Rolling Fun #8: New LPs, Mark-ups, Giant Guns for Space Cargo, How to Find a Lead Investor, Software for Manufacturing, AI for Ecomm.
This is our 8th pod episode with Al and Bo and starts off with a special one-time intro. We’re officially up-to-date with our current investments.
We invest in obsessive geniuses building utopian technologies. If you invested with us in Q1 of this year, you’d be delighted to hear about the revolutionary tech companies you now own a piece of.
If you missed out on this latest round, accredited investors can join us through AngelList today.
This episode covers updates to Reactiv, Dirac, and Longshot–as well as some tactics for founders looking for lead investors.
Links to Platforms:
Here’s what we explored in the episode:
We start the show with a one-off intro feat. Dr Dre.
We welcome some of our new notable LPs: Kevin Espiritu of Epic Gardening and Jim O'Shaughnessy.
In Q1 2024, we invested in Dirac, Reactiv, and Longshot.
Dirac is developing software for manufacturers -- it allows them to automate the creation of work instructions, the step-by-step instructions technicians follow on factor floors.
Reactiv uses AI to generate native mobile apps directly from Shopify stores, making it easy for ecommerce companies to create awesome customer experiences without spending hundreds of thousands on mobile dev shops.
Longshot's ultimate goal is to build the world's biggest "gun" -- actually a 10-kilometer-long vacuum tube to launch payloads into space at Mach 20+.
Al wants to get a ride in it.
Our investment strategy is to spread investments across many early-stage companies, make smaller bets early on then double down on the ones showing real progress.
Invest your money into high-growth startups at the earliest stages
When new technologies meet the market, the world changes for the better. That's why we invest our money into the best founders in our network.
We write small checks to 15-20 very different startups each year. Previous investments include Aalo, Gently.com, Omella, Driv.ly, Weavechain, Stell Engineering, Ouros, Solve Data, and more.
Our Website has background on the fund, our past deals, and more.
Accredited Investors: reply to this email, I'll send you our deck, and we'll get you into our deals starting this quarter.
Learn more about Al Doan, Bo Fishback, and Rolling Fun:
Additional episodes if you enjoyed:
Rolling Fun #6: Investing in Robotic Prosthetics, 10x Batteries. Al meets MrBeast
Rolling Fun #5: Investing in Nuclear, Ecommerce Data, and AI Productivity
Episode Transcript:
Bo Fishback: But it's like when you're that age, I think people are so nervous that like you have to do the things to be a part of things, and I never felt that. I just never- I never felt peer-pressure. I never gave a shit.
Al Doan: I always thought I was smarter than everybody. I'm like you guys are not- Like I'm not sure… I had too much confidence in myself.
Bo Fishback: I have and do always think I'm smarter than everyone else. And so I'm kind of like all I know is like you're an idiot. Like, I might be wrong, but I'm smart enough to be okay with being wrong. But you're an idiot.
Al Doan: You watch them all get drunk, and you're like you're not funnier when you're drunk.
Bo Fishback: No, you're an idiot. You're dumber actually. I'm getting smarter by the minute because you are getting dumber. My relative intelligence exploding in this…
Eric Jorgenson: The greatest – not the greatest moment of my wedding – one of the many great moments of my wedding was you each discovering that I had the specific perfect beverage for you planned at the wedding.
Bo Fishback: Oh, that was the best.
Eric Jorgenson: You discovering root beer and you discovering Coke and Perrier.
Bo Fishback: Yes, yes, yes. The best. The best.
Eric Jorgenson: The triumphant looks on your faces. It's fantastic.
Bo Fishback: All right, let's shoot a podcast. We can transition out of religion and philosophy to the next episode.
Eric Jorgenson: To the next episode. Okay.
Bo Fishback: Can we get that intro music, like Next Episode, Dr. Dre?
Eric Jorgenson: I'll probably have six seconds of it before the copyright payment.
Bo Fishback: All we need is six seconds. Everybody's going to know that.
Eric Jorgenson: Yeah, it's true. It doesn’t take long.
Al Doan: You get free use with 15.
Eric Jorgenson: Wait, really? 15 seconds. I thought it was…
Bo Fishback: Oh, we definitely need Next Episode, Dr. Dre. Let’s go.
Eric Jorgenson: All right, Johnny, you heard that.
Al Doan: Not legal advice, but like also no one's going to sue a podcast that doesn’t make any money.
Bo Fishback: Also true. Also true. Okay, we're rolling.
Eric Jorgenson: We're rolling. I want to start this episode with deep appreciation and excitement for-
Al Doan: How deep?
Eric Jorgenson: Deep.
Bo Fishback: Is this about new LPs?
Eric Jorgenson: Marianas Trench deep appreciation and excitement about new LPs.
Bo Fishback: Yo, very exciting. Very exciting this quarter.
Eric Jorgenson: We love new investments. We love, we love new LPs. And these two in particular, like both friends, both brilliant people, very excited to like have them rolling alongside us. Kevin Espiritu, the gardening god, the plant daddy.
Al Doan: I like him. I've talked to him once I think. You connected us.
Eric Jorgenson: You two absolutely must hang out until like the thing that has to emerge-
Al Doan: He lives in San Diego, and San Diego is just not on the way to anywhere.
Eric Jorgenson: Neither is Hamilton, Missouri.
Al Doan: You don't know that.
Bo Fishback: Hamilton is on the way to everywhere. What do you mean? You can't get anywhere without going over Hamilton, Missouri.
Al Doan: No, but I will drive to Kansas City in a heartbeat, and that is on the way to a number of places.
Eric Jorgenson: Yeah, you and Kevin have got to get together and make the baby that is the Garden City.
Bo Fishback: But Garden City, I'm afraid that's already taken by New Jersey unfortunately.
Eric Jorgenson: How the fuck did they get that name, by the way? There's not one plant in the whole state of New Jersey.
Bo Fishback: I'm positive Kevin has opinions on that.
Al Doan: No, he's awesome. It's funny because I think he took money from... He raised some money, and he's blowing up his business right now and doing a great job. I was friends with the same people that he took money from. And so, I had these very similar arcs and experiences, both came from YouTube into ecommerce and stuff. I love what he's doing over there. And honestly, a very good Twitter follow even if you're not into plants.
