Podcast Episode 40

Venture Chronicles: A Founder’s Odyssey into the Heart of Tech Capital with Ben Narasin

In this insightful podcast episode of Venture Chronicles: A Founder Odyssey into the Heart of Tech Capital, Ben Narasin, founder of Tenacity Venture Capital, shares invaluable wisdom on navigating the world of venture capital and entrepreneurship. From the importance of tenacity and understanding investor dynamics to practical tips on pitching and reaching out, Ben offers a wealth of experience and advice for both founders and investors alike. Tune in to gain a deeper understanding of the entrepreneurial journey and the dynamics of the tech industry.

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Introduction and Discussion on Data and Risk

Ryan Davies: Welcome everyone to the tech Business roundtable podcast show. This is a podcast show dedicated to shining a spotlight on tech innovators, entrepreneurs, founders, and the compelling narratives behind the movements they’ve established. I’m your host, Ryan Davies, and I’m hosting today’s discussion. Venture Chronicles: A Founder’s Odyssey into the Heart of Tech Capital with Ben Narasin. Ben, Thank you so much for joining us here today.

Ben: Hey, thanks for having me. It’s always good to do these.

Ryan Davies: You know what? I can’t wait to dive into the amount of expertise, knowledge and just life lessons here. I think our listeners are going to be invaluable for our listeners. Ben Narasin, known for his involvement in the tech and venture capital industry, has been an active investor and entrepreneur with a focus on early-stage start-ups. He’s been known for making investments in these early-stage tech companies and is a serial entrepreneur as well. And has been involved in building, scaling, and exiting a number of amazing, successful companies along the way. He’s an advisor and a mentor providing guidance and support to emerging entrepreneurs and is a polished public speaker known to participate in many industry conferences, sharing insights and experiences with the broader community. Twenty-five years experience in business,  17 as a VC. I want to turn it over to you in case there’s anything I missed there to color up the rest of the way, Ben.

Ben: Covered it, man. Looks like my LinkedIn profile is 25 years as an entrepreneur, and 17 years as an investor. I guess it’s 18 now, but they both feed the other. I mean, being an entrepreneur was critical to my ability to sort of shape how I think about being an investor, and there are not a lot of us. I used to believe there would be a lot of ex-founders as VCs, but it’s a relatively small slice of the venture community.

Taking Risks and Learning from Experience

Ryan Davies: I think that’s amazing. I’m a big sports guy and it’s always some of the best managers are the ones that are ex-players or coaches or best ex-players, right? Because you’ve lived both sides of the journey. So you kind of get a unique perspective from that from that side of things. And you’ve had a diverse but incredibly successful career as both a serial entrepreneur before trans transitioning into the venture capital world. Can you walk us through some of the key milestones or lessons from the entrepreneurial journey that helped shape your perspective as an investor?

