Episode 19 | Part Two: Gen Z VC

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 chat with Marshall Sandman, the managing director of Animal Capital. In part 1, we talked about how he built the first Gen Z VC fund with help from social media stars like Josh Richards. Marshall, I wanted to talk about the cross-section of social media and investing. And if I can recap for a second on what you do, it looks like you're investing not just into the influencer space, but also into the entire ecosystem that the influencer space impacts, right? So the visibility that these people have, and then the products and services that are beneficial to the crowd of people that these influencers influence. And I'm wondering if there's any more to that strategy, or is it really that simple?

I think that there's just much, much more that, uh, we can do because I think that when you— and you're, you're not wrong, but I think that most people ascribe certain verticals to these guys, right?

Mm-hmm.

I think that you, you think about, you know, like protein after a workout, or you think about fashion, um, and apparel, or you think about, you know, certain, you know, lifestyle forward-facing things like Music, which we have invested in and absolutely love some of our founders in that space and think that they're killing it. I think it's just more widespread. And so I don't disagree with anything that you said. I just think that there's a stigma attached to some of what we do and who we do it with and for the audiences that we serve. And to me, it's what audiences should we not serve? And I don't think that there is an answer to that. I think that if we can expand our reach to a broader audience across the sort of BIPOC spectrum, which is something I'm focused on in my fund. There's not much that we can't touch, you know, successfully if we do a really good and thoughtful job and sort of start from the, from the ground up.

So, but if you think about it, you have all of these influencers that have the ability to impact a ton, a huge audience, and you're focused on B2C. And it seems like the alignment of, okay, I have this massive this massive audience and, you know, a stadium of people that I can impact at any one time. Finding businesses that align with that preexisting audience seems like it's pretty easy to do. Finding the right businesses seems like it's very difficult. Do you have any tricks in terms of finding the right deals?

Volume.

Volume.

It's volume. The reality is, is the market is awesome for this right now. We have so many amazing founders from some of these, you know, really big name brand businesses that, you know, you and I both deal with every day, but, you know, Facebook, Netflix, Google, Uber, eBay, which you know very, very well. There's so many awesome engineers and so many awesome business development people and product managers that come out with a fire under their ass with some unbelievable idea. And the only thing that we can do is do our best to see as many of them as we possibly can.

So this is interesting. So you're like 30 years old, right? And social media obviously is a giant driver for you and your investors. How can Gen Xers and Boomers get involved in, you know, mixing this up and getting involved in the two?

I think that Gen Xers and, and other, other generations— I mean, I'm, I'm a millennial, um, which for the first time as I'm saying it makes me feel a little bit old.

Um, wow.

But we all have our own audiences, right? Like Josh, Griffin, and Noah speak to anyone be between the ages of 12 and 27, and I'm 29. And I have seen some of their videos because they're now my friends and my business partners. But as a part of this fund and as a part of this strategy, have targeted LPs that have different audiences so that when— obviously, Josh Griffin and Noah are going to touch the majority of the businesses that we work with in a substantive way. But if there's— we have a couple of pro athletes that have a very different audience, that have an older audience, that have a—

Mm-hmm.

Josh Griffin know that, you know, if you're looking for 23-year-old white girl to make a purchase, we have a pretty good in with that person. If you're looking for a 35-year-old, you know, African American male, probably not. And so we are really focused on building our, our LP base with folks that have that audience so that we can speak to more audiences with the businesses that we work with.

Mm-hmm.

And I think about that constantly because I think that is a way for me to prove That I'm walk— I'm walking the walk of we're going to, we're gonna change the model and we're gonna show that we're not just a social media post and that what we can do on the organic marketing side and what we can do on the go-to-market and, and the way that we can do, do those things is different and, and, and substantively different. Not just a little different.

Yeah, it's substantially different. I mean, you're bringing something to the table besides money, right? I mean, you know, I always tell entrepreneurs, I'm like, listen, it's not just about the money. It's about who you're bringing to the table with the money. And you guys are bringing in a massive audience along with the money to invest in the business. And so for any entrepreneurs listening, I mean, this is a good place to go to look at opportunities where you're getting smart money and value. Just wanted to do a shout out there. In an interview, you recently said you have these lingering thoughts or you don't have any doubts of lingering thoughts. And these things that come into other people's heads don't come into your head because you're too busy. You have horse blinders on and you're pushing forward. How do you shut out the noise? How do you get so focused that the only thing that you're focusing on is your objective?

