Behind those warm and cozy knights at home. Thousands of employees at BP go to work every day. People producing more US natural gas, people building grid scale solar capacity, people turning landfill waste gas into pipeline quality renewable natural gas, and people delivering all of that power where it's needed. They're part of almost three hundred thousand jobs VP supports across the country. Learn more at VP dot com Slash Investing in America.
Megan Host of Alexander is Well. She's at one of the most successful VC firms of all time, Treacan Harwitz, and she leads the firm's Cultural Leadership Fund CLF, which is actually a very big deal. A lot of high profile people are in there. Yeah, and you know, she's just, you know, it's very interesting because there's not a lot of black people in VC, and there's not a lot of women in VC, so she's obviously a black woman.
So it's it's already, you know, a legendary situation just to even be in her position, but just you know, somebody that has killed in the game and is a rising star in the world of VC. So I feel like we haven't had a venture capital conversation in a while since John Henry was on. Shout to John, who
always you know, gives so much great insight. These conversations are very needed because you know, it's high level conversation with my god nineteen keys will say yep, and it kind of you know, gets people a information, but also thinking outside the box where we're not just talking about the same thing every single week, where it's like now you can start to thinking on a much higher level with talking about you know, billions of dollars and things
of that nature. So welcome, thank you for joining us, appreciate.
It, thank you for having me. I'm this is a big deal. I got to call my mom and let her know where I am.
That sixty mon on YouTube. She's watching it, no word, hit the like one and if you're on YouTube, hit the like one. Sixty three hundred people. This is all the biggest show ever created when it comes to investing, fantastic.
I'm listen. I need to I need you to say that number again so I can try to get on the plane. I need to put in a.
I mean, we will be honest if you could be an investors.
So oh yeah, you gotta be an investment.
I'm gonna try really really hard to make it. It's a crazy weekend for flying stuff I gotta do, but I'm gonna try to squeeze in one day. I promise, I'm gonna trying real hard.
It would be I got a ticket.
I bought a ticket, not even knowing if I could come. But I already have a ticket, and if I can't make it, I'm going to give it to somebody can come for sure.
Appreciate thank you, appreciate that. Okay, let's get into this conversation.
Let's do it.
I'm gonna jump right into it because I think you heard. We was talking to Don Peebles, and one of the things that he's said was, I don't want to quote the wrong number, but it's something like sixty billion dollars something like that. Venture capital money out there flowing on a crazy amount of sixty six billion, less than point like seven percent of one percent, like less than seventy basis points. Yeah, one goes to black and women, minority
and women businesses combined. It's not even the number is not even big enough to just say black businesses. So they got to put women in there combined.
So it's a fraction of a percent, you are career.
A fraction of a percent. When from my understanding, also, black women percentage wise started the most businesses last year in America.
So what we do black women? We just do it all everybody.
That's a fact. So that's a disturbing number. That's an extremely disturbing number that nobody's talking about, because, like he told us, he was like, imagine if it was even proportional to the population where it's like, I think we're like twenty percent of the population. So imagine if twenty percent of that sixty six billion went to black businesses, Like, imagine how that would change the landscape of things overnight. Like the money's there, it's in circulation, it's just not
getting to us. But nobody's talking about that. But everybody's saying, like, well, black businesses fell and different things in that nature. But I mean there's underlying issues on why this is happening. So, okay, how do we solve this problem with venture capital?
So first, it's way more than sixty six billion and venture money out there working. I couldn't even tell you, but you know, in Drees and Horwitz alone, we've got about thirty billion under management. We're just one firm that's only been in operation for the last ten to twelve years. And so we're just one firm. There's hundreds of firms out there, multiple that are big kind of multi stage investment firms like ours. So so sixty six, I would say, is a low a low number.
Maybe they think that every year, maybe sixty annually.
But at work, there's a lot of dollars at work over time. But you're asking a big question and I think is really hard to solve. But one of the things that I've seen over the last few years is people just got to put the put the money out there, because you know, historically people have a way that they look at companies. It's like you have to have, you know, we want the founders to have a certain degree. We want the founders who have a certain amount of experience
have worked at a certain set of companies. Right if we've worked at you know, X, Twitter, it's Facebook, it's you know, Yelp engineer, whatever the case may be. And the fact is that you don't need all those things to be a good founder. And so I think when we can open up the scope to who can be a good founder, we will likely get more dollars in
the hands of black folks and black women specifically. At the same time, I think the other thing is really important is putting black investors in place so they can distribute the capital. Right because people a lot of times, like for our for kind of the industries that people like you usually can only like understand problems that like
you know or that you've seen. And so when we ask white investors to understand black companies or black businesses, if they're in a particular space, they don't get it right. So then they get into the investment committee meeting and they got to do a vote, and they're like, well, I don't understand. I don't get it. And so if we have black investors that have dollars they can put into companies, that also, I think will increase the amount of dollars that go into black founders. At the same time,
it's not like black founders only found black companies. We find you know, social media companies or consumer you know e commerce companies too. But we do need to have more folks in the room understand our community to make the decision. So I would say probably those two things.
So VC is something that you know, it's not spoken about in a lot of our communities, and so I'm interested And what led you to the path of VC, it's for sure.
