Ep. 8 - Brian Schettler / AEI Horizon X - The secrets behind how AEI Horizon X has risen to the top

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Good morning, everybody. Welcome to another episode of Open Innovation Talks, the podcast sponsored by Mind the Bridge. Mind the Bridge is an international innovation advisory firm providing products and services for corporates and startups. Hi, I'm Marco Marinucci, the founder and CEO at Minderbridge, and today I'll be sitting with Brian Shetler. Brian is a partner at AEI HorizonX Fund, a fund that has an interesting history because it was a spin-off from the CVC at Boeing. Now today, the topic of the day is in fact this macro trend of CVCs becoming more and more independent and shifting away as a separate unit, potentially with multiple LPs, limited partners. So stay with us and follow our activities.

Good morning again from a sunny San Francisco. We are today recording yet another fantastic MendeChat out of our offices, and today we have the pleasure to have with us Brian Shetler, partner and the head of AEI HorizonX. Hi, Brian.

Hey, great to be here, Marco.

Great, great to have you on, and I believe you're in St. Louis today, right?

Yes, cold St. Louis.

In cold St. Louis, we, uh, the conversation of today will be around a very interesting topic that is the evolution of the models of, uh, CBC and corporate venture capital. We want to cover how, uh, an historical large company like Boeing, uh, you know, started with an internal fund and corporate venture capital fund and evolved over time. So You've lived through the whole process from the very beginning to what it is today. So why don't you guide us through what's been the path?

Yeah, it's been quite a journey, starting about 5 years ago, 2017. I was a former Boeing employee earlier on in my career in various strategy and M&A kind of roles. And in 2017, the company Boeing started embarking on a transformation around new forms of innovation and innovation programs. And one of the pieces they wanted to add to that was a venture capital component. And they brought me in and back from the outside to really design it from scratch. I literally showed up with a blank piece of paper. The concept of what does a venture capital fund for a big corporate like Boeing look like? What should our goals be to try to really enhance the focus of startup activity on aerospace innovation and do everything that we can to bring kind of Boeing's experience and heft to help accelerate and make these companies successful. So that was the general premise. And over those 5 years or so inside of Boeing, we built a great portfolio. We deployed a couple hundred million dollars in capital. We invested in north of 40 companies, some with direct equity investments, some via accelerator programs that we ran around the world, but really building a nice diverse portfolio of companies that were trying to change the future of mobility, that were trying to change the future of space, trying to change the future of manufacturing, and then the whole layer of sort of digital technologies that can make all sort of sectors better.

And so, Brian, yeah, just a question here. In version 1 of the, of the fund, was this a separate entity, uh, with a separate, uh, structure, or what were you guys investing off balance?

Yeah, good, good point. And it's a key piece of the evolution. So we were 100% inside of Boeing, off of Boeing's balance sheet, right? So we had a commitment from the CFO and CEO of kind of an annual budget, how much they, they wanted us to invest. But you have to remember, 2017 was also some of the best days of Boeing's history when the stock was doing well, cash generation was at an all-time high. And so, you know, really it could afford to deploy a lot of capital at these kinds of companies. And that all started to change, as everyone on the outside world and inside Boeing knows, you know, roughly the time of the, you know, the 737 MAX crisis, then COVID on top of that. I mean, in and of themselves, those two points could be kind of company-ending sort of moments, and Boeing yet managed to survive and sort of reemerge with a strong sort of capability. But when you're a venture fund inside of a company going through a crisis, it's easy to get a spotlight shined on you as a potential discretionary item. And not something that the company needs to remain committed to. And I saw this, I mean, you know, there's a lot of case studies about, you know, the fail of venture capital and corporates. And so I wanted to not be another sort of negative case study in the files. And so we took a very proactive approach to try to come up with a structure that would evolve the setup of our venture fund to not force the company's hand to decide, hey, do we need to quit or, you know, do we need to cut something else in the company at the expense of ventures? How could we sort of have our cake and eat it too, to use that phrase? And so we came up with a concept of a spin-out. And so roughly August of last year, we finally executed it, which was to take the entire portfolio that we built and the management of the portfolio. So me and 4 of my venture investing teammates, take them outside the company and partner with a private equity fund, AE Industrial Partners in our case, and really blend that together to create an integrated investing platform that could do everything from venture to later-stage growth to even potential buyout. But keeping Boeing as the key sort of differentiator to this structure, having a unique agreement with Boeing still that sees us have a two-way value proposition where we continue to bring exciting new innovations and capabilities to Boeing, but also be able to pull on all those unique corporate elements that makes, you know, corporate venture so attractive for startups in the first place. And in Boeing's case, that could be everything from, you know, business and market channels, that could be engineering experts, that could be regulatory experts for aerospace. And so we still have access to all that and via a strong strategic agreement. But now we have the flexibility to diversify our capital streams. And so we focus a lot on third-party capital. We find other investors that are willing to invest in now a dedicated fund. Boeing still remains an anchor LP in our funds and is a key sort of vested party in this, right? They have skin in the game. But we're also able to unburden Boeing's balance sheet so that they can focus their balance sheet at the things that are most critical to their internal activities, and we can still execute a venture strategy with third-party capital.