It's just, I mean, I think it's person to person, right? For me, I'm very, very, very fortunate that I, and this sounds dumb and almost colloquial, but like I have awesome parents. I mean, big shout out to Lisa and Michael. They have empowered me to do everything that I'm doing today. And you sort of rewind to where this interview started of, who was driving me from cross-country and basketball practice to theater practice, to the Angus Barn where I was washing dishes before I could drive. And it's them, and it's because I was single-mindedly, single-focused, the horse blinders were on. I'm getting into the hotel school. That is freaking happening. My grades are not gonna be the thing to get me there. But, you know, at one point I had to build a chuppah in the middle of the night for a wedding that was happening the next day. It's those things and those stories that drove me to getting to Cornell, which was the first big step towards all these other things. Taking a big step back and thinking about why am I doing all these things and what is the goal and narrowing down, not like what's my 5-year plan. And I got roasted for this on a podcast recently. I said on Evan Carmichael's YouTube and podcast, I said, you know, venture-backed businesses, if you're like pre-seed or seed, like you don't need a business plan. And it's not that I meant that you don't need a business plan and you shouldn't have a plan. What I meant to say was getting caught up in the numbers and my— in your revenue forecast and your ground-up build from your margin is going to keep you from seeing the bigger vision. And so for me, it is how do I identify the goals and how do I get there? And as long as you continue to look yourself in the mirror, be honest about what those things are and what makes you happy, you're going to have a pretty Semi-easy job of shutting out that noise. And I'm— I've only brought my parents to say it's, you know, having a support system to do that is invaluable. And, uh, I just don't— I don't discount that at all.

I agree with you on the business plan. I mean, you know, when people present a big plan, I'm like, oh, you know, nobody wants to look at that. Let's just have a conversation, look at your deck, look at your numbers, and then dig in from there. I agree with you 100%. I don't know who roasted you, but I don't know if they've ever been a practitioner or just an investor, you know.

So, well, you, you never know the audience, but I, someone, so a friend of mine directed me to the YouTube comments and there were like 140 comments and I think like 40 of them were like, oh, so you don't need to, you don't need a business plan, you just get money. It's like, let's read between the lines, folks. Just, just a teeny, teeny tiny bit. Yeah.

Well, you got the haters all the time, you know, I mean, you're, you're in the spotlight, so you, you know, it's gonna happen, right?

I absolutely don't mind the haters. I've actually, I don't know how many of these podcasts you've done, but my way of raising money for Harlem Grown was by doing Instagram Lives. And I would do 30-minute Instagram Lives 3 times a week. And I did 90 of them. So I put out a lot of content into the world. And if you stop and listen to the haters, you're never gonna get to where you're going.

Right, and your social influencers probably are really fond of that statement right there, right? I mean, these guys just get slammed Constantly, and they still keep going, no problem.

I mean, they're, they're, they're dauntless, honestly. I mean, they, they get crapped on constantly, but it's, it's funny because, you know, the, those, um, those negative voices are just much louder than the positive voices, and no one has interest in hearing the, you know, obviously it's nice to, you know, have, get, get compliments, but they just don't resonate. Uh, it's kind of like the, uh, you know, the bass singer in the choir gets heard the loudest.

Yeah, yeah, I get it. Yeah, I, you know, I wanted to talk to you about something else. So this Clubhouse thing, right? This Clubhouse thing came out of nowhere, pops up, everybody's on it. I heard that you were able to get 3 investors who learned about your fund via Clubhouse and also found out about haircare business that was started by a 19-year-old entrepreneur.

Tim Morris, my guy.

Yeah, yeah, yeah. And I wanted to— maybe you could tell me a little bit about that story, and then we can dive into this whole Clubhouse thing You know, and what you did during the pandemic, and you were talking about doing the Instagram Live, but you've been all over this stuff. So for a lot of people who are just getting started in Clubhouse, what is Clubhouse?

Sure, so Clubhouse, and I'm happy to talk about it 'cause we just invested in Clubhouse in both their Series B and their Series C. So excited to promote the platform. Clubhouse is an audio-only, live-only group chat where people have profiles, but there's no direct messaging. There's just kind of affinity-based and topic-based groups that occur literally all day and all night. Um, I think you can have up to like 10,000 people in a room at a time. And there's folks on stage curating a conversation. There's folks in the audience just listening. And so the folks on stage can bring people up onto the stage. They can kick them back down. Actually plugging myself, I wrote an article about the importance of Clubhouse for Newsweek. So if you wanna go read that, it's a, I, I think I did an okay job with the article.

