EP 147: DC Palter - Why Startups Face the 'Pit of Hell': The Truth About Securing Funding

Startups promise innovation, but why do so many fail to secure the funding they need?

Investors demand results before committing, yet startups require resources to build. This paradox leaves founders stuck in what angel investor DC Palter calls the "pit of hell." How can startups navigate this critical gap and convince investors to bet on their vision?

🎙️ What's in the Episode:
1️⃣ Cracking the Funding Code: Learn why most pitches fail and how founders can craft stories that eliminate investor doubts and inspire confidence.
2️⃣ The Angel Investor's Playbook: Discover how to manage long-term returns and why patience is critical in high-stakes investing.
3️⃣ The Climate Tech Challenge: Explore why building billion-dollar solutions demands more than innovation—it requires grit, strategy, and understanding the full business cycle.

👤 About DC Palter:
DC Palter is a seasoned venture investor, startup founder, and award-winning author. With 25 years of experience in tech, he bridges the worlds of business and storytelling. His expertise spans hard tech, climate tech, and helping startups succeed through mentorship, scrappiness, and vision.

💡 QUOTES:
(01:01:19) "The best pitches show why failure isn’t just unlikely—it’s impossible."

(01:44:59) "Batteries are the key to unlocking sustainable energy solutions."

(02:15:58) "The biggest challenge is investors want a finished product, but startups need funds to build."

(01:19:52) "The best solutions don’t sell themselves; they solve real problems customers feel deeply."

(01:16:48) "The CEO’s role isn’t just building products; it’s creating a sustainable business.

⏰ Timestamps:
(02:40) The Power of Storytelling in High-Stakes Business and Writing

(11:49) Bridging Science and Business: The Role of Mentorship

(17:31) Balancing Angel Investing and Flexibility

(20:42) Shifting from Corporate to Startup Mindset

(39:06) The Startup Funding "Pit of Hell"

(45:49) Why Founders Must Pitch a $100M Vision, Not Just a Great Product

(53:36) Crafting a Pitch Investors Can't Resist

(01:08:58) Understanding Hard Tech: Beyond Invention

(01:19:02) The Hard Work of Product-Market Fit

(01:42:44) Batteries: The Key to Renewable Energy

(02:05:44) The Global Privacy Paradox

(02:19:48) The Long Game of Angel Investing

If you’re ready to uncover the secrets of startup success, learn how to navigate hard tech challenges, and master the art of pitching, this episode is for you.

👀 Stay Tuned: Watch the full episode to discover the tools, strategies, and stories that can transform your approach to investing and entrepreneurship.

🔔 Subscribe, comment, and share to support the show and bring more transformative insights from leaders like DC Palter to light.

Transcript

00:00:00:00 - 00:00:29:22

Christian Soschner

Did you know that most startup investors expect quick returns? But often face a 15 year journey instead? It's a dilemma every founder and investor must confront. Balancing risk with patience. What does it take to thrive in high tech, biotech, deep tech, or climate tech? When challenges often fail in surmountable?

00:00:29:22 - 00:00:39:16

DC Palter

We are going to be the one out of 100 that is going to be the huge success. And you need to invest in us. And here's why you need to invest in

00:00:39:16 - 00:00:47:03

Christian Soschner

In today's episode, we explore the emotional and strategic realities of investing.

00:00:47:05 - 00:00:55:24

Christian Soschner

How to navigate the funding pit of hell and the delicate balance between storytelling and delivering results.

00:00:55:24 - 00:01:11:03

Christian Soschner

Jesse Parker is a seasoned startup founder and venture investor with 25 years of experience in tech. From his groundbreaking work in Silicon Valley to writing critically acclaimed novels.

00:01:11:03 - 00:01:25:15

Christian Soschner

D.C. bridges the worlds of business and art. He has offered books on Japanese culture. Won awards for fiction and brings unmatched insight into mentorship, climates, tech,

00:01:25:15 - 00:01:30:00

Christian Soschner

and the power of storytelling to transform business outcomes.

00:01:30:00 - 00:01:37:15

DC Palter

There's a lot of hackers out there who are better than the U.S government, and they will find those backdoors and they will get in. And suddenly all

00:01:37:15 - 00:01:48:08

Christian Soschner

Here is what you can expect in this episode. Answers to questions like why most ancient investors aren't full time and how to manage long term returns.

00:01:48:08 - 00:01:54:06

Christian Soschner

The power of crafting a startup pitch that eliminates doubts and ensures investor confidence.

00:01:54:06 - 00:01:58:06

Christian Soschner

How climate, tech and hard tech demand more than innovation.

00:01:58:06 - 00:02:01:19

Christian Soschner

They require. Solving Billion-Dollar challenges.

00:02:01:19 - 00:02:13:01

DC Palter

I'm so excited about batteries that I went and took a whole class on, on, on batteries in the battery industry. Because I think batteries changes everything. If you could make

00:02:13:04 - 00:02:43:22

Christian Soschner

This episode promises actionable insights and emotional depth. It's not just about understanding startups and investments, but about realizing why we are drawn to these challenges. Before diving in, subscribe, share and leave a comment. It helps us continue bringing high caliber conversations like this one to you for free. Now stay tuned and let's explore the fascinating journey of startups with VC partner.

00:02:43:22 - 00:02:47:00

DC Palter

maybe I will.

00:02:47:02 - 00:02:57:00

Christian Soschner

Yeah. Maybe you have some some ideas. I think the regulatory question was one of the the two of positive. Right. You can write a hundred pages about it.

00:02:57:02 - 00:03:02:04

DC Palter

Yes. That's a that's a master's thesis. If not a PhD.

00:03:02:06 - 00:03:23:13

Christian Soschner

Yeah. Maybe something comes out of the podcast. You see, it's good to have you back. I started to live streaming. So I hope that's fine with you. Should be live in a few seconds on on LinkedIn. Yeah. Here we go. It works. So I it's interesting to see what technology can do. These days. When I think back ten years, it was not possible.

00:03:23:14 - 00:03:31:10

DC Palter

Oh, absolutely. Yes. WebEx. And, go to a meeting and, yeah, it's been a lot of time on those and, well, it's a different world nowadays.

00:03:31:12 - 00:03:34:08

Christian Soschner

You remember those, go meeting days?

00:03:34:10 - 00:03:34:18

DC Palter

Oh,

00:03:34:18 - 00:03:52:08

DC Palter

absolutely. Yes. They were our customers because they made networking equipment and network simulators and, all the people who made this, sort of, video conferencing solutions need a way of simulating different networks. So, we, we, we provide the equipment for them.

00:03:52:08 - 00:03:57:15

DC Palter

Yeah. And then we use them, for, for our own, customer demonstrations.

00:03:57:17 - 00:04:16:11

Christian Soschner

Yeah, we had to go to meeting. I was working at the biotech company back then, and, it was first from 2008 to 2014, 15 ish. It was a Canadian company that relocated to Austria, and we used GoToMeeting, but it was not even close to today's, convenient use with zoom or with with Microsoft Teams.

00:04:16:13 - 00:04:18:09

DC Palter

Yep.

00:04:18:11 - 00:04:21:00

Christian Soschner

And you're back in your Japanese house?

00:04:21:04 - 00:04:22:22

DC Palter

Yeah. So welcome to my tea house.

00:04:22:22 - 00:04:46:23

DC Palter

This is actually, this is not a fake background. This is a real background here. Yeah. Not on the wall here. And nothing disappears. This is my wife's tea ceremony. Teaching room where she teaches Japanese tea ceremony, and, I use it for my, my podcasting or whenever I want to, to get out of my my boring little office.

00:04:47:00 - 00:04:53:01

Christian Soschner

That's a good. That's a good idea. I think your wife was also part of your first book about the tea ceremony, when many remember it right about,

00:04:53:03 - 00:05:01:02

DC Palter

The ceremony was in there is not. No way. Because. Yeah, the mother in the story was, very difficult person. And my wife is not.

00:05:01:04 - 00:05:04:04

Christian Soschner

So it was not inspired by by, by your wife?

00:05:04:04 - 00:05:15:05

DC Palter

No, no, but, obviously I pulled some of the tea ceremony from, from kind of my experience here and how it's very rigid and, that fit that character.

00:05:15:07 - 00:05:24:17

Christian Soschner

Yeah. And in your new book, I started reading it about 10% in the story. It's, hope it works on my Kindle. It's countdown to the crypto.

00:05:24:19 - 00:05:30:18

DC Palter

Countdown to description. Okay. Thank you. I hope you're enjoying it. Yes, I wrote a new book.

00:05:30:20 - 00:05:39:03

Christian Soschner

And after started starting reading it efforts. This will be a deadly serious episode today because in the first chapter, you already killed Joy.

00:05:39:05 - 00:05:43:19

DC Palter

Oh, yes. Yes, the, joy is dead. The end of joy.

00:05:43:21 - 00:05:44:06

Christian Soschner

Yeah.

00:05:44:06 - 00:05:47:02

DC Palter

That was what a real killjoy.

00:05:47:04 - 00:05:51:17

Christian Soschner

So you really jump right into the action with with your book?

00:05:51:19 - 00:06:11:13

DC Palter

Yeah. Well, that is kind of why you need to write books nowadays. That's what writers expect. You get to grab them by the by the throat and pull them in, or, you know, in today's very, you know, we're used to everything happening very quickly. So you got to get to the action right away, one way or another,

00:06:11:13 - 00:06:12:08

DC Palter

having sidesteps.

00:06:12:08 - 00:06:16:18

Christian Soschner

Let's get to the action with the podcast. We come back to that later in the podcast.

00:06:16:20 - 00:06:17:20

DC Palter

Well, good.

00:06:17:22 - 00:06:32:10

Christian Soschner

As the, I want to get into the habit of starting each live stream recording with what's the speaker? Can you speak? Expect overview questions around stats. What are the top three outcomes that you hope to achieve through this podcast appearance?

00:06:32:12 - 00:06:33:16

DC Palter

All right. So,

00:06:33:16 - 00:07:01:16

DC Palter

you know, I spend a lot of my time mentoring startups and investing in startups, particularly climate tech space, and I'm going to be talking about that. And, my overriding concern and the reason I've written about 200 articles that you can find online, is that the startup founders have a better idea of what investors are looking for, because startup founders are over here and they're trying to put together pitch decks, and somebody gives me a template and they put it together and they take it to investors and investors kind of like, yeah, sorry.

00:07:01:16 - 00:07:25:07

DC Palter

No. So the founders need to understand what are investors looking for? Why are they looking for what is the pitch need to be. And it's not just a template. There's a flow to it. So I want people to come away. That's kind of the most important thing. I want people to come away from this call from, second is one specifically talk about climate, tech, space and hard tech because hard tech is really, really hard.

00:07:25:07 - 00:07:40:17

DC Palter

You know, I have a lot of respect for the people who, who are doing it, and I want to help them, but I also want them to understand, what it takes and how to navigate the space, because it's a little bit different from doing a software startup. And then lastly, I already started talking about it.

00:07:40:17 - 00:07:50:04

DC Palter

I want people to, hear about my, my new my new novel about Silicon Valley and, and startup world and, hopefully enjoy that.

00:07:50:07 - 00:07:54:06

Christian Soschner

Yeah. I'm happy that you didn't destroy Silicon Valley in your book. So.

00:07:54:08 - 00:07:57:12

DC Palter

Yes. I haven't blown it up yet. Maybe that'll be the next book where I will take

00:07:57:12 - 00:08:02:14

DC Palter

over the world. I will start working on that book. Oh, really? It's about a,

00:08:02:14 - 00:08:16:08

DC Palter

this is this is, first, and now it's here on on your podcast. I'm working on another novel. I just started it about a, a toaster, that, suddenly becomes sentient,

00:08:16:08 - 00:08:18:00

DC Palter

and I think that's God.

00:08:18:02 - 00:08:36:23

DC Palter

And it wants to tell people, humans how to live. And obviously, this is all about ChatGPT. And, and we think it's going to be like, you know, like in Terminator where it's going to be these robots are just going to take over the world. But no, no, it's going to be the refrigerators and the toasters that are going to take over the world.

00:08:37:00 - 00:08:44:21

Christian Soschner

So is it more like a comedy or is it more like a philosophical book or something in between?

00:08:44:23 - 00:08:58:02

DC Palter

It's it's a fun book. It's more farcical, more crazy. A lot of religion, a lot of, understanding about, about the, I world in Silicon Valley.

00:08:58:04 - 00:09:05:21

Christian Soschner

So if Hollywood, makes it into a movie, you have to ask Arnold Schwarzenegger to star in the toaster.

00:09:05:23 - 00:09:08:14

DC Palter

It would be a really strong toaster.

00:09:08:16 - 00:09:25:14

Christian Soschner

This would be fun to watch. Yeah. It's interesting, this artificial intelligence revolution. Some people I heard, I think, Lex Fridman podcast, Elon Musk and people like that, they talk very often about an intelligent and life form and intelligent life form. I see it more as a tool, as it more as a tool. But what's your opinion on that?

00:09:25:16 - 00:09:48:09

DC Palter

Yes. No, I agree with you completely. And I think what we may get into this, a little bit later, but, you know, when I started in Angel investing about ten years ago, I saw a lot of pitches for versus. And, you know, sir, you know, software as a service. And it was a new business model. And everyone was like, well, let's convert this business to SAS, let's convert this business to us and let's convert this business.

00:09:48:09 - 00:10:09:15

DC Palter

And so I think I kind of boring, you know, SAS for everything SAS for bowling alley operation, SAS for ordering, you know, toy cars, whatever. It was SAS for everything. And then suddenly blockchain came out of nowhere as blockchain for this, blockchain for that. And blockchain was going to take over the world. And I kept thinking, you know, chain is a tool, it is a database.

00:10:09:15 - 00:10:28:15

DC Palter

And I don't really care whether you solve the problem with a distributed database or a centralized database. Whatever works. And there's probably some solutions, some problems that you can solve with a distributed database but don't pitch me about blockchain. Pitch me about the, you know, what problem you're solving. And it just happens. You're using a distributed database for it.

00:10:28:17 - 00:11:03:17

DC Palter

Now it's I every pitch we hear is I for this, I for that. And again unless you're pitching, you know open AI or anthropic or one in the other actual I providers or internal AI tools, which is a little bit different. All of these are applications, and it's using AI as a way to solve a problem. And I really don't care whether you use AI or, or heuristics or you have, you know, mice in the background that are running on, on little hamster wheels to get you your answers.

00:11:03:17 - 00:11:25:12

DC Palter

It doesn't matter. It's a tool. It's a programing model. It's a it's a shortcut to a programing model where you just say, hey, computer, you figured out yourself, and there's things that that work better that way than, you know, where their heuristics aren't, aren't going to be, solvable. But I don't care. What I care is that you have a problem that can be solved.

00:11:25:12 - 00:11:28:23

DC Palter

And this is just a tool to do it with that.

00:11:28:24 - 00:11:29:02

Christian Soschner

I

00:11:29:02 - 00:11:53:16

Christian Soschner

couldn't I couldn't agree more. You're an angel investor in or close to Silicon Valley in Los Angeles. And from the Austrian perspective, it's next to Silicon Valley. From your perspective, it's a little bit it's a little bit larger. Yeah. How do you how do you, see your role these days in 2024 as an angel investor impacting the startup ecosystem in the United States?

00:11:53:18 - 00:11:54:23

DC Palter

So first,

00:11:54:23 - 00:12:13:05

DC Palter

I do need to clarify, like you said, from, from Austria, Los Angeles and San Francisco are probably like right next to each other, but it's actually a six hour drive away. So it's quite a distance and it's a different world. So I'm in Los Angeles. We are the entertainment capital of the world.

00:12:13:07 - 00:12:37:21

DC Palter

Everyone I know is in entertainment one way or another. The lawyers do entertainment law, the, the writers do script writing. And a lot of the startups in this space, are focused on things like, like advertising, right. Or influencers and very different from what you find, Silicon Valley, which is actually quite different from what you would find in San Francisco.

00:12:37:21 - 00:12:57:08

DC Palter

So we're a different ecosystem. And I'm a lot more in tune to Silicon Valley than I am to Los Angeles because I'm a hard tech person. I come from an IT background and a, a climate tech, interest in climate tech all over the country. But it in particular, is based up in Silicon Valley.

00:12:57:08 - 00:13:24:12

DC Palter

So, la Los Angeles tends to be a lot more consumer focused or ad tech marketing focused, which don't really excite me. So, I see those pitches and I'm like, great, where's where's the climate tech pitches? So that said, when you get into climate tech, in particular, there isn't that kind of nexus of everything being concentrated in one place the same way as you find.

00:13:24:14 - 00:13:53:03

DC Palter

So it is in, you know, San Jose, Silicon Valley. You know, all the, all the software, like, like, like Facebook is in San Francisco. Climate tech is all over the country. All over the world. We see a lot of great startups coming out of places like, like like Europe in particular, I think is ahead of the US, at least in the, in the early stages.

00:13:53:05 - 00:14:13:21

DC Palter

So my role then is like, how do I get involved in them? How do I mentor the startups so that they are ready for investment so they understand what investors need? And, you know, a lot of the founders, especially the ones that are talking to mentors like me, don't have a lot of startup experience. I don't have a lot of business experience.

00:14:13:21 - 00:14:35:15

DC Palter

It's often, PhD's in research. They are brilliant people, but they don't understand how to talk to customers. They don't understand how to business. They don't understand accounting. So and, you know, investors ask, you know, is that accrual based, revenues or is that cash based revenues? They scratch their heads. And, you know, and investors who tend to be finance people say, yeah, okay, you don't understand anything.