That's a very interesting outcome. We're going to talk about how other CVCs have been evolving over time in this ongoing process, but You're probably one of a kind that has this strong partnership with an outside entity that is actually private equity. So give us a little bit of a flavor of what the partner here, so AE Industrial Partners, was doing before and why then.

Yeah, so AE Industrial has a long history of investing in similar markets to where we were focusing our venture activity. So they were very big and well-experienced in aerospace and defense markets and even broader industrial markets. And so that, that was a key sort of focus for us of folks that understood the uniqueness of the markets that we participate in. Aerospace is unique. There's heavy regulation, there's nuances about what works in aerospace and what doesn't. So you want a partner that, that understands those, those sort of pieces. So that was point one. Two, They, they have a history of, of, of execution. They have a history of raising capital for their private equity funds. They have north of $3 billion of assets under management. They have an experienced team that knows a lot of the companies and players in these broader markets. Um, and they are surrounded by a network of professionals that have so much experience from building and executing critical roles inside large companies. And so as you think about venture-type companies growing up and getting into more mature companies, it's bringing that extra experience and capability to bear from these operating partners inside of AEI that, that can really make a difference too at the end of the day in making our portfolio as successful as possible. So That said, you know, the last piece to it is always people, right? You want to work with people that are philosophically aligned the like way, that the culture fits well, and A Industrial was the perfect fit for us.

And so technically now, is this a joint venture or is that a separate LLC that is managed by a number of partners? How is that transition?

Being implemented? Yeah, we operate in sort of a joint venture type framework, but technically, you know, we're set up as a dedicated, you know, independent fund managed by AE Industrial's, you know, management company, which I'm an employee of and my investing team is an employee of. And Boeing acts as an LP to that fund. But also as a unique strategic partner. We have a strategic advisory committee with Boeing that we talk with quarterly to really get aligned on strategic priorities, projects, you know, underway to kind of focus activity both on our side and in Boeing's side. But, you know, realizing at the end of the day that we are an independent fund, we have a fiduciary duty to all of our investors. So we really take, you the focus of doing what's best for all of our investors, but try to use that Boeing strategic angle as something that adds additional upside to our portfolio and all that are invested in it.

And so Boeing obviously remains as the anchor LP. How many other LPs do you have? And does the traditional LPs of GHION.AI also, you know, co-invested in a fund.

