The Exchanges

Q What's the morning routine for you? Is there any ritual preparation maybe the night before?

A Yeah, it's pretty boring, but the reality is I'm getting old. Uh, so I wake up about six o'clock. Um, I probably read for 30 to 45 minutes Think current events, technology, news, politics, sports, those type of things. Then I spend probably another half hour, uh, just before the kids are getting up, really getting caught up with email and candidly dealing with the top priorities that probably kept me up from the night before. Um, and so that way when I get to work after I drop off my kids about eight 38 45, I feel like I'm not behind. So really those 60 to 90 minutes when I wake up kind of get me set for the day.

AI assessment note: “I wake up about six o'clock. Um, I probably read for 30 to 45 minutes”

Q So for an emerging community like LA, what's first then? Is it the investors or is it the high quality startups?

A I believe that, you know, there's plenty of capital out there, locally, nationally, and globally, and they're starving for great ideas and great entrepreneurs building great businesses, so the capital will find the great businesses, and you can just look at LA, there are very few top-fifty venture funds that don't have an investment in Southern California today. Some of the top investors, historically, whether it's Kleiner Perkins, or whether it's Benchmark, or Sequoia, They all have multiple Los Angeles based companies in their portfolio. Um, so I don't think, I think the capital will find the great businesses. I think we are just now getting the great entrepreneurs who may have been doing things in different categories or market segments to think about technology related businesses in Southern California.

AI assessment note: “the capital will find the great businesses”

Q What's the morning routine for you? Is there any ritual preparation maybe the night before?

A Yeah, it's pretty boring, but the reality is I'm getting old. Uh, so I wake up about six o'clock. Um, I probably read for 30 to 45 minutes Think current events, technology, news, politics, sports, those type of things. Then I spend probably another half hour, uh, just before the kids are getting up, really getting caught up with email and candidly dealing with the top priorities that probably kept me up from the night before. Um, and so that way when I get to work after I drop off my kids about eight 38 45, I feel like I'm not behind. So really those 60 to 90 minutes when I wake up kind of get me set for the day.

AI assessment note: “so I wake up about six o'clock. Um, I probably read for 30 to 45 minutes”

Q Now, I'd love to get started today with a bit about you and how you came to be a partner and upfront. So how did you come to be in this position?

A Uh, yeah, I have a pretty unconventional track record to be in venture capital. I think two things I'm most proud of. I'm pretty sure I'm the I'm the only current or former chief marketing officer who is also an investor. And I know I'm the only person who ever used to work at a horse racing track. Uh, and so I have a very different way that I got here and it actually drives a lot of my decision making and the type of entrepreneurs I look to support. But the real story is I moved down here back into Los Angeles in 2008 after spending a lot of time at eBay. Up in the Bay Area and eventually became the chief marketing officer at a business called Haute Look, which is a fashion e-commerce business that we, we sold very successfully to Nordstrom in 2011. And the truth is I was only a couple of years into my vesting schedule when that acquisition. And so I continued to work at Nordstrom, but also had done pretty well through the exit, um, and started doing some angel investing in Southern California companies and can only national companies. I was a co-founder of an accelerator here in Los Angeles called Mucker Lab with a couple of fellow eBay colleagues, uh, that I worked with and really spent time getting to know what was going on here in Los Angeles, which I'm sure we'll talk about later. And during that process, really in 2013 or so, I got to know the, what was then GRP Partners…

AI assessment note: “I got to know the, what was then GRP Partners, which is now Upfront Ventures”

Q And with this kind of, um, very physical retail discussion, I'd love to hear what your takeaways were then from your time with Nordstrom and that acquisition. What did you learn about the kind of consumer market?

