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Kickstart's Founding Story: A Conversation with Gavin Christensen, Alex Soffe, and Dalton Wright, Kickstart's Founding Partners
12 Plays1 year ago
Can VCs be founders too? We're talking with Kickstart's founding partners to understand how Kickstart…was kickstarted. Join us in today's conversation with investors Gavin Christensen, Alex Soffe, and Dalton Wright of Kickstart (a VC firm for startups in Utah, Colorado, and the Mountain West), as we bring you both sides of a Perfect Pitch. In this episode, we'll talk about:
The slow grind of Kickstart's everyday life in the early days
Why no one took Utah VCs seriously and why that has changed
Low points in Kickstart's history and how the team survived
What is next in Kickstart's story…
Recommended
Transcript
Introduction and Podcast Overview
00:00:00
Speaker
Can VCs be founders too?
00:00:02
Speaker
Today, we're talking with Kickstart's founding partners to understand how Kickstart was kickstarted.
00:00:07
Speaker
Join us in today's conversation with investors, Gavin Christensen, Dalton Wright, and Alex Sof, as we bring you both sides of A Perfect Pitch.
00:00:26
Speaker
Perfect Pitch is a podcast from Kickstart that reveals the minds of both investors and entrepreneurs throughout a startup's journey.
Meet the Guests: Kickstart's Founders
00:00:35
Speaker
I'm your host, Karen Zunlick, and I'm really excited to introduce you to the team today.
00:00:39
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Gavin and Dalton, you're both familiar voices on the show, and we're excited to have you back.
00:00:43
Speaker
As always, we'll have a link to their bios in our show notes.
00:00:46
Speaker
And today we're joined by a longtime Kickstart partner, new guest to the show, Alex
Alex Soph's Journey to Kickstart
00:00:51
Speaker
Soph.
00:00:51
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Alex, welcome.
00:00:53
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Great to be here.
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He's very excited to be here.
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We're going to learn a lot more about you in this episode.
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But to summarize, you graduated from the University of Utah with your master's degree in accounting.
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Your career started at EY, where you provided assurance and advisory services.
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And after that, you were the director of finance at Signal Peak Ventures.
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Today, you're a general partner and CFO at Kickstart.
00:01:17
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And obviously, we jumped over a lot between your days at Signal Peak and today.
00:01:21
Speaker
But before we jump into the good stuff about how Kickstart got started, what else should we know about you?
00:01:27
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Huge fan of Halloween.
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Speaker
We do a fun spook alley every year with five fog machines, probably 12 to 13 animatronics, lasers, the whole deal.
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Speaker
Will we be publicizing your address?
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Speaker
Maybe we could post some photos though, because it really is amazing.
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We're excited to have you.
Gavin Christensen's Path to Venture Capital
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Gavin, we'll start with you because you were the visionary for Kickstart.
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Tell us a bit about what you were doing before Kickstart.
00:01:53
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As an aside, Kez, I would say getting Al on the podcast, it's a new moment for the podcast.
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I know.
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He doesn't seek a lot of attention.
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And so getting him on for this episode is a special moment for all of us.
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There's no going back, Al.
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He may find he just likes it.
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My background prior to Kickstart was I was a BY undergrad, spent some time in consulting, came back and joined a venture firm called vSpring, which was a very entrepreneurial shop.
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It was really the first fund.
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There was others, but they really planted their flag in Utah.
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And it was founded by Greg Warnock and Paul Alstrom.
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And they attracted an amazing team of young people and they really were focused on, hey, we're going to get this ecosystem going.
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And so they raised a bunch of capital and hired a bunch of people and did a bunch of deals.
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Joining that team, I really fell in love with doing venture capital in Utah and just how interesting and stimulating it was.
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When I was at BYU, prior to my LDS mission, I was going to be a literature professor because I loved writing and reading and I loved discussion, but I loved just like the intellectual kind of
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I don't know, back and forth of that process.
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And I got back from a mission out of Norway.
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Now we say that it was amazing, but it made me pretty pragmatic.
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I came back with an appreciation with how hard life can be.
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And it was like, you know what?
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I almost felt this is tongue in cheek, but I feel like maybe I don't need to take a kind of vow of poverty and go be a liberal arts professor.
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I can...
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Maybe read and write and teach and do something else.
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And what I found in venture capital was just incredible variety.
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I fell in love with the psychological challenge of helping entrepreneurs navigate all the challenges of building something special.
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That was my process during business school was really coming to terms with that and saying, wow, I can't let go of this industry.
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And I was so lucky to be part of vSpring that really let young people do irresponsible things like myself, sit on boards, help with fundraising.
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It was amazing.
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And ironically, this is how vSpring was.
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I tried to leave, but they kept me on boards.
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Like it was funny.
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I was at Kellogg in Chicago and I spent the summer with Google.
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This was an...
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And so it was a really exciting time to be part of Google.
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But I just realized that I just had fallen too much in love with venture capital.
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I spent a lot of my time at Kellogg working on what we call the Kellogg Venture Fund Project, which really was a seed fund.
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And spending a lot of time thinking about what a seed fund model would look like, what would make it work, what were the levers and kind of as an academic exercise that eventually grew into a passion for me.
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And I started to have conversations with Paul Ostrom and Dinesh at vSpring of coming back to vSpring.
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and taken over their New Mexico office.
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They needed someone to take
Founding Challenges of Kickstart
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that over.
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And I had framed it as, hey, if I come back, I'd love to move out of the garage, so to speak.
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I'd love to have a little more autonomy and maybe be able to do this seed fund idea.
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And Paul had been working on a seed fund for Utah along with University of Utah and other stakeholders.
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Fast forward to when I rejoined vSpring, those two kind of efforts came together.
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There was some energy to do a seed fund.
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Some of that was frustrated energy because it was hard to get everybody to cooperate.
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And I stepped into that with the vSpring gang.
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And that was the early kind of energy that eventually became Kickstart Fund One, which we had a first close of vSpring and University of Utah and some angel groups and a local bank, allied bank in April of 08.
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Everything felt really exciting.
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and really hopeful.
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And I think this is about when you enter Dalton, just to introduce where Al and Dalton were on this.
00:06:02
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Yeah.
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So my earliest recollections of kickstart come from the advertisement.
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Was it like an adventurer's wanted ad in the newspaper, like Shackleton?
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That would have been amazing.
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That was, you know, the Shackleton imagery in the Polar Explorers was always at the very beginning.
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That was on the website.
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I remember that.
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We put it on the website.
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It was just like a passion I had and it just worked its way over to... The call to adventure.
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Yeah, call to adventure.
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Call to do something that probably will fail.
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But if successful, you know, glory will be ours.
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Yeah, that's right.
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That's right.
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Yeah.
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What's interesting about my journey to Kickstart was that I was able to work with some of the original founders of vSpring, even before I had joined Kickstart.
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So Kickstart was being launched under the vSpring umbrella.
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And at the time, I had been working for Greg Warnock, who split off, went and did something else outside of vSpring.
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Now he's, of course, the managing director of Mercado.
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At the time, I was helping him with a little fund called Gazelle.
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And that's when...
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Gavin was launching Kickstart.
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There wasn't a seed fund in Utah at the time, just to be clear.
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There were other investors who would write Series A checks, but seed really in Utah wasn't a thing yet.
00:07:15
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And I would just interject and say seed was almost nowhere in the world.
00:07:20
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There was a few seed funds in California, maybe a few in the East Coast, and that was it.
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And it wasn't obvious that Utah as an ecosystem could even support a dedicated seed strategy.
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In fact, very few people believed that back then.
00:07:35
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But I was so excited to get the experience working at the earliest stage of venture capital.
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I had already had a little bit of experience as an entrepreneur, had a little bit of experience.
00:07:43
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doing investments, but really was still very much a student and was interested in putting myself in a position to be close to the great entrepreneurs of this ecosystem.
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And when Kickstarter was launching, I thought more than anything, that's the place where I want to be to interface, interact with amazing entrepreneurs are going to do big things.
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And so I threw my hat in the ring.
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There's only one seed fund launching in Utah and there's one position available at that fund and I'm going to be that person.
00:08:10
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But, you know, yeah, my early memories I have from the interview process was engaging through the HireVue.
00:08:16
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So HireVue was one of the portfolio companies that we wish we had added back then.
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There's probably more to...
00:08:22
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unpack there, but we were very evaluation sensitive back then.
00:08:26
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And so the technology that we use to do the interview process, the hiring process where they sent me a webcam, I was visiting my brother in Michigan.
00:08:34
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And it's interesting that we were testing that technology so early just in terms of our ability to interview remotely.
00:08:40
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And yet we still got it wrong in terms of not making the investment decision.
00:08:44
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So I did the hire view interview, went well, and was invited back for an in-person interview.
00:08:50
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And I remember I met with Gavin, I met with Paul Allstrom, I met with Dennis Wood, and these are all familiar names at vSpring.
00:08:58
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And at the time they told me this is going to be a $20 million fund.
00:09:03
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And the role that we're hiring for is $75,000 a year or something like that.
00:09:08
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For me at the time, just to be clear, $75,000 a year was much more than I had ever made at that point in my life.
00:09:14
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So it was pretty fresh out of undergrad.
00:09:17
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Everything was just perfect.
00:09:18
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It's the industry I wanted to be in.
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It was the group I wanted to work with, the people I wanted to be around.
00:09:23
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The compensation was phenomenal.
00:09:25
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And I wanted this.
00:09:26
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And so I lobbied anybody I knew.
00:09:28
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that could possibly give me any sort of an advantage.
00:09:32
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I had people who worked at vSpring that I was calling up saying, hey, I don't know if you remember, but we interacted during this interview years ago when I was doing this.
00:09:38
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And would you mind saying something to Gavin?
00:09:40
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I probably contacted 10 different people because I wanted it so bad.
00:09:44
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And I was lucky enough to get hired.
00:09:46
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And so it was the end of the summer.
00:09:46
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I remember I was wrapping up the summer.
00:09:49
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I hadn't yet accepted a job position that I was looking for.
00:09:52
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I was golfing with my dad and I got the call from Gavin saying, Hey Dalton, actually, I don't know if it's worth saying back then I went by Justin, but it's worth it.
00:10:00
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Yeah.
00:10:01
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So a lot of people in the early days of Kickstarter remember me as Justin.
00:10:04
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That's my middle name.
00:10:05
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So Gavin said, Hey, good news, bad news.
00:10:07
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Good news is
00:10:08
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we've conducted the process and you're the person that we want to hire.
00:10:12
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Bad news is fundraising is going much slower than we expected.
00:10:15
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We're not going to have a $20 million fund like we expected.
00:10:18
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Right now we're at four.
00:10:20
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We don't know when we're going to raise any more money.
00:10:22
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And so if you're still in, we can pay you $2,000 a month.
00:10:26
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And the joke that we've had over all these years is that Gavin was too respectful to call that a salary.
00:10:31
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He just said, well, it'll be a stipend.
00:10:32
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And that was an easy decision.
00:10:33
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I didn't even have to think twice about it.
00:10:35
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I just said, absolutely.
00:10:36
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I'm in.
00:10:37
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I would have done it for a thousand.
00:10:38
Speaker
I probably would have paid a thousand dollars to have that job, to be honest.
00:10:41
Speaker
But for me, it was an opportunity to learn venture capital, learn seed stage venture capital, actually do live deals and learn from some of the best in the business who were
00:10:50
Speaker
At the time, it wasn't proven that they were some of the best in the business, but it was early in developing a reputation, a brand.
00:10:57
Speaker
And I got to throw in before it was obvious that it was going to work.
00:11:01
Speaker
Because I might interject here.
00:11:03
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And just for our listeners, for those that are younger and thinking about their careers, I think there's a lot to learn from the Dalton joining Kickstart story.
00:11:13
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Because when you think about early in your career, the thing you don't have is network.
00:11:18
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You don't have experience.
00:11:20
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you don't have the momentum that allows you to go on to do other things and to make money and to have an impact.
