Jeffery: Welcome to the supporters fund asking investor I’m your host Jeffrey Potvin and let’s please welcome Martin Tobias managing partner of incisive ventures as our investor today. Welcome, Martin. Pleasure having you join us.

Martin: Hi. Thanks for having me. I’m excited to talk investing.

Jeffery: I love it. Well, we’re excited to have you here today because, one, you’ve got an incredible background into. I’ve listened to a lot of your content and there’s so much valuable things that you share just around how startup environment works, how startups should look at investing or getting investors. So there’s a lot of great material and there’s a bunch of things we want to dive into, which is some of the articles you’ve written over the past. And one in particular, which is the 59 things you’ve learned in 59 years. And so I’m excited to throw that out there too, because there’s a lot of startup excitement that we can dive into some of the pieces you talk about. So the way we like to start our show is we want to dive into your background so we can drive right back. We’ll unpack all of this. But if you could share a little bit about yourself all the way through, even the age groups that you’ve done a lot of great things. So you can talk about the Angel group, you created all of these things and then one thing about you that nobody would know.

Martin: Okay, super. Well, we can go all the way back. I’ve been a guy that’s been sort of an entrepreneur. My whole life. I remember my first entrepreneurial thing. I was six years old, and I was obsessing about buying this radio that looked like a satellite or something. And it was on a keychain and it costs like $36. My parents are like, We’re not buying you a $36 fucking radio. And I’m like, Well, how do I get this radio? And they’re like, Well, you have to earn some money. And I’m like, How do I earn money? And so they’re like, You could do a Kool-Aid stand. So I did a Kool-Aid stand out in front of my house when I was six years old because I wanted this fucking radio thing. I ended up making like $150. And then I had this extra money and I had to decide what to do with it. So I got the bug of, you know, wanting something, working hard to get it, and then, you know, figuring out capital allocation of excess profits at six years old. So I’ve been an entrepreneur interested in starting new things and making money, you know, sort of forever in college at Oregon State University, I was the CFO of the student government. And one of the things I did is change our treasury thing so that we got a better return on our investments. And I did a little a small micro VC fund where we funded a couple of student ventures, its first time they’d ever done it. So I’ve loved investing in people and doing ventures to support entrepreneurs. For a long time. I went out of college, I went to Microsoft and was there before the IPO and that was a really great venture funded story there. And I sort of understood or learned about the venture capital by talking to the people at Microsoft. Then when I left Microsoft, I started my first company called Cloud AI Technologies, and it was a streaming media service provider. It was kind of in the beginning of the whole dot com boom. And, you know, it was three years from starting to IPO. And we were in fact the last IPO of the dot com boom. We went public in March 17th of the dotcom boom. The end of the dot com boom was March 20th. What I learned about bubbles was it’s always better to be inside of one than outside of one. So we were able to get our IPO done before the bubble burst and that also taught me that, you know, a lot of this thing about starting companies is about timing and getting lucky about the time that you’re in and understanding the phase of the market that you’re in and, you know, making the right decisions based on the stage. After that, I started full time as an investor. I was a venture partner at Ignition Partners and that was we were the first investors in DocuSign and DocuSign is kind of the quintessential essential software company that I’m trying to find to invest in now, which I say is technology companies that reduce friction at scale. And if you think about what DocuSign did, being able to sign documents on your phone instead of printing something out and faxing it, millions of people sign documents every day. That’s the scale and the technology enabled you to do that thing that you would need to do, you know, an order of magnitude better. Ten next, better. And that’s kind of the promise of technology has been for a long time, is to make our lives better and more efficient. And, you know, DocuSign is an example of that. And I’ve been trying to find more of those kinds of companies. So I started investing really full time at ignition. I’ve kind of gone back and forth. I’ve been a limited partner in venture funds too. I’m currently a limited partner in 17 venture funds. The first venture fund I ever invested in when I was at Microsoft was Ron Conway’s Silicon Valley Angels. And, you know, he went around Silicon Valley in the late nineties with a shotgun, investing in everybody he could, and he invested in these two guys named Larry and Sergey that ended up being Google. And that venture fund distributed some Google shares at the IPO to limited partners, including me. Some of those IPO shares I still own. So my cost basis on Google is like $0.50 and I’m never selling those shares. First of all, I don’t want to pay the capital gains tax. But second of all, to remind myself of the power of getting in early on some of these potentially transformative companies, it can be really life changing for the investors for the employees in the companies, for the customers. Frankly, the reason Google was so successful is that at the time when they went public, people forget this. They were like, it’s like the IPO. But what happened is that when people went to Yahoo! And did a search and went to Google and did a search, the results in Google were ten X better and people stopped searching on Yahoo! Like immediately when they discovered Google because Google was in fact ten X better than Yahoo! And there were technical reasons for that. But that’s the kind of value you have to deliver to really, you know, make people change at scale and Google has been able to, you know, maintain that innovation over decades now. So that’s kind of a long winded way of how I started investing, started being a CEO basically about three years ago, I started investing myself as incisive ventures. I have about a $2 Million a year allocation to write checks into companies myself. And I started doing that and a bunch of my friends said, We’d like what you’re investing in. Could you please start a venture fund to let us invest with you? And I started my first fund three years ago and I’m on my second fund now. I’m writing $250,000 checks into pre-seed software companies looking for companies like DocuSign. I say that reduce friction at scale and it’s been going very well and I really love working with entrepreneurs and starting new things, something you would not know about me. I am a super nerd and I fall down rabbit holes all the time. I think that’s a good quality for a a an investor because you want to go down the rabbit holes of whatever the CEOs are building. But one of the rabbit holes I fell down before I started in Space Adventures was longevity, and I invested in this company called Bulletproof Coffee, which is run by Dave Asprey, and he wanted to spin out a longevity clinic business called Upgrade Labs and asked me to run it for him. I knew nothing about health care, but I fell down the health care rat hole and I am 59 years old. But my biological age, as measured by things like your telomeres and your epigenetic clock, is 39 years old. So biologically I’m 20 years younger than I am in my chronological age. I’m super excited about that.

