Vitaly Golomb - Mavka Capital

Welcome to another VC Wisdom podcast. We have Vitaly Golomb with us today. He's an investment banking and venture capital— is a managing partner at Mavka. He does M&A, capital raising, corporate finance. His specialty is in mobility, energy transition, embodied AI, and robotics. A best-selling author, speaker, and I read a couple of his articles. Well written, well thought as well. I like how you think, Vitaly. We think Similarly, you're not afraid to say what you think and what you feel is right. So welcome to Pod. Tell us a bit more about yourself and what you've been up to.

Thanks, Charles. Appreciate it. Nice to be on with you. Yeah, basically grew up in Silicon Valley, based in Silicon Valley. I've always been kind of on all sides of the table, first as a designer, young designer, then entrepreneur in the software venture-backed space, and then became corporate VC, then investment banker, and starting a fund now again. So kind of all over the place, on all sides of the table in the entrepreneurial game in Silicon Valley.

Really cool. How did you start it out? What was your first company? What was your first investment?

Well, my first company, I was the youngest employee of Kinko's, for those in the US might remember it back in the '90s. So when my friends in high school were delivering pizzas or working at Starbucks back in the day, I was a regional designer. So a self-taught designer, and that kind of took off from there. Then I started a print and design firm with my, with my dad, uh, still while in high school. And then while I was, uh, in college, I was running a dot-com enterprise software design team with about, uh, 15-20 people and couldn't go to bars with them after work because I wasn't 21 yet. So it got started pretty early. You know, I've angel invested along the way, but I primarily invested in my own companies, the first phase of my career, let's say the first 10-15 years. My software company was a pioneer in SaaS space for the commercial printing industry that I learned before that. So I built a big software package for them, won lots of awards, and were the only venture-backed company in that space. And by the time I was kind of heading towards the exit with that company, I was already involved with a bunch of accelerators and funds. Kind of on that side of things and sold the company, got to know HP through that process because it was, you know, HP is a big player in the commercial printing space as well and ended up selling it to a competitor but joined Hewlett-Packard after the split to help launch the corporate venture arm, which still exists today, HP Tech Ventures, that invests on behalf of HP Inc. So that's how I got to that side, but then I did a bunch of advisory deals as well, first one being Rimac, which is now Bugatti Rimac, first big deal, first mobility deal. Got to know the company when they were, you know, just starting out in 2012. By 2015, I was formally helping them, a little company out of Croatia doing a hypercar, first electric hypercar, and then we successfully closed that round in 2017, and kind of the rest is history. Now it's, you know, owns Bugatti, and it's just done incredible things. But I've gone on to do a bunch of different advisory, M&A, raising capital type of deals in the last decade. So that's a quick summary.

Key System, you got acquired, right? So that was the first time you got acquired in 2015, correct?

Yeah, so we sold the company to a competitor. You know, it wasn't a home run type of exit by any means, but, you know, it was a full cycle, kind of from idea to building a product, building out the team, building out the sales and kind of all the management, everything here in Silicon Valley. Opened an engineering office in Kyiv, got a chance to, you know, doing way too much travel, spending a week a month in Kyiv. That's quite a commute, 18 hours each direction, a 10-hour time difference between California and Ukraine. And I was born in Ukraine, so that's my connection. But yeah, kind of full cycle, taking it to exit. We learned lots, and I've imparted a lot of those learnings of my own and those that I've witnessed alongside into my book that I published almost 10 years ago now, there's a new edition coming out, Accelerate Startup. You know, if I knew then what I know now, maybe that company would have been bigger and gotten further than we did, but—

How so? What would have you changed?

