Rolling Fun #2: Q1 Portfolio Recap, Q2 Updates, Right Kind of Risks and more with Al Doan and Bo Fishback
This is the second episode of the podcast dedicated to Rolling Fun, an early-stage venture capital fund I started with my buddies Al and Bo.
During today’s conversation, the three of us chat about the first investments we’ve made as a fund, and why we are excited about them (as well as some causes for nervousness--always plenty of risks) – we talk about Gently (formerly Wearloom), Lumo, Stablegains, and Terran Robotics. We also talk about reasons for passing on startups, and we highlight some of the awesome investors that have joined us as LPs in the last few months.
Rolling Fun is focused on investing in technology companies from all over the world. If you are an accredited investor and think you might be interested in joining us or if you have a startup we might invest in, feel free to reach out for more info.
Here’s what we chatted about in the episode:
Gently is aiming to crawl all second-hand marketplaces and aggregate the data. We are excited about the idea of being able to find an instant value on stuff as well as the tech opportunity the company is bringing to the table.
Gently is made up of a young team and it is their first time building a company, so hopefully, we can be a great resource to them.
Terran Robotics is a company in the drone construction space. They are working towards being able to construct adobe structures with drones that can carry the mud, drop it where a wall will be, and then impact hammer the material in to create walls.
Lumo is a water management software. The company is looking to modernize and revolutionize irrigation, and we are excited about the eventual potential to have water rights represented on the blockchain.
Stablegains is essentially a simple web2 frontend for accessing web3, and anybody (including your parents) can easily deposit money and earn 15% a year on the cash.
There are a ton of similar opportunities for companies that are bridging the web2 and web3 worlds.
Balaji has recently become an investor, and he’s predicted some of the company ideas we are now investing in.
Matt Goetz, the CEO of Blocktower Capital, is also joining us, as well as Stu Ludlow, the CTO of RFP365.
We are not investing in Al’s company Pretzel because that would be weird.
We are looking for very early, very risky companies to invest in... the only way to get that 100X return.
Learn more about Al Doan and Bo Fishback:
Additional episodes if you enjoyed:
Shane Mac: Building Messaging Protocol for Web3 (XMTP), Company Culture, and Scaling Trust
Chris Powers: Starting A Real Estate Empire at 17, Focus, Podcast Flywheels
Episode Transcript:
Al Doan: Eric wrote like 20 pages on why this was a great idea.
Bo Fishback: You got pretty fired up about it I think.
Al Doan: My feedback was like, dude, there's a 98% chance we're wrong. You should not tell people that we did a good job yet.
Eric Jorgenson: I didn't know that the takeaway was, hey, we did a good job.
Al Doan: You literally started with congratulations on pre-rich. You are rich already early.
Eric Jorgenson: Look, there was an asterisk right next to it. I don't know how much more clear I can be.
Hello again, my friends, and welcome. Welcome to the second episode of Rolling Fun. These are conversations with my two partners in our early-stage venture capital fund that we're just getting going. The last episode we covered all of our backgrounds and the beginnings of the fund if you want to check that out. But you will enjoy this episode even if you haven't heard that one. Today, we'll talk through the first four investments we've made – a drone construction company, nest for water management, a very simple UI interface to make crypto accessible, and one more. We also chat through main reasons that we passed on startups and share a few of the incredible investors who joined us as LPs so far in the last few months. Rolling Fun invests in early-stage technology companies all over the world. You can invest with us. We'll help you put some money to work, or perhaps we'll invest in your startup. Either way, we'd love to talk to you if you want to drop me a line on email or Twitter, and you can visit rolling.fun for more info. We're open for investment now, and we'll hit our fund cap eventually, but it's first come, first serve until then. If you enjoy this conversation and want to read more about tech, startups, and startup investing, ejorgenson.com has my newsletter and blog posts and everything else that I work on there. Please enjoy this conversation arriving at your ears in three, two, one.
Okay, I feel like the most pressing issue in the tech world today is what would Twitter look like if Elon Musk actually bought it? He put in an offer today. Do you see that?
Al Doan: Yeah, no poop, Sherlock.
Eric Jorgenson: Just in case you hadn’t looked at your phone in the last three hours. What would he do with it?
Al Doan: No, I just, I love it. I want him to buy Apple next. Can he fix the Apple maps? Anything he's pissed off about in life, he's like, you know what sucks? The federal government, I'm coming in. I don't know. I love the takes, like people that don't understand how takeovers work, and they're like, wait, what's happening? He is buying more shares? He is going to get it? This is going to be terrible. No man should be allowed to own this much of a company.
Bo Fishback: Yeah, I think I share Elon's take that Twitter’s a wildly undervalued company, and I think there's no chance he's probably going to get to buy it for what he's offered.
Al Doan: 36% above share price?
Bo Fishback: I think the move is like they say no, he announces a competitor. The competitor doesn't work. But in the process, Twitter's price goes down.
Al Doan: They say no, he sells off his stock, the shareholders sue the board for saying no.
Bo Fishback: But that happens every day. I think that's just like normal public company bullshit. I think that it's- look, I think the truth is like they nailed distribution; it's the most important media company that there is.
Al Doan: But if the value drops by like 50% post-
Eric Jorgenson: That has happened like three times over the last few years.
Al Doan: Not related to a single decision where the board made a choice that pushed the share price down 50%, right?
Bo Fishback: But I think the Twitter board probably also thinks it's highly undervalued as a company, and instead of a $40 billion company, it should be an $800 billion company and they just haven't gotten there yet. So, I think it's- whatever, I think it's good tech public market drama. I think it would be hilarious if Elon owned it. I can't quite imagine he has that much time in the day, though he keeps manufacturing more time in the day, so maybe.
Eric Jorgenson: Yeah. I kept watching Jack just get his ass kicked and have to go on like month long meditation retreats and get hauled of in front of Congress and being like that job looks terrible. Why would anyone want to do that?
Al Doan: He for sure would not CEO it, right?
Bo Fishback: Well in process I learned Jack owns 2% of Twitter. Elon owns four and a half times as much of Twitter already as Jack does. Like it's so crazy.
Eric Jorgenson: Sip that Vernors, Al.
Al Doan: Yeah, no, it is. If we're doing a tech roundup, it's like Twitter, what else is ridiculous right now?
Eric Jorgenson: Fast. Do you have any empathy for that guy?
Al Doan: Well, I did until I got to know him. I feel like as soon as you start listening to his stuff- it's the same as like the Robinhood CEO when he went on during the GME stuff. And you're like, oh man, you shouldn't have opened your mouth because now everybody hates you. But before we thought, no, probably good intentions and just went awry. Turns out, you're a terrible human.
Eric Jorgenson: A hundred million's a lot to burn in a year.
Bo Fishback: I don't know. I'm going to say like I probably-
Al Doan: Some of your best times were at a hundred million burned.