Yeah, so what we thought about this in two phases. First was to take the portfolio that we built today over the first 5 years or so and recapitalize it with some new LP dollars to give us follow-on investment opportunities, to even do a couple select new investments where we had been a bit dormant over the last couple years. And so Really, we just found 2 additional investors to join us in addition to Boeing to kind of close out what we call our Fund 1. And over the next 3 to 5 years, we'll keep executing a strategy to exit our portfolio and to kind of put a nice bow around our first fund. Later this year, we intend to launch a Fund 2, which will be a from-scratch raise that will have much more partnership and investment from additional LPs. We'll formally try to attract and retain as many investors in that fund that see alignment to our focus. And we'll hopefully have a sizable enough amount of capital to execute a strong venture strategy to keep this cycle going.

And does Boeing retain any specific rights over the other investors as an anchor LP?

No, nothing that's against the interests of the other investors. And so we really try to bring an option for all of the new investors to come to the table and benefit in similar ways. Where it's really unique again is just sort of the strategic advisory angle and where we just formalized a mechanism to ensure we have direct linkage to Boeing and the value that it can bring to our portfolio, and that we can bring awareness to Boeing for the exciting new capabilities that, that we've come across. And what we like about that, and something I didn't mention as part of the spin-out, is I used to have a team reporting to me that was solely focused on portfolio development, and, and we left that team behind after the spin to stay connected to the Chief Technology Office of Boeing and act as our, you know, force of application to drive action inside of Boeing around the capabilities we're investing in. So we have a key partner inside of Boeing that lives and breathes our portfolio on a daily basis and tries to find ways to insert that capability all through the tentacles of Boeing business units, technology chains, new business development opportunities and even our end customers in defense and commercial.

What has that team become meanwhile, considering that it's not part of the fund, but it still acts as a bridge between the ventures and the inside business units?

We call it our Applied Innovation Team. And so it has a formal reporting structure inside of Boeing, again, to the Chief Technology Officer. They, they are funded by Boeing to really try to drive accelerated, you know, value and adoption of new external innovation. And so that, that's what I think the partnership around this structure, why that's so unique. We, we couldn't make near the difference inside of Boeing just being 100% on the outside and try to opportunistically try to, you know, chuck opportunities over the fence and into Boeing. So by having this direct linkage and this team that sits inside of Boeing, they act as the conduit across the company, and it just makes the adoption so much easier. They have a budget to support proof of concepts with the companies that we invest in, so it can accelerate, you know, sort of the technology spend required to pull this, inside. We all know how hard it is sometimes to change R&D budgets inside of big companies in an agile and dynamic manner. And so by this team having its own pot of funds, they're able to jumpstart the adoption while we let the sort of R&D process play out over the course of its budgeting cycle.

So, and I'm very interested about some of the technicalities of how this flow of information from outside into the business units of Boeing is implemented. Before going there though, maybe some details about the current fund. So size, kind of investments, focus, and also maybe as part of that, uh, was the— were the, um, the investments that Boeing did initially before under your supervision, uh, rolled in into the fund, or that's two separate— no, separate—

it was rolled into the fund. So we have full continuity of the fund we built inside of Boeing still today. So we still act you know, very actively with that portfolio. We've always been an active investor, not a passive investor. We take board seats or board observer roles of every company we invest in. And so we want to be there with our founders and their leadership teams and the other members of the board to really bring all of our collective experience and network to bear to try to make them successful. So that continues. So we still have full continuity. With the previous portfolio today. Our focus still stays very much the same as when it was in Boeing. We think our market segments are still very attractive and ripe for venture investment. So mobility transformation, space connectivity, industry 4.0 technologies, and kind of the transformation of manufacturing, digital. I will say we've added additional emphasis around sustainability now as well. Aerospace is finally catching up in terms of a market that's embracing sustainability kind of technology and pathways to become more sustainable in the future. So we're definitely paying attention to that space. I'd say carbon footprint reductions, carbon footprint reduction, new forms of fuels, new forms of propulsion that could capture more electric, capture more hydrogen or sustainable aviation. Kind of fuels. So really trying to enable that space to be— to have a lot more innovation focused at it. I'd say, you know, we typically write checks anywhere from a $1 to $10 million amount for our first participation. I could see that increasing in part of this new fund. The nice thing about not being on Boeing's balance sheet is you don't have to worry as much about consolidated financial statements. You don't have to worry about various triggers around ownership. And so in this fund structure, you know, we have had a bit more flexibility to tailor our investment strategy uniquely to each particular company and the syndicates that are coming together. And if it makes sense for us to take a larger ownership, we can. If we have the right sort of partners investing with us and collectively we have the right amount of ownership to really kind of drive, you know, good governance, then we can do that. But I think the flexibility that we have now in the dedicated fund structure is great.

