Lo Toney of Plexo Capital joins Nick to discuss Common Traits Shared by Top GPs, Why Underrepresented Fund Managers Will Produce Superior Returns, and SPACs vs. Direct Listings vs. IPOs. In this episode, we cover:
- Walk us through your background and path to VC?
- Why are Product Management skills similar to the skills required for VC?
- What’s the thesis at Plexo Capital?
- Do you think a thesis on investing in underrepresented founders will produce superior returns?
- What do you say to pundits that claim you’ve restricted your options and will have far fewer managers to choose from… which will adversely impact returns?
- On a percentage basis… will there be more outsided outcomes from diverse founders (or managers) vs. those that are not diverse?
- How are you innovating on the LP side?
- We talked about some of the challenges of raising funds… are there ways that you work with and help emerging managers raising a first-time fund?
- Not just about performance… especially early on. What are the common success traits you see in GPs?
- What’s your position on investing in the management company or even the GP itself?
- Where do you see the market for secondaries evolving?
- I’d like to talk about the exit market a bit…
- What are your thoughts on companies listing direct?
- How about the explosion of SPACs — net positive or negative for venture?
- Any unintended consequences that founders (or investors) need to watch out for?
- Zoom is now worth more than Uber, Airbnb, and Stripe combined… Are the three companies undervalued or is Zoom overvalued… or is the pricing about right?
- Amazing to see companies like Paypal and Square have surpassed Goldman in market cap
- “3 Data Points”…
- You’re approached by a first-time fund manager. The fund manager did not work for a large, brand-name venture firm before and she has never had an institutional investor. She has been actively investing for 3+ years. She plans to raise $20M to invest in 30 seed-stage companies w/ no reserves. The catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
- What 3 questions do you ask?
- Plexo Capital invests in emerging seed-stage VCs led by diverse teams and also invests directly into companies sourced from the portfolio of VCs where Plexo has an investment.
- The path Lo thought made the most sense to VC was to learn the functional skill of product management, have the ability to run a large P+L at a tech company, and become a CEO of a tech company. He believed that one would learn empathy with the founders on the other side of the table.
- All of those things that a product manager thinks about are the same things that a VC thinks about, particularly a VC at the early stage before there’s an abundance of data to be able to do more data analysis comparables to other companies.
- The product management functional skill set has allowed Lo to understand how to be successful as a VC and to be able to provide a different perspective to the entrepreneur.
- At Plexo Capital, they focus on underrepresented GPs, and they are disciples of the power law distribution of returns. And one of the things they’ve done is that they have married these insights and network access from this GPS that they focus on with the power law distribution of returns.
- The fact remains that when you have a diverse set of investors around the table, the data tells us their portfolios are going to be diverse.
- Plexo Capital was designed to be the best value add LP to their GPs. The same way Andreessen Horowitz was known early for innovating around being an extremely founder-friendly firm Plexo Capital is extremely GP friendly.
- Lo looks for GPs that are behaving like entrepreneurs. He likes operators who turn to GPs because that’s just how they behave. They know how to operate in terms of building a company. And when they are at the early stages in building a venture capital firm, it is very similar to building out a company.
- “I think there’s two things I’ve learned are like talking about religion and politics, portfolio construction, and management investments.”
- Lo is bullish on secondaries. Both secondaries on the direct side, and secondaries for interest in GPs.
- Lo thinks that one of the trends he is starting to see is more GPs that have a strategy that focuses exclusively on secondaries.
- He thinks that we’re going to see secondaries be an essential component of liquidity increasingly. And he believes that GPs need to and will become much more sophisticated than they are today in the world of secondaries.
- On a CNBC segment, Lo mentioned that he believes that companies are hacking the IPO process because they are listing direct. There hasn’t been a lot of innovation on the ability to take a company public. And he is now finally starting to see innovation to realize liquidity for investors.
- A SPAC is another way to hack the IPO process. Lo thinks we’re going to continue to see this level of innovation, and who knows whether these will ultimately be the vehicles, processes, and methods that persist long term with success.
- Lo’s response to Nick’s Three data points question: What’s her track record? What’s her portfolio construction model? What’s her thesis?
Transcribed with AI
welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is the full ratchet.
Nick Moran 0:18
Low Tony joins us today from Los Angeles. Lowe is founding managing partner at pleco capital plateau capital invests in emerging seed stage VCs led by diverse teams, and also invest directly into company source from the portfolio of VCs were plexo has an investment. Prior to plexo. Lowe has had extensive experience in tech, including roles as studio GM and Zynga, CEO at Learn street partner at Comcast Catalyst Fund, and also a partner at GV, formerly known as Google Ventures. Lo. Welcome to the show.
Lo Toney 0:49
Nick, thanks so much for having me. This is one of my favorite podcasts. So it’s an honor to be on your show.
Nick Moran 0:55
Appreciate it. It’s such a pleasure to have you. Yeah, take us through your background, your brief background and path to venture.
Lo Toney 1:03
Sure, I grew up in the bay area in Oakland, California, and went off to the east coast to Virginia to go to Hampton University for college, spent some time in Chicago before returning to the bay to go back to grad school at Cal Berkeley, and had the benefit of being around a lot of entrepreneurs and VCs that made their way through cow to to lecture about entrepreneurship and venture capital got really excited about venture capital after entering cow thinking that I would go into investment banking, helping take companies public, I got more excited about the earlier part of the process. And being able to help companies achieve their dreams of having liquidity I got into a few classes where I was able to meet one on one with some entrepreneurs and VCs and like the eager beaver that I once was, I guess I still kind of am because I’m a lifelong learner. But I asked how to get into venture capital. And the the path that I thought made the most sense was learned the functional skill of product management because that playbook is very similar to early stage venture capital, have the ability to run a large p&l, and preferably a tech company to understand how to scale and what are the necessary components that should be in place to scale and understand what different elements need to be added over time or may be taken away. And then finally, be a CEO of a tech company, because one will learn empathy with the founders on the other side of the table. So I was able to do all those things in my career, maybe looking at my background, one might not be able to connect the dots. But it made sense to me, because all of those things together helped me get into a role initially at Comcast ventures, and then ultimately was recruited over to Google Ventures now rebranded as GV, with alphabet restructuring the holding company for Google, right. And when I was there, we wanted to have access to more deal flow at GV, and came up with this interesting thesis around black GPS and the unique path they have into venture capital GPS named General Partner and it’s interchangeable with VC or venture capital. We made five limited partner investments are LP investments into seed stage funds led by a black GP. And I thought that there might be an interesting way to scale that up as an independent platform. And that was the genesis of flexo capital, I expanded it to not only include investing in the black GPS, but also female GPS and other GPS of color, and then came up with the idea that we could do something similar to what we were doing at GV, which is to source deals for plexo capital to invest directly into from the portfolio’s of those GPS where we’ve made an LP investment. So I incubated that for about a, you know, a year and a half, and I guess I came up I came up with the idea around February of 2016. I decided to do it full time around Thanksgiving of 2016 and basically transition from being a partner at GV to in essence being an entrepreneur in residence or an EIR, but instead of focusing on a company, I focused on building out flexo capital, and then spun it out in the spring of 2018 brought alphabet on as our anchor investor, and then subsequently raised from Intel Capital Cisco investments, the Royal Bank of Canada que por capital, Hampton University an HBCU We’re I mentioned I went to school, so very proud of that one. And then finally, the the Ford Foundation. So a really interesting mix of both corporates, mainly through their venture units, as well as some traditional institutional LPs. And it’s worked for us, you know, we are a fun one is a 42 and a half million dollar vehicle. And you know, we’re calling it a 6040 or so split between LP investing and direct investing 20 LP investments, or commitments, I should say, in fund one. And we have an active portfolio of about 17 companies as well.
