What You Need to Know Before Investing in Startups | Jaclyn Johnson

14:25Mary Holland:I'm going totally off script now because this is so fascinating. The Roth IRA was news to me and this angel act, I had heard about it, but I didn't realize it was a test, like a serious test because being devil's advocate about this act is which we talked about in the first half of this episode. A lot of people don't understand the risks of private investing and it scares me. It's almost reminds me of the gambling effect that people are betting their life savings on who's going to win Love Island. And it's just very reckless and like dangerous, frankly, and predatory. But what I love about Cherub is you guys are really educating.

14:58Mary Holland:Yeah. That's what this whole what I'm pitching at at the Cherub Festival or are you calling it a festival? It's the creator summit. Creator summit. The point is so that they can learn what to ask. So three questions that every person should ask the startup before they invest rapid fire. Oh, God. Okay. I would say like, well, one is like, who is your core customer?

15:18Jaclyn Johnson:So everyone can have an idea. But if you don't know who your core customer is, or the problem you're solving, like that's a big red flag to me. What is your exit plan? This feels obvious, but I've been on so many pitches where people are like, and then I don't know, I might like hand it down to like my family. I'm like, okay, well, that doesn't help me as an investor. What do you mean you don't have an exit plan, or you have no idea who could like ever buy you? And the third one would really be like, what's your go to market, right? Like what, how are you getting out into the world? Because again, great ideas are great.

15:47Jaclyn Johnson:If you cannot get them out in the world and have people convert on those

15:51Mary Holland:ideas, it's not going to do anything. That makes sense. Okay. Noted for my pet. Yes. I'm going to make sure I have all of those answers.

15:57Jaclyn Johnson:Also, I would say, why you? Like, I think that's the biggest thing. Cause I think when you're investing early stage, at the end of the day, I invest in the founder. Yeah. A hundred percent. Like, do I believe you're going to go all the way on this? Do I think you're a hundred percent dedicated to it? And why are you the right person to build this right now? Right. I think if you can answer those questions, that's like for me, like Chuck. Okay. Shifting gears to your founder side.

16:19Mary Holland:I mean, you, I was just telling you before this, the most serial entrepreneur right now, it's so incredible and impressive. I want to start with your money story because I ask all of my guests, I feel like how you grew up around money really dictates how you show up in the world. I imagine growing up with entrepreneurs gave you a high risk tolerance. Yes. Can you tell me about the conversation of money growing up and risk and how that's affected you today? It's so funny.

16:42Jaclyn Johnson:So my parents co-own a small business together. My mom is like the financial side. My dad is like the sales side. And so my sister and I like grew up in their office, like stuffing envelopes, not to make it sound like 100 years old, but like just like teetering around my mom, like talking to everyone and like my dad doing the thing. And so we just grew up around business in general and also parents that worked like all the time, you know, so it wasn't like that nine to five, I'm home with my family. It was like, I remember my mom like up, like doing stuff on her calculator at night. And then my dad, like, so I was like, just always surrounded by it.

17:13Jaclyn Johnson:But what was really interesting was that my parents are very like, how do I say this? Like in a polite way, but very frugal. Like they're very like cash conscious because they're entrepreneurs, right? When you own a small business and you have like employees, you're just terrified to get to the next payroll, especially when you're starting. You're like, okay, I've just got to hustle and have this mentality. And so my mom actually raised my sister and I very tight ship, but also very money educated. So she got us credit cards when we were 14 and we'd like pump gas like once a month to help build our credit scores.

17:44Jaclyn Johnson:Like she was so good at being like, OK, here's how we're going to budget. Here's how we're thinking about this. Like get a job. Like I had two jobs in high school. I was like saving. I was like, you know, all these different things. Yeah. And so we were very trained, I feel like on the money side, but also had a very much a mentality around like save as much as you can. Yeah. Scarcity. Scarcity mindset, like save, save, save, save, save. And so I think like that benefited me so much as an entrepreneur, especially as a bootstrapped founder. So building like create and cultivate from literally zero and even my first company from a laptop and an idea made me like such a scrappy entrepreneur that I was able to do everything.

18:23Jaclyn Johnson:and I never relied on paying someone else or paying for service or paying for whatever to help build my business. I was like, I'm the one that needs to quarterback this till the end. Where this got difficult, I would say, was like when I was making a lot of money and very successful, undoing that mentality of like, can I do this? Like, should I spend this money on myself? Or like little things where it's like, I hired a team to help me do my social media and I remember being like, but I can do it. But it's like, no, but my time is more valuable. and if I can spend like so that was like a little hard to unpack once I became very successful because you're so in that mindset.