So I just learned about VC in twenty sixteen, so about six years and I was on a completely different path in life. I went to Fark Atlanta undergrad shout.
Out to the path.
Shout out to the Panthers, and I was getting a sociology degree. I was like, ooh, I love learning about people and groups. And I had this idea that I wanted to be an academic. I wanted to do research full time and teach full time, dean of a school and the president of a college. And I went through this path, got my first masters, went to a PhD. Hated dropped out. I was like, I got to get out of here. This is this is not for me.
Moved to California, and you know they say to be successful in Silicon Valley you got to have a good dropout store. So I got my drag out store, moved to Silicon Valley and it wasn't until I went to business school. So I went to business school at Stanford, and I didn't live on campus because by the time I went to business school, I was much older than you know, most of the people there, and I was like, I'm gonna save my house. I'm not gonna move on campus and all that stuff. So I was trying to
be tracked. Okay, when I was picking my classes, I didn't want to be driving at nine o'clock in the morning. I'm the one I want. It is very hectic. And so there was a venture class that was like early afternoon. I said, perfect, sign me up and didn't know what it was. And so I get in there and it's actually with Eric Schmidt. So Eric Schmidt is former CEO of Google, former CEO chairman. Everybody calls to him, you know, the first adult in the room at Google, and I
knew it. Got completely distracted by finance, that's the bottom line. Went into that class, read everything, just started doing extra stuff, extra reading. And one day we went for a walk with Eric after class and he may or may not remember this, but we did a little short walk around the GSP and he's like, you know, maybe you're one of my best students. I think you should try venture for real. And I said, play people don't do that. I said, now, why would you try to set me
up for failure? Knowing that there are not people who look like me in this industry, and so I kind of just brush it off. But after a while, I said, you know what, mayan if Eric Schmiz says you should try something, maybe you should try it. So then the rest is kind of history. I spent my time running up and down sand Hill Road the rest of my
time at business school, started doing internships. You're supposed to do like one internship between year one and year two in business school, and I think I did a total of like four all throughout the year I was working during school turned into a full time role, and I've been doing it ever since.
Cool question for you for those who are interested in getting into the VC space, what are some of the most innovative ways you've seen people that look like us breath into the industry.
Yep, So I would say that there's two ways, and honestly, the most innovative that I think most successful thing I've seen people do is start their own In the last two or three years, we've seen more black founded venture funds and firms than I've ever seen. It's been an explosion and I love it. If you're looking for the more traditional path, there's a couple of ways you can
do it. So working at a startup, people love seeing that you've spent time on a product team, that you've spent time in engineering or spent time in marketing, because you have insight into what to look for in a founder, right you understand like, oh, they need to set up this piece of the company or this vertical. You have
insight into kind of what the needs are in the space. Also, going to business school and kind of just getting an extra business edge and how to think about you know, technology and think about business and to think about startups is important. But I say one of the easy ways is going to a startup and actually spending some time in it because you get kind of an extra edge. And then actually probably the most important thing is having a perspective about the future. So VC is a long game.
It is very different from the public market. It is not like oh, I'll buy some stocks and the next year I'm gonna cash out, or in two years I'm gonna cash out, or in five years I'm gonna catch cause I tell my I tell my investors in CLF. You know, venture is an eight to ten year game. Like it is a long view game. I say, if you're gonna come to me in two years and ask me where your money is, I don't have I don't
have it. And so investors you have a perspective on what they think is going to happen in the future, like, oh, I think you know, people are going to want to start communicating through I don't know, bird calls it by you know, by twenty thirty, right, And so you start looking for companies in that space. You they just really want people who are kind of thinking beyond the way. So if you can kind of formulate, you know, an idea around that, I think you're likely setting yourself up for success.
Let me let me ask you this, ask me this. Okay, how do you get the money? So if how do companies position themselves to attract venture capital money?
Mm hmm. So different vcs like different things. All vcs are not the same. And the first thing is that people would You're gonna put yourself in a good position if you find the vcs that are looking for what you have. So, if you're building a consumer product, a social app, necessarily going to talk to enterprise investors or fintech investors or the biotech investors that's not going to
serve you. You're gonna waste everybody's time, your time and their time, and neither you know, neither party is gonna like that. So identify who the investors are that are in your space and not just like your vertical, but you're your size range, right, So are you raising a pre c round?
Right?
Are you raising five hundred thousand dollars? You're raising five hundred thousand dollars. You don't want to go to a growth fund, right. They're looking for companies that are much later, have a ton of revenue. You have a ton of you know, staff already. So make sure you're not only in the right vertical, but also in the right size range of you know, what you're trying to raise. You know, early stage vcs tend to be looking for folks who
great ideas. What it's you know, it's usually pre traction, sometimes pre products before you have anything. So if you're your early stage, it's really about the team that's building it, right, what is your background? Why are you the best person to build this particular company? And then as you grow it kind of changes, Right, how much traction do you have if you have an app? What's the engagement looking like you know, how often are people on your app
and for how long? So whatever the kind of key performance indicators are for your business, that's really what you should lean named you.
I think this conversation is extremely important. We all have children. I have a daughter, and Megan, obviously you are somebody that is extremely It's inspirational, right, And so I wonder what the experience is like coming into the space obviously that we're not familiar with in our community a lot of times as a black woman coming into the space, what has that experience been like for you over the past six or seven years?