Jeffery: That’s actually pretty fascinating to to learn about that. You can put an age to where your body sits versus where you are on paper. I guess to put it in more layman’s terms and that you can kind of figure that out based off of could be biometrics of energy, a lot of different things that would tie in to this, the types of foods you’re eating that are kind of helping you regenerate instead of breaking down cells. So there’s a lot of cool things that come out of that. I’ve been following this one gentleman. It’s been, I guess, 20 years just spent gobs of money trying to figure out how can I break the code of of staying young. So it’s kind of fascinating that we all have something in our mind that says, hey, you know, maybe they say life is long, but really, maybe it’s not that long and maybe I can find different ways to make it better throughout my journey. And that could be through food and exercise and many other things. But, you know, it sounds pretty fascinating.

Martin: I’m super fascinated by it. And not just because I’m getting to an age where it’s a little more concerning for that, but it’s mostly because our entire medical system, what I learned running upgrade labs, our entire medical system was designed for acute care. And it’s really good at that. You break your arm, we got a guy who can fix your arm, right? And we’ve done such a good job at acute care that what most people die of today is not acute injuries, it’s lifestyle diseases. The top four killers are cardiac disease, Alzheimer’s, diabetes and one other thing, but they’re all relate. They’re all systemic and lifestyle choices. Diabetes is a lifestyle choice. You eat a bunch of sugar, you’re going to get diabetes. There’s certain amount of it that’s genetic, but most of it is to do with your lifestyle. So the problem we have in health care now is not the acute thing. Like you get cancer, you know, we don’t know how to solve it. We know how to solve it. We know how to cut out most cancers. The problem is we don’t know how to prevent cancer. And I think what I hope for our health care system is that over the next 20 years, we start to understand what keeps you healthy. And most doctors today, they have absolutely no idea what keeps you healthy. They might have an idea how to fix you if you break, but the general health care system is do whatever the fuck you want and we’ll try to fix you when you break. It is much better with as with many things like car maintenance to do your maintenance and to know whether your device is working is incorrect working order and has all of the parts that that are working correctly and doesn’t have wear and tear in the right places because that will prevent failures more than trying to deal with failures after they happen. I’m really excited about a lot of companies that are pushing that envelope back to how do we understand what health is and how do we quantifiably keep people healthy. It doesn’t mean they’re not going to ever get sick. It just means that we know they’re healthy versus right now, the definition of health is the absence of disease. And that’s not a very good definition of health.

Jeffery: Completely agree with that. There’s a really good book that’s worth checking out. It’s a little older, but it’s Chasing Life by Sanjeev Gupta, and he researches all over the world all these different ways that people have found a way to build longevity into their livelihood. And some of them were, you know, swimmers, people that would look for or deep dive down for pearls in I think it’s in Taiwan. And it would go down 20, 30, 40 meters. And they found that the diet and the way these people operated and because of the pressure changes, they were 80 years old, still being able to swim down to super deep water and their average lifespan was 103. So way different than the rest of the world. And they’re like, wow, we should investigate this. So it’s a really good book. On putting measures in. I’ll probably have to fact check some of these because it’s been a while and hopefully that’s the correct remember that I have of those details, but still fascinating and, you know, I think I’m going to peel back to maybe back to your youth and talk a little bit about the the lemonade stand where you had over succeeded. You’re in the eyes of buying one radio and could eventually buy for radio. So I guess with your your surplus that you made on that and it’s what I find fascinating about is that you remember the story because it was so prevalent in your mind, even at six years old, of what you went through to do that. And in my head, I started to think of all these things I was doing from digging worms and selling them to, you know, you name it, bottle running out of collecting beer bottles in the bush I was coming up with what were the things that I was doing as well that kind of matched that. But there was this learning that you gain from that. And maybe it was the hustle, maybe it was getting out of your comfort zone. And then that kind of propelled you into your university days where again, you started more entrepreneur things along that journey. Are there a couple of things that really stood out to you that when you got to the end of university, you said, Hey, this is really who I am? I learned this journey quite a bit and it was that I had these five things that really stood behind me to make me an entrepreneur versus going to work for a corporation. Is there something in there kind of Drew you to it? Was it family? Was it the desire to be enlist, making money? Like, what were those things that really drove you in that space?

Martin: Well, what really drove me, so I was a double major in computer science and business, and I was interested in computer science. I had a lot of friends that were doing computer science for the pure computer technology challenges, other guys writing device drivers for keyboards and, you know, in the guts of making computers work. And I was like, I’m not interested in that. What I did is I built a program in Excel at the time, or maybe it was Lotus, I was Lotus that was a spreadsheet that helped me trade stocks. I’m like, I’m going to use technology to solve business problems. I want to make more money. I want to, you know, do something with the technology that helps my life, not just technology for technology purposes. And so when I graduated with that degree, I wasn’t technical enough to go to work as a programmer for Microsoft off right, you know, in the deep tech stuff. So and I wasn’t business enough to go to work for Procter and Gamble or one of those other sort of big general business things. So where I ended up going actually was Andersen Consulting, which was doing applying technology to solve business problems. And they had a good training program. And I did go to work for the big company. But the reason I did initially is that I said, you know, I’m going to learn so much more, you know, working for one of these companies and I’ll work for different clients. At Andersen, we worked at like different, different clients. And eventually what happens at Andersen is that one of your clients ends up hiring you. And I said, That’s the path I want to go because I want to work for somebody else or work for myself. But I want to get trained on how to do that. And so that’s why I went to Andersen Consulting. And in the end, I was there for four years, but I worked for a year and a half for Microsoft at Andersen Consulting, and then Microsoft hired me, and that was going into a startup. So the my journey was to a big company that had a good training program for a young person. Andersen then to a startup, which Microsoft at the time was a startup. Before the IPO, I made a giant pile of money at Microsoft, and then I left and started my own company, and I got enough money from working at the startup of Microsoft to start my own company and start my entrepreneurial journey. After that, you’re typically not going to make enough money to start your own entrepreneurial journey. Working at a big company, you have to go likely to a startup that is in its growth phases and hopefully you get lucky and work at one that ends up working. I got lucky, or maybe I was smart, but I was at Microsoft at the right time.

