder to come by so just likes clutter with clutter is doing and there's a bunch of companies that are in the storage space and you know obviously there's like the Arab armies of the world that are starting to share their own space. All of that is incredibly important and I think that there's gonna be more and more that comes around goods space your own items rather than buying new stuff.

I just don't think there's you know we don't need more stuff. That's the only thing I like. We will continue to be consumers because that's the nature of who we are. But do we actually need that new pair of shoes. Probably not.

Well I think there's a whole interesting sort of aspect of investing in what the generation coming up is interested in. I think there's a real social consciousness.

Two hundred percent. And that's why when we were talking about one of the things I am you know super bullish on is messaging. Right. So if you do look at the next generation of consumers or the next generation of people who are are going to be entering into the workforce. Text messaging is is intrinsic to our everyday well-being or well-being but just being and if you look at a phone of a 15 year old to a twenty five year old frankly or my phone for that matter it's full of group chats and those group chats are indicators of content and content is essentially just what social media is.

Right. We're consuming constantly consuming media through text messaging. The minute that you have the attention. So I message being obviously one of the largest platforms for messaging. But the minute that you have the attention of a consumer you can do a lot with that you can. I mean look what we chat does in China. You know they essentially run their entire lives through that single platform paying bills they communicate through that. That's essentially their email as well. Everything is done through reach. Now I don't think that because the U.S. doesn't function like China I don't think there's gonna be quite the same level of consolidation but I wouldn't be surprised if we started to have a lot more movement towards messaging being the platform for a lot of the various things that we do on on individual apps.

I think that's good.

I still have stress around never knowing whether something came into my slack or my estimates or my hang out or whatever else. But that has an interesting I do feel like we should study other countries more to learn what we're gonna be doing in the future.

I think China is a little bit difficult for us to compare to. But there are other countries definitely that are. I mean even Japan uses line in a really effective way.

Yeah I'm a little concerned that that my S M S is going to get just as cluttered as my email I'm sort of enjoying mine or it is isn't I mean I haven't looked to my phone but I'm sure it's filled with a bunch of useless messages from my friends and you don't get a lot of offers right now yet.

Well I'm starting to get a few I'm starting to get a few. I mean look at the political campaigns right you're constantly hit up by who knows at you know what campaigns are running at the time or organizations that get a hold of your number. I mean everything that we do you authenticate through your phone number.

And so all it takes is one of those businesses to essentially sell your number to some forum and now you're out there but I'm not getting it right now.

Yeah I get it some political but I'm not getting tons of offers for the Starbucks when I walk past it. Yes.

That's why I'm talking about what I'm. I think the future. Yeah right. Like it's not happening right now. But I wouldn't be surprised and not even very long now. A few years I mean we have a company that's doing that sort of entering this space in an effective way. That's trying to create an environment that creates valuable communication through text messaging and creating content through that but it's it's difficult.

But it's personalized and that's key. Yeah.

So I'm not leading you on.

I think the marketplaces thing is really interesting because to me it's a fundamental shift in the way our economy works. You know anywhere that there's a middleman and there's a lot of places that still have middle middlemen or middle people there could be a marketplace for me. I miss the fundamental democratization that the Internet promises means that people who who deal on you know I've got a secret Rolodex of people I can do business with.

Those are going to turn into marketplaces but it's kind of interesting like I'm going to take shift selling cars as an example. So you get rid of the middlemen like the real estate agent or something right. But you still have a tech technology component there and there's still someone then programming how depending on how centralized or decentralized the marketplace is they'll give it it's a fairly centralized marketplace where you're actually doing let's say the pricing.

There's still some there's still some middleman in there who might be helping control the demand for your supply.

Yeah you could be optimizing the middleman rather than replacing it.

Yeah but it's intact there still. But I like that as a way of disrupting our economy.

I mean I think look the reality is there's a lot of different infrastructures that are going to be key to a lot of this right. Block chain is is going to be a massive player in terms of any future tech that's created in my opinion again. Block chain being very different in cryptocurrency is and I think there are some cases where you know utility coins and crypto currencies have a place I think that's been intertwined a little too much. What block chain technology and crypto is are two even though they are built on the same fundamental infrastructure.

There's two very different things. But I do think that what block chain allows is for.