A Oh, yeah. So I learned a tremendous about, as much about the consumer themselves, but I learned a lot about brand loyalty. Um, there's always, there's always great stories about Nordstrom, how they were, they had the best return policy anywhere. Um, and that you could return shoes that were worn for three years and bring them back and get your money back. And, and a lot of the stuff that was actually was mostly folklore, um, where they didn't actually do everything they said, but the perception of the brand was that of great customer service and the importance of that and the value that to the company, um, I really underestimated. So just the, the earned customer loyalty and really what lifetime value literally means as in my mother shops that has shopped at Nordstrom for 50 years or 40 years. Um, so I think that was important. Scale was another thing I learned. I mean, when I was at Haute Look, you know, we would do, we got to a point where we were doing, say, twenty-five million dollars a month of sales before I left. Um, and we had started, we were doing a million a month, so we had huge growth, but Nordstrom's was doing ten billion dollars a year, right? And just the sheer enormity of having a stores business, um, an online business, and then their, their acquired businesses like Haute Look, So just, just the understanding of what it takes in an organization to truly scale,…

AI assessment note: “I learned a lot about brand loyalty... Scale was another thing I learned.”

Q And then what online brand have you been most impressed with in recent years?

A Yeah. So I talked about Dollar Shave Club, which is an example of an LA company before, but I think what Michael, um, has done around building a brand organically in a very fun and innovative way, starting with that great video. And then most recently is television commercials and new product launches and everything in between. I love brands that are really disrupting the legacy provider. So in Los Angeles, for example, we have another company called Honest Company that's done a very good job building brand. They're both attacking the same company, which is Procter & Gamble, and you can see them responding by doing what big companies do, you know, creating grassroots, quote-unquote grassroots marketing efforts, challenging the claims of, of these innovative brands. You see them actually trying to do their own scientific research about the quality of the products. Um, you see this dispersement of these brands, and so I think you know you're, you know it's working when that's where the legacy providers, uh, react. So I think those, those are, A couple examples of very special brands that are in my backyard that I'm very proud of.

AI assessment note: “I talked about Dollar Shave Club... we have another company called Honest Company”

Q So for an emerging community like LA, what's first then? Is it the investors or is it the high quality startups?

A I believe that, you know, there's plenty of capital out there, locally, nationally, and globally, and they're starving for great ideas and great entrepreneurs building great businesses, so the capital will find the great businesses, and you can just look at LA, there are very few top-fifty venture funds that don't have an investment in Southern California today. Some of the top investors, historically, whether it's Kleiner Perkins, or whether it's Benchmark, or Sequoia, They all have multiple Los Angeles based companies in their portfolio. Um, so I don't think, I think the capital will find the great businesses. I think we are just now getting the great entrepreneurs who may have been doing things in different categories or market segments to think about technology related businesses in Southern California.

AI assessment note: “the capital will find the great businesses”

Q Now, I'd love to get started today with a bit about you and how you came to be a partner and upfront. So how did you come to be in this position?

A Uh, yeah, I have a pretty unconventional track record to be in venture capital. I think two things I'm most proud of. I'm pretty sure I'm the I'm the only current or former chief marketing officer who is also an investor. And I know I'm the only person who ever used to work at a horse racing track. Uh, and so I have a very different way that I got here and it actually drives a lot of my decision making and the type of entrepreneurs I look to support. But the real story is I moved down here back into Los Angeles in 2008 after spending a lot of time at eBay. Up in the Bay Area and eventually became the chief marketing officer at a business called Haute Look, which is a fashion e-commerce business that we, we sold very successfully to Nordstrom in 2011. And the truth is I was only a couple of years into my vesting schedule when that acquisition. And so I continued to work at Nordstrom, but also had done pretty well through the exit, um, and started doing some angel investing in Southern California companies and can only national companies. I was a co-founder of an accelerator here in Los Angeles called Mucker Lab with a couple of fellow eBay colleagues, uh, that I worked with and really spent time getting to know what was going on here in Los Angeles, which I'm sure we'll talk about later. And during that process, really in 2013 or so, I got to know the, what was then GRP Partners…

AI assessment note: “I got to know the, what was then GRP Partners, which is now Upfront Ventures”

Q And then what online brand have you been most impressed with in recent years?

