This episode is so good. If you care about how culture is born in a city or what makes LA tech special, then get some inspiration as Crosscut’s Brett Brewer talks about the early days of building Intermix and MySpace and how he sees the ecosystem evolving.
Today I am thrilled to be in-person with Brett Brewer. I cannot think of anyone who is more of a pillar of the LA tech and venture community than Brett. Brett is one of the founders of Crosscut. Crosscut is now investing out of Crosscut Fund V. He’s also the founder of Intermix the company that incubated MySpace,
Well, it’s a fun chance to get to go into the early days of LA tech but just to catch us up really quickly. If you could just remind us your ideal check size now, sort of round size at Crosscut, and then we’re just diving in.
You got it. I like it straight to current business, $85 million fund size. $2 to $2.5M sweet spot check size. We make 25 investments per fund. And we are open for business.
Okay. wonderful. We got that out of the way, Brett, take me back. I think you’re from Turlock. I know nothing about Turlock.
So Turlock is a better place than people think. equidistant between Sacramento and Fresno in the great central valley of California. The central valley of California goes Sacramento, Stockton, Modesto, Turlock, Atwater, Merced, Fresno, and Bakersfield. And that’s the 99 freeway grapes of wrath.
That sort of feel it’s very flat. It’s very hot,And so it a better place than people think it’s admittedly not Venice and it’s not lovely Los Angeles, but it was a fantastic place to grow up.
My dad was an optometrist. My parents met at Berkeley. They wanted to pick a small town for him to build his optometric from which he did over roughly 45 years. So that’s how we ended up there.
What were you like in high school?
I was, you know, don’t think most people mean it as a compliment, but the most common thing that people say to me is you haven’t changed a
So I am exactly kind of the same as I was in high school.
but you seem very calm and wise in a way that I don’t think of high schoolers.
Yeah. Well, I wouldn’t make no mistake. This show is not long enough to list all the mistakes I made in high school. And I made I did make a lot of them. So when I say the same, I mean the same sort of demeanor and I was always interested in business, I have learned a lot since high school.
And what about college? College was college. I was in a fraternity, a great fraternity that I loved being instilled. Really my closest friends in the world are UCLA Sigma news. And I moved immediately into the fraternity as a sophomore and sort of skipped a bunch of steps at it.
great time. Graduated in December 95, traveled around the world for 10 months left with my really good friend. One of my best friends from kindergarten Shaved our heads grew beards and sort of that whole thing, but got back to Los Angeles in late 96.
And the internet wave that had really started, continued to accelerate and as an entrepreneur it was just too tempting to pass up. I got very lucky. My college roommate, Brad and I, and three other Sigma news were living in Manhattan beach at 4, 4, 7 20 third place. And that’s where we really started intermix media. So two of us, Brad, and I got it rolling. It took, it was a different era, but it took something like 18 months to get it initially off the ground and raise any sort of capital. And then we really launched in kind of early 1998. And to show you the speed that was happening back then we were public by April of 99.
Wow. How nice of an operation was it? When you went public,
we were doing we were an e-commerce business, selling movies and music and games online, competing with CD now competing with Amazon. Very tough business, by the way. Really brings me pause to this day when thinking about e-commerce because e-commerce is always hard.
E-commerce if you’re selling someone else’s product and it’s a commodity good, it’s impossible, basically, especially for a smaller company, but that’s what we were doing. And we were probably doing eight to $10 million a year in revenue. We had roughly a $50 million market cap when we went.
we raised about four and a half million dollars through that process.
We have going
Yes. So think very small, but the whole market, everything was smaller than after the.com crash, what it did, interestingly, is it took most of the well-funded competitors that
were losing tons of money and it either put them out of business immediately or put them out of business slowly. Because we had so little capital anyway, we always had to look at it like we actually need to make money or get as close as we can as possible to making money.
So yeah, How did the business
yeah I’ll I’ll, tell ya. So we weren’t the smartest bunch, but we were smart enough to realize that competing. By selling someone else’s commodity goods at virtually no margin. And in some cases, negative margin, we were going to eventually go out of business. So in the middle of 2000, we sold the e-commerce business, the entire e-commerce business at that time for a million dollars in cash to show you how small everything was.
