200 Rejections to a Billion-Dollar Exit: Larry Cheng on Resilience and Growth

21:33Ryan Hanley:Yeah. Yeah. I'm with you. I think if you're upfront with who's a good fit and who's not and believe that there's enough opportunity out there that you will eventually find it, that just becomes a filtering mechanism. Like, you know, I've the first time I raised money, you know, one of the investors that we brought on, like, I wish we hadn't like in hindsight, you know what I mean? So it's like we were kind of instead of providing a. Let's put it. Let me let me frame this the right way. we made what I would consider a classic mistake in that we we glossed everything to make it seem right for this particular investor where I think if we were maybe a little more pragmatic not that the business was bad I mean the business ended up doing fine and everything was good but for this particular investor if we had just been kind of fully transparent and exactly real with where we were going you know, instead of like, hey, we need money, like we want to get someone in.

22:33Ryan Hanley:I think this person would have selected out and we wouldn't have had the downstream problems of now the friction of it really wasn't the right investment for them. It didn't really fit what their expertise was. They didn't understand the market. So there was a lot of friction there. And it's like, I was so anxious to get that capital in the door that I didn't put the right filters in place and then had all this friction downstream that I wish that I didn't had. So that was like a really good life lesson. and just in general for people listening, like the wrong money is almost as bad as no money.

23:03Oh, it's worse. I have a couple of thoughts on that. First is the relationship between an investor and an operator or an entrepreneur. I mean, it may last longer than most marriages in this country. So you should be making that choice above everything else on the basis of trust. Do you trust this person? Do you want to be married to them in some context? Set aside valuation, set aside value ads, at all of that stuff, that's the most foundational thing. You raised something that was, secondly, that I thought was really interesting. I often ask this question in a first meeting with a company, but you can invert it.

23:37The question I ask is, okay, if we go through this entire diligence process with you, what is the worst stuff that we're going to find? What are the worst metrics that are going to bother us? And can you just tell them to me now so I can tell you if it's worth it to go through the entire diligence process? And again, that's a reverse qualification, right? Like, can my firm stomach your greatest risk? Because firms have different personalities. And so in some ways, if you want to reverse qualify again, put out the bad stuff first. Say, here, this is what you're going to find. And be upfront, be transparent.

24:10And if they can handle it, great. If they can't, you've saved yourself two months of due diligence. And so.

24:16Ryan Hanley:Completely love that. I call it eight-miling. And I use that in all aspects, you know, in a lot of different aspects of my life. I think it's a good sales tactic. I think it's a good relationship builder. It's good for partnerships, all kinds of stuff. Like just like, uh, and I actually learned this from a mentor of mine 15 years ago, uh, in my first executive position that I was, you know, I, I got brought along on a lot of meetings as a, as a young professional at the time. And I think I was 29 and I was a CMO and, and I got to sit in a lot of rooms that maybe I, maybe technically on paper shouldn't have been sitting in those rooms, but I got to listen in and be part of these conversations.

24:53Ryan Hanley:And what the CEO at that time, and he was kind of a slippery son of a gun, but he was very good at what he did. And, you know, he would start certain meetings, like here's what this looks like if it doesn't work, right? Like here's how, if this doesn't work, if we do what we're about to do, what we came to sit at this table to talk about, here's what it looks like if everything falls apart. If after six months, we hate each other, here's how we get out of this. And he would literally start by talking about the end. And at first I was like, you know, it just didn't make any sense to me. I just didn't have enough life experience at that time or business experience to understand what he was doing.

25:34Ryan Hanley:But then he explained to me what you're talking about. He's like, I don't, if they hate what this looks like, what this could potentially look like in six months, I want to know now. He goes, he goes, also it's a backdoor sales tactic. because it shows that it kind of shows that you don't need them or that you're willing to talk about the end. And it's almost like an assumed sale. Like we're going to do business together, but if it goes bad, here's how we get out. Right. And, and that's where I kind of came up with this, this, I called it the ego. You're eight miling them, right. Where Eminem at the end is like, here's all the bad things about me.

26:07Ryan Hanley:Now tell them something they don't know. You know, that's kind of where I got that from. And, um, but it's a wonderful, I mean, one, I think it does create healthy relationships. Absolutely. And it sets that filter up front. It also is a sneaky, really good way to create that assumed sale or urgency mindset of like, oh my gosh, these guys, like they're sophisticated enough to think about the end first. Like, okay. And that, you know, it was a whole different kind of conversation. So I love that. I was trying to figure out the eight mile reference. So thank you for explaining that to me. Yeah, yeah, yeah.

