The Exchanges

Q so kind of you. Yes, I am like Benjamin Button of VC Podcasting, but I do want to dive straight in and ask, you know, you've had this incredible operational career, and now investing with Velvet Sea. So, Bluntley, how did you make your way into the world of Startups. And then how did you come to change sides of the table and be an investor with Velvet Sea today?

A Yeah, the simple answer is timing. I found myself at Medill Northwestern's journalism school in 1993. This was the eve of the collapse of classified ads, which were the lifeblood of newspapers. And at the same time, I was fortunate enough to land internships at several newspapers, Fort Lauderdale Sun Sentinel, Roll Call, and around the same time, the commercial internet. So Netscape and Yahoo and all these companies took off And I was immediately enthralled by this new thing called the internet. And it was obvious to me at the time that the future of ad-based media was not that bright. And it was even more obvious after my internships that I wasn't the greatest journalist. So I just focused on the internet. I started a company at Northwestern called University Wire. We ultimately merged it with a company called Student Advantage and went public in So it was one of those Robbie Stevens deals, sixty million on 300 valuation, basically like a series B these days. And then I went on to start golf.com with Cass, my wife, my partner, my best friend. We sold that to Time Warner and moved to New York. And ultimately in New York, we started Buddy Media, which purchased by Salesforce about six years after we started. And I spent close to four years, you know, learning from the best team in software at the time and today, you know, for what it's worth. And so the transition to investor st…

AI assessment note: “the transition to investor started really around 2010. We're fortunate to have amazing entrepreneurs”

Q you there in terms of that kind of operational element. I do want to also, slightly taking it back, and I hope it's okay for me to ask a more personal one, but you know, I saw an incredible YouTube video that you did, and you stated about some health challenges you faced early on in life. Can you tell me about this, and how it actually impacted your mindset?

A Yeah, you're really going back far. You're going back Back to embryonic, Mike. I was born with a congenital heart defect. I had what's called a ventricular septal defect, a hole in between the two ventricles. Luckily, closed up when I was born, and I was asymptomatic for much of my life. When I was 19, they decided they needed to go in to fix it, and when they went in, they saw that my valve needed replacing, and basically, you know, my heart needed to be rebuilt in many ways, and so I had two open-heart surgeries within eight days of each other. After the first one, my aortic valve burst. I had zero blood pressure, and I had two hours to get into the operating room and get it fixed. And really, I emerged out of that process when I was 19, you know, before my junior year at Northwestern, a pretty changed person. Before that, I was kind of stressed out. I stressed about the little stuff. Afterward, I was fearless. I felt like I was playing in overtime. I shouldn't have been there. I should have been dead. If it Weren't for great doctors. And timing, I would have been dead. And so I came out of it saying, what's the worst thing that could happen? I'm alive. That's really all that matters.

AI assessment note: “Afterward, I was fearless. I felt like I was playing in overtime.”

Q you there in terms of that kind of operational element. I do want to also, slightly taking it back, and I hope it's okay for me to ask a more personal one, but you know, I saw an incredible YouTube video that you did, and you stated about some health challenges you faced early on in life. Can you tell me about this, and how it actually impacted your mindset?

A Yeah, you're really going back far. You're going back Back to embryonic, Mike. I was born with a congenital heart defect. I had what's called a ventricular septal defect, a hole in between the two ventricles. Luckily, closed up when I was born, and I was asymptomatic for much of my life. When I was 19, they decided they needed to go in to fix it, and when they went in, they saw that my valve needed replacing, and basically, you know, my heart needed to be rebuilt in many ways, and so I had two open-heart surgeries within eight days of each other. After the first one, my aortic valve burst. I had zero blood pressure, and I had two hours to get into the operating room and get it fixed. And really, I emerged out of that process when I was 19, you know, before my junior year at Northwestern, a pretty changed person. Before that, I was kind of stressed out. I stressed about the little stuff. Afterward, I was fearless. I felt like I was playing in overtime. I shouldn't have been there. I should have been dead. If it Weren't for great doctors. And timing, I would have been dead. And so I came out of it saying, what's the worst thing that could happen? I'm alive. That's really all that matters.

AI assessment note: “I was born with a congenital heart defect... Afterward, I was fearless.”

Q I do have to ask though, Mike, which is like, you've seen just the most incredible changes in financial markets, and one being the dot-com era, and the boom and the bust. And so Nick Mater, our mutual friend, asked, how did the dot-com era fundamentally impact your approach to business and investing in the companies that you do today?