Number one lesson is that, you know, I thought I was building a product that I knew for myself, because I was essentially, I came from that industry and I knew, okay, we're going to automate that industry, we're going to create an e-commerce front end, we're going to automate the backend, commercial printing is essentially a manufacturing industry. So you have, you know, you have the ceiling of how much you can sell the product for, and then your floor is the cost, right? And in between is your margin. And that cost you can control, the ceiling you can't really control much because you're competing with others. But the floor is all about yield management, right? In manufacturing, it means that you make fewer mistakes, you do things faster, more efficiently. So we built this entire ERP system for that industry. But we spend a lot of time, probably an inordinate amount of time, educating our customer on how to use the system and implementing the system. But reality is you can do that in the enterprise, but with small-medium business, you have people with a much lower level of education or bandwidth or technical ability, so you have to make it easy for them. So we spend a lot of time trying to teach them how to use the product and best practices and teaching them how to be online marketers. Early on. But we got to a point where they said, you know what, we don't care about all these yield management things because, you know, they don't think about it that way. They said, just get us more customers. We'll happily pay you 30% commission on all— on everything you bring to us so we don't have to learn how to do online marketing. And we did build a marketplace. We quickly prototyped it, put it out there, tested it, and it was working. But by that point, we were kind of running out of gas. With the capital that we raised, then we needed to do a big pivot and raise a lot more capital, which kind of at that point was just out of trend, you know, it would be that much more difficult. So we made a decision to all the tech, you know, the IP, the patents, million lines of code, we wrote all of that, we decided to do a tech sale essentially with some of the customers that we already had on board, which weren't a lot, you know, but we did have some first early revenue. So it's kind of how we landed and These days on the M&A side, we encounter a lot of that as well, right? We have lots of companies that are heavy on product, heavy on IP. They have dozens of patents that they've developed over 10 years. They might have raised, you know, Series A, Series B, but they don't have a whole lot of commercial traction to show for. And it's, it's, it's, it's much more difficult to go to a big player and say, you know, imagine if you have this technology, what you can do with it and what, you know, how you can commercialize it better. It's much easier to sell and say, look, you know, this company is growing 50% a year, they figured out both the product but also the revenue engines. That's a much better situation to be in, but, you know, live and learn. And, you know, there's kind of the experience part of it for the entrepreneur. There's also the perspective where, what the entrepreneur is coming from, they could be coming from an engineering background, product background, not necessarily sales and marketing background. And vice versa. And ultimately, you have to deal with kind of the macro conditions and where you are in the environment and who your competitors are and what's going on in the economy and what are kind of the overall trends. The other thing I would say is that I was very biased coming into that industry because I came from that industry. And there was a lot of people kind of pushing against it saying, oh, print is dying, print is dying. Print is still an $800 billion industry. The problem is that it's a pretty stagnant market and maybe shrinking a couple of percent a year depending on the subsegment. But it's very difficult if you're a new player coming into a big market like that. For every dollar you earn, you have to take it away from a big competitor that already has a brand, that already has, you know, customer relationships, all these things. This is why venture capital chases new trends, because, you know, high tide raises all ships, all boats. When you come in and you're a player in an industry that's growing 50% or 100% a year on its own, you just have to be average to grow 50% or 100%. And if you're outstanding, you're growing much faster than that, you're kind of absorbing market share. So there's a lot of different factors in play, but those are, you know, some of the kind of transferable lessons that I can impart on others these days.

How would you quantify the venture capital climate nowadays?

It's very bifurcated, right? The headline numbers are big, right? Big, big numbers, especially in Silicon Valley. But those big numbers are increasingly going to a very small group of companies that are absorbing all the air in the room. In very specific sectors. On the other hand, I have a lot of friends, and I would call them mentors in venture capital, who've been doing it for many years, and all of them are telling me that they have, you know, they've been software investors and they would invest 2-3 deals a quarter. Right now, they are lucky if they invested in one company this year at all, because they don't see that, you know, software has no moats, right? So yeah, I wrote about this, one of my recent articles, There's no moats in software anymore. You can vibe code pretty much anything. Just having a software product is not enough, right? Software just became very quickly very easy. So you have to have proprietary data, you have to have very sticky customer relationships, you have to have your own models, right? If somebody can build it over the weekend, nobody's going to fund it because there's no block, you know, there's no advantage there. And that's why, you know, the fund that we're doing, in part I would say, is we're looking at robotics because robotics still has an advantage. Physical products are coming are becoming more interesting again for venture capital. Silicon Valley used to be about silicon and hardware things and semiconductor. And about 10, 15 years ago, it went all software. And now we're coming back, right? It's been different. A lot of the investment banking we're doing is around physical things, right? Mobility, energy transition, industrial automation, prop tech, material science. And those have been out of trend for typical Silicon Valley VC, especially blue chip, because they've been seen as very capital intensive and taking a long time. But now all the big players in the LLM game at least have to invest tens of billions of dollars into data centers. So talk about capital intensive, right? So now it's actually robotics companies look like a better deal than trying to compete at the top of the heap with the big, AI players. So it's, it's all circular and interesting, right? It all changes.

