And so I've always been impacted by their lives and what they did. And I always wanted to be in business. Let's say I was wish I played a musical instrument, but didn't in any case, I had a chance to.

When I came out of college, I went to work in investment banking, did that for four years. I went to grad school and came back out and got a chance to work for an entrepreneur named Bill Daniels. Bill is known as the father of cable TV.

He's dead now. He died 10 years ago.

But and so they had investments all over the country. They were in M&A. And they raised private equity for a number of companies in the business. And they had never done anything internationally. And I spoke French and I was young and I was willing to get on a plane and go in anywhere. And he hired me to be that person. And if I fast forward 20 years now, I lived in France, I lived in England, I lived in New York City, I spent time and worked on deals in 30 different countries, raised multi, multi billions of dollars and worked on multi-billions of dollars of M&A transactions.

And the people I was working for were all entrepreneurs. These were not old companies that had been around forever and we were selling them or raising money. These were these were individuals, men, women, different countries, different races, starting cable television companies, wireless telephone companies, outdoor advertising, billboards, ISP is hosting companies as that business started to grow.

So I had an incredible exposure to many different types of entrepreneurs and that's what kind of paved the way or that's why I feel comfortable having the opportunity to meet with so many different founders in the seed stage. As you know, in the seed stage, there's not a lot of information.

I'm a financial expert. I'm on the I'm the chairman of that committee of all t-s, which is the fourth largest telecom operator, United States. We have 10 billion of revenue. I'm the head of the audit committee. If you want to talk about finance, we can do that all day long.

I don't know. That's a big public company. Yes. Yes. And, you know, that's a serious responsibility.

But the point is, in our stage of investing in seed companies, we're really exposed to the founding team and the founders. And we're trying to make a bet, an educated bet. But we're trying to make a decision based on what we think that founders capable of. Everybody has an idea. Everybody's writing code. Everybody's excited.

You know, of course, I want people to have grit, but it's so hard to tell like that. And that's a common thing that most v.c say. I do spend a lot of time. I mean, when founders come into my office, sort of I go see them. Of course, we don't we don't open the deck. We do not open the laptop. I don't let them do that, to be honest, just because if you can't tell me what your company does in two minutes by looking me in the eye, it's gonna be hard for you to really.

Raise the money. And so I love to spend time understanding who they are, and I ask questions like, what did your mom do? Do you have a sister? Was she older? Was she more aggressive than you? Was your brother a better athlete? You know, I start to figure out and there in fairness, they kind of look at me sometimes like what?

You know, what are you asking? But I really want to understand who they are, because as you know, in this space, we spend money, spend the next 10 years with this person and hopefully being helpful to that person, not just as an investor, but in their life. I had been investing personally in companies since the late 90s and I'd also invested in and have invested in numerous venture capital in private equity firms, private. But 20 now and I'm investor in several funds here in L.A.

and some very exposed to the investment world. The investment process funds direct investments and I wanted to expand that personal investing side into more professional investing side. And so that's why I started the fund in August 2012, literally seven years ago.

Well, I remember back then it was it was a much smaller scene, as you said. There wasn't really much money in town. And it was so small that we had lunch, pretty much all of us every month or so. Things have changed a bit since then. What do you what do you think of L.A. today versus then?

Well, I miss those lunches. There were Davids referring to, I think, six or seven of us that all had small funds and we used to have lunch and we'd literally go through our deal flow. Imagine doing that today.

He acts like, who else? Who is in? Who's the original Matterazzo t.x?

You, me, Berko. Who else? I mean, it was it was great.

And we tried it for about a year and a half in it. And it also just became hard scheduling. And then it started to say, well, gosh, we're all raising more money. We're all get a little more competitive.

Probably not a longstanding lunch that we could keep. So but what's interesting about you, said, David, is that very quickly, both of us became a known brand in L.A. and some of our other people like cross-cut and others, because there was, in fairness, very little competition. Since then, as you know, the market's grown dramatically. We've all been chest thumpers for the L.A. ecosystem. It has grown dramatically around us. You know, we are having tangible evidence that the engineering schools that drive this economy are staying.