26:42Ryan Hanley:You know, I just, I, uh, you know, I, I've always found that, um, uh, I've always found that scene at the end to be like, it's a, it's a wonderful scene. It's, you know, dynamic and the wrapping and all that kind of stuff, uh, philosophically. And just from a, from a business perspective, I always, I found it's like, uh, you've completely taken away when you put all, like you, you said, put the warts out first, right? Here's the three metrics that, you know, when people say no to us, here's the three metrics that they use to say no. And if you don't, you know, if whatever, right? But just in a relationship right now, so I bring up the dating thing.

27:19Ryan Hanley:I got divorced three years ago, so I had to go through some dating. I'm now seeing a woman, everything's very good, and I'm happy. But like, but dating again in your 40s, I was like, oh my God, like, it's wild, dude. It's wild. It is a wild world and um whatever it's all good but uh but the idea is like if by by by eminem you know in this scene for guys if you haven't seen the scene basically the idea is at the very end there's a rap battle and the best guy you know eminem's going up against this guy who's been the like top guy in this rap battle for you know months or years or whatever and essentially what he does because the rap battles are usually tearing each other apart he and his version of it basically says all the shitty stuff about himself, right?

28:01Ryan Hanley:So he's going, you know, he's like, you know, so it's mostly like, it's very urban Detroit. So it's mostly black guys. And these, a lot of these guys use the fact that he's white against him. And he's like, look, I am white. I am a bum. I am a trailer park. You know, my mom is broke, you know, but he says all this stuff. Right. And basically he takes away all the ammo that the other person would use against him. And I said, okay, well, I don't do rap battles, but I would rather if I'm going to sell something to you, right, say, okay, here's where we're not great, you know, this thing and this thing, you know, other competitors, they might do that better.

28:37Ryan Hanley:If those are high priorities for you, then, you know, whatever. But this thing and this thing, we're awesome at. And now by leading with the things we're not good at, like you said, if those are major problems, that person immediately steps away and you don't have to waste your time. It's the quick no that you said earlier. So yeah, you can use it if you want. That's how I refer to it. If you search my tweet archive, since you have already done that, I do have a post, which I think is adjacent and relevant, where I say for good CEOs, they give me the bad news early and the good news late. And what happens a lot is you go to a board meeting or something and the CEO will say, we're about to sign this, We're about to sign that.

29:18And I think we're going to land that and this and try to get you really excited about what might come. And oftentimes those don't come or it doesn't come exactly the same way. But what's really trust building is when there might be bad news and they come early with it. I'm seeing some problems here. It might turn into something. And they don't tell you any good news until it actually happens. Like tell it after the fact. And so that's a really trust building posture that I think my best CEOs adopt.

29:45Ryan Hanley:I love that. That is tremendous advice. Guys, if you're listening, that also works, I think, really well with your team, right? When you're having team meetings. Again, if trust is important to you, which it should be, right? And in these things, I think when you hide the warts that everyone knows are there, right? It creates this like gossipy culture of like, oh, that must be really bad because he's not talking about it, even though we all know, right? Or maybe it's worse than we thought, where if you just come out and go, hey, we missed our quarter by 3%. Here's the reasons, you know, we're going to fix this one, you know, whatever the issues are, you know, what's funny is, and you probably see this is oftentimes when you lead with the problems, again, you eight mile them, people will go, oh, I know how to solve that.

30:34Ryan Hanley:Oh, you're having that problem. Right. You know, especially with a situation like yours, where you have all this experience and other companies, you know, you're like, you're in a position to go, oh, if you're having that problem, we got two companies over here that have already solved that. You know, either we can connect you or, Hey, let's spend an hour. I can show you how to fix that problem. And now all of a sudden these things that were problems aren't that you would never know about if you buried that stuff. A hundred percent. Yeah. Yeah. Yeah. I love that. Well, dude, I want to, I want to transition to, to Chewy because I want to, I want to talk about this story.

31:04Ryan Hanley:So guys, um, you were, uh, first or early into Chewy and first, first into Chewy, which is amazing. And then this is the largest e-commerce exit in history, right? Chewy at the time. Yep. So, so talk to me about just the process of finding a company. Did you, did you know, or just have a feeling or hopeful? Like, what is it? Like, what is the experience of being first into a company that then has the largest exit in its sector at that time ever? Like, how does that, what does that process from start to finish look like? And, and how do you navigate that? Sure. So for those who don't know, Chewy is a pet food e-commerce company, and we invested in the company in 2013.

