Adam Lilling — Plus Capital

Posted on Wednesday, June 24, 2020

Adam Lilling probably has the coolest job.  He’s the founder and managing partner at Plus Capital, where he works with celebrities like Ellen and Portia who want to invest in growing companies (post-seed) that align with their values.

 

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Adam Lilling is with me.  He’s the founder and managing partner at Plus Capital, where he works with celebrities who want to invest in growing companies. Adam is one of the original L.A. startup people previously starting Launchpad L.A. with Mark Suster and Peter Lee. He was the founder of Pazanga and Pentagon CDs, which is one of the first Internet sites to sell CDs and tapes online.   Supercool. 

Adam, thank you for joining me.

Thank you for having me. So just to set context here. We are a couple weeks in from George Floyds Killing. And I just wanted to start by saying, how are you doing? Where’s your head at today? 

I was at a protest with my wife and two daughters over the weekend. And, you know, your heart goes out to everybody that has been fighting this fight so long. I mean, it’s it’s we at Plus Capital put out a statement. It’s hard to it’s not hard to know what to say. 

It’s hard to because you’re just not in someone’s shoes, like I feel like I’m somebody with a lot of empathy. I think people that know me know I really care about other people. But in this situation, it’s amazing to see the momentum building across the world. I mean, it’s there’s been flashpoints so many times and just nothing happens. And people say, well, you shouldn’t protest. We shouldn’t do anything. But it makes a difference. So I’m just hoping that change comes.  That’s it. 

But my wife was saying this to me the other day, like, you have to be vocal. And I’m not. I’m more of an action and vocal person. But when I’ve listened to a lot in the last week especially or two weeks, I just think you have to be vocal and you can’t be quiet. And that’s not my nature. But I’m doing a lot more talking and a lot more statements and a lot more standing up.

Yeah, absolutely. I mean, yeah, it’s just opening up every day, opening at Twitter and watching what’s going on on the streets with police and protesters. It’s hard not to feel angry.

You know, last night was the you know, a lot of things have gotten to me and shook me up. But last night I put it I tweeted about it last night I retweeted somebody else, baby names dot com, which I used to name my kid, my both my kids. I just sat there and looked at names and they put on their home page all the names of not all but dozens and dozens of names of black men and women that got killed by police and and just saying that these were somebodies baby, too.

And I still get my hair. And when I saw that, just thinking of that, because it’s just so real, it’s like as a parent, you know, it’s important to think of everybody else as you would like your child like they matter. Yeah.

Yeah. That is tingly.

And here we are talking about venture capital, by the way, which, you know, has terrible statistics for black venture capitalists and black founders, both male and female, in terms of dollars that go against it. And even the things that we’re seeing seem a little tokenized right now. Like, I really believe it’s an ethos. You have to have each firm, even at our firm. The female founders side, I think forty two percent of the founders or co-founders at that are backed by an artist or an athlete.

Plus’s is female. I’m a big believer that there should be balance. And I think you just have to do it. I mean, and then the statistics will change. It’s just hard to keep talking about it. I think you have to you have to have it in your ethos.

Absolutely. But I started by saying a little bit about Plus. But help me characterize what you’re doing when you’re backing these founders and connecting them with celebrities.

Well, you know, it was about 2012. Marc Suster had started Launchpad L.A. in 09 and brought me in as a co-founder of around the mentorship program with him. And then we brought in Sam Teller to run and co-found the accelerator. I was lucky to invest in 40 or 50 companies with him and Mark and Peter Lee and Jim Andelman and the team of investment team that was backing Launchpad companies.

I I was trying to figure out what I was going to do with my next 20 years. And I was mentor chief at a Launchpad. I mentor the startup. So I always used to say, you need a mission and a minimum viable product. And then you’ll figure out the business. And I had been a founder since 1995, and it was always the business. To sir the mission. So I just stopped and I and one day I was waiting.

This is the real story. One day I was waiting at a friend’s movie premiere. I wasn’t a Hollywood guy. I just have to have a couple friends in Hollywood. And an infamous person walked out of the bathroom as I was waiting for my wife. And I said, well, she can do more to effect change in the world in a day than most people can in a lifetime.

So if we could combine the amplification of people who can effect that change and tie it back to the best operators and entrepreneurs.

I just thought that was my mission. I thought I could move the world forward faster by teaming up with the people who could speak where I was not. I wasn’t blogging or posting like the Marks of the world. I just that’s not who I am. I just wanted to say, you have a voice. You have a passion. Let me help you get behind. Know the person who is the better operator than me, too. I was never the best operator.

