David Hall Discusses the State of Venture Capital (Podcast)

is run by Steve Case. And in my research with Steve Murray, I came across Rise of the Rest and afterwards he said, Oh you're interested in this, I got a guy you have to speak to UH and his name is David Hall. If you are remotely interested in Oh, my goodness, so much stuff. The state of venture capital in America today, Why it doesn't have to just be focused on three areas, namely San Francisco, Boston in New York. How much entrepreneurship, technology, startup energy is in the rest

of the country. Well, you're going to find this conversation absolutely fascinating. With no further ado, my chat with David Hall. My special guest today is David Hall. He is a partner at the venture capital fund Rise of the Rest Seed Funds, part of Revolution Partners VC. He comes to us with a b a. In Economics from Morehouse College

and an NBA from Harvard. Prior to joining Revolution, he worked at The Washington Post as the director of Planning and Developing, managing corporate M and A and investments, and helping to launch a number of new print and dig dual publications. David Hall, Welcome to Bloomberg. Thank you, Barry. It's a pleasure to be here. So I've been speaking to a number of vcs over the past couple of years, and I'm always fascinated by their backgrounds. Your background is

a little unusual. How do you get from the Washington Post to the world of venture Let's let's start with what were you doing at the Washington Post. Yeah, so I went to the Washington Post. Actually interned at the Washington Post company between my first and second years at Harvard Business School, and it was for me, it was a perfect big place because where do newly minted MBAs

want to go. They want to go to industries that are in crisis, And there was no greater crisis in the two thousand early two thousand's than the print newspaper let me interrupt. You newly minted MBAs want to go to industries in crisis. I always thought they either wanted to go to high paying Wall Street jobs or high paying Silicon Valley jobs. You're suggesting other Well, I figured I could always end up in one of those high

paying coastal jobs. But but for cutting my teeth, I needed to manage a business through disruption, and and that, to me was going to be such an interesting you know, how how could I be the savior of of the great gray Lady of of of Washington at least? And managing a business through disruption sounds a lot like what vcs look for in startups. It's, you know, I was reflecting on the train up here from from Washington, how much of what I've been working on has been kind

of accumulative. It's it's looking for these these How do you recognize disruption before it hits? And then how do you manage through the disruption? And how do you and now from a from an investor's perspective, how do you manage that process? Sort of indirectly because we're not in the company every day, but we're advising these companies about disruption that's either coming or disruption that hopefully they're creating

with their products and services that they're launching. Quite quite interesting. So that was your first experience in the workforce. How did you tack from that or to venture. It's easy to talk about, but but it's actually more visual. You know. I was sitting there one day at the Washington Post, and it's the only place I've ever worked where sitting at your desk reading the newspaper was called product research, right,

And so I was reading an article. I was reading an article about Steve Case and the firm that he just launched after leaving a well time warner, called Revolution, and it was gonna build these big iconic businesses that we're gonna tackle really tough problems around healthcare and and financial services. And it just was so exciting to me. I said, I've got to I've got to plot my way there. I you know, I did a little cyber stocking at the time, finding out where the Revolution offices were.

I did some LinkedIn searches to find who I knew there, and ended up finding a woman that I went to a business school with who was there a couple of free coffees for her and and a glass of chardonnay, And I found myself with with an email introduction to one of the one of the founders. And that's that's how it started. And and not I have to point out, unlike most of the big vcs, Revolution didn't set up shop in New Yorker, Boston or anywhere in the Bay area.

In Silicon Valley. They're pretty close to where the Washington Post is headquarters. It's it was three blocks. It was the easiest commute for an interview I've ever had. Yeah, I mean, you know, the Revolution story and and and what Steve has built and others have built with Revolution is really phenomenal in in the Washington, D C. Area. It's you know, it's been his home. A O. L.

Grew up in the in the Dullest Corridor. Has been a phenomenal explosion of just capital ingenuity in that area and has helped spawn, you know, the grandchildren of A. O. L. Or now companies like Vox Media, which is you know, run by Jim Bangkoff, who was at A O L. Or even living Social which was a huge company that was run by a former product manager at Revolution Health.

So you're still seeing these spillover effects of of that that sort of huge entrepreneurial flashpoint with A O L. Now I think of that area as very heavily um laden with telecoms and other networking firms. Uh, is there any cross pollination with Revolution or you have a very specific set of things you focus on and telecom may

not be it. Well, I mean, given given sort of the A O L uh DNA of our place, there's a lot of a lot of focus on on on social networking, social media, and and general consumerism, like how how do we how do we make the lives of consumers better, easier, faster, cheaper by by investing in a lot of products that that's sort of where the consumer

is the end user. So a lot of our investments throughout time have been either B to C directly or B two B two C, where where the end user the business might not necessarily be generated from the consumer, but the end user was a consumer. Because just you know, the A O L D N A is really pervasive about how do you make it how do you make it easy for the average Joe to get online. That's exactly what the on ramp to the internet. That's how

we described A O L for forever um. So does that background own change what you look at how you look at it, or what you put company capital in. What's the impact of the A O L background is it? Is it just so obvious, is hey, we're used to doing U B two C sort of investments, business to consumer sort of investments, or is there a change in the entire process of what comes your way and the way you consider it. Well, I guess the way that I'd most likely consider it think about it is we

really approach things from a brand building perspective. How do you build the brand so that it helps the consumer recognize that there's there's trust behind the brand, there's a simplicity, there's a real value add that's coming through through the products that we're backing. I would also say that you know, we're also as we deploy capital and a lot of the deals that come to us are deals that that

are are pretty focused on consumer stuff. We we have a lot of B two B this to business and investments as well, but but you know, a lot of the deals that we see just end up being really strong consumer brands. I previously had one of the partners in your firm, Steve murray on an. I discussed ever so briefly Rise of the Rest with him, and he said, Hey, I got a guy you should speak to about this. Name is David. I love this concept, and I have to just give a really brief explanation and then let

you dive into this. So most of the venture capital money spent in the United States, it's San Francisco, it's Boston, it's New York. They're a handful of other places, but there are these huge stretches of entrepreneurs and innovators and technologists that it's a venture capital desert. What led to the development of Rise of the Rest side funds and tell us how it came about and how it actually operates. Yeah, sure, it's. It's It's actually stems from a very very simple premise.

We believe that great entrepreneurs can start great businesses anywhere, and for so long in our country's history, or at least in the current and in the recent history and the digital history digital era, that that that belief was epicentric to the coastal hubs of As you said, San Francisco, New York, in Boston, and one of the things that we've been doing at Revolution when working with Steve, we started in twenty fourteen these these bus tours, which became

themed Rise of the Rest bus tours. And let's put a little flesh on that. Half a million dollars, a bunch of people pile into a bus, you go to a specific city. What happens there, it's it's it's we started. We kicked it off in Detroit, and we start in the morning. We we convene the leadership, I like to call it the suits and the T shirts getting together for the first time. Will bring the politicians, the mayors,

the governors, the state and federal officers. Will bring the heads of economic development, the university presidents or business school deans. Will bring the heads of the tent pole companies, those big success companies that have kind of broken out and

made a name for themselves. But we'll also bring the startups, the T shirts, the guys who are guys and girls, guys and ladies who are cranking every day on building the next app or the next B two B sas business and bring them together to say what's going on in Detroit, in Nashville, in Pittsburgh, what's happening in this city? What industries are flaring up? What are you what are you noticing about the flow of talent, the flow of capital, the flow of ideas into and even out of your city.

