213. Crisis Coverage w/ Semil Shah – VC Fund Management in a Pandemic World

213. Crisis Coverage w/ Semil Shah - VC Fund Management in a Pandemic World
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Nick Moran Angel List

Semil Shah of Haystack joins Nick on a special Crisis Coverage installment to discuss VC Fund Management in a Pandemic World. In this episode, we cover:

  • Last time we had you on was Nov. 2017… quick update on you and Haystack since then?
  • LP interaction – are capital call defaults a serious issue to consider in this environment?
  • How do you think investment dollar volume adjusts in 2020 vs. ’19?
  • I know you’ve had a lot of calls w/ friends and mentors lately… what are you hearing from the veteran investors right now?
  • What feedback or insights have surprised you?
  • What actions have you taken since the crisis hit to adjust your own strategy?
  • How do you see the value of face-to-face interaction playing out in the VC-Founder interaction during pitches moving forward?
  • How are you prioritizing reserves when triaging?
  • In the case of a fund running low on dry powder right now, what are your thoughts on reopening a fund?
  • In what cases should an early stage company change their business model to address the changing environment?
  • What are your thoughts on GTM, or changes in GTM, in this environment?
  • I saw that you guys are Crowdsourcing a list of startups who have changed their business model to help fight covid-19.  What have been the most interesting so far?
  • Over/under on duration?

Guest Links:

Transcribed with AI:

0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran, and this is the fool ratchet.

0:23
Semil Shah of haystack is back again joining us today from Menlo Park Smeal is an investor in over 70 companies. He’s the founder and GP of haystack, and he’s a venture partner at lightspeed. In 2017, just four years after starting his own fund, he was named to the Midas Brink list by Forbes. He’s an active blogger and has been very vocal since the crisis broke to help both startup founders and fund managers alike. Sunil, I think this is the third time you’ve been on the show. Third time’s a charm. Welcome back.

0:49
Hey, thanks for having me, Nick. And good to reconnect.

0:53
Yeah, so you’ve you’ve written a lot about adapting to the crisis managing through it. I’d love to dive into some of those points. But before we do so, I believe last time you’re on was like November of 2017. timeframe. Can you give me a quick update on yourself and haystack since then? Yeah,

1:10
I think since then, we’ve raised another fund. We opened that fund for business in September of 2019. It was a it’s a $50 million, fund five, zero. And it was mostly institutional. So that that felt like a really big breakthrough. And it feels like the right size in terms of ownerships, and, you know, things I wanted to do. And so yeah, we’re just at the beginning of investing that and so it feels like, you know, not that I would prefer today’s environment over yesterday’s environment. But I feel very fortunate that we have so much capital, and sort of long term partnerships now to invest. So that’s the big update.

1:55
Can you give us a sense for the number of LPs that are in that fund? Ah,

2:00
I mean, I have a lot of CEOs in there. But like the main institutional LPs, it’s about eat. You know, got it. Yeah. Okay. Yeah.

2:11
So let’s, let’s start there. So how have you adapted sort of messaging and communication with the LPS? And how what have you heard from them? Since you know, or over the past three weeks? Yeah,

2:22
well, I would what I would say here to be clear, as like, I’ve been talking to a lot of LPs, both that are mine, but also that are not mine. And so I think, in the same way, that this public health and economic and sort of looming mental social isolation crisis will affect everyone in different ways. I think that’s the same for LPS. So you know, I talked to an LP, where it’s a multifamily, sorry, it’s a single family office, quite large, quite institutional, and they don’t have an operating business to manage. So it’s just the family office. And, you know, there’s a group that has a hedge fund, there’s a group that has a real estate fund, there’s a group that does Publix, there’s a group that does PE. And so because of the lack of an operating business, and the diversification built in there, as a buyer of equity, they’re very excited about this time, you know, they want to put more capital to work because they view the prices are going to be going down considerably. On the other hand, if you think about any sort of endowment or foundation out there that a lot of GPS would love to have on their own investor base in their own investor base, you know, think of a random nonprofit that maybe needs to supply emergency funds to one of their programs, or may not be able to fundraise via events, like they used to, or think about a university where they’ve had to send the students home. They’re considering tuition reimbursements. They’re laying off staff or furloughing staff. And then they may also manage funds for the medical school. Or the scientific departments that are on the frontlines of this. So it’s like, I think it’s pretty nuts. A when you think about all of these things put together and if someone’s in the crosshairs of that. So that’s kind of what I’m hearing. It just depends on the strategy, I think, funder funds who have to raise their own funds, it’s going to be a title fight for those funds, right? It already was super tight before the year started. So that’s kind of what I’m hearing.