18:59Mary Holland:No, I mean, you have to spend money to make money. And I think I grew up in a scarcity mindset as well. And even starting this business, it's so hard for me to delegate and to say like even something as small as like I don't want to pay to get my makeup done. But the amount of time, the amount of things that emails I could send in the glam chair instead of doing my own, even the littlest, tiniest trade-offs, I feel like great entrepreneurs have to unlock that mindset and scarcity mindset growing up. A lot of us did have. And it's very easy to think you can save your way to wealth and you just can't.

19:31Jaclyn Johnson:It's just not reality.

19:32Mary Holland:It's not possible. So you've had multiple acquisitions and you sold Create and Cultivate. Yes. And you sold it for 22 million, if I'm not mistaken, which is a life-changing sum. Yes. What's most impressive is that you sold an events business during COVID. 10 out of 10, do not recommend it.

19:49Jaclyn Johnson:I can't even imagine.

19:51Mary Holland:And I wanna hear exactly what you were thinking when that money hit your account, how much of that hit your account as well. You said you bootstrapped, meaning you used all your own money to build it. So you maintained most of that equity, I imagine. But I guess my first question is, what did it feel like when you got that check and it hit your bank account? And what did you do with it?

20:10Jaclyn Johnson:It's funny. It's such a complicated story because there's so much that goes into that transaction happening. Essentially, pre-COVID, so let's just say Q1 2020, we were on track to do$25 million that year. We had done$5 million Q1 with like a$5 to$7 million EBITDA. So we were... EBITDA meaning profit. Like essentially profit. Yeah. And essentially, we had LOIs. We were in a sale process from multiple people in the$75 million range. Oh my gosh. Yes. So that's where like my brain was. And these were also strategics, which was very exciting to me. So these were like companies that I would go into, be a part of that would enhance the business, blah, blah, blah.

20:58Jaclyn Johnson:We were like a perfect acquisition for a strategic. So I'm so excited. I get like a little rippling of like, there's like this thing happening and I'm like, no problem. Flatten the curve. Right. We got this. and then it was like no no no this is like so obviously everyone pulls out no so this was like

21:16Mary Holland:in january you had all of these letters yeah like honestly we had like top of march like

21:22Jaclyn Johnson:stop it you were ready to go top of march yes yes brutal brutal i'm like everything but it was heartbreaking obviously at that point we had to unravel we were coming up on our south by event. And I like remember sitting in our office with the TV on because it was like the Austin County was like going to do a live broadcast. Yeah. And basically they were like, we're canceling South by. But then South by like, no, we're still going to do it. And I was like, I remember just being like, we have let's just like keep pushing, keep pushing. And then it was like, no, everything is shutting down. Unpacking that event.

21:58Jaclyn Johnson:We also had a Coachella event. We had millions of dollars in revenue for. And basically what I'll say is like, I mean, it was emotionally a nightmare. I was obviously devastated because in my mind, I'm like, cool. Now this goes to zero. Right. In many ways. Right. And so like my 10 years of work down the drain, like, and also I was tired. Like I was like, I was at the finish line. You know what I mean? I was ready to go. And so now I'm like, okay, I have to rebuild this up maybe over five more years. Like I just like felt so defeated. Entrepreneurs went one or two ways in COVID. It was like you either.

22:32Jaclyn Johnson:It was like fight or flight. And I definitely fought. I like woke up and I was like, we're launching a digital conference, like going live May. We're launching a we had a lease on a pop up we were going to launch that I basically turned into Postmates partnership where we were like delivering female founded goods and like PPC where like we were like top of LA Times front of ad week, like every brand started coming to us and being like, help us build a digital conference. We ended up like ending the year with like nine million in revenue. and 4 million EBITDA. 2020? 2020. You're kidding. For an events business.

23:05Jaclyn Johnson:For an events business. It was crazy. I wizarded up. I became a video editor. I was like a psychopath. Like we had this gorgeous office space. It was like featured in Dwell, empty. And I'm like, we're turning it into a photo and video studio. We're launching like everything, like even Crate and Cultivate 100, we did all virtually. We had people go in individually with like masks and shoot. And like we did a live with Kiki Palmer. It was like, we made it happen. And thankfully, like 80%, I would say of our sponsors stayed with us and kept their sponsorship dollars with us. Like shout out MasterCard, like the most amazing, thank God, because they're like our biggest partner was like, we're sticking with you.

23:41Jaclyn Johnson:So we were very lucky in that sense. So were they? Yeah. So were they. Yeah. And so what ended up happening was end of year. So summer, fall, basically, we got a lot of people. There was a lot of predatory acquisition happening where people were like, we know you're suffering. We're going to come by you. So we got a lot of those. and we're like, no, we're fine. Like at horrible valuations. Yeah. Like we'll just give you stock and like whatever. And we were like, no, no, no, no, no, we're not doing that. I was like, we're holding out. We're holding out. And essentially the only people who started to come in interested with cash offers were private equity and family offices.