Eric Jorgenson: He's great. His Twitter is all about his business lessons and stuff. He's got a YouTube channel about it now. He's hired himself out of an executive, super heavy executive role at Epic Gardening. They're doing some amazing acquisitions.
Al Doan: Put the founder back into being the genius instead of being the guy that sends emails great.
Eric Jorgenson: And he just keeps building the business. He's doing some awesome acquisitions. He's thinking really long. I've done a few podcast episodes with him.
Al Doan: We like Kevin a lot.
Eric Jorgenson: We love Kevin. We love Kevin.
Al Doan: Welcome to the fold, my boy.
Eric Jorgenson: His note to us when we joined the podcast was so great.
Bo Fishback: I'm just a farmer. I don't know. It was hilarious.
Eric Jorgenson: I'm a simple farmer. I have no deep tech connections. I'm rolling my potato profits into deep tech investments.
Bo Fishback: Very cute. I liked that a lot. Great vibe.
Eric Jorgenson: This is American dynamism. Farmers use deep tech.
Al Doan: He should come to my 250 acres and farm here. Like I don't know, I've got land I don't know what to do with.
Eric Jorgenson: Dude, he would be- that would actually be a really cool series of like him kind of giving you ideas and stuff to do.
Bo Fishback: We literally rolled up to Al's house today and he was digging up all of his raspberries. He clearly needs help. He needs help.
Al Doan: No, I got the back 40 coming out of CRP next year. Like he could do the full recover the land, turn it into a productive farm.
Eric Jorgenson: Can you break that sentence down for people that don't own hundreds of acres of land?
Al Doan: Oh yeah, so CRP, this is when the government pays you not to farm. And it's a nice program that everybody's got some land they don't want to do anything with, it's trash land, they put it into CRP and don't touch it for 10 years, and you get a check from the government every year.
Eric Jorgenson: Because it's good for native species?
Al Doan: This is why we pay taxes. No, it's to suppress pricing on farm stuff. So like if everybody's growing wheat, then the price goes too low. So, they pay you to stay out of producing crops.
Eric Jorgenson: We planted some local pollinators for bees and birds and butterflies and stuff, but that's a different program.
Al Doan: I did that on my other 120 acres, yes. Also pollinator program is a great move. They pay you a lot of money to do that. But the CRP is like, tons of people do it, and it's literally just to control the price on agriculture stuff, which is the dumbest use of taxes I think anybody ever came up with. So anyway, you do it 10 years, you're not farming this stuff, like trees come out. You're supposed to maintain it, but nobody does. I got to do a prescribed burn again on this one. It's another field coming up for a burn.
Eric Jorgenson: Exciting.
Al Doan: It is good. It is a nice time. But Kevin could come out and he'd be like, all right, we're going to burn this off, this plot's going to be- we're going to plant some stuff here, turn this into trees. Like I would love that.
Eric Jorgenson: That'd be really cool. And you've got a town that can get turned into Garden Town.
Al Doan: I’ve got so much to give you, Kevin. Deep appreciation.
Eric Jorgenson: Deep, deep trenches of appreciation. So yeah, Kevin's got to come out. He would be a great- we could all do the podcast together and it’d be very fun. If you want a background on Kevin, go listen to the podcast I did with him. The other, our new kingpin LP, the brilliant dynamic and hilarious Jim O'Shaughnessy, O'Shaughnessy Ventures. Is that your trench of appreciation?
Bo Fishback: Really, really awesome to have him as an LP. That’s super great.
Eric Jorgenson: He's awesome, incredibly aligned. I love the stuff that he’s doing.
Al Doan: I mean, nice guy, but also it just makes us feel good.
Eric Jorgenson: It does make us feel good.
Al Doan: We're smart, gosh dang it. We have good ideas.
Eric Jorgenson: Maybe we are if Jim says we are, I don't know. But he loves-
Bo Fishback: You are like social proofing yourself.
Eric Jorgenson: Hate it or love it, the game must be played.
Bo Fishback: That's right, that's right.
Eric Jorgenson: Yeah, he does some great deep tech investments. He also like writes- we fulfill an interesting niche for him I think, which we can for other family offices, which is like we are willing, able, and eager to do checks below the size that makes sense for a lot of family offices to do directly. A lot of them are like, this just doesn't make sense for us to do a check less than a million dollars or half a million dollars. And most of what we're doing is 50 to a hundred, maybe a little bigger. And so, for people to be like, yeah, give us a million bucks a year. And we will be that early cutting edge. We'll write those small checks. We'll handle those founders and get them off the ground. And then if you're paying attention to what we're doing and we're communicating often, maybe you'll get a lead or a large chunk of their coming fundraise and we can help you kind of build that conviction over the course of years.
Al Doan: It's funny. We have a couple LPs that are, yeah, like are family, connected to family offices and funds and stuff. And they're immediately the ones that we want to help succeed. It's like, hey, we got a deal. They're raising again. You’ve got to talk to these guys because we feel so much appreciation for them that we immediately want to go and make sure we're doing right by them.
Bo Fishback: Yeah, I think it's part of the reason that this is fun for us. Also, like we don't have to get- we're not doing this for a paycheck. We're doing this because it's like fun to talk to these folks and work together. But for everyone who does this with like a grown up fund, they've got like hurdle rates like with paid employees, and if they can't do big enough things, the business doesn't work. And for us, it's like, let's get a lot of exposure to great founders, great technology. And so, great things are going to come out of that, but we're not trying to do this for a paycheck, which is the thing that doesn't make sense for family offices, it doesn't make sense for venture funds, but the things that come out of the other end of this will make a lot of sense for them, I think. And so, it is a fun place for us to be, really fun.
Eric Jorgenson: It's a fun place. I think it is a place of great returns. It's a place where the normal laws of physics of like $50 to 200 million venture funds don't always make sense or can't. And it's really fun... It's a thing we were doing anyway. So we might as well do it better and larger and more than we could before. Yeah. And there's two classes of people that get our first warm intros when we feel like we have a really exciting deal, which is like, first and foremost, our LPs and, secondarily or in parallel, really, really amazing funds that we work with a lot that we feel like are high credibility leads, a little bit like we were talking about last episode of like they're great to work with, they write big checks, they run real processes, they do it often enough to be reliable and treat founders well. Okay. Should we do the portfolio update for Q1?
Al Doan: Oh, yeah. We got updates.
Eric Jorgenson: We got updates.
Al Doan: Updates. We got updates.