We follow that with visiting, going out and seeing that, talking to these companies, and and going and being in their physical spaces and meeting as many companies as possible in that venue. And then and then we in the day with a celebration. We do a pitch competition where the winner has historically received a hundred thousand dollar investment, but it's a way for the community to show the best of the future and you know, a handful of ideas.

How that's evolved over time. We've done it now in thirty eight different cities on silly seven different wars, so we've we've literally been you know, from from places like York, Pennsylvania, down to New Orleans, which is near my hometown, uh and seen seen this play out in so many different cities.

And it's what you walk away from is both like the how different cities take entrepreneurship differently and how they've had to deal with it differently, which is not not undifferent from how or indifferent from how they've had to

to historically deal with economic ebbs and flows. I mean, one of the things that's really interesting to me is we see a lot of robotics in Pittsburgh, for example, because of the focus of Carnegie Mellon, but also the history of steel there, which kind of makes sense if you draw a narrow line between steel to robotics. Right. You see a lot of advanced manufacturing in Detroit, which

obviously makes a lot of sense, but interesting. You'll see some interest, some really interesting things like ed tech in New Orleans. Why because Katrina forced New Orleans to rethink their entire education system, and you saw a lot of Teach for America alums coming there to be helpful, but then being entrepreneurial about how do they how do they solve these problems and these these these Teach for America alums mostly started businesses in New Orleans focusing on education

and education reform. So you see this, this the legacy of the great industries of America and steel and manufacturing take place. But also you see the resurgence because of current situations in places like New Orleans that that that launched these burgeoning industries and things like education technology. So what are some of the advantages of not being in

these coastal urban centers. When you roll into a Detroit or a Pittsburgh, I have to imagine the costs of everything are are a fraction of what San Francisco is. It's so funny. I was on a call just the other day with a company that relocated from Boston to Wisconsin, and they were able to extend their burn by over six months just by redomiciling the company. Right, So I think that I think that there are a couple of things.

I think that obviously, the call of living differences are really different, and and and and you can grow a company a lot farther on on the same amount of funding. But I think you're also seeing the flow of talent. I think you're seeing people graduate from, you know, the University of Michigan, or graduate from Georgia State or Georgia Tech. And say, you know what, I don't I don't necessarily feel like I want to go to these these these coastal hubs. I want to I want to stay here.

I want to become an entrepreneur. And it's easier because my network is here. It's it's it's it's a more livable, more affordable, definitely more affordable environment. But but the jobs are now starting to happen. It's it's part of the flywheel that we're seeing this flow of talent boomerang back

home because that's where they want to be. And and I think that you know, the combination of those two factors with the flattening of of the you know, it's never been cheaper to start a business because of you know, things like a laptop and an internet connection in Amazon Cloud, and you're pretty much ready to get ready to go, and and and that wasn't always the case, you know,

a decade twenty years ago. Just to say the least, there is a giant um demand for STEM jobs even in the highest paying silicon valley and and biotech in in Boston and a little bit of everything in New York. Do you run into an issue of shortage of of skilled cat labor in in those towns that may not be known for their their tech workers. So I would you know that that's a that's a common issue. We hear a lot and I think that the real, the real focus is for a lot of the early stage jobs.

A lot of the you know junior folks, the entry level jobs. They're coming right out of the university. So it's it's no different from leaving Morgan's Morehouse and coming up to New York to work at Morgan Stanley. These folks graduate from you know, Vanderbilt and then go work directly into one of the Nashville startup Nashville startups, I think, what about koders and and statistical analysts is I guess

designers you could pretty much find it. You can find a lot of these folks anywhere, and I think you're you're starting to see the recruiting of them away from the hubs. One of the big challenges for for for developers, particularly in in the coastal hubs, is there's such a high opportunity cost on their talent. Right if if you have a bad quarter as a startup or miss a couple of year milestones, half of your development staff is looking for another job because they recognize that, you know,

unless they work for Google, Yeah and and so. But but but in Madison or in Detroit, like, you've got a stickier employee, and we're seeing that those folks end up staying around longer, being more productive. You know, they're able to get a backyard and start a family. I mean, I I saw a deck one time. We're a we. The question was asked, what about recruiting, How hard is it to recruit? And the the entrepreneurs showed a slide of a birthday party. He says, it's easy for me

to recruit because I can promise this. I can't promise a backyard birthday party in San Francisco, New York. And and I have to point out and ask you about the board of advisors for um Rise of the Rest. This is just an astonishing list. Jim's Barksdale of of Netscape, Jeff Bezos, Tory Birch, Ray Dalio, Steve Case, John Dor. I'm just I'm gonna stop there. But that's just an unbelievable list of investors. It goes on and on and on. What's it like working with a group that August and esteem.

We are beyond privilege that that that those those notable entrepreneurs, investors, business leaders, among the best of our era, have decided to join us on this mission. And you know, we think that the things that they saw in us, and and and sort of the implicit mission of what we were doing, of democratizing this flow of capital was really important. But we also think that they're they're you know, they're investors.

These folks understand business and they understand that there's something going on in the heartland, there's something going on in the middle of America that you know, either their personal portfolio didn't necessarily have have a enough allocation, but also, you know, a lot of these folks are from you know, David Rubinstein, one of our LPs is from Baltimore. You know, Basis is from New Mexico. Their their hometowns are these cities that have been left behind a lot of times.

And of course everybody wants to see their hometown flourish, and they want to see the return of jobs to to a lot of these places where where they they have they haven't seen the economic growth and vitality that that that we've seen a lot on the coasts. Fascinating. So let's talk a little bit about private markets and and venture investing. Why is it that when we look at private pre public companies, there's an expectation that the performance is going to be so much better than the

public markets. You know, why shouldn't people just buy an index fund and forget about it? Is? Is how someone put it the question to me, So I'm gonna pass it to you. What are the potential upsides of a venture investment? Well, well, I I think you know. The first thing is the appetite and ability to allocate risk. Whereas because of regulation, because of just the the the cost and visibility of being public, it's harder for companies

in the public markets to do that. But on the private side, we're able to see things before they're before they're ready for prime time, where they're still very risky and can completely flame out. Right. The risk of every round of investment that we do a revolution and the rise of the rest we we we run the risk of the company calling us up one day saying it

didn't work. And you know, as as as as painful as that is, they're luckily for us, there's so many more calls that say, hey, it's working really well, or it's what we think. We've got eighty percent of it figured out, and and then the risk has been greatly reduced. But the opportunity is still huge to come up with, you know, the next social network. You know, it's it's really risky when it's a little a little face app

for Harvard University students. It's a lot less risky when Facebook is going from the United States into the world world. And I think that that's that's where the public markets do really really well at assessing risk. I think the private markets do really really well at sort of evaluating and managing risk before the drug is cleared FDA approval.