Jeffery: Which is really cool because again, being able to be part of that environment is obviously amazing for obviously lots of stories throughout the years. Big fan back then as well, just learning that journey. But one of the things that really caught my attention to what you shared is that there was a learning module like you were there to learn. And one of my questions that I was excited to kind of ask you was, Do you believe that it makes sense for someone coming out of school that they should go and take a corporate experience? You went right into consulting, which gives you such a vast idea of where are the business problems are. So it kind of allows you to hone in your skillset over time because you start to find areas that interest you more. And I think one of your other things that you talk about is that go which, you know, like do the things that you know, go to the spots that you’re good at. So is that something that you would say, you know, to students out there, don’t go create a job, create a business, jump into something that interests you because you’re going to get that corporate experience that you may not get If you don’t try it then Or do you say go out and just explore the world and try building something and see what happens?

Martin: As an investor, I find it very difficult to invest in incredibly young entrepreneurs, maybe right out of college that have no business experience at all. I frankly find it hard because I’ve found that to be very a very challenging model to make work. I tend to like it. Maybe it’s because it was my path, but I think young people need to get some experience working at another company, whether that’s a big company with a training program like an Addison Consulting or a fast growing startup, like a microsoft or like, you know, some new startup today, I think before you start something, you need to have worked somewhere else to understand what the business world is really like, but also to get some insight. I mean, you know, let’s say I talked to this guy who was writing software for the rental industry, equipment rental industry, and he was like, you know, I built all this software and it works amazing. And I built it as a college project. And I said, okay, well, how do you know what the rental industry, how it works? How do you know? You know, the companies that run it, what their business models are, what their margins are, what they care about, what’s important, what their problems are? And he’s like, Well, I don’t I just built this software and they’re buying it. And I’m like, That’s not that great, because you I don’t think you really understand your customer, the kind of entrepreneurs that tend to be really successful in my mind and in my experience are people who have worked in a particular industry for a big company or a startup. They have tried to solve problems in the big company organization or in the startup organization, and they have failed or they have found their organizations they’re working for was failing to solve the problem in the correct way. And they got so frustrated that the big company was doing was fucking up that they left with their insight and started something to do it the right way. That tends to be a good insight with connections and some experience to just start something it is not is great to just come up with an idea in a business class, a college, and, you know, try to build it without a lot of market context. I frankly have found that model to not be that successful.

Jeffery: And it kind of makes sense that you’re going to run into a lot of pitfalls. There are a lot of things that can occur in an early stage business. And if you’re a first time young founder, he may have a lot more drive, but you may lack the ability to figure out how to get around the corner or to get over that wall that’s in front of you. And those things can jump up at any time.

Martin: Yeah, And what I’m talking about is for B2B software companies, there are plenty of entrepreneurial things you can start on your own where you don’t need a ton of experience. If you want to start a car wash business, if you want to start an HVAC business, you’ve got to start a contracting like there’s hundreds of small businesses that people can start without a lot of experience and without a lot of capital that can be profitable lifestyle businesses. This is not what I’m talking about. What I’m talking about is if you want to start something that could potentially be a doc, you sign a Google or a microsoft, you know, a transformative technology company, it is always better to start that from a foundation of market knowledge. Hope that you gained, you know, working in the industry and then you come up with some particular insight of how you think you can operate that business better. And then you attract investors and you go try to do that.

Jeffery: No, I love that. Now, through this kind of portion of when you move through Microsoft and jumped into a couple of businesses that you created, I’m how did you find at that time the landscape around raising funds? Has it shifted a lot from then? The way it is today? Are people a lot more interested in these tech businesses that you’re talking about than they were then? Because back then maybe there was the fear of the Internet’s not going to work. This thing doesn’t make sense. Or and today everybody’s just sprinkling money around like it’s on a firehose. So is there a bit of a change or do you see there’s going to be a bigger change happening?