00:14:35:15 - 00:15:00:14

DC Palter

So, I try to be the person in the middle that is helping these, these startups, kind of understand how to build, a business instead of just, build a, you know, do research and then build a product. So, and then that goes from the mentorship to the, the investing. I'm, they see, I do two kinds of investing, actually, I should be clear.

00:15:00:16 - 00:15:22:10

DC Palter

So ones where I'm serious about this. Making money. I do not invest as an individual. There's. I just don't have the amount of time it takes to really do the diligence to go into, all of the details of of the company. I don't have the time. I don't have the expertise. I know my section, so I work within an angel group, and in two different angel groups.

00:15:22:10 - 00:15:53:01

DC Palter

One is Tech Coast Angels or DCA venture Group, which is focused on startups in the LA ecosystem. And then another group called Chemical Angels, which is focused on, startups in the chemistry and materials, innovation area, both in climate tech and then in life sciences. And so if a company comes to me looking for serious investment, I say, come to my groups, there's 400 people, one group, there's 70 people in the other group, a lot of expertise.

00:15:53:03 - 00:16:13:13

DC Palter

And really looking for a team that can dive into all of the details, spend time on it. Figure out everything that needs to be figured out, and then I can say, yeah, okay. I have the confidence that this is a good investment, with good terms, with good prospects. That's said, I do come across a lot of startups that are not ready for that.

00:16:13:13 - 00:16:30:12

DC Palter

And, you know, they they'll pitch to the groups and the group will say, sorry too early. You don't have customer validation yet. So, in some cases it's not. People are just reaching out to me on LinkedIn. Sorry, all those people listening on LinkedIn or just like, hey, see, here's I got a great, story for you.

00:16:30:12 - 00:16:52:02

DC Palter

And I get a lot of those every day. It is companies that I've been involved in some way, as a mentor, as a, CMO. But I have some sort of inside information that I know that this company, is operating. Well, does have the right prospects, even though they don't know how to to pitch that to investors yet.

00:16:52:04 - 00:17:14:12

DC Palter

They're at this stage where, you know, at least I have some confidence from kind of inside information, which is perfectly legal. And investing in a startup that these look like this looks like a good investment at a very early stage, a low valuation. And even then it's very high risk. So I won't put in very much. So those are kind of it's not quite friends and family, but it's not theory.

00:17:14:12 - 00:17:34:24

DC Palter

It's angel investing at either. So I have that middle stage where, I'm one of the people in the network who will invest a small amount at the early stage to help them get to that next stage. And those are different. I'm not going to spend as much time in it, on it. I'm not going to worry as much about, is that a ten tax return or 50 tax return?

00:17:34:24 - 00:17:37:19

DC Palter

But I'm also not going to invest as much because I'm,

00:17:37:19 - 00:17:42:02

DC Palter

I have to assume that it's going to fail. Unfortunately.

00:17:42:04 - 00:17:59:10

Christian Soschner

You have, different hats as, far as I remember and understood from your explanation. Now, on one hand, you're, investing with your angel group, on the other hand, you also go in earlier when you have, a role or when you had the role in the company. So you are not a full time angel investor, basically.

00:17:59:10 - 00:18:00:10

Christian Soschner

So you're also.

00:18:00:13 - 00:18:02:24

DC Palter

Correct. Yeah. And most angel investors

00:18:02:24 - 00:18:27:08

DC Palter

are not full time angel investors. A lot of people have full time jobs and they're doing this, you know, nights and weekends. Some people are retired. Some people have jobs, have flexibility that they can do, you know, like like lawyers are really good, right? You can you can be a lawyer. You can work whatever out, you know, not a corporate lawyer, but, your own practice, you can work at night and you can work on weekends, so you can meet with startups during the day.

00:18:27:10 - 00:18:44:19

DC Palter

Some people will do it as part of their, their jobs. But there aren't many people that are full time angel investors because you it's very difficult to make money as an angel investor. And even if you're lucky, it's 10 to 15 years before you get to return. So you need other income or need to be retired.

00:18:44:19 - 00:19:06:04

DC Palter

So, I'm kind of in the middle. I do some, some fractional chief marketing officer work. I do some angel investing, I do some mentoring, some of which pay, some of which doesn't pay. And then I'm also a writer, some of which pays and some which doesn't pay. And then, you know, I, I'm very fortunate that I've had some startups that have been successful.

00:19:06:04 - 00:19:10:19

DC Palter

So I don't need to worry about, you know, paying my mortgage today so I can

00:19:10:19 - 00:19:13:20

DC Palter

I can be flexible about what I spend my time on.

00:19:13:22 - 00:19:35:24

Christian Soschner

So on one hand, you have your investments as an angel investor. On the other hand, you also have some sort of service income, service fees as a fractional CMO. Yes, a mentor, as a coach, helping people to straighten out their pitches. For example, can you shine a little bit more light on some pivotal moments in your career that led you to become, a startup founder and, fractional CMO?

00:19:36:01 - 00:19:45:03

DC Palter

Yeah, that's a really good question, because I'm not your traditional startup founder. I'm. I'm, pretty conservative

00:19:45:03 - 00:19:58:07

DC Palter

guy. I'm very, I'm not a huge risk taker. I'm not one of the people who went to college and said, I want to start a, startup. And in fact, when I went to college in the 1980s, nobody had even heard the word startup.

00:19:58:07 - 00:20:19:05

DC Palter

There were there were, you know, the VCs were investing in Intel. They weren't investing in, in, you know, unknowns. So the world's changed a lot. But even then, I went to school, I assumed I was going to work at, as an engineer in a big company. Worked my way up engineering management. And then I'd be, you know, president or CEO of General Motors or something like that.

00:20:19:07 - 00:20:46:14

DC Palter

And along the way, I worked at General Motors, and I hated it. Then I worked at Honeywell, and I hated it. And I escaped. I went to Japan, and I worked for a Japanese company, and I loved it as a big Japanese company, as a steel company. But the main thing I was different, is that the company's in Japan, and it's starting to change there, too.

00:20:46:14 - 00:21:10:08

DC Palter

But it's very different from here. Here you have a job, you get paid to get your job done. At the end of your eight hours, your job is finished. You go home. And in fact, in Europe, you're not allowed to work past those eight hours, right. So it's very, what's the right term? You know, you get paid for your, your time one way or another, whether that's, you know, monthly salary or an hourly salary or salary.

00:21:10:10 - 00:21:35:20

DC Palter

And when they don't need you anymore, you're gone when you don't need them anymore. And then something interesting, you leave. Japan is very much you join a company when you're out of school. You stay there for most of your career. They take care of you. You're part of the team. Everyone is very professional. Everyone is working as part of the team, for the team success, for the company success.

00:21:35:22 - 00:21:57:22

DC Palter

And I really enjoyed that. It was very different. And I felt, you know, a sense of belonging. I felt a sense of pride and an accomplishments. So I love that. But after a while, I said, you know, I don't want to be doing engineering all day, every day. I was getting kind of bored and and and I'm not Japanese, obviously.

00:21:57:22 - 00:22:16:21

DC Palter

So, I needed to figure out what my career path was going to be. So I decided I wanted to be on the on the business side of technology. I love technology, but I didn't love sitting there all day, running one model after another, model after another model. For months on end, I got boring. I like wearing lots of hats.

00:22:16:23 - 00:22:42:01

DC Palter

We went back, got a master's degree. Not in entrepreneurship like all my colleagues, but in technology marketing. So I could be on the business side of technology. When I graduated, all the interesting jobs were at startups. This was the 1990s. This was the the.com bubble. And so I joined a startup doing, network, you know, computer networking and wow, I loved it.

00:22:42:01 - 00:22:58:08

DC Palter

There were seven engineers and there was me, and I was the person in charge of the business side of things, and I didn't figure it out. I didn't know anything about the computer networking space. I didn't know anything. You know, I was I was an energy engineer. I didn't really know anything about sales or marketing other than what they taught you at school.

00:22:58:08 - 00:23:16:11

DC Palter

So I had to figure it out. And every day was a different challenge. And I loved it. And we were small team of, you know, seven, eight, ten and then up to 20 people, we pivoted, we had new products. Commercial customers told us what, what they wanted. We came out with it as, lo and behold, all the other customers wanted to.

00:23:16:14 - 00:23:37:01

DC Palter

So it was great. And I really, I found I really enjoyed that environment. The, the small company, the everybody pulling together is like Japan only, if you're successful, you actually do really well. Wow. Okay. This is great. So when that company was, acquired, you, you know, I wasn't going to work for big company.

00:23:37:01 - 00:24:02:22

DC Palter

So, I said, okay, it's time to do my own startups. I did my own startup after that, and now I already had the team, already knew what we, you know, what customers needed. And so there's just kind of a program session that was accidental from from the beginning. And so, you know, it's and then that took me into angel investing because I was part of the, the startup ecosystem.

00:24:02:22 - 00:24:21:02

DC Palter

I wanted to support other startups in the ecosystem. I wanted to help other founders get started. And I also wanted to keep my eye on what else was going on in the, the startup ecosystem, because you never know when you might find something, something interesting, useful to you. You saw it as an investment or, you know, possibly next opportunity.

00:24:21:02 - 00:24:48:07

DC Palter

So, became involved in angel investing and very quickly saw what investors were looking for and what the startups were pitching were worlds apart. So that that got me saying, I need to be that person in the middle that can help the startups really understand what investors are looking for. And I've been doing that for for ten years with my my writing and my marketing and my pitch deck assistance and things like that.

00:24:48:09 - 00:24:56:17

Christian Soschner

You mentioned that in the 90s, you started the startup. Was the term startup in California?

00:24:56:17 - 00:25:19:08

DC Palter

No, no, no, nobody called it a startup. We didn't use that term. It wasn't a venture investment. It was it was a small business. It was a, we started off as kind of we call ourselves a consulting business, but it was, we made networking software that we license to the big, the big, computer manufacturers.

00:25:19:08 - 00:25:42:08

DC Palter

And the idea was to reuse as much of it as possible for each customer. So it didn't fit the startup business model. It wasn't we're going to be $100 million and be acquired very quickly. But we ended up customers said, well, we need something that makes a network faster. And we built that. And suddenly there were, you know, 10,000 customers who wanted it.

00:25:42:08 - 00:26:04:14

DC Palter

So we got pulled into what was a kind of typical venture model. And it turns out our competitors were all venture, backed. And so we, we had to figure out that world pretty quickly. But again, it was it. Every day was another adventure, another thing to figure out. And that was that. And that's what I really enjoy.

00:26:04:16 - 00:26:11:02

Christian Soschner

The venture capital was popular already in the 90s, 70s and 80s in California. I guess.

00:26:11:04 - 00:26:30:22

DC Palter

I think it started in the 90s, where it got big with the dotcom bubble was, you know, before that it was very specialized. It was people like, you know, the founders of Intel looking for money to build a new kind of chip. Apple came out of, venture capital, but it was it was very niche, very specialized.

00:26:30:22 - 00:26:46:21

DC Palter

You had to know people. And it was very concentrated in Silicon Valley. So that's changed now. It's everywhere in the world now. There is a million nuts in Europe out there. Yeah. And and it's in Europe. It's in India. It's in Africa. It's everywhere. Now.

00:26:46:24 - 00:27:06:24

Christian Soschner

I asked, Sebastian, what have you been? He was on my podcast. You wrote the book The Paolo. It's, it's basically I call it the History of Venture Capital. And he writes a lot about the United States and Southeast Asia and China. And they ask him, why didn't you write anything about Europe in your book? And he this idea, because there is no venture capital and so.

00:27:06:24 - 00:27:11:09

DC Palter

Well, that's very dismissive and absolutely not true.

00:27:11:11 - 00:27:14:08

Christian Soschner

He's a he's an inspiration. I think he's a lot of different.

00:27:14:08 - 00:27:39:00

DC Palter

I think it has its. And so I'm not an expert on on European venture capital, but I've run across a few of them and it feels more conservative. A lot of it is corporate venture capital. The ones that aren't kind of have that corporate attitude of, we want to invest in BRL, we want to invest in Crown, we want to invest when the company is already expanding and we have lots of money, we can help them.

00:27:39:02 - 00:28:02:22

DC Palter

But then there's companies like shell and BASF and, you know, a lot of consumer companies that also are working with the startups to help them get started. So, there's a little bit more conservatives than the US and kind of investing a little bit later, but not really very much difference. So maybe you didn't write about it because it just wasn't very exciting, because it really isn't all that much different.

00:28:02:24 - 00:28:04:03

DC Palter

It just smaller.

00:28:04:05 - 00:28:25:20

Christian Soschner

There's a lot of venture capital in the early stages in Europe, but there is a huge gap in the later stages, especially from Serie A onwards, is I think it's in all industries. It's really difficult. Right. To get funded the traditional way for Europeans is either to make foreign acquisition, hoping that a big company by space time early or to move to the United States.

00:28:25:22 - 00:28:28:23

DC Palter

Yeah. So so I've got it backwards. I think you're you're right

00:28:28:23 - 00:28:45:14

DC Palter

that, the big money is in, in the US, in the private equity and it's money that's come from all over the world. So it's not just American money, but the industry is here. The the venture capital companies are here and some of them will invest in in Europe.

00:28:45:14 - 00:29:06:07

DC Palter

But most of them it's easier to get investment if, you know, if you're in the US. And so that's like you said, that's where the big money is. And at that point you're probably. Yeah, I mean, you have to have a world wide operation already for most, most things, unless you're doing like food delivery, if you're doing anything climate tech or, or life sciences, you you need to be worldwide.

00:29:06:07 - 00:29:09:20

DC Palter

So where you're based really doesn't matter all that much.

00:29:09:22 - 00:29:42:06

Christian Soschner

And so you guys did an incredible job selling the S&P 500 ETFs globally in the finger. It's just like a like a waterfall people I think most of the world most of different instruments buys S&P 500 DfES. They provide statistics basically for venture capitalists to make money. So yeah the big stories and some went into S&P 500 and then you can it's just pure stuff and I think trickles down to the early stage funds in your ecosystem.

00:29:42:08 - 00:29:53:19

Christian Soschner

You're you describe yourself as a conservative person. What attracted you to become a business? Investing in startups is anything but conservative. I think.

00:29:53:21 - 00:30:32:00

DC Palter

Yeah, yeah, it is. And you're completely right. But, it's interesting and it's exciting. And, so for for my public investments, my methodology is pretty simple. I take half of it and I put it into S&P 500 and I think, okay, that's kind of the conservative thing to do. I take the other half and I say I'm going to put it into things that I feel like I know more than the other investors, as things tend to be the tech industry, or maybe it's, you know, some product my wife likes and I'm like, oh, okay.

00:30:32:00 - 00:30:55:06

DC Palter

She thinks this is great. Then, you know, they're going to take off or something like that. In the end, the S&P 500 is better than those ones. But they haven't been they haven't done that. And I've had some, some good successes there. So I do the same thing when it comes to my angel investments. I say, you know, I'm not angel investing for just the point of angel investing.

00:30:55:06 - 00:31:15:21

DC Palter

It's not a I'm not a VC. Right. And VC is getting paid to invest in other people's money for big funds. I'm doing this because, I want to do it and, and, and so I'm going to invest in things that I want to invest in. And in the same way, our angel groups have, member funds. And I'll put some of my money into the member funds.

00:31:15:21 - 00:31:32:20

DC Palter

And if the other members think it's great whether I'm interested or not. Wonderful. Great. Okay. They've done the work. They think this is wonderful. And I hope they're successful. I'll take the other half and I'll say, okay, now I'm going to invest in things that get me excited. They're going to get me excited on the business side.

00:31:32:20 - 00:31:55:02

DC Palter

They're going to get me excited on the technology side. So, and, or they're going to get me excited in the industry side because they're in an industry like climate tech, where I feel like I know more than the other people, and therefore I can, judge a good investment better than, other people. I may be wrong most of the time, but it you know, it'll take me ten years to find out.

00:31:55:02 - 00:32:08:12

DC Palter

So at least for ten years, I can feel like I'm investing in things that other people, are missing, and and hopefully they'll be successful. So, ask me again in ten years whether I turned out doing better than, than other investors.

00:32:08:14 - 00:32:13:04

Christian Soschner

You graduated in the 80s. Started working on a traditional career path.

00:32:13:06 - 00:32:14:09

DC Palter

Yes.

00:32:14:09 - 00:32:41:00

Christian Soschner

Got in touch with the startup ecosystem in the 90s, and also with venture funds, then worked yourself, up to 2024. When you look at your experience and we switch now the conversation to pitching, these days, what what are the biggest challenges, in your opinion, you see, for founders today in 2024?

00:32:41:02 - 00:32:43:18

DC Palter

So this year in particular is

00:32:43:18 - 00:33:04:12

DC Palter

kind of a transition year. We had a big bubble during during Covid. And then we kind of had a little bit of a crash. And now we're kind of coming back. So the startup environment is a little messy right now, and nobody's quite sure whether it's going up or going down. There's more investment, but it's lower valuations.

00:33:04:14 - 00:33:23:05

DC Palter

It's slower than it was before, but it was faster than last year. So everyone's kind of in a little state of flux of what's going on. And, and and for founders, that's really frustrating because you've got 18 month, you've got no funding for 18 months, hopefully. And now your 18 months are up and you need more money.

00:33:23:07 - 00:33:40:00

DC Palter

And you go back to the VCs who said, okay, as soon as you meet, you know, you get to 1 million IRR, will invest $5 million in your business, and you go back to them and then they say, oh, no. Now we're looking for companies that have at least 3 million IRR. Like, but I'm out of money now.

00:33:40:02 - 00:34:03:05

DC Palter

Are you. Promise me you were going to, to June. That's when we got to a million IRR. Like. Well, it's not the promise that is you know, that was our that was our metrics. That and our metrics have changed. And, you know, come back again when when you're at 3 million. So it's a tough environment for startups to have to go back to the earlier investors and say, you know, can you put in more so we can get to these new milestones?