4:40
Do you think capital call defaults will be a real issue this year or next?

4:44
Again, I think it depends on who, who your LPs are. If your LPs are individuals, they might have lost 10 to 40% of their net worth in the last month. So they may do it out of conservation. have a desire for conservation, or they may do it. Because they literally can’t. I think institutional will be more, you know, have larger pools of capital, but it really depends on who your LPs are and what their exposure is. But, you know, yeah, I’ve been telling friends who have funds to like, pick three friends who are managers, one of them will do incredibly well in this environment, one of them will have defaults in their capital calls, and one of them won’t be able to raise them next month. You know, yeah. It’s, it’s going to be like that. What

5:33
would your guidance be to emerging managers that do have to raise, you know, next quarter, or the following?

5:44
I think it comes down to relationships to start. So if you have relationships with people, seeing, you know, telling the story about how the deal environment maybe is changing, and it’s an opportunity to put capital to work, and having a point of view of how to put that capital to work. I think another angle could be, you know, pushing things out. So maybe someone wants to raise a fund of excise. And maybe they say, Okay, well, I’ll raise a third of x or a half of X and fight with the army that I have right now. And let live to fight another day. I think, you know, converting temporarily to some SPVs. If you have access to capital, and just, you know, there’s some advantages to doing that, too. But, you know, for me, like, when I started, and you were a little bit like this, too, it was hard to raise a million dollars, and for a small fund in 2012, and 2013, when I did it. And now people are so used to it, they were just raising 1530 out of the gate, because they they needed it for whatever personal expenses they had or things like that. But no one really owes anybody that and so I think we’re gonna go back to that timeframe, a little bit where, okay, if you really want to do it, you’ve got to have a side hustle, or maybe five side hustles and you do this and you kind of build your way up there.

7:14
Yeah, I hear you. I mean, our, our fun. One was six, 6 million. And we sidecar with SPVs about an equivalent check on the side cars, to our initial checks. So it’s, it’s kind of a $6 million fund that functions a little bit more like 12. But we were we were gonna go out later this year for fun, too. And with existing LPs, only I had interest in like the 20 to three verbals. And that’s, I’m just, I mean, that would have been a first close. So, you know, we’re aiming higher than than that for the second close, but my confidence in that has gone way down. And that’s,

7:52
I think, I think, like, you know, one, I don’t think it’s worth making any big, big decisions right now, because more information is going to come out. So I would just say, like, you know, even on a human level, is it appropriate to go ask for money from people you don’t know, right now? You could argue it’s not really appropriate, like, just on a human level. Yeah. Right. I think number two is that like, for people that you know, it’s a time to like, either give them a call or email them about what you’re doing, as a manager, you know, to to adjust to the new environment, both for portfolio your point of view. And then like, I think, telling the story, this isn’t for you, or this is for anybody telling the story of how the pricing environment may change one. Yep. And to that, like technology is now what drives the economy worldwide, that’s not going to change. And that, you know, here are the opportunities to go do that. I think people will see that over time, because there wasn’t anything structurally wrong with our economy. Not that it was perfect, but I do think like, there will be quarters and quarters of like down down activity, and then it will take a year or two to recover from it and a lot of stimulus. And so it’ll just take time, but I still think like people can go try to raise capital, maybe the targets are a little bit different.