Totally? So first, I have two kids. You're you, You're getting mom life right now. Because here's a crib. You see the paw Patrol.
Been there, Chase is on the case.
Okay, in the chat, I need you to say something if paw Patrol has a choke hold on your child like it for two years for two right, it's a thing. But for me as a mom, I'll say And I think venture in general has a long way to go when it comes to women in our role in this industry. And I think there's a lot of learning to do and a lot of role to do. But what I can say is that you know, at Andres and Horwitz, I've had a really fantastic experience as my own. I'm
actually on maternity right now. I have a two months those I have a two month hole, and I am a technically not you know, technically not working. But I really do love, you know, my role, and I love my firm so much that I'm happy to share about them any any chance I get. But I think the key is people making sure that they have really great maternity policies, people making sure that women feel supported in
the workplace. And it's not like, oh, if you have kids and you can't work until two am and you can't drop everything and get on a flight in Whateur that that doesn't mean you're any less committed to your role. And I think one of the things, and I hope this is okay for me to share, one of my favorite things about our firm is our leadership has been really phenomenal from a maternity le perspective and just supporting
women at work. And when the pandemic first started, you know, everybody was like, oh, we're going remote, but we think we're going to come back. We might do hybrid like no, like companies were really trying to figure her out what they were going to do. And I'll never forget Our founder Ben Horwitz got on our all hands and told us, you know, it just happens every Friday. And he says, you know, I was talking to lots of staff about what they want to do, and you know, trying to
get opinions on like what should happened first. That's the first sign of a good leader, is like asking people what they actually want to do. And he said, I was speaking to a woman and she said, this pandemic has been the first time that I felt like I could be a good mom and a good employee. And he said, I'm not taking that away from people. I can't take it away. So he said, we're not going back, you know, no matter what we do, we're not going back to you know, fully in office culture because I
can't do that to the moms. And I'm just like, sign me up, you know. So I really really appreciated that. But I think overall the industry does have a really really long way because it's not a lot of women.
Yeah, to tell in to what you were talking about, Like, as a parent, I have won seven year old. He's in there playing Fortnite. Now, how do you balance everything? So being a woman, African American woman and the super competitive space, how do you manage that family life while trying to be the best at your craft in this VC space.
I don't.
I don't balance it here. I'm gonna be agree with you. I don't balance it here with I do my best, but I try to put like a couple of little rules in play. So for me with my first son was I have a three year old and two months old. I was like, he's he's coming everywhere with me. I don't care if it's work, I don't care if it's for play. Up until he's two, I'm gonna takehim with me because if I'm traveling for work, even if I'm on for two nights, I'm all stressed out, like I
miss him and I gotta FaceTime. But if he's if he's with me, I can stay somewhere for two weeks and not be worried about it because whenever I get off for I'm going to be back with him. So that's kind of the first thing that I do. And I think that having women kind of food have been my superiors over time when they have children, they really lean into two women who are in the same position.
So I try to provide that for people who are on my team as well as much as I can, Like, you need flexibility, your child is sick, un feel bad about your childhood and sick? Why should Why should be scared to tell your boss? Right? And so I try to create that type of environment for everybody around, and I hope that people try to do it for me too.
And we just gotta stop explaining ourselves like, oh, I gotta leave early because I gotta take my kids to the you know, the they gotta basketball game, and just say I gotta go leave early, don't you know. We don't have to do all of explaining and hoping that people will like say, okay, it's all right saying what you never do.
You think that's an African American thing or a woman thing?
Yeah?
Both?
Both? Both?
Yeah? Yeah, all right, So let's let's talk about this. How do you pitch yourself to companies with VC, Like if you if, what what should what should? Like, what's the uh one on one kit that somebody should have if they're interested in getting VC money? And at what point should somebody even entertain trying to get VC money.
Yeah, so REASONA. People can disagree, but I think that it really just depends on how ready you want to be. But venture tech startups is very much a fail fast type of mentality. You rather try early figure out what you're doing wrong, and then come back again after you've
fixed all your mistakes. If you're trying to get every being perfect, like, oh, my company has to be perfect and we have to have all these details right, et cetera, you're probably gonna spend too much time trying to get that right and actually not know what you need to
fix because you haven't shown anybody right. You're building in secret and you're like, oh, this has to be perfect, and then at the end of the day you go do your pitch and they're like, oh, all these things are wrong and you could have fixed them far earlier. So again, if you want to raise at the pre seed level, a lot of people don't have a product. It's just an idea and a pitch dick and you're walking somebody through what you think it can be. A lot of investors on the VC side are just we
care about magnitude, right. It's like how big can this idea get? Have you identified a really really big market? Is it a really really great team, and do I think that they can execute and you can get money with nothing?
Well, so let's let's let's let's break this down a little bit. Yeah, So, because I want to talk to
people that that's not really familiar with the space. So the team is the team is very important, right, So putting together a team like senior leadership, all the people that have already had success in the space, that's going to be helpful, right, And then like putting together like the pitch deck of the idea of kind of like you said, just even if it's not fully there yet, like yeap what it can potentially do, and convincing somebody that you have the capability of actually making this happen.