Martin: Well, there’s there’s definitely cycles in all of these businesses. And I would not say we’re in a firehose of money phase right now that stopped in November of last year. We are in a trickle of money right now, but it will come back. And when I went to raise money for my first company, Cloud Technologies, I was a limited partner in a venture fund in Seattle. And so I knew of venture capitalist. I called him, you know, he gave me a term sheet in like 5 minutes. So I had kind of an easy way to do it. I already knew him. He knew me. We had a relationship. It was fairly easy. But at the time in Seattle, there were maybe four or five venture funds in Seattle. And I don’t know the total number of dollars that were deployed in then that would have been 96 or 97. But it was an order of magnitude less than it is today. And today there’s probably 40 or 50 venture capitalist in Seattle that are deploying 10 to 20 times more money. So there is an order of magnitude more money available for startups today than there was back then. But there was enough back then and there is enough today. The what’s changed is basically in November of last year and these things go in cycles. I was in a positive cycle before the dot com boom. I was, you know, at the beginning of it. And I realize now that I was lucky to be at the beginning of it. If I had tried to start my company at the end of it, like in 2008 or like in 2020 or in 2002 or 2001, it would have been a lot harder to raise money because things were in lockdown then after the bubble burst. So I didn’t know it at the time, but I was at the beginning of a bubble and the bubble turned out. I turned out to benefit from from that bubble. That bubble burst. But, you know, still some very transformative companies got started and made it through that bubble like Amazon, Google, all these companies that we know today. And we had a contraction in 2008, but basically in November of last year, we ended basically a 12 year bull market for venture capital. There was an amazing time even which surprised a lot of people during the pandemic. We had about a one quarter pause of venture investing during the pandemic, and then it was off to the races again. And we had, you know, 2020 and 2021 and 2022 were some of the best markets in 2022. I think there were a thousand unicorns created like two every day or something like that. It was a crazy time for deploying capital in venture capital and all of that has stopped today. And we are, you know, public market valuations of SAS software companies are down 80%. Private market valuations are down about 80%. The public markets have come back in the last couple of months. The private markets have not yet come back. We are in a trance position every time in venture capital, but we’re also personally, I believe, in an amazing time. If you look at historically, every venture funds that started investing in companies after a crash, if you look at the companies that were the venture firms that were started in 2001 and two after the crash of 2000 venture firms that were starting 2009, after the crash of 2008, those venture vintage venture funds tend to be some of the best performing venture funds of all time. And the reason is, is the whole game in venture is buy low, sell high, and after a crash is the low, you want to be buying in the low, not selling in the low. So here we are in, you know, 2023. We had basically a crash in November of last year, 2022, Q1 of 2023 was very low. We’re starting to see a little bit of a recovery. But I believe venture capital firms did start deploying in 2023 and 2024 are going to be very good returning vintages because things are going to return in 2025, 2026. And the companies that are going to benefit are the ones that were started in 2023 and 2024.

Jeffery: Now I like that it and it’s very positive for entrepreneurs to basically get out there and start pushing your venture around, start figuring out what you can do.

Martin: Something right now. Yeah. And you know, you’re going to probably not like the valuations and you’re going to complain that you’re not getting the valuations that people could have gotten two years ago. Well, get over it, raise money and build. What the heck you need to build in the market that you have, not the market you wish you had.

Jeffery: A lot of it is there. There are a couple of things like you’ve taken the company public, you’ve worked inside of startups that went public. Are there maybe four or five things that you would say as a founder of you’re starting a company today, put these down, write them on a piece of paper, put them on the wall, focus on them, because this is going to help you be successful or help you get through the next five years of your business, because it’s really important for them to wrap their head around. And I think the one thing I found from a lot of the things you’ve written is focus. Focus is a big one. Is there other things that you would use to really drive that home for them?

Martin: Yeah, If it’s focus it. Stay focused on what’s in front of you and what you have to execute in the short term. Everybody talks has a long term vision. You know, in five years I want to be this in that. I don’t fucking care what you want to do in five years. I’m giving you money that’s going to last a year or two. So tell me what you’re going to do within the funding window that I’m giving you money for. And this is something that I think a lot of entrepreneurs miss. It’s that they’ve got this big vision, but they don’t do a great job focusing on executing the short term vision because these are all steps, right? If you don’t get steps one done, you don’t get to do step two or three or four. You need to have a very clear step one into and you need to have a very good way to keep track of that. I care more about what companies are going to do in the next 6 to 9 months than I care about what they’re doing to do in three years. And I look at what they said they were going to do six months ago and did they achieve it? I would say if you overdeliver, if you under-promise and overdeliver as an entrepreneur, that’s going to lead to success with investors and with your company. And in general, focus on the near-term milestones and the near-term objectives and stay maniacally focused on those. The long term things will take care of themselves, and in fact, the long term may never come if you don’t do the near-term.

Jeffery: I love that there’s this a great book called World Eight, and it talks to all of these big conglomerates and how like Toyota has the planet ten years out. But they say that this is just basically an idea of how business gets to where it needs to go. But your focus is on now how do we go from now to here? And if you don’t have this ten year vision of the business, which it changes 99% of the time, is that you’ll just run around rap, that you’ll never go to any of these directions you want. Is that a fair assessment?

Martin: It is. And, you know, one of the biggest things that kills startups is trying to do too much unlimited resources. Kind of the definition of a startup is that you’ve got limited resources. Let’s say you raise $1,000,000 in a pre-seed round, you’ve got $1,000,000. That’s it. Like as a CEO you have I think I see a CEO has only one job and that is don’t fucking run out of money. If you run out of money, your company’s dead. Don’t fucking run out of money. There’s only three tools you have to not run out of money. One, you can sell something to get money to. You can cut expenses. Three, you can raise capital. Those are your only tools. People get confused. They’re like, Well, we have to, you know, service all of these customers in all these geographies outside. We have to grow. We have to. Well, the problem is you can get distracted. Most startups fail because they the only reason I start fails is because it runs out of money. That’s the only reason it fails. Why does it run out of money? It doesn’t sell enough or raise enough money to keep running. That’s that’s it. That’s as simple as it gets. And the problem is that most CEOs that fail, they did too much or spent too much money relative to how much revenue they got. They just didn’t get the revenue up in in time. And it’s usually because they’re doing too much. They they spent too much money, they expanded too much ahead of revenue. And that’s why, you know, what I love is companies that are incredibly focused, like I invest in this company called Levels, and they’re doing CGM monitoring. They were in data for three years. They had a constrained waitlist. They end their waitlist end up being like 180,000 people. They the reason they were in beta, they were they’re opening up the waitlist like 500 people a month. The reason they were very slowly building their thing is that they wanted to get they wanted to limit the amount of customers they had on their platform until they got the software to be perfect or to be able to scale. And then until they got their operations, able to handle all the shipping of everything and whatever, and they’re like, as long until we fix the scalability things, we’re not going to open the floodgates. And that was incredibly smart on their part. What many companies do is open the floodgates before they’re ready, before their products are ready, before their operations are ready, before whatever, and then they get flooded with demand. If they’re lucky. But their operations fall apart and customer satisfaction goes down and they’re dead. I personally would rather companies be measured in their investments, like if the levels had opened up their sales operations ahead of time, they would have had to expand their customer service organization, their warehouse organization, the developer. They would have had to jack up their burn rate way ahead of of sales, and it might have killed the company. But as it was, they were able to manage the process much better. I think that’s the real key to startup success is managing your expenses relative to your opportunity and not over investing. That’s what kills every startup overinvesting relative to the revenue potential. Too soon.