I never had the biggest voice. But I really felt like those two needed to come together at it.

And so by bringing them together, I don’t really understand the basics of sort of how a celebrity in this case, they’re actually investing money in exchange for equity, but they’re also lending their their brand name or their.

You’re actually asking us capital do. And I just gave it the mission, but not because it actually started as a small fund where we then we had limited partners that were artists and athletes and their business managers and their entertainment attorneys. And we started to just test the thesis of how this worked. The product that we have today really falls under investing your financial capital and or your sweat equity into a great venture backed companies. We also have a second part, which is we advise celebrities on all things startup.

So we advise Ellen DeGeneres on it by Ellen or Portia, her wife, Portia de Rossi, on her company, General Public, which is the art that’s behind here that unlike you can’t see because it’s audio. But from the video, there’s a art on my wall and it’s sold in R.H. would be say, with Zoe Saldana. We have like eight or nine companies where we advise celebrities on them being founder. But 50 plus companies, we usually have the artists or athlete invest in a top quartile, venture backed company post product market fit where they can be more gas on the fire, helping with customer acquisition, business development, press, things that once you’ve got the product now we will have an artist or an athlete invest all the way through to precede or seed.

But typically, like the sweet spot for what we do is we figure out how to construct the involvement of an artist or an athlete in a venture backed company, because there’s a lotta you know, there’s a lot of intricacies to use of name, use of time, use of social platforms, all the things that go along with their money.

And that’s what we specialize.

And so is that a company that’s raising around that financing and the artist, it being investment becomes, you know, on the cap table during a round of financing, or it might be at any point getting involved.

It’s at any point in time. Sometimes it’s in during a round.

Usually, look, there’s a power to having an artist or an athlete on the cap table in the right way. There’s no power if you do it in the wrong way. 

The one thing that I think we do differently than it used to be in the past when I started actually one people, Google Ventures. This is probably 2012. So we did a study and it looks like celebrities have no effect on their success or failure of a business.

And so I dug in a little bit with them. I go, what stage you’re talking about? Like 70 percent of companies are going to have a pivot, you’re never your first products are never gonna be your long term product. You’re going to fight.

You’ve got to wait for product market fit. So it’s hard to say. I love this product.

OK. Now I love it now. So show.

So there’s this moment in time for for for a venture backed company that could be series A, B, C, G.

It depends.

But you’re finding that product market fit. And then all of a sudden, it feels like magic. And you’re like, I need everybody behind me that I can. And so our job is to find who is authentically a believer in what this person is doing, who has the right engagement and audience to bring that message worldwide. And how do you then set it up so that they can help use the infrastructure? They use their voice tied to their existing initiatives, like if it’s just a social pose.

It’s not going to go anywhere. If there’s a marketing spend, then all of a sudden celebrity is a growth hack, as we like to call it. All of a sudden it makes sense or you’re trying to get into that really big retailer or that big partner. You know, having a big name celebrity, say, I’d like to take a meeting with you, CEO of that company. You want to drive an enterprise deal? Let me tell you, we have athletes that can sit in a room and we have artists that can sit in a room and close a seven or eight figure SAS contract.

So like the artist or athlete, we’ll actually take a meeting. We’ll show up and be there. We got it at it. Interesting.

We really focus on at the highest level things that are better for the planet and the beings that are on it. We don’t call ourselves an impact fund, but we just want to know. Here’s the line in the sand. We always want to be on this side and on the on the right side of it.

But it usually translates into five key areas for us. The future of work. The future of education. The conscious consumer. Health and wellness as a general category and sustainability as a general category, those are the five pillars that we know across the board, whether it’s veganism for Ellen and Portia who have or plant based protein with Ellen Portia, because it’s part of their Very Good Ventures that we help them invest in or, you know. Shaun White doing better sleep and better eating nutrition for what he’s doing.

And so these celebrities have already sort of had to go through this process of deciding on the causes that they care about.

I ask that and it sounds obvious, but sometimes like at a company, we go through these value discovery exercises.

And it’s just not obvious.

Well, yes and no, I mean, there are people who have pillars that they walk in the door with. 

But many times we’ll go through an exercise like when we kick off with an artist or an athlete, we’ll spend an hour to three hours just talking about what their hobbies are, what what they do at eleven o’clock at night when no one’s paying them and they would be paying they’re using their own money for it or, you know, what are the brands that they love, whether or not they’re endorsing them or not.

Like in the world we live in, it’s all about authenticity. So it doesn’t matter. Like the world is like we just caught a wave. The world in social media, it’s shifted from you can get, you know, five, 10 million dollars a year from a brand, whether you like it or not. Now, you’ve got to go on social media and talk about it and it’s got to be authentic to you. So, you know, we come along and say, hey, I know you don’t really love that company.