31:49We found the company, we have analysts, folks recently out of college who were calling companies, and one of the analysts called Chewy, and I hopped on a call with them, and they said they were trying to sell pet food online. If you don't know, back in the dot-com era, the biggest bust of all the dot-com companies in 2000 was this company called Pets.com. It had a sock puppet as its kind of mascot. And it was just a huge debacle of like, how can you send 50 pound bags of dog food over the mail and make any money? Like, it's stupid. And that persisted in the venture and growth equity mindset. So I spent some time meeting with them.

32:27And what I realized is that the world had kind of changed. And at the highest level, this is a great area to invest. And it's sort of contrarian is look for big failures, let time pass and see if those models might work today. And what had changed with Chewy is, number one, there's this whole humanization of pets movement where people wanted to buy organic, grass-fed, like all the best stuff, whereas we used to buy like Purina kibble in the grocery store, and we don't do that anymore. So basically that bag of dog food got more expensive, which made it more affordable to ship. and then just the proliferation of online shoppers, more pets, like more than half of households have pets.

33:11And so the market just got a lot bigger for online pet food e-commerce. And I remember, literally, this is what happened. I was in a PetSmart and I was - This podcast is supported by The RealReal. Meet Christine. She loves shopping. And this is the sound of fashion overload. Too many fabulous things, not enough space. So Christine started selling with The RealReal.

33:34Ryan Hanley:I've always loved collecting designer pieces. Gucci bags, Prada heels, but my style keeps evolving. Selling with the RealReal? Game changer. I earn more and they do everything. Seriously, just drop off your items or schedule a pickup. We handle the photos, descriptions, pricing, even shipping. You just sit back and watch your items sell fast to our 38 million members. And I get peace of mind knowing I earn more selling with the RealReal than anywhere else. Exactly. This? That's the sound of your closet working for you. The RealReal. Earn more, save time, sell fast. And right now, you can get an extra$100 site credit when you sell for the first time.

34:13Go to therealreal.com to get your extra$100. Therealreal.com. That's therealreal.com. getting pet food for my dog. And I had met with Chewy. And I knew Chewy was trying to be the low cost, low price point player. And I started looking up every in the store, I started looking up the price point of the exact same product on Chewy. And Chewy was, you know, 30 % cheaper than what PetSmart was in store, Petco in store. And I was thinking it kept happening over and over again. And I knew Chewy's financials in my head. And I thought, wait a second, you're saying that I can just order on Chewy for 30 % lower price.

34:54I don't have to come here, drive here, park, see if my product is even in stock, and carry it home and lug it all home. And it just seemed like a no-brainer value proposition. It's basically a more convenient, lower price point service for exactly what you're already buying. And so we made an investment. And the company grew from, so we met it when they were doing 25 million in revenue. And about the time that we invested, they finished the 70 million revenue year. And they went to 200 million, to 400 million, to 900 million, to 2 billion in revenue and onwards as a public company. And it was a great success and much, much credit to Ryan Cohen, the team who actually took on Amazon in the pet food vertical on by having better service for the, for the pet customer.

35:46Ryan Hanley:Did that, this probably isn't the right follow-up question, but it's where my brain goes. Did that push you into looking at other like e-commerce verticals? Like what did you get like that all of a sudden? Oh, Hey, there's an opportunity. And then you start snowballing into those. Or did that feel like a one-off opportunity in terms of it's vertical because of the space and the timing, et cetera. So we definitely did some more in e-commerce. However, doing more in e-commerce helped us to appreciate how unique Chewy was as a company. And we do a very foundational analysis called customer cohorts, which is you track how much a customer spends over time.

36:26And Chewy, for a transactional consumer e-commerce business, it was like the customer came and they never left. They kept spending the same amount, and we're talking over time, for a decade. And so it was the most stable, predictable spend pattern of any consumer business we have seen. And normally, like, a very good enterprise product gets that kind of retention dynamic. And so Chewy had figured out something in a great category. It's definitely a special company. We sold the business for$3.3 billion after just three and a half years after investing, and it was a great success for us, but hard to replicate.

37:09I do think I have a company right now that reminds me of Chewy called US Mobile, which is a mobile carrier. You can get your cell phone service through them. And so it's taken like a decade to find a company that has similar dynamics.

37:25Ryan Hanley:So a company like Chewy that comes in, you said they're doing$25 million when you made the investment. They looking for, was that just financial and then you sit on a board? Are they looking for guidance, support, help? When you're at that size, what are you looking for out of the investors that come in? Like if they already got the team mostly in place and your job is really just to kind of follow along and and maybe just be a fiduciary as far as a board member, et cetera, or investor. But or are they still at that point looking for you? Hey, can you make a connection here? Do you have any expertise here, et cetera?

