Transcript
Speaker: All right, welcome to another episode of Startup Impact Radio, a podcast about entrepreneurs and their vision for changing the world.
Speaker: My co-host is Scott Tobe, CEO of Signature Financial Planning, and I'm Joel Reed, CEO of OpenArc.
Speaker: Today we're talking about angel investing in Pittsburgh with Catherine Mott, who is the founder of Blue Tree Capital Group, Blue Tree Allied Angels, and the Blue Tree Venture Fund.
Speaker: We'll discuss everything there is to know about the startup ecosystem in Pittsburgh, both then and now.
Speaker: Thank you so much for joining us, Catherine.
Speaker: Thank you for having me.
Speaker: I'm pleased to be here.
Speaker: Great, Catherine.
Speaker: So you're one of the pioneers who helped shape where we are today.
Speaker: Talk to us a little bit about how you got started with BlueTree.
Speaker: What led you to start that?
Speaker: Oh, thank you.
Speaker: It was many moons ago, so go back 20 years.
Speaker: I came from the financial industry, banking, and also with a Series 7, 63, 53 licensure from my banking experience.
Speaker: And I had the good fortune to be self-employed for a little while and exit from that.
Speaker: And so think 99, 2000, when there was a big bubble going on in startups, and primarily California, and had the opportunity to invest in a couple of companies directly.
Speaker: So I didn't know it was called angel investing at that time.
Speaker: But I was always particularly a maverick leaning into how
Speaker: people will buy in the future or behave in the future and how it impacts, you know, commercial opportunities.
Speaker: So it seemed intriguing.
Speaker: So I made my first three angel investments then and coming from a background in finance, it just didn't feel right to just write a check because I liked what I heard.
Speaker: You know, so it really, I,
Speaker: I started doing some research when someone said something to me about angel investing.
Speaker: I didn't know that's what I was doing.
Speaker: And so at that time, so think 2001 to there were about 90 professionally managed angel groups in the United States.
Speaker: And, um, I learned a little bit about them.
Speaker: researched, met with people.
Speaker: I took 18 months to research and visited different people from around the country, primarily Boston, Washington, DC, and California, and learned their practices, learned their best practices.
Speaker: And because I was probably around the movers and the shakers at that time, who I'm seeking help from, right?
Speaker: And, um,
Speaker: They're the ones that basically said to me, once you get your group up and running, let's all stay in touch with one another and discuss best practices.
Speaker: And then it morphed into Kauffman Foundation wanting to support a professional development organization, just like the NVCA is for the venture capital.
Speaker: So I was one of the first involved in that.
Speaker: I guess the making of the angel capital association, the ACA and became, you know, a member of the board and one thing led to another.
Speaker: And we by virtue of that, I was able to watch this whole industry grow tremendously from these 90 professionally managed groups to, you know, thousands that also became,
Speaker: not just angel groups, but also seat professional seed funds.
Speaker: Cause I wasn't the only one out there.
Speaker: Everybody understood that if, you know, you should treat your, your private holdings, your private stock, just like you do your public stock and, you know, and do all the things that you do there.
Speaker: You, you do your diligence, you, you diversify, you know, um, it, it, it seemed to make sense, um, to approach it in a professional fashion.
Speaker: So,
Speaker: That's what we did at the ACA.
Speaker: I was very fortunate.
Speaker: I became chairman of the board of the ACA.
Speaker: Here in Pittsburgh is where my heart is, where I saw the ecosystem taking shape.
Speaker: At that time, there was just InnovationWorks and Pittsburgh Life Sciences Greenhouse.
Speaker: I've now watched it change to
Speaker: I think pre pandemic, there were like 20 or 30 incubators, accelerators in Pittsburgh and started other angel groups and other types of seed investments and early stage investments, um, in, in the city.
Speaker: And, um, it's been, um, it's been a wonderful, wonderful experience because I've watched how the whole ecosystem changed from this fledgling little startup ecosystem to this powerhouse today.
Speaker: that we have.
Speaker: And I know everybody kind of circles around robotics, but it's not just robotics.
Speaker: We have a very healthy ecosystem with software, with life science, particularly pharma companies being spun out of the universities and really, really brilliant people.
Speaker: So it's been a wonderful, wonderful experience.