And so how many, how many investments you plan to do to make per year? What's the size of Fund 1 as a result of that?

Yeah, so the, so the size of Fund 1 will still be in kind of the couple hundred million dollar range, and we'll make— by the end of it, we'll have made probably 50 investments. Now that includes a number of our accelerators, like I mentioned, that, that we've run, uh, There's 29 or so accelerator companies that we have in our portfolio. But, you know, the idea being, you know, we want a well-diversified portfolio. We want to benefit from all the power laws and kind of rules of venture capital. But we also want to ensure we're reserving for follow-on investments. A big key to our strategy is we're not a one-and-done investor. We realize the importance for an investor like us, somebody with the industry knowledge, somebody with the connection to Boeing, the signaling effect that that has when you continue to participate in following rounds. And so, you know, in nearly every case, unless something dramatic has happened at one of our portfolio companies, we try to find ways to invest in follow-on rounds. We try to be active with the investor syndicate development. We'll lead rounds, you know, very often. And because oftentimes it's other investors looking to us to set valuations based on what we know about the markets or our experience to date. So, you know, we try to take as active of a role as we can.

So I know it's very hard to single out specific investments as a, as a, you know, as a parent single out specific kids of yours, but also with the idea that you've been the winner of the prize of a startup investment, both for actually interesting setup that you just described, but also for the investments you've been doing. Maybe, maybe a couple of examples of, of a couple of things that stood out, whether it's in the process, in the current integration with the, with Boeing business units, or in general as a, as a very intriguing investment that you think that, uh, yeah.

So I'll give a couple examples. One, and, and most recent, sort of in the news too, is one of our portfolio companies, SparkCognition. It's an artificial intelligence company with a heavy focus on kind of predictive analytics, cybersecurity, natural language processing. And we invested very early. I just missed their Series A in 2017. And so we invested in the Series B for the first time a little bit later. But that was one where it was our first sort of foray into trying to showcase to Boeing that this wasn't a world where they needed to invent everything themselves. They have a lot. They have a very strong IT group. They have a very strong data science and analytics group. But, you know, this could be an opportunity to capitalize on sizable investment that's going into product development and capability development outside of Boeing, but still pull on that capability and leverage it to add value to Boeing products and services and/or embrace it as an enterprise like as large as Boeing's to capture discrete value and cost savings. And so we've invested now in the Series B and Series C while we were inside of Boeing. And with that portfolio development team that worked for me, we've installed a number of projects around the company where we've deployed it on factory floors to leverage cost savings almost immediately in how we do our work. And then separately, we've started inserting the capability inside of discrete products and services that we're selling to our end customers, both in commercial and defense markets. And so how we use that as a differentiator to help win new business. And so that's been a great partnership, uh, that, that's emerged. The problem that we then, you know, reached in, in sort of after the Series C and with what Boeing was going through is like how How could we invest, you know, sizable capital in the Series D round, for example, when Boeing's balance sheet was hurting so much? And so after the spinout this past August, uh, Spark went to raise a Series D, and because we now had new capital, we had new third-party investors, we were able to help, you know, invest in and build out the Series D round. And that just closed a few weeks ago, $123 million raise. They got to unicorn status at about a $1.4 billion valuation. And so it's just been a tremendous evolution of that company from a very small, you know, Series A, Series B type company to one that's now a unicorn, just closed the Series D and has a portfolio of opportunities inside the Boeing company that we've been able to bridge to create real value. So that's So that's been a huge highlight for us, our partnership with that company. Is there a question there?