A lot more transparency in terms of transactions and tracing back sort of the transaction lifecycle of any sort of marketplace. And so I think it's actually gonna open up a lot more opportunities in the space.

Right. Let's move on to like sort of the less about investing more about you. So you are do some lecturing at USC.

Yeah I mean I'm a sucker for anytime a professor asks me to come out and guest lecture. I do it and I realized this week that I was a guest lecturer on Friday.

And then came back to SC on Monday and I'm doing it again next Wednesday and I'm like I probably should start getting paid for this because it's taking up a lot of time. But I do love it.

I think that you know being a former student myself at USC specifically I didn't get any of this. And the the opportunity to learn about an industry that's super passionate about and going in I wouldn't say give back but go and actually have a conversation with these incredibly smart individuals and see what the younger generation is thinking is actually incredibly valuable to me. So it's not a one way transaction at all. It's definitely super interesting to go back to talking to 18 to you know I do go to MBA classes so often people my age as well but having very open conversations about the things that they're interested in and I think I'd say that is the most valuable thing at least for me.

And then going back is just fun as well.

So how do you sort of overall. So you say yes when people ask you to come and lecture but how do you decide what to say yes to in in your life more broadly in terms of. I think you have Denson is involved volunteering and being involved like how do you decide what to say yes to and when it's like no I if I say yes to one more thing I will break.

I do understand how to balance my time but I always will say like if you want something done I mean this is a very common thing if you want something done ask a busy person. I find that I am. I find that I am obviously busy but I have no problem setting aside time for myself at all. And so I say yes to the things that I want to do. And I think that I think it's more that I put out what I want to do. So I asked for those things more often than not.

Netscape Well I look forward to crossing paths more with you. I really it's a treat to shop and see your face at the events and I appreciate having you on the pad. David anything else.

No thank you very much. Great so much for having me.

And it was real life. Guitar Hero So long story short I don't know what I was gonna do. My brother was like hey we started this business. Things are going well. We are going to raise capital in San Francisco. We'd love for you to join on. And that's how my tech career started catches up between music media and Luma. Yeah. So I'll just quickly run through it after me so I start a company called Tiki which was in the video streaming space. We saw an opportunity that was really continuing in education but there was still a need for this digital education market and we wanted to create an environment that was essentially a digital auditorium where a large group of people could engage with a single speaker or group of speakers in a more effective way and you know to look at going back to 2012 there was no Facebook Live.

There was very few platforms there's like you stream live stream. There was a company called spree cast which no longer exists but there was a few players in the space that were doing this which we thought in a poor way and wanted to reinvent the way that we we had engagements online and education being one of them. But it could be a lot of other things. Unfortunately I think through a combination of timing maybe lack of experience I don't know I was quite young at the time still. I had a very difficult time product sizing this.

So we ended up doing these one off events for companies larger companies almost like a digital agency and had a just a very very difficult time converting into a product that we could scale and turn into something that was more sustainable. And when we decided OK maybe we'll go into the consumer space. It was a chicken and egg situation where all the voices were asking me for traction and I didn't have the capital to be able to back traction myself because server costs were so high. And this is where timing comes in I'm AWOL.

Cloud services was just kind of taking effect we were on Rackspace which just was far more expensive. Our cost of streaming the actual video was extremely high. So I had a massive issue of I can't go to a consumer market without having the capital to back that.

And so ultimately was a chicken and egg situation which today I don't think I would face because the reality is I was young I didn't have the contacts I didn't have the traction or the track record for that matter and I really wish you know maybe if I look back it could have done it differently.

But yeah. So you think if you had men more experience you could have convince people to give you that money. Hundreds.

Yeah I look I mean we're not even going back that far or properly talking about this is seven years ago. The difference between me now and then is light years.

I mean I absolutely could I could raise capital for that idea back then if I was me today. Or I guess that's one way of looking at it but I don't know if I would be who I am today if it wasn't for that experience.

So I think going through the however many pitch meetings I went through and getting a bunch of soft no's which is the worst and we can talk about that later but has shaped me to be the investor I am today because then I went on and actually took the expansion manager role at each club which was a young company up in the Bay Area where I moved there and helped them expand wrote our playbook to launch different cities and ultimately helped grow that company to I believe were over 600 employees today.