24:17And personally,

24:19Jaclyn Johnson:I didn't love either option personally. Why? Because private equity is notorious for like ruining businesses. And also private equity meant like I would likely step aside, which I was kind of OK with at the time. But I knew it would be like you have to say goodbye to this like when this deal gets done. And family offices, like essentially a lot of them were like combining it with something or like merging it with an idea that wasn't like my total vision for the company. So it was like it wasn't the end of the world, but it wasn't like great either. Essentially, it was the end of the year. Are events coming back?

24:51Jaclyn Johnson:Do I keep pushing this digital membership and program? Like, am I even like, do I even have the energy to continue on? And so our banker, who was amazing, was like, let me go. Like, what is your number that you want to walk away with that you won't feel like this is disappointing? And I gave her my number. And she's like, all right, I'll go try and make the deal happen. And she like essentially made the deal happen. Yeah, of course. We had a female banker.

25:16Mary Holland:And so we ended up selling to private equity. Okay. So it was private equity. And so was it was that a little bit emotional of they have my number, but I didn't want PE. Yes. Okay.

25:27Jaclyn Johnson:So, and again, I was happy with, like, I liked them. I was very happy with the outcome, obviously, but it wasn't my first choice. So essentially, a few things happened. You're talking about the day of and the wire hitting. Yeah. It was getting to that finish line. Anyone who's been through private equity diligence knows it is a nightmare. It is. In 2016, you spent$24 on this thing. Why? Where does this go? Is this a one-time expense is this that you're like, yeah, oh my God, you're like racking your brain. My CFO at the time, Neha Kumar, who I love, like quarterbacked that part of the diligence.

26:00Jaclyn Johnson:Thank God for her. Because I was like, I'm going to keep running the business. I don't believe any of this is happening until it's done. And then essentially it was like, I woke up that morning. I was so exhausted. I was like, we had our closing meeting. I remember I like, we get off the call and they're like, you know, everyone say I, I, I, whatever. And then it's like the wire hits. And I had a podcast with Diane von Furstenberg, like right after. So I got on the podcast. It was virtual, obviously. And I was, she's like, how are you? And I was like, I just sold my company for$22. Diane's like, good for you, darling.

26:32Jaclyn Johnson:I got it. It was so funny, but it was kind of like business

26:36Mary Holland:as usual. Like I just had a normal ass day after. From that story. Wow. I have like so many takeaways that the main one being you could have easily blamed the world and just given up and called in bed and been like, oh, like this isn't for me. I guess, you know, the world hates me. It's not my fault, X, Y and Z. But you did the exact opposite. You got your ass up and you said how you're a problem solver, which at every founder's core, they have to be able to solve problems and make decisions quickly. And I so respect that you could have easily blamed COVID and blamed your situation and blamed timing.

27:10Mary Holland:But like you turned to this business, you brought it back up essentially.

27:14Jaclyn Johnson:Totally. I mean, my business partner's like, you're the most relentless human I've ever met. And I feel like that is such a good way to describe me. I'm like, not today.

27:21Mary Holland:We're doing this. Let's go. Try again. Yeah, try again. I know. It's so impressive. But then back to the numbers. So because you bootstrapped, used your own money, you owned 100 % of the business, right? I did not own 100 % of the business.

27:33Jaclyn Johnson:So I had two partners on the business. So Raina Panchansky, who is the founder of DBA. Okay. And then Alison Statter and Sherry Giroir, who owned Blended Strategy together, they also had money on the cap table. So they were more strategic partners on the cap table. But essentially what happened with the private equity deal is they did a majority stake. So they ended up buying, I want to say, like 90 % of the company was like somewhere around that. Okay. So essentially, pretty much everyone got bought out. I had to roll a little bit of my equity, which means a little bit of the money to like, keep me incentivized to keep helping the

28:05Mary Holland:brand. Got it. But I own the majority of the company. Okay, amazing. And then you obviously had to pay some to taxes. So much to taxes. Oh, gosh. Being in California is a real nightmare. Yeah. But essentially, I think it's like 30 or 40%. Wow. I mean, I hear of some founders like moving to Tennessee for a year before they sell.

28:23Jaclyn Johnson:No, it has to be longer than a year. It's like, you really do have to commit. I think it's like two or three years. Okay. Primary residence. I know, my mom's like, come to Florida. But I was like, honestly, I, as you love or post COVID, that's very doable. Right. But pre-COVID, I'm like, I have an office. I have an employee. Like I'm not moving to Vegas. Right.

28:41Mary Holland:I mean, for 30, 40 percent of a 22 million dollar company, though, I think I might make the move to Florida or Tennessee or somewhere or Texas. Wow. And then when the money hit, did you so you just went and met with your private banker and you were like, let's invest this. Or did you reserve a little bit for private investing? What was your thought process there.