Eric Jorgenson: Dirac, Reactiv, and Longshot, in that order.
Al Doan: That should be a rap album.
Eric Jorgenson: Dirac is Fil Aronshtein. Went and met this dude in New York. He's an amazing Twitter follow also. It's kind of how we got to know each other. I just saw the first video that they did with Christian Kyle who does First Principles, like amazing follow, sent us some amazing deals, really good dude. And just started DMing Fil, like this is really cool. He sent me some demos, liked it, we talked. After I met him in New York, I was like, oh shit, this is like the momentum, the team. They're all brilliant. They're like, it's such a classic start up office.
Al Doan: Do you have a man crush on them?
Eric Jorgenson: Yeah. I have like a nerd crush.
Al Doan: The hair, the team.
Eric Jorgenson: He's got like a sick undercut. There's like, you go into the office, there's like stimulants everywhere.
Al Doan: He’s wearing a top hat.
Bo Fishback: He's putting pre-workout in his coffee. Like no one has slept in like months.
Eric Jorgenson: You're like, yes, this is America. Like these guys are going to win. This is awesome. They're, I mean, really interesting, super, super sharp founders. Like the two co-founders, I can't remember if they met in high school or college, but they were like doing mathletes together, stayed close through college, went to work at some big like aviation company.
Al Doan: Boeing.
Eric Jorgenson: Probably or similar.
Al Doan: JetBlue.
Eric Jorgenson: Can't remember.
Al Doan: Southwest. SkyWest. Regional Charters. Are any of these ringing a bell?
Eric Jorgenson: So, they got familiar with both the hardware manufacturing process and they were writing code in those companies and just saw this shit show of work assembly instructions. So, they see this opportunity. So, there's been a few recent developments in software engines, the physics-
Al Doan: For the layman, work assembly instructions?
Eric Jorgenson: Okay, so you take a CAD, like a manufacturing engineer designs a product in CAD. Big fancy software for designing stuff. Then they like have to translate that CAD program into a set of instructions for actually like the technicians in the factory to assemble the thing.
Al Doan: Yeah, because you can't build off of a- like a CAD file isn't an image. It's like the layers and layers.
Eric Jorgenson: The layers and layers, and it's static. And so what they do is like someone goes screen by screen through that CAD file, layers on layers, like Photoshop layers and screenshots and writes instructions in like basically a giant ass PowerPoint.
Al Doan: This is like writing your documentation for your code but for CAD. Is that what's happening?
Eric Jorgenson: You're writing the program, quote-unquote, that the technicians in the factory are supposed to follow. So they're like, step one, do the thing. Here's a screenshot. Here's instructions. Flip the page. Step two, put this bolt in, tighten this nut to this spec.
Al Doan: On average, what, about 200 to 300 pages for these?
Eric Jorgenson: That's what he said. This is not my native waters. But slow process to create it, error prone, like it doesn't have a feedback loop between the technicians actually doing the work. Maybe they're writing on the things, but that never makes it back to the engineers. So, what he's doing is like there are new physics engines in software that enable us to do really smart things with those CAD files, plus there's some really rad AI stuff that helps us write the instructions automatically. So, let's build a software program that takes in that CAD file, automatically generates these work assembly instructions through AI, through these physics engines, and then gives the technicians actually doing the work the layer to sort of give the feedback to like this is dumb, this doesn't work, this spec breaks this part, like too much torque, too little torque, can't get the wrench in there, whatever. And so, this feedback loop sort of takes place. And this is, on the one hand, you can be like, why has this not been built yet? Because it's a huge problem, it affects so many people, but at only individual manufacturing facilities, and it isn't software enabled.
Al Doan: There's not like a tech documentation company that does this exclusively already. Everybody just sort of does it as a side-
Eric Jorgenson: But if you believe LLMs and these like physics sensors were the things that unlock this opportunity and that whoever gets there like fastest and highest credibility gets there. And they are, like they're flying. They have the sales pipeline.
Al Doan: Why would a manufacturing company want to keep this in house? There's no value for them to do a crappy job and still keep people on staff to do it if they can like just farm it out.
Eric Jorgenson: So it is similar to sort of the Stell Engineering investment that we did, like incredible software for enabling speed and precision of manufacturing, which I think is like, it is a huge, huge market, underappreciated. There's tons of software people out there that would never know this opportunity exists unless you came out of that specific thing and had like the entrepreneurial zeal to go after it. And Fil is like super dynamic, like amazing pitch. He put together an amazing funding round and set of people who are involved in this thing.
Al Doan: That's fun.
Eric Jorgenson: Yeah. Like really sharp, moving fast. They just moved their headquarters to the Gundo.
Al Doan: Where is that?
Eric Jorgenson: El Segundo, California. Which is a very exciting scene. That might end up being a little hot pocket of Renaissance talent that's coming out of there.
Al Doan: El Segundo, is that the EAC headquarters? Is that what's happening?
Eric Jorgenson: Basically, yeah. All these dudes with the giant American flags and squat racks in the corner of their warehouses.
Al Doan: A lot of people say Hamilton is the El Segundo of the Midwest. Everybody says that.
Bo Fishback: I've heard that. I’ve heard that also, Al.
Eric Jorgenson: Making that happen. Yeah, so that's Dirac. We're pre seed in that. I think they're going to have a very bright future. And yeah, Fil's a great dude. Him and Ethan at Ouros are buds too.
Al Doan: It figures they know each other. Future builders. Well, let me tell you about Reactiv.
Eric Jorgenson: Please.
Al Doan: This is our boy Ross up in Canada. Smart guys, smart guys, smart guys. So, Ross, we've been working with Ross for a couple of months now trying to help him pull the round together and get everything going. It's funny, this is more my world, I think, the ecommerce, mobile app stuff.
Eric Jorgenson: This one was definitely Al coming to me and Bo being like this is my one, this is e-com, this is my shot, like my wheelhouse, and we're like, okay.
Al Doan: So the thing that I think that we see that other people don't is mainly there is some value in mobile apps for e-com businesses. So, you have your standard ones like a Tapcart or something. And Tapcart does like a basic off the mill template for an e-com place. So if you're buying crap in China and reselling it in America, Tapcart's going to do great.
Eric Jorgenson: Like Squarespace for mobile apps.
