"You can be the best in anything you choose. It's just putting the time in to learn and make your mistakes so that you can keep growing."
Mike Jarmuz on learning from small investments
Angel Investor, Mike Jarmuz, recalled his humble start handling a record label in high school while living in Tucson, Arizona. Taking advantage of his experience as a first employee in a company, he eventually learned what it takes to be in a startup. Fast forward, he now has over 1200 companies under his belt.
He attributes his success to his persistence in various industries, like bitcoin, healthcare technology, and the entertainment industry. He also views failures as a way to learn.
He also shared his investment process and provided interesting analogies between Angel Investing, gambling, and record labels.
I’m a solo Angel Investor and just started building out Lightning ⚡️ Ventures (a syndicate and fund exclusively dedicated to investing in Bitcoin companies with the goal of supporting Lightning Network adoption worldwide. I’m an early Bitcoiner and a jack of all trades sort of fella. I still own a small cafe on the Lower East Side (Flowers Cafe) and still maintain a NY Real Estate Broker’s license. My partner Tone Vays and I have an annual Bitcoin conference (Unconfiscatable) in Las Vegas and that keeps us pretty busy for part of the year. I’m also lucky to be advising and working with an incredible company called Azteco.
I’m a very active investor (1000+ companies) and am creating a dataset and investment strategy I have appropriately titled “Piking.” No royal pedigree or ivy league education for me, ended up on a different path.
I’m a music business veteran with 10+ years in various areas of the industry. Boutique independent concert promoter in multiple southwest US markets. Owned, operated and worked with countless indie record labels over the years developing artists. Partner of Boxcar Music Management (The Format) on Elektra/WEA. Co-Founder of AMJ Concerts. Previous Partner at CAP Concerts (Corey Adams Presents) & The World Famous NILE THEATRE (Mesa, AZ). Former General Manager and Booking Agent for Modified Arts Venue & Gallery (Phoenix, AZ).
I am a lifelong entrepreneur with over 20 years of experience in a broad range of industries. Lover of all small businesses! I have personally owned a retail clothing store, flower shop, bar, cafe, and, music venue. I also have related experience in healthcare technology, event management, ticketing, nightlife, venue/theatre operations, talent buying, concert & music production, sound engineering, lighting design, catering, travel, tour management, e-commerce, screen-printing, merchandising, real estate, transportation, grassroots marketing, personal finance, marketing, and business consulting.
The full #OPNAskAnAngel talk
Mike: not even close but it was good though. I had never heard of that one before.
Jeffery: Well, I was going with the Spanish touch.
Mike: I grew up in Arizona. i was hormoz quite a bit, but my friends call me Muzz.
Jeffery: Muzz, I love it. and Jarmuz is obviously a great name too. so it sounds like you could have a spanish discotheque band behind this. and i’m sure there’s something in there. and then we’re gonna dive into that. But again Mike, thank you very much for joining us today. I’m gonna say that of all of the investors I’ve talked to in my lifetime, you’re the one that I’ve had the most excitement to dive into because you’ve done some crazy amount of investing and done a lot of great things. so i’m excited to explore this today. So maybe the best way for us to start is to learn a little bit more about ourselves. so maybe you can share a little bit about your background. kind of where you’re sitting today, what you’re looking at doing in the future and then one thing about you that nobody would know.
Mike: sure. so i’m from Arizona and i grew up in just a regular middle class family. I was in the music business for a long time. That was my primary focus. I had a record label in high school. We ran a really cool punk rock venue. We did 35 concerts a month in Phoenix, Tucson and Albuquerque. We grew that to be a rather large business. I started managing a band. they were called “The Format.” We got a big major label deal with Elektra when we were in our early 20s and toured with them for many years. I toured with some other bands as well. and when that came to a close, i did some soul searching. I went to Mississippi. I lived on a plantation farm at this mystical place called the Crossroads. It’s a famous place, home of the blues here in the US. and Shortly after that, I moved to New York City where I started all over again, not working in music. and pretty much, i drove a taxi and i made a life for myself there in New York. Basically starting over, I got into real estate. I got very lucky with a healthcare tech company. I was the first employee and watched this one single owner build that company from zero to selling it for 450 million dollars to Blue Cross Blue Shield of Michigan. and then I was an early employee with him again at his next company. He said, i was his rabbit’s foot. i guess because clearly I don’t have the MBA or PhD or clinical knowledge, but I supported him and he just sold that again. So now I’m unemployed and officially focused on angel investing full-time. I started in 2015 on the secondary markets, just participating. I didn’t want to lose all my money. I wasn’t quite as cavalier and skillful as yourself to make those decisions. it was very important to me to not lose all my money and then just put a lot in my own personal education. and eventually started investing in early stage companies. and now that’s really what i’m focused on. And I think one thing that most people don’t know about me that I’m just now starting to embrace is that I did not finish high school. I have an 11th grade education.
Jeffery: Well, you’re crushing it for 11th grade education. so amazing and awesome story. and i know we’ve chatted a few times about all the other great things you’ve done but man, phenomenal story. so let’s go back to a little bit about when you were working with the first startup. Can you share a little bit about what that looked like from where it’s taking you today? So you know, people don’t just jump into investing and decide, hey, I’m going to be an investor. you work through. you learn the elements of what it took to be in a startup. maybe share a little bit about what that experience was like and kind of how much that played into where you are today.