38:06Yeah, I mean, at the time they had never raised capital. They didn't have a board. And so the first board meeting in the firm's history was after we invested me and the two founders, which was a lot of fun. I'll always remember that first board meeting. They didn't really know what was supposed to happen in a board meeting, which is totally fine. But the two founders handed me four printouts pages from QuickBooks. And they said, they passed it to me over the table and said, okay, so what do we do in a board meeting? That was the board meeting. And it was a relatively brief one, I have to say. But by no means, at the point that we invest, the team is not fully built out.

38:45the strategy is not fully developed, and the capital needs may not be fully addressed. And so there was a lot of big steps with that company. We made a strategic decision to actually insource all of our own fulfillment centers, for fulfillment capacity. We were using a third party, and we decided to actually build our own, which is a huge decision. We helped to raise capital to do that. And there were expansions in the different product categories, expansion, different geographies. And so it was, it, there was a lot going on at the time.

39:17Ryan Hanley:But I think for, for you guys listening at home, one of the big takeaways from there is think about this Chewy's 25 million in revenue, right? And you're saying they don't have everything built out. They don't have everything, you know, every system's not, so I think, you know, just take a little pressure off yourself, guys, when you're building these companies and you're early to, I think there's a lot of stress that I think founders put on themselves to, to be, to be mature faster than maybe is even a positive, right? I think sometimes immaturity in certain places helps you look at problems differently, ask for help from people, et cetera.

39:55Ryan Hanley:When we race to maturity really fast, we sometimes get this idea that like, we're supposed to know everything and we're supposed to know how a board meeting works and we're supposed to know how every system works. And it's like that, you know, I've talked to very successful people on this show, a hundred million plus, you know, exits and all this different stuff. And they'll even tell you the day they're exiting 10, 15 years into their business, they still don't feel like they have everything lined up. So it's like, you know, there's, there's, I think sometimes, especially early or first time founders, et cetera, they put so much pressure on themselves to be perfect when I don't know that anyone, you know, and I guess maybe I'm just looking for validation on this.

40:33Ryan Hanley:Like you're not expecting them to be perfect when they start talking to you. Not at all. All of our companies, we would probably describe as raw operationally. What I often say, like over the course of our investment, a lot of things change, but certain important things stay the same. What stays the same is sort of the problem that you're trying to solve, the customer that you're focused on, your commitment to that mission, the culture of that you're trying to instill into your business. That stays the same. What changes is the scale and the organization of that scale in a better change because you want to grow.

41:10And so how finance changes, sales, customer success, your board, you know, all of this stuff, it'll be, you know, hopefully if you're successful, 10, 50, 100 times the size. But who you are as a company should stay the same.

41:25Ryan Hanley:Now, you also sit on the board of directors of GameStop still today. Yep. Were you on the board during the big, what was it, the Reddit run up or whatever, the message board when everyone was going and driving the price all over the place? Were you there when that was going on? Thank goodness, no. I came right after that. And maybe I'll connect the two. Yes, please. Ryan Cohen was the founder and CEO of Chewy, co-founder and CEO of Chewy. And he became the active investor behind GameStop and is now the CEO of GameStop. And so that's how that's my connection to GameStop. And I, I joined the board to help out shortly after all of that.

42:05Ryan Hanley:Yeah. Now, just I know you weren't there during the time, but I'm sure you've had discussions about that moment since. And I know even there's been a couple secondary tries at doing a similar run up and it hasn't worked as well, etc. Like when you're sitting on a board and, you know, I've never sat on the board of a public company. So, you know, this is experience that I don't have. I'm very interested. Like, and you see, like, you see that kind of like your stock price. Everyone looks at a company basically if you're, you know, and I'd say particularly amateur or unsophisticated investors. And they basically just look at price and they look at how much they're willing to spend on something.

42:42Ryan Hanley:And they put this arbitrary value on it, right? When you're sitting there as a board member and you really understand how these market dynamics work and you watch something like some price manipulation happening, which is what was happening, right? I mean, people were driving the price up and obviously it came back down. but how do you handle that as a public company and managing what's happening with a stock price and having to hit quarterly earnings and all that kind of stuff versus the private company world where you're not necessarily on that time clock if you're able to pay your bills, right?

