Episode 12 | Part Two: Prime Time

Gregory Shepard, an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, TEDx speaker, and Forbes author. This is The Boss Podcast with Gregory Shepard.

Welcome back to my conversation with Dakin Sloss, the founder and general partner of Prime Movers Lab. A couple weeks ago, his company announced that they raised $245 million for its Dakin, to say that your approach is diversified would be an understatement. You're into human longevity, solar, nuclear, space, aviation, autonomous transportation. The list goes on and on. Why is your group so attractive to investors? This space is pretty crowded.

Yeah, I mean, first and foremost, people like to invest in things that it looks like are working. And I think the track record that we've produced has caused that to be. I think second, people back people, right? And the team— it's not about me, it's about the team— is phenomenal. I mentioned some of the folks, but there's another 15 really amazing folks that make this possible. And I think people like backing really fantastic people. And then, yeah, third, as you pointed out, I think the world's leading investors don't want to just put their money into something just for the sake of making money if it's possible, but also be able to have a big positive contribution. You know, I shy away from the term impact investing because I think it's been tainted by people who had good intent but weren't looking at the unit economics, weren't looking at were these real businesses that were actually going to be able to realize their vision.

Mm-hmm.

But I think there's a real desire from RLPs and from the wealthy folks that back funds like this in general to make sure that their capital is doing good for the world while it's producing returns. And I think that's definitely helped. Actually, if you look over the last 12 months, there's basically been very few first or second funds raised during the pandemic, because it's been quite difficult as a fundraising environment from LPs, where they've really generally been kind of backing people who already had multiple funds under their belt. And we really managed to break out of that noise, because I think it's a unique mission and a unique team and track record.

Yeah, and the total perspective, and everyone likes to call themselves founder-friendly. But how do you help your portfolio cos? In what way do you specifically help them to be founder-friendly besides the concept of just treating them like a customer in more detail?

Yeah, so the first— obviously asking that question then sparks a bunch of corollaries. So I think the first thing is recognizing what's the biggest risk that every business faces at an early stage. And it's team dynamics and founder psychology. You know, 80% of success is psychology, 20% is like the mechanics of building the business. So we have a full-time executive coach on the team. And I also mentioned that, you know, our partner Tony Robbins, who's one of the world's leading executive coaches and business strategists, brings a huge amount of resources and kind of unique ability to support our CEOs. And then each of our partners are meeting on a weekly basis with each of our CEOs, going deep on strategy, fundraising, go-to-market, sales, marketing, execution, hiring, whatever it is that they need. And so, by having that kind of regular coaching and that regular engagement with us, we're actually able to really dig in and help them solve day-to-day problems. In addition to that, we have all these different partners, you know, focusing on talent, government relations, PR, and kind of the operational pieces of the mechanics.

Okay.

Yeah. So, in general though, the thing that we've tried to do really well, I think, is ask founders, what do you need? It's like, it's not a hard question to ask. When you get— when you ask, you get answers. With those answers, we've made hires and built out a team that's designed to repeatedly deliver what they need to them. As I said before, not just so that they succeed, but so that they enjoy the process of succeeding. Because if they enjoy the process of succeeding, suddenly that impact that we want to have is happening at that micro level of that CEO's life getting better, their co-founders, their employees, their communities. And you really can't bring about these kind of large-scale contributions if you're not starting with yourself in terms of having a good time going through the ups and downs of entrepreneurship.

Yeah, and it really contributes to the overall— it's interesting, that's right in line with the founder and CEO of Upward Farms. Jason Green says that you are the only investors with whom they conduct and benefit from weekly conversations. How important do you think those conversations are? And what is in those conversations?

Yeah, I mean, I think the fundamental commitment we make to founders is that by far the least useful thing we provide is capital. And The only way you can do that is you have to be in the details with people. So it's one thing if you see each other at a board meeting once a quarter. It's another thing if on a weekly basis you're touching base, and then in between that there's daily text messages and calls and voice messages going on. And it's it's like we're their partner in building the business. And sure, we happen to be the ones who put in the money and are the investors. But like that's a secondary role. And I I think that's a good point. Like actually is. People get too caught up in the role of investor and founder. Who cares? We have a business. We have a mission we want to achieve. Let's do it together. What do you need? What do I need to do? Let's make it happen. That's like the the approach in terms of the details of the conversation. One week it might be recruiting ahead of finance. The next week it might be how to close this particular customer. The next week it might be a challenge with an employee that they're having. Next week it might be setting them up for another fundraise. Whatever it is, we try to be pretty. Broad in the range of things that we're supporting and serving on, and also being humble to the fact that, like, I think this is another big mistake investors make, is sure, I've built a couple companies before, but I haven't built this person's company. And the general principles are going to apply, but the way in which they're going to apply is going to be unique to each company. And that's very fundamental to the types of businesses these are where there's true breakthroughs. And so you have to, you have to be humble enough to say, Hey, here's some thoughts. Let's figure out how we apply it. Not think that you have the answer or the right way.

Oh, man. You and I are so in line. I can't even— you're the only person I think I've talked to in years that is in line with my philosophies.

Well, we need to get you talking to some more people then.

Well, yeah. I mean, well, you know, like not a lot of people are willing to really act that way. A lot of people are like, oh, yeah, and they talk that way. But there's not as many of them that when you actually are in the deal, that they actually behave that way, right? So, if you talk to entrepreneurs, I did a 5-year study on why entrepreneurs fail. And I had a team of 5 doing this study. And when you really look into it, bad advice and investors primarily providing the bad advice is one of the primary reasons why 90% of entrepreneurs fail, right?