Yeah, just like if we think about superintelligence and AGI, technically everything would go down to zero value, but that doesn't make sense as well because there's still human relationship and human genius. So I'm not sure why it seems to be more of a mental thing than a physical thing. Of course you can vibe code your stuff, but most of the vibe-coded stuff is shit. And if you are a smart founder, you can get users, right? Paid users. And that in itself can be reinvested in better software, and then you start climbing. That's still very investible in my opinion. And yes, we've seen more hardware companies and traditional sector companies coming out of YC, but still most are like B2B AI software companies, right? So what are your thoughts on this?

Yeah, I mean, it's a little bit cyclical because people will come out of what they already know and they will make more of that, right? So for example, that's why, for example, fintech or regtech is headquartered in New York, or anything content and media is generally in Southern California. It's because you have angel investors even investing in things they know because they come out of those industries. So there's a certain kind of flywheel around that. But I would say, to be fair, you can definitely vibe code a prototype and take it to customers and do customer development. That part is relatively easy. You certainly would have to kind of hand code a lot of different things and certainly architect things properly for scale. But that's not really a concern, you know, that's actually counter to the advice I would give at the earliest stages because a lot of times you have software developer CEOs who think they know better, and they'll just go right in and start building production software and take all the time in the world and the limited resources of time and money and human developers they have, they will spend thinking that they already figured it out. And they skip all the customer development steps, which is a huge mistake. You have to validate your thesis because by definition, if you're doing something worth doing, nobody's ever done it before, it's new. So you're working on a lot of assumptions if you haven't tested it with your customers or potential customers. I was just giving a talk on Monday to a bunch of European Executive MBA students, and some of them were working on things, and I told them like, look, you know, first thing you got to do is go and test your assumptions with somebody. Do it on paper, go talk to them and ask them how they're doing, you know, if you think you have an insight into a particular problem, go talk to your potential buyers, your customers, and ask them how they're dealing with this right now. Maybe the problem that you're thinking about is imaginary, maybe it's not a problem to them. Maybe they're thinking about something else. And I wish I took that advice when I was the first, you know, I could have saved myself at least 2 or 3 years, first 2, 3 years of that company. You know, this is a decade, a decade and a half ago now, very different technology era, but we should have done that. We should have had that conversation and said, you know what, we're not gonna build that ERP and e-commerce system. Instead, we're just going to send them leads. We're gonna give them a dashboard and we're going to do all the online marketing. We don't need to teach them how to do it. We don't need to tell them how much we're spending. All they care about is that, you know, we're going to charge you per lead or per percentage of revenue. Yeah. So that's an important element.

Podcast, right? Like start a podcast, go to your ICP and ask them questions. And people are like, oh, everyone has podcasts. It's missing the point entirely. Podcast is about building relationships. You target your ICP. It's likely that it's going to be their first podcast, right? They're going to feel all important, have the spotlight, and then you can ask them all the questions you want, which is pretty genius. And that can lead to a discovery call, right? It's like data, data, data. You pre-qualify them and eventually they can become customers. I think that's the most scalable and genius solution nowadays. And the moat is exactly what I described, like, oh, I don't want to start a podcast because everyone has theirs. Well, that's not even the point, right? And I feel that has a little moat in itself.

Yeah, I think it's an interesting technique that I see more and more these days, but it is for kind of sales-minded people. Like, that's accessible to people who are extroverted enough and are willing to put themselves out there and do this in this format. Whereas, you know, product or engineering people are definitely not that. This would be very awkward for them, and they have to kind of learn the sales skills to begin with, sales and marketing skills. We actually started a sister company, Mafia Growth, because we saw a huge gap where you see a lot of technical founders get to kind of single-digit million revenue, and they're able to kind of use their personal relationship. This is like definitely founder-led growth, and they somehow get to a point where they raise, you know, their $10-20 million Series A. But to get to Series B is a very different story, and then kind of the clock is ticking. They have, you know, 4 to 6 quarters of money to figure it out, to figure out the revenue engines. And we basically, you know, that's the big gap, and they'll make a bad hire of a CMO, Or they'll spend time kind of going in a completely different direction and all of a sudden they lost half the runway to try to get there and it just becomes too late. And this is why 80% of Series A companies don't get to Series B is really because this reason. So we kind of parachute in a CMO to first and foremost set the marketing strategy. Who is the ICP? What are we trying to do? You know, what does a lead look like? What does the sales process should look like on the other end? How do we set all those things up and then hand over the keys with a complete like revenue engine which is the difference between kind of a company kind of landing on the roof, shooting for the stars, landing on the roof, or actually getting to Series B and actually starting to scale beyond that. So, yeah, a lot of things, a lot of those, yeah, a lot of skills that are just missing for engineers.