Jeffery: I think one really cool thing to think about in life is, with one phone call your entire life can change. and you often forget that and you get kind of stuck in this. and I was in real estate. I was renting apartments in New York City trying to sell apartments. I got this call from this guy one day and he said to meet me at the Four Seasons, Saturday morning. He called me to a ridiculous apartment. I thought it was one of my friends messing with me. it was like 40,000 a month, some insane apartment nobody ever called me on it. and i met him and i showed him a bunch of apartments. he didn’t rent any of them. and he offered me a job. He said, come work with me. your life is going to change. and it was him and his wife and they were just laughing. He doesn’t even know how much his life is going to change. and I worked for him. I was the first employee. He gave me some equity and just watching, we didn’t even have an office. It was two two guys in a car. I was driving him around to these meetings. and i thought to myself that i gave up. i was just starting to do well in real estate and i’m thinking what the heck am i doing with this guy. and sure enough, next thing, he’s got 200 employees and just the decisions that you come across when to raise money, when to not raise money. Let’s take an attractive line of credit from Goldman Sachs. it’s non-dilutive. and let’s distribute it just all these kind of high-level decisions that i was on the inside circle to the guy. and it was really cool watching him watching him do that.
Jeffery: You got to really learn what it takes to be a startup because, being the first employee of a business as you mentioned, you were able to work in the equity side, which makes sense. you’re the first employee but you were actually on the front line. so you got to see how everything was unfolding and be part of those conversations. and be part of what was going to be that next big thing. and interestingly enough, you took the risk, which in the investing world, risk is number one. This is what we do. we risk everything and you risked a job that you said you were doing well at to get into this business and learn the ropes. so now you’re in this, and you’re learning from these two individuals. How did you find that? Were you at some point, thinking these guys sold me on this? This is a bag of beans. this isn’t what i look for. I was looking for the good stuff. Has there been anything like that ever crossed your mind? I mean, the job that I was hired for was really like Joe Friday. whatever i need, you’re that. and I have a marketing background. so when that opportunity presented itself to build out the clinics and really market it, I was really good in that role. but until then, i’m driving these guys around all day to meetings and getting sandwiches. and he moved from Las Vegas to New York and I’m coordinating, dealing with movers. i’m doing all these things that weren’t really, you know i’m not too good for anything. so i’m happy to support the team and what was needed at the time but yeah, i was totally thinking, you know, what I am doing, it’s in danger, indentured servitude for these people. But, they ended up totally taking really good care of me.
Jeffery: That’s amazing. so now you’re kind of in this position. you’re at 200 people. Has your role changed? Do you start to define your role? Are you doing more on the investor side? Are you learning more of those things and saying, you know what, I got to drive this line of business? or were you still focused on marketing? How did that all work?
Mike: Well, late 2012, kind of when they were in the hyper growth period, that’s when I really discovered bitcoin. Once you go down that rabbit hole, I mean it just kicks your head open. so i really went full on and i pretty much tried to quit. I just told them, listen i’m gonna do something with this. i don’t know what it is but I’m going to do that and they did not want to lose me. so they said, well what can we do to make you happy? and it was, you know, i don’t want to. I don’t want to do this anymore. and they said, alright. Well, we’ll make you the marketing director. we’ll make that a real title for you. and you can do that. So I ended up buying bitcoin. it was secondary. it was a hobby, but that’s kind of how it happened. I basically had to try to quit nice. So then you dive into this bitcoin space which I know became that hobby that kind of continued all the way on until today.
Jeffery: what was the thing that interested you the most about it and that you were early?
Mike: there’s not too many people that were really into bitcoin back in 2012. outside of maybe scammers, drug dealers and everybody else that was finding a way to move money, a lot of the people from that point in time that discovered bitcoin then, um even probably still today, you’re all gold and silver people. i mean you’re all the gold and silver crowd, the sound money you know listening to all of those podcasts and those type of people that are that are preaching and the anti-federal reserve and hyperinflation and all of this stuff, so that it was really familiar was an easy transition getting into bitcoin because i came from that and um that was pretty much what it was, just better money. it just only makes logical sense that bitcoin was gonna be much more useful in the future than gold. so it wasn’t too much of a stretch putting those two together. and then i just started to play with it like you’re a hobbyist. That’s the best way to get into bitcoin. so you learn how to make a paper wallet which many people now don’t do anymore. and I owned a small bar in New York City called “Old Man Hustle”. and i met this guy. We accepted bitcoin and we got a little bit of press for that. and we had the second bitcoin ATM in New York City. This guy brought a homemade box and stuck it in the back. and that was a really cool thing. It was the second one that was in New York City.
Jeffery: Oh that’s amazing! so now you’ve got the bitcoin machine. you’re transacting. you’re doing lots of great things. then you go back into this next company. What drove you back into that?
Mike: So that’s a good question for you because when you invest in entrepreneurs that are successful multiple times, you know when it’s clear that somebody’s a winner. it’s more likely that they’re going to be a winner again at least. That’s what I found. so the guy that i had hitched my wagon to, his star so to speak, was a winner. So how could I not sign on again for this next venture? And that’s just pretty much. it was an easy decision and these are not like running the business kind of people. Everyone runs mach 5 and within six years we sell it. so it’s not kind of like a career long term choice.