A Great question. I've been working on tech startups since 1993 1994 so i'm coming up on 30 years and you know it's hard to understand cycles without either living through them or working in crypto for three months you understand kind of ups and downs and so on friday was april 14th i'll never forget this date 2000 the nasdaq which is where all the tech companies were fell nine percent and it ended a week in which it lost i think 20 25, 30% of its value. I was 25, newly married, a new house, millions of dollars of stock in a company that I'd taken public. So you wire had merged with student advantage that lost 80% of its value. So here I was a young guy on paper seemed to be worth a lot and now not really worth a lot. And so I learned a few lessons the hard way. And I think those lessons still drive me today, both as an entrepreneur And as an investor, you know, as I think about it, raise more money than you think you're going to need. As an entrepreneur, figure out how much you need to execute your plan, and then raise two times that number, one and a half times that number. It almost always takes more money and more time than you think. Because you're an entrepreneur, like me, you're eternally optimistic, and so just make sure there's some padding. Two is fundamentals matter. No matter how hot your company is, it'll eventually be valued based on fundamentals. So sales, profits,…

AI assessment note: “I learned a few lessons the hard way. And I think those lessons still drive me today”

Q so kind of you. Yes, I am like Benjamin Button of VC Podcasting, but I do want to dive straight in and ask, you know, you've had this incredible operational career, and now investing with Velvet Sea. So, Bluntley, how did you make your way into the world of Startups. And then how did you come to change sides of the table and be an investor with Velvet Sea today?

A Yeah, the simple answer is timing. I found myself at Medill Northwestern's journalism school in 1993. This was the eve of the collapse of classified ads, which were the lifeblood of newspapers. And at the same time, I was fortunate enough to land internships at several newspapers, Fort Lauderdale Sun Sentinel, Roll Call, and around the same time, the commercial internet. So Netscape and Yahoo and all these companies took off And I was immediately enthralled by this new thing called the internet. And it was obvious to me at the time that the future of ad-based media was not that bright. And it was even more obvious after my internships that I wasn't the greatest journalist. So I just focused on the internet. I started a company at Northwestern called University Wire. We ultimately merged it with a company called Student Advantage and went public in So it was one of those Robbie Stevens deals, sixty million on 300 valuation, basically like a series B these days. And then I went on to start golf.com with Cass, my wife, my partner, my best friend. We sold that to Time Warner and moved to New York. And ultimately in New York, we started Buddy Media, which purchased by Salesforce about six years after we started. And I spent close to four years, you know, learning from the best team in software at the time and today, you know, for what it's worth. And so the transition to investor st…

AI assessment note: “The simple answer is timing. I found myself at Medill Northwestern's journalism school in 1993.”

Q so kind of you. Yes, I am like Benjamin Button of VC Podcasting, but I do want to dive straight in and ask, you know, you've had this incredible operational career, and now investing with Velvet Sea. So, Bluntley, how did you make your way into the world of Startups. And then how did you come to change sides of the table and be an investor with Velvet Sea today?

A Yeah, the simple answer is timing. I found myself at Medill Northwestern's journalism school in 1993. This was the eve of the collapse of classified ads, which were the lifeblood of newspapers. And at the same time, I was fortunate enough to land internships at several newspapers, Fort Lauderdale Sun Sentinel, Roll Call, and around the same time, the commercial internet. So Netscape and Yahoo and all these companies took off And I was immediately enthralled by this new thing called the internet. And it was obvious to me at the time that the future of ad-based media was not that bright. And it was even more obvious after my internships that I wasn't the greatest journalist. So I just focused on the internet. I started a company at Northwestern called University Wire. We ultimately merged it with a company called Student Advantage and went public in So it was one of those Robbie Stevens deals, sixty million on 300 valuation, basically like a series B these days. And then I went on to start golf.com with Cass, my wife, my partner, my best friend. We sold that to Time Warner and moved to New York. And ultimately in New York, we started Buddy Media, which purchased by Salesforce about six years after we started. And I spent close to four years, you know, learning from the best team in software at the time and today, you know, for what it's worth. And so the transition to investor st…

AI assessment note: “And so the transition to investor started really around 2010.”

Q you there in terms of that kind of operational element. I do want to also, slightly taking it back, and I hope it's okay for me to ask a more personal one, but you know, I saw an incredible YouTube video that you did, and you stated about some health challenges you faced early on in life. Can you tell me about this, and how it actually impacted your mindset?

A Yeah, you're really going back far. You're going back Back to embryonic, Mike. I was born with a congenital heart defect. I had what's called a ventricular septal defect, a hole in between the two ventricles. Luckily, closed up when I was born, and I was asymptomatic for much of my life. When I was 19, they decided they needed to go in to fix it, and when they went in, they saw that my valve needed replacing, and basically, you know, my heart needed to be rebuilt in many ways, and so I had two open-heart surgeries within eight days of each other. After the first one, my aortic valve burst. I had zero blood pressure, and I had two hours to get into the operating room and get it fixed. And really, I emerged out of that process when I was 19, you know, before my junior year at Northwestern, a pretty changed person. Before that, I was kind of stressed out. I stressed about the little stuff. Afterward, I was fearless. I felt like I was playing in overtime. I shouldn't have been there. I should have been dead. If it Weren't for great doctors. And timing, I would have been dead. And so I came out of it saying, what's the worst thing that could happen? I'm alive. That's really all that matters.

