So now all of a sudden, really only in the past couple of years, the entire problem of automating low cost labor is is is relegated to more of a software problem and less of a of an expensive hardware problem. 

Something like a robotic arm is how much does it cost? I mean, so.

Well, I'll give you like a timeline of rough, you know, like like twenty fifteen. A robotic arm might have cost like that, like a kind of a six axis robotic arm. It's kind of like the size of a human robotic arm. The take would have cost somewhere between like sixty thousand bucks to one hundred thousand dollars before that, even even even larger. Right. When this all started in 2016, they were kind of running in the forties, give or take.

And then now, like I said, like there's eight thousand dollar robotic arms, that volume of one. So, like, not even like volume pricing. So on land in the US, including shipping.

So got to ENSO and as six axis is what my arm does. No.

Well I guess wanted to, I mean it just needs a very articulate arm, needs like it means I can twist and turn in six different ways. Got it.

So you can just program that with software to do whatever you want.

Yeah. Pretty much. Pretty much like pick fruit, prepare food, cook anything, dispense anything. So it's really neat really. Like when you work with the robotic arms you have have the ability to you're mimicking how a human arm moves, not necessarily how to do a specific object like. So people look at Miso and then look at creator. Creator is a really cool company in in NorCal. They do they basically got something the size of a mainframe that prints burgers, you know.

And so Krater has taken this mechanical solution of like, you know, it makes a hell of a burger like kind of on the style burger because you've been in that restaurant, you know, but you don't at but don't ask it to make a chicken burger. Don't ask. It's to deep fry fries and a mixed salad. But but miso is a really flexible approach because it's because we're really mimicking how a human arm moves, because we use robotic arms.

And so the same piece of hardware can make a burger, can deep fry fries, can do prep, can do packaging, can do a whole lot of things.

So I find it super, super inspiring, super cool that I could just buy a a six degree, six axis robotic arm for a thousand dollars.

But tell me more about why why the intersection with food is particularly interesting to you. Well, because, I mean, you know, the best investments I think come from the really hard problems and I think that there's there's not a bigger problem right now or an industry that's more under siege than the food industry. I mean, forget about covid for a second. Even before this industry was was scraping by on single digit EBITA multiples, you know, like the restaurants fail faster and more often than startups.

Right. So so this is an industry that's under massive strain from from all areas. Like there's there's rising labor costs, there's rising food costs. Real estate costs is going crazy. Delivery is introducing a whole new set of challenges. And most of those problems I mentioned are really well served by automation.

And then once you automate, that just kind of takes away the pain. But how do you elevate everything? You know, I mean, if you can automate all of a sudden the level of quality that you can reach can be so much higher, as well as the speed of service and consistency. You know, you can do things like adjust cook times based on the thickness of the meats and the heat at that at the at that particular point on the grill, because every grill is as different, heated, hot and cold points.

It's really frustrating. And you can do things like coordinate things that coordinate all the food that's happened in the kitchen.

It's all very Jetson's. And so with WaveMaker Labs, what I said at the beginning, which is you're doing this in partnership with corporate partners. And so who are the typical corporate partners and how does that work when you're starting these new endeavors?

Yeah, I mean, by and large, the corporations who are who are really well, it's it's all over the map because we've we've chosen to to focus in robotics and food because for a couple of reasons. One, robotics is a highly, highly specialized skill set that almost no corporation that that's just generally in short supply in the world, but certainly the kind of corporations that we're talking to, people who run large food organizations, they have no business and no ability to possibly have this kind of capability.

So so so we bring a really unique skill set to to an industry that is that doesn't have any access to the skill set for the most part. And so the reason why we do this is because we're not incredible idea faries.

What we're really good at doing anything I wish, but what we're really good at doing and what's repeatable, more importantly, is that is that we can we can understand problems from corporations. And because we've got a really incredible, incredibly deep bench bench when it comes to technology and robotics, we can generally solve most of their problems through automation.

And then we and then we basically will go build it. We make sure that they supply a large letter of intent so that when when we have. Completed it, they buy it but like, for instance, we had a fifty million dollar, five zero LOI for our pizza concept, which isn't called Maestro, please invest. And and that was from a store that had a pizza joint that had about 700 locations, so you've got like a fifty million dollar LOI from someone who says if you make these pizza vending machines, I'll put them all over the place.

