Beginner's Mind

#110: DC Palter - From Japan to Silicon Valley: A Unique Business Angel Journey

April 06, 2023 Christian Soschner, DC Palter Season 4 Episode 19
Beginner's Mind
#110: DC Palter - From Japan to Silicon Valley: A Unique Business Angel Journey
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Show Notes Transcript Chapter Markers

Unlock the secrets to startup success! Dive into an engaging conversation with DC Palter, a seasoned startup founder, CEO, and angel investor, as he shares invaluable insights and advice for CEOs and investors. Explore resilience, Japanese culture's impact on business, and innovative strategies. Don't miss out!

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Christian Soschner
Today’s speaker is DC Palter

đź“š Book mentions in the episode:
To Kill a Unicorn
The Power Law

đź“– Memorable Quotes:
(14:42) "We need to think outside the box, have a goal, a dream; sometimes it works out spectacularly, and a lot of times it doesn't, but we tried and that's the building blocks for the next one."
(42:23) "The number that's always quoted is “90% will fail”, but that doesn't mean fail outright. That means not succeeding as expected. About half of those will actually fail outright and give you no return, and then another four will give you something like your money back, maybe a little bit more, maybe a little bit less. So we call that a failure anyway, even though they haven't really completely failed."
(01:01:56) "You can have a really simple idea, but if you have a lot of customers for it, if you know how to market it and build up a brand name, you can make a lot of money – and that's what investors are looking for."
(1:27:57) "Marketing is about understanding the business, the market, and the customers, and becoming part of that community, so that customers find you."
(1:48:07) “Embrace resilience, for every day is a challenge. You may be familiar with the English expression, 'three steps forward, two steps back.' However, in the world of startups, it's more like taking three steps forward and 2.9 steps back. Indeed, each day is a roller coaster ride.”

⏰ Timestamps:
(01:46) Tea Ceremony, Japanese Culture, and Shared Interests
(05:15) Who is Satoshi Nakamoto?
(06:39) Silicon Valley Life, Work, and Writing Experience
(07:22) Arnold Schwarzenegger and the Startup World
(13:00) Tesla's Success: Overcoming Skepticism in Electric Vehicles 
(16:21) Theranos: Fake it Till You Make It
(20:04) The Valley of Death: Challenges in Raising Money for Hard Tech Startups
(24:42) Defining Financial Investor: Angel vs. Venture Capitalist 
(29:03) Investing in Startups: Balancing Personal Interests and Group Expertise
(36:56) Uncovering succes

The Physician Syndicate: Angel Investing | Venture Capital | Startups | Personal Finance
The Physician Syndicate Podcast: A podcast for physicians to jump into the startup world.

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yet so this is my only copy so you bought it yourself I had to buy it myself from Amazon and have it delivered

0:06

already I thought you get a ton of books I do but they haven't arrived yet and

0:13

people were asking me where you know can I see the book or I need to show it for events like this so I had to you know if

0:19

you order it directly from Amazon it comes you know a day or two later um the ones where you order a box of

0:25

them uh take take a month to arrive yeah are we recording are you recording from

0:31

your house or is it so this is actually our tea house uh in the in the back of

0:38

our house this is my wife's uh room that she uses for teaching Tea Ceremony so we're preparing for uh girls day

0:46

um which is uh called hinamatsuri so Hina means the dolls and you can see the dolls behind us and the uh the picture

0:53

on the scroll of the um of of the kinds of dolls that are

0:59

here which is the you know Emperor Empress uh and and the court that's cool

1:04

so we have a common interest in Japan I'm training in Japanese martial arts

1:09

unfortunately I don't think I have a book here I hear this

1:15

so I can show you this one the complete ninja wow okay it's an uh it's a martial arts

1:23

taught by masaki hatsumi He Is the Grand Master he was a true master in Japan and

1:30

so I think we have a comment what is your interest in in Japanese culture come from uh I lived in Japan a long time

1:37

um and you know obviously living there I I learned the language I I kind of spend

1:44

a lot of my time there I really enjoyed the the corporate culture and the um the way

1:50

it's very different from America in fact America's one extreme of individualism Japan's The Other Extreme of everybody

1:56

kind of looks out for each other and takes care of each other which has its downsides too

2:01

um and so it's especially as a as a non-native it's uh it can be a struggle

2:06

to live there but it can also be incredibly interesting and rewarding so uh and then I married my wife who she

2:12

was a computer programmer I was the engineer on a project together um and dragged her back here you know uh

2:18

she gave up on computer programming and she teaches uh Ikebana Japanese flower arrangement and uh and tea ceremony and

2:25

also teaches the Japanese school so she keeps busy doing Japanese culture while uh I do startups and write about

2:32

startups and write about Japanese culture and uh and then the book as as you see kind of combines both of those

2:38

with uh with Japanese culture but also startups in Silver Valley is it about your life to cook them no absolutely not

2:46

at all um it's uh but I mean you you're reading it's a farce

2:52

about Silicon Valley um and kind of the parts about the Japanese culture are

2:58

just uh you know they're they're imagined but you know they're they're they are based on some sort of reality

3:05

it's it's fun reading it's it reads like uh for me for me as an Austrian like a parallel universe there are so many

3:11

things in there that uh I always think I know it so you mentioned Google you

3:16

mentioned apple and stand there suddenly some uh some new terms what meberg for

3:23

example it's hilarious I think yes well I couldn't say we work right because then we were Kazumi for for uh you know

3:31

for for their reputation so I yeah I called it me working instead and I created this uh I couldn't call a

3:37

company you know where he worked Google so I had to make up a whole new company where he worked which was uh mecon or

3:43

mekan which of course just like Google has all you know they've got their own mapping and they've got their own

3:51

um office space and uh and uh videos and

3:56

everything else and you reveal the true identity and I

4:01

think it's really the true identity of Satoshi Nakamoto how did you find how

4:07

did you find it out well I went driving around Silicon Valley I said where would Satoshi Nakamoto Live Well yeah yeah I

4:14

mean he's yeah Assuming he's a real Japanese and person and he uh and he was

4:19

a researcher in uh databases which you kind of have to be to have invented uh

4:25

the distribute database which is what um cryptocurrency is and blockchain is uh so I assumed he was you know had to be a

4:32

postdoc or grad student or professor at uh at Stanford because all all all new

4:37

inventions come out of Stanford of course right so then yeah now he's a billionaire so

4:43

where would he be well he'd be in the mountains the outside of Silicon Valley near near a tea house

4:48

so you live close to Silicon Valley in California and in Los Angeles as far as

4:54

I research so actually yeah this is a little bit strange um Los Angeles and uh and and the San

5:01

Francisco Bay Area are uh pretty far apart it's about an eight-hour drive I think it's about uh it's about 500 miles

5:08

so um I don't actually live in Silicon Valley but all of my work uh was up

5:14

there I used to fly up there once or twice a week all of our customers were up there so uh I was in Los Angeles

5:21

which is not a tech place it is entertainment this is It's Hollywood right and everyone is in the

5:27

entertainment business except me and I'm in the tech business and I'm like this weird offshoot uh umbilical cord tied to

5:34

Silicon Valley that um I would go up there you know twice a week so

5:39

um it was a little bit strange writing about Silicon Valley where I don't live

5:44

and trying to really write the details of what goes on on a daily basis in different neighborhoods and um but I've

5:51

just spent so much time there that that uh I was able to do that but as I was writing

5:57

um the book I actually took a couple trips up there to uh to to look at some of the details that you're not going to

6:03

get just looking at uh at Street View maps yes I mean the home I was born in the

6:13

same region like Arnold Schwarzenegger so I think it's uh if it was one of your uh Governors back then it was the

6:19

governor he actually lives pretty close to us in in Los Angeles in Brentwood yes really say hello when you see him uh

6:26

next time I see him so um I live very close to a small airport called Santa Monica Airport which is

6:32

just private airplanes and when he was governor he used to fly into that airport

6:38

um every weekend because he'd be up in Sacramento which is the capital of California during during the week for governor work and they would fly fly

6:45

back in his private jet to uh and and we could hear his airplane flying in because the airport's supposed to close

6:51

at nine o'clock at night no one's allowed to fly in at uh after nine o'clock except if you're the governor

6:56

you could fly at 11 o'clock at night and we would hear the airplane arriving every Friday night at 11. yeah it seems

7:02

to have some advantages to be the governor yeah be a governor yeah it's kind of good I should try it is it one of your goals

7:09

to become governor of California um you know I have these dreams of like

7:15

what if I was a politician but nobody listens to me anyway so that I don't

7:20

have the right personality um and the interesting thing was neither did uh neither did Arnold Schwarzenegger

7:25

so uh I'm probably going to get myself in a lot of trouble here by saying uh he

7:31

was my favorite governor of California and nobody says that because

7:36

almost everyone who follows politics is especially in California is very strongly Democrat or very strongly

7:43

Republican and he was in the middle and he he was a republican but he he

7:50

promoted a lot of the democratic um uh policies and even more importantly he

7:57

changed the politics to try to make the parties less important which was the only thing you could possibly do that

8:03

both parties would hate you for so everyone hates uh Arnold Schwarzenegger as a governor except for

8:09

for me um it was tough for him to get much done because both of the parties wouldn't support him so it was it was a

8:15

struggle but I I really liked how we changed the policy so we have open primaries and less party

8:23

um uh pushing things anyway um one of the few things I could say

8:30

that everyone will hate me for so I I ought to be careful no I I will not hate you so uh I know Schwarzenegger is in

8:36

Austria and I'm an Austrian and I grew up with stories about Arnold's uh swats

8:42

I think in in in the US he says Schwarzenegger and yeah Schwarzenegger in German yeah and uh I mean I was born

8:49

in the 70s and I think it makes a perfect hook to your book and to your background and start up investing I

8:55

think we should talk about three topics in this uh in this podcast one is your

9:00

background your experience in P2P Marketing in the tech sector uh your

9:05

experience with startups and your advice to startups you write a lot of videos I

9:12

love your yes and tweets thank you I I think probably

9:17

just exaggerated that I read every single one but I think every I've read most about it and don't have time I

9:24

appreciate and then let's uh dive into your book photos of questions here wonderful I

9:31

don't think is a good it's a good hook to the startup world because uh when I was a boy in the 70s so late 70s early

9:38

80s there were the stories about this stupid Austrian who believes he can

9:43

become famous with bodybuilding so he did not do a normal job and he of course

9:49

succeeded he got Mr Universe and then he had this idea uh which in the Austrian Universe was

9:56

also ridiculous he wanted to become an actor and everybody here around said no way no way in Hollywood and he succeeded

10:04

and he did yes yes he did the first thing governor of California so as an

10:11

Australia it was like it's hilarious I mean a bodybuilder an actor an Austrian

10:17

a governor yes governor of California amazing and he did it and I think in the

10:23

startup world it's pretty much the same because very often startup Founders have ideas

10:29

where they let's say get a little bit of pushback like Arnold Schwarzenegger did

10:35

nobody believes that they can do it what is your experience with the startup world so I think you're exactly right that um

