Dan Kimerling of Deciens Capital joins Nick to discuss Defying the VC Orthodox, Re-inventing Financial Services, Picking Righteousness Over Returns, and Why VCs Should be More Like Rick Rubin and Less Like Don Wilson. In this episode we cover:
How to Diversify Risk
How to Support a Fee Structure That is Different
The Rise of Free and Open Source Software.
What Communities Are Most Underserved by FinTech.
The Role That FinTech Plays in Decarbonizing Finance.
The Art of Creating the Future.
The hosts of The Full Ratchet are
Nick Moran and Nate Pierotti of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI: 0:18 Dan Kimerling joins us today from Albuquerque, NM. He’s the founder and managing partner at Deciens Capital, an early stage venture fund investing in the next generation of financial services. Deciens has led rounds in notable companies including Chipper Cash, Treasury Prime, Funding U, Therma, and Three Farm Financial, amongst others. Prior to Deciens, Dan was co-founder and CEO of Standard Treasury, a company that built API solutions for the global financial services community and was acquired by Silicon Valley Bank. Dan, welcome to the show! 0:52 Thank you, Nick. It’s a privilege to be here. 0:54 Always a pleasure, Dan, always a pleasure. Tell us a bit about your backstory in your path to becoming an investor? 1:00 Well, I mean, the best place to start I think is at the beginning, which is, you know, I was born and raised in central New Jersey. And I did okay, in school, and kids, my age, who did well in school, you know, you became a doctor or a lawyer. So I went to college thinking I’d be a lawyer, I was good at science, but I wasn’t that good. I don’t really like blood. So I didn’t think I was going to be a doctor. So I thought I’d be a lawyer, and biotech, very fortuitous set of circumstances, I ended up going to the University of Chicago for college. And that was awesome. And if any of your listeners know about the University of Chicago, it’s where fun goes to die. Or alternatively, some people call it work hard play hard ways for people forget the play part. And that was where you didn’t know, I definitely have a masochistic relationship with work. It’s definitely a core part of my personality. And so it was an excellent fit for me. And then, so college and grad school, and then after grad school, I made my way out to the valley. And I was the first employee at TechCrunch. This was in 2006 2007. And that was just an incredible ride. I mean, there was like no better per kid from Jersey who went to squat Chicago, there is no better place to land, the TechCrunch in those early days. And then after we sold TechCrunch day a while, which was in 2010, I became obsessed with this question like, how will software? How will software really change the fundamental nature of the financial services industry? And that really became a guiding question for now 13 years, you know, almost a third of my life, that has really been a guiding question. And so that was, and that is express itself, in many different ways, many, many different ways. But it clearly express itself with center Treasury, and I’m happy to talk about that. But after some standard treasury and spending a couple of years at SV, it became clear to me that what I want to do is I want to coach founders, who are obsessed with the same kinds of questions that I am, that I’m much better as a coach than I am as a player on the field. And it’s really been my life’s calling to help guide others on this journey, and help them be the best version of themselves that they can be. And that’s really what we’ve been doing at Def scenes now. In one month, it’ll be seven years, seven years, we’ve been doing that. Three, three, fun, a lot of blood, sweat and tears. 3:50 I think your first vintage was 17. If memory serves, and RS was 18, so we were getting going around the same time. So what are some of those key questions you mentioned? You know, founders that are asking themselves some key questions. I would imagine they relate to financial services and fintech, you know, what are some of those things that you asked yourself, and led you to becoming a VC? 4:14 Nick, I think they’re pretty existential questions around what does it mean to live a good life? Like, why are we on this planet? What are we what were we put here to do? Where are we put here to live? As Henry David Thoreau would say where we put here to live lives of quiet desperation, or what we put on this planet took lives of like trying to truly live and embrace all the chaos that comes with any kind of creative, entrepreneurial journey, where we put on this planet to live life’s you know, a central theme in my life is that I always want to be fighting for the extra ordinary, and that means I’ll fuck things up all the time. I will fail over and over again. But we’re going to try to be extraordinary. And in doing so we may just have the chance of achieving greatness. And so when we talk to entrepreneurs, what we’re looking for are people that really have this ability that have unusual levels of resilience and fortitude. And that problems or challenges, which would seem insurmountable to even accomplish individuals seem like highly tractable problems to them. We, in seven years, what we’ve observed as the single biggest difference between entrepreneurs that accomplish something, and those that accomplish greatness, is the ability to be resilient in the face of adversity. 