Speaker: So Joel mentioned that you helped to pioneer that ecosystem that you're talking about.
Speaker: And certainly you alluded to parts of that in your answer just now.
Speaker: But I'm curious, when you started BlueTree, what was it like to work in the fledgling ecosystem that you mentioned?
Speaker: And how much more difficult was it versus now with a more robust ecosystem?
Speaker: It was indeed challenging, number one.
Speaker: Fortunately, I'm blind to it.
Speaker: I came from the financial industry where it's primarily male anyways, right?
Speaker: So this is even more primarily male.
Speaker: And so to want to crack into this industry was a challenge.
Speaker: I did meet with Joel Adams for when I first launched and he was very gracious enough to give me some great advice as well.
Speaker: But fortunately for me, I came from an industry where I had a lot of business contacts.
Speaker: And so I could build immediately build a network around people who had like-minded interest around creating a professional process and, and to creating a diverse portfolio.
Speaker: And so fortunately I had a quick, you know, 12 people by rent, by the way, all men and, um, who were seeking the same thing I was seeking.
Speaker: Um,
Speaker: Now I will tell you this, when I launched, I had a partner and he and I started this together and I think that helped a bit.
Speaker: And I also will tell you, we had our coming out party at the Andy Warhol Museum and we invited the whole community and
Speaker: About four years later, I ran into a few of the people who were there and they said to me, it might have been five years later, they said to me, yes, we were
Speaker: We were really intrigued, you hear you, you know, that you were going to go out and launch this professionally managed angel group.
Speaker: And we were drinking your booze and eating your food and going, yeah, right.
Speaker: She's going to do this.
Speaker: And I guess she showed us.
Speaker: So I thought, well, you know, that might be an underhanded compliment, but I'll take it.
Speaker: I'll take it.
Speaker: You proved them wrong.
Speaker: That's awesome.
Speaker: So yeah, it was indeed a challenge.
Speaker: But we were pretty persistent.
Speaker: And when we had a very, what can I say, we had a very disciplined process.
Speaker: And I think that's what compelled people to want to come and join us.
Speaker: We would invite people to attend our meetings.
Speaker: We would invite them to participate in our due diligence or in mentoring and monitoring the companies and
Speaker: That was attractive to a lot of people because this is a hands-on asset class.
Speaker: And by spreading that load based on our own specific talents, we could be more value added to companies.
Speaker: That's great.
Speaker: Catherine, at the beginning, you mentioned a discipline process and the doubters that you had at the beginning.
Speaker: If you had to pick one thing that was maybe the biggest challenge that you had to overcome at the beginning of this, what would you point to as being the biggest challenge they had to overcome?
Speaker: Yeah, I mean, it truly was an immature ecosystem.
Speaker: I mean, people were not familiar with professionally managed angel groups.
Speaker: And if you said angels, they actually thought cowboys and Indians, right?
Speaker: That, that, you know, that
Speaker: they're just loose cannons.
Speaker: They don't have a professional process.
Speaker: They don't do the diligence.
Speaker: And they did.
Speaker: They had a notorious, I mean, you know, they had a notorious reputation for just writing checks.
Speaker: And so one or two things came out of that.
Speaker: One is they're really dumb and they'll just write the check and they don't care about, you know, or they really can get in your face and be a nuisance and you don't necessarily want to take their money.
Speaker: And that was kind of the image out there.
Speaker: And so there was some
Speaker: you know, to communicate that we are different in the fact that we are approaching this in a professional portfolio fashion was something it took some education and not just for investors, but for entrepreneurs, because entrepreneurs expect came in and pitched and thought we'd write the check that day.
Speaker: You know, and then when we take six weeks to two months to do diligence and give them an answer, you know, I mean, it was like, we got this reputation.
Speaker: Well, maybe you shouldn't go to them.
Speaker: They're too slow.
Speaker: And we are basically saying, well, that's, that's our process.
Speaker: And, um, we can aggregate more money than you could, you can with individual investors out there trying to do it yourself.
Speaker: So, um, as the ecosystem grew around the United States, we started.
Speaker: co-investing and syndicating with other angel groups.
Speaker: So those professional groups that, that manage money and do, you know, the professional process, we would syndicate.