Al Doan: Yeah. It plugs into Shopify and gives you an app and you did it. Awesome. I don't think that there's any utility in that. I think people that are using that are making a big mistake. You're wasting money because why does anybody care? But the reason they use it is because, essentially, you're getting free push notifications to a user. So, if you have people that are going to download that app, they're just saving you money on texts and emails. And great. The value in an app, as my company just went through and a bunch of other companies that I work with, the guys that call me for advice and stuff, the theory that we've sort of settled on is, if you have loyal customers, if you have people that like you're invested in building a good experience with, you would use an app along with a number of other things, mainly to build like customer appreciation software. You're building ways of building experiences for these people. And so, any brand that has loyalty like that has a need for something more native. And most of the time, it's going to act as their loyalty program. That's how this stuff should end up. And so, what Reactiv does that we think is great is they make the process of, there's a platform that takes your Shopify store and turns it into a mobile app platform that you can build on top of. So, you don't need to go and hire, you don't need to be a mobile dev shop to spin up an experience in there. It's your normal dev team that they built the thing for the web and it will also work now on mobile or they can build custom experiences for mobile in normal React JavaScript, which is great, and they also use AI to automate a bunch of that. So, they'll do the- they get you 90% of the way there, and then you finish out. Super smart team, great salespeople, very well connected, they've done this before sort of stuff. The opportunities that they're seeing, they have like 40 or 50 customers already signed LOIs, a number of those customers already writing checks into this round because they’re just like they want it to exist. I have this big philosophy in the app space. Why are you smiling at me? We have this big philosophy in the app space that like there needs to be an enterprise version of the Shopify ecosystem, and nobody's building that yet. And so when we see apps and founders that are staring at that space, same as we are, it's easy to get excited about what they're doing and the opportunity that's coming that way.
Eric Jorgenson: What's that mean, enterprise version of the Shopify ecosystem?
Al Doan: Yeah, so like right now we use, we're a big store, or sorry, the Quilt Company is a big store on Shopify.
Eric Jorgenson: And for context, like if-
Al Doan: Like a hundred million plus.
Eric Jorgenson: It's a big business.
Al Doan: Yeah. So like there's, when we signed up, gosh, I don't know, three years ago to move on to Shopify, because what I realized in ecommerce is you're sort of building four pages over and over again. It's homepage, product page, browse page, and checkout; that's ecommerce. And so, we had been spinning our own version. Then we were like playing all this ball with Magento and all this other crap. And it's like, no, all right, we're going to give all that to Shopify, and my eight-man dev team is just going to build experiences on top of Shopify. Well, so then you go into the ecosystem and you're like, oh, there's all these great apps in there, and you download a review app. So I've got a reviews app that we're paying a couple thousand bucks a month to have reviews. And what you would want, because we have a lot of reviews, what you'd want is to be able to build any experience you want off of the back of that. So really what I need is I need somebody that says, hey, here's a reviews database, and I put an API layer on top and made it easy for you to integrate this into anywhere you want on your shop. Instead, what you have is people that build for like $500,000 a year stores that are like, click this button, put that widget in there. So, getting real access to an API or even a database structure that's thought ahead to like, oh, well, I should let you show reviews by user or something. So when I talk about enterprise versions, it's like the grownup versions of these little baby apps that Shopify is run by these baby apps and built just looking at like what's great out there and then building the grownup version of that is a big opportunity.
Eric Jorgenson: So, you worked with Ross for a few years?
Al Doan: No, I worked with Ross for a year at his previous company doing the mobile app stuff, and he's a standout guy over there. And then he left to start his own thing. And I was one of the guys that he called just to be like, how does this work? What does this look like? And I was like, well, what are you doing? And as it came together, there was enough meat on the bone that we felt comfortable. Well, because we see a lot of deals that are just like buddies that are doing cool stuff and like we can back them personally. It's why we have a $26,000 minimum, so that I can write a 25K check into a friend and have it be no big deal. But we thought there was enough meat on the bone for this guy to say, look, we see 100X here. We see some very good visibility into the gaps and why this isn't being done already. And we think we can make a difference in getting it done. And so then, worked with him a couple of months, tried to help him pull the round together and all that stuff. And he's great. It's awesome. It's been fun to see it come together. As soon as it did come together, then it's like, now we're competing for space in here. But no, it was… No, I mean, it's fun. I'm a big fan of it. I'm a big fan of people that are building in this space and doing big swings for that larger scale client.
Eric Jorgenson: I couldn't believe, like the first reaction through the deck or through the pitch is kind of like, wait, you're doing something inside the Shopify ecosystem, like there's no way that's a big enough TAM, like addressable market. And Al’s like, check the math. Please, do it.
Al Doan: Yeah. Well, I mean, that's always my level of comfort. It's like, dude, it's big. And it's getting to the point where you should- there's almost no reason to not, if you're an e-com brand, to not be on Shopify. Like, Magento sucks. Like all the alternatives are big commerce. Who's going to go and build their- Staples isn't going to move their site onto big commerce. And so, the people that are going to get the big brands is going to continue to be Shopify, and there's going to continue to be big opportunity to build inside of there. Give the homepage, browse page, product page, and checkout to somebody that's going to do this all day and it's not going to break when Black Friday traffic hits and all that stuff, and then go build great experiences on top of it.
Eric Jorgenson: I like this as another example of the kind of like hyper-precise, already in the market people who are empowered to build a new kind of company by AI. On the one hand, this is an AI company, on the other hand, there's an ecommerce tool.
Al Doan: It's funny, because we talked internally, it's like we're kind of aligning more to like, can we put stuff in space? Can we launch this to Mars? Can we build a nuclear reactor in our trunk? And to have a mobile app software company show up, the criteria for us still is like we're industry agnostic. We really like big, big swings. And we think this is a big enough swing in here that we felt comfortable jumping in there. But kind of a detour from our normal areas we're finding.
Eric Jorgenson: Well, it's a really interesting like we are still doing- we are still always making the best capital allocation decision we can with the information we have at any given moment, like within rough parameters. But like, how do we develop conviction and where does it come from in each individual idea? Sometimes, like the one we're about to talk about next, it is like that is a deep tech, super high, like super unique vision, super singular kind of company with brilliant founders. Sometimes, it comes from you knowing this space better than anybody maybe in the world, knowing that you're a customer of this, like you are investing in it. We're investing in it through Rolling Fun. Your company is investing. Missouri Star is writing a check directly. Like, you know this problem space and you can be like a kingmaker of this company by all the people that you know and the conferences you go to and like being an e-com leader.
