Joe Wilson, Managing Partner at Undeterred Capital - VC from the ground up - The Michael Girdley Show Episode 48

Hey, Michael here. Thanks for coming back to an episode of The Michael Girdley Show. Today I sat down and had a great conversation with Joe Wilson, and Joe is somebody I met at a conference about 6 months ago. He is a, you know, a deep tech investor, runs a VC fund out of L.A. He'll tell the whole story about that. But we went down a bunch of cool rabbit holes of stuff that, you know, I thought was pretty new to me and pretty interesting. Like, how does deep tech investing work? One of the things he did that was super interesting is how he responded to the COVID-2020 pandemic by— as a scientist, by doing something about it. Really pretty cool. And then how he thinks about different stuff like what, what defines a shady business or not. It's something I've been struggling with. I know I have my answer, but I'm curious how other people think about it. So really cool conversation with Joe. Hopefully you can stick around and listen for the whole thing. Really was good. And here's the episode after a brief word from our sponsor. Hey, Michael here. Uh, sponsor for today's show is actually, uh, a product that I'm a part of called DMBridge. Uh, and what DMBridge is, uh, is a service that we built, uh, to solve the problem that Twitter's direct messaging functionality is a total mess. So we built DMBridge to help you fix that. Um, a lot of the other solutions, uh, do things like requiring you to install a whole nother inbox. We didn't want another inbox. So we created DMBridge, and what it does is it takes all of your Twitter DMs and has them appear inside of your email inbox. So you can reply to them just like it's a regular email. You see them just like it's a regular email. You can search them later like it's one of your regular emails, all just by using DMBridge. So, uh, we're currently live with the product. Uh, would love for you to sign up and become a customer, uh, and check it out. So you can find that at dmbridge.app. and go on there, put in your name, uh, and be either part of the beta or join us as part of the live use of the product. And again, check it out, dmbridge.app. Joe, thanks for being here and joining me today on my podcast. I'm honored that you're here.

Thanks for having me.

Cool, man. Well, you and I met at Capital Camp, um, and we were like the two ships at, at sailing at night that met and both decided to sit in the front row in the main stage, um, which is a learned habit of something that I've started to do in life, uh, when Whenever I go to a show or any sort of conference or whatever, like, I just walk straight up to the front and I— that, that makes me pay attention. It's like, it's got going to high school. Um, but like, yeah, I got to know you a bit and I think you're going to be new to my audience and stuff. So maybe we start with, you know, give us a brief introduction as to who you are and what you do now.

Yeah, absolutely. And I have to say that the sitting in the front row thing, um, I actually picked that up from my wife. Uh, she's an entrepreneur. We met in business school. And, you know, she used to do that for all of our classes. And so as a way to talk to her and I guess to pay attention, I started doing the same thing. So that is a habit that is now ingrained in my mind as well. Uh, um, so Undeterred Capital. Yeah, so, um, I am the managing partner of an early-stage venture capital firm called Undeterred Capital. We invest in really early-stage deep tech and bioscience companies. So think first check-in, pre-seed, seed stage financing. Really, we want to be an entrepreneur's first partner out of the gate. Almost always it's a, you know, a founder trying to commercialize this scientific or technical breakthrough. Normally they've been working on the problem for 5, 6, 10 years, normally extremely smart on the technical side, and are looking for help in terms of actually commercializing the tech. Operationalize it and, and building a core team. So, uh, I'm the managing partner of that firm. I started Undeterred Capital about 2 years ago now, started investing out of it about 18 months ago, up to a dozen portfolio companies at this point. Again, all of them at first investment was at the, the pre-seed and seed stages. Um, I, I guess a little my background as well. Should we go into that a little bit? That'd be helpful. Yeah, so, so before Undeterred, I was a venture partner at an early-stage biotech fund called MarsBio that's also here in LA, run by my, my friend Rob Reinhardt, who started a company called Soylent. But before that, I was on the operator side. So started a company called Multiply Labs when I was at grad school at MIT. Basically, the vision was to create personalized medicine. And we did that via a combination of 3D printing and injection molding capsules and then filling them with these custom-built robotic systems. So in that way, we could alter the release profile of the drugs and fill them with custom amounts of medication as well, enabling true personalization catered to, to individual patients. So I started this company with two PhD students at MIT. One was a PhD in robotics, the CEO, Fred Perrietti. And the other was a PhD in pharmaceutical science, uh, Alicia Malochi. We started working on it in 2015, 2016, spun it out of MIT, took it through Y Combinator, and, uh, and built a company behind it. So got approved for a manufacturing facility in San Francisco, and, and I was the COO there for about 3 years before moving down to LA and jumping on the investing side of the table.

Yeah, well, and so when you went to go start Multiply, you dropped out of an MBA program, is that Do I have that right?

I did, I did. Yeah, I was there for a year. Um, you know, I, I went to MIT with the very explicit aim of starting a company. So once I did, and, and once it started to have some success, I said, hey, mission accomplished, let's, uh, let's do the next thing. Yeah.