Speaker: So it would not be uncommon for me to invest in a deal in Pittsburgh and bring in groups from Ohio, Texas, DC, Virginia, New York to syndicate an investment opportunity.
Speaker: So, but we, I mean, we had to slog it out.
Speaker: So for our listeners who don't know the history, let's talk a little bit about the history.
Speaker: So you started Blue Tree Allied Angels, which was investing in pre-Series A seed rounds and super early stage.
Speaker: And then just a few years ago, you guys pivoted and created Blue Tree Venture Fund.
Speaker: Can you talk to us about why the pivot?
Speaker: What did you see that made you pivot?
Speaker: And talk to us a little bit about how that's going.
Speaker: Yeah.
Speaker: When we first started, so when I first started with my partner, we saw an opportunity that was on the rise.
Speaker: You know, whenever you see this, the fact that people are getting in more and more involved with investing in startups, um, because it's in the media and we have social media, even as, as primitive as it was back in 03, there was a little bit of that out there.
Speaker: And, um,
Speaker: you know, people started to become familiar with this concept and things grew.
Speaker: And so we, we, we really, in my opinion, rode a wave because it started to become, people became more familiar with it and wanted to join the group.
Speaker: And we would get, instead of asking people to join, they were asking us to join.
Speaker: Um, and so we were serving an open hole, particularly in what is called the flyover States.
Speaker: That is, if you're not in New York, you're not in California or Washington, those states, or Boston, you're considered the flyover country where VCs fly over you, right?
Speaker: And money flies over you and you don't get access to it.
Speaker: And so we saw the ecosystem continue to expand and it was an underserved market.
Speaker: And so we're addressing an underserved market.
Speaker: Now, having done this for like 20 years now,
Speaker: we saw that the ecosystem was growing after the jobs act, there was crowdfunding and there was, there was this ability to become an angel investor and not necessarily be accredited and for entrepreneurs to file under reg D to raise money under what is called 506 C instead of B, which means they can do a general solicitation.
Speaker: And, um,
Speaker: So we saw that and the field became very crowded.
Speaker: There was just a group of people over here that a bunch of friends that were creating something.
Speaker: And, you know, it became got to a point where mix for us syndication with people who are like minded gets everybody aligned and rowing the same direction.
Speaker: But if you syndicate from someone with a 506 C and then you've got 506 B and then you've got this angel group and then you've got this seed fund, the expectations aren't necessarily the same and people aren't growing in the same direction.
Speaker: So consequently, it can be a dysfunctional board arises or just, you know, or you've got all these people giving advice to different people, giving advice to the entrepreneurs that maybe aren't giving such great advice.
Speaker: And we saw it become a field that maybe, you know, it's still serving entrepreneurs because entrepreneurs always need capital, but it made it difficult for us to co-invest.
Speaker: And unless again, it was with our, our syndicate partners.
Speaker: On the other hand, we also saw, again, in the flyover region, primarily the region we serve.
Speaker: So think Penn state through Chicago is that
Speaker: A lot of companies were doing well.
Speaker: They were starting to scale.
Speaker: They would need money.
Speaker: And we would talk to coastal VCs who would say, well, when they're ready for 20 million, let us know because we can't invest anything less than 20 million or 10 million.
Speaker: And the companies really, at that point, they got, they had their seed funding, which is think about, you know, up to one or 2 million.
Speaker: At this point, they need three to 12 or three to 15.
Speaker: before they can get the attention of the larger VCs.
Speaker: And so when you look at that market, there is a dearth of Series A investors in our region.
Speaker: So again, we see it in our own portfolio and said, how can we serve our portfolio by becoming Series A investors and stay, again, serving the region we know and love.
Speaker: And so that's why we pivoted.
Speaker: We decided to, again, it's another underserved market that we're tackling.
Speaker: Now, I do expect others will see what we see, and they already are.
Speaker: And as a matter of fact, many of our colleagues, professionally managed angel groups have started their own funds like QC Angels in Cincinnati and North Coast in Cleveland and Vision Tech in Indianapolis and Hyde Park in Chicago and
Speaker: you know, they're all seeing the same thing as we saw that there was a need for a series A funds in our, and again, in our little corner of the world.
Speaker: So you've just talked about how that series A gap existed.