29:00Jaclyn Johnson:Essentially, when you're going through a process, you get courted by banks. Oh, I'm sure. I remember we courted people going through exits at Deutsche Bank. Yes, all the time. So I met with Goldman and UBS and Merrill Lynch and like everyone. Yeah. Right. And they like take you out and they're like, here's what we're going to do for you and blah, blah, blah, blah. I was actually pretty sold on Goldman. I really, really like them. However, my aunt had also exited her business around the same time. She's a boss bitch. She sold her company is Sotheby's. She's amazing real estate icon. So we were going through it at like the same time.

29:31Jaclyn Johnson:And she ended up going with UBS with this like the Dylan group. And she's like, I love them. Like he's he's been in the business forever. And his son's young and smart and like whatever. And she was like kind of showing me what they did for her. And so I ended up meeting with them. And the thing that people don't know is like they all take different fees. Right. So as you know, it's like quarterly, there's a fee or based on the amount of money, there's a fee. And UBS had the most attractive fees coming out of it. So again, if I had made$50 million, maybe Goldman would have made more sense because the fees were higher, but obviously you're getting more things.

30:01Jaclyn Johnson:But UBS to me made the most sense at that time. And I love them. I'm still with them. I feel like they've done an incredible job for me. I call them the CFOs of my life in many ways. But what I love about Chris, especially that I get to talk to him all the time, is he's like, okay, here's the full layout. Here's how much is in this. Here's how high risk it is. Here's how medium risk it is. here's like where you can actually go and spend. Like you've been really smart about real estate. I've made a lot of money off of real estate. He's like, keep doing what you're doing on that. And then like, you're totally fine to do like 150,$300 ,000 in angel investing a year.

30:34Jaclyn Johnson:Wow. But you don't have to think about it. And obviously, stocks go up and down. So you don't really know. And I do feel like I'm hedging in a way with angel investing and obviously like betting on myself.

30:46Mary Holland:Yeah. Like diversifying that portfolio you as much as you can. And that's what I guess private bankers do the best job of is it's almost just you need someone to trust, but verify. It's like, this feels like a lot of money. Tell me I'm OK. Yes. My chief investment officer for Mary and Pip came from UBS. They have a great program. Amazing. And that's all they do is wealth management. So it's nice that there's

31:08Jaclyn Johnson:like a focus there.

31:09Mary Holland:OK, so you got the money. You went with UBS. You start investing it. how long after did you buy the business back? So it was two years after.

31:17Jaclyn Johnson:So essentially, once the business was sold, I stayed on for six months. And then we brought on a new CEO. And then I stepped down as CEO. But I still was like involved. I obviously still had equity in the company because I rolled some of that. And then I was basically still going to events and really just supporting the CEO, the new CEO and her role. So I'm like on the board meetings doing all these different things. And essentially like the VC or sorry, the PE firm, like we had this board meeting and they basically were like, all is good. We feel really good. We get off this board meeting. And then like two weeks later, they call me, which is weird.

31:52Jaclyn Johnson:Like, why are you calling me? And essentially it was like, we've lost faith in the business moving forward. We want to do a secondary sale early. And I was like, why? Like, this doesn't make any sense. Like, it doesn't feel like the right moment. Like, so I'm like asking all these questions and he's like, unless you can go raise$2 million in like the next 30 days and I'll match it and blah, blah, blah. And I'm like, I don't, I'm not part of the company. Right. It's not my responsibility. It's not going well. What do you, I'm also like, also I've never raised money at that point. I'm like, so he's like, call your rich girlfriends.

32:27Jaclyn Johnson:Oh my gosh. First of all, not how it works. Yeah. First of all,

32:30Mary Holland:not how it works, babe.

32:31Jaclyn Johnson:Mr. P like, shouldn't you know?

32:33Mary Holland:Yeah.

32:33Jaclyn Johnson:Shouldn't you know? And I'm like, so but I also was like oh no so I'm like okay so I hang up he's like call me tomorrow I'm like okay and essentially I was like okay this can go one of two ways I tried to raise this money which I feel like is going to be a disaster I try to help sell it to someone that I like think would be a good home for it I end up um kind of trying to like reach out to like some friends and things like that and I'm like I don't know and I reached out to the CEO the like acting CEO and she was like, I'm done. Like, I feel like they're liars. They told me everything was fine.