Al Doan: What's funny, like really our unfair advantage in a lot of this stuff is our people that we know, and we don't want our buddies to not call us if they're not putting something on the moon. It's like, no, no, still call us. Like we'll- what, you’ve got a new candy bar you're making? Like maybe that's interesting. If you can talk us into-
Eric Jorgenson: If you're Mr. Beast.
Al Doan: And we love the market, and we love the founder. We'll follow any of that anywhere. We deliberately didn't put any constraints on ourselves. But yeah, it's fun to get the phone calls. I mean, that's some of the best part of doing any of this, is the randomness of the day of like, huh, building a house with a drone. Okay, I haven't thought about that ever. Let's look at that one. How’s he doing?
Eric Jorgenson: Yeah, or the other category I think is conviction of the people. Like sometimes we've known people for 20 years. We've watched them build two or three companies. We're like, whatever that person decides to do, I have a lot of data and a lot of-
Al Doan: Really internally, our best filter is like, can it 100X? And if it can't, that needs to be a personal check. And if it can, that can be a Rolling Fun check. Which has been really- I mean, it's a great filter for us to stare at and say, do we believe that this can go?
Eric Jorgenson: I think that's the midway curve. Because the dummy and the Jedi are both like, can it 100X? Is it going to end up really big? And everything in the middle is like allocation percentage, fund minimum, round size, valuation, entry price. Do it get big?
Al Doan: Dude, I love this next one though, man. Tell the story of this guy.
Eric Jorgenson: Longshot. I love a pun. As soon as I grokked what this company did and the name, I was like, I'm in. These are my kind of guys. This is amazing. I'm going to start this time with a shout out to Mo Mahmood for introducing me to the founder, Mike Grace. He definitely like pegged me right with this one. It was a little crazy. The concept is we’ll build the world's biggest potato gun, basically. The ultimate vision is a kilometers long, maybe a 10-kilometer long vacuum tube that shoots precise air jets behind a capsule or a vehicle or a payload to get it to like slowly – well, not slowly – but like increase in acceleration over the course of this huge distance until it's at like Mach 10 to 20, which is like 10,000 plus miles an hour, and then go off this giant ramp and scream through the air and get up into space.
Al Doan: So, think like 50 gallon barrel drums getting launched into space.
Eric Jorgenson: Like even bigger, I think.
Al Doan: And then you have a spaceship collecting these payloads up there?
Eric Jorgenson: So, I think there's a ton you can do with it.
Al Doan: Or is that just like an auto unpack satellite that hits?
Eric Jorgenson: I think that you can get a lot of stuff up and out of this. I think what's interesting is, what really clicked for me is how this is actually the perfect complement to a mature set of rocket technologies. So, I was kind of like- the founder, Mike Grace, is like, this is one of the only ways that we can get stuff up into space cheaper than rockets. Rockets do it, but they're actually a really gentle ride compared to this 20,000-hour thing.
Al Doan: Elon got the price down to, what, like 4K a kilogram or something like that, and he's like, we cut that down dramatically.
Eric Jorgenson: Yeah, these numbers might be out of pocket, but I think Elon is like $1,000 per kilogram payload to space through Starship, maybe at maturity. I don't think that's every one. Mike is like, we can do it for, also at maturity, can do it for $10 per kilogram payload to space.
Al Doan: I just want to know, can they give me a sun death? Can I get in the barrel and go into the sun in the end? I'll pay for that.
Eric Jorgenson: You will not make it 10 feet...
Bo Fishback: A blob of you could. But it would be in blob form.
Al Doan: Put me in a barrel. You can package me up. You need some peanuts or something in there. You don't want any… And then you launch me at Mach 20 into the sun.
Eric Jorgenson: I don't know if you can solar sail somebody into the sun. It seems tough.
Al Doan: Well, because the sun is pushing the solar out.
Eric Jorgenson: Tack and jive, tack and jive.
Al Doan: How does anybody ever get a sun death in this world?
Eric Jorgenson: Propulsion. A lot of liquid oxygen. So they have a-
Al Doan: I'm sorry. I've distracted us again.
Eric Jorgenson: No. That's what you're here for. That is a perfect complement to rockets because they can take only low sensitivity payloads that are above a certain weight threshold. So, it's got to be 50 or 500 kilograms. It's got to go through this like 1000G acceleration process and survive the high atmosphere drag up into space. But if we're going to do heavy industry in space, we need a way to get high mass stuff super reliably and super cheaply off the earth. So this is for supply drops to the moon to Mars. This is for getting up the heavy materials to build a Dyson sphere. This is for solar sailing stuff.
Al Doan: Wait, you're trying to build a Dyson sphere, bro?
Eric Jorgenson: This is a key enabling technology for Dyson sphere, and that's what we're all doing here. I thought we were on the same page. And it's a cool- the margin of error can be much lower than rockets because the rocket, the whole launch system has to go up and everything. And this is like, you can over-engineer the hell out of this gun because it just, a few times a day, can just like thump new stuff out into space. So, this is just such a cool company. They're like building a giant test thing out in the Tonopah Desert by Area 51. They have a clever sort of process for getting ever closer, like building a business as they develop the technology because they are doing hypersonic tests for the government. So, the Air Force has given them a bunch of money already to help them develop this technology to do Mach 10, Mach 15 tests in these things. And so, they get a bunch of revenue that way, moving towards this ultimate vision of space access. And he's got this awesome chart in the deck where he's like, there's a 20-year chart where it's like, we are a hypersonic testing business, and then we're a space launch business, and then we're a space services business like Starlink, because we're the only ones who can get stuff up into space that cheaply. I'm like, hell yeah.
Al Doan: He had such a strong close too where he's like, would you like to come see this 4 kilometer gun? And we're like-
Bo Fishback: Affirmative.
Eric Jorgenson: Yes, we do. Thank you. We will be right there. And he's like, do you want to ride in it? Only if you're sitting next to me.
Al Doan: Yeah, I mean, bribes work for us. We will write you a check if you let us come play with your giant 4 kilometer gun.
Eric Jorgenson: How big of a potato can we get? We need Kevin Espiritu to grow a 50 kilogram potato and shoot it through the world's biggest potato gun.