Speaker: Talk a little bit more about the current startup ecosystem and the challenges or
Speaker: Where are we today in Pittsburgh and the broader flyover region that you mentioned, Catherine, in terms of just the current market that you're seeing as you're out there talking to entrepreneurs?
Speaker: It continues to be a very healthy ecosystem for startups.
Speaker: So the pandemic kind of hurt all of the incubators and co-working spaces that were out there.
Speaker: So a few survived that.
Speaker: And so there, so the, and there still remains innovation works and a sender and, oh, I don't want to miss anyone.
Speaker: I'm trying to think if I'm, you know, the CMU, University of Pittsburgh and, and Duquesne university and,
Speaker: They all have their innovation programs.
Speaker: And I'm thinking, what's Scott Kitt Needham's at CMU?
Speaker: Project Olympus.
Speaker: Yeah, Project Olympus.
Speaker: Those are still around and really doing very well.
Speaker: And the attention has moved now from, you know, there's always things that become
Speaker: In the venture capital industry, there's boom and bust, and you've seen it.
Speaker: Think about, again, 2001, right?
Speaker: 2000, 2001.
Speaker: 88 and 89, that caused another one.
Speaker: Yeah, no, 2008, 2009.
Speaker: But that wasn't by virtue of the venture capital industry, you know, we call it creating a bubble, right?
Speaker: Yeah.
Speaker: They do create their own bubbles.
Speaker: So recently they did the same thing.
Speaker: I believe another bubble is going to be created around AI and chat GBT and all that stuff.
Speaker: But they all do, they all chase the same thing.
Speaker: And looking for the one thing that's going to drive a 3000% return on investment.
Speaker: We're not like that.
Speaker: We're more practical.
Speaker: Um, you know, you know, there are other practical funders.
Speaker: We call them rational VC.
Speaker: That's what we call ourselves rational VC.
Speaker: Um, but anyways, back to the ecosystem and your question is that now the attention is turned to robotics, which I'm glad to see, cause it is a capital intensive business.
Speaker: Um, and they've been able to create a lot of media around that.
Speaker: You need a media exposure to attract outside VCs.
Speaker: And so that is one thing that we still don't do well in Pittsburgh.
Speaker: We have this self-effacing way of how we think of ourselves.
Speaker: I don't know.
Speaker: We don't do enough bragging about what we do well here.
Speaker: There's not a lot of media about what is happening with our companies here.
Speaker: I'll give you a good example.
Speaker: When you look at one of our companies we did really well with was called Wambach.
Speaker: We invested when they had six members on their team as an angel group.
Speaker: And six years later, that company grew and sold for 225 million to proof point with close to 300 local employees.
Speaker: That's a big story, right?
Speaker: Very little, very little attention to that.
Speaker: And when proof point acquired them,
Speaker: Proofpoint didn't pick up the company and say, you're coming to California.
Speaker: They said, wait a minute, we're keeping you here because there's talent.
Speaker: There's great rent on space, right?
Speaker: Think about overhead costs.
Speaker: Compare a salary of someone that needs to code, does coding and does architecting well, right?
Speaker: Straight out of CMU compared to
Speaker: California.
Speaker: I mean, they just saw that there was every good reason to keep that company here.
Speaker: And there was little to no social, I mean, we had social media around it, but little to no attention to things like that.
Speaker: Those are the great stories about Pittsburgh and the kinds of things that are being built here.
Speaker: And they're quietly doing things because
Speaker: There's not much PR around it.
Speaker: I think about shoe fitter.
Speaker: Scott, I think you saw shoe fitter, right?
Speaker: It was acquired by Amazon.
Speaker: You know, another good story.
Speaker: You know, we can, I mean, I could probably name several, but the whole idea behind that is there needs to be more media efforts behind it.
Speaker: And we need to, we need to brag.
Speaker: We shouldn't be so humble.
Speaker: We need to brag about it.
Speaker: I couldn't agree with you more, Catherine.
Speaker: We are the best kept secret that really should not be a secret.
Speaker: Although I do have to say, you sound a little bit like my mom who always says that like, I only talk about the things that I'm struggling with.
Speaker: I never talk about my successes.
Speaker: So we, myself and Pittsburgh need to take that to heart.