So let's let's talk about those numbers. And I'm not going to hold you to a specific number, but my general understanding of the way venture investing works is your expectation is that the vast majority of investments are going to be that phone call, hey it didn't work out. How many break even or better? And how many are just outsize giant winners. I mean, look, I think every

every venture capitalist underwrites a little bit differently. Um, you know, we don't really talk about sort of how we think the the ebbs and flows of the market will will

affect us. The goal obviously for us is to have as few, uh as few zero returners as possible, and we think one of the benefits of of our geographic focus outside of the coast actually benefits us be because again the dollar goes longer, and a little bit of this sort of Midwestern and southeastern and and and just the the ethos of the people is I'm not gonna let this fail. And and and you know, we typically find companies that are farther along in their revenue cycles.

So they're there, there have been, They've been a lot more de risked than than the proverbial napkin on a in a Silicon Valley coffee shop. Right, And so we we we see that really interesting. We also think look on the upside and then the hockey stick side. We think that there's lots of opportunity outside of the traditional the judicial coast to see those those companies really accelerate and have this explosive growth because because of the flows

of capital are so or so have been so flattened. Um. But I'm really you know, to answer your question, I think that there are a handful of companies that are are going to go go to zero. That's just the nature of the beast. Um. For for me, it's all about protecting the middle and the upside and making sure that those companies that have a ants are introduced to the right customers and partners and and and executives from recruiting so that they can actually skyrocket on onto some

real successes. Are you finding the valuations are better away from the coasts and that the ability to um pick and choose your spots is a little easier than perhaps what people are dealing with in the Bay area. Yeah, I think so. I mean, I think we're seeing a lot of um less competitive valuations. I think there's still I think they're still froth in the market, and and

and in every market. But we were we are finding, by and large, our buying prices are a lot better than than some of our our our value competitors and New York competitors are seeing in in the standard Series A or series seed round that we would invest in. And and since you brought up froth in the market, um, we've seen a number of unicorns over a billion dollars in the private market, although a few of them seem to have gotten their wings clipped uh recently. Um, how

do you view this sort of cycle? How frothy is it? It doesn't feel to me like this is situation because so many of these companies seem to be either generating revenue or heaven forbid actually making profits. How do you look at that froth and the overall cycle. So I was literally cutting my teeth in during the first big, big sort of tech correction UM and then was working at Revolution during the big economic recession of oh eight oh nine. This, this, as you said, seems different to me.

And I think it's because we're seeing these companies stay private longer and not rush for a public market exit. And I think that that that helps them figure it out right. Like you know, folks were financing on S one one threats and eight o nine and and that didn't play out very well for them. And I think you're seeing the companies take the time and and build the gale necessary to get it right when when the

I p O actually ends up happening. Quite interesting. Let's let's talk a little bit about the sort of venture investing you guys do at UM Revolution. What sort of returns are you looking for on any specific funds or any specific investment. Yeah, you know, we're we're a traditional VC. You know, we want to put a dollar in the machine and get more than a dollar, hopefully hopefully a five or a ten coming back on out of the machine.

But but but but to me, the goal is also about building these great iconic companies that are tackling some of the toughest problems that we as a society are facing around healthcare and education, transportation, food security, and things like that, because I think that those are those are gonna be big winners for investors over security, having great and and and open access to healthy, clean food options because we're you know, we're still trying to make sure

that we have a healthy population, and and there are lots of businesses that are working really hard to get Farm to table is sort of the yeah, the rule of the day, but but just trying to figure out how do we make how do we do that at a sustainable, scalable level. Right farm to table in Brooklyn or or the city or even the suburbs are small restaurants and local farmers and it's very high end and

very chicy. You're talking about a much broader approach, And I want to mention industries that you're looking to disrupt include food, healthcare, transportation, agriculture. These are like basic foundations

of society. How can you disrupt those? Yeah, So the way that we think about that and and we largely see opportunity through the lens of geography, and that we think that, you know, the then if you're going to come out with the newest farm tech business, kind of hard to see how that's going to be a guy from midtown Manhattan coming up with that or a lady from Silicon Valley who's gonna be able to come come up with those ideas who's never spent time on the farm.

And we think that there are, you know, lots of experts in places like Des Moines or St. Louis who know a bit about farming and agriculture. We think there are lots of manufacturing experts who who come out of places like like Detroit and and and an Arbor who can help us build things as a as a country. And so we we think that those types of opportunities are gonna come perhaps outside of the Valley and outside of New York. And let let me be clear, because

it was one of the criticisms. We get it. Our fund a lot is about about bashing the valley, and and we are definitely not not bachelors of the valley. We appreciates looking valley. They are the cathedral that every other city aims to be as it relates to sort of allocating capital and assessing risk for for early stage entrepreneurs. And and I tell you know, a lot of the cities when we go and tour always ask us what's one thing that they do in the valley better than

what we do, you know in pick a city. And the answers always they accept failure and they accept risk so differently then you know of the cities in the country because because it's it's it's just woven into the ethos of Silicon Valley. Things fail, but out of that, like like Phoenix's, you know, these great companies can emerge from entrepreneurs we've had massive failures, and so we go ahead. We just we love to to highlight you know, we're not We're not looking to steal share from New York

or Boston to the valley. We're looking to grow the denominator. And say, you know, if of all venture capital went to three states last year, Massachusetts, New York, and California. One percent of venture capital goes to a place like Michigan, one percent goes to Georgia. There's a lot of smart people in those states. And if we can just not not move California from to lift Georgia from one to two percent, but just grow the denominator. So it really because the beauty of what we do is, you know,

as an asset class venture largely creates jobs. Right when when we write a when I'm investing in a company, the first thing I always ask is what are you gonna do with the money, And almost always the first answer is We're gonna hire you know, It's not it's not we're going to close the factory to generate profitability, or we're gonna close the trade at a you know three A or a I R R. It's I'm gonna go hire fifteen developers and to community managers and and

a CMO because we're trying to build something great. And that to me, you know that we all know in cities and politicians are well aware of things like the tech multiplier, where every technology job generates you know, five

to six general economy jobs. So when they go out and hire five people, that's you know, another dentist that gets hired, or another restaurant that needs to open, or a coffee place that needs to open on the corner to help sort of accommodate all of that growth in some of these heartland areas that have been losing for the last couple of years. I love your take on

on failure in Silicon Valley. My favorite thing on some of their VC Bay area websites is their list of here's yeah, we we said no to Ober, we said no to Apple, we said no to Amazon, like their list of failures, and it's a badge of honor. You're you're dead right on that. It's quite it's quite fascinating. So when you're putting together a portfolio of companies, when when I look at a portfolio of stocks, I want to see some US companies, some emerging market companies, some

European and Asia, Japanese companies. How do you approach creating a portfolio? Do you think in terms of different sectors and a distribution of risk? Tell us about how you go about doing that. Yeah, so we were we're obviously a geographically diverse because that's part of part of our

our mandate. But but in that we we we have lots of different industries, We have lots of different business models, and you know, some are like like we've talked about a little earlier, some are directed consumers, some are business to business and and you know, summer like will likely end up being pro cyclical, some will likely be countercyclical.

