Marshall Sandman: What It Takes To Win In Venture Capital | Trailblazers Podcast Episode 47

0:00Erica Wenger: Today on the show, I am so excited to be joined by Marshall Sandman. Marshall is the founder and general partner of Animal Capital, the seed stage venture firm he launched in 2020. Out of the gate, he identified and backed four unicorns in his first fund, Colossal Biosciences, Whatnot, Underdog Sports, and WAP, landing Animal's debut vintage in the top 1 % of seed stage performance by both MOIC and DPI. Animal is backed by some of the most prolific celebrities and entrepreneurs of the 21st century, Mark Wahlberg, Paris Hilton, Pete Davidson, and James Corden among them. alongside the founders of Netflix, Twitch, Tinder, and Android, the lead director of Apollo, and the former president of Disney.

0:34Erica Wenger: Before Animal, Marshall attended Cornell's School of Hotel Management, worked as an investment banker at Goldman Sachs, and went on to lead private investing at Time Warner. Beyond the fund, he's also a film producer and a longtime philanthropist, having raised more than a million dollars for the American Cancer Society over the years. A North Carolina native, Marshall lives today in New York City. Let's welcome Marshall. Thanks for having me. I'm so excited to have you here. What an epic bio. Thank you. I had written, you asked me to write one and I had not written one in so long. I was like, you know what?

1:03This is the moment. I'm going to write one right now. So you have the first fresh bio in many years.

1:07Erica Wenger: I feel honored. And I can say with confidence, it's a great one. Thank you very much. You got to balance the like the name drops with the like what we've actually done. And I feel like you have a great balance of that where it's like, oh, he's done cool stuff. Oh, wow. He knows cool people. Wow. He's done cool stuff. Wow. He knows cool people. And I think that's a lot of the bio. Well, you want, first of all, you just want to be able to copy paste it for the next five years. I wrote it when I started Animal Capital. I'm now six issues in and I've now written a second one. And when I'm 34, when I turn 40, it will be time for my third bio.

1:36Erica Wenger: Yeah, so timeless. It sounds like that's a real quality. That's the goal. I like it. I like it. Cool. Well, before we get into all the questions I have, we do like to start every podcast with a bit of an icebreaker. Okay. So if you look back on your journey so far, personal or professional, what has been the hardest part? The part that you look back on and you think almost broke you? Oh, sure.

2:01I think the question I ask myself all the time is if I had to go back knowing everything I know now, could I do it again? Like if I had to go back to square one, could I run it back again? And I don't know that I could. When I started the business, I had a handful of sort of celebrity TikTok folks that were around and they wanted to take a lot of founder calls with me and investor calls with me. But I was in charge of setting them up. I was in charge of getting them on the phone and then guiding them and making them look smart, but also looking like a thoughtful conduit for capital and capital allocator and leading with a fiduciary responsibility.

2:38And at that point, I took anywhere from 14 to 18 calls a day in 20 to 40 minute blocks and I burned out my vocal cords. I could not speak for about 90 days. They said that if I had come in to the ear, nose, and throat doctor any later, like he said, within days, they would have had to freeze my vocal cords and I might not be speaking to you with the same tonality that I speak to you now. And that time that I wasn't really speaking and I kind of hunkered back down and we had made some progress. And so it was just a lot of emails and texts and no time on the phone and no time talking to anybody.

3:12I it was a that was like the coming to Jesus moment was that that sort of 90 day period and looking back and saying, like, have I actually made it far enough that I've done anything? I turned down job offers at major sports leagues. I turned down an offer at a family office, a growth equity fund all while I was raising the money. But it was that that back of my mind itch of what if this doesn't work? I should still be interviewing for jobs. I'm running running a startup that doesn't exist yet of my fund, which you totally understand. And at the same time, still interviewing for jobs that I'm turning down.

3:42And that was by far the darkest period of this. And then I think you're going between fund one and fund two. And again, it's an experience I think any emerging manager has is you will raise in an up moment, like when the market is good. And you are absolutely the last thing that your LPs are going to write a check into. They are going to do every other thing that they're going to do, equity, debt, real estate, nutritional private equity, and then venture. You are the last thing that they're going to do. And so when you raise in a nice market, it's a fairly positive feeling. And you're like, oh, great.

4:22It's going okay. I'm kind of hitting 20 % or 30%, whatever it is in that moment. And then you fast forward. And on paper, I was already in the probably like three and a half, 4X-ish realm. and we were north of a 50 % IRR and I couldn't raise a dollar for fund two. And I think that it's a moment when you look in the mirror and you feel how I expect the founders we invest in feel, which is like, what have I done here? I have made no money personally, not a dollar. And even to this day, like we're just crossing a one in DPI. So we're just about to be able to, I'm just about to be able to pay myself truly for the first time in six years, not making any money, burning through my savings, listings markups on paper it looks like a bunch of businesses that are unicorns will they be able to raise again will they not be able to raise again do they do anything real um i i didn't know and that's a really long answer but it was it was really dark and it was there was a lot of just took a lot of sleepless nights and i'm really thankful that i have supportive people in my life to tell me no like this is this is worthwhile and i don't know like it's a bad probably a bad answer but like that i think that's the part that um founders respect the most about you and me yeah which is we've been there we've been there and you're not talking to a partner at light speed or bessemer or graycroft or wherever we're like that's just a job for them and if all goes well for them they will eventually be in our seats um we're actually on the same page with them in many ways and understand that that existential crisis yeah um wow i mean i appreciate you sharing

5:55Erica Wenger: all that there's uh there's like two hard moments in there there's like the 90 day silence yeah and then there's the like fundraising um maybe let's jump back to the 90 day sense i'm going to talk about both so at what point in your there's like a fly here i don't know if you can see um at one point during your fundraising journey uh did you have that sort of like vocal fry can't do it anymore burned out like how long had you been doing that you know 14 to 18 calls a day just so we can understand timing eight months probably wow eight months of that you don't think you're going to break but then you just know one day and and again i think in anyone that has raised money in any capacity whether you are the professional fundraiser at an art museum uh to a founder to us it is it's a momentum game and when you feel the thing that like x factor moment of like someone just committed money to me i remember the first time and i'm sure you do remember the first time someone wrote me a check it is electric like it is pulsing through your fucking veins and that's spectacular and so i had had some of those positive moments that had fueled me forward but you you realize how much easier it is really early on to write a check than it is to ever get money back from something yeah i know especially like six years into you're probably like checking the clock yeah 100 um who was that first first person that wrote you that check oh gosh uh his name is matt he's a super nice guy he's he's like closer to our age and he was just a successful investment picker and he was like i'm making a bet on you because like you would make a bet on me and i was sitting like peak peak of covid i had isolated myself in los angeles without any you know by myself and then went to my friend jack davis's house um which is a beautiful malibu house that burned down in the palisades fire that does not exist anymore and this guy matt called me and he was like you know what i'm in like someone's got to take a bet on you and like why not me electric right shout out matt yeah shout out oh electric i mean it's funny i actually had a phone call or i said zoom call last week with someone who uh i'm not actively fundraising but they sort of preempt they were like whatever you do next i'm in kind of thing and it was one of those moments where like you get off the call and you like physically like i was just like did my own little dance you know like you have to you have to express it it's so exciting people it is i think it is not just similar than being in high school and being in a play.

8:17Erica Wenger: Yeah. And you get that. Were you an actor? Big time. Yeah, you really give actor vibes. Like, could you have gone that route? I know you have like a huge entertainment network, but like, was that the plan at one point? That was the plan going at the end of high school. That was the plan. And I got into the hotel school, which was like kind of like a different dream. And the plan changed, but also I got a lot of time left. You do have a lot of time left. And that's the beauty of building a following. Ronald Reagan was an actor and then he ran for president. Totally. Listen, if Reagan can do both, you can do both.

8:43Erica Wenger: And that's also the beauty of building your following the way that you are is like you have optionality. Not to say that the fund is not going to be the last job you ever do because it totally could be. Do you want the fund to be the last job you ever do? You know, it's funny, like 100 % yes. But I think of my firm so differently than most people think about venture. Yeah. That I think of it as all encompassing with my interest because I'm building it my way. So like 100 % is the last job I'll have, but I'm doing this whole media thing in a way that like I don't think anyone else is doing it. Agreed.

9:09Erica Wenger: One thing I've learned talking to GPs on the show and in my own experience as a GP, your back office is a signal. How fast you close deals, how clean the LP experience is, how your K-1s land, investors notice all of it. The more buttoned up you are, the more likely they are to give you more money in the future. That's why I want to talk about Sidecar. Sidecar is the SPV platform built for fund managers who want institutional quality execution without hiring a full back office team. They'll review your deal within hours, handle full secondary transaction support, and give you transparent pricing up front.