9:25
Yeah, I mean, the fundamentals, I think are still sound. And the value is going to be good for the foreseeable future. But a lot of that liquidity, you know, a lot of people were betting with house money. Let’s be honest, right. There was there was just a lot of alpha in the market and people were using the public says their cash machine and investing across different asset classes, but a part of that was their allocation of venture. I mean, I saw it myself. I saw a lot of people that had made so much from the Bull Run On that we were on, that they were allocating quite a bit to not just venture but a lot of alternatives and, and other asset classes. Yeah, that

10:11
happens all the time, I think, you know, if someone’s going in and out of asset classes like that, they’re probably not a great LP to target. I mean, again, when you’re starting, you don’t get the benefit of choosing. But ultimately, like, people play in and out like that, you can’t really time venture markets, and people are going to start companies. Like, I’m sure you’ve been talking to people starting companies now or raising their first rounds of capital. So that’ll that’ll always happen. And like, of course, the pricing is going to adjust, like the valuations are gonna, you know, completely adjust. So, you know, it’s, it’s a time to make those long term bets, I think, as a manager to like, being really, really early. You have to, you have to show the ability to get your companies funded after because it really takes like 10 or 20 million, I mean, let’s say five to 10 million, to really get a shot to build a technology company. Yep, made a minimum. So a small fund isn’t going to supply all that. That’s the other thing, right? is like, there’ll be more of a premium on that.

11:21
How much do you think valuations just in in how do you think investment dollar volume adjusts in 2020?

11:31
Investment dollar, I mean, I, I don’t know the numbers. I mean, it seems like VCs have a lot of dry powder, but they’re going to be a lot slower. So the numbers obviously going to be significantly lower than it would have been. I still think a lot of them have a shopping list of things they want to buy, and have access to Yep. So So I think that money will still be deployed, I still think at every stage there like capital, balances and imbalances. So like, you could say that, for the next year or so there’s still an imbalance of supply of seed cash and Angel cash to, relative to the startups versus a series a capital is probably much more constrained. But I think there’ll be like two types of rounds. And it’s the same today, it’s just the pricing will be more stark, there’s someone who’s really good who a few people want to work with and bid on working with them, that they’ll have a better pricing advantage, especially if things are working. If other people are taking much more of a risk and things are unknown, I think you could see in rounds like 30% dilution, give or take, if not more. And, you know, in a previous era, a Series A by a top tier firm would have been, you know, five on 11, PRI, or something, you know, like, maybe even lower. And so people just haven’t really gotten, you know, it’ll take a while if that’s going to happen. It’ll take a little while for that to happen. But it’ll be a shock for people.

13:05
Yeah, I’m seeing pricing come down already. Especially AC, I’ve seen I’ve only seen a handful of term sheets. And I’m seeing on the order of about 20% reduction from where we’re at in February. Okay. Which doesn’t feel that significant. I mean, Chris Davis was just on the program, and he was arguing for, you know, 40 plus percent discounts. I don’t know that we’re gonna see that, but I don’t have a crystal ball. So we’ll find out.

13:38
Yep, we’ll find out. I mean, again, I think it’s a it’s dependent upon who, you know, how much demand there is for that specific equity? You know, because it just takes two to tango if two firms really want to work with somebody. Right. Right. That’s all that’s all you need. So I think it’s the cases where the investors taking a lot of the risk, and sticking their neck out there. I think those will be, you know, it’ll be harder. I mean, I also think like a lot of entrepreneurs you and I have met probably are very careful, smartly, about dilution when they start, and they may not start if the dilution is worse. And so I think you’ll see some people opt out of doing startups because they’ll say, Well, I can make more money doing this. And I don’t want to give up this amount of my company, and there’ll be other people who will just say, this is the only thing I want to do, you know, the thought of doing something else is worse. So let’s go. So we’ll see. Yep.

14:34
So, you know, I know you’ve done a number of calls, similar to myself and probably some others, but you have a variety of pretty high profile mentors that, you know, you’ve been learning from and working with for many years. You know, what are you hearing from from those sort of veteran investors right now?

14:53
I mean, there’s a lot like any particular area.

14:57
I was gonna leave it to you. I mean, maybe What are the major insights from them based on previous crises that I’m talking about now?