Speaker: So, yeah.
Speaker: So our show is called Startup Impact Radio, and we talk a lot about the impacts that you have.
Speaker: And certainly you've had a ton of impact.
Speaker: You've already talked about some of it, but I'm wondering if you would just look back at your career so far and talk about what are the impacts that you're most proud of?
Speaker: Every year we round up, we tally up our numbers that we've invested to date.
Speaker: And having come from this scrappy little
Speaker: you know, 12 member group to an 80 member plus group that invested at this point between all of our entities, $95 million.
Speaker: Um, that, I mean, it's small compared to, you know, the billion dollar VCs and in, um, you know, California and Boston, but again,
Speaker: We're rational VC.
Speaker: We look for the wombats of the world, right?
Speaker: Wombat, you know, the total amount that they raised was something like 15 million.
Speaker: That's it.
Speaker: And again, that was rational growth.
Speaker: Sometimes you should interview, if you haven't interviewed Joe Ferrara, the CEO, he tells a great story about how he managed cashflow.
Speaker: And that is the most critical thing
Speaker: when you're trying to scale your company in a way on minimal resources.
Speaker: Right?
Speaker: So that's a great story to tell.
Speaker: But I would say one is we got, I guess we got people comfortable with angel investing in this region, but it wasn't quite unknown.
Speaker: I have to give credit to, there was Tom Canfield and, and,
Speaker: Don Jones and Jerry McGinnis and some of those folks that were early angel investors who really did a great job of helping people understand investing in startup companies.
Speaker: And so they led the way for us.
Speaker: They kind of created the first, let's say, first road down this path.
Speaker: And we kind of came up behind them and
Speaker: showed how we could do it professionally as a group.
Speaker: And so now, as you can see, everybody's comfortable with angel investing.
Speaker: They're starting to... And realizing this should be a piece of your total overall holdings, right?
Speaker: All your assets, everybody understands that this could be a nice piece of the way you build wealth, right?
Speaker: It's wealth creation.
Speaker: And so you think about the benefit of that.
Speaker: And I said the word wealth creation, not only recreating wealth for the investors, but re-creating wealth for the employees.
Speaker: And that makes a world of difference as well.
Speaker: So when I think about the impact, I wish I would have kept track how many employees, you know, maybe can we go back and do the research maybe someday, but you know, when you're too busy investing and monitoring and,
Speaker: raising capital, it's, you know, it's kind of, you know, hard to take some time to do that research, but you know, we're very proud of the fact that we've had a meaningful impact on the economy and, and we've created wealth, not only for our investors, but for many employees as well.
Speaker: Absolutely.
Speaker: That's, that's probably my favorite thing about being an entrepreneur is creating jobs for people.
Speaker: That really resonates with me, Catherine.
Speaker: Yeah.
Speaker: And I have to say Joe Ferrara is an effortlessly awesome skier.
Speaker: I've skied with him a few times and we totally do need to have him on our show.
Speaker: So great suggestion there.
Speaker: There isn't anything he doesn't do well, as far as I'm concerned.
Speaker: And just the, just the impact you guys were part of, of all those jobs that Wombat was created is, is just amazing.
Speaker: So yeah.
Speaker: Thank you.
Speaker: My only regret is I joined BlueTree literally the meeting after Wombat presented.
Speaker: I kept thinking I'll get in eventually, but as Catherine said, they were so capital efficient that I never got a chance to actually get in it.
Speaker: So I did miss that one, sadly.
Speaker: Yeah.
Speaker: Catherine, you've used the word several times now that you try to distinguish part of your investment philosophy, this idea of your rational investors.
Speaker: You could just expand a little bit more about what that means to you and BlueTree overall and the fund and so forth.
Speaker: Yeah.
Speaker: One of the things I tell people is how we
Speaker: you know, we all develop and grow based on what we've learned over time.
Speaker: Right.
Speaker: Um, and so I think about all the scars that we're wearing and how we learn from them.
Speaker: Shame on us if we don't.
Speaker: Right.
Speaker: So when we first in, you know, in started investing, so let me, I'll tell you the story and then I'll tell you why we call it rational versus, you know, irrational.
Speaker: Um, when we first started,
Speaker: We took a look at this and said, we need to have, you know, some, you know, to diversify our portfolio, we need to have some life sciences and we need to have some tech.