9:40Erica Wenger: No platform carry. Also, your LK relationships stay private, which is super important. It is not a marketplace. If you're running a professional fund, your infrastructure should look like it. Sidecar makes that possible without the overhead. Check them out at sidecar.io slash partners slash trailblazers. Let's talk about fundraising. You know, how did you make it through those hard moments? Like, you feel like markups are great on paper. you are a few years in, you're raising your second fund, the market's totally crappy. What makes you get through that? You know, I took, this is advice I've given to so many friends that have raised funds over the years.

10:18And from successful entrepreneur that's like, I'm gonna go raise a fund to I won't dox the person, but there is a very, very successful first employee of a multi-billion dollar public company now who is our age and went to go raise a fund and i went over to his beautiful home in west village and it was a i mean it was like a a home in west village yeah i was gonna say the

10:43Erica Wenger: word home is never oh yeah in new york okay it was a home i'm from north carolina and when i say home i think about my parents house this is this is a home yes um and he said i'm gonna raise 25 million dollars and i said that's great how much are you committing because there's an expectation I no expectation really of me or of you have raised, you know, we raised a very small first fund of maybe you do a little bit, but like, so you, everyone in the room with you, the first cover of the cover of your deck is I helped build a multi-billion dollar public company that trades nicely on the New York Stock Exchange.

11:16So how much are you committing? He's like, oh, I wasn't planning on committing.

11:19Erica Wenger: Oh my God. And he ended up never raising the fund. And so I've given this advice many times to friends that have ended up doing it, not doing it, which is when you don't get to the number you want, but you've got some money, and it's enough. I mean, and I think any, I genuinely think any number from a million dollars to 30 million, it doesn't matter. It's enough. You just divide it evenly and you run the strategy you're going to run. Stop raising. Put a pin in it. Be done. It's a pride thing. It doesn't fucking matter. You're not making money from it for four to five to six to 10 years. When you start the fund, you are 17 years away from being at the end of the fund cycle, which you're earlier on in that than I am.

11:54And as we have launched Fund 3, that was my biggest thought. So that's what I did. I took my own advice and I said, this sucks. I just hired my best friend, Dylan, to come work with me. And it was the best decision I've ever made in my entire life. And we just decided to be done. We just put a pin in it and said, we wanted to raise, I think we said we wanted to raise 25 and I think we raised 18. And we had written one check that was probably a little bigger than it should have been based on that fund size. Okay, that's it. And we redivided the fund math and we went forward that way. And it ended up being the right decision for us because the market absolutely sucked in 23 and 24 when we were writing most of those checks and even into 25.

12:35But that depresses valuations, that gives us an opportunity to get a better entry price. And by sitting around, we weren't looking in the mirror and being kind of intellectually honest with ourselves.

12:44Erica Wenger: Totally. And also, it takes up so much time from the actual work of meeting founders. Fundraising is so time consuming. And so there's something to be said, too, for sort of like you're in or you're out. Our priority is meeting founders. We'll come back to market when things are better and we have more to show. Bye. Like you have to do that. Your expectation of founders is the same expectation that our LP should have of us. Yeah, totally. Which is get it done, which is decide that you're in or out. By the way, it's pretty helpful to me to even say that you're out like it sucks. I'm going to I'm not going to hate you, but I'm going to be frustrated.

13:15Yep. But let's move on from this. So we don't have to talk about it anymore because you are hiring me for a service. That service is to find early stage investments, to go write checks and to maybe provide some co-invest and send me more money than I sent you. That's the job. Talking to you is literally the last thing.

13:30Erica Wenger: And it annoys them because they already know they're in. Like every extra time, every extra call, every extra minute you spend with someone else is time away from the thing that they've already paid you to do. I'm not sure if you feel this way or not. that I have gotten to this place six years in where I'm so fortunate to have so many LPs that did fund one and fund two and fund three. And my closest LPs that have become like family and feel like uncle, you know, aunts and uncles, they like say sorry on the phone. Like, sorry, like I know that like, you know, you offer this co-investor, like I've asked you so many questions about it, whatever.

14:00Sorry, sorry, sorry, sorry. And not that anyone should ever apologize to me. I don't need an apology, but it is funny because it is actually an implicit recognition that, yeah,

14:10Erica Wenger: this isn't how i should be spending my time they know deep down on some level which manifests in the i'm sorry it's somewhere in there somewhere in there yeah um so i want to talk a little bit about team so you just mentioned hiring your best friend dylan who's lovely by the way yeah she's the goat the goat and like totally random aside she's like best friends with like my like family sister-in-law kind of thing i won't go into the specifics but like we have like personal life connections too which is really fun um so i know dylan's obviously very involved now with Animal Capital. But when you started, you had a lot more of these like celebrity GP, celebrity advisors, Noah Beck, Josh Richards, Griffin Johnson.

14:48Erica Wenger: Talk to me about like the evolution of the team and like how you think about bringing in new people now and using celebrities to your advantage. Yeah, I think there's two pieces to it. One, there's like a broad, there is a broad misconception that even this many years and like as you talked about Whatnot, Whatnot, WAP, Underdog and Colossal, Colossal is entirely B2B business. WAP is technically entirely a B2B business. Whatnot is a B2B to C business. And Underdog is the only of those four is the only traditional B2C consumer internet business. We're not really a consumer fund. We are 85 % B2B, B2B to C.

15:24And we do a little bit of consumer with spectacular founders that were like, oh, damn, I got to write you a check or you're going to do something awesome. So when I started the business, that was always the plan. It was never to be super consumery. So I've been saying to people, we don't write creator economy checks. We don't do consumer. We didn't do crypto. We don't do.ai. We don't do media production. All these things that you might think we would do because of who's around the table. But that's the whole point is that we are a diversity play for the people that are around the table. They already do those things.

15:55I don't want someone to invest in an energy drink with me because there's an opportunity cost to that, to Griffin, right? Griffin has a really big deal with Celsius. If he comes in and invests in some energy drink or doesn't do the Celsius deal for me, like that opportunity cost is really, really big. And the chance that he beats his sort of internal IRR metric based on that investment, really low. It's like basically 0 % chance that's going to work. It's going to work out to where it beats a really big traditional brand deal. So when we started, that was the plan was Noah, Griffin, Josh, and we're going to take founder calls and we're going to set them up for a certain level of like looking smart and it brought sexiness, right?

16:37Like it brought a level of sexiness.

16:38Erica Wenger: Make the celebrities look smart. Correct. Not the founders look cool that celebrities are on their cap table. It's make the celebrities look smart. Okay. It is put them in the room together so that the celebrity looks and feels smart like they're engaged in an interesting B2B business, which by the way, that worked. And on the other side, let the founder feel cool and interesting and create this validating moment. And also it often puts the founder into rooms and we did this we've done this many times over the years where we took one of our celebrities and we put them on stage at like south by southwest with one of our celebrities or the aspen ideas festival or up front all to make sure that that room is full of great people so that there's b2b relationships they want to go make we're facilitating this because nick braun from succession plays uh cousin greg in succession like he's in the room so of course i'm gonna go see this crazy space b2b tech data center whatever founder and then people end up learning because they're in the room um so you are lending the fame in some way it's just in a very thoughtful way like on a speaking stage not in a hey i'm gonna be a public co-founder or like show this on my instagram kind of way 100 the whole the whole goal is if you the whole goal is for us to not do any instagram social media uh it is to create that oh you're going to the i'm making this up actually no this is this is a true story um i went to the sports illustrated formula one party a year two years ago and something i don't really do anymore and i was um walking through the party and i saw lebron james who like i absolutely obsessed lebron james i'm the biggest lebron james fan in the entire world and i like walked towards the security area where he was and um no one like the big security guard was like you are not getting anywhere close to this And someone yelled my name.

18:24From inside LeBron's area. From inside LeBron's area. And it was James Corden. And he had invested in the fund, but we'd never met in person. And I was with one of my founders. And so my founder got great photos with James Corden and with LeBron James. And James reposting the stuff on his Instagram, whatever. All of a sudden, he's now completely engaged with the founder that he wasn't going to be engaged with before. And he reads my updates. And he's been a really thoughtful investor. But that founder is always going to take my call when they have a multi-billion dollar unicorn because of this really interesting experience that we had it sounds dumb but it is

18:55Erica Wenger: true there's also something with the human experience where like we look up to lebron james we look up to james corden because they're in our pop culture ecosystem and uh we're just gonna find it cool like don't you think that sometimes you just want to like i'm seeing this a lot take money from cool people people that you admire i mean i just had jeff wu on who runs you know logan jakes fun who i'm sure i'm sure you know um and like so much like yes of course it's a thoughtful investing strategy. Like they're doing some really cool stuff. But also there's a lot of founders that are just like, I kind of want like the Chainsmokers or like Logan Jake Paul, my cap table or James Corden indirectly getting my updates.

19:28Most founders.