And then I did that again for a company called zeal massage on demand based out of New York where I became our L.A. GM and ended up helping run the western region and expanding our B2B business and a variety of other things. So you know I sort of launched me into to my operational career to really understanding what growth looks like and joining zeal super early and growing to where we are today where we're raising our Series C to being an investor now investing in a bunch of businesses and being able to recognize some of the early pitfalls that I faced as a young entrepreneur.

But ultimately everyone faces them to hear more about what you have your entrepreneurial experiences affect the way you are an investor today. That's. No thing we should come back to it.

Yeah. Are you different. So with me so you know again I was very close to the founding team I was on the the first employees.

It was very difficult. We grew to I believe is about 25 people and many now we're talking about this before but we grew to you know a pretty sizable team. We were a golden child in the Silicon Beach environment. I believe you probably remember me so maybe my brother at the time I do.

And and we had you know we had again raised capital from some of the big names and to have this meteoric rise and a pretty devastating fall in the grand scheme of things was very very difficult less for me more for my my brother and watching you know and he's an incredibly empathetic person and an amazing leader.

But but having to go through that sometimes you just don't you know you're not able to to find product market fit in terms of we had issues monetizing that was really our downfall. But that was a wake up moment for me to recognize how real this was. You know like every time as a CEO or a founder you bring someone onto your team you're taking not only them but you're taking their family your you're taking care of their kids their wife or husband.

And ultimately that responsibility weighs heavily on your shoulders as a founder. And so I think that created a certain level of empathy that for every company that we're investing at such early stages the risks are incredibly high for us.

No question in terms of our dollars but they're incredibly high for every single person on that team and recognizing that helps us really understand how to build and scale a team but also more importantly how to speak to the founders correctly so that they can work mentally and physically through these processes as well.

When we were talking before the podcast you said that your founder experience potentially made you a harsher critic or a more candid critic of startup ideas.

Well yeah with Tiki union raising capital is there's nothing worse than going to a meeting feeling like it went really well not hearing back for a while and then when you hear back it's one thing to not hear back for a while because we're all really busy. We all understand there's like it's not always a quick turnaround I think. I don't know when when we were talking about this we were talking about an hour at a panel at the panel where everyone was drinking a lot. Oh yeah it's a good time. But you know I think for me there's nothing worse than not hearing back for a while and then when you hear back you're not getting anything but I'm sorry this isn't for us or you know it was great to meet you but you know we're gonna pass on this round and I get it.

There's you know there's only a certain amount of time that the visas have and there's only a certain amount of mindshare that they have. But for me it was so incredibly it was painful because all I wanted was to know why or I wanted to know what I could do to improve. And I felt like most of the meetings I had walked out with nothing. And so it ended up being a massive waste of time not only for me but I assume for them as well. And that was that was just something that I didn't want to carry into my investment career.

So do you always when you passed you always give as much as I possibly can.

I mean it's especially if I've met with someone I mean frankly if I've spoken with someone on the phone or or met with them in person I do my best to I'd say ninety five percent of the time I'm sure there's someone or a couple of people out there that I maybe didn't give super helpful feedback so I don't want to say a hundred percent of the time but I do my best.

Yes absolutely.

And what what it's like it's more personality sort of fits. There are times where I find a reason if any raise.

Yeah I mean I think there's just that kind of goes back to the empathy concept right like the last thing I want to do is is hurt someone's feelings because I think that like they're like they don't vibe I don't think they're cool like that's not what this is about.

What if it's useful feedback like you pitched really aggressively so aggressively like I get it it's a turnoff or something like I think there's some there are times when I'll tell you in the meeting I wouldn't write an email though saying that probably if it was if it was like in the moment I'd say hey like this you know I'm not connecting on this right now. I think for me I try to be a little bit more constructive especially if I don't know the person construct around the business potentially the wave like what they're pitching not necessarily the way they're pitching.

It's not my job is a first impression to come back with harsh criticism around who they are as a person right away. But I think if I get to know them that's something I could do a little bit more. I have no problem doing that though and I think someone always asks like what if it's the the founder that you don't like. First of all I try to say I don't like them but it could be that I don't think that they're the right founder for that and I've said that multiple times where I felt hey you know this just doesn't feel like a business that you should be starting there.