Ben: Sure. I mean, I can sort of sum up 25 years in 30 seconds. I got my first job when I was 11, working for 25 cents an hour in credit. Then, I got a raise of 25 cents an hour in credit and 25 cents in cash. I thought that was a big deal till they paid the same wage to the next guy. I learned a lot of managerial lessons from what a bad boss I had when, well, obviously, the guys employed an 11-year-old. Come on. That’s not a good start. Started my first business when I was 12 and ran businesses pretty much nonstop thereafter. It was the only thing I ever liked my whole life when I was young. I only cared about dating and entrepreneurship, and now I only care about my family and entrepreneurship. So, unlike you, I don’t have any interest in sports, nor do I have any hobbies other than the founders of my family. The only other thing I do is play Call of Duty at night and sometimes on the weekends, usually with one of my founders out of Latin America. Along the way, what really gave me there are two things about my entrepreneurial journey that have been particularly valuable to me. One was all the realities you learn by being an entrepreneur. This is not a thing you learn to do by reading I mean, there are lessons to be learned in books. I have plenty of books I’ve read, but where you’re really going to learn is by doing. So, a lot of people have a false perception about what entrepreneurship looks like, and I have none. There’s no naivete in me about how hard it is is the hardest job in the world. If you’re not a first responder, if you’re in an office, it’s the hardest job in the world. The other thing that happened was I got, you know, I started one of the first dot coms in 93. So I was there for the birth of the web, and all the technology was built to support it, and that entire run up and crashed down, and then when the bubble burst, I had taken that company public, but I had never raised venture capital, so I was able to take a private, but I also bought about a dozen other startups that had raised enormous amounts of money. I made money on 11 of them. I made a mistake on the 12th. Every mistake I made and everything I did, right has been valuable for me to help other entrepreneurs on their journey, but that company also gave me the liquidity and freedom to do whatever I wanted. I actually retired for quite a while I don’t need to ever do that again. I failed entirely. If I think about the failures of my life, retiring is one of them. So when I got to Silicon Valley about 20 years ago, I saw this big gap in the market between angel and venture, and that’s what I decided to fill. So in 2007, I started what was one of the first three institutional SEED funds it turned out. So basically, I’ve been doing SEED since 2007. I also did traditional venture investing. So during my 1718 years as an investor, it was eight years as a SEED investor, seven years in the traditional venture, mainly at a new enterprise, Associates, which has historically been the largest venture firm in the world and one of my favorites and then I spun out of about 2.5 years ago with their support to start my own fund, which is SEED and occasionally pre SEED. And so I’m looking for entrepreneurs, so I’ll tell you a quick story. when I first started investing, when I was doing just seed, predominantly, I was three years into the journey, and I had not had a single company fail. Now, I was backing about 8 to 10 companies a year. That really worried me. I was like. I am clearly not taking enough risk because in 2007, 89, I’m backing guys and gals with PowerPoint slides and nothing else. I should have had more failures. So, I decided to loosen up on some things that were a mistake. It changed my view of investing dramatically. I tightened all that stuff up. I realized there are other places I can loosen up, but really only one. But I was talking to a friend of mine who I’ve known for a long, long time. He actually worked with my father, and we almost did business together when I was young. And I was saying I’m very confused. I don’t understand how I could have no failures. I clearly am making a mistake here. You can’t do this early-stage investing and not have people fail. Now, believe me, over the last 17 years, my failure rate is about one-third of my company, which is lower than venture, which is about 40%. But it’s, you know, it’s not zero. I don’t want it to be zero. Zero is wrong. But he looked at me and said, oh, I get it. I was like, what do you mean? Do you get it? I don’t understand it. I’m me. He’s like, yeah, no, that’s it. You only invest in people just like you. I was like, I don’t understand. What do you mean? He’s like, you will never give up, and you back people just like that. If you think about the name of my fund, tenacity, venture capital, Tenacity is the only secret to entrepreneurial success. Brilliance is assumed, but I’m not funding dumb people. Sorry. A great idea is assumed, I’m not funding dumb ideas, and a huge market is assumed if you have those three. Without those three things, I’m not going to fund you. The difference between whether you succeed or fail may very well rest on whether you’re tenacious enough to push through incredible hardship and refuse to fail multiple times. Almost every great success story has inside of it a story of near-death experience as a company, and if you decide to give up, well, you’re done.

Ryan Davies: That’s just incredible. I love that story of the no-fail rate and then realize that even no failure is a failure in some essence, right? To be able to embrace that and not go out and celebrate it and have that expectation that, well, I’m bulletproof, I’m fail-proof in this sense, and be able to figure that right?

Ben: Once you get overconfident, man, like I think she’d always be nervous, you know, as a buddy of mine who’s been successful as an early-stage investor showed me a company that I had a lot of experience, and he basically showed me a company that was almost identical to a company I’d started during the bubble, and I told him it wasn’t going to work and I didn’t want to invest and he looked at me, and he said, Ben, you know, my track record is unparalleled, and I was like, are you saying, because you haven’t had a failure in your portfolio before you won’t in the future like that, you’re such a good picker that you’re not going to make a mistake, and he didn’t, he was like, well, I said, you know what kind of rock climbers die the most? It isn’t amateurs, it’s experts. It’s overconfident experts that didn’t wear a helmet, and I can tell you exact stories of this and that is a dangerous place to be. I saw that investor’s company again about two years later raising money, and it was the same story, and I was like, yeah, I’m gonna pass. How’s it going? Well, we burned through 10 $12 million, and it doesn’t look like we’re going to make it not a surprise. In fact, I had given the advice to do something totally different that he was always succeeding at, and he said to me, I should have listened to you about that other thing. Hey, you know, if you want to put 10 million in a crater and light a match, that’s your business, but it ain’t going to be my money. Hey, look, people burn money up all the time. So I spend way too much. But you gotta have a shot, and I don’t think these guys had a shot.