10:42

especially I focus on hard tech um which I think is also your specialty as well

10:47

um and you get I think two kinds of Founders you get the founders who are the PhD students who go through the

10:53

research and they invent some you know some new technology let's say a better uh a better cathode for lithium-ion

11:00

battery and they're like okay this is you know store 50 more energy um let's let's make a you know let's get

11:07

a patent let's make a company let's sell this to business uh so very straightforward right or at least it

11:12

seems that way and then you have the other half which uh tends to be more the the business people who say

11:19

we need a we need a better uh battery and you know everyone's working on Lithium-ion batteries and you know

11:25

there's a million researchers on that let's do something completely different you know let's let's uh let's make a

11:30

completely different battery or even forget about batteries you know maybe there's a better way of storing energy

11:36

um and come up with some ideas and sometimes they're pretty radical um Elon Musk is probably a great example and again we're back into politics so

11:43

he's probably the closest analog to to uh Arnold uh I apologize for my American

11:48

pronunciation but uh Arnold Schwarzenegger uh Elon Musk is kind of the Arnold Schwarzenegger of the startup

11:54

world and he started I I believe yeah um and then he's like well

12:00

why can't we have electric vehicles we ought to be able to have electric vehicles so

12:06

um we said well actually it wasn't him there were other Founders who made electric vehicles but you know it was a

12:12

small sort of thing it was cute and he's like okay well let's turn this into a big business and he did and Tesla is

12:17

just this huge amazing uh success that I was very skeptical of at the beginning

12:22

having worked no electric vehicles and he was like wow he did it he's changed the world with electric vehicles and the

12:29

same thing as SpaceX right it's just like why can't we make a uh a cheaper

12:34

faster better way of going into space than the usual government bureaucratic way why does it have to be done in you

12:41

know in a government system why can't we take these ideas and yeah maybe we'll blow up a couple

12:46

um but we can also build a hundred of them and do it faster and do it at 100th

12:53

of the cost and that's you know that's worth it and we succeeded that as well

12:58

um and solar panels on the roof and uh well now we'll see how he does with Twitter where he's coming in to

13:05

something that already exists instead of starting from um something pretty pretty fresh but

13:11

um that's kind of the idea that I think the outside world has of startup Founders uh

13:17

and unicorn leaders uh most of them are not that way most of them are much more

13:24

um much more willing to follow the rules especially when it you know means the government's suing you for for uh

13:31

Financial violations um but it does tend to be people who think

13:37

outside the box who say I have a goal I have a dream we need to do this there's

13:42

got to be a way to build it sometimes it works out spectacularly and a lot of times it doesn't but you know

13:50

we tried and then that's kind of the building blocks for the next one even theranos right um fairness was and and we'll come back

13:57

to this in the book but Sarah knows was a great idea their notes was why do we need these

14:03

giant blood machines that you know we have to send our blood test out and it takes three days to get results now we

14:09

have microfluidics now we have all of these other Technologies where we can do this quickly we can do just you know

14:15

real-time analysis of of uh of blood samples and we can give you a result right now

14:20

the problem is she had this dream of well we're going to do 130 tests with uh with one drop of

14:26

blood and that was physically impossible if she had backed off and said that's our Dream for 10 years from now we can

14:33

do the 10 most important tests that you need to know right now like your cholesterol and uh

14:40

um you know some of the other major things that that you want and you don't want to wait three days for because

14:45

that's silly um and we can do that with maybe not a drop of blood but a small small amount of blood instead of having to like take

14:51

three tubes of blood she actually built that it could it would have worked if she had backed off

14:57

and said well this is what we have now and it's not our you know it's we have this goal we're going to make we're not

15:02

going to make more cows we're going to add to it but she got into this idea of I have to get to my my dream and she was

15:09

willing to fake it till you make it right she was willing to to lie and say uh when they asked her you know how much

15:14

can you do she said we can do all these things instead of saying no we can do this right now and this is great and

15:20

this is like half of the market and it's still 10 billion dollars so uh this is wonderful uh and this is where the

15:25

inexperienced played in um so there's a lot of people like that and

15:32

some of them figure out yeah we can't do everything we want to do but we can do you know 90 of the important stuff and

15:39

we'll get to the the other things later um and then there's some of them are just like no no no I gotta this is my

15:45

dream this is what I have to do and it's uh you know who cares if it if it blows up along the way so

15:53

um is definitely a good example for for the

15:58

craziness of the startup world I think it was Sebastian malabi his book is

16:04

really good it's uh the history of venture capital in my opinion and he called it a premature truths so in his

16:12

book that's a great line yes um yeah

16:17

the founders point of view and I see this a little bit too often now the startups this is kind of where the book

16:24

comes from um I will I I've seen Founders where I've known things from the inside or

16:29

found out later when the company uh imploded that the idea is well especially for hard tech if we don't get

16:36

the money we can't build it but if we don't if we don't have it already no one

16:42

will give us the money so they're willing to premature truth is such a perfect word we will have it in six

16:49

months so give us the money now we'll tell you we have it now and then by the time you ask to see a sample of it well

16:55

we'll have it by then and if we don't well we're going to implode anyway so

17:00

who cares right and so you know theranos just kept on going going and turned into like billions of dollars so it made big

17:06

news but um I've been involved in other ones either as an employee or uh or or as an

17:13

Augusta where uh it was the same sort of thing they just didn't get very far after the six months okay

17:20

and investors together lost a few hundred thousand dollars it doesn't make the news it doesn't become a documentary

17:25

but it's not all that uncommon how many how many cases are there in in Silicon

17:32

valleys in your opinion told me that I kind of did a thought exercise so uh I

17:38

have invested either directly or through uh a couple of uh a handful of funds in

17:43

roughly about 100 startups um and of those hundred I would say two

17:49

of them um we found out afterwards just out and out lied to us and said they had

17:54

something that they didn't have another five so just on my small anecdotal sample I'd

18:02

say roughly two percent are just held out lying now again it's premature truth

18:08

their idea is not to be a fraud their ideas to get the money so that they can build it so that they will have it later

18:13

but they are lost sorry to interrupt in your thought process just a question popped up in my

18:19

mind uh do you think in your opinion would it make a difference when they

18:24

clearly say uh it's our vision so we are not there yet we need the money we get

18:30

decent at milestone in with that amount of capital but division we will realize

18:35

probably Quantum Computing for example will probably realize in five years 10 years 15 years we don't know yet uh

18:41

would it make a difference in your opinion uh in fundraising uh compared to the situation like the aronos where she

18:48

said I have the Holy cradle of Diagnostics and it's just one blood sampling can they have else every

18:53

disease well it makes a huge difference um especially for hard tech it's the

18:59

there's a there's a huge Valley of Death where investors don't want to put money

19:04

in until you've built it because you know just doing some research in University or just having you know

19:09

something on paper you might find a few investors that'll put in a little bit of money but uh it's really tough to go and

19:16

raise two million dollars or five million dollars that you actually need to build it until you actually have the

19:21

product nobody wants to invest in a in a PowerPoint presentation right what they

19:27

want to invest in is a product so once you have the product it's easy to raise money and then once you have customers

19:34

for the product it's another it's an order of magnitude easier to raise money so your two orders of magnitude

19:40

difference um and how difficult it is to raise money and how much you can raise when

19:46

you don't actually have the product yet so there's a huge temptation to say we're at the next stage already uh as

19:52

you said premature truth we will be there soon but if you say we're we'll be there soon they'll say okay come back to

19:58

us when you're there so you say yeah we are there now uh and uh Well turns out

20:05

you weren't so yeah about two percent in my experience just out and out lied

20:10

another five percent was in kind of this gray area they didn't completely lie but

20:17

especially about customers they said that customers signed when it was they they were in the process of talking to

20:24

them um but they didn't have signed contracts they weren't actually customers yet but they would say yeah we have five

20:29

customers um who have already signed contracts and they they didn't now maybe they would in

20:35

three months have those five signed um but yeah it it

20:41

it's it's bad when you end up lying because then you get caught in it later and um

20:48

and but it's just so tempting just to say we're we're one step ahead of where we

20:54

are uh and another part of it is from the marketing point of view that's expected right and it when you're

21:01

doing marketing for your product you don't go out and you and say well we have something that we're talking to

21:06

some customers about you say look at these customers they're already excited about our product right

21:12

um and let's put their names up on our website if we can do it if the first part would be the Austrian the German

21:17

Way it took just downplay it so it's uh yeah so the American way versus the

21:23

German Way and then the Japanese way um is is very different right I think as

21:28

you say the German Austrian way is we have to follow you know we we have to be truthful about it where where

21:35

statuses which is why Americans really good at marketing right it's like that's true find a way to spin it without

21:42

exactly lying but put your best foot forward to get people excited about it and you know if the customers are not

21:49

really customers yet you find a way of saying we're you know we've got five five people using it look at these great

21:55

studies they've done well it turns out you know you gave it to them for free and they were playing with it they aren't actually the customers get okay

22:01

that's fine you have people using it that's the message you want to get across but it's just but it's just seven

22:07

percent in that you mentioned two percent uh live five percent yeah we're

22:12

in this gray area and we have 93 left so 93 basically uh pretty honest yes

22:19

that's cool that's cool yeah that's not that's not that I think it is the other way it's like seven there's like tens of

22:26

thousands of startups and that means there's you know thousands of uh of uh

22:32

not exactly frauds but companies that are lying about what they're doing and and uh being unethical

22:38

um so I look at it you know that's a huge problem but yeah you're right three percent are are uh you know they will

22:46

try to spend it they will try to say here's you know here's why you should look at us and here's all of our great

22:51

points but you know if you ask them a question and say you know have these people sign the contract how many actual customers you have uh they will say yeah

22:58

we're talking to investors we we have we have to tell the truth and here's uh here's our actual status

23:05

you mentioned a couple of minutes ago you invested in 100 startup or more than

23:10

100 startups uh did they understand it right yes so I've invested in about 40

23:17

startups um directly and about so and then in a member of

23:24

five different funds um Angel funds either chemical Angels or techost Angels where are we as a group

23:30

will invest in uh startups I've been doing that for a few years so there's five funds and together uh they've

23:36

invested in about roughly 60 companies so I called 100 total how do you define

23:42

uh in California Angel Investments you define yourself as an industry investor uh what is your definition of financial

23:48

investor when someone wants to go to California I'm asking this question because yeah basically California is the

23:55

dream of every startup founder here in Europe uh the best ones wants to relocate to United States and I'm just

24:02

curious to understand better the the reality in California what is your definition of financial investor

24:09

um so let me give you the venture capitalist uh definition of an angel investor first because it's a little bit

24:15

easier to understand so from a venture capitalist point of view a venture capital firm is a professional investor

24:22

and an angel investor is an amateur investor uh that's the way they look

24:27

they kind of look down on Angel Investors with 100 startups invested I would not directly put you in the

24:33

amateur category but but the the point is important that

24:38

they are I mean a venture fund is a business I think I wrote about that uh last week

24:45

um and they have employees who that's their full-time job to look at startups

24:50

and to investigate the startups and uh and work with the startups and I think this really gets into the best

24:55

definition of an angel investor is uh an angel oh and that's the other point and they're investing other people's money