What's the byline? What's the subject line so that we can—

I think it was why business leaders have to be on Clubhouse.

Okay, cool.

Something along those lines. And so, you know, for me, and to speak to, you know, your point, your question earlier, it's not just about Clubhouse. It is about harnessing the power of social media for your own purposes. And so in Clubhouse, the magic is that it is raw. And it is live, and it is not recorded, and it is not— there's no way for someone to rehearse what they're saying in there. And so the relationships are very, very real, and you can certainly get catfished in there, but you can also build a freaking career in there. And for me, a couple of people reached out and talked about investing in the fund. And this was before I launched the fund. So people heard me talking about investing and whatever and said, hey, Are there SPVs? Is there a way to participate in what you're doing? And I said, actually, since you asked, you came to me, I can tell you yes, there is a way to write a check. And those were some of my first checks. Those few folks were in my first sort of 12-ish checks into animal capital. And those are relationships that I really built. And a big, big shout out to a friend of mine that I work with all the time now, a woman named Carson Woods, who was, I think, the director of creative at Superplastic, which is a big NFT business, you know, sort of create, you know, doing the creative and some of the, you know, the artwork and the big drops for NFTs, which has been a huge kind of topic and subject, you know, subject area for Clubhouse. And she was not only able to create content for herself and community for herself, but she did one better than that. She ended up leaving Superplastic and working for herself and, uh, has been a consultant to some of the biggest NFT dropping creative businesses and artists, and she's working on stuff with us. And she's— she left Burlington, Vermont, where Superplastics headquartered, and moved out to LA. And it is because she is a raw, charismatic, brilliant human being that saw what was in front of her, saw the opportunity to capitalize on it, and just— I mean, she like was like the Pixar lamp and was jumping on top of the eye to make herself heard and to create a platform for herself and has been stupidly successful. I mean, went from, went from, you know, her, you know, kind of past life where she was already doing pretty well to on, you know, on calls with like Waka Flocka Flame and these guys in the Sway House. And it has, has really capitalized on the current platform. So Clubhouse is a really, really, really powerful tool for real-life conversations and spectacular people. You obviously have to be careful. You need to do your diligence and make sure who you're talking to, who you're talking to is who they say they are. And they are really this, you know, the experts that you They say, you know, they claim to be. Um, but if you're able to get through some of that, the value to be gleaned from it is really special.

Yeah, I mean, it sounds like— I mean, it's, it's an unusual thing. I just started getting into Clubhouse, right? So I just started like getting in there and starting to do meetings and stuff, and it was amazing to me because you just start and people just show up magically. It's just, it's, it's really incredible. I wanted to ask you now about this business. So, you know, this haircare business that was started by this 19-year-old entrepreneur who sounded like maybe a decade older on the platform. Maybe you could tell me a little bit more about that experience.

Timmy's a good kid, and I shouldn't call him a kid because he's the same age as Josh, but he basically took no outside capital. He has moved like 20,000 units of his Vibe haircare product, which is a male-oriented Haircare product, you know, obviously really, really tough market, tough place to get shelf space, but bootstrapped, awesome branding, awesome founder, like, you know, good-looking guy, which helps in the space. And he found the one specific target, one specific SKU, which is his spray clay, which I use every freaking day. It is in my hair right now. And just hammered it and is sitting out in, I think, in like Temecula in California and convinced one of the biggest, you know, chemical processing plants to make his product for unbelievable margins for someone that's moving sort of a small amount of product. And so that's the type of thing where you want to hear about every business.

Yeah.

You want to hear about someone that is grinding that hard to make their thing work. And he's going to be successful. And I'm so excited to be a part of that journey with him. Because he freaking deserves it.

I love that. I love when you see— because that's where I came from. I came from nothing, worked my way up to giant transaction, you know, 14 transactions of startups that I did myself. And I came from nothing and, and just grind and grind and sweat and cried and, you know, up, you know, sleepless nights working multiple jobs. And I pulled it off. And I love, like you, when you see that happen. Those people deserve magic.

I couldn't agree more. Um, there we have a couple founders, uh, Anthony and Amir Brown, that we invested in, in their pre-seed alongside a16z the tail end of last year. They founded a platform called Breakr, which matches musicians and influencers in order for them to share the claiming rights of songs across social media platforms. And you talk about 2 people that just like grind and use every platform in front of them and work harder and harder and harder. And At the same time that they're thinking about the pie-in-the-sky vision and they're thinking about how to be tactical today. You just wanna find people like that to get behind because it makes my job, it makes your job so much easier.