15:05
I personally don’t listen to anything related to previous crises because they seem to pale in comparison. I think the one thing that I’ve heard that makes sense to me logically is that I wasn’t investing during this time. I mean, I just graduated college. But the impact of the.com bubble on the technology and startup world was for years, it was a, it was a multi year thing. And people have told me who have invested during that cycle as well, that they believe this will also be more like that, where it will be a number of years, people will this, this, these pan sort of pandemics running in parallel will alter the startup ecosystem for a few years?

15:55
Great. It’s, I mean, it’s tough. It’s, it’s tough to hear that. But I think, you know, the reality is this cuts so deep across so many sectors, and the tail of this could just be so long. It’s really, I mean, even if they do find, you know, vaccine or treatments, here in the next quarter or two, there’s some damage that’s been done that, in some cases is irreversible, you know, to both people and to businesses. Yeah,

16:26
I think we don’t, March feels like an appetizer for the main event. And, you know, it’s not going to be a pretty main event. So it’s, uh, you know, I think a lot of us haven’t really digested what the reality is going to be of like, this high unemployment. You know, when people look at the markets and like, market seems to stabilize, I’m like, Okay, well, you know, the jobless claims are just, it’s just unheard of. So I’m more of a worrier about that stuff, both as an investor, but also just as a citizen, I’m just, you know, I’m more bearish about the prospects that that creates. I do think there are opportunities created by but there are more obstacles and areas of concern?

17:19
Well, I know you you’ve got a background is as a chef, so I’m sure you know, a number of people in the service industry that it’s that’s affected as well. You know, somebody a lot of curiosity, how, or what actions rather, have you taken at haystack to adjust? Maybe your strategy or your investment approach, if any? Yeah,

17:40
I think in terms of approach, well, we’ve done as you know, we’ve created a, we’ve created like a zoom process with some speed bumps, to evaluate new investments. So I would say we’re evaluating fewer, but still evaluating them and like raising the bar even higher. And then we’re communicating that process very clearly with the founder so that they understand where we’re taking a little bit of extra time. And when we would get back to them with an answer. In terms of strategy, what we’re doing internally, like I have two colleagues on my investment team that work with me who are who are young and recently out of college, but super bright, in halfway and I say Seung v. And so we’ve been having weekly calls just about what do we think will happen. Ian’s been focusing on the consumer side, consumer behaviors and all she has been focused on more enterprise b2b. And we’re, we’ve been caught, like sending clips of articles and things that we’ve written weekly to each other. And we’re going to try to produce like an internal document and memo. And as well as a screening process, we’re gonna adapt our screening filter, you know, to like, adjust to a kind of COVID, or pandemic world. So it’s sort of in process right now. But that’s what we’re focusing on.

19:05
Can you give us some inkling of what those adjustments might look like? Or, you know, how you’re thinking about that? Just

19:14
don’t, I mean, the only thing we thought about is from the moment a founder founder doesn’t meet me first, but if it graduates to the level where I meet the founder, over zoom, then we would and we want to go deeper. We sort of warn the founder that we’re probably going to take extra time to do referencing because we can’t sit in front of the person. And that we probably want to do one zoom that’s like kind of more social in nature, just so that there’s some in like, social interaction, you know. So I think I think we’ll do a an investment in, in, in q2 at some point. I just don’t know when and what it will look like in terms of the strategy We’re taking an internal week next week. So like, I kind of decreed that we’re only working on internal projects next week to kind of reset. And so we’re not allowed to talk to external partners or external founders or anything like that. And then sort of regroup from there. It’s,

20:18
it’s a unique challenge, right? Because I don’t think I’ve made an investment yet, where I didn’t have a social engagement with the founder, that could be a casual coffee, that could be a cocktail, that could be dinner. But something that felt not like diligence, but just felt like, who are you as a person? And here’s who I am. And let’s just relax. And there’s so much I think that happens in an interaction like that to get the parties comfortable with each other or, or not. And we’ve lost that. Right. So how do you think the value of face to face interaction is going to impact sort of this VC founder, relationship and diligence? Um,

21:05
I think what’s Well, one is I think we’ll all be forced to adapt, I think the manner in which were introduced, will, will become more important, the, the level of structured communication that the founder can convey, over a slide deck will be more critical. The reporting that they do or how they manage metrics, I just think the bar will go higher, because people will still want to take risk, but they’ll, they’ll look for new cues on how to de risk it. How to de risk those things.