Right for sure? For sure? And I would say even beyond getting to senior leadership, when you're at the really really early stage, it's about the founding team, right, who are the people who are founding this company.
If it's like, oh, say it's an education tech company and it's about teaching kids how to xyz whatever, and you're a former teacher, right, that's really interesting to investors because you know the space, you understand what the need is, or you're a former principal or a school board member, and then you partner.
Up with say an engineer who was at whatever other ed tech company. Right, we're looking at are these puzzle pieces in place for this idea and this team to actually work.
So you're leading the Cultural Leadership Fund. Can you talk about what it is it's important and how unique it is to the tech space.
I can, I can so Cultural Leadership Fund, So it probably starts. Let me started what Inreas and Horwitz is because that will make Cultural Leadership Fund make even more sense.
So do it.
In Treason Horowitz, we are a venture capital firm. We've got again about thirty billion dollars under management, and we do early stage and growth stage investing, so the full kind of scale of a venture capital h and we do so through a number of funds. So we've got a venture funds, We've got crypto fund, we've got growth we have a biotech fund. So all of those funds
exist at our firm. And then Culturallyadership Fund is this other fund that is a strategic co investment vehicle inside of Injuries and World with so we invest alongside those other ones that I just mentioned. But the thing that is really interesting and really cool about what we do at CLEFT is that we do those co investments with
two main missions in mind. So the first is connecting the world's greatest cultural leaders to the best new technology companies, and the second is getting more young African Americans into technology. So that first mission, you guys actually kind of talked about it earlier. When we say getting cultural leaders into technology companies, we mean the world's greatest athletes, entertainers, musicians, cea level executives, all of whom are excited about technology.
They're interested in innovation, they want to play a role in the things that are being built across this industry. And c LEFT gets to be an on ramp for that. And I think for so many you know, we call them cultural leaders. You know, in the past it's been about like getting a sponsorship deal with a company after they've gotten big, or figuring out how to monetize on X platform. But for us, it's about getting ownership on
the cap table of these companies. And again, these are companies kind of pre public, so before the average retail investor can get into a company, we're taking it back to the private space and making sure that we get black dollars onto the tables of these companies.
Cool question for you, So what are like three or four key traits that an entrepreneur can have that will make your fund or one similar to it go crazy like once you see their pitch deck or presentation.
Yep.
So the important thing to know there's CLF is a co investment vehicle, so we don't do direct investments. We invest alongside the other fund. But I think that's an important piece to bring up though, because in this concept, I think about black generational wealth and I think there's a few really key ways to do it. When we
think about technology and technology companies. The first is obviously investing in black founders, right, It's making sure you put dollars in their hands so they can put into their companies and grow. The second is getting black dollars on cap tables, so getting black investors into whatever tech companies
that are out there. And then the third is getting black talent into tech companies, so being an employee at the seed or the Series A or the Series B stage, because that early employee equity can potentially be very very valuable down the road. Right, We've all heard the stories of Facebook or Twitter making people millionaires overnight, and so I think those are the three ways to really build generational wealth for the black community. I think technology has
proven that time and time again. And see A Left focuses on those last two. We focus on black investor dollars on the cap table, and we focus on black talent into technology companies.
Dame Dash on the FaceTime call during Mark on Monday, A man, A man, what's up? Bro? Look say what's up?
Everybody?
One of the most powerful people in in venture capital, this is Dame Dash. Say that we're only doing a live show right now.
Bro, you're on the live show.
What did you say? Is that the cara skills you're showing me as a curtain? Yo, We're on a live show. I'mnna call you. I'm gonna call you right back. Yeah, Man, Actually make an announcement.
Actually, what do you think about? Bring him?
Let's dang, dang. I wasn't you gotta break the good? I wasn't good. I wasn't planning on this. But everything happens for a reason. So Dame Dash is one of our favorite people on Earth. A cultural icon. He reminds us every single time he speaks to us how much he's helped our program, how important he is to us.
Without I remind you.
How much I have to help my program. That's too so so, Dame I called you the other day. I said, look, we got this big thing invest Fest. We need you there. And after about five minutes, Dame Dash will be out in Vestfest. Confirmed.
You better not let me get around Dames. You think I am crazy?
Now, boy, Dave Dash, Ladies and Jail will be in Atlanta August seven.
I'm gonna make sure you that I must. I'm gonna call you every single day to make sure you that that's a fact that.
This episode is brought to you by P and C Bank. A lot of people think podcasts about work are boring, and sure, they definitely can be, but understanding of professionals routine shows us how they achieve their success little by little, day after day. It's like banking with P and C Bank. It might seem boring to save, plan and make calculated decisions with your bank, but keeping your money boring is what helps you live or more happily fulfilled life. P
and C Bank Brilliantly Boring since eighteen sixty five. Brilliantly Boring since eighteen sixty five is a service mark of the PNC Financial Service Group, Inc. P and C Bank National Association member fdic.
Erners.
What's Up?