And so I feel like as we you know, as we take a step up and look broadly at our portfolio, we do have a range of of of really interesting business models in in in targets of the economy that are different. You know, we've got some healthcare companies, We've got some retail or e commerce companies. We've got a handful of food opportunities that we're pursuing. And so uh, food different from agriculture or one and the same we

we see food in agriculture is perfectly commingled. And we've got some some some longer plays and in the actech business. And we also have a couple of of of food brands that were also really excited about. I remember reading and it's a couple of years ago already. I think

it was Wired magazine. You talk about ag tech, there are these big commercial like John Dear tractors, and people pretty much created a using an iPhone and a satellite receiver a way to self pro him these tractors to do a whole field with nobody sitting in the cab. Long before they were self driving cars and trucks. It seems that tractors were pretty much the first to do that.

When you talk about ad tech, is that the sort of stuff you're referring to, or is it more specific um soil chemistry and material science and things along that or a little bit of everything. It's a little bit of everything. I'll give you an example. We're investors in a business called app Harvest. App Harvest is based in Pikeville, Kentucky.

And what this business does, and it's so fascinating. The founder and entrepreneurs is just this really dynamic guy and he's found he's basically turning abandoned coal mines into hydroponic farms, hydroponic greenhouses, and he's hiring former coal workers to come work these new farms on on what used to be

a coal mine. And so to me, that's that's the the essence of ingenuity, Like how do you take abandoned awful coal mines and tournament to really high, high quality produce that by by virtual Being in Pikeville, Kentucky is like less than a day from of the United States, Right, That's that's how you deliver a better, higher quality product to a greater degree of people than than while doing it in a way that lifts up a community that's been you know, by almost by definition sort of impacted

by the change in one sort of the the economy. How do you respond when someone comes along and pitches you something like that. My immediate reaction is growing food in coal mines? That sounds horrible. How do you get by that initial wow, that's pretty wacky and out there, or have you trained yourself to sort of say, huh, well,

that's interesting. The hardest thing about being a venture capitalist is to always avoid that initial gut reaction of that will never work, because you'll that will never work yourself to death less business and and and for me, the question always in that being well, how can that work? Imagine the possibilities and imagine how like, like, how can these ingredients be put together? You know, flour, sugar, eggs, milk independently would all taste gross, but you put them

together and you come out as a cake. How can you assemble these ingredients to to be a cake as opposed to you know, a mudpie? Right? And I think that's that's one of the challenges we face every day is is because nothing's ever gonna work, and and we're we're looking at ideas and a power point deck, talking to founders with with hopefully some high degree of domain expertise, because it gives them the authority to talk about, you know,

hydroponic farming and abandoned coal mines. But but but you've got to start looking through and saying, all right, well if if, if this guy is able to get you know, this technology, and and maybe find this scientist and maybe pull together this other expert, like he's got a very credible shot and making this all work. And I love doing this at at the Seed stay Age, right. And one of the other benefits of our job is we get to see this stuff before it's really ready for

mass consumption. We typically like to invest post product market fit. But but but but before before sort of mass adoption and and so it's really interesting to see sort of the reaction of the first handful of consumers and and and and customers of some of these products. How do they react, how how how resonant is the product as as it's starting to hit the market. You know, the parallel in the public markets is simply when someone tells me an idea about a stock, and my immediate reaction is, oh,

that's a dog. Probably means the worst of it is already priced, and I've taught myself to recognize that over the years. But you're talking about stuff that's so high concept and so interesting. I find that fascinating your responses. How can we make that work? We have been speaking with David Hall. He is a partner at Rise of the Rest seed Fund, part of Revolution Partners. If you enjoy this conversation, be sure and come back for the podcast extras, where we keep the digital tape rolling and

continue to discuss all things venture capital. We love your comments, feedback and suggestions. You can write to us at m IB podcast at Bloomberg dot net. Follow me on Twitter at Rich Halts. You can check out my Deli column on Bloomberg dot com. I'm Barry Hults. You're listening to Masters and Business on Bloomberg Radio. Welcome to the podcast, David, Thank you so much for doing this. This is really

fascinating stuff. I am endlessly in treged by the ideas um within the venture community, and you guys are actually disrupting the way traditional venture capital is done. It's amazing. At the vast majority of the states in America don't have a whole lot of venture investing, and I really, I really am fascinated by that. So I didn't mention Steve Case, who is the founder of a O L. Really this seems to be his brainchild. Is that a fair assessment? So? So, how did this come about? And

how was this announced? Was it supposed to be a one off when Steve first um did this? Or give us a little little background on that. Yeah, So I think that the notion of the Rise of the Rest started as as just an interesting slogan for how how can we engage some of these communities and and find find great entrepreneurs, find great deal flow for our funds.

But as we started to uncover what's going on in these communities, it grew to its own, It spawned its own sort of life and its own own being, and it was really interesting to become part of these communities. And what it ended up being for us was a great way to meet and have authentic relationships with the people on the ground and a lot of these cities

that we're building the businesses and supporting the entrepreneurs. It's it's interesting, it's so great to meet the the entrepreneurs support organizations, the ecosystem building organizations like the accelerators and the incubators, which have really exploded over the last couple of years, and and and understand how they are supporting and having to do it differently and often very grassroots and a lot of these communities where it isn't sort of the thing that you do, and and and and

having that that drive to keep going and saying, you know what we're gonna We're gonna bring our We had eight companies in our last accelerator class, We're gonna expand it to ten companies in this next cycle. Like that's really interesting. And so what we were doing and what Steve lad and you know, Steve's I've come to respect him more and more the longer I've worked with him. I've been working with him for over a decade now.

And you know this is there a lot of people of Steve's caliber that spend their time doing lots of other things. Steve Steve invests in entrepreneurs. That's his passion and that's what he does. And and it's been great to learn from him on on having that be part of not only his legacy but his passion to invest in entrepreneurs and and traffic in these great ideas and

great future. I mean, he's he's one of the most accomplished futurists I know about thinking about where the where the ball is going and trying to sort of marshal the resources to be there and in in revolution as.