There's someone that is way more equipped to start this business and that's one of the reasons why I'm passing. That's a hard thing to tell someone honestly that's it's not even and it's not even personal but it's it's definitely hard to say. I don't think that you are the person to build this business but that's probably the most valid pass I could have.

Should we hit the limit basics because I was trying to get the lemon basics up front as much as I can and then kind of go back to advice for entrepreneurs which I think is really interesting.

Go. Yeah. So lemme launch we are a precede fund here in Santa Monica focused on investing in mostly software businesses both B2C and B2B. We've made almost 30 investments I think we're at something like 27 or 28 investments to date in the last four years.

We you know I think the key here is we try to focus on storytelling and the reason for that is at our earliest stages one of the biggest things that companies can do is is position their product effectively not only to go and raise capital which is part of storytelling but when you're selling to a customer when you're selling to any sort of consumer. You have to be able to position your product effectively in the market. And that starts with your products you buy you x of your products user experience and interface of your products and design but also goes down to the messaging and why your product is valuable and how you're going to essentially impact their life in some some way.

So value is as a real word like a mate the main word that we try to focus on what is the value of not only your business but your product.

And so honing in on that at the pre seed stage is a really good time because obviously that sets the foundation for for the future and that can be done for a VR company that could be done for a B2B ensure tech company it doesn't matter what you're selling you have to create value for the consumer.

Can you talk about the transition away from thinking of yourself as an accelerator to knowing appreciate it.

Yeah. So you know initially when we built out launch part of it came you know going back to my days as an operator as well. Me and the team we're looking at the landscape of Los Angeles and the need for a fundamental sort of platform to help really entrepreneurs amplify MCR. You know tech stars there were other platforms accelerator types that exist launchpad at the time were they all I'm talking about in 2015. So a launch pad obviously going back to 2011 12 but right. Looking at the landscape when we were looking to position ourselves in the market there weren't a lot of players who were really creating a mentor first community built platform and there were a lot of not a lot of you know some seed funds and prestige funds like yourselves which bring a ton of value but felt a little bit later frankly in the in the pipeline.

And so and I don't want to leave out wonder if you see but he's again more like a traditional press fund as well. But the reality is we just saw an opportunity to to be a platform for great precede entrepreneurs to be able to come together and provide them resources like mentors and experts partners.

You know we have great partners in our our our program as well as the sort of the investor pipeline. Ultimately though the transition in the last year or so has been almost forced upon us because you know the ecosystem as a whole is changed. There's a lot more money there are higher valuations.

It's a lot harder to warrant the operational costs that comes with this housing of companies sort of in an accelerator type model than exists even four years ago. And so you're starting to see amplify moving towards more of a traditional price you'd find you're even looking at maker and they have their labs program for sure but their capital side is investing more of the seed stage and we're sort of forced to follow suit because there's just not enough great entrepreneurs who are willing to take the dilution. Peter Pham on here with science and they have a slightly different model as well but it's just really difficult to identify those amazing entrepreneurs and we don't have the bandwidth to actually be an incubator which is a totally different conversation.

So that's why we think a lot of the precede funds are not into the accelerator market. By any means but offering a lot of those same services. I think everybody not just pricey but I think a lot of funds are saying just to stay competitive. They're offering a lot more.

Well that's why the hell we have a head of platform who focuses on connecting our companies with great mentors you know connecting them with putting on amazing valuable events workshops connecting them with great partners and bringing the sort of external community of Los Angeles and San Francisco together to help build these businesses. But I think that again goes across the board.

I think all funds are starting to recognize this a little bit more and are starting to take a bit of a focus on how can we provide the value post investment that other funds are providing.

I think all of the accelerators here in town except for TechStars have dropped at least drop the class model where you have people coming in for an indeterminate amount of time with my daughter me and before I ever had a class. Right. And maybe at the very very beginning but not for it.

We didn't where we were. So one thing I will say is like I never wanted to build something that had batches classes demo days standard terms that he ripped on demo day is a little bit on the Demo Day I guess I know. Well I mean I have to stand by. I have to stand by what I've consistently said and the reality is I believe there is a place for accelerators and there are some that do it really really well.

I just know that we didn't have the capabilities and the bandwidth to do it the right way and so if we can't do it the right way we're not going to do it at all.