And we had started experimenting with low cost content sites. So we were actually one of the first businesses that started casual game sites online. We actually built a game called gold miner that is still around to this day. That’s a simple little game with this old guy that reaches down his arm. And , you make gold.
but we started launching low cost content sites on the side because we knew we weren’t going to be able To live in that world, sold the e-commerce division and then took basically our twenty-five or 30 smartest people and continued to build the business all about content. So we were really one of the first companies to launch a dating site. We had a dating site called Cuba junction that grew very large.
We had a fitness site called fitness heaven. And another area that we just got lucky is we were one of the first high traffic sites to really embrace the concept of performance advertising.
because we didn’t have a brand or a Salesforce that could get to Nike or McDonald’s we had to say, okay, you’re a credit card advertiser.
You’re a car insurance, advertiser, whatever you are. And you’ll pay us $6, a lead $1, a click, whatever it is. Okay. We’ll figure that out. As simple as that sounds by embracing the concept of that. We are only going to get paid when we deliver value to these advertisers. It was just in our DNA the entire time. I mean, it is fascinating how it’s only the whole industry is 18 years old. or so, I mean, it’s
Okay. So you’re launching your own content sites, You’re creating the gold miner games, and other things, but then you’re also doing acquisitions how did my space, I mean, not that I’m not interested in gold miner, but let’s be clear.
My space is the bigger
Yes, it really is. But even crystal Wolf loves gold miner. So we did 27 acquisitions over about eight years.
And this is you and your college classmate who started
yes, Brad left in roughly 2003. So I’m the only person that was there at the start in there at the end, but yeah, like most things we ended up hiring a decent number of people from UCLA, a decent number of people from Sigma, Nu our fraternity.
And we’re all kind of very fortunate to still be friends to this day. But one of our, very early things that we became aware of was that talent was everything in this category.
And in LA at that time, you really only had five or six or seven companies. You had lower my bills. You had price grabber, you had shop Zilla, you had intermix value click and really three or four others. And there was sort of an unspoken rule that we didn’t go aggressively and poach from each other, it’s just not what we did it wasn’t in the culture of this market. Unlike of course bay area culture, consequently, it was very hard to get really talented people. And it was very hard to recruit from the bay area, So one of the best ways we found to get super talented entrepreneurial folks was through acquisition. So we started very early. We started buying companies in 90. Adam Goldenberg who’s the CEO of Fabletics and Savage started a company called gamers Alliance.
That was literally our second acquisition, some point in middle of 1999 and a million other talented people we got through acquisition. So one of those acquisitions was a company called response base response base was physically housed at lower my bills where my friend Matt coffin was the CEO and they were an e-commerce business.
Response was started by Josh Berman, Christa Wolf, Aber, and Colin, they were extremely entrepreneurial group coming together with another extremely entrepreneurial group. So we did that acquisition. and the whole thing was basically an earn-out over two years.
So if you fast forward, cause we’re limited on time you get to 2003, And we were at 60 60 center drive.
We had two floors. We had roughly 250 people. but at the end of that two year, earn-out that e-commerce business called response space kind of competed in a way with what Adam Goldenberg was running, which was the rest of the e-commerce business, which was all our own products.
So we never got back into the business of reselling others, but we were selling our own proprietary products. So the decision was made to combine response space under Adam. And we were left of course, with, I think one of the most talented teams that’s ever existed in Los Angeles with Christa Wolf and Josh and Tom and Colin and Aber, and a moment to pause and say, let’s go after something really big.
Like we were launching sites one to two a month. We had launched grab games relatively recently. Again, casual gaming sites. We had news sites. We were also always very cash, poor kind of a business. So sat down, me, Chris and Tom, I feel like it was yesterday.
And they came up with a bunch of good ideas. We white boarded them out, and one of them was to go after the social networking space and build what we thought would be a version of Friendster except way cooler and way more control for the user. And we launched it with an interoffice promotion. Again, we had roughly 250 employees.
I believe you sent around
. I did send it around. Yeah. , the email out to everyone at intermix was very simple. It was, we’re launching a site tomorrow called MySpace.