Yeah.

It's like all over the place. So, it's interesting because when you talk to them, you talk to the different investors and you ask these sort of questions, right? So, what do you provide? And Then you ask the entrepreneur, and the entrepreneur says, "Well, they said they were going to give you all this, but then in reality they didn't really do that." And that's pretty common. But you actually walk the walk, and that, my friend, is very unique. And those people that are listening, this is an exceptional firm and should be praised for their etiquette. On a personal note, I wanted to sort of throw this out there. I mean, you're another one of these Stanford whiz kids. Right, who not only studied math and physics, but also philosophy. And I'm in line with all those things, by the way. I'm really into physics and philosophy. But I'm curious why you studied these things and how you ended up where you are.

Yeah, well, thank you. First off, you're too kind. I think the entrepreneurs that we partner with are really the folks that should be commended. We're just the folks in the background helping them.

Going back to humility. See?

Well, thank you. My journey, a little circuitous. So yeah, I basically studied physics, math, and philosophy. And You know, at the time, definitely wasn't so humble. You get humbled by life over time. I basically wanted to go work on like theoretical physics problems to understand the nature of the universe and matter and energy. And while I still find those topics really intriguing, I realized I really wanted to do something that was going to have an impact on the world today, now in our lifetime, and contribute to human flourishing. And I realized that the way to do that was in business. And so basically, at that time, was mentored by Joe Lonsdale, the co-founder of Palantir. And we started a nonprofit together and then a company, OpenGov, which has done quite well. And after that, built a company, Tachius, which is serving the oil and gas industry in helping them to operate more efficiently and effectively, and then started Prime Movers Lab. So it was kind of every time there was a question of, you know, like, how can we solve this problem? And then we went and figured out how to do it.

That is just— that's exactly the philosophy. I don't know if you've looked at BOSS, the Business Operating Support System, but I would really like to talk to you about that to get your insights. I'd be happy to. This is a program that I put together. Yeah, it's a program I put together to help entrepreneurs in the early stages, right, to try to prevent the— the average failure is 90% at 5 years, but the first 50% fall off after a year, right? So, I'm focused on trying to help these entrepreneurs get to the level where they can talk to a group like yours. And I would really love that. We invest in our companies too, and I could learn a lot from where you are upstream from where I'm at. And I really appreciate the time and energy that you put into this podcast, and I would really like to have you back again. Let me ask you in closing, what would you recommend to entrepreneurs in the space in terms of raising capital from a group like yours? I hear a lot from entrepreneurs that So, you know, they say they want to look at the deals and they want the deal flow and etc., etc. But when it comes down to it, the average VC actually in the United States gets 1,000 proposals a year. That's by Forbes. That's a quote by Forbes. So how do you get through to these people? What do they have to say? How do they get through? What are the deals that you look at and what makes those deals something worth looking at?

Yeah. So, I mean, we, we looked at, I think, about 3,000 deals last year. And so you obviously have like a triage process up front to figure out where you're going to focus. And we really look at 4 criteria. We look at the team, we look at the technology, we look at the market, we look at the deal. The deal is kind of the easiest thing for us to filter on, is the amount of capital and the stage and the valuation that they're raising at kind of a fit for where we enter. We generally invest first, you know, $2 to $5 million at a seed stage. Second is the team. And We're really looking for 2 things fundamentally in teams, and particularly the CEO, the leader. One, is this person ridiculously resilient? Because the only thing that all founders have in common that have succeeded is they didn't give up. And we really want to understand that track record helps, but there's other ways to assess that as well. And then similarly, entrepreneurship is this funny game where like you have to be, I'm never giving up no matter what, but I'm willing to give up all of the details along the way, if that makes sense.

Yeah.

Because you're getting customer feedback, you're getting investor feedback, you're getting team feedback, and you have to iterate and adjust and adapt to what you're actually learning of how this vision's gonna come into the world. And so we wanna make sure people are coachable and they're open to feedback and they're growth-oriented. And then on the technology, we go very deep on that. That's kind of a little later in the process. And on the market, we wanna see huge market opportunities. And so I think one thing that entrepreneurs— this is a long-winded way of getting to this, but one thing entrepreneurs could do better in presenting to us or to any firm is none of us are hiding like what our criteria are, you know, like those are up on our website and blogs here on this podcast, present to an investment firm in the language that that investment firm is using, go through the points that they've highlighted in their own public communications matter to them. And then the other thing is, it's always better to get some sort of intro, right? Because it demonstrates the ability to network and hustle, which always matters in these businesses. And a lot of Entrepreneurs, I think, underappreciate that at first, that the key to making a company work is the people. And if you can cultivate and tap a network to kind of get introduced to investors, it's a good proxy for doing that with your customers, with your team, with future investors. So those are a few of my kind of initial thoughts.

Dakin, thank you so much for your time. I really appreciate it. This has been a fantastic time, and I hope Hope to see you again. Good luck.

Awesome. Thanks for having me on, and happy to contribute any way I can.

If you want to reach out to Dakin or find out more information about him, go to primemoverslab.com, and feel free to reach out to me on LinkedIn anytime. Until next time, my friends, namaste.

Learn more about the Boss Business Operating Support System at bossstartupsience.com. Or you can reach Gregory Shepard at GregoryShepard.com. This has been a production of Forbes Books.