A Yeah. So I talked about Dollar Shave Club, which is an example of an LA company before, but I think what Michael, um, has done around building a brand organically in a very fun and innovative way, starting with that great video. And then most recently is television commercials and new product launches and everything in between. I love brands that are really disrupting the legacy provider. So in Los Angeles, for example, we have another company called Honest Company that's done a very good job building brand. They're both attacking the same company, which is Procter & Gamble, and you can see them responding by doing what big companies do, you know, creating grassroots, quote-unquote grassroots marketing efforts, challenging the claims of, of these innovative brands. You see them actually trying to do their own scientific research about the quality of the products. Um, you see this dispersement of these brands, and so I think you know you're, you know it's working when that's where the legacy providers, uh, react. So I think those, those are, A couple examples of very special brands that are in my backyard that I'm very proud of.

AI assessment note: “So I talked about Dollar Shave Club”

Q And, you know, you're very sure of your, um, founder assessment and your investing thesis now having been an investor for three, three and a half years. How's that changed then over the years? When you started out, how did you look to go about kind of investment thesis creation?

A Yeah, well, I think a lot of it, I think at the beginning I had some general market thesis about retail innovation and some consumer products categories. What I quickly learned is I'm much better off reacting to strong entrepreneurs who think they can do something with a market versus my own point of view about a certain market. So I think that was kind of, that was a big early driver for the types of companies I'm looking at and entrepreneurs I was seeking out. Now I would say I'm much more reactive to just really responding to quality people with quality ideas versus me saying, hey, I want to do live events, uh, virtual reality, for example. Um, instead of trying to find the company in that space, I'm more likely to wait to find a great entrepreneur who presents an idea like that to me.

AI assessment note: “at the beginning I had some general market thesis... Now I would say I'm much more reactive”

Q Okay, bad example, but you get what I mean. They're kind of online brands, meaning they can pass the costs onto their, they can pass the savings onto their consumers and have lower pricing. Does this mean we'll see an end to the physical high street, do you think?

A No, because I think curation is important. I think the reality is not all brands can afford to distribute product directly at scale to their customers. I believe that similar to like wine, fashion needs someone to tell us What looks good. Um, and maybe it's not going to be so much the department store anymore, but it might be an influencer or something else. But I do think those aggregator brands and styles are important. It's why liquor stores exist to tell us which are the, the, the, the 50 wines we can choose from. I think Nordstrom's role is no different in that, you know, the certain styles and, and types of products that we'd be interested in. So I think it will definitely change. I think you're already seeing Things like private label brands and other things really to drive margin in the stores changing. And the reality is, we talked earlier, there are just very different types of customers now. You have the, the high-end customers. Think of, like, the, the Barneys of the world or Neiman Marcus of the world. I put, I put everything into the world into a department store to kind of identify different customer traits. In the middle, you have, like, a Macy's and a Nordstrom, and on the lower end, you might have a Penny's or a Kohl's. Um, and they all serve different perspectives. Different purposes to different markets.

AI assessment note: “No, because I think curation is important.”

Q So would you, would you say that investor specialization isn't necessarily the optimal strategy to go for?

A Yeah, look, I don't, I think it depends. I think for me, definitely not. But in general, I think the reality is I would, I would take a great team in a very good market over a decent team in a great market. Cause I think at the end of the day, the great end of the day, the great team has a flexibility insight to really move into great markets. Um, and so I think if you narrowly say, Hey, I'm looking for a company that It fits X, Y, and Z. You may force yourself into a decision just because it was the only thing you found, and you might settle for an investment. And I don't think you can ever settle for investments in venture capital.

AI assessment note: “I think it depends. I think for me, definitely not.”

Q And, you know, you're very sure of your, um, founder assessment and your investing thesis now having been an investor for three, three and a half years. How's that changed then over the years? When you started out, how did you look to go about kind of investment thesis creation?

A Yeah, well, I think a lot of it, I think at the beginning I had some general market thesis about retail innovation and some consumer products categories. What I quickly learned is I'm much better off reacting to strong entrepreneurs who think they can do something with a market versus my own point of view about a certain market. So I think that was kind of, that was a big early driver for the types of companies I'm looking at and entrepreneurs I was seeking out. Now I would say I'm much more reactive to just really responding to quality people with quality ideas versus me saying, hey, I want to do live events, uh, virtual reality, for example. Um, instead of trying to find the company in that space, I'm more likely to wait to find a great entrepreneur who presents an idea like that to me.