Bo Fishback: I think it hasn't gone really smoothly. I think that is one of those things where when someone offers you a hundred million, part of the calculus that they make is, hey, maybe this guy's crazy or maybe he's brilliant. And more often than not, it breaks the crazy way. But when it breaks the brilliant way, it ends up being an amazing investment. Do not think people did not say that exact thing about Elon multiple times. It just turned out that he was right.
Al Doan: Or Adam Neumann for example, yeah.
Bo Fishback: I think it is one of those, like I think I have empathy for it only because like when someone offers you a hundred million, because you hand waved really well and you said you're going to one-click the internet, and they give it to you, you're not going to say like, no, just kidding, like actually I'm insane. You're going to say like, yes, let's go see if we can pull it off. And the investors on the other side, like they made a bad bet.
Al Doan: I think that's the hilarious bit is like this guy, like there's no way he was- he did nothing to show that he could pull it off. Like you would see at least some indicators along the way that like you could build the team that was going to go and execute and knock this out.
Eric Jorgenson: I wonder if it was like one of those things where VC one saw that VC two funded a one-click checkout company and was like we can't not be in that space. Let's fund any lunatic that walks in the door, no matter how long the odds are.
Al Doan: Are you talking about Lyft? Lyft and Uber, is that how that went down?
Eric Jorgenson: That one actually is a good- that worked out great for both of them. But there was like four of them. Do you remember in San Francisco at that time? There was like an orange one with door mirror pockets. And like there's a ton of those things.
Al Doan: Yeah, there's always space for a number two. But I don't think that's what this was.
Bo Fishback: I think people chronically underestimate that part of the job, even at a hundred million dollars of investment for VCs, is to take risks that might seem crazy but might pay off. And then they get super excited about the fail porn when they go to zero. But that's how the ecosystem works.
Al Doan: You are supposed to fail nine times and [inaudible 7:19].
Bo Fishback: And so some are big, and some are small, and some you never hear about. And some, because they have just the perfect guy who wants the fame, even though he had the failure who goes out and is fine looking like an idiot. I think it's just part of the deal.
Al Doan: But then the other one click company, is it Ryan Barlow, Berlow? That guy's such an entertaining person to watch on Twitter as well. But like apparently his company is crushing it.
Eric Jorgenson: So was Fast until it wasn't.
Al Doan: Do we know what Bolt’s numbers are? Do they ever tell us how much revenue? But he says crushing it with so much conviction. The Fast guy, he started to have doubt when he would say he was crushing it. I knew, I think we all knew he was doomed at that point.
Eric Jorgenson: That guy, that playbook pisses me off because it shouldn't work, but it does. Everyone talks about him because he's doing annoying, stupid, mean things to people.
Al Doan: Because he is the only one brave enough to call out Patrick Collison is a murderous mob boss. Which I met Patrick, he's a nice man, but so are most mob bosses, very gentle, soft-spoken. So, who's to say? He just had one, it was Sequoia in the New York Times. Did you see that? I love it. I love a little bit- I mean, just if Elon buys the whole platform, just think what could happen. Here's the big question: Does Elon put Donald Trump back on Twitter if he buys it?
Eric Jorgenson: Ryan Breslow is the CEO, Donald Trump’s account is back.
Al Doan: I could see that guy just like mix it all up to watch the world burn and would just laugh the whole time. I think that like what if it was just a great trolling moment for Elon?
Eric Jorgenson: Do think he really believes that like life is a simulation and he's just playing a video game? Like how close to actually acting in that life do you think he is?
Al Doan: Are you saying do we all believe that? Yeah. No, what? What are we talking about right now?
Eric Jorgenson: Should we talk about ourselves instead of just our opinions? Our fund, the fund that we're rolling up. Tell us about it.
Al Doan: Just a bunch of dudes talking about tech, that's what this show is. Why do you have to make it so complicated, Eric?
Eric Jorgenson: I was just trying to organize things I guess, compulsion maybe, OCD. Q1 recap, portfolio recap, the Rolling Fun.
Al Doan: Do we have an intro? Is there like some sort of music that plays when we say let’s talk about the Rolling Fun.
Eric Jorgenson: We need a drum roll. Al, do you want to tell us about Wearloom? No, it's not Wearloom anymore. We're rebranding- they are rebranding. It is gently.com.
Al Doan: Which Eric thought would have been a porn site. It was, I don't know how. It's just like romance novel excerpts.
Eric Jorgenson: Look, after spending 10 years telling people how to spell zaarly.com, I just commend anybody who has an actual word as their domain. Like the ROI on that domain is good.
Bo Fishback: Is it actually just spelled like gently? Or is there like a surprise I at the end or something?
Al Doan: All right. So, the idea on this was Gently is going and crawling all the second-hand marketplaces and aggregating. So, like the idea that you could just go look for this purse model X and see how much it costs from everywhere else. And that's interesting. I mean, there's a lot of tech behind like the ML to match all that stuff because people are not great at writing descriptions or telling you what they're selling, but like the ability to go and sort of on Amazon, you have buy it new and then buy it use are all these options. It's like the buy it used for everything that could go be listed anywhere. And the interesting pieces that we saw were like creating an asset class of your used goods and having a value associated with that I think is a big play here, just strictly in that data. And then, becoming- like they have no intent to replace the secondhand platforms but sort of letting those be exposed in bigger ways or letting secondhand actually be the preferred way of buying because it wasn't so much about is this a thing or where is it? Or it's this much here and that much there. It's now just like a unified data feed that can go wherever the marketplace is. And so, we thought that was really clever. There's like obviously secondhand is plenty big in its own. It's even bigger if it becomes more accessible. I would say the things we're most excited about, like the idea of instant value on your stuff and you knowing how much your stuff is worth, and me saying, hey, you might want to list this thing because it's now worth X amount or the price is going up or down.
Eric Jorgenson: StockX does that really well, like real time, basically auctions, values. Like you just feel good opening that app, and oh shit, my sneakers are worth $800.
Al Doan: Yeah. So, I'm very bullish on that. The thing that I'd be most scared about or what was the phrase we're using? Not scared, nervous. We are excited about a thing, what makes us the most nervous, and then why we love- whatever. But the thing that would make me nervous, it's a young team, the founders are young, good indicators from other investors. Like there's a lot of people propping it up and validating the idea, but it's an ML heavy play. And I mean, that's hard to pull off sometimes. They've got a smart CTO, but it's like we're very early. It's like two guys in a dorm room trying to make it happen. And so, they're building their team now. All signs are good. They have great growth month over month. Like everything feels really good. But if I was going to call out a thing I was nervous about, it's just it's their first time building a company. And that's why we matter – we'll help them. And then, yeah, so that was Wearloom now Gently, we are in.
Eric Jorgenson: It's a useful product right now. So, like people can go and like I sent it to a few people. You can go us this thing now.
Al Doan: Yeah, sign up, get daily alerts on your stuff. Like they're not even a website yet that you can do a thing with, it's just an email alert of like, hey, we found this thing that you've been looking for, check it out, which is useful. Like the people that I've talked to that consume the secondhand stuff a lot, they were like, oh, that's great. And a little bit viral in that. Yeah, it's cool.