Ryan Davies:  I mean, I love the Real World stories and kind of that, that putting it into perspective from that sense. You kind of talked about calculating risk and mitigating risk and things like that, and I think you’ve probably got a really unique balance of the instincts of an entrepreneur with that ability to be analytical from a VC side, but how do you evaluate risk as a VC and what advice would you give to founders about? Like you said, embrace risk while still maintaining a kind of strategic prudence and being cautious in what they’re doing.

Ben: So those are two really big questions. So, let’s break them into two. Let’s talk about my evaluation of risk first. Then, we can come back to entrepreneurs bearing a risk. I often will say I have all these pithy little sayings, and I’ve stolen lots of other pithy little things from other VCs. So I always say I need five things to make an investment: people, a great idea in a huge market if it works. So what I realized the first time I thought I wasn’t taking enough risk was that I needed to be willing to take more risk, and I decided to take that risk on the people. That was a mistake. You never compromise on the people. Now, I also don’t want to really compromise on the idea of the size of the market. What I realized was I would be so obsessive in my diligence that one material risk factor could get me to not do a deal. and one of my favorite phrases I’ve stolen from somebody else, and unfortunately, I don’t know who to credit with it is we will underwrite to one miracle, not two, and what I realized is if there was, if everything else checked a box for me, but there was one major risk that was a tolerable risk for me to take and I learned this because I was working on a company. There’s a woman that pitched me in a demo day session, and I loved what she was doing. it was in a category I didn’t know well, so I spent a whole bunch of time on diligence. In the end, I came back and said, I’m really worried about fraud risk for this one specific reason, and because of that, I just don’t think I can afford to take the risk because that one thing if it happens, kills your whole company. She was raising money at that time at $3 million pre-post. This was 08 when people did that. About nine months later, we talked again and she is absolutely crushing it. And I’m like, I made a mistake. I really want to invest. Can I invest? Well, not in the last round, but if you help me raise my series A, I’ll let you invest in the series A. So I introduced her to an investor who funded her for the series A, that’s a big part of what I do. A tier one firm here in Silicon Valley, and I invested alongside them, and I paid 30. Now, the pricing is irrelevant. What’s relevant is I paid ten times as much as I would have paid if I was willing to bear that one risk. So what I realized is when it boils down to one risk, I can be wrong eight times out of 10 and be better off. So, I don’t need to be that obsessive, and I’ve tried to get better. By the way, it’s a constant journey. This is not a destination I have reached; this is a journey I am continuously traveling. I was reading about Charlie Munger, who just died recently, and I just heard his book, which is being republished because it was out of print and thousands of dollars on a penthouse house for the book; maybe, maybe there’s so much wisdom in it I should have, but I basically said his, one of his favorite things was to tear down his long-held beliefs. I love that. You know, you have to be willing to be wrong. Now, in fairness, my wife will often basically say to me because I frustrate her all the time. I’ve been married for 30 years, by the way. Why are you always right? Why are you so sure you’re always right? You’re so confident in this. Why do you know you’re right? And I’m like, honey, I am not always right, but if I look at my history, I am usually right. So all I can do is there’s another saying: I stole from somebody seldom wrong, never in doubt. It is often hard to question your beliefs. There are things I think won’t change about me. And I’ve sort of tried to be self-aware enough to know those. I talk too much as an example. Tried to work on that. It never works. I’ve given up. It’s not that because I’m older, I’m stuck in my ways, but I think there are genetically brain-coded parts of me that I don’t care how much I train aren’t going to change, but a belief system should be able to change. Data should be able to change it like it. It is another great quote I stole from somebody. Actually, Mike Maples stole it from somebody, quoted it to me, and told me who it came from. I don’t remember if we’ve got data on this discussion, so we need to look at that. If we’ve got an opinion, we’ll go with mine. Opinion is your gut. It’s your subconscious. It’s everything you’ve learned in your entire life, and if it comes from an informed place, it’s important. If we’re going to debate something in start-up land, I’m comfortable with my opinions. If we’re going to debate something in physics, I’m not. If we’re going to debate chemistry, I’m not real estate. I’m not. You win every single time. Your opinion is better than mine. You want to talk about the ruble? I got nothing. So, you know, you can beat me on that one easily. But if there’s data available to support an argument, that’s what I want to see, and if it shows me that I’m wrong, great, prove me wrong. No problem. I will admit I’m wrong faster than anybody. I just need the proof or a very compelling argument to show me that you’ve got more knowledge and the ability to show me at least indications of my wrongness that are helpful to me to understand it. The second part of the question, though, was entrepreneurs’ willingness to bear risk, and this is also a question, by the way, for aspiring or actual VCs because it’s amazing how many young people go into ventures that don’t really understand how to think about risk. It’s somewhat stunning to me, but the thing about the reason I think entrepreneurship, it is so hard. One of the many reasons and the reason I have so much respect for entrepreneurs you’ve got somebody that had achieved something. Maybe they’ve got a great job, maybe they got a great education, whatever, and they’re now going to put all that aside and take the ultimate risk financially to try something new. No safety net. Nobody to rely on if things go wrong; they’re to blame for everything, and they’re going to jump if they do it right all the way into the deep end of the ocean and start swimming. Now, having said that, one of the things you need to do is an entrepreneur is be willing to jump. Not jumping is a tragic thing. You and many examples of this, but like, you know, you’ve all heard it perfect. It cannot be the enemy of good enough. Get that thing live. Start learning from people. They’re going to touch it. Don’t stay in a room with your peer group and hash out what you think is going to happen. I spent when I started my web business and call it 93. I spent six months on research. I took UNIX classes. I talked to people. I learned to code HTML. I learned more in six days of being live than in that six months. All six months were wasted compared to what I learned from people touching my product, and I regret that I did. I mean, it all went well. I got the company public, etc. I’m here because that gave me a little liquidity and freedom to do what I wanted to do, but I could have gotten there six months earlier. We were one of the first in the world, but you know, like I was one of the first three institutional SEED investors, but Josh Kopelman announced the first round of capital one week before me. Two weeks earlier, a little harder work. I could actually sit here and tell you I was the first to my knowledge. The third is a guy that claims he was there then that I never saw, but I’ll give him credit for it. That’s why I say three. I don’t know, you know, the details of when he actually started, but hard work is critical to this. Hard work is important. Smarts are important, but luck is required. I don’t care how smart you are, and I don’t care how hard you work somewhere along the way. The combination of that hard work and serendipity or some other form of luck, which could just be timing, is the difference.