AI assessment note: “What I quickly learned is I'm much better off reacting to strong entrepreneurs”

Q Okay, bad example, but you get what I mean. They're kind of online brands, meaning they can pass the costs onto their, they can pass the savings onto their consumers and have lower pricing. Does this mean we'll see an end to the physical high street, do you think?

A No, because I think curation is important. I think the reality is not all brands can afford to distribute product directly at scale to their customers. I believe that similar to like wine, fashion needs someone to tell us What looks good. Um, and maybe it's not going to be so much the department store anymore, but it might be an influencer or something else. But I do think those aggregator brands and styles are important. It's why liquor stores exist to tell us which are the, the, the, the 50 wines we can choose from. I think Nordstrom's role is no different in that, you know, the certain styles and, and types of products that we'd be interested in. So I think it will definitely change. I think you're already seeing Things like private label brands and other things really to drive margin in the stores changing. And the reality is, we talked earlier, there are just very different types of customers now. You have the, the high-end customers. Think of, like, the, the Barneys of the world or Neiman Marcus of the world. I put, I put everything into the world into a department store to kind of identify different customer traits. In the middle, you have, like, a Macy's and a Nordstrom, and on the lower end, you might have a Penny's or a Kohl's. Um, and they all serve different perspectives. Different purposes to different markets.

AI assessment note: “No, because I think curation is important.”

Q And do you agree, a recent guest of mine said that with the new millennial generation, there's a lack of brand loyalty. Do you agree with this or do you think there's potentially even more?

A I think there's actually even more. I think it's more of a changing customer, I would say. I don't like to use the term millennial because I think we're all changing the way that we buy, um, and technology is really driving that, but look at, look at using, uh, the Chipotle example here in the U.S. There was a brand incredibly loved, but then incredibly hated within a very short period of time because of a quote-unquote betrayal of, a betrayal of trust around the products and the, that they were selling. Um, in this case, it was the food they were serving. So I think brand or, you know, consumers today are very receptive to think of Apple, think of Lululemon, think of those types of brands, but they have incredible loyalty. I think there may be an appetite to discover more than in the past. Maybe I can find that new artist, find that new fashion brand, find that new type of food. But in general, I think when you do find brands that you love, today's customer will continue to migrate more and more to them. Um, and so again, I think it's, there's definitely, maybe the outcome is more winners. That you really notice and there's less of a middle tier. Um, but I do think brand and brand development is, is more important now, mostly because it just enables you to differentiate in a very crowded market because your ability for anyone to launch new brands is much easier now than it was…

AI assessment note: “I think there's actually even more.”

Q And with this kind of, um, very physical retail discussion, I'd love to hear what your takeaways were then from your time with Nordstrom and that acquisition. What did you learn about the kind of consumer market?

A Oh, yeah. So I learned a tremendous about, as much about the consumer themselves, but I learned a lot about brand loyalty. Um, there's always, there's always great stories about Nordstrom, how they were, they had the best return policy anywhere. Um, and that you could return shoes that were worn for three years and bring them back and get your money back. And, and a lot of the stuff that was actually was mostly folklore, um, where they didn't actually do everything they said, but the perception of the brand was that of great customer service and the importance of that and the value that to the company, um, I really underestimated. So just the, the earned customer loyalty and really what lifetime value literally means as in my mother shops that has shopped at Nordstrom for 50 years or 40 years. Um, so I think that was important. Scale was another thing I learned. I mean, when I was at Haute Look, you know, we would do, we got to a point where we were doing, say, twenty-five million dollars a month of sales before I left. Um, and we had started, we were doing a million a month, so we had huge growth, but Nordstrom's was doing ten billion dollars a year, right? And just the sheer enormity of having a stores business, um, an online business, and then their, their acquired businesses like Haute Look, So just, just the understanding of what it takes in an organization to truly scale,…

AI assessment note: “I learned a tremendous about, as much about the consumer themselves, but I learned”

Q And do you agree, a recent guest of mine said that with the new millennial generation, there's a lack of brand loyalty. Do you agree with this or do you think there's potentially even more?