AI assessment note: “Afterward, I was fearless. I felt like I was playing in overtime.”

Q I want to start on really kind of the aspects of the art of venture, because I always think it's like a craft. And you said before, how you operate as an investor is more important than what you do or what you've done. I thought this was a really intriguing one. What did you mean by that statement?

A Well, I think what I meant is that money in today's market is fungible. You can get it anywhere. Experience and reputation are not. So in venture, if you look at the great returns, Experience and reputation drive results for the funds, and entrepreneurs want to work with experienced and great investors of great track records and great reputations, and so as a serial entrepreneur and now investor, I've had the benefit of knowing so many great investors, and I felt what it's like to work with the most respected investors, and so when I sit here today, it's hard for me to tell you all the specific things Roger Ehrenberg did, Karen Klein, Howard Lindzen, Ian Siglo, Jeff Richards, Jules Maltz, you know, many others did to help me as investors in Buddy Media. I really don't remember what they did. However, I can tell you without thinking how they interacted with me, how they showed up to meetings, how intently they listened to me, how they made me feel during good times and bad, how seriously they took my asks. And so being a great investor is part therapy. It's part advisor. I find that many of the entrepreneurs know the right answer. They just need someone to talk to. And so when I look at what we're doing at Velvet Sea Ventures, I don't judge Velvet Sea by the total assets we have under management. Even though we're happy with what we have, I care much more about how we show up, h…

AI assessment note: “what I meant is that money in today's market is fungible.”

Q know, scale in the early days and make mistakes, and I'm sure you have it with the portfolio to say where you know they're going wrong, but you can't cross the line of operator. And so I guess my question is, how do you think about a guardrail to keep up versus a guardrail to remove and let them learn? On either side, as a father or as a founder.

A So it's much easier with founders, and the reason I say that is we have experience doing what they did. We can share our ideas. If they listen, great. If they don't, great, right? We don't want to run the companies. We love entrepreneurs. If the entrepreneur isn't happy, if they're not feeling supported, if they're not comfortable, they're never going to succeed, and so we do not have a heavy hand, and you know, the second that we come in with guardrails, With any sort of parental-type heavy hand, it kills the relationship. I didn't like it when entrepreneurs, when investors tried it with us. Having said that, I love robust conversation, disagreement. Our board meetings were a combination at Buddy Media and WWE and Hugfest. Yeah, we had strong opinions on our board. We had Eric Hippo and Ian Sigalo from Graycroft and Jeff Richards and Karen Klein. These are big brains. Big personalities. And we just went at it, and then we all hugged at the end and moved on. And so kids, I can't say I have experience as parents. This is our first time, right? Your kids, the default position is you're wrong. Founders, the default position is maybe you're right. Founders respect you. Your kids are like, you're embarrassing me. You're goofy. You make weird sounds. I don't want you to see my friends, right?

AI assessment note: “the second that we come in with guardrails, With any sort of parental-type heavy hand”

Q Final one for you, Mike. What's the most recent publicly announced investment, and why did you say yes and get so excited?

A You know, I've now talked about this company a bunch, you know, Leo Labs, which is our last one. We just announced it. Sixty-five million dollar Series B funding. Velvet Sea led the round with Insight Partners. We've now, you know, we've made three investments as a fund into the company. My partner, John, was one of the early investors in the company as well. I mean, it's extra sweet because there aren't many more competent or nice people than Dan. You know, Dan Separley, who is the founder, CEO. You know, we made the investment because they've been executing. We think it'll be one of the most important companies in one of the largest emerging markets, which is low earth Orbit, which really is where the action is in commercial space, and they basically make the business of space possible. We're so excited to be a partner.

AI assessment note: “we made the investment because they've been executing. We think it'll be one of”

Q I'm totally with you on that. You mentioned Jeff Richards earlier. I spoke to Jeff before the show, and he in particular wanted to ask, when you think about now investing full-time and the lessons learned moving to venture full-time, in particular, you've had some early home runs. You've had some that haven't worked. If we take the home runs first, What have you learned from your early home runs?

A So the early home runs, you know, both investing out of our own balance sheet and now Velvet Sea Ventures really boiled down to three things that I think we all know, but we forget often. One team, obviously it's always about the people. Does a team have a track record of winning? Is the team the right team to tackle the problem they are addressing? You know, winners win. And I see it again and again, you know, winners figure it out. And so it starts with that because even though we're entrepreneurs, we don't want to run the company. You know, we want to support the company. We want to be called when there are big issues that the founder wants to work through, but you know, they're the ones who are building the business. Second one is market. It's hard to change pilots mid-flight. It's even harder to change the market you're operating in. Basically, will the market be large enough to support several massive growth companies? I've never seen a large company emerge in a tiny market, and so the market is so critical. And then the third is just networks matter. It takes a village to grow these Businesses, no matter what the company is, you need to have people around the table, and so I look at the companies that really have hit it out of the park with Velvet Sea, and, you know, it's Walter Driver at Scopely, and, you know, Yoni at eToro, and Dan Separley at Leo Labs. Those are peop…

AI assessment note: “So the early home runs... really boiled down to three things”

Q Can I ask you a bit of a weird one before we move into the quick It's like, you know, you speak with this incredible serenity and calmness, and you've just seen everything, Mike, from, you know, the incredible years building. What are your insecurities today as an investor?