You ever walk into a small business and everything just works like The checkout is fast, the receipts are digital, tipping is a breeze, and you're out the door before the line even builds Odds are they're using Square? We love supporting businesses that run on Square because it just
feels seamless. Whether it's a local coffee shop, a vendor at a pop up market, or even one of our merch partners, Square makes it easy for them to take payments, manage inventory, and run their business with confidence, all from one simple system. If you're a business owner or even just thinking about launching something soon, Square is hands down one of the best tools out there to help you start, run,
and grow. It's not just about payments, it's about giving you time back so you can focus on what matters most Ready. To see how Square can transform your business, visit Square dot com, backslash, go, backslash, eyl to learn more that Square dot com backslash, go, backslash, eyl, don't wait, don't hesitate, let's square handle the back end so you can keep pushing your vision forward.
Buying a car and Carvana was so easy. I was able to finance it through them.
I just, oh, wait, you mean finance.
Yeah, finance, got pre qualified for a Carvana auto loan, entered my terms and shot from thousands of great car options, always in my budget.
That's cool that financing through Carvana.
Was so easy, financed, done, and I get to pick up my car from their Carvana venue machine tomorrow by nanced.
Right, That's what I said.
You can spend time trying to pronounce financing or you can actually finance and buy your car today on the financing subject of credit approval.
Additional terms and conditions were apply.
Fact yes, breaking bread, Dame, I'm gonna call you. I'm gonna call you after this is over. Brother, You got your bedline.
Oh it's uh always always, always got jokes, jokes.
Truth and true, challeng killing alright, Uh, Dame Dash will be at investments ladies and gentlemen. Yes, market Monday's exclusive. I was gonna wait till till next week to drop that, but.
Yeah, I'm glad I'm on this episode because all the big announcements are coming in these episodes, is the fact, right At first, it's funny. I I think we were supposed to do a different day, but I ended up on the biggest announcement.
That is true. That's true, Tyler Perry, ask it just it just keeps getting bigger and bigger, and we're not done.
Yeah.
I'm sorry. I'm sorry to interrupt, but I couldn't resist myself Dan. Anytime Dan calls that's what you know, that's a legendary moment we grew up on, like music like Rockefeller, like you know. So it's still kind of weird to me that Dan Dash calls me FaceTime like it's blessings. It's surreal. It's weird. Yeah, you know what I'm saying.
Like the numbers that come through. I'm like, yeah, okay, yeah, this is our life now.
Yeah, and ask any question real quick?
Yes please.
So Ben is one of my favorite entrepreneurs of all time.
Can you share maybe like three or four big.
Lessons you've learned from him since being there?
Oh, take the time. Yes, that's a good question. You put me on the spot. I have learned actually a lot of lessons from being my favorite. I'll give you my favorite. So our firm is really active venture firm, doing a life of stuff all the time, and I think there are a lot of opportunities that come our way that could be quick and easy. But then as this phrase and we have this value at the firm
that says we take the long view on relationships. And what that means is is we're we're in a relationship business. But what that means is that we don't sacrifice relationships for a quick book. You don't have to when people
come into our firm. You don't have to worry about us going and running and tell somebody else about your business or all your secrets, or you know that we'll steal something or switch up something up like, we are very loyal to the relationships that we build, and that is just dangerously critical to me because I think that loyalty is really important, and I think trust is really important.
But we take the long beyond relationships. Nobody had forever has to worry about us, you know, flipping and dipping for a million here or five million there or ten million here. We are we really try to be about it.
Let me ask you that you spoke about the series a series BB here like seed round. We just spoke to Pinky from Floody Big and she just got twenty five million dollars in her seat.
Pinky my heart. That is my bag.
Oh yeah, yeah, thinky.
That's my bag. We went to college together. She is my Sto Roars. She brought me into Delta. She was Miss the Au the year before me, and then I was Miss c Au but she was Miss Junior and I was missing. We've been living up on each other for a long time for a long time. She's everything and I'm always following in her footsteps. So this is.
Old.
She has a one week old.
Yeah that is my sister for sure.
Shout out to Pinky. But yeah, can you kind of talk about that like seed rounds, round a round, Like what does that mean?
Yep.
So that's just about the stage that you are in the company. And I tell people to think about fundraising rounds as like a step function. It's not like a lot a linear you know, relationship like this, it just goes to It's not like that where it's like you do your valuation grows and it doesn't work like that.
It's like this right, And what that means is like if you're at a seed round, there's all the stuff that you need to do before you can raise a series series A, and then when you raise a series A, you just stay flat. There's all the stuff you need to do and accomplish and achieve from attraction and a profit and a revenue perspective before you can raise a series B, and then you jump up to the next round.
It's not kind of this like constant ticking, but essentially usually like a seed round is maybe you've got a rough version of your product. You are, you know, working on a beta. Maybe you've got a couple of people testing it out. By series A, you you found a little bit of product market fit you're starting to think about you know, you've got a repeatable process for acquiring customer or users. Right, there's all these kind of uh T traction and benchmarks that that firms are looking for.
And every firm is different. Right, Some firms might say, well, no, let seed that you said is more of a serious age to me, and for other people like, oh, that's totally a serious be So every firm is different. But the idea is that there's kind of these benchmarks that you have to meet to get to each ground.