We’ll make you in the long run more if you just throw yourself money wise and sweat into the company love. So it’s a lot of the beginning is just figuring out what are they, why they love, what they love and why they care about, what they care about.

And then us figuring out how to connect the dots back to why companies need scale partners or amplification partners.

And like when you’re talking about scale partners, I don’t know the world of celebrity or influencers very well. What sort of scale are you talking about and how much influence are they expected to bring and how many how much reach are they expected to have?

By the way, it’s not a silver bullet. It’s nowhere near it. It’s part of a larger plan. Right. If you’re going to spend this year, 10, 20, 30 million dollars in customer acquisition, marketing and you’re looking at a CAC of 50 bucks, you can a celebrity or an artist or an athlete help you bring the cash down to 30 bucks or thirty five bucks for half a million people that you’re gonna go reach out to, like maybe a lot of times.

Yes. If you do it correctly. It’s not the organic post. It’s not that, hey, I’m going to show up at this event and shake hands. It’s not the traditional endorsement stuff. 

It’s taking the audience. It’s taking the awareness. It’s taking the trust. It’s taking those building blocks and putting that in to what the company’s plans are in the right way at it.

And I’m interested to ask more about celebrity, but may stick on just like technical stuff here. And so you then as Plus Capital will often then sort of co-invest at the same time.

Yeah. So first, we’re always in this world knows a lot of people that have no plan. Both sides. Right. They’ll work with the brand and they work with an artist. We have a mission that’s about artists first. Right. Or an art athlete first. So the first thing we think about is what’s best for the artists to the athlete. What is the right company? How do how do we get them involved in it? And if it fits a certain criteria?

For us, it’s usually like Series B or later top decile venture firm, you know, where the the artist or athlete is accessing a company that a traditional venture capitalist would never be able to access on their own, because this is a unique situation. We then have a set of capital to invest alongside our artists and athletes. And in the beginning, we just asked, hey, do you mind if we write a check next to you? And they were like, oh, my God, we don’t know.

You liked it so much. Of course. And then we called a company and they were like, well, I thought they were going to write a much bigger check. So we allocated more money. So then we started doing it and we realized, you know, I think we’re pretty good venture capitalists, too, like we helped sell downstream. We we we we put our sweat into it with a much smaller check. And the lead investor, I think dollar for dollar is pretty helpful.

So we’ve gotten into this pattern where when it fits, our mandate will we’ll invest alongside our artists and athletes, but it always starts with them first. We’ll never invest in a company if it’s not made for an artist or an athlete. If someone just invites plus into a deal when I already check it.

So I’m new to L.A. and it’s very striking. The tech world in L.A. has more celebrity involvement. It’s fun. But I haven’t yet sorted out who’s who. So there’s business managers and there’s lawyers who work with these celebrities and and advisers of different forms. Can you tell me that? Do you resemble an investment adviser or who do you interact with? Like, is it always directly with the celebrity? So we have a deal plus that we will not work on a celebrity without having direct relationship with them.

So just answer your question. Typically there is an agent. There is a manager is a business manager. There’s an entertainment attorney is a publicist.

There’s a lot of people in there life.  The main people that fee off them as a back end participation are the four that I first said, art agent, manager, business manager and entertainment attorney. We started with entertainment attorneys and business managers because business managers like the CFO, entertainment attorneys are like the general counsel.

Managers are like the head of business development. Agents are legally allowed to close deals for them. So they are the infrastructure for their sales. You know, they’re they’re they’re they’re head of sales managers are more, you know, understand the brand. Right. And and then than anything else versus a business manager which is handling the money. That’s their infrastructure that’s there. That’s the management team. We started by going to business managers and entertainment attorneys. Then we started to do more sweat equity deals.

So we had to work closer with the managers.

But we just handle it like we are there. We actually have an investment bank, a broker dealer that we set up last year because we believe that these are securities. The S.E.C. and FINRA believe that if you’re going to negotiate securities on behalf of someone and get compensated on it, you need to be registered broker dealer. So we went through all of that 

We do have a lot of celebrities that introduce us to their friends now because we have that kind of relationship.

But that’s that’s the industry. That was a long winded way of taking you through the industry.

So now celebrities introduce you to their celebrity friends. So you have got the coolest job around.

I have Amanda, Ryan, Jordan, all of us. We think we have the coolest job.

I mean, it’s not a job. It’s the comparison. Before this, though, you were really deep in the startup world, right? You were in tech. You were building an online store for tapes and CDs, which I found funny.