33:04Jaclyn Johnson:I told the team they're fine. Now everyone's in jeopardy, which I totally understood. I was like, I get it. And I was like, would you go raise with me? I'll like raise with you. And she was like, no. So then I was like, well, I'm not going to go do this by myself. Right. Then they're like trying to get me to come back as CEO. And I was like, no, I don't want to do that. It's like a mess. So I was essentially like, I there's like no options here. But then it like hit me. I'm like, what if I buy it back. Like, yeah. And so I threw my hat in the ring, essentially saying like, listen, I'm not, I can't raise the money.

33:32Jaclyn Johnson:I don't feel confident I can do that. I understand by saying that there are consequences to that of the business. However, if we are going to go to a secondary sale, I love to throw my hat in the ring, which ripple effect a bunch of stuff, which is like recusing yourself from the board. You're no longer part of it. Blah, blah, blah, blah. It's like a mess. So at that point, then I brought in Marina where I was like, do you want to do this together. Like, let's buy it back. You can run it because I like don't I'm at that point I have cherub. Yeah. No desire to go back being the CEO. Like she's like, let's do it.

34:00Jaclyn Johnson:And so we begin three months of like negotiations with the P.E. firm. Also the board, which was made up of the lenders who had like lent the business the business money who would have been owed. It was like a whole thing. Anyway, long story short, we ended up doing a deal with the lender, not the P.E. firm. The P.E. firm like wanted nothing to do with us. They're like trying to charge us two to three million dollars. We're like, no. Yeah. And we basically went to lender and I was like, listen, like I'm the only person that can revive this. You're going to lose all your money anyway. Like I'll give you equity in the new co if you like give us back the assets.

34:33Jaclyn Johnson:And so they agreed to that, which was really exciting. And so we got back essentially all the assets. End of 2023 took a beat. Top of 2024. We raised from angels. We raised 600 ,000 from angels. Okay. Because we're like, we need capital to restart this thing because it's like a 12 plus year old household name. We can't just like, yes, be posting ourselves. Yeah, exactly. Starting over. We have like a 500 ,000 person email list. I'm like, you got to like ramp up, raised, spent a month building out the strategy, built out the new strategy of what we want to do, what we think was like going to be the right direction.

35:06Jaclyn Johnson:And then we didn't even set out to raise, but essentially our investors were good friends of mine from my previous CNC 1.0. And we're like, what's going on with this business now? I told them the story. We pitched them. They ended up investing 2 million. So we ended up raising 2.6 million total. And then, yeah, the rest is history.

35:24Mary Holland:Wait, so how much you sold it for 22 million? How much did you buy it back for? We can't disclose it, but it was much less.

35:32Jaclyn Johnson:Much, much less. Yes. Okay.

35:34Mary Holland:Amazing. Oh my gosh. I'm so happy it's back. It's back. And it's back in full force. You guys are crushing it. I'm so excited for the festival. It's going to be major. And I feel like you guys just do such a good job of creating a safe place for women in business to thrive and really like make deals. Like men have all these conferences and they talk about investments and they make deals with one another and we've been just left out. But partly it's not all their fault. You know, it's partly just because society has made us, trained us to not talk about money in that way and create and Cultivate is such an empowering organization where just every party or every event that I go to by you guys, I meet an investor or a founder friend and I learn from them and I invite them to my next thing.

36:16Mary Holland:And I'm always encouraging either people I mentor or interns that work at Mary and Pepp to like curate the room you want to be in. Like if you go to one of these events and meet people, you host a picnic or a dinner. It doesn't have to cost a bunch of money. And you guys do such a good job of curating a room. It's amazing. Are you looking, I have to ask, because we have all these selling, buying, all these things. Are you looking to exit at this time? Yes. So obviously now we're VC backed.

36:42Jaclyn Johnson:So the goal is to exit. You know, I think the business is very different than it was back in the day. Like previously, I would say we were very much a multifaceted media company with events being our core pillar. But we also had a really successful podcast, book deals, product lines in Target. Like we were very multifaceted. We had chosen the works. So we were much more like media centric opportunity to buy, whereas this time around, we're far more events focused and large scale events focused. So it's a little bit of a different strategy, but obviously there's like we're seeing large scale

37:13Mary Holland:events get snapped up left and right in the M &A process. So that's super exciting as well. So exciting. And you said something interesting there. You're VC backed. So of course you have to exit. If VCs are looking to your earlier point, they have one winner, one unicorn out of their whole portfolio. So they really push you to look for an exit. Do you ever feel pressure to exit before you're ready? No, it's actually the opposite, I would say. So it's interesting.

37:36Jaclyn Johnson:I think VCs, they only want you to exit if they're going to get their money back. Right. So if you, I would say on the flip side, so like, for instance, if you're like building this business and you're like, okay, I want to like, even in some of the contracts I've seen, it's like, you can't exit for less than a certain amount once a VC of invest. So like, even if you're like, I got a$50 million offer, I will personally walk away with$20 million. You might not be able to take that offer because they need you to get to$100 million exit. So it's kind of almost different in that way, I would say. And now I will also say VCs have changed a lot.