5:53 If you were to pick one word to describe the founders of your portfolio company, what word would that be? Tough? Very good. Well, I’m sure I’m sure if I asked Michael Arrington, how he would describe you. That was one of the words that comes to mind. Dan, tell us more about Deskins. What is Deskins? Where are you at? You know, how much have you raised? And what are you guys invest in? 6:14 Well, so that’s the core of dessins is a desire to run. Sorry. So you know, in the better part of 20 years in the tech industry, I’ve seen lots of different cycles of venture capital. And really what we’re trying to do, in my opinion, is get back to a relational artisanal approach to venture capital, rather than a industrial transactional approach to venture capital. And I think that’s at the heart of everything we do that it is about a relational artisanal approach to partnering with entrepreneurs and helping them achieve the best they can achieve. And so that’s really at the heart of everything we do. You know, in a given year, we will partner with three or four teams, always starting at the seed or precede stage. Oh, and we will always partner with them as their lead financier. And help them really try and build financial services businesses have of enduring of enduring character. And that’s really the goal. So, you know, if I were to summarize, we move slowly. We don’t do that many deals, we only do fintech. And we only do it as a weed financier. And a couple of weeks ago, you had one of the founders of True Ventures on. And that’s really one of the models that we look at, we’ll get how true partners with entrepreneurs as like, a kind of a just as like a touchstone for the kinds of values that a firm can build, and the kind of way that they can prosecute this craft over many years. 8:01 How many total logos Do you think you’ll have? Yeah, so 8:05 we have, we have 20, Logos across seven years. Our first funding, we did nine deals. And our second fund, we did 11 deals. And our third fund, I would imagine what 12 To 15 deals, 8:19 and I suspect that you have a complimentary aggressive reserve strategy as well, this isn’t just a get in and the hands off. 8:29 Now, we don’t believe that. Clearly, some venture firms believe that venture capital can be prosecuted like a trader prosecuted to buying or selling of securities or commodities, right? They get in, they put in the trade. And then they get out somehow, at some point, that is the antithesis of how we want to live. We want to be in the trenches with these entrepreneurs, these, we want to be their brothers and sisters and arms to founders. And that means rolling up our sleeves, getting our hands very dirty. And you know, how we’ve structured our team reflects that, and how we’ve structured our capital strategy really reflects that. And we work both we have very large as a percentage of our overall fund. We have quite significant reserves. And then we also use CO invest. We have this incredible community of Capital Partners. And part of how we work with our Capital Partners, is by bringing them in on a co invest basis quite frequently, in order to have them, you know, in order for us to be able to support companies throughout their lifecycle. 9:47 And what order would reserves Wiis is like 50% or more 9:52 so 50% of maybe a little more than 50% 55% but then using SPV is we can really flex up our reserve strategy on a as needed basis. Sure, hard part of what we’ve observed is small funds outperform big funds. I think there’s like quite a bit of empirical evidence of that. That goes, I mean, the, I think the data on that is very poor. But the flip side of that is that big funds have resources. And so part of how we designed our program with modestly sized early stage funds, and then using SPV is and CO investment on a deal by deal basis, kind of helps us operate with a small fund the nimbleness of a small fund, but the resources of a large fund. And that’s, I think, been a core part of our process. Now for a number of years. 10:55 Well, I’ve got you today, you know, I want to get into FinTech and go deep there. But before we do, we’ve talked a bit about sort of the establishment in the Orthodox VC. And you and I have chatted, you know, a few times in the past, about how you guys are kind of running counter to that in a number of ways. Tell me more about some of these misguided beliefs of the Orthodox VC firms. You mentioned, kind of the transactional and trading mentality, you know, in, in your estimation, what are the primary beliefs that that you believe to be misguided? 11:30 Well, I think that there are no quick managers of your scale or my scale, I think we face a lot of incentives that are hard to win, there’s an incentive to get a larger, there’s an incentive to fight more for fees than carry, there’s an incentive to be more about providing mediocre consistent returns than unusual exceptional returns. I think those are some that’s like one set of incentives. I think there’s also a set of narratives, which have become very commonplace in our industry. For example, in our industry, there’s a belief that the primary way that value is great it is through sourcing deals all day, you want to be talking to entrepreneurs, just seeing as many reps as possible, and trying to find hot deals, quote, unquote, hot, hot deals, and then by begging, borrowing and stealing your way into handing those entrepreneurs money. And your hope is that you can get into a couple of hot deals and prove that you have quote, unquote, access to investable companies. And I think that that narrative is premised on this idea that there are a small number of companies every year that matter. And so if a small number used 13:08 to be the case 15 years ago, 13:10 I think it’s always been the question of, I think what it is, is a reverses cause an effect. So the question is like, one, is it empirically true that only a small number of companies matter? And two, is that like, is that a cause? Or is that an effect of the structure of venture capital? 13:32 I see. Yes. Okay. Right, like 13:35 one, I don’t actually think that data would validate that there that the distribution of outcomes is so caught is that such a small number of companies matter. And I think that the ability of companies to compound their equity, at very high rates of return over many years, would suggest that if we have a broader aperture, many more companies can matter. Second, there’s no natural law that I’ve observed, that says that only X number of companies can matter per year. It’s not like, No, we’re not this is not gravity. This is not, you know, Einstein’s theory of relativity. There’s nothing that says that we can’t have more great companies. As far as I, as far as I’ve seen, nothing. We firmly believe that the limiting factor on the number of great companies is the number of great entrepreneurs and the number of courageous finance years, right in finance, it is better to fail conventionally than succeed unconventionally, that’s the ethos. So the financial of the business of finance, and that’s not how we want to live. We want to succeed unconventionally. We want to be bold and courageous as a firm. We want to find It these kinds of narratives, which we think don’t serve entrepreneurs, and they certainly don’t serve limited partners. 