The the the the graduates are staying here because there's so much more opportunity. There's so many more companies getting started. Those companies are selling. They're starting more companies. We know how this works. If you go back to 2010 11 and you're a star engineer coming out of any one of the top five schools here, you're optionality is very limited.

So you went to some Cisco and we've had some incredible entrepreneurs who've left here to start companies in terms Cisco, Whooper Air, BMB. They went to UCLA.

Like there's a lot of great founders here who, if you look back, maybe went to serve Cisco in New York or some other market because their work wasn't the opportunity here.

Now there's the opportunity to feel like there's enough capital here now. I think there's enough capital for the seed market for sure. We all still need to go primarily to San Francisco to get the A's businesses. There are bigger firms here, all friends of ours, the great Croſs upfronts of the world. We know that. But they can't do every deal here. And so there's more capital than ever, more companies than ever, more people than ever. I think that all builds on itself.

Let's hit the basics of your investing now, which I think you're writing, 19 million a half dollar checks. Yes, roughly seven or eight deals a year. Yes. High conviction.

High conviction, low volume. Got it.

What else do we know about the basics?

You're usually then someone sort of second CFO and what we call ourselves is first institutional check, which may not be fair because if calling precede fun, like for example, Dustin has done a fantastic job. I mean, he does a lot of early stage Precy checks. He's institutional. He has investors, but it's traditionally more of an institutional round. We do about 65 percent of all of our deals are in Southern California on purpose.

100 percent of our deals are B2B. I've always focused on B2B.

And we have led 80 percent of our deals. So as much as we love the angel community and precede people, you know, we have to do the work to get to that lead check. And that's what we're striving to do.

And all of your deals then, will you'll expect them to have some traction. They should have some revenues.

Yes. And so, you know, I can give you numbers, but we we it's a good point. We do look for traction. Of course, you do adjust that traction based on the founder experience. We're investors an open path. We're led by Alex Casa. I was Alex's banker in the 90s. They've invested in four companies. I invested with him for a long time. He's an investor and bonfire. They didn't need a lot of money.

They had a lot of money themselves to invest in their own company. There was no seed round there and they had no revenues and kind of a plan. They were making progress on their plan. But so there's an example where we will do a no revenue situation. But the founder has to have that unique experience.

But like a more typical person, how how long do you meet them and do your diligence? What does that kind of look like? More traditionally?

Well, two pieces there. One is I have invested in companies in the first meeting and I can give you names. Jeff Green from the trade desk. Walter Driver from ScottPelley. Katherine from Klick Media. And that's where it kind of goes back to my gut instinct on people and the conversation that we're having. And I've got to be part of this part of this opportunity. So that's one side of it. The other side. Now it's getting harder.

You can't do that. You can't walk in. And I'll give you million, half dollars.

And I guess just matching rates as someone walks in and you give them. You're like, I'm in. I want to be part of this. Yes.

And can you do that now? I mean, if you asked Walter, who just told me this two weeks ago, he goes, I remember our meeting and it was I think was with on he's like, you walked in doctors about 30 minutes, said, I'm in and I'm and I'm what is like I don't know who this guy is, but if that's the way he is acting like I wanted to be an investor.

That's what he told me. So that worked out now. Now we have to spend more time. And it's just the function of the size check we're writing. Still have to have those instincts and drive off of that.

So I'm not going to go forward on it on a deal or spend much time. I don't have the instincts on the founder to try and do that. Now we need to spend more time. We have a great team. So that's part of the, you know, part of this conversation. You know, Bonfire is just not me. Bonfire came out of the combination of Jim Anderman, who's a fantastic investor and a fantastic person who's always focused somebody to be in Southern California.

We've been in Co-investing since 2012. It was a very organic relationship for us to become partners. And so that's allowed me to scale my own skill set and allowed him to scale his own skill set. We've since added two more people, Brett Qunar and Tyler Churchill. You know, so we feel like we have a very good team that has a lot of different skills, which allows us to do the due diligence that we need to do faster.

And so do you. You meet someone. Do you go to Jim or Brett or Tyler for certain things for.

