183. Automation vs. AI (Adeyemi Ajao)

Nick Moran Angel List

Adeyemi Ajao of Base 10 Partners joins Nick to discuss Automation vs. AI. In this episode, we cover:

  • Backstory – Growing up in Spain and Nigeria and his path to entrepreneurship.
  • Previous to Base10 Partners, you had quite a successful career as an entrepreneur, founding highly influential companies such as Tuenti, Identified and Cabify in Latin America – talk a bit about your experience founding and scaling multiple tech companies, ultimately to exit?
  • How did you, TJ and Reggie come together and decide to create Base10?
  • On the website it says that you “started Base10 to take a profoundly different approach to Automation.” Tell us more about your thesis on automation and how it’s different.
  • Talk about Automation vs. AI and the potentially misleading guidance that we’re hearing from many firms in the valley with regard to AI.
  • Of course, with any big changes that are made to the way people traditionally do things, there is a reaction. While some will embrace automation tools, others will have an adverse reaction. Are there certain sectors, categories or even functions that you think will more readily adopt automation solutions?
  • You mentioned a number of industries… Real Estate, Construction, SaaS, Agriculture, Logistics, Consumer… you have these Partners listed on the website, like Fifth Wall, Bessemer, Owl, Shasta, Bain Capital… can you explain the details of your partnership program?
  • When researching sectors that youโ€™re interested in and assessing the opportunity to implement automation tools, what key factors are you looking for?
  • “We know automation. We have seen it succeed and fail. We know what playbook to apply from team structure to go-to-market, automated customer service or data collection systems.” Talk to us about the playbook elements that have application across the automation-focused startups you work with?
  • You’ve discussed the pride you take in being: Hispanic, American, European, African, black and white. It’s quite notable that you raised the first black-led VC fund of over $100M. How were you able to break through such a significant glass ceiling where others haven’t?

Guest Links:

Key Takeaways:

  1. Adeyemi shares the success stories behind founding, Tuenti – known as the Spanish Facebook and the largest Social Media platform in Spain, later acquired by Telefonica for $100M. Cabify – the equivalent of Uber in Latin America and Spain, and Identified – Workday’s first public acquisition.
  2. Prior to Base10, Ade had a hand in starting Workday Ventures and lead their first 10 investments, including an investment in Jobr, that was at the time run by his now partner TJ Nahigian.
  3. When investing in Tech companies, especially at early stages, there is always going to be plenty of room for improvement, however, if there’s a great product with real traction, having a little faith in the team will go a long way.
  4. Ade is drawn to companies that are taking monotonous, everyday, heavy workflow processes and using data in interesting ways to rebuild and transform them into simple solutions.
  5. Ade and TJ Nahigian recognized they had similar beliefs and valuable yet complimentary skill sets, and decided to merge the two, forming Base 10.
  6. The true purpose of Automation is finding real problems, that real people experience everyday and providing legitimate solutions that will create a meaningful change for it’s users.
  7. Through his experience, Ade has found that physically spending time in the field your researching and understanding their day to day workflow, is ultimately the only way to truly find the problems worth solving.
  8. There are 2 general categories of Automation – Process Automation and Decision Making. AI typically falls into the Decision Making category.
  9. Ade addresses the misconceptions behind AI being a threat to millions of jobs throughout the country. He believes AI is merely a decision making tool to help us with automation, and there is absolutely no threat associated.
  10. At Base10, their ultimate goal for Automation is to make society as a whole fundamentally better. They are currently targeting waste reduction in the construction industry.
  11. Sectors Ade believes will benefit from the application of Automation tools include transportation, food delivery, construction and logistics.
  12. With their expertise in Automation solutions at Base10, they’ve developed a partnership program to spread their knowledge amongst multiple industries by collaborating with firms who are experts in specific fields.
  13. Automation is not an industry within itself but something that has the opportunity to touch a vast number of industries in different ways.

Transcribed with AI:

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

Welcome back to TFR today the man who’s been called the Mark Zuckerberg of Spain. Adeyemi Ajao joins us out he is managing partner at base 10, which invests in early stage companies that are bringing automation to traditional sectors. In today’s interview, we discuss Adi his experience growing up in Spain in Nigeria and his path to entrepreneurship. The story behind founding 20 identified and Cabify and his transition to Angel investing, how his experience has influenced him today at base 10. The automation investment focus at the firm, how automation will influence traditional sectors and the role that AI will play. How he researches sectors assessing the top opportunities for automation, how base 10 has established investment partnerships with other firms that have very complementary specialties. We talk about the key factors that are they look for in automation tools.

And we wrap up without his thoughts on being the first black lead VC firm to raise $100 million fund. Here’s the interview with the great Adi a Zhao of base 10.