Eric Jorgenson: Useful MBP. My first reaction when I first sort of saw this was why couldn't this have been done 10 years ago? Like we've had second-hand marketplaces, we've had Thread Up or whatever, Stitch- not Stitch Fix, Stitch Up, like where's the actual technology here? But there's like real sort of computing and ML innovation in like actually interpreting all of these different listings with different formats, with different structured data across all these marketplaces and like stitching them all together and creating this huge kind of like table in the back. And there is like proprietary tech and data and cool.
Al Doan: It’s funny because like the company that I'm building, Pretzel, there's this layer of like, oh, we'll just go catalog the world's SKUs, the 400 billion SKUs that make up everything you could possibly buy. And we'll just index that. It’ll be easy. It's like great, index that times a million permutations of different ways it gets listed. Like that's a very hard challenge to solve. And if they solve it, they'll be in a great spot. But dude, the catalog of SKUs and then marrying things into that. It's not a solved problem, even for clean databases. Like you go to the grocery store, you can't- like the beans on the shelf are not easily matched to the beans on the shelf at the other grocery store. Like that's still an unsolved problem, let alone the secondhand marketplace stuff. So, there's a lot of tech opportunity there for sure.
Eric Jorgenson: Yeah. And the other thing that jumped off the page for me at that with their retention, even an MBP stage, is like super high.
Al Doan: Like 96%, yeah. Nobody unsubscribes from it, which is a good indicator on the product. Like people get it and they dig it.
Eric Jorgenson: How much should we- can we talk about that? I think so.
Al Doan: I’m not allowed to disclose how much-
Eric Jorgenson: I truly don't know what the rules are and I probably should.
Al Doan: We're small checks. We're like 25K to 50K checks, especially right now. As we get bigger, as we fill out the round, we will be a little bit more because we don't want to necessarily do more investments. We just want to do a little bit more dollar wise in these investments. But right now, everything is going to be 25 to 50K.
Eric Jorgenson: And that one was in the Q1 fund.
Al Doan: Anybody who was in Q1 has exposure to that. Good work people. You did a good job. What else did we do in Q1? Because there was like three of them, right?
Eric Jorgenson: There was two. Wearloom/Gently, gently.com and Terran Robotics. Terran was the other Q1.
Al Doan: Give me Terran. What'd you like? What made you nervous?
Eric Jorgenson: Bo was the source of Terran, but I got really excited about it, and I still think Bo thinks we’re crazy for doing it.
Bo Fishback: No, I like it. I think it absolutely is in the bucket of-
Al Doan: This was your brother knew a guy doing a thing?
Bo Fishback: So, my brother called me, my brother who is very sharp, called me and said that one of the very smartest guys he's ever worked with was starting a company in the drone construction space. He was thinking about investing in it personally. We checked it out. Eric did a pretty decent deep dive on it, and it feels like sci-fi that's just in reach, I think that category of like in reach sci-fi, like hey, this could work. Could it work in the next year or two? Is it going to take ten? Could it work with $20 million or does it need $2 billion? It is in that if they can pull it off, it could be something really special. So yeah, we pulled the trigger on that one. I don't know if you want to deep dive into-
Al Doan: Eric wrote like 20 pages on why this is a great idea.
Bo Fishback: You got pretty fired up about it I think.
Al Doan: Yeah, my feedback was like, dude, there's a 98% chance we're wrong. You should not tell people that we did a good job yet.
Eric Jorgenson: I didn't know that the takeaway was, hey, we did a good job.
Al Doan: You literally started with congratulations on pre-rich. You are rich already early.
Eric Jorgenson: Look, there was an asterisk right next to it. I don't know how much more clear I could be.
Al Doan: I wouldn’t say I was enthusiastic. You said I was a billionaire already.
Eric Jorgenson: All I said was I was excited about it. There's no guarantee of future billionaire status…yet. Maybe as we-
Al Doan: We will be more confident in the future, absolutely.
Eric Jorgenson: Yeah, if they don't go out of business in the next year. No, I got like-
Al Doan: What'd you love? Give us the synopsis and then what you loved and what were you nervous about?
Eric Jorgenson: So, I love that one super bold, unique, and like looking far out.
Al Doan: The premise is they have like drones that can carry like 20 pounds, it's not like a pound.
Eric Jorgenson: Imagine like those little quad copter drones that fly around carrying, I don't know, cameras or whatever that are getting really, really good, but huge, like six rotors, 10 feet across, giant claw on the bottom. And it can fly around carrying these kind of like clay bricks and then fly over with a tool and like impact hammer it into an adobe wall and form a wall or any structure that you design it to do.
Al Doan: Yeah, because they mix up like a clay, and it's not even bricks. They're just like scooping up mud and like dropping it where a wall will be and then forming it up and it's like, okay. So, I mean, it's adobe structures that they're going to automate. It's like the idea that you could just put 20 drones and then 1,000 drones just running all day moving this mud around. It's like that is cool.
Eric Jorgenson: Yeah. And to be clear, we are far from that. Like that’s how I envisioned it.
Al Doan: We saw a drone that picked up some mud and dropped it.
Eric Jorgenson: And like 20 feet away and can carry the equivalent weight of a tool. Like that's the stage that we're at, but it's also like three guys real early. So, the tech is cool. I believe in the trajectory of the tech. I totally trust Luke to know smart, capable people. And if anybody- if I trust anyone's outsourced judgment to know who the kind of people are who can pull this kind of thing off, like Luke is the guy.
Al Doan: Did you talk to the founders?
Eric Jorgenson: I actually didn't.
Al Doan: We are the worst investors ever. You never even talked to the guy?
Eric Jorgenson: We emailed.
Al Doan: You’ve got to pick up the phone.
Eric Jorgenson: Are you a partner in this fund?
Al Doan: I just rubber stamp your requests. You got talking about how much you trust Luke, and Luke is not the guy building this or taking our money. All right, we're going to have him on- you’ve got him on the podcast or something.
Eric Jorgenson: I do want to have them on. I want to go out to Bloomington and go and see these drones flying around.
Al Doan: That's a good trip. We should take that trip.
Eric Jorgenson: That'd be a good drive. But yeah, they build these cool- They're like, I don't know, testing these things out. And there is enough- One of the things I like about them is they are showing progress enough publicly that I didn't feel like I had to dig into a ton of shit.
Al Doan: There's legit videos of like here we are in the shop doing this thing.
Eric Jorgenson: They’ve got a YouTube channel. They've been putting out videos for month. They sent like a deck and a memo and a long- there was a lot in there.
Al Doan: They had real stuff. We have to believe they are real. All right, well, I am going to convince you now, people, dear listeners and LPs that have given us your money, we will not give thousands of dollars to anyone without calling them on the phone first. That is our commitment to you as stewards of your money.
Eric Jorgenson: Did you talk to the Wearloom founders?
Al Doan: Yes, of course, I talked to Wearloom. Sam is a nice guy.
Eric Jorgenson: Just checking. We should have talked about that a few weeks ago.
Al Doan: Can we edit that out in post? Nobody needs to know these dark secrets of ours.