It’s a place for friends. Please invite as many friends as you can. It will allow you to share and see what everyone else is doing. And that was the little pitch. That’s what we launched the first three to four weeks went.
Okay. but what really changed the, dynamic turned up the heat on the business was. When Chris and Tom and Josh came up with a very simple theme, which was, we need to have people be able to find people they don’t know that have shared common interests.
So if I love playing violin and I’m looking for someone else to play the violin with, it’s nice. If I know there’s someone in Hermosa beach and in the original system, much like Friendster, you couldn’t see people unless you were connected to them. So we had the idea to make Tom Anderson be everybody’s default friend.
And Tom was a 24 hour a day, kind of a guy, always like head of product, really good at listening to the users, But by having Tom be everybody’s default friend of course allowed everybody to see everybody else.
And the rest is history as they. And because we were already an internet publisher with our gaming sites and our news sites and our other content sites, knew common behavior. So we knew take the gaming world. The average user would come to the site two to three times a week and stay on the site for seven to 12 page views and six to 12 minutes kind of range even honestly , as soon as we made the Thom edition users were coming back to the site, six to eight times a day, looking at 10 to 15 page views and staying on the site for 15 minutes.
was fascinating. I mean, we would literally say, what is everybody doing? Like, what is it that they’re so fascinating.
And now, as you know, we know people are generally fascinated with themselves and, and , there’s a human nature thing that if I go to your MySpace page and I put a comment on your picture that I want to go back there in an hour or two, and see if you commented on my comment.
If I put up a new picture of me surfing or us surfing together, I’m going back in two hours to see, did anyone comment on it that today in 2022 seems of course not like any major breakthrough, but in, the summer of 2003, that was a major aha moment. that’s really what made my space grow faster than anything I’ve ever seen. if you, fast forward six months, you could see it spreading through actual cities. So you would see it go into St.
Louis And you’d see, on a Thursday or Friday, 500 users on a Saturday or Sunday, a thousand, and, following day, 10,000, the following day, 46,000, you know, it would really actually just go into that market and everyone would invite their friends and it would grow like a weed.
We used to love doing that with the Google trends stuff, or you can see a new DJ and they’d really hit in Germany and then they’d hit in London and you could watch the Google trends to see like which cities liked, which new music, um, anyhow, how did you get from there to selling to NewsCorp?
Well, from that moment on, we really did just what you would do and just what most business people would do. we put all the best resources on MySpace and grew it honestly, as fast as we could. , just to show you the reality on the ground, we were constantly cash strapped and a business like MySpace at that time, took a lot of servers.
And even with performance advertising, any way you could slice it was, you know, deficit spending. , there were at least two different times where people on the board with me outside investors were saying, we got to unplug those servers.
We got to turn that thing off. We can’t afford to keep growing my space at this rate. And everyone on the operating side of the equation would literally look at these people like they were from the moon. Like This has a chance literally to be one of the great brands of the internet and to take us places we’ve never been before. The last thing we’re going to do is unplug the. To save money on our electric bill.
So there were growing pains. The entire saga had growing pains and it’s a whole nother thing, you know, big personalities we’re all over the place at intermix. But generally speaking, , we entrepreneurs, you know, we kept on plugging away and, always saw eye to eye on how to maximize value up until the summer of 2005.
but by the summer of 2005, you had.
Sumner Redstone at Viacom and Rupert Murdoch at NewsCorp, both come to the realization that they were losing their audience very quickly. And that this younger demo didn’t disappear off the face of the earth. And so in a kind of a very cool way, especially for people that are interested in business both Sumner, Redstone and Rupert Murdoch sent the signals down in their organization, go find out where everybody is, where is the youth and acquire them, because they’re not watching MTV. They’re not reading our newspapers. They’re not listening to our radio show. Like where did everybody go? So we actually initially engaged with Viacom, Viacom owns MTV, and there was a thought that.
MTV and MySpace made a lot of sense.
So corporate culture, I’ve always been fascinated with corporate culture, very different corporate cultures between Viacom and NewsCorp. We were engaged for probably four to six weeks picture 10 to 12 people coming from different areas of Viacom working within our mix, working with MySpace, seeing how the whole thing would, work.