Nick Moran 5:39
Very good, quite a journey they’re low. You know, we’ve asked, as a firm here, a new stack, we’ve had a lot of help from merging GPS and established GPS, a few of which are black GPS, including audit, Zhao, and Richard Kirby and Charles Hudson, probably some names that you know, well,
Lo Toney 5:59
names I know, well, because all three of those are they at base 10, Richard at equal and Charles at precursor are all plexo capital GPS. So we’ve committed to to their funds, when
Nick Moran 6:13
you’ve got some good ones there a quick shout out to those guys, thank you so much for, you know, spending spending the time on the multiple calls, and, and even in some cases in San Francisco, New York to to help us out. So, you know, you mentioned in the intro that you feel like product management skills are similar to the skills that VCs need. You know, why do you think that that’s the case?
Lo Toney 6:36
Now, first, let me just say that whenever someone provides feedback, one should always think about the context that that feedback is coming from. So based on my interactions, early in my career with VCs, they happen to be early stage VCs, they were pretty much entrepreneurs, founders of companies in their prior life before venture capital. So as a result, you know, as most of our of your listeners will know, pretty much when you’re starting a company, as a founder, you know, your until one scales and hires a team, the founder or CEO is pretty much the product manager. And so they provided that feedback around product management being a good functional skill, just thinking about the fact that as a product manager, one needs to understand the market size opportunity, you know, what is the true problem that exists? Why did is does it exist? What is the, you know, the path that a customer needs to go down in order to meet a specific desired outcome? And what are the challenges or roadblocks encountered, going down that path? And then thinking about how to create a solution to address those roadblocks in a more efficient way to be able to get to the desired outcome? And then understand who is that customer? What’s the persona of the customer? What’s the descriptor that would best describe in detail that customer? Where do they shop? What are they influenced by? What’s the right way to market? What’s the right way to sell to that customer? What are the economics of the product in order to achieve profitability? Is the market large enough to achieve venture scale? You know, all of those things that a product manager thinks about are the same things that a VC thinks about, particularly a VC at the early stage before there’s an abundance of data to be able to do more data analysis comparables to other companies? You know, I think, at the early stage, I’m bullish on operators transitioning into venture capital, former product managers transitioning into venture capital. And then I think at the later stage, you know, I’ve seen a lot of successful profiles of people that might come from investment banking or management, consulting, or even coming down from private equity, or, you know, even kind of functional skill sets in corporate development inside of a corporation. You know, I have a colleague at GV former colleague, I guess, although I’m still an advisor to GV. So I think of him as a colleague, Tyson Clark, who came from Oracle and had a successful career in corporate development. I think what’s really unique about Tyson is that he brings an understanding from Oracle needing to understand how the potential acquisitions fit into the business units. So he needed to have some pretty good product sense. And so as a result, I think he provides a unique ability to be able to provide entrepreneurs at the board level strategy around thinking about structuring potential deals, whether that’s an acquisition or IPO, being able to think about structuring financings the strategic decisions that a CEO will come into place. So I think there’s there’s a myriad of backgrounds that will All work to get one into venture capital. Again, the context for me is coming from a product management functional skill set that I think has allowed me to understand how to be successful as a VC and then even be able to provide a different perspective to the entrepreneur that they can respect based on my knowledge about how to think about product. Right,
Nick Moran 10:23
right. Low anything else you’d like to say about the thesis at Flexa? that we didn’t cover in the intro? No, I
Lo Toney 10:32
think Nick was interesting is that the obvious headline is the focus on black GPS, female GPS, people of color that are leading venture capital funds, their unique path and the venture the networks they have that allow them to see differentiated deal flow and the different lens to evaluate not only the actual opportunity itself, in a way that one can do with certain familiarity with markets when there’s not a lot of data, and then also a different lens to evaluate the entrepreneurs. That’s the headline that people think about. But I think what’s really interesting is that at flexo, capital, we are disciples of the power law distribution of returns. And one of the things that we’ve done is we’ve married these insights and network access from these GPS that we focus on with the power law distribution of returns. And so as, as your listeners probably know, you know, when you look historically, you know, over the past 20 years or so, or even longer, you know, the distribution of returns is a power loss shape, meaning that the, you know, the median return for early stage precedes the small series, as you know, sub call it sub $20 million rounds, the median return is 5.6%. Now, by the way, one would never incur this level of risk as an institutional investor, it would violate fiduciary responsibility to incur this risk for a 5.6% return, it’d be easier to go to the market, do an index against the s&p and get 5.8 of the Russell and maybe get, you know, high sixes, right, what people are investing for what your team is investing for, are the outliers. And the mean, return on an annualized basis is 22%. So what that means is, you know, the mean is so far away from the median, it pulls the distribution, giving it that power law shape, think Facebook, think Google, think all of these outlier companies that have these enormous returns. And so that’s what we’re investing for. And when I think about the GPS that we go after, what we’re trying to do is we’re coupling this power law distribution thesis. With the GPS having this unique access, we focus on GPS that primarily lead rounds for the majority of their deals. And as a result, if we identify those GPS that have excellent judgment, great sourcing, the