Speaker: So that's kind of how we first started and figured out how do we balance those because life sciences is long term, longer term, longer tail, 14, 15 years.
Speaker: And tech can have an exit within four or five, six years, um, and, and generate returns.
Speaker: So we.
Speaker: first thought that's how we were going to balance it.
Speaker: And we were kind of like a VC.
Speaker: In other words, we were swinging for the fences.
Speaker: And that is we had investing in life sciences in that peptologics or those kinds of companies that will produce high return.
Speaker: I mean, I'm not talking about a 10X, I'm talking about 100X plus, 300X plus.
Speaker: Yeah.
Speaker: We're hoping for a thousand.
Speaker: You know, so, so anyways, it, you know, what we learned though is when you're managing money over a short period of time, like most people are starting to expect returns in 10 years, you've got that window and that's kind of been ingrained in the pattern of most VC funds.
Speaker: You know, they're usually 10 years.
Speaker: Now I see them with terms of 12 and 14 years.
Speaker: but most people become to expect to see their funds returned in 10 years.
Speaker: So when we did, we learned from that and said, okay, as we need to then to drive IRR to our investors in, you know, internal rate of return rather than ROI, we need to focus on shorter term kinds of companies and you know, that they can get to an exit more efficiently.
Speaker: And we kind of dropped investing in consumer products.
Speaker: We dropped investing in life sciences.
Speaker: While we continue to support the companies that we're in, especially when they're doing well, that is one thing that we do that some groups didn't do for a while.
Speaker: They didn't do follow-on investing.
Speaker: They just did the first round.
Speaker: We continue to invest in companies that were doing well.
Speaker: So anyways, we decided that
Speaker: because there's such rich intellectual property.
Speaker: Again, think about the universities that we serve in our footprint on software enabled technology.
Speaker: So again, CMU, right?
Speaker: Northwestern, you know, we can name several, right?
Speaker: Case Western, some others, but it made sense for us so that our fund
Speaker: that we were going to raise, it's called BlueTree VC, had to focus on software-enabled technology.
Speaker: Then what we did was we kind of took a look at what industries were going to have a need, a particular need, for improved efficiency.
Speaker: So we looked at supply chain, we looked at, you know,
Speaker: electricity in the grid.
Speaker: We looked at data management, you know, those kinds of things.
Speaker: And we said, what are going to be the real problems they have to solve over the next 10 years, right?
Speaker: Five years, really.
Speaker: And kind of honed in on just those kinds of things.
Speaker: So we, and the way we looked at AI and ML is AI and ML, even back when we first launched the fund just last year is, is it's going to be part of anything and everything.
Speaker: So, you know,
Speaker: Whether, you know, so we kind of think that's very generic.
Speaker: We're not looking for something that's generic.
Speaker: We're looking for them to solve a really unique problem that might include AI and ML, right.
Speaker: Um, it might be part of the solution.
Speaker: Um, so it, it helps us be a bit more focused.
Speaker: And when I say rational, we're not, we're looking, when we look at each company, we say, okay,
Speaker: what's the probability of getting a 10X return in five to six years?
Speaker: And that's it.
Speaker: That's what we're looking at at 10X.
Speaker: And if four of those companies do that out of 20 that we invest in, we'll have delivered to our investors.
Speaker: So that's what we mean by rational.
Speaker: We're not being the VC where you throw money, lots of money at them and hope they figure it out and
Speaker: and they'll pivot and pivot and pivot.
Speaker: We're at this time, we're at the time we're investing now as in BTVC, it's not in anticipation of demand, it's in response to demand.
Speaker: And so we have a little proof in the pudding, and we also want the founders to know who they're building the company for.
Speaker: Now, they're going to either merge with someone or be acquired, that kind of thing.
Speaker: You know, and that's our focus.
Speaker: And so we're not trying to be the one that's going to invest in, you know, hundreds of millions of dollars in Duolingo and, you know, and give them five years to figure it out and spend lots of money.
Speaker: We can't, we say we've got a small amount of, we're a small fund.
Speaker: We have a small amount of money and we have to be rational about it.
Speaker: And we expect, you know, the companies in which we invest be Joe Ferrara's of the world
Speaker: Nice.