25:01

right they are a fund they get they get money from Big institutions like retirement funds and uh

25:08

um uh universities and insurance companies and their job is to go find start Dustin

25:14

they have employees they do that full-time Angel Investors are investing their own money I think that's the key

25:20

differentiator uh it's coming out of my bank account and I'm investing and I am

25:26

making a personal decision whether to invest in that uh startup myself the

25:32

place where the gray area in between there is I'm also a member of Angel groups where we as a group will have a

25:40

fund and we'll decide whether to invest but fundamentally it's our own money it's it's a pool of

25:46

our own money and we are making our own decisions and then um if there's success the money goes

25:53

back into our own bank account so um it is a fund but it is still

25:58

um a volunteer organization where we do all of the investigating ourselves and decide ourselves what we want to invest

26:04

in rather than a company an investment fund that is investing on behalf of

26:10

other people with full-time employees being paid to do that so that's the other part is I am not

26:16

paid to be an investor I'm investing because I want to and because my hope

26:23

and my expectation is those investments will pay off um so I could invest in Apple stock and Netflix and

26:30

um you know and Procter and Gamble or I can invest in startups and actually of course I do right what would be this is

26:36

my next question what motivated you to take your money and invest it in

26:43

startups so when you became an angel investor instead of leaving it uh on the

26:49

public sector I mean the returns in the last 10 years thanks to quantitative easing in companies like Facebook Apple

26:56

Google Netflix were simply mesmerizing uh for public companies what motivated

27:02

you to go down the private investment route so uh I should say I do both right and I

27:08

put more money into like s p index funds because that's that's where my

27:13

retirement money is going right I don't put my retirement money into investing in in startups the risk is too high the

27:20

the uh um the returns take too long to come there but

27:26

um I would start I found them uh I started to a successful startups of my own and then I've been kind of a

27:32

co-founder of partial part-time co-founder of three other ones I really enjoy being part of startups

27:38

um and I enjoy being part of the startup ecosystem um and so I enjoy I mean one of the

27:44

great things about an angel group is you get all of these companies coming to you giving you their pitch you get to see

27:49

what's going on you get to be part of the ecosystem I enjoy being at uh accelerators and kind of working with

27:56

other startups and kind of helping them along uh getting started uh and investing is part of that so if I find

28:03

one that I think is uh it you know has a good chance of succeeding and especially

28:09

if it's in an area where I know something about right uh whether you know kind of climate Tech is one area of

28:15

specialty of mine and then kind of my own starts or in the I.T space so if they're in that space I know something I

28:21

feel like I know more than general public and I can I can guess whether they have a good

28:28

chance of success so I'm not only investing but then I want to be working with the founders and helping them along

28:34

as a mentor and advisor then the angel funds I'm taking advantage of everybody

28:41

else's expertise right so med tech is a great example uh Tech host angels

28:47

if something comes through tecos Angels which uh there's 400 Angel Investors uh

28:53

our particular chapter has 150 or so Angel Investors in it

28:58

um there's like four or five of us that are have an interest in a specialty in hard tech and something comes through

29:05

this climate attack it's like I'll jump on that I'll do the investigation I'll leave the deal and I will recommend it

29:11

to the rest of the group well probably about half of the things coming through these days into Tech

29:17

Coast angels are Life Sciences whether that be Pharma whether that be test tools whether that be med tech I know

29:24

nothing about that space and that takes a lot of special expertise you need to evaluate the tech I mean the pitch

29:29

sounds great right we're going to cure cancer well not all cancers but one particular kind of cancer or we've got a

29:34

test stool to be able to give you a blood test faster for uh anemia or uh or

29:39

diabetes or and there's all these great things coming through the pictures sound wonderful will be great

29:45

but I don't know how many competitors there are that may be years ahead of them I don't know what the FDA is going

29:51

to approve or not I don't know how much money it's going to take to get through the regulatory approval process I don't

29:57

even know what the regulatory approval process is so I'm I'm not going to invest in that myself however in our

30:03

group we have members who are doctors we have members who are anesthesiologists we have members who built med tech

30:10

companies we have a member who was uh part of the FDA who who did

30:16

approvals of of uh new medicines and knows that process intimately so if

30:23

those people look at it and say this is a good investment be like okay good yes let's put our fund

30:29

money into that because uh that sounds great even though I don't have a way of evaluating it so the Investments that

30:36

are individual are mostly in spaces where I know something about and I've worked with the founders I believe in it

30:42

and then the other ones are ones where the group members have uh have validated

30:47

and looked into it and then I'm just coming along for the ride so you're a good contact person to info

30:53

management it's mostly life science uh Med stack you can hook them up with the right people

30:58

um in your angel groups it's good it's good to know both yeah Taco's Angels is

31:03

primarily not personally but primarily focused on companies in uh California specifically Southern California so it

31:11

can be anything it's not but it's just nowadays especially since we're tied to UCLA and USC

31:17

um and a lot of the innovation in the Los Angeles area that is not related to entertainment and marketing uh tends to

31:24

be in life sciences and those are the things that we've invest in but we've seen everything from women's handbags to

31:30

uh organic cider to new ways of packaging wine to wine kits to sake kits

31:36

to um just about everything you can imagine will come through but the ones that have

31:42

gotten the most excitement and the most investment have been uh in the med tech space recently on the other side there's

31:49

chemical Angels which is a Nationwide group and I think this is this is probably more interesting in general we

31:56

invest in anything that is um we say chemistry enabled whether new chemistry new materials roughly about

32:04

half of that is sustainability how do we make things uh without using

32:09

um petroleum products how do we recycle how do we build better batteries uh it

32:16

tends to be about materials and chemistry uh and then the other half is uh is med tech or or Pharmaceuticals how

32:24

do yeah that again comes out of how do we use chemistry to uh to improve life

32:29

so we actually split it pretty roughly 50 50 into the life sciences and the uh

32:37

more traditional chemistry which is nowadays mostly about sustainability so uh any listeners who uh have a startup

32:43

that's in life sciences space take a look at chemical angels I think that's that's a good place for people to uh to

32:50

apply and it would help to be willing to create the headquarter in the United

32:55

States if I got you right yeah to pitch to chemical Angels

33:01

um we we rarely look at things outside of the US because it's difficult for uh the

33:08

group itself is mostly Americans and it's difficult for Americans to invest outside the US unfortunately due to our

33:13

crazy tax laws uh Canada we do sometimes invest in Canada

33:19

but beyond that um it needs to be a U.S corporation now

33:25

that doesn't mean the company can't be based outside the U.S so and in fact in

33:30

sustainability Europe is ahead of the US absolutely we've never seen a lot of great research oh absolutely when it

33:36

comes to sustainability um yeah because the U.S political situation

33:41

has been so difficult when it comes to sustainability it's kind of held held things back where I think Europe has

33:48

been for quite a while has seen the climate uh crisis as a crisis that needs solving and a lot of University Research

33:55

a lot of the startups that people want to make have come out of um out of uh Europe uh Germany and

34:03

Austria in particular very strong in in chemicals and chemical manufacturing and kind of uh we're seeing a lot of things

34:09

come out of there of how do we do it better how do we do it without using petrochemicals how do we use green

34:16

hydrogen we're seeing a lot of that coming out of uh Germany Austria UK also

34:22

has a lot of startups in the in the particularly in climate uh related space so uh it's kind of frustrating for me as

34:29

an American it's difficult for me to invest in those companies and there is a big enough ecosystem in those places

34:35

that it doesn't really make sense to say um yeah we're going to be our employees

34:41

are all going to be in Austria but we're going to have our corporate head corporate

34:46

um structure be based in the US and Delaware because we want American investors

34:52

um whereas um if you are based in

34:57

um India is a good example uh most of the Indian starts that we see will kind

35:02

of follow this path of yes all of our employees are in India except for like one sales guy who might be in the U.S

35:08

but we will set up our corporate structure to be a U.S Delaware corporation that way we can get

35:13

investment from both uh people in India and investors in the U.S

35:19

now when you look at Europe I think it's pretty much a similar situation I mean the the seat investing startup investing

35:25

is pretty much solved thanks to public funds right um but it's yes that's another advantage of Europe is there's a

35:32

lot more public investment and quite a bit of corporate investment um

35:38

but there's still a lacking uh for series a series piece of venture capital basically is still a huge gap let's talk

35:45

a little bit about the analytics and the numbers uh with your 100 startups if you are a valuable source of information the

35:51

numbers that I use when I talk about public and private Investments are pretty simple so

35:56

mostly explained that in public companies you can say 12 of the companies create positive returns while

36:02

88 are rubbish and the the magic is finding the 12 and

36:08

Warren Buffett for example is excellent in that and when I talk about private Investments my numbers are that

36:14

when we see Fund invests in their companies um three to four are bounds to fail uh

36:21

three to four with dual cage uh they will return the investment and a bit more and two to three companies will be

36:29

the big Winners so there will be the unicorns who uh creates the mesmerizing returns of 10x and whenever we see is

36:36

lucky maybe one is a real unicorn with 100 to 200 x uh return on investment

36:43

now you mentioned that you're involved with Angel groups close to staff what close to La so it's still be I think the

36:51

motherland of venture capital and Angel investment and you with your groups have

36:56

invested in 100 companies uh what are your statistics what did you see return

37:01

wise yeah so I don't have the numbers offhand but um I actually wrote a uh one of my

37:10

articles uh at the beginning of this year in March and so the biggest problem

37:15

with investing in startups is everyone asks you how are you doing and like with

37:21

with public stocks I can I can go in on uh Google or Yahoo or you know CNBC I

37:26

can tell you today you know in my update or am I down uh even real estate I could go into Zillow and I could say yeah this

37:33

is roughly how much uh my my uh my real estate portfolio is worth

37:40

um startups you don't know um and you won't know for roughly 10 years

37:47

and I've only been doing Angel Investing for 12 years and of course most people have only been doing it for like three or four right so you invest in companies

37:54

and there's something called the J curve that throws people off um and it's kind of frustrating uh so

38:00

the J curve says your failures come quick and your successes take a long time and the bigger the success is the

38:07

longer it takes so uh the ones that fail tend to fail quickly right they were

38:12

going to build something it didn't work they run out of money and the story I lost my money so what tends to happen is

38:18

in the first and I got in into Angel Investing I said I have this pot of money and this is how much I'm going to

38:24

invest and I'll split it up like uh first year second year third year and then after the third year I should start

38:30

getting returns and I can use that to invest in the next ones afterwards uh I got to the end of three years and I'm

38:36

completely out of money um I had no returns yet like one gave me my money back and like uh two or three

38:43

of them failed completely and the others are just like well we're you know we're we're on our we went from pre-seed to

38:49

seed right so you know hopefully in another couple years we'll get to series a another two or three years after that

38:55

we'll get to series B and one day you'll get a return and mostly most people don't get that right you don't get any

39:01

money back until the company exits you can't get out of your Augusta um so it's dead money

39:07

so earlier this year I went back and I said how have I been doing and and I did this

39:14

exercise January 1st and I said okay I had this first three years after the first three years I ran out of money