So obviously the fund, you've had a lot of people invest You've had obviously celebrities, you've had cultural leaders You've had athletes. I'm wondering from your side, how encouraging it is to see this type of diversity coming into the space, or if it's not at the pace that you you know that is fulfilling to you, What can we do to encourage people to look at this as a way to actually put into your portfolio as a way to generate generational wealth, Like, yeah, what are your thoughts on that?
Yep, for sure, so I we The insight that kind of started Cultural Leadership Fund was this idea that when it came to the things that were cool, what people wore, what people liked to do, what they talked about, it was black Twitter and Instagram and in black TikTok. It was black people and what we were doing that everybody wanted to do. So but again, so often we weren't capturing any of the value of these companies right Again, we'd be real popping on there and then maybe get
a sponsorship later or whatever the case is. It came to owning the company as they grew and your kind of relationship growing proportionately, you know, and your wealth growing proportionately to the company, it just didn't exist. So Cleft was created in order to kind of alleviate that, where it's like, Okay, these black culture creators, people shaping, shifting,
creating culture. If we can get them on the cap tables early, then they can really truly capture the value of what it is that they're bringing to the platform. And so I love it because our investors have become some of the most savvy, thoughtful, you know, investment partners in these companies that that I've ever seen. So this whole concept of like a dumb athlete, this whole concept of like a spacey you know, actress or whoever business leader,
it's those days are over. These are some of the most thoughtful and kind of intricate people that that I've ever met in portfolio company like working with them. They don't want to work with people who are just going to drop a couple of dollars and disappear. That's that's completely useless because money is abundant when it comes to the venture capital space. It's like they don't have to save your money. They don't have to take your money.
They're getting money from you know, entries and Horrwitzer's choir or whoever else. If you're you know, when you're a coach or leader, it's not about your money. It's about the value that you can help bring to help the company succeed. And so I've seen people really come into that, you know, into their own as investors through through the cleft,
and I think that's only going to grow. I think it's an insight that other people are starting to catch on to and try to create kind of similar similar vehicles. But we're really proud that we get to be the first you you.
Talk about the impact is.
It?
Can you talk to us about the impact that attending c AU had in your life, because sometimes I think is after the Americans, we think HBCU isn't as good. But the guy who actually uh introduced me to investor went to Clark.
You mentioned why would you not?
Why would he go anywhere else?
Shout at him? Doctor pleasant? Right?
Can you talk about how important and what an impact Attendant Clark had on you in your career?
Was everything? Again, I was from I'm from Alabama, Montgomery.
Wow, I got a family in Midway.
You've been over there, come on family in Bidway. Yeah, Okay, that's the.
Country, country country, but it's okay.
My people are from Pigeon Creek and Greenville and yeah, and people try to let me. I'm gonna come back to your question. But people try to play me because all the people from California and New York be like, I'm from New York, I'm from California, and like where do your grandma from? Where's your grandmother from? And they'd be like, Mississippi, Ala, all these othern states. You're welcome, You're welcome, drinking out of a mason jar, like it's
my life, it's my life. But remind me really quickly, what was the question of Clark Atlanta. Yes, but I think when it came to experiencing people from lots of different places, it's I think places like Clark Atlanta that bring together students, particularly because it's it's a private aheb see you, it's really small, and so people come from different states, which I really enjoyed. Our whole model find a way or make one. It is on my whiteboard
I live by every day. I learned that I have a choice in the way that I respond to things and when I want to give up and when I want to keep going, really really good at just figuring stuff out, figuring it out. And I think this concept that, like people say it all the time, so I don't mean to sound cliche, but like, it's a lot of types of black people out here. We are not all the same, we are not all We don't talk the same, we don't dress the same, we don't think the same.
And I think I learned to appreciate the full diaspora of of black folks and who we are, you know, regardless of where we're from. But Park Atlanta is not We are hustlers also music, everybody's working on something. Listen, you can't go to Caalculanta. There's musician, somebody's producing, doing hair wrapping, it's popping, and everybody wants to come hang out on cak Atlanta's promenade and we we It just really is a beautiful space of community. And I'm so blessed.
And I'm because I come from a family of just HBCU people and I'm I'm praying, I'm hopeful that my kids will go to an HBC they go wherever they want but it is a beautiful, beautiful experience.
Shout all the HBCUs. We might have something social HBCUs to the city Atlanta. Let me ask you this as far as the VC world is concerned, Yeah, what is what's the rate of returns that you guys look for, like when you're investing, like in your portfolio, like what the you know ten years like down the line you say, okay, this, this was good. It's a two part question, but that's the first part.
So first you're trying to get it go to jail. Then SEC is gonna be after me. I got about what I say. I don't want them knocking on my door. But I'll actually point to something that Steve Harvey said when he was on with you guys. He talked to you guys about banning average, and I remember y'all being like, ooh, that's the first time we heard that this, friends, Dang it. So I can't brand that is Like the VC metric that we love talking about is VC is about batting averages.
But the piece that I would add to what Steve said was batting average is important, but also even more important is your slugging percentage. Right, So what is the magnitude of the hits that you're making, because your batting average could be X. Right, you hit three out of ten, But I think everybody would rather, you know, hit a home run with you know, bases loaded and knock it out of the park. And so we think a lot about what is the magnitude of the investments that we're making.