I'm not sure I need you to bang on this. Or when do they.

Yeah, I mean, we are falling into place in terms of what we know the other one's good at or better at, call it. You don't have to.

I don't have to know everything about every company. Yeah. And I didn't know that when I was alone. So.

So what what is what what are the things that you're better at? What are the things that you get it? Jim Farr or Brett, let me answer a different way, which is, you know, we've now added and you guys YouTube particularly know this very well as successful operators.

I'm not an operator. I've been around operators. I've been involved these companies. But I would not you know, I can't claim that I started a company and I know what it's like. And so Brett Cleaner, who was early employee at Siebel Systems and then an early employee in the top 50 employees at Salesforce and worked there for twelve years. He was head of product, head of sales, you know, head of everything.

They were a lot of hats back in the day.

And. And so when we're going through some, maybe some. And he's a SAS expert. Right. So when we are trying to figure out go to market strategy, which I think is very important in the seed stage, is how you're actually going to accomplish this stuff. He's got a very good sense and a very good understanding of how that that roadmap should work.

So that's the skill that we've added. Jim is a..

I call it like the guys recall is annoying. Like we talk about something four years ago because when we were talking to that company, it's called and he knows the name of the company and the CEO and what they did and like. No idea. No clue. I've never heard that company before.

He's like, look at your notes and my Goga. So my point is like his ability to take a look at a company and understand immediately who the competitors already are or what competitors or what other companies may be doing something similar. Or he has that skill set.

He's also had incredible you know, he's been investing for 20 years. So he has a lot of unique ability to like unique abilities to understand structuring of things. You know, we've gotten some deals that we didn't think we could get into or we didn't like the price. And we ended up negotiating a different way to get the price. It made sense for us. So we have a great kind of great team that, you know, we're all getting to know each other's strengths and weaknesses.

And that just makes us better as a platform.

How do you make decisions ultimately? Like so you go and you have that feeling that you get like this is a person I want to be in business with. Mm hmm. Do you take it back to the partnership? Do you have people meet with them separately? Yeah. So. Imagine a deal comes to me from you or any other source, and the first pass is going to we all trust each other.

So there's a lot of deals nuther, none of us see from the other because the other one passed on. It just it doesn't fit its consumer. It's not. Southern California is not the right founder. It's a business we don't care about. It's something blah, blah, blah. We can get through those pretty quickly. And then there's a company that comes in and said, well, this is pretty interesting. We put it into our system and I'm responsible because it came to me for that first pass, first pass, meaning first conversation.

And sometimes we will grab each other depending on the timing of it. Like this is very interesting. This is kind of moving. We need to at least get two of us on this right away. Other times it's up to that person to have that first conversation or first meeting and then come back and say this is something we need to take a look at and here's why. And so what we're trying to get better at and being more forceful on, is that why part.

So instead of sending an email to each other and saying, interesting company, what do you think? Yeah, right.

Because that's not familiar. Yes. Because what that does is opens up opens it up for the next pass. So example, Jim gets a company, likes it, sends it to me. I'm like, don't like this company. I know this person. I know the founder didn't like the business. Oh, OK.

So that's another pass opportunity before we really get too deep. But it is it is up to me or that person that's driving the deal to kind of explain to the others why we think it's a positive event. It's up to the others to start explaining why they don't think so or why they agree. And then that starts to drive a process of. Let's get them in. Let's go see them. Brett, you need to do a call. Jim, go meet with them.

And then we start to coalesce our thinking. And it and it just bubbles up, to be honest. And we get to a point where we're saying, look, if we can get this type of price range and we can put this type of money in. We should evaluate, you know, we kind of then that person who is in charge goes back to the founder and says, here's what we'd like to do. Are you are you interested?

Because you have to sell ourselves now more than ever. Right. Because there's more competition. And then we start the process. I mean, I can you know, we're we're in the middle of a deal now where Brett and Tyler were on the lead. They wrote a nice e-mail to the founder, copied us, said, here's what we like about the company. Here's what we want to learn more about. This is our position. Do you want to go?