Jeffery: I love that. It’s a great case study. That’s what it takes to be an entrepreneur for one too. It’s a great case study on how to be more controlled of your environment and not allowing the outside forces like investors or others to push you into changing what you think is better for your customers and your in your direction going forward. And it sounds like they’ve pulled all the right levers at the right time and they were confident in their own ability and their product to be able to streamline this and come out at the right time and say, okay, we’re going to let these many in now. And they controlled it well enough that it actually helped them scale and grow a real business. That’s incredible. You know, I kind of want to take that and shift this into these 59 items that you’ve learned in your 59 years. And the reason why is because so many of these really tie in that we’re talking about today, really tie in to what you came up in your article with. So I had picked out a couple of these and I just kind of want to touch on a few of them and maybe you can explain some of them as well. There’s one that I wasn’t sure what it was about, and I’m I’m pretty sure you’ll be able to to hit that one up, but I’ll save that one for last. So the my favorite one was how many ships sandwiches are you willing to eat?

Martin: Yeah.

Jeffery: And I love that. It is so true. So I’m going to get you two to just dive into that one real quick on what that represents to a founder and what you mean by that.

Martin: Well, I stole that one from Mark Benson. And the his story is, you know, when he was young, a teenager, or he wanted to be a lead guitarist for somebody like Metallica. And so he had these big concert posters on his wall and he’s like, that’s my dream. I want to stand on stage in front of 300,000 people and play guitar for Metallica. But and so that was his goal. And lots of entrepreneurs have it in state goal that they want to do. But that’s not the important thing. Important thing is not because everybody who plays guitar wants to be Metallica. The question is how many ship sandwiches are you willing to eat along the way to becoming Metallica? Do you like eating this shit sandwiches along the way? Because the shit sandwiches of being a guitarist in a band is You’ve got to go play shitty gigs at some dive bar on the weekend. You’ve got to beg your friends to come to your gigs, you’ve got to practice in your mom’s basement, you’ve got to do a paper route to buy a new fucking guitar. Like these are all the hard things on the way. And if you don’t enjoy the hard things that are on the way to where you want to go, you’re never going to get there.

Jeffery: I love that hair standing up on my arms. That was very, very impactful because it’s so true in anything you do in life, there’s going to be a many, many obstacles. And how many of those are you willing to push your way through to get to where you want to be?

Martin: And you you are much more likely to get to where you want to be if. You enjoy the journey along the way, right? Agreed. I think, you know, I don’t know the guitarist for Metallica, but I bet he was the kind of guy who loved practicing in his garage, who loved inviting his friends. Like all along the way. He just loved being a guitarist. And he got lucky to be a guitarist for Metallica, but he didn’t. I think most people that get very successful, I mean, you look at people, you know, like Bill Gates, okay, he’s very successful as a computer entrepreneur, but he program he was the kind of guy who wouldn’t sleep for three days because he was programing shit, like he loved programing and did it all the time. And frankly, the business skills were after he became, you know, an amazing programmer.

Jeffery: Great. He honed in on those skills. And I think that really does elevate your you to your next game but could use the Malcolm Gladwell 10,000 hour rule but it’s the same idea how much time and effort are you willing to put into something to be the best and then what you’re going to have to go through after that because when you’re the best, everybody wants to take you down. So you’re going to run into a lot of obstacles in that which actually comes up with the next one that I really like, which is obstacles is the way. So it really does decided that no matter there’s no straight line to end goals, there’s always something that’s going to be thrown in front of you and you have to be willing to get around them.

Martin: You do. And that’s the Stoics saying from Marcus Aurelius. And you know, a lot of people will a little more explanation of that is that a lot of people in their lives will complain about obstacles. It’ll be like, you know, my God, this guy is going slow in front of me. I am late for a meeting. That what a fucking asshole. you know, once you switch your mind to understanding that obstacles will come up, that obstacles are not some glitch in the matrix they are part and parcel of your life. Maybe you can be a little more accepting of them. You’re going to be able to deal with life in a much more calm and and meaningful way. If you realize that obstacles are not side things on the path of life, they are the path.

Jeffery: Exactly.

Martin: They will come up. They will come up again. And the way you deal with them is the is determinant of the quality of your life. And if you think that those are separate things that screw up your life, you’re going to have a screwed up life because they’re going to keep coming.

Jeffery: So I love that. And that actually lives up into your next one. And I’m going to whip through these three here. But the next one was, you don’t control the world around you, only how you respond to it, which is exactly what you of got there, which I love. And then the next one was deal with it. Don’t deny it that one another nipping it in the bud and solving your problems right away. Why wait? Why let it foster or fester in the background? It’s only going to make things a thousand times worse. By the time you deal with it. Your brain’s a pattern matching. I love this, especially for investors. That’s really what you’re doing, is you’re matching this whole room and what this person saying, what they’re doing, you’re matching it up to the other 35,000 ventures that you’ve seen in the last ten years and you’re coming out. Is this the one that’s going to be better than the next? Find the flow. And what I love about this one is it’s a great book, which I’ve been reading with, yeah, The Rise of Superman. It’s all about flow. And I love that you talk about flow quite a bit. So this is that was also a great one. And then I think the the last one, which was and you mentioned this again, play it, play to your strengths and we talk about this a little bit earlier. So I think those are my most impactful of your 59 of the list. And then there was one that I just had to ask about. So what is say the time just ask, which was practice the Hudson Bay start. And I didn’t know what that was. I was going to do some research, but I figured I would just ask the question and I’m hoping it’s good.