Al Doan: My best hack growing up, we had a pear tree out front. When the pears would get so juicy and they'd all fall down, you had unlimited pears. You put that in the potato gun. I could get it over the 40 acre field. I blew up a number of potato guns in my hands as a child. I have very fond memories of this. Anyway, so I'm saying I should be allowed to snap the igniter.
Bo Fishback: As an expert.
Al Doan: All right, all right, all right. Everybody clear out. Uncle Al’s got this. I'm just saying, I've got the credentials.
Eric Jorgenson: Yeah, I like it. I like it a lot. It'll take a minute to get to the giant fancy version, but it's definitely like, as far as obsessive geniuses building utopian technologies, like check, check, check, check. The passing the test of like, can this company credibly be the only company on earth capable of doing blank? Yes. Very, very cool.
Al Doan: So really, if you invested in Q1, well done. You're geniuses. You got into some great companies. Genius. And if you didn't invest yet, go die. I’m just kidding. I'm just trying to think of a mean thing to say, but it’s not my native tongue. I still like you. I don’t know. Try again next quarter.
Eric Jorgenson: The meaner Al tries to be, the cuter he becomes… So I feel, on each quarter, I could probably credibly say this each quarter, but I feel like our bar continues to raise of what a really good looking company is. And we are now starting to see the follow-ons of the investments from a year or two ago, which is amazing. It feels so good.
Al Doan: Just very validating.
Eric Jorgenson: When the bar goes up and you're getting good feedback on the stuff we did a year ago, I'm like, oh my god, I can't wait. I can't wait.
Al Doan: We need those shirts, by the way. Pre rich should be our thing.
Eric Jorgenson: Who's the head of the merch committee around here? I bet some people would buy those too, which is good because we need the revenue. This is a noble cause we're serving, but it's not particularly probable.
Al Doan: Actually, I will say, you're paying for all of our barbecue dinners, so I'm fine. I feel great.
Bo Fishback: Locked in. We're locked in. It’s what we’re here for.
Eric Jorgenson: We don't need much. We're simple.
Al Doan: We're but simple barbecue eaters.
Eric Jorgenson: Okay. What are some of the things that we're learning? Would you say we're learning?
Bo Fishback: Oh, we're definitely learning. I don't know. I thought it might be worthwhile because we've got enough companies now that are going out to raise money to talk a little bit about where we're at on to follow on or not follow on which is really like-
Al Doan: We just had our first and only follow on.
Bo Fishback: Yeah. And I think it's like tricky. It created a lot of conversation amongst us about should we-
Al Doan: I loved the idea of having the hard and fast rule of we never follow on, just so I never had to tell one company no and another company yes. Because the signaling and all that stuff felt like a lot to navigate. But then also because we're investing so early, we have like, hey, we weren't even a company when you put money in. Now we are, and you've seen some validation, like would you like to? As capital allocators, there's an argument for, there's very smart opportunities for some of these.
Eric Jorgenson: And as the fund grows, like sometimes we just get to take even a more correctly sized bite for the total fund structure now that we've got like more capital than we had two years ago.
Al Doan: I still, like we've had a couple of companies- well, it's funny because quarter by quarter, it changes. We've had a few companies that have come back and been like, hey, thanks for that $38 you gave me. You really screwed up the math on my cap table. Would you mind-
Bo Fishback: It was $26,000, just to be clear.
Al Doan: Would you mind evening this out? And like they always, their rounds always come up when we're like, there's 25 other great opportunities that quarter and we're staring at it and we're just like tortured even to pick our next couple, and you have to say no. And so, really, I feel like the follow on from us came because there's like, we had just enough left in the quarter that it made sense. And also, I guess follow on happens when the circus hits just right. And when it doesn't, we write a check in and then we just give you support and love you.
Bo Fishback: Yeah, I think it's a thing we're going to keep talking about. And I don't think we have like a... We don't have deep religion about it. But what I will say is that like, whatever, two years in, certainly compared to last year, I'm personally like way, way more confident that we're going to keep having deal flow that grows. And so when the trade-off is like, with a kind of limited fund size, do you want to be making new investments, or do you want to be doubling down on the ones that have shown traction or whatever? We're small enough where those are real trade-offs right now, but also like gets me kind of excited as we start to bring on new LPs and grow where it's like, ooh, we're going to get to say yes to the best answer every time. And I think that's like, I don't know, I kind of really feel like in the last few months, I've kind of really landed on like, okay, we're going to be able to do this like extremely well when we're two or three times our current size. Like we should not- the way that we're doing this is not befit a $20 million fund, but being able to employ like a couple few million a year, we're going to be able to make the best decisions for how to allocate capital. And so, it makes me think like, hey, ringing the LP bell is a good idea, making sure that our current portfolio companies know that like we're open to follow on. Like we're open to follow on, but we are still at the size that we have to be really-
Al Doan: Don't feel bad if we say no because it’s not-
Bo Fishback: Yeah. It's not a signal as much as it is like us trying to figure out like what is the right size at which we can just like say yes to the ones that are making progress and just double down every time. I mean, it makes funds work much better, frankly, when like you can double down on your winners. It really sucks if you do that all of the time, when you tell someone no, it is a signal. And we are not in the business of sending that signal. We're just not big enough to get to everything we wish we could get to now.
Eric Jorgenson: We're grading on a curve, a hard curve every quarter based on whatever opportunities we have in front of us.
Bo Fishback: I mean, it was like three investments last quarter, three investments the quarter before, our investment amounts per deal are actually going up mostly, and actually there's quite a bit of room to even double and triple those. Like 50, 75, 100 thousand dollar checks could almost have always been $100 or 200 or 250,000 checks. So like which white space we want to eat up as we do this is a thing that we're going to just keep working on and we'll keep you guys posted as we do it. But like more money makes this thing work better actually.
Al Doan: It's funny, the dynamic of the rolling fund is one that like being in it is different than I thought it would be of like sort of the quarter deadline. If you raise a fund, you're trying to look at like we've got X checks to write this year, the next two years, or the next four years even, and you're trying to balance that out. And for us, it moves so quick, man. Like what you see this quarter, and we're committing capital and committing the support quarter by quarter by quarter. Like every three months, we get a whole new batch of stuff to try and solve and stare at.