19:29Erica Wenger: Like most founders want that. They all have, they're good at their job because they also have passions that they're in their personal life. And I mean, I'll give a lot of credit to Griffin and to Noah because like the models evolved a lot, right? I think that anyone that's been watching for a long time can see that my models evolved. It was Griffin, Josh, Noah. Between fund one and fund two, Josh and I made a mutual decision to part ways, which is fine. And he's gone on to be successful doing other things. And Griffin, Noah and I started an apparel brand together called Efe's. And it was a gender neutral underwear.

20:01And it was a slog. We don't do consumer. But here we are incubating a consumer brand. Why'd you do that? Because I didn't know them that well at the time that we started it. And I needed to do something that would tether me to them. That would get us closer. that would make us feel closer and that we would be in the trenches together. Because if they weren't a part of my business for like call it two years-ish looking back, did I have enough juice to go raise another fund? Did I have enough juice to go raise a third fund?

20:29Erica Wenger: And like on your own too, like with your own merit. On my own merit, on the back of my own, of the success of my investment, on the back of Dylan's merit, on the back of like what we've actually done in our track record, I needed to kind of say yes to whatever the hell they wanted to do. We went through a process with Silly Bands. I helped them do their investment in Poppy, which ended up being really successful. It was not a fund investment. I just have to say, I have not heard the word silly bands in about 10 years. Yeah, well, we tried. It didn't go very well. I mean, the founder of it was a really cool guy and he has a business podcast too, but like it just didn't go.

21:00And Noah was in the trenches on calls about the silhouettes. How's the photo shoot going to go? What's our CAC to LTV ratio on Facebook? Love that. On Facebook. Who's running that strategy? Do you need me to take more photos that you can run ads behind? Like he stepped all the way up and it sucked for three plus years. And we just this year are doing the businesses 10X in the last year. And obviously as a firm, we invested at a$1 million valuation.

21:28Erica Wenger: Yeah, we love an incubation at the one or two. Yeah, yeah. And huge success today. And it's called Sown Again Now. We did a rebrand and we're working with our Australian team and they're doing an amazing job. And Noah's, it's working really nicely because Noah's on Baywatch now. And like, will I ever do that again? Fuck no. Yeah, absolutely not. Like no chance on this earth. I don't know if you have to bleep me, but like. No, say it. Like, holy cow. No, but credit to Noah and Griffin, on the other hand, like has been on more B2B calls. He is showing up at breakaway music festivals. He's helping them figure out DJs for last minute shows and using his network to make sure that the VIP section is full.

22:09That's not something he's doing on his social media. that is you guys are launching in tampa this year you don't know anyone in tampa let me go make sure that that your social media when you do show up in tampa is going to look amazing and we're six years into this and i'm i'm going to an egg farm with griffin tomorrow in kentucky that we have invested in that's what i'm doing tomorrow um it's called sunny side eggs he's got a b2b business it's great um he's got a b2b business and a b2c business and griffin and i and andrew east sean johnson's um husband the three of us are going tomorrow to the egg farm and this is what we do like this is the best part so yeah griffin and noah not involved every day they're great advisors to the business love them to death yeah um but like like this it evolved and they have found their the right place within our ecosystem and now it's it's a little bit more um even like between our sort of 25 celebrities everyone kind of does a little bit of something yeah and it sounds like

23:04Erica Wenger: they really found the thing that they are uniquely good at. And that is, that's what happens when something scales. Like when you start, you are all figuring it out. Everyone's doing things that they don't really know. They're wearing multiple hats. Everyone's just trying to like get comfortable. And now you're six years in and people are really slotting into their spots. And I think it's awesome that that made room for someone like Dylan. And so that now you two can really like be at the helm of the ship and have these amazing celebrity advisors. Yeah. And I think that those celebrities, we've been a referral business now for five, you know, not six years, but for five years and so pete davidson's a net net new investor to us and there's we have a couple of nba players that have participated in the recent fund and i haven't talked to them about what they want their public relationship to the firm to be but like they genuinely want to do something that they don't do in their day-to-day and so there's an i know you feel this way there's an educational piece yeah which is really really they just want someone they can text that they can just say like hey i saw this other thing too tell me how it's going yeah and by the way the answer to that 99.9 99 % of the time is no, please don't invest in that.

24:06And like LeBron is not an investor. I would have said that at the beginning of the podcast 15 times.

24:10Erica Wenger: We would be wearing shirts right now saying like LeBron is an investor in Animal Capital. I already ordered my Sixers jersey. It just had not shown up yet. Yeah. But it's when LeBron texts and says, hey, like I'm looking at this, you know, this data center space deal, B2B, SAS, AI, agent, blah, blah, blah. The agents talk to each other. LeBron, like, no. And it's valued at 500 posts. They've done nothing. yeah yeah yeah correct they've done absolutely nothing yeah like they like someone from their founding team was in yc once and you're like and you have to remind people like that like actually there's gonna the second that you forget about this there's gonna be five more deals that you want to do yeah there's more well also if you spend time and this is what i always say too like if you spend time in the industry you'll meet the other 50 teams working on this like when you don't have the time and you don't have the reps you're like wow this like data center and space thing seems cool and you're like oh there's so many of those and this is what's happening and this is the pulse that they don't have the energy to spend time on.

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25:33Erica Wenger: And here's the part creators like myself love most. When you earn on Beehive, you actually get to keep all of it. So there's 0 % taken from your subscriptions, 0 % from your digital products and publishers on the platform have actually made tens of millions in revenue and kept every single cent. So if you're tired of stitching tools together and ready to actually own your audience, go to beehive.com and use the code trailblazers30 for 30 % off your first three months. that's beehive b-e-e-h-i-i-v.com code trailblazers30 so i have a confession i used to be a compulsive note taker every single meeting i'd be half listening and half scribbling and still leaving with gaps on next steps details that were shared and more but granola completely changed that for me it's an ai powered notepad for meetings and it's connected to every single call on my calendar before each call it shows me a well-researched brief so i knew who i'm meeting with and the full context going in during the call i jot down whatever stands out maybe it's a keyword or a decision I make, and Granola handles the rest.

26:29Erica Wenger: It'll transcribe in the background on the call and then turns my rough notes into clean, structured takeaways the second we hang up. There's also no bots joining calls. It just works in the background. I use Granola for several things. If I finish a meeting with a potential investor in my fund, I'll ask Granola, what could I have done better to get my point across? If I'm meeting with a founder I like, I'll ask Granola to point out any major green flags or maybe red flags I may not have already caught. For people with a lot of deep meetings and decisions that require analyst context granola is a game changer actually we're running granola on today's episode so you can read the full show notes at granola.ai slash trailblazers new users get three months completely free that's granola.ai slash trailblazers i mean the obvious question i have for you is like how did you meet all these celebrity people i mean so i you and i both like very deep in this industry we know all the lps there are a lot of the firms i would say 90 plus of the firms have the same types of lps it's like endowments once you get bigger pension funds once you get bigger fund to funds some family offices high net worths but it is certainly not the rolodex that you've put together i mean like it's insane it's absolutely insane so like what can you share about how you met these people pete davidson good one james corden i mean these are not paris hilton invests in funds yeah but the others like what we talked to paris on the way here love that um the it's funny because i'm gonna do i'm gonna talk about this on my socials this week but we're gonna we're gonna do it right here yep um i cold called i i had a sense not for paris or james or mark walberg or any of those folks um when i started i actually thought that the ideal lp for me that was a celebrity um because this this was all rooted not in i wanted to be around famous people, although it is obviously cool now.

28:17I'm not going to act like it's not. It's cool. I came from Time Warner and it became Warner Media while I was there. And we were supposed to be helping our founders that we invested in. And we had this huge ecosystem, right? We don't just own the MBA on TNT. We own Bleacher Report. We also produced The Bachelor and we produced Gossip Girl. And we're also one of the best and biggest B2B tech partners and clients for any neat business that you can freaking imagine. And so, but then we would write a check and then we wouldn't help. We would be like -

28:50Erica Wenger: Well, that's very CBC. Like corporate venture firms are sort of notorious for like not really being all that involved. And I took the job to be involved. I made it really, really clear in my interview process. That's the part that I want to do. Writing a check anyone can do. Getting involved is something that it takes. I'll pump your tires. It takes an Erica to go do. Yeah. So I wanted to build a network that could provide us a similar style of help that WarnerMedia could have but didn't. And I thought the perfect LP for me would be like a Bravo Liberty. Carl Radke, Ramona Singer, Bethany, Craig and Austin from Summer House, like that vibe.

29:30And like, I'm so fortunate that today that like Ramona, Austin, Carl, all people that I know and are, you know, Kyle moderately friendly with. And I got them on the phone.