Jeffery: very cool. and Now you jump into this next opportunity. How much was it? How big and different was it from the first opportunity? were you still focused on the marketing side? were you doing more things now because you’ve expanded? you got a bar. you’re in bitcoin. Are you now exploring different avenues working with this new venture?
Mike: no, it was in healthcare technology, in documentation improvement. By the way, the entire healthcare system is just absolutely horrific. That’s a whole nother thing. but i didn’t have a high level position at this company. but I was much better that way because I can just do my own thing and support them with whatever they need. and you don’t have to be. it wasn’t as demanding. So that’s when I was really kind of starting with angel investing which takes time. If you get in 300 syndicates and start following people like yourself, and start reading every day and consuming and processing as much as you can, it’s easy to put your job on the back burner a bit when there’s so many different opportunities being presented to you all day.
Jeffery: no, i agree with that and so that kind of moves you into that new stage. now so that company, did it exit as well?
Mike: yeah! It was very cool.
Jeffery: well, congratulations on being part of two exits and working your way through that and learning as much as you possibly could. so that’s awesome.
Mike: Well, now I’m unemployed. so i gotta figure out what to do now.
Jeffery: I’m gonna guess you’re probably doing okay. So I won’t worry too much about being unemployed. you’ll find something, i’m sure, like tomorrow, like that. so you’re a pretty clever guy. so now taking a look back, you start working. you start investing. So how much of that early stage experience you’ve gotten really helped you propel into this investment world? and what got you started? Who told you about, hey, come and invest in these syndicates or invest in these startup companies? What got you involved in that? So, I think maybe still to this day. But definitely at that time, I still think I am the most active investor on Equity Zen, which is in my opinion the best place to get started if you’re an accredited investor and you want to participate in some late stage secondaries. That is the place. and i was just in so many deals and luckily you know, you start with that 2015 area. all of those IPOs are hitting now and have been hitting for the past two years. It’s been really good in that respect. So I went to this financial conference. I met this guy from Long Island and I was telling them what I was doing. I said, you know, look at some of these returns, you know your money’s only tied up for maybe 18 to 24 months. Maybe it’s a 4x or a 6x. maybe you get a 3x, but look at how great this is. and he says, yeah that’s great. but he’s like, but let me show you something. He’s like, why don’t you take a look at this. and then all of a sudden, you know, you start looking at these early stage things. I said, well, I don’t want to lose all my money. i’ve always been too scared to invest in the early stage stuff because doesn’t eighty percent of it go to zero? does ninety percent of it go to zero and then you start learning, well what’s the power law? What’s the power law of investing? Because coming from a music business background, that’s the only industry. Entertainment is the only industry where you can have a 90% failure rate and still be wildly successful. like that’s your entire business. you know the one pop star pays for everything else. that’s done on that label, the one good tv show, the one movie. so making that connection with angel and early stage investing, it started to loosen me up a little bit. you’re not going to lose all your money. and if you do, it’s fine because it’s a numbers game. it really is and you hit the nail on the head there with the power rule. and the one in ten success. But that one in ten is successful, like you said, it offsets all the losses of the other ten. and of course, everybody’s goal is they want two, or maybe three successes in those ten. and they’ll do whatever it takes to kind of get there.
Jeffery: So now you’re kind of going through all this learning. you’ve got startup experience. you’re investing all over the board. Today, you’ve got, I think , close to 1200 or more investments. Is that correct?
Mike: Yeah, over 1200 companies.
Jeffery: brilliant. I’m hitting the green red button right now. just alert. Amazing. This is pretty cool.
Mike: well you know the thing about that is, it sounds like a lot. and it is a lot. but when you have an amount as low as a thousand dollars, and maybe as high as a hundred thousand dollars, for the founder that i worked for, or some really exclusive opportunity for his company that i’m not with right now, you know what i mean, but for the most part, they’re small amounts. The secondaries are always 10 or 20 000. you don’t really get away from that. but what you get for that thousand dollars, you get the best education ever about a company and about their life. and when you try to read everything, what’s working, what’s not working, what are the KPIs that they care about, what are the pain points, maybe you tune into a founder zoom call, you listen at your leisure, just learning so much from all of that, you become this living breathing API for all sorts. and I just really love education. it’s not just about making a ton of money. it’s not just about getting those multiples, like there’s so much that you learn and you learn it firsthand. you learn it from dilution, by experiencing it. you learn it from conversions or an exit scam. four months ago, this was the hottest. This is the hottest deal ever and they were in this accelerator and everyone’s in. and this is the greatest deal and you invest in five minutes later. COBIT has been horrible in India. we’re winding down operations. we’re able to return 30% of everyone’s investment. thank god, that was a small investment. but look at the education. look what you learned from it. you know the same way, when it’s hey, this is the hottest deal ever. everyone in the world is in it. you know, from naval, personally to every top tier fund. you know that the damn thing reads like a hollywood script for who’s in the deal and you invest in. all of a sudden four months later, the damn thing is 30 to 40 x what you invested in. you know that’s another one for the file manager. you know what i mean. Why did I only invest such a small amount? you know so but to do that enough times. If you were, I hate to use a gambling analogy, but if you were going to learn how to play blackjack in a casino, you wouldn’t go to the 500 hand table. I mean you just wouldn’t. you would see a lot of hands at the dollar table with your buddies before you decided to do something else. and um i had a guy, a cpa, who was asking me what i was doing. and i said i’m angel investing. he says, i hate that. i said why. he said, well, i made two large investments and they both went to zero. and that’s the problem. The problem is people come in. they write a big 50,000 check and then it doesn’t work out, invest 2k into 25 deals, follow the companies, learn as much as you can, hit the pro rata hard you know. When the winners emerge, that’s when you really get in. you can always invest more later. the amounts can always go up. and I wish people had that kind of wisdom before they got started..