A So I didn't have a ton of insecurities when we were investing out of our own balance sheet. We did about 60 deals, you know, with our own money. We never raise outside capital, and so when we decided to, you know, partner with Jim Petroni's and do Velvet Sea Ventures, you start asking yourself questions like, okay, I've gotten 250,000 to a million dollars of, like, Personal allocation for all these deals. Can we get ten million? Can we get 20? Can we get fifty million? Which is, you know, the largest deal that we've done. Are we kind of like a cute addition to the cap table, or are we like a strategic investor? Because we want to work at the highest levels of venture with the best co-investors, the best entrepreneurs. I had all these other insecurities that I hadn't felt since I started really U-Wire. At Northwestern, you know, I think everyone, no matter what they've done, you know, has this kind of imposter syndrome. And so, although I'm friends with all these VCs and I've made all this money on the investments and I was pre IPO and all these companies, including like Facebook and Tumblr and like, can I do it for a living? And so as we come out of like our first fund and we've been able to, you know, invest in companies, you know, the most important thing to me is we've product market We are people who at least 15 entrepreneurs have said, I really want you, and many of which …

AI assessment note: “Are we kind of like a cute addition to the cap table, or”

Q ever that, you know, when we mentioned the incredible names of the mutual friends we have in venture before, before when you were personal investing, you were collaborative, two 50 to a million, they can bring you into rounds, you can bring them in. Now, in many ways, you could be competitive. How do you think about that move from collaborator to competitor, and how do you get around that?

A So that was one of my big fears, and so the way we've gotten around it is being who we are, Which by nature is collaborative. If we don't have sharp elbows optimized for the longterm and not any deal, there's not one deal, which, you know, we're going to go to the mat and say, we need the whole allocation. We need this, this, this. As soon as we start talking about like, we need, we're done. Like, it's not about us. It's about the entrepreneur. Most of the terms are pretty standard these days. So we don't even have to negotiate that many terms. And so I just look at what we have to date. And, you know, if I look at, you know, A company that I helped seed way back when, Scopely, you know, he didn't have to open up allocation for Velvet Sea, and a few rounds ago, we got a really big allocation, because we've, I think, been helpful. I look at Sutra, which is a startup in the fitness space, and that's one I collaborated with Jeff Richards on, right? I look at Leo Labs that I just spoke about. I sent it to Devin Parekh, one of my idols in the investing world, who is also on our board, and we co-led it together. And so we keep our funds relatively small. We have iconic business builders, you know, our investors and LPs. There's plenty of money to go around. More and more LPs are saying that, you know, venture actually is an asset class and let's shift more dollars to it. And so it's …

AI assessment note: “the way we've gotten around it is being who we are, Which by nature is collaborative.”

Q I want to start on really kind of the aspects of the art of venture, because I always think it's like a craft. And you said before, how you operate as an investor is more important than what you do or what you've done. I thought this was a really intriguing one. What did you mean by that statement?

A Well, I think what I meant is that money in today's market is fungible. You can get it anywhere. Experience and reputation are not. So in venture, if you look at the great returns, Experience and reputation drive results for the funds, and entrepreneurs want to work with experienced and great investors of great track records and great reputations, and so as a serial entrepreneur and now investor, I've had the benefit of knowing so many great investors, and I felt what it's like to work with the most respected investors, and so when I sit here today, it's hard for me to tell you all the specific things Roger Ehrenberg did, Karen Klein, Howard Lindzen, Ian Siglo, Jeff Richards, Jules Maltz, you know, many others did to help me as investors in Buddy Media. I really don't remember what they did. However, I can tell you without thinking how they interacted with me, how they showed up to meetings, how intently they listened to me, how they made me feel during good times and bad, how seriously they took my asks. And so being a great investor is part therapy. It's part advisor. I find that many of the entrepreneurs know the right answer. They just need someone to talk to. And so when I look at what we're doing at Velvet Sea Ventures, I don't judge Velvet Sea by the total assets we have under management. Even though we're happy with what we have, I care much more about how we show up, h…

AI assessment note: “I really don't remember what they did. However, I can tell you without thinking how they interacted”

Q Listen, the joy of editing, my friend. Tell me, what is the favorite book, and why do I have to read it?

A My favorite book by By far, not even close, is Viktor Frankl's Man's Search for Meaning. It was a book that I've read many times. I've given it away to many of your listeners. You know, it captures Viktor's years as a prisoner in Nazi concentration camps during World War II, and it's really about the most important part of being human, which is identifying your purpose, identifying something that gives you purpose no matter how miserable the circumstances are. Something to feel positive about, something to immerse yourself into, and it's just been an inspiration for me. I don't have any right here at my desk. In New York City, next to my desk, I have just a stack of these, and when I think someone needs it, I send it to them.