Do you think there’s a lot of similarities in the culture. A lot of differences. Now that you’re kind of bridging both both sides of the Hollywood in tech, the culture is to me completely different.

You know, no one or two in the dot com crash came. A lot of people went back to big companies like when we started doing Launchpad. Like, you could count the people that were in the startup community on a couple hands. Like, I mean, it was like when we threw our dinners at Launchpad. It started with 30, 40 people, maybe got to 50, 60, 70 people like like you.

We could we. I know that. Yeah.

I know a lot of the people get put.

And you’ll see a lot of those people around town that are just revered in terms of them being mentors in this community. 

It’s funny. But when I was growing up, everyone had a screenplay and then I moved to San Francisco, where everyone has a business plan they want you to read.

Do you think, like, there’s better ways of building bridges between the two communities? Should other people be doing more of what you’re doing? Yes and no. Like when when I think of Hollywood and I think or I think of the artist community, I think of technology. I always call that the imagination economy. Right. In Hollywood, you can take a script that says, here’s these bloop people on a planet. And it becomes Avatar. And here’s, you know, Evan saying, here’s disappearing photos and it becomes Snapchat.

These are both imaginations. These are ideas that need a different kind of execution to get to scale. But I don’t think from a business perspective, like do digital media companies and startups have to do more together?

I actually don’t think there’s a lot of venture capital backable media like we’re seeing it a lot. It’s hard to do media as a venture capital, bankable business, just like music, is a tough venture capital, bankable business. So I would say aerospace. Yes. Right. There’s a lot of industries that are L.A. dominant industries like aerospace that I would I would prioritize over Hollywood to be more ingrained in the tech community right now. It’s a looking thing.

Right. You have a lot of celebrities wanting to get involved in tech and not necessarily for the right reasons. And we actually avoid having someone write a check into a company just as it’s cool, like we want them to do it because they it’s something they’re passionate about, because just like what happened with Covid, like all of a sudden valuations are changing and oh, my God, there’s going to be a pay to play. And you have people freaking out when it’s about money, but when it’s about the passion or the mission, you’re like, well, what do we do to fix this?

But but backing entrepreneurs became cool right in the locker room. And everybody starts talking about what companies they’re invested in at the parties. Everyone’s saying, but I’m invested in that company. I’m a backer of that company because it’s cool and cool fades. So it’s got to be about more than cool.

Yeah, actually, that was that was one question I did want to ask. I see some similarity. I just did. Deb Benton. Do you know her. She was the president CEO of NastyGal. Yeah.

And shoot as with Kim Kardashian and says, you know, we were taught we were talking about how people can really get beat up in the media. And we and obviously Kim Kardashian and Sophia Amarosa are our big celebrities in their own right. But, you know, we always talk about our startup founders needing to build grit. What do you see working with celebrity celebrities get totally beat up at times. Do you think there’s either lessons learned there or things you’ve seen with with the media turning on people that we can learn from?

That’s a good question. It’s a tough question. I mean, look, I’m biased, but I think Ellen DeGeneres has done more for this world in her lifetime than most human beings. And she’s getting beat up right now. Right. And I know she’s got an incredibly compassionate heart. And I know she just loves to do good for others. She’s lived through enough in her lifetime that she is not going to complain and she’s not going to even sit there and go, oh, woe is me, she’s just going to like she did this week, she’s going apologize and do better because she’s all about the mission.

I think that that lesson goes to entrepreneurs, which is like you’re not used to it. If you were like just like artists and athletes are not used to the things that you’ve been beaten down like this. My third Black Swan event in my lifetime, I got lost everything in the dot com crash. I lost so much in the 08, 09 financial crash. And I feel guilty about it. But we’re having the time. Know everybody in the world wants to work with us right now because they’re home and they are passionate about changing the world.

So I’m having like I I’m working every minute of every day, including weekends. So, like, you just have to live through these moments to understand them. So I think the lessons that you can translate between artist and athlete and entrepreneur is if you haven’t gone through it many times before, you’re not going to be great at it. You’re not going to understand it fully. You’re just have to be more of a study of history and other people in their shoes than having to always learn through your own experiences.

I think you made two different points that I think your first point was some of and maybe I got I, I that I always forget.

I know, but I’m not sure I got this right. But there was something about it. Your if you as your celebrity grows, you’re more media figures. Some people love you, some people hate you. Get used to that fact that you’re not always a darling or something.

Correct. Whereas to be taken down by somebody. Right. And whereas this started, CEOs sometimes go really do become media darlings overnight and get crapped on the next day.