39:20

from my my pot of investment and I stopped for a couple years after that so I had this nice cohort of about 10

39:26

Investments and I went back and I said how have those 10 Investments done uh roughly half of them

39:34

uh I wish I had it in front of me but say three or four of them failed it was about 10 Investments about three or four

39:40

of them failed uh about three or four of them got me my

39:46

money back or some fraction of it uh and one gave two of them gave me a 2x so

39:53

after and then two of them were still left and I know my numbers don't add up right but um of those eight

40:00

um it was roughly half failures and the half money back plus a little bit more

40:07

uh so I had broken even after 10 years but I still had two left like okay well

40:14

at least I broke even right if I invest in real estate it would have done a lot better I invested in Netflix I would have done a lot better good thing that's

40:19

not my retirement money uh and if I get my money back great because really I'm just trying to help startups

40:26

um and then three months after that one of those two uh had a 20x return wow

40:32

suddenly my uh after 10 years my break even investment turned out to be a uh

40:39

because you got them all together the 20x out of out of uh 10 then I had a 2X

40:44

return so roughly about the same as public stocks and I still have one left and I'm waiting to see uh how they do

40:51

the other ones kind of are following in that same pattern um

40:57

so I think the numbers are are pretty close the expectation is that uh the the

41:02

number that's always quoted is 90 will fail but that doesn't mean fail outright that means not so about half of those

41:10

will actually fail out right and give you no return and then another four will give you something like your money back

41:16

maybe a little bit more maybe a little bit less so we call that a failure anyway even though they haven't really it wasn't a complete failure and that

41:23

last one is the one um and if it's just a 10x return all you've done is now gotten your money

41:30

back right so it needs to be 100 x returning so we're and that's kind of the mentality of the VCS is we don't

41:36

want a 10x return we're I mean and tax return is great but that's not worth shooting for we have to shoot for the

41:41

100x return yeah because if our one success is the 10x return all we've done is gotten our money back for the front

41:48

no I think I mean couldn't agree more because for the VCS I think the hurdle rate for

41:53

uh they have to beat this Berkshire heavily basically every LPS the potential to invest directly in the S P

42:00

500 I think it's 10 to 12 depending on the time of the year yeah yeah I'm sure deliver solidly 20 yeah and now we also

42:08

have this risk-free interest rate pack which you think in the United States is close to five percent currently five

42:14

yeah yeah and when we see Stone shoot for the 100 x and uh also assuming the 90 failure rate uh they have no chance

42:22

of returning the more than 20 percent that they'll be expected yeah so they

42:28

need to be shooting for 20 to 25 after fees their fees are pretty substantial

42:33

so um they're looking for unicorns and a lot of startup Founders don't get that

42:38

so we get a lot of pitches that will show us the kind of fall into two kind

42:44

two categories that don't really work one is we have a great business it's going to be profitable we'll generate

42:50

you know 10 20 returns every year continue on it's just like nice that is

42:56

not Adventure business that is a great business that is not a venture investment we're looking for uh an

43:01

acquisition or an IPO or a high roll ticket um that's just the nature of the business the other ones uh tend to be uh

43:10

we've got a great business uh we have a great product uh it's going to take five years and Google's gonna buy us out for

43:16

uh for five acts you're gonna get five extra money back and they think that's wonderful and like you know if you could

43:23

guarantee me 5x my money back in in five years absolutely that is wonderful but

43:30

the odds of them actually getting that are one in ten so I need 50x yeah

43:36

yeah this is this is pretty uh I mean I think the big learnings from what you said for everybody who wants to get

43:42

their feet wet with eventually investing is one it's a long game so it's not that you get your money back next year so

43:48

it's like not like a savings account uh it's minimum 10 years and the

43:54

expectation must be that it probably doesn't create right away this mesmerizing returns so that people have

44:01

to wait at least for 10 years to see something coming back and uh which is

44:06

more or less in many cases breaking even a little bit above that is the right

44:11

understanding for initial investors absolutely you got it and and most new

44:17

Angel Investors don't know that I didn't know that when I got started like I said I thought everyone said well return

44:22

return to three to five years so you'll start getting your first returns after three years then you get your full after

44:27

five years it's more like it's five to 12 years so you start getting some

44:33

returns after five years and then the bigger ones that actually make the difference tend to be in years seven

44:39

nine eleven um so it it's a very long games and uh

44:45

also learning is uh don't go all in don't go already know don't don't bet

44:51

your retirement on it this is uh this is your extra money and even so you hear

44:58

about these Venture funds that they've got a billion dollars to invest or 100 million dollars to invest do you think

45:03

well it's a lot of money um and the people that are investing in

45:08

them are retirement funds and uh University endowments and corporations

45:13

and what you find is they typically will say we have to put most you know half of our money has to go into bonds uh it's

45:20

safe we need to be able to pay people um and then like another 40 goes into uh

45:27

public stocks because we need to juice our returns a little bit we'll put something like three percent into

45:32

venture capital but you these these organizations have

45:38

so much money that three percent ends up being tens of millions of dollars that they can invest in in Venture funds so

45:45

um but even even them it's yeah we're only three percent of our money goes

45:51

into Venture Capital uh mine's a little bit more than that but it is not a huge

45:56

amount so I I kind of I think of it as almost like a part-time job right as uh

46:01

and it takes a lot of time it's a lot of work uh to find the companies and really investigate them to make sure that

46:08

they're worth investing in I'm curious um to understand a little bit better the angel mentality in California

46:15

um is that your group invests in a lot of uh startups why not directly in a venture fund

46:22

wouldn't it be much more comfortable to just delegate the task and say okay let's take the money from the angel

46:27

group put it in a venture fund and let's uh just other people to the hard work and

46:34

then they should come back in 10 years since deliver mesmerizing returns wouldn't that be much easier than

46:40

investing directly yourself in a company or doing the work with the ancient group they also have to do that utility chance

46:47

process in in your area of expertise yourself would be not be easier to go

46:52

into it so that's probably most people uh especially like what was called family offices and people very rich

46:58

people would have um or their families have kind of an operation to to do investing and for the

47:04

most part they yeah they allocate some of them just like you know the the big corporations they allocate some amount

47:10

of bonds some amount to public stocks and some amount to venture funds and then they go off on cruise to Italy and

47:17

uh and have a nice life I completely agree it's beautiful you

47:23

should go go to Austria have Christians show you around there's lots to see

47:29

um the people who are Angel Investors are well there's kind of two categories uh one is kind of the the

47:38

not real angel investors but people who are um just kind of on the periphery

47:43

people's on Pitch decks they're like that's nice um I think that's great idea I'll give you a little bit of money

47:49

um and then there's kind of groups like us that do this on a regular basis ongoing and expect to make uh you know a

47:57

fair number of Investments over the course of the year we do it because we enjoy it we do it

48:02

because uh we want to be part of the ecosystem we want to work with the founders we want to get in at a stage

48:08

earlier than the Venture funds which need to invest five ten million dollars at a time can do

48:14

um and we we live vicariously through these startups you know a lot of us are retired

48:19

um and we don't want the work of creating our own startups ourselves and

48:25

and don't have the time to do it but we like to be more involved in just giving

48:30

money to a fund uh we want to hear the pitches we want to see what's going on we want to work with the founders we you

48:37

know we don't like the the work itself of calling up their customers and saying you know does it work or not but we like

48:43

the process of being able to find startups that we believe in and

48:48

um feeling like we have some tie to it and and that's I think the important thing you just put money in a fund as an

48:54

investment if you're doing Angel Investing now you in some way feel some

48:59

responsibility for that company you're in some way a part of that company's success and if you want to ask me about

49:05

companies in cleantech I have a nice list of them that I've invested in and I am proud of all of them

49:12

um and I will go out and I will I will help them in any way that that I can I will introduce them to customers if I

49:18

hear people I will introduce them to other investors so you become part of the company and that's

49:24

um an unpaid part but um you're you're you're tied into their success and you kind of live through

49:29

their success I mean I understand this this uh this middle agreement at one point in time

49:35

uh you probably say when you have created your own startups your CEO that you say okay I don't want to get my

49:41

hands too dirty anymore right let's let's let's the younger generation do the work yes uh let me rephrase the

49:49

question a little bit and come from another angle uh your groups and you you have a lot of expertise you looked at

49:55

many companies you said hundred Investments so probably you looked at thousands of companies in the process of

50:02

the last 10 years with your group um have you ever thought about uh

50:07

turning your angel groups into a fund and also offer it to institutions to say

50:13

okay give us your money and uh we have a deal flow

50:19

there has been some discussion so we have a fund right so we pool our money uh and so we'll either invest as

50:24

individuals so let me give you an example a company comes through um we look at them we we have a fund

50:31

um so TCA Los Angeles has a fund that's three million dollars um we'll typically do 10 Investments

50:38

over the course of the Year they'll usually be like three hundred thousand dollars each

50:43

um at the end of the year we use up the fund then we start a new fund so the fund is pooled money from you know the

50:49

150 investors in the group um in different amounts and we in and then based on how much money you put in

50:56

that gives you your your voting rights in deciding uh whether to to invest in a startup or not

51:03

um there's been oh and there's no fees involved right so if you put money in a

51:08

venture fund you they're professionals but you know they they have to make money out of it right so they make money

51:14

by taking two percent of the fund every year to cover the cost of the employees and the operations and then 20 of the

51:22

um of the successes is disgusting and that's the that's the big money so um we don't take fees other than the

51:29

actual operational cost of like paying for legal fees or accounting or stuff

51:35

like that so um first of all there's no fees if we took money from outside uh people

51:42

uh or outside groups and that gave us more money to invest with I mean that's that's good but we'd have to we'd have

51:48

to charge them for it right so there need to be a fee structure and that kind of adds some complication to the process

51:54

but more importantly then we're now feeling like we're

51:59

responsible to other people and that kind of changes when you ask me the difference between a VC fund and

52:04

Angel Investors as Angel Investors we are only responsible to ourselves and we don't have to justify why we invest in

52:12

something other than we think it's a good idea um and so that gives us a different

52:18

mentality than a VC fund does and I wrote about that this week that the VC funds have to invest in things that they

52:25

think their investors um are going to find attractive because they need to put out reports on a

52:31

quarterly basis and say here's what we invested in and why we invested in them and when they fail because 90 of them

52:37

will fail they have to be able to say yeah that wasn't a bad investment it didn't work out sorry but it was a good

52:43

investment um and that kind of reduces their flexibility to invest in things that

52:48

might be a little bit different or interesting um because they kind of have to follow

52:53

the herd uh because when it fails they need to say yeah everybody else thought is a great idea too but yeah sorry

53:00

um and so not having to justify why we invest in something to anyone other than

53:06

ourselves kind of changes the mentality and I don't think we want to do that uh

53:11

that said there's quite a few people who are Angel Investors who've been successful as Angel Investors and they

53:18

say well I'm doing all this work myself I'm doing the invest I'm finding the companies I'm doing the investigations

53:24

uh I'm joining the board of the companies but the amount of money I can put in is limited if I take money from

53:30

other people I can make this into a part-time job or even a full-time job and so a lot of the small funds I mean