Out of Miami Zhao joins us today from San Francisco. Ria is managing partner at base 10 partners. Base 10 is a Silicon Valley based venture firm with investments in grin ship Well, the pillow club among others. Out is also VP of tech strategy at workday

lead investor at workday ventures, founding investor at Cabify and co founder of exited tech startups

identified and 20 previous to base 10 Odd they had a very successful run as an entrepreneur and angel investor participating in more than 40 deals including companies like Dollar Shave Club, relate IQ jobber Instacart and reflective

rd. Welcome to the program.

Thanks. Hello, Nick. Very happy to be here. Thanks for having me. Absolutely.

So you grew up in both Spain and Nigeria. Is that right? Yeah,

that is correct. So the Yemeni is Nigerian name, but the accent is Spanish I was in, in Nigeria in Lagos in my early childhood. But when I was pretty young, we moved to southern Spain to a place called Marbella. And I was the year until I move to the US now 10 years ago.

Awesome. There must be something in the water in Spain, I’ve got a an intern associate from Chicago Booth right now who’s Spanish and he’s one of the brightest people I’ve ever been around.

And that that is very good to hear. You know, I will say that 10 years ago, there were no many of us in this neck of the woods. But but more and more, we’re seeing more more Europeans, smarter Spanish, and actually a lot of Latin intrapreneurs making it here, which is very, very good to see what’s

about time, and I do want to kind of touch on that a little later in the interview. But can we start off with just in general your path to entrepreneurship?

Absolutely, absolutely. So, you know, I described myself as an entrepreneur turned investor. And as you were alluding to, before, I founded or helped found three companies before starting base 10. And the first one was almost accident. So I want to call it in Spain. In Madrid, I was graduating in 2005, which was my last year, um, together with another two college classmates, we would put together the side that was supposed to be a social side, what was later called a social network. And we name it 20, which is sadly number 20. But with the Hispanic phonetic pronunciation, because it was for 20 years old 20 ended up going very well. It became the largest social network in the country. So we were the the Spanish Facebook. And that ended up being $100 million acquisition by Telefonica, which is the largest telco in Europe. For us, it was a great success, we learn a lot for Spain. It was one of the very, very first venture backed exits. And we’re very proud that we believe that we help turn what is today to a much more mature startup ecosystem. And I think for all of us, the founders were very young and it really solidified that we all wanted to spend the rest of our careers in technology. And for me in particular, you know, as much as I love Spain, I decided that if I was serious about technology, I needed to move here. So that’s why I decided to move to Palo Alto and roll myself into Stanford Business School very much with the idea of starting another company. And I made two great classmates during the business school years, and ended up starting two companies with them. One of them to seal going and BetterHelp. It incubate on was founding investor, scope halophyte. And it’s doing great. It’s the equivalent of Uber, in Latin and Spain. And, you know, today employs more than 2000 people, it’s in 12 countries, and I’m doing fantastic things to to my co founder, and the other one was a data company called identified to started with Brendan Wallace, who you also had on the podcast. And as you know, we were doing really AI applied to recruiting, or as we said, a recruiting company, or a data company disguised as a recruiting company, we were recommending companies who to hire based on data, and we will run that company for four years to get too close to the million revenue. And as we were closing our series, we we got a very good offer to sell it to workday to see large HR software public company, we actually became workdays very first acquisition, as a public company. I joined Workday for more than two years, had a great time earlier, one of the most interesting things they bear to us held work they Istar worthy ventures, which is their corporate venture firm, that today’s about two 50 million, led the first 10 investments out of all the ventures. And through that our very, very first investment through workday ventures was another recruiting company called Jover, which was run by my now co founder, and they stand. So that’s how I met TJ, who is now my partner. And that was kind of the beginning story of base 10. I was already you know, his investor. You know, although this is based on it’s my first institutional venture fund, I had been investing heavily, as you mentioned before, as a personal investor. And to this point, I’ve done almost 50 personal investments started back in 2010. And as you said, some some very good companies in the air, like Dollar Shave Club rugby, in Stacker, 99, taxes, etc. So that’s, that’s a bit of my path to kind of Spain to and Nigeria to Western love

here in the background, you know, both kind of how you came together with with TJ with the Jabra investment but but also Brendan, who, as you mentioned, we featured on the program, he rocks have loved keeping in touch with him since he was featured. But I’d love to hear a bit more about the process of scaling multiple tech companies to exit. You know, I know we could spend hours and hours on all the lessons learned, you know, during that experience, but can you talk about maybe some of the formative lessons and maybe some of the things you’ve taken with you now that you’re a venture investor full time?