And we were a public company of course at the time. So I would always say a public company is for sale every day. Like we don’t have the option to say, we don’t want to sell, we are for sale and anyone can buy any amount of the company or less that they want at any time. so we engaged of course, with Viacom and we’re going down that process.
Meanwhile, down the street at news Corp,
Rupert Murdoch as the story goes, he had been a little sick and Rupert’s very rarely sick, but he had been sick that caused them to be able to be home and be reading. He reads about my space. He had just tapped Ross Levinson to help spend a billion or $2 billion on acquisitions.
He calls Ross and says, this is what I got to have. This is what I got to own. And so Ross and Mr. Murdoch parachute in, they get wind. Of course, fortunately for us of the Viacom’s situation. And NewsCorp goes as fast as an entity of that size can possibly go from, start to announced acquisition, which was basically four and a half to five days.
And so we were all staying in the century Plaza, hotel and meeting in our lawyers law firm across the street, literally Thursday, Friday, Saturday, Sunday.
And we announced the deal Monday morning, which was exciting. I will
And it was like 650 million. It was a
yeah 680 million was number it really was a roller coaster ride that ended on a high note., I was very happy for Los Angeles.
I was very happy for everyone that works at intermix. We had a lot of amazing people over all those years, put blood, sweat, and tears into the entity and have it have that kind of happy conclusion. I was honestly just like tickled pink very happy still to this day.
That’s great. , tell me a little bit about navigating all those big personalities.
Well, talent is talent. So you mean within intermix and stuff? Yeah, so I, I feel very blessed to very early on whether it’s rich Rosenblatt, Christa Wolf, Adam Goldenberg, Josh Berman, Don wrestler,
and give it just the, for people who don’t know all those names I think I sort of do like Christa Wolf is still jam
crystal will the jam city.
One of the really big companies here in Los Angeles,
Adam, is he in your portfolio as
Adam is definitely very much a part of
our portfolio early cross cut one and cross cut. Two investments are a business called Fabletics, which Kate Hudson is the face of it. It’s a very large business based in, Manhattan beach that is in all over the world and a very big business.
He has a hundred physical stores.
It’s a very good cross cut investment. And then Savage Rihanna is the face of Savage. And so Adam’s the CEO of both of those business. Adam was my roommate after we bought his business years ago. Yes. And so Adam’s a good example same with Chris and same with a lot of this gang.
We really grew up together in business. Different people came in at slightly different stages, but nobody ever left is the truth. Like once you were in, I viewed it as my job with these talented people. what is it going to take to keep you underneath this tent? What structure, what comp structure, what else do you want to do you want to launch your own thing?
Let’s launch your own thing., we were highly incentivized, or I thought I was highly incentivized to keep super talented people inside the entity. That ended up being, I think one of the keys to our success was just all that firepower, almost impossible to do today.
Um The other thing we had going for us of course, for full disclosure was there were just less opportunities. You couldn’t, roll out of an intermix or any other company for that matter and raise $10 million at a $25 million pre and just start doing your own thing.
But what I’m trying to get at is almost like you see all these founder challenges today in your portfolio and everyone’s portfolio. I mean, in life.
, how do you advise people to get through these hard situations where talent has big personalities?
think long-term is number one. if you just take a deep breath and you look at what a well-run team can accomplish let’s make the pie bigger uh it’s kinda the number one thing.
Structure another one. So I learned a ton, you know, we were, again, very fortunate to go public early. One of the concepts was to have currency and to be able to buy half the time we used cash or. But a lot of the times we use stock and it didn’t take very many acquisitions to figure out that the team that’s running that newly acquired business will do what’s exactly in their best interest to achieve those earn-out goals, regardless of its impact on the parent company. It’s just how people think. And so making that mistake one or two times, you realize, oh, it needs to be less of a cash earn-out situation just for what this smaller entity is doing. It needs to be $3 million in stock for reaching a goal that is much better for the bigger entity,
And do you think the culture in LA has changed a lot? Like I still feel it as very collaborative,
I think it’s changed a little bit. compared to, and I hate to pick on the bay area the biggest, greatest tech companies in the world have been produced there.