Bo Fishback: Well, it's interesting, like related to the conversation we had in the last episode, which was one hour ago, the difference between this type of fund, it really is like every quarter, we are actively investing. There's no such thing here as like, oh, hey, we've deployed our capital in the first 18 months. It's a 10 year fund. Everything else we're holding for follow on while we go to raise our next fund. That's not how it works with a rolling fund. Every single quarter, we're looking at the pipeline. We're taking advantage of the best things that are in front of us. And like, boom, if we're not in that quarter, either we pass or we hope we get you on the next time. But it is a much more active pipeline where there is no future in which we're like, oh, sorry, we've deployed all our capital because the capital is also renewing as we're doing those investments. And so it really is, it makes it a much more active process as opposed to like a we're done, which is I think kind of what we wanted, like a thing to keep working on, not a thing to do and then be done with.
Eric Jorgenson: I think from that perspective, it's a really good structure.
Bo Fishback: It is. I like it a lot.
Eric Jorgenson: And it helps us, like if you have a year and a half deployment period, it's really hard hard to not just sit and be like, maybe I'll get a better opportunity in nine months and miss things that turn out to be great. It's not a hard rule that we have to allocate every quarter. We can roll over with no penalties whatsoever. But it does give us these slightly artificial but still mentally helpful barriers.
Bo Fishback: Our investing window never closes, but also our ability to raise money never closes, which is why like for everybody who got all of the K1s as you're going to pay your taxes this year, it's because this structure enables us to have new investors come in this quarter who get exposure to this stuff this last quarter, but without having exposure to the previous stuff because you were there first, so you got more exposure. And so like the way that this thing works, it actually, it creates a lot of K1s, but it also makes it so that it is a very, very vibrant pipeline on both ends, on the LP and the company end. That is much more interesting than doing a first fund, not knowing how it goes, waiting around to see for three years what happens with your investment. Oh, it actually worked. Now, we need to go raise another fund, which is the traditional venture model. They can write really big checks and all that stuff, but they can't just take new investors all the time.
Al Doan: I think it's why the content stuff that you've headed up, with the podcast and all the letters and updates and stuff that are being sent, it matters so much because we don't have 12 years to wait and see how our results are. You guys are actively evaluating us on our performance quarter by quarter by quarter. And so, you're right, where there's no penalty for not investing everything, we can roll it over, I also think if you're an investor and you've committed your capital, there's an expectation that we are going and sourcing the best deals that we can find in that quarter and committing that capital. And so it's, I mean-
Bo Fishback: It is also, like what you mentioned earlier, the feedback cycle of LPs being like, hey, this is great, you guys are keeping us posted. Like we have to. You don't have to keep investing. It's not like we took your money and said, see ya. There are plenty, plenty of like zombie venture funds out there who raised all the money, you don't hear from them, you don't even really know what's in the portfolio unless you harass them about it, and the dudes are off like surfing or whatever. This is like an ongoing thing. And it's like the onus is on us to be good communicators, to create good content, to keep bringing companies in. And frankly, like every time the door opens for a new LP to come in and participate in the most recent quarter, that door is always open. And so it's just a much more living way to do this. And that's a really cool- that's why this is neat.
Eric Jorgenson: I like that, as we mentioned before, it can be very frustrating as a founder to pitch like investors who keep their door open because they don't want to miss anything, but they don't actually have any capital to allocate. That sucks.
Bo Fishback: Correct. And you don't even know and you have no idea. It's totally opaque.
Eric Jorgenson: But I like this structure.
Al Doan: Who? Name names.
Eric Jorgenson: I think this structure, the cons are definitely a lot of K1s, but also get an accountant.
Al Doan: We had like one person be like, dude, what the crap are all these K1s? And now we're very sensitive to how many K1s we carry.
Bo Fishback: I think that was one of those like I was also thinking it, and then a lot of people think it but don't ask it. And it actually makes sense when you know that it's a new fund every quarter and that enables new people to come in every single quarter, and it keeps the engine, like it keeps it living. Like that's what it does.
Eric Jorgenson: And because of that, it’s very fair. If you didn't invest in us for the last two years, you didn't get those investments. If you invest starting right now, starting this quarter, you're in this quarter. And as soon as we, I mean, within 90 days, basically, as soon as we take in your capital, we're deploying it. We're not calling capital two years ahead of-
Al Doan: If I may, if I may, if the K1s bother you, just invest more so it's more meaningful.
Eric Jorgenson: Yeah, that's a very good point.
Al Doan: You do a 5k a quarter, I mean, what are you doing with that K1? Do 25k a quarter. Now that's a meaty K1.
Eric Jorgenson: And it's worth doing the paperwork. That's a good point. And I like that it is also, the other pro is that it's flexible. Like I have friends, many friends who are LPs in the fund and they call me like I'm so sorry, I got to pause my subscription. I'm going to go start a company and I need all my cash. I'm like fucking awesome.
Bo Fishback: Can we invest?
Eric Jorgenson: That is exactly what is beautiful about this structure. And so, yeah, people kind of come and go all the time, and I think it treats them very equitably. It lets us continue to constantly allocate and be active all the time. Yeah, it's a very like...
Al Doan: Creativity is born of constraint. This has been a fun constraint to have of, all right, how do we do the best with this?
Eric Jorgenson: And it ties to the theme that I've been thinking about of things that we're learning is the timing. It helps to force decisions. And when you think about it as a quarter, as a cohesive thing, we try to blend a little and get a few different opportunities each quarter and take action that quarter. And we're seeing... I had experiences recently on two ends of the spectrum of timing. One round moved really quickly and the valuation moved quickly. And so, a conversation I had about a lower valuation in 30, 60, 90 days was suddenly a very different valuation. And maybe that changes relatively little about the decision and the thesis and what will happen eventually. But it's interesting to compare that to something where, in some cases, you're able to raise at the same terms or invest at the same terms that you invested in six or 12 or 18 months ago if you were close to the founder and if you know what's coming. And that's some of those opportunistic follow-ons where you're like, if there has been a lot of progress, paying the same terms that you paid 18 months ago, 12 months ago, or even technical milestones ago can turn out to be a really good deal and gets really high IRR, which doesn't really matter until a really long way away.