ability to be able to win deals because of their unique superpower or value proposition. And if they’re investing as a lead, what we ended up with is, you know, these highly convicted investments that minimize the underlying overlap of the portfolio companies allowing us to cast as wide a net as possible through our GPS to capture those outliers. So in essence, what we’re doing is we’re able to offer our limited partners, a way to access early stage venture capital in this basket of sorts that we have through our general partners. And I think what’s what’s most interesting is the combination of our ability to leverage our GPS with the fact that we’re doing some direct investing as well. We have this really unique risk reward profile for our portfolio construction, which allows us to have a pretty high floor, but as well as have the upside from the Durex as well. So I’m most proud of the fact that, you know, we have top quartile performance, even though we incur this additional layer of fees that other VCs don’t have. So when I say performance, I mean, comparing ourselves to other venture funds. So at the same time, while we have to incur another level layer of fees on top of our GPS for Plex, oh, capital, yeah, we’re still able to get the performance to make us competitive with pureplay venture funds low talk to us
Nick Moran 14:38
more about investing in this underrepresented founder group, you know, and that group producing superior returns right there’s there’s a group of pundits out there that are are gonna claim that you’ve restricted your your options in your you know, number of total GPS available to invest in and because of that reduction, it may adversely affect returns, you know, how do you respond under that,
Lo Toney 15:01
we’re super excited about the fact that we’re focused on the GPS that we believe are going to build the next generation of franchises. And what the data tells us is that when there’s a diverse set of investors around the table, and there’s many different ways to look at diversity for us, we focus on ethnicity, and gender. So Black GPS, or the GPS of color, female GPS, you could also look, I think, at regions that are underserved, I think you could look at groups like, you know, veterans, LGBTQ, but the fact remains that when you have a diverse set of investors around the table, the data tells us their portfolios are going to be diverse. And so what we found is that there are so many dynamics that the both the GPS as well as the founders of these companies face, and, you know, we have not been able to pinpoint directly, but I think we can all agree that, number one, it’s hard as hell for any entrepreneur of any color, or any gender to go out and raise money and be successful. And I think, you know, what we’ve seen is that, if you are a female, or if you’re a person of color, it’s even that much more difficult. So there’s kind of this resiliency that comes into play with understanding that those odds are kind of stacked against you. Number one, just to start a company in general, you got 99 problems, right. And then you got like 100, or 101, if you’re a female, and you’re a person of color, and we just see this great resiliency and the ability to be able to, to, you know, overcome those odds, often, and it doesn’t happen in every instance, just you know, like, every company that’s founded by a, you know, a white male doesn’t succeed, not every company founded by a black female is going to succeed. But we just see that that’s something extra, that the entrepreneurs that we like to invest to, and to bring to the table, that allows them to be able to to persevere, to have the resiliency to to want to do it, number one, and then to even be able to overcome those odds. So there’s been many studies, you know, we don’t have to go into them. But you know, everyone from McKinsey to women in VC, even first round has done some studies that just show that, you know, certain people that come from these groups tend when they when they succeed, they tend to succeed really well.
Nick Moran 17:21
I like that a lot. I think, you know, if you’re looking at an apples to apples comparison of two founders, or even two venture capitalists, and you no one had, it’s not an even playing field, right. And so if one had sort of a much more difficult time to get to the place that they got to, I think that says a lot about character and resilience, as you pointed out, lo, do you think that on a percentage basis, there will be more outsized outcomes from diverse founders, diverse founders or managers versus those that are not diverse?
Lo Toney 17:56
We certainly hope so. And you know, I think we’re in early days. So when I look at some of our GPS, and we’ve talked about three of them, you know, base 10, equal and precursor, those numbers look really good. You know, there we are on a plexal. Capital, we are only as good as our GPS. The reason that our numbers look good, is because our GPs are doing some extraordinary things. I think there are similar dynamics that we discussed around founders that also apply to GPS as well. There’s hard it’s hard. I mean, I thought I raised money as an entrepreneur, I thought that was hard. I said, I raise money as an entrepreneur, raising money as a venture fund, it can’t be that much more difficult. As you know, it’s there’s almost no comparison not to downplay the hard work of our entrepreneurs. But it’s, you know, when you think about raising money as an entrepreneur, the VC looks at that as the risk in isolation, right? I understand what I’m getting into, I’m making a number of bets and the investment into an entrepreneur, that’s one investment, it’s isolated. A GP, as you know, you’re basically going to investors and saying, pretty much, why don’t you invest into this bank account where we have a blank checkbook. So different diligence process to raise money, because these investors typically have either a fiduciary responsibility to some plan sponsor or a fiduciary responsibility to themselves to not just give money away? Right. So you know, it’s very difficult. I think a lot of those same dynamics apply. You know, I’m super proud of what Adi has been able to accomplish with base 10 With what Richard has been able to accomplish with the audit and TJ, you know, Richard and Rick and Charles at precursor, I mean, they have they have done some amazing things to be able to get over some some pretty stacked dogs.
Nick Moran 19:49
So I mean, not to, to, to, you know, beat this drum more but some of the best people I’ve interacted with in the business unbelievably helpful, and just smart savvy managers as well. But yeah, you know, transitioning a bit here, you know, low, how are you guys innovating at plexo? On the LP side?