A I think there's actually even more. I think it's more of a changing customer, I would say. I don't like to use the term millennial because I think we're all changing the way that we buy, um, and technology is really driving that, but look at, look at using, uh, the Chipotle example here in the U.S. There was a brand incredibly loved, but then incredibly hated within a very short period of time because of a quote-unquote betrayal of, a betrayal of trust around the products and the, that they were selling. Um, in this case, it was the food they were serving. So I think brand or, you know, consumers today are very receptive to think of Apple, think of Lululemon, think of those types of brands, but they have incredible loyalty. I think there may be an appetite to discover more than in the past. Maybe I can find that new artist, find that new fashion brand, find that new type of food. But in general, I think when you do find brands that you love, today's customer will continue to migrate more and more to them. Um, and so again, I think it's, there's definitely, maybe the outcome is more winners. That you really notice and there's less of a middle tier. Um, but I do think brand and brand development is, is more important now, mostly because it just enables you to differentiate in a very crowded market because your ability for anyone to launch new brands is much easier now than it was…

AI assessment note: “I think there's actually even more. I think it's more of a changing customer”

Q And as you said, unorthodox start there. So I have to, so I have to ask, what do you think that unorthodox start Gave you in terms of affecting your decision-making process as an investor?

A Yeah, so I really, uh, the term I use is, is grit, um, or moxie. I think those are two terms that I really look for in entrepreneurs, because I think I was always that. I grew up in a small town. I was supposed to be a dairyman or, you know, much more of a different type, but I didn't, I thought VCs were the Viet Cong. I didn't know what a venture, I didn't know what a venture capitalist was until I was You know, and eBay when I was 32, I think. Um, and so I just kind of, if you really look at those entrepreneurs, um, that have built great companies, obviously there's a lot of people who went to Harvard, and Yale, and Stanford, but I think really the interesting ones, or the ones that I think I like to follow and spend time with, have a different kind of element. You know, they had some, I don't want to say that hardship, but they overcame something, they were underdog, they really took advantage, and you'll hear me say this a lot, of their own unfair advantage. And I kind of think that we're the type of firm, actually, that Mark Suster and other partners have similar backgrounds, is I really respond to those type of entrepreneurs, those people who, who, who notice something, notice an opportunity, and really try and parlay that into a large business success, and so I tend to have filters around those type of entrepreneurs, um, versus what I call more of the silver spoon entrep…

AI assessment note: “the term I use is, is grit, um, or moxie... I really look for in entrepreneurs”

Q So would you, would you say that investor specialization isn't necessarily the optimal strategy to go for?

A Yeah, look, I don't, I think it depends. I think for me, definitely not. But in general, I think the reality is I would, I would take a great team in a very good market over a decent team in a great market. Cause I think at the end of the day, the great end of the day, the great team has a flexibility insight to really move into great markets. Um, and so I think if you narrowly say, Hey, I'm looking for a company that It fits X, Y, and Z. You may force yourself into a decision just because it was the only thing you found, and you might settle for an investment. And I don't think you can ever settle for investments in venture capital.

AI assessment note: “I think it depends. I think for me, definitely not.”

Q Is brand enough of IP for you guys to invest? Is that, you know, a very meaningful, tangible ownership stake that someone has over someone else?

A Yeah, I would say it's one of a handful of Um, I think if you look at, especially like direct to consumer type of brands, I think we, my formula is a very large market opportunity that doesn't have multiple brand participants that can play in, let's say high margin categories that have reoccurring purchasing characteristics. Meaning this idea of I can build a direct to consumer brand in categories that have this, but the most important part of it all is you have a founder and Or a team that has some sort of unfair advantage and perspective in that category. And brand development might be one of those. I think we'll talk, I think a brand like Dollar Shave Club is an example of that where, you know, you wouldn't think that a brand could be developed in and around something owned by Procter & Gamble via Gillette. But I think through some innovation, through a founder with a unique perspective, they're able to separate through the clutter and actually build something pretty powerful in a very short period of time.

AI assessment note: “Yeah, I would say it's one of a handful of”

Q And as you said, unorthodox start there. So I have to, so I have to ask, what do you think that unorthodox start Gave you in terms of affecting your decision-making process as an investor?