Rayan Davies :  What’s the saying? It says success is where opportunity meets time or whatever it is there.

Ben:   The luck is the combination of hard work and serendipity. 

Rayan Davies: There it is. 

Ben:  I love the lucky you get. The more you have to get lucky. 

Founder-Market Fit and Investment Decisions

Rayan Davies: That’s exactly it, and I think, you know, we talked a little bit about it now, but I think listening to you speak and how you present this is the founder market fit. I think it’s a little distinctive in how you do it compared to the traditional way, but maybe you could delve a little bit into the importance of that aspect in terms of how it influences investment decisions and success from that founder’s Market fit perspective. 

Ben:  Well, a lot of my entrepreneurs are first-time founders. They may or may not have experience in the category. They’re attacking, I’m fine if they do, I’m fine if they don’t, if they have a compelling vision. One of the things that people tell me ask me, what do you look for? What do you look for? It took me years and years and years to have an answer. My answer is simple. I’m looking for founders that make me say wow. Now, there might not be deep expertise in the category. It might be a vision of the category that I’ve never thought of. Sometimes. Wow, that is an incredible depth of cogency. That’s just insane. But you know, I need to believe in, as I said, people. The founder is critical, but the idea and the market. So, one example I use of a pass for me, which my wife thinks is a mistake, by the way, if you say to me in line one because you always have a one-line elevator pitch. We’re making GPS dog collars. Awesome. I fostered 200 dogs. I need those dog collars. It’s not a venture-backed investment for me. I don’t see a multibillion-dollar public company. My definition of venture back investment is multibillion-dollar, probably fiber public company in the future. If everything goes right, there’s luck, and there’s hard work. There’s everything, but if it works, it’s a $5 billion public company that can grow from there. Preferably, by the way, my favorite business is uncapped upside, no limits. I mean, there are what, four or no, $5 trillion companies, public companies right now. All in the United States, all start-ups. No reason I should like it. That’s the level I would like, hey, like I would like. My fund, we’re shooting for 40 to 100 X on an investment, but I would like to have 1000 X, and I’d like to have an unlimited. Look liking wanting. This year, we were on pace to see about 8000 pitches. I backed that down about halfway through the year, but we funded three. I don’t fund the top 1% of entrepreneurs. I fund top one bip. It is a ridiculously hard thing to be a founder and to get to success, and I know that from experience and look, like I said, 17 years in 100 and 50 companies, a third of them have lost me money in some form. I’ve got five companies in the Republic at this point in my history. Not including my own, I guess I would make it six. I’ve got lots of great acquisitions. That wasn’t what I was shooting for, but they made me a lot of money. I’ve got 40 X, 58 X, 30 X, 60 X, and another 58 X 100 X. I don’t have my 1000 X yet. So you’re not going to get 1000 extra funding. The top 1%, for the most part, I don’t think. Oh, look, de facto, all my entrepreneurs are top 1%, but they’re the top one bit but the ones I see. Look, a venture is not the right form of money for a lot of types of businesses and that’s probably one of the greatest places of misunderstanding for entrepreneurs. So it’s like the old saying, why do you rob banks? That’s where the money is. People pitch venture because there’s money there. That doesn’t mean it’s your type of money. If you’re a vegan, you shouldn’t be pitching a steak restaurant, right? Like venture only like venture. Think of it this way. If you’re a lion, you eat meat, you don’t try to serve a lion salad, or they’ll eat you. So that’s venture. Like there’s a certain type of thing they need, they need to return the fund. You’re pitching a billion-dollar fund, man. You might better have a line of sight to a multibillion-dollar acquisition or a multibillion-dollar public company or outcome if it all goes right because if you have a line of sight with a $300 million acquisition by Salesforce is a nice tech in, that’s great for you, and it’s probably pretty good for a small fun, but it ain’t interesting to a multibillion-dollar operator. So avoid the pain of being in conflict with somebody later because by the way, conflict means they veto your deal and fire you and replace you with somebody else.

Flexibility and Adaptability in Business

Ryan Davies:  I think that’s just, again, incredible invite advice in terms of, like, making sure you’re positioning yourself properly, you’re aligning properly with the right people and, and the expectations are met from both sides on that side, and I think both entrepreneurship and you kind of touched on it before and venture capital requires this unbelievable amount of adaptability and being able to react to changing dynamics, especially in the tech landscape as well. Things are so rapidly moving and whatnot. What advice do you have for the kind of founders that are navigating these similar changes in terms of these ever-changing environments that they’re in?