Eric Jorgenson: That makes me even more hopeful that this is the one [fundraising company 22:03]
Al Doan: Dear investors, congratulations on being rich already.
Eric Jorgenson: Asterisk, Al.
Al Doan: There are no words that will ever be eaten. So, what made you nervous about this venture?
Bo Fishback: What made you nervous, Al?
Al Doan: The fact that we don't know if he's real. That we are saying he has a YouTube channel so this Nigerian prince must be a real thing. No, let's see, the things that would make me nervous about this investment are strictly that it's like, I mean, it's robots and it's just really early. Like the ability for them to do all the things that it will take to make a house is- really the things that make me excited is like the idea of going out to some random mountain top in a desert and not needing to take a cement truck and lumber to build a dwelling. Like I want to do the tiny home village in the middle of nowhere, just like great drones, you keep rocking, you fly, drop, charge, and keep going. And we're going to have a bunch of like cool little houses, adobe houses that the intended lifespan is going to be 15 years.
Eric Jorgenson: Dude, adobe lasts forever.
Al Doan: I've seen mud in the wild and it doesn't last forever.
Eric Jorgenson: There are like castles in Africa built in this stuff that is like- they were like 12 to 16 inches thick. They are rad.
Al Doan: All right, that sounds pretty good. I don’t know anything about adobe so I will redact my previous assessment.
Eric Jorgenson: This is a big part of their collateral actually was like, hey, most people don't know that much about adobe earth structure, but we're trying to replace the sort of like frame insulated dry wall construction thing that has just become popular that is not that long lasting, quite expensive, but like cheap plastic materials because there's four different subcontractors that have to do all this work, the scheduling, it takes forever. And they're kind of like, look, these walls are temperature regulating, humidity regulating. They are super, super structural, they're thick, they're cheaper. They're half the cost, they capture a bunch of carbon and we can build them cheaper.
Al Doan: If you didn't need cement to build your house, you start cutting out a lot of the things. Maybe is this a climate investment? This might be in our climate-
Eric Jorgenson: They could reasonably sell- I mean, they probably get some economic boost from carbon credits, I think. I don't know if it's like SGNE investment or whatever.
Al Doan: The things that make me nervous, just like it's a big reach. It's a big reach and we’ve got to see if it can be done. And also, we've never met this person. So, we don't know if he's real. Those are the two, if I had to pick two things that might give me a little-
Eric Jorgenson: Definitely more risk that we're too early than too late on this one. But I like the fact that-
Al Doan: I mean, we're supposed to be early, like leaning into it.
Eric Jorgenson: I like the idea that there is a potential for accumulating advantage in like a physical world thing. Like the AI and the software that you have to build in order to train the drones to do the stuff, like it is a hardware challenge, but there's software advantages and pricing and scale.
Al Doan: To pat ourselves on the back, I mean, what you got to do is find some really smart dudes. You don't need company builders at this point. You need guys that can solve the problem. And then we can help them piece together the company builders. Like this is three PhD guys- I don't know if that's who these are, but I would think you’d just want three really smart humans that are saying, all right, how do we make this thing go? And if they can solve it, we can build a company out of it. We would happily help them.
Bo Fishback: In some ways, it's similar I think to Gently where that's the risk we want. We want the risk of like, hey, we know they're really smart. We know the space is really interesting. We also know it's really hard. But these are not companies also that are like ready to take 30 or 40 million. So, it is where like $50,000 checks really help. And the ones that work can really go. And so, I think that should always be in the risk category for us is like 2, 3, 4, really smart young people. That's the right risk, check. Doing something awesome, let's see what happens.
Al Doan: It does feel weird to justify it in audio form after the fact where it's like, wait, why did we do this? It's like, no wait, we find good ideas with founders that want to build them, jockeys that want to ride that horse, and we go back the people and the ideas that we think are going to go. Like that's what we're supposed to do. So don't make us feel bad, people. That's all we're saying. Like, we're doing a good job. We're doing fine.
Eric Jorgenson: That one is 80% tech risk. Like if they can do that for that much cheaper, then the market will a hundred percent be there, which feels like the right thing to do. The right kind of risk.
Al Doan: They can pick us up and take us for a ride, I think it is all worth it. We can pay back this full amount if they can give us a ride.
Eric Jorgenson: How many, like I don't know, 10 of those drones that can pick up a 20 pound brick. It's probably more than that. I think the weight of those things is probably-
Al Doan: It is hard, like with the quad copter- well, no, there was a quad copter that was like had a human cockpit thing. No, but it's a hard technical challenge to like lift 300 pounds.
Eric Jorgenson: Stably and then apply force with a tool while staying stable in the air. And that's what was in that post was like basically this cool like 10-year history of advances in drone, like AI piloted drones that can do crazy stability. And you can just throw one up in the air upside down, and it will immediately self-right.
Al Doan: Yes, we know what drones are.
Eric Jorgenson: You know what drones are. I think underestimating the ability for tech to self-drive those things and stabilize and what becomes possible, like this when they become bigger scale, is pretty rad. So, that's my rationalization.
Al Doan: If you are in Q1, you’ve got exposure to that baby, too.
Eric Jorgenson: If the CEO is a real person, then that's true. Look, he sent me emails; he’s probably a real person.
Bo Fishback: I’ve got say, I think it's very, very important we bring him on the next podcast. It may be the most important thing we do in the history of our fund, guys, is actually- and maybe even fly him to physically be in the room.
Al Doan: We just want you to drink a Vernors. What's so hard about that? A newspaper with today's date on it.
Eric Jorgenson: So that's the wrap for Q1 fund.
Al Doan: Again, you’re geniuses for being in here with us.
Eric Jorgenson: One company with a real founder and one with a hypothetical founder. And I feel good about both of them, equally good.
Al Doan: Let's follow up. We’ve got some Q2 ones we've already done. Let me give you Lumo first because Lumo is a friend of mine. His name is John Hennigan, and he is a human being that I have touched with my hands.
Eric Jorgenson: Why were you touching John?