No, no, no, no. I mean, I think you have another example in your mind.

Yeah, just another kind of on a different end of the spectrum, talking about the future of mobility, the future of transportation, and the transition to some forms of aerospace platforms moving to an electrified sort of structure. And so whether you're thinking of eVTOL in the future, sort of flying taxi types, or just general flying transport, we invested in a company early on called EP Systems based out of Utah. And they're a company that was really trying to create a scalable aviation certifiable grade lithium battery packs that could be used in these future platforms. And this is a perfect area for, you know, something like Corporate Venture to invest in, right? Boeing does not need to invest the billions of dollars that it takes to be its own battery manufacturer. There's, there's others that are doing it. There's plenty of, of, of infrastructure around battery development around the world. But if it could have a seat at the table to help shape the requirements for batteries that needed to, you know, be developed to fit the applications for aerospace, then it, you know, it's a win-win for them. And so we invested in EP Systems, you know, very early on, helped to lead a round. Saffron, uh, joined us in that endeavor, and, uh, we have already now been working in a variety of ways to help get them specced into future Boeing products and services. And now You know, Boeing has access to this, this great new battery technology that, you know, otherwise it might have had to spend, you know, hundreds of millions of dollars to create itself. And instead, you know, you use the power of investors on the outside to help build the technology, scale the technology. But Boeing got precisely what it needed out of it in terms of capability. So again, I could talk 25 additional examples across the whole portfolio, but I think that You know, it just sort of gives you a sense of how we think about the nice marriage of, you know, investment, the rationale for a third-party investor, but then also the unique strategic value that comes to Boeing from the partnership. Yeah.

And I think it also highlights the kind of probably your role to convey the message of the or address the syndrome of not invented here and not built here. That companies of the size and the history of a very strong R&D as Boeing have to face, right? When they have to decide, you know, which way to go, looking at the future that is uncertain. So on that topic, give us a little bit more color of how do you integrate the feedback loop from the different business units? Is there a specific process? Is that formal? Is that informal? Is that something that obviously coming from from the inside is much easier for you because you know, you know, the levers. But give us a, you know, a color of how do you think that, that process has evolved and what other companies in theory can learn from this experience.

Yeah, I, I, I can't overstate the value of, of having an internal group and/or champion, like in our case our Applied Innovation Group. They can act as the central node of all of the communication flow and feedback that, that we need to execute a good investment strategy, but also have a complete understanding of the, you know, the, the capabilities, the, the, the new technologies and, and needs of Boeing that would be the most attractive. And that could help be immensely helpful in helping shape, you know, how, how we think about, you know, what market segments are attractive, what new technology attract— are attractive, or even what new company what new companies that we see, what new startups are attractive. And so the feedback loop we've set up with Applied Innovation is, you know, they can act as a central node to engage first with the technical community. So we spend a lot of time inside of Boeing building technology roadmaps, understanding the kind of long-term strategies to progress capability from where it is today to what's needed in the future. And so we can have a nice sort of map of, you know, what we have, what we have good plans for, what is being solved with internal R&D, but where are gaps or where are things that really should have a strong make-buy decision around them to see if there is a better opportunity to solve it on the outside. And so we created a master matrix, we call it our Rosetta Stone or ROSI for short, and that's our North Star in a way to just at least have an understanding of where there's capability needs where there are gaps. Now that can't be the end-all be-all because you have to take, you know, kind of a critical thinking to the next level to understand how multiple pieces play together. Just because something's a gap doesn't mean I should invest in a startup in that area right away. You have to layer in a strategy component to this and a business component to this to ensure everything's lining up. And so we, we spend a lot of time, you know, then the applied innovation team does aggregating inputs from the business units and their respective strategy team. So the nice thing about this applied innovation group is they dual hat to this technology office but also the chief strategy officer. So we really have a nice blend of what's being, you know, kind of driven from a business strategy level but also what's happening at the technology, uh, kind of where the rubber is meeting the road. And so that's, that's how we're aggregating that. And then the communication between applied innovation and But for us on the outside, that's just a seamless sort of process that we've set up that first involves a linked Salesforce account. So we can share things seamlessly back and forth with each other so that, you know, anything that's put into a Boeing sort of needs can come over to us. If we find an exciting company, that gets populated in our Salesforce and Boeing can assess it. And so we really just try to enable collaborative sort of framework. And then we just ensure we have, you know, open communication too, and really just sort of force the conversation on a near-weekly basis to just ensure that we're, you know, communicating openly. And not only in sort of informing new opportunities, but then kind of following up and project managing the adoption cycle inside of Boeing for our portfolio. If we're really counting on a Boeing project to come through to help make a company more successful, you know, we get to kind of hold that applied innovation team accountable to help sort of deliver. So that's sort of how we set it up. It all starts with communication and enabling a sort of seamless collaboration structure.