That’s not lost on me, but it is not a culture there of clearly companies don’t want to help other companies. As a matter of fact, it’s the opposite. Two thirds of them are suing each other and you know, the way they aggressively go after. But it really started, I believe with the companies themselves in this market.
we we felt like, because we were honestly, so looked down upon by the bay area community that The only way that the 15 tech companies in Los Angeles in the late nineties could survive was by one, not poaching employees from each other, but two helping with introductions with investors, helping on strategy, helping with business development introductions–like there was no help coming from the bay area. And so do I think that makes LA special? I do. Do I think it, started from the original days of tech. Yeah.
I think that will always be an element here that, truthfully gives us an advantage. It’s a real advantage to be able to leverage the, overall strength and brain power of the whole ecosystem than being in a tiny little conference room and trying to sneak in a term sheet during a meeting without talking to anybody else.
so good. Uh, what do you think about all the changes and all the big funds that are showing up and what that means for. think for the most part. All new capital in this market is a positive. It’s certainly a positive for LA and for a variety of reasons that really do care about LA and this ecosystem. And I even believe it’s a positive for cross cut. There are so many companies being created in this market thousands per year.
Now cross-cut only makes eight to 10 investments a year and all of our investments need to raise, follow on investment. , and nothing makes me happier than when the follow on investors come from this market. And the other element, which I know you’ve experienced, that gives cross-cut and ten one ten and the other well-entrenched seed funds.
think a long shelf life in this market is yes, SoftBank and tiger and, Cotu, and these other mega funds can come into LA and have they, yes. I mean, I’ve never seen anything quite like it, right? They are in this market, they are buying homes in this market. They are living in this market.
Really what they want to do at seed. they want to write a check and they really don’t want to hear anything else. Well, that sounds fine. And if I was in that position, I probably would do the same thing, but the company still has to be built.
Someone still has to figure out, should this company continue to outsource tech or hire a CTO. How do we deal with the founder dynamics? You mentioned earlier, Two founders calling SoftBank that have never really talked to SoftBank before and giving both their sides of the argument.
Can they even get an audience there? I don’t even know. So fortunately for us, we’ve continued to be brought in to these seed deals, even when tiger and SoftBank and other fancy names are making those investments. Because those individuals are smart and they say, cross cut here, you can do the company building part.
You do the heavy work. Yeah. But I think that’s the fun part. like I love doing it. , , that’s the part that gets me out of bed in the morning. Th true sitting in a conference room in front of a whiteboard with a three or four person team and spending an hour or two thinking about their business, and then honestly getting to parachute out do it again is exhilarating.
Again, so good. So talk to me about working with founders and especially these really remarkable founders who have now reshaped industries multiple times. I don’t know who you put in that category, but Adam Goldenberg rich, rich Rosenblatt. So Rich Rosenblatt was a demand media as well
After intermix. And he went to news Corp with me and we all spent six months at news Corp,
rich rich was, was brought in as the second CEO or
Yes Yeah, exactly. So rich and I have been friends dating back to about 1998, so we were always good friends. I was very fortunate to get the opportunity in the end of 2003, early 2004, where we needed some new blood. We needed some fresh energy, honestly. And so I got to recruit my great friend, rich Rosenblatt to come in as CEO.
So who are these people who changed the world? I mean, they’re fascinating to me
fascinating to me also. Yeah. Common denominator. I, yeah. I mean, if you, if you look at very different personalities I’m probably gonna get a lot of texts after this, but if I looked at, you know, what’s, the similarity between rich Rosenblatt, crystal Wolf and Adam Goldenberg that they do not take no for an answer.
I mean, they will March forward. And if that doesn’t work, they’ll try this. And if this doesn’t work, they’ll try that
You have to have those traits
Yeah. So you mentioned that you have taught is that UCLA Okay
Okay. good. And you had three basic rules.
teaching, I should clarify the teaching is a class once a semester or once a
yeah. My, three basic rules that I was trying to bring to a class like that, or any kind of entrepreneurial activity are simple.
One is take advantage of your advantages. And I think on a regular basis, companies lose sight of that. And it can be a big company like Google, honestly, where you say, what’s, Google’s advantage what Google’s advantages. They’re in 110 countries, they have billions of dollars on the balance sheet. They have more resources than everyone else.