43:20Ryan Hanley:As long as you're not running out of money, you're not necessarily on a clock like with a publicly traded company, you have to do quarterly earnings reports, You have people pushing price up, pushing down shorts, you know, all these different things that you have to deal with. Like, how do you manage the value of the company differently? And just what are some of the things you have to consider public versus private? Yeah, I appreciate the connection between the two because I live in the private company world and I'm on a couple public company boards, GameStop and Grove. and I think I bring that private company mentality into it, which is I don't worry about the day-to-day movements of the stock price or, and I actually don't look to optimized for a quarterly earnings report because our job is to build the business for the long term and make those decisions that set the business on a great foundation to grow profitably in the long run.

44:11And that's what we do. So if there's volatility between here and there, it's not even occupying my mind, to be honest. It's really about just making the right decisions for the business over the long run.

44:25Ryan Hanley:Awesome. All right, well, I want to transition into what you're seeing in the market today because I have a bunch of questions from where you sit and what you think about. First, I want to go to crypto, right? In general, is this a space you follow? And two, like, obviously we've seen a big move down. Bitcoin actually was, it's kind of bounced back up a little bit, but as of last week, it was down 10 % year over year. You know, a lot of questions around the crypto space. My personal belief is that this, the technology outside of the tokens and the value of the tokens, the technology is absolutely game-changing, revolutionary, and ultimately where I see a lot of businesses going over time.

45:07But that seems to be, you know, I look at like the,

45:10Ryan Hanley:I'll give you an example. I look at the insurance industry and the insurance contract in particular. And if insurance contracts were put onto a blockchain and that was ubiquitous across the industry, how much faster, how much more transparency, how much more pricing stability I think could be built into the market. But no one has even stepped their toes in that. I mean, it's literally just conversations at association meetings, et cetera. So where do you see kind of crypto in general? And are there any businesses or spaces that you see taking the application of a blockchain or crypto technology in general and actually being applied outside of just the tokenization of this technology?

45:54Yeah, crypto is funny. When crypto is riding up, everyone's like, it is the game changing currency of the world. And when it's going down, it's like, there's no intrinsic value. It's a joke. It's a Ponzi scheme. And I do think there are practical applications. Probably the most likely and most bullish on is just the use of stable coins for international money transfer. That's a slow, expensive, complicated process. And I think that's where the combination of crypto and blockchain can do very basic business things like make a transaction cheaper and faster. And that's what it needs to do. I think there is utility for certain currencies as an inflationary hedge.

46:44And as in the same way gold is, you could say gold is not a cash producing yielding asset. But I mean, it's gone on a bull run the last couple of years, but it's always been occupied a space. I think there's space for that in crypto. There's a lot of junk in crypto. There's a lot of stuff that's going to be worth nothing and already is. And and so that's that's sort of the nature of speculation in an early market.

47:12Yeah.

47:13Ryan Hanley:I'm with you on this. The stable coins to me are so obvious. I mean, just, I know a lot of founders, a lot of, a lot of just business owners in general that I, that I talked to, uh, the ones that are, that are leaning towards the future a little bit are paying, say, uh, either expats or virtual assistants or overseas. they're paying them in USDC or USDT because it's, it want to transact immediately. So they have the money instantaneously, essentially the fees, you know, there's, there's no essential fee for the transaction to the, for the most part, or at least relative to what it would cost to, you know, pay them internationally through a standard, you know, service.

47:51Ryan Hanley:And just, just taking that, that expense out of the business, especially if you have a large international team, it can get you more bodies. I mean, I, I literally know, know people who have been able to put more bodies on their team simply by paying in you know in in stable coin versus paying just because of the fees you pay to transfer internationally it's just easier for everybody that that one seems so obvious that uh i follow and i'm very intrigued and speculate speculate quite a bit on bitcoin i think the rest are you know i think it's very interesting how, how much sentiment drives that particular space.

48:28Ryan Hanley:Like it's, it's crazy. It's like this big human psychology experiment. It's wild. But yeah, I find it. And, and I think the underlying tech, as much as I can understand it as a, as a lowly math major with a liberal arts degree, you know, as much as I can understand it, I see that the technology itself being game changing, but the real world applications have been slow, very slow. I unfortunately think a lot of that has to do with the craziness associated with the tokenization. And if there wasn't so much garbage out there, I feel like there'd be more effort and enthusiasm behind bringing it into kind of how we operate and businesses outside of that space.

49:16Ryan Hanley:So I guess the next one that we have to talk about from where you're sitting is AI, right? I mean, obviously, we talked a little bit before we went live around ChatGPT selling ads. Like, you know, there's so much news. We're in the model wars. It's freaking nuts. You know, like every day someone's got a new point something that's X better than someone else. And, you know, and then everyone's just using it to write emails. So it's like, what are we even talking about? But, you know, from your seat when you're, you know, with your investment thesis, like, What are you seeing coming that gets you excited that you're spending time on from a sector perspective?