Jeffery: And that’s brilliant. I love the way. I love the analogies and there’s nothing wrong with using the analogy of gambling. because really at the end of the day, what you’re doing is you’re playing the laws of averages. you’re figuring out how can i get as much information into my brain as possible around this circumstance, build patterns so that i can learn and understand how these things are all going to operate and work and then i can execute on the ones that are going to be successful. I can double down, quadruple down, whatever I need to. but i’m going to set it up now so that it can have a footprint and grow. and really that’s what investing through a fund or investing in directly into a company is all about. you’ll come in, test the water, put in that 2 grand or 10 grand or 20 grand, whatever you’re comfortable with, and you put that in and then you watch and you learn you participate and you start to see, is there a lie here? Is this real? Is this fake? and then when you get going further ahead, you start seeing who’s coming in. and like you said, that laundry list of big leaders jumping in on top of that business. Well now, I can double down, triple down and make sure that I’m making a footprint and the ones that you see that are having a tough time or having a rougher, go on investing. well maybe you don’t go back in or you put in a smaller position because maybe they haven’t figured out how that mvp is going to hit the market. so a lot of learning by just trial and error. and i love the way you’re trialing and erroring because you’re doing it with small increments. but you’re taking down so many industries in so many areas that it’s like anything. I think someone told me that if you go out and talk to 50 women, one of them will talk to you back and go on a date. so the odds are 1 and 50. so you’ve got the same 1 in 10 odds that if i invest in 50 companies, i’ve got 55 that will be a home run. So I need to double down on those ones and that comes from experience and the only way to gain experience is taking the time to make sure you make a lot of investments, a different approach than putting all your eggs into smaller baskets. but I love how you’ve tackled that. so if investing in this journey that we’re all on because you started somewhere, you remember when you probably were in the public markets first. and then you kind of got exposed to this world. you level up your experience.
Mike: So I just leveled up to the angel world in the early stage world, and at some point in time, I hope to be able to level up to what you’re doing. you’re hosting pitch events. You know, you’re getting people together. you can sit face to face with a founder and be one of the first checks in and not really rely on the signaling because even for a thousand bucks or two thousand bucks, even for a small nominal amount, the signaling still has to line up. I mean you’re still following top tier investors, you know. I love crowdfunding. I love what crowdfunding is doing in general. But you know, if there’s 85 companies living in the republic right now, I could really only recommend maybe two or three of them and those are because I’ve read deal memos on those companies from other places that weren’t crowdfunding. so you can send those to a few friends and be like, hey, you should check this company out. I know this is legit. look at the signaling. their xyz, their whatever, you know. but then you get somebody hooked on crowdfunding and they’re just putting money into all these things. That to me is a disaster, you know. so i think you really have to pay attention to the signaling and then you get to a point like you’re in, where you don’t have to look at the signaling you know, what data you need from that company before you make an investment, send me this this, this and this on this dashboard. and that’s how you pull the trigger and i hope to be able to do that one day.
Jeffery: Well, I don’t see it being too far. Maybe tomorrow will be a good start. but you really have summarized a lot of great points and i think what really stands out in in what you were sharing is that if you take a professional sports player because we’re all familiar with basketball so we’ll utilize this as the analogy here, is that, you take LeBron James isn’t playing four other sports. he isn’t testing the waters on how to become a professional swimmer. he literally went into one sport and dominated it. and he didn’t dominate it from day one. he went in, practiced. He learned. He had leaders that he looked up to and he started to learn from what they were doing. He learned from their mistakes. He learned how they interacted with coaches. He learned how he interacted with players. and he built himself a brand and he built himself a position that he could get and be reliable to everybody else around him, so then people started to lean on him to keep being that person and eventually he grew. he hit stature. he hit size. he hit brand and now all of a sudden every team wants him. so he’s not looking for the signals anymore, he is the signal. So is he having an update? He’s having a down day. but he’s got 15 years of background learning and experience that has driven him to get to that point. It’s the same thing with investing in early stage companies. you have to take the time to put everything into it. to be the best, your goal is that, i want to be the best. and you can’t be the best by being there part-time. you want to make sure that how you build your brand and how you build you is all about focus. It’s about trial and error. Losses, we all have them. but we have to talk about them. we have to share about them. and then eventually people start to lean into you. and look for those signals. and that’s when you know, i guess in a way you can say, i’ve made it. because you become the focal point of being the best in that industry. and you can be the best in investing. you can be the best in sports. You can be the best in anything you choose. It’s just putting the time in to learn and make your mistakes so that you can keep growing. and you’re obviously doing all of those right things no matter how many different angles you cut it, 1200 investments. I don’t know anybody that’s done more than maybe 300 or 400 in my personal world. and that’s again on the top tier. so you’ve already stepped way above all of that by experiencing that level of volume. but you’re also taking in a huge level of data and inputs which means that the next company that you see instantly, you can tell in 30 seconds. now they’re not doing the right things or they’re on the wrong angle because you’ve got so many data inputs coming from every other area. See, it’s interesting because you’re investing out of a fund. And, now I’m investing out of a very small little boutique fund project. but you know that’s when you really have to be careful, right? I had pre-ipo shares of Lyft and Uber on the secondary, not big investments. that wouldn’t be a conflict at least.