Yeah. And just imagine, like just just being a regular startup, like imagine. OK, like I think people are interested in these pizza vending machines. I've got zero proof. And when I go pitch another another investor, well, they've got to kind of take my word for it because of that, it's got to be a really low valuation because a lot of risk know. But like but like what if you could start a company before you've written entire before you've written even a single line of code and you start out with a 50 million dollar LOI and superstrong conviction, you're tackling a problem that actually matters.

Mm hmm. Yeah. And I've sometimes called those, like, development customers or something in the early stages where there are also hopefully, you know, they're in it with you. And so they're giving you feedback 

Exactly. How many companies have you invested in where they go six months down a rabbit hole of R&D? That means that is totally not applicable to the customer. Like probably like all of them is my guess.

Buck, I try to help my companies avoid that.

Yeah, but it's really hard, you know, because, like, you got a conviction, but you don't really have access like a big customer. You can truly tell you what's going on. So, so, so we make sure they're involved on at least a monthly basis with our product development.

I mean, it makes total sense. And I'm super interested in hearing more about Miso's journey. But also, you know, on the flip side, sometimes we talk about strategic investors coming in and I think maybe it's particularly in the later rounds where it can be more mixed.

You're bringing up a point, you know, like how how do we WaveMaker labs, like, engage, you know, companies one hundred billion dollars of revenue a year, which is where we're engaged one, for instance.

Right. How how about how do you engage them at like a super early incubation stage? Because those guys are serious d investors, if they're investors at all, you know, and it's all about the approach, you know, it's like it's very much like a partnership approach. If you make them feel like, no, you're you're the founders two and you're going to own a big piece, this company of this things. And if you by nature, you're just incredible customer weight or market reach, can kingmake this company, then you're going to win, too, you know?

And so and so that's that's sort of how you get like get someone who's really slow, stodgy, super late stage investor if investor at all, and to doing ground up incubation in some crazy robotics shop.

So they get to feel like a founder. Yeah. Interesting, and I guess why not sort of do it themselves?

Also, a couple of things. I mean, because because we WaveMaker Labs is really highly specialized. I mean, we've got our CTO, Martin Buehler. It's so good to know what he's doing with us, but he's really, really good. So so he was director of robotics at Boston Dynamics for five years, built the walking dog from paper to Walking Dog, this guy's been like number one. Number two engineer at any robotics company that's mattered in history. And in my opinion and so, you know, and our team's about twenty two engineers, like, they just don't have this kind of talent. And they also don't have the kind of talent to really innovate internally because these corporations, they don't have the equity structure, they don't have the incentives.

You know, we will we'll create the company, we'll find a CEO, we'll get it capitalized. We'll get the next round capitalized. And they just they just don't have those skill sets internally.

And how do you make them feel like a founder as opposed to just a funder?

Well, we make them come up with the idea and we give them founders shares. It's really a joint venture. And so, you know, typically we'll start off with a discovery phase where we will really spend, like I want to say, it's four to six weeks digging into their business and

We want to solve problems that are really important to them. So we have their attention. And so and so we really kind of like pull the answers from them over the over the course of time.

And so we make it think that we make them think it's their idea.

Have you what have you learned about corporate innovation in the course of you doing this? So one like I speak to a lot of corporate innovation groups, and whenever I get into a group that is like the innovation group, I always know my job is to be a lot harder because and the reason why is because I think that it's it's incredibly challenging to make any progress that certainly it's like seriously revolutionary or innovative when you're inside a corporation and you have to deal with that structure did this come out of me robotics or, you know, you were doing this or just give me a full review of you and how you got here.

Yeah, I mean, so I prior to prior to joining Wavemaker, I founded my own venture fund called Canyon Creek Capital employed out there.

Let me just stop you on that. When I looked at your LinkedIn, it kind of looks like you went from business school to starting your own fund.

I did. I did. Nobody would do that.

I mean, it was it was really it was a really fun journey. So, like, I came out of business school around 2011 and and I just come off as starting a fintech company and successfully started it without funding and wound up without funding is is based on a government program.

And I started looking around like a sort of realizing, you know, I would like to make a couple of, like, seed investments just personally as an angel. And I didn't like what is happening at Tech Coast Angels, but I was pretty, pretty poor and I got an angel.

Why did you not like the angel groups? 

Well, I mean, so so I did I didn't like it, particularly because there's a lot of voices in the room. And I think that I think that that a startup that is looking to get funded, you know, doesn't want to talk to ten people, getting, you know, putting in ranges of like, you know, fifteen to fifty thousand dollars. You know, they don't want talk to all those people.