00:34:03:07 - 00:34:26:20

DC Palter

And that's everyone in the startup world. There's a lot of bridge rounds. There's a lot of down rounds right now. There's a lot of frustration from, from from founders. New founders are finding all of the money going into early stage is going into those, supporting the the earlier ones. So they're having trouble getting finances. There's a lot of frustration, but investors are coming back.

00:34:26:20 - 00:34:54:21

DC Palter

It's slowly there's you know, we're we're still investing more than than we did in the past couple of years. So it's it's a reasonable environment. But if if they got started in 2020 and they thought, oh yeah, I just need to do a pitch, I can people can throw money at, you know, that that is gone. Right. So we're kind of back to 2018 climate tech where I, you know, the most, is always been a challenging year.

00:34:54:23 - 00:35:24:21

DC Palter

And despite this being, you know, the climate, climate change crisis being probably, I will say the, the defining problem of our era, it's tough for investment because it's hard tech and hard tech is is tough. And, you know, we can divide it into life sciences and, and climate tech and life sciences. So much easier than like the tech and life sciences isn't easy.

00:35:24:23 - 00:35:49:04

DC Palter

But life science is about the science, right? If you have something that works and you have, you know, some sort of, you know, clinical trials, or even kind of pre trials, you have, you know, studies in, in mice or pigs or something like that. That's enough to get started to say we've got something and it works.

00:35:49:04 - 00:35:56:07

DC Palter

And now it's just a matter of getting through. You know, you know Siri you know clinical trial you know, what is it c

00:35:56:07 - 00:36:07:02

DC Palter

b a get her FDA approval and then somebody is going to buy us 4 or $5 billion. Wonderful. That's easy. All I need to do as an investor is look at the

00:36:07:02 - 00:36:10:14

DC Palter

science. Does the science work?

00:36:10:16 - 00:36:32:19

DC Palter

That's what I'm betting on. I'm not, but that's the world I don't know. So I can't invest in that. Right. So I leave that to the doctors and and the and and the chemists and the people and know that space because I, I don't I can't evaluate that side when it comes to climate tech. We have all of the issues of building a non life sciences startup.

00:36:32:19 - 00:36:49:04

DC Palter

You have to build a you have to build a product. You have to get the product to market. Then you have to beat the competition. Then you have to grow the business. So you're going to have to, you know, you have to build a sales team. You're going to have to have a go to market strategy. You're going to have to do advertising.

00:36:49:04 - 00:37:17:09

DC Palter

You're you're going to have to deal with supply chain. You're going to have to get to $100 million in sales, and then you're gonna have to find somebody that acquires the business, which nobody knows who that is in climate tech yet. So life sciences is easy if you have a pharmaceutical product and it works and you get FDA approval or, you know, European Union approval, one of the big pharmaceutical companies is going to buy you and they're going to buy you for a large amount because drugs are so valuable.

00:37:17:11 - 00:37:41:07

DC Palter

If you have a great battery, no one knows. Is Tesla going to buy you? Probably not. Is Panasonic or LG going to buy you? Maybe. Maybe not. Probably not for a big, you know, not for not for a big multiple. So you have to build the business, but you're going to need a lot of money to build the business, and nobody wants to give you the money until you've already proven the business.

00:37:41:07 - 00:37:58:09

DC Palter

So you've got all of the challenges of building a software business, but then you've also got to deal with supply chain. You've got to deal with warranties, you've got to deal with hardware. You got to deal with the fact that something is broken or doesn't work. That's six months to fix instead of two days of rewriting a piece of code.

00:37:58:11 - 00:38:21:18

DC Palter

So it's really tough. And investors look at it and say, well, that's really tough. I'd rather if I'm looking for a good investment, I'd rather invest in software, I'd rather invest in life sciences. So, everybody knows that this is a huge challenge and that climate change is the defining problem of our era. But no one has figured out with the business model for startups in this space is going to be.

00:38:21:18 - 00:38:42:14

DC Palter

So that's where I think the biggest challenge. And it's really frustrating for for everybody. And the startups are like, well, I've just invented this great new battery. Why won't people give me $10 million? And investors say, well, you know, you've tested something in the lab that kind of works and it's going to take you $10 million just to prove that you, you know, the customers are interested in it.

00:38:42:14 - 00:39:09:23

DC Palter

Come back to me when customers are interested. And so kind of bridging that gap. And, and that's not even the, that's not even the, the Valley of Death, which is next stage. So this is like the, the, the pit of hell that founders have to go through to get to customer validation. And every startup, every startup, when they pitch to me as a mentor and, you know, like, I'm into mentorship program.

00:39:09:23 - 00:39:31:21

DC Palter

So sometimes I'll talk to five, ten companies and day there's one after another. They're early stage founders. They're looking to get investment. They all say, well, we're looking to raise $2 million or $5 million to build our product. And I have to tell them, like, look, sorry, investors are looking for finished products, and then every single one of them says, okay, then what do we do?

00:39:31:23 - 00:39:51:13

DC Palter

How do we get the money we need to get to that next stage? And that's not a simple answer. That is a bunch of different things. It means being scrappy. It means not raising $5 million. It'd be nice if I could raise $5 million if you can do it right. Most of most startups are going to find that that's not going to be possible.

00:39:51:13 - 00:40:20:21

DC Palter

So how much do you really need not to get to here, but to get to that next major milestone where you can talk to a network of investors. So can you get by with 500 K or like 750 K? Can I find investors that are not really just looking at this as an investment but are looking for, something that solves a problem and those are not going to be the people that are on the web saying, I'm an angel investor, I'm a VC.

00:40:20:21 - 00:40:36:01

DC Palter

Those are going to be people who are executive at the, you know, at the at the big companies that use the product. Those are going to be founders at other companies that exited that have some extra time and money and want to work with startups in this space. Some of these are going to be some mentors. Some of these are going to become customers.

00:40:36:01 - 00:40:59:00

DC Palter

Some of these may potentially become investors. So you need to talk to them. But that's not going to be a lot of money. These are not VCs writing $2 million. Check. These are individuals writing ten K checks. Fortunately we have a great program in the US. I don't know. Europe is kind of split different places of different things, and I don't know if it's as structured, but in the US we have something called the SBIR.

00:40:59:03 - 00:41:23:12

DC Palter

I don't even remember what it stands for is the Small Business Innovation Research or something like that. It is grants money from the government, $1.25 million for each grant. And you can get you can get multiple grants to take your technology for different, different applications. That is where if you're in life sciences or tech, that's the place to start.

00:41:23:14 - 00:41:48:05

DC Palter

That is money to help you develop the product, to help commercialize the product before taking it to investors. So I always look for, have you gotten as much grants as you possibly can? Have you gotten a million year? Have you gotten $5 million to build the product instead of looking to investors do that? You can also talk to suppliers and customers, and some of them are going to say, yes, if this works, this is going to revolutionize my business.

00:41:48:05 - 00:42:10:14

DC Palter

It solves a huge problem for me. Yeah, I can throw in 100 K right now to invest and more importantly, I want to work with you to on that pilot program. Same thing. You know, suppliers may say, you know, if this works, I'm going to be selling $10 million a year of my chemicals. I want you to succeed.

00:42:10:14 - 00:42:24:06

DC Palter

I want to be your partner. I can give you 100 K right now. Or probably I'm not going to give you cash. I'm not going to give you endorsement. But I can give you free chemical so I can give you the chemicals at, at cost. And I can work with you on the pilot program. I can give you some expertise you don't have.

00:42:24:08 - 00:42:48:10

DC Palter

So it's really about building up this kind of your own ecosystem of grants and small investors and mentors and, customers and partners and really being scrappy and trying to find enough to get you to that next stage because, if you're just going to be pitching VCs with, you know, with your great idea, you're not going to get very far.

00:42:48:10 - 00:43:14:15

Christian Soschner

You take it's two big areas. One is pitching toolbox, and the other one is climate change. Can we start first with, the founder part and with the work part and then move to the urgency of climate change? You mentioned that, these days, venture capitalist cars, which is quite surprising because I think the best time to invest is when, when, when when the market is down.

00:43:14:17 - 00:43:32:16

Christian Soschner

Especially in these times, I think pitching the right way to investors is key to success. And you'll see, I think every year, couple of rental groups, a couple of hundred pitches. What are the most common mistakes in European that founders make when pitching to investors?

00:43:32:18 - 00:43:34:03

DC Palter

Okay, so I'll give you the

00:43:34:03 - 00:43:55:17

DC Palter

number one mistake. And it is especially true for hard tech people because you get scientists in the room instead of salespeople and marketing people, and they tell you in a lot of detail how wonderful their product is, how wonderful their invention is, and it is. The problem is, I'm not investing in an invention.

00:43:55:17 - 00:44:26:12

DC Palter

I'm not investing in technology. I'm not even investing in a business. I am investing and I'm buying stock in a company that at some point is going to be acquired or, or do an IPO in 99% of time is being acquired. So let's just we'll talk about being acquired. So if I'm putting my money in, you got to tell me how I'm going to get the money out, because it's not like a public stock.

00:44:26:12 - 00:44:39:03

DC Palter

I can buy Apple stock if it goes down, I can sell it. If it goes up and I make profit, I can sell it, I can trade it, I can do whatever I want with it. And they pay a dividend. So I get some cash along the way so it doesn't work that way. Start by, put the money in.

00:44:39:08 - 00:45:11:08

DC Palter

And it is gone. It's, I'm just a number on the cap table. Was you line an Excel spreadsheet saying, I own this much any amount did the business. What do I get from that other than the satisfaction of being able to come on your podcast and say, I invested in this company. Nothing until that company is acquired, and then it needs to be acquired for a large multiple of what I put in, 90% of the companies I invest in, that's that's the usual number that everybody talks about.

00:45:11:10 - 00:45:32:03

DC Palter

So half of them will fail outright. Another 40% will you? You'll get your money back, which after ten years means it's you've really lost your money. And one of them will be a success if you're doing well. And so I need that one to be a great success. So we pitch to investors. Don't tell me why you have a great product.

00:45:32:05 - 00:45:53:03

DC Palter

Don't tell me why this solves the big need. Well, you have to tell me those things. But what you need to do is to tell me a story of how a a huge need with a great solution that nobody else has, is going to get to $100 million business that some industry giant is going to acquire for a large amount of money five years from now, seven years from now.

00:45:53:05 - 00:46:11:24

DC Palter

And then I will get a nice return from that. That's going to be huge. I'll make up for all my other losses. That is a good pitch, and it's pretty rare that early stage startups give that pitch. They always want to tell me how wonderful their product is. I'm like, okay, nice product, but but what's in it for me as an investor?

00:46:11:24 - 00:46:32:14

DC Palter

And I'm investing to make money. I'm investing to make up for, all of the when I make my other investments. So that's the number one mistake I see. The it was the second one. I was, I was I'm a kind of blanket. So let's let's just go on.

00:46:32:17 - 00:46:38:21

Christian Soschner

Yeah. It's interesting that understanding the need of the person you put humility typically sounds problem, isn't it.

00:46:38:22 - 00:46:41:13

DC Palter

Right. Yeah. So you got to put on your

00:46:41:13 - 00:46:59:01

DC Palter

sales hat. Everybody thinks I'm talking to investors. They love products. They want to invest in property. Like, no, we are buying stock in your business and you got to put it on your sales hat, even if that's not a natural for you. I'm not an actual sales person, but you are putting sales out and say, I'm selling something.

00:46:59:03 - 00:47:14:24

DC Palter

I'm not selling my technology. I'm not selling my products. I am selling stock in my business. Now, why is somebody going to buy stock in my business? Because that stock is going to be worth more at some point, and they're going to get a return from it. So that is what you are selling is stock in your business.

00:47:14:24 - 00:47:21:00

DC Palter

So sell me on the stock in your business. And why that's going to be, a great thing for me to buy.

00:47:21:02 - 00:47:21:07

Christian Soschner

I

00:47:21:07 - 00:47:37:24

Christian Soschner

think this is one crucial lesson for, for founders that investors want to make. Money doesn't matter if it's a business engine or a venture capital. Big surprise, big surprise. But yeah, it's not it's not common. It's not common knowledge in the in the startup you're still not.

00:47:37:24 - 00:47:38:06

DC Palter

That's

00:47:38:06 - 00:47:58:05

DC Palter

right. And they just kind of, I don't know what most founders are thinking other than while there's people with money whose job it is to invest in great product. And it's like, no, the VCs are getting paid based on, you know, they get bonuses based on how much money they make for their investors. And so they need to make money.

00:47:58:07 - 00:48:20:20

DC Palter

Angel investors. Well, this is our our retirement funds. And you know, I have a choice, right? I can I can buy a new car or I can in your business. I can take my wife on a cruise of the Mediterranean. Or I can go to Austria and have fun and, and go see you. Or I can write you a check for 20, you know, and ready to start a check for 25 K.

00:48:20:20 - 00:48:52:01

DC Palter

So you got to give me a reason why that is worth doing. And the answer needs to be because that 25 K check in five years is going to turn into 250 K or 500 K or $1 million. Because that's really the reason that anyone who's looking, you know, anyone who is a serious investor is investing. And that's different from friends and family, friends and family round that initial round and kind of into that, what I call the network round, where you're talking to, suppliers and customers and mentors and people like that.

00:48:52:01 - 00:49:12:20

DC Palter

And sometimes me, we're investing because we want to support you. We're investing because, Christian, you're my best friend, and I trust you, and I love you, and I'm willing to give you some money and good luck to you. And, you know, send me a postcard when you're successful. I'm investing because you're my son, and, I don't have a choice if I want you to leave my house.

00:49:12:20 - 00:49:35:00

DC Palter

So here's some money. I'm investing because I'm with a company and this solves a huge problem for us. If it works, it's game changing. We want it to succeed. Here are some a small amount of money to. Let's try it out. The views are very different from VCs. Know. You know, standard VCs. Not corporate VCs, but standard VCs and angel investors.

00:49:35:00 - 00:49:54:15

DC Palter

Everyone think angel investors are just rich people that want to throw money at, interesting problems. And that's not true. We are we are individual VCs. We are investing because, we are instead of putting money in S&P 500, we're putting some of our money into startups, and we are looking for a return.

00:49:54:18 - 00:50:06:02

Christian Soschner

That's so interesting what you say. I think after 25 years of the 18 years now, the startup world to start with innovative spending in life sciences, which is so easy that you said yes. I think it's.

00:50:06:04 - 00:50:10:18

DC Palter

Still really tough. I know I just said it's like, no, no, it was not easy.

00:50:10:24 - 00:50:12:21

Christian Soschner

That that was that was it just kidding. Just kidding.

00:50:13:01 - 00:50:21:20

DC Palter

Yeah. And if you come up with a cure for cancer, you know, I will, I will dedicate my next book to you. But.

00:50:21:22 - 00:50:24:02

Christian Soschner

That's that's the challenge investor.

00:50:24:08 - 00:50:30:14

DC Palter

It's easy to it's easier to evaluate because you don't have anything other than the science to think about.

00:50:30:16 - 00:50:46:01

Christian Soschner

Yeah, that's that's that's one interesting part. But for the for the founders, I think it boils down when, when people approach me and say, Christian, you know, a lot of investors can help us get in touch with investors. So forget this introduction business, I mean, introduction, it's nothing today, but it's two questions that you need to answer.

00:50:46:01 - 00:51:05:23

Christian Soschner

One is how much money do you need? And then I here for example, just made up number 3 million. My second question is, how can you guarantee me that after a maximum of ten years, you can return 30 million? And most of the founders look at me and say, why should I do that? I think it's so easy.

00:51:05:23 - 00:51:21:15

Christian Soschner

You don't have an investment case. You don't need to look at it. It's off the pitch like, what's there to it? If they are not confident that in ten years time they can return a minimum of a ten x and if they are fast left and confused. Yes. Don't pitch to investors. It's my opinion. How do you see that?

00:51:21:15 - 00:51:28:09

DC Palter

Okay, I don't like this. Okay, so when I, when somebody sends me a pitch deck,

00:51:28:09 - 00:51:44:05

DC Palter

I don't go through it page by page. I turn to two pages in particular. The first one is revenue projections. Now everyone says, why do you look at revenue projections on a company that is, you know, that they don't even know what their product is yet.

00:51:44:09 - 00:52:01:17

DC Palter

This is a very early stage. But this is what the company is aiming for. This is their plan. It's going to change tomorrow. But are they looking to build a product that's going to be $100 million, $200 million, $500 million, and is the acquisition target or they build it, you know, so the VC don't have to worry about you.

00:52:01:17 - 00:52:27:15

DC Palter

They don't get the smaller ones, don't get to that stage. But as Nathan, we get a lot of pitches. They're building a nice, comfortable, profitable $10 million. And that's wonderful. I love niche businesses. I love small, sustainable businesses. They make important products that people need every day. They are not venture business. So my first question is, are you going is your plan to get to a size that makes this investable for, for investors?

00:52:27:15 - 00:52:46:19

DC Palter

Because if you're under 50 million, it's hard to get a high value. There's no way you're going to get to index acquisition. So, it's not it's not investment. So the second thing I look at is, you know, what is the what is the exit strategy? And maybe it's not even there most of the time, but who's going to acquire this business?

00:52:46:22 - 00:53:09:08

DC Palter

Why are they going to acquire what sort of multiples they typically pay. And then I can say, okay, if this is successful, then this can give me a good return and most pitches don't have that information in there. And I'm like, okay, that's an interesting product. But I don't I don't see how, you haven't convinced me.

00:53:09:08 - 00:53:11:17

DC Palter

It's a great investment.