53:37

we hear about the big funds by you know like um a16z or Coastal Adventures you know

53:43

or then billions of dollars to play with uh but there's also a lot of small funds out there that might be a 10 million

53:48

dollar fund or even a two million dollar fund uh which tend to be one person who

53:53

started as an angel investor and then um got some of his friends and or other people uh you've been able to go back

54:01

and say you know here's my success over the past 10 years I can do something similar for for you uh why don't you

54:07

give me a little bit of money and I will I will invest it for you the same things that I am investing in personally

54:13

uh and so a lot of the small funds do work that way back to my example uh so

54:19

something comes through as a group we may invest three hundred thousand dollars but then we'll also pull uh

54:25

individual Investments so if the fund says this is a great idea um and I really believe it is well uh

54:31

and not just using my fund money um but I may also invest some amount

54:37

myself and so typically we'll put together like another two hundred thousand dollars from uh our uh group

54:43

members and end up making a total of five hundred thousand dollar investment and then we'll recommend it to our

54:51

sister organ so I'm in TCA Los Angeles there's TCA Orange County and then there's Pasadena Angels uh which are

54:58

part of our same group and so we'll we'll send them over to those groups which have their own fund and their own

55:04

uh um individual Investments as well and together we may put together a million

55:10

dollar investment now for for uh a VC fund not small and there's a lot of

55:16

work because now you've got you know 20 30 people that are all like making individual decisions instead of just one

55:22

fund saying you know here's a check for two million dollars and five million dollars but we can't invest in things that the funds won't invest in we can

55:28

invest in an earlier stage than funds typically can so one advantage of your investment

55:34

stand then is to go in much earlier than this is usually two women this is usually don't take the first risk and

55:40

the second thing is that you can also invest in 5 10 20 30X perspectives and don't necessarily need to go for the 100

55:48

or 200x perspective because you don't have any LPS in that you have to satisfy yeah so uh kind of three right so yes uh

55:57

we can go in earlier for things that we think will scale but uh they're not the size where they're ready for two million

56:02

dollar or five million dollar check from uh from a VC fund um we can invest in things that are are

56:09

lower risk or further along um that are too small they will never

56:15

need a five million dollar check um they need a million dollars to get to the point where uh where somebody can

56:21

acquire them for 50 million dollars these fees won't be interested in that those great for Angel Investing and the

56:27

last one is kind of things that uh don't fit the VC mindset

56:33

um it's not in their sweet spot it's not an area of expertise uh and maybe it's a

56:39

little bit too off the wall it might be things like organic cider right you know they just don't it doesn't it's not

56:45

software it doesn't sit in in kind of fun but we can invest in it because it

56:52

looks like a great opportunity why not um so again we can invest in it because

56:57

it's something we believe in we think is interesting um even if it's even if we can't justify

57:03

it to other people uh let me ask you another question about the startup world uh since your group

57:09

since you are doing uh your job very diligently and you are not the the typical angel investor that I very often

57:16

meet in Europe or family office who occasionally invest in a startup right so you really have a uh sort of due

57:23

diligence process but yes what are the three biggest mistakes that

57:29

you have seen with startups when they approach investors that can easily be

57:35

fixed but startups don't do that what are the three biggest mistakes they make when pitching to you yeah so the first

57:41

one is easy and I keep writing about it over and over and over again because I keep seeing it over and over and over

57:46

again especially in hard tech where you have scientists doing the the pitch and

57:52

they have the idea of we've invented a great product I want to tell you all about this product and they'll spend 10 minutes telling us about how wonderful

57:58

the product is and the advice I always give them is it is not about the product is absolutely

58:04

not about the product it's not even about the business it's about the investment you were

58:09

selling something you're not selling a product we're not customers you are selling stock in your in your company

58:15

and you need to tell us why we should buy stock in your company and that's because we're going to make money from stock in your company so the pitch is

58:23

not about how great product it is it's about why this is the best investment you're going to see in in years why this

58:29

is the one that's going to have the 100 x return the products part of that

58:34

um you know you there's not going to be a business unless there's a product so there needs to be a product there needs to be a uh a market there needs to be a

58:42

real need um but those are just kind of the precursors to get you to having a good business

58:48

and then so it's like how do we scale the business from zero to a hundred um and then

58:54

somebody's gonna buy you who's going to buy you why are they going to buy you how much they're going to buy you for um why is this going to be the one

59:00

investment out of uh out of 10 or 100 that's going to be uh have a great return so that's what the pitch is about

59:07

it's a it's selling stock in the business to investors who are looking for a return is not about the product so

59:13

start with the product um but that's don't tell don't spend your whole pitch on the product spend

59:19

one third of your pitch of the product um second is

59:26

and this is so I started off as an engineer but I've spent most of my career as a technical marketing person

59:31

and so this is my particular bias but I see too much again in hard tech that is

59:37

this attitude of um kind of ties into we'll build the product right it's all about the product

59:44

um it's not about the product it's about the it's about the market it's about the customers and they have this attitude of

59:51

if we build it customers will come if it happens great

59:58

um and and Life Sciences it is that way right if you invent a better cure for cancer you don't need to go out and

1:00:04

Market it you just need to get it through FDA approvals and you know you'll be worth a billion dollars

1:00:10

um but when it comes so many years so many other ways to fail but the usual

1:00:16

way to fail for not life sciences is you you may have a great product but you

1:00:21

haven't figured out how to get it to customers you haven't even figured out who your customers are so they talked

1:00:27

about the invention they talk about the patents they talk about the technology I don't I need to know those things but

1:00:33

I want to talk about the customers who's the customer why do they need it how are they going to buy it how are you

1:00:38

going to get it to them um how are you going to find them um and so again this is my marketing

1:00:45

person bias but to me the marketing is more important than the product itself

1:00:50

if you don't have customers it doesn't matter if you've got the greatest invention in the world um and you could have the stupidest

1:00:56

invention in the world in fact most unicorns to be honest are really stupid things right um

1:01:02

you know clothing kits right or or meal kits that's not rocket science

1:01:08

but they get bought out for a billion dollars right um and have they really added to the

1:01:14

happiness of the world yeah I don't really think so but they've found a

1:01:19

billion dollars worth of customers congratulations the investors have gotten have gotten Rich

1:01:25

um you can have a really really simple idea but if you if you have a lot of

1:01:31

customers for it if you know how to Market if you can build up a brand name you can make a lot of money and that's

1:01:37

what investors are looking for so uh and if you don't do those things you're going to fail it doesn't matter how great your product is if you don't have

1:01:43

customers you don't have a business um and somebody five years later will come along with uh with exactly the same

1:01:49

thing you'll be like that that's fine yeah but you didn't find the customer so

1:01:54

it it really is about the business and I tend to look for startups that have

1:02:01

especially technical startups that have uh co-founders that have the technology

1:02:06

side but also the business side and I see too many that are just like well I've got a PhD I'm a smart person and

1:02:13

you are really smart and I'll go to an accelerator and I'll learn all about business and pitching and you know it's

1:02:19

technical products I can talk to the customers and um and then I'll hire a sales guy at some point like no no no no marketing is

1:02:27

just as tough as building a product and if you don't do the marketing you're

1:02:32

not going to be successful so you really need somebody who is understands the marketing not the sales with the

1:02:38

marketing figuring out the strategy understanding the uh the the you know

1:02:45

the Dynamics of the industry who the Distributors and resellers are who the thought leaders are who the customers

1:02:51

are how to price it how do how to find the keywords that people are going to

1:02:56

get excited to find you online these are it's easier than building a new cathode

1:03:02

uh for a Lithium-Ion battery but it's it's not something you're going to pick up in three months in accelerator either

1:03:08

you need a business person who knows how to build a startup um

1:03:15

and then the last one and I see this a lot is

1:03:21

especially for for for young people venture capital is great

1:03:27

Venture Capital can give you a lot of money and and include Angel Investing in

1:03:32

there um as a way to build your business but it is not the only way and is not

1:03:38

the right way for a lot of startups and everyone just has this idea of I've got a great business I've got a great idea I

1:03:44

just need a pitch deck I'll go find money and then we'll build the business and I see so many great businesses that

1:03:50

really shouldn't take Venture Capital because it doesn't venture capital is a very specific

1:03:57

way of building a business of we're going to take a lot of money we're going to grow as fast as we can we're going to

1:04:02

acquired as fast as we can so we can make a lot of money selling our stock that is great if you have something that

1:04:07

can grow quickly and be acquired quickly for a large multiple that's the way to go I see a lot that are really solid

1:04:15

businesses that will generate a lot of profitability but they're not protectable right there's no

1:04:21

patents there's no brand name or they're too small right the market is just not a billions of dollars so they can build a

1:04:28

nice 25 million dollar business they can be generating five million dollars of profits a year that's not interesting to

1:04:35

for an acquisition so you can build a business that for the next 20 years will be generating five million dollars in in

1:04:41

profits that is not something that Venture investors want to invest in but there are other ways to build that

1:04:47

business so kind of think through your business and what your plans are what your goals

1:04:53

are and the best way to build a business and say is Venture the way to do that or

1:04:58

do I want to go for Grants do I want to uh kind of self-fund it do I want to especially with technical products we

1:05:05

can often get uh customers to prepay for something if they need enough they will prepay engineering for it

1:05:11

um uh or we can be consultants for for companies and help them build it and keep the technology and sell it to other

1:05:16

people uh so there's a lot of ways to build a business it's not as easy as going to a fund and getting a check for

1:05:22

five million dollars and then going hire people but it can your chance of successes uh

1:05:27

will also be a lot higher so um Venture is not the only way to build

1:05:33

a good business and for a lot of a lot of startups is not the right way of doing it so kind of think those things

1:05:38

through yeah I couldn't agree more especially at the last point so Ventures and Specialty and I think it became a

1:05:44

little bit too much attention in the last five years or six years due to the

1:05:51

missing interest rates on the market yeah a lot of possibilities to make money with the company when I was in commercial school back in the 80s and

1:05:57

90s uh when she was not in the school books so it was basically build the

1:06:03

product and now that's our only teach in school yeah they have entrepreneur programs every school has an

1:06:09

entrepreneur program and it's pretty much an accelerator that says here that's how to do a pitch deck to go out and get Venture investing it's like but

1:06:15

you're building a chain of nail salons that's great it's wonderful I I support you but that

1:06:22

is not going to get Venture funding unless you come up with a way of of

1:06:27

being a unique brand that then you can scale the brand right that's kind of a

1:06:33

different story yeah it's something like Steve chops did I think with with airplane and the

1:06:38

iPhone so this is uh also was not really a venture case I mean putting a putting a smartphone or putting a new mobile

1:06:44

phone into a market that's declining this was really interesting in 2006 when we talked about uh marketing stories

1:06:51

let's switch let's switch to the main main act in this podcast

1:06:58

yeah my first question about your book is I mean you're you're a pretty busy

1:07:04

man so you have a lot of Investments ancient groups what was the reason that you sat down uh

1:07:12

preserved some time every three years for three years three years yes

1:07:19

so I just sold my uh my last company and I said well what am I gonna do next

1:07:26

um and I didn't have anything lined up um I in fact I couldn't start working at

1:07:32

another company because I had a transition period uh and I've always I've always been a writer uh that's kind