They'd much prefer to talk to TenOneTen or Wavemaker or professional venture firm. And so, so, so I felt that like that because like I think venture is all about adverse selection. You know, the the best group of companies like they go initially to institutional venture capital and then they get to go to the angels or large super angels. Then they go to like individual angels, then they go, then they end up at like angel groups.

And so, like the best companies are being cherrypicked all along the way. And so by the time they finally end up at an angel group, everyone in town should have passed and passed on them. But by that point, because because nobody wants to go through the hassle of dealing with ten thousand investors, it's just really challenging. If you have to if you have to have a personal relationship with them, which you don't with the other crowdfunding prisons.

OK, I mean, here's the thing. I agree with you. And yet I would like you know, I want a vibrant, vibrant angel ecosystem.

So so I'm curious on on on what you did. I interrupted. Go on.

Well, well, so, so, so, so, so before I started the fund, I tried to start a different version of an angel group where where really, you know, it's highly, highly curated, essentially, like, you know, I would vet them or bet the companies myself and everyone would invest behind an LLC. And I wasn't charging any imagine fee or carried interest or anything. And so it's much more streamlined process for for startups.

And I felt like I wasn't so subject to the adverse selection problem. Well, I did one deal and I quickly realized, jeez, that was a ton of work to not get paid for. And then so so I went back to my my group of investors, which is like literally just, you know, friends like chipping in like five or ten thousand dollars, like there's no no whale in this story, you know.

And then it started start applying a little bit of management fee and it's a carried interest, you know, so so it started out as a pledge fund and quickly deployed about six million dollars across eleven deals got and was lucky enough to get three really quick exits, you know, sold an ad to a company for basically kind of get your money back. Sold Bluebottle initially and then sold a company called Gyft GYFT, some wallet for gift cards to first data.

That's extremely impressive. But you don't I don't want every MBA to go and think that they can just do this necessarily.

But tell me about just for our listeners, can you explain, like pledge fund versus like an SPV or rolling fund, all the other terms that we hear?

Yeah, I mean, pledge fund is is really just a group of people who are willing to potentially invest in your deals. And if there's and if they do a deal, it's basically like an SUV, then there is some margin structure on it. But but it's a hell of a lot easier for early, early, early investors to start their career because like like when you start, you have no track record. And so I don't have a track record either.

And so so I just started essentially like selling the deal. I was like, here's here's a specific deal and here's how you how it could work and here's my analysis of it and got together and that you can get behind.

But but and that's different than an SPV or is it the same as basically the same for. And would you recommend to people who want to be doing some of this to to, you know, start up their SPVs themselves?

Absolutely. I mean I mean, it's it's there are some nice tools out there, like, you know, doing this to Angel. Angel, this is pretty good. You know, AngelList will take, you know, 25 percent of your carry, but it's about to help. It's a really easy way to do it.

OK, so that was that was out of business school. What we're talking about this amazing six million that had bluebottle, gyft and everything else in it.

Yeah. Good for you. And then I'm not looking, I'm not sure I'm going in order here. But then what happened next.

Well so, so, so I sold gift and so sent a bunch of money back to my investors. And so at that point I started to raise a committed fund because investors because I'll always ask for money from your investors when you've just given that give it to them because because you know they have it and then you know, right after an exit because they love you for that moment, but they might not love you in six months.

So Canyon Creek as a committed fund was about ten dollars million. But I kept I kept up my my pledge fund activities and so ended up deploying twenty million dollars alongside of the ten that I deployed out of committed funds. So what's more impactful?

You know, I think pledge fund, SPVs, can certainly be more impactful than a regular committed fund rate because you get the carry on if you have one deal that knocks it out of the park.

That's right, yeah. What are the winners? Winners are winners. Good, awesome. 

OK, So what did you do next.

Yeah. So lost my mind. Decided to go back in the startup world a little bit.

Right? I mean, not not exactly. So with with with the last check out of out of the committed fund, it Canyon Creek Capital. I decided to try something different and I was just let's let's incubate something, you know.

And so I was kind of I was looking at y why now that I've been a founder and Ben AVC, why did you decide you want to incubate something?

I've been asking myself that for a long time. It's because.

Right so hard. It's so hard. And then what I'm doing, at WaveMaker Labs is like incubating ten companies. So it's like ten times harder. But like by the time I thought it was easy, it was starting. Companies is not easy. Investing, I think is a hell of a lot easier.

Because like when when when I was kind of when I was kind of just looking back and reflecting on what happened in Canyon Creek and what went well, what didn't, all that stuff and what what type of companies performed well, I looked at Miso and so we incubated it.