AI assessment note: “My favorite book by By far, not even close, is Viktor Frankl's Man's Search”

Q Listen, the joy of editing, my friend. Tell me, what is the favorite book, and why do I have to read it?

A My favorite book by By far, not even close, is Viktor Frankl's Man's Search for Meaning. It was a book that I've read many times. I've given it away to many of your listeners. You know, it captures Viktor's years as a prisoner in Nazi concentration camps during World War II, and it's really about the most important part of being human, which is identifying your purpose, identifying something that gives you purpose no matter how miserable the circumstances are. Something to feel positive about, something to immerse yourself into, and it's just been an inspiration for me. I don't have any right here at my desk. In New York City, next to my desk, I have just a stack of these, and when I think someone needs it, I send it to them.

AI assessment note: “My favorite book by By far, not even close, is Viktor Frankl's Man's Search for Meaning.”

Q I do have to ask though, Mike, which is like, you've seen just the most incredible changes in financial markets, and one being the dot-com era, and the boom and the bust. And so Nick Mater, our mutual friend, asked, how did the dot-com era fundamentally impact your approach to business and investing in the companies that you do today?

A Great question. I've been working on tech startups since 1993 1994 so i'm coming up on 30 years and you know it's hard to understand cycles without either living through them or working in crypto for three months you understand kind of ups and downs and so on friday was april 14th i'll never forget this date 2000 the nasdaq which is where all the tech companies were fell nine percent and it ended a week in which it lost i think 20 25, 30% of its value. I was 25, newly married, a new house, millions of dollars of stock in a company that I'd taken public. So you wire had merged with student advantage that lost 80% of its value. So here I was a young guy on paper seemed to be worth a lot and now not really worth a lot. And so I learned a few lessons the hard way. And I think those lessons still drive me today, both as an entrepreneur And as an investor, you know, as I think about it, raise more money than you think you're going to need. As an entrepreneur, figure out how much you need to execute your plan, and then raise two times that number, one and a half times that number. It almost always takes more money and more time than you think. Because you're an entrepreneur, like me, you're eternally optimistic, and so just make sure there's some padding. Two is fundamentals matter. No matter how hot your company is, it'll eventually be valued based on fundamentals. So sales, profits,…

AI assessment note: “those lessons still drive me today, both as an entrepreneur And as an investor”

Q I'm totally with you on that. You mentioned Jeff Richards earlier. I spoke to Jeff before the show, and he in particular wanted to ask, when you think about now investing full-time and the lessons learned moving to venture full-time, in particular, you've had some early home runs. You've had some that haven't worked. If we take the home runs first, What have you learned from your early home runs?

A So the early home runs, you know, both investing out of our own balance sheet and now Velvet Sea Ventures really boiled down to three things that I think we all know, but we forget often. One team, obviously it's always about the people. Does a team have a track record of winning? Is the team the right team to tackle the problem they are addressing? You know, winners win. And I see it again and again, you know, winners figure it out. And so it starts with that because even though we're entrepreneurs, we don't want to run the company. You know, we want to support the company. We want to be called when there are big issues that the founder wants to work through, but you know, they're the ones who are building the business. Second one is market. It's hard to change pilots mid-flight. It's even harder to change the market you're operating in. Basically, will the market be large enough to support several massive growth companies? I've never seen a large company emerge in a tiny market, and so the market is so critical. And then the third is just networks matter. It takes a village to grow these Businesses, no matter what the company is, you need to have people around the table, and so I look at the companies that really have hit it out of the park with Velvet Sea, and, you know, it's Walter Driver at Scopely, and, you know, Yoni at eToro, and Dan Separley at Leo Labs. Those are peop…

AI assessment note: “really boiled down to three things that I think we all know, but we forget”

Q ever that, you know, when we mentioned the incredible names of the mutual friends we have in venture before, before when you were personal investing, you were collaborative, two 50 to a million, they can bring you into rounds, you can bring them in. Now, in many ways, you could be competitive. How do you think about that move from collaborator to competitor, and how do you get around that?