Mike: I don’t view it as a conflict, you know. There’s room for both. I hope that that’s an accepted standard that comes with early stages, especially people who are really active like myself, you know. you have to exercise discretion. you have to be very confident with everything. but i don’t think just because i invested in this rowing technology startup company, i can’t invest in other rowing technology companies in another part of the world, or they have a slightly different business model. I don’t think it’s the winner take all. and i think a lot of people really get fixated on, well, i’ve already invested in this vegan tennis shoe company. I can’t invest in this vegan sock company. and i don’t think that’s necessarily the case especially when you have these small investments. We call it picking. it’s a joke, we’re all pikers. but when you’re making these small investments, i don’t think you have to really be too careful about that. as long as you’re not causing harm to either company. and i’m just waiting. I don’t know if that’s gonna be acceptable. I don’t know if somebody’s gonna eventually take a look at what I’ve done and be like, you can’t freaking do that. I don’t know. Hey, just remember you’re an entrepreneur and you can do anything until you get slapped. and in this case, i think that you’re pushing the line.
Jeffery: And I love it. I do the same. i look at, if i’m going to invest in a company here, i want to make sure the next company i invest in is going to benefit the first company and the third company and the second and the fourth because they all intertwine somehow and they’re all going to grow each other by each other, whatever that looks like. so we’re in proptech. we’re buying one that’s managing proptech. we’re in one that’s managing the assets, then we’re in one that’s selling the assets. and why is that? because they all have to leverage off the same industry, same contacts, build a bigger business. So at the end of the day, I think there’s always ways to leverage that. but at the same time, it’s also being transparent enough so that your investors and the way that they’re operating, they’re also understanding the point of view that you’re taking. and utilizing what we do on our fun side, we look at where this company is going to scale to? Where are they going to be in the next five to seven years? Will the industry still love them? Will they still be a buyer out there for them or are they just going to be a trend and then they’re going to dissipate in the next few years? so we have to look at a lot of different signals on that side of it. but it’s day one. they’re really early companies. so we can make a small investment in, personally help them grow and then come in from the fun side and help them double down or quadruple down. and I think all of those things can change the plan. it’s just a matter of timing and how you view your investments. There’s a lot of benefits also when somebody gets me on the team and when you have that insane data set that anybody wants to penetrate the employee rewards market. you know, Alice did a good job, Bob gives her 20 stars. She cashes them out for a gift card. Whenever somebody really wants to get into this space, I consult my data. and I’m already in seven of those companies. maybe what i mean and i have warm intros. and i’m able to provide them to this new company who wants to get in that space. so there’s a lot of value that can be added by the sure volume. and i think that that kind of offsets any potential. Why do we want this guy in the deal?
Jeffery: I think you’re doing a great job, man. I think you would be a home run to have on any team because of the amount of data and understanding you have, the things you’ve gone through. and you know what, i’m going to ask this question. which is going to be related to i’m looking for a success story. something that just blew your mind that you couldn’t believe happened. you don’t even have to meet the entrepreneur ,but just the fact that this person had to go through x y and z to get where they were. Is there any story that just pops in your mind that just kind of blows your mind on what it takes to be an entrepreneur? or a personal success story? Neither one works.
Mike: As far as a personal success story, I’m a really big fan of cyan banister. And you know basically, she was a homeless person from Tucson, Arizona, and she grew to be a partner at Founders Fund and discovered technology along the way and caught a few breaks. and it’s unbelievable what she overcame in her life. so i’m a big fan. It’s a personal motivator for me. And as far as entrepreneurs go, I can’t really cite one. but oftentimes, you come across four failed startups. and that is ripe for whatever they’re talking to you about. so there’s a lot in there from the first time, the first time founder, which are all fun. they’re all different hands that you’re dealt and somebody who has failed three or four times shouldn’t be taken lightly when they’re pitching their new idea to you. That’s just something that I think I know I don’t really have. a very good example for you, but no that’s brilliant and well shared.