Al Doan: With my hands at gently.com. John is a super smart engineer. Like I've tried to build things with John a few times. If I could talk him into coming and working with me, I would have. He built a company called ThinkNear, which was with Techstars back in 2010. Him and Ellie, they built this company that was the first hyper local DMP for like mobile advertising. The idea being like you can walk within a hundred yards of a Toyota dealership, and Ford would serve you an ad. They were like the first guys to come up with that, sold that like eight months after they started it to Telenav, the Israeli GPS company. And then he went and like just did nothing for a while. And then he was working at Google and Amazon, padding the resume, a bunch of golden handcuffs, was dying to get out of there and came up with this idea, Lumo, which it's like a water management software. So, it's agriculture-ish a little bit, but they're starting with wineries, people that need like precise amounts of water at precise intervals. And the big opportunity they found is like right now in that space, like you've got to spend a bunch of money on the hardware, and there's zero software for it. So, they're like, well, we'll just make this SaaS. You don't have any upfront hardware costs. You're just going to pay us a decent monthly fee and we'll put the hardware in and rotate it out and give you great software. And we think we can win a bunch of this business. They’ve got great backers and advisors and people in that space. But the thing that makes us excited about it is where they want to go with it, where they see water rights sort of being represented on the blockchain and being bought and sold and being able to facilitate that. Sort of water like analysis and measurement is a big deal in that world where that exists, and then taking the tech they build for that and putting it in every place that water's touched is where we see it. And so incredibly smart people. They've already got like prototypes out in the field. They had people already signing up, customers already signing up for it. They will be in a good cashflow position in a year or two with the investment they've got right now; they don't need a ton of money to get somewhere interesting. And so that was that one. Like good actual human, great bit of tech and sort of tech insight in the space where they're just like, man, we're going to be dumb enough to go and build software for things- like there's not an irrigation- a farmer that has the irrigation that can pull up his phone and be like do-do-do, there, it's all set up, and look, it's perfect. Here's how much water went in, and here's how- it's like, no, you're looking at these old dials and like think of your sprinkler systems that were in your dad's garage, like that's still how it runs. And so, replacing all of that with new tech, new software, new hardware, doing the whole thing.
Eric Jorgenson: It's a good mix, similar to Density, the pattern of like they are producing the hardware but selling it in a SaaS model.
Al Doan: Oh, and let me tell you, I guess if there was a thing that I was nervous about with them, it's that they would get stuck along the way to the big vision in like trying to support a customer base in an $80 million market. Like if they go and get $80 million and they're sitting in a spot, there's a very real chance, to support those customers, it consumes all their time and energy and then they can never get to the stuff that we're really excited about would probably be my biggest fear, but not a terrible outcome for us, even if that does happen. But they're smart enough. They’ve got stuff coming out. Like I'm confident in a lot of areas, but their version one market is big enough that it could swallow them, but small enough that it's not huge for us.
Eric Jorgenson: Yeah, I feel like there's distribution risk in agriculture, just like that's a hard market. But yeah, I think I agree, like high odds of a decent SaaS business with potential upside for something huge.
Al Doan: He's committed me to catfishing for the product on FarmersOnly.com. So, I might have to-
Eric Jorgenson: You would crush on FarmersOnly.com.
Al Doan: Thank you guys. You didn’t have to say that. I’m happily married, so it has to be a catfish, it couldn’t be real.
Bo Fishback: He is married to a farmer so it's what you'd expect.
Eric Jorgenson: I think there was another thing to cover on Lumo. Oh, oh, like California is starting to regulate requiring reporting for water use and irrigation, but like potentially way, way, way more of that.
Al Doan: Yeah, literally, if you have a personal well, you now need- you will need a solution that monitors and measures and says how much you are doing, and nobody's got great versions of that yet. All right, go build it, guys, go knock it out. It could accelerate a lot. Like there's a real chance that a big opportunity meets these guys on their path. That would be awesome.
Eric Jorgenson: Yeah. There's a lot of like-
Al Doan: Again, kind of climate tech-y in nature. Maybe we're very influenced.
Eric Jorgenson: Maybe we are. Maybe we're going to save the planet on accident.
Al Doan: Bio-Dome 2 will be about us.
Eric Jorgenson: I think the last podcast we created peace. So now we will just create abundance. Everybody will have a home and water and everything will be easy, and gently used clothes.
Al Doan: Let me early congratulate on saving the planet.
Eric Jorgenson: Next, second company in Q2, Stablegains, which came from-
Al Doan: Will we be in Stablegains by the time this goes live?
Eric Jorgenson: Yeah. We can cover Stablegains. These guys reached out when they were about to be finished with YC and just reached out and were like, hey, I saw that you invest now. We've been like reading your stuff for a little bit.
Al Doan: This is props to Eric. He gets deal flow because people-
Eric Jorgenson: This is that passive inbound deal flow.
Al Doan: They never met him, but they assume because they email him, he's very smart.
Eric Jorgenson: It's true. Yeah, like being able to really carefully curate the stupid things that you say out of your personal presence and just publish the smart things online really creates this false impression of intelligence.
Al Doan: No, you are a smart guy. You are a nice gentleman.
Eric Jorgenson: These guys I did talk to.
Al Doan: I’m so sorry that’s now the trope that is just feeding.
Eric Jorgenson: I can't even edit it out now because it's been recurring. So, thank you. I appreciate that. No, it's a lesson well learned. Talk to the founders you invest in. I was just trying to be low maintenance. It wasn't our biggest check. There was a tight timeline. I was traveling. I didn't want to schedule and bother people. So, we just said yes.
Bo Fishback: I'm unclear if this podcast will be publishable.
Al Doan: We are so sorry that we lost- Are we making fun of the Fast co-founder or are we on his side? I can’t remember. We are so sorry we lost your $120 million. I tried so hard to build this company for you. Anyway, Stablegains, we like Stablegains.
Eric Jorgenson: Stablegains founders reached out; they are in YC currently. They have a relatively high valuation for having already- being as far along as they are, but they are growing insanely fast. The product is basically a very simple web2 front end for currently anchor protocol, but soon to be other crypto stuff. And basically anybody, including your mom, can go on and deposit money and earn 15% a year on your cash. There's still risk there. Like Anchor is new.
Al Doan: My favorite part was when Bo was analyzing this and said I threw a million dollars into a thing to try it out with another one. And I made money on that and it worked like this.
Bo Fishback: Actually, we talked, this one I liked because last podcast, we talked about kind of where web2 and web3 meet. And there's all of this stuff going on in web3 that people are trying to figure out. And it is crazy that you can go, just as an individual, and lend money to people who are going out and making very big bets in the world of crypto and lending that money pays outside rewards because it's like just a new frontier and the Stablegains guys have just done the, hey, what if we made a really clean web2 front end to get exposure to that web3? There’s margin in it for us because it's hard to go get spun up in the crypto world and have the right wallet and buy the right thing. And they're like, instead, you can just send us your money and we'll go chase and secure the kind of highest gains for you with no work. And that just- I think we're going to see, actually, like hundreds of companies like this, but just like web3 easy button. And it's actually going to really help web3 because it's going to onboard all these people who might not have gotten into it. And then you start digging around and figuring out like, hey, there's like a lot of ways to kind of like leverage that whole ecosystem. And so, these guys are just kind of right down the middle of that thesis, I think.
Al Doan: I loved like your experiment was like, all right, I can go and do this myself. So, you connected your wallet and you went and staked it against the thing, and you earned good returns.
Bo Fishback: And I thought the whole time, if I asked my dad to do this, there's literally zero chance.