And she wrote back with you. I'd love to.

I'd love to dig in deeper. And so we're all digging in. Then we share customer responsibility. So back to the point of having traction. We want to make sure they have traction. That is relevant because a lot of times young companies have maybe their friend is the CTO at some company and they're their first customer. Or maybe they're selling a product that wasn't really the right. It was kind of a custom product, which is really not the product they're gonna sell or be able to sell on a scale basis.

And so we try to figure out if the customers are real customers and if they're the solution they're buying is the one that the company is actually going to be able to sell. And so in the situation, this company, again, they have you know, we asked for six references and we're going to each call one or two of them and then we write notes and then we share those notes into a Google doc. And it's up to the other people to do the work and make sure they're reading and figuring out.

And we look for, of course, like you. We look for any red flags in the conversation with with customers. So that's how we make sure that all of us know what's happening with the company as opposed to just one person or two people driving it and saying, hey, we really like this company. We just gave a term sheet that never happens.

Right. And I think you said something like 50K Emaar might be arranged, but it completely depends if it's because we all have LP is and because we're getting red res our next fund.

I have all the numbers at my fingertips. Of course the average Emaar are across the entire portfolio is about fifty five thousand.

But in fairness, that's skewed by a couple of bigger companies and the companies that have no revenue. And so I'm not sure how relevant that fifty five thousand number is. It's more relevant, you know, how many customers and if those customers are real.

Now, what we try to track, we track revenue growth on purpose again, because we know the market is is pretty strong right now and a lot of companies are raising money, which is fantastic. I'm not quite sure some of the money being raised is actually tied to the performance of the company or just a market situation. And so even when our companies get up Brownes, we want to just make sure and check that this is because it's actually growing company.

And so we do track revenue that way.

It was interesting. We'll Sue is saying that their follow on decisions are made exclusively quantitatively. Yes.

And set the metrics. Yes. We have what we call pre and post investment criteria. We have roadmaps for the companies we've built. We're building a lot of tools for our founders. I mean, we really want to be the B2B software specialist and we're building tools such as we have. We have a sale. We have a Sarcelles model that's a open Google doc that we share with everybody. We have board decks and it's open Google, Google Docs that we share with everybody.

But we're building more processes around pre and post Nisha's preem post metrics. So and as we are investing about 60 percent of our capital in Vorlons, we have that sames, that same kind of attempt to have criteria as to if we should do it. Before we started recording today, you you were telling us a story about a company that was called inbound and you actually engage with them. Is that a good way to reach you two people? Do you make a lot of investments to people who just reach out cold or do you get most of your referrals from people like us?

How does that work?

Well. The reality is we get most referrals from people we know, and that's unfortunate thing about the business. I wrestle with the number of founders that can't get to any of us because they're not in the system. So I think that's a flaw in the venture capital system.

And so I don't like to say I won't talk to you unless you have a warm referral, which I know other v.c say. It just is so gross. But the reality is we really are busy people. So the way that people get to us is primarily from some sort of relationship.

We have other v.p.'s. I've been around for a long time, so I have a lot of a network of people all over the world, which is helpful. So there's a we have more than 20. Investors in the fund who were founders themselves and the as you know, you get a lot of deal flow that way because you're you're a confidant, you're a mentor to many new companies. And so that flow is never stopping. And now that we have four people multiply that by four, you know, it's by a 6 X multiplication on the number of deals we're getting.

That's more likely how we get our deal flow. But I would say that the I am open minded. But I get frustrated when the person I'm talking to doesn't recognize that. We're all busy and we're very. You know, this is this is serious business. Can you name an example of of a company that came in cold where it worked out?

Yes. So a company called Active Measure, which has changed its name to disco here in L.A.. They're out in Glendale. Three founders, Armenian descent. They came in cold and there was a revenue line in their email that caught my attention many times. How do you two myself like? Is that real? I can't read the numbers. Million in revenue or something. And the way that the person wrote the e-mail was very professional, like this is a professional person, like they had bad careers prior.