38:13Jaclyn Johnson:And I think there's a lot of people who have like an elephant model, which is not the unicorn model, which is like running in a pack, like multiple companies that do well and helping them all focus. And so there's been this shift in mentality in that way. But the reality is if you have a VC on your cap table and you're not performing year three, year four, like they just put you aside. Right. Like they're like, OK, that's a write off. And so that becomes like dead money on your cap table. Right. So you're like, they're no longer strategic and helping. And now I have to like bring in other people that are strategic and helping.

38:42Jaclyn Johnson:So it's just like a different thing. But yeah, VCs expect an outcome. But so do angel investors. Right. Right. They expect an outcome, too.

38:48Mary Holland:No, that makes sense. Oh, my gosh. I have like so many questions, but I heard you say, so there's unicorn, elephants. Yes. Is there any other animals?

38:58Jaclyn Johnson:I don't think so currently, but yeah, I actually really like the elephant mentality because I'm like, yeah, that's how it should be. Like, right. I actually think the days, well, with AI, who knows? But the days of like, okay, 20 companies are going to be$1 billion exit. Why not have 10,$500 million exits or$100 million exits and have the same success metrics? I think there's like, I think the tech bubble made it this massive, you know, kind of number that everyone's reaching for. But I think there are really strong exits. Like a good example is like, I have a friend who exited for like$250 million and we both made the same amount on our exit.

39:34Jaclyn Johnson:Wow. Which is something to think about, right? Yeah. You're seeing all these companies being like, we exited for 500 million, but they have so little equity in the business because they've had to raise so much money to get to that number. Who's to say one is better than the other? Right. Right.

39:47Mary Holland:I was talking to Simon Huck. He came on and he was like, I was like, what do you think about announcing raises? Because I'm about to raise, obviously. And I'm like, is it worth announcing? Like, I don't want all the attention on me. And he was like, maybe a couple of alerts, but you don't need to like go crazy with the announcement. What is your take on that?

40:03Jaclyn Johnson:Yeah, I think it does a few different things. It announces like it's a credibility nod, right? Sure. So it depends on who's on your cap table, I think, too. So like, I think having a traditional VC say yes to you puts a little badge of honor on your business and will help you raise in the future. So in that way, yes, I do think it's very impactful. To your point, I don't think anyone should be raising$5,$10,$15 million early stage. Like that to me feels egregious. Yeah. Unless you're able to have this massive valuation, at which point then you have to perform. Yeah. Because if you're ever going to raise again, then you're like chasing that metric.

40:39Jaclyn Johnson:whereas like I'm like a slow and steady girl. I'm like, okay, a million here, two million here. Okay, get to the next milestone, increase the valuation, a couple more million here, a couple more million, increase the valuation. Because like I have a very specific number I want to stick to in terms of ownership that I will only hit if we get the valuation to a certain place. I will also say you're building an app, right? And so Cherub is like an app, web app. The idea three, even three years ago was like you need so much money for engineering, right? Like Engineering is so expensive. But now with Claude, with all of these tools, our engineering costs

41:13Mary Holland:dropped 50 percent from our initial projections because we can ship so much quicker with Claude. That's so fascinating because when did you start building Cherub? It was like three years ago. Three years ago. OK, yeah, I started building Mary and Pip last year. So even now our engineering costs are dropping. But like I started, I only raised 600K to build an investment app, which is like unheard of. Yeah. Three years ago, I would have had to raise 5 million probably. You know what I mean? And now we're SOC2. We have all like down pat. Everything cyber is super secure. And our engineering team is just able to ship so much quicker.

41:48Mary Holland:It's such an amazing time to build.

41:51Jaclyn Johnson:Exactly. So I think the costs are going to go down. What I think is interesting, I mean, obviously, AI tokens are expensive. However, I think this is going to create a ripple effect in the VC world. Because typically founders were so reliant on venture capital because they needed so much money because engineering was so expensive. So what happens now when you don't need as much money? Do you just go to angels? So that's, again, the angel marketplace.

42:15Mary Holland:Okay, that makes total sense because you go to VC when you need a huge check. 5, 10, 15. What do you see for the future of VC?

42:22Jaclyn Johnson:I think the early stage investing market is going to be dominated by angel investors. I think we'll start to see a massive uptick because founders want to give up less equity. Angels are more friendly when it comes to valuations. They're more strategic. They care more. They're the right type of people, especially with creators coming on. I think pre-seed will almost be 100 % angels versus I think VCs will only get involved later stage.

42:45Mary Holland:Much later, like series A or B? Yeah. Wow.

42:49Jaclyn Johnson:I would say maybe series A, but B mostly.