49:53Well, it's interesting. If I extrapolate up, I have seen more companies, AI companies, in the last 10 months that I would say have gotten to$10 million in revenue with less than 10 employees in probably less than one year being in market than I have in my entire career. It is shocking. And that's all on the rails of AI. and there's a huge amount of experimental spend in everything. And what's challenging for us as investors is we don't know what's going to stick and whatever is working, there's 50 competitors along the same lines. And the way I think about it is not dissimilar than how you might think about crypto or just any other businesses.

50:35Set aside the revenue growth because there's so much experimentation happening. who is solving a real long-term business problem or consumer problem well? And who is doing it in a way that builds a moat for your business? And I just ask those two questions and try and decipher everything else through that. But we're seeing really, I mean, I can't even begin because we're seeing so many applications. And by the way, all of our portfolio companies are embracing AI across their businesses. And so it's really fun. The hype cycle needs to chill out a little bit. All those VCs we were talking about at the beginning of the episode, they're all feeding into the hype cycle.

51:17They know it. They're all paying super high valuations that will not sustain, and they know it. They just don't want to be the last ones holding the bag. But AI will certainly be transformative.

51:28Ryan Hanley:Yeah. As an experiment, I was using one of the vibe coding platforms just to say, like, you read all this stuff online, you hear different things. And I was like, okay, I want to just see what's real and what's not real. Like how hard is this actually to do? And, you know, I think very basic, you know, just for those who haven't played with these things at home, you know, very basic applications, simple API connections into different systems. You can set up and create some nice little neat, you know, kind of straightforward functional applications you can vibe code pretty well. And then there becomes a spot where if you want to really take this to the next level, you have to do real development work and solidify the systems and do different stuff that I think is the next level.

52:13Ryan Hanley:But what hit me was if, you know, this Jamoke sitting in his house on a Saturday morning while his kids are watching TV is vibe coding up an application that I can sell in three hours, right? How does someone who's out there maybe solving a similar problem, but I'll say in a more real way, I don't want to discount vibe coded platform, but like, you know, in a more entrenched and long-term way, right? How do you figure out the signal from the noise in that scenario, right? So like let's say you've taken on – you've put your own money in. You have a team. You're doing something similar and maybe from a consumer perspective sounds similar but is deeper, richer, more secure, et cetera than something I just told the computer to make while – again, while I was having my cup of coffee on a Saturday morning.

53:02Ryan Hanley:but to a consumer front facing, very difficult to differentiate between my very light vibe coded thing and this more entrenched piece. How are you working with or what are you seeing from your portfolio companies or just the market in general? Like, I don't wanna say real businesses, but how do they, how, if this is something that I'm gonna do for 10 years, right? This is a real company. I wanna expand it. I wanna grow it. I'm going to eventually want to take on capital, whatever, versus my like little side hustle, side quest project. Right. How does that company stand out today when there's so much noise in the marketplace versus the 400 vibe coded things that kind of look and feel like it?

53:48Yeah. Well, businesses can differentiate on other things other than the code of their product. Right. And so, I mean, we talked a little bit about Chewy. Chewy was going directly up against Amazon, who was the 800-pound gorilla, and we won on customer service. So I look for an AI application slash company. Can they differentiate on other things? Is there a community element that's a mode? Is there a service element that's a mode? Is there a pricing and packaging orientation that's better suited for their market? So there's layers around the business. Is there a go-to-market strategy that is different than the other one?

54:28because you can win by doing a lot of other things right when the despite the products being sort of comparable think about think about how many versions of water are on the shelf um if there's if there's a commodity product perhaps it's water um yet certain water brands win like liquid death um or others versus and that's because they've done something different with brand and distribution and their community and so forth. So I almost think about it in that dimension is, okay, forget the code for a second. Let's look at everything else and how are you gonna win?

55:03Ryan Hanley:Yeah, it's funny. I was thinking through this idea with coffee. I had a founder of a coffee brand on Seven Weeks Coffee. It was on a few weeks ago. And we were talking about this because man, I mean, there are just a million micro, we'll call them micro coffee roasting brands out there. And he's, you know, he basically said, you know, and his spin was more like his was like a Christian pro light, you know, very kind of classic Orthodox Christian views is kind of the tact he took. But, you know, you look at black rifle coffee, you look at, you know, all these different, they all, the way they differentiate.

