Sriram Gollapalli: Exited Tech Founder Who Loves Investing

0:00Sulfillment is relative based on time and space of where you are. Sri Ram Galapali. After selling his software as a service business eight years ago, he spent six years working with an acquirer before embracing his newfound freedom. His calling, investing and fostering a community of like-minded investors. This episode delves into Sri Ram's post-exit journey, including an introspection retreat, angel investing and the challenges of estate planning. Everyone in the community has to show proof of assets of at least 2.2 million investable assets. Do you really need that sweater? Do you really want a$200 jacket?

0:36Whereas the other side, you're making these wild bets, either a$25 ,000 angel investment, or it always feels like different pots of money. It was a mix of silent meditation, a mix of nature solos, a mix of breathing exercises. I do see myself continuing to find ways to build, touch, and feel things. I think legacy is important. I would like to be remembered for inspiring the next generation of builders.

1:10Hi, Sriram. Hi there. Good morning or good afternoon. Very excited about this interview. Excellent. Me as well. One of the first I've done. So excited. So let me jump right in and ask you to go back to that moment when you sold iLabs Operation Systems and how did it feel? Oh, good question. It was a mix of relief and a little bit of anticipation of what might be next. And also, most importantly, actually, how are we going to be treating the people that we've been really shepherding over the last 10 years? Fantastic. So you bootstrapped it, didn't you? We did. We raised a little bit of friends and family back in the mid-2000s.

1:53And yeah, we got it all the way through a strategic exit 10 years later. So would you say it was a life-changing exit for you? I think so. You know, life-changing is always relative. But it was definitely bought us a lot of freedom to decide how to spend the next several years of our lives. Okay. So how did your thinking about the exit change over time? Because it was eight years ago, wasn't it? You had a chance to process your experience by now. Okay, so how did it feel? How did it change over time? So I think at the beginning, it was sort of like, and one of the things we heard as we were doing some of the research around then was, don't change too much.

2:31Like, be thoughtful after the exit, you know, buy a dinner, splurge on this or that, but don't do anything completely out of the ordinary. So we didn't, we say that because we didn't change too much. You know, we, we, you know, I remember still getting the check in the mail, literally, both to the company and then my share and just kind of seeing that sharing with my parents. You can't share this with too many people because for all the reasons that I'm sure you know. So I'll never forget that. And then, and then after that sort of excitement subsided, it was sort of like trying to understand what happens, how do we approach, how do we think about it?

3:12what are the kinds of steps that we should do should we do anything differently what have we bought and ultimately Anastasia I think what you buy with that kind of experience is freedom of time and how you approach how it's you have a responsibility to be more intentional about the time that you have and how you can approach it and I'd say I continue to feel that today even eight years later on choices I make now I bought myself a freedom of I can't I can spend weeks or months or even several years not having to worry about necessarily the day-to-day, but focus on what I want to do. Now, I don't do that well, but I have an opportunity to be thoughtful from that perspective.

3:55How was your exit structured, as much as you can share, obviously? Sure. It was a 100 % asset purchase agreement. What that means is Agilent Technologies is a public company. They purchased all the assets of iLab. We were fortunate through the process. We actually, we were approached by private equity and strategics. We had a whole process, happy to dive into that. But we went with Agilent. They were a fantastic fit. They're still a fantastic fit today. They're taking extremely good care of our staff. I was shocked, actually. I left formally about a year and a half ago or a little over a year ago.

4:35And I was writing my goodbye email, Anastasia. And I think it was when I was trying to look through the directory of the people that were still there. This is six years after I left. I want to say like 75 % of the people were still at Agile after we left. And that just really warmed our hearts because we're so great to find a place because I know I hear horror stories and things like that yeah um having said that the exit was pretty much an asset purchase agreement for cash and then there was about 25 stock that was left for uh the entire equity holders and you and you joined the buyer didn't do you for quite some time we did all of us joined the buyer uh i stayed for as i mentioned uh just over six to six and a half years almost um with them it was yeah Yeah, it was a journey.