I think the symphony that he's been able to create by bringing the right people together to help execute on that that vision of of of really thinking about the future and thinking about how entrepreneurs can drive and be changing change agents in the future and again some of the bigger problems that we're going to be facing, which which is why I would guess that list of notables who were on the who are investors in and board members of Rise of the Rest, I'm not going to

read the names. Go to their website and look at it. It's the most mind blowing list of investors I've ever seen associated with one organization in my entire life. It's it's astounding, and I don't even want to build up the hype too much. Just go go to the website and check it out Google Rise of the Rest funds um investors or advisors, and it's it's really astonishing. You

mentioned um incubators and other types of accelerators. You know, we know about those in cities like Boston and New York and San Francisco, and there were a number of some of which one actually went public. There were a number of of incubators that had been around for a while. Where are you finding incubators outside of the coasts and are they private? Are they public? Are they private public

joint ventures? Tell us a little bit about yes. Simply you find it takes different different types of organizations to help the war, the the the ecosystems, right. I mean, there are quite a few, and most, the majority, overwhelming majority, i'd say, are private enterprises that people are running and hopefully running for profit. Some include coworking, so that there's like a real business model there. Others are you say coworking, Um, I immediately think of we works, But that's not what

you're necessarily referring. Very similarly, you you the entrepreneur rents desk space, and so that becomes the revenue model, the business model for the coworking space and helps to feed the incubator or accelerator. But but we we've seen dozens of models of how this can work and you know, and I think a lot of them are specific for the company, specific for the city of geography, but the

goal is unlocking entrepreneurship. It's taking the man or woman who's working for one of the big companies in the city saying, you know what I can. I've been working at Procter and Gamble forever in Cincinnati, and I love what I do. But boy, I have a great e commerce opper community that'd love to go and start. And now there's a vehicle for them to extract themselves from that big corporation and like, go start a startup somewhere. So let's let's talk about some of the cities you've

been to. You mentioned Detroit, Pittsburgh, Cincinnati, um, New Orleans. What other cities have have you guys invested in and how do they vary um from location location geography to geography. Yeah, so we've you know, we've been You've named a few of the cities, but cities from as small as a couple hundred thousand people to as large as you know, three or four million people. We are most recent seventh Rise of the rest tour three or four million. That's

like Chicago. Is that what we're talking about. You know, we we went to Dallas, Chattanooga, Birmingham, Memphis, and Louisville, Kentucky on our last tour. That's a great cross section of the types of cities that we go to. Some big, you know, big major cities that that everybody has heard of. Others all these cities are people cities people have heard of, but but others less well known for being tech hubs.

Like I don't think of Chattanooga as a tech hub, and you'd be surprised to find out that Chattanooga has such a strong logistics tech industry that well, I think it's there the proximity of Chattanooga to both obviously Atlanta, which is a huge because you have, um who, you have a couple of airlines there, a couple of transportation companies, but then you go up to Chattanooga and it's it's close, it's it's it's close to lots of that transportation tech hub,

but also a lot of freight travels through Atlanta through Chattanooga. And even the winner of our Rise of the Rest tour in in Chattanooga this year. It was a company called Freight Waves that is waves, not freight wave freight WA waves yea. And what that company is doing is building the technology platform to help shippers properly assess and

and and and UH book freight. So it's a data platform that helps them determine the freight cost because of all sorts of things like fuel and temperature and load it's being being transported between any two end points. Hard industry that was basically done analog up until these guys have come along and help them, help them digitize this and create a fulsome platform for for the transmission of freight. That that's quite fascinating. What what cities have surprised you?

That seems like an interesting surprise. What else has really surprised you, either in their focus or any other way. Yeah, so I'd say one of the big surprises to me was Indianapolis. Um, Indianapolis is obviously a great city, has storied American city. And what one of the things and one of the big highlights is there was a business they're called Exact Target that sold a salesforce for multiple

billions of dollars. The founders of Exact Target after they sort of spun out of the salesforce, UH world, double down, triple down in Indianapolis and and created an ecosystem. They're focused on B two B business to business softwares of services companies, and so they've really like anchored themselves around this notion of B two B sas is going to be what Indianapolis is known for, at least from a

technology a startup perspective, and it's become a hub. They've got, uh, the founders that have created a company called the High

Alpha Studio. They've got a fund there they invest in and handfuls of companies that are coming out of Indianapolis and who would have thought right, And it was so it was such a sort of great ecosystem that Salesforce, after their acquisition of this company, Exact Target, moved it's HQ two to Indianapolis and now has one of the largest buildings UH in the city of Indianapolis is by Sales is owned and operated by Salesforce and has a

couple of thousand employees in Indianapolis. And so it's it's amazing to see how that city has kind of really, you know, really exploded in growth around a couple of founders who said, we're gonna double down in our in our hometown. That's what give me one more city. That kind of was like, wow, I didn't expect to see that an overwhelming set at voices or you know, well, I'm trying to come up with a really good, good example for you. I mean, I'll go back to to

to Chattanooga. I was really surprised. I mean, they you know, they're they're a handful of just really great companies. There's a company we were not investors in, but but it's it's a logistics and a moving company called Bellhops based in Chattanooga. That's a really strong company. And seeing how a city that that's not the largest city by by any stretch of the word, has really focused on building

this really dense community. We have this this this phrase that we use a lot called network density, which you know network density, network density, which means how how can you how can you create this this tight network of people of entrepreneurs of of of of uh fans of entrepreneurship, bring them together and have your little city play a lot bigger or at least have the startup part of your little city play a lot bigger, right, And what they've been able to do and by bringing you know,

fun and startup accelerators in the Chattanooga area. Together, they've created this strong network where everybody knows each other and all the entrepreneurs are are are talking about, you know, best practice, sharing and and recruiting new people. When new people come in, they meet a handful of the executives at other companies that say, you know, come move from

Chicago to Chattanooga. We'll we'll show you around, We'll we'll take you out on the on a on a boat, and you know, really wine and dine you as a community to say that you're joining our community, not necessarily just joining this company. Interesting you mentioned Chicago. Have you spent any time in the West Loop that that's a little bit of a tech hub that seems to be exploding.

We're really excited to have one of my one of my UH portfolio companies that we invested in earlier this year is a Chicago based company called Foxtrot that's on a trend that I love on the future of retail. Foxtrot is reimagining the convenience store. We we all know lots of convenience stores and and and obviously we're sitting in New York City where where the corner bodega is people. People love their their corner bodegas, but in a lot of America there there isn't that that sort of deep

passion around around your convenience store. Foxtrot does half of its business through mobile app orders that get delivered to your door in and you know, in less than an hour. And it's a great business, perfect for launching in a city like Chicago. And and we're really excited about that opportunity because we think that you know, there hasn't been a lot of disruption in the convenience store market and

over a generation. And being able to have really cool products ordering ordered at the tap of a phone, but also be be your corner store that you walk past and get a bagel and a coffee on your way to work in the morning. Is is actually pretty cool that that's interesting? So I wanted to I was gonna ask you how you source companies, But I'm going to

change that question a little bit. When you announce, hey, here's our new tour and we'll go into these five cities, does that open a floodgate of inquiries or are you still flipping over rocks to find where the next great entrepreneur is? When we go to a city and we announced that we're gonna come to the city, we we get scores of applications to participate. Even in our pitch competition, we're able to put those companies in our database and

start to track them. Um. We we we really have, I think, have taken a more data driven approach to looking at and lots of different companies across the country because it's the only way that we're gonna be able to do it with a relatively small team at scale, and and we also rely heavily on our network partners.