15:10 Yeah, I think you make a good point. And structurally, there are some VC that based on their size structure and portfolio construction, they do need to be in, you know, a very small number of the biggest hits. Otherwise, they’re fun math doesn’t work. Whereas, like you said before, the data strongly suggest that smaller funds do better in the range of healthy, great outcomes is much more broad. For those funds that have size discipline. Yeah, one 15:46 of the things we always talk about at our internal team meetings, and also, like our ELPAC conversations and things like that is you always want to have multiple methods to achieve the same outcome. Right, like 100x, company 320 X companies, right? Like you want to have multiple paths to achieve the same outcome. Because then you have, that’s one method of diversifying outcome risk. And if you have a fund that requires you to own 20%, of all of the 10 most important companies important being in quotes here, but you basically sign yourself up to only have a one path to vault and that’s not really 16:35 how do you handle so you’re often preceding and seeding as the lead VC companies, and then you’ve got substantial reserves. And you know, you deploy those aggressively and certain logos. Many years ago, we had Charlie O’Donnell on the program. And he admitted that by Series A, he often still doesn’t know which ones are winners, like, there’s a lot of logos that he’s invested in that get to series A and it doesn’t mean that they’re going to be fun returners. So, you know, how do you get clarity on which of your breakouts to back the truck up on and 17:14 first have a lot of intellectual humility, acknowledge that you often are wrong. But this is this is a little this business is a little bit like baseball, you don’t have to get it right. In baseball, you only have to hit 300 to make it through to Cooperstown. So appropriate in our probability critical. Second, we have a certain set of beliefs about what delineates companies that are great or not. Now you can we could talk about what those beliefs are. And you can even disagree with those beliefs, but we have them. And you can think of this as being thesis driven. We have certain theses about what 20 It’s great companies suffer from the mediocre ones. And so as we see those theses are invalidated. We see our hypotheses play out in the real world, we have greater and greater conviction. So if we start with a $2 million check, and then a year later, we put in another million, and a year later, we put in another 2 million, each one of those checks, is de risked more than the upside is dissipated. And sometimes it built, the scale of the upside could even be increased. So I think that’s a little bit how you do it, you. And this is one of the reasons why we’re very involved with each company. We don’t do that many companies so we can be very involved. So we can watch and walk in the lesson and see what’s happening. So that we can deploy our reserve strategy in this nuanced way, such that ultimately we can concentrate our capital into the most important positions. And each vintage, 19:02 you talked about involvement with the port goes down, what does that mean to you? And you know, what do you think of sort of the the standard, you know, platform or services support model? 19:16 I mean, it is the single greatest privilege of my life is to be with our entrepreneurs and help them achieve their ambitions. That is the single greatest privilege of ROI. And I love it more than anything. And that is, and we are extremely involved with each company. We almost become family to these people are entrepreneurs. Like I said before, I want my team I want our team to be brothers and sisters and arms with these entrepreneurs in the trenches with them. So I often joke that my job is 50% investment banker, 50% management consultant, and 50% Rabbi, because, you know, for entrepreneurs, we will Got to be that all in with them as far and you know, we have a one partner per five portfolio company ratio now, and so we can be that involved. So that’s one thing. I think the second thing you were talking about is other other firms platforms. I think it depends on how cynical you are. A highly cynical view of the world would be that platforms are designed to let firms deploy more dollars per GDP per unit of time, and therefore grab a more dollars and more fees. I’m not sure that I think that that is strictly the logic. But I think that there is a sort of inescapable industrial nature of many venture firms, where it’s like, how quickly can we put dollars out? So how quickly can we raise more dollars? So how quickly can we grow our fee base, so we can then hire more people to like, perpetuate that cycle, it is a profound reality of the venture economy. And with that, I think that for many, for many portfolio support functions, it is about pulling the GP out of that relationship, so that he or she can go to more deal. And the reaction, or the experience that entrepreneurs have is one of an entrepreneur, I call the investor, the investor shuttles me to the portfolio support professional, the portfolio support professional doesn’t know what to do, hasn’t lived that experience. So then they’re trying to find somebody else in their network, who has that experience, maybe at another port PCO, etc. And so they function as a routers. Yeah, I think that we are destined don’t want to be routers, we want to be doers. And so I think in the coming years, our hope, with our portfolio support model is that we have people on staff who we can forward deployed a portfolio companies and actually do shit for them, write the fucking software, sell the goddamn software, build the product, hire the people, like our people, the dusty into payroll, it’s on us, but we forward deploy them to support our portfolio companies in them. Do you do that actively 22:33 today? 