Ben: Someone said it pretty well. It was firm on vision and flexible on the path. So, I often will say to entrepreneurs like you have to have a northern light. How you get there is going to change if you are rigid in your belief of how to get there, and it is a straight line. Well, life’s going to smack you in the face. Think about it like, I don’t like pivots. I don’t like it when basically a pivot to me is when you take your crew, and you sail off to get to, you know, the island of series. Something goes wrong.You turn the boat around, you sail it back to the dock, you unload the crew, and you think about another journey. Not great. Those have very low success rates. They’re few, and they’re very famous, but that you can count them on one hand, you’ll have plenty of fingers left. I don’t mind tacking into the wind. Just stick with the metaphor for a second. You’re sailing to a point and the winds changed. You have to tack into that. That’s fine.Be reactive, be flexible. I’ll give you an example that isn’t about how you run your business, but it’s the same mindset that can be very damaging to an entrepreneur. Entrepreneurs pitching me from a deck, which, by the way, always pitched from a deck, in my opinion. I spend four hours on average when my entrepreneurs are going out to raise their series. A doing what I call deck doctor. A huge part of what I do is help my entrepreneurs raise a series. I help them with their deck, help them with the introductions to the right people at the right time, help them with term sheets, and help them with what they need to expect. So you’re pitching an investor, and you get to slide one, you get to slide two, and you get to slide three. I have a question, blah, blah, blah. Back to slide four. Well, I don’t really know if you answered my question. Can we go back to that? And the obvious frustration usually from an engineer, to be honest, of not being able to go to steps four and five and six is like dude, here’s what I say to my founders. If a VC asks you a question, fundraising that is a yellow light, you slow down, and you answer that question. Now, if it’s later in the deck, you can say, hey, I’ve got a slide later. Do you want me to jump to it or can we come back to it in a few minutes? They usually say, yeah, just come back to it. If they ask you a question a second time, that is a blinking red light. You do not advance until you have thoroughly answered that question and they are comfortable with it because you might want to get back to your deck. It’s not about you. Sales 101. It doesn’t matter what you want. It matters what the guy or gal across the table from you wants, and if they want to get that question answered, if you don’t answer it, they are not paying attention. They are thinking, why didn’t this person answer my question? Well, I guess I had to figure it out myself. They’re ignoring what you’re saying because, inside their mind, they’re back at that point of confusion, that rigidity of, I have to get back to my deck. I have to follow my process. I have to go from step one to step two to step three to step four, and I don’t care what you want. It is enormously frustrating almost immediately a pass for me and really crushes your presence temptation, but it also will crush your business. I don’t mind if you plan out the next 100 years. That’s great. You want to have a 100-year vision. That’s awesome, but if you’re so stuck with it that you’re driving the Titanic, you see the iceberg, and you say, you know what, this is the path we charted. It’s the straight path. We have to jam through that iceberg. They all died, right? You know that story. So you don’t, you move the boat, and you get around the iceberg and figure it out. Be willing to tack into the wind in pursuit of your ultimate goal. Now, if your ultimate goal has been proven to be impossible, or you just have, for some reason, decided it’s not the right goal anymore. That’s a different discussion. That’s usually how pivots work. It is one of my favorites again. I steal so many quotes because they’re so good. With the old saying goes, good artists borrow, and great artists steal. It’s the best opportunities were, until recently impossible and are now merely highly improbable. GAI is probably a great example of that, but there have been many