Lo Toney 20:17
This is something I really enjoyed talking about, Nick, because, look, I was on the GP side of the table before that I was an operator. And, as an operator, it’s really interesting, because we’re trying to create the future. And one of the biggest ironies to me was that when I looked at venture capital, I didn’t really see a lot of innovation. And fortunately, I was at GV, which I think is one of the more innovative funds just in terms of the composition of the team, the way the data is used to be able to help support the decisions made by the extraordinary GPS. And the thing that I really wanted to do was to really dig in and understand why is it the case that we can have some of the most innovative companies in the world creating the future, but yet the folks that are financing these companies really haven’t innovated on the model too much. Now, that said, I believe that what we are seeing today and have seen over the past several years, we are now starting to see some amazing innovation, super excited about that tip of the hat and kudos to all of the GPS trying to disrupt the model, right. And there’s a lot of folks doing that, whether it’s, you know, looking at platforms like Angel List, looking at what’s happening at YC, 500, Tech Stars, the incubators, whether it’s the the operator GPS that are raising either rolling funds, or they’re putting together SPVs, or that are kind of breaking the mold by beating out the more traditional firms to lead these deals, or whether it’s the clear banks of the world being able to provide an alternative capital source for entrepreneurs to fund the growth of their business for the specific aspect that really doesn’t need the expense of taking on more venture capital. Great innovation there. So when I stepped back, and was that GV and just kind of looking at the model, I also said, Well, hey, let me understand this world of limited partners. Now remember, I was my introduction to venture capital was at Comcast ventures, corporate VC, GV, which kind of isn’t really is more like a financially focused, standalone independent entity. However, only one LP, it’s the balance sheet of alphabet, right. So I never had to go through the fundraising process. So I didn’t even know where all the sources of capital were. So once I started to look at the world of the plan sponsors like the public pension funds, the Taft Hartley funds, the foundations, the endowments, the family offices, what I actually saw was that, wow, I thought there was not much innovation happening at the VC level. If that’s the case, there’s almost no innovation happening at the LP level. Yep. And so what we wanted to do is not only did we want to build a firm that we think of more as an institutional investor, allocating capital across the full stack of financing opportunities globally. But we also wanted to really rethink what it means to be a limited partner in these venture funds. Apply the same principles of product management, when we look at opportunities to build companies to the opportunity within the limited partner space. So thinking of the general partner as the customer. And in that context, what are the needs of the general partner? And so we tried to design flexo capital, and we’re on our roadmap to create a franchise where we will be the best value add LP to our GPS. So what does that mean? We like to really focus on helping our GPS number one, since we focus on emerging managers fund one fun twos, we want to help those GPS transition from being a great investor, to a great fund manager. And it’s different to be a great fund manager, as I’m sure you know. Yeah. I mean, there’s things like back office support this necessary to provide the reporting to LPs to be able to issue the capital calls, making sure that there’s the right accounting and tax group in place to provide that service the right legal team to help with fund formation, how do you negotiate an LPA? What are the different levers that are given takes to be able to achieve a win win situation between the GP and the LPs, how to think about the investor relations function to be able to have the right tone of communications on a quarterly basis or through the annual meeting, how to even develop a go to market strategy to understand what’s the best composition of LPs to be able to achieve a Long Term franchise how to think about mapping a portfolio construction strategy that manages risk and reward that really fits within the thesis and the network of the GP, like all of those things are really important to build a long living franchise as a fund manager. And what I’ve learned anecdotally, from LPs, as I’ve been entering this world is that often it’s the case that an LP may not an LP may not necessarily focus in on performance as a reason to not commit to a fund, or churn out a manager, it may actually be the case that performance might be fine. But it’s more around the inability of that fund manager to achieve institutional investor grade, in their structure, in their ability to be able to create their firm. And so that’s something that we feel is really important. And then the other thing that I would say, just at a really high level, is we just we think differently. I think the same way Andreessen Horowitz was known early for innovating around being an extremely founder friendly firm at flexo. Capital, we are extremely GP friendly. So we don’t try to really turn the screws on negotiating the LPA. You know, we understand that it’s difficult, and there’s not a lot of management fee available to be able to finance their business and operations, we focus on being as friendly to GPS as possible, really helping them through the process, we have a very specific set of criteria that we look for. Often, it doesn’t mean that if we do not commit to a GP at flexural capital that they will not go on to be successful, we’ve seen a lot of GP that just don’t fit our model that will go on to be quite successful. So we’d like to help those GPS with introductions to LPs, right? As we do with our with our GPS that we commit to, we have investors in flexo capital that are downstream investors. So in addition to identifying opportunities from our GPS portfolios, for Plex or capital to invest into, we are always looking for opportunities to be able to find the right fit for one of our GPS companies downstream financing, to a GV to an Intel Capital, we like to provide Intel Capital Cisco investments in GV with access to our GPS to build relationships, we’re not a gatekeeper. We’re a facilitator. And we believe that the insights that our GPs are seeing at the front lines of investing at the precede seed and early stages can be really helpful to our partners. So what we’re really trying to do is build a complete ecosystem and network, that’s a win win. And I think just like, you know, why C has built this community, you know, we want to build a YC for GPS, so that we can provide them with some of the the, you know, the training to be able to understand how to build a firm, and make that transition from investor to fund manager, great investor to great fund manager, but also to have a community of flexible capital GPS, so that they can do things amongst themselves and share knowledge as well together. So that’s really the big vision, we want to be the most value add LP possible.
Nick Moran 28:26
It’s refreshing to hear an LP talk, talk about innovation, you know, on that side of the business, because you don’t hear about it very often. And, you know, earlier a point you made was that when you’re evaluating GPS, and working with GPS, it’s not just about the performance, especially early on, in a fun life. You know, I’m, I’m curious, what sort of common success traits or behaviors you’re seeing in GPS, I mean, I know you’ve only been at this a few years between, you know, running flexo, autonomously, and then also spinning things up within GV. But, you know, have you observed some behaviors that stand out with the GPS that just give you a lot of confidence as an LP?
Lo Toney 29:13
We have, and I would say, again, I’m gonna say, understand the context of where this comes from. I feel like as the managing partner, the founder of flexo capital, I really believe I exercise more entrepreneurial muscle than Vc muscle specifically, when I think about my time at GV, a great organization, but you know, the resources that were available at GV were just absolutely incredible. You know, David Crane, the CEO of GV, my former manager, he has done an amazing job of leading GV into that upper echelon of the top tier VCs. Now, for a lot of us that have had the training at the GVS of the world and decide to hang our own shingle. I mean, we’re hustling, I mean, we’re basically behaving much more like an entrepreneur than like a VC, especially from a shop that has a lot of resources. So the thing that we really look for is we really look for those GPS that are behaving like entrepreneurs. And I think that’s another aspect of why we like these operators turn GPUs is just because that’s just how they behave. They typically are they know how to operate in terms of building a company. And when you’re at the early stages, you know, building your your venture capital firm, is very similar to building out a company, I
Nick Moran 30:44
couldn’t agree with you more, right? You need you need to know what your objectives are, you need to your point earlier with product management, you need to know the desired outcomes, you should be measured measuring the OKRs and measuring your progress and, and building every day.
Lo Toney 30:58
Absolutely. Absolutely. Well, what
Nick Moran 31:02
is your position on investing in the management company? Or even the GP itself?