Speaker: Nice.
Speaker: I mean, the whole idea is to help them.
Speaker: I mean, we don't invest and not expect to be partners because we still know it's early stage and it's hands-on.
Speaker: So it's a rational approach to consider the fact that you must provide resources to your companies in which you're investing besides money.
Speaker: Yeah, I've always appreciated the strategic approach to working alongside the companies that you're investing in.
Speaker: And I always thought that that seemed like a no-brainer, but there aren't a lot of people that are doing that.
Speaker: And so congratulations on pulling that off.
Speaker: And I do think that that's led to a lot of the success that you guys have had.
Speaker: Yeah.
Speaker: And we could talk about success all day long because it's fun.
Speaker: But I have found that, you know, from the guests that we've interviewed on this podcast that I tend to learn the most when people talk about the failures that they've had and how they've been able to overcome them.
Speaker: So can you talk to us about, you know, some failures that you might have experienced over your career?
Speaker: What did you learn from them?
Speaker: And how do you do things differently based on those?
Speaker: Well, my first lessons come from my early years when you have a bad boss and you say, I never want to treat people that way.
Speaker: That to me is the biggest lesson you learn is that you walk away from that saying, you know, when I do something on my own or when I become a manager or when I become a CEO, whatever it is, I'm not going to do that to my staff or my associates, you know.
Speaker: So, you know,
Speaker: you know, I guess I would say that, you know, I watch how performance is impacted by the lack of respect for the hard work people do.
Speaker: And I just, I think that's really a critical thing to carry forward in anything you do, whether it's, you know, you're working on a committee at your church, or you're working on a, you know, a nonprofit with people, I just show respect all the time for people, regardless, you don't know
Speaker: You don't know where they're coming from.
Speaker: Right.
Speaker: And so just be respectful.
Speaker: Um, the other thing is I would say my, my biggest lesson is that that execution risk is the biggest risk and it's also the hardest risk to manage.
Speaker: Um, people will be people that would be personality issues, um, and personality issues, sync things faster than strategic issues.
Speaker: and our strategic concerns.
Speaker: And, um, I think paying attention to chemistry and human dynamics is so essential.
Speaker: And, you know, and I have to tell you, I mean, I used to think, gee, you know, um, you, you just hire the right person and it should just work because they have the right skillset.
Speaker: Well, they may not have the right chemistry and that can happen on boards as well.
Speaker: You can get on a board and I won't name companies, but sometimes you'll be on boards where egos, everybody has to impress each other as if, you know, I know more than you or I put the most money and therefore my voice should be the biggest, even though it's the least value added, you know,
Speaker: That's the thing that is the most complicated thing to deal with.
Speaker: And when you're on a board where you're serving with people who are not serving the company well, it's a challenge how to work with them to get them to serve the company well.
Speaker: And especially when you're dealing with huge egos who think they know all the answers or have all the answers.
Speaker: Um, that, that to me is a challenge.
Speaker: I still don't know how to get over.
Speaker: I mean, I, I, I still, I mean, I work at that.
Speaker: I read, you know, I, I read human behavior books still after all these years trying to figure out, um, how, you know, you know, I took all the OD classes when I got my master's, you know, and, and, you know, it's still always a challenge somewhere.
Speaker: And, um, and I guess I will tell one story.
Speaker: is I was the only one on a board.
Speaker: Again, the only female.
Speaker: And I was the one that is objecting to hiring a new CEO.
Speaker: We needed a new CEO.
Speaker: There's no doubt about that.
Speaker: And the CEO said that himself or herself.
Speaker: And so we went through the process, but there was this bro culture.
Speaker: I don't know what else to call it, guys.
Speaker: Sorry.
Speaker: It was this bro culture.
Speaker: It's he's so cool.
Speaker: He said, you know, and I don't want to say anything more about his background because that'll give a hint about what company it probably is.
Speaker: And it was like, but we interviewed this other person who brings the experience and, you know, and led a company to an exit and is more operational focused and, you know, and, and more, you know, and, and,
Speaker: and much more organized and, you know, but, oh, this person's personality is going to raise all kinds of money.
Speaker: So I was the one to object, but they wanted to have a consensus on the board and pushed me into saying, I should agree.