5:21There were four years of the proper vest. And then afterwards, I continued to find, you know, interesting things and how to make an impact. How did it feel to suddenly become an employee, essentially, after you were a co-founder? I think there's a one part relief of not having to make all the decisions and worry about payroll and worry about, you know, approving expense accounts or things like that necessarily, or wondering about, you know, where the different investments we're making. um but also one part like ensuring you still have the entrepreneurial it's hard to ever let that entrepreneurial happen you know i've been an entrepreneur since i was like the late late 90s when i was in high school so losing some autonomy from a decision making process can be challenging um but it's also sometimes it's relieving also like someone's telling you here are the things you should do and i can tell you if you're doing a good job or not and that's always sometimes you You know, when my wife says decision fatigue sometimes can be challenging.

6:20And if you have some time to turn that part of your brain off for a little while, that can sometimes be a different kind of way of use your mind. So I understand that iLabs, you ran operations. I did. I ran a number of things. So I started as a tech, my background's technology, helped code the first few lines, which I was just looking actually two nights ago for whatever reason. But my code is still being used nearly 20 years later in production. That's a huge compliment, isn't it? Or something. And I have a fondness for the ops side, whether it's HR ops or streamlining ops or things like that, getting things off the ground and finding the right people to kind of manage those things.

7:02But I'd say my heart straddles the technology side because that's where a lot of my training came from, as well as the operations side where appropriate. Would you call yourself a creative person? My friends definitely would. I don't know that I'm the best, but yes, I would say so. So I'm really curious to understand how your motivation changed over time, because obviously you continued creating new businesses. How your motivation was different between when you started iLabs and when you started your next business after you stopped working for the buyer? I would say, you know, look, creativity comes a lot.

7:42It's true. mother's necessity is the mother of all inventions and I think even from I was just hanging out my parents house not too long ago and they brought one of my first inventions out when I was in elementary school I built this wooden structure with a shelf a small piece of wood and a pole hooked up to it and I'd written a name on it and I spelled it g-e-t-o-w-e-l it was called the get towel. So it was a tool that I had used apparently when I was in probably elementary or middle school, I built this thing out of wood, and to literally get towels off the high shelves. So I would say creativity has always been there.

8:24I think there has been a need to solve problems in whatever I might see day to day. In the beginning, it was around this whole B2B space for cancer research hospitals, which was pretty fascinating, finding a way to help them streamline operations. And then through the ideation phase, trying to solve personal finance challenges, children's organizational challenges that we kind of stumbled through. And then what we do today with Longingall kind of on the community side. But I think creativity has always played a role, both in parenting, I have three small children, but also in how you kind of form the genesis of some of these business ideas.

9:06How did your idea with the second business come to you? Well, you have to define second, Anastasia, because I've had several seconds. Okay, okay. So tell me about all of them. Tell me about the journey you had. Yeah, I don't know how much time we have. I only know those you disclosed. Yes. So yeah, in high school and in college, my partner who I'm still completely friends with, So Tad, he and I started our last one with together. We've run through a number of businesses, everything from helping set up a social space for friends online in the early 2000s, keeping our high school class together, which obviously sounds familiar now, to helping people find and source raw diamonds for people.

9:50We thought we built a whole website to help people identify, help to kind of streamline the diamond buying process. We learned a lot through that process. Oh, wow. work out as as time will tell but um it was fascinating to go through that journey today even before we started lung angle tad and i were going through a number of different ideation phases um everything from helping investors um streamline k-1s for those of you that have investor those of you that have private placements um having and organizing k-1s is a highly frustrating process which should be much easier so we kind of designed something around that to things kids related.

10:29You know, even today, Anastasia, if you go through an airport going past security, it is very hard to find diapers and baby formula. It's shocking. I was with my nine-month-old and four-year-old at the time. We were flying back from New Zealand. We were in an airport. We were past security, and we had checked our diapers in or something similar, and we couldn't find diapers. So we kind of ideated a whole process around a vending machine for diapers and baby stuff. And long story, we didn't launch it just for TAM reasons and other complexities around regulations. But there are always these kinds of problems that we're trying to crack.

11:05Did you do all that while you were working for... Yeah, we had some nights and weekends opportunities to kind of, you know, we definitely at Agilent, there were a lot of interesting ideas to solve with the buyer. Both helping them kind of break into the next generation of software and technologies and solving problems at that corporate level. And we gave that our all. And I think it was a fascinating place. It's a fantastic place to work. I would recommend it both as a buyer, as a seller, as an employee, great culture and everything else like that. But I think for us and in our stage of our lives, we knew we were kind of thinking about, you know, after giving it a go, what could be next?