00:53:11:17 - 00:53:33:00

Christian Soschner

Yeah. That's so interesting. When you look at, life science and I think also the other from the camera document that you mentioned, it's a lot of pet product and it's a scientific background. You see tons of data of scientific data. Yeah. When we wrap it up in a core message now on this podcast, what's your advice to founders?

00:53:33:00 - 00:53:40:11

Christian Soschner

How should they change the pitch and the tech so that it truly stands out when an investor looks at it?

00:53:40:13 - 00:53:41:20

DC Palter

So you need to cover

00:53:41:20 - 00:54:09:21

DC Palter

the 11 topics. And I've got that on my website. And I have an article in there. I always refer people to that. The 11 slides are perfect pitch deck, and I think pretty much everyone there's a bunch of other templates out there that have pretty much the same thing. So problem solution, you know, market size, go to market strategy, competition, competitive moat in deal terms, exit strategy.

00:54:09:21 - 00:54:26:12

DC Palter

I'm probably missing 1 or 2 in there. But it's not a template. It's a story. It's a story of how you're going to solve a problem and get to a large size, and somebody's going to acquire the business, and the investor is going to make a lot of money. So you need to tell that story in the story arc.

00:54:26:14 - 00:54:51:22

DC Palter

But I think the one thing that distinguishes the great pitches that people invest in from the 99% of pitches that we hear and we're like, okay, well, that's interesting, but we're not excited about it. Is, the great pitches. Now let's start with start the other way, the decent pitches. I'm not even going to talk about the bad pitches because that's most of them.

00:54:51:22 - 00:55:14:18

DC Palter

But the good pitches tell me why this is a good investment and why I will get a good return from it. The great pitches. Let me back up again. The the good pitches. Tell me why this is a good investment. And why there's a you know, a good chance that the company will succeed. The great pitches.

00:55:14:24 - 00:55:36:00

DC Palter

Tell me why this startup has zero chance of failure. Why? This is a slam dunk. Why this is going to be the one out of 100 that's going to make it big. Why? This is going to be the one out of ten that is going to, make up for all of my losses. Why? This is the one that you absolutely can't miss investing in.

00:55:36:02 - 00:55:52:23

DC Palter

And when somebody pitches like that, they have no trouble raising money. And, you know, even if it's not in their field. Right. I tend to focus on climate because I know the space, but I've heard some in, you know, all sorts of things like, wow, I have to invest in this. This is this is the great one.

00:55:53:04 - 00:56:13:13

DC Palter

And when we talk about the founder and we invest in the founder and it's and you know, it's it's the team. It's the team. That's really what we're talking about. Are you pitching us on why you are the people that are going to succeed? Why? This is the, the one startup that is. Yeah, is going to make our day.

00:56:13:13 - 00:56:32:04

DC Palter

Why? This is the one we're going to be telling, all of our friends that we invested in. Right. And and that's why I say amateurs tell you how they're going to succeed. Professionals tell you how they're not going to fail, how they can't fail, how it's impossible that they will fail because they've got everything in place.

00:56:32:04 - 00:56:37:07

DC Palter

They are the ones who are going to do it. So that's the difference in a good pitch and a great pitch.

00:56:37:09 - 00:56:54:21

Christian Soschner

Oh, really? It's, between it's obvious. What are the success for one pitch success. And, you said that, those who really stand out. Yeah, come from the direction that, they explain why they can fail. So there's such a different.

00:56:54:23 - 00:57:11:23

DC Palter

It's, I mean, it's the same pitch, but it's, it's kind of a different attitude. In some ways is just being good at sales, right? This is the product that's going to solve your problem. This is the investment that is going to be the one that makes it for you. And you can't go overboard, right?

00:57:11:23 - 00:57:29:21

DC Palter

I mean, sometimes they're just too selective. You're like, yeah, I don't believe a word. I don't have any credibility. But if done right, it's like, it's it's not why this has a chance of succeeding. It's why this won't fail. Why, why we've got all of our bases covered. Why? We know all the steps that we're going to need to take, why?

00:57:29:21 - 00:57:52:15

DC Palter

We've already talked to customers, and they're already excited about it. Why it won't fail when we scale, you know, from from lab to pilot to, to to commercial sites because most, chemical processes fail in these things. We have the team that knows all these things. We have the team that done all these things before. We have every contingency covered.

00:57:52:17 - 00:58:08:09

DC Palter

Worst case, this happens. We know how to deal with that. So you just really get a set of confidence. Oh, and then the biggest one right a lot of companies that make a great product. But then the market turns out to be really tiny compared to what they thought it was. Or you know, customers like, well, that's great, but I'm doing something else right now.

00:58:08:09 - 00:58:29:09

DC Palter

So they don't they don't want to pay for it. And so that's kind of the main failure mode is is a decent product. But it's just not it's just the market is not what you think. It's going to be so convincing us that yes, we we know that there's these customer we've already signed up, these customers, they are waiting for this product they're sending us is right now they're desperate for the product.

00:58:29:13 - 00:58:46:05

DC Palter

We just need that money to build the product for them. And we've got all the steps marked out. We've got the people to do it. We've we've done it before. And it just gives you confidence that these people know what they're doing. It's not a couple of college kids have a great idea and then, you know, just don't know how to execute it.

00:58:46:07 - 00:59:15:09

DC Palter

All of the pieces are in line. And it's just a matter of, you know, what's the point is in and turn the crank and outcomes product. And then that turns into, into money for, for investors. So, that it's a different pitch. It's, it's a different sprint. It's a different way to present the, the solution to, to customers because you, I mean, to to industry as usual way is the template.

00:59:15:09 - 00:59:42:12

DC Palter

And, you know, here's our product, here's our market size, here's our, here's our competition. But instead of saying, well, here's the competition and here's why we're better, it's like, here's, here's what we're doing and here's what the competition's doing, why that doesn't work, and why, why people have told us already that this is the solution they need, and they're already begging us to, you know, to, to get it to them.

00:59:42:14 - 00:59:48:03

DC Palter

It's it just it's it's a slight difference, but it's a different story.

00:59:48:06 - 01:00:17:14

Christian Soschner

Now, that's an interesting point. I think, and it totally makes sense after listening to you. I think that's why they interpret your words. That's the successful founders basically create a checklist and, are aware that, when they pitch, they basically pitch to a reptile. So it's a limbic system. It's for and they have to work through the checklist and come up with, answers to all potential fears the investor has, why this will not be successful.

01:00:17:17 - 01:00:41:07

Christian Soschner

So it's basically a method that I read in genius only spoke about paper, which describes that David Sacks already today, that David Sacks used a similar technique. He walked through all threats that could destroy, destroy people at the time. And, did this with his team regularly to find out the weak spots in the company. So it's basically, if I may sign into.

01:00:41:09 - 01:01:01:03

Christian Soschner

It's what you said. It's a similar technique that successful founders should, before they pitch, think through. What are the fears of investors? What can destroy our business, and how did we tackle that already? And make sure that this doesn't happen with this, interpretation you would, agree to or did I miss something?

01:01:01:05 - 01:01:01:13

DC Palter

So

01:01:01:13 - 01:01:13:00

DC Palter

so that's completely true. But it's more than just having, you know, getting rid of the red flags and having everything covered. It is really just it's a different story. It is.

01:01:13:00 - 01:01:22:19

DC Palter

We are going to be the one out of 100 that is going to be the huge success. And you need to invest in us. And here's why you need to invest in

01:01:22:19 - 01:01:22:23

DC Palter

us.

01:01:22:23 - 01:01:43:20

DC Palter

And if you don't invest in us, you're going to be, you know, you're going to be kicking yourself for the rest of your life. We are the one that's going to succeed. And instead of the usual pitch of here's the reasons why we're going, here's the reasons why, you know, we we have a chance of succeeding. So and so, yes, they have to have all of their bases covered.

01:01:43:20 - 01:02:00:14

DC Palter

And we want that confidence that they they know all the things that they need to do. They've been there before. They've done it before. There's no gaps. If there's any gaps, they've told us what they are and how they're going to rectify them. I mean, we know there's going to be gaps, right? So tell us where the gaps are.

01:02:00:20 - 01:02:17:21

DC Palter

Tell us what the plan is to solve it. But mostly, again, the biggest chance of failure is the market turns out to be a lot smaller than they thought it's going to be. So why is this going to be huge? Why is somebody going to spend $1 billion buying the company once they have a good a good solution?

01:02:17:23 - 01:02:40:12

DC Palter

And so it's just a better sales pitch, right? I mean, when you go in to, to, to talk to a customer, you don't tell them why your product is good, you tell them why your product is the only one that's going to solve your problem. It's the same thing. Instead of telling me why this is a good investment, tell me why this is the best investment we will ever make.

01:02:40:12 - 01:02:44:20

Christian Soschner

That a good salesperson talks about the outcome he produces, not the solution.

01:02:44:22 - 01:02:50:04

DC Palter

And the outcome is just going to be a great success. And, and there's no way it's going to fail.

01:02:50:06 - 01:03:13:08

Christian Soschner

Night. You mentioned drug development before biotech left. So and so, so when I look at pitches, you always have this. We have a great science. And, yeah, trophies. The great science is not the problem. The problem with drug development is the clinical development stage to get it from clinics to the market. And the interesting thing is, when you look at the team, there is nobody usually with early stage companies who has any experience in that field.

01:03:13:10 - 01:03:37:19

Christian Soschner

So one of the biggest problems investors have then is okay if they have nobody on board, who understands how to turn science into a track, into a product, right. And also understands how the health care system works and also understands how hospitals and physicians work and what their problems are. It's a high chance of failure because the kind of just turn it into a product.

01:03:37:21 - 01:03:50:06

Christian Soschner

And this, I think, should be tackled before they pitch to investors as you said, with with the. Yeah, just just think about what what what what is the outcome that you want to have and then structure your team accordingly.

01:03:50:08 - 01:03:50:14

DC Palter

That

01:03:50:14 - 01:04:05:20

DC Palter

is completely true. And I think I was a little bit dismissive about saying life sciences is easy because I'm not thinking I'm not in that space. I'm not thinking about, all of that where, you know, I think probably other people look at climate tech and say, oh, yeah, just build a better battery, right? And you build a better battery.

01:04:05:20 - 01:04:13:05

DC Palter

It'll be worth billions of dollars, and investors will make lots of money. So, the more you know, the more you understand the challenges.

01:04:13:07 - 01:04:36:17

Christian Soschner

I think, it is easier when you have the right team. And to get the right team, you need to understand what problems you will face along the way. And then you need to make sure that at least in the founding team, there is someone it doesn't matter what what industry is this that there is someone in the founding team who has a track record on solving exactly this problem, I think it is right.

01:04:36:20 - 01:04:41:13

Christian Soschner

Changes the probability of success in the investor pitch tremendously.

01:04:41:15 - 01:05:03:20

DC Palter

Yeah, and especially hard tech, both climate tech and and life sciences. Those things are very technical. Right. And it's not something you can just go on to, you know, on YouTube and, and listen to some articles and, and get some advice you really have to know, like what is the FDA approval process and how do you work that system.

01:05:03:20 - 01:05:21:23

DC Palter

Right. That is somebody who's been there before, you know, maybe not. Is the person in charge, but has has been through it. They know what the process is. Clinical trials, like you say, that's that's a whole world of clinical trials. And if you don't know what's involved, how to organize them, how to pay for them, how to get people to join them.

01:05:22:00 - 01:05:48:04

DC Palter

You can study all you want, but you're you're not going to have the right, experience. Whereas software. Offers so much easier. Right? There's really, you know, being a salesperson. Good. Being a good marketing person is and isn't easy, and it takes on a personality. But, you can say, yeah, I can fake it. And you have something that people want.

01:05:48:06 - 01:06:08:16

DC Palter

They will tell you what they need. They will, they will, they will buy it. I don't I don't want to say software is easy, but, if you're a programmer, you know, you get a programmer, a good businessperson together and you can make product and you can build a business around it. And if there's anything you don't know, you can ask mentors, you can ask, you can watch YouTube, you can read some books, and you can you can customize.

01:06:08:16 - 01:06:32:18

DC Palter

You can you can figure it out. What if it doesn't? If what you tried today doesn't work, you can try something different tomorrow. Whereas you go into a clinical trial, you better have that planned out perfectly or you just wasted $10 million. And I've unfortunately been involved in some startups that wasted $10 million and then had to go back and redo the clinical trials.

01:06:32:20 - 01:06:49:04

DC Palter

If if, if they didn't just go out of business, sell. Yeah. That takes some real expertise to to kind of know you can't just get somebody who's like, oh yeah, I can. I can figure it out. You really have to have people who know.

01:06:49:06 - 01:06:49:11

Christian Soschner

I

01:06:49:11 - 01:07:12:07

Christian Soschner

think. I think it's not much different. It's, tremendously structured when I think about you mentioned batteries. That you can produce the best battery and then you don't have anybody on the team who understands how the industry works and what their needs are and which people wants to purchase the battery. At the end of the day, I can also imagine it's like life science, more B2B business, not a B2C business.

01:07:12:09 - 01:07:31:17

Christian Soschner

When I look at, I think the easiest game today, when you look at today's capabilities, compared to the 90s, is probably the gaming industry, when you can produce a nice app with a nice game, you get an influencer with a huge followership and you give them the card you give them a cut of your of the revenues to just promote it on their profile and, delisted.

01:07:31:21 - 01:07:50:03

Christian Soschner

When they look at life science, when you don't know the pharma industry and you don't know the decision makers in there, you have zero chance moving the products forward towards a license deal so that you can return capital to the investors and make sure that, if it works after clinical phase two, it moves forward. I think climate tech must be different, isn't it?

01:07:50:03 - 01:07:54:04

Christian Soschner

You need to understand the industry, the decision makers. You need to have the contacts.

01:07:54:06 - 01:07:54:16

DC Palter

Yeah.

01:07:54:16 - 01:08:20:00

DC Palter

And like you're saying clinical trials for, or for life sciences and pharma, and batteries, you better understand manufacturing because just having a great chemistry doesn't mean you can manufacture it, or you can manufacture it at, at a reasonable cost, because it's all about cost in the end. You know, it. And so you get some scientists are like, I've just invented this better battery, but can you manufacture it?

01:08:20:00 - 01:08:42:06

DC Palter

Can you manufacture to scale? Is it safe? Is it, you know, is it going to charge fast? There's all of these questions beyond just, you know, does does it work? And then you have, yes. You know, how do we get it into customers that, that's probably one of the biggest failure points is and this goes everywhere in startups.

01:08:42:08 - 01:09:02:03

DC Palter

You get the product founders, and they have this idea, we call it, you know, build it and they will come from, from the, the Field of Dreams. Maybe, like, if we build this product, customers will find it and they will love it. Now, I'm a marketing person, right? So I'm always thinking, how do I get that product in front of customers?

01:09:02:03 - 01:09:21:15

DC Palter

How do I get customers to buy it? How do I get them to change their processes? How do I get them to get away from the status quo that they've been doing for a long time? And that is not easy. And it depends what the product is. It may be close to impossible or, you know, we love to see drop in replacements, convention switching one thing for another.

01:09:21:17 - 01:09:40:11

DC Palter

But what are they thinking? Is this something that needs to last for 20 years? If so, how are you going to prove that it's not going to die after ten years? So like I said, it's understanding what the customers need, what their requirements are, what their processes are, what their purchasing process is, what their evaluation process is, and most of all, how long it's going to take.

01:09:40:13 - 01:09:59:24

DC Palter

Startup founders always get that wrong in the hard tech space. I think there's some understanding of life sciences is going to take a long time, but, you know, when it comes to things like, like batteries, everyone thinks, okay, I'll build it and I'll send out some samples and they'll test it out for three months, and then they'll they'll put it into the manufacturing process, if you like.

01:10:00:01 - 01:10:28:17

DC Palter

That is not how General Motors works. That is not how Tesla works. It's 3 to 5 years of, you know, it's like a year of evaluation. And then it's like 3 to 5 years of real world testing, and then they're like, okay, we're confident in this. We're going to move, move towards this stage. There are some things they can do faster, but if they're expecting a 20 year lifetime and they're on the hook for warranties, you better bet they're they're going to be testing it pretty carefully for a long period of time.

01:10:28:17 - 01:10:56:01

DC Palter

They're going to be very careful about making any changes. And so those, those purchasing cycles are really, really long. And that's fine if you're working at SG and or LG or, you know, or Panasonic and you can, you know, five years is is no big deal. You're a startup, you've got 18 months of runway. Having a five year purchasing cycle is definitely.

01:10:56:03 - 01:11:13:11

DC Palter

And even worse, is not planning for that five year cycle. And having it as part of your milestones that you think you're going to start getting orders in in a year is just not going to happen. And a lot of companies go out of business because not because they don't have a good product, but because they run out of money because they couldn't.

01:11:13:13 - 01:11:20:04

DC Palter

It was just it was going to take too long. And they didn't have enough traction, to, to get more funding.

01:11:20:06 - 01:11:34:20

Christian Soschner

Yeah. I think one key part of this conversation is that, understanding that startup means building a business, not building a product at the end of the day. Yes. Founders need to understand all aspects of their business, especially also the sales cycles that you mentioned.

01:11:34:22 - 01:11:37:04

DC Palter

Yep.

01:11:37:04 - 01:11:59:00

DC Palter

Absolutely. 100%. It's the business. You have to know how to build a business. That's that's why you investors almost always, look for a founding pair, at least a pair. They own a high tech thing. We want somebody who is really an expert in the technology, and we want somebody who is really an expert on the business.

01:11:59:02 - 01:12:16:06

DC Palter

And you're just not going to find somebody who both. And if they are both, they don't have time to do both. And this is as a marketing person and business person, this is really frustrating to me. So I hear a lot of pitches. They'll be like two PhDs. Who are, you know, brilliant. And they understand the science.