Absolutely, absolutely. So here’s some of the things I can offer. It was interesting to start with 20, in a place of Spain, which at the time had no technical system. And, and the reason that was interesting is because we didn’t know what we were wrong, what we were doing wrong, because there was no way around to look for the right way to do things. Literally, like, you know, you couldn’t ask anyone in Madrid, what was a product manager, because we’re no product managers. And venture capital wasn’t really a thing. And like you actually the regulation, they don’t allow you to give the stock options to employees. So we’re we’re kind of making this stuff up as we went. And we’ll come here to Silicon Valley and like, talk to whoever like will want to talk to us to literally ask very basic questions like, hey, how do you project manage an engineering team and things like that. And what was interesting is that we grew up pretty quickly. And I will say that looking back, we did 99% of things wrong, having now seen or they are readily done, unlike, you know, the great software startups. But we did wonder, right? And instead people love the product. People love the product was purely by URL. They were using it all the time. engagement was crazy. Like at some point, people were spending four hours a day in the site. And it was interesting, because then when when we started identified with Brandon, it was ultimately successful company, but it took us a while to find product market fit. And and that was you know, five years after having started 20 I knew A lot more. We Brenda and I have been in business school. We’re hiring engineers out of like Google and Facebook, and LinkedIn. And we’re designing the processes the right way we were raised from the right investors. But one thing that matter, which was people love the product, it actually took a couple of years until that happened. So that that was a very interesting contrasting experience, which, you know, now as a venture capitalist, when we look at companies and and when we’re evaluating our like, you know, there is always in the early stages, a lot not to like, in fact, there is always an a thing. Ben Horowitz says this, in his book, that when you look at an early stage team, you should realize that there is something terribly wrong with every team member, including yourself. And that’s very true. And I always think back I’d like you know, if we’re looking at 20, today, I will never invest at the seed stage, like, we had no idea or given all the wrong answers. But it didn’t really matter. So I think that a lot that sometimes you see founders, and you see themes, and and you have to think, Well, if the product will demand that works, how are these people going to be transformed? And they will probably look very differently three years from now. And you kind of have to take a leap of faith and imagine that. Love it. Love it. So how did

you TJ and ultimately, Reggie come together and decide to create based on.

So as I mentioned before, I was investing a lot, right, I started in 2010. And originally, I didn’t really know at all what I was doing in the sense that I will invest for one of three reasons one that I really liked the technology to that I believe that that should exist in the world are three that I really liked the person. And there was really no no rhyme or reason to, let’s say, my first 10 or 15 investments. And then something interesting happened. On one hand, I was spending a lot of my time developing machine learning and artificial intelligence products, I would say identify them and then work there. But more and more. As an investor, I was being attracted to companies that are in the surface, they didn’t look like a data company. But if you peel the first layer of the onion, a lot of why they were being successful is because they were doing really interesting things with data. And in particular, I’m talking about companies like Instacart, that is a grocery delivery company, or Califia, 99 taxes that are you know, transportation people, delivery companies, or shipbob, which is logistics package delivery company. But the truth is, and this actually came when I put some of these entrepreneurs together, that they will tell each other, you know, you and I actually run the same business, you just happen to deliver food, I deliver people, you deliver packages, and that in my mind, started to form a theme of, you know, it’s not really about data isn’t really about machine learning. It’s about taking the side kind of every day, kind of boring, kind of heavy workflow processes that have a lot of inherent value. And thinking. If an engineer was looking at them with a blank canvas, how will they rebuild it. And I ended up doing a lot more investments in food delivery in transportation and logistics. And they started doing quite well. And when I was describing this, this theme or these pieces, to a lot of my friends in venture capital, that there were like me technically minded and enamored with machine learning. They didn’t really put the finger on it. They were like, you know, they will ask questions like, well, but is the algorithm better? Or like, what is their data pipeline are we like, it doesn’t really matter, at least not for the first couple of years. When I’m at TD, and when he described what he was doing at Ubirr. This was back in 2014. And it was a mobile app for finding jobs. And when he was describing why he has wanted to like aggregate all the your postings in the world and put them in mobile format, which seems very, very easy, but actually, it’s very hard and it got him to be the number one job up in the US in like no time. I was really drawn by the way he was describing his business and he came from the opposite background of me. He grew up in mental capital. He was at Summit, then XL and then Cotu where he helped launch the the private investment practice of Khartoum and he was first train investor that really got the theme I was talking about and the nuances of it. So although I was his venture capitalist, our relationship was one of oh, I’m your investor. In all my personal investing, he ended up becoming my go to a person to call and discuss an investment with Wow. And he was joking, that he’s like, look, we are going to establish a program by which you’re going to spend five to 10 hours a week, like telling me all about data and like talking to my engineer, as an intern, I would like help you villians on your company’s perfect. And it helped that, by the way, my I live like five minutes away from the euro first. So this happened for a couple of years. And eventually, TJ sold Jover, to Monster. And he was thinking of going back to venture capital, he was talking to a few firms. And that’s kind of when when I told him, Hey, we have been doing this informally, we seem to believe the same things about how the world is going to change. And about if you were to be allowed venture capital firm from scratch today, what would you do differently? Why don’t we actually believe we have very complementary skill sets, but we really found the same things. So let’s, let’s tie the knot. And that happened now two years ago. So that’s, that’s the story.