42:50Mary Holland:Because it goes friends and family, pre-seed, seed, series A.

42:55Jaclyn Johnson:There's extended seed. There's so many.

42:58Mary Holland:Typically seed and then series A. And series A is, I think,

43:01Jaclyn Johnson:when you start to take on like board seats and things like that.

43:04Mary Holland:Right. And there's some companies that like for any founders out there who are starting that don't ever need to raise. I never raised for Create and Cultivate. I bootstrapped that business. I sold my first company, bootstrapped that business. Bootstrapping is the way to go if you can do it, of course.

43:18Jaclyn Johnson:Yeah, it's I would not do it again, but I'm also tired because I didn't do it for so long. But I do think especially with AI, you can definitely get away with it longer.

43:33Mary Holland:Totally. And OK, so all of this talk about just your experience, which is so valuable and you're super young still like you have a whole you have decades to keep building and selling and building and selling. And it sounds like there's just a lot of emotion attached to a lot of these decisions. How do you stay, I guess, emotionally well? And what decisions have been much harder for you versus more exciting for you?

43:57Jaclyn Johnson:Yeah, I would say I did not stay emotionally well for a very long time, especially building Create and Cultivate. Like I was, I had no boundaries. I was so tied up in that business. I was working so hard. I was like really, really intensely focused on the outcome in the sale. So I think after stepping away for two years, like post-sale is when I really like recalibrated my like nervous system, my health, like my wellness, my boundaries, all of those different things. Like, you know, Ali Webb and I, I love her so much. She's like one of my best friends. But like we joke, like we're like, we look so good post-exit.

44:29Jaclyn Johnson:Like the post-exit glow up is so real. Like even like Allison from Poppy and I were joking about it. But we're like, because when you're building the company, you're just like in it, right? And it's like, I know it looks very glam on social, but it's really not. Like, it's like you are deep into a spreadsheet, like running ragged. Like, I never had my nails. I was just like, oh, my gosh, missing every Botox appointment.

44:48Mary Holland:I was like, I haven't like looked in the mirror.

44:51Jaclyn Johnson:And we need to get ourselves together. No, totally. And so it's like the post-exal glow up is so real. But I'm very specific about my boundaries of like what I'm willing to do. Because I am the type of person that if given like a little taste, I will go so hard. I will totally lose myself so quickly to the business and go so deep and so hard and like become a monster of like a shell of a human. And I don't want that again. And even my boyfriend will still to this day, like on a Saturday, I'll be like, you know, working and stuff. And he's like, you don't have to do that. Yeah. You literally don't have to do that.

45:23Jaclyn Johnson:Yeah. And so I'm like, yeah, you're right. You're right. I need to like, yeah, then out a little and like have boundaries and things like that. So it's still emotional, though. I mean, it's like interpersonal relationships at play all the time, teams, dynamics. You know, I think it's, I think I've gotten much better as a leader now where I'm like, I can definitely, I don't take

45:42Mary Holland:things as personally and like the stakes aren't as high for me.

45:46Jaclyn Johnson:Yeah. So I think that also changes things where the stakes are high for some of my partners that are involved in this. And so I'm very like cognizant of that, but I also protect my own energy at the same time.

45:56Mary Holland:Right. Would you say though, that you, your business wouldn't have been built to what it is if you hadn't burnt yourself out just a little bit. Totally. And it was like, I was on so many podcasts being like,

46:04Jaclyn Johnson:like, work-life balance doesn't exist. Well, but I was like, I look insane, like a psycho. But it was so true. I actually do think it's true. I will say it was a different time. I remember when Shopify launched. Like, I remember when Squarespace launched. Like, I built my first website on HTML. So now I will say there are so many tools to help make you more productive, more successful, quicker. But there's also the stress of having to produce content every single second of every single day.

46:35Mary Holland:Yeah. It's like, yeah, it's gotten easier, but also harder because you have to do so much more. And I think that like when you hear burnout, burnout is required. You think staying up until 3 a.m. every single night, no sleep, no eating. And it's like it's not that's not how it is. I know I will say if I stay up till 2 a.m. working, which is very rare, I'll sleep until 10 and I'll go for a walk in the middle of the day. You know what I mean? And it's just whenever you can pick up work, it's almost like you take work home with you, but it's just a part of you. So it doesn't feel like work.

47:05Jaclyn Johnson:Exactly. Burnout doesn't look like what you think it looks like. I think it's also just like your brain, like your brain doesn't shut off. I think that is actually what it more looks like, where I remember just being like waking up and having an idea and being like, OK, I'm going to start this thing. And they're like, oh, I'm going to do this. And I still was like hanging out with friends and like doing things. But like my brain never shut off about the business. And like, that is where I was burning out, where I was like, I need to focus on myself and I'm deprioritizing everything else. And so did you ever meditate out of curiosity?