01:12:16:06 - 01:12:41:12

DC Palter

And they say, well, this guy's going to be the CEO, and this guy is going to be the CTO for this girl. And I think that's wonderful. You know, the science you have, nobody has any business experience. They're like, oh, well, we did a Techstars, mentorship program for three months, and we learned all about how to sell products like, you know, for 20 years.

01:12:41:12 - 01:12:55:06

DC Palter

And I don't have a clue. And you're going to do it in three months and you're going to become you start, you know, selling products to customers and do the marketing and so it's back to that field of dreams. We build it and the customers are just going to buy it. It's like, no, it doesn't work that way.

01:12:55:08 - 01:13:26:22

DC Palter

Then the marketing is as important as the product itself, the business side, the sales side. It's not just everyone who has this idea, well, we'll get it. We'll get it working and we'll hire a salesperson and a salesperson. Just go out and sell. Never, ever, ever works. And I always tell people, don't hire a salesperson until you're series A, do not hire somebody whose job is to be on commission, to be on quota, to go out and sell something until you have a repeatable sales process.

01:13:26:22 - 01:13:42:02

DC Palter

And the way you got to the repeatable sales process is you've done it yourself for three years, and you've talked to customers and you've gotten their feedback. There's the salesperson who just wants to make a sale. He wants to get something signed and wants to move on to the next one. And the numbers game. That's not what you need.

01:13:42:02 - 01:14:00:18

DC Palter

But in your early stage, you need to talk to customers. I tell people a no is just as important as a yes. If you can get to know and you can find out why. Well, you get one person to buy something and five people to tell you no for the same reason. Like, well, okay, we've solved one person's problem.

01:14:00:20 - 01:14:18:20

DC Palter

We can solve these other five people's problem. This is not the product the market needs. This is the product that market needs. So you need that feedback. And that feedback is more important than, you know, a sale of, you know, probably like $10,000 for, for a, a prototype or or a sample. Right. That's not going to get you very far.

01:14:19:01 - 01:14:43:12

DC Palter

Sounds exciting. What you need is that feedback and people telling, you know, people and telling you why that's going to take the CTO and the CEO sitting down with the potential customer and understanding their needs. And so everyone understands, okay, MVP is that's our trial. That's to see if there's if people are interested or not. And I say, your version one zero is a trial.

01:14:43:15 - 01:15:13:02

DC Palter

Your version two oh is a trial. When you get to version five. Oh you go hire salesperson. Just get them out selling to everybody. But version 101. Version two. Oh you especially your is, the feedback is more important than the sales. That's what you're after. And you're not going to get that from the salesperson. The CEO needs to be involved, needs to understand the customer's required, needs to understand whether the product can be adapted or changed and and, and whether then there's an important decision whether you're going to pivot the business to what you're hearing.

01:15:13:03 - 01:15:29:14

DC Palter

But when they said, well, this is nice, but what we need is this or you know, this is nice. Well, we'll buy it, but we really want to solve this problem or that's they buy it and they say, here's how we're using it. And it's probably not the way you thought it was. It's just like, oh, okay.

01:15:29:14 - 01:15:57:00

DC Palter

Well, if they're using it this way, then I instead of making all these features over here, I need to make these features here that people need. And so that customer feedback is so much more important than a APL, which is why the CEO needs to be doing sales for like the first 3 or 4 years. Then later, you know, when when you've got a repeatable sales process, you have a finished product, when you're already selling a lot of it, then you're a salesperson, you go out and just just sell the product.

01:15:57:00 - 01:16:18:09

DC Palter

So, unfortunately, a lot of founders don't get that. So please listen to me. Please don't hire a salesperson. Please think that you know the role of the CEO. The role the CEO stuff. CEO is three full time jobs. Number one, you gotta build product. Yeah, you got a CTO is building a product, but the CTO is responsible for the product.

01:16:18:11 - 01:16:31:17

DC Palter

So you may not be doing the coding. You may not be in the lab, but you're the one who's deciding what the product is. That's pretty much a full time job. Second, you're the salesperson. You need to be selling full time. You need to be talking, telling customers full time. You need to be out there every day.

01:16:31:17 - 01:16:52:16

DC Palter

Trade shows, you know, customer calls, zooms, whatever you need to be talking customers all day, every day to find out what they need and whether you can fit their need. And third, you got to be finding investors and grant money and, and keeping the, the, the cash flow in the business, doing all the business things at the same time.

01:16:52:16 - 01:17:00:06

DC Palter

So you have to do all three things at the same time and, don't don't, don't count on getting any sleep.

01:17:00:08 - 01:17:00:13

Christian Soschner

I

01:17:00:13 - 01:17:05:04

Christian Soschner

would add the fourth thing, the nurturing, mommy of the team, but also.

01:17:05:05 - 01:17:06:12

DC Palter

That's right. Absolutely.

01:17:06:14 - 01:17:13:00

Christian Soschner

But also but also swinging the whip when it's necessary, both can conducive the motivation to much.

01:17:13:02 - 01:17:14:05

DC Palter

You're running the business.

01:17:14:07 - 01:17:36:20

Christian Soschner

Yeah. Yeah. I would like to overemphasize two things, because I think it's really important. And also see this, also in California, also in, in Boston and, of course, in Europe and the obvious floods, the United States guys have it figured out. But I like your Field of Dreams analogy. When people say, okay, now we have a great solution.

01:17:36:22 - 01:18:08:16

Christian Soschner

Nobody's coming there. What do you expect? The world is noisy today. The world is loud. There are so many layers on the market, so many people who are really good salesperson, who make customers think they have the best solution. Customers get frustrated because they buy something that doesn't work, and then a scared and, anxious and say nothing on the market works and you have the best solution and they don't find it then because they are really scared of, what is your recommendation when you hear a startup saying, they don't come?

01:18:08:18 - 01:18:13:05

Christian Soschner

We should we should, buy something, buy our product?

01:18:14:20 - 01:18:32:00

DC Palter

to customers, and they need to know what the customers actually need and what they will pay for and what their pain points are. So they need to make the right product for the customer, and they probably haven't had enough customers are are not throwing money at them and not throwing orders have done.

01:18:32:00 - 01:19:07:22

DC Palter

And they don't have the right product yet, so they still need to figure out their product market and figure that out. Yet even though they think they have a second, then they need to market properly. They need to be, you know, whether it's advertising, whether it's trade shows, whether it's working with distributors and resellers, but it's having the right, website, whether that is, you know, going out to the supermarket and handing out samples, whether that is doing advertisements and, during the World Cup, you need to figure out how are you gonna get in front of those customers, how much that's going to cost, and how much that's going to return,

01:19:07:24 - 01:19:33:23

DC Palter

figure out the way of doing that. And so, and it's really about, again, understanding customers what they need, what they respond to, usually just a few keywords that really highlight their problem points and how you solve it. So don't talk about and make sense, right. Don't talk about what I can do for you. Here's my product. Please buy my product.

01:19:34:02 - 01:19:56:07

DC Palter

That's not going to get anybody interested. It's here is your problem and here is how I can fix your problem. What is it? What? Why is this going to make your life better? And understanding what that is, what those keywords are, what that pain point is and how you're going to solve it. Maybe 2 or 3 different versions of that.

01:19:56:09 - 01:20:18:04

DC Palter

Yet that across very clearly not why we have a great product, but why we solve your problem. That's marketing. But you know, so we hit on like a product market fit. So you gotta have the right product market fit. You don't know who's gonna buy it. And and you have to have the right go to market strategy.

01:20:18:06 - 01:20:44:10

DC Palter

Right? If I do super Bowl ads for my batteries. No one's gonna buy that, right? No one goes out and says, I need, you know, this, this this manufacturers lithium ion batteries. Now they go buy a car. Right. So Super Bowl ads are I mean, this is obvious thing, but, you need to know where the customers are, who the customers are, where are they going to be?

01:20:44:12 - 01:21:06:08

DC Palter

How do you get to them? And, and, and how they're going to buy and what people don't understand. And that's what we mean by go to market strategy is not how am I going to get my first five customers? How am I going to get my first million dollars? That's just going to be, you know, you going in and talking to people and getting people think that it's how are you going to get from $1 million to $100 million?

01:21:06:10 - 01:21:26:02

DC Palter

And that's not easy. It's easy. Everybody would be doing it. And so you really need to understand the market and the customers and have a strategy. Are you going to are you going to hire a huge sales team or are you going to work with resellers? Are you going to be doing a lot of advertising? It's going to be influencers.

01:21:26:04 - 01:21:40:12

DC Palter

Big companies can kind of do all the above. You know, startups don't have a lot of money. And so you really have to be smart. How are you going to get, how are you going to wrap that up without going burning through tens of millions of dollars? So, marketing.

01:21:40:12 - 01:21:41:02

Christian Soschner

Stuff.

01:21:41:04 - 01:21:43:14

DC Palter

This product stuff, the, you know.

01:21:43:16 - 01:22:06:01

Christian Soschner

This is this is the market. Sorry for interrupting. I think this is really hot, and I really like how you how you phrase it. It's product market fit. You need someone on this team who is interested in doing this hard work in finding product market fit, which means identifying potential customers, flying to them. They won't come to you.

01:22:06:05 - 01:22:36:16

Christian Soschner

You need to go to them, either at conferences or their offices, sitting down with them and identifying what are their needs, what are their problems, which problems do they have, and then fly home, talk with your team and figure out how does your solutions solve this problem and how you should communicate this to them. And then becomes, comes the next funny part in my conversations with startups, when they say it's pretty cool, we don't have a lot of money.

01:22:36:16 - 01:23:03:05

Christian Soschner

So what we need is basically people who bring us customers. So this is why we hire someone, pay them a finder's fee. When you bring your customer and I say, this doesn't complete your product market fit mission because, someone just arranging half an hour call between you and them, they won't buy it because they don't understand. There's no bridge between your need, right need, and your solution.

01:23:03:09 - 01:23:06:16

Christian Soschner

So you need to bridge that first. And this is hard work.

01:23:06:18 - 01:23:07:04

DC Palter

Yeah,

01:23:07:04 - 01:23:20:16

DC Palter

yeah. That works once you're already, ten, $20 million business and you have a reputation and people know who you are, and then it's just like you need introductions, you need to get in front of them. Right? But, but, but started it.

01:23:20:18 - 01:23:24:03

Christian Soschner

But then you already did this product market fit work and benefits.

01:23:24:05 - 01:23:24:20

DC Palter

That's right.

01:23:24:22 - 01:23:42:18

Christian Soschner

That's right. Look at you. Look at the startups with a solution most of the time to fail because they haven't figured out the product market fit yet. It doesn't mean that they don't see it. It means to not fix the bridge. That's okay. And the first thing to say is this, goes into this second parts that you mentioned, the sales process.

01:23:42:18 - 01:24:01:13

Christian Soschner

This isn't the next intuition. Once you have the product market fit, you figure you need to figure out the sales process. And the worst thing you can do is hire the average salesperson. They won't deliver the sales process. They want to have a handbook. They want to have a description. They want to have a script. They want training.

01:24:01:15 - 01:24:13:10

Christian Soschner

And yes, then they can sell. But the founders need to figure out is the entire sales process once they know the product market fit. And this is not something to delegate to an average salesperson.

01:24:13:12 - 01:24:40:07

DC Palter

Yes. And even worse, salespeople, are compensated for short short term success. And people who tend to go into sales, Tend to be thinking short term. How do I get a sale today so I can get my my quota so that I can get my bonus? So I can have a nice Christmas present or buy a new car?

01:24:40:09 - 01:25:00:17

DC Palter

And that's that's fine. But at the early stages, you need long term thinking, because those short term sales are don't really mean anything other than validation. What we need is those conversations with, with the customers. We need to be thinking, yeah, I can give up. I'm probably off to the pivot at some point. Right. So I'm giving up all those sales anyway.

01:25:00:19 - 01:25:34:00

DC Palter

But you know, what is the longer term opportunity and how do I judge, you know, staying with this versus switching over to this, which may be bigger, but is starting over. So, the CEO has to do that and maybe the CTO, that's not somebody you can bring in and say, go, go, go, go sell. One of the things I do is, you know, when I was, when I was running my startups, I would bring not just the sales and marketing team to trade shows.

01:25:34:00 - 01:25:50:10

DC Palter

I would bring the engineering team and that was that. That accomplished two things. And it was amazing. You'd walk around the trade show floor and all of the trade show booths for the small ones or big ones. It was always just sales guys. You walk up to a booth and you ask them a question and they wouldn't know the answer.

01:25:50:16 - 01:26:03:23

DC Palter

They'd be like, well, here's what we have going to do this, I don't know. I'll get back to you. Can you do this? Oh yeah, of course you can do that and do this. Of course you can do that. And of course it could.

01:26:04:00 - 01:26:23:02

DC Palter

I would bring a technical. I would always have at least one technical person and one marketing person in the booth. Because when people say, can you do this? That's the key question, right? Why did they want to do that? Let's talk to them. Find out what they're trying to accomplish instead of like, do you know, do I have this feature list?

01:26:23:02 - 01:26:46:01

DC Palter

It's like, what are you trying to do? I can't ask those questions. I need the engineer to talk. You know, as an engineer who's a technical engineer, an engineer conversation. I need the engineer. Talk to their engineer. Really find out what problem they're trying to solve so I can say, yeah, okay, I don't do this that you ask for, not I do this, which will solve your problem, or I can, I can, you know, with a week of work, I can adjust this and it will do exactly what you need.

01:26:46:01 - 01:27:04:24

DC Palter

And by the way, well, that's a great idea. I'm going to add that. So to accomplish two things. One is we got a lot more sales with the cost. It wasn't. And people would ask you to do things and all I could answer was no, it it can't. Where the engineers would say, well, but now that I understand what you're trying accomplish, we can make it do that for you.

01:27:05:01 - 01:27:27:03

DC Palter

And then more importantly, we find out what the customer needs, and I. I'm not the technical person in the room, so I couldn't really ask this question very well. And so that was just the best place to do customer discovery. And really understand product market fit and what people were looking for. And you just missed all of that by sending the sales team to the trade show was just like so much better.

01:27:27:07 - 01:27:46:00

DC Palter

Now the engineers hate going. They just absolutely hated the trade show. They had to force them to do it. But, as long as they were compensated based on long term success of the business instead of like, did you do this? You know, write this many lines of code this week or did you do this test this week?

01:27:46:02 - 01:28:06:11

DC Palter

Then everyone is part of the team and every and that's the other thing I hate about sales is it's often, well, the salespeople go on sale, they get a commission, they get a bonus, and everybody else is just like, okay, well, company got some sales and now I have more work to do. I really like it when everyone is involved in all of the processes, so.

01:28:06:16 - 01:28:22:05

DC Palter

And you can only do that in a company that's up to about 20 people in size, maybe 25 is we get 100 person company and can't do that anymore. But when you're smaller, you can do these things and you can have everybody kind of involved in all the processes and seeing what's going on, and everybody does have something to offer.

01:28:22:06 - 01:28:46:17

DC Palter

The marketing team should know what the engineers are working on. The engineer should be talking to the customers. They shouldn't have a separate support team because then you're isolated from everything going on. So, I really like everybody just being one team with, like, different main hats and people switching, and trade shows. A good place to do that support, like I would force the engineers to do is support.

01:28:46:23 - 01:29:12:09

DC Palter

One thing engineers don't want to do is support. But when they're doing support, they're hearing the problems customers out, and it's probably not what they thought. The product is being used in a different way than they were expecting. And that's causing the problems. And then they come back and they come up with solutions to it. Right now we have a better, so I really like getting everybody is as good as people start.

01:29:12:09 - 01:29:25:13

DC Palter

So you get everybody involved in all aspects of it and get people out of their, their comfort zone. Make sure that they are, kind of know what's going on in all the places and actively involved in, in all the areas.

01:29:25:15 - 01:29:47:11

Christian Soschner

Yeah, I totally agree to what they say. I think, startups or companies collapse any kind of company needs to budget that. Really in fact, that that really in, trade shows you that I think this is a crucial element. Trade shows are not for sanity. And this is the misconception they're very often seen. In other words, when it comes to funding, there are designated trade shows.

01:29:47:17 - 01:30:11:08

Christian Soschner

I think in every industry there are a lot of investors, attend or you call it conferences or another term. Yeah, but it's not for signing the deal. It's for getting contacts and the fact finding mission. What they are currently looking for and other solutions should look like, also, when it comes to B2B environments, talking with potential customers, with business developer salespeople, it's not about sending titillated trade show.

01:30:11:10 - 01:30:25:06

Christian Soschner

It's understanding the industry. And in my opinion, what you mentioned, I think any company needs enough budget that at least once a year, every team member has to go to one trade show to get a deeper insight into the industry.

01:30:25:08 - 01:30:27:09

DC Palter

Yeah. Yep.

01:30:27:11 - 01:30:45:03

Christian Soschner

And this very often. This very often. Really. Misses. May I ask you another question? I mean, in Europe, we technically do idea. In Europe we have the problem. That's, still the problem, in my opinion, that we can't really scale companies with venture capital, which is a pity. It leads to very fast, acquisitions by the industry.

01:30:45:05 - 01:31:11:12

Christian Soschner

It's good for the industry. It's probably cheaper, but I think it leaves a lot of, value on the table. Sometimes, in my opinion, it's better that the company just develops the solution further. It becomes a much better solution. And the usual way European startups take is relocating or moving to the to the United States. And, lately you mentioned earlier that salespeople, like to travel.

01:31:11:12 - 01:31:38:01

Christian Soschner

But when you look at the engineers, they don't like to travel in startups very often you have engineers and scientists and they have the idea, yeah, you get us money and they invest in Europe, and I don't see them ever again for the next five years and then come back, when a European company wants to attract US investments, starting with angel money and then moving up to venture capital.

