The Exchanges

Q because, you know, there's a lot of firms that kind of say, you know, kind of the fluffy words, founder first, you know, this and that, and, um, it's all in, um, you know, good faith, uh, what have you, um, but you're so authentic about it. So, um, Like, how did you get into entrepreneurship? How did you stumble into this? What, what created this, um, passion within you?

A I think it's not something I really chose. I don't even think it happened. I best guess I have is it's actually like some sort of DNA type thing. You probably share it. Um, my story is I'm a middle-class kid from, you know, West Covina, Los Angeles, outskirts of nowhere. And I've been a lifelong entrepreneur. I didn't come. There's no, a lot of, not a lot of other entrepreneurs in my family. I didn't, wasn't taught, but I was selling baseball cards in elementary, Canyon junior high computers to graduate seniors high school. I'm sure there's a lot of people listening to this who have a similar story. Uh, I tried to start five companies in college, no idea what I was doing. I did my undergrad at Duke and the school has become very entrepreneurial since then. But at the time, one of two entrepreneurs on campus and I badly needed mentorship and didn't get it. Uh, came out, knew I needed to, you know, learn real business skills. Uh, did a lab through consulting at Bain, and then, uh, doing diligence and M&A transactions at KPMG. Did my MBA at Columbia, and then about 16 years ago, was fortunate enough to land in a venture capital job. Um, had some really great mentors. Uh, learned and taught a lot about the business, and then 10 years, uh, thought it was time to go out on my own and, uh, set up Interplay.

AI assessment note: “I've been a lifelong entrepreneur... selling baseball cards in elementary”

Q So you got a lot going on. Um, what's your favorite part of the, the whole ecosystem? I guess that's kind of like asking what your favorite kid is, but like, um, it totally is. Well, what part gets you most fired up these days?

A But it's, the answer is it's like a, it's a, it's a layer of it. It's not one business line or the, I love everything we're doing. I'm really passionate about, cause I feel like it all moves the needle and matters. And, you know, um, we're 10 years in an interplay and, I don't plan on retiring. So we got a long, you know, God willing, we have a long way ahead to keep building this and having impact. But the, um, the thing that gets me most fired up is brainstorming. And what's great about this particular job for me is when I'm hearing company pitches, when I'm getting phone calls from founders, or I'm ideating on a new business to start, all of those things are moments where you're kind of on that whiteboard being creative. And I think in a normal, Job as an executive in a company , you really have that breakthrough moment once a month, maybe, maybe twice a month. But the beauty for me is the person who's obsessed with that experience is that by virtue of being part of this bigger platform, I get pulled into that moment of ideation a couple of times a day. And so I get to have higher frequency of living in those moments, um, that it gave me goosebumps, get me all fired up about like something cool we're doing or, Way. We're going to make someone's job better or whatever it is, but it's like that creative, creative outlet. It's awesome.

AI assessment note: “the thing that gets me most fired up is brainstorming.”

Q kind of perspective? You know, it's, um, July 13th. I believe we're, this is the Third biggest drop on the NASDAQ. Um, you know, probably not your first rodeo in terms of a downturn, but how do you, like if you, I'm sure you've done this, but what advice are you giving entrepreneurs right now in terms of like how to view a downturn, how to think through a downturn?

A Yeah. Um, so this is my third downturn, second one in a venture seat. Um, I think the first thing I'm telling people, uh, is that this is normal. I think the extent to which people are feeling a sense of panic or a hopelessness, uh, that comes with this, I think that's not the right lens to look at it. Uh, the market's like a wave and sometimes, you know, it's up and down and you got to surf all different angles. And so this is the downturn part of the wave. Now within the downturn market scenarios, there's kind of two types. I liken it to a car. Uh, there's a type where you are intentionally shifting down gear. The people who are puppeteering the market, the fed are intentionally slowing the economy. And there's a different type of downturn. It's when the, it's when the engine breaks, a piston pops and smokes coming out of the hood. And that's the downturn. We had no eight. And that was a cataclysmic downturn. That was a downturn where we were not sure if the system still worked. There was questions about trust in the equity markets and the debt markets, trust of capital flows. No one really knew what was happening. This is much more of a downtrend that was frankly predictable and it's a controlled from my perspective on it. It's a controlled, um, scenario where the fed is intentionally shrinking market by increasing interest rates. I can go through the whole My macroeconomics…

AI assessment note: “the first thing I'm telling people, uh, is that this is normal.”

Q always kind of worked for me. And then also, I just, um, have more fun, um, while building. So, um, You know, I guess my next question is, um, you know, so you have all, you have so much going on. How do you manage all of this? That's kind of one thing I was trying to wrap my head around as you said all that. Um, yeah, great question.