55:43Ryan Hanley:I mean, I, if you can tell me that you can really taste the difference between all these different things, I think you're lying to me. I mean, not that they're not good, but I mean, come on. I mean, there's 10 million different roasted coffee beans. There's only so many ways you can make it taste, but, but it very much feels like the brand and the connection to the community is how they differentiate themselves. It could literally be roasted in the same place and put a different package on it that speaks to a different audience. So do you feel like today, like my, my, what I'm, what I have been talking a little bit about and thinking through is that while brand has always been important, content and how you tell your story has always been important.

56:23Ryan Hanley:In this kind of era of AI where people can spin up narratives so quickly, it almost feels like your brand, your message, your community, and, and this is kind of where my question is going, the personal brand of the founder or founders has become more important than ever before. Almost like, uh, like, I mean, look at the Elon Musk, like none of his companies do. I mean, obviously Elon Musk is an exception to an exception. So I get what I'm asking here, but, um, none of his companies do advertising. None of them. It's just him on Twitter, you know, talking, saying crazy shit and everyone goes and checks out his company.

57:00Ryan Hanley:Right. So like, I guess every very few founders will ever be Elon Musk or say the crazy shit that he says as much as I love him. Um, you know, how do you balance that? Right. Do the founders need to have a personal brand today? Does there have to be some core intrinsic, you know, this happened in my life and this is why I started it story? Is that more important than before you think because of this, or is it just kind of same and need to be good? I think it's really important. I preach this to my founders and CEOs to be external and to be authentic and to be engaged where your community is. A great example of this in my portfolio is the founder and CEO of US Mobile, Ahmed Khadak.

57:38He is dominating Reddit. All product development ideas go on Reddit. All announcements go on Reddit. Customer service is on Reddit. I think we have the largest corporate subreddit on Reddit for US Mobile. And it's a very authentic community. And he's right in the middle of it. And he takes hate. He takes love. He takes everything in between. And I think we're in a day and age where the face and the founder and the CEO of the business can't be hidden. You've got to be upfront and you've got to engage and you've got to be real. And even as a public company CEO, it's like if you're going to rely on the quarterly earnings call as your communication with shareholders, that's from 50 years ago.

58:22I mean, we've got to come into this age. And so I actually think that is super important. And if you go back to your AI question, if you have two AI companies with like products, but you have one founder who's built the community in a social ecosystem around it and the other who's just coding in the back, you know, then you have two different, completely different companies. And so so I'm very much forward on on that on that dimension.

58:48Ryan Hanley:Yeah, I look at Jensen Wang from NVIDIA, and as their run-up has happened, and he started getting out there more before the big run-up, but during it, he has been out front. You see him at more conferences, more talks, more whatever, more panels than I think you saw him in previous years. And I have to believe that that is not an accident, right? I think that's not like one day he just woke up and said, Oh, I think I'll start doing more talks today. I mean, it very much feels like a strategy and you know, the messaging behind it of like, you know, I, I think it's, it's gone viral quite a few times now, but that whole, like, it's supposed to be hard talk that he gave.

59:32Ryan Hanley:Like, I feel blessed that, you know, I had these hardships because they made me better. And you know, too many, too many founders are looking for easy and you know, that whole thing that I'm butchering it. You can go find it guys. It's brilliant. I mean, it's absolutely brilliant, but it also kind of makes you like, when you hear that, if you're that type of like, you know, I'm going to go get it, you know, I'm going to work hard. Like I'm going to dominate the world mentality, whatever your thing is like, you can't help, but like now lean towards him a little and be like, geez, I kind of, I kind of hope these guys win.

1:00:06Ryan Hanley:Like, I love that. Like you can't help yourself. It's like, it's a human reaction. and you know I guess my last question for you around this is is just like if you do get that founder who really wants to just sit in the dark room and code that's their zone of genius that's where they want to be um would you and if there's another option add it but I guess that the two that I'm thinking about are do you recommend that that founder stay in the room and stay in their zone of genius and hire out a face to go out and start telling the story or is it look like Like, I know that's where you want to be, but part of your role as the founder and CEO of this company is you need to spend some time in front of people and start to develop that side of your career of how you operate.

1:00:52Yeah, I probably shouldn't knock founders who want to sit in a room and code because there have been some great founders who are in that bucket, Mark Zuckerberg being one of them who I've been in the past. but I might suggest this. Just turn on the camera during your day a little bit and be who you are. Maybe you're basically Twitch streaming as your code. But people want to see the real thing, and even if it's just a little bit every day, it actually says something. It tells your shareholders, your customers, whoever, something about you. You don't need to be Jensen Huang and go out and do TED Talks if that's not who you are.

1:01:32but even sharing a little bit from your day, I think that's awesome.