21:46
You know, while we’re talking about still talking about managing a fund, you know, what, what are your thoughts on sort of triaging portfolio at this point and prioritizing reserves?

22:00
Yeah, most of us seed investors don’t have them any reserves. And I think it, you know, there’s a risk there of like, wash out. I mean, I think I think if a seed investor has a core position, you know, going to talk to those people about how things stand is important, but a lot of seed investors won’t have ball control. You know, that’s the that’s the reality. What do you mean by that? I just mean that there could be a lot of recaps on rounds, and seeing the maesters could get washed out? Yeah. Yeah. So we’ll see. I mean, we’ll see how bad it gets. But that happens in every cycle.

22:41
I mean, is there a shift, though, as you think about, I don’t know what your reserves strategy is. But as you think about reserves that are allocated to extending companies versus reserves that are just, you know, for pro rata is doubling down tripling down on winners?

22:56
Yeah, though. I haven’t thought through this that much. I mean, it’s a good question. I think one, one argument that was made to me that I think is interesting, and I hadn’t thought about before is, if the follow on rounds to hold your ownership are going to be lower, then you might be able to take more shots on goal. Right? You don’t need as many reserves. But you know, I’ve been I’ve been reserving one to one. Obviously, I’m not going to allocate those reserves one to one, but as a as an insurance. So that’s kind of how we’ve been operating.

23:29
Got it. So this current fund 25 will go into new investments 25 will be reserved, correct? Yeah. Got it. What do you think about funds that are low and dry powder potentially reopening?

23:45
Oh, yeah, that’s actually another thing, too. I do think funds will will reopen. Because if you’re an LP, and you can get into the fund, and you can already look in the underlying, it’s not a blind pool anymore. You know? Yeah, the only issue is, is that the current LPS will have to Okay. And that’s probably easier for the less institutional, smaller funds to do and harder for more professional institutional funds to do, right.

24:12
Because a lot of those professional institutions will block it.

24:18
They’d either want to do it themselves if they thought it was good opportunity, or they wouldn’t want someone to freeride into their portfolio. So, I mean, I’m speaking theoretically, I don’t really have experience here, but that’s what the theory would tell me.

24:31
How long do you think is a comfortable period for completing a fundraise, right VC fund manager raising of funds? Because I think the average I think the stats I saw the average is often 18 months, which feels long to me, but yeah,

24:49
I don’t know. I mean, I know Joe Lonsdale is first one took him 18 months. And it was like one of the best performing funds ever. So I don’t really know I think the The best thing I’ve heard, the best thing I’ve heard on this is like, from Mike Maples more more about turning the question around on the on the investor and saying, How long do you want to spend doing it? You know? Because at a certain point, it doesn’t make sense to keep going. The other thing I would say is that, like, it’s so hard to time how long your fundraiser is, because like, ideally, you’re building up to a point where you enter the market, and you count that time. You know, like, you’re filling your data room,

25:29
you’re getting deployed raise. Yeah,

25:32
it’s like a never ending thing. So yeah, I don’t I don’t know. I think like, you know, there are a lot of funds out there now. So I think the question is, if you keep going around trying to do it, how are you going to support yourself during that process? Right?

25:49
Well, hopefully, you have a fund under management, and hopefully that helps. So talking about the company’s a little bit. What has been your guidance to companies so far that you’re working with, you know, with regards to like changing business model changing go to market? I know that it’s, it’s probably customized and specific for every company. But can you give us some thoughts on that?

26:11
What I basically says like, if you’re an early stage pre series, a company, and you have less than 12 months of runway, you either have to figure out how to get 12 months of runway, or consider likely selling the company unless you can live off monetization. And not every early stage company can. The guidance at seed has been sort of holding 12 to 24 months of runway. So that largely means like thinking through the rent, if there’s an office and thinking through salaries if the team has slightly over hired, so nothing earth shattering in terms of advice here, but the general thing is like 1218 24, you want to have more than 12? Ideally, 18. And in the best case, scenario 24.