And you went— so you went to Duke undergrad, which is like not the most elite of colleges, but it's pretty serious. And then, but then you went to like one of the kind of the top 5 schools. So I was like, so just for full transparency, like, I never got into any of those incredibly good schools. Like, I was like rejected by, you know, I tried Harvard, Princeton, all those guys. I probably had SAT scores to get in, but I never got in, uh, just because I wasn't special enough, evidently. But I was always just kind of curious, like, so you have, like, you've spent time at like a regular, like I would describe as a normal person university, then you went to like, you know, You spent time at MIT. So like, like, is— what's— what was the difference? Was there a difference? Was it pretty much the same?

I mean, I love starting this off with Duke shots. I think that's a good way to get this going. Um, yeah, I mean, both Duke and MIT were the highest concentration of intelligent people that I've ever been around. I think it was Duke as an undergrad— I mean, I grew up in Nashville, Tennessee, um, Certainly some smart people there, but the talent density at Duke was unreal. And the entrepreneurs that come out of there, the executives that come out of there, that was a pretty incredible powder keg to be part of. MIT was the same thing, both business school and the wider universities. I mean, I think the engineering department at MIT alone, I mean, certainly like per capita density of like intelligent people incredible and off the charts, just, just really doing awesome things and working on foundational technologies, which is the, the reason I went in the first place. So I would say like there wasn't too much of a difference between the two universities in terms of the, the quality of people, but it certainly was, was super high.

Yeah, well, I mean, my— it was interesting when I went to like a just a pretty much average undergraduate college, you know, called Lafayette College in Pennsylvania, so maybe top quartile, um, you know, university, and I first week, I'm like hanging out with the other people in freshman year, and one of the, one of the kids at the other end of the hall was like, yeah, I got into Harvard. And I was like, why did you come here if you go to Harvard? Like, this is the craziest story. And, um, he said, oh, like, I just wanted to go to a smaller school where the engineering was a real focus. And I was like, oh, like, you know, maybe there's— maybe it's not so black and white, you know, so binary in terms of the difference between some of these schools. Like, you have really smart people, but I was always just— I was curious, like, I wonder how many doofuses, like, made it into Dartmouth or Princeton or whatever. Um, so anyway, I don't— that's not really a question.

I think the short answer is a lot. Yeah, I think, like, the more a— the more driven and kind of the more individually driven a person is, I think the less it matters where they go to university. I think the university matters as a backstop and as a way to open doors for those who maybe don't have that framework yet.

Yeah, totally dig it. Yeah, that's— I mean, the network point of the great sorting mechanism that is these schools is people really like underestimate that a ton. Super cool. Okay, so like when I think about my experience with like VC, like, like I'm accustomed to like standard like IT, SaaS, like kind of VC, Um, but the whole world of when like healthcare, like startups or biotech or any of the deep tech stuff comes along, it looks like just such a foreign hard world to me. So like what— I mean, have you kind of compared and contrasted like what those two worlds are, are like and, and how are they same and how are they different as you think about it?

Yeah, I think, um, they vary a lot at, at different stages. I think if you go to my corner of the world, which is really early stage, there's a, there's a good amount of overlap. So if you take a, you know, one of the most important things in whether you're talking about SaaS or whether you're talking about a robotics company, the founding team is going to be totally, totally critical. And the assessment of that founding team may vary a little bit, right? I think, you know, falling in love, so to speak, with a highly technical founder that's building a robotics company is not the same process necessarily as someone who's building a SaaS machine, right? Like, those founder profiles can differ, but I, you know, I think there are a lot of similarities there. Yeah, so I do think there are, you know, there are some overlaps in those areas. In terms of differences, I mean, these companies are, in terms of like how they're scaled up, it looks pretty different. And the expectations also also vary there. So if I'm investing in a company, I don't expect them to be at, you know, $1 to $2 million in ARR, you know, by the time they raise their Series A necessarily, right? A lot of times there are de-risking technical or scientific events before they get to that milestone. So it, you know, it varies by company. I think that, you know, one of the things that is really important to internalize if you're investing in bio or deep tech companies is to, to just be really humble with what you know well and what you don't. I think for people who are investing in deep tech for the first time, they view it as a single entity, and the companies within that world can vary enormously, right? So our areas are health, biological platforms, and applied robotics. Um, even within those, we don't do therapeutics. That's not one of our areas of focus. We really don't do much in space. You know, there's a number of like smaller subsets that we don't touch because, you know, that's not where we're— that's not necessarily where we're experts in. So I think like, as opposed to SaaS investing, you just have to be very, very disciplined with what you know well and what you're branching into and not necessarily apply the same heuristics across the board.

Yeah, dig it. Well, I mean, So do you think about like deep tech investing in, in venture capital is like the risk is actually the, the truly like the science end of it? Whereas like almost all VC startups on my end of the spectrum in the IT SaaS area, like those tend to be market risks. Like we're going out to, it's, it's a knowable thing that you could go build this, you know, it may be a question of how long it takes to build. You know, data center monitoring software or whatever. But it's— that's a pretty known quantity. It's somewhat— it's predictable that you can build, you know, Salesforce. Like, it's not— it's not really a question. But the market risk is— is totally 100— not necessarily 100% of it, but majority of it. And does that invert with deep tech? Like, you're having to push science forward in order to really reach what is an obvious kind of market opportunity? I think, like, the most deep tech kind of opportunity would be like, I'm going to cure cancer. Like, well, science has to get better but there's clearly not a lot of market risk around, around that thing.