What’s the advantage of a 10 person company that’s competing with Google? Well, they don’t have the bureaucracy. They can change and pivot and make a partnership. That’ll change their whole business.
It doesn’t really matter what bucket you’re in, but you’ve got advantages as a company and by the way, as an individual.
So when I meet someone and they want help finding a new job, or what should they do next? Like, we’ll take advantage of your advantages.
what are the Bret brewer advantages? Much like um the, people I mentioned earlier, , I don’t have a problem reaching out to people.
I don’t know. And it’s a disadvantage of the fact that I’m not on LinkedIn and on any social media,
You’re not I know you’re not, hard to
yes exactly hard to find it hard to research. And, , I can’t say that some sort of master plan behind that. But what it does is it makes it, so when I meet someone at a networking event or I meet someone at a work event or whatever the case.
I have to actually follow up with them. If I say many can I buy you coffee? Or can I buy you lunch? I want to hear about what deals you’re interested in. You’re never going to find me on LinkedIn and otherwise. So I have to say, can I get your cell phone? Can I get your email address? And if I want to get to someone else that you know, , I have to work.
ItNumber two is control the
This is Number two, advice.
Two of three control the controllables
And simply what that means is in startup world. I often find that startups get too carried away with things outside of their control. Certainly politics, but you name it with competitors and things in far off places, you got to control the controllables.
And as a startup, as you know, it’s pretty simple game. need to hit milestones. That’s going to make this business attractive enough for additional capital, whether inside or outside capital coming in, or we’re not going to hit those milestones. And this business is going to go out of business. I mean, that’s really what sort of happens.
So, staying focused and controlling your controllables. I find as being a really common sense, but not often followed rule and ties right into the.
And you can make an argument the most important, which is I always prefer action to inaction. So when companies come and they say, Brett, well, we were thinking about testing this.
And then we thought about testing that. Sarah wanted to do this and we were having an offsite and then we’re gonna have another off-site in two weeks. And we’re going to summarize that into out my, you guys. If we did one thing, right at intermix MySpace, it was speed.
by the time we’ve analyzed it and written the pros and cons. We could have honestly, already launched that site and seen if the site period works, let alone added that feature. The amount of time that people spend thinking about a feature, just add it, show it to 5% of your users. will literally know in 24 hours, we don’t have to guess.
And because we kind of grew up with the. when we would come across other traditional businesses, media companies and stuff, you could just see the thinking. They brought a much more analysis thinking always to the internet. It’s one of the reasons why early on, and I think still big media executives have had such a hard time transitioning to the internet.
It’s just a different way of thinking. So anyway, action. I always prefer action to inaction is number three.
Interesting. who control the controllables, do you think it’s often that people are trying to control the uncontrollables?
I do. I think they’re worried about the uncontrollables.
I think they’re thinking about the uncontrollables. can’t boil the ocean, so you need to control your controllables and execute on
And you were like in your twenties, late twenties?
Yeah. , I was 26 when we went public.
And what Why don’t you do more? I’m you’re hard to find even on other podcasts or that sort of
this is literally, and this will be great for your audience.
This is truly my first podcast
know actually I very very honored, Brett. But I just wasn’t sure exactly why. I viewed my role and still view my role as. It’s funny. You mentioned all the personalities of the old days. , there are different types of personalities.
There are people that love to see their name in a press release. There are people that love to see their name on a banner. There’s people that love to see their name. That just isn’t what made me tick. What made me tick was the success of the entity. What made me tick honestly, was being able to make payroll in two
or in a month and having enough money to do that.
Creating a safe, fun working environment where people could exchange ideas and things would be built. That’s what made me excited. So consequently, I always felt comfortable playing a role that was facilitating that and it, made it much more likely that I could facilitate that if I didn’t also want to have my name in lights.
And so that is just played out , over the 22 years.
Um I read enough of stealing my space.
I kind of through it. It was
actually really good
but what I kept reading was, and then brewed walk in and kind of say chill out. That was my summary of where you come in. and Like tell everyone calm down.
one of my favorite lines is always, it’s going to be okay and it’s going to be okay. And it’s okay if we launch something and it doesn’t work. It’s even okay. Back then we had a lot of problems just being up. You remember uptime was like a real
and e-commerce transactions processing them.