27:04
And you think that that’s mostly due to the fact that VCs are slowing down? Or do you think the bar is also going to significantly increase when it comes to traction metrics?

27:16
I think it’s too early to tell, like my view is that in q2, people will still be digesting this and won’t sell the numbers, and then you’ll see a lot of the carnage on the balance sheet and public earnings, and like missed forecasts in q2. And so that in q3, the prices will continue to get low in the private markets. That’s that’s kind of how I’m thinking about it.

27:44
Got it. You know, I saw that you guys were put together or crowdsourcing a list of startups that have changed their business model to help fight COVID-19. Can you highlight some of the interesting ones on that list so far?

27:57
Oh, boy, let me call it up here. I don’t think I have it. Immediately set me see. I know one of our company. One of our companies, called meter in Boston is converting everything to doing. Converting, they’re like 3d printing now to creating ventilators off a open source project from MIT. Let’s see here. I mean, there’s obviously the larger companies like LVMH, doing hand sanitizer and Anheuser Busch doing sanitizer and then the, the auto companies getting the ventilators I’m looking for like, any interesting startups here. I guess. Flexport. Right. They did. They did some donation, seven shipping, shipping masks around, although I don’t think they like completely reoriented around a desktop metal, obviously. Carbon 3d. So there, I’m sure there are more. But we didn’t catch. You know, we didn’t catch all of them. Of course. What do you think

29:01
happens to these large, late stage well funded companies that have crazy exposure to the crisis? You know, because they’re serving, you know, their model or their their markets are just exploding. Give me an example like bird. Yeah. You know, any of the mobility companies?

29:23
Well, I think those were in trouble before this, honestly. And this pandemic has acted as an accelerant. In some cases, it’s accelerated zoom. From 10 to two and a million da use. Yep. And it’s actually it’s actually as an accelerant, that bird was in lime are already struggling and now they’re, like, really struggling, you know? Yeah. That’s kind of how I view it is like, it’s accentuating those things like zoom was growing now it’s really growing. You know? Um, but obviously people are not going out. They’re not going to do that for a while. And no one knows the effects of the social distancing here, you know? You can see in Uber and Lyft as well, you know, there’s just no one, no one ever thought this could come here, right?

30:19
Well, yeah, lift is a great example. Right? Aren’t they worth like, right now? They’re worth right around 5 billion, yet they’ve got 2 million ish in cash.

30:28
Yeah, I mean, I think that’s the issue. I was surprised by that, too. Just, you know, how much cash they’re spending per month? And they’re not super profitable businesses with margins? So yeah, I mean, I don’t know what, what the, what the future is gonna hold for some of these companies, and sort of scary to think about? Well,

30:49
any any other advice or thoughts for the audience, whether it be founders are investors trying to manage through this?

30:58
I think for for investor, like, sort of people managing smaller funds, or, sorry, smaller funds or working on larger funds. I don’t know if I have any great advice other than, you know, it’s, we’re putting in business to really understand the venture business model, but also to act as a sort of some sort of safety net or support net for the founders that we back. And luckily, at seed, we’re not the only ones. But in the cases where we’ve taken lead positions, or have a lot of money at work, in those cases, like, we’re going to have to parachute into some situations, maybe more so than we would have otherwise. And I think, for founders is coming to terms with the randomness of this, like, I think some people who have really good companies are just gonna get walloped, you know, through no fault of their own. Yeah. And it’s not really fair. But hopefully, you know, the people who get negatively impacted, I’m not even talking about the public health side of this, because I’m sure that will happen too, but just like get impacted in terms of their business, or have to, like shut things down, like, my hope is that the silver lining there is like the the wound is deep enough where someone wants to get back on the horse in a couple years and solve the new problems that have been created in the world. You know, yep. They will be that. That’s the opportunity, right? Yeah.

32:34
So lots of folks are saying this is like a one to two quarter sort of hit? What’s your over under on it?