22:35 We’re starting to, we’re starting to and how do you support that? 22:38 I mean, do you have a fee structure that’s different than the standard or 22:43 have modest taste? Share carry frequently? Right, like? No, I mean, we’re not that big of a firm. I’m working out of my, you know, my bedroom here. I’m in, basically, but it’s about knowing that that will pay dividends mazing. Interesting. What? Yeah, tell me your reaction to that? 23:03 Well, I think I mean, there are distinctive models out there, right. There’s the Standard Model. There’s platform models, there are studio based models, where things are incubated. I think it’s unique. I think just deploying talent on portfolio companies. I mean, my initial reaction when you’re talking about the router, is that the vast majority of the people I’ve met in the ecosystem are way too free and loose with intros, regardless of the quality of the person. Sometimes it’s inversely correlated, I’ll meet somebody who’s incredibly successful, and very knowledgeable. And they’ll make these loose intros to people that don’t follow up, or they’re not that good. And I can’t make sense of it. You know, because I feel like your network is kind of a reflection of you. And if you’re providing a referral for somebody, and trying to, you know, help them out, you should be very discerning with those referrals, like when a founder comes to me and says, Hey, I need an incredible accountant with this specific specialty. Most often, my response is, I don’t have somebody who’s a 10 out of 10. And so I’m probably not the best because I’m just not going to send somebody who’s a four out of 10. And it’s very rare to have those great ones. So from the standpoint of having in house folks that, you know, you put your name next to and vouch for, and they’re going to do best in class work. I think that the portfolio is going to, you know, receive that very positively, as long as it syncs with their culture, you know, your style, probably should be in sync with many of your portfolio style. Otherwise, there can be some cultural mismatch in the way that things get done. 24:50 We have no aspiration to go become a mega cap private equity firm. We don’t we want to be we want to remain a boutique venture capital firm, but I I am inspired by how they operate in the sense that they have teams of Best in Class professionals that are paid by the management company that go like Thor’s deployed to their courtrooms. That is inspiring to me. And the one in particular that I think is very inspiring is Alpine investors. If you’re not familiar, or your listeners aren’t familiar, I think this is like one example of this kind of model. And I don’t see it that much in venture capital. I am the second part of it is a lot of how we work at dessins is trying to create what you would call positive selection bias, we bias ourselves towards working with certain founders that are more immediate, more appreciative of our approach, and where our approach can be more creative to that engagement. And so hopefully, this creates over time, positive selection bias, and who we work with, how we work with them, and the kinds of outcomes we can generate for our ecosystem. Cool. 26:08 I was thinking about transitioning to FinTech at this point, Dan, is there anything else you want to cover on VC and DESE ends? Before we do that, 26:19 I would just encourage people to check out our website where some of our writing goes into more detail about our for, like the observations we have about the market today. And also our thoughts on some of these specific tactical issues. 26:36 Yeah, I can say from personal experience, there’s some there’s some good reads some good blog posts, so check that out. All right, Dan. So let’s, let’s talk a bit about fintech. It’s a broad category. What areas within FinTech are you most interested in at stos? 26:53 I often joke the money making ones. But I think part of the thing that I would say, Nick, is that we have a certain set of beliefs about what makes internet scale financial services companies, I’ll just briefly say there are you’re looking for businesses that have increasing returns to scale, ever deepening moats in a winner take all or winner take most markets that are very large. And so we’re always like plowing through opportunities to see does any given opportunity reflect those four beliefs, and what this is turned into a certain areas where we tend to invest over and over again. So for example, we tend to invest a lot at the intersection of developer tools, or more generally, tooling, and financial services, we’ve done a number of investments at the intersection of financial services and climate change. ever aware of a rapidly aging population in the United States, we’ve done a number of investments focused on the intersection of financial services and aging, we have a passion for a call either by embedded finance kind of companies, we have a couple of those, and then we love payments, payments is always something I’ve been very interested in. And we have a number of businesses kind of in the payment space, as well. 28:23 What’s an immediate pass, right FinTech deal hits your inbox is there two or three factors that just, they’re not going to be a fit 28:32 stage, you know, we only get in, we always start our engagement at seed or pricing. Second, we can’t be the lead investor. If we can’t be the lead, it’s not worth it. I think the other thing, so those are pretty easy. And like, I think entrepreneurs respect the fact that we’re very clear. We want to bleed a seed or pre seed round as the start of all our engagements. I think on some of the softer, we see that many, many, many businesses do not actually have increasing returns to scale, there is not true operating leverage in the business model. You know, you put $1 You know, ideally, it works like you put $1 into sales and marketing today, you get $1 out next year, you put $1 and you get $3 out the year after that, you put $1 and you get $10 out, that’s like increasing returns to scale. There’s something about the business and the business model, which generates which generates increasing return on invested capital relative to the weighted average cost of capital. So that’s what we’re really looking for. Another way of saying that is, existential way the thing that I worry most about is the deflationary nature of technology. Right Nick? What was your first computer? Say? Just you remember? 