A So I've got an incredible team. It's a short answer. Uh, we have seven partners currently at Interplay and a lot of other people around, around the rim who are playing very important roles. I believe if you're managed with transparency, consistency, you delegate, but you hire really competent people and empower them. You can get a lot done. So I'm not working crazy hours doing what I'm doing. I don't like to, I'm not a four hour work week guy. I don't want to be for me. 40, 50 hours a week is ideal. And I'm probably doing 50 to 60 right now, but I've got, uh, people in the partnership. I try to think every partner could be someone who could take the firm over and run the whole thing. So they're all awesome. Right. It's really easy to support them in the things they're working on when they're doing, you know, when they have such great capability, a lot of them have been CEOs before. So it's just the caliber of the folks that makes it really easy to, um, scale.

AI assessment note: “So I've got an incredible team. It's a short answer.”

Q downturns and I'm a big believer of that because constraints when you're building a business really helps you focus on, you know, what really, um, like the core part of your business, um, in terms of, you know, building companies compared to when it's easy to get capital when it's not, um, you know, how much do you think that comes into play in terms of building like iconic companies?

A There is a pattern. A lot of great companies have risen from the ashes of these markets. Probably a couple of factors. I think there is what you're saying, some discipline, you know, VCs as they're shifting their own investment frequency, they're also looking for different things. Uh, six months ago, 12 months ago, we were looking for, you know, most VCs were looking for growth at all costs, almost irrationally. Uh, people have reverted back to fundamentals, which is where we always live at Interply. We love looking for good unit economics, good fundamentals in the business. So it's more important to have a healthy, functional economic story, knowing your LTV CAC ratio makes sense, et cetera, et cetera, et cetera, good margins all the way through than it is to grow at an insane clip, maybe an outsized clip in this market. So the first thing that shifts, I think for entrepreneurs that we give advice to is growth at all costs is no longer as critical as having a healthy business. That doesn't mean a profitable business because bottom line profitability is a choice to not reinvest money in growth. But there are moments where you'll find entrepreneurs out there with a negative gross margin. That's insane. You can never scale into profitability or a healthy company with a negative gross margin. Unless it eventually writes itself. So I would say business fundamentals are back on the …

AI assessment note: “There is a pattern. A lot of great companies have risen from the ashes”

Q business apps, um, I didn't have any experience at all. Like, I literally had no sales experience, marketing experience, but, um, it worked out because, um, this is my next question. Um, what would you say the most important factor is in terms of a startup succeeding? And there's actually a scientific, um, like research that's been done around this. Um, so that it gets your take and I'll share.

A Yeah. I'm sure someone has a better answer. Um, I'll answer a couple of ways and these would be my guts. I think you need all of the ingredients of, um, real idea. So it's business model, everything else, you know, market and all of that. Uh, the team is the number one. Thing that you can kind of, that's, that's the fixed item, typically, that you don't want to be readjusting early on. Within a team, the characteristics that I think make people really successful as entrepreneurs, all three things that you have in spades, and why you were probably successful despite having no experience in college, it's humility, organizational skills, and work ethic, grit. And if you have those three things, you'll keep peddling, and people will tell you to turn left and right, and you'll learn and you'll figure it out. Any of those three can be a major weak link in the game. The one I'll add to this question, which is probably not in the study or commonly requested or asked about or talked about, is I also think in our venture-backed world, How you finance your company is a big determinant of how much money the entrepreneur actually makes. Now that may not be the definition of success. It might be how big the company is, but a lot of entrepreneurs are out there trying to raise venture capital when they have businesses that should not raise venture capital. And I do think there is a framework f…

AI assessment note: “the team is the number one. Thing that you can kind of”

Q different, um, industry sectors. Um, just kind of a question I'm curious about, um, what, what part of the tech, um, or startup ecosystem, um, Are you really bullish on right now? Like what would it be B to B SaaS? Would it be blockchain? Maybe I'm asking you to pick a favorite again, but, um, what's maybe one sector that, you know, you're, you're really kind of looking at.

A Um, so we do B to B SaaS, B to B marketplaces, consumer technology. Um, I think those continue to be, and we were launching a blockchain fund. So I think all of those continue to be super exciting spaces. I think Where you pick the favorites, if you're doing this right, is you look at kind of the, the cycle of innovation, and innovation is really coming from pain points, right? And you can't experience every pain point with a finite amount of time in your life and a finite amount of, amount of experiences. We're all living on different journeys through this life. So there's someone out working on a farm, experiencing different technological gaps than what I'm experiencing in my office here in Soho, New York City. Right. And those experiences are really important because I can sit in an office all day and come up with spaces that I think are going to be areas where there's opportunities for disruption. And I do that, but the reality is the real innovation, the real creativity is coming from people who are feeling a pain point in the area where I'm not touching. So we love, uh, kind of our method for looking for entrepreneurs is not to say, Hey, we think You know, the acquisition environment needs to be disrupted. Who's doing that? Very few VCs, and I think very little of the real innovation cycle actually happens that way. We try to find patterns. So when someone walks in and sa…

AI assessment note: “our method for looking for entrepreneurs is not to say, Hey, we think”