They're in their late thirties. They're business people. They understand certain things and they understand that that their time in my time is limited. And this was a good example of how Jim and I worked together. The first real deal that he and I worked on together. And I had been following him and thinking about it and meeting them. And they were tremendously exciting, unique, good people that I were really happy were investors in.

But it just was an outside investment. It was you. They don't know anything about the L.A. community. They're not involved in the v.c committee. They could care less. You know, we all are finding those CEOs that just o okay, let's go down, hang out. Silicon Beach. They don't do that. Why? Because they're building a business. And so we got to know them. And I was wrestling with how to move on the next step.

And that was right when Jim and I really started partnering. And we you know, I said, Jim, you've got to go meet these guys. I can't figure out why I like them so much, but I'm having trouble kind of pulling a trigger here.

And he went and met with them and then flew the next day to Boulder to meet me for meetings in Boulder. And he said, I really like them, but I can't figure out why or what we're supposed to do.

You know, we we both had the exact same kind of positive reaction. But also, what should we do? And that was great because we ended up digging and digging in, finding out who was better at asking what questions. Better question, you know. Find out who was going to ask the better questions. And we started driving towards a deal and they'd already accepted money from angels at a much higher price than we were willing to pay. So we ended up working out a unique transaction.

And then it subsequently was funded by our friends at Alpha Edison, and they're doing fantastically. And that million dollar revenue is, you know, grown. Twenty five plus times. And so were. That's a good example of of a cold situation.

So we enjoy that. Coming up with our random personal question list.

Oh, no, there's nothing to be worried about. But there was fun. How to how do you describe your style?

And I said, I find you a little intimidating when first meeting you. David said you're multi-layered. How do you describe yourself?

Good question. I understand that maybe I'm intimidating, which is not what I'm trying to be. Of course I think that. What? I tried to be as direct and the directness I don't know where that comes from, whether it's my dad or Bill Daniels or whatever, but I consider myself to be a time management expert. That is my one of my superpowers. And that was driven by my career in investment banking, where I had 10 deals going on at any given time in eight different countries.

You can't live if you don't have the ability to organize your thoughts and organize yourself.

So I consider myself that my time is precious, that I'm trying to be as helpful as I can to you as quickly as possible. I have a need to be helpful, right. So I kind of take some conversations as like, what do you think we should do?

Well, here's what you should do. You just asked me what what do you think you should do?

OK. OK. But that's direct. And I have the same thing. David says, I can't do small taxes. Same thing, except here's the difference between us. You come across as not only very direct and time management, but also very self-confident.

So your directness has a and I know what I'm talking about, which I don't think thankfully I think that's the case.

I mean, again, I am very soft and I'm one of those guys that cries at every movie, everything my kids do. I've cried publicly. My kids tease me. My wife teases me because of the exact thing you're saying. It's like, well, you're so tough on the outside, but you're like you melt at the basic things in life. And so that comes from my mom, who is the sweetest person in the world who recently died.

And I tried to be a little. More cognizant of what she was like. In various different situations, I like plants. She was a she had a huge green thumb. Her house was in house and gardens. The garden part, not the house. Even though we don't meet plants here, it's just kind of. I've always I was always into things like that. She made me laugh all the time. She was fantastic. So I don't know why we're going down the path, my mom.

But. I guess what I'm trying to do is, is be as helpful as possible in a short period of time because I think everybody has a short period of time. And so it's not an attempt to be intimidating. It's an attempt to be direct and helpful.

But do you still have professional doubts or do you still get nervous in your professional life?

Oh, yeah. So, you know, we have I've had a lot of great investments, have had a lot of success. I was listened to a ton. You know, 37 investments. Five unicorns, et cetera. And, you know, sometimes when you peel the onion, as much as I made on the trade desk. And I think Jeff would say I was helpful at times because I had unique information and and ideas on some things. I didn't make the trade desk, you know.

And so a lot of us haven't. A lot of us have. A lot of us and this goes up and down through the entire market. There's a there's a certainly a amount of luck in all this process. And so I'm always questioning is this decision actually matter? I mean, is this going to be a lucky? Am I happy to be lucky at times than than actually making a decision that matters in these companies? And so the question in the you know, the what was the phrase you used the.