When there is a collaboration that is a result of an investment made that then can can have some application within Boeing, do you assign people? Are there people assigned from, uh, from the Applied Innovation team to that portfolio company that will, will—

that team? Yeah, yeah, that team's about 10 people, and, and there is a single individual assigned to each portfolio company, and they own the spectrum of projects that are, uh, underway inside the Boeing Company, and they're the ones accountable and measured on, on execution. Executing that strategy. And so that applied innovation team has their own sort of staff, you know, management process to make that happen. But, you know, then everything gets aggregated in, again, in Salesforce. So you have full sort of dashboards to understand how the projects are going, where there's more funding might be needed, or where there's risk or opportunity. And so that team can really stay on top of how the application is going.

Excellent. Do you also invite some of the senior members there, or maybe from the business units, as part of your evaluation of investments? I don't know if you have a formal investment committee, but how do you use that knowledge from within?

Yeah, so we still ensure we keep proper firewalls when it comes to investment decision-making. So, you know, it's really important that we showcase to our third-party investors that We have an independent investment committee. No member of Boeing is on, on the investment committee. You know, we are a group of investment professionals and we have to make decisions that are in the best interests of our collective investors. That said, you know, we definitely can use Boeing resources to help dive deep into the companies as part of our due diligence. And so as we're thinking about, you know, our complete investment memo, as we're thinking about report out to our investment committee. You know, we'll use AEI resources to help due diligence. We'll use Boeing resources. We'll use third parties if necessary. But that's, that's how we approach it and really just sort of make sure when it finally comes to the investment decision phase that, that, that we act as that independent investment committee.

Makes sense. So, Brian, to, to finish here, I want I want to pick your brain more on models of how the CVC industry, the corporate venture capital industry, has been evolving. And there is a clear trend here. We have a number of examples that we can mention, but the idea is to experiment sometimes, a rebranding or making some, you know, distance between the corporate mothership with the investment arm when it's specifically here with early stages, CVC-focused investment, or sometimes also, you know, that's another potential model that we have seen to use kind of a CVC as a service as one of these options. I mean, the market is full of examples that are a mix of the two, Speaking about rebranding, you know, the SAP into Sapphire, uh, the bank BBVA with, uh, what then became Propel Ventures, even Google, that is my alma mater, with, uh, what Google Ventures became GV. It's kind of a, you know, try to make a, like, a separation that has, has different reasons. What, what, what is your take?