30:02 Yes, it was an IBM compatible, maybe a compact. 30:07 So one of my first computers was a compact 483 86 SX. Yeah. And that thing was a piece of shit. And it cost the bloody fortune. And like every year, computers get better. And software eats more of the world. And so what the in economics, he would call this D inflationary equation, or there’s a lot of disinflationary pressure in technology. So the question is, what can help a business fight the disinflationary nature of technology of Moore’s Law and so on? And like right now with ai, ai is massively dis massively. And so when I talk to a company, I’m like, how do you protect your margins? How do you fight this trend? And so a lot of like those four criteria are about how do you get how do you gain operational leverage and fight the disinflationary nature of technology, such that you can generate these kinds of outsized returns that are necessary for venture backed businesses, 31:17 because price will continue to drop and the market will get smaller. But as it gets, volume goes up. But 31:24 prices, right, like, unless you are very thoughtful, prices continue to fall, or the amount of value you have to deliver to charge the same thing goes up every year. And I didn’t even talk about free and open source software. But free and open source software is another trend. Which fight is highly disinflationary. You, I remember when I had to spend hundreds of dollars to get box the versions of Office, you remember box versions of Office? In like course, right? Right. What and like it was hundreds of dollars in the 90s. And now I spend 990, I actually get Google Drive for free with with my corporate Gmail, and I can spend like $4 a month on Office, right? Like, the the relentless march of technological progress is tough on new market entrants. And so I think, 32:25 although Microsoft may be one of the better examples of somebody that navigated and fought that pressure, well, for sure, 32:32 I mean, as core, there’s a reason why they’re one of the greatest. Agreed, 32:37 agreed. Let’s talk about banking. Right? You spent some time in banking, your first company was acquired by Silicon Valley Bank, you know, in terms of modernizing the banking system, what what inning Do you think we’re in, 32:50 we’re still warming up. We haven’t even started putting the first thing. I don’t play baseball, they want to know that I’m not that athletic. But whatever it is that the baseball players do to warm up before the first pitch gets thrown out. That’s what we’re maybe I know, they’re throwing the ball round, or the batting cage, I don’t know, whatever, that’s where we’re at, round the horn or whatever they’re doing that, you know, to get stretched and loose. That’s where we’re at. I really want you 33:17 to give us more context on that, like, what have we accomplished within, you know, technology and infrastructure with regards to banking? And what do you see the next phase looking like? 33:30 Remember that financial services is 20% of global GDP. Just think about that. It is 20% of global GDP. And it is the as a sector, it is the largest consumer of IT software and services of any sector. And that is, I mean, the scale of the opportunity is incredible. And like it is a foundational set of infrastructure for our global economy, right, like, everything we do touches the Financial Services wrong. And within that, it is so the lack of customer centricity is shocking. Very few financial services companies operate with a customer first approach, where the customer is really at the heart of everything they do. So that’s one thing I hate. The second thing is, clearly, the Internet changes the distribution model. Right? Like when I was growing up in Jersey, the only way you got financial services is by going to our branch. And so the only kinds of financial products that were built, were those like be sold via branches. However, like then the Internet came out. And then you know, you had the rise of like the traits of the world. And then you even got the rise of the Robin Hood’s of the world because As you know, everybody got connected to the internet. And then everyone got a smartphone and you had a supercomputer in your pocket. But the thing that I’ve just come to really see is that we haven’t reached a level of mass customization. So I’ll give you an example of one of our portfolio companies in this company truly financial, which does financial services, financial services for the elderly, and their caregivers. And clearly, that wouldn’t have worked in a world where you had to get branch distribution. But now that the internet means that we can get digital distribution, the fact that the elderly are spread out across the country is no longer an issue. And I even see something that’s why. And clearly, like, the best example of this is probably USAA. And what they do for veterans, right, like you can create a scaled financial services institution that actually gives a shit about certain customers, and really builds products and services for the way that they need products and services, and puts them at the center of the product creation and distribution. And so why are we so early in the game? Because so many financial institutions don’t really think about the customer as the center of what they do. And, you know, they’re just like scale. Supermarkets, very generic. 36:33 Interesting. You’ve mentioned the elderly a couple of times now, who or what communities, communities do you think are most underserved? 