So when we go to these cities, we meet the local vcs and the regional vcs and we asked them, hey, you know, are there what are the two or three companies that you guys are most excited about in Raleigh, Durham. And they're happy to tell us the two or three companies that they're most excited And you do that to two or three local funds and you've got to you know, a dozen companies at the end of the day that that are you know, ones that that tend to bubble

above the some of the rest. But but it's also a temporal thing, right you come back six months later and it's a new batch of companies. So we we we love to maintain these really authentic relationships with with the partners and investors in the community, and then that helps introduce us to the entrepreneurs that are really making a difference. Huh, what what about competition? You mentioned other

vcas and areas. Are you at all concerned that you're going to start running into competition in some of these places or is it still a sort of cooperative, friendly um group of other players in the same space who might be co investors in the same companies. Yeah, I I see them more as as collaborators and competition. We we we need people were We're not going to write a full investment round. If a company is doing a five million dollar series seed round, we're not going to

do that entire round. So if we do some of it,

we're gonna need other people to help participate. And it's always helpful to have you know, local eyes and ears on the ground who know the company, or know the founder, or know the have domain expertise in in the business and so being able to bring all of those folks into the round is one of the reasons why we're doing this we were able to be massive connectors of of You know, if you might be a healthcare expert fund based in Nashville and if we found a healthcare

deal in in St. Louis, we'd love to bring you guys into that deal because it just only helps make that deal, helps de risk the deal to our limited partners in our and our fund, but also helps potentially expand that the access for that company. So it's not just network density, but then it's the network effect cross pollinating from city to city. You got it quite interesting. Um, do you have a target for number of investments you're gonna make each year or is it really you just

kind of take it as it comes. Yeah, I think we'll do about a hundred hundred fifty investments out of this fund over the next couple of years. But we're we don't have a specific target. We we again are being super opportunistic about about finding great companies in in in in these regions. And you mentioned this fund. My assumption is this is set up as a traditional VCG general partners and limited partner. There's any thoughts on is there going to be a rise of the rest to

rise the rest? Three you're gonna stack that down down the years. What happens when you basically say, okay, we're filled up. You know, I'm focused on deploying the hundred and fifty million that our limited partners have invested in and in us in this fund and and and hope to really make a difference and obviously create a lot of value and and and and in the fund that

we're in. You know, who knows what the future is gonna hold, But we're super excited about about the limited partners trusting us in the capital that we're deploying into what I think are a fantastic array of companies that that showcase the best of of what's going on in you know, at least forty seven of the fifty states, although we do have investments in California and in in uh in in New York, but but not necessarily in

Silicon Valley or City. And you know, I've danced around this question, and you you came close to answering it, but I haven't asked it, So let me just blurt it out. Um. I have to imagine there are a

lot of misconceptions about venture investing in general. You reference the misconception about your relationship with Silicon Valley, But just speaking broadly, what do you think is is some of the biggest misconceptions about how venture capitalists operate what they invest in, just generally speaking, So I think from the from the capital deployment side, the biggest misconception is that

it's easy. Is that you just you sit around listening to a couple of pitches and whenever something rang out, you're right a check. And I mean, and you know, we we apply science, we apply data to to to our decision making, and you know, and and we we do a lot of work. I mean, we're it's not just come in for a pitch and come out thirty minutes later with with the check, right, I mean the closest we get to that or in our pitch competitions.

But but but for our our our our normal investments, we're doing due diligence and we're asking big questions about the market opportunity and about the founder's domain expertise, and about all sorts of ebbs and flows of the real market opportunity in the business model. I think from the capital receiving perspective, I think the biggest misconception is that a lot of entrepreneurs have great companies, but they're not

necessarily venture backable. And I think that there's this this misconception that that venture is is the the financing source of of of kings. And and you know, I was tell whenever I start having conversations and talk to particularly large audiences of of entrepreneurs, I say, the first best source of financing is revenue. Right, revenue doesn't take any of your company, you don't have to pay any of it back. And if you can scale your company through revenue,

that's best. But a lot of a lot of folks have really good businesses that just aren't necessarily venture capital are VC backable businesses because they're either not growing at a scale or have a broaden off large enough market opportunity. I mean, typically venture capitalists are looking for billion dollar, billion dollar businesses and and we have a specific model to help help help de find what that means. And you look at companies like Uber, it's totally reimagining the

taxi dispatch industry. Period. That's a billion that's it's easy to see the global unstoppable. But there are there are lots of there's lots of really good, really small, really great small businesses where the proprietors are going to be millionaires, but those aren't necessarily always great venture backable businesses makes

a lot of sense. The one question I before I get to my favorite questions, the one question that has been um annoying at me has been this, what cities have you not gotten to that you're looking forward to going and doing a rise of the Rest tour through. So, like I said, we've been the thirty eight cities. You can do the math and know that there are lots of cities that we haven't been to. You know, we we we are in the process of thinking through and

and plotting out our our next tour. But we I'll leave as a nugget and we'll we'll make sure that very you're on the list of people that we tell when we we decide where we're headed the bus to next.

But it's it's you know, we we look to find cities where there's been some some entrepreneurial some startup activity, where there's been a few successes and their their their companies to point to where there's a willingness by all of the stakeholders, from the local university to the politicians who are leaning in on saying, yeah, we we support startups. We we want that type of ecosystem to be in our town, and we want to try to have those those cities flare up on our map and get in

front of us. And we have we've got to we've perfected the way of getting it done now and and we'll we'll we'll let you be among the first to know where we're headed ups. I'm looking forward to it, all right. So let's jump to some of my favorite questions we ask all of our guests. Tell us the most important thing people don't know about your background. So that's a pretty easy one for me, and and it's it always surprises you want. I want to see the

look on your face. I'm sorry you guys can't see it who are listening, But I am a former competitive swimmer. I was going to say that, you know, I was going to guess, yeah, hard, hard, hard for those of you guys listening. I am six ft tall, two d and fifty something. He's a solid. I thought you're gonna tell me you were like a middle linebacker, not competitive swimmer.

What you swim? I I swim. Uh started at age six and swam through college, actually through first couple of years of college, but I did a lot of medley and sprint freestyle because I just obviously I'm not gonna do distance. I definitely don't have a body for distance um recreationally, and you know, I have to take the kids out. But for me it was such an important thing because number one, it's it's the perfect both individual

and team sport. And so he really teaches you how to how to be a member of the team, but also how to really focus. And then the second thing for me that it really taught was how to It

showed the direct link between preparation and execution. Right, you go to practice, you work hard, and practice, your times get lower, you win, and and and this the side benefit was it also taught me to deal a little bit with with defeat and losing, because it's just it's important for six and seven and twelve year old to learn that also important for forty somethings to learn. That. Tell us about some of your early mentors who affected

the way you look at the world of investment. So the first, obviously, and I'm sure this is something you hear a lot, is it was my dad. I mean, he's a dentist, just retired dentist, but an entrepreneur, a small business owner. And my first job was working in this office and seeing seeing how it's it's a daily seven opportunity, thinking about you know, the practice and the building and the employees that you've got working for you, but also seeing the benefits that come from working really hard.