A So that was one of my big fears, and so the way we've gotten around it is being who we are, Which by nature is collaborative. If we don't have sharp elbows optimized for the longterm and not any deal, there's not one deal, which, you know, we're going to go to the mat and say, we need the whole allocation. We need this, this, this. As soon as we start talking about like, we need, we're done. Like, it's not about us. It's about the entrepreneur. Most of the terms are pretty standard these days. So we don't even have to negotiate that many terms. And so I just look at what we have to date. And, you know, if I look at, you know, A company that I helped seed way back when, Scopely, you know, he didn't have to open up allocation for Velvet Sea, and a few rounds ago, we got a really big allocation, because we've, I think, been helpful. I look at Sutra, which is a startup in the fitness space, and that's one I collaborated with Jeff Richards on, right? I look at Leo Labs that I just spoke about. I sent it to Devin Parekh, one of my idols in the investing world, who is also on our board, and we co-led it together. And so we keep our funds relatively small. We have iconic business builders, you know, our investors and LPs. There's plenty of money to go around. More and more LPs are saying that, you know, venture actually is an asset class and let's shift more dollars to it. And so it's …

AI assessment note: “the way we've gotten around it is being who we are, Which by nature is collaborative”

Q we chatted before about this and you said a brilliant statement, which is having sex with my co-founder is a feature, not a bug. I never expected to say that on the show. So that's a first for me. Why do you think working with your wife as you do is such a superpower? Because as we know, most VCs go, ah, husband and wife team, and suddenly get scared.

A You know, Cass is a special person, and so she's intuitive, she's empathetic, she's compassionate, and she has an ability to sense things which, which I can't. And so we have a partnership that I think is the greatest founder partnership that I could ever have, which is we do exactly different things. I'm much more like sales, external, you know, for our companies, raise money, And she's much more internally focused. And so although we're partners, we don't overlap. We have complete trust. And when you start a company with the co-founder, usually you're not married to them. You know, there've been great results from married co-founders. You basically are getting married. I mean, you're spending more time with your co-founder than you are with your spouse and any two thinking people who are smart and thoughtful are going to have disagreements and how you work through those disagreements. How you emerge stronger is really important, and so when we have, you know, we have three kids and three dogs, and we've done all these companies, and now this fund, we know how to make decisions, we know have disagreements, and we know how to, you know, go to bed not upset with each other, which is key.

AI assessment note: “we know how to make decisions, we know have disagreements”

Q I'm totally with you on that. You mentioned Jeff Richards earlier. I spoke to Jeff before the show, and he in particular wanted to ask, when you think about now investing full-time and the lessons learned moving to venture full-time, in particular, you've had some early home runs. You've had some that haven't worked. If we take the home runs first, What have you learned from your early home runs?

A So the early home runs, you know, both investing out of our own balance sheet and now Velvet Sea Ventures really boiled down to three things that I think we all know, but we forget often. One team, obviously it's always about the people. Does a team have a track record of winning? Is the team the right team to tackle the problem they are addressing? You know, winners win. And I see it again and again, you know, winners figure it out. And so it starts with that because even though we're entrepreneurs, we don't want to run the company. You know, we want to support the company. We want to be called when there are big issues that the founder wants to work through, but you know, they're the ones who are building the business. Second one is market. It's hard to change pilots mid-flight. It's even harder to change the market you're operating in. Basically, will the market be large enough to support several massive growth companies? I've never seen a large company emerge in a tiny market, and so the market is so critical. And then the third is just networks matter. It takes a village to grow these Businesses, no matter what the company is, you need to have people around the table, and so I look at the companies that really have hit it out of the park with Velvet Sea, and, you know, it's Walter Driver at Scopely, and, you know, Yoni at eToro, and Dan Separley at Leo Labs. Those are peop…

AI assessment note: “really boiled down to three things that I think we all know, but we forget often”

Q they were, and what a terrible employee they were, and I was like, oh no, and I took that very seriously, and I didn't make the investment. Six million pre, now it's like eight billion, or whatever it is. That was my biggest miss, and now I've changed my process a lot. When you think back to your biggest miss, what was that, and how did it change your process?

A So, my biggest misses were really as a personal investor, you know, sitting in a hotel room in 2011 with Kevin Systrom and Travis from Uber and, you know, having the opportunity, but not raising my hand and saying like, hey, I'd love to invest, right? I think my biggest mistakes as a venture investor has involved selling too early. And so when you're investing your own money, you know, you kind of want to recycle capital. And I look at some of the deals in which we took money off the table. It's like, oh, that was a mistake. You know, I was concentrated in sales forces. I sold some of that. I have companies that I seeded that I took money off the tape. You know, one of them, you know, Braze is going public. I helped get that company going. Miles was one of my top partners at Buddy Media. Incredible company, right? And so what I've learned, which I wish I knew at the beginning of venture, is just hold on and keep investing in the great ones. And that's what Velvet Sea is all about. It's all about like, oh, you're raising another round. We're putting in more, right? Like we put fifteen million dollars more into Leo Labs. Cause he's doing such a great job creating the data service that makes sure that satellites don't crash into like nuts and bolts. And so it's like he invited us in cause we'd been so helpful, right? I'm not selling Leo labs maybe ever, right?

AI assessment note: “what I've learned, which I wish I knew at the beginning of venture, is just hold on”

Q Totally get you. Can I ask, you mentioned there about retiring. Why did it not work, and what did you learn about yourself from that time?