1:07:38

of mostly kind of technical marketing but um I've always enjoyed writing uh and

1:07:45

I've always wanted to write a novel I've actually written a couple of other novels in my spare time that didn't get

1:07:51

published so I said okay now I'm at a point in my life I actually can part-time work on uh work on a novel I

1:07:59

went back and I got a went back to school uh to a master's program in creative writing uh so that I would have

1:08:06

some deadlines and I would have other people around me being writers as well um and that kind of forced me to work on

1:08:12

it I if I didn't have the school program I would have given up multiple times um because I I hit a dead end a few

1:08:19

times they're just like this is not working this is horrible and you give up uh almost quit but I kept going and

1:08:26

going and going and finally got to the point where it was flowing it was working

1:08:31

um but it was it really comes down to I always wanted to be a a novelist but

1:08:38

never really had the the time to do it so now I had the time to do it and I thought well what should I write about I

1:08:43

mean um I could write about anything I want to write about but what do I know well

1:08:48

uh Silicon Valley startups and all the craziness of of Silicon Valley and let's

1:08:54

let's just write this really crazy story about Silicon Valley that uh that's a lot of fun to to read and so that's what

1:09:00

I started working on yeah it's like this dystopian film I read on the internet uh yes I decided to

1:09:08

not before the podcast to not finish the book because it would be tempting to me

1:09:14

to just give away the idea I might pay 220 2020. uh thank God I didn't stop it

1:09:20

it's really a great book it's it's so fun to read um

1:09:25

there was one question that popped up in my mind when I think if I read the first

1:09:30

20-25 Pages or super duper it reminded me a little bit so the way you started

1:09:36

the story and explained it the first thought that they had in Amanda came in uh

1:09:41

was it inspired by uh tyrannos and their nose their nose their nose

1:09:48

um yeah so I started writing the novel before theranos uh or before people knew

1:09:54

about uh the the fraud of theranos and I had this startup that

1:10:01

was doing some evil things um but I couldn't figure out how they

1:10:06

would hide that right uh they were doing some really bad things uh so how would how would they uh you know what would be

1:10:13

the Dynamics inside the company and right in the middle of writing it the

1:10:18

therano Scandal broke uh first in the Wall Street Journal and then the book bad blood came out and I'm like

1:10:24

so I had already had the original version uh was was quite a bit different

1:10:30

where the founder of the the president of the company was Satoshi Nakamoto

1:10:37

and uh uh Katie who's is now the founder

1:10:42

of uh of uh of super duper uh was uh one

1:10:48

of the employees who was who was kind of giving away the inside information so

1:10:54

when theranos broke I'm like oh 80 is is Elizabeth Holmes

1:11:00

she's exactly like Elizabeth Holmes and here is the playbook for how she's going

1:11:06

to hide uh what she's doing because what she's doing is is is evil right

1:11:12

um and why she would justify it to herself and how she would um and you'll start to see that through

1:11:18

the second half of the book um you start to find out how she is hidden what she's doing and

1:11:25

um and justifying what she's doing as being a a good thing rather than evil

1:11:32

another great thing but I liked the book is that you mix some cartoons into the into the plot into the storyline how did

1:11:39

you come up with this idea uh well the main character uh is a big

1:11:44

fan of of manga the main character is a Japanese American uh and

1:11:49

um quite a few of the interactions with him and his ex-girlfriend come back to

1:11:55

One Piece manga which was they were both fans of his kids she had been a drawing person who drew as well and I thought

1:12:03

you know it'd be interesting to actually have a few themes done in the style of

1:12:09

One Piece manga a very specific style of One Piece manga um

1:12:15

so it's kids or teen boy teen Adventure

1:12:21

manga um and I tried to replicate that in in the story I can't draw I absolutely cannot

1:12:28

draw so I had to hire somebody it took me uh I I hired five separate people before

1:12:33

I found somebody who understood what I was trying to get and and Drew it the way I wanted it to so

1:12:40

um that wasn't easy and when I finished I started showing the book to agents and

1:12:45

Publishers like well we can't put manga in there uh it can't be done no one's done it it's uh it's a mess it's a

1:12:51

disaster uh so I stripped it all out and I started showing it to agents and

1:12:57

Publishers and uh they're like well it's about Silicon Valley we don't publish books about Silicon Valley so I finally

1:13:02

found this one publisher pandemon like yeah this is this is exactly what we we look for and they had seen the version

1:13:08

without the the manga in it where the dream sequences were just described is in text

1:13:14

and then I said you know the original version had had some manga in there you know what would you think of that and I

1:13:20

thought they were going to say yeah same thing as everybody else production wise is a disaster we can't do that you're

1:13:26

like oh well that's different and interesting we love gnashyaps let's let's throw that in there so I gave him the manga and they put it back in

1:13:33

um it turned out to be a real mess for for production right um trying especially the ebook version

1:13:39

trying to get the graphics oh yeah the mouth well um was so in print it's a lot easier but

1:13:46

in ebook it's really a mess and uh I I think they regret their decision for the

1:13:51

amount of work it took um but uh it does make the book somewhat uh

1:13:58

different and distinctive I think no it's it's fun it's fun to read I love it I love it so thank you because I can I

1:14:04

can finish out the second half there's another question I would like to ask you I mean I love reading American books so

1:14:10

I mean from a bookshelf before Richmond from America and I realized the tendency

1:14:16

with us-based writers that they seem to enjoy to use German words in their

1:14:23

writing what is the reason why do Americans sometimes uh use German words what is

1:14:30

what what do you want to express with that I think you also have some something Parts in your book uh two of I

1:14:36

think I discovered two or three words in in truly okay um so super duper of course has the

1:14:43

umlots on there which make it look like um german-ish uh but that's really nice

1:14:49

Uber right there yeah because originally the company was a competitor to Uber so

1:14:55

they were super duper because they're they're revolutionizing Transportation which is what uh over before it turned

1:15:02

into a regular company um really was a startup that was revolutionizing Transportation no one

1:15:08

was going to own cars anymore they were going to have robot uh self-driving vehicles

1:15:13

um and they were just going to take over everything with Transportation uh they turned into a meal delivery company but

1:15:19

you know but when I started writing it they were taking over the transportation industry so super duper was a takeoff on

1:15:25

on Uber even though they don't look like it in in internally so the umlots went

1:15:31

on there because it's Uber right um why that's you know why Uber is using

1:15:36

the German word well you know Superman and the uberments and you know you're probably laughing at my pronunciation

1:15:42

but um there's there's some amount of German in words that have made their way into

1:15:48

American consciousness ah okay that's that's that's good to know

1:15:54

um how much research did you need to do for writing this book

1:16:00

uh not very much because this is I mean it's it

1:16:08

Isabel Silicon Valley I know Silicon Valley well uh it's about Japanese culture I know Japanese culture well so

1:16:14

I didn't need to do a lot of research um theranos gave me kind of the blueprint

1:16:21

that I needed for uh for what was happening um but every day while I'm writing I've

1:16:26

got Wikipedia open to double check things I've got street view open to kind of check the The View I've got Maps

1:16:32

because maps are really critical to the story of where things are and how he's moving from place to place

1:16:38

um and I probably spent as much time looking at those things and checking the details as as uh as I am writing so you

1:16:45

could say it's 50 research or you could say zero research on just double checking things I did have to go up to

1:16:50

the area and drive around and see people and check restaurants and get a feel for places a few times while I was while I

1:16:58

was doing it but um you know if I live there which you normally would if you're writing about a

1:17:03

very specific place I would just be like walking outside and seeing things so um

1:17:08

research research not very much there is some discussion in there of uh particle

1:17:14

physics um and that's how the system works um

1:17:21

a little research not very much anyone who knows particle physics will just completely laugh at uh how this device

1:17:28

is supposed to work um and the original version had like 10 pages of description of how it would

1:17:34

work and how it and kind of the whole philosophy behind how the system would

1:17:39

would work because it was it was it was about philosophy more than and and kind of the whole um

1:17:46

the the Schrodinger's cat right okay so there's one of the Judith Schrodinger's cat uh story

1:17:52

um which ties into particle physics and and the whole you know what is reality versus what is non-reality uh but

1:18:00

there's a lot in there and everyone's just like ah this stuff is boring so I took 90 of it out and just like yeah it

1:18:07

works this way that's the end of it and you know who you know I'm not going to try and justify it that's that's not

1:18:12

what the story is about there's also a love story in the book uh I mean yeah to to man one woman uh what was the

1:18:20

decision to put a little bit of a romance into it gotta keep it interesting right

1:18:26

um so as I was

1:18:31

working on and figuring out how to write a mystery because I'm not never a mystery writer before one of the things

1:18:39

uh the professor at the school said was mystery is tough because

1:18:45

every chapter has to accomplish two things one is you have to uh develop the

1:18:51

character and number two is you have to develop the plot most stories you can do one or the other

1:18:58

it's either about the plot and the plot moves forward and the characters don't need to be developed uh or it's just you

1:19:05

know it's literary fiction and you just write about the character and every every chapter is about developing the character in their Journey mystery you

1:19:12

have to do both at the same time um so I needed to give him some some grounding

1:19:19

uh and I think it also it's one of the things that drives him right I mean he's the main character uh

1:19:27

tedhara is is a geek um people tell you that himself he's a

1:19:33

hacker uh he's a programmer he's a you know he's got a degree master's degree

1:19:39

in mathematics he is not good at dealing with people he is horrible dealing with people uh

1:19:45

and he knows that and he wants to get beyond that but it's very difficult for him and so having

1:19:52

um his ex-girlfriend that he's still kind of in love with um be the foil for him I think really

1:19:58

helped develop the story because she could do things that he can't do and he could do things that she can't do and I

1:20:03

like having them together but also that tension between them of uh being

1:20:09

ex-boyfriend and girlfriend but still really being in love with each other but not being able to figure out how they

1:20:15

could be together kind of added a another layer to the story Beyond just like who did it and what's going on in

1:20:22

this crazy startup yeah why let me I mean I understood I mean it's nice to

1:20:28

start with this this love story so I can relate to that I think everybody has an accent uh uh in our times and uh

1:20:37

is familiar with the development of the complex complications when uh doing something together with with an

1:20:43

ex-partner and then suddenly you bring up a second man a policeman uh into this

1:20:49

story this is already complicated story uh ex-boyfriend ex-girlfriend they have to solve a problem and then comes uh

1:21:03

with her I didn't do that on purpose that just kind of happened as I was writing and a

1:21:09

lot of things in the book just kind of happened as it was as I was writing sometimes

1:21:15

they screwed up the story and I had to like go back throw away the 50 pages and say yeah okay that didn't work uh this

1:21:21

one worked out um that having that rivalry there kind of pushed him in in certain ways that he

1:21:29

needed to be pushed I like it because it was an unexpected turn it didn't absolutely it did

1:21:35

absolutely not expected so I was okay while I was reading a fellow came in I

1:21:40

can relate to the story about the startup I can uh this public

1:21:47

memories so I saw some similarities at the beginning and said maybe it goes down the draw I don't know yet I'm