36:41 I mean, that’s a that’s an I don’t have the specific answer to that. I think when I go around the US, what’s clear is very few people are well served, like, if you tend to look and the way you know, that is you look at customer satisfaction data on financial services relative to other industries. And financial services tend to be one of the least, like, has some of the lowest customer satisfaction scores, what are known as NPS scores, net promoter scores of any industry, they’re like, right up there with airlines, the cable company and your dentist, people fucking hate their banks, Nick, they hate them. You know, I would say, like the elderly are one group that were quite passionate about and think that are poorly served. We have another we do a lot of work with agriculture, the farmers that grow our food, and the kind of intermediaries that take props and bring them to market, we think that’s a very important and underserved sector. We have a chipper cash, we have, you know, a focus on immigrants and wood chipper in particular, on immigrants from Africa and the African diaspora. That’s another community that’s very poorly served, and so on, and so forth. And then we have a set of investments that are focused on another group of musicians and artists more generally, and creators and people who are in the creative arts. And then we have a bunch of investments about the infrastructure that enables these kinds of targeted financial services to be developed. Because, Nick, if you want to build a bank that targets the venture capital community, you need to then be able to buy infrastructure to go build that, for the podcaster community with, et cetera. 38:38 Trust me, I have thought about it many, many times. Unfortunately, I stayed focused on the core craft, you know, you mentioned Africa and chipper cash, is there a framework you use to think about fintechs that will win in an established market like the US versus, you know, those in an emerging market like Africa? 38:56 Yeah. And we’ve we also have done work in Latin America as well. So, I think the framework is the same, but the context is different. Right, like the the essentials are essential, right? Like, people want to have money today, and they want to save it securely for the future. People need to borrow money today to invest in their future, their education, their housing, etc, they have money in place x and they need to send it to place why or money from place wise coming to them and play sex, they want to protect their home, you know, they need insurance to protect themselves against whatever life may bring and so on. These are universal, but then the cut the specific context of the licensing the capital, the risk and so on, highly context specific and so the framework is the same, but the specific context is quite different. And what you see, we believe, is that, I’ll give an example, we did a deal where we’re investing in a company that looks a little bit like Experian or TransUnion, or Equifax, but in an emerging market. And what you see is like the need for credit bureaus, as a mechanism to securely provision credit, something, there has to always be some body, a government body or a private market body to do the credit scoring. And that knowledge and learning of what happened in the US can be applied to other countries, for sure. Conversely, when you look at like, for example, what’s happened in India, with their payment system, and their identity management system, which are protocols, UPI or a dar in the stack, and you’re like, that is cutting edge. And so we’re always looking at what are model in the US that can go abroad that are abroad and can come to the US or other countries. Because Financial Services Innovation, knows no geographic boundaries, 41:08 but the founder mindset, you know, when you invest cross country, are there cultural differences or behavioral differences that you’ve noticed? And, you know, how do you get signal on that? 41:22 Well, how you get signal on it is pretty consistent in my mind, which is to say, you don’t move very quickly. You watch and observe founders and their behavior over many months. And by and you try and put them in different contexts, doing a zoom is very different than going meeting in person. And meeting in person in the office is very different than maybe going out to dinner. Or even better, having them to your house for dinner. I love meeting, if a spouse if a founders partner, meeting their spouse, because you learn a lot about somebody by seeing how they interact with their spouse. And so there are lots of techniques we’ve developed to watch and observe how founders behave over many, many years. But the only, the thing that’s most consistent is it takes a while, you have to look for the arc, and the trajectory, not the dot not the point in time. I have a second thing is, as I said before, we have this sort of belief that starting a company is a little bit like chewing glass and warning to like the taste of your own blood. It’s not for the faint of heart. And so what we’re looking for people, we’re looking for people that have just overcome tremendous adversity. And those are people that sometimes are not well adjusted. I’m not that well dressed and neck, you know that. I certainly have my own personality quirks. But we’re looking for these people. And that, that whatever that is that that desire to build a better future, that desire to just one of the things we often say is that excellence is the capacity to endure pain. And so we’re trying and that ability, twin European, to often travel around the world to make a better life for themselves and their family, or to go to university and to overcome, oftentimes, tremendously long odds. And to achieve greatness, that’s not culturally specific. I think those people are, we have not found specific cultural or cultural nuances. 