Lo Toney 31:10
Yeah, I was. I’ve learned that, you know, it’s interesting. Just Just a quick aside, you know, I worked I spent a little bit of time with Vinod Khosla, I ran a company called Learn Street. And, you know, I remember Vinod had this really unique perspective of, you know, sometimes it makes sense to go with an industry insider. Sometimes it makes sense to go with an industry outsider. And sometimes the reason that one would want to go to an industry outsider, is because they don’t know why certain things exist, right? Often what you’ve learned is, a lot of times people do things and you ask them, Hey, why, why did we do this thing that way, and then we’ve always done it that way, without actually taking the time to take a step back. And understand and think about critically about, well, actually, why do we do this this way, and has anything changed within the environment that would make us want to do something different, or have the dynamics around our particular focus, maybe we should look at this differently than companies x and y. So with that context, I will say, you know, I’m an I’m an outsider, right to the to the world of limited partner investing, it’s not I came from the GP side on the operating side. And so when I think about the GPS that we’re going after, you know, a lot of them don’t necessarily have the financial resources, to be able to number one, we always say, prepare for going without a salary for, you know, 1824 months, whatever the amount of time is to raise a fund. Typically, these GPS, who have the ability to with the credibility to even go and attempt to raise a fund, they probably got that by working at a shop where they were making, I don’t know, call it, you know, a half million dollars a year, or maybe a little bit less, or maybe a little bit more. So if they have to go without that salary for 1824 months, they still have to maintain a lifestyle, they’re paying out of pocket for things like legal services, maybe they’re gonna hire someone. So that’s all out of pocket, in addition to the travel, right, once the fund has at least a first close, there’s the ability to have a little bit of the recoup of fund formation expenses, but that’s usually capped at you know, 200 to 5300, maybe a little bit more, definitely doesn’t cover can’t recoup salary, you’ll recoup some of the fund formation expenses, that’ll mainly be legal, maybe a little bit of travel, but you’re probably not going to recoup everything right. And then even once the fund closes, the management fee available is not likely going to allow the GP to have the same salary that they left to start their fund. Right, it’s probably going to be less, at least for a little bit of time, right? Least until they can stack a couple of funds. And oh, by the way, they have to turn around and commit one to 2% of their own capital to the firm. Right. That’s an expensive proposition. Yeah, we, you know, it might be a million dollars, right? When you add everything in foregone salary, money out of pocket and decrease in salary, with the new salary after the fun closes. Well, it reminds
Nick Moran 34:19
me of your founder analogy, right. It’s like the founder that can make a few 100 grand easy at a big tech company that goes and starts their own thing. And they’re, you know, they’re making peanuts early. Exactly.
Lo Toney 34:30
And again, I think people from the outside think every VC is rich. And we know that’s not the case. This is a long term game. It’s a get rich, slow. No one’s getting rich off management fee unless you’ve got you know, billion dollar funds that are stature or maybe you could have a nice salary from that that’s not the case in our world. And so our perspective is, we have spent over a year now looking at the world of private equity and kind of understanding this more commonly accepted practice in the world of private equity, where firms will invest into the management company of a fund, and then take a percentage ownership participate at that same percentage, typically with the deal structured and private equity, participate in the cash flows that come through from management fees, it’s usually the same percentage. So if you sell 10% of your management company, the investor will receive 10% of the management fees. And then kind of the rule of thumb the going rate and private equity is half of the carry. So 10% of the management fees, in this case, 5% of the carry, and that stacked on top of funds, those deals are done in perpetuity, which is another topic. Usually, there’s a provision for managers, the general partners to buy out the investor. But if you think about the numbers, these are, you know, typically billion multi billion dollar funds, right, the investment might be, you know, hundreds of millions or even billions of dollars. And so some of that translates to the world of venture capital, right? So if you think about why do private equity folks do it? Well, sometimes just because the the founding partners are moving on in their career, and they’re trying to transition out, they want to realize some liquidity, while still having some of their upside kept on a vesting schedule. So they can leave, they can walk out the door with a little bit of money in their pocket, that’s one reason. Another reason is a lot of the junior partners that are coming up, typically as part of a transition, they might be asset rich, right? They’ve got a lot of carry on paper, but they haven’t realized it. So their liquidity poor. And there’s multiple ways that one could finance this, but you know, this, this way of using an investment into the management company, it has these these tax advantages. If the GP doesn’t touch the money, they don’t incur ordinary income. And so therefore, they can apply a portion of that investment towards their GP commit, which is taxed at long term capital gain. Pretty nice. Yeah, right. And then, you know, another reason might be a GP wants to build out some infrastructure and team. I mean, this is what VISTA Robert Smith did really well, right, they took two investments from dial capital, which is a unit of Neuberger Berman. And that allowed this, to build out this, you know, these consulting services, and all of these services that are provided to their portfolio companies to make them world class, that was a pretty good investment, right. And obviously, you know, there’s also the ability to be able to, if it’s the right partner to tap into that partners infrastructure, so maybe that partner brings to the table, some back office that can be shared across multiple investments into other GPS management companies, that investor might also bring a network of limited partners that the GP can access in order to make it easier to raise funds in the future. Some of those dynamics apply to the world of venture capital, it’s not as commonly accepted, I think, we have heard a lot about situations that haven’t worked out very well. And I believe that a lot of those are because of it wasn’t, it wasn’t an optimal structure for the deal. I think there’s other dynamics at play here as well, I just don’t know if structuring a deal and venture capital into a management company in perpetuity is the right way to go is great for the investor, I just don’t know that that’s the best for the GDP in this instance, again, it’s the different dynamics, some of it has to do with the size of the firm as well. I also think that if we think about what we’re trying to solve for in the world of emerging managers in venture capital, we’re actually trying to solve for the fact that they don’t have a lot of management fee. So I don’t know if the common practice of taking the same pro rata amount of the amount of investment or the percentage of management company acquired in the private equity world, make sense in the venture world, you know, maybe that has to get flipped, maybe there’s less management fee taken. And then there’s more carry taken. So we’re exploring these different options, because we have now heard enough from GPS, and we’ve seen instances where the GPs are selling a part of their management company. The other piece that was mentioned in your question, my thoughts around, you know, the selling a piece of the GP, you know, I think, you know, that’s something that we see as well. The concern I have with selling part of the GP, again, in everything is structure, but I like the line of investing into the management company, because in theory, if it’s focused on what’s coming out of the Jeep that you know, the general partners piece of the economics you know, if you think Think about management fee. I mean, that’s like the least align piece of the economics between LPs and GPS anyway. And then if it’s if it’s coming out overall of the of the GPS carry, I mean, that’s kind of isolating that investment. My concern with taking an investment into the GP, is that all of a sudden, that kind of opens this Pandora’s box, where usually it’s associated with an LP committing to a fund. And so now all these other LPs are looking at that investment and saying, wait a minute, wait a minute, that’s preferred economics, I want that deal. And so then I just believe it opens this Pandora’s box where I like, the separation and the focus on the management company itself, because then that separates it from the from the, you know, the GPS that are associated with the general partner entity, which is associated with that current fund.