47:37Jaclyn Johnson:No.

47:37Mary Holland:Okay. I feel like I'm very like, I don't know if I'm doing it right. No, I know. I know. It's so hard. You should listen to 10 % Happier It Got Me. It's like for fidgety people and people who are skeptics. But it's I've found that meditation has helped me focus because I wake up at 2am and like think of ideas and everything. and it just basically turns your brain completely off. So highly recommend meditation or like a yoga where it's a conscious, like working out is a great form.

48:02Jaclyn Johnson:I do yoga, I do Pilates. It's like my favorite, like Zen.

48:05Mary Holland:It's, you feel like a hundred bucks leaving that. It feels like I just took a long ass nap after I go to yoga class because my brain shuts off for five seconds. Okay, last section, investor. You've invested in some major companies. We talked about Crown Affair or we talked about Away, Crown Affair, many others. Was that Away investment, the best investment you made? Yeah, definitely the best investment so far. I do think Crown Affair is going to be a close second. Live Tinted also, I'm really, really bullish on both those businesses. Okay, that's so exciting. And you're always, I feel like I talk to different types of angels who invest in different themes.

48:41Mary Holland:You're CPG, consumer.

48:43Jaclyn Johnson:I've been primarily CPG and consumer. I've actually shifted a little bit into tech. I've just invested in, or I've invested in Intro. I don't know if you know Intro, the platform where you can book. I invested in that. I'm also an investor in UPOP, which is a portfolio company that's launching soon. It's like an OS for creators. Super excited about that. So now I'm kind of shifting more into tech and then also health. Okay. Tech and health, like women's health? Women's health specifically, yeah.

49:09Mary Holland:I think that's about to be. Perimenopause, early detection, that type of stuff. Oh my gosh. So important. Okay. So that brings me to my next question. You're more focused on women's health and tech because I ask all my people what you're investing in now. anything outside of private investing? You mentioned real estate.

49:25Jaclyn Johnson:Yeah, real estate has been really good for me. I bought my first house in LA after my first acquisition, completely redid it, like full flip. Sold that house at the height of COVID, like market, which was amazing. Had my second home in LA that I bought, sold that last year. Wow, congrats. Which was great. And so I've redid all my houses. So I did a lot of, I love interior design. It's like my one thing that I refuse to turn into a business, but it's like, I love doing it. And so I was able to like get really strong returns on both those houses. I also have a house in Napa Valley. Okay. And so like real estate has been something that I really, really enjoy.

50:00Jaclyn Johnson:I'm currently renting in New York and I'm so happy because owning a house is a nightmare. Especially here. There's always something wrong. Yeah. So now it's nice. I'm like, hello, I have a problem. Like, I love that.

50:11Mary Holland:No, totally. What would you say out of all of your entire portfolio, public markets, private investing, real estate, if I'm missing anything, structured products, I don't know what else you're invested in, has made you the most money?

50:21Jaclyn Johnson:I mean, by building and selling businesses. Oh, building businesses. Building businesses. Yeah. So that has definitely made me the most money.

50:27Mary Holland:And then you have that one unicorn that's like dopamine hit. You're like, I got to do it again. Okay. Before we go, I ask all my guests this, what is your growing interest outside of investing? It could be a show, a hobby. Yes. No, I love this so much because I'm like, God forbid we have hobbies. Like I feel like we've lost the art of having hobbies.

50:43Jaclyn Johnson:But I would say actually for me, it's travel. Like I love traveling so much. And I feel like I did not go on vacation for 10 years, like building the company. And so now I'm really making up for it. I just this year alone have done Morocco, Croatia, Italy, France, like all over. And I just love it so much. It's been like really, really fun. That's like where I definitely like splurged the most amount of money. Totally. Experiences over things. Yes. Every day of the week.

51:10Mary Holland:Well, thank you so much, Jacqueline, for coming. This was so helpful. After today's episode, I want you to think of one financial goal that you've been pursuing. Maybe it's saving a little extra money each month, or maybe you're starting your own business. Think long and hard about what you're willing to give up to get there. More money can mean a lot less of other things. More money in a business can mean less control. More growth could mean more stress. Bigger opportunity could mean less time and flexibility. In today's episode, Jacqueline is really honest about these trade-offs. There were times when she was tired and she didn't feel like doing something.

51:44Mary Holland:There were other times where she didn't want the role of CEO. She knew she didn't want private equity, but she also knew the number that would make that trade-off worth it. But you do have to know what matters to you and what would make the trade-off worth it. So before you chase the next level, I want you to ask yourself, what am I trying to get out of this? What am I willing to do to get there? And what am I absolutely not willing to trade? All right, y 'all, see you next week.

52:17Thank you.