29:42Erica Wenger: covid hit so what happened give me like ramona give me like the ramona like how do we get in with ramona is it like friends of friends is it we get one we get others the ramona the ramona story is an old story but i'm happy to tell it um it was this was in people magazine many years ago what about to say okay like five six years ago we'll try to find it in the archive you know when editors are looking they'll like pull it up it's not that hard to find really okay tell me i did a covid fundraiser um and i cold dm'd avery singer ramona's daughter yep and we had this like live instagram chat and we're raising money for a great charity here called harlem grown and avery kind of out of nowhere was like yeah the best thing about covid is like kind of been dating in silos like i feel like i have three boyfriends right now and it was a very innocent comment and she obviously didn't have three boyfriends but she was like out dating in the hamptons was its own sort of like insular community and people magazine picked it up and basically like like shredded her the three boyfriends comment yes hold that okay i had no clue that they were watching like i had 1800 followers on instagram i had no clue anyone's watching people were watching because she had a bigger following and that was being brought to the show obviously and it blew up um i felt horrible felt completely responsible i was in new york for a job interview while i was raising for animal capital and still wasn't sure what i was going to do and i drove out to the hamptons and i went to ramona's house uh and i apologized to avery's face and i apologized to ramona's face and i took a tennis lesson with ramona this was in like this was one of the weirdest days of my entire life and avery and i've been wonderful friends since but like that's a relationship that's now cemented for forever um and then how do you go from be embarrassing avery to becoming bffs with avery and friends with the mom to then having the mom be the lp like what's the they did not invest i they're more than welcome to invest.

31:31Oh, I see, I see. But it just built one to the next. And then you meet the next person,

31:35Erica Wenger: you're like, oh yeah, like I know Avery or Avery invites you to something and it just kind of flows. Carl Radke saw the Avery thing and for whatever reason was then responded to my DM about helping me raise money for Harlem Grown. He said on Instagram with me that he was sober. So this whole thing that he's done now, he has a sober bar in Brooklyn. It literally started with him announcing he was sober on Instagram Live with me in 2020 Also, you can go find some People magazine. I love that everything stems from Instagram Live. It feels like a very COVID thing to do. It was a very COVID thing to do.

32:06But it was the best way for me to start this process. And it literally went one by one until I ended up on the phone with the founders of Cameo. And they had seen my Instagram. I was pitching them to invest. They actually didn't invest. But they brought the founder, not the founder, the first employee of Masterclass on the phone. And this was like the seminal moment of my entire career. And we did a pitch call. He called me after because my cell phone number was in my email I sent to them. And he said, hey, I can tell from your background you're in LA. Why don't you come over to the house? I definitely want to invest.

32:35But I want to meet you first. So I got in the car. I drove up there. I'm Googling him on my phone, which I should not have been texting and driving. Sorry, mom. But I was looking at my phone. And it turns out I'm going to Christina Aguilera's house. This is Matt Rutledge, Christina Aguilera's husband. And I'm going to their house. And I was like, holy shit.

32:50Erica Wenger: Do we find this out on Google? Do we find this out? Okay, yeah. Google. We look up his name and then we see like married to Christina Aguilera. A bajillion photos of the two of them, you know, at the American Music Awards and at the Grammys and whatever. And he's this big deal executive who had produced, I think, was her executive producer of The Voice. That's how they met. Whoa. And he's one of my best friends now. And it's like so crazy to look back on this weird moment. He walked me down the street after they decided to invest down their street in their neighborhood to Paris and Carter's house.

33:22Erica Wenger: And said, you have to meet this guy and like basically watch you. And they invested. and every single person was a referral from then on. I love that. It shows how hustle is everything. And the people who have the fancy names and the big follower counts or whatever, they're all hustling. Like I'm sure still to this day, you're sending cold emails all the time, cold DMs all the time. Of course, maybe the ones that convert are more warm, but there's gotta be still a cold practice. How do you think about it? It's funny because we work with one, one of our businesses needs a salesperson and I someone followed me on Instagram and then I saw that they also connected me on LinkedIn.

33:58I'm sure you feel this way too, which is like most of the time people's names sort of get lost, but everyone's like, oh, that name sort of like stands out to me. And like, I see them on LinkedIn and like, what's the deal? And so you end up like kind of clicking through. And he was not traditionally a salesperson. And we have been LinkedIn messaging for like a week now, including today. And I'm probably going to see if he wants to maybe leave this job and see what he wants to do next yeah and so it's nothing's cold anymore it just isn't um there's so few there's so few people what what you one of our founders and i will not i'm not going to dox him super hard has a very b2b data security business and he really wanted timothy chalamet to invest in his business and it's like okay i don't get why he would do that but like timothy's not invest in the fund i've never met him whatever but i was able to get the phone call and have the conversation And he said no, and that's fine.

34:45But like, it's very, very rare there's someone I can't get on the phone now.

34:51Erica Wenger: Yeah. And I'm gonna knock on wood. I know, I know. I hear you though. It's like, once you reach a point too, everything feels lukewarm. Like, that's what I say. Like, once you've got enough with like the really like warm signal people in your corner, and once you yourself have enough of a brand, then everything kind of feels not too far out of reach. How many times has someone said to you that you got on the phone with LP founder? Hey, I love your content before you even start the conversation. and you already know that the conversation is different from that moment. Well, because you don't even have to also do the like explainer.

35:18Erica Wenger: They already trust you. Like I think that's so much of business too is like, you know, you want to find creative ways to build trust quickly. And I think content is a really obvious way to do that. I want to ask you about your approach too. So you talk about obviously you always do a lot of B2B stuff, even just listing off your portfolio companies. But you have a very public facing persona and people think you do a lot of creator and your celebrity LPs. How do you think about the messaging? How do you think about communicating to the world what you do. And I'd love to hear a little bit more about that because I'm dealing with that dissonance as well.

35:48Erica Wenger: Like I can't get pitched to another consumer social creator economy, whatever. Like I just can't. So tell me about how you're messaging all that. There's a couple of different versions of this. I think that the most important thing, and it has been probably like the sacrifice of some followers on Instagram and LinkedIn and TikTok and wherever else is I am. And I know that you see me do this. I'm brutal. Like I'm just brutal. Like you will, I, you know, I posted some like clickbaity shit where people I'm like, give me your idea. I'll respond to you. And I think I had like a thousand comments or something freaking crazy.

36:24I was like, Oh my God. Like, and I think I responded to like the first 300 of them. Like I did a good job. I was on a plane and I got through most of them. And I said flat out to people like, this isn't it. Start over. Like try again. Like I, when it comes to this isn't what I do, you have to scream it from the freaking rooftops because the reality is, is you probably will never completely change the narrative. It's true for me. It's true for you. Like you, there will be some piece that people will think because you went through the experience and worked as hard as you, as you, Erica, have worked to build the following that you have and build the career that you have, that you will have an appreciation for the thing that they're trying to do and that they are special.

37:03And by the way, we want our founders to be narcissistic. We want our founders to be selfish so you actually want crazy people to believe it's true yeah and i took a call with a founder today an hour ago and he exited founder that's building in the sort of like ai media agency advertising space which i would tell you cold no hard no yeah hard no violent no and i'm i'll tell you i'm considering it so like like he's really really smart and he's completely aware of the competition he's up against of how duplicative it could be how quickly someone could come and chase him and that self-awareness is like so you say no i say i don't do consumer i say i don't do things that need fda approval and then you end up doing them and sometimes it works and sometimes it doesn't but like the complete other side of that is like you also will have um you'll just you just end up being surprised so the from a messaging perspective you got to scream your feelings from the rooftops.

38:02Yeah. By the way, that's true for founders. If there's something that you're doing in a way that you're versus the way that you're being perceived, you have to scream it. Like you can't, don't try to keep the quiet part quiet, say the quiet part out loud because otherwise, otherwise you're going to be misconstrued or people are going to think that you don't know enough about yourself and your business.

38:23Erica Wenger: Well, you're not confident. Like, I think that's so much of it too. Like you said, like we look for, obviously you need to be self-aware, but true confidence. Like you know exactly what you're building, you know exactly who you're up against, you know, exactly your market. And I think that when you hide things, you stay too quiet, it gives the wrong impression. The 2026 primaries are taking shape. And if you have a strong opinion about how they're going to go, CalShe lets you actually trade on it. CalShe is the largest prediction market in the U.S., federally regulated and available in all 50 states.

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39:18Erica Wenger: Or go to Kalshi.com slash R slash TRAILBLAZERS to accept this$20 offer. With Kalshi, you can trade on anything. 18 plus only, restrictions and eligibility requirements apply. Event contract trading involves risk and may not be suitable for all investors. Prices, values, and available markets may differ from those mentioned. For more information, see calshi.com slash regulatory. Okay, so a quick experiment. Think about the last long message you typed. Could be a Slack thread, a prompt into Claude, maybe it's a detailed email. It probably took you 10 minutes, maybe even 20 to get it right. Now imagine you just said it out loud instead.