43:49 Love it. Talk a bit about the role that FinTech plays in decarbonize finance. Yeah, of 43:56 course. So I think this really goes back to a lot of the history of the birth of the industrial economy in the United States. If you read about Andrew Carnegie, JP Morgan, and like the robber barons, and the birth of the railroads and the steel on the coal, and all that, and in Chicago, like the slaughterhouses and so on, that only happened because the financial services economy co evolved to enable those developments. That’s the critical thing. There was a historical prime crisis, as well. Well, there’s like a historical coevolution of industry of like the real world and the financial world. They evolve in parallel. And so if you think that like in that, so like, I don’t know how old you are, and if you think that like the rest of my investable life, the question of how do we decarbonize the economy? may produce less carbon, produce energy in a sustainable way, electrify the economy, MIDI mitigate damage that has already been done, try and pull carbon out of the atmosphere, and so on. If you believe all those things, then you must believe that there will have to be a co evolutionary history to be written for this next generation of industrialization, or, and we really do believe that. And so, you know, we want to make some investments in companies that we think over the next 1015 20 years can grow into those scaled financial institutions that play a very critical role in this next phase. For more the economy goes, 45:49 Dan deal paces slow down at all levels, particularly the growth stage, how does an early stage concentrated VC, like yourself navigate the market? And also, how do you advise your portfolio founders in the environment? 46:06 Well, I mean, I think there are a couple of things. Well, one, we’ve continued to be able to get large scale financings done even in the last 18 months. And I think that’s less about how skilled me and my team are, and more about how skilled the entrepreneurs, we partner, you know, we partner with her, and I’m very thankful for them. I think the second thing is to remember that the market is episodic, and oftentimes quick quiz, and to just stay focused on what matters and what the third thing I would just say is, so I just remember 99 2000 2001 2000 How do I continue the 2002? There are all these people who said that Amazon went survive. And now the people who went long Amazon in 2001 2002 are laughing all the way to the fucking bank. I remember, like all the people and video, right and videos are a trillion dollar company. Right, like, right, but Nvidia has been public for 30 years. Right, I’m looking at the NVIDIA went public, I guess in 1999, at 82 cents a share on a on a split adjusted basis. And today, it’s at 440 per share on a split adjusted basis. So I think I just according to city evident way after the market, closed city, really some research that says that NVIDIA could go to 600 bucks a share. I don’t know. But I just like say these things, because it is not about how smooth the line is. Right? It’s about how we’re the area under it’s not about how smooth the curve is. It’s about how big the fucking area is under the curve. Right? And it’s like, just remember that if you’re truly creating value, if you’re truly compounding your equity, that high rates of return net of dilution, then like what Jay Powell does, what happens on Twitter, what these things they don’t really matter. stay focus, stay execution oriented, say, just just really get back to basics. 48:30 Let’s get Dan, I know you speak with Capital Partners and number of LPs on a frequent basis. What is the best question you’ve been asked by an LP in recent months, 48:42 we work with one of one of our LPS that has a public pension plan. And that LP, and it’s a public pension plan for a group of public service public workers that die young and and often died terrible deaths. And so I think part of it is like, and so like, we always think about it as like this privilege that we’re helping to take care of these incredible individuals who often passed away in the private their wives, and they have families that we support. And if they’re disabled, or whatever, you know, we help them. And so always the questions are about why are you doing it? You know, a lot, Nick. Shockingly, a lot of people think we’re crazy, because we run a highly concentrated strategy of early stage investing. But, you know, whether you believe in the righteousness of that approach, and whether you become a zealot for the approach like we have or not, it’s really about the question of, why are we doing this? Like, are we doing this for the right reasons? And I think that ultimately the best questions LPS ask are about values, and about making sure that the people they are partner Hang with are truly aligned with the values that they are trying to install in the world. Just as we have to ask ourselves, does any given help? Are they a good fit for us as and so on? It’s really a two sided matching problem. Kind of what about you, Nick? What, what? What of LP has been asking you that gets you that you’re excited about? 50:23 You did not just do that? Oh, boy. Well, first, I’ll say, I appreciate your response. Because it’s consistent with a long term focus. These things can feel very transactional. But this is a long cycle business, to your point around the area under the curve is what matters most like unbounded outcomes, if you get the long term alignment, right and vision, right. And you partner with the right sort of folks that agree, then often that that helps tremendously in the journey. The best question, let’s see, so the best thing I’ve heard, I think, you know, an LPS many couple months ago, Nick, you’ve got a couple breakouts and fun one, if they break out in a huge way. And you’re able to pocket that dpi? How do I know that you’re gonna go on to raise another fund, and not just invest as a family office? 51:15 So I, I had this conversation with an LP not that long ago. And it’s surprising to me for two reasons. One is because they, you know, Nick, I didn’t grow up very wealthy. I grew up with in relatively modest circumstances. So even like deci is at its current scale, can more than take care of me, my family, and the family and all of our people, you know, I’ve six employees and all their families. The second thing is to think I care about the money at all, right? Like, I seriously want to give every dollar I make from this away. We don’t want to have kids, I want to give literally every single dollar away. So why are we working so hard, so we can give more dollars away. It’s not about the money. And I know a lot of alternative asset managers don’t understand that. They get into it for the money. But it is not about the money. It’s about the fucking righteousness, and about the journey and the artistic expression of creating this firm. That’s why I do it. And like, if we make $1, or we make billions of dollars, I’m still gonna fucking do it. Because it is about this artistic need that I have. And our team has to create an alternative approach to building venture capital, to getting back to this artisanal relational model, to being in the trenches with these founders being their brothers and sisters in arms. That’s why we do it. Yeah, I mean, look, I want to make a good bit of money, too, for sure. No, but it’s not about the money. It’s about being fucking right. 