11:41And are there opportunities to go next? Trust me, we would have been probably fine staying there another five, 10 years, maybe. there are people there that we met that were there for 30 or 40 years which is nearly unearned these days so that really is a testament to them but for us we thought maybe there's another go we had a we started a personal finance multi-factor hedge fund that we ran throughout three years working through a very interesting analysis of our funds and things like that we shut that down and then with long angle though that was also again a personal need back to creativity is there a safe space to ask questions of friends who are fortunate to have an exit or just be fortunate to be younger good savers or be in an industry that affords you to have more wealth when you're younger and having a safe space to ask questions of each other in a community-like environment without fear of being solicited to.

12:37A lot of the questions we had after the exit, it still shocks me today, Anastasia, after the banker or whoever goes you through the process or a buyer buys you goes through the process, they give you these, you know, large amounts of money, smaller, large, depending, but that's pretty much it. There's very little financial education that comes after that. And we said, there really needs to be something to help you with that. Um, asking questions like, do you get umbrella insurance? Do you superfund your kids 529s now? How much are you paying for taxes? Who do you go to? How much does your trust and estate plan look like?

13:07Um, what level of acronym soup do you want to put in place for your kids? There's so much online, it's hard to distill everything. So we kind of said, let's kind of create a safe space for a dozen friends to go who are going through processes like that together and share information in a judgment-free, objective place to have those conversations. So how old is Lona Engel now? It is officially probably three and a half years old. Okay. How is it going? It's going really well. It's going to create a vetted space for this community. And today we have over 2 ,500 people. How do you vet people? Great question.

13:45Everyone goes through an interview. So everyone goes through an application process. But we keep it streamlined, but objective. So everyone has an interview either in person or over Zoom. And we also really look for character, wanting to give back to the community, want to share insights, want to learn from each other. You might be a very novice, you might be an expert, but you're there to learn and especially not solicitation. I mean, that's obviously the most important thing. But fortunately, as you probably know as well, this world is full of people trying to make a business, which is fine, but trying to navigate that.

14:20And then lastly, we do wealth verification. Everyone in the community has to show proof of assets of at least 2.2 million investable assets, liquid or liquid. How many members do you have now? Just over 20 ,000. That's great. That's very fast growth, I think. Yeah, especially with the vetted spot. You know, we went back and forth on vetting and doing all that stuff, but we got a lot of feedback from the community members that it's important to interview everyone, especially when Tad and I were doing them. So, yeah, Tad and I each together have nearly met 1 ,000 people each. Oh, wow. That must be taking a lot of your time.

14:54It is, yeah. Actually, just before this call, I met a fantastic hotel operator in Honduras trying to figure out what might be next. Or last week it was an oral surgeon. And then obviously the tech, early tech employees. It's been fascinating to kind of find and see the diversity of wealth, especially when we're younger. But I've now learned also a lot that wealth comes, can be generated in a number of different ways. Tech exits are obviously a common one, but not the only way. Do you have regular meetings? Yes. So with Long Angle, we actually do quite a bit. So we do happy hours in most of our major US and global cities.

15:29about three times or four times a year. We do Zoom events three times a week, actually on a whole list of topics. So last week it was related to healthcare, longevity, travel, home building. I think this week we're doing one on mental wellness and tax loss harvesting, asset allocation strategies. So we're biting topics that the community is interested in and we kind of create basically small Zooms or breakouts, both hosted as well as just with community members. Great. So what does it give you personally? I would say it's fascinating, Anastasia. Knowing what I know now today, I think there's just such an interesting opportunity to help this demographic.

16:11Most of us are 30s and 40s. Most of us have two kids under 10. And most of us, some of us have wealth advisors, some of us don't. And most of us have like this sweet spot of five to 50 million. And so we have, call it four or five, or to be able to talk to seven or eight or nine decades ahead of us. Still, and really helping us find intentional ways to think about what might be out there and discovering the unknown unknowns. For me personally, for example, we're just going through our personal estate trust and estate planning. So how do people approach that? You know, it's not a question that you can very easily ask a set of peers, but with the community we are, we're able to kind of go through that.