Nick Moran 40:52
Right, right. Yeah, I don’t know, if I put on the LP hat for a second, I have to feel like, the focus is on the upside returns and not the downside. And in light of that, if you know, I’m not an LP, or at least not at any scale, you know, like you are, but I would think that I would want a haircut on the carry on paying before I would want, you know, access to either the GP or the management company.
Lo Toney 41:23
Yeah, and I, you know, this is I tell you, man, this is like, this is like talking, I think there’s two things I’ve learned are like talking religion and politics, portfolio construction, and management investments.
Nick Moran 41:38
That’s good. That’s good. That’s a good soundbite. Low. Any thoughts on how secondaries are evolving in the market for secondary?
Lo Toney 41:47
We’re really bullish on secondaries. You know, Nick, I think, when we look at the amount of time that it takes for a company to go all the way from precede to a liquidity event, we’ve only seen that timeline increase. And we believe and looking at a lot of our GPS, we see a spectrum in terms of the level of sophistication in how to use secondaries as a lever to be able to realize some liquidity for the LPs, to be able to show a dpi, you know, distributions in advance of going up to a fundraise. So we think the secondary market is going to increasingly become an important component. I mean, as we know, it is a very opaque world to try and identify ways to to get access to the market. Obviously, there are folks like carta shares post, you know, I mean, I even put like an angel list into those buckets, you know, doing innovative interesting things. But I believe that secondaries are going to increasingly become important, because when we think about what stage our investor, our LPs, our LP investments into GPS or investing, you know, there’s this signaling piece, I think, that a lot of people often think about, but for a lot of our folks, when they come in at precede us feed, yeah, I don’t know if people really like Blink, because they know, okay, if this person is taking some off the table, that really isn’t the same signal risk, as if it were one of my large multi stage, late stage investors taking some off the table. You know, in addition, when you think about employees, you know, life events happen, right? You know, employees might want to need some liquidity to purchase a home, you could have an unfortunate case of a divorce, maybe a death. The kids, you know, tuition payment or something. I mean, there’s a lot of needs that employees have as well. So, you know, I believe that secondaries are really important. And I would say both secondaries on the direct side, and that could be purchased from a venture funds. So it could be preferred, it could be purchased through employees, that would be common. And then I would also say, you know, the, the world of secondaries for interest in GPS as well is pretty interesting, right?
Nick Moran 44:24
I’m seeing more of that. Yeah. Right.
Lo Toney 44:25
Because what what’s interesting is think about the J curve, right? So the J curve, the phenomenon where, you know, the early investments of venture fund are basically underwater, right? And then it looks like a j as they go across zero and break into positive territory. So you know, you always like to say the lemons ripen early. And so if it’s the case that for whatever reason, a GP needs to sell a piece of, you know, maybe it’s an LP that is, you know, defaulting or again You know, divorce or death, and needs to realize some liquidity, if there’s the opportunity to be able to number one, I mean, it’s always best to buy that at a discount, right? That’s the name of the game. But even if it’s not at a discount, even if there’s more clarity around, you know, the early losers, and then the emerging winners, that I think those are pretty attractive situations, and being able to to use technology to be able to make that process more efficient again, you know, I mean, it’s, it’s a very, it’s a world with a lot of, you know, asymmetric information is I would almost say, intentionally obfuscating the ability to even get that data. I mean, that’s part of the challenge. But I think one of the trends that I’m seeing is I’m starting to see more GPs that actually have a strategy that focuses exclusively on secondaries. Yep. We’re actually working and have been working closely with a GP that has a background from, you know, major investment bank thing, Goldman Sachs, Morgan Stanley, and then also one of the elite hedge funds. And that gap has created a secondary model to invest into secondaries. But to be able to have investment bank grade research, to be able to understand the company itself, the trajectory, how well it’s performing, what the prospects are, what the future financing events will look like. And really be able to determine with a high degree of sophistication and confidence and conviction, what the right pricing opportunity is, and then be able to have the ability to network their way into buying shares in those companies. And that could be through employees, or that could be through through venture funds that were early investors as well. So I think we’re going to and I’ve also seen some GPS that are focused on doing the same thing, kind of taking a page out of the, you know, like industry ventures, you know, Hans and Raul and Lindsay’s book and industry, kind of focusing on doing that same strategy, but for pieces of of well performing venture funds as well. So I think we’re going to increasingly see secondary being an important component of liquidity. And I believe that GPS need to end will become much more sophisticated than they are today in the world of secondaries.
Nick Moran 47:31
Yeah, it’s interesting. It’ll, it’ll be I’m curious to see how this plays out. And we’ve had a lot of inbound from actually some big, big name brands about, you know, secondaries, conversations, and I was having trouble figuring out, you know, is this kind of a new thing? Or is it just because we’ve been around long enough now? The portfolio’s mature? And so? Yeah, I’ll be I’ll be staying close to that, to see how it plays out. Lo, I wanted to touch on sort of exit environment, as well. You know, first off, just what are your thoughts on the companies that are listing direct?