over time because when you change the world fundamentally, that’s when you make truly enormous businesses that people can just be extremely proud of or extremely profitable immunity. Just wow. I mean, you know, we all want to have a Google in us, but, you know, as an investor certainly, and I hope, you know, also that that’s probably a fair thing to say, you don’t need to have a Google in you. You need to have what you need in you, and this is where I think the biggest challenge for entrepreneurs seeking venture capital can be. There’s a huge difference from what you need and what you want. We might all want to be billionaires. I don’t know if I care; would I refuse it? I mean, if nobody knew and somebody came to me and said I got a billion dollars for you, and I got it in gold, and I want to give it to you because I saw this interview you did on this Roundtable and I thought you were awesome and I think you deserve to be a billionaire and be like other, you know, like obviously strings. This is a pretend thing, but I wouldn’t say no. I don’t have anything to do with that money. I’m not that philanthropic yet, which is the only way you can really use that kind of capital unless you’re like an over-the-top yacht builder or playing the buyer or collector of super exotics. So, you know, hey, it’d be nice. Sure. But it’s not like I need that, but I will tell you this: when I was running my company, we signed that underwriter’s letter. I had somebody come to me that wanted to buy the company from me. I owned 80% of the company, and they were going to pay me the low end of the IPO range. I immediately, without thought, said, absolutely not because I needed to take my company public. That was basically the embodiment of everything I believed I would be since I was 12 years old. There wasn’t any possibility I was taking that deal. Here’s the thing. If I just took out a piece of paper and wrote on one side sell the company of which I own 80% for the IPO price or take the company public with 50% dilution and then wait an eternity to sell my shares, which I never did because you don’t get to sell your shares as CEO of a public company I would have realized very quickly. That’s a lot more money. But that wasn’t. In fact, one of the only board members I liked and trusted I had my board was not fun. Said to me, Ben, you cannot just, you know, say absolutely no to these things. This is life-changing, this is huge and I said to him, that’s not what this is about. My arrogance was outrageous, but it was because it was born from something that I believed I could be and I needed to be. Most of the great entrepreneurs are arrogant and san or irrational who say no to hundreds of millions of dollars. Well, you’re not going to get a multibillion-dollar company out of you if you’re going to say yes to the $300 million bid. So my point is, it is not about what you want. It is about what you need. What is the thing inside you that when it is provided to you, you will say yes if you come from, I don’t know, I’m just, you come from a small town. The wealthiest family in the town has a $2 million house. If you came home, having sold your company for $40 million and keeping half of it $20 million, you would be the biggest thing in town, and that matters to you, and that is what you’ve always wanted your entire life and what you need. You’re going to sell someone that offers you 40. You’ve done nothing wrong with that. That is, whether it’s truly life-changing depends on where you live. It’s tough 20 million, and then tax is a different conversation. But net, do you have kids? You’re in a major metro. You go to private school like jeez, do you have aspirations in certain ways? But net, if that’s what you need, you’re going to want to take it. You want investors that are aligned with that because if you don’t have them, I have seen more than one person, some friends, who had the opportunity to take a lot more than that off the table and were shut down by their investors. Those invest you take money from a VC or any form of private equity. That’s a one-way prenup, and you don’t control it. They can divorce you, you cannot divorce them, and you tell them you want to do XYZ, and they don’t like it. Well, maybe you don’t get to do XYZ and I’ve plenty of stories on that path.