39:50Erica Wenger: That is the whole pitch for Whisperflow. Whisperflow is voice to text that actually works in every app on every device. You speak naturally and it outputs clean formatted text that's ready to send. No setup, no integrations, no fixing weird transcription errors. And it works across Gmail, Slack, NoShane, Claude, iMessage, wherever you type. And unlike the built-in dictation on your phone, Whisperflow removes all filler words, mid-sentence corrections and jargon. What I personally love about it too is that it perfectly matches my style. So I often type in all lowercase letters. So it'll type like that.

40:21Erica Wenger: I also say things like LMK, which means let me know in shorthand, and it'll auto adjust it from let me know to LMK. Like many of you, I also do a lot of brain dumping into LLMs. So instead of typing it all out, I actually just speak my windy train of thought into Whisperflow, which is infinitely faster than trying to get my fingers to keep up with the pace of my thoughts. If you do any serious writing or just send a lot of messages and emails, using Whisperflow is a no-brainer. Get one whole month of Whisperflow Pro completely free at ref.whisperflow.ai. One thing we talk a lot about is the role of founder-led brands and the importance of founder-led brands.

40:54Erica Wenger: And I would say the same for like founder led firms, which obviously you and I have taken that approach. What's your take on like the future of content, the future of like, you know, this like founder as celebrity, GPS celebrity. I feel like you have a really interesting take here because you're doing it yourself, but you also see it from like a pure entertainment standpoint with all your LPs and advisors. It's funny because you're a couple of years younger than me and a couple of years later into starting your firm and have been so successful thus far. And you're going to build an amazing platform.

41:22Erica Wenger: We're figuring it out. um and but this is v2 this is hard the second time around like i started in this the first time around with alex and drew at mantis and the chain smokers and the v1 of the anti-fund that you know when it was jeff was kind of coming on there and it was logan and jake and now more of one less of the other now both whatever chantelle jeffries who i think is like a dj yeah vision ventures i don't think that's still i don't think it's a thing yeah um i won't comment on the success or failure of it but the d 'amelios had a fund i i actually remember four something four four four yeah yeah yeah four three one no i think four four four that sounds right that sounds right yeah which like we had you know they had a lot of conversations with me about what my relationship to that should be it did not matriculate into anything and um in its original v1 form i'm it and Alex and Drew are at.

42:19That's it. Everybody else is gone. And there's reason for that because Alex is...

42:25Erica Wenger: Well, Jeff's still around. Jeff and the Pauls. Jeff and the Pauls. But their model is different than their model was five years ago. Oh, I see what you're saying. You're saying true to who you are. No, it's not like a... You're saying they stay consistent. Yeah, yeah, yeah. What the strategy was in 2020 and 2021 is the same as our strategy today. Yep. Not some major evolution of whatever and we're doing it this way Like just Mantis and Animal Capital. And I text Alex about it. Not all the time, but at least once a quarter, we have like something happens. We're overlapping on a deal. And we have like a little bit of like a we've all come so far moment.

42:59Erica Wenger: How has it been five years? Yeah. We are old. It was more fun when we were at the Vegas clubs together then. And now we're just old. And they're still there. And as you know, I have largely stopped drinking. So like different planets. But this version is different. Because it's harder to raise money and that's not going to go away. The more institutional investors are going to invest in more institutional firms, which I find to be uninteresting and I think is largely against what they should be doing. I think that the whole point of venture is the emerging manager practice and the platform practice and how those things interact with each other.

43:38Because inherently, your performance and my performance, from a mathematical perspective, this is not indicative of future performance, but we will be better.

43:48Erica Wenger: Yeah, it's just math. The math bears itself out. The smaller the fun, the better the chances you're going to smack it. And so I think that that's the most important thing. And people weren't paying attention to that six years ago. I think that it's not dissimilar than like in the last five or six years and put AI aside. Private equity is entirely different, right? And it's entirely different not because just because money got more expensive or money got less expensive or there's more or less assets out there. It's because markets mature. And private equity has now been around for probably 60 to 70 years.

44:19And venture has really only been around for like 35 to 40.

44:22Erica Wenger: Yeah. And so you actually have to do the history lesson and say, we are heading towards that moment where delivering alpha is going to get harder. And so that's one is it's evolved. And I think that you've done it the right way and you had the benefit of watching people blow it. I think I came in at the right time. Completely. Yeah. I was able to miss the whole crazy bull, the whole crypto thing. I mean, I obviously was at another firm doing that, but I wasn't in my own. Yeah. Which helped. And now your track record is completely your own. And that is a very different feeling. Yeah. And then the second piece, which is content super important.

44:59I don't think that it matters for the large firms. And they really seem to believe that it does. And I think that's a really big misconception. Lightspeed hired into the space and Andreessen hired into the space. And one of my dear friends, I think you probably know Bryson, who's like working on his venture thing. And Bryson's awesome. And we talk all the time. And he's been offered like a boatload of money by firms to come help them with their business development.

45:29Erica Wenger: The numbers that are being tossed. Because. Oh, it is crazy. Because there are hundreds, if not thousands of AI startups that over-raised, that can't deliver, that maybe had a spike in ARR that it's not coming back down to earth or the margin's bad or the compute power that they have to deliver to exist in the frontier model and whatever token models. Holy shit. The margin math isn't working anymore. So what do we do? We got to go spend this money on the marketing side in some way. I don't think it makes any sense for a large firm because the large firms are so different than you and I. And they're different for one reason, which is you and I are venture capitalists and they're asset managers.

46:09Erica Wenger: We should actually change what we call them. Like, I think they should not be called VCs. It should be a different category. It's time for a rebrand. Yeah. Or maybe we need to rebrand. You know what I mean? Maybe that's actually venture capital and that's like its own thing. And we are its own asset class. I don't know. Something. Yeah. And there's there's some some word out there, because I think that the I think that can conceptually what we do is completely different. Yeah. When you and I just talked about this on social media, but, you know, the biggest firms out there, the global venture capital firms and the Andreessen's of the world, the writing, you know, across all the different portfolios, thousand checks a year.

46:47Erica Wenger: People don't know this, but like Sequoia was the highest check writer in terms of like quantity of companies last year. Sequoia. People think it's going to be some random spray and pray fund, but it's Sequoia. Yeah. And by the way, how different is that than Goldman Sachs going and doing it? It's one of the largest asset managers in the world. JP Morgan, I think, is JP Morgan Chase and Wells Fargo, two of the biggest asset managers on the planet. That's what they do is you are building the world's biggest bell curve statistically. And that's what's actually happening versus for you and me. We have to – so I think that the math bears out to something like 2 % or 3 % of those 1 ,000 a year end up being unicorns that has no relationship to the exit moment.

47:31You and I have to beat that number. And it's not that we have to smack it past the number, but we need to beat about 5%. And similarly, thinking about rebrand, the other rebrand I like is I hate unicorns. Hate it. I don't like it. the fact that people judge me based on my unicorns is cool because I have some. But if I didn't have some, I would be like, absolutely, fuck that. I look at it now and I say, how many of my businesses have 10x?

47:56Erica Wenger: You know, so this is why I wrote this whole article called Elephants, Not Unicorns, because I could not agree with you more. And so many of these firms, by the way, when they come in, the first round is at 100 post. So when it hits a unicorn, that's a 10x. Now, the company that you started with, Noah, like you came in at a one. As long as you get it to 10, it's the same exact equivalent of a return. and people don't understand this. It's comfortably worth about$30 million today. We don't, we're profitable. Okay, so that's a 30X. That's the equivalent of joining Andreessen at 100 and seeing it go to three.

48:22Erica Wenger: And by the way, you guys also might not even be diluting yourselves the whole way, which is a whole other conversation. 100%. Yeah. And as an investor in Colossal, I am inclined to call it a woolly mammoth. Love that for you. Love that for you. Yeah. I think we can all pick our animal. We can all be happy with our own animals. But I think it's this concept that it's about like the multiple. We need to go through our branding. You don't need to sit in a room and go through branding exercises. It's not venture capital war. It's X. It's not unicorns anymore. We're going to publish like a whole new, like this is what our industry is after this episode.

48:50Yeah. And then people are going to, people are going to come back to our white paper. Correct. And say, oh my, oh my God.

48:55Erica Wenger: They were right. They changed everything. They changed the whole industry. Well, okay. So you bring up a very interesting question and this is the last one before our lightning round. But, you know, there's like the multi-stage platforms, which is a very interesting product, but it's different than you and I. And then there's like the emerging funds. Let's call it sub hundred, maybe sub hundred fifty million dollars. what's the what's the future of animal like do you want to grow into multi-stage do you want to stay i'm this is kind of a leading question because i do know the answer here um but like talk to me about where you want to go and i will just add a little asterisk that i did see something about an acquisition you guys recently made i don't know how public you're making that it seems like it's been a little bit scrubbed so like you can either answer that or not but talk to me about the future and any potential acquisitions you want to share yeah um it's a great question and And I appreciate you asking.