01:31:38:03 - 01:31:46:03

Christian Soschner

In your opinion, how should they position themselves to attract investments from US investors?

01:31:46:03 - 01:32:20:21

DC Palter

Right. So I'm going to focus on the early stage. So pre-seed in the seed. So an angel group like mine and me as an individual investor will only invest in US companies. Now, VCs have a different structure. They actually most of them set up two separate legal entities. One for investing in the US, one for investing outside the US, because all investments outside the US are subject to actually for individuals or subject to a bunch of very crazy reporting and tax laws that are just not worth the hassle.

01:32:20:21 - 01:32:43:22

DC Palter

So, there's enough opportunities in the US all we invest in, in the US. But I don't care where the company is actually operating. I don't care where their customers are. I don't care where the team is. So long as my money goes into a US corporation, you can be in Austria and say we're a worldwide company or teams in Austria.

01:32:43:22 - 01:33:02:19

DC Palter

Now, eventually we're probably gonna have developers in India. We're going to have support team in Ukraine, we're going to be a worldwide company. Right now our team is in Austria, but we need euros investment because that's where the big investment is. Hi, you, you set up a corporate structure that is a Delaware C Corp and that's the parent company.

01:33:02:19 - 01:33:29:01

DC Palter

There's probably a a subsidiary that's running the local operations in in Austria or Vienna. And that's fine. I as long as you can convince me there's a great market there. I don't care that your team is in Austria, and that's great. That your customers are, say, pharmaceutical companies or chemical companies in, in Europe and in fact, in climate tech, Europe is ahead of the US.

01:33:29:01 - 01:33:48:18

DC Palter

And there's more things going on and things like batteries and, snow in energy storage and things like that. So it's great. I would love to invest in more European companies, so long as the corporate structure is a, Delaware or C Corp. So that's all I really need to do, except the Delaware C Corp make the the European company a subsidiary.

01:33:48:18 - 01:34:10:05

DC Palter

That and we can invest in the Delaware C Corp. And you can pitch to our investment groups. You can tell us all the great reasons why you're a great startup and, and, our chance to invest in any European success. Now, once you get to the big VCs where they're putting in $10 million, $20 million, $100 million, their requirements may be a little bit different.

01:34:10:05 - 01:34:33:07

DC Palter

And they may say, look, the big market is in the US. So we are going to invest in somebody who's focused on the US, definitely in life sciences, because the acquisitions in the US are just so outrageously large. Our health system is broken. So any drug, no matter what, is worth a few billion dollars. So you better be in the US and you better be going through FDA approval.

01:34:33:09 - 01:34:55:01

DC Palter

I don't deal with life sciences. I don't have to worry about any of that. So I'm attack. Europe's ahead of the US. That's great. And I would love to invest in more European companies. But legally I'm kind of boxed in that I have to indict the US companies. So great set up. US headquarters. That's it's just a lawyer in, in in Delaware who signed some forms and now you're Delaware Tech Corp.

01:34:55:06 - 01:34:58:06

DC Palter

And now investors all across the US can invest.

01:34:58:09 - 01:35:04:17

Christian Soschner

Oh, that's a good idea. You really think Europe is ahead in climate tech?

01:35:04:19 - 01:35:07:06

DC Palter

Yes, absolutely.

01:35:07:08 - 01:35:10:20

Christian Soschner

What are the reasons, in your opinion?

01:35:10:22 - 01:35:12:12

DC Palter

Well, on

01:35:12:12 - 01:35:39:06

DC Palter

the customer side, Europe cares. And you don't have the same Europe as political problems, but they're different political problems from the US political problems. And, it's very difficult to kind of push through it. Well, Americans don't like regulations. So that's, that's a problem. And like saying, you know, you need to reduce methane leaks is is the stuff that's kind of basic is very difficult.

01:35:39:08 - 01:36:27:08

DC Palter

Saying we need to transition away from, you know, petroleum, gasoline powered vehicles to electric vehicles. We need to get away from coal. You know, we don't have a carbon tax. That's probably right. That right. No carbon tax in the US. You have a carbon tax and in, in Europe. So. And when I look at the the chemicals companies like BASF, they're, you know, they're investing in and, redoing their operations and looking for start ups and looking for ways of reducing, the, the, carbon content where American companies are really we're thinking about it, but there's just no push on the regulatory side, no push on the government

01:36:27:08 - 01:36:50:03

DC Palter

side, and definitely no push on the consumer side. So I just took a whole class on batteries, battery industry. And it was run in Europe. And I was like, I would I was shocked at how much time we spent on recycling, recycling batteries. And I thought, you know, in America. We don't we're not thinking about recycling batteries.

01:36:50:03 - 01:37:13:11

DC Palter

You know, at some point it'll we'll have to do it. But there's no regulations around it. Europe has a battery passport regulation coming on. There's a lot of regulations in Europe. So your problem is too much regulation. But there's a lot of regulation about how we're going to reduce the, the carbon content, how we are going to, get rid of dangerous chemicals, how we are going to do more recycling.

01:37:13:13 - 01:37:45:05

DC Palter

America. We're a lot more capitalist. And we say, yeah, well, the market will figure that out. But in the meantime, we're not putting incentives in the market like a carbon tax. So, you know, gas and oil is so cheap. Natural gas is so cheap that it's really hard for any, you know, any, any green solutions to compete. So and then there's more government money in Europe going towards green solutions and you know, and, and safety solutions and recycling and things like that.

01:37:45:05 - 01:37:51:12

DC Palter

The US is just just not as nearly as concerned about.

01:37:51:15 - 01:38:15:10

Christian Soschner

Yeah. The European landscape I mean this is a I think an interesting tension on the global markets. You said in the US, the core opinion is the market will figure it out. And, you have a lot of regulations. When you look at the CO2 tax, I mean, it was introduced in times of high inflation. And you mentioned that the United States doesn't have the CO2 tax.

01:38:15:10 - 01:38:38:09

Christian Soschner

So when I look at the economic effects of the CO2 tax in Europe, it's currently more a burden for the companies. So they have to pay a lot more, which theoretically pushes a lot of pressure on the economy to evolve green solutions. But, today it's so easy to relocate a company. And when you see that, energy is much cheaper in the United States, the European companies are doing that right now.

01:38:38:13 - 01:39:00:08

Christian Soschner

The just, just don't shop in Europe entry with somewhere in Latin America, United States with less taxes. So maybe we'll see how this turns out when we look at, climate change. How do you see this problem? How big is mean when whenever I open the internet to see these two big opinions currently on the internet, one part says it's completely alive.

01:39:00:08 - 01:39:11:01

Christian Soschner

It doesn't exist. And the other part says, in 100 years, we will all be dead. If we don't, how do you see the urgency of climate change?

01:39:11:04 - 01:39:13:18

DC Palter

Well, I'm I'm

01:39:13:18 - 01:39:41:18

DC Palter

not nearly as as extreme as those polar views, which, I think are more about people trying to attract attention than actually believing that. But, I do define climate, change, as is the defining, crisis of our generation. And, we've, we've made this problem for ourselves that we need to fix it. But, it's a difficult problem to fix because it's a worldwide problem.

01:39:41:18 - 01:40:04:22

DC Palter

And the US says, well, why should why should we spend more on green technologies when China's not doing that? Right? So, it takes global cooperation and that's not something that's happening right now. But, you know, on the technology side, on the startup side, I'm always looking for, I mean, I, I've always been energy sustainability. It's always been a passion for me.

01:40:04:22 - 01:40:32:21

DC Palter

And it just feels like we we need solutions. And I really want to see solutions made. I want to be contributing to making solutions. But the. Yeah, especially in the US, the political environment. So even in the US we have two different US's, we have the, the coasts, which are very much, liberal. I don't wanna get too far into politics, but very much climate change is the problem.

01:40:32:21 - 01:40:52:05

DC Palter

We need to do something about it. Then we have the middle of the country for the most part, which is like, yeah, well, it'll solve itself somehow. You know, why should we spend more on, you know, on our cars? Because, because it may get hotter in, in, you know, in Italy or something. I don't think it will all die.

01:40:52:06 - 01:41:14:17

DC Palter

And, and, and one of the problems is the US probably won't be all that badly affected by climate change unless it gets really, really bad. You know, some places will like Miami or, you know, the hurricanes are going to get worse. Weather is going to change. But will that completely affect my life? Well, I'm too old to for it to make much of a difference.

01:41:14:17 - 01:41:31:06

DC Palter

I'll be dead by then. But even if I wasn't, you know, the area I'm in, we might get more rain, which isn't a bad thing. We probably have more storms. But, the bigger problem is going to be like, well, the places where they grow corn and wheat, it's going to be different. We're going to have to change.

01:41:31:06 - 01:41:54:18

DC Palter

We're gonna have to adapt. We can adapt. You go some places where there's not enough water and they can't adapt, and then you're gonna have more wars and you're going to have more, you know, more struggling people. And and the food that we're growing is going to be more difficult to grow in some places. And so it's going to be about adoption, but it also means we're going to have more wars, we're going to have more complex.

01:41:54:18 - 01:42:11:12

DC Palter

We're we're going to have more more challenges that we shouldn't have and that, frankly, we could get rid of if we were, better, you know, that are now protecting our own environment where we live.

01:42:11:12 - 01:42:29:22

Christian Soschner

Yeah, I totally agree. I mean, it doesn't really matter. It's a, it's a it's more of an academic discussion between these two powers, which is fine for social media. But at the end of the day, we have to make sure that, our lifestyle is sustainable and that we have enough to eat. We solve the core problems. And, for that, we need technological solutions.

01:42:29:22 - 01:42:48:03

Christian Soschner

In any case, it doesn't matter if it's manmade or it's, just a cycle of nature. It happens, and we need solutions for that. In your opinion, what are the most promising areas within climate tech that you are excited about currently?

01:42:48:05 - 01:42:48:13

DC Palter

So I

01:42:48:13 - 01:42:49:12

DC Palter

mentioned batteries.

01:42:49:12 - 01:43:00:19

DC Palter

I'm so excited about batteries that I went and took a whole class on, on, on batteries in the battery industry. Because I think batteries changes everything. If you could make

01:43:00:19 - 01:43:11:07

DC Palter

a battery that had ten times the capacity of the current lithium ion batteries, well, and ten times capacity at the same cost means, you know, same capacity, a 10th of the cost.

01:43:11:09 - 01:43:46:06

DC Palter

Now, EVs are cheaper than, gas cars, right? Now solar and wind energy, you can store it and it makes a lot of sense. So and I see a lot of innovation in batteries, and in Chemical Angels where we hear pitches in climate tech. It tends to be batteries, batteries, batteries, batteries, everything from, you know, kind of minor, minor improvements to the existing battery technology is great because then just drop in replacements.

01:43:46:08 - 01:44:13:05

DC Palter

You know, better, I know is better. Cathodes, better electrolytes, better separators. In lithium ion batteries too. Okay. Well, can we make different kind of batteries? Can we make low batteries? Can we make, lithium metal batteries? Can we make solid state batteries in these be cheaper? Can these be safer? Can these be easier to recycle? Can we do them without using cobalt that has to be mined in, in the Congo and has problems with that.

01:44:13:07 - 01:45:04:05

DC Palter

So fundamentally, I think the biggest challenge is that batteries are expensive and not particularly, ideal. Yet they're getting better every year, but they're getting better at 10% per year, whereas the CPU got better at, you know, a doubled in capacity every year. So we need to be more on that cycle. And if we can do that, that changes everything because now we can electrify everything now, now with gas now, solar and wind start to make a lot more sense and be and be the most affordable, solutions because so solar power, if you think about over the 20 year lifetime compared to building a a gas natural gas plant is cheaper,

01:45:04:07 - 01:45:29:06

DC Palter

than building that natural gas plant when you include the, you know, the solar's free and gas is you have to pay for it. But you can't store it. They still need the gas plant to run at night. If batteries are cheap and effective and fast to charge, then that changes that whole equation. So I really think that batteries, number one, is is the biggest area where we can make a difference.

01:45:29:08 - 01:45:54:14

DC Palter

I'm looking at some other technologies and things like, you know, direct carbon capture, air capture, or, you know, waste stream capture or some interesting technologies coming there. I'm involved in a lot of startups in, in the, green chemical space. How do we make chemicals? How do we make things like, you know, fibers, without using petroleum or without using a lot of water to grow cotton?

01:45:54:16 - 01:46:20:06

DC Palter

Can we do that with agricultural waste? How do we recycle things instead of just throwing all of our plastic in, in, in a way, and it being wasted? So there's a lot of areas that we're seeing innovation every day. We see a lot of, scientific, effort going into other things. And it's great. And, you know, occasionally a few of those will, I'll say it's actually a good business to, and we'll invest in those.

01:46:20:06 - 01:46:47:06

DC Palter

But, batteries are tough to invest in. I love batteries on, on the technology side, and I, but as an angel investor. So to take a battery to market is kind of starts at like $10 million. So my small check's not going to make a big difference. They really need the grants. They really need, you know, focused VCs that can write 1 to $5 million check.

01:46:47:06 - 01:47:10:22

DC Palter

So, it's except for a few drop in replacements for existing things, like, you know, battery separator or, or a way of making graphite that's makes better battery electrodes than the existing way of making graphite. Those are investable. But most of the kind of big inventions are just going to take it takes $100 billion to bring it to market.

01:47:10:24 - 01:47:31:06

DC Palter

It takes something between 500 million and $1 billion to make a production plant for batteries, any sort of scale. So my little check's not going to make much of a difference there, even on the commercialization side. So it's a little bit frustrating that I think that's the most important thing, but I really can't do much to invest there.

01:47:31:08 - 01:47:40:24

DC Palter

But I do what I can and I mentor the companies even though I might not invest in them. And then there are other areas that are easier to invest in. Things like water purification.

01:47:40:24 - 01:48:04:00

Christian Soschner

Now, it reminds me very much about, on track development. The first business case I calculated was 2006, 1 billion. And there was a figuring out where to invest in case for a business back, back in 2006. Now the industry looks a little bit different. There are more, service partners on the market, more partners where you can outsource work, but it's still, pretty much expensive.

01:48:04:00 - 01:48:13:23

Christian Soschner

And, so I think the the only viable option that I often see is becoming becoming a co-founder, but then you can only do 1 or 2 businesses at the same time.

01:48:13:24 - 01:48:14:12

DC Palter

That's right.

01:48:14:12 - 01:48:40:13

Christian Soschner

And you get a little bit of return when you attract venture capital and, get some service fees or salaries, then you can at least redeem your initial investment and have, practically speaking, a lottery ticket on a big win further down the road. Yeah. Oh, when we look at the battery urgency and a little bit with climate change, did you look at the Norway case, in that respect of wind, solar and how they store energy?

01:48:40:15 - 01:48:44:15

DC Palter

No, no, I, I don't have much, expertise there.

01:48:44:16 - 01:49:07:12

Christian Soschner

They are doing. It's quite interesting the, because I said, I mean, I live in Austria, so we don't have, the ocean close by, and, wind is unreliable and sun is unreliable. German authorities. So I always said, wind and solar bounce to the trick alone. So you need something in between batteries. One solution. Nuclear arsenal.

01:49:07:12 - 01:49:31:09

Christian Soschner

A solution. But Austria doesn't like nuclear power plants. And then it gets the argument back. Look at Norway. They are 100% on renewable energy. Wind and solar. How do they do that? And looked at that. And the interesting thing was they use small lakes and with wind and solar, there's always a problem with the wind, but there is no wind turbines.

01:49:31:10 - 01:49:40:00

Christian Soschner

Yeah. There was this energy that just pumped the water up back into the lake and then can, use it again to produce energy. This is quite an interesting concept.

01:49:40:05 - 01:49:47:20

DC Palter

Yeah, yeah. So that's called pumped hydro. And that's, that's been around a long time. It's, and

01:49:47:20 - 01:50:11:24

DC Palter

you do that where you can it's it's very, effective. There's just not many places where there's where you can actually do it, where you can actually move the water up and then move it down again. But I've seen some interesting startups that are kind of working on, like, the same concept, like, one is using so oil wells, especially U.S. oil wells, or they're doing fracking.

01:50:12:01 - 01:50:32:13

DC Palter

There's only enough oil in them to last for about, you know, 3 to 5 years. And after that you have an empty oil well that legally you have to yeah, you have to close off and and and protect from nothing escaping. So that's an expense for the company. And they're saying, well, what? We've got this two mile pipe, let's use that.

01:50:32:13 - 01:50:49:16

DC Palter

We'll put a weight in it and we'll, you know, when when we have extra energy, we will, we will lower the weight. Sorry. We will raise the weight. And when we need, when we need to generate power will lower the weight, weight. And that will turn the turbine. So the same basic idea is pumped hydro.

01:50:49:16 - 01:51:15:23

DC Palter

But we're going to use these 10,000 empty oil wells that are sitting out in, in the ground right now and, and use it that way. There's also like salt formations that help. But where there's been mining and now they have these places where you can pump carbon dioxide in there. Same way. And then when we need energy, we can pull the, we can have the carbon dioxide run a, a turbine.

01:51:15:23 - 01:51:48:23

DC Palter

So, a lot of things along those along that path. But the question is the cost, how much does it cost? And so it would work in Norway. Because I think Norway is a particular high tax environment, high cost of living. People, are willing to pay more for, or, renewable energy. Meanwhile, they get most of their money, the government gets their money from selling oil in the North Sea and selling them around the world.

01:51:48:23 - 01:52:11:04

DC Palter

But we won't go there. But the the, the the country in the population wants is very, environmentally conscious and wants to use, green energy. And that's that's great. America is not that way. And we're going to look at that and say, yeah, but we can just get gas out of the ground, we can burn the gas and we can generate power.