00:11:26
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And so Dalton popped in the interview process because of his ambition, because of his passion for what we were doing and his hustle, in addition to intellect and the things he'd done.
00:11:38
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So I think...
00:11:39
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Him really being willing, and we'll talk more about his career arc, but him being willing to be very flexible on pay meant that he really made a big kind of deposit in the relationship with myself and others at vSpring and Kickstart to where his role went from being an analyst to being like part of the founding team here that really helped shape the fund and then set him up
00:12:07
Speaker
He really played the long game.
00:12:08
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And I think so many young people, that's such a great lesson to learn if you want to accelerate your career is to just recognize that you're not optimizing for title or money early.
Kickstart's Evolution and Strategy
00:12:20
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If you optimize for those, you're not going to have the opportunities to do when you are willing to put some, you know, quote unquote, skin in the game.
00:12:27
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Yeah, he was really optimizing for learning and growth and like establishing that foundation.
00:12:32
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Yeah, and also I think my personal situation, it wasn't like...
00:12:37
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I had already had any type of an exit or a windfall that allowed me to be super flexible.
00:12:43
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It was just that I kept my burn rate low.
00:12:47
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And that's the other advice that I give to young people is keep your options open by not painting yourselves into a corner with how much money you're consuming or the lifestyle that you have to support.
00:12:58
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keep your options open.
00:13:00
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So when you think about how Kickstart pays its people, it charges a 2% management fee on the money under management and $4 million at 2% per year isn't enough.
00:13:10
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It covers the audit.
00:13:11
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But as far as actually paying the salaries, it was not yet a viable fund, but Gavin was able to make sacrifices.
00:13:18
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I was able to make some sacrifices until it became viable.
00:13:21
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The ability to maintain flexibility and prioritize learning and choosing who you get to work with and the type of work that you get to do.
00:13:28
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To me, that was worth a lot more than a higher salary.
00:13:33
Speaker
And I think the other thing I would say for those who are interested in getting into this business or I think this applies to other industries as well, not just venture capital.
00:13:41
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Are you benchmarking against your peers in terms of how much money they're making right out of undergraduate?
00:13:46
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What are the things that you're trying to compare yourself on?
00:13:48
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And I know there's a lot of pitfalls about comparing yourself, period, to other people.
00:13:52
Speaker
but you really know what matters to you.
00:13:54
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And I think so often people fall into the traps of, okay, it's like, you want to go get the more prestigious job that pays well, the recognized brand name right out of college.
00:14:04
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You want what you're doing to be seen as credible,
00:14:09
Speaker
prestigious, valuable.
00:14:11
Speaker
And a lot of times in the startup world, when I joined Kickstart, it wasn't prestigious, right?
00:14:16
Speaker
There was something that's prestigious about venture.
00:14:17
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I don't want to say that there's nothing prestigious.
00:14:19
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I clearly wanted something to do in this industry, but it was just a really half-baked strategy with a lot of lack of structure and a lot of risk.
00:14:30
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And when I told people,
00:14:32
Speaker
What I did, the only time I ever got any type of social proof or validation in the early days for what we were doing was when people confused us with Kickstarter.
00:14:40
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It's like, oh yeah, you guys, congratulations on all your success.
00:14:43
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I've heard about you.
00:14:45
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Actually, you haven't heard about us yet, probably because nobody has really.
00:14:48
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We barely matter in anybody's minds yet.
00:14:50
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And so I think investing and creating value for people who are doing interesting things early is, at least in my path, I found a lot of happiness by...
00:15:00
Speaker
Throwing in early with ambitious entrepreneurs who were trying to do something important and hard and challenging and doing everything I can to help those people be successful before it was obvious.
00:15:13
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And in that process, I became part of these stories.
00:15:17
Speaker
And I think too, what you're also speaking to is this like intentionality around it.
00:15:21
Speaker
It can be very easy when you're early on your career, I think.
00:15:23
Speaker
And I don't know, I'd be interested in thoughts on this too, to just be like, oh, it's going to stardust and luck.
00:15:27
Speaker
And I'm going to stumble into these really amazing opportunities because I've got this experience or this education, but you have to be very intentional and you have to hustle a lot to get this job that ended up only having a stipend.
00:15:37
Speaker
And it's just a lot of grit and grind in the beginning.
00:15:41
Speaker
Maybe the biggest theme that...
00:15:45
Speaker
is not obvious, it's just patience and belief in yourself and being patient with the process.
00:15:54
Speaker
Just backing up a little bit, thinking about my motivation, I'm not someone who grew up always wanting to start something.
00:16:03
Speaker
What happened is being at vSpring, I fell in love with being a venture capitalist.
00:16:07
Speaker
And I fell in love with the process and the actual work of that.
00:16:11
Speaker
And then they were good enough to me to say, hey, you take over this New Mexico office.
00:16:16
Speaker
We'll let you run with this seed fund thing.
00:16:20
Speaker
Now, the seed fund thing was an ash pile of dreams because there were several people that wanted to do it and there was a falling out and it wasn't perfect.
00:16:27
Speaker
It was a mess.
00:16:29
Speaker
But as I got into it, I realized that
00:16:32
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Whoa, okay.
00:16:33
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There's no way that this fails, which makes no sense actually, but I had so much belief in that.
00:16:39
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I credit the vSpring partners partly for this because they had so much conviction about where Utah was going.
00:16:45
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That became like just an axiom for Kickstarter.
00:16:48
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Yeah, Utah is going to happen.
00:16:50
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We're going to plant our flag.
00:16:52
Speaker
We're going to go early.
00:16:53
Speaker
And so many things happened to make Kickstart possible that needed to happen.
00:16:59
Speaker
For example, when I was at business school, I wrote this white paper about the rise of the Business Web 2.0, which at that time, there was like one SaaS company in the world.
00:17:09
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And the movement of business software to the cloud enabled really the most important category for seed funds to be part of.
00:17:18
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Because prior to that, like the nature of technology was such that like you really couldn't get it done with small money.
00:17:24
Speaker
Now,
00:17:25
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Plot twist, K1, our first fund, is not very successful.
00:17:29
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So we were still on the product market fit journey with K1, actually.
00:17:33
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And part of it was saying, you know what?
00:17:35
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We need to invest in way more software as a service than we did.
00:17:38
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And we did in our second fund is amazing.
00:17:41
Speaker
That was one of the big things we learned.
00:17:42
Speaker
But there's other so many important technology trends, societal trends, demographic things that happened in Utah that made Kickstart possible.
00:17:50
Speaker
There's always so many layers of
00:17:53
Speaker
and I guess it's one of the themes I want to make sure that comes through in this, it's like, it takes a team.
00:17:57
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I was the guy staying in the arena.
00:17:59
Speaker
Dalton was critical.
00:18:01
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Al, and we're going to talk to Al, get his take.
00:18:04
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He was critical in terms of allowing us to not run off the rails early, just from a,
00:18:10
Speaker
being organized standpoint and actually reporting out on what we were doing standpoint.
00:18:14
Speaker
And then we had multiple existential moments at Kickstart probably every few years for a while.
00:18:21
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It's only been four or five years that I don't lose literal sleep over existential risk for Kickstart.
00:18:27
Speaker
And so founding stories, they're not an event, they're a process.
00:18:31
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And especially in a venture fund, as we talked about this, that's one thing I would just underscore is a venture fund, it takes a while.
00:18:39
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And as the journey has gone, I found that I have as much satisfaction from the building of the firm and the culture of the firm and the building of the people in the firm as I do in the companies.
00:18:48
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That's given me equal amounts of satisfaction.
00:18:52
Speaker
I'm excited to like double click on some of those, but let's hear from Al.
Al Soph's Venture Capital Journey
00:18:55
Speaker
What were you thinking when Kickstart first started?
00:18:59
Speaker
So I think it was 02 or 03.
00:19:01
Speaker
I can't even remember.
00:19:01
Speaker
I was undergrad at the University of Utah, wrapping up an accounting degree, had a chance to do a busy season internship with Ernst & Young.
00:19:10
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It just felt like at the U, it was hard to join a big forward firm.
00:19:14
Speaker
It just was hard.
00:19:15
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They'd take one or two of us.
00:19:17
Speaker
Got super lucky that was able to join.
00:19:20
Speaker
And then it was really interesting.
00:19:22
Speaker
My first client was a small fund up in Park City called, I think it was Prospector Equity.
00:19:28
Speaker
Yeah, that's right.
00:19:29
Speaker
My second client was vSpring.
00:19:32
Speaker
And then my third client was DW Healthcare Partners, another sort of private equity fund up in Park City.
00:19:37
Speaker
And really what it was is I just got lucky.
00:19:39
Speaker
There was these two folks at Ernst & Young, Peter Wall and Kelly Robbins, that were both U of U grads, and they were just looking out for me.
00:19:45
Speaker
So they gave me this experience.
00:19:47
Speaker
I just remember sitting in that middle conference room at vSpring on that first time I was at the audit.
00:19:53
Speaker
I was like, man, there's an energy here.
00:19:55
Speaker
So I joined EY a couple of years later after I finished a master's degree and come back and got really lucky that the same two folks pulled me in on the funds again.
00:20:09
Speaker
I wanted that.
00:20:10
Speaker
I was asking for that.
00:20:12
Speaker
It was the best experience I had during the internship.
00:20:15
Speaker
And that sort of set off an annual three to four weeks at vSpring for five years.
00:20:21
Speaker
I'd go to vSpring, go do the audit for three to four weeks, got to know mostly the finance team and mostly just observed the other partners.
00:20:29
Speaker
I think I met Gavin once.
00:20:31
Speaker
This would have been 04 to 09 timeframe.
00:20:35
Speaker
But mostly just observed the partners, got really close with Travis, who's now the CFO at Signal Peak, and then Dave Anderson, who's the then CFO at vSpring.
00:20:47
Speaker
Unlike Dalton, that it was hard work, I got really lucky.
00:20:50
Speaker
I actually did.
00:20:50
Speaker
So this is some stardust.
00:20:51
Speaker
This is the stardust moment.
00:20:53
Speaker
My boss at the time, David Jolly, who was the managing partner at UI at the time, just great boss, great person to work with, got really close with him.
00:21:02
Speaker
It just so happened every year he would go skiing with Dave Anderson for about three or four days.
00:21:07
Speaker
I feel like they went up to the Stein Erikson.
00:21:08
Speaker
I might be misremembering that, but they would go up.
00:21:12
Speaker
see the downhill mogul competition, spend a couple of days skiing.
00:21:16
Speaker
They were counterparts at EY for a little bit.
00:21:19
Speaker
So David was just really close to the vSpring CFO.
00:21:23
Speaker
And I had expressed to David in the past that like, hey, I think venture capital is really interesting.
00:21:29
Speaker
I knew after four or five years at EY that I didn't want to be in public accounting forever, but enjoyed my time there.
00:21:36
Speaker
I also knew I didn't want to really be like a
00:21:40
Speaker
director of SEC reporting for some public company.
00:21:44
Speaker
It sounded as miserable as it sounds, but it just wasn't for me.
00:21:49
Speaker
I just knew the 500 page checklists were just not my thing.
00:21:53
Speaker
I think I was a decent auditor, but I just think it wasn't my thing.
00:21:57
Speaker
And so I got really lucky that one day David wanted to go to lunch with me.
00:22:00
Speaker
I think we had just wrapped up the vSpring audit about a month prior.
00:22:04
Speaker
And he's like, hey, I know you want to be at vSpring.
00:22:08
Speaker
Dave Anderson wants to hire you.
00:22:09
Speaker
They need some more help.
00:22:10
Speaker
And so that is just not how it usually goes at public accounting.
00:22:15
Speaker
Usually you go in and you tell them you're going to move on to something else and they try to keep you or they're mad at you or it's just...
00:22:23
Speaker
You leave them in a bad situation because you're leaving at a bad time.
00:22:26
Speaker
And I just got super lucky that I had a boss in David that was like, hey, go for it.