Jeffery: Well, I love that because in my mind, what it resonates with is, one of our portfolio companies called Scout, Adam. And he went through that. He built three companies. I’m pretty sure it was three and he would say, you know what, I had to fail. one didn’t work out very well. things didn’t go well, but you know what, i did this time. and this is what he had told me when we fell in love with his brand and his business. He said, i took the time to focus on the environment. it’s outside of tech. Tech is my space and now I’m in cpg. but i learned and i took everything i learned and i took my time on this one and i have staged it out perfectly. and i will tell you that in the year and a half or two years that we’ve been working with him, he has staged everything along the way just perfectly. I’m going to race here. I’m going to do this. I’m gonna do that so he took all of that learning to get himself into a better position. So you know what, those four failures are amazing. because i think that really drives that person home to saying, this next one is gonna be the one. I am going to make this one work because, if you’re going to try that many times, that means you’re dedicated. and you know how to hustle and you’re going to do whatever it takes. and you also know when to quit because you’re already on to the next thing. so i think that’s a valuable share man. I think that’s a great story. and also you know one other thing that happened with a company that unwound me, and i didn’t even know that this could happen as part of the education. we invested in a company and then five months later, got the email that they’re ceasing operations with an apology from the founder. but we were able to get back all of our money. That founder had it and he returned all of the syndicate’s money and made them whole. and i don’t know how that worked. I don’t know if he had it. or what his balance sheet was like or why we got all of it. I mean, I don’t know how everyone could get all of their money back. you know it couldn’t have happened. but he did that, right. and he wants everyone to know that he tried to do the right thing. and he’s going to have a new project. and this is how he chose to deal with it. so that’s just another learning, case-by-case thing. I didn’t even know that that could happen. So how you as a founder deal with those failures, certainly it left a very good light on how we all view him because he admitted his failure. He gave us our money back and now he’s in stealth mode building his next thing. so you just never know where that road can take you. and that very next thing could be of decacorn. Who knows? and that’s again a true testament to the founder, the entrepreneur, on how they view their business. how they view the interaction. they’re making sure that they’re planting this going forward, that they’re going to set it up for the next one to be a little bit more successful or hopefully a lot more. but they’re taking care of what they first started with and there’s a lot of founders that just kind of fluff off all that money they raised or don’t care about how they spent it or not focused on growing the business. and it’s a shame that when people get money, they don’t look at it as i should protect this and i should protect the investor and protect the business and grow it. but at the same time, we can’t make everybody whole and make everybody perfect. But I do appreciate those types of founders because they’re the ones you want to keep investing in every time they build a company. So now, we’re going to kind of jump right into it and man, this has been great. I love all of this journey that you’ve been on. How much of, I guess, last question before we jump into the rapid fire questions, how much of running and operating a band and touring and 35 shows a month, that’s insane, that’s like three you’re doing. some days you might have been doing two or three shows in a day. It’s incredible how much of that hustle. Do you see? That’s kind of baked into your wanting to learn and be part of this whole startup environment.
Mike: It’s the same thing, alright. so my favorite part about booking shows was developing an artist. Okay, so the first time that the xyz band, you booked them maybe 50 to 40 people. It’s in the basement. they got small amounts of money and you maintain that relationship. and you are working with the agent and the record label and you’re following the band and maybe they come through again. and maybe there’s 250 people there. so you can look at each one of these things as series rounds. I make a lot of connections between the music business and early stage investing. maybe there’s 300 people there and you maintain that relationship may be pro rata. I don’t know, okay. And then maybe there’s another promoter in town who’s calling the band and he’s trying to submit an offer and get wind of it. and then i’m talking to the band and the manager saying, hey no, no, no, uh. you were playing for 50 people. We’ve done every show in these markets. There’s no way I’m losing it. and then maybe they squash it and you just take them as far as you can. and pretty soon, they’re doing 4000 people. and when they get to that point as an independent concert promoter, you have to lose them, which i haven’t had, this experience in investing. At some point in time, when they came in with those big checks, and those I didn’t even know, the letters went that high in the alphabet. you will lose all connection with that company. it’s over. and maybe they give you some token appreciation or whatever it is, you know. so when you lose the band after that 4000, it’s hard to keep them after four or five thousand people. you just can’t do them. they buy the whole tour and it’s a whole different kind of world at that point. you know that aspect of it as far as developing the strong relationships really supporting your portfolio companies or your artists moving forward. That’s totally applicable to the VC world I found.
Jeffery: no, that’s amazing. And I’m totally following this. I’ll call it myself.
Mike: I was a roadie in one of my buddy’s bands, so we were the first fans at his first concert. and there may have been 10 people there and so forth. We were jamming with them and making sure that we followed this all the way along. and the synergies between what they’re doing and raising pre-seed series a, all that is just like the crowd. The first crowd was ten people, put a couple bucks in and then the next crowd and the next crowd just kept growing .And you know eventually at one point, we were in Vancouver at a big concert and there’s tens of thousands of people there. and you’re like, man, they finally made it. This is so cool. and What you’ve got is every video recording of everything that they’ve ever done. but it’s just like having a piece of equity in that company. so you’re right, there’s a lot of synergies. you can take out of everything that goes on in life and especially from the abandoned concert circuit. so that’s pretty cool. I love it. and you know, not only that you know when the agent is fielding offers for different shows in different markets, they might get an absurdly higher offer to play the club. that makes no sense, you know. it’s not the place for the show but they’re gonna over bid and they’re going to pay for it. and oftentimes, we tell the agent, take the money. I mean just like, just do it you know, do it, whatever. and the show sucks, the promoter loses his shirt, you know the bands pissed off because the tickets weren’t priced right. maybe it wasn’t all ages. maybe a lot of their core fans couldn’t even go. and so that has to be close to making the wrong decisions on who you take money from as a company. Oh, you know what this is. It’s a high price. It’s a ridiculous valuation. and maybe it turns out that nobody really wins there. or they didn’t add value or they wished that they would have gone with somebody who really specialized in the seed or series that was going to roll up their sleeves and do something. So I’m thinking about maybe writing a little bit about some parallels in the music business with bc because I am pretty passionate about it and I do find it to be very similar.
Jeffery: I’ll buy the book, man. I’ll read the pdf. but it still sounds pretty cool. and i do agree. There’s a lot of correlation between that. Actually man, we could talk all day. So one last question, I promise. What was the best or most favorable experience you had with a band? Like, was there, i’m making something up, but it was like the chili’s and you got them to play here. like is there any story that just blew your mind away? like a top band that you got to interact with. I’m a big fan. I love going to concerts. So is there anything that kind of fits in that realm?