1:21:53

halfway through um and then there was this love story because the ex ex-girlfriend

1:21:59

ex-boyfriend and uh someone they're looking for his arrival and then comes

1:22:05

up there the police were they thought how complicated is that now completely unexpected it's a pretty complicated

1:22:12

story for a book that isn't all that long maybe too complicated at times but

1:22:17

you know but I think that happens I think it it it will seem for me and has

1:22:23

tension and nice tension I'm at this part when they have their private the personal speech here I think it as a

1:22:28

police temper uh or at the Tea House I have really forgot a little bit about that it's really good for it it's very

1:22:34

good with country let me ask you another question a little bit uh going away from the storyline I don't want to give it

1:22:40

away right now people should buy the book and read it thank you so let's uh this is the also the reason why I

1:22:46

stopped it I'm just I think I'm too honest so I would after finishing it I thought I would just simply give it away

1:22:53

which doesn't make sense on a podcast um you reached out to me with the

1:22:58

question if I can host you on a podcast let's talk a little bit at the end of this podcast about the importance of

1:23:05

social media in b2p marketing these days on one hand for writers but also on the other hand for startups uh you have also

1:23:13

a background in P2P marketing if I remember one of your latest posts right

1:23:20

um how useful is social media these days for business to business marketing

1:23:27

ah you know 20 years ago if you didn't have a website you didn't exist that was kind of a saying and and now it's just

1:23:34

the truth in fact now it's so true that you don't even need a website anymore because people don't don't uh

1:23:39

necessarily look at your website as the first thing then you look at social media and

1:23:45

again this kind of goes back to what I was saying before especially for like hard tech people think it's about the

1:23:51

product if you build it they will come um and that's not true you have to find

1:23:57

customers or you have to find ways to be a customers to find you a lot of people think so here's the

1:24:04

difference in sales and market right sales things I have a product I I can

1:24:09

make a list of the potential customers I can call them up I can email them I can tell them what I have and then they will

1:24:15

uh they'll be like wonderful great tell me more that's a Salesman mentality I'm a marketing person uh I don't want to

1:24:21

make cold calls I don't want to try to reach out to people who I don't know who don't want to talk to me

1:24:27

um what I want to do is get them to find it and the sales process becomes so much

1:24:33

easier when they find you and they're like that's exactly what I need let me call these guys and find out more

1:24:38

details and then they're your friends you do the demo they and it's so much easier than kind of going the the sales

1:24:44

person route especially for a startup because for your startup they don't know who you are you try calling them they're

1:24:50

like yeah I don't know you sorry I'm busy um marketing is key and social media is key

1:24:57

to marketing nowadays now it kind of depends on what you're doing it's interesting uh my wife is on Instagram

1:25:03

all day I'm on LinkedIn all day and we kind of meet in the middle at Twitter and then

1:25:10

she does flower arrangements she does ichibanda um and Instagram is the place to be for

1:25:17

that it used to be Facebook now it's Instagram she puts her Arrangements up there she has I don't know thousands of

1:25:23

people all over the world see her uh see her Arrangements see you can see her exhibitions and they're like oh yeah I

1:25:29

want to do that too um how do I sign up for a class or something like that um

1:25:34

that's consumer marketing for B2B marketing it's mostly LinkedIn

1:25:40

because that's where people are going to find out about new ideas new things that are

1:25:46

changing um but it's also medium is a great place as well and yeah I don't know if you

1:25:51

consider medium to be a social social media I do it's a great place to not promote your

1:25:59

product but promote yourself and not promote yourself as I am the

1:26:04

expert at this but um to go on to and the same thing in in LinkedIn so you can use LinkedIn in two

1:26:11

ways one is as sales I can reach out I here's my list of people here's the titles they have I can find them I can

1:26:17

get them into my network and I can I can shoot a message and say Here's why you should be interested in what we do

1:26:23

um You probably you know you're you're it's better than email but your response rate's going to be low the

1:26:29

other way you're doing it is the marketing way I'm going to write a post about some great new technology I've

1:26:34

been that our company is invented but I'm not going to talk about our company I'm going to talk about why

1:26:40

adding silicon to lithium-ion batteries will will uh is the wave of the future

1:26:46

and is going to enable batteries to be twice as uh store twice as much and be

1:26:51

able to uh charge twice as fast and be 10 times safer and it's going to change

1:26:57

the world wow now everyone who is involved in the in the lithium-ion boundary space wants

1:27:04

to read that they don't want to read about your company they want to read about you they want to read about how silicon batteries technology is

1:27:10

advancing and what's new there and how that's going to change uh change the world and make it better and make a

1:27:16

better product at the end you're like okay and this is what we do um or you know just build up a following

1:27:21

that way and so I've always felt that this way of giving back to the community being part

1:27:28

of the community giving back to the community being embedded in the community

1:27:33

um it's a longer process it's a longer game but it works whereas just saying a post

1:27:40

of here's this great new technology we've invented looks like a press release other than your own company

1:27:46

employees and their friends and maybe your parents clicking on like and and follow no one wants to read that

1:27:53

so I think marketing has to be smart and it has to be about understanding the business understanding the uh the market

1:28:02

understanding the customers and becoming part of that community and then

1:28:08

when you put out the post of hey look at this great you know new um uh invention we have they're like oh

1:28:15

well that's that's exactly what was reading about in this other article I need to learn more uh so I think that's

1:28:20

really really key now again Life Sciences whole different story you invent a cure to cancer there's like you

1:28:28

know it's just a matter of going through a regulatory process and then talking to you know Pfizer and a few other

1:28:33

companies like that and you're done different way of operating it's about the science uh even if it's like med

1:28:39

tech there's conferences where everybody goes and you're just kind of part of it but when it comes to anything else even

1:28:45

if it's very technical you have to find the customers but I think more importantly you have to make it so the

1:28:50

customers find you and that to me is what marketing is about so I think it's key

1:28:57

um and if you don't do it then you're just building a product and build it and nobody will come no also also life

1:29:04

science change with the pandemic I would totally agree to what you said uh three

1:29:09

years ago so before 2020 that was exactly the way that you mentioned right uh life science you can forget about

1:29:15

social media you need to know the right people within Pfizer you need to prove in clinical trial that uh it works and

1:29:22

then you can sell it directly to the to the industry but it also changed in life science with the pandemic now I think

1:29:28

everybody in life science is on LinkedIn and it's heavy than using it and promoting it but it makes easier in my

1:29:35

opinion is on one hand finding the right Venture capitalists yeah so especially when it comes to

1:29:41

values beliefs uh and personal fit between Founders and VCS

1:29:48

when founders demonstrate over years what they did in the past their

1:29:55

successes their failures it beats a lot of trust and it also helps to receive understand are the founders working in

1:30:03

the direction I want them to go so is it really a we see mindset the founders as you mentioned before right

1:30:10

um ABC wants to sell basically to the industry and where the founder wants to change the world and wants to build a

1:30:16

huge sales force it's not the VC case so it helps to differentiate that um and also be Caesar using it heavily

1:30:24

uh I learned yes they promote a lot uh but they're using a lot of the know-how

1:30:30

and describe a lot of the know-how on LinkedIn these days which is a very wide level resource

1:30:36

um my question to you before I continue talking endlessly I mean you have built a huge following on

1:30:42

medium I think it's about 30 000 people if I remember it right um then you have about 13 000 on

1:30:50

LinkedIn or twelve thousand he even stalking me yes yeah yeah I'm doing a

1:30:55

little bit of my research for the podcast um how did it change your business life

1:31:01

did you feel an impact or is it just yeah I have it and it's nice to have uh but what's how did you change your

1:31:08

business this huge following so

1:31:13

the The Following on LinkedIn started because I was building startups and I

1:31:19

needed to find customers and I was doing exactly what I described which is like being connected with everyone in the

1:31:25

industry and um just kind of being part of it and that built up you know um

1:31:31

some let's say 5 000 followers that way which was basically just me like

1:31:36

reaching out to 10 000 people and half of them saying Okay um

1:31:42

and then I started the the writing on medium about about startups and

1:31:48

specifically uh and the way that came about was I was you know so I've been an

1:31:54

investor for 10 years angel investor at that point um and I also a uh and I'm a mentor at a

1:32:01

lot of different accelerators and I would hear the same questions I would hear the same misunderstandings some of

1:32:07

the things that we're talking about today all the things that in my articles mostly come out of discussions with uh

1:32:13

startups and kind of what advice they need or what do they not understanding and I'm much more of a writer than a

1:32:20

talker and so it I kept on hearing the same questions let me put my thoughts down organize it write it up and it kind

1:32:28

of started with like what's a good pitch deck why are these pitch decks horrible why are we spending uh weeks and weeks

1:32:35

and weeks revising the pitch decks and they're still not very good how do we make a good pitch deck what's wrong with

1:32:40

it it's my heads up

1:32:46

so I started writing a uh a series of articles about

1:32:53

uh about how to make a good pitch deck what needs to be in the pitch deck what needs to be in each slide I put up on my

1:32:59

own blog and I thought well you know Google searches will find it nobody

1:33:05

found it so the only people who read it were the uh where you know kind of the startup Founders where I I would be at a

1:33:13

accelerator I'd say you know I I try I explain this a lot more detail a lot better in this article here is the link

1:33:19

to it just read the article then we can come back and discuss particular questions and I put a medium because why not

1:33:27

another place to get the same articles out and uh nobody read it

1:33:33

and uh so then a um a publication on

1:33:38

medium sad oh this is interesting can we add it to the publication yeah sure

1:33:43

whatever and suddenly I went from having like five views a day to having uh a thousand

1:33:51

views a day like wow okay this is how it works you need to be in a publication

1:33:57

um and then people started following me when so I started which year was this this uh that was probably two years ago

1:34:04

I started doing that um and then so I started having a lot of

1:34:09

people following me and I was writing these every every week or every two weeks I started in this Rhythm and I'd

1:34:14

write it I put it on the on the publication Publications would send it out they have like 200 000 followers or

1:34:19

another publication of two million followers and get a lot of readers they would follow me and then some of them

1:34:25

would would hit me up on LinkedIn I'd put the same articles on LinkedIn um and so then you know the the people

1:34:33

in in my community would would um forward it to uh would would share it or

1:34:38

uh I guess on LinkedIn if you hit uh like or add a comment and it goes out to the people that are their first

1:34:46

connections so I get started getting a lot of people following me that way I'm like great anyone wants please follow me

1:34:51

anyone watching the show right now please uh please connect with me on LinkedIn love to have a bigger Community it's really about building that

1:34:57

Community um and then somehow or other I became like

1:35:03

the top writer in venture capital on uh on linked uh on on medium and medium

1:35:09

started recommending me as one of the people to follow uh so I started getting you know my followers to start exploding

1:35:16

I'm like wow um and then then I go on Twitter and like I've been working on my Twitter

1:35:21

followers for like two years and I'm still like at a thousand right and I'm

1:35:26

following all these people nobody's following me back it's like okay Twitter's a different world so yeah um now of those followers on uh