Yeah, I, I think there's a lot of commonality, uh, to, in a couple ways, to to those examples you have and how I think about our own journey and what would've derailed us very early on. I think fundamentally the biggest key to success at the end of the day is one, understanding the culture of your particular corporate. But I think most corporates have a similar culture as it relates to this not invented here syndrome and this instinctual sort of threat reaction to the outside world in domains they can't control. And so I think a key to success here, regardless of how the strategy plays out or how a corporate views it, is it has to start with something that's inside the four walls of your particular company. I look back like there's no way we would've been successful today or here today if we were just a fund on the outside from day one trying to make inroads into the Boeing Company as outsiders. So we had a hard enough time from day one being employees of the Boeing Company to overcome how we jokingly called the antibodies trying to attack you because this felt so different. It felt so against the traditional DNA of the company, and it required a lot of patience, explanation, political capital. And proof that the structure really yielded results and that it could be trusted. And that would've been an impossibility inside of Boeing to try to prove, again, if I was just an outside consultant or somebody that wasn't wearing a Boeing badge. And so starting that way, at least for us, was sort of critical to earn the trust, to earn the relationships and respect, and start pivoting the culture of the company to be more accepting of, of this kind of approach to venture, to the fact that these startups, you know, with the right encouragement, handholding, and funding, could be, you know, superstars in the future of aerospace. So, so setting that mold up first, I think, was critical. Then, you know, this evolution, I think it— even if Boeing hadn't gone through some of its own sort of corporate crises, I think it's a really good evolution for any sort of established corporate fund to start thinking about for a couple of reasons. One, you always have to think about the opportunity cost of your company's own discretionary capital. And if we're just coming off the balance sheet, you know, it's a constant trade your CFO has to make every single day of like, invest more in this fund or invest more in, you know, a capital expense or employee salary or, you know, pick your line item and you just create so much more flexibility for your CFO if you say you're going to solve this problem of opportunity cost by raising more money from the outside. And why shouldn't we, right? You know, why should one company have the outsized responsibility of funding most of the development and taking on the lion's share of the risk? And so I think just having that evolution sort of play out was really, really healthy. There's— and, and there's a couple other benefits to play out, too. When you think about the team of investment professionals, one weakness corporate venture has always had versus its more institutional VC counterparts is a compensation structure that properly retains and attracts, you know, members of the team for the long haul. When I, when I was building my original team, I was pulling on every angle possible to try to shape a compensation structure that was, you know, adapted sort of away from the traditional comp approach in Boeing. And most HR systems just don't accommodate that. And Boeing's was no different. And so I had to be very creative in how I was hiring resources from the inside, how I was trying to, you know, show some opportunity and upside in the long run. But it was nothing that would ever compete with the potential for carry or, you know, large sort of discretionary bonuses based on kind of performance. Because if you're inside a big company, generally you're measured with how the whole company does, not just how your, your one little segment, in our case venture, does. And so the spinout allowed us to really create this dedicated fund structure, set up a comp system that was much more competitive with institutional investors, and now when I extend offers to folks on, on the outside of the company, you know, they don't laugh at me, right? Because, you know, before it was just— yeah, so it's, it's, uh, it's something that can be really competitive and but also benefit from what good VC structure is all about, is that it's aligned incentive, right? If, if I just work, work my butt off and try to get the best possible outcomes and that those outcomes happen, I get rewarded for it. The portfolio company does well, the fund does well. It's just a great alignment that, that's set up there. And so, uh, when you're inside a corporate and your comp doesn't change if all your companies go bankrupt, like, that's, that's not setting up the right sort of structure, uh, and alignment. So I think that's been a healthy evolution for the team as well.

Uh, Brian, again, thanks for your time. Thanks for your inputs and Congratulations again.

Well, thanks a lot, Marco. Really appreciate the chat and thanks again for the award. We're really excited by it.

Hope you appreciated this episode. Next episode, my partner in crime, Alberto Netti, will be talking with Franz Menzel, the Vice President of Technology and Innovation and also the CTO at Factory Automation at Siemens. The topic of the discussion will be Venture Builder at Siemens, and if you are in the world of open innovation, you know that Venture Building is one of the hot topics of the day. So don't miss that and add your comments, your thoughts, your suggestions of things that you want to talk about or suggesting to talk about on Instagram or join us our community on LinkedIn. Look for Mind the Bridge and you'll find us there. Um, talk to you soon.

Thank you for being with us today and see you in the next episode of Open Innovation Talks: Mind the Bridge Chat with Industry Leaders.