So super low cost basis. And, you know, it was about 15 million dollars like the last round at this time. A couple of years ago, it was at, you know, ten million dollars and a 40 million post. And and at that point, I was basically almost exactly a 10x. And typically, if you're a seed investor and someone tells it you're at a 10x return, you should kind of like mentally think, well, that that that company is probably now like an 80 or 100 company, depending on a whole bunch of factors.

Right. But I was at 40 and so I was like, well, gee, is this kind of a magic number? Because, you know, something like eighty six percent of all, you know, exits happen at thirty five million dollars or below. And and yet, like almost all of us are chasing these 10 X plus hundred million dollar, you know, unicorn, God forbid, companies. Right. This this tiny, tiny, super long tail.

And so I thought, well, jeez, you know, if if there's a way to create to incubate at scale, then I don't need to sell these companies for a hundred million dollars. I can sell this company for 20, 30, 40 and be super, super, wildly happy.

So I tried to I've been trying to to recreate that ever since.

Well, I mean, we all just are watching Snowflake and just the amazing it's not just their performance, but it's also the amazing amount of ownership. That is it summit partners who incubated them. And so just looking at the ownership percent does make it tempting to go start more companies. You can see you can own more. Yeah, and and if you if you choose your corporate partners correctly, you're probably building right towards an acquirer who doesn't have any diligence to do on you because it's calling you every month

What has changed about your approach to incubation? What have you learned?

A lot of the same lessons you learn as an investor, it's all about the founder and the people,

And we also have a pretty unique approach to to financing, you know, we don't go to traditional venture at all. We embrace crowdfunding almost exclusively.

OK, so tell me about this piece of equity crowdfunding and just give me sort of the 101, the really basic view.

So so with equity crowdfunding, you know, essentially you're selling shares online. You're allowed to advertise, which is huge. And it's really to start you've got to have a compelling pitch. It's a much more involved sale than a typical e-commerce thing. And I'm not like you might buy a shirt based on one advertisement, but if you bought for equity crowdfunding, typically you've got to catch them with advertising and then you've got to continually tell them a story over several months of your campaign.

And then and then they'll they'll hopefully invest. And there's sort of like a reverse bell curve of like the if you if you're running a campaign for nine for like six months, you get a bunch at the beginning. It's kind of like the curve goes down until like kind of not a whole lot in the middle. And then like half your money you could erase the very last month. So it's super nerve racking. You never know if you're actually getting anywhere until the very end.

What would be like a typical you know, the person is raising a couple million or one of your companies is raising a couple million. How much are they raising and what size checks are they getting?

And just how does it all work? Yeah, it's so Miso something. So, for instance, is raising thirty million dollars and eighty million pre we're at about seven million dollars. Typical check size is like two thousand dollars, but there are people who are writing. So one of our other companies called Graze, it's a commercial autonomous lawnmower, is just closed on four million dollars. All crowdfunding, one at one investor put in two hundred fifty thousand dollars without even speaking to us.

So it's mostly the small checks, you know, single digit thousands, but it's better. But there's also really big dollars out there to be good to be gotten.

So you're raising 30 million on an 80 pre. Yeah, on a crowdfunding platform. That's right. SeedInvest.

I just think of it as smaller dollar stuff. OK, so SeedInvest. Tell me about equity. Crowdfunding is different than sort of a traditional like a Kickstarter. Is that true?

Yeah. I mean, you're just getting shares instead of a product. OK, but why what are the misconceptions about equity crowdfunding? Why doesn't everyone.

Because I had the misconception that you were raising, like, you know, a million now and we're raising like 50 grand a day. If that makes makes it gives you an idea of the scale. And I mean I mean, think about it for a second.

So so the entire venture world is like, I'm oversimplifying here, but L.A., New York and SF. Right. Mostly SF. In terms of volume of dollars.

And I would say that that I would I would wager that technology and startups are like one of the most the public is fascinated by it, you know, and venture capital is the highest return asset class. But the general public has no access whatsoever to it. So it's sort of a rich get richer story. But like, you know, you tell me like there are people who want to put a thousand bucks into Miso Robotics. There are people in Europe, in Asia, like I'm running a global a global fund raise.

Like if you're a if you're a traditional venture fund or a startup company in L.A., like you're going to go do the circuit, you're going to find a way are going to do it in one town. You're going to meet all the people in town.