Wow, that’s great. Had a it says on the website that you started based tend to take a profoundly different approach to automation. Yes, tell us more about your thesis on automation and how it’s different. Absolutely.

So, you know, automation is one of those things that everyone is talking about, and everyone, or a lot of people have very strong opinions about. But it’s very hard to define. And part of what makes it hard is that there are a number of words and terms associated with automation, like, you know, artificial intelligence, analytics, robotics, etc, that are parts of automation, but are not necessarily automation, or even core to automation in many places. And one way to think about it, instead, when you think about what we do day to day, as humans, and you’ll think about the parts that, that have been automated and have been taken over by artificial intelligence, mostly, we’re thinking about our phones, like, you know, we’re thinking about things like music recommendation, and, you know, what, what Siri can do in search. And, and your third one is thing worth thinking about SAS models for companies where, you know, you’re you help with the automated accounting and, and things like that, and, and all those problems are important, and are pretty well understood. You know, they’re probably 90%, or 99%, of what the venture capital industry has been about, for the last 20 years, bad. When you take a little bit of a soom out, and you start thinking about, Okay, so we’re spending a lot of time on our phones, but when we look at the entire planet, and when we look at what people actually do, and why it’s important, you start thinking about other things like, oh, waste management, and food, and agriculture, and construction, and transportation, and logistics, and all these things that are not pure software, but that actually touch the real world. And if you spend time in those fields, and what I mean by spending time is actually going to a bunch of construction sites, and asking them what problems they have and what automation means for them, you kind of get a pretty different answer of what will you will respect if you’re sitting in Silicon Valley. And that is out of experience. So when t and I started doing research on the fund, we were like, Oh, we’re going to be fin driven. And we’re going to do research in different industries. And we met with with a number of teams that were doing automation for construction. And we thought all that was about IoT and smart helmets and drums and things like that. And then we went to the actual construction sites and, and the answer was more like, yeah, oh, that’s great. Well, that’s super interesting. And I have a little bit of fun innovation budget for that. But, but you know what I really want to know, I want to know who shows up for work. Because right now I employ 10s of 1000s of people. And I actually don’t know who shows up for work every day, and that’s a problem. You know, it will be revolutionary. If on top of knowing who shows up for work, I actually learn what they’re actually working on. Because that will help me be better at assigning resources. And that will help me eventually calculate my return on investment. And right now, I have no idea. And I don’t think the smart helmets or drones necessarily going to help me with that. So can you help me with that? Can you like, put together a spreadsheet to like count people? And that answer is not, by the way, by, you know, some random construction company in like Southern Spain, I’m talking about like, large multinational us bass players. And the same is true. For the logistics industry. The same is true for the transportation industry, particularly industrial transportation, the same is true for read the real estate industry. And you are starting to see venture capital firms that are emerging with a deep understanding of these industries, and are building funds that are specifically focused on on those. We think that is very good. And we think that has a lot of merit, because in order to meaningful help these entrepreneurs, we don’t think that it’s enough to know algorithms or to know SAS, you actually have to understand those industries. And our vision, or what we want to become, is taking a horizontal approach as to trying to define Okay, what does our automation actually means? What is it going to mean for all of us? What are the real consequences? What is it going to take to really automate and create meaningful change on things like waste management and agriculture? And why does that matter? So that is a little bit our, our take on what we understand my automation, what we are about and and what we want to be?

You know, it always sort of frustrates me when folks, especially in the venture industry, start conflating automation and AI. Yeah, you know, you’ve written about how there may be some misleading guidance from firms in the Valley with regard to, to sort of this topic. Can you talk about that a bit, sort of the automation versus AI debate?