Yeah, I mean, you know, there's something to be said for just effort and just hard work, right? Just having the discipline, focus, drive, enthusiasm to get through and make something happen. It's like the recipe for a strong entrepreneur. There's like pain that you go through that you've never experienced in your life until you start your own business, you know? So it's refreshing to hear somebody on the investor side that respects that work ethic. One of your missions is to help social media stars monetize their value. Can you give the listeners more context here? We do have a lot of social media influencers listening to the show, so this might be a good opportunity for you. How do these influencers make the most money? How do they get in touch with you? How do they work through to become something that becomes valuable to them in a monetary way.

I have this conversation all the time with influencers, creators of all sizes, from sort of like people with as many followers as I have. I have like no followers. I have like 9,000 followers on Instagram, to Josh and Griffin, who have tens of millions of followers, to the very biggest stars in the world that I've been blessed enough to be able to be on the phone with. There's a couple things to do. And honestly, it's about— and I kind of mentioned this before, but it is really about like looking in the mirror and seeing what your audience likes, what you like, what you like working on, because that's the stuff you're gonna be the most successful at. And with, you know, Josh Griffin, Noah, you know, Michael and I, our 3 buckets are— we talk about our license, endorse, and own. And it's clear what each of those things mean, but really it's about working across the value chain of, okay, I need to make X number of dollars to, to live. I need to make— I'm, I'm making this up, but let's say you think that you need to make $100,000 for you and your station of life as a creator. That is 8 campaigns and that's 8, you know, 8 campaigns at $12,500 a pop. Okay. How do I create value on top of that? And is it okay that, that's all I really have the capacity to do? Or is it, why don't I go back to this? Making this up again. If I am a female and I wear bathing suits on my Instagram, why don't I go back to my— the businesses I work with and try to consult for them and do a little bit more than just being on the side? How do I take a second bite out of that apple? Okay, now that I'm in this space, I'm looking around and like I have cash sitting on the sidelines. What's like a really simple investment strategy for me? Maybe that business I'm consulting for would not just give me dollars, but they would give me some equity value in the business. Maybe I can work alongside someone that wants to be promoted and make their platform bigger, bigger, that is on the crypto side and will help me invest my dollars, even if it's small dollars, even if it's $2,000 to $5,000 or $0 to $1,000 to start building out that portfolio. And it is really about identifying those tentpoles of your career and what's meaningful and what moves the needle for you to diversify appropriately, if that, if that makes sense, because You know, influencers are often told, and I'm taking this straight out of Josh's mouth and onto your podcast, but influencers are often told you're either gonna be a model, musician, or actor, so pick one. And great, those are 3 great options, so do all those things and then do, then consult, and then invest, and then continue to do your brand campaigns and find a way to connect across platforms with your audience in new and meaningful ways that feel organic.

Thank you very much. I really appreciate you being on the podcast. In closing, can you tell people how to get ahold of you?

info@animalcapital.com. I check it pretty frequently. And then my, honestly, my Instagram DMs, I read them all. So people, if you reach out to me on LinkedIn, I am definitely not going to respond. I just, honestly, it's my fault. And I'm gonna cop to a big mistake that I made. We were on Bloomberg Live last week and my cell phone number was attached to my LinkedIn. And my phone just broke in half. And like fun and like sounds cool and interesting, It was awful, and like and like my like freaking mom couldn't get a hold of me for like two days, and she thought I died. But I just I had like eleven hundred phone calls and more texts than that, and I was like, I am going to change my ways. So Instagram is the best way to get me quickly. Info at animalcapital.com if you're trying to like pitch a business or like or you know want to do something like with me on the investing side. That's the best way to get me. And beyond that, people comment on my Instagrams and I respond. And you know Timmy Morris is a great example of. If you just keep banging down my door, it will work if it's going to work. And if it doesn't work, it will become annoying very fast.

Marshall Sandman, managing partner, Animal Capital. Thank you so much. I really appreciate your time. I appreciate the advice, and I know the listeners do too. Thank you so much.

Thank you. I really, really enjoyed, uh, being on here. And if you ever need me back, I'm, I'm, I'm available to you.

Would love to. Well, that wraps up This episode of the Boss Podcast. If you enjoyed the show, make sure that you take a second to subscribe and automatically get the updates of when new shows drop. Also, if you have a minute, I'd love it if you left us a review so more folks like you can discover the show. I'll see you next time. Namaste, my friends.

Learn more about the Boss Business Operating Support System at bossstartupsience.com. Or you can reach Gregory Shepard at GregoryShepard.com.

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