49:39Erica Wenger: And I think you know what I'm talking about. Yeah, it was hard to miss. Something I couldn't stop in the moment, which was interesting on its own. Very Google-able. I'm not going to talk about it. I think a bunch of things. I think, number one, we are great at what we do. And I know you well enough to know that you feel the same way and you deserve to feel the same way about yourself. and I am very fortunate that the single greatest venture capital investor in the history of planet earth is my partner um I'm happy to be number two to her she's the goat uh and yeah I think that Dylan is this like um I don't know like she's this is like a really weird comparison she's like the the woman that's the carving on the front of our pirate ship and the captain of the ship you know And I'm, you know, I try to be as good of a first mate to her as I can be.

50:36And it's a constant North Star is really the word I'm looking for. It's a constant North Star of what do we most enjoy doing? And if you enjoy doing it, then you're going to probably be a little better at it. And I'll embarrass Dylan really quickly even more. Dylan was going into labor with her second child in January.

50:54Erica Wenger: Wait, quick aside, she has the most beautiful children. In human history, the most beautiful children. No, it should be studied. it's it's it's really unfair because i also think that if like the government knew they'd be like you must have 10 more children like you know they're like like models yeah these are the ones you need like we need to populate the world with these no i agree okay keep going okay so you're saying which is going to labor she's going to labor and just on january 19th and um i'm planning on going up there the next day and giving her and her husband space but her husband also knows that she's married to me and he and i haven't we've we've been in a really nice like double date throuple for many years now.

51:25Erica Wenger: As it should be. Yeah. And one of our founders that we convinced to raise venture capital money was not going to raise money. It's called BuyWander. They're out in Spokane, Washington. We invested a sub$10 million valuation. They have raised well clear of a 10x of that, but that round was going on and they did not understand how to calculate customer churn in the way, in a traditional sense, because it's an interesting auction platform. And so it's not like people are churning really. It's really that you want to see how many repeat customers you have and how often someone that bids on it in this auction comes back, whatever.

52:01And I couldn't quite articulate the math and like, which makes me bad at my job. And Dylan got on the phone with them from the hospital bed, like 90 minutes before she had her daughter and walked them through the math and did the math for them. That's what we're good at. And so anything that we do that distracts from that is a waste of time. So as we grow and we think about what we want to do, we want to do things that give us the opportunity to build better relationships with our founders that are more trusted, where we can be thoughtful providers of capital and advice and network. And so what we have to do from a fundraising strategy beside that and from an investing strategy beside that is very clear to me.

52:48We will buy the things that we want to buy, that we think that us owning makes the most sense. With the right leadership team, we are not that leadership team, but with the right leadership team in place, we will invest in the things that we want to invest in where we think we can lend the biggest hand with the biggest opportunity. And I want to be a flexible capital source, not a traditional capital source.

53:08Erica Wenger: What does flexible mean to you? You're being vague. I'm pushing you to be more specific. I'm putting you on the spot. In the last three years, and this, I mean, I'm not breaking news. It's my own news. In the last year, we've provided non-venture capital money to three different founders. We provided structured notes to founders who were profitable and needed what I would consider to be a line of credit style investment with a little bit of an equity kicker because we believe that that is what certain founders need and that going out and building a deck and building a data room to do a round when what you really need is$150 ,000 to make one hire who's going to be a million dollars of revenue and$150 ,000 hire, just give them, pardon my language, but give them the fucking money.

53:53Like don't make them go out to net new people and have that conversation. Like that's what follow on capital should really be about.

53:59Erica Wenger: Very interesting. Do you structure your own vehicles for that or do you have it as part of the fund? We have 100 % discretion as to how we spend the money in the fund. Love. We do what we want. We love a good LPA. We know, we love a GP-friendly LPA. Yes. And my LPAC is a thoughtful mining entrepreneur, a former name partner at Wilson Zincini, and the GP of M13, Carter Room, who's like my work dad. Paris's husband. Paris's husband. Probably Carter, yeah. He's like my work dad, and we're very close. But we go ask them, we get the piece of paper signed, and then we do what we want. Yeah, I love that.

54:34Erica Wenger: I love that. And I think also that's the beauty of being emerging is you can really have flexibility and you don't have the endowments or more institutions kind of like breathing down your throat. So staying with the high net worth family office crowd makes sense. Here's a problem I hear constantly from operators. The data exists. The answers are somewhere in there. But getting to them, actually pulling a useful insight without bugging the data team or learning SQL takes way too long or just does not happen. Hex solves that. Hex is an AI analytics platform where anyone on your team can ask data questions in plain English and get real answers backed by your actual business context.

55:05Erica Wenger: No SQL required. And the best part is that Hex shows you exactly how its data agents think. so you can see where the logic comes from and trust the output. The more your team uses it, the smarter it gets. From seed stage founders running lean to larger orgs dealing with serious data complexity, Hex is built to scale with you. It's game-changing for people like me who want to understand what's going on under the hood, but we are not the data experts. It's funny, too, because I feel like every time I look over my operator friend's shoulders, whether they're in product or marketing or ops, they often have a Hex dashboard pulled up.

55:34Erica Wenger: It's a great tool. Trailblazers listeners get an exclusive 30-day free trial at hex.ai. slash trailblazers we're gonna do some lightning round okay oh clearly that's not my strong suit is answering quickly you're gonna do your best you can expand if you want okay but give me whatever comes to mind okay and you can't say both that's the one rule of this game okay trailblazer trade-offs book in hand or podcast in ears podcast in ears do you have a favorite besides trailblazers besides trailblazers uh right now probably the town the matt bell and the entertainment podcast you really you've got this like entertainment thing which we didn't get into enough but you really matt i'm looking right in the camera matt i want to be on the podcast i know that you know that i want to be on the podcast put me on the podcast love okay can i just as a quick aside like more people need to ask for what they want in life totally they're never gonna get it otherwise like do you want someone to give you money do you want to be on a podcast like just ask direct yeah love great Hire slow or fire fast?

56:34Hire slow. Okay. I have had experiences within our founder ecosystems where we are kind of the hiring engine, especially earlier on when we had more time to do those things. And I think that I'll use a quick example, which is like I hired my, was my chief of staff is now a principal on my team sam and sam was like talent not but not a refined investor like that was the that was the trick i knew that was a trade-off and i hired her when she was 20 years old and now she's 26 she's been with me since day one she's been with me longer than dylan by a long time and um we we picked talent and we i'm not joking i would say i am the sam mechanic i invented sam i'm looking back at you i invented the engine and that she would agree with me like

57:22Erica Wenger: I love that. How gratifying is that, right? There's so much of our job. We taught her accounting. Yeah, yeah, yeah. She's a computer science major from Stanford. She did not want to learn accounting. And so I think that hiring slow so that you know that someone's willing to go through those moments, those learning moments is a lot more important than firing fast, I guess. Yeah, I love that. And also keeping people for a long time. Like I'm a big, like everyone I've hired for the most part, still with me. And you need that like commitment on both sides. 10 small wins or one big moonshot?

57:52Both. Screw it. Sorry. No, that's not the game. We don't. Ten small wins. Definitely.

58:01Erica Wenger: OK, well, we just switched it up there. Yeah. Both to definite. OK, tell me more. Well, I think that I think that my small wins for this, like on a from a scale perspective, aren't that small. I'm making it a trick question. You are. You're going to 10 big wins. That's basically what you're doing. OK, fine. Thanks. Thank you. Being early or being right. Oh, God. I love being right. Being right. It feels good. It's so. I know. Oh, my God. I got into an argument with an investor yesterday. And he ended up flat out apologizing six hours later. And I was so spun up about it that I called my dad, which is like, sorry, I'm 34.

58:41I called my dad. Get over it. And he was like, just, you're good. It's not about being right. Come on, dad. It's about being right. and it felt great when I was right. Yeah. It never gets old. My parents always listen to whatever I do and they're going to hate that answer.

58:57Erica Wenger: They're going to be like, did I teach you literally nothing? Oh, and one more for the camera. Happy birthday, dad. It's his birthday on Saturday. 65. I love that, but this is not going to come out on his birthday. But you know, we'll try to get close to his birthday. It doesn't matter when it comes out. He'll still feel the thing. Yeah, he'll feel delayed. Fine. It'll almost be more nice because he'll get like two birthdays. Yeah. Okay, what's the best teacher? A mentor or a mistake? Definitely a mistake. I mean, that's not even close. I would consider my, like, I've said this so many times, but like Carter and then David Beck, who was my boss at WarnerMedia, who's now one of the, I think he's like the co-global head of streaming at Disney, who's my old boss at WarnerMedia.

59:33Like, they're definitely my like mentors that I go to consistently for questions and whatever. And they're awesome. And they keep me from making mistakes. But those lessons don't impress themselves into your brain the same way that a mistake does.