01:52:11:06 - 01:52:46:23

DC Palter

You know, $0.03 a kilowatt hour. Why are we going to spend $0.50 a kilowatt hour to to store energy when we've got all this gas? So, a lot of times it just comes down to cost. And that's where, again, I think Europe in general is further ahead and willing to say, yeah, we're we're going to we're going to charge more, for, for the price of, of, of petroleum so that that kind of forces you to other solutions that, as you said, sometimes that's that they say, well, we're going to open our new plant somewhere else for cheaper instead of doing it in Europe.

01:52:47:01 - 01:53:14:01

Christian Soschner

Now, I totally agree. I think you mentioned energy electricity. I think electricity is one of the growing areas in the next, 2 or 3 decades. When I look at all inventions of today, the oil, they all need electricity. So there is no invention. I think it's not running on electricity anymore. When we replace old cars in Europe at the United States with electric vehicle, demand is simply growing.

01:53:14:01 - 01:53:32:15

Christian Soschner

When you look at artificial intelligence, the chip industry, the number of chips goes up. When I think back, I mean, I was born in the 70s, in the 70s, we needed electricity to turn on the lights and to cook and, to wash the dishes. And that's it. Now you have, I think, per person, what is the chip density?

01:53:32:15 - 01:53:45:04

Christian Soschner

I mean, you have an iPhone, you have a smartphone, some tablet computer or two computers. The car is completely reliant on electricity. So the demand will drop. And I think this is a huge opportunity.

01:53:45:04 - 01:53:45:11

DC Palter

Still,

01:53:45:11 - 01:53:49:04

DC Palter

that's a huge problem. Yeah. And

01:53:49:04 - 01:54:07:13

DC Palter

it's a big regulatory problem in the US because we need long distance power lines to connect the different areas. And that needs permits. And that causes fighting. And so it takes something like ten years to hook up, a new a new power plant. And that's just insane. Why aren't we doing that faster?

01:54:07:15 - 01:54:29:20

DC Palter

I think Europe has similar problems of, okay, now you have to go from Austria to Germany to, you know, to, to the Czech Republic or something like that. And now you're crossing different countries, which, means different power companies, different regulators, different regulations. And so that adds a different layer of complication.

01:54:29:22 - 01:54:30:04

Christian Soschner

And

01:54:30:04 - 01:54:42:21

Christian Soschner

complex, to what the company who sells, trading electricity across borders, jurisdictions, distances. I think they will make it good business. There will be a lot of money.

01:54:42:23 - 01:54:49:07

DC Palter

Well, the first one that did that was Enron money bill.

01:54:49:09 - 01:54:52:18

Christian Soschner

Was the Enron success case.

01:54:52:20 - 01:55:08:18

DC Palter

They were until they started setting, trying to find ways to make more and more and more money. And then they they got fraudulent at the beginning. They were actually pretty successful with energy trading, like never. Then. Yeah. Then they then they went overboard.

01:55:08:20 - 01:55:30:00

Christian Soschner

Never trade trust. So yes, a big problem. When when we move a little bit forward in our conversation to writing, you are an ambitious writer. You wrote two novels. But the first book was about Japanese culture. Yeah.

01:55:30:02 - 01:55:30:19

DC Palter

So my

01:55:30:19 - 01:55:49:05

DC Palter

my first book was just published 25 years ago was, I lived in coal Bay, which is part of the western part of Japan. So, Osaka, Kyoto, coal Bay and a little bit Nara is kind of a separate area of Japan from from Tokyo area. And the culture is a little bit different. And most importantly, the language is a little bit different.

01:55:49:05 - 01:56:07:02

DC Palter

So it's like the difference between British English and American English. And so imagine you're you're a a language student. You're living in, in coal Bay, but I am maybe, how different is Austrian German from German, German.

01:56:07:04 - 01:56:08:20

Christian Soschner

Oh, very different narrative.

01:56:08:21 - 01:56:27:22

DC Palter

Yeah. Okay. So somebody wants to learn German. But they go to, they go to study in, in Vienna and what they're learning, it's a language school is the German. German, right. Because when people say, I'm studying German, that's what they study. But then all around them, people are. That's not what they're talking. Right? That's not how they're speaking.

01:56:27:22 - 01:56:48:09

DC Palter

It's, you know, it. Grammar is the same. And most of the words they're saying, but it's different. And so it's the same thing. I was in Kobe, I was learning Tokyo Japanese because that's standard Japanese. And everyone around me was speaking the local, Western, Japanese. And so it drove me crazy. There was no internet. That is a long time ago.

01:56:48:09 - 01:57:09:23

DC Palter

So I started making my own little dictionary of all the words I didn't know and all the expressions I didn't know. And then I realized, well, there might be, you know, I'm not the only person here. That's that's confused by this. There's no other way learning it. So I, I, I had a friend who knew a, a major book publisher publishes language books in, in Japan.

01:57:09:23 - 01:57:25:13

DC Palter

So, I told him about that, and, like, oh, that's a great idea. And so, I, my, myself and co-writer put it together, and we did that 25 years ago. It's still in print now, and it still sells. Actually, it still sells more copies every year than my novel.

01:57:25:18 - 01:57:37:13

Christian Soschner

Yeah, it's another 25 years, probably on the market. Yeah. When your new book, what inspired you to write a new book but inspired the plot of the new book?

01:57:37:15 - 01:57:38:02

DC Palter

So

01:57:38:02 - 01:57:55:13

DC Palter

my first novel was this one, To Kill a Unicorn. And this is about Silicon Valley. I've always wanted to be a novelist. I've always written short stories, but at some point in my career I had to say, do I want to be a writer or do I want to be an engineer? And I thought, engineers actually get paid.

01:57:55:13 - 01:58:14:02

DC Palter

Writers don't. So, and I thought, well, if I'm an engineer, I'll actually be out in the world, have stuff to write about. The problem is, and every time to write, you know, between being an engineer and then having a life and then doing startups, my life is pretty busy. So, when the last company was sold, I thought you know, I want to take a little break.

01:58:14:02 - 01:58:28:03

DC Palter

I don't want to do another startup right away. What do I really want to do? So I want to do I want to get back into climate tech. So I want to do investing. I don't want to do investing. I'll, you know, all day, every day. It's not a full time job. What I want to do with the other half of my time, well, I want to be a writer.

01:58:28:07 - 01:58:56:12

DC Palter

So, I started writing articles, about, you know, all the mentorship things, all the startup things. But I really wanted to get back to writing a novel, and, well, what do I know? I know Silicon Valley, I know startups, so, and no one else is writing novels about those things. So I sat down, and I spent three years writing, writing to kill a unicorn, which is about a startup in Silicon Valley that, is, kind of based on Theranos and doing some, some bad things.

01:58:56:12 - 01:59:20:07

DC Palter

And one of the, employees is is missing. And his friend who's, who's a hacker, wants to wants to find him. So I wanted to write a fiction book. Mystery book that was really not from somebody who doesn't know Silicon Valley and doesn't know the world of hacking, doesn't know the world of programmers, and doesn't know kind of what it's about, and kind of just sees it from the outside.

01:59:20:11 - 01:59:40:17

DC Palter

I want to write it for people who are actually in this world and, will appreciate it. So, it's a little bit too technical. There's too much detail in there for, for for people that don't know anything about the startup world, about Silicon Valley. But for people who do, it's just like, this is, I tell you, the most fun you'll ever have reading about Silicon Valley.

01:59:40:19 - 02:00:00:16

DC Palter

So I finished the first one, and, I was, you know, just yeah, I was quite proud of it. And I said, okay, well, what's next? And so, I really enjoyed writing about the, the characters, especially Ted Hara and all of his challenges and then his, his girlfriend and their kind of difficult relationship with each other.

02:00:00:18 - 02:00:26:12

DC Palter

And, I said, well, let's I'm for for another murder. Except one of the things that I've, one of my other kind of pet peeves besides climate change is personal privacy. I'm not a huge advocate there, but I'm really concerned about how the government feels like it has a right. To all of your information, again, you're very different from the US.

02:00:26:14 - 02:00:50:15

DC Palter

Us basically we say, well, there may be murderers, child, child pornographers and terrorists out there. And so the government needs to right the right to see everything. And so basically, you know, the CIA and the NSA and other groups have, you can get or at least be used to be able to get to everything that, that, that you do.

02:00:50:17 - 02:01:13:17

DC Palter

And then one day Apple came along and said, no, we don't like that. We're going to, change our security policy so that only the sender and receiver have, have the keys. And you can, you know, the data may be stored on our cloud, it may be on our phones, but unless you have the password, we can't get it.

02:01:13:19 - 02:01:37:17

DC Palter

And that got the FBI so angry, and they said, well, how are we going to stop terrorists? And, you know, Apple is and Steve Jobs, I think, said it the yes, that's the problem. But so is you having access to everything. And so you want you want information. You're going to have to get it from, from the users.

02:01:37:19 - 02:02:05:22

DC Palter

And there's been a few court cases about that. And the FBI is trying to force Apple to, with some backdoors in its code. So the FBI with warrant could have access to everything. And and Apple is kind of said no. And so everyone's kind of waiting for another case where the FBI is going to try again and force Apple and Google now and Microsoft now to change your security policy so that they have access to everybody's information.

02:02:05:24 - 02:02:28:18

DC Palter

And so I thought, well, what what would cause that what would get people willing to give up their privacy? And the answer was terrorism. What is going to make people I mean, that's what it was after, you know, after the 911 attacks. And we basically said, you know, government has access to everything because we need to protect and protection is more important than personal privacy.

02:02:28:20 - 02:02:52:11

DC Palter

So now we're in a different environment. It's 20 years later, what's going to to get people willing to give up their privacy again? Well, it's either murder or, you know, major murder case. That's that's in the news or or, terrorist threat. So that was the basis of the story. And, but I need to make it exciting, right?

02:02:52:11 - 02:03:12:01

DC Palter

People don't want to read about politics. People don't want to read about personal privacy. They want to read about my friend is missing and and a bomb is about to attack. And how do we stop them? And how is my main character going to stop them? So, Ted, Ted Hara was already ready, my favorite hacker.

02:03:12:01 - 02:03:39:04

DC Palter

And he's going to figure out who kind of hapless. He doesn't really know what he's doing. He thinks he does, he's young, a little bit immature, but his girlfriend is a lot more mature. She's going to tell him what to do. And, so this had that dynamic there and wanted to create the next story. So this one is much more so the original story to kill a unicorn is kind of this crazy Silicon Valley like HBO Silicon Valley story about, startup founders and all the craziness of Silicon Valley.

02:03:39:06 - 02:04:03:18

DC Palter

The the new one, which just came out a couple months ago. Description is much more of your standard cyber thriller. Bomb's about to go go off the neck. The main character has to try to find a way to stop them. Ends up, you know, there's the police are going to try to pin it on him. So same characters, same setting, in Japan, town of Silicon Valley.

02:04:03:20 - 02:04:08:08

DC Palter

But kind of very different, styles.

02:04:08:13 - 02:04:17:13

Christian Soschner

I just when I was speaking, there's a lot of information in the biography of Tim Cook about, Apple and privacy and the fight against, FBI and,

02:04:17:15 - 02:04:18:12

DC Palter

Right.

02:04:18:14 - 02:04:20:17

Christian Soschner

And the CIA. It's quite interesting to read.

02:04:20:18 - 02:04:33:02

DC Palter

Yeah. Okay. So that was that was kind of the basis of, of this novel and what is what's going to be the next round between Apple and, and, and the CIA?

02:04:33:04 - 02:04:40:11

Christian Soschner

It already became reality in Austria a couple of days ago. Did you read about the US? No, I have a concert last week.

02:04:40:13 - 02:04:45:04

DC Palter

Yeah. Yeah, yeah. The, the the threat of a terrorist attack or concert.

02:04:45:04 - 02:05:08:03

Christian Soschner

Yeah, yeah. And the US secret services informed the Austrian, right. Authorities about the terrorist attack in Austria. Also, we were very serious about privacy. And so this was the reason why our authorities, had no chance to discover this. So it's, needed, now, opinion penalties. That is, with this, a national, symbol for the United States.

02:05:08:03 - 02:05:31:18

Christian Soschner

And nothing would be nothing worse than a terrorist attack on a concert of a US, superstar. And my reasoning why the US government cared about Austria in that respect and defended the, captured. The terrorists were three young boys. And now we have exactly the discussion that you mentioned about privacy. And, people are very willing to give it up.

02:05:31:20 - 02:05:48:06

Christian Soschner

Right. I mean, is it really so a problem when I think of 99% of, of of people who cares about them immediate just want to live a normal life. No danger, no crime. Why is privacy such a big issue, in your opinion?

02:05:48:08 - 02:05:48:16

DC Palter

It's a

02:05:48:16 - 02:06:33:12

DC Palter

good question because I probably don't do anything that, that, that that I care that the US government is, is spying on me or not. But, Let's put it this way. If there's a backdoor, a way for the, for the US government to get to read all of my emails, that means there's a way for the Chinese government to read all of the Chinese citizens emails, and there's a way for the Russian government to read all of the Russian, citizens emails and, anyone who, you know, they have thought police there, anyone who is against Putin is, wants to say anything bad about the Chinese government.

02:06:33:14 - 02:06:54:08

DC Palter

Well, they're not going to be able to a job. They're not going to be, you know, they may maybe they won't go to jail if they haven't actually done anything. But the government is watching. So I have a little bit more, trust in the US government. But anything the US government does, every other government around the world will be able to do as well.

02:06:54:08 - 02:07:02:09

DC Palter

So, the IT infrastructure needs to be as secure as possible. And then the biggest thing is the US government can hack in.

02:07:02:09 - 02:07:09:24

DC Palter

There's a lot of hackers out there who are better than the U.S government, and they will find those backdoors and they will get in. And suddenly all

02:07:09:24 - 02:07:18:00

DC Palter

the, you know, all, all, all, all the hackers access to everything, there's just no way to make that work.

02:07:18:02 - 02:07:18:06

Christian Soschner

I

02:07:18:06 - 02:07:36:13

Christian Soschner

mean, I think the world of 1960 or 1950, I mean, this is the past. I don't think we get it back. And, with the internet and the global connectivity, isn't everything transparent? Anyways.

02:07:36:15 - 02:07:37:18

DC Palter

So

02:07:37:18 - 02:08:00:21

DC Palter

communications, you know, things that put out in public are public. But I have an expectation that if I send a message to my wife that the US government and the Russian government and the Japanese government are not reading those and then telling other people about them, and I don't want to be in a world where the government gets to read all of my personal communications.

02:08:00:23 - 02:08:39:00

DC Palter

That means there's some bad people that are going to be communicating, some bad things. But I really don't like the idea of all of my communications between my wife and my family and my friends. And be read by anybody secretly who may not like me for some reason and may decide to. Yeah, tell some other people maybe I have trouble getting a job because, you know, I wrote something like, you know, I don't like this general, that I met somewhere, and suddenly I have a contract with the, with the Defense Department.

02:08:39:00 - 02:08:59:02

DC Palter

It gets canceled. There's just too many ways that information can be abused. And it's been abused. And that's what scares me the most. The fact that. Yeah, again, if the government can read it, there's a lot of smart hackers out there that they'll they'll get to it too. And then all of my financial information will get stolen.

02:08:59:05 - 02:09:17:02

Christian Soschner

I mean, the interesting thing before 2020, I think nobody cares. Then came the pandemic and everybody started writing everything on Facebook. And, so yeah, it's like honest, the open book, I was and I thought a lot about it because with the, with the podcast email, when you think about it, what you can do with it is days.

02:09:17:02 - 02:09:44:09

Christian Soschner

So we put a lot of content out in video, and you can use voice and facial expression and running AI against it. Trained with. So yeah, it's all scary. And what is this video really about it? When you think back for the years when you met a person for the first time and this person was not trained in psychology, or criminology or any other area, it was really the first contact with a person.

02:09:44:09 - 02:09:53:04

Christian Soschner

No information. The first information exchange, was about who are you? What's your name? Right. And so, you know everything already about you.

02:09:53:06 - 02:09:56:24

DC Palter

And now it's on LinkedIn. Right. And it's a Facebook. It's, Yeah.

02:09:57:00 - 02:10:00:00

Christian Soschner

And we are encouraged to post and post and post.

02:10:00:02 - 02:10:02:10

DC Palter

Yes. That's right.

02:10:02:12 - 02:10:10:03

Christian Soschner

How do we how do you see this change? Is it a danger or is it, an advancement of society?

02:10:10:03 - 02:10:39:04

DC Palter

That's a good question. I, I tend to see every new technology as mostly an advancement, but also creates new, new ways people can scam you or or, you know, like, Facebook was great because it could it could connect all the people around the world. You can find new new groups. If you were kind of a specialist, you know, like you, you like writing and you can't find any other mystery writers in LA.

02:10:39:04 - 02:11:10:22

DC Palter

You could connect with mystery writers in San Francisco or in Vienna. So Facebook was absolutely wonderful. But then at the same time, it's, it's just a huge conduit for misinformation and lies and scams and everything else. So there's good and bad and everything, and, you know, can we can can we find ways of emphasizing the, you know, the benefits and reducing the, the, you know, the not so good pieces.

02:11:10:22 - 02:11:15:06

DC Palter

And, and that to me is more of a political problem, not a technology problem.

02:11:15:08 - 02:11:27:15

Christian Soschner

But but how would you solve it if you were, the one in power who can decide how to reduce the risks and, increase the benefits? How would your solution look like?