Right, right. We also both target like technical people. I think, yeah, lots of them get taken advantage of because, yeah, they're technical and on the spectrum, they don't really know how to bridge the gap between like their target humans Um, I love how clear the pitch is on your website and that it's a very small niche from Series A to Series B. That's like, I don't even know how to close these people. Me, I do it like pre-seed and seed. I'm yet to discover that in the statistics that you pointed out. It has a window of time, you have urgency, right? Which is essential when you're selling something. So I, I just love it. My question for you, um, I looked at your background, right? Like, you seem, even if you've been like in the SF Bay Area, you still seem like an outsider, right? In the Bay Area, you've done your print business. What I mean by that, you didn't start it straight up in VC, right? You know, like these VC kids that just went to Harvard and start from day one. You had to run a physical print business, go with the agency. You had like your role at HP as well, running their venture cap arm. You're still like building, right? And nowadays you have capital, you have growth, and you have the ventures, right? So you invest in founders, you help them raise capital, and you help them grow, which is exactly what I fucking do, right? Like, we both do the same thing. I think it's genius. My question for you is like, what's next? Will you do that for the next 5, 10 years? Do you have a master plan behind that one, or is that like almost your final Charizard evolution?

Yeah, I mean, it's a— we're building a bit of a platform, right? It's not necessarily that all of these companies, all of our, you know, ICPs for each one overlap. There is a little bit of overlap, right? And there's certainly a lot of synergy between these things. And there's a bit of a flywheel for us, but the investment banking practice came first. And it's something that I've been doing for the longest and most consistently. I was running the mobility and climate practice at a firm called DrakeStar in the Silicon Valley office. Larger firm and then started MAFKA in '23, about 3 years ago, and to kind of really focus on my sectors again. And that has grown nicely, kind of organically, but my goal was always to come back and do a fund. I do have a knack on the investment side. I know that business inside and out. And coming back to kind of the agency world with MAFKA Growth, I was also, you know, partners there, who are, you know, very impressive in their own right, and I'm kind of helping out. I was in the agency business, I had my own, you know, design firm, lots of awards and things, but that was kind of in my early 20s. Coming back to that now and trying to find the right niche for marketing services, you know, that firm is gonna focus B2B, let's say broadly, whereas Mavka Capital, you know, we have two other partners and we each focus on a couple of different sectors where we keep a finger on the pulse and we're experts in those sectors and what's going on in those sectors. Sectors. And, uh, the re— part of the reason why, uh, boards and investors and CEOs bring us in is because we can tell them something they don't know about their own sector and give them an objective view and an objective process and the relationships that we have in each sector. Now, the venture fund itself is really narrowly focused. It's specifically focused on embodied AI, which in our research shows 39% CAGR, compound annual growth rate, for the next 15 years. Which is the fastest growing technology wave of all time, right? So that's kind of the focus area.

Um, but it's super hard to crack, right? Like, I know that you probably have your thesis, but humanoids, which is like the ultimate version of it, right? Like Optimus Prime or whatever he calls it, uh, or Archer, I believe it's— oh no, Figure.