00:22:31
Speaker
No, just go for it.
00:22:32
Speaker
I know you want to be there.
00:22:33
Speaker
So let me help you be there.
00:22:36
Speaker
That is how I feel like everyone should be.
00:22:37
Speaker
I'm going to cut you off, but that would be an amazing experience for people if everyone had that support.
00:22:42
Speaker
It was really special.
00:22:43
Speaker
David just was a great person to work for.
00:22:46
Speaker
Maybe it says more about my abilities as an auditor.
00:22:48
Speaker
He's like, hey, maybe you should leave.
00:22:51
Speaker
So that was May of 2009.
00:22:52
Speaker
And what I would say is I joined...
00:22:55
Speaker
Knowing that I was going to be doing vSpring stuff, but also knowing like I was going to pick up this little thing, Kickstart, that I didn't really know much about because we did not at Kickstart at the time.
00:23:05
Speaker
And then I was going to pick up this other little sort of side thing called Alta Growth, which was a fund based in Mexico that we were also kind of doing some of the back office stuff for.
00:23:16
Speaker
I realized pretty quickly when I joined vSpring that I joined towards the tail end of a deployment cycle on a fund.
00:23:23
Speaker
So I joined Fund 3.
00:23:24
Speaker
After I joined, I feel like vSpring did...
00:23:28
Speaker
two more deals.
00:23:28
Speaker
I think they did Matchbin and Vutara.
00:23:31
Speaker
I think those were the final two V Spring deals.
00:23:35
Speaker
And I quickly realized all the energy was actually on with Kickstart because they were the one doing deals.
00:23:43
Speaker
And we were doing... Tiny deals.
00:23:46
Speaker
100K, 200K deals.
00:23:48
Speaker
But all of the energy was there.
00:23:50
Speaker
And I wanted to sort of put more of my time at Tickstart, even though at the time, I think when I joined, it was 4 million.
00:23:57
Speaker
Yeah.
00:23:58
Speaker
By, I want to say 2010, it was 8 million.
00:24:02
Speaker
So we had some sort of a fund to do.
00:24:04
Speaker
We were crushing it.
00:24:05
Speaker
Something.
00:24:05
Speaker
We had doubled.
00:24:08
Speaker
Doubled inside 2X to fund.
00:24:10
Speaker
But the energy was really fun and the need was there from the ecosystem standpoint.
00:24:15
Speaker
That's sort of my recollection of now we're going 14, 15 years ago.
00:24:20
Speaker
Help me be a fly on the wall back then.
00:24:22
Speaker
What was the day-to-day like for all of you?
00:24:25
Speaker
It's probably important to set the stage.
00:24:27
Speaker
So Dalton was on stipend.
00:24:29
Speaker
I was living in New Mexico when my family was there and I was spending a lot of time commuting back and forth.
00:24:35
Speaker
I think we just knew that we had this small little fund, say $4 million, maybe in 2010 became $8 million.
00:24:43
Speaker
We were trying to lead deals with 250K checks.
00:24:47
Speaker
We would be on the phone kind of dialing in syndicate dollars, 25K at a time.
00:24:53
Speaker
Like a really red hot seed deal that we would do back then would be like a million bucks,
Investment Lessons and Utah's VC Landscape
00:25:00
Speaker
750.
00:25:00
Speaker
And so it was logistically super challenging.
00:25:04
Speaker
We were making it work by being part of this larger fund.
00:25:08
Speaker
But that larger fund wasn't actively doing new deals after a while.
00:25:12
Speaker
And Paul had gone down to start a fund in Mexico.
00:25:14
Speaker
And eventually Dalton and I had a tough chat where I'm like, man, I feel so guilty that we're only paying you this amount of money.
00:25:22
Speaker
And this is an amazing opportunity for you to go join a fund that will likely have more money to put to work.
00:25:27
Speaker
Now, we just knew that we were in for a wilderness period, as one of my entrepreneurs says.
00:25:32
Speaker
We had a little bit of a grind to get to the next fund, to prove enough to get to the next fund.
00:25:38
Speaker
You also have to put yourself in the context of that time.
00:25:41
Speaker
Following the Great Recession, it just was not obvious that venture would ever recover.
00:25:48
Speaker
It was very existential for all of Utah Tech at the time.
00:25:51
Speaker
Our belief level, I think, was really high.
00:25:55
Speaker
Weirdly high.
00:25:56
Speaker
We just put our heads down and survived.
00:26:00
Speaker
It just wasn't obvious, as Gavin pointed out, that the market would recover, the venture capital would come back, or that seed stage would be on a path to become something in Utah.
00:26:09
Speaker
So not only were we trying to do something that hadn't been done before in the state, but it was also in the context of dramatically deteriorating market conditions.
00:26:17
Speaker
And I don't remember feeling pessimistic, but I remember feeling like the uncertainty, the deep uncertainty, maybe to answer the question about being a fly on the wall.
00:26:28
Speaker
So from my perspective,
00:26:30
Speaker
In those days, I was spending a lot of time in the vSpring office because this was being developed under the vSpring umbrella.
00:26:36
Speaker
Gavin was commuting in on Mondays, typically for partner meetings, flying in from New Mexico.
00:26:41
Speaker
I think I was the only full-time employee at Kickstart, maybe.
00:26:45
Speaker
I think you were still working more hours for Kickstart than I was at the time.
00:26:47
Speaker
But, you know, I was still... I was all in.
00:26:50
Speaker
I had still had roles at vSpring that I had to...
00:26:53
Speaker
Manage, yeah.
00:26:53
Speaker
Yeah.
00:26:54
Speaker
My recollection of that time was just deep gratitude to work with vSpring, gratitude to work with somebody like Gavin as a mentor, gratitude to be in the game, be in the industry.
00:27:04
Speaker
So I spent a lot of time in those early days trying to establish credibility for Kickstart's due diligence process.
00:27:11
Speaker
So it was hard to raise money.
00:27:13
Speaker
We would commit 250K or something like that to a round.
00:27:16
Speaker
And we were trying to get another 250K from a bunch of angels or we were dialing West Coast firms and they were saying, remove your companies to the Bay Area before we're even going to consider funding them.
00:27:28
Speaker
We don't invest in Utah.
00:27:29
Speaker
That was the attitude that we were getting, especially in that environment where people were, I think, retrenching in the venture industry.
00:27:35
Speaker
People weren't looking to expand their investment practice into Utah at the time.
00:27:41
Speaker
And I would say follow-on rounds were super rare.
00:27:44
Speaker
Yeah.
00:27:45
Speaker
And so we just never assumed there was follow-on capital after us.
00:27:49
Speaker
Yeah.
00:27:50
Speaker
We were hoping and there were some exceptions.
00:27:52
Speaker
And so we really focused on, okay, what can we accomplish with this money, which is too little.
00:27:57
Speaker
We realized in fund one, we were funding companies to be about halfway to somewhere interesting.
00:28:01
Speaker
Yeah.
00:28:01
Speaker
Yeah.
00:28:03
Speaker
And we were also funding companies in some cases weren't particularly capital efficient.
00:28:07
Speaker
We were investing in some hardware businesses.
00:28:10
Speaker
To Gavin's earlier point about this shift towards the cloud, we didn't really hit our B2B SaaS source.
00:28:17
Speaker
stride and actually pick winners until we were investing out of fund two.
00:28:21
Speaker
Fund one, you'll see a kind of a hodgepodge of medical devices.
00:28:26
Speaker
Super res, microscopy, cancer drug.
00:28:29
Speaker
The original thesis was we had some universities as LPs.
00:28:32
Speaker
Yeah.
00:28:33
Speaker
We thought that the commercialization engine pointed out a seed fund would be this incredible spark for great companies.
00:28:42
Speaker
It can be, I would say probably one of our biggest lessons learned was like,
00:28:47
Speaker
Tech is awesome, but who cares without great entrepreneurs?
00:28:51
Speaker
And so we're backing people and they create great tech.
00:28:55
Speaker
And if you spend something out of university, that's exciting and awesome, but you're going to completely remake it from scratch.
00:29:01
Speaker
And so if you don't have the people who want to be entrepreneurs,
00:29:04
Speaker
then that's tough.
00:29:06
Speaker
Yeah.
00:29:07
Speaker
Yeah.
00:29:07
Speaker
I mean, so much of Fund One was a tech commercialization story because when we were out telling the story of Kickstart and raising money for Kickstart, it was the story of bringing the community together, a vehicle that was going to unite the ecosystem, align the ecosystem to support the earliest founders and accelerate the pace of innovation in the ecosystem.
00:29:28
Speaker
And we had an investment committee, people from Brian Cummings and Ed Weinshanker.
00:29:33
Speaker
Mike Alder.
00:29:33
Speaker
Mike Alder.
00:29:34
Speaker
Mike Alder.
00:29:36
Speaker
Guy Latender.
00:29:36
Speaker
Guy Latender.
00:29:37
Speaker
Brian Ritchie.
00:29:38
Speaker
Yeah.
00:29:38
Speaker
Yeah.
00:29:39
Speaker
And I'm sure we're missing some names.
00:29:40
Speaker
Doug Wells.
00:29:40
Speaker
We'll have to add in the notes because there were a lot of people early on that really took the time to attend those investment committee meetings and give us their perspective on the decisions that we were making.
00:29:51
Speaker
This idea, though, of what does it mean to have found product market fit as a venture fund, I think, is an interesting question.
00:29:57
Speaker
What does it mean to go zero to one as a venture fund?
00:29:59
Speaker
It's very different than a startup.
00:30:01
Speaker
But I think of Fund One as a little bit of a proof of concept where what ultimately worked for Kickstart was not the original story that we were pitching.
00:30:11
Speaker
We actually had to continue to refine our investment strategy and move with the market.
00:30:16
Speaker
And in hindsight, when you look back at the deals that we missed in fund one, it was a narrow path to having a great fund.
00:30:21
Speaker
Now, these subsequent funds that we've raised, we've made a lot of great investments, but we've missed a lot of great investments.
00:30:26
Speaker
And we still are able to put together good funds, even though we missed some great investments.
00:30:31
Speaker
In fund one days, if you miss the one or two fund makers in your region, you don't have another shot at getting a decent fund.
00:30:38
Speaker
And so most of our investments, you see a lot in there that were kind of IP dependent and you're based off of university research.
00:30:45
Speaker
And the companies that we actually missed were, think of them as the college dropout SaaS founders.
00:30:51
Speaker
They weren't trying to negotiate a licensing agreement with the university to commercialize IP.
00:30:55
Speaker
They had spotted a market problem and they were going at it and they were going to build the product to meet that problem or solve that problem.
00:31:01
Speaker
They weren't starting with the product and looking for the problem.
00:31:04
Speaker
You could say some of those founders that we backed in Fund One, they had these...
00:31:09
Speaker
impressive resumes.
00:31:11
Speaker
They had a lot of academic training, let's say, but they didn't have the instincts for commercialization.
00:31:17
Speaker
They didn't have the same grit level in terms of really going to market with whatever they had with very little resource that we found with the folks that we missed.
00:31:28
Speaker
We backed some great founders, but this is an interesting kind of moment at Kickstart, right?
00:31:33
Speaker
08 was an earlier time for this ecosystem.
00:31:36
Speaker
There wasn't as many founders and leaders that really knew the process.
00:31:41
Speaker
And the process matters is something we have learned at Kickstart.
00:31:45
Speaker
I remember you tell the story of, we won't say the company, but a fund one company that between the closing of the fundraise and the first board meeting, they come to the first board meeting and say, we're out of money.
00:31:57
Speaker
Well, it was actually better than that.
00:31:59
Speaker
And by the way, this was somebody who was an experienced founder, but it was like, we're out of money.
00:32:05
Speaker
I fired my co-founder.
00:32:07
Speaker
We were in default of our lease and they're one of our biggest investors and we're in a lawsuit with them.
00:32:13
Speaker
That was like the update.
00:32:14
Speaker
Terrific.
00:32:15
Speaker
First board meeting.