59:48Erica Wenger: I almost think that they would want you to make the mistakes you learn it for yourself sometimes like they almost are like I could step in here and tell him but he's got to learn this one thing and like a controlled way or in an early way you know yeah and you'll there they're just there's so many things about this job and any job I'm sure but like this is now the job I've done more than any other job that you aren't going to forget some of these mistakes they're going to keep you up and you're going to like relive them in your dreams and wake up in a freaking sweat and be like good reminder Yeah, won't do that again.

1:00:20Erica Wenger: Okay, is the future of AI abundance or chaos?

1:00:25It's going to be chaos for a little longer, and then it's going to be abundance. So I'm going to say abundance. I genuinely don't think that people understand from a venture capital perspective, because that's what this podcast is here for, the end state. And I think it's our job to understand it. and it's why it's so disappointing when you see some of these like Y Combinator batches and like what's getting funded and what's getting this like interesting public media support I I find it disheartening because I am including in this room I'm not the smartest person in this room you are not close no not true um and in most rooms like I do a good job of like not being that person.

1:01:12I try to surround myself with people that are not like ha ha smarter than me, but genuinely like, damn, like smarter than me. And it's so clear to me what the future is eventually because like fable came out and it's this big thing this week, whatever. And someone did like a whole snowboarding video game with one prompt. And you're like, Oh my God, the video game industry is dead. And it's like, well, no, it's not actually, it's going to get way more efficient. And what's been really interesting for six years, which is a totally different podcast for an hour, which is a different hour, is AAA Video Games was a very interesting venture capital play probably eight, nine years ago.

1:01:48And five, six years ago, it died. And it's still dead. This actually brings it back because you can run a more efficient platform to that moment where you test and demo the game. And so, like, I've been saying this now for just a few months that AI will create more jobs than it destroys. and it is about looking through those, all those prompts and all what the outputs might be and where it's going to be made more efficient, what's not and being intellectually honest with yourself about what, where the innovation's going to be from a human capital perspective.

1:02:19Erica Wenger: I also think there's such a responsibility that like now we're actually check writers to like put it in the things that we want to see actually work at scale. Like I always think about like alignment and just like, if I really want my founder to do well, I want my LPs to get super rich. I want it to be the business that I actually also want to see more of in the world. And I agree with you. I think sometimes the stuff that gets funded doesn't always match the thing that I would like to see at scale. A hundred percent. Yeah. And that's why we're here. It's the same thing that we expect of our founders, right?

1:02:46Which is a definitive level of selfishness, narcissism, single track minded. We have to be that way, too.

1:02:54Erica Wenger: Yeah, totally. Killer product or loyal niche audience? Loyal niche audience. And every time. um we backed a handful of killer products that are those businesses don't exist anymore um it's sad it happens um i you know i'll actually i don't i don't care i'm gonna talk about it we invested in a business called vessel health with monogram monogram i would consider at the time to be a tier one firm i don't actually don't know what venture they do now no i don't either um don't come across them yeah and five years ago it was like every deal and it was a it was a urine test strip and it was patented it was far ahead of the far ahead of the curve and the uh it had i think 12 core biomarkers on a cp on the stick you scan the qr code on the stick with your phone and you're supposed to do it you know every day once a week whatever and they were so far ahead years no audience and we invested and then we invested again which you talk about mistakes one of the dumbest things i've ever done and the signals were not there to invest again and i did it anyway because I believed in the product.

1:03:58I used the product. I thought it was excellent. And so a loyal niche audience is always more interesting because at the end of the day, like you'd much rather have a business continue to exist and have longevity than flame out.

1:04:14Erica Wenger: 100%. And I think also that's what so much of what's shifting in venture is it used to be the common consensus like, you know, you need to have a great product and it's so hard to build something and there's like such a capital cost to do so that that actually is supreme. And I think we're starting to see more and more like distribution go to market. That's all that matters. It's why it's it's why marketplaces as a venture backed business are always a hot topic in any venture cycle. It's always interesting to talk about marketplaces because you have two jobs to do, supply and demand. And I find that to be totally compelling in this market because AI makes like matching people a little bit easier.

1:04:52It makes building the products a little bit more easier, but it doesn't change anything about demand. It's why the dumb pitch that you get today that I'm sure you get 10 a day and I get 10 a day is I built the thing where the agents talk to the agents and these agents are out there with a budget and they get to spend this much money. And this is where they're going to go spend it. And you're like, yeah, OK, like, I don't know, like not anytime soon.

1:05:16Erica Wenger: I hear you. Marketplace is a whole other conversation. I want to get deep on that with you because I have a lot of thoughts as well. VC or bootstrapping? Bootstrapping. If you can do it. I think you've done this on Instagram. I've done this on Instagram. Don't take money from us. Don't take money from us. Don't take money from us. Yeah. We are predators. It is our job. We're animals, some might say. We certainly are. Elephants and woolly mammoths. Exactly. our goal is to get the lowest valuation to own as much of your company as we can to get money out when it makes sense for us to get money out without handicapping you or your business if you can bootstrap you should i think the only i mean there's lots of times not bootstrap um you when you're chasing um when you're chasing a market like when there's like this is a moment and you can prove to me or prove to arco why it's a moment um that's i think that's when you need to raise venture capital money.

1:06:15And then the other side of that would be like some sort of like an arms race. Like there's lots of competition here. I have a reason to believe that with this money, I can move out ahead of the competition and here's why. Again, that's reason to raise venture capital. But like, I'll give you a dumb example, but like I'm obsessed with windowpane manufacturing. I have no investments in the space. I would love to have an investment in the space. I think it's a really compelling space.

1:06:39Erica Wenger: Shout out to all windowpane manufacturing founders, you know? Yeah, please. And the reality is, is it's a very capital intensive business to get started. But then your margin profile on Windows is awesome. That's why I like it so much is because it's high barrier to entry, great margin after that. And I think that like that's that's the interesting place where it's like you should be able to bootstrap. But like what what what this isn't it's a wonderful life from 100 years ago. Like like you can't go out and get like a small business loan and bring your papers to the bank and like put a second mortgage in your house.

1:07:11Like money doesn't work that way anymore, unfortunately.

1:07:14Erica Wenger: Yeah. I think you got to know the times we're in too. And I think that's a lot of the stuff that, yeah, we can help educate on too. Yeah. Why we're here. Never post on social media again or never fundraise another dollar again. Oh, gosh. I mean, both of those have extreme mental burdens that they place on both of us. Never post on social media again. So you'd be able to fundraise. Okay. And tell me why. I think that what I'm most passionate about today is the scope of the impact that we can have on founders. Yeah. And I think that being able to write checks puts me in that position to do more than posting on social.

1:08:03That said, posting on social media has been an extraordinary blessing.

1:08:08Erica Wenger: Yeah. Game changer for a lot of us. Yeah, I hear you. I mean, the dream is that you can have so much money yourself like the homebrew guys and you can just like funnel your money back into what you're doing. If I had a dollar for every time I said to Dylan, do you think that animal capital will ever just be our family office? Yeah. The Marshall and Dylan family office? At some point it could be. I mean, I think also our strategies, I mean, at least the ones we're running now can be run with like less capital than a billion dollars. And so you don't necessarily even need to be at that level. And so it could make sense.

1:08:34No, but how nice would it be for you if you're like, listen, like I don't have this, but I'm saying like, I'm going to be you. I'm Erica. Yeah. I have been running funds. I've raised fund one, two, three, four. I have made$100 million. And now every two years, I'm going to deploy$8 million into venture over two years. And I'm going to write, what are those, 32$250 ,000 checks, no follow on. And you say like, as time goes on, if you're as rigorous as you are now, you'll never run out of money doing it that way. and you don't ever have to fundraise again and you don't have to talk to any investors.

1:09:12It sounds awesome.

1:09:13Erica Wenger: I know. It's definitely enticing, especially when you're deep in fundraise mode and you think about what all the potential opportunities are if you don't do that. 100%. I mean, constantly you think about that, but I think that your ability to fundraise and your ability to write checks, even whether you write them or you don't write them, just the ability to yeah put you in a different position to post on social media yeah 100 and that's also something that i've been like really talking a lot of people about is like we need a lot more people on socials like you and me who are actually in the game writing checks there's a lot of like outsiders who are so well-intentioned and like really want to participate um and they should absolutely be there too but we also need people that are like playing the game writing the checks like in the circles there's a extreme disparity in um there's an extreme disparity and veracity between what we do and what many others do and it's really difficult to watch and you see people have you know a viral post here or a viral post there and you're like you i don't know if you feel this way i'll speak for myself feel some jealousy you're like damn that was a good idea and then you like get a little angrier because you're like you don't even write checks you never raised money like like or you wrote checks and you sucked at it like what are you what are you doing here and it's but the reality is like they have every right to fake it till they make it too uh and so you have to kind of like measure it with that i i think that um i do think that you've done a really nice job of garnering an audience of folks that uh have a deep appreciation for how large you're working thank you i appreciate it i mean that i think that changes your relationship with the audience in a really nice way i hope so i think also i love that venture is so meritocratic and like i think sometimes social feels a little more not that it's not a lot of hard work, but it can feel like a little bit like random or like you can talk, but you don't have to do.