Mike: Oh my god! We have so many ridiculous stories. I don’t even know where to start with this. We have a ton but one time we got a call at the Nile about doing a Snoop Dogg show. Now this was way outside of what we would normally do. this is not our thing, but it was on like no notice. It was like five days’ notice. and the place held like 1200 people. and we did it and we almost instantly sold it out. and he didn’t want to show up. He wasn’t there. and so the doors opened at seven o’clock at night. and where is this guy? I mean this is a real show with William Morris. this is it. Where is the man himself? and I think that that crowd waited at least five hours apparently. He had a little bit too much to drink and left his adaptor, which I don’t know if you hip-hop people, they sing to adapt tapes. They put in the adapter and he lost the freaking adapter tape at some club a couple of miles away the night before. and everyone’s running around trying to go to this club Pompeii at the time to find Snoop Dogg’s freaking adapter tape. so we can get this guy on the stage and eventually somewhere at like 12:30 in the morning, he was there with the tape and he played the show and no one got refunds. Everything was good. but i don’t know why i thought of that story, but i just, wow, that sauce popped out. It still happened. so they went too and they delivered and Snoop Dogg delivered. I love following him on Instagram. he’s always got some entertaining stuff but that’s cool that he delivered. and that’s what you got to do when you’re an entrepreneur in a business is that when something big happens, you got to be there. and you gotta put it all together even if you’re late.
Jeffery: Absolutely brilliant. great story alright. we’re going to jump into the rapid fire questions we got. we’ll start with the business ones, then we’ll jump into the personal. you got it alright? pick one or the other. first one from an investment standpoint. Are you interested in a solo founder or co-founder?
Jeffery: unicorn or four-year 10x exit?
Mike: four-year 10x exit.
Jeffery: I love it. attacker cpg tech brand or tech?
Mike: man, this is hard.
Jeffery: Ah, tech ai or blockchain ai?
Mike: there’s no purpose for blockchain other than bitcoin. it’s all pointless.
Jeffery: I love it. First time founder or second or third time founder?
Mike: second or third.
Jeffery: first money in or series a?
Mike: series a. just because i’m not there okay.
Jeffery: angel or VCU?
Mike: in what context?
Jeffery: would you be more interested to be an angel or would you be more interested to be a VC?
Jeffery: boarded seat or observer?
Jeffery: safe or convertible note?
Mike: hands down convertible note.
Jeffery: lead or follow?
Jeffery: equity or interest payments?
Jeffery: favorite part of investing?
Mike: seeing every cool thing that’s being built in the entire world every day.
Jeffery: I’ll write down your line because I love that. and I totally agree with you on that. number of companies invested per year?
Jeffery: works alright. preferred terms?
Mike: preferred terms in what way?
Jeffery: uh, like you want equity convertible notes?
Mike: uh, i’d rather have priced rounds always. and just as a tidbit, i will never ever invest in an uncapped note with or without a discount. There’s no chance I would ever invest in an uncapped note. I don’t care if it’s the best company in the universe. It’s an instant no. As soon as I know, it’s an uncapped note, I don’t even want to read what the company is about.
Jeffery: hitting the red green button. I’m on the same boat. I totally agree with that. Preferred vertical of focus. Do you focus on any verticals?
Mike: I’m pretty agnostic. I’m open to any vertical, any space, any stage.
Jeffery: I love it. Maybe two things that you look for that stand out in a startup that you’ll invest in?
Mike: month-over-month growth and signaling. I also really pay attention to the burn. The burn is always a big deal. so i mean, it has to be everything, has to be trending up and to the right month over month growth, subscriber growth weekly. you know whatever metrics are there have to be off the charts, that with the signaling and i’m in for sure.
Jeffery: I love it. Okay, we’re gonna jump into the personal questions. book or movie?
Jeffery: Superman or batman?
Jeffery: pizza pop or ice cream bar?
Mike: ice cream bar.
Jeffery: five minutes with Bezos or Oprah?
Jeffery: Arsenal or Manchester United?
Jeffery: what? Ah, I’m trying to find Arsenal fans. Uh, bike or rollerblades?
Jeffery: Big Mac or Chicken mcnuggets?
Mike: big mac.
Jeffery: trophy or money?
Mike: That’s a hard one. Money.
Jeffery: beer or wine?
Jeffery: alarm clock or mobile phone?
Mike: mobile phone. I love an alarm clock. I just don’t have one. I don’t feel right answering.
Jeffery: alright. hotel or hostel?
Jeffery: king or be rich?
Mike: rich. Nobody wants to be a king.
Jeffery: concert or amusement park?
Mike: oh, that’s a tough one. amusement park. That also depends on the van. but sorry, go ahead. I’ll stick with the amusement park.
Jeffery: Okay, alright. Has life in the US been boring without trump? yes or no?
Mike: Yes, I totally agree with that. Um, alright. favorite sports team?
Mike: favorite movie and what character would you play in the movie?
Jeffery: oh, my favorite movie?
Mike: my favorite movie is actually a crazy movie called Waking Life. Um, and man, that’s a tough one. I didn’t know you were going to ask those types of things. Um, who would I play in a movie? you’re catching me off guard. I would play Tom Cruise in Jerry Maguire.