00:32:15
Speaker
We always joke about first board meetings, but I tell you, K1 first board meetings are a class of their own because it was kind of like, okay, do we still have a company?
00:32:24
Speaker
It was a bumpy time.
00:32:25
Speaker
I'll tell one more story, which kind of illustrates a little bit of
00:32:30
Speaker
what K1 was like.
00:32:31
Speaker
So when I'd come from New Mexico, you know, Kickstarter didn't really have much of an expense account.
00:32:36
Speaker
We had none, right?
00:32:37
Speaker
And so I would stay with my folks.
00:32:39
Speaker
And I was working a lot of hours, as Dalton was saying.
00:32:41
Speaker
I was like all in.
00:32:43
Speaker
for a long time with this.
00:32:45
Speaker
And I would come back late at night to my family's house.
00:32:48
Speaker
My parents are like super like safe, conservative people.
00:32:52
Speaker
And so it's always locked and they sleep very soundly.
00:32:55
Speaker
I would be like knocking on the door.
00:32:57
Speaker
And this is like one in the morning.
00:32:58
Speaker
And it was weird.
00:32:58
Speaker
I was like, oh, here I am in like high school again, locked out like late one or two in the morning coming back from the office.
00:33:06
Speaker
I would end up ringing the doorbell, which is I felt really bad about.
00:33:09
Speaker
And they'd come in like, oh, honey.
00:33:11
Speaker
But they didn't, they wouldn't give you a key.
00:33:14
Speaker
That's the punchline is I was like, hey, mom, maybe I could get a key, you know, that way I wouldn't have to wake you guys up.
00:33:20
Speaker
And she's like, oh, honey, what if you lost it?
00:33:26
Speaker
And for me, it was one of those illustrations of like, hey, you can never really leave.
00:33:30
Speaker
Like, here I am, not a huge fund, but like $8 million, you know, and like all these investors are believing in us.
00:33:36
Speaker
And my parents still don't trust me with a house.
00:33:40
Speaker
I have my own house in New Mexico and a family, you know, it's like, no.
00:33:43
Speaker
Oh, honey, what if you lost it?
00:33:44
Speaker
What if you lost it?
00:33:45
Speaker
So anyway, that was a humbling time.
00:33:47
Speaker
So that was like four years of that.
00:33:50
Speaker
And I think that's one of the themes that we all experience is like, hey, there's a volume of effort and work that goes into this process.
00:33:57
Speaker
But I'm not sure if we could have gotten over the hump if the volume of work had not been there.
00:34:02
Speaker
My quick fly on the wall would be, there's just a lot of change with what we'll call the mothership with vSpring too.
00:34:10
Speaker
navigating that as Paul embarked to go down to Mexico to do Alta Ventures.
00:34:15
Speaker
And eventually by 2012, he had Ron Hines and Brandon Tidwell come in.
00:34:20
Speaker
I just remember being...
00:34:23
Speaker
know, just a little unsettled just as far as what my role was.
00:34:27
Speaker
I just tried to use it as the opportunity to just observe and learn.
00:34:31
Speaker
And I'm a quiet person and I would say just that's the way I learn is observing.
00:34:36
Speaker
So, you know, do want to echo what Dalton said is, you know, a lot of gratitude for those Beespring founders that certainly treated me amazing.
00:34:47
Speaker
It's funny, Thanksgiving week, I always think of how nice Dinesh was.
00:34:50
Speaker
He'd come around and
00:34:51
Speaker
Usually the Wednesday before and give everyone a $25 gift card to Smith's or something.
00:34:56
Speaker
He just felt like a million bucks.
00:34:58
Speaker
Yeah.
00:34:58
Speaker
But just classy people letting me work 75% of my time with their stuff, but 25% of my stuff with Kickstart.
00:35:06
Speaker
But like I said, all the energy was with Gavin.
00:35:08
Speaker
Yeah.
00:35:09
Speaker
It was hard to have him down in New Mexico.
00:35:12
Speaker
Yeah, it was tough.
00:35:13
Speaker
That was the challenge.
00:35:14
Speaker
It was exhausting for him trying to learn about Kickstarter.
00:35:18
Speaker
It was hard because most of this was going to be over the phone.
00:35:21
Speaker
You were up here a lot, but there's a limit on how much you can be up here with having a young family and stuff.
00:35:26
Speaker
So I just remember...
00:35:29
Speaker
Just very different when Fund 2 came along and you're here full-time, fully present.
00:35:35
Speaker
And I just think that lifted a burden off of you and off of the fund in general.
00:35:41
Speaker
There is something to be said, and we've talked about it with our founding teams.
00:35:47
Speaker
In some ways, it's actually just a miracle that Kickstart worked at all.
00:35:51
Speaker
It is.
00:35:51
Speaker
Yeah.
00:35:52
Speaker
You being there, Dalton being here, I'm spending a little bit of time on it.
00:35:57
Speaker
Frankly, all of your LPs are here.
00:35:59
Speaker
It's a miracle that it... No, absolutely.
00:36:01
Speaker
And one theme I'd love to summarize that with is what are the uncomfortable things that you're willing to do that other people are not willing to do so you can do your special thing?
00:36:13
Speaker
There's a lot of smart people in the world.
00:36:14
Speaker
There's a lot of hustle.
00:36:15
Speaker
But what are you willing to do
00:36:18
Speaker
And I think with Kickstart, one of the things I learned is that, let's say you have some brands on your resume, you've been to a hot business school, and there was definitely that period where I had a lot of peers who were like, Kickstart?
00:36:31
Speaker
That's not even cool.
00:36:33
Speaker
It was kind of like, ooh, wow, that sounds lame.
00:36:36
Speaker
It never bugged me because I was always like, hey, whatever.
00:36:39
Speaker
I know how fun this is, and I believe, and I find this very meaningful.
00:36:44
Speaker
You just have to...
00:36:45
Speaker
let go that social proof way of defining your life, I think is certainly one aspect.
00:36:51
Speaker
And I think another aspect is sometimes you have to just survive first before you can thrive.
00:36:58
Speaker
And so for Dalton, that meant taking another job.
00:37:02
Speaker
His total early time at Kickstart wasn't that long, but he made a big impact and we stayed close and we'll go to the next chapter of the story soon.
00:37:09
Speaker
And he was like my obvious first call and saying, we need a principal, actually a partner.
00:37:17
Speaker
And more than a stipend this time.
00:37:19
Speaker
So, you know, we'll tell that part of the story.
00:37:21
Speaker
And for Al, it was hanging around the hoop and saying, oh boy, the mothership is changing and where do I need to go?
00:37:28
Speaker
And for me, without getting too detailed, one of the most painful aspects of my life and my career was some challenges in my family that meant that I moved from New Mexico back to Utah to be around family for some hard things that happened to our family.
00:37:43
Speaker
And then the vSpring situation being tricky enough in terms of management fee where essentially they gave me an ultimatum saying, look, we can pay part of your salary, but we can't do it if you're not in New Mexico.
00:37:57
Speaker
And so me saying, kickstart's not ready for me to be full time.
00:38:01
Speaker
And so I have to turn my sad little family that's pretty shattered around and go back to New Mexico.
00:38:09
Speaker
That was a really shattering day for me.
00:38:12
Speaker
But it was like, I'm not ready to let go of this dream of Kickstart.
00:38:15
Speaker
And I've seen many of our entrepreneurs do something like this, which is like, hey, I'm going to go without salary.
00:38:19
Speaker
I'm going to get a part-time job, which is sort of what I was doing, so that I could stay with the dream.
00:38:26
Speaker
I'm so glad that I did it, but it was very far from obvious.
00:38:30
Speaker
And of course, your family pays a price for that kind of whiplash.
00:38:34
Speaker
So those are the kind of moments that led up to fun too.
00:38:38
Speaker
And this was not like up into the right.
00:38:43
Speaker
This was grind and believe and survive.
00:38:46
Speaker
But we did prove enough, I think, with those early days to earn the right to start talking about a fun too.
00:38:52
Speaker
And actually...
00:38:54
Speaker
When Brandon and Ron came and took over with Scott vSpring, it actually really created a unique window for Kickstart to spin out and be independent.
00:39:04
Speaker
One of the great things about the early vSpring crew is we had all these talented people, Jaron Paul, Jeff Curl, Clark Miyazaki, Ildar, Fazljanov.
00:39:14
Speaker
I'm thinking who else was part of that crew?
00:39:16
Speaker
Matt Hoffman.
00:39:17
Speaker
Yeah, JD Gardner.
00:39:18
Speaker
Anyways, a great crew.
00:39:21
Speaker
Clark and I had been in touch and he had an entrepreneurial background, really complimented my background, which had been largely in VC.
00:39:28
Speaker
Eventually, I asked him to team up with me to do fun too.
00:39:32
Speaker
And we went out and pulled in many of our existing LPs.
00:39:37
Speaker
We lost some as well.
00:39:39
Speaker
Actually, we lost most.
00:39:40
Speaker
Ah!
00:39:40
Speaker
If I'm honest.
00:39:41
Speaker
But not all.
00:39:42
Speaker
Yeah, not all.
00:39:43
Speaker
I was going to say like we lost 60, 70%.
00:39:44
Speaker
Yeah, at least.
00:39:45
Speaker
And so it's a really tough fundraise.
00:39:47
Speaker
And I think it was very eye-opening for Clark as we went through that fundraise.
00:39:51
Speaker
Just very different to fundraise for a company versus a fund.
00:39:55
Speaker
But we were able to secure in 2012 enough LP interest to have a $26 million fund.
00:40:03
Speaker
I remember one specific meeting with a lot of our existing LPs.
00:40:08
Speaker
I think we had a bunch of universities involved anyway, and somebody from the state was getting involved and saying, we figured out it's illegal for these endowments to invest in Kickstart.
00:40:18
Speaker
It was devastating to us, right?
00:40:20
Speaker
It was like, what?
00:40:20
Speaker
It was just so crazy.
00:40:22
Speaker
And there was these bureaucratic reasons and blah, blah.
00:40:25
Speaker
But I remember Clark getting really red-faced and being like, you have got to be kidding me.
00:40:30
Speaker
And it's just, it's a process of raising money for a fund.
00:40:34
Speaker
It's a different skill set.
00:40:36
Speaker
It takes a lot of patience.
00:40:37
Speaker
But anyway, we closed down on that fund and got a deal done to spin Kickstarter out of vSpring and
00:40:43
Speaker
is I think about a bunch of funds here locally.
00:40:45
Speaker
Essentially every seed fund locally in Utah and throughout the region started as part of another fund or part of a family office.
00:40:53
Speaker
Essentially had like an incubating entity.
00:40:56
Speaker
And our good fortune was our incubating entity was troubled and we were troubled.
00:41:01
Speaker
And so it was pretty easy to part ways because we were like, we don't need each other's troubles.
00:41:06
Speaker
And at the time, I think that incubating entity thought, wow, good luck with that Kickstarter thing.
00:41:11
Speaker
And we're probably thinking the same thing.
00:41:13
Speaker
Good luck with that, your thing.
00:41:14
Speaker
And we had a pretty clean launching from that perspective.
00:41:19
Speaker
Just inserting a personal moment.
00:41:22
Speaker
One of the options on the table was just pay an outsource group to do all this sort of back office CFO type stuff.
00:41:29
Speaker
And I was just like, you can pay me less.
00:41:32
Speaker
Yeah.
00:41:35
Speaker
And I'll do anything else you want me to do.
00:41:37
Speaker
And so that was my plea and sell, which is I'll do anything.
00:41:42
Speaker
I sort of happily took a role of, yeah, I'll schedule every deal screen.
00:41:47
Speaker
I'll follow up with the entrepreneurs.
00:41:51
Speaker
I'll go buy drinks.
00:41:52
Speaker
It was just three of us.
00:41:54
Speaker
And you guys were doing the same.
00:41:56
Speaker
We'll just divide.
00:41:57
Speaker
And my strategy has always been do a bunch of stuff that no one else in the room wants to do.