Bo Fishback: Yeah, I think it also really makes the conversation real that we have a lot of. We don't invest less than $26,000. That's an annoying amount of money. I don't think we've invested more than a couple hundred thousand in anything, but it's also like we have opportunities in every one of these to invest more money or to make an additional investment or two additional investments. And that's its own kind of force curve where when we look around the table at each other, it's like, guys, would we rather be a hundred in here or would we rather be in 50 here and here? It starts to make you really be like, I like that one, but I love this one. So like, let's load up, let's load up when we think we see really big opportunities.
Al Doan: Well, it’s funny, I think we have a preference to more exposure across more companies. So like if we have 120 left, it's like, oh, it's 50 and 70. But for us, we probably look at that and say that's four 30s. Especially if there's enough volume, we have a preference to many bets as opposed to we got the one. And mainly that's because, I mean, we are so early and we're playing so far ahead that like if we're open to some follow on, then like there's a great move because we're in, we're big early supporters, we're going to help and we're going to watch, and then our big bets can come later. We're not worried about that.
Eric Jorgenson: I like the counter, it's not counterintuitive, but it's counter to the common narrative of venture, which is like I feel like there's a lot of funds pitching like fewer bigger bets, minimum allocation, like minimum ownership percentage. And like-
Al Doan: Well, because they're optimizing for workload at that point. They're optimizing for their own workload with those kinds of decisions.
Eric Jorgenson: With their board seats, their oversight. And maybe in series A, that makes a ton of sense. But the portfolio math of early, early stage, true pre seed is you really want to throw a lot of darts. You want to be sure that you have some money in the very extreme left power law. And part of that is a high bar and good deal flow and being useful and getting that allocation. But another part is just throwing a lot of good darts. And it's uncomfortable. The hubris of VC is like, oh no, I have read every book and I have interviewed thousands of founders and this is the one. And it's actually much harder to do that than to throw 20 darts and like get some money into the earliest stage.
Al Doan: I don't know that any of us would ever enjoy- like what you were talking about before, if you lead a round, you have all the extra paperwork that goes along with it. You have to have that conviction and know that you're right because you're putting millions of dollars behind it. And for us, it's like, man, I like three or four things about this guy, the company. It's sort of feeling like it might come together. We should take a serious look at it. And that's way more fun for us. I think we'd all kind of be miserable if we had to sit in a chair and make three bets in a year and we had to be right most of the time. It's not-
Eric Jorgenson: A hard game. Different people play different games and this one is ours.
Al Doan: Hats off to you guys that can do those big ones and you let your conviction build and build in that stuff. But for us, we get to see, is it a great opportunity? Do we believe the guys can actually make it work. It's funny, I went on a venture capital podcast a couple of weeks ago. I didn't realize that it was a venture capital podcast. I thought I was just hanging out with some buddies. They're like, tell us about your fund. What's the thesis? What's the strategy? I was like, all right, well, great questions. First, I should know the answers to these really quick. But second, the way that I described ourselves, I'm like, we have a ton of fun because we're doing stuff that we genuinely like. And what we're looking for is like we don't need everything to be there. We're looking for like, do we like the guy or girl? Do we like the founder? Do we believe that the company is doing something that we think is interesting and we think can make a difference? Do we think that they can actually do it? And I'm like, if all of those are sort of there, there's a good chance- I mean, that's all the math we need to make an investment, and then we're choosing the best of those. But we're not in data rooms. We're not in nerdy spreadsheets. We don't need your proforma and all that stuff. We're earlier than that. We're having more fun, I think, than the other guys are because of that.
Eric Jorgenson: That was actually a big debate on the Twitters this week. This woman posted, actually, I think financial models are helpful at pre-seed. Everybody in the world quote tweeted her and was like, this is ridiculous. I’m like, can we not have a nuance? For some businesses, it probably makes a ton of sense, but should it be a requirement for all of them? Longshot doesn't need a- does not need a proforma financial model.
Al Doan: Reactiv actually did need the proforma model because we needed to see exactly how much they're charging and how much they're making. Because they're dealing in that world, where Longshot is like, we think we can get it to space. Let us know if you do.
Eric Jorgenson: There's a lot of different things being called venture, a lot of different types of investing being called venture these days.
Al Doan: Guys, that's so true.
Eric Jorgenson: So true. So wise. Speaking of smart ladies, our very first actual specific deliberate intra-round markup happened in Q1, which is Stell Engineering.
Al Doan: Oh, yeah. What did they end up raising?
Eric Jorgenson: We invested pre-seed, and they just raised their seed very quickly, actually. I got some emails for reference checks, and by the time I had responded to them, they're like, never mind, they already signed a term with somebody else. I was like, oh, all right, cool. So there's a TechCrunch article about it with all the numbers that are public, I think, but like raised a decent size seed round.
Al Doan: They're going to kill it. Everybody that's looked into that company is just like, whoa.
Bo Fishback: No, they execute.
Eric Jorgenson: They execute. The team is amazing. Their updates are very great. They're super customer development driven, software that's iterating quickly, like in a unique market.
Al Doan: Well, it's funny. They built in such a smart way because they were optimizing for that product market fit by like they have their pilot programs running with like almost nothing, which speaks to the demand. These companies were like, if you have anything, great, we'll use it. And then they got to build around customers so quickly. They did it such a brilliant way.
Eric Jorgenson: Yeah, also Mallory and Ann are both super- I mean they met as co-presidents of the aerospace-
Al Doan: I kind of, every LinkedIn, I'm like, happy investor, very small, I mean, I like you guys. Way to go. It's such a weird- all of them, because we're in like 20-something companies now, and so there's all these updates. I feel we're caveating everything with like, I saw in them what nobody else could see, eh, a little bit, and we were right.
Eric Jorgenson: It is an unfortunate sort of reality in this game-
Al Doan: How do you humble brag? I don’t know.
Eric Jorgenson: That you have to be like just slightly public about your achievements in order to spin the flywheel of like credibility and awareness. And it's why every investor is so goddamn annoying on Twitter, probably myself included.
Bo Fishback: I suck at that part. I’m sorry.
Al Doan: Bro, what if we got hit by VC Brags? What if that was us?
Eric Jorgenson: That's a good dude, actually. I know who's behind it.
Al Doan: You know?
Eric Jorgenson: Yeah, I pay him hush money to not make fun of me on Twitter.
Al Doan: He’s your Stormy Daniels. Who among us doesn't have a Stormy Daniels?
Eric Jorgenson: All right, I'm going to stop recording before we find out too much about Al on tape. Thanks everybody.
Al Doan: See ya.