Speaker: I'm like, no, you have a majority, you know, you got what you want.
Speaker: I just don't think he's, he, she's the best candidate.
Speaker: So, um, you know, nine months later I was right, but,
Speaker: they had to replace again.
Speaker: So, you know, it's just, you know, understanding and what, here's what I took away from that is I'm pretty much a straight shooter.
Speaker: Should I approach people when I'm in a, like a big bro culture like that better by asking questions than stating my own opinion.
Speaker: And so I went back and learned from that and came back to,
Speaker: to my books and said, you know, and when we had our retreat with the team, with the, the, the blue tree VC team, um, recently, um, this was the case study I brought in because I said, you know, it, it often, you know, we have to not just point the fingers at here's the dynamics here.
Speaker: Well, obviously I'm not going to change the dynamics, you know, just because I'm, you know, but what kinds of questions can I ask?
Speaker: that would get people to see what I'm seeing in their inability to probably meet the objectives or meet the criteria the company needs.
Speaker: And so we went through some exercises like that.
Speaker: And I said, and that prepares them, my parents, the team, should you be in that situation again is learn how to ask the right questions.
Speaker: and not necessarily think that you're, you know, because you're being a straight shooter that you're going to change anyone's mind.
Speaker: So.
Speaker: I've been in that kind of situation as a lone voice on a board where you don't have any position power to change minds.
Speaker: You have to influence with questions or, and that is difficult.
Speaker: You were just evoking some emotion there of ever remembering that.
Speaker: Yeah.
Speaker: And, and, you know, and I mean, it just, you know, and not that it would have been effective, but could I have been more effective?
Speaker: I don't know.
Speaker: And had I tried those questions and, and generally we are, I mean, generally when you asking good questions, you're more effective at,
Speaker: effectuating change.
Speaker: Wow.
Speaker: Great advice.
Speaker: Let's, we'll bring this in for a landing, Catherine.
Speaker: I'm sure we could talk for another three hours.
Speaker: I want to respect your time.
Speaker: We always like to end the episode asking people about what their favorite drink is.
Speaker: It could be an alcoholic drink or non-alcoholic, whatever, whatever your preference.
Speaker: What, what it was, what would your favorite drink be in this summer of 23 in Pittsburgh?
Speaker: I only have one.
Speaker: actually two favorite drinks and, um, it never changes no matter what season it is.
Speaker: It is a single scotch usually, you know, on, you know, with less Pete.
Speaker: Um, so think of, you know, of things like, um, I don't know.
Speaker: I'm trying to think, um, Belvedere or, um, um,
Speaker: I don't, I'm not crazy about blends.
Speaker: And so it's, it's a sipping cocktail, no matter what.
Speaker: So, um, where's your favorite place to have a single match single malt scotch.
Speaker: That's not Friday night, Friday nights, Friday nights, home, quiet peace sitting by the fire side.
Speaker: so i know we're in the more fun part of the interview but i do have one more question do you have um do you guys still have blue tree venture capital open and are you guys still raising capital for that yes we are thank you for bringing that up scott we are raising capital our minimum um is 250 000 um and uh the fund will close for additional capital at the end of this year december so we are still looking and for new investors we are also talking to institutional investors right now which is exciting we just got
Speaker: two $1 million commitments recently.
Speaker: So we're pretty excited about that.
Speaker: So when you reach your final close, we need to get together and have a single malt scotch at your house so that you're in the place you want to be having it.
Speaker: Sounds good to me.
Speaker: You can help me do it.
Speaker: Sounds good.
Speaker: All right.
Speaker: Well, thank you everybody for listening.
Speaker: If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media or leave a rating and review.
Speaker: It all helps.
Speaker: You can follow me on LinkedIn at Joel Reed OA and follow Scott Tobe on LinkedIn at Scott Tobe SFP.
Speaker: And Catherine, if people want to learn more about your fund or follow you, what would the best way to do that be?
Speaker: Bluetreevc.com.
Speaker: Okay, awesome.
Speaker: Well, thank you so much, Catherine.
Speaker: You're an amazing guest, and we'll see you all next time.
Speaker: Thank you.
Speaker: Thank you.
Speaker: Bye.
Speaker: Thank you.