00:42:02
Speaker
It might lead to some job security.
00:42:05
Speaker
So you have, you know, I'm sure many listeners have had parents that have been out of a job at times and I certainly had.
00:42:13
Speaker
And so that sort of sticks with you.
00:42:15
Speaker
So my mind was like, do the stuff that no one else wants to do because it's so boring or so confusing or so stupid.
00:42:23
Speaker
And that's why even to this day, there's some stuff I'm not going to give up.
00:42:26
Speaker
Yeah.
00:42:28
Speaker
As soon as someone else knows how to do it, I think I'm expendable and you can show me the door.
00:42:32
Speaker
So I just remember those early days when Clark joined and we sort of broke off on our own.
00:42:37
Speaker
Now, coincidentally, we sublet from V-Spring.
00:42:41
Speaker
They were super nice.
00:42:42
Speaker
We sort of built this awesome little space attached with a shared kitchen with the Signal Peak guys.
00:42:46
Speaker
And that was great.
00:42:47
Speaker
But it was a lot of fun because we had...
00:42:49
Speaker
A fund that we felt like, man, we could do some real damage.
00:42:53
Speaker
Like three X fund size.
00:42:54
Speaker
This is insane.
00:42:55
Speaker
Yeah.
00:42:56
Speaker
A couple of moments for me that I remember.
00:42:59
Speaker
One is we did that first capital call.
00:43:02
Speaker
And I remember when it hit our bank account, which was finally our bank account.
00:43:06
Speaker
When we'd like, we could actually check our signing.
00:43:09
Speaker
Yeah.
00:43:10
Speaker
And I, whatever that first, it was, let's say it was a million five.
00:43:13
Speaker
I remember thinking there is a million five in our bank account.
00:43:16
Speaker
This is nuts.
00:43:17
Speaker
I can't believe they did.
00:43:18
Speaker
I can't believe they did.
00:43:20
Speaker
And then you get used to it after that.
00:43:21
Speaker
But it was like that moment of this is real.
00:43:23
Speaker
This is happening.
00:43:24
Speaker
Like we're out of the basement, even though we're moved into the guest house.
00:43:28
Speaker
But we kept the same structure.
00:43:30
Speaker
We kept the investment committee.
00:43:32
Speaker
Many of these same people continued with us.
00:43:34
Speaker
Some of the things I learned as I grew up in venture capital is I just felt so strongly about the Utah strategy.
00:43:42
Speaker
This is going to work as long as we don't blow ourselves up.
00:43:46
Speaker
Product market fit in a venture fund is creating a culture and a strategy that's repeatable, that makes good decisions, that you get people together.
00:43:55
Speaker
And because of your culture, because of your process, you make better decisions than you would individually.
00:44:01
Speaker
And I had seen how other funds, if you got that wrong, like you could actually make worse decisions as a group than you would make individually.
00:44:08
Speaker
But we had that confidence and we had a ton of fun doing fun too.
00:44:12
Speaker
I think it was just amazing.
00:44:13
Speaker
Incredible deal flow.
00:44:15
Speaker
SaaS came on the scene.
00:44:17
Speaker
Many people know some of the companies that we funded in that fund.
00:44:21
Speaker
At Kickstarter, we call something that returns a fund a dragon instead of unicorn because dragons eat unicorns.
00:44:26
Speaker
And we have a dragon wall at Kickstarter because of that.
00:44:29
Speaker
And we have already multiple dragons out of two and we'll have many more actually.
00:44:35
Speaker
So it's just a great fund.
00:44:36
Speaker
I do remember early though, Clark questioning whether we did have good deal flows.
00:44:42
Speaker
It took a little bit of time to build, but my recollection of the story is, you know, one of the early sort of deal days.
00:44:50
Speaker
We used to do deal screen days.
00:44:51
Speaker
We would do nine to five to come out of eight, 10 companies.
00:44:55
Speaker
Anyone could come pitch is really the idea, but...
00:44:57
Speaker
I feel like one of those early ones, wasn't there like a clay cat litter deal?
00:45:02
Speaker
And then Clark turns to you after he's like, how's our deal flow?
00:45:08
Speaker
Yeah.
00:45:09
Speaker
Probably there's a lot of moments I'm sure Clark had early during the fundraiser.
00:45:13
Speaker
Yeah.
00:45:14
Speaker
Yeah.
00:45:14
Speaker
I think there was a lot of that where he's like, huh?
00:45:19
Speaker
I think there was some gut check moments and Clark was awesome.
00:45:24
Speaker
He was such a great compliment to us.
00:45:27
Speaker
If we go back and see our pitch deck for K3 and the companies we highlighted, I think Lucid probably was on there.
00:45:34
Speaker
But other than that, it was very different.
00:45:37
Speaker
It's a lesson we've tried to really understand at Kickstarter is you just don't know.
00:45:43
Speaker
What you think are your best companies can become some of your worst and vice versa.
00:45:46
Speaker
And you just stay patient.
00:45:48
Speaker
Don't lock companies and don't get too rigid in how you see companies.
00:45:52
Speaker
You just don't get too high or low.
00:45:55
Speaker
And that was probably the next crisis for Kickstart was Clark.
00:46:00
Speaker
We had a common friend, Jeff Curl, who's now at Paleon.
00:46:04
Speaker
He's an amazing entrepreneur.
00:46:05
Speaker
And he kept coming after Clark and saying, Hey, I've got this really hot company stance.
00:46:12
Speaker
And I think Clark was like, hey, I haven't made this little money in a long time.
00:46:17
Speaker
Because we were not paying big salaries.
00:46:20
Speaker
These were not high salaries.
00:46:22
Speaker
We were doing a lot of work.
00:46:24
Speaker
And I always joke that Clark was like, yeah, I'm used to...
00:46:29
Speaker
maybe spend a little more time with rappers and supermodels and having a team.
00:46:33
Speaker
And this is great, guys.
00:46:34
Speaker
But what if I were to go join Stance?
00:46:38
Speaker
To Clark's credit, he was super transparent with us.
00:46:40
Speaker
We worked it out.
00:46:41
Speaker
We tested it with LPs.
00:46:43
Speaker
And amazingly, our LPs were like, you know what?
00:46:47
Speaker
We believe in Kickstart.
00:46:48
Speaker
We do want to know...
00:46:50
Speaker
Who the next partner is.
00:46:52
Speaker
Okay, we know you.
00:46:53
Speaker
We see Al.
00:46:55
Speaker
Who else is there?
00:46:56
Speaker
And Dalton was at Wharton at the time and I gave him a call and was like, hey Dalton.
00:47:02
Speaker
Actually, the reality is I had given you an offer prior to that.
00:47:06
Speaker
That was principle.
00:47:07
Speaker
Yeah.
00:47:08
Speaker
I didn't know that Clark was leaving when I had agreed to come back to Kickstart.
00:47:11
Speaker
That was one of the big surprises.
00:47:13
Speaker
Gavin and I had worked on our agreement and we documented it, put it in writing.
00:47:18
Speaker
Gavin was ready to put a signature on the top.
00:47:20
Speaker
It had everything that we had agreed to.
00:47:22
Speaker
Title was principle.
00:47:23
Speaker
And he said, are you ready for the big surprise?
00:47:25
Speaker
And I said, I think so.
00:47:26
Speaker
So he crossed that off, that principle title and said, partner.
00:47:29
Speaker
You know, I said, Clark's leaving, we need you to step up and be a partner, which for me was great, obviously.
00:47:34
Speaker
This is great news.
00:47:36
Speaker
Not that Clark was leaving, but the opportunity for me was great.
00:47:39
Speaker
It was clear that Kickstart was in a much more stable position than I certainly remembered.
00:47:44
Speaker
I had been gone for five years.
00:47:46
Speaker
As Gavin mentioned, I moved down to Mexico with Paul in 2009.
00:47:50
Speaker
We spent three years, I spent three years in northern Mexico helping Paul and Rogelio, another partner to raise Alta Ventures, which was one of the first early stage tech funds in the country.
00:47:59
Speaker
And I came back and did grad school.
00:48:01
Speaker
So I had been gone for a while when Gavin was, you know, I left when we still had $4 million under management.
00:48:06
Speaker
Gavin went through this desert, got it up to $8 million.
00:48:09
Speaker
Al got involved.
00:48:12
Speaker
Clark got involved.
00:48:13
Speaker
And she got that $26 million fundraise.
00:48:15
Speaker
But now when you mentioned that $25 gift card that Dinesh gave you, to give a sense of where we were at, the Christmas or the holiday party of 2008, this is Kickstart's
00:48:26
Speaker
first year in business.
00:48:27
Speaker
Kickstarter couldn't have its own holiday party.
00:48:29
Speaker
We were, you know, doing the holiday party as part of V Spring's holiday party.
00:48:32
Speaker
And, you know, we did like a breakfast or a lunch at Grand America.
00:48:37
Speaker
And V Spring included me in the gifts, which the gift that I got was an iPod Touch, which at the time I'm like, I can't believe how much these people value me.
00:48:47
Speaker
Yeah.
00:48:49
Speaker
I felt the same way, right?
00:48:50
Speaker
I mean, that was like material.
00:48:52
Speaker
It was like sweet.
00:48:53
Speaker
Yeah, yeah.
00:48:54
Speaker
And so it was just to go from that to tail end of fund two, raising fund three, it was like, this fund is actually a viable fund.
00:49:02
Speaker
It's becoming a viable fund.
00:49:04
Speaker
We weren't out of the woods and Clark's departure posed some risk to the fund, but there was already enough trust built and enough momentum in the portfolio and enough belief in what Kickstart was doing that we were able to keep the momentum going and not really miss a beat.
00:49:20
Speaker
But sometimes I ask myself this question, what does it mean to be a founder?
00:49:24
Speaker
I don't consider myself a founder of Kickstarter, even though I consider myself a member of the founding team.
00:49:28
Speaker
And I don't consider myself a founder of Alta Ventures in Mexico, even though I consider myself a member of the founding team.
00:49:34
Speaker
And I think the word founder, almost like entrepreneur, how do you define some of these words and they can be misused.
00:49:40
Speaker
But I think of a founder as somebody who, for an important span, if they weren't part of that business, the business fails.
00:49:50
Speaker
As I think about who deserves to be thought of as a founder of the fund or who deserves to be thought of as the founder of Kickstart, I think of those years from 2008, 2009, 2010, 11.
00:49:58
Speaker
Those were the years where if Gavin had said, this is too hard...
00:50:07
Speaker
Kickstart ceases to exist.
00:50:09
Speaker
Maybe I'm wrong.
00:50:10
Speaker
Maybe somebody else steps up, raises their hand, has the same level of drive, passion, dedication, radical belief in this.
00:50:16
Speaker
Maybe somebody steps up and fills that role.
00:50:19
Speaker
But I think any day in that three to four year stretch that Gavin decided that it was over, I think it ends.
00:50:25
Speaker
And so I just want to acknowledge that I'm not the founder and I was able to rejoin kickstart at a time where it was so much safer for me to come back.
00:50:35
Speaker
And I didn't realize, you know, I wasn't taking that much of a risk and met my wife down when I was raising the fund in Mexico.
00:50:42
Speaker
And it was like, okay, I can't take the gamble route so much anymore.
00:50:46
Speaker
I have to have a little more confidence that this is going to turn into something.
00:50:49
Speaker
And everything was pointing to Utah heating up.
00:50:52
Speaker
Everything was pointing to Kickstart having a very strong position in this ecosystem.
00:50:57
Speaker
And since then, I think we've gone on to raise another 450 some odd million dollars since that point.
00:51:05
Speaker
But I just think that the inflection point had already been achieved.
00:51:08
Speaker
That's how I feel about it.
00:51:10
Speaker
I don't know what the exact inflection point is to a venture fund or product market fit.
00:51:14
Speaker
But at that point in time, you look at it and you say, people really wanted Kickstart's involvement in their companies.