Um, There's a few players there. I mean, that's— that the humanoids are not kind of the focus of embodied AI right now. On the surface, that seems to be the ultimate, but if you start looking very closely, you know, humanoids, you know, that could be a whole separate conversation. There's very limited use for bipedal, certainly bipedal robot within the home. It's not going to happen anytime soon because, you know, look at the— look at the warnings on the back of your toaster. Right, the safety warnings. Now imagine putting a, you know, 50-kilo or 150-pound robot around kids, pets, and seniors in a house, like not with current-day technology, right? So robotics is really useful in very different forms, different form factors. So we look at healthcare automation, certainly, which could be, you know, supporting aging population, etc., not necessarily a robot with two legs, a head, and arms. But a lot of other automations that are more relevant. We're talking about logistics automation, like handling materials, those kind of things in warehouses. We're talking about manufacturing, industrial automation. We're talking about autonomy, right? So autonomy, you know, on the road is truly the first proper, you know, robotics use, right, that's going to go mainstream, that people will have in their own cars, and it's going to become a standard. And that's also a can of worms that can go into, you know, there's lots of claims obviously there. But there's also a reality of what's happening in autonomy. And then the last piece, which we have a little bit of an unfair advantage as me as a Ukrainian, is security and defense. And we also, we also look at not— we don't look at miltech, right? We're not interested in pure weapons companies, but we are interested in, in things that can truly be, you know, using defense as a platform to develop new capabilities, just like NASA gave us a lot of technologies that we use every day that people forget about. But for example, in Ukraine, you can see a very capable ecosystem of electronics manufacturing is going to come online that will be serving Europe and maybe US competing with China, maybe even semiconductor fabs in Ukraine to kind of to, to serve Europe. And as much as I know you're, you're not in the US, but in the US there's kind of an anti-China chance, you know, because China is a big competitor to the US and absorbing a lot of things. In Europe, it's even, it's even stronger because Europe feels very vulnerable without having this technology base that US has domestically. So, so those are the areas that we look, right? It's very practical. We're looking at kind of first revenue companies that are doing kind of vertical application of robotics already in market, not something that's 10 years out in the future, We'll leave that to the bigger funds to kind of roll the dice a little bit. But practical things, you know, first money, first institutional money into these companies at seed or Series A, and helping them get to bigger markets, to Fortune 500 customers. If they're outside the US, we can help, we can be the bridge that brings them into Silicon Valley so they can compete with the best of the best and have a chance to be a leader in their category. So that's kind of where we focus on that one.

So you have Mafka Growth for cash flow, that's your cash cow, then you have bigger ticket with the ventures, right? Like what's your moonshot? Do you have like a moonshot in mind nowadays?

Not something that I'm going to put on the podcast yet, but, you know, I would say Mafka Capital is actually our kind of most established leg of the stool right now. Mafka Ventures, we have a thesis, we're actively fundraising the fund right now, So stay tuned to that. After growth, we have some interesting things coming out where we want to propagate. We have great CMOs on board, like former CMO of Microsoft and Cisco Asia. We have former head of marketing for Novartis and Dell. These are the type of profiles, you know, startup, Series A startups would never be able to hire them. We can parachute them in to set the strategy. Kind of best in class. So we've taken our time to develop that, but we're also launching online courses, kind of basically an academy for earlier stage companies to start kind of thinking in the right direction and start understanding what they know, what they don't know, and how to bridge that gap. So when they get to that point of kind of post-Series A, they know better kind of what they need. How do they, how does this thing work at all? How does marketing, what is marketing strategy? How do you set the marketing strategy for a technology company, for a B2B company? Those kind of things. So that's kind of where we're in the process of developing that, and we have some launches for interesting things happening. We actually have a full-day San Francisco workshop in August coming up that we're bringing like a small group to see if we can put a lot of these techniques into action and have them walk away with, you know, real tools and just a very small group, like 10-15 people.

And a guy that has his hand in so many things nowadays, what does that day in your life look like?

Yeah, I mean, the important thing is that I have great teams, you know, on all three sides. I have two partners on Mafri Capital side, I have a partner in the fund, I have two partners who are really leading more than I am on the Mafri Growth side, and we have a great team kind of growing globally that's supporting all of this behind the scenes. And, you know, I do other things besides all this. So I'm pretty good with time management and people management. I also have a second edition of my first book, Accelerated Startup, coming out. And I wrote a whole new other book on political economics and kind of the radicalization of young men in America, which is, you know, I'm a hobbyist economist. So these are the type of things I enjoy researching and writing about and kind of losing sleep over as a father as well., and, and, uh, and back to music, which is originally the, the, the plan A was music when I was a, when I was a teenager. Um, so I'm a little bit back to that now that my kids are a little older and I have a little bit more bandwidth, uh, for, you know, for the side hustle. So, you know, a lot of things happening, uh, yeah, but it's, you know, this is what we do, right? This— we, we want to make things exciting and, and try different things and combine things.

Love it, dude. Where can, uh, people find out more about you?

I publish a lot on LinkedIn and Medium as far as my articles. So follow me on LinkedIn, you can find me there. And what else? Yeah, you can find me— golem.net is my personal site. So that's kind of the home base for all my projects. But MavkaCap is our main Mavka Capital website. We also publish a newsletter every Tuesday to a large group of people. So a lot of news and transactions that happen in our categories. So that's mavkarreport.com. So I encourage everybody to sign up. It's— we get great reviews on that.

And I love your posts on LinkedIn, so you can follow Vitaly Golomb on LinkedIn. So how is Vitaly?