And so he you know, we we we working and work was always important in stress to our in our in our home, and and being thoughtful and being really good to to the people that worked for you was also a really important character uh uh. Character building that that I saw through my dad every day. UM My uncle Eugene Flood is a was was was working on Wall Street. Kind of opened my eyes. I worked for

several years after college at Morgan Stanley. UM huge mentor to bring me, take a little southern boy from Louisiana and expose them to sort of the the machinations of Wall Street. Was really a big eye opener and career changer for me. So let's talk about venture investors who affected the way you approach um deploying capital as a

as a venture capitalist. So this is gonna sound a little contrarian, but um, the again, having worked at the Washington Post company under Don Graham and the Graham family, who were heavily influenced by Buffett. You know, it was a board member and a shareholder for a very long time. Yeah, and and but the essence of that for gilosophy is kind of invest in what you know and and and don't.

Don't don't try to to to force fit an idea or a company in a certain in a certain milieu where where it's gonna it's gonna it's gonna go where the company needs to go. And and and and I really appreciate particularly the notion that that you know, if if if you don't understand it, you can't invest in it. And so you've got to be smart about figuring out, like what what makes sense? How do you follow the

money from the customer's wallet to the cash register? And if it takes too many hops and starts to get a little blood blurry, then that's it's hard for me to want to back that type of company. Everybody's favorite question. Tell us about some of your favorite books, be the fiction, nonfiction,

venture investing, or otherwise. So the book that I really like and have gone back to, it's a little tiny, thin book, but it's called The Inner Game of Tennis, and it's by a guy by by the name of Timothy Galway and basically talks about how do you how do you maintain high levels of performance while still being relaxed and and sort of allow your your inner game the game that you know, not the game that you necessarily practice for, but what happens when you're on the

court playing how do you how do you perfect that game as opposed to the very mechanical of throw the ball up, hit the serve and and make sure the ball goes in to like you're playing against an opponent, how do you make that? How do you allow yourself to relax and and practice that? And it's it's so the implications of the book will beyond the tennis court have been huge for me from from a business perspective one.

How do you maintain intensity while still being relaxed and thoughtful about about how you can approach the game from a different angle that that's fascinating. Any of the books you want to mention um I just finished reading recently a book called Disintegration by Eugene Robinson who at the Washington Post. It's a fascinating take for me on on the subsegmentation of Black America. Basically, African Americans for for so long have been considered by politicians, by by marketers

to be relatively monolithic but uniform block. They're all going to vote this way, they're all going to do, They're gonna buy this kind of product. But but in reality, Robinson points out that there are four different types of real subgroups. The elite, so the Obama's and the Oprah's of the world. The middle class, which is the broad sort of group of us that are African American and college educated and who are who are working and living parts of the American dream. But then the two that

are really interesting to me were the emergent class. So this is the group of folks that are are biracial or biracial with with African American being part of that that that composition, but also the African diasporan immigrants who are first, second, third generation immigrants who have a totally different view of themselves because some of them aren't necessarily

African Americans, they might be Nigerian Americans. But but but the the notion that that they see the world and they they act and and interact with the world differently. And then the final group was the what he calls the abandoned, which are the folks that just have really been left behind and are are the folks that that we hear about and read about frequently in the news.

And it just understanding that that that that black America is is really sub segmented into these different groups that have you know, obvious similarities but but some pretty stark differences was a really fascinating reason. Some of the data on that fourth group is really very discouraging in terms of employment gains, wage gains. It's just the numbers have been pretty, uh, pretty intimidating. I'm going to definitely take

a look at that book. I have to ask you if you play tennis um and and if the book was at all helpful, it you know, my results not necessarily worthstanding, But to me, yeah, it was absolutely That's that's it's it's one of my passions. I you know, I try to get out as frequently as I can. I just registered for a new flex league, so I'm excited to get out on the court and and and

work out some of the cobwebs. But yeah, the the ability to to relax on the court and focus not focus on the mechanics of getting in the right position, but just play and breathe and and and then control that that you can't that you can't that you can control, right like, so you can control how many times you bounced the ball, and you and and it really teaches you to focus on the things that you can control,

because there's so much that you can't control. So in that moment, focus on breathing and focus on where you want to hit the ball as opposed to the exact mechanics of how you're gonna stand and how you're gonna position your racket and your feet to hit the ball. So it's a it's a great reads. The book is

was published in the seventies and has been used. I mean, like folks like Billy jing King swear by it, and it's The author has now written several other books about like, you know, the inner game of golf and the inner game of business and things like that. But but for me, the application as somebody who loves tennis and loves playing tennis into business this into my personal life has been a really helpful. Guy. That's fascinating. I am late to the game of tennis. I only started playing with in

the past few years. Um and my one of my biggest issues. I do these drills on Monday nights and most of the I shouldn't say most, about two thirds of the it's men's drills. Two thirds of the guys are considerably younger than me. And then there's a group of guys in their fifties and sixties, most of whom are are either good or very good. And the problem with playing with the young studs are that they want to crush the ball. It's baseball. And as much as

I laugh at them, it's like unforecedra unforced era. When you're playing with big hitters, you can help. The crowd sucks you along and suddenly I'm trying to smash the ball and it's a constant effort. I love that idea of relaxed intensity, don't try and kill the ball, play within yourself. And but you you mentioned that, and I immediately went to that, I'm going to crush this ball Roger Federer style. But you're not retro Federer. You don't have that swing. Just get get the ball across the

net the place that you wanted to go. If you can hit the ball where you want it to go, you will nine times out of ten win the point. Right, And if you if you can focus on just that, hitting the ball where you want it to go. Well, before I learned the proper mechanics, I could literally put the ball anywhere on the court, not with power and not with speed, but I I could kiss any line