Ryan Davies: I love these stories. I could talk all day about these, and I love that we now have a guest visitor as well.

Ben: A cat that cost me half a million dollars, but I won’t tell you.

Ryan Davies: That one story for another time, you know, as we’re closing off here, I really kind of wanted to just touch on one more thing here is sort of like a crystal ball looking ahead in terms of areas of trends or innovations again around the tech industry, if we’ve got it, but from an entrepreneurial and an investment perspective, are there things that are catching your attention? Are there things that stand out to you or again, is it really just about, are you the right person with the right idea and the right market to make it go?

Ben: Well, I think it’s the last look. As I said, we were on pace to see 8000 pitches this year. I funded three, and I got pretty close to a deal this month, but in the end, we couldn’t see eye to eye on what rational pricing was, and you know, I care about entry price. So, I don’t look GAI is interesting. It’s going to change a lot, maybe everything. It’s not clear to me how you protect it. There’s a story I like, which is that in the US at the peak of the internal combustion engines. Early days, there were 200 car companies. Picking a GAI opportunity is like believing that you can pick out which one, Ford. I don’t know how to do that. So I’m pretty reticent there, but I’m open-minded. The company I almost invested in was a GAI company. I think he wanted too much of the sizzle valuation of GAI, and I wasn’t going to get there way too early. No way to be clear. It could be protected. I was willing to bet on the entrepreneur at what I thought was a pretty high price, but he needed to even higher. So I’m not, I don’t have, I’m not really a thesis-based guy where I’m seeking about half of my portfolios in fintech. I was just sitting with a VC, I know, this morning, right before this interview. He’s like, you really like lending. I’m like, well, I like lending as long as they’ve got an edge, and as long as it’s an AR-like, I don’t want balance sheet lending, but I think if I’ve got proprietary underwriting data and a way to make good money on the lending and you know, there’s value beyond just the lending. Sure, not a lot of people in fintech like lending, but it’s not that I went out looking for lending businesses that entrepreneurs presented me with really smart opportunities that are enormous, that could be just amazing businesses and in some places even make the world a better, which is a nice bonus. I’m not a double bottom line investor, I’m not a triple bottom line investor, I believe a good human being, and I’d like to see the world be better, so I don’t have any companies I know of that make the world worse, but I have several that I know make the world better. So that always makes me happy. It makes me happy. It can’t influence my decision. You’re going to make the world infinitely better, but you’re not going to be a viable multibillion-dollar public company. That’s for a double bottom line. People go find a charity. So I don’t have anything specific I’m seeking out right now, and the reason for a long time that I would just, you know, 8000, I mean, it’s crazy how many pitches you here because I’m just looking, it’s like this business is literally in many ways and I have changed my process because I, I didn’t think that was as productive as I was hoping it would be but I have always seen at least 1000 companies here even in the old days, and it’s sort of like digging through a mountain of granite or garnets because somewhere in there is that precious diamond and you don’t even notice what that it looks different in the beginning. Sometimes you have to stare, sometimes you see it where one of the facets is shining, it’s a diamond. Other times, it’s like, huh, by the way, if you have to do a lot of squinting, you’re probably making a mistake. That’s not an investment you should make if you have to think. Yes. But, and well, if, and da, da, if, let me put it this way, I’ve learned many things in 17 years. If you’re talking yourself into something, you’ve already made a mistake.

Ryan Davies:  I love that I think it’s even beyond investing advice. That’s something we could all just take away.