Al Doan: Like this is your world. And it was like 45 minutes to get done, but you did it, and you're making a great return. It's like, all right, you can ACH money in, and like my dad can ACH money. And so, like you go to Stablegains, connect a bank account, put 10 grand in, and you're going to earn 15% on that over the course of the year. Like the fact that our dads can go and do this or our moms can go and do this, and they don't have to get a wallet and they don't have to worry about what are gas fees and am I on the right protocol? I mean, I've like tried to do- I'm not a dummy, and I think I've got like a couple grand stuck in some random protocol somewhere like on the way. And the gas fees didn't work out and now I'm like, well, I need Ethereum now to get that money back. Ah, screw it, just like maybe it'll grow. But like my mom could never navigate that world and she'll be like, oh, so I just wired or ACH 10 grand in, and then I get this money and it'll give it back to me, and I can pull my money out anytime. And I don't have to think about what a wallet or a protocol is or learn any of that stuff. And the fact that it's a two-minute thing that they've shaved it down 45 and you get- and Stablegains, obviously, they get a little chunk of that return as their profit, but you would give that up so that you didn't have to worry about it. You could talk in dollars and not coins if you're an old dog. So, we like it a lot, think that there's a ton of room. If you're building more like this, talk to us. Tell us what's up.
Eric Jorgenson: It's not- a lot of the crypto native people are like, oh, they just don't- to them, using a wallet is easy and they're like everybody should have their own private keys and be fully decentralized and all this stuff. And it's just, I think they underestimate how much of an on-ramp people need with tools and products and stuff that they're familiar with. And so, I think we're going to see like quite a long period of time where these are all really good businesses and actually positioned really well to go from- Stablegains with 10 million or 100 million users could very easily say like, hey, do you want an extra 3%? Do you want to move this, transition this to your own wallet? Do you want to turn this into coins? So, I think it's a really cool thing. They're growing like 15% a week or something insane like that. They are new, so the numbers aren't small, but they're big enough to be meaningful. The payback on a new customer is less than a month, which is crazy. Yeah, excited about that one. Definitely risks involving like competitive things. I think there's nothing deeply proprietary about it. So, this is a little bit of a blitzkrieg. There is underlying risk of whatever protocols they are built on. So, like if the stable coins lose their peg, a lot of people that don't fully understand what's happening on the backend of that 15% will be pissed and they'll be pissed at Stablegains, not be like, oh, I took an assumed risk that I understood perfectly and life happens. Like that could be bad.
Al Doan: Also, that's why you give them a chunk of the return. So you have somebody that's like stressed about that and adding other options and diversifying.
Eric Jorgenson: And that's all on their roadmap.
Al Doan: Man, it's really- It's one of those things where it's easy to look at and be like everybody should just be able to do this and they can make it themselves. Like, why would we invest in this? But man, the web 2.0 version of web 3.0, there's a lot of money to be made there.
Bo Fishback: I love seeing companies that are working on clean on ramps to web3, and they're really hard to build, I think, and it takes people who really understand the not clean on ramp because they're not just building it for themselves. They're building it for other people. And I think that space is going to be really hot and it's going to grow really fast, and it's actually going to drag people into web3 in ways that they never would've gotten there themselves, which just creates more and more kind of value in the ecosystem. So yeah, you said it, Al, I love this kind of company. The more companies we can see like this, I think the better, because there'll be lots and lots of winners.
Eric Jorgenson: There's a lot of people I think who are like calling for easier onboard wallets and easier this. And like this is actually the solution. It's like make it feel like something that you already know how to use.
Al Doan: Dude, I love like white label this, let every neobank let you earn 15% in their little thing. And then like use Stablegains as the backend. I love it.
Eric Jorgenson: Yep, absolutely. So, things that anybody listening can do to help those companies. I mean, gently.com you can just use. Lumo or Terran, their customers are general contractors and they're hiring, mostly engineers.
Al Doan: If you're an engineer and want to work on robotics and quad copters-
Eric Jorgenson: If you're a general contractor who's cool and believes in a future that is also cool and want to build some earth houses, you can reach out to Terran.
Al Doan: Are they taking contractors right now?
Eric Jorgenson: Yeah, they've already had a few LOIs like this summer, which is rad.
Al Doan: I’ll be a contractor. I'll sign an LOI. I’ll build a house with them.
Bo Fishback: I was going to say these guys are a short hop away from Al’s true wisdom of they don't even have to even buy a city, they can just build a city themselves. So maybe they just build-
Al Doan: Some big rancher with 7,000 acres is just like how did a town get here? It's like the future of swatting somebody where you're like, no, I'm going to build a house in your back yard.
Eric Jorgenson: Al can't keep a close eye on all 200 of those acres. I think we can sneak something in there.
Al Doan: 1000%. I will just show up and be like they're here. The squatters are here.
Eric Jorgenson: We're going to build a podcast studio deep in your woods.
Al Doan: An adobe podcast studio on the ranch would be amazing.
Al Doan: Or go to a helicopter pad for some hospital and just squat there in your new house that you built. There is so much we could do with this.
Eric Jorgenson: I think we can build them fast enough that it just like happens in the middle of the night.
Al Doan: Yeah, that's what I'm envisioning. I need an 8-hour turnaround. Come out with your cup of coffee in the morning. What's up, guys? You didn't want my house here? Fine, fine your house now, whatever.
Eric Jorgenson: I saw that on the Terran YouTube channel, there's a new video. They like built a test wall and then were like seeing how robust it was. They started like shooting at it, and it was bulletproof. They start shooting like big rifles at it, still bulletproof. Stood there with a like polybutylene torch for like five minutes, still perfectly standing fine.
Al Doan: That doesn’t sound like that engaging of a YouTube video, five minutes of standing with a torch.
Eric Jorgenson: They smash cut in the middle of the torching part, but like robust walls. Dry wall ain’t bulletproof. You're worried about kids punching a hole in the drywall, not going to happen.
Al Doan: You are worried about the Russians invading, which we have to be now because Russia sucks all of a sudden, build a wall real fast. What if these things were ready?
Eric Jorgenson: Got to hurry up with Terran. Mostly to make me look less stupid.
Al Doan: I would love it if he got on here and was like, actually, it's pronounced Terran. Like the first thing out of his mouth. I don't want you to feel like an idiot. It's Terran.
Eric Jorgenson: We wanted it to get confused with- Yeah, thank you. I appreciate that. Okay, fund updates. Despite our stupidity, or at least my stupidity, I'll only speak for myself on that, we have a number of new very smart LPs, which continues to surprise and amaze and delight me. Balaji became an investor the last couple of months.
Al Doan: That guy is great. I will say he's never talked to us. I don't know. You've talked to him. I've never talked to him. Is he real? He might just be an AI simulation.
Eric Jorgenson: Al, you've got to believe that people that you haven't touched are real, like that is a thing that exists.
Al Doan: Okay. All right. I'll take this. It seems crazy to me though.
Eric Jorgenson: I mean, I see over and over-
Al Doan: No, he's great though.
Eric Jorgenson: Yeah. And he's killed it on a bunch of his investments.
Al Doan: Are you doing like a futurist book with him or something?
Eric Jorgenson: I’m doing an Almanac of Balaji next, like the same style as the one with Naval but for Balaji. And so, I'm spending like multiple hours a day reading all the stuff he's ever written and said and learning all this.
Al Doan: How cool that he's coming in on our stuff; that's awesome.