52:59 Yeah, if it were just about the outcome, we would be doing something else doing this, 53:06 right. We just wanted to have the world’s largest chips that would right like Ken Griffin, Elon, Jeff Bezos, Bill Gates, Warren Buffett, they’re going to always have bigger chipsets than you and I are, Nick Don’t, don’t you Nick, don’t take it personally. They’re gonna always have bigger chipsets than we do. So it’s not about who can have the biggest chip sack. And if we wanted to just make a lot of money, and not work that hard. There are a lot of other jobs in the markets, right? Like, we could go in Chicago, there are lots of Prop shops, we can just start our own prop shop, and like the railway can, and, or whatever it may be, we can be like Don Wilson, like he’s, he’s figured something out. But right, like it’s not about the money. It’s about his MO. It’s about the art of creating the future. And it’s about the art of helping others create the future. And it’s about the best metaphor, I think, is that of the record producer. And I love Rick Rubin and if you’re not familiar or any of your listeners are not familiar, like we are like basically little Rick Rubin’s and yes, we’re not working with Dr. Dre and Johnny Cash and the Beastie Boys, but we’re working with others. We’re working with Hammond mates from chipper we’re working with Chris from Treasury practice, like the art of creating of helping others the art of finding incredible artists and helping them make the best possible fucking art they can in crisis. That’s what we do. 54:43 It’s helping creatives like self actualized professionally. Rick is the best and I’ve made the same analogy before it’s it’s it’s really a cool art and science that he pulls off. But you got to be able to choose him to not just help them 55:00 Oh, yeah, no, clearly there’s a little bit of luck, no doubt a little clearly. There’s, it’s not about batting 1000. But I think it’s about, there’s just the feeling that you get when you’re working with an entrepreneur. And you and this entrepreneur are the Yiddish word we’re kismet, you’re like, in deep sync. And like the partnership that you that we bring, and they bring, it’s just magic. And I hope that that means that we’re one of the best firms ever. Like, we want to be really fucking good at what we do. But we want to do that, because we want to be really good at our craft. And if we’re really good at our craft, we’ll make a lot of money. It’s not about making a lot of money. That’s like a byproduct of being good at what we do, and a passion for what we do. 56:00 Okay. Dan, if we can feature anyone here on the show? Who do you think we should interview? And what topic would you like to hear them speak about? 56:08 Well, recently, I’ve really gotten into the founders podcast, us with the founders, the podcast. Now I’m not familiar with it’s pretty good. So I think the founder of that podcast, David center would be a good one. You know, Phil Black is that from true as a as a big mentor of mine? And I think I’ve learned a lot from him. And Nigel, Boris, I acuity. But I think I would encourage you to think about like, what are things we can if we think that the best metaphor for what we do is that of like the record producer, or the editor of a book? What are things we can learn from other professions? Both in terms of like the capital, but also, how do you find these very special humans? And how do you help them be the best they can? And I think that there are many contexts in which we’re looking for people that can have power while outcomes. And knowing that people that hope can generate power outcomes are very spiky, they have some incredible strengths and some real weaknesses. How do we support people like that in our lives? 57:13 Love it. Dan, do you have any habits, tactics or techniques that are a secret weapon? 57:20 Exercise? Right. So one of the things, Nick about our job is that our job, we have very little agency, right? Like we can pinch LPs to invest in us. And we can mentor founders, we work through influence. And so acknowledging that I’ve looked for things in my life to give me back a feeling of control. So exercise, I control how hard I exercise, how long I exercise, right? It gives me back a sense of I have control. I’m a big fan of routine. So I go into better more or less the same type of getting up more or less the same time, and being processed, driven. But I think a secret weapon for me is putting the phone away and going for a long dog walk with my wife. I think it is one of my secret weapons, because it’s just being outside not having the phone on me not being connected for like an hour or 90 minutes every day. It’s the best fresh air vitamin D. I mean, and it’s free. I mean, you know, I I pay for that shit. 58:28 Why not increase your own capacity and output right through? nurturing the nurturing the body? I love it, Dan, and then finally hear what’s the best way for listeners to 58:38 nurturing the body and the soul in the soul? 58:42 Very good, sir. And what finally, what’s the best way for listeners to connect with you and follow along with dezigns? 58:48 Well, Twitter, I’m at Deakin rowing on Twitter. decedents is desams on Twitter. Jessie adjust.com. We’re very active on LinkedIn. Yeah. If you want to email me, Dan Ducey and stuff calm. I mean, it’s very, you know, 59:04 he is Dan Kimerling. The firm is Deciens. Dan, always a pleasure, sir, you are one of one. And every time we meet, I learned a lot. So appreciate you joining us today. Thank you. 59:22 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 them 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 accomplishment 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 Transcribed by https://otter.ai