1:35:36

medium um there's so I think it's currently somewhere around uh 30 000 followers I'd

1:35:43

say probably half or more are people who just like logged in so that they could

1:35:48

see one article um and when you set up your account it makes you follow a few people so they I

1:35:54

was one of the top ones I hate like like I never hear from them again so they're kind of like Bots

1:35:59

um they're not real followers um but there probably are you know I I do get up to 10 000 people reading uh

1:36:07

reading an article if I have a good title that uh a little bit clickbait and people get excited about it so

1:36:13

um it's really been a great way to uh to build an audience and get in front of people

1:36:19

um and ironically I started doing this as a way to kind of

1:36:24

build my following and eventually help promote the book as well um I probably won't make very much money

1:36:30

from your book I mean that's just the nature of small press you just don't make very much

1:36:36

um I'll probably make more from from the articles on medium that are used to

1:36:41

promote the uh the book uh because medium does pay you a little bit for each uh for each viewers or each reader

1:36:48

so um anyway uh even if it didn't pay me and at some point medium will probably

1:36:54

run out of money and stop paying their their uh their writers because they're a startup as well well

1:37:00

they'll definitely cut the amount that they they pay um they're they're kind of trying to

1:37:06

find a business model they are a startup themselves I think a series C startup that

1:37:11

um has I don't think the growth rates are what they need to be to get to an IPL

1:37:17

and no one seems interested in buying them so they're I mean they just got rid of the last CEO who's the founder and

1:37:23

brought in somebody else and now they're trying some new things um right now it's not sustainable

1:37:29

um they're completely subscription no advertising I think the next thing to do is probably add advertising

1:37:34

um it costs right now they uh so if you

1:37:39

sign up uh after reading one of my articles I get paid half of your subscription fees so you're it's five

1:37:46

dollars a month I get 250 a month uh that's nice and then they also pay

1:37:51

somewhere around half of their uh their subscription fees uh to writers for the

1:37:57

articles based on how much they're read so that's 100 of their income right there

1:38:04

uh so I don't know how they make money and I'm pretty sure they're losing money um

1:38:10

so at some point they're gonna have to figure out a business model that either gets them much higher growth or gets them uh more uh faster growing revenues

1:38:20

so that they can either be acquired or do an IPL there's some some writers make serious or make serious money on on media my

1:38:27

Reds it's a hundred thousand dollars one wrote he made hundred thousand and his

1:38:32

his best paying jobs for 75 000 young person it's great yeah dialect what I

1:38:37

liked about medium I mean I started writing on medium in end of 2019 and so the reason was I was looking for a

1:38:44

simple platform where I could post one or two articles to promote the conference they're organized in 2019

1:38:51

here in Vienna right and the interesting thing was is still that Medium is doing

1:38:57

a fantastic job in getting the Articles into Google research so almost every

1:39:03

article that I wrote has uh my world a great ranking in Google

1:39:09

search much better than posting My article on my own website yeah and I think this makes the platform very

1:39:15

unique I hope they keep keep going and continue that because the I mean I don't have a lot of followers I think it's 1

1:39:20

300 or something but I do get a lot of reach out so a lot of people try that's

1:39:25

great they found it on Google search then uh connect with me on LinkedIn

1:39:31

um podcast for example some people found me a medium then found out that I also promote my podcast on video right

1:39:37

anything yeah so a lot of the people on medium are doing it because they want to

1:39:42

make money and so there's a lot of trash on medium and there's a lot of Click

1:39:48

bait and there's a lot of not very good articles and sometimes I think medium I tell people medium can be Twitter

1:39:55

without a word limit um it just Rands and blogs and not very well written stuff

1:40:01

um but it is whatever you want it to be and uh there's also a lot of really

1:40:06

great content on there um and if you're not using it to try to make money because your job is to Market

1:40:13

something else whether that be your conferences or whether that be a product um it can be I mean if you just have

1:40:20

your own company blog it's not going to get high rankings and is very clearly promoting

1:40:26

your own product so sometimes that's good you want to have both of them

1:40:31

but medium is is a place to post kind of industry articles

1:40:41

no I like I like medium um let's come to the to the final questions we are almost at two hours so

1:40:47

it's uh wow it's one hour 40 42.

1:40:52

um we take it a lot in this podcast um so talking about your experiences please essential giving advice to

1:40:59

potential Angel Investors we talked about Venture Capital about the startup World about your book about business to

1:41:05

business marketing um usually I enter my podcast with give advice to this or that group uh in our

1:41:12

case I would like to give it a little bit of a different term you finished your book it's out on the market and I

1:41:18

can recommend it uh you also mentions that uh you'll de-west it in some

1:41:24

startups what's next in your life is it the next is it uh investing in more

1:41:31

startups what are your plans for the future what am I going to be when I grow up yeah I'm still trying to figure that

1:41:36

out uh right now it's probably a little bit of all of the above so the second book

1:41:42

is finished and hopefully we'll come out sometime around the end of this year oh really SQL yeah so it's a SQL same

1:41:49

characters uh Ted and uh sumire again with another mystery more of a cyber

1:41:55

Thriller No manga in this one um about uh again hacking about privacy and and terrorism so I was finished I'm

1:42:02

working on my third one which is completely different story about uh sake tasting in Japan

1:42:09

um where there's this is more of an Agatha Christie style uh mystery

1:42:15

um but at the same time I you know I really enjoy Angel Investing and working with

1:42:21

startups so I will absolutely be continuing to to do that um but then at some point I'm still

1:42:28

waiting to find the right startup uh to jump in and join as a co-founder so uh

1:42:35

I've joined a few as um as a like fractional co-founder of

1:42:40

fractional Chief marketing officer I really like to find one in the area of my passion which is climate Tech

1:42:47

um and jump in and and be the co-founder as a full-time job and kind of move everything else to being uh part-time uh

1:42:55

but I haven't found that yet so in the meantime it's a little bit of this a little bit dot people looking by LinkedIn profile it's like well what is

1:43:01

this guy is he a novelist is he uh start a Founder is he a marketing person is he a uh uh is he an editor of a Japanese

1:43:09

magazine is a Japanese teacher or like we can't figure out what this person is I'm like yeah I can't either sorry

1:43:16

yeah so you don't you want to get your hands dirty again

1:43:22

absolutely yes yes

1:43:30

I love investing in the public market I love doing podcasts it's uh I learn a

1:43:36

lot we're talking like uh talking to interesting people's like people like you but I still like creating companies

1:43:42

building companies I love that uh what's your reason to go back into the yeah it's the same thing I mean investing in

1:43:50

other companies is great you get to do you kind of live vicariously without having to do any any real work

1:43:58

um but to me as a Founder who spent you know a couple decades building uh my own

1:44:05

startups uh that's what I really enjoy it's it's the creative process it's the

1:44:11

figuring it's the daily I mean every day is frustrating every day drives you crazy but at the same time

1:44:17

um when you find a new customer when you figure out you know how you're going to Pivot when you build the product when

1:44:23

you write the greatest web page that's ever been written um there is a real satisfaction in that

1:44:30

that um is is hard to find anywhere else and I think once you're a startup founder

1:44:35

you're always a startup founder so you always hear start a Founder's like well this is my next startup this is my next start but this is my next server it's

1:44:41

like why don't you stay at some companies like no uh it's the startup phase where you're where you know

1:44:48

there's less than 25 people you are figuring things out there's no bureaucracy uh that's the exciting part

1:44:55

for me and I think there's you know like yourself I I would imagine uh you know put me in a company with 200 people

1:45:01

where I get 10 employees that can do everything for me I just get to say what they should do

1:45:07

I'd rather just invest than do that right you know I don't I I I I like having I like having a team I like

1:45:13

having people working with me and being the team leader I don't like just being a boss and kind of setting priorities uh

1:45:19

so the startup phase where you're really figuring things out to me is the uh the

1:45:25

creative part is the exciting part and you get to wear a lot of hats right the bigger the company is uh you know the

1:45:32

more you get kind of pigeonholed into this is your role right here you do this um and I like the writing I like the you

1:45:39

know I don't like sales but I like talking to customers so I do that too and uh you know I get involved I'll do

1:45:45

the QA right because somebody needs to make sure the product works and we don't have a QA person so that's me no one

1:45:51

else is doing I'll answer the phones I'll make the coffee whatever it takes to build a startup um that's kind of part of the process

1:45:57

and I like just kind of being involved in everything yeah I couldn't agree more I couldn't

1:46:03

agree more I love you too usually we should figure out a startup together and and build something we'd be great

1:46:10

together you have some ideas here

1:46:15

um last question we we we promise not to kill anybody we'll start there first

1:46:21

rule of our mission statement we will not kill anybody after reading this book yeah absolutely absolutely uh

1:46:30

we could continue in my opinion for another two hours but yeah I think you have other things to do it's your

1:46:36

morning it's my evening um yes it's time for you to have a beer and enjoy your uh enjoy your weekend

1:46:41

that's true um final question did we miss anything in this podcast is there anything open

1:46:47

that you would like to ask me is there any topic that you would like to have tackled is there any message you would

1:46:54

like to spread to the world uh to start with the message to startups

1:47:02

um which is and it ties into what I was saying before uh if you want to build a startup

1:47:07

be prepared to be resilient every day is a challenge

1:47:12

um we have an expression in English you probably know three steps forward two steps back

1:47:18

um startups is three steps forward 2.9 steps back um it's you every day is a roller

1:47:24

coaster you feel like you're making progress and then like everything evaporates and uh it drives you crazy

1:47:30

but it's an adventure so um you know if you don't like Adventures

1:47:36

don't do the startup and if you do like Adventures startups are great and it's

1:47:41

going to drive you crazy but um just relax at some point and enjoy the ride because it will be a crazy ride

1:47:48

uh so that's kind of my message of be prepared uh don't get over uh excited when good

1:47:56

things happen because the bad thing's gonna happen and don't get depressed when the bad things happen because something good is is coming soon that

1:48:02

that all that's even better so sit back and enjoy the uh the the uh the ride uh

1:48:08

and then lastly um I I have to put the last plug in for my book people ask me where they can buy

1:48:14

it the easiest way is go on Amazon Amazon rules the world uh in fact I

1:48:19

think pretty much anywhere in the world you can find my book on Amazon to kill a unicorn and it's available as ebook or

1:48:24

uh or paperback and being in Europe is not an excuse it also ships to Europe obviously it's in English only right now

1:48:32

sorry but uh it's good today we'll get that it's good training for European startups when they

1:48:39

want to pitch then in the United States yeah thank you very much for this uh

1:48:45

I enjoyed it yeah I really I really enjoyed this skill it's a lot of fun and

1:48:50

I can't wait until I get your second book I'm gonna have to get you an autographed

1:48:56

copy for the second one so that's what this would be great I would love it I love it yeah thank you very much for your time uh have a great thanks

1:49:03

Christian have a great Friday and enjoy yourself will do you too all right take care soon bye

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(Cont.) #110: DC Palter - From Japan to Silicon Valley: A Unique Business Angel Journey
(Cont.) #110: DC Palter - From Japan to Silicon Valley: A Unique Business Angel Journey