And that's kind of what that's why why we're here today and structurally the companies you invest in it as an exchange of equity for capital there's no common stock or any note that goes with it.

No there's no like funky terms or anything where they have to pay us back or anything like that so it's only some of the company again I will refer to Paul Oracle's podcast it's a great one. Well the L.A. venture podcast with Paul Oracle I guess is a better way to say it. He he talks about we offer this space and we offer this opportunity to come in as part of our investment but it is not a requirement by no means.

And how much do you invest. What are the what's the range of checks.

Our average check size is two hundred fifty thousand dollars.

What that you know in terms of ownership we're always looking to get anywhere between 3 and 8 percent depending on how early the businesses. But you know will we have written checks as low as actually 70. Well originally we wrote as low as 50 we're not doing that anymore. But like it's one hundred to two hundred fifty thousand dollars. You have to write a bigger check.

We have written half a million Yes I noticed that I referred to as Lumen you referred back as Luma launch. And so just remind me the relationship and maybe just clarify what the terms in terms of your investing off balance sheet or how how that works with Luma.

Absolutely.

So without over complicating it Luma our parent business is one of the largest independent creative studios in the world. We've had for the last 20 years been one of the Tier 1 visual effects houses for movies like Black Panther and a long list of other Marvel films as well as some other blockbusters. Luma the parent business is looking at other endeavors including original pictures and launches part of the expansion of the business itself.

But what's really different about us versus other corporate ventures which is technically what we are we are not a strategic corporate investor so we're not looking to invest in media. We're not looking to invest in things that effectively affect the bottom line of the business or could be an eminent opportunity. Instead we are using launch as a vehicle to.

Well I mean it's partly financial for sure but it's also just an interest by the leaders of our company to want to get involved with the tech community. And so that's how it all started.

If an entrepreneur is coming to Luma launch they're going to interact with you with your manager Matt and Daniel. OK. Let's stay on the advice on fedoras because it's every and you have good you tell it like it is you we're talking about time pressure and time pressure can be kind of a double edged sword. How do you think about life I'm an entrepreneur you know should I should I strap your fellow or not strap your fellow also from for us.

You know we've done a pretty good job of investing in businesses with high conviction in the sense that like we didn't invest alongside other investors and every one of our investments is that in fact some of our best investments and I won't name them but some of our best investments. We were the only institutional investor. And so you know I think that when I of founders coming to me saying Hey I got a bunch of other term sheets or I have a bunch of people who are circling and you have to move you know make a decision by Friday for me if anything that just makes me sort of brush them off because I find that like let me go through my process because I'm gonna make a decision regardless of what other investors feel.

And if you don't let me go through my decision I'm not going to I'm not going to just because someone else invested even if they're as amazing as 10 110. Right. Like I'm not going to make that investment just because someone else felt like it's a great investment we're gonna make an investment because we feel like it's a good investment. So if you come at me with some kind of artificial time crunch that needs to be hit most likely it's going to end up poorly in terms of a decision.

What if it's not an artificial time crunch.

They really are trying to then I'll big allocation. We always try to go as fast as we can. So I'm not going to say that we're going to drag our feet. We don't. We actually quite fast in our process but the reality is like I'm gonna go through our process so as long as we can do that effectively then great and we're gonna do it as fast as we can.

If it's a great investment we're gonna try to get involved but I just I think that it's more about if I feel the pressure sometimes it actually makes me feel a little bit more hesitant to do the deal when someone pitches me unfortunately I'm constantly and we talked about this on the panel I'm constantly in a pessimistic sort of hamster wheel of trying to figure out all of the reasons why the company is going to fail which is shitty because we live in a world. Let me rephrase that we live in an industry where we are ideally optimistic.

Yeah right. As soon as we make an investment we're extremely optimistic that this is a business that can be a multi-billion dollar business. That is the idea. Generally when you make an investment in venture but ninety nine point nine percent of the time we come to a pessimistic outcome of this is not going to work or at least we don't think that it's going to work and thus it's not for us. And so I'm consciously going on this hamster wheel. Well this is why it's going to fail and this is why it's going to fail and this is why it's going to fail or for some reason or this doesn't work.

For some reason and ultimately have to come to the conclusion that I'll check the box. Okay maybe it or maybe it or we may and then eventually jump to the right right. Swipe right swipe left unfortunately were swiping left ninety nine point X percent of the time. And so I don't I think it's your job to try to poke at the things that will make you essentially not check the box of okay. I think it could work.