I mean, we had all you name the issue. We.
And there was, as you pointed out is mentioned in the book, like very often the right message. I think, for me to bring to that panic equation was it’s going to be okay. Let’s start with a deep breath
How do your friends describe you?
I think relatively lighthearted, fun to be around. And hopefully I literally am. I think, you know, from CME action, I am always, if I’m at somewhere, I am trying to add value. , I’m trying to kind of make things a little bit better.
I know that sounds a little.
If I’m at someone’s house, I want to be positive and be helpful and give them a compliment on their new refrigerator or their new linoleum, know? that is just how my brain works. I get it directly from both of my parents who operate exactly like that.
And it, I like it.
That’s great. Should we talk at all about cross cut really quickly? I mean just themes you like Picasso was a great investment. Did you leave that?
I did Spencer’s amazing. And Austin, it’s a fantastic one. Austin spoke at our LP summit. Sure. I love talking about cross-cut.
was very fortunate to live on a little street, Adam Goldenberg was my roommate. And Marco LRD, who’s the current CEO of ad knowledge, who was also at intermix for many years. We lived on Porto Del Mar in about 2001.
Next door to me moves Brian and Elisa Garrett.
Oh, I, sorta knew
Yes And I yes Brian Garrett, , one of the other co-founders of cross cut and a great friend. So lo and behold, they did buy it and we became neighbors and lifelong friends and started throwing parties and events together.
Great. And now you guys are cross-cut five. The other one thing to touch on that, I found really interesting about cross-cut is the way you’re doing SPVs interesting because you’re actually able to invest a lot of capital right now. How are you thinking about your SPV and strategy there?
Yeah, it’s evolved, , but we’ve evolved with the market. So what the market has said is big family offices and endowments and institutions even are more comfortable going direct and writing bigger checks today than they were five or 10 years ago.
as you. in lots of cases take Picasso, which you mentioned earlier, when you have big successes, your pro-rata gets to be a pretty big number pretty quickly from an 85 or a hundred million dollar fund size cross-cut or any other entity is not going to have the capital from the underlying funds.
So it’s a really nice opportunity to be able to share with those LPs where they can come in through this SPV structure, and the companies get to raise the capital they need. So we are open for business. We are still roughly 65% of our investments are in Los Angeles, which I love even in the COVID.
and I know you’re really passionate about LA tech cares. So maybe we could squeeze that in real quick.
Sure. So I’m happy to, I’ve always been a believer in education and this concept that equality and education is a must.
I think it’s sort of the number one thing that as a society, we need to be delivering So last 20 years I’ve spent most of my nonprofit time in and around education. All of a sudden COVID happens which nobody saw coming including me, but it clearly made a huge divide between the haves and the have-nots.
So one of the reasons we launched LA tech cares and I’ll get to what we do in a second.
Was, we need to have a product we needed to swing into action. I thought to help alleviate and minimize that divide. So I called my good friend, Brian Lee um honest company in legal zoom and bam. And then the amazing Kwanza Jones who’s runs a big family office here in Los Angeles.
And I knew instantly they’d be on board, which they would to launch LA tech cares. And the concept was let’s use technology to minimize this digital divide. So the first year of COVID, we raised roughly $250,000 and got 5,000 wifi hotspots in the hands of kids at Alliance charter schools, which are 27 public high schools here in LA with 13,000 kids, 5,000 of them had no ability to even access their teacher or access current.
Let alone do it. And one of the concepts behind LA tech cares was I wanted it to all come from the LA tech community. So I really leveraged and leaned on the VC community first. And my question I would share with your listenership is LA tech cares is coming down the mountain again.
So it’ll be in June, July, and I am open for business with ideas where we can focus. I’d like to do one thing that can help kids at risk in need. Kids here in Los Angeles with their educational journey And please email me any ideas. . I’d love to talk about the subject bread at cross-cut Duffy.
See, that’s sort of find me,
Please email me, love helping any entrepreneur. We really do pride ourselves on trying to be helpful in any way, shape and form we can for the entrepreneur.
Wow. That’s great. Uh But it’s been great having on the show and getting to know you a little bit better.
Thank you for having me and I look forward to seeing you out there in the real world