Do you ever question yourself? Yeah.

I mean, I mean, totally nervous about that process. And as we continue to raise more money and we have a new partnership and we have new people and all those things are playing into, you know, the variables that can make you successful or unsuccessful. And so I think the the the other thing I worry about is timing. Ten one ten has a great portfolio out of their 2012/2013 investments double. And one is the same thing. Timing was great.

Then we were investing in companies at $3 million. Five million dollars. It's early time unique founders. And I can't tell if that's, you know, if we're gonna wake up in 2025 and go, wow, you remember when we were investing in 2018, 19? And was that because we were such good investors or do we have great timing or a combination? Now, having said all that, I trust what we're doing. So I have to come back to that.

But actually, I was gonna be one of my questions, which is sort of a how do you think about your own success?

And, you know, coming to L.A., you seem like you're in an extremely successful place where you are right now. And yet I always think it's fun to be sort of striving for the next thing. And so I don't know what you're striving for as your next thing or whether you measure success that much more about the plants and the family.

I was very forceful or very open in saying that I want to win in v.c, so I want to put up our numbers. This is me at double time. I want my numbers on a wall next to 10 1 10s, next to muckers, next to cross-cut. And you want to crush us? I want to win.

And that is not a blame game on that. Yes. And that is not a normal way.

This is talk necessarily, as I was told. Well, come on. We're all collaborative. We're all going to do it. What's it matter?

And like, fine. But like, are we all trying to get 3.7 times or might try to get 3.8 and you guys get 3.7? That's what I'm trying to get. And you can talk to Tyler like we don't lose deals very often. We do. It's really like I'm still mad about a deal we lost to the daily conversation we have and we're trying to make sure we don't do that again. And those are some of the processes we're working on a bonfire.

So as we are getting ready to raise this next fund, which is going very well, we are having a lot of internal, you know, conversations about who we want to be and what we want to be and when we all have short term and long term. Objectives, but short term and long term things we have to accomplish. So, yeah, we're trying to raise this fund because we need to raise this fund to continue to push the the model and push the platform.

But OK, what do we stand for and what do we look like in 10 years? And we're talking about that and we're we're trying to work backwards. Which is a hard exercise to do because so many variables go into that. And why is that important? Because we feel like that enhances the reputation and enhances deal flow quality. And enhances returns for investors. So I have no issue competing with you for the rest of my career. But I would think that your success is also extremely dependent on L.A.

just continuing to thrive, and that will make it a much more interesting place to be for the rest of our life.

Yeah, we've we've made the bet like we're all in. My wife was born, raised here.

I had to create this. This is really where it came from. Like I moved here in 0 7.

I was head of International. So I lived on an airplane still from L.A. And so I didn't have any relationship to Southern California, didn't care. Because I was so busy elsewhere and our business wasn't here. Entertainments here, I get that we didn't do entertainment. So once we saw the firm and I woke up and we went through the 0 8 0 9 crisis and gave me a lot of time to stay home because there wasn't a lot of deals happening in the world.

And I said lot. Wow. You know, we've got to recreate because I'm still young. Recreate. An opportunity here in L.A. and this is it. And so that's when I went in all in Southern California lucked out. I didn't make Southern California a great market. Neither did Marxist or anybody else but talking about it and pushing it and being supportive like Mark has been, for example, has been stream positive for the market, so lucked out on that perspective.

Great. So should we wrap wrap this up and say, I want to be cognizant of treating your time?

Oh, shut up. Harrell's did my time, too. So how did People's Diner?

No, this was great. It sure. Yeah. Any more questions?

So he should know lots more questions. So we'll ask him over beers. Thank you so much, guys. I appreciate it. Thanks. Thank you. Thanks, Mark. Great. I just listened to that episode. Mark Mullen is such a lovely fellow and so tolerant of my questions, really like that guy. Next up, even though a peek of ventures should be a good one. We're recording these once a week and having a great time doing it.

So please do share with the friends that we have more listeners and can get more great guests excited to be on the show.