Eric Jorgenson: And I keep being like, hey, I'm investing in these companies that like- there's literally a few paragraphs where he's like predicting something exactly like Stablegains . He's like we will see a ton of like very friendly web2 front ends with crypto backends and like we've had FinTech for 20 years that has just been like covering up the dog shit infrastructure. But now crypto will actually make the infrastructure work, but the UIs, we've already spent so much time making them great. So just use the great UIs and like speed everything up on the backend. And I was like, wow, Balaji said that smart thing, Stablegains, yep, let's do that. And then went and I was like, hey Balaji, this is like two times this has happened now where like you talked about a thing conceptually that I ended up then investing in, and if you want us to like put some of your money in these things, like this is great. And he's like, yeah cool, love it. Thank you, Balaji. Yeah, all like ideologically aligned, and he's always like 10 years ahead, which he’s killed it with that, which just kind of makes me more confident being like, yeah, let's do the stuff that's crazy far out.
Al Doan: He is a fun thinker, man. I listened to his Tim Ferriss podcast and just like a very thoughtful- I expect like futurist guys to talk like I talk where I get talking really fast like, oh my God, it's going to be so crazy. And like they're going to come in. It's going to be wild. He's just like this very measured, like no, so I've thought about this and here's my thinking. I don't need to convince you; my words will do their work.
Eric Jorgenson: Yeah, so he's awesome. Matt Goetz, president- or CEO of Blocktower Capital, which is delightful since we were like, hell yeah, let's do all the crypto stuff we can. They see amazing deals and he and Ari are just wildly smart. And they're starting like a later stage VC fund now, too. So, we'll just have like more and more and more stuff. I mean, I genuinely hope we can have a good- be functional scouts for them kind of through this. So that’s a cool one. Stu Ludlow, who we're meeting just after this, he is the CTO of RFP365.
Al Doan: That guy better invest.
Eric Jorgenson: He already did; don’t be mad. Really good CTO, working on something, cool crypto stuff next.
Al Doan: Did he leave, what is it, C2FO?
Eric Jorgenson: RFP365. What did I say?
Al Doan: I don't know. Anyway, Stu.
Eric Jorgenson: Go Stu. Yeah, RFP365, one of those like classic very boring, but wildly profitable Kansas City tech companies, which seems to be what we specialize in.
Al Doan: Yeah. Can we get a consumer breakout out of here that's not H&R Block?
Eric Jorgenson: Yeah. What would it take? Hallmark, AMC.
Al Doan: AMC is out of here? Good for us.
Eric Jorgenson: It's not going to be Zaarley. We held hopes of that one for a while.
Al Doan: I'll do Pretzel.
Bo Fishback: We would appreciate that.
Al Doan: Thank you everybody. Thank you. Such a pleasure to be here.
Eric Jorgenson: What's the pretzel update, Al?
Al Doan: We're going to launch in two weeks. We are launched, I mean, you can go get us in the app store. We're the third, when you search for Pretzel in the app store, we’re the third one behind Auntie Anne's and like Corn Dog On A Stick. But we are going to rise in those ranks. And no, we got a couple of features that are going to go live that we're excited about, which will finally, I mean, everybody signs up- you sign up right now and like put all your accounts on there and you're like, huh, why’d I come back and that's what we're trying to- That's the loop we're closing where we'll get that all circled around. I want you listeners to know we will not be investing in Pretzel as the Rolling Fun. We find it a conflict of interest because I would just feel weird. But if you'd like exposure to that company, call me, I'll talk to you.
Eric Jorgenson: I'm glad you didn't ask us. It would have been awkward. You have to recuse yourself.
Al Doan: I did ask, I was like, do we want to? We're like no, we don't. I even said no, I refused my own offering. I was like, do you want-? And I was like let me put on my Rolling Fun hat. No, this feels weird.
Eric Jorgenson: The Q1, Q2 thing, especially after I wrote Terran, people kept asking like am I exposed to this or this? And so, each quarter is its own individual fund. And the deadline is the last day of the second month of the quarter to subscribe and be included in that quarter. So, end of February was the deadline to subscribe to the fund to get Q1 exposure. And end of May is going to be for Q2 and et cetera, et cetera.
Al Doan: So, you guys can still be a part of these, Lumo and Stablegains and whatever else we go into.
Eric Jorgenson: Yeah. For the first couple of weeks this podcast is out, you can still subscribe to that.
Al Doan: That feels generous of us. You're welcome, everybody.
Eric Jorgenson: It is pretty cool, like I think it is not common that you can know some of what is in the fund that you're investing in already. Like that's not common in that world. You basically can wait 60 days to see what's in a quarter and then get into it.
Al Doan: I fell proud of us for like taking everybody along the journey. This isn't a normal bit of visibility into the process for most funds.
Eric Jorgenson: I feel like we could do better at this if we were less honest about what we were doing and how.
Al Doan: You are saying if we lied a little bit. I think that's actually the standard practice of VCs. So, the fact that we're like we are nervous about some stuff. Also, we're optimistic and we hope everything turns out great. It's very rare. Good honest is what I’m saying.
Eric Jorgenson: Yeah, good on you. And good on you for putting good on us. Thank you for doing that. I think another thing, a ton of LPs and listeners have just said a big part of their motivation was sort of learning how to angel invest along with us and getting a sense of what goes well in deals and what goes poorly and what you're supposed to do and what you're not supposed to do – quote unquote. And so, I feel like it'd be good to talk about some of the reasons that we passed on companies that we passed on, not just what we went into. I don't want to say like specific companies that we passed, but a reason to not invest in a company to show some of that kind of like other path that deal flow goes in.
Al Doan: Yeah. So, there's a couple of reasons that come to mind. One is that they're too far along. So, for us, a 25K check in a 100 million dollar company, we're saying even if it does get to a billion, that's a 250K return, like that's not early enough. That'd be a great return, and maybe we'll do some of those down the road. But we literally have to look for these very early, very risky, like could it possibly happen because of the check size we're writing? An $80 million company doesn't make sense or a $100 million company doesn't make sense to get into necessarily, where like something at 30 or 50 would be easier for us to justify. So, valuation starts to matter. Let's see, what else?
Eric Jorgenson: I mean, by the same token, it's got to either- the rule that I go back to is like I have to be able to see that it can hundred X. So that either means you got to be like early with something that's-
Al Doan: If it's a hundred X at like a 100 million and what if we got in at 10? That would be way smarter.
Eric Jorgenson: I would absolutely invest in Stripe at 100 million. But in retrospect, obviously, that is a great idea. If you see a true platform, something that keeps going that big that is like huge, sure.
Al Doan: It's crazy. Like Stripe at like 6 billion was a genius idea still. It's like just being able to have that visibility and see it.
Eric Jorgenson: And that's why I go back to a hundred X rather than like, oh, 100 million is too high of a valuation. And by the same token, something that's a $10 million valuation has to be able to get bigger than 100 million.
Al Doan: Well, the thing that's enticing about those like further along companies is they've got it figured out. It's like, hey, we're making money, we're doing great. We're a $60 million company. It's like, yeah, I would love to be in that because what you're printing money, you nailed it. Now this feels like a very confident spend where the risk and reward happens at this other stage. But man, it's so alluring to be there in that very safe we are making money spot.