Lo Toney 48:06
Yeah, the listing direct is is pretty. I mean, it’s, I was on a segment on CNBC, and I said, it’s almost like these companies are hacking the IPO process, because again, thinking about innovation, there hasn’t really been a lot of innovation on the ability to take a company public. And we’re now finally starting to see that same level of innovation that happens with these entrepreneurs taken to how they are going to realize liquidity for their investors. Obviously, direct listing is one approach, right? You know, you think all the way back to, you know, like, like Google, you know, Google’s around for like five years. And when went public did the direct listing more recently, you know, we’ve Palantir is going to use that process. I think it’s really interesting that the technology has advanced significantly over the past few years to where it’s much easier to execute a direct listing, given the, you know, the technology that is in place now in these exchanges. So I think it’s something to definitely watch for, you know, what are some of the dynamics that drive that? Well, you know, I don’t have anything against the the investment banks, I think they do a great job and add a lot of value. That said, there has been some frustration, I think, on the part of, you know, some of the folks that are on the other side of the table, whether that be you know, that the principal’s the founders of these companies that believe that when there’s a significant pop in the IPO on the first day of trading, you know, a run up in the share price over what the you know, the IPO price was that’s considered a positive thing, you know, but at the end of the day, one can look at that and say, well, there was actually a lot of money left on the table for the for the founders of the company and the early investors. So I can certainly understand why there is is the desire to look at that I think people also look at the fees that the banks are taking, and, and are trying to rationalize those fees. And you know, are those fees? Correct? Or do they really represent the amount of value brought, you need to have certain things in place, obviously, to be able to execute a successful direct listing? Right. And I think this is where bankers do bring value. It’s hard to do a direct listing if there’s not a big brand associated with the company, right? Because, you know, one of the things that the bankers do bring to the table is the identification of scaled institutional investors to be able to buy those shares. So, you know, if it’s a brand name company doing a direct listing, right, that makes sense, because people will have heard about it. But you know, I think that’s one of the things that that comes into play, you know, so I don’t know, man, you know, it’s, it’s interesting, the thing that’s also interesting, you know, when you when you do the IPO process, it’s actually a financing event for the company. Whereas, you know, with these with these, unless, if the company does a significant financing in advance of a direct listing, it’s not necessarily a financing event, although I think there are some changes on that front as well, that are coming into the market.
Nick Moran 51:13
Right, right. We could probably do a whole episode on this. And
Lo Toney 51:16
yeah, you really could, with, you know, with Spax, the special Yes, dispatch,
Nick Moran 51:21
what are your thoughts on the specs? You
Lo Toney 51:24
know, again, it’s, it’s another way of being able to, to kind of hack the IPO process. And, you know, I think one of the things that is interesting about the spec, kind of going back to the comment on direct listings are most likely going to be more successful if there’s a brand name associated with them. What’s interesting about the spec is, you know, the person raising the spec is the brand. Right? So so, you know, it’s, it’s the person that’s actually taking their reputation to the market. So if people know this individual behind the spec, they’re basically investing in that individual. Now, obviously, they have to come with a thesis, but you know, there’s a lot of wiggle room thesis around what types of companies that finance SPAC will look to acquire. So, you know, again, I think that we we’re overdue for innovation in being able to to realize liquidity for these companies. And given the dynamics of, you know, fewer companies going public, there being a longer timeline, you know, the opening and closing of the IPO window based on macro events that are outside of a company’s control, you know, I think we’re going to continue to see this level of innovation, I applaud it, who knows whether or not these will ultimately be the vehicles, processes and methods that persist long term with success. But I think that one would have to just look at the fact that all these dynamics in play are forcing innovation, we needed the innovation, there’s nothing wrong with innovation, and it should happen everywhere. I
Nick Moran 53:06
couldn’t agree with you more. You know, just recently, Zoom is valued more than Airbnb, Uber and Stripe combined. Which is a crazy statistic to read. But do you think that those three companies are undervalued, undervalued? Or do you think zum zum is overvalued? Or do you think that that’s not
Lo Toney 53:25
heard that stat that is an insane stat? Oh, yeah, you know what I’ll give, I’ll give a plug for one of the other plexo capital GP. So Maven ventures, which is a flexible capital GP, Jim and Sarah, they were one of the seed investors of Maven. And Jim always likes to remind me that, that he actually named the company which is interesting, just to kind of think about that that was a good name, actually, Sue. Yeah, he named the company. Yeah. What’s interesting, look, what we’ve seen, especially in the pandemic that we’re in, unfortunately, as a as a as a globe, is, we’ve seen this acceleration of infrastructure, in order to be able to facilitate remote work. We have many companies where people were pounding the drum saying, we’ll never be remote, we’ll never have that process in place, there will never be a policy, and therefore there was never any investment made. And now just based on these unfortunate events, over the past few months, this year, we have been forced to put that infrastructure in place. So we’ve probably accelerated where we would have been, I don’t know who knows how long it would have taken us to get to where we are today with in terms of you know, people having the right laptops with the right security with the right internet speed, and then what else do you need? Well, you need the ability to have a very simple way to set up video conferencing. So, you know, maybe who knows, if Zoom is overvalued, maybe those other companies are undervalued. And we’ve just seen an acceleration of zooms valuation to where it would have been in the future. And, you know, hopefully, we can, we can see the company being able to keep up with that valuation. We all know, that’s tough, you know, these expectations of investors, especially the analysts, it’s a tough place to be. But I think the more interesting thing to me is the fact that we have this new normal that we’re setting into. And I think of it in terms of two buckets, we have a bucket of types of services and companies that provided those services where we were already seeing acceleration, and all the pandemic has done is just accelerated those forward, then we have another bucket where it’s not really clear, you know, what? Well, I should say, it is clear that there are going to be a set of behaviors that will persist in our psychology, beyond the end of the pandemic, right. And there are going to be companies that are going to support those new behaviors. And I think those are going to be some of the more exciting opportunities to invest into over the next few years.
Nick Moran 56:20
Very good. So I’m gonna give you a hypothetical, this question is called three data points. This is not how you do your job clearly. But I’m going to ask you to make a decision low. So let’s say you’re approached by first time fund manager, the fund manager did not work for a large brand name venture firm before, and she has never had an institutional investor, she has been actively investing for over three years, she plans to raise 20 million to invest in 30, seed stage companies with no reserves. The catch is you can only ask her three questions for three very specific data points in order to make your decision, what three questions you ask,
Lo Toney 57:00
what’s her track record? Okay, what’s her portfolio construction model? Okay, and what’s her thesis?
Nick Moran 57:06
Okay. Those are good other specific things that you’re looking for. And each of those are?