A So I, you know, I loved painting. I got a studio. I was, yeah, a little burned out traveling the world. Frankly, Salesforce is an incredible company. I was working, you know, probably harder at Salesforce than I was at, uh, Buddy Media, and I was working really hard at Buddy Media. You know, traveling all over the world and Dreamforce, and you know, it's always on. So when I left, I just wanted to take a little Time. And what I realized is that hobbies are things that you love, but you're not. And so I found myself just getting frustrated, trying to be an artist and gravitating back to what I love, which is entrepreneurs and tech. And very soon we started ramping up our investing activities and took a little time to understand that it's just what we do. So what we do is venture and it's a part of who we are. It's our It's our friend group, it's our support group, it's our love, and we feel so lucky to be able to do it for a living. I mean, the fact that we get to learn about new companies, meet entrepreneurs, and make money in the process, we're so lucky in so many ways.

AI assessment note: “what I realized is that hobbies are things that you love, but you're not”

Q know, scale in the early days and make mistakes, and I'm sure you have it with the portfolio to say where you know they're going wrong, but you can't cross the line of operator. And so I guess my question is, how do you think about a guardrail to keep up versus a guardrail to remove and let them learn? On either side, as a father or as a founder.

A So it's much easier with founders, and the reason I say that is we have experience doing what they did. We can share our ideas. If they listen, great. If they don't, great, right? We don't want to run the companies. We love entrepreneurs. If the entrepreneur isn't happy, if they're not feeling supported, if they're not comfortable, they're never going to succeed, and so we do not have a heavy hand, and you know, the second that we come in with guardrails, With any sort of parental-type heavy hand, it kills the relationship. I didn't like it when entrepreneurs, when investors tried it with us. Having said that, I love robust conversation, disagreement. Our board meetings were a combination at Buddy Media and WWE and Hugfest. Yeah, we had strong opinions on our board. We had Eric Hippo and Ian Sigalo from Graycroft and Jeff Richards and Karen Klein. These are big brains. Big personalities. And we just went at it, and then we all hugged at the end and moved on. And so kids, I can't say I have experience as parents. This is our first time, right? Your kids, the default position is you're wrong. Founders, the default position is maybe you're right. Founders respect you. Your kids are like, you're embarrassing me. You're goofy. You make weird sounds. I don't want you to see my friends, right?

AI assessment note: “the second that we come in with guardrails, With any sort of parental-type heavy hand”

Q I guess I'm really digging here at, like, what do you advise founders to get the most out of their board? Is it the board prep? Is it the communication that they do? Is it the Appointedness is the questions they ask. What do you advise founders to get the best out of their board?

A Communicate clearly. Communicate regularly. Communicate the wins. Communicate all of the shit sandwiches that are going on. There's not one company that doesn't have just stuff blowing up every day. Let's just say great venture investors have no problem with bad news. Our day is loaded with bad news. We have a huge problem with surprises. Don't tell me your rate. You're going to run out of money next month. Don't tell me after the fact, like three months that you lost the biggest customer. Share all of the good news, the bad news, not in a way that you're trying to paint it a certain way. And typically it comes in like, here are the wins and here's what I'm worried about. We've lost these customers. We lost these employees. Our net promoter scores down 20%, whatever it is, right? We didn't hit our revenue numbers. It also feels good because bad news is Eat you inside. If you don't get it out, if you don't share it with someone, it will just stack on top of each other, like really heavy books you don't want to read, and then eventually fall over, and either create disastrous effects for the business, or disastrous effects for your health. You know, founder depression is really a big issue, and a lot of it is because of the gap between what they think the expectations are, and the reality of their situation.

AI assessment note: “Communicate clearly. Communicate regularly. Communicate the wins. Communicate all of the shit sandwiches”

Q we chatted before about this and you said a brilliant statement, which is having sex with my co-founder is a feature, not a bug. I never expected to say that on the show. So that's a first for me. Why do you think working with your wife as you do is such a superpower? Because as we know, most VCs go, ah, husband and wife team, and suddenly get scared.

A You know, Cass is a special person, and so she's intuitive, she's empathetic, she's compassionate, and she has an ability to sense things which, which I can't. And so we have a partnership that I think is the greatest founder partnership that I could ever have, which is we do exactly different things. I'm much more like sales, external, you know, for our companies, raise money, And she's much more internally focused. And so although we're partners, we don't overlap. We have complete trust. And when you start a company with the co-founder, usually you're not married to them. You know, there've been great results from married co-founders. You basically are getting married. I mean, you're spending more time with your co-founder than you are with your spouse and any two thinking people who are smart and thoughtful are going to have disagreements and how you work through those disagreements. How you emerge stronger is really important, and so when we have, you know, we have three kids and three dogs, and we've done all these companies, and now this fund, we know how to make decisions, we know have disagreements, and we know how to, you know, go to bed not upset with each other, which is key.

AI assessment note: “we do exactly different things... We have complete trust.”

Q I want to start on really kind of the aspects of the art of venture, because I always think it's like a craft. And you said before, how you operate as an investor is more important than what you do or what you've done. I thought this was a really intriguing one. What did you mean by that statement?