16:51How do you approach a lot of kid related stuff? How are you approaching like college counseling or how do you approach sort of things like that? How do other people do it? What is the right place to invest that money in time? And what are other places to do that? Travel is another big topic. You know, my wife and I want to do some extended travel this summer, maybe. So how do you how do you approach kind of travel with those periods with kids? So you do a lot of angel investing. I do. How does that work for the community? Do you do it with the members of the community? No. So actually, it's a good point.

17:25So before I started Long Eagle, while I was still with the buyer, I lived in Boston. I lived in Boston for about 15 years, actually. So we just moved back to D.C. area, close to the family. In Boston, I had gotten together with some friends and we had all had exits of different magnitudes and really enjoyed angel investing. So we said, let's kind of create a space for us to share angel deals, vet them together and maybe go with together. that actually turned into another group that I run I volunteer and I run that group on the side it's called TBD Angels it's now one of the fastest growing east coast angel networks New England based but east coast leading about 300 people in the community there we invest in angel deals about once a month we vet deals probably twice a week on every single sort of domain.

18:19It's really just looking and that group is made up of formerly operators or people have expertise in the industry. So I personally probably have, oh gosh, like 40 or 50 angel investments across the board. I just invested in one last week. It was a high school or grade school, ed tech for computer science actually. Do you think angel investing is a good financial strategy?

18:52no. I tell anyone that gets into angel investing, do it because you love helping the next generation of entrepreneurs. Do it because you want to have a pulse. Think of it as a paid education. If you break even, you've done amazing. I honestly believe that. Yes, you might find the Uber. I think I was just reading another story about someone who exited for, I think it was like 300 100x in two years, highly possible, but you can also go buy a lottery card and potentially do something similar. I personally have not had to exit, so I can't speak like that or that perspective from an angel, but it's just been so rewarding to speak to the next generation, figure out how to help them, connect them with the right people.

19:31As a portion of your financial strategy, if that is something for asset allocation purposes, go with a true angel fund that has been proven to get access to that. Otherwise, making individual investments, it's incredibly educational, but I would not say the smartest financial strategy. Do you think for you, it was a good way to spend your time? Spending time is an interesting question in general, right? A limited time. I asked myself the other day, like, what would I do with another hour of the day? And it's related to working out because I just don't work out anyway. So I'll admit that the time I spend today is probably a little bit around mentoring, a little bit about deal flow sourcing, but it's not as much time as I used to do at all for a number of reasons, both for raising children, running Long Angle and things like that.

20:24But again, it depends on what stage of life and what stage of career and what kind of things you want to do with your time. After an exit, I think it's a great, great way to spend some time to get a pulse of what's going on because you get to almost get a paid consultative seat across a number of industries, most likely with an exit. You have access to either peers or can get access to a wide variety of things. So you can quickly dabble across a number of industries, whether it's one of our best investments was a women's champagne brand, for example, or B2B SaaS or social or crypto or health tech.

20:59You can quickly see all these things and realize, okay, well, I have a passion for this space, So let me go deeper now here. So I think it's a reasonable space, a reasonable place to spend time as a post-exit investor, founder, person. But it's certainly not for everybody. It's definitely a very popular activity post-exit, as I'm sure you know. But people regret doing it later because I think their expectations were different from yours. They actually did expect a big financial outcome and often doesn't happen. or they expected to not spend time on it. And then they realized that without spending time on it, lots of startups don't quite have the experience.

21:44They would need to succeed. So these people end up spending more time than they bargained for. Would you agree with that? Now, it's interesting, especially as an angel, depending on where you're playing, you're generally playing in the pre-seed space. and the impact you have then can be high, but as they grow, you may not be the right person. You're also like, most likely you're very small on the cap table or the founder, but they're them being the founders. So yes, they're appreciative of you, but they don't really always have the time to give you the update that you're seeking or what have you.