1:11:04Erica Wenger: And in our business, I feel like in venture, it's really action-based. And I love that. I love that like, if I'm bad at this job, people will know. And if I'm really good at this job, everyone will also know. And I love that, you know? Completely. It's why platforms like Traded VC are so interesting. Like that's a different podcast of like, is that good or is it bad for the space? I really like those guys. They've always been so supportive of me. And they always, even if I'm like the teeniest, tiniest check in this big rabbit. They toss you in. I put my face in there and I'm like, hey, I text the guy.

1:11:30I'm like, thank you. It's really nice.

1:11:32Erica Wenger: Yeah, yeah. And so I don't know. I think it will. I do think that our hard work will pay off. I agree. I agree. We'll see. Is AI overhyped? This is the last question. Is AI overhyped or underhyped?

1:11:53It's overhyped. I think that people I'm sorry I keep not doing what you asked me to do it's overhyped because it's misunderstood I think that what AI today boils down to is the top 150 to 200 use cases for the regular person and then the thousand use cases for the frontier closed model the like engineer of the engineers Nobel science prize winners at Anthropic and at OpenAI and upper plexi in these places that are pushing the boundaries and looking for government contracts and whatever. But the business model, the token business model versus the open source business model, what Elon Musk is doing and why SpaceX keeps trading down and down and down.

1:12:37And next week, depending on what this records, it might be last week, but their first lockup for their stock will have passed. And they IPO'd and they sprinted up to about$2.25 trillion. And I think as of recording, maybe they're at$1.53 trillion, which for people doing the math, that's a 33 % discount. And the reason for that is because there's a supply and demand thing going on. There's a marketplace thing going on. There's$7 trillion of committed capital on planet Earth, terrestrial planet Earth, where we live for data centers. And more and more in the geographies where these data centers are supposed to be built, Eastern Tennessee, Northern Texas, Nebraska, you're looking for places that are flat, that don't have tornado warnings coming, where electricity is trading as a commodity, is trading flat at a discount.

1:13:29There's a lot of reasons why people pick the places that they pick. But you see in those towns, city councils are rejecting plans for data centers. And so what they're doing is they're going to have to take that money and they're going to have to go try out the space data center thing. And what that means is that Elon Musk is going to put some amount of hardware on his Falcon X rocket and it's going to go to space. And without heat, water or electricity, there's going to be some sort of gravitational pull that creates the movement. The same as in your in a fancy watch. It's called a resonance chronometer.

1:14:00It's the thing in your watch that keeps your watch actually winding and on time, despite the fact that there's no battery in it. And the hope is going to be that the amount of compute power that is delivered can meet the demands on planet Earth. And people just don't understand the basic economics of that. It's getting less expensive because more supply is coming online. Demand is going to go up and then demand is going to stop going up. And which means the prices are just going to fall and fall and fall and fall. And it puts Elon in an interesting position where his thing works.

1:14:33Erica Wenger: It's going to freaking crush. Because it will take 10, 15, 20 years. That's how long these things take to have Republican to Democrat, pro-business to not pro-business, city councils turn over to actually - Bureaucracy, 100%. To approve these data centers. Yeah. He doesn't have a bureaucracy to send the rockets to space. And so I say it's overhyped because the extraordinary lack of understanding from really, really smart people about how it actually works and the actual use cases that will take up 99 % of my mom, Lisa, who I love to death, going on Google and using Gemini because, yes, she'll use ChatGBT to pick interesting fun cafes in Paris, but most of the time, she's just going to use Google's Gemini because it's just easier.

1:15:14That's what most of AI is going to end up being for a little while.

1:15:19Erica Wenger: So interesting. I think what people have a hard time seeing is the 10 years from now vision. And how does the tension and bureaucracy within city councils have anything to do with what Elon's doing. I think a lot of people, we don't go five steps ahead. We stay right where we are. And so I think it's up to you and I, and you're encouraging me even with this conversation to like make more content that is more future predicting. It's a lot of what we talk about behind closed doors. Why are these things happening? Why are we investing the way that we are? It's because we're talking about 10 years from now.

1:15:47Erica Wenger: We're not talking about tomorrow because that's completely not relevant anymore. No, it's completely not relevant. And you sit and look and I mean, there's so many things out there that are going to have a relationship to what we do. And one of the interesting, I think, themes of 2026 and will be 2027 venture is deglobalization. And it's, okay, lots of people are paying attention to supply chain like they were during COVID because of the Strait of Hormuz and the Trump war, not war. What's the relationship between that and Israel? And what's the politics between Zoran and Netanyahu? They're looking at this micro thing and they're saying, well, I can't invest and something that needs to get through the straighter hormones.

1:16:30It's like, sure, I get that. That's going to get more expensive or you don't know the thing's going to show up. Can you take a huge step back from that and think about, all right, well, who's going to build a manufacturing plant in the United States? Are manufacturing plants venture-backable businesses? That's for a different podcast. Did you look at Send, Cut, Send? I know what it is. I didn't look at it.

1:16:50Erica Wenger: Okay, okay. But very in your alley right now. Yeah. Is that a venture-backable business? Yes or no? I don't know. So what's the future of private equity? Because it used to be that our hope, our dream would be that 20 to 25 % of our winners weren't IPOs and weren't secondary sales. They went to private equity, but private equity, not hiring the same way they used to, not raising money the way that they used to. It is Apollo, BlackRock, Blackstone, and Aries, and it is almost no one else anymore. Middle market private equity is being, how does that affect our jobs? And so many people get so hung up and staring at CNBC and Squawk Box that they completely forget that like our job is not about investing for today.

1:17:29It is about the fact that we invested in it. I'm Jewish and like cremation is like not a very Jewish thing. It's actually we're supposed to get married instead of cremated. We invest in cremation business anyway. I don't have to get cremated.

1:17:39Erica Wenger: There's enough people that want to get cremated. Yeah, it's fine. So actually cremation nine to one is the most popular form of death care in the country. We invested five years ago. Yeah. Our founder's name is Tom Harry. He's been in death care for 20 years. He's really successful and wonderful. I invested in Tom in 2021. Tom's business has grown every single quarter since I call it March of 2021-ish. And he has never asked me for anything. He sends me a quarterly update. He sent me my Q2 update yesterday. He grew another 36%. Congratulations, Tom. He doesn't need anything from me. And I'm going to be invested in Tom.

1:18:13I'm 34. I'm going to be invested in Tom when I'm 44. I don't know if he's going to exit. I don't know when he's going to exit. Maybe we'll go ring the bell in the New York Stock Exchange. Maybe that'll be a virtual experience one day. I don't know. When you write that first check to the last time that you exit your last business, it'll be 17 years minimum. So stop watching. Don't stop watching the news because it matters. But how does that actually impact the founders that show up? And the founders, the best founders, they're thinking about it too.

1:18:40Erica Wenger: 100%. And this is also not even just with venture and investing. It's like, in general, in life, we do need to take a few steps back and think about things in broader time horizons. Because I agree with you. I think a lot of things, when we get so up close to it, we get confused. We get lost. We can't see clearly. And when we step back, that's when we actually get the answers. And that's what we get paid to do. But I think in general, as a consumer, a lot of people should do that, too. Instead of getting so consumed in that day story. You know, how many people out there invested millions, if not tens, if not billions of dollars in open AI at an$880 billion valuation before 32 hours later?

1:19:16It's like it's actually about open source. And actually, the charge for tokens is going down. The secondary price of open AI has gone down 40 percent because they want to make a quick buck.

1:19:26Erica Wenger: They want to talk about it at the dinner party. Like, that's the other thing. It's like it's more about ego than long term returns because it's short term versus long term. And that's like so much of the root of it is just like, can we think bigger picture here? Yeah. Anyway, you and I could go on and on about this. But thank you for being here, Marshall. This was so much fun. Great to hear your hot takes. I always try to make sure we're giving a good podcast to your folks. You crushed. You crushed. Thank you. Thank you. Thanks for having me. Thanks so much for listening to the Trailblazers podcast.

1:19:54Erica Wenger: If you found this conversation valuable, please follow along on socials, share with a friend, leave a review, all the things. Most of all, please subscribe to our channel. It helps more constrained builders find us and supports the work we're doing here. To learn more about what we're doing, you can visit trailblazerspod.com or my venture capital firm parkrangerscap.com or just follow along on socials at Erica underscore Wenger. Until next time, keep trailblazing.