32:42
I’d say like, at least a year of bad economic news, probably a ton of stimulus, and probably one or two years after that of like, slower recovery. So this will make 2008 for those who live that like feel like just a blip? Well,

33:04
hopefully they get the affiliation clause eliminated, and the PPP and eidl programs can actually help some of the venture backed startups that are creating the technology of the future. Yeah,

33:17
let’s hope so. I mean, I think you know, who’s gonna build the Uber of fever clinics? Who’s gonna who’s gonna build the Facebook of pandemic surveillance? And, you know, it’s, I haven’t even digested all of this yet. I think I’m trying to every day like, you’re probably I was talking with Howard Linden yesterday who were talking about public stocks. And he was saying that, you know, the beauty of his public stock persona, is that you can go in and out of a company with whatever mood strikes you versus obviously when you’re betting on founders and early stage companies, you’re you’re with him for a long time. And he just said, I woke up and Disney’s business model isn’t fit for this new world, and I sold my stock and I want to buy a peloton, you know, and I think in a way, that’s it’s kind of crass. But it’s also Howard’s being really like, he’s making a great point, which is, we all have to kind of rewire and re underwrite, you know, to the things that we believe in now, because the old The old way of thinking about things just doesn’t work. It’s

34:32
a new environment. Everything has changed. I mean, just just my wife was telling me today she works in in the mental health world. Oh, yeah. What does she do? She’s middle management, but it’s for an agency. So it’s an agency that serves, you know, a broad base of public, you know, people and it’s one of the largest agencies in Illinois, but they were having a chat about how to get their class. Science on telehealth, everyone moved over to telehealth from these in person clinical sessions. They have to have them sign a waiver, right. And the way that they traditionally did that when telehealth was a very small part of their business is they would mail this waiver to the client snail mail. The client would sign it and mail it back, right? Because this population does not have fax machines. And my wife’s comment to senior management was, you know, well, I’m sure you’ve considered Docusign. And there’s probably some reasons why it why it’s not the best fit. But should we take another look at that? And the response she got is what what is Docusign? I mean, it’s just, it’s amazing how, well, it’s amazing. On one hand, how, you know, some industries just have not embraced tech. But on the other hand, you know, think God, there are tech solutions that exist that can help mitigate some of the challenges

35:59
early. Yeah, and I think going back to this accelerant comment, right, like, things, you know, people are resistant to change. Your great uncle doesn’t want to zoom, because he thinks it’s dumb, or my great uncle doesn’t want to do DocuSign because he likes to send them in a FedEx, you know, envelope. Yeah. Well, now you don’t have a choice. And so this thing has stripped away and pushed aside the sort of human tensity tendency to resist certain things, and given license to the people who can accelerate that change. And, you know, people’s priorities have shifted is like, Okay, well, if you don’t use DocuSign, you find less contracts, and you get paid less. So you choose. Right or right. And so we all know, some we all know, somebody like that who,

36:56
you know, needs to be forced into change. Yeah,

36:59
needs to be forced to change. And so that is a silver lining of this. I mean, again, the cost of the silver lining is pretty brutal. Yeah. I think I would rather not have it be that way. But it’s where we are. I mean, by the way, in Chicago, like, is, is it like a hotspot area right now? I’ve been trying to limit my intake of news, because it just depressing. But I just be curious, like, how are things out there for you?

37:31
I think, from what I’ve heard on the numbers, I think that it’s fairly controlled. So Governor, yeah, I mean, it’s, you know, it’s still growing, growing. But in terms of the curves, I think we’re Yeah, we’re in a good spot. The governor Pritzker, who has actually been on the program before he was one of the early governors to put in, you know, a quarantine. And

37:54
oh, that’s right. He did that pretty publicly. In early

37:58
Yes. Yes. Shelter at home and all that. And he extend, he just recently extended it throughout the month of April. So to a reasonable degree, it looks like we’re in control. That being said, you know, I, I do see more people out, then I would expect to see out but most of them are just walking. I mean, people need to at least walk in some sunshine. So it’s not like people are congregating in large groups. Thank god. Okay.

38:24
Well, take care of your wife as well. And yeah, ma’am. Cook a lot. There

38:33
we go. All right. He’s the meal shot. Thank you so much Jamil for making time to talk to you. Yeah, best of luck with everything take care of okay, you too. Bye bye. That will wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest confidently thanks for joining us