00:51:19
Speaker
The best companies wanted to talk to us.
00:51:21
Speaker
We had solid LPs that wanted to be the patient capital that believed in this ecosystem for a long arc.
00:51:27
Speaker
And we had the fund returners in there.
00:51:29
Speaker
So we were actually going to return capital to our investors.
00:51:32
Speaker
And I think that's the point in hindsight, you look back and say, Kickstart had product market fit.
00:51:35
Speaker
Yeah.
00:51:35
Speaker
And that's around the time that I came back and was able to help accelerate it a little bit in my own way.
00:51:41
Speaker
But we went from fund two, which was a $26 million fund to a $39 million fund three.
00:51:47
Speaker
And I have to thank Clark, he's always too, because I think he helped put this into place.
00:51:50
Speaker
He chose a different path.
00:51:52
Speaker
We would be missing out on important opportunities to thank people who have contributed if we didn't see that.
00:51:56
Speaker
Because a lot of people along the way added something that made this possible.
00:52:00
Speaker
I appreciate that, Dolan.
00:52:00
Speaker
I think it's how I see it.
00:52:02
Speaker
I see myself as the common thread.
00:52:04
Speaker
An entrepreneur organizes the factors of production behind a vision.
00:52:10
Speaker
And I'm the common thread, but you made important sacrifices.
00:52:13
Speaker
Al has talked about how he put skin in the game with Kickstart.
00:52:17
Speaker
And we all grew up together.
00:52:19
Speaker
It's not like I knew what I was doing.
00:52:22
Speaker
I will say, though, I thought you did because I...
00:52:26
Speaker
This is the first I've heard of this.
00:52:28
Speaker
I mean, I used to, I probably never said this.
00:52:31
Speaker
I was nervous.
00:52:33
Speaker
I still get nervous sometimes in deal screens where I'm like, I don't know what they're talking about.
00:52:38
Speaker
And Gavin's so articulate and smart.
00:52:40
Speaker
Clark's the same.
00:52:41
Speaker
And I'm just like, oh my gosh, I'm so...
00:52:44
Speaker
so stupid.
00:52:45
Speaker
I can't even comprehend what you do.
00:52:47
Speaker
I think what I realized is like, you just have to see a lot of deals.
00:52:50
Speaker
Yeah.
00:52:51
Speaker
And I had not yet seen a lot of deals.
00:52:52
Speaker
Now I still am the quietest person in the room regardless, but I felt like at that time, I'm like, was just blown away that the questions that you would ask and that Clark would ask.
00:53:03
Speaker
And I'm just like, how do these guys know this much stuff?
00:53:07
Speaker
Like,
00:53:09
Speaker
I don't know a lot of stuff in general.
00:53:10
Speaker
Science fiction books.
00:53:11
Speaker
Yeah.
00:53:12
Speaker
Sci-fi.
00:53:13
Speaker
It must have been now.
00:53:14
Speaker
You just realize the old 10,000 hour rules.
00:53:17
Speaker
Okay.
00:53:17
Speaker
You see a lot of deals and you just get more comfortable and see patterns.
00:53:21
Speaker
But yeah, I always felt you didn't know what you were doing from day one.
00:53:25
Speaker
So I've waited until now.
00:53:26
Speaker
Yeah.
00:53:28
Speaker
That's part of the thing where you just learn to act the part because you're like, I sort of have to.
00:53:35
Speaker
To your point, Dalton, I think if we hadn't worked, someone else would have risen up to do this because it was such a needed thing.
00:53:41
Speaker
And I will say one of those cool things that we've learned about all the years is that he came from a very different background than the general partners at Kickstart.
00:53:49
Speaker
But that approach, that humility, that just really different take of like being the different kind of voice in the room has been super stabilizing for Kickstart.
00:53:58
Speaker
Because we were so scarce in resources, we just forced Al to do deals.
00:54:01
Speaker
It was great.
00:54:03
Speaker
It just so happened, right?
00:54:04
Speaker
The first fund two deal where you guys were like, yeah, you can do it.
00:54:07
Speaker
It was an accounting deal.
00:54:09
Speaker
It was pretty comfortable.
00:54:11
Speaker
It was bookly, but it got me some reps of sitting in a boardroom as a board member because I've had counterparts of mine ask before of like,
00:54:20
Speaker
how does your fund let you do deals?
00:54:22
Speaker
And it's, we had to do everything.
00:54:24
Speaker
We didn't have enough bandwidth to not have all of us do some version of something.
00:54:29
Speaker
And so just once again, dumb luck, right?
00:54:32
Speaker
Like just very lucky to be in a spot where
00:54:36
Speaker
Gavin has a full plate.
00:54:37
Speaker
Clark has a full plate.
00:54:39
Speaker
Very soon, Dalton has a full plate.
00:54:41
Speaker
And so it's like, sweet.
00:54:42
Speaker
I can actually fill my plate a little bit with some non-accounting, non-finance stuff.
00:54:48
Speaker
That's how I got those opportunities at vSpring.
00:54:50
Speaker
It was, look, everybody's got too much.
00:54:51
Speaker
So you get to do stuff you shouldn't be doing, but whatever.
00:54:54
Speaker
That's what we do.
00:54:56
Speaker
One other theme I want to put out there, because I talked to a lot of early fund managers.
00:55:00
Speaker
They're like, hey, how'd you do it?
00:55:02
Speaker
How'd you raise that first fund?
00:55:04
Speaker
And you realize that fund one allowed us to do fund two, which is awesome.
00:55:09
Speaker
Even there's a lot we hadn't figured out with fund one and ultimately was not that successful of a fund.
00:55:14
Speaker
But I think one insight that we had that I think is helpful is that
00:55:19
Speaker
When you're a seed fund manager, it takes a long time to know whether you're even good at all.
00:55:24
Speaker
And it takes a long time to know whether there's going to be return or not.
00:55:28
Speaker
And so one of the ways that you can have a second fund and a third fund is by embracing every other aspect of the experience for LPs, recognizing that just as a seed fund investor in a startup company,
00:55:41
Speaker
You're looking for a financial return, but there's also a bunch of other aspects of the experience that are important.
00:55:45
Speaker
And so we kind of embraced that.
00:55:47
Speaker
We had this outside investment committee that made LPs feel like they're part of the process, even though they don't have to do a lot of the work.
00:55:54
Speaker
I probably stopped doing this in like fund three, but I would call every LP every quarter.
00:55:59
Speaker
We have a lot of LPs.
00:56:00
Speaker
So unfortunately, I don't do that anymore.
00:56:03
Speaker
And answer questions and making an experience because a lot of our LPs were angel investors that just wanted to be part of a venture fund and see what it was like and co-invest in deals.
00:56:12
Speaker
So I think that's one thing that a lot of GPs don't really understand that process as well as they should.
00:56:20
Speaker
And just recognize, hey, that's part of what you're providing is certainly the ability to have great returns, but also this experience.
00:56:27
Speaker
And that's part of what LPs early on are looking for.
00:56:31
Speaker
And we felt so lucky to have this room of these crazy qualified people that we could bounce things off of, do sanity checks, co-invest with, and still feel lucky, right?
00:56:43
Speaker
So it's been just an amazing resource over the years to be able to tap into that network.
00:56:48
Speaker
Yeah, you had the conviction, but it was such a wilderness for so long.
00:56:55
Speaker
How do you keep going?
00:56:55
Speaker
Why the Seed Fund in Utah?
00:56:57
Speaker
What was magical about Utah?
00:57:00
Speaker
I had developed that conviction while at vSpring and I went away to business school and thought more about it.
00:57:05
Speaker
Ultimately, the thing that was so special about Utah was the culture.
00:57:09
Speaker
It was the demographics.
00:57:10
Speaker
It was this incredibly myth of the West community.
00:57:14
Speaker
pioneer culture that just wanted to shock the world with what we did.
00:57:19
Speaker
And you had all these individuals doing entrepreneurial things.
00:57:21
Speaker
Now, they weren't always like gold standard businesses, but they were out hustling and wanted to create great businesses.
00:57:28
Speaker
And that was what made Utah different from the other states in the West.
00:57:32
Speaker
It wasn't like...
00:57:35
Speaker
It wasn't income levels.
00:57:37
Speaker
It wasn't housing.
00:57:38
Speaker
It was a beautiful place to be and great quality of life.
00:57:41
Speaker
But ultimately, it was the culture of entrepreneurship.
00:57:44
Speaker
I think about a story, which is funny.
00:57:47
Speaker
I think this is like peak early kickstart when things were looking really good and vSpring was feeling good.
00:57:53
Speaker
This was the only time I think I've ever been on a private plane.
00:57:58
Speaker
The vSpring partners rented a private plane to do fundraising for their latest fund.
00:58:02
Speaker
And I got to piggyback on that to pitch kickstart.
00:58:06
Speaker
And it wasn't like a cool plane, but it was like a novel experience for me.
00:58:10
Speaker
But we went to Wyoming and Montana in this plane.
00:58:13
Speaker
And we're pitching like, hey, you got research universities.
00:58:18
Speaker
Maybe we should do Kickstart here kind of thing.
00:58:20
Speaker
And I realized that Utah was really different.
00:58:23
Speaker
And it was that culture of entrepreneurship.
00:58:26
Speaker
And really, we've talked about how Fund One was to focus on research universities and labs and not focus enough on people and entrepreneurs.
00:58:37
Speaker
And how sometimes those are the same thing and sometimes they're not.
00:58:40
Speaker
And so by the time we got to fund two, we really doubled down on, okay, let's make sure we invest in the right entrepreneurs.
00:58:47
Speaker
And if there's commercialization involved, great, but that's not the mandate.
00:58:51
Speaker
The thing that I would also add, to really understand why there initially was a real lack of belief in seed stage capital in Utah, part of it is a question of seed stage.
00:59:01
Speaker
And what was happening at the time was that we had this shift from on-prem software to cloud software.
00:59:08
Speaker
So this was the cloud revolution, the rise of enterprise software, B2B SaaS,
00:59:14
Speaker
And prior to the seed stage becoming a category, if you were an entrepreneur, and especially if you were an entrepreneur in Utah that wanted to raise money, you had to have enough credibility, network, validation, access, all of the things to put together a $5 million round right out of the gate.
00:59:31
Speaker
Right.
00:59:31
Speaker
To buy servers and database and space.
00:59:34
Speaker
Pre-revenue.
00:59:35
Speaker
Yeah.
00:59:36
Speaker
Before you had your first customer, before you had any traction, you had to convince somebody to give you $5 million to set up the environment for you to start developing your product.
00:59:43
Speaker
So there were very few people that would write those checks or could raise that type of money unless you had a reputation you could go to the Bay Area and go command that type of a fundraise.
00:59:53
Speaker
And so there was this trend that was underway where all of a sudden the cost of starting a company, particularly a software business, was falling through the floor.
01:00:03
Speaker
I don't want to paint with too broad of a stroke here, but you could actually get to product market fit on a half a million dollar investment for the first time.
01:00:11
Speaker
It's a software business, maybe for the first time ever.
01:00:14
Speaker
In the past, you had to raise 10x that amount.
01:00:16
Speaker
And so there was this new category that was forming to serve those entrepreneurs with smaller capital raises and just taking more shots on goal with smaller checks.
01:00:25
Speaker
And so in the early days, while this was unfolding, people would look at these unproven seed stage companies coming out of Utah and they'd think,
01:00:33
Speaker
If you want to build a multi-billion dollar company, you're not going to build it in Utah.
01:00:37
Speaker
You're going to build it in the Bay Area, obviously, because that's what we can point to in the past.
01:00:42
Speaker
So those early calls, trying to raise money, get the follow-on around, a lot of smug, condescending attitudes, frankly, towards us.
01:00:49
Speaker
Like we're, you know, hicks out in Utah, you know, like,
01:00:53
Speaker
I don't know.
01:00:53
Speaker
Maybe I'm exaggerating it a little bit, but you didn't get a sense of like, what are you guys doing?