Absolutely, yeah. So we kind of divide our automation into two other meal 1000 frameworks that people can take, but the one we use is very simple things like, Hey, you have process automation, which is essentially a process that is manual, making it more efficient, like, you know, packaging something, and you have the decision making kind of automation, which is around, for example, in recruiting, shall I choose Candidate A or Candidate B? That’s kind of the two types of automation that that we use. And AI is really, generally understood to be more the second and the first, it’s really generally understood to be more about the decision making. And within that, oh, you say there is, you know, a specific if you wish, AI, which is around one particular field, like, Oh, do you understand written language? And can you decide if a given text is about a venture capital pain? Sure. It’s a crime novel. And you have general intelligence, which is, you know, the movies essentially, terminator or Blade Runner. And our general view in the whole AI thing is sad. When we read the headlines around, oh, my god, the robots are going to take everyone jobs, and like the general AI is coming in and like computers are so much your phone is so much more smart than than it was 10 years ago, and what is it going to be in 10 years? We kind of roll our eyes. Yes, in truth is that if you were to take the Tom, Ted, neuroscientists in the world, and the top 10, artificial intelligence experts, and the top 10 Psychology experts, and you ask them, Hey, what is general intelligence, you will probably get very, very different answers. And that tools is a tall tale of, you know, how can you attempt to replicate something that you actually don’t know what it is? Our general view is that artificial intelligence as a field, be general artificial intelligence part as a field, the one that people fear when they’re like, oh, Robert Williams takeover, its current state is akin to where she e6 was at the beginning of the 20th century. And it’s really interesting to like, go back and read word, when the leading physicists were saying at the beginning of the 20th century, because it was a time of great hubris. It was a time in which people thought, you know, now that we understand the laws of motion, we can basically predict everything. And the moment we find out the rules of ether. It’s done, like physics is sober, like, we’re so close to explaining the entire world. And then, you know, suddenly, Einstein and quantum mechanics came around and the story was a little bit different. We think that is state today, we think that you know, there is we’re getting ahead of ourselves. And artificial intelligence is extremely interesting. We love it or nerds, but it is only relevant for us as some very interesting tool to help with a specific automation tasks. Meaning, are there small decisions that you have to take when packaging something and deciding if you know it goes to warehouse a or warehouse? B? Yes. And artificial intelligence, some form of artificial intelligence? How would that? Absolutely. Does that mean that you’re going to have no people in the logistics industry? 10 years from now? Absolutely. Not? Absolutely. Not. There? Yes. Too many things, to predict too many variables to consider. And again, to when I have this debate with, with some colleagues, that know a lot more about machine learning than I do, I’m like, Okay, take a tour of our warehouse with me. Let’s have this conversation. Again, I couldn’t

agree with you more, you know, we had Tim O’Reilly on the show, and he talked about AI as a tool or a threat, and how so many people see it as a threat. But to him is really, you know, it’s just a tool like, like any other piece of technology that can be used for different purposes. But, you know, on this last point you made about, you know, different types of automation, whether it be processor or decision making, or, you know, these different sectors that you’ve seen automation applied to, do you think that there are certain sectors or categories or functions that lend themselves better to automation here in the near term, you know, maybe in the next three to seven years, you know, some areas that you think are primed for disruptive technology around automation, whereas, you know, there might be some other categories that aren’t quite ready for it. Yep,

yep. Absolutely. So we think about that a lot. You know, I’d have a stand in the roughly a little bit less than two years that we have been doing investments, our two top areas of investments have been in logistics, actually will, both commercial logistics and consumer logistics. And I think, you know, yet generally, everyone will agree with this statement, I prefer things delivered to me than going through them if I don’t have to. And if I can have them cheaper, faster, and more reliable, that will be a good thing. So we think we’ll see more and more of that. And that is, today that is strongly for, for a very small set of goods, and in very few and specific cities of the world. So there’s a lot to grow there. We have been doing a lot on transportation, we’ve done a little bit in construction, and we want to want to do more, because one question that that we always ask is, hey, how, how are our companies making everything society as a whole, fundamentally better, and, you know, people talk talk a lot about our efficiency, we like to talk more about reduction of waste. And in particular, in certain industries like construction, if you worry, you should take the the amount of materials that are used thrown away, out of every construction project is mind blowing. By some estimates, it’s more than 30% per construction project in the world. And if you were to aggregate that and yes, thing, a fan could reduce it by a little, how much better will it be for everyone, including the planet itself, talking about, you know, making an impact? And the interesting thing is all the technology to do that, it’s basically there is a question around really understanding okay, what is the market? Like, what are the incentives and how do I get people to adopt this in a way that is useful for them today? So that’s a little bit of the framework of, of how we think about that, in terms of industries that that are not ready for automation, and a number and, and, you know, we are usually again, the the automation whereas, uh, you know, Chairman’s, so it’s a blanket and, you know, there is a lot of new ones and it’s also not fair to talk about a particular industry give really have to worry about sub sub industry because all these are very large. But in general, it is safe to say that in things that include people making a decision about what other people want, or what other people need, or how other people are feeling. We think we’re very, very, very, very early on all of that.