A Yeah, so I really, uh, the term I use is, is grit, um, or moxie. I think those are two terms that I really look for in entrepreneurs, because I think I was always that. I grew up in a small town. I was supposed to be a dairyman or, you know, much more of a different type, but I didn't, I thought VCs were the Viet Cong. I didn't know what a venture, I didn't know what a venture capitalist was until I was You know, and eBay when I was 32, I think. Um, and so I just kind of, if you really look at those entrepreneurs, um, that have built great companies, obviously there's a lot of people who went to Harvard, and Yale, and Stanford, but I think really the interesting ones, or the ones that I think I like to follow and spend time with, have a different kind of element. You know, they had some, I don't want to say that hardship, but they overcame something, they were underdog, they really took advantage, and you'll hear me say this a lot, of their own unfair advantage. And I kind of think that we're the type of firm, actually, that Mark Suster and other partners have similar backgrounds, is I really respond to those type of entrepreneurs, those people who, who, who notice something, notice an opportunity, and really try and parlay that into a large business success, and so I tend to have filters around those type of entrepreneurs, um, versus what I call more of the silver spoon entrep…

AI assessment note: “I tend to have filters around those type of entrepreneurs”

Q And is that grit always kind of inherently obvious, or how do you look to expose that in the initial meetings?

A Uh, well, I think you can really talk about, there are things that I try, I have filters that I put on, you know, things like name droppers, those people who over, over exaggerate their titles and the work they've done. You know, when a They ran a hundred million dollar budget for Pepsi Cola or something. I just find that very hard to believe. And so I think a lot of people may try and oversell themselves. Um, you can also drive it around, you know, when people really give credit to their other team members or credits to their bosses for putting them in positions to succeed, there are just some elements of what people say and how they say it, as well as how they define the market opportunity they're going after. You know, those people who really pitch a one trillion dollar Dollar market or something like that versus having realistic expectations about the products or service they can offer. I kind of use those. And then, you know, back to, I use the term unfair advantage. Like, what is this person or this team? What's their unique advantage they have to conquer and develop a market? And so I kind of tie all those together.

AI assessment note: “I have filters that I put on, you know, things like name droppers”

Q Is brand enough of IP for you guys to invest? Is that, you know, a very meaningful, tangible ownership stake that someone has over someone else?

A Yeah, I would say it's one of a handful of Um, I think if you look at, especially like direct to consumer type of brands, I think we, my formula is a very large market opportunity that doesn't have multiple brand participants that can play in, let's say high margin categories that have reoccurring purchasing characteristics. Meaning this idea of I can build a direct to consumer brand in categories that have this, but the most important part of it all is you have a founder and Or a team that has some sort of unfair advantage and perspective in that category. And brand development might be one of those. I think we'll talk, I think a brand like Dollar Shave Club is an example of that where, you know, you wouldn't think that a brand could be developed in and around something owned by Procter & Gamble via Gillette. But I think through some innovation, through a founder with a unique perspective, they're able to separate through the clutter and actually build something pretty powerful in a very short period of time.

AI assessment note: “Yeah, I would say it's one of a handful of”

Q And is that grit always kind of inherently obvious, or how do you look to expose that in the initial meetings?

A Uh, well, I think you can really talk about, there are things that I try, I have filters that I put on, you know, things like name droppers, those people who over, over exaggerate their titles and the work they've done. You know, when a They ran a hundred million dollar budget for Pepsi Cola or something. I just find that very hard to believe. And so I think a lot of people may try and oversell themselves. Um, you can also drive it around, you know, when people really give credit to their other team members or credits to their bosses for putting them in positions to succeed, there are just some elements of what people say and how they say it, as well as how they define the market opportunity they're going after. You know, those people who really pitch a one trillion dollar Dollar market or something like that versus having realistic expectations about the products or service they can offer. I kind of use those. And then, you know, back to, I use the term unfair advantage. Like, what is this person or this team? What's their unique advantage they have to conquer and develop a market? And so I kind of tie all those together.

AI assessment note: “I have filters that I put on, you know, things like name droppers”