We love, you know, we can hit a single or a double, but we really, really really love home runs, you know, whether we get ten X or fifty X or one hundred X or a thousand X. We really do try to make investments into companies that we think are we're going to return the fund.
So let me let me ask you this if I can. The second part of that question is the harsh reality. Chris Lyon, somebody who you're familiar with.
Y if I know that guy, shout out to our guy.
So I was talking to him in l A. Mike went, low, you hear me? Now? Yes here you are back in business, all right? So he was talking. I was talking to him in l A a few a few a while ago, and he was saying that the greatest wealth opportunity in history is happening right now and will be happening for like the next decade in tech startups, and he was like, the vast majority of black people is not going to be able to benefit from it and then not going
to be able to make any money from it. And we talked about this show is about stock market investing right public trumpets, but we understand that massive amounts of wealth is made on the private side VC before companies go public yep. So like that's where you get a ten thousand x return and that's when you can turn fifty thousand to five million. Of course those that doesn't happen every day, but it's possible, yeh's. But you need access,
you need relationships, you need money. So that's something that nobody's talking about because billions of dollars are being generated with these tech startup companies and it's going to continue to be generated. But not only do black people hardly get any money from venture capital, they don't really they don't have the opportunity or the resources actually invest in venture capital. So that's a whole another set of problems.
So how do we get more people into actually the opportunity to invest in the private market as opposed to only investing in public markets.
Yep, so who there's a lot there. So, first, private market investing and specifically venture capital is dangerously risky. It is the riskiest asset class that you can get involved in. And I say that knowing that in the public market, by the time a company goes public, let me just tell you what going public means. Going public means that
you've already got a board in place. It means you've got a certain amount of revenue, you've got compliance things, but you've got all these systems in place in order to go public and sell your stock to a retail investor. That it's already been adjusted for risk. It's already been checked for risk. When you are betting on two guys
in a garage and I'm gonna say Montgomery, Obama. Just from two guys in garage and Montgomery, you know they could be complete total clowns, right, there's a huge amount of risk that you're taking that is just simply not there in the public market. And so, and the reason why it's so risky again, it's because venture is a long game and it's eight to ten years before a
company will go public or be bought. So that's ten years of risk you're taking up front, and we all know and investing, the people who take the biggest risks are the ones that are going to get the biggest reward. And so that's why venture returns are so huge or can be really huge, because we're paying pennies on the dollar for you know, a stock that's you know, thirty
dollars when it goes public. Most VC firms you know, six years later, seven years later before, sorry, sixty seven years before paid a dollar and fifty cents for sure, right, So but we had to wait you know, ten years for it to go public and to actually get liquidity, so your money is locked up for a really, really
long time. So with that being said, it's very, very risky, and the government doesn't want people taking that kind of risk as individuals, right because you know, that's why we got those classifications of accredited and and unaccredited investor, And that's because they don't want people to spend in their you know, retirement on some random idea that they heard
from a person to be an investor. So it started as a means of protection, but I do think it needs to be loose in because I think there's a lot of you know, well qualified, very able people who can make investment decisions, but it's really tough and people need to be protected from that. So there has to
be some balance around private and public investing. And the last thing I'll say is, yes, black people haven't historically been involved, but like the firms that are coming up the last couple of years with these black general partners. I know you mentioned John Henry earlier and the guys that he works with there are I mean, I've known of at least twenty to thirty, you know, black lead or black GP funds in the last two years. So
I'm really really optimistic about it. And like I said, the other way that I think people are going so black black people investing is one way to get money. And I'll actually talk about like how we make money because I think that's probably important to describe to people black people investing the dollars is when you invest the dollars, you get the money back. Black people on the cat tables at either as the GP or as an investor in a GP, and then black people working at the
tech companies. Right, Entrepreneurship is not for everybody. I say that all the time, and I have one thing that I'm trying to get people to stop saying, is that, like people who work at companies aren't betting on themselves. What that's crazy, Like that's ridiculous, Like just to leave
the company and bet on yourself. I don't want to be an entrepreneur, Like I have no desire to build a company, right, So for the people who are interested in a particular you know, problem that they want to work on or company they want to be a part of, getting in at the early stage is really important. How you can cash in on that that will.
Yeah, so one of the I'll just add to well what what Shad said from it, that's from an investment standpoint, but sometimes you know, having the educational process is even more beneficial when your hands on you're actually in the space.
And so what are some of the opportunities and roles that come within being in a VC firm, Like how do people even apply or what are the qualifications that they need to even be in a firm right, and what are the roles because like obviously you're you're leading a role, but there's other opportunities for people to be employed inside of it, right where they can get hands on knowledge.
So there's space for employing and inventure and employee intake. So inventure, if you're you know, firms like Indres and Horowitz, you know, we we need all kinds of people, right, We need investors, we need marketing people and Dreas and Horowitz has been a huge kind of marketing and content you know machine for the last several years. One of the things where most is our content, right, so editors,
podcast people. We have to go to market folks. So if you've done sales and customer success, we support our portfolio companies with those things. So we need folks who have those those skill sets. And so I think at the larger stage firms or the larger you know size firms, there's like a range of jobs that you could do, similar to tech. To be in tech, you don't need to be technical, you don't need to know how to code. You could be in HR, you can be in marketing,
you can be in sales. So it really is just about making that transition into the technology space because like you said, I agree with Chris one thousand, technology is the biggest wealth driver that we have today. And so we were very very like hardcore about it. And I'll say it over and over again that it is one of the clearest largest ways to build wealth over a period of time.