02:11:27:17 - 02:11:52:07

DC Palter

Well, I'd have to write a master's thesis for have to study it more. But yeah, certainly, I think this goes more towards the European way of thinking of let's have some regulations, let's have some rules. Let's say, this is what companies are allowed to do, and this is what they're not allowed to do, where the American idea is, well, anybody can do anything they want, until it gets really bad.

02:11:52:07 - 02:12:13:04

DC Palter

And then we're going to make some crazy regulations that don't make any sense. So, and when I talk about, you know, political problems, it does mean regulation. And I don't think it's you can't do this. It's, you know, here's now for something like that is, you know, here's what companies are allowed to do, here's what they're allowed.

02:12:13:04 - 02:12:33:23

DC Palter

You know, here's the privacy rules. Here's the, you know, subscription rules. Here's, you know, the the age of people are allowed to do things, but there's no easy answer there. And it's going to it's going to evolve and change. And that's kind of the biggest problem with regulators, because regulators like to like plan things out for ten years.

02:12:33:23 - 02:12:53:21

DC Palter

And like we're going to set we're going to make this regulation that's going to come into effect in, in in 2030. It's like, no, we need something that the stop something going on right now today. And companies can move fast and regulators can't. So that it is a challenge I will give you that. But I always fundamentally it's kind of strange.

02:12:53:21 - 02:13:11:20

DC Palter

I'm, I'm mentally I'm much more of a pessimist. Right. I'm much more of a let's make sure, you know, I'm conservative, make sure things don't go wrong. You know, kind of see all of the I'm really good at running a business because I would I can always see all the things, all the problems that could occur and make sure they don't occur.

02:13:11:22 - 02:13:28:11

DC Palter

So I won't grow as fast as, you know, like crazy people are willing to take lots of risks, but I can make a business successful. We'll do the same thing. Like I'm the opposite. Welcome to technology. Right. I'm kind of an optimist, I see. Yeah, everything. There's good and bad and everything. And technology is just a tool.

02:13:28:11 - 02:13:54:12

DC Palter

Like we started at the beginning. And it's how the tools being used. And can we, you know, it's always going to, you know, it's going to improve the world, but there will be people abusing it. And can we find ways of, of stopping that abuse, whether that is, you know, whether it's regulation, whether that's police, whether that is countries collaborating with each other and none of that's none of that's easy.

02:13:54:14 - 02:14:18:01

DC Palter

But we don't want to say you can't you can't improve technology or else I think we're dead. We always want to be improving technology. We always want to be making the world better, stronger. And we just need to be better aware of the downsides and able to able to adjust to them quicker.

02:14:18:03 - 02:14:18:08

Christian Soschner

I

02:14:18:08 - 02:14:44:09

Christian Soschner

totally agree, I totally agree this. It's really great talking to you and time flies. I see that we are. Yes. What, two hours in the conversation? I have one final question to you. But before I ask it, is there any topic open that you would like to tackle before we brought up and we didn't talk about so far yet.

02:14:44:11 - 02:14:44:15

DC Palter

And

02:14:44:15 - 02:15:05:14

DC Palter

you want to go back to the, the, the start ups and what is the biggest? Just myself. My knees are getting a little tired here because I'm not sitting on a chair. Biggest challenge of tea ceremony is, sitting on your own. Your legs for. For a couple of hours at a time. Chairs were great inventions.

02:15:05:16 - 02:15:14:15

DC Palter

Yeah. So kind of back to where we we were talking at the beginning of what is the biggest challenge for, startup founders and particularly, hard

02:15:14:15 - 02:15:34:18

DC Palter

tech founders and and we I touched on this a bit, but I do want to emphasize that. The biggest challenge is that investors want to see a completed product, but startups need the money to get to a completed product.

02:15:34:18 - 02:16:01:21

DC Palter

And that is a really difficult challenge. And there's no easy answer to that. Just pitching to a thousand VCs isn't going to solve the problem, because they're all going to come back and say, you're too early, come back to us. You know, a couple of years when when you have some customer signed up. So the solution is being scrappy, figuring out how to do as much as you can with as little as can government grants got, especially if you're in the US.

02:16:01:22 - 02:16:22:12

DC Palter

Got to apply for government grants. They're there. Get them, grab them, use them. They're wonderful. Million dollar million and a quarter at a time. Use that to take care of the, you know, the research and development costs. Still, I need a little bit more money. Talk to customers, talk to suppliers, talk to mentors, talk to people in the industry.

02:16:22:17 - 02:16:40:20

DC Palter

A little bit of investment. Not very much. Don't think you're going to raise $2 million, like try to raise like 500 K. Figure it out. But the minimum you need to raise to get you to that next step where you can start talking to investors. And that is the biggest challenge, the biggest misunderstanding I see in the hard tech space.

02:16:40:20 - 02:16:56:01

DC Palter

I think everybody puts together pitch deck and says, I'm, I need $5 million. I'm just going to start pitching VCs. And, you know, one of them is going to get excited and give me $5 million check. It's not going to happen. So, really need to think through, well, how am I going to survive on 500 K?

02:16:56:03 - 02:17:14:22

DC Palter

Plus 1 million or 2 in grants? And how am I going to get those grants? And how am I going to get that 500 K and who the who those investors are going to be? And that's not easy. If it was easy, it wouldn't be called hard tech. So it's, it's a challenge. Be prepared for that challenge.

02:17:14:24 - 02:17:36:19

DC Palter

If you come into it with the right attitude of this is tough, and I do need to be scrappy, and I'm not just going to find somebody to write a check for $5 million. You're actually going to come out with a better business in the end of that, a more better chance of success. So, know that going in, be prepared, be ready, be thinking through it, and then you can be successful, whereas you don't know what you don't know.

02:17:36:24 - 02:17:47:23

DC Palter

You just like, I know how to write a pitch deck, I'm going to go get investors. You're going to be spending a lot of you're going to be wasting a lot of time not making any progress. So be prepared. No, no. The process is.

02:17:48:00 - 02:17:48:10

Christian Soschner

Not

02:17:48:10 - 02:18:07:04

Christian Soschner

great points. Great points. I think the role model could be the drug development process, which is a practically a stepwise, derisking process. It's, I think probably similar tool to the tech problems I had from my conversation with CERN that many of their technologies take 1 or 2 decades, until the, really useful product.

02:18:07:04 - 02:18:09:19

DC Palter

It's not going to be fast.

02:18:09:21 - 02:18:28:12

Christian Soschner

That's true. It's anything but fast. And the the landscape in drug development has evolved over the last two decades in a way that there are a lot of service partners out on the market that you can contract. So they are not owned by a single company, but the contract, many companies make sure that their patents are not infringed so that they keep this work separate.

02:18:28:12 - 02:18:53:19

Christian Soschner

But you can basically pick the services when you need them. Any trials, for example, or any other thing. And the entire industry in the pharma industry is organized that they are, preferred acquisition point or license point is a clinical phase tool, which is not a finished product. But it shows proof of concept. I would say it's effective and it's safe.

02:18:53:19 - 02:19:10:11

Christian Soschner

And, I think probably the hard data, hard sticky areas. Also in the, in the federal space probably evolved over time in a similar ecosystem. It doesn't solve the problems yet, but I see that the industry must step in much earlier, to make something happen in that area. Yeah.

02:19:10:13 - 02:19:13:17

DC Palter

Yeah.

02:19:13:19 - 02:19:35:17

Christian Soschner

The final question to you, you have a lot of investment experience in public markets and in, as a business and also as a startup founder when someone wants to get into investing. But why would you give them.

02:19:35:19 - 02:19:36:01

DC Palter

Okay.

02:19:36:01 - 02:19:51:21

DC Palter

So I'm going to focus on the new angel investor. And what is the one thing that most of them don't know that they need to know? And the one thing I wish I knew when I was starting. So when I was starting, my idea was.

02:19:51:23 - 02:20:16:21

DC Palter

Every startup pitches and says, we're going to, have an exit. We're going to get your return in 3 to 5 years. And I believed and I thought, okay, so here's what I do. I'm going to invest this money dollars each year. I'm going to plan for, I've got this much to invest. I'm gonna divide up in a Thursday morning that's, you know, one third, first year, second or third year, third year.

02:20:16:21 - 02:20:38:06

DC Palter

I start getting returns, and then I can use those returns to start, start doing, investing in and new startups. And at least by year four, there should be more returns. By year five, there should be a lot of returns. And then, you know, I'll keep some of it for myself, but I'll give me a bigger pot to keep investing, and it'll be this nice flywheel that, you know, once I once I get started, I prime the pump.

02:20:38:06 - 02:21:07:08

DC Palter

After the first three years, I will just be able to keep investing. I was completely wrong. So there's something called the J curve, and the J curve says, your portfolio will do this. So you'll start off with this much that you allocated. You'll, you'll put your money in and, and your cash, your bank account for, for investing will keep going down and down and down.

02:21:07:08 - 02:21:30:08

DC Palter

You'll hit zero at some point, you'll start getting some returns. But you will not get good returns at the beginning. Yeah, there's exceptions, but yeah, at least not for me. Not for most people. So at the beginning, you'll have your failures. Your failures tend to come fast, and your successes, slowly. And your big successes come, even slower.

02:21:30:08 - 02:22:08:23

DC Palter

And you're really big successes take a really long time. So over 15 years, you may do great, but your first, at the end of five years, you will be down to zero. In year six you might get some, like some failed, but not completely failed. So you get some buyouts, you get like 50% of your money back, you'll have some one XS, you'll have some half XS, you'll have some two XS and gradually get some money back so that after they worked it out that after ten years I had broken even with ten years to get back, to break even though I still had some companies in my portfolio that hadn't exited yet.

02:22:08:23 - 02:22:25:21

DC Palter

So like in year 12, I had my first big exit and suddenly I was two x and I still have a couple company. 15 years later, I still have a couple of companies left that haven't exited yet that hopefully will give some decent returns so I can get to like A3X, but it's going to take me 15 to 20 years.

02:22:25:23 - 02:22:43:10

DC Palter

But my idea of well is just going to put money in and after a few years I going to get return. I can use that money for doing in new investments. I was completely wrong. So after five years, I stopped investing. I continued doing mentoring by something, vesting, until I start getting some returns and and my company got acquired.

02:22:43:11 - 02:23:05:01

DC Palter

I had more money to invest. I'm like, okay, I'll put a new pot in here and do some more. So I've had some good returns over over time, but it took a long time. And it's frustrating because you're you just get failure or failure or failure failure. You have some companies that send you, you know, you know, you know, quarterly updates that say, we're doing great, we're doing great, we're doing great.

02:23:05:07 - 02:23:25:05

DC Palter

And then they run out of money or like, and then you get some that are like, we're doing great, we're doing great, we're doing great. And then the another round of investment, I get another round of investment and it just takes forever. So you do get some good returns eventually. Hopefully. But it takes forever. And in the meantime, it's not like public stocks where you can buy them and sell them.

02:23:25:05 - 02:23:44:07

DC Palter

And, get some dividends or, or even know what they're worth. It's, you know, the money's gone out the door. They may tell you that they're doing well, but you don't really know until you get a return. That's going to take a long time. That's my one piece of advice. You're deciding to be an angel investor.

02:23:44:07 - 02:23:47:20

DC Palter

Be prepared. It's, It's a long road.

02:23:47:22 - 02:23:54:18

Christian Soschner

Yeah. That's true. Talking about, building on what you said, I think the

02:23:54:18 - 02:24:16:09

Christian Soschner

average return rate for an S&P 500 is about, 7 to 8%, or what? They it's. I recently listened to the CEO of the Norwegian Oil Fund. He invests all the oil money, diversifies. And in the conversation, he said that he's aiming at 6 to 7% as a good of over time because it's generational.

02:24:16:09 - 02:24:32:14

Christian Soschner

And they don't need to have this 20, 30%. When you look at the startup worlds, they're always these outlier cases, he said. I invested once and half a year later I got my billion back and it was just $1,000. And this motivates so many people to become a business.

02:24:32:14 - 02:24:33:03

DC Palter

Yes.

02:24:33:05 - 02:24:39:20

Christian Soschner

You have a lot of experience. You have seen a lot, you know, a lot of business angels. In your opinion, what's a good return expectation?

02:24:39:22 - 02:25:02:16

DC Palter

So I I've invested in 50 startups individually and about another 100 more through funds. And then I also have, I've got a number on funds, but, where we pull money and we, we invest together. So last year I did an analysis of what my returns were. And the problem is, well, you don't know for 15 years.

02:25:02:18 - 02:25:31:05

DC Palter

But I had this interesting effect because I, I stopped investing for a while, so I had this cohort of investments like my own little fund, and I could see what my returns were, and I could see also, I invested in a couple of returns that, in a couple member funds that invest in 30 companies at roughly the same time and what their returns were and, both mine and the, the Angel Group fund, the return was roughly 7%.

02:25:31:07 - 02:25:53:17

DC Palter

And so my S&P funds have done, like you say, probably, you know, recently pretty well. So 8 or 9%, my real estate investment has done much better. So I just want to make money. I could I could just put it all in S&P funds and maybe some, you know, public stocks, maybe do a bit more in real estate.

02:25:53:19 - 02:26:15:06

DC Palter

It's just money that's not interesting. Right. So I think you'll find for most you, you find some angel investor who's like you say they heard about these great returns. They're like, yeah, yeah, yeah, I'm going to make a fortune. I'm putting a little bit of money and it'll be a huge return. Most of them are disappointed. I think you find my, my goal is to get returns so that I can invest in new startups.

02:26:15:06 - 02:26:31:02

DC Palter

Right? I want them to exit so I get the money back. So I get a nice return. Is like to X5X ten x. And that means I can invest in ten more startups, right? Or I can invest more in each startup. So I'm doing it because I want to support the companies. I don't want to lose money on it.

02:26:31:04 - 02:26:53:10

DC Palter

But the more the bigger returns I get, the more I can invest in other startups that can help the ecosystem. It's it's not just about making money. And that's why I do that instead of S&P 500 or real estate, which is just strictly, you know, retirement money. So I think you find the people are serious angel investors.

02:26:53:10 - 02:27:11:01

DC Palter

They do it because they enjoy doing it. They enjoy working with founders. They enjoy seeing company success and, it's a way of living vicariously through the startups. And their successes are success. And that's not the way with Apple, right? I buy Apple stock and it goes up. I can't say, yeah, yeah, it's successful and look how great it is.

02:27:11:07 - 02:27:29:05

DC Palter

But I put 100 K into a battery startup. And then, you know, they turn into, you know, the next new battery technology. I can say, hey, I was one of the early investors in that company. Part of the reason they were successful, I bought the CEO and he knows me and we're we're friends. And so we do live vicariously through the startups.

02:27:29:05 - 02:27:45:21

DC Palter

And that's kind of part of the reason we, we, we invest in startups and want to be part of that ecosystem. And a lot of us are founders. It's easier to invest in ten startups than doing one of our, our own. And we do want to provide advice. We do want to work with the founders. We do want to be mentors.

02:27:45:21 - 02:28:04:12

DC Palter

We do want to be part of the ecosystem. It's not just about writing a check and and hopefully getting a return later. That may be different for most people, but I think most of the angels that I know, and there's a lot my in my, network, we're doing it because we enjoy it, and we want to be helpful and want to give back to the community.

02:28:04:14 - 02:28:08:23

DC Palter

We don't lose money at it, but we do want to help the company succeed.

02:28:09:00 - 02:28:23:20

Christian Soschner

And I think it's a good attitude. When you see someone with a great idea, help them invest. Yeah, become a business angel, but with the right expectation. That's, Yeah. This is not a fast track to a windfall. Profits, right?

02:28:23:22 - 02:28:25:14

DC Palter

Yep.

02:28:25:16 - 02:28:31:02

Christian Soschner

Jesse, thank you very much for sharing your insights. It's of course, thank you for talking to you.

02:28:31:04 - 02:28:38:24

DC Palter

And a wonderful time talking with you. Time is is really gone by quickly. And, really appreciate you having me, on your channel.

02:28:39:01 - 02:28:43:03

Christian Soschner

Sure. Let's revisit, in one year or when your next novel is coming out.

02:28:43:03 - 02:28:43:23

DC Palter

That sounds good.

02:28:44:00 - 02:28:51:15

Christian Soschner

Ever happened? Sergio, thank you very much for sharing your knowledge on coast. And, have a great, great week ahead.

02:28:51:16 - 02:28:53:03

DC Palter

You too. Take care.

02:28:53:06 - 02:28:55:08

Christian Soschner

Thank you. See you soon. Bye bye.

02:28:55:10 - 02:28:55:17

DC Palter

Bye.

02:28:55:22 - 02:29:17:09

DC Palter

Startups aren't just about ideas, they are about grit strategy. And so think billion dollar challenges. In this episode, DC parks shared the raw realities of angel investing in the art of crafting a pitch that instills confidence and why hard tech and camera tech demand extraordinary perseverance.

02:29:17:09 - 02:29:23:09

DC Palter

The problem is clear investors seek returns, but startups often face years of uncertainty.

02:29:23:11 - 02:29:35:20

DC Palter

It's a daunting journey, but as we learned today, with the right team, scrappy strategies and storytelling that eliminates doubt, success is not only possible, it's inevitable.

02:29:35:20 - 02:29:50:05

DC Palter

Whether it's navigating the pit of hell in finding or redefining energy solutions through groundbreaking battery technology, this conversation has been about unlocking potential and overcoming obstacles to create lasting impact.

02:29:50:09 - 02:30:07:11

DC Palter

If this episode resonated. Help us grow by liking, commenting and sharing. Your support attracts visionary speakers and ensures we continue delivering free, insightful content for ambitious CEOs, investors, and changemakers like you.

02:30:07:11 - 02:30:22:06

DC Palter

Remember, innovation isn't just about technology. It's about the human stories and determination behind it. Stay inspired. Stay connected and we will see you in the next episode of the podcast.