Got it makes sense. With all these industries that you’ve mentioned, like real estate and construction and agriculture and logistics, consumer industries, of course, you’ve listed partners on your website. Notice fifth while of course, Brendan, but also Bessemer, and owl and Shasta and Bain Capital. Can you explain more details about this partnership program that you’ve launched that based on

salutely? Yeah, so So I was mentioning before, you know, you’re starting to see. So even when, even when, when I moved to Silicon Valley, which was 2008, the venture capital industry was, to a large extent, according to industry, like, you know, there were not that many firms that weren’t that big, an m&a experiences an angel investor, if you weren’t here, and you knew the right people, you weren’t going to say the right things, because there just wasn’t that much competition. And there wasn’t that much specialization, everyone was, to a large extent, a generalist. And if you understood technology, you understood a lot of it. And if you understood technology and sales, and you basically understood everything, and that works, if you are mostly doing software, but that doesn’t really work, if you are really going to invest all across the value chain of logistics, from, you know, warehousing, to trucks, to cargo ships, or if you’re going to invest in things like title insurance, because they are complex, and they need a level of specialization. And thing is difficult to think that any given general partner or even a smart partnership is going to become an expert in every single one of those fields. This is very hard. So obviously more competition on AI in general, if you truly believe that, eventually, automation is not going to be an industry in itself, but rather something that is going to touch every industry, you have to believe that more and more specialist firms in those industries in major capital are going to emerge. And again, we see that as a very positive thing. One of the other consequences, I think, of the expansion of automation and technology to every industry is that the venture capital industry itself, is becoming more difficult for any given firm to cover everything. And that leads to more collaboration. Because, you know, I might not know, in order for about FinTech, specifically, to know if a company that is automating payments for gig economy workers in Latin America is okay, from a regulatory perspective, what the entire competitive landscape in the world for payments is like, but I know that my friend naked Ribbit capital, probably has done that work. And he’s probably under setting what do we have to say about the automation part of it? So that was really the spirit, like, you know, the these firms similar? Again, I’m talking to each other. I mean, like, Hey, I think we both believe the same thing about the world. But you have this perfect for this, and I have this one, why don’t we look at it together, and kind of do research together, and maybe partner and why people are too. And that’s what we are trying to formalize. And it’s it’s a very, you know, light program of USA. At this time, we’re being very systematic at looking at the industry after industry, you’re going to understand your industry better than us. So if we see something interesting here, why won’t do it together? Why Why don’t wood research together? And it’s working quite well. It’s working quite well.

I love it. I love how you’ve taken, you know, a horizontal concept like automation and developed expertise around that and then partnered with folks that have industry expertise and more of a vertical way, it seems like the type of partnership that could have tremendous value. Thank you. So are they when you’re researching sectors that you’re interested in and assessing the opportunity to implement automation tools? What are some of the key factors that you’re looking for? So,

I will go to to the example that we had before around construction. When you know when we are even had this framework out what what was true about great automation companies and the Things that Instacart had in common with Uber and had in common with Airbnb, from a technical perspective and all these things. And then once we got the feedback from being in the construction fields and understanding for everyone, Hey, I just want to know what shows up for work. Every team that we met, that was focusing on automation for the construction industry. The first question that we asked was, how many hours have you spent working in a construction field? And you’ll be surprised how many teams Thank you, you will be surprised how many times we filter out basically, zero? Literally, it will be like, Well, no, we haven’t really bad. We have three PhDs in artificial intelligence. Great, great, great. Yeah, I don’t think that’s self. So I always say I’m grossly exaggerating. But you get the idea. Yeah. So all these to say that the first thing that we look for, is understanding by the founding team of the needs of that market. And we really go deep on that. We’ll really go deep on why you care about this. Why do you think other people are going to care about this? And provided that the technology works? How do you plan to get the industry to adopt it, because again, in a lot of these industries, it’s not about the technology or the tools not being there is about the intrapreneurs have not found a good way to convince people that it is worth it to take a step back and do things in this different way. So the go to market and, and the understanding of the workflow, because in, in general, in all these things, construction, real estate logistics, they’re like very complex workflows, right. And you have, again, warehouses working with transportation companies working with cargo ships, working with poor authorities working with customs officers, it is very complex, very complex, very, very complex. And some companies like I don’t know, Cutera, USA, you know, I’m going to own everything. And yes, we completely vertically integrated, and but you cannot begin there. So we spend a lot of time thinking, Okay, what is the part of the workflow that could really offer the most short term return of investment for people to switch to using more technology? Are we convinced that the entrepreneur gets it because they intimately understand that workflow? And do they have the capacity to convince others to switch to that, and I would say that that, that is, you know, about 50%, of what we’ll really spend time understanding. And then from there, there are a lot of things about about the product that we look for. Here’s an interesting piece and the technology part, I think all of our investments have fantastic engineering teams. But a lot of the technology that they use, and this is something that confounds me is that a lot of the technology that they’re using, I was using similar technology identified, but I needed to build at 30 person, that our engineering team to develop it because it didn’t exist today. You can do an API call to tensor flow, and you essentially get the same. All this to say, we believe that in general, the pure technology risk is going to be somewhat commoditized. And what is going to matter more is, how do you adapt it to our specific workflow, the industry? What does the product look like? So people want to use it? I don’t know if that makes sense. But that’s a bit how we’re thinking about it. Absolutely.