01:00:57
Speaker
I had your capital in Utah.
01:00:58
Speaker
No, absolutely.
01:00:59
Speaker
I think it's no exaggeration to say it was smug and condescending just as a rule, honestly.
01:01:05
Speaker
And even as early as, or as late as Fund 2, right?
01:01:09
Speaker
We have a deal where Series A lead comes in and they're like, you need to move the team to the Bay Area.
01:01:15
Speaker
I would say even after Fund 2 that happened.
01:01:17
Speaker
Now, of course, it's a very different story where we...
01:01:21
Speaker
do a lot of deals.
01:01:22
Speaker
And they love the fact that, you know, hey, it's based in Utah.
01:01:24
Speaker
Hey, can I base part of my other companies here, et cetera, et cetera.
01:01:28
Speaker
It's changed so dramatically.
01:01:31
Speaker
Again, and most of the, some of those structural changes were just happening as Kickstart got underway.
01:01:39
Speaker
It took until K2 2012 to really become mature enough to really allow us
01:01:45
Speaker
to low-end disrupt what's going on in venture capital at a subtle level, and then what's the company creation in the SaaS world.
01:01:55
Speaker
One great metaphor, since we like to talk about Kickstarter and the myth of the West, railroads created shared infrastructure.
01:02:02
Speaker
And now the early railroad story is very messy.
01:02:05
Speaker
However, the shared infrastructure that's created by railroads allows incredible innovation.
01:02:11
Speaker
And that's what happened with shared infrastructure.
01:02:14
Speaker
on the internet and eventually cloud infrastructure that was both shared and proprietary, where you can create the opportunity for low-end disruption for startups, where you didn't have to have this full-stack technical expertise and hardware in order to compete.
01:02:28
Speaker
And then Utah entrepreneurs who maybe had a little more go-to-market orientation versus tech orientation could come in and create value for customers.
01:02:38
Speaker
That explains some of the reasons why the environment shifted so much for those years.
01:02:43
Speaker
You know, we don't get those questions anymore about whether or not you can build a billion dollar company in Utah, whether or not companies should stay and grow in Utah.
01:02:50
Speaker
It's just nice that those aren't the questions that we get anymore.
01:02:52
Speaker
So what questions do you get?
01:02:55
Speaker
Let's talk about funds four, five and six.
01:02:58
Speaker
As we think about our region, there's questions on, hey, how big can our companies get?
01:03:02
Speaker
Is there a lid?
01:03:03
Speaker
We don't think there is at all.
01:03:05
Speaker
You can always have more and more successful exits and large public companies that are sustaining and go on to buy other startups.
01:03:11
Speaker
I think that's maybe the next chapter for Utah and Colorado is maybe heading into that chapter as well.
01:03:18
Speaker
But I think our goal is to be the most active pre-seed and seed player in the regions that we really care about.
01:03:24
Speaker
And so we worry about the infrastructure of those regions, education, air, water, like the basics, because we think the demographics and the drive and culture is like rock solid and going to continue.
01:03:38
Speaker
And we just want to make sure that entrepreneurs have the raw materials in terms of infrastructure, such that they can attract talent, so they can scale companies, they can not have a lid on what they can achieve.
01:03:50
Speaker
So in some ways, our eyes have lifted a little bit higher level across our region just to make sure that we're looking ahead for them and they're not getting blocked by stuff like that.
01:04:00
Speaker
That's what I would say.
01:04:01
Speaker
Yeah, I also feel like every single fund that we've raised, we've had to make some slight adjustments.
01:04:07
Speaker
The good news in fund one, fund two days, you didn't really have a lot of competition for seed deals.
01:04:12
Speaker
And so you could be a gatekeeper, kingmaker, choose your deals, take your time.
01:04:17
Speaker
But on the other hand, you didn't have a vibrant co-investment ecosystem and follow-on network.
01:04:22
Speaker
Now we do.
01:04:23
Speaker
And so even though it's a more competitive industry that we're in, it's such a better time to be invested.
01:04:28
Speaker
Yeah.
01:04:28
Speaker
It's more competitive and that's better.
01:04:30
Speaker
Yeah.
01:04:30
Speaker
Sometimes it sounds surprising to some people.
01:04:32
Speaker
You want to be a monopolist if you can.
01:04:34
Speaker
But I think about the early kickstart days when nobody actually was doing that with maybe the exception of Gavin, believing that this was actually going to be
01:04:46
Speaker
an interesting economic proposition, financial proposition.
01:04:49
Speaker
It was a feeder for bigger rounds down the road.
01:04:53
Speaker
It was an opportunity to get university, you know, IP off the shelves and commercialize.
01:04:58
Speaker
There were a lot of reasons why the fund won early investors were intrigued by what we were doing.
01:05:02
Speaker
And a lot of people saw us as Switzerland in some ways that we play nice with everybody.
01:05:07
Speaker
We're a community building organization.
01:05:10
Speaker
We're not here to take anybody's business away from them.
01:05:12
Speaker
We're here to accelerate what's going on.
01:05:14
Speaker
Everything was about the community, about the ecosystem.
01:05:17
Speaker
And people treated us like we were working on a charity or that we were do-gooders and they just were not threatened.
01:05:23
Speaker
And so they were kind and accommodating to us, but they didn't really care.
01:05:28
Speaker
Nobody really cared that much.
01:05:29
Speaker
And so I look at where we're going now and all of the environment is so different than what it was.
01:05:36
Speaker
I don't want to like say it too much, but the environment is so different than what it was in 2008 as an entrepreneur to raise money.
01:05:43
Speaker
And we've played a role in that.
01:05:45
Speaker
The terms are very different, the type of support that you can get, the partnership access that you have, the access to additional markets.
01:05:52
Speaker
Everything is so much better than it was back then.
01:05:55
Speaker
And so our challenge is, as we've raised these bigger funds, how do we learn the right lessons from the past and also not become complacent in how we do our business?
01:06:05
Speaker
Because this is a very competitive industry and we have to change with each fund that we raise.
01:06:09
Speaker
We raise bigger funds.
01:06:10
Speaker
We write bigger checks each time around.
01:06:12
Speaker
We want to stay true to our seed roots, but at the same time, we still have to put big multiples on these funds that we're raising.
01:06:18
Speaker
So as I think about the future, we've always had this side on being a world-class seed fund in Utah.
01:06:24
Speaker
And now we've expanded to Colorado too.
01:06:26
Speaker
So we're saying we want to be world-class seed investors in the mountain states.
01:06:30
Speaker
It's going to partially come from doing what we already know.
01:06:33
Speaker
It's also partially going to come from doing things that we haven't ever done before.
01:06:37
Speaker
I love that about Kickstart because this is an environment where we can do new things.
01:06:41
Speaker
Even though we're on fund six, fund seven, that's part of our culture.
01:06:44
Speaker
Every single fund, we've innovated something new as we've gone in order to make us a little more competitive, add a little more value to the entrepreneurs that we're serving, be better at what we do.
01:06:53
Speaker
And I think our biggest threat
01:06:55
Speaker
There are macro challenges in this industry right now, but our biggest threat is not staying and not maintaining our innovative DNA.
01:07:04
Speaker
And I'm not overly concerned about that because I know what the culture is here.
01:07:06
Speaker
But to me, we don't get to fund eight, nine, 10 by running the same playbook that we were running into.
01:07:14
Speaker
We just have to get better every step of the way.
01:07:16
Speaker
We have to get better and not get complacent.
01:07:18
Speaker
Some of that's geographic expansion in our region.
01:07:21
Speaker
Some of it's writing stronger lead checks.
01:07:25
Speaker
Fund one was a 250K average check size.
01:07:27
Speaker
Now we're 2 million average check size.
01:07:30
Speaker
So I don't know.
01:07:30
Speaker
What else would you add?
01:07:32
Speaker
No, I think that's right.
01:07:33
Speaker
I think some of the guiding principles I'd say that throughout have been when we were a monopolist, let's say, or when we're the only game in town, we needed to play a long game and really...
01:07:47
Speaker
behave with entrepreneurs and behave with the community in a way that we would have the kind of community we wanted 10 years down the road.
01:07:54
Speaker
But I think as competition has entered and mostly ends up being collaborators, it's made us better.
01:07:59
Speaker
It's sharpened us.
01:08:00
Speaker
It's been good for entrepreneurs.
01:08:02
Speaker
Most of the deals we do, there's a lot of challenging times and we're really happy if there's other people involved with us.
01:08:07
Speaker
That's the norm.
01:08:08
Speaker
These are long journeys, 10 years plus, and it's a lot of struggle and a lot of problem solving.
01:08:13
Speaker
And so we love to have more minds and checks around the table to do that.
01:08:18
Speaker
So I think playing along games have been a big part of what we've done historically.
01:08:21
Speaker
As Dalton has said, innovation.
01:08:22
Speaker
Dalton's been a big part of that for us coming up with, okay, here's how we can get more value to our entrepreneurs and scale up our team and take it to the next level.
01:08:33
Speaker
Certainly it's been also entrepreneurial leadership means always adjusting what you do as the company scales.
01:08:40
Speaker
And Kickstarter as a team and a platform isn't going to scale to a ton of people.
01:08:45
Speaker
It's scaled in terms of capital, in terms of number of companies, but we need to keep adjusting the roles that we play as partners.
01:08:51
Speaker
And part of that is bringing out amazing partners that we have over the years.
01:08:55
Speaker
Kurt was an important contributor at Kickstarter, did some great things for us.
01:08:59
Speaker
We brought in Kat recently.
01:09:01
Speaker
She's doing an incredible job bringing her startup operating background and really blazing a path there.
01:09:08
Speaker
And
01:09:09
Speaker
Tanner now is a big part of our next-gen story as a partner at Kickstart.
01:09:14
Speaker
So part of it is scaling up people and making room for them, giving away our Legos, as one of my entrepreneurs loves to say.
01:09:21
Speaker
And that's satisfying for me, right?
01:09:23
Speaker
Like I said, we grew up together here.
01:09:25
Speaker
And to see what Al has scaled up to be and what Dalton has is super rewarding.
01:09:32
Speaker
I want to do a little rapid fire and I would love to know from each of you, what was the high point in Kickstart's history?
01:09:37
Speaker
What was the low point?
01:09:38
Speaker
And then what are you looking forward to with Kickstart?
01:09:42
Speaker
You can work at this business for so long and wonder, are we any good at this?
01:09:48
Speaker
Are we just good salespeople who managed to convince investors to go on this crazy journey with us?
01:09:53
Speaker
And it's honestly a space where you can get people pretty excited because what's not exciting about seed stage venture capital is
01:10:00
Speaker
The prospect of identifying a company that's going to solve a huge problem in the world and deliver a solution at scale, create a bunch of wealth and abundance in the process is really exciting.
01:10:10
Speaker
I think that it lends itself to storytelling because that's what you have in the early days.
01:10:14
Speaker
And you're looking at a very far distant future, you know, companies that are going to hit their maturity 10 years down the road, potentially.
01:10:23
Speaker
And so I think that for me, getting to that point where you round trip the money from the investor into our hands as the managers into the hands of the entrepreneur and then back to the investors, that feels like, OK, this is working.
01:10:38
Speaker
We can keep doing this.
01:10:39
Speaker
We deserve to be in business.
01:10:41
Speaker
We aren't charlatans.
01:10:43
Speaker
We aren't scamsters.
01:10:44
Speaker
You know, we actually are making good on what we said we were going to do.
01:10:47
Speaker
And of course, we never believed that we were just salespeople.
01:10:50
Speaker
We believe in this business.
01:10:52
Speaker
But 10 years into that, to be working at something for 10 years and still not have returned capital, that moment when you return capital feels like the finest moments you have as an investor feeling, okay, our model is working.
01:11:06
Speaker
That came when we did a partial realization of Lucid software, Lucid's the dragon fund too.
01:11:12
Speaker
It also came when we realized our investment in Podium.
01:11:16
Speaker
We've had a couple of these moments where we've returned capital back to our investors and returned funds.