A Well, I think what I meant is that money in today's market is fungible. You can get it anywhere. Experience and reputation are not. So in venture, if you look at the great returns, Experience and reputation drive results for the funds, and entrepreneurs want to work with experienced and great investors of great track records and great reputations, and so as a serial entrepreneur and now investor, I've had the benefit of knowing so many great investors, and I felt what it's like to work with the most respected investors, and so when I sit here today, it's hard for me to tell you all the specific things Roger Ehrenberg did, Karen Klein, Howard Lindzen, Ian Siglo, Jeff Richards, Jules Maltz, you know, many others did to help me as investors in Buddy Media. I really don't remember what they did. However, I can tell you without thinking how they interacted with me, how they showed up to meetings, how intently they listened to me, how they made me feel during good times and bad, how seriously they took my asks. And so being a great investor is part therapy. It's part advisor. I find that many of the entrepreneurs know the right answer. They just need someone to talk to. And so when I look at what we're doing at Velvet Sea Ventures, I don't judge Velvet Sea by the total assets we have under management. Even though we're happy with what we have, I care much more about how we show up, h…

AI assessment note: “I think what I meant is that money in today's market is fungible.”

Q we chatted before about this and you said a brilliant statement, which is having sex with my co-founder is a feature, not a bug. I never expected to say that on the show. So that's a first for me. Why do you think working with your wife as you do is such a superpower? Because as we know, most VCs go, ah, husband and wife team, and suddenly get scared.

A You know, Cass is a special person, and so she's intuitive, she's empathetic, she's compassionate, and she has an ability to sense things which, which I can't. And so we have a partnership that I think is the greatest founder partnership that I could ever have, which is we do exactly different things. I'm much more like sales, external, you know, for our companies, raise money, And she's much more internally focused. And so although we're partners, we don't overlap. We have complete trust. And when you start a company with the co-founder, usually you're not married to them. You know, there've been great results from married co-founders. You basically are getting married. I mean, you're spending more time with your co-founder than you are with your spouse and any two thinking people who are smart and thoughtful are going to have disagreements and how you work through those disagreements. How you emerge stronger is really important, and so when we have, you know, we have three kids and three dogs, and we've done all these companies, and now this fund, we know how to make decisions, we know have disagreements, and we know how to, you know, go to bed not upset with each other, which is key.

AI assessment note: “we do exactly different things. I'm much more like sales... We have complete trust.”

Q Totally get you. Can I ask, you mentioned there about retiring. Why did it not work, and what did you learn about yourself from that time?

A So I, you know, I loved painting. I got a studio. I was, yeah, a little burned out traveling the world. Frankly, Salesforce is an incredible company. I was working, you know, probably harder at Salesforce than I was at, uh, Buddy Media, and I was working really hard at Buddy Media. You know, traveling all over the world and Dreamforce, and you know, it's always on. So when I left, I just wanted to take a little Time. And what I realized is that hobbies are things that you love, but you're not. And so I found myself just getting frustrated, trying to be an artist and gravitating back to what I love, which is entrepreneurs and tech. And very soon we started ramping up our investing activities and took a little time to understand that it's just what we do. So what we do is venture and it's a part of who we are. It's our It's our friend group, it's our support group, it's our love, and we feel so lucky to be able to do it for a living. I mean, the fact that we get to learn about new companies, meet entrepreneurs, and make money in the process, we're so lucky in so many ways.

AI assessment note: “what I realized is that hobbies are things that you love, but you're not.”

Q know, scale in the early days and make mistakes, and I'm sure you have it with the portfolio to say where you know they're going wrong, but you can't cross the line of operator. And so I guess my question is, how do you think about a guardrail to keep up versus a guardrail to remove and let them learn? On either side, as a father or as a founder.

A So it's much easier with founders, and the reason I say that is we have experience doing what they did. We can share our ideas. If they listen, great. If they don't, great, right? We don't want to run the companies. We love entrepreneurs. If the entrepreneur isn't happy, if they're not feeling supported, if they're not comfortable, they're never going to succeed, and so we do not have a heavy hand, and you know, the second that we come in with guardrails, With any sort of parental-type heavy hand, it kills the relationship. I didn't like it when entrepreneurs, when investors tried it with us. Having said that, I love robust conversation, disagreement. Our board meetings were a combination at Buddy Media and WWE and Hugfest. Yeah, we had strong opinions on our board. We had Eric Hippo and Ian Sigalo from Graycroft and Jeff Richards and Karen Klein. These are big brains. Big personalities. And we just went at it, and then we all hugged at the end and moved on. And so kids, I can't say I have experience as parents. This is our first time, right? Your kids, the default position is you're wrong. Founders, the default position is maybe you're right. Founders respect you. Your kids are like, you're embarrassing me. You're goofy. You make weird sounds. I don't want you to see my friends, right?

AI assessment note: “the second that we come in with guardrails, With any sort of parental-type heavy hand”