And they’re just not used. They’re not used to it. Right. And so you just go through it. But I guess my point is, can you really just study history and learn that, or do you just have to go through and you get better at being resilient by getting crapped on on some days?

Yeah, I think that’s. I find that there are some people that are calm under pressure and our studies of history and they’ve figured out a path and they have a plan.

I’m not one of them, by the way. I mean, I am very emotional. I have to go through something and my team will tell you I’m terrible at planning show and process. So I just look at those people and I think, you know, you asked yourself, how did Brian Chesky just get through what he just got through at being beat and did this incredible, like, severance package and let like he put great people around him. He learned from others.

He took advice, like he didn’t have experience in that. I mean, I think that sometimes when I talk about so-and-so is really smart, what I really mean is they’re able to absorb that information now from it.

Exactly. So, OK, so you’ve done a lot of mentorship, as you were saying. Were you the mentorship in chief or something like that at launch? A mentor in chief.

All of it. What do you find? What sort of advice do you find yourself giving nowadays? More.

You know. I loved being the first check and I love being there when people were first getting a product launch. I mean, it’s a personal passion of mine. I probably manifests in my ability or my time that I put in with artists that are launching their own brands or their own companies as founders, because I get to do that with them. But really, my time is spent advising people on structure, my mentorship comes in the form of helping people find that fit, find resolution on that fit, find scale through that fit. And honestly, I get just as much, if not more joy out of it, because the tangible results are so quick. When you see, like, it’s funny, I’ll I’ll see. I’ll be sitting and watching TV with my kids and five brands will show up in the course of an hour that I talked to that founder in the last week, I had worked on something really cool that made that happen.

I was always the early stage guy. So now working on this is just a new fun chapter for me. So that’s my aunt. Do you think I mean, it is a hard question how you live your life this way. But do you think about things that you wish you were spending more time on the things I wish I spent more time on.

Yes. Years and years ago, but I’ve corrected that. Like, the only thing I wish I spent more time on is my family. And I’m trying really hard in this new chapter of my life to do it as a startup founder. I spent three hundred sixty three sixty 365 days working and it was stupid. It was the wrong balance. Like it mentally mistake. Like you think I have to. If I’m not working right now, I’m failing.

Again, things you didn’t get mentorship for more learn from other people. That was one of my mistakes. But now the only thing I look at is, am I am I am giving up an hour of my time that I could be with my kids and my wife. But when you love what you do, it’s not a job. When you have a mission, whether it’s a job, a nonprofit, a hobby, whatever it is, when you get to spend time on something you love.

It doesn’t feel like work. And when you get to do it at the highest level. I got lucky, right? I mean, again, timing tied to luck. One of the first artists, if not me, first artist I got to work with directly through this model was Ellen, and so, you know, getting the next one being blank was was the question from the business manager, the manager or the entertainment attorney or the agent was, well, who do you work with? And it took me a year before I even asked, is it okay if I use your money like I did in the agency world? You may not even work on that person, but if they’re a client of the agency, you’re calling and going, I represent Ellen DeGeneres.

I never used it because I came from startup. You don’t open your mouth and you think you got something there. And so I said they said, well, I can’t say everybody, but I work with Ellen DeGeneres. And they said, Can I call business manager Harvey Newman or can I call her lawyer? Given your. And I said, you’re here, give him a call. And I put him on an email and then I got the next client and the next day.

And so I got lucky. I got to start at scale with people who can change the world.

And where do you think and where do you think you want to be in in five years? You want to just be doing the same.

Do you have a vision for how this evolves?

I do have a vision for how it evolves, but it’s more on the same mission, like everything that we do is around. How do you Bakry? How do you put the great AMPA, the great founders and great operators, together with the great amplification artists and the great artists and athletes that have that amplification, and that can be us growing more around the world. That could be growing into more categories, that can grow into more stages. We’re working on something with a public company right now.

So you’ve seen the power that these celebrities have. Do you ever yourself, does celebrity appeal to you or would the closer to you? Does it appeal to you?

More or less. I never came from Hollywood. I’m not the person who goes and hangs out with celebrities because they’re celebrities. To me, it’s it’s they’re just people. We care about what they can accomplish. And to me, that’s what I care about celebrity. It’s really the social capital and trust that they have. Well, it’s great.

And it seems like a very natural fit to be building this in the L.A. market. So it’s great to have you on the L.A. Venture podcast. I could keep asking you questions for hours, but I think I’ll I’ll let you go back to your regular life here.

Oh, thank you. I’m big fans of 10 110, so thanks.