01:11:20
Speaker
And it gives us confidence that we can do this at an even bigger level.
01:11:25
Speaker
So I think of that as a high point.
01:11:27
Speaker
I think of a low point.
01:11:28
Speaker
For me personally, the low points aren't
01:11:31
Speaker
At Kickstart per se, it's more within my head.
01:11:33
Speaker
But those low points where I feel like I'm mediocre at times, you know, like doing half work, I would say.
01:11:40
Speaker
I think in this business, it can be a little bit easy to feel disempowered at times.
01:11:46
Speaker
We've all had this experience of making an investment and then at the first board meeting and thinking, oh, what have I gotten myself into?
01:11:53
Speaker
Those first board meetings.
Board Meetings and Investment Challenges
01:11:54
Speaker
Yeah, it's very rare for you to go to a first board meeting and come away thinking like,
01:11:58
Speaker
can I get more money to work on this business?
01:12:00
Speaker
You know, more often than not, you're thinking, I've made a terrible, I may have made a serious mistake here because you can see the warts of all these companies and all of these startups have warts, every single one of them, even the best ones.
01:12:11
Speaker
Sometimes the best investments that I've made are the ones where
01:12:15
Speaker
They were the easiest, maybe even low conviction investments.
01:12:18
Speaker
And at times the ones where it was the hardest one to get my head around, but I finally got there and big, bold, daring investment that never took a product to market.
01:12:26
Speaker
And so I've had the experience of having high conviction, having those investments go to zero.
01:12:29
Speaker
And also I've had the experience of having, call it mediocre conviction, go to the moon.
01:12:33
Speaker
And so that puts me in a pretty humble state of being able to even predict winners, predict the future.
01:12:38
Speaker
You know, so when I find myself at low points, it's because I'm questioning my ability to actually bend the arc of any of these companies.
01:12:45
Speaker
There's only so much you can do as an investor.
01:12:47
Speaker
And so when I'm at my best, I'm thinking, I am getting better at this.
01:12:51
Speaker
I'm learning.
01:12:52
Speaker
I'm helping entrepreneurs.
01:12:53
Speaker
These companies matter.
01:12:55
Speaker
For me, the highs and lows have more to do with how I'm managing my own psychology.
01:12:59
Speaker
It's a business with long feedback loops.
01:13:01
Speaker
And so there are these moments where you question, am I good at this?
01:13:04
Speaker
And so particularly the seed stage, you know, where you're taking people who haven't even yet defined their product in some
Kickstart's Expansion into Colorado
01:13:10
Speaker
ways.
01:13:10
Speaker
So what am I most excited about at Kickstart right now?
01:13:14
Speaker
I'm most excited about what I'm working on in Colorado.
01:13:17
Speaker
So move the family to Colorado.
01:13:19
Speaker
This is the chance for me to take a lot of lessons learned at Kickstart and also down in Mexico and apply them into a new ecosystem where I think Kickstart has an important role to play.
01:13:31
Speaker
We're not doing the first seed fund in the ecosystem like we were in Utah.
01:13:35
Speaker
There are other great investors in Colorado.
01:13:37
Speaker
It's a different motion that we're making in that state.
01:13:40
Speaker
But I am just so excited about some of the initiatives that we're launching.
01:13:44
Speaker
We're doing a program called 14 Founders.
01:13:46
Speaker
This is based off of these 14,000 foot peaks, 14ers in Colorado.
01:13:50
Speaker
We're going to recognize Colorado, recognize the pioneers of Colorado's ecosystem and invest in the next wave of entrepreneurs.
01:13:56
Speaker
And we're going to be announcing for this program, the recipients of these new investments from the peaks of these 14ers.
01:14:02
Speaker
So for me, I'm in love with the mountain states.
01:14:04
Speaker
I'm in love with Utah.
01:14:05
Speaker
I'm in love with Colorado.
01:14:06
Speaker
And what I'm most excited about right now is my mission to go launch Kickstart in Colorado and have it count for the ecosystem in Colorado and count for us as a firm here.
01:14:16
Speaker
And we're really pumped that Dalton raised his hand to do this.
01:14:21
Speaker
We actually didn't anticipate that we would have one of our general partners raise their hand and Dalton did.
01:14:27
Speaker
And this is very in line with
01:14:29
Speaker
His early work with us at Kickstart, really getting the ecosystem of Utah behind Kickstart, what he did in Mexico and with the Alta team.
01:14:39
Speaker
He's got a playbook and he's got a passion for really mixing it up every few years and taking on a new challenge.
01:14:46
Speaker
And we're really pumped about what Dalton's doing in Colorado.
01:14:50
Speaker
And we couldn't be more excited about Colorado and what we see there.
01:14:54
Speaker
It's hard not to echo almost exactly what Dalton said in terms of returning capital, but maybe I would just say at a personal level, high point is advocate for a deal.
Emotional Highs and Lows in Venture Capital
01:15:06
Speaker
And at the end of the deal, you actually made money for the fund.
01:15:09
Speaker
And I thought of times to put more money in and that actually worked too.
01:15:14
Speaker
So that's certainly a personal high point.
01:15:17
Speaker
Low point is
01:15:19
Speaker
Same could be said when you advocate for a deal and it doesn't work, but maybe just, I would say every fundraise we've had, there's been a low point where we've lost an LP, had a, what we thought was a firm yes that turned into a firm no, what we thought was a $10 million commitment that turned into a $1 million commitment.
01:15:39
Speaker
Those are low points when every fund, and we've been really fortunate to raise good funds.
01:15:44
Speaker
We have amazing LPs, but
01:15:48
Speaker
Multiple funds, it feels like we raised the fund two or three times over on what we thought it was on paper to what it became.
01:15:57
Speaker
So those are always low points because I don't think any of us around the table here take any of this for granted.
01:16:03
Speaker
It's not a no-brainer that...
01:16:06
Speaker
An LP is going to say yes next time, right?
01:16:08
Speaker
And so we have to keep proving it.
01:16:11
Speaker
And there's times when it's not us, it's them, right?
01:16:14
Speaker
Like it's timing on their standpoint or allocations or whatever it is, but those are always low moments because...
01:16:21
Speaker
We're relevant when we can actually provide something to entrepreneurs in the form of capital and hopefully expertise and help all this, but ultimately they need capital.
01:16:31
Speaker
And so if we can't do that, we become less relevant.
01:16:34
Speaker
So fundraisers are always lots of high points and low points.
01:16:38
Speaker
And then in terms of what I'm excited for, I just enjoy coming to work every day.
01:16:43
Speaker
I'm as excited as I've always been.
01:16:45
Speaker
And I feel just beyond fortunate.
01:16:48
Speaker
There's a lot of people that have a daily grind of a job that's hard.
01:16:52
Speaker
And we certainly have a lot of low moments.
01:16:54
Speaker
We have so many companies to worry about.
01:16:58
Speaker
And inevitably, there's going to be more companies that are struggling than not.
01:17:02
Speaker
And so that weighs on you.
01:17:03
Speaker
But to work with a great team...
01:17:05
Speaker
I work with people and entrepreneurs that we're inspired by.
01:17:09
Speaker
You can just make every day a good day, regardless
Reflections on Success and Challenges
01:17:12
Speaker
of what's going on.
01:17:12
Speaker
And I'm just excited that we're investing out of a big fund and have a lot of amazing deals that we're going to choose over the next couple of years.
01:17:21
Speaker
In thinking about the high and low of my journey, Kickstarter, there's lots.
01:17:27
Speaker
I love the answer that Dalton and Al have given.
01:17:30
Speaker
These are two proven investors who have delivered great results for LPs, cash on cash.
01:17:36
Speaker
That's ultimately what matters.
01:17:37
Speaker
But also delivered great results for entrepreneurs in terms of advice they're giving and support.
01:17:42
Speaker
And you see how even people who are proven, it takes a lot of humility to do this business well.
01:17:47
Speaker
a lot of character, a lot of grit.
01:17:50
Speaker
And I would echo what they're saying, which is like, I remember writing the quarterly report when we finally had returned a fund.
01:17:58
Speaker
And just saying, you know what?
01:18:01
Speaker
I've given a lot of promises.
01:18:02
Speaker
I've made a lot of predictions.
01:18:04
Speaker
I've told a lot of stories over the years.
01:18:06
Speaker
I had a lot of belief, but it's awesome.
01:18:08
Speaker
We're sending you a wire and we've given you a multiple on your money.
01:18:11
Speaker
We've turned a few funds and we've got great visibility to doing really well across many funds.
01:18:16
Speaker
We've got seven active funds now.
01:18:19
Speaker
So what I tell people is that's just more relief than anything.
01:18:22
Speaker
It's hard to be like cocky at all.
01:18:24
Speaker
It's more just relief.
01:18:25
Speaker
Like, oh, thank you that it's working.
01:18:28
Speaker
That's how I feel about it, honestly.
01:18:31
Speaker
The low point is trickier.
01:18:32
Speaker
And what I would say, without getting too specific, is I would characterize low points in this journey being typical of the human experience, which is their human tragedies.
01:18:44
Speaker
So that might be an entrepreneur we backed.
01:18:46
Speaker
There was a failure of integrity.
01:18:47
Speaker
Maybe it was fraud.
01:18:49
Speaker
That's super rare, but it happens.
01:18:52
Speaker
Maybe it's a tragedy in the entrepreneur's life.
01:18:54
Speaker
Maybe something happened to someone on our team.
01:18:57
Speaker
It's these human tragedies that are the low points.
01:19:00
Speaker
And I would say, even for me specifically, I think there was a period where I was worried that because of my fanatical effort to get Kickstarter off the ground, that I was going to lose other things that mattered a lot to me.
01:19:14
Speaker
Thankfully, I didn't.
01:19:16
Speaker
But it's one reason I'm passionate about having entrepreneurs win, but win across the board.
01:19:26
Speaker
And not always paying such a high price for what's so important.
01:19:32
Speaker
That's what I think is the low point.
01:19:34
Speaker
It's also what makes us beautiful is when you can get it right.
01:19:38
Speaker
So in some ways, that's kind of what makes...
01:19:40
Speaker
this ecosystem different is because we care about the balance sheet across the board and we believe that it's possible.
01:19:47
Speaker
So that's what I'd say.
01:19:49
Speaker
And then finally, what am I excited about with Kickstart?
Focus on Growth and Engagement
01:19:55
Speaker
For me, what gets me motivated, especially at this stage in the game, 20 years of venture capital, 16 plus at Kickstart, is just continuing to see our team level up, to see our companies and our ecosystem level up.
01:20:07
Speaker
And we want to stay nimble and flexible by keeping our culture what it is.
01:20:12
Speaker
and just be responsive to what our entrepreneurs need.
01:20:15
Speaker
And I'm excited just for the work of what we do.
01:20:19
Speaker
It's endlessly interesting and endlessly challenging.
01:20:23
Speaker
I feel like at this point, I know what I'm doing.
01:20:27
Speaker
I do learn every day and that keeps me interested and humble.
01:20:32
Speaker
Well, Gavin, Al, Dalton, thank you so much for this episode and for sharing all that insight into Kickstart.
01:20:39
Speaker
Great to have you.
01:20:39
Speaker
Thank you.
01:20:40
Speaker
Thank you.
01:20:41
Speaker
Good to be here.
01:20:42
Speaker
Thank you, Alex, Dalton, and Gavin.
01:20:44
Speaker
And of course, thank you for listening as we dive deep into what it takes to create the perfect pitch.
01:20:49
Speaker
If you want to learn more about our Kickstart investors, we'll have links to their profiles in our show notes at kickstartfund.com.
01:20:55
Speaker
You can listen to more episodes of Perfect Pitch wherever you listen to your podcasts.
01:20:58
Speaker
And if you like what you're learning, leave us a review or rating.
01:21:01
Speaker
We'll be back next time with more insights from entrepreneurs and the investors who fund them.
01:21:05
Speaker
So be sure to subscribe so you don't miss a thing.