I've been trying to spend more time thinking about what the business looks like if everything goes right. Because I've found that you're an optimistic one. Well I'm sometimes I'm optimistic sometimes and pessimistic but the I've gotten into trouble looking for those gotcha kind of. This won't work features of a business. There's several look I could name businesses that I've passed on for really sound reasons only to find that the business pivoted or found a way around those to get around those things that I objected to in another completely different way and become very successful.

So there may be right. Imagine how use would have to be able to like I would never rent my room to some stranger for a night. It's very easy to say no right. It's very easy to say no. So we start talking more about.

Not just advice for entrepreneurs but just like in their tactics. But more things you're seeing a lot of things you're excited by. Sure we talk a little tiny bit about marketplaces because you know I've been building a marketplace you like marketplaces. What do you see in marketplaces.

I know I. I've obviously been involved with marketplaces both both as an operator and an investor in a few different capacities. I think that the marketplace business model is something that we're very comfortable with as a consumer demographic. The problem is that I think we're running out of ideas. I think that we're starting to see on the marketplace side is very non sexy marketplaces that are starting to pop up and look again marketplace dynamics are very different than like what we consider to be like consumer marketplaces which is Uber or Airbnb B and there's different types of marketplaces like Uber being more of a service or zeal.

Like my previous company being a service where you have a specific set of people who are then deployed to you know to the consumer's request but then there's Airbnb B where where you actually have to consumers right you have one which is the hosts and you have one which is the the person who is at home the guest you are now. We're using marketplace dynamics in a variety of different industries you're seeing it. I think there was one that was recently in roofing that just raised some some funding. Yeah yeah there is.

There was one in shipping and a big big marketplace opportunities that aren't necessarily micro transactions so there's definitely opportunities in the space. I'm just concerned that we're sort of grasping at straws when it comes to starting a bunch of new marketplaces for consumer businesses. I'm sure there are some great ones that can that can exist but it's been pretty saturated over the last few years.

I remember thinking in nineteen ninety nine that e-commerce was already you know fully thought right.

So yeah I thought you were interested in marketplaces kind of for a social good aspect to it which is almost at producing less and taking advantage of the assets that exists and looking to shadow one of your companies.

I think what you enjoy most is doing is awesome right. I think that we need less. I think we need less shit. Yeah I think we need to be. I mean look space is only becoming harder and harder to come by so just likes clutter with clutter is doing and there's a bunch of companies that are in the storage space and you know obviously there's like the Arab armies of the world that are starting to share their own space. All of that is incredibly important and I think that there's gonna be more and more that comes around goods space your own items rather than buying new stuff.

I just don't think there's you know we don't need more stuff. That's the only thing I like. We will continue to be consumers because that's the nature of who we are. But do we actually need that new pair of shoes. Probably not.

Well I think there's a whole interesting sort of aspect of investing in what the generation coming up is interested in. I think there's a real social consciousness.

Two hundred percent. And that's why when we were talking about one of the things I am you know super bullish on is messaging. Right. So if you do look at the next generation of consumers or the next generation of people who are are going to be entering into the workforce. Text messaging is is intrinsic to our everyday well-being or well-being but just being and if you look at a phone of a 15 year old to a twenty five year old frankly or my phone for that matter it's full of group chats and those group chats are indicators of content and content is essentially just what social media is.

Right. We're consuming constantly consuming media through text messaging. The minute that you have the attention. So I message being obviously one of the largest platforms for messaging. But the minute that you have the attention of a consumer you can do a lot with that you can. I mean look what we chat does in China. You know they essentially run their entire lives through that single platform paying bills they communicate through that. That's essentially their email as well. Everything is done through reach. Now I don't think that because the U.S. doesn't function like China I don't think there's gonna be quite the same level of consolidation but I wouldn't be surprised if we started to have a lot more movement towards messaging being the platform for a lot of the various things that we do on on individual apps.

I think that's good.

I still have stress around never knowing whether something came into my slack or my estimates or my hang out or whatever else. But that has an interesting I do feel like we should study other countries more to learn what we're gonna be doing in the future.