What are the three books and three conferences you think people should attend or read to learn more about angel or venture capital?
So our founder Ben Horwitz has a book called The Hard Thing About Hard Things. I think it was a great book about company building and the whole space. And actually Scott Cooper, Scott Cooper does not get the shine you know he deserves. Scott Cooper is one of the four managing directors at Injuries and Horwitz, and he has
a book called The Secrets of sand Hill Road. And for the folks who don't know, sand Hill Road is considered kind of VC land, right, All of the largest, kind of most active VC firms at least from years past, are on sand Hill Road. It's in Menlo Park. All of them are, you know, kind of side by side all down this road. And it's called Secrets of sand Hill Road. And you can get the insight into what it's like, how people think about investing in companies, how
the firm thinks about it. It's one of my favorite books. That's a solid one. And then one of the first ones that I read it's like a little sin book.
It's called breaking the VC. And I'm sure y'all can agree one of the when it comes to things you don't know about, if you get the vocabulary downpack, you're probably seventy to eighty percent there if you just learn the language that people are speaking and it breaks down the words like investment and like carried interest and you know, arr, whatever the case may be, just so you can get knowledgeable about about the space and how it works. And actually, can I go back? I mean, I sorry, go head
a shot. I was gonna say, I brought up careed interest again, and I feel like I should probably tell people about what that is and how vcs make money, because I think this show is about how it all works and how to get people to make more money. So the way that venture firms make money is we take money from outside investors. They're call it limited partners, and their hope essentially is that will flip it. They hope to give us money and then we'll flip it.
And you know, we have feed carried interest. And I think it actually comes from like old schools like shipping, like actual ships, where it's like, well, carry your load from one place to the next. But we're going to keep twenty percent of either whatever it is you're shipping or the money that you make off of shipping or
get carried over to venture capital and investing. And essentially, so say we raised, you know, get one hundred million dollars from outside investors, and we three exits, So three hundred million dollars we've made from the investments that we made with that original hundred million. One hundred million dollars is going to go back to the investors, right, you get your money back first, and then at the two hundred million dollars it's left, we're going to divide that out.
Some firms take as little as twenty percent. Some firms take thirty percent if they you know, at least three exit. Like if there's a range, let's just say thirty percent, So one hundred goes back to you, and then the two hundred million you get to keep seventy percent, and then the venture capitalist keep thirty percent. So if there's two hundred million dollars of profit, will keep sixty million. And that's how we make money.
Yes, very important.
So when we get when we get our black investors on the cap table, that one was it one additional goes to.
Them And I think I had to ask you this before, but the ultimate goal for you guys is investing in a company, and the company either has to go public on a stock market like Uber or one of these, or it has to be purchased acquired like Ring which got acquired by Amazon.
Ye.
Those are like the two way two main ways that you guys would make money, right.
Yeah, those are called liquidity events, So our money is locked up until the company goes through a liquidity event of going public or being purchased. And like when you when you think about like the batting average, slugging percentage, et cetera, when it comes to like how many companies really do fail? Right you said earlier like, oh, I've heard or a lot of people, a lot of other people were saying that black women companies fail or black
companies sail. Most companies fail. You don't have any lack, you know, like I want to say, like eighty to ninety percent of startups fail because it's a tough it's a tough industry. It's a really tough thing to do, and founders have to be really resilient and have a great idea and build the right team and get the right coade. Like there's all these pieces that need to work,
and so it venture a lot of times. If you invest in ten companies, maybe you know, probably seven of them are going to go to zero and then two might be singles or doubles, but you're praying that one of them. Right. Is that one hundred x that you talked about with shy yea or more?
Yeah? I like that percentage? Yeah yeah, yeah, let's go before go ahead. Yeah yeah.
My final question, what's the one piece of advice that you wish you would have known sex years prior when you entered into the venture space.
The power of relationships. I didn't know if that was as important as it is, and it's probably more important than it should be. So even from applying to jobs to you know, building your house to what get it sending your kids to school, like who you know and and the relationship that you can build is just really important. And when it comes to like finding new companies and sharing deals and spending time with each other, like networks
are just really really important. And I learned that the hard way because I used to you know, really think that like if I just I used to think I could do everything on my own, and you just can't. You cannot, And that is into so many different ways, in different parts of life that you just can't do it all on your own. So building networks is really really important.
It's the most it's actually the most important thing in the world. Relationships is I agree to everything.
You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast easy? Just use Indeed. Stop struggling to get your job posts seen on other job sites. With Indeed sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster. According to Indeed data, sponsored jobs posted directly on Indeed have forty
five percent more applications than non sponsored jobs. Don't wait any longer, speed up your hiring right now with Indeed, and listeners of this show will get a seventy five dollars sponsored job credit to get your jobs more visibility at indeed dot com slash pod Katz thirteen. Just go to indeed dot com slash p O d k A t Z thirteen right now and support our show by saying you heard about Indeed on this podcast, Terms and conditions apply. Hiring, indeed, is all you need