Jeffery: ah, nice. That’s good. Yeah, alright. and you said the movie is called Waking Life? Alright, I gotta check that out. favorite book?
Mike: Fear and Loathing in Las Vegas. I love that book. I literally downloaded it not too long ago, like two months ago just to listen to it again. I had the book version of it, but I had to listen to it again. I’m just a huge fan too.
Jeffery: So that’s awesome. Alright, last question. What is your superpower?
Mike: uh, a work ethic and determination that is unparalleled to anyone i’ve ever met. I’m a tourist. I’m the bull and once a taurus runs at something and starts to go, it just cannot be stopped. So when I get obsessed with things, you know, it doesn’t even feel like work, like this, like angel investing stuff, you know, reading books and learning it. if it feels like play to you, you will do very well at it because it’s not even work. so that is my definite superpower. and at the same time, the Taurus, the bull, you know, you can’t push a Taurus. you can’t push that bull to do anything it doesn’t want to do. so it goes both ways. but definitely, hard work.
Jeffery: Geez, I might think I’m a Taurus. I’m actually an aquarius but I feel like I’m a Taurus based on what you just said. But, that’s brilliant man. That’s a great superpower to have. and being determined, and as you say, like getting done and moving it forward. and being heavily focused on that. it’s uh, phenomenal and when you kick off your next funding, we’re gonna have to chat because i’m interested to obviously dive into that because, i think you’re phenomenal in what you’re doing. so i’m excited to keep following along with your journey. So either way, Mike, I want to say thank you very much for all of your time today and joining us and sharing your story. Phenomenal. I love your background. I love what you’ve done and how you’ve accomplished what you have. Uh, you’re in my books. your number one especially with how you’ve been investing and the way you’ve been tackling this space. absolutely awesome. don’t change. don’t stop. keep pushing it forward man. you’re doing amazing things and the way we like to end our show is, we like to give you the last word. so if you’ve got anything you want to share to the startup community, to investors. but we turn it over to you. but again thank you so much for joining us today.
Mike: First off, when you want to launch your syndicate okay, and you want to start going that route, I hope that you think of me first, because I’d love to help you get that off the ground because I think that you got everything in place for that. As far as the closing goes, I would say, if you’re looking to invest, learn as much as possible. get on every platform that there is and just start reviewing deals. read the calcaneus book. read venture deals. you know what i mean. There’s so much educational material on Funders Club. Um, you know, send Jeffery or me an email. I mean we’ll give you just too much. you won’t even be able to digest it all. so just really get in and get started and learn. just start somewhere and the amounts can always go up. put in the smallest amount ever and then just track the company. follow it. see what works. see what doesn’t. just get involved somewhere, okay? and if you’re a founder, know all your options on the table. you know how many different ways, there’s never been a better time to get out there and raise money. and you can syndicate it and you can do roll-up vehicles. You can look at crowdfunding. you can get advice from VCs. there’s so many different ways to build your business. just make sure that you educate yourself on everything that’s around in 2021. and lastly, the thing that i’m most passionate about, that i hope changes is, it is an absolute tragedy that any person that is of legal gambling age, uh regardless of their situation in life, can walk into any casino in las vegas and lose all their money and that is the casino’s entire business model. their business survives on that. It is a rigged game okay. but the fact that they limit these unsophisticated investors from investing in technology companies or private companies is an absolute crime. it should be illegal. So I’m personally going to advocate against changing those laws. They’ve been loosening a little bit over time but it is absolutely inexcusable why you can’t invest in all the companies that you’re investing in or I’m investing in because these people might lose all their money but they can walk into any casino and actually lose their money. Um, so that is something I’m very passionate about and it absolutely drives me insane.
Jeffery: Mike, I love it and I will hardly agree with you. I think what you’re pushing for is correct. it should be freedom of choice especially when it’s something you worked hard to earn. and you should choose how you want to spend it. and if you can lose it all in a casino, it would be a better place to lose it in a hundred startups than it is to lose it in one spot on a table. so i love it and uh you’ve got my vote as well. So I’m not sure if you’re running for the mayor of New York or what’s next, but when you do figure that out, let’s stay in touch. but again, thank you very much for all your time man. you’re awesome.
Mike: thanks Jeffery. i really appreciate you having me man and chatting.
Jeffery: alright. He was a fantastic man. Mike, I just love the way he wanted to learn, how he attacked this market and being able to go in and just say, you know what, I need to learn more about this. taking the experience he got from running a band, the analogies and everything else that followed in behind that man. Phenomenal. tied it in really nicely into how the startup world worked and i think we can all relate to that once we start to understand our past experiences and how we can relate them into getting in and investing in early-stage companies. and you can see that just from that and working in the companies that he did. he gained a lot of knowledge and then in order for him to feel comfortable to dive in and invest, he went all in, just started to invest and figure out what was working, what information he could learn from, and you know that’s really what it takes to kind of be the best. and understand the markets that you’re going to jump into. I really enjoyed that conversation. and love the Snoop Dogg story and again all the things you’re doing might keep it up. great work. and I want to thank everybody again for tuning in and again thanks for joining us today. If you enjoyed the conversation, please subscribe to our YouTube channel or follow us on Spotify, Apple podcast and or Stitcher. and You can also check us out at supportersfund.com or for startup events, visit opn.ninja. Thanks everybody and have a great week.
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