I think China is a little bit difficult for us to compare to. But there are other countries definitely that are. I mean even Japan uses line in a really effective way.

Yeah I'm a little concerned that that my S M S is going to get just as cluttered as my email I'm sort of enjoying mine or it is isn't I mean I haven't looked to my phone but I'm sure it's filled with a bunch of useless messages from my friends and you don't get a lot of offers right now yet.

Well I'm starting to get a few I'm starting to get a few. I mean look at the political campaigns right you're constantly hit up by who knows at you know what campaigns are running at the time or organizations that get a hold of your number. I mean everything that we do you authenticate through your phone number.

And so all it takes is one of those businesses to essentially sell your number to some forum and now you're out there but I'm not getting it right now.

Yeah I get it some political but I'm not getting tons of offers for the Starbucks when I walk past it. Yes.

That's why I'm talking about what I'm. I think the future. Yeah right. Like it's not happening right now. But I wouldn't be surprised and not even very long now. A few years I mean we have a company that's doing that sort of entering this space in an effective way. That's trying to create an environment that creates valuable communication through text messaging and creating content through that but it's it's difficult.

But it's personalized and that's key. Yeah.

So I'm not leading you on.

I think the marketplaces thing is really interesting because to me it's a fundamental shift in the way our economy works. You know anywhere that there's a middleman and there's a lot of places that still have middle middlemen or middle people there could be a marketplace for me. I miss the fundamental democratization that the Internet promises means that people who who deal on you know I've got a secret Rolodex of people I can do business with.

Those are going to turn into marketplaces but it's kind of interesting like I'm going to take shift selling cars as an example. So you get rid of the middlemen like the real estate agent or something right. But you still have a tech technology component there and there's still someone then programming how depending on how centralized or decentralized the marketplace is they'll give it it's a fairly centralized marketplace where you're actually doing let's say the pricing.

There's still some there's still some middleman in there who might be helping control the demand for your supply.

Yeah you could be optimizing the middleman rather than replacing it.

Yeah but it's intact there still. But I like that as a way of disrupting our economy.

I mean I think look the reality is there's a lot of different infrastructures that are going to be key to a lot of this right. Block chain is is going to be a massive player in terms of any future tech that's created in my opinion again. Block chain being very different in cryptocurrency is and I think there are some cases where you know utility coins and crypto currencies have a place I think that's been intertwined a little too much. What block chain technology and crypto is are two even though they are built on the same fundamental infrastructure.

There's two very different things. But I do think that what block chain allows is for.

A lot more transparency in terms of transactions and tracing back sort of the transaction lifecycle of any sort of marketplace. And so I think it's actually gonna open up a lot more opportunities in the space.

Right. Let's move on to like sort of the less about investing more about you. So you are do some lecturing at USC.

Yeah I mean I'm a sucker for anytime a professor asks me to come out and guest lecture. I do it and I realized this week that I was a guest lecturer on Friday.

And then came back to SC on Monday and I'm doing it again next Wednesday and I'm like I probably should start getting paid for this because it's taking up a lot of time. But I do love it.

I think that you know being a former student myself at USC specifically I didn't get any of this. And the the opportunity to learn about an industry that's super passionate about and going in I wouldn't say give back but go and actually have a conversation with these incredibly smart individuals and see what the younger generation is thinking is actually incredibly valuable to me. So it's not a one way transaction at all. It's definitely super interesting to go back to talking to 18 to you know I do go to MBA classes so often people my age as well but having very open conversations about the things that they're interested in and I think I'd say that is the most valuable thing at least for me.

And then going back is just fun as well.

So how do you sort of overall. So you say yes when people ask you to come and lecture but how do you decide what to say yes to in in your life more broadly in terms of. I think you have Denson is involved volunteering and being involved like how do you decide what to say yes to and when it's like no I if I say yes to one more thing I will break.

I do understand how to balance my time but I always will say like if you want something done I mean this is a very common thing if you want something done ask a busy person. I find that I am. I find that I am obviously busy but I have no problem setting aside time for myself at all. And so I say yes to the things that I want to do. And I think that I think it's more that I put out what I want to do. So I asked for those things more often than not.

Netscape Well I look forward to crossing paths more with you. I really it's a treat to shop and see your face at the events and I appreciate having you on the pad. David anything else.

No thank you very much. Great so much for having me.

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