22:21And the last thing I'll mention is it's a long game. Like, you know, there will be those few, you know diamonds in the rough that exited within call it 18 24 36 months even but most likely if they exit it's at least five if not seven nine ten longer years and the second thing that you're sort of setting yourself up for is probably putting more in over time as new fundraising comes in are you willing to ride that journey completely or let your place let your slice continue to get diluted both answers are actually potentially fine you know you have to make the bets correctly um for the post-exit founders that find themselves feeling like they're spending more time i would ask ask them are they getting the return on that time or do they feel like the return is actually there because chances are your time is likely better spent unless you're kind of really have an official relationship with that so so how do you invest your wealth outside of angel investing what's your thinking um it's it's been it's definitely ebbed and flowed in a number of different ways uh the early post exit days i was very much i did some boglehead sort of broad based index strategies but i also said look i'm young enough and i think i'm smart enough that i should just be able to buy my own tickers and kind of equity positions and do that i did fine I didn't do amazing, but I definitely, the beta was, the alpha was actually fantastic.

23:50I doubled, I think, a lot of the first seeds within three to five years. Now, again, nearly anyone could have in that time period of 2017 to early 20s. But again, you had to kind of be in the right spaces across almost any industry and any investment you could have done that. But, and like I earlier mentioned, I now get 50 or 60 different K1s, a lot from the angels, but also a lot from a lot of the private placements that I do. I'm sort of biased towards some of the secondary offerings that private market offerings that are out there, you know, the unique fund structures that have a unique space to arbitrage and find unique private equity placements, getting access to those, which we've been able to do through Long Angle and other places, has been a growing portion of my portfolio.

24:37I have a little bit of real estate. and then everything else i'm actually now trying to simplify a bit more into broad-based indices um like the bti zbo is a little bit of vix's maybe some international exposure i still have several individual ticker symbols i bought a share of berkshire a after the exit for fun and that's phenomenally well fortunately um so uh i think there's a there's a reason to get some more simplicity my accountant would love if i had more simplistic approaches my wife would probably love it if i had less places to log into so i had a fun eight eight year journey in uh that process and now i was slowly like realizing i want to spend time in other places so i can simplify that realizing the return profiles along with the private equity placements are likely going to be more than fine so and then offering myself to kind of invest in other areas do you find do you find investing fun uh investing in what that's the question at the process just the process of investing comparing to the process of building a company uh i would say it it was fun especially when you got to see some of the the thing about investing that i think can be immediately fun and also give the adrenaline hit are some of the immediate wins like very rarely can you buy like Nvidia, for example, and then watch what happens to it within days, weeks, months, years, and then realize, okay, well, that was phenomenally to go on that ride.

26:09And there was an immediate return for that minuscule amount of time, depending on how you did the research process. Having said that, I now know, and no one needed to tell me this, that active stock picking is really best left to probably no one, honestly, you know, broad-based indices, largely over time, everyone will tell you nine, nine times out of a hundred will beat any sort of active manager. So fun, good things I knew about at the time, but I'd say building. And there was also the first probably five years I was, I was that person checking the portfolio every other day just because I could and watching things go up and down.

26:48It was stressful, but it was also, and it was super fun. It also came into the calculus when I was making decisions on things. when you watch portfolio swings in like, you know, five digits, sometimes six digits, it really puts a perspective on when you're making your day to day buying. Like my wife would say this also. She's like, you're spending so much time thinking about buying this for$100. And you're watching your entire portfolio swing by tens of thousands of dollars. And it's very sort of counterintuitive because, you know, we grew up from a humble household. You're taught to be thoughtful.

27:23You're taught to be, let's be weighing those decisions. you know do you really need that sweater do you really want a$200 jacket or whatever it is whereas the other side you're making these wild bets either call it$25 ,000 angel investment or it always feels like different pots of money but it's it's it's fascinating so a longer way to answer your question also or shorter way rather is that I personally feel like I now have a lot more fun building whether it's building and investing time in the company in watching the kids grow and investing in the pursuits that they have. I think now I'm realizing investing in one's health is really important.

28:01I still don't spend enough time on that. So yeah, I think that answers that. So what other activities you find meaningful besides building and taking care of the kids and family? You know, I am trying to get involved, for example, more in the, we'll see how it goes out, but in like the DC tech scene, why you give back in whatever that means, giving back both from a perspective of the next generation of entrepreneurs or trying to help build up DC as a tech city. We have a lot of history here. How do we grow it? How do we make it kind of bring it back to some of its luster? And then I'd say personally on the health side, spending more time with the family, trying to get date night in, which still appears to be a challenge for whatever reason.