Martin: yeah. So the Hudson Bay start is the so Hudson Bay was a big trading company out of Europe that I think they were headquartered in Chicago and they were exploring the western United States. And so what they would do is do these huge expeditions where they’d have hundreds of people and thousands of, you know, supplies and, you know, horses and everything. And they’re like, we’re going to go off and explore this area for six months or a year. But what the way they would start is they would get everybody together at the headquarters and they would leave. But They would go like three miles. They wouldn’t go 100 miles. Day one. They would go just a little bit outside of their comfort zone, close enough to where if they forgot anything, they could go back and get something right or Yeah, so so it’s sort of like a trial balloon. So if you’re if you’re going on a big journey, the idea of that is if you’re going on a big journey, take the small step first. Take make your first steps to 3 to 4 steps, small, incremental. That’s how you get going on the journey of a thousand miles starts with one step. Focus on those first steps, Get those first right, Do them slowly, check your resources, make sure your head encompasses working, Make sure your horses are fed. Make sure that you know what you think you’ve brought along. You brought enough along, that kind of thing. Because long journeys are hard and they typically have problems. And if you’re going to have problems, discover them earlier while you’re still close enough to do something about them. That’s the Hudson Bay start.

Jeffery: Well said. I love that. You know what? That’s that should be the motto for a start up. You know, figure out your first few steps and make sure you’ve got enough room that you can figure out, out. Ask the right people to bring in the right information to help you get to your next few steps. But don’t just start don’t.

Martin: Start.

Jeffery: Running. You’re going to miss things. You’re going to drop things and you’re going to cause yourself more problems. I love that. Beautiful. All right. We’re going to jump into our next segment. This was that was brilliant. So the first question I’m going to ask is what was the toughest lesson you’ve learned to date as an investor.

Martin: That your stock price is not actual money in the bank? When I took Lord I technology’s public, I owned a major a material amount of the company. I think my shares were worth over $500. Million on the day of the IPO, the stock was down 97% a year and a half later. Don’t cry for me. I was able to get plenty of money off the table, but the number on your balance sheet is not cash. And it’s and a lot of investors are learning that recently, you know, you’ve seen as we were talking about unicorns earlier, there were something like a thousand unicorns created in 2021. Many of those companies are going to be revalued so investors who are thinking they have X amount of money because the unicorn is worth this amount of money, they’re going to get a rude awakening when that company does a secondary and gets re assigned. It is not money in your bank until it’s money in your bank. That is the biggest lesson of every investor. There’s been a lot of venture capital firms in the last three or four years that are going around talking about their returns, but all their returns are all related to paper markups that are illiquid, that may or may not turn into actual money, do not operate your life. So when my company went public and I had that giant number on my balance sheet, I had a friend that whose company went public. His number was 120 million on his balance sheet. First thing he did is he goes to Miami, he goes to CIBC Oppenheimer. I think he takes out a $20 million margin loan against $220 million. Stocks, goes to Miami, buys a giant place on the beach, gets a bunch of girls boats like he changed his life. He’s like, I’m I have $120 million right year and a half later, his stock’s down 97%. He gets a margin call, he loses his house. But he changed his lifestyle thinking he had the money. That was not, in fact, money in his bank. When my company went public, I did not change my lifestyle. I didn’t buy a new house. I didn’t buy a new car. I didn’t invest in anything. I continued to live the same lifestyle. I’m not as bad as Warren Buffett is living in the same fucking house for 30 years, but it was very similar. I did not change my lifestyle based on a fake number in an investment portfolio.

Jeffery: Now that’s some great advice. Brilliant advice. Okay, we’re going to go into the 62nd rant. The way this works is that you can rant about anything. I’m going to start the clock. You’ve got 60 seconds to go. I will try and rebuttal once and then you can close it off. If that works. If you’re ready to go, I will head signal you that you’ve got 5 seconds left but are on the races. Here we go. Go.

Martin: My biggest rant as a venture capital investor is I hate lawyers and I hate investment bankers. They screw up the capital formation stage. I had a company recently that was trying to raise venture capital money, and an investment banker came and said, Well, I think I can help you raise money. And but what you have to do is keep growing and showing these crazy numbers and investing basically keep your burn really high and I’ll be able to make you money. Well, investment bankers are coin operated. They’re not. In fact, shareholders like venture capitalists are. I’m helping you because I’m already an investor. An investment banker is trying to make a commission just like lawyers. They are never incented to solve a case that you’re in because they get paid by the hour. So people that are getting paid by the hour or paid by commission are fricking leeches on this ecosystem because they don’t add any value at all. They only get paid if something positive happens, which they’re usually not the benefactor or the cause of their they’re more leeches. So I hate investment bankers and lawyers.

Jeffery: That’s a great rant. Now I’m going to say that without bankers and lawyers, you probably wouldn’t even get access to some of these great deals that they I don’t know how or why, but accountants, lawyers and bankers all tend to come up with the best deal flow. They find this deal flow. People go to them because of their profession. So they may be structured incorrectly, but there is some upside because you’re getting maybe getting some of that deal flow. And is it worth getting that deal flow If you can go in and change the mindset of that entrepreneur to save their business before they dive too deep.

Martin: They’re necessary evils in the system.

Jeffery: I love it. Well said. I do find they do get some crazy deal flow and I’m always trying to figure that out. But at the same time I do agree because they both go because.