Eric Jorgenson: And then there's some that are just like high ass valuations. We have a deck and we're asking for- we're raising on a 30 million. Like that's-
Al Doan: That's YC.
Eric Jorgenson: That’s YC. But it is YC marking up their own higher fund.
Al Doan: What are the other reasons that we let go?
Bo Fishback: I find all of the deals that we have looked at so far, as soon as I can put them into a bucket that like I don't care about learning more about, then I'm out. Like, I don't actually care what the deal is, to be honest with you. I don't even- I don't care that much. Like if it's not interesting for me to think we're going to spend time talking about it and it's going to teach us about other investments and introduce us to- like, I think that to me is like is it a thing that we are interested in getting smarter about as they build the company, and when it's not, then that's the easy out for me, like actually more than valuation, more than anything else. Because I mean, it's just like a big part of this for me. It's like I love reading these and thinking like, oh, I did not know the water industry was so interesting. And then you start digging into it and you're like, holy cow, it's massive and it's interesting. Like let's do a deal there and see what happens.
Al Doan: Well, you almost want to like chat with the founders, like we have had a few where they're like, we're building in the- a new leg- I don't know what a dumb idea would be, but like parking for universities, it's like, all right, we don't care. I want no part of that. Even though you might make great money, I hope you do, like this isn't a thing that we want exposure on. Some- I mean, what would make you say no to a founder? I don’t know, like again, getting on the phone, as we talk to them, because I've been on calls- like we talk to most of these people and they'll say- I'm so sorry. I'm so sorry. I feel like such a douche now. But I'm saying we'll get on the phone with them. We chat with these guys. And like some of them you just get a weird vibe from, where it's like I wouldn't- kind of going back to the hangout thing, like I just don't want to know you better.
Eric Jorgenson: Which is like reasonably predictive of are people going to want to work for you? Are other investors going to want to invest in you? That is not just like being selfish with your time, but it's a decent predictor of how everything else is going to go.
Al Doan: Why else have we said no so far?
Eric Jorgenson: On a founder level, on that topic, I think there are- I don't know if this is founder or market, but there's a bunch that I think are like this is a shoe in for a $50 million company, or you just get the sense of like this founder wants to build their company and exit and they will take any capital that they can to get there. But they're not truly building a venture scale business to exit at.
Al Doan: Like a service business or something smaller. That kind of thing.
Eric Jorgenson: Yeah, or just like a very niche SaaS app or something that's like this is a great investment, it's just like for a different kind of fund.
Al Doan: I will tell you one of the things that's been a big win that I didn't have as a single investor, as a solo investor, is like we literally had a couple of companies that we were looking at. We were like these are good ideas. And then all of a sudden, we have like ten companies, we got to choose two. And all of a sudden, we got way better at picking. Which I never- like solo Al, I’m just like, oh, I like you, great, here's a check. I like you, here's a check. And now all of a sudden, with our combined deal flow, we have-
Bo Fishback: It's a forced curve.
Al Doan: You love them all, which two kids are your favorite? You’ve got to pick two that you're going to save.
Bo Fishback: That's why I only had two.
Al Doan: In a fire, I’d know I’d have to leave one.
Eric Jorgenson: Yeah, I think that's a- it is painful to have like high opportunity costs. And I'm learning to separate like this is an investible company. Like I like all these ten from this is- like let's look at them as a set and see what is actually our best opportunity or set of opportunities and try to kind of get our money into those.
Al Doan: So, if you're investing at home, I mean, that's probably one of the best things you could do is like don't write a check in isolation. If you like that company, go look at what other 10 companies are doing something similar and who would you write a check into if you could. That's probably a more positive way to look at it or to approach it that's going to be safer for your money.
Eric Jorgenson: I mean, I think you said your structure last time was like you'd basically write four checks a year. It's like one a quarter, but like try to look at the five that you're going to get that quarter together. Don't be like a first to the post.
Al Doan: We get together for lunch once a month. I mean, this is kind of our first time doing a lot of this. And so, we got together today though and talked through like five new deals. I'm like, all right, let's say no to these and say yes to this one.
Eric Jorgenson: We like them all, but we like these the best. One other reason for declines, to finish that off, that is an unfortunate one, is API risk. I've seen- like companies that are built entirely on other companies where there's like a single point of-
Al Doan: Oh, like Facebook shuts off the pipe and you're dead.
Eric Jorgenson: There's a few success stories there, but I feel like there's a way- there's a huge grave yard area. Zynga is the success story that I thought of. But there's a lot more companies that I feel like-
Al Doan: All the Twitter ecosystem, any modern Facebook ecosystem.
Eric Jorgenson: Instagram, Twitter. You can build an amazing company really fast to 10 million and then have it die and disappear. And everything looks great until the moment that it flops.
Al Doan: I feel so bad for those founders, man. Great products. It's a better experience.
Eric Jorgenson: And they like deserve- and the customer loves the product and deserves access to that data in that way that like the platform just hasn't bothered to build yet, but it's like, hey, we'll probably do it someday, so we can't let them create value.
Bo Fishback: That is why there is an outsized reward for building the platforms though. Like the platform companies are 800 billion, trillion dollar companies and the feature companies are not because they live at the mercy of the platforms. So, I mean, it’s tough.
Eric Jorgenson: I appreciate you hanging out with us today. Thank you for listening. You put up with a lot to get to that information. I hope you got something useful out of it. If you'd like to invest with us, we have availability for investors to join this quarter. The deadline to join the Q2 fund that has some of the companies we mentioned in there is May 31st. The minimum is 16K a year, and we are limited, unfortunately, to working only with accredited investors. Please remember that startup investing is incredibly illiquid, very high risk, and nobody knows what's going to happen, including us. Please read more at rolling.fun to get some context. If you're interested, we'd love to have you join us. And we'll keep publishing episodes like this and blog posts like the one I wrote about Terran to keep you up to date on all of our investments and what's going on. We hope you appreciate the transparency and the spirit with which we do this. And you're along for the ride, bumps, bruises, and all. If there are any questions or topics you want us to cover in the next episode, drop me an email or a tweet and we'll look forward to talking about that. If you like this episode, you might appreciate my episodes with Shane Mac, who was one of my inspirations for starting this fund, and with Chris Powers, who's an incredible operator and capital allocator, some lessons to learn across those two. A thought to leave you with, make sure your money has a job. Even if it's not with us, put your money to work somewhere, make sure it's productive, and remember that your money can work harder than you can.
I really appreciate you hanging out with us. This is all about laughing and learning, building leverage, and compounding our faces off.
What our brains aren't evolved to comprehend is how much leverage is possible in modern society.
There's a revolution going on, man. Go pay attention to it. Get a part of it. Get exposed to it. You're going to make money along the way. You're going to have fun.
A call to adventure.
This is the new form of leverage.
Take a few quiet moments for yourself. Breathe deep and be well.