Lo Toney 57:13
Absolutely, so we like to understand the judgment of a GP. And obviously, that also happens throughout the course of many conversations as to the why certain investments were made both good and bad. But then also just, you know, quantitatively, we just like to see, you know, what does the performance look like to give us a sense for the GP. And we try to map that to the dynamics of the deal deals that were done in the past to generate that track record, because what we want to see is okay, there’s great judgment here. But it was all at a big brand name fun, where it was part of syndicate rounds. Okay, that’s not as interesting as, say, the I would even say, you know, a prolific angel investor, that was going out and making early bets before a big name venture fund came in. So we have no problem whatsoever, going after a GP, in this case, female that, you know, maybe they have a track record that wasn’t a big firm, but they’ve actually done it themselves. I mean, I actually like those deals, especially if it’s an even smaller fund, right? That’s a proof of concept, you have to be able to show I can execute on this strategy. And I’m going to show dynamics of deals, that would be the same dynamics, if I had a $50 million fund, right? We love that. portfolio construction is an interesting one, you know, my good friend of over 20 years, Michael Kim has sat down and really focuses on a concentrated portfolio. And I understand why, for us, we have concentrated portfolios, and some of our GPS, we have GPS that have larger portfolios, in this case, she has a portfolio plan of 30 companies, I’d really want to understand if there’s not going to be you know, any reserves, which I could even understand because it’s going to be hard to buy up ownership to keep the place on the premise that downstream so I get that the ownership is going to be made up front. But what are the ownership targets, what’s going to be the discipline to be able to walk away from a valuation if it doesn’t meet those targets? And then in certain cases, I’m also comfortable, we’re also comfortable, you know, not being so hyper focused on ownership targets and valuation, but just getting into the best companies. And so then this kind of, you know, the model of okay, what are the types of companies because, you know, the smaller the fun, the less dependent one is on needing to have multiple billion plus outcomes to be able to deliver that 3x. Net Return that we like to underwrite to by the way, we actually underwrite the 3x and Apple, we really want to see four or 5x. And so the portfolio construction strategy for us needs to map to the strategy of the GP, the thesis, their ability to have access to the right deal. flow? And then what are going to be the dynamics of the deal? Are they going to lead deals? Are they going to participate as part of a syndicate? We obviously, as I mentioned earlier, we like folks that that lead, and then, you know, I just like to get to know folks over a long period of time, and get to know their moral compass, and to be able to understand, you know, what is the unique superpower that the GP brings to the table? So you know, those are, those are all things that we look for. And yeah, I guess you could sum it down to those to those three questions. Very good.
Nick Moran 1:00:31
Low, what do you know, you need to get better
Lo Toney 1:00:34
at and need to get better at? I think, like every one, I’m a lifelong learner. But I think the one thing that I try to be critical on myself about is the ability to be able to, to take a lot of the ideas that we have about applying technology, to the investment process, both to make the process itself more efficient, but also to make better decisions. You know, we’ve done a lot of things that have been innovative. And the thing that we’re trying to get better on, put myself on the spot to lead that is to not make them projects, but to make sure that we can make them products. And I would say that’s the thing that we have to get better on is kind of really having the ability to kind of focus on, okay, what really is necessary, and think like a product manager, you know, what are the things that we could be doing, but in to not do them as a one off, we could do an MVP, obviously, because you don’t want to invest into something that’s not going to work out. But we’ve done a few things here and there, where it’s been interesting, but it was on more of a project basis. And we need to transfer that thinking to be able to create products so that we can scale them, implement them, and just make them more accessible and just treat it like a product manager would, you
Nick Moran 1:02:00
know, in the interest of, of new experiments and new models? I’d be curious, you know, if you met a fund manager, who you thought was great, and you liked the portfolio construction, the strategy, the edge, etc. And they were doing a rolling fund would, would you and can you invest in a rolling fund?
Lo Toney 1:02:19
You know, it’s okay, so we’ve had, there’s been a lot of talk about about these roles. So we’ve given ourselves the ultimate flexibility. And again, I go back to I really like operators transitioning into the GP role. That’s where we’re seeing, at least for us, we’re seeing a lot of these these rolling funds. So the answer is yes, we can. And yes, we are interested, I think it’s a really innovative model. I mean, to me, it reminds me it’s not really dissimilar to you know, the GP that comes to the table with access to a deal puts together an SPV. You know, I don’t have to make a mental leap this too far from from that dynamic and structure. So I’m, I’m, again, I’m all for innovation. And that’s another innovation that I you know, we don’t know if it will persist over time to stay on the test. But at least it’s something that’s innovative. And it’s allowing another group of individuals that have access to great entrepreneurs to be able to enter this game.
Nick Moran 1:03:21
Very good. And then finally, what’s the best way for listeners to connect with you and follow along with plateau?
Lo Toney 1:03:28
Yeah, please reach out. We’re all over social, our website has a contact form as well. We’re on LinkedIn, we’re on Twitter, go directly to the website, flexo cap.com. And there’s ways for both GPS as well as entrepreneurs to be able to to enter our process. In fact, I would just like to make a comment, we are using a page out of the playbook of que por capital that is trying to level the playing field for access, one of the things that we have learned is that the inability to be able to access certain venture funds because people don’t necessarily have the background of going to the same schools as as these venture capitalists. So everyone that comes through the process of flexible capital, whether an entrepreneur or a general partner that wants to receive consideration for funding goes through the same process, we have an air table form that people must fill out and everyone fills out that form the same information. And then we have a group that is OB suffocated from any inbound that I received that points to the person to that form. So then our team reviews all of the submissions, and then that way, they can actually evaluate it without having the color of oh, well this came inbound from this VC and therefore we’re gonna give it this treatment or this one came straight from low so we’ll give it this treatment. So it’s something that we take great pride in to try and level the playing field.
Nick Moran 1:04:58
Well that that’s great. I I mean, thank you. Thank you so much for doing this today. I mean, you’ve always made yourself super accessible to me and others and always appreciate your words of wisdom and your advice for for early stage managers and everything you’re doing to innovate on the LP side of the asset class, which is, which is in dire need.
Lo Toney 1:05:17
Well, I appreciate that. And again, this is one of my favorite podcasts. It was like a personal victory for me, you know, feather in my cap to be able to say I was on your podcast,
Nick Moran 1:05:27
you’re the man. Well, thanks. Thanks again, low appreciate the time and the insight.
Lo Toney 1:05:31
Alrighty, take care, take care.
Speaker 3 1:05:38
All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot him an email. Let them know what particularly resonated with you. I can’t tell you how much I appreciate that. Some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same, a compliment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over prepare, choose carefully and invest confidently thanks so much for listening