Martin: Everybody needs a lawyer to do certain things, but that lawyers are a tax on the ecosystem. They do not create anything. They tax the ecosystem. And they they, I think, unfairly and unduly tax the ecosystem. But because they are a mandatory tax on the ecosystem, they do see a lot that is going on in the ecosystem and are involved in a lot of things which they think is value, but it’s not value. They are like, I can’t a lawyer’s idea of adding value is spending more time basically billing you more money to write a complicated, more complicated contract than you actually need. That’s their idea of adding value, which the incentives are just in the wrong place. The right way to add value is to, you know, help a CEO close a business deal. A lawyer has never helped a CEO close a business deal. In fact, more lawyers have prevented business deals from being closed because they add too many belt and suspenders, too many disclosures, too many contractual things that kill lawyers have killed more business deals than they have ever created. In my mind.

Jeffery: Sounds like a great entrepreneurial venture to help fix this. So I agree. There’s a line that needs to be created and maybe it’s been blinded over the last few years. So. All right. We’re going to switch over to our next segment, which is rapid fire questions around the investment side. So coming from you as an investor, I’d like you to pick one or the other on what better represents you as an investor. So first question, founder or co-founder,

Martin: Founder,

Jeffery: Unicorn or a four year ten X exit,

Martin: Unicorn

Jeffery: Tech or CPG

Martin: Tech,

Jeffery: NFT or Web 3.0?

Martin: Neither.

Jeffery: Okay, I heard blockchain a first time founder or second third time founder.

Martin: Second, third time.

Jeffery: First money in or series A.

Martin: First money in.

Jeffery: Angel or VC.

Martin: VC.

Jeffery: Board seat or Observer.

Martin: Observer.

Jeffery: Safe or convertible note.

Martin: Convertible note

Jeffery: Lead Or follow

Martin: Follow

Jeffery: Number of in company number of companies invested per year.

Martin: 12

Jeffery: Awesome favorite part of investing.

Martin: Helping CEO is figure out product market fit.

Jeffery: Verticals to focus.

Martin: Health care, real estate tech supply chain fintech.

Jeffery: Okay two qualities for a startup to stand out to you.

Martin: Amazing founder market fit and some distribution trick to get your product into the market.

Jeffery: Like that. What is nine pieces of it? Nine out of ten times a piece of advice you give?

Martin: The founders raised more money than you think.

Jeffery: Do you have a philosophy or rules that you stand behind?

Martin: Yeah, I tend to try to follow the stoic philosophy, which is which you see in some of my learnings. The obstacle is the way you focus on what you can control or focus on your reaction, not other people’s opinions. It’s worked very well.

Jeffery: I love that self-management, it really does, does show and it does help. I agree. Who is your hero, mentor and why?

Martin: I’m not sure I have a mentor. I think my my heroes are the entrepreneurs who have eaten a lot of shit sandwiches and made it work. Guys like Bill Gates, Elon Musk.

Jeffery: Yeah. Okay. What is your biggest fear or phobia in the business startup ecosystem.

Martin: Besides lawyers fear or phobia? I don’t really have a greatest fear, but something I worry about which has reared its head a little bit more recently is an increase in the number of bad actors you might have seen in the press recently. A a company CEO did raise three and a half million dollars and he basically stole it all and went to the fucking Bahamas. I’ve had two companies in my portfolio closed because of CEO fraud and basically lying about their numbers. And you know, this is a very trust based business. We’re deploying our capital based on a lot of trust, and I’m seeing a few more people in the industry violate that trust. And I’m worried that that is a trend that might continue. You always have a certain amount of bad apples in in any ecosystem, but I’ve seen more than I’m comfortable with recently.

Jeffery: Well shared greed. What line do you find you share to investors over and over.

Martin: To investors or CEOs or.

Jeffery: Investors? Investors?

Martin: What line do I share to investors? I don’t think I have one that I share a lot. I do repeat ad nauseum that precede where I invest first. Institutional check is very different from the rest of VCs. We’re not Tiger Global. That’s bowling in to the series C or D pre IPO. We’re not a series A, There are different stages to the growth of venture capital, and the job of the venture capitalist at each stage is quite different. And I tell other investors that are investing in venture capital firms or looking at venture capital as an asset class, that they need to understand that the job of a VC and PRE-SEED is very different from the job of the VC in the series A or the Series C. I repeat that over and over again. A lot of times big limited partners will think venture capital is one homogeneous asset class and it’s not well shared.

Jeffery: What is your worst investment? My worst. You don’t have to name names. You don’t have to name names. Just more of what was the thing you learned from it the most in that worse investment?

Martin: Well, I don’t know if my worst investment is the ones that didn’t work out or the ones I think my worst investments are the ones that where where the CEOs ended up being dishonest and I ended up getting duped by somebody who was lying to me. Those are the ones that hurt the most. You know, investments where I, you know, made the best I could with the information that I can. And then it just didn’t work out. I never regret those because everybody’s working in the best interest. The ones that I feel the worst about are the ones where I got duped. And if you make enough investments, you’re going to get duped. And those feel the worst.

Jeffery: I second that second that, okay, we’re going to we’re going to jump into the personal side now. Same idea. Pick the one that fits best for you. Book or movie book. Superman or Batman.

Martin: Superman

Jeffery: Fortune Cookie or birthday cake.

Martin: Fortune cookie.

Jeffery: Most famous person that pops in your mind.

Martin: Marcus Aurelius

Jeffery: First Brand that pops in your Mind.

Martin: Microsoft

Jeffery: 5 minutes of Bezos or Oprah,

Martin: Bezos

Jeffery: Mountain or Beach

Martin: Beach

Jeffery: Bike or run.

Martin: Bike.

Jeffery: Big Mac or Chicken McNuggets.

Martin: Neither.

Jeffery: Trophy your money.

Martin: Money.

Jeffery: Beer or wine.

Martin: Neither

Jeffery: TED Talk or book reading.

Martin: TEDTalk.

Jeffery: Tik Tok or Instagram.

Martin: Instagram.

Jeffery: Facebook or LinkedIn.

Martin: LinkedIn.

Jeffery: Favorite movie and what character would you play?