And how do I know it won't be a sort of an adverse selection, kind of like what you were talking about with raising from from an angel group? Like if I'm an investor, how do I know I'm not the sucker at the poker table if I'm putting in my two thousand dollars?

I mean, you just have to use that to make your own judgment.

And and everyone in town and every venture investor and every professional investor like you say the word crowdfunding, they meet like wrinkle their nose, like, oh, really? You can get funded by anybody else, you know. But it's like that's not the case at all. I mean I mean, like, first of all, like it's possible for startups to. Seed without the massive brain that is in the VC fund, like the book, but the book for myself.

So so you know, but but but the reason why it is that there's this like mischaracterises terrorization or just like disdain for equity crowdfunding is because everybody kind of got burned. So the Jobs Act was passed in 2012 and a bunch of investors, including myself, invested in crowdfunding startups or something somewhere in or around that space. They all failed because the S.E.C. took four years until mid 2016 to actually approve the Jobs Act. Right.

And so then after four years of all this hype about that equity crowdfunding, everybody looks at looks at the at the at the crowdfunding market in mid sixteen and says, oh, see, like a like a drop in the bucket. I was like, no, volume is a brand new market, you know, and so I just took their eyes off it. But meanwhile, in the past couple of years, there's been 10, 20, 50. There's even been a single one hundred million dollar round get done through equity crowdfunding.

So this is really, I think, a revolution. And I don't think people should be discounting it, but it is very hard to do.

And is seed investors, how do I know which are the the good ones and why? I'm just going to go back to Kickstarter. Indiegogo. Why are they still, if I understand correctly, set up to be funding in exchange for a product as opposed to for equity?

I mean, just because because I think that there's different markets or different people, I think people really want alternative assets to be part of their of their their future and their finance, their finances. And and, you know, equity crowdfunding is the only avenue into the early stage venture world to get access to those kind of returns.

Hmm, great. And any other tips for doing it? Well. I mean, I mean, it's so we've learned by failing here, but now we're really, really good, like we're launching for more crowdfunding campaigns before the end of the year.

Probably you've got to plan everything out. You've got you've got a plan update's out for like your entire six month period. Like every week you have a new update to go talk to your your because you're building an audience, you're cultivating that audience, you're convincing them to invest. And you're talking about like the opportunity. And so it's not as simple as like as like buying an advertisement on Facebook and having them click and then, boom, you got an investor.

It's like, you know, you've got to really work at it. 

So I think that it's it's prudent to find people who've done this before and have them manage your campaign in a WaveMaker actually is starting to manage third party campaigns of people who we know just because we're we're good at it and scalable for us.

But but if you like an influencer, are you like it's like a social media, like you're going to build up your followers or something a little bit.

Yeah.

And we've we've we've also on that point, we've also kind of we've also embraced crowdfunding because we're in a unique position to take advantage of it because because we're a holding company structure that has as many portfolio companies underneath it. And so any time any one of our portfolio companies raises capital and they have like so Graze has almost three thousand investors, for instance, our lawn mower company, you know, those three thousand investors are now in the wavemaker ecosystem.

And we will market them, you know, Miso robotics, for instance. And so it's like we're actually capturing a high percentage of the investors who actually invest on seedinvest and startengine and all the platforms. And it's pretty interesting because now we get to remarket to each of them.

Yeah, yeah. It makes it tennyson's fascinating. Well I want to save a little time to ask you random personal questions. Anything else I really need to hit from, from wave maker. From WaveMaker no other than if you want to, you know, build cool, cool products and robotics and food, give us a call.

Do you care what geography people are in? You know, we want them to be in L.A. right now or the Philippines.

OK, got it. OK, random personal questions.

What motivates you?

I mean, just creating new jobs. I mean, creating new something. It's never been there before. Like just because we do a ton of of wholesale creating comes of whole cloth. And it's so fun to do that, especially when you know that it's going to make an impact on a customer who is sitting right next to you.

And so so creating just creating value is super fun. I, I love creating, I love unfastening with robots and I like creating other platforms. So when I said that, I mean, we're looking to do to create wavemaker labs and different verticals and industries and even geographies. And now we're trying to copy and paste ourselves all over the world to really give ourselves this global perspective and global innovation.

That's great. Do you have robotic arms in your house? No.

I wish no technical ability of my own, but I would have thought that maybe you just had robotic arm serving your breakfast or something.

Well, I mean, that is a company we've been toying around with starting.

That's fantastic. Well, I look forward to seeing the future that you're going to build, Buck it's really been fun to chat with you.

Great. Likewise. Thank you.

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