Ben: if you’re an entrepreneur as well. Look, everything is harder than you think. Acquisitions are a great example; they are never going to work out the way you think they are. You know, cut all your projections in half, and you’re probably still being optimistic, and then decide if it was worth doing it. But, you know, there is, look, I believe very much in the importance of trusting your gut. It isn’t some magical voodoo gut to me. Is your subconscious mind expressing what you have learned over the entirety of your life but going back to this, my gut is only relevant to things that I have some point of reference on. Maybe it’s the humans. Maybe it’s the idea, maybe it’s the market. I don’t know. But if it’s about something I don’t understand at all, I don’t think my gut’s worth anything. Should I have a gut? Like this morning? I had a board meeting that started at 4:30 a.m. because it’s the UK, and I’m up here, and I’m like, but as soon as the markets opened, we’re in a part I don’t need to listen to. I like Berkshire Hathaway. So I’m going to sell some options on it. I decided to tweak the price. If I had just hit, boom,  I  would have made back half the money I sold in 15 minutes because the market moved that way. It was like, oh, I should have just traded, like, as if I had a gut instinct, I would have made all that money in no time. Guess what? It went the other way, and then the moment it was down, did I have a gut? No, of course, I didn’t have a gut. There is no such thing. I don’t have a magic crystal ball gut that predicts the stock market, but I have a gut for entrepreneur realities and for people, I think, and that’s what I’m going to rely on.

Seeking Venture Capital and Understanding Investor Expectations

Ryan Davies: Incredible. What I’d love to just last as we’re, as we’re kind of closing off the episode here. You know, Tenacity Venture Capital is where you’re with as the founder and GP, there for our listeners just to learn more. Maybe there’s someone who’s like, he’d be perfect to speak at our conference or something like that. Just ways to reach out and get more from you. Oh, sure. Well, there’s so I read 100% of my emails. I read 100% of my LinkedIn inbounds and I read all my Twitter DMs. So, both Ben Narasin and Tenacity have LinkedIn profiles. I don’t even have a website. The Tenacity LinkedIn profile is the equivalent of a website you messaged me there. I’m going to see it. You DM me on Twitter. I’m going to see it. I read them all, by the way, for entrepreneurs that are interested in pitching me. One thing I’ll encourage you to do in any VC pitch is read their profile. You can also Google me, and I’ve written for everybody from Business Insider, the Information, and TechCrunch. My content out there big time. The reason I do so many of these, I want people to be able to understand me and decide if I’m relevant to them before they pitch me. But here’s the thing: on my profile page, Ben Narasin and founder and general partner, Tencity Venture Capital, boom, second-line pitch me or send me what you want to talk about in a one-line elevator pitch with an RR if you have it, period, I don’t do crypto, security or med tech. 90% of my inbounds seven paragraphs long crypto opportunity I now have stopped bothering to react. I just sent them back a picture of my profile with the headline circle. So, if you want to pitch me? Here’s the other point. I read it all. It doesn’t mean I respond to it all. I take up 500 behind. I’m going to read them all. It doesn’t mean I’m going to say, and by the way, if I do respond, not a fit, that’s all you’re going to get because I’m not going to explain why I have people that used to send me deals flow, and they’re like, could you tell me why you didn’t like the last 11? But now you want to see this 12? No, and don’t send me any more deal flow. I can’t sit here and take 583 reasons why I didn’t decide to respond to something, but I’m happy to respond to the ones I like, and I’m happy to do a Zoom, and I’m happy to do a meeting if the Zoom works out. Like to me, it’s all about in-person at this point, but I still do a lot of zooms.

Ryan Davies: Perfect. That’s incredible. So, you know, I think with that, let’s take a take a minute of heartfelt thanks from us, hearing from all our listeners. Then, on this amazing podcast, Venture Chronicles: A Founder’s Odyssey into the Heart of Tech Capital with Ben Narasin, with Ben Narasin and Ben, thank you so so much. The insights, the stories, and the wisdom shared here are invaluable, and hoping we can do this again because I think there are 50 other topics.

Ben: I’m sure we could cover an AMA and let your entrepreneurs ask questions, but I enjoyed it. Thanks for having me. See you next time.

Ryan Davies: Wonderful. Thanks so much, Ben. I really appreciate it, and we can’t do it we do without you listeners. So, until we meet again with another amazing TBR episode, I’m your host, Ryan Davies. Thanks so much for being here. Take care everyone.

About Our Host and Guest

Director of Marketing – Ekwa.Tech & Ekwa Marketing
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Founder & GP Tenacity Venture Capital
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” If you’re talking yourself into something, you’ve already made a mistake.”

– Ben Narasin –