Martin: Casablanca. And of course, the guy.

Jeffery: Great movie, but a long time favorite book.

Martin: Business book is Thinking in Bets by Annie Duke.

Jeffery: Favorite sports team.

Martin: Don’t have one. Don’t follow sports.

Jeffery: I’m going to check out that. Thinking of bets. I keep hearing it. I got to jump into it. I know about it. Just haven’t read it.

Martin: It’s amazing.

Jeffery: Is there any any areas that you read up a lot on or areas you go to, podcasts that you listen to, the you or areas of interest that you can share?

Martin: As we start off in this, I’m a big fan of the health and wellness stuff and I really enjoyed Peter Attias podcast as well as Andrew Huberman podcast. Those are two probably the best ones that are giving really, really good health and wellness advice at scale.

Jeffery: Okay, we’re almost there. What’s the meaning of success to you?

Martin: The meaning of success. I actually just posted something about it this morning. A quote from Seneca is to be happy with what you have to success is when you’re happy with what you have and you do not want more than you have. It doesn’t mean you can’t be ambitious. Seneca was probably the richest man in the world at the time when he said this, and he said, The only thing you can control is what you, you, you can’t. Nobody can get everything they want, but anyone can control and limit what they want. The key to a successful life is to not want what you don’t have.

Jeffery: Well said.

Martin: And Andrew Rockefeller talked about it too. He said, If you can be happy having $10, that’s wealth. You’re wealthy with ten. If you’re happy with $10, you’re wealthy. If you require $100 million to be happy and then, you know, you’re not going to feel like you’re wealthy, tell you $100 million, that’s your decision, John. But it is not you know, it does not mean that $100 million is wealthy and $10 million $10 is not the wealthy person is the one who doesn’t want more money than they have. That is true wealth.

Jeffery: Like it. What is your superpower?

Martin: I don’t know that that is a good question. I’m still trying to figure that out.

Jeffery: Well, I’m going to say, from the things that I’ve read or the things that I’ve observed, I would say that you’re very good at being direct and sharing exactly how it is, and you don’t have to hold anything back. But experience shows. I think that’s obviously a good skill set to have. I’m sure there’s many more focus and all of those things elements all tie together. So I’m going to say your experience shows that sleeve. So you’re you’re not afraid to let it out there. So that’s good.

Martin: I appreciate that. I’ll take it.

Jeffery: Well, we like to we like to say thank you very much for joining us. This has been fantastic. Martin learned a ton. Wrote Amelia. I could write a book now, but you have so much great content, great things to share that love, all of it. And the way we kind of like to end our show is that we want to give you the last word. So anything that you want to share to the investor community, to the startup community, I turn it over to you to share. Please also share how people can get a hold of you. And again, thank you very much for being on the show and sharing all this valuable information.

Martin: Yeah, thank you for having me and it’s been fun. I got to talk about some stories I usually don’t talk about. Like my Kool-Aid Stan story. I you know, investors and founders in in start ups are in this low probability matching game. And I say no, 99% of the time. Founders here know 99% of the time. The number one thing that will help in a low probability matching game is increase on each side. That’s why I love doing things like this, because I tell people exactly what I’m looking for. If that’s what they have, it’s easier for them to find me. And I would encourage CEOs and investors both to communicate more about what they’re building, what they like to invest in, so that we can solve this matching game faster And so and save everybody a bunch of time. I want to invest in founders that I have a huge amount of confidence in. I want to find people to partner with for ten years to build something great. And I know that CEOs want to find real partners, not just people who write checks. So I would encourage everyone to communicate a little bit more about what they’re building and what their interests are so that we can solve this low probability matching game much better. That’s why I started writing a lot more about my thoughts on investing on Twitter. You can follow me there at Martin G. Tobias. And, you know, don’t take my word as the gospel for everything to do with startups has only to do with me. If you want to pitch me, I tell you exactly what I’m interested in. I may not be the right person for you to pitch. If you don’t have that, you should go find the person whose wants exactly what you have. That’s why I communicate things on Twitter, not to tell people what kind of company they should have, but to tell them if they want to pitch me. This is what you need to have because I’m trying to solve this probability matching game.

Jeffery: I love it. Well shared. And again, thank you very much for your time today.

Martin: MARTIN All right. Thank you.

Jeffery: Okay. Just going to do my exit, working on this new software. So hopefully this all works so well, but fantastic that he wrote those 59 pieces of 59 years. I think they were all great and glad that we were able to jump into some. And just to reiterate, you don’t control the world around you, only how you respond to it. Find the flow obstacles is the way, deal with it or deal with it. Don’t deny it. Brains Pattern matching play to your strengths and we should. Sandwiches. Are you willing to eat and then practice the Hudson based art? I love that they’re all fantastic. Take your time. Go at it. Be precise. Find the flow. Focus. Find where you can scale. Timing makes a big difference, of course, in this world and what you’re working on. And if you’re just starting out as a founder, you know, you mentioned to get into a good training program, going somewhere where you’re going to learn a lot, those are all going to be big and beneficial to you. Market knowledge is going to be, you know, it’s going to be game for that as well. And then when you’re working on that first to months of your business, you know, did you achieve what you said you would? You know, don’t run out of money. There’s only three ways to kind of build your business around that. You got to sell something, cut expenses or raise more money. So keep these things in mind when you’re building out your companies. And, you know, I think there’s a lot of great value in that. So thank you for joining us today. If you enjoy this conversation, please feel free to share with your friends. Subscribe to our YouTube channel or please follow us on Spotify, Google and or Apple. Feel free to share an audio or video clip around our show. We may include it in one of our future podcasts. You can find us on social platforms, including LinkedIn supporters Fund. Your support and comments are truly appreciated. Please visit us at Support S1 E-commerce Startup Events at Open People Network. Thank you and have a fantastic day.