1:01:36Ryan Hanley:Yeah, I love that idea. It's funny, I've been in insurance for a long time, been an executive of different things. Today, I do more consulting and coaching and then I say I run this media business and sometimes, I don't want to say bored because I probably always have something to do but let's say I'm just kind of banging around through my day. hey, a couple of times I've just popped open my phone, turned it on live to like Instagram or something. And I'll just be banging away on my work, talking about an idea or something I'm doing. And then people ask them questions. And like, those will go crazy.

1:02:14Ryan Hanley:Like people will be like, why are you doing this? Why, you know, why did you, you know, in some of it's like silly decisions. Like, why did you choose Substack for like your home for your business? You know, whatever. And, you know, these are real questions that people have, varying degrees of difficulty and triteness, but ultimately important to people. And I'm literally working just with the phone on a live, and then you're looking down and seeing questions that come up and answering the questions as you're working. And it's very simple to do. And I think where people, where particularly people who tend to be more tacticians of the thing that they do, they don't want always that content piece.

1:02:59Ryan Hanley:It almost feels like beneath them sometimes. I've had people say like, ah, that content stuff's for influencers. I don't want to be an influencer. I'm like, you are an influencer, but you're the CEO and founder of this company. You are an influencer, whether you think you are or you aren't, you are. And I think that's a real thing that we just can't get away from today. It just feels like part of the job. It doesn't feel optional anymore. Yeah, I do Twitter live streams every once in a while, maybe once a month, something like that. And the first time I did it, I had a very clear agenda of what I wanted to talk about.

1:03:35And I had certain questions I wanted to address and this and that. And I put together a nice PowerPoint deck. And now I'm just like, I'm going to go live, whatever you guys got, let me know. And we just go. And it's always well received. I think people want to see you in your real element and just be who you are.

1:03:52Ryan Hanley:Yeah, I completely agree. Larry, this has been an incredible conversation. I could talk to you for another couple hours. I love your methodology. I love your mindset and how you're approaching this. And I think in particular, this idea, you know, we've talked about a lot of really good stuff, but this idea of turn your long maybes into quick no's, if there's anything, guys, that we can take away, this is, it's great for fundraising. It's great for sales. Like I said, it's great for really anything in your life that you're trying to achieve. We don't want to waste time on the people who aren't serious or committed to us.

1:04:25Ryan Hanley:And there's 8 billion people in the world. So if you have something of even the smallest amount of value or potential, eventually you will run into someone who believes in what you believe and wants to be part of it and just keep going. I absolutely love it. Larry, where can people get deeper into your world if they want to follow along with your journey or, or they just, they want to know more about Volition and what you're doing, or maybe they are a founder and they want to talk to you guys. Like how do they get deeper into your space? Yeah. So Volition is volitioncapital.com. I'm very active on, on X.

1:04:57So my handle is Larry VC and both Volition Capital and myself are on LinkedIn as well. So those would be probably the, the X LinkedIn and the website are the ways to go.

1:05:07Ryan Hanley:Tremendous. And guys, I'll have links to everything that Larry just mentioned, whether you're on YouTube or wherever you listen to podcasts, just scroll down in the description. I'll have links to everything. Dude, appreciate you. Appreciate the time. Tremendous. And anytime you want to come back on, open invitation, my friend. Thanks so much, Ryan. It's a lot of fun. Take care.

1:05:32Say what you want about AI, but it's here. And it's helping businesses get more done in a day. Wix's website builder is infused with AI so you can stay ahead. Create a beautiful, functional website just by describing your idea. Track how your site appears in AI search results. Create custom images on demand. Or launch an entire campaign in a matter of minutes. Wix gives you AI wherever you need it. Try it now for free at Wix.com. Hear that? That's me in Tokyo learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I worry about is using too much wasabi. Get where you're going with SPY, the world's most traded ETF.

1:06:15Getting there starts here with State Street Investment Management. Before investing, consider the fund's investment objectives, risks, charges, and expenses. Visit statestreet.com slash IM for perspectives containing this and other information. Read it carefully. SPY is subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal. Alps Distributors, Inc. Distributor.

1:06:31Ryan Hanley:Everybody knows Shaq, but off camera, he's just a regular guy. People never believe me when I say I'm just like them. I take out the trash, do dishes, and I struggle with moderate obstructive sleep apnea or OSA. And a lot of adults with obesity also struggle with moderate to severe OSA. You know those scary breathing interruptions during sleep? The loud snoring, choking, and daytime fatigue? I knew I had to talk to my doctor. Don't sleep on the symptoms. Learn more at dontsleeponosa.com. This information is provided by Lilly, a medicine company.