I mean, the point about understanding the customers and being close to them is is something that certainly resonates with us had a recent experience with a founder in New York who was building what I thought to be very revolutionary technology with regards to the trucking industry. And his key entry point was truckers themselves truck drivers. And I asked him that, you know, this is probably third meeting we got in I should have asked earlier, but I asked him, you know, how many truck drivers have you interacted with? And he said, Oh, well, my uncle’s a truck driver. I said, Great. You know, that’s, that’s great that you got some good voices, because how many other folks, are you going to truckstops? Or, you know, interview? No, I haven’t done any of that. Just just my uncle. And it was so disappointing to hear that because, you know, all this time and effort into building what seemed like a wonderful solution, but who knows if it’s the right solution, if you’re not, if you’re not close to the customers? Absolutely.

And by the way, I’ve been guilty of this as an entrepreneur myself, like when we, you know, we started identifying and I describe it as a data company masquerading as a recruiting company. I had all these ideas about Why recruiters should do things the way we were building them, because our system was so much more smart. And, you know, like made so much more dispassionate and unfair decisions. And the truth is, no one cares about how smart the system is. They care about the value, they get funding it, and in their day to day, learning the vision like no customer, they’re not jumping into the weekend, they’re jumping into how to make my day better. In general, part of what we think about this is, at the macro level, has been interesting to see how, in the last 10 years, at least, for me, you know, Silicon Valley, when I first moved here, no one really anticipated knew or cared that much about Silicon Valley, in 2008. Then it became this really cool place where, you know, people were dreamers, and doing all these fantastic things and making like magic happen, and it was beloved. And people came here I’m wearing out. And recently, in the last, like, three years or so, the tone is switching again. And it’s been a lot more, you know, yeah, the Silicon Valley folks telling the rest of the world what to do, and how we should live our lives and like, you want to, like Come here and take all these jobs away. And, and you’re seeing it with a lot of companies that that touch series, like, you know, the, the ride sharing companies and companies like Airbnb, that, that get real backlash, and, and the tone has changed, you know, perfect is normal. But perfed might be rooted in this fact that we as venture capitalist, some founders do have the responsibility to be very humble around, hey, no, we’re not a smarter, we’re not here to tell people what to do. We’re here to serve, and to help solve problems. And we’re going to have to begin by listening what is actually important. So we look for that, and founders a lot, because we are seeing that is the next generation, that is the people that are going to be making a big impact.

It’s kind of an interesting duality. I mean, I even notice myself that, you know, for every conversation I have with somebody who’s not in the industry, that’s excited about technology and excited about new things that that are emerging, I almost have one counterpart conversation with somebody who’s frustrated with some technology, you’re afraid that you know, something is going to impact their livelihood in some way. And it’s unfortunate, you know, that, that there is kind of this backlash, and there has been some negative unintended consequences of various different whether it be a specific tech startup or or the industry in general.

Yeah, yeah. It’s, it’s interesting. I’m we have to, I think, again, us as a community, can we have to deliberately listen to that big listen to that and understand what it means. And another interesting thing that that I have observed when I was setting out this at the beginning of our interview, is that again, when when we started 2018, in Madrid, there was basically no tech ecosystem. When Cabify started, no one in the Valley really wanted to touch like in America, right. And today, you look at what is happening. And I think of the last YC batch, the two hottest quote, unquote, companies were two Latin American companies. And I see I now get a lot more people. And it’s funny, this happens to me quite a bit I get, I will get pinged by my other business that I know, refer me to companies in Peru or Colombia mean, like, hey, this guy’s not from your country, right? Yeah, sure. Sure, no problem, thank you. But it’s good to see in the sense that it more and more companies like, you know, automation is definitely no longer as Silicon Valley monopoly, and a belief, the fact that all these companies are being started and all these other communities is going to have a very interesting effect in tech, because you might see companies that are started here. And because they’re not close to the industry, or the community that they’re intending to serve, might actually be at a competitive disadvantage. And I think that’s very interesting.