I wanted to. Once I learned the proper way to stroke a ball, that skill set took a step back as you start learning the mechanics and becoming more comfortable with it. But um, it's like Mike Tyson says, though all of that preparation goes out when you get hit in the fits exactly That's exactly right. And and that testosterone poisoning, that competitive spirit. These are drills. It doesn't there's no winning and losing. Who cares? You get sucked right into it. It's the most amazing it of of

crowd psychology. Yeah, it's I'm gonna look into that book because it's definitely uh appealing. And and and once again we digress about tennis instead of talking about what we should be talking about. Um, so let's talk about the venture capital industry. What's changed since you've joined the industry, and is this for the better or the worst? Yeah, I'd say the biggest thing has just been the the

influx of data into the industry. You know. It's it's funny we we require and and suggest and advise our companies to leverage data and your decision making. And I think for the for the first time now we've got huge sets of big data that help us understand and rank and and and target entrepreneurs. And so it's it's important for us to to leverage this data because it helps us. It helps us make better decisions and helps

us be more algorithmic about our decision making. But it also really helps us recognize that we can bring in more entrepreneurs of color and women entrepreneurs into the fold because we're not necessarily relying on just network pattern matching from from guys who went to Harvard or guys who

went to Stanford who all look alike. And so it's it's I'm happy that that that's the case because it's making the table bigger and adding allowing us to add more seats to the table of of entrepreneurs and broaden that scope of entrepreneurs. Particularly for as we were talking about earlier some of the people who who have been left behind. Even further so, when we look at um the sort of demographics of of who venture investing is

giving money to. Specifically, do you think Revolution is more diverse, more gender friendly, more people of color friendly than the typical let's call it Stanford based or Stanford located vcs. I don't know what what other other vcs UH entrepreneurs look like. I'm very proud. Data is not broadly shared, to say the least, but I'm very proud that that we we've got quite a few entrepreneurs of color, women entrepreneurs um in in our portfolio, and and they've performed

thus far really well. We we One of our exits was by an African American female entrepreneur who had this business part Pick that was sold to Amazon and part part Pick. It's it's it's like Shazam for visual search. So take a picture of something and it will run its algorithm and say this is most likely a screw and you can you know, and and Amazon acquired the business a couple of years ago, and you know, and so when I use the Amazon app and say I want to see this, well, you can take a photo

of something. There are parts of the Amazon app. I don't know exactly how how it's been filtered into the Amazon application and basically algorithm, but yeah, that basic concept is part of that part of that part of the Amazon DNA now and you know, and I'm just very proud of that. I'm very proud that we you know, we we look at a broader we have a broader aperture for for who is an entrepreneur and and and what types of investments were willing to make. Tell us

what else you're really excited about these days? Oh, my tea is a little bit earlier, But I'm really excited about thinking about the future of retail. You know, we every every e commerce is eating the world, yet eighty five or some of the things that we buy are still things that you buy sort of in person. And we were investors and I mentioned this company, Foxtrot, which is redoing the convenience store. We're also investors in a

in a company called Neighborhood Goods. It's a Dallas based company that's looking to sort of reinvigorate the department store model. You walk into a department store today, you see more employees than you do customers walking around. And that's because it's it's become so transactional. Uh, you want a white shirt, you go to the department store, you buy a white shirt.

But if you wanted to go and see what's there, you don't naturally think to go walk through a department store and and sort of browse and be, be and and have have an experience. And and what what Neighborhood Goods is looking to do is is sort of bring

back some of that experience. It's almost really a throwback to the way that the department stores used to be where you'd get you know, you can go and brows and look at at something that's seasonally appropriate, but also have a bite to eat at the lunch counter, and you know, you have a broader array of things to buy.

And and so these guys are curating lots of digitally native brands that are looking for retail points of presence because it's become obvious with businesses like Warby Parker, like having stores actually matters because people want to touch and feel and experience your product. But then there are other larger and more mainstream brands that are looking for new ways to activate and and show off their products to

their their existing consumers as well as new consumers. And then you see lots of like um makers, local folks, local craftsmen that have cool products that they want to share. They don't have a big showcase arena to do that. And then obviously wrap that all around with food and community music, art, and it's a really cool installation in in sort of how how we think, or at least the company thinks consumers want to shop in the next next generation. Tell us about a time you failed and

what you learned from the experience. So I was a banker and and you know there there there are no no limit to the failure stories there. But one particular moment where I I I consistently said yeah, I understood what I was doing and had no idea what I was doing, and I got it wrong. The the end result of the analysis was completely wrong. And for that, for me, was was a hard failure to take because I never wanted to be the guy that got it

completely wrong. But what it led me to understand and recognize is that I'm not going to walk away if I don't understand what's going on. Like I asked that, don't assume that I asked the dumb questions. You know, in a world like like banking, you get caught up in the jargon, and folks were dropping all sorts of terms. I had no idea what they meant, and instead of asking, I just tried to figure it out. And two o'clock became four o'clock became six o'clock in the morning, and

I'm still looking at the blank screen. And it was it was an embarrassing, awful failure. But it was the last time I ever had that failure. Interesting, Um, what do you do for fun? We know you played tennis, but outside of that, tell us what you do to keep either mentally sharp or fit outside of the office. So, ye,

tennis is the main thing. I've got two young kids and try to spend as much time with those folks, and and you know, they're they're they're young boys, and all they love to do is run around and and so I I get a good work out with with those folks. But uh, it's it's it's it's harder these days to find that time to to get sharp and and I really I struggle with it. It's one of

the things that I really work on. But but I'm recognizing more and more now that I've got to take the hour or two hours for myself and either go play tennis or go right on the peloton or whatever, and and and try to try to sweat it out a little bit. If a millennial or recent college grad came up to you and said they were interested in a career in venture investing, what sort of advice might you give them? I would say, start a business, become

an entrepreneur. I I the I don't think that this was given much to my generation of of of college graduates. And I think again, as we talked about the cost of starting a business or nothing, and the opportunity cost of doing it when you're twenty two, you know, if you fail, you dust yourself off and onto the next go on to you know, go get a regular job there.

But but you have so few opportunities to start a business and live off of Ramen noodles for for a year with your three three best mates in in a in a in a tiny either coworking co living facility or or small cheap apartment. Starting a business, all you need is good WiFi. Like you said, good WiFi, and and and and Amazon Web Services account you've got a business going, so I think that they should start businesses. That's the best way to learn this job by being

an entrepreneur. And and my final question, what is it that you know about venture capital investing today that you wish you knew fifteen years ago or so when you again started. I wish I appreciated more how much this was an apprenticeship business, right, how much you've got to learn from people, And you've got to You've got to sit there and and sort of really it's it's hard to do this unless you've been an entrepreneur and have

lots of domain expertise. But by going through the typical channels, you've got to learn from somebody else. You can't read books about this, you can't watch Shark Tank and and come away as as a VC. You've got to learn from other people. And then by asking questions, you know, so, so was that a good or a bad company? And having those questions asked to you and developed that that gut and that that that that insight and intuition around around what makes a good founder and what what's what's

the right business opportunity? A lot of that's got to be shown. You've got to be shown the way or shown a handful of examples on how to do it, because every VC is a little different. But I think that that most of us, as you talked about, from sort of business mentors. We learned how we approached these from from other people, from books or or from classes. Quite fascinating. We have been speaking with David Hall. He is a partner at the Rise of the Rest seed Fund,

part of Revolution UH Partners. If you enjoy this conversation, well be sure and look up an Inch or down an Inch on Apple, iTunes, Stitcher, Overcast, Bloomberg dot com, wherever your final podcasts are sold, and you can see any of our other two hundred or so UH previous conversations. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. I would be remiss if I did not think the crack staff

that helps put together UH these weekly conversations. Attica val Bron is our project manager. Modina Parwana is our producer slash audio engineer. Taylor Riggs is our booker slash producer. Michael bat Nick is our head of research. I'm Barry Rehults. You've been listening to mat astors in business on Bloomberg radioh