While we’re on the topic, you’ve discussed sort of the pride you take in being Hispanic American, European, African, black and white. I think it’s quite notable that you raise the first black lid VC fund of over $100 million. Are they How were you able to break through this significant glass ceiling so to speak where where others haven’t?

Well, thank you, Nick. Thank you for the question. You know, for me, it is a indeed take a lot of pride on my heritage. And I think that, you know, what, in general, I found was found being a little bit different. And advantage, one because you know, it forces you to just think differently. And to, because you already know that people are not going to look at you for your sign insider, it kind of forces you, or it makes it easier to be a little bit more of an independent thinker, because you’re not going to fully fit in anyway. So that that has always been interesting. To me. What, in my case, I found very, very interesting and very informational is that growing up in Spain, I never really had an understanding of what in America is defined as black culture, right? Because where I grew up, my brother and I were the only two black kids around. So we were a unit of two. And we grew up with the Nigerian influence, but the two local culture and then when I moved to the US, there was this community that I, in some ways I immediately belong to, but in other ways was completely alien to me. And I knew and understood intellectually, that there was a history of this community being treated very differently. And that is still being pervasive today, clearly in numbers land in a lot of other subtle ways. But it really took me quite a few years to interior outside. And in some ways, that provided me the opportunity to look at it from a very fresh perspective, and without a lot of preconceived notions, although at the same time, admittedly, I was very ignorant about certain things. And I’ll give you a very concrete example, when we started racing base 10, we thankfully had a lot of support from investors and LPS that already knew me or TA for an intrapreneurs that we had back in the past and gave us great recommendations. And, and in general, from the community, I cannot say anything but positive things for for the amount of support that we had. And towards the end of our fundraising, one of our existing LPS mentioned Hey, have you talked to institutions that are looking to deploy capital in managers that are minorities? And the honest answer was no. Should we? And they were like, yes, of course, you should, for a number of reasons. But to begin with you, you will have a greater chance, and it is a very good thing to do. Because you’re helping yourself and helping this institution of opening the community. I will say, Yeah, that makes a lot of sense. It had not been occurred to me. And and we didn’t do it until until the very end, totally, very, very less close, which, you know, gets to say that, on one hand, I am very privileged to have the heritage of all these different communities and be able to connect at a certain level with, with entrepreneurs of color, or with Latino entrepreneurs, or with Hispanic entrepreneurs, because we have that common heritage, that I do think it allows me to be a voice on the team on our team that that can have a slightly different perspective. But at the same time, because I grew up a number of different community, it does allow to see things from a fresh perspective, and hopefully, in the right to to be a part of that conversation, and help with a little bit more diversity that, in general, I think it’s a good thing to everyone.

Well, you make for a great leader and representative of all the folks that come from minority backgrounds or have been disadvantaged that, you know, are trying to do great things in tech. Not that you need the responsibility of being the leader of of that. But I think, you know, I speak for the listener base, that it’s always great. And we really appreciate hearing these stories, because many of us are not from Silicon Valley and did not grow up with a privileged background. And, you know, it’s great to hear these stories.

Well, thanks a lot for that, Nick. I, I have to say that just being honest, I don’t see myself by any means as our leader or speaking for a community because, you know, it’s as I said before, I am kind of a mixed match of very different places. And the only story for which I can kind of speak for is my own on the people that have worked with me along the way. But what I will say is that it is our privilege to be able to be part of the diversity story in some shape or form. and hopefully do a little bit more for that because it is important. And I do think we will all benefit from it.

Thanks for that. I’d if we could cover any topic here on the program, What topic do you think we should address? And who would you like to hear speak about it?

That is an interesting one, I would say that there are a lot of topics that we’re interested on. One of the ones that we have talked a lot about is how can we reduce waste in industries as all by improving efficiency? I was calling before a stat on how by some estimates, 30% of all materials that are used in construction projects are thrown away, and how harmful that is, I will love to hear someone talk about how can that be reduced not only for construction, but for things like food, and other industries? Are

they what investor has influenced or inspired you most?

I will talk about a recent one. I’ll say that I’ve been working in two portfolio companies with hanstone GGB and Carlota putsborough admonishes ventures, we been working very closely with them, particularly two portfolio companies that recently merged, and I have been inspired by the combination of hard work and humility that they both displayed. And not only them, but all of the other co investors, but in particular them to taught me a lesson of you know, how to be great and how to be aggressive, while being extremely kind and extremely humble.

And finally, what’s the best way for listeners to connect with you?

Are they standard BC? And I was I was looking forward to talking to interesting people.

Awesome. Well, this has been such a pleasure. I’m so glad that Brendon introduced the two of us, please say thank you to him next time you guys chat. And thanks so much for spending your time with us today.

My pleasure, Nick, thank you

that we’ll wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest competently. Thanks for joining us