Yeah, I think net people over-index on the scientific and technical diligence side of the table for deep tech investing. I think because there is a lot to dig into and a lot to understand there, I think some investors really focus on that aspect of if the science checks out, I've done a ton of research to make sure the science checks out, the science checks out, here's a check, right? And I think, especially at the pre-seed and seed, science and technology is obviously important. We spend a ton of time on diligence there. But that is, you know, that is a necessary but not totally fulfilling condition, right? Like the, the reality is, a lot of deep tech companies pivot, and a lot of them pivot away from their core technology at some point in their lifetime. And the companies that survive that pivot are ones that have unbelievably strong and versatile founders, not necessarily the strongest technologies out of the gate. So I think that, that is a misconception that, you know, you do the science and technical diligence, and that is the core of what you're underwriting. Most of what I underwrite actually is, is product and market risk, is scaling risk. I don't do many investments where I'm taking on a binary science risk where it's give us $1 million and in a year this will either be worth zero or $1 billion, right? Like, that's, that's not really my world. I don't invest in drugs. I am investing off the back of some initial data, some proof of concept. And the question is, can they scale it up from there?

Yeah, they get— what do you— you know, so I think kind of the classical deep, deep tech, um, investment, you know, VC startup that most people are familiar with is Theranos, right?

So, um, sorry to go there, but, but like, no, no, no, it's an important one.

Yeah. I mean, as I think about like, well, she was definitely a testament that in VC, like, you know, to build a startup, you only have to really find a couple of believers. Um, and lots of stuff can happen, right? That's kind of the beauty of, of VC. Yeah, so anyway, I mean, Elizabeth Holmes's Theranos, really this idea it only takes a couple of believers on the VC side, um, to enable something like that to happen. Um, but I was just, you know, curious, like, how do you think about how that going down so publicly has kind of affected what you're doing now? And then are, you know, do you do anything differently now to kind of definitely avoid something like that? Because it feels like now in deep tech there's like zero excuse for that happening again to a VC. Um, and arguably there weren't, weren't that many VCs involved that really knew what they were doing. But it's just curious how that's affected how you're thinking about, you know, building a firm and building a fund.

Yeah, I think there's a couple checks in place there. I think one, eschewing any sort of technical diligence because a founder puts up a wall is— as, I mean, that's what happened in Theranos's case— that's an instant pass, right? That's just, that's just not gonna work. If someone, a founder, does not allow you to into the scientific or technical diligence, they're— I mean, they're not getting a check from me. That's absolutely no way. Um, so I think that's one. I think the people check, or the like, don't be totally evil check, is another one. I think the best check against that is spending time with people, right? I think you get a little more tuned to that over time. My model is a little different, uh, than I think a lot of pre-seed and seed investors. I typically spend a good amount of time with these companies before I invest, so that can— sometimes it's a month or two. I've had cases where it's 8 or 9 months. One of our, one of our investments we're just about to close, which will be our 13th, I've known the founders for 10 months, um, and I've, I've been able to work with them. I get to, get to observe the progress. They get to see how I'm doing, right? That helps remove a little bit of the, the moral quandary so you can see how they are as people. So I think those two checks are, are super important, and I think most likely would have caught Theranos or companies like Theranos. The only point where, um, I would say, you know, could another Theranos happen? Yes. Is, I mean, pre-seed and seed bets are highly speculative in a lot of cases, right? It is not uncommon for a founder to come to us and say, we have not solved all the science, right? It is not proven that this can happen at scale. Um, so in that, and maybe they could raise $100 million, $1 billion to continue executing against the idea when it hasn't been solved yet. And in that case, maybe there, there could be another Theranos. Like, the, the early stage ecosystem is, is set up to support, you know, potentially, you know, a lot of potential zero outcomes. So that, that's how I think one could slip through the goalie.

Yeah, well, I think people would be really surprised to understand the amount of actual fraud that goes on on the startup side. Like, you know, having experienced it and kind of seen it through, through friends, you have a situation where if, you know, where you're not a Theranos, like, and she was on the COVID of Forbes all the time, um, where at a smaller scale everyone involved, if you discover there's fraud, is actually highly incentivized to just sweep it under the rug. because it, if it gets out publicly, it makes the VCs look bad, uh, the founders could go to jail, um, the people that were the customers, like, they're going to be mad and start suing. So like, everybody, everybody loses, um, in the situation. So nobody's really incentivized to make it public. So, you know, I think people really underestimate, you know, in, in a venture portfolio, let's say 1 or 2 of your 40 deals are going to be an outside— outsized percentage of your returns. Like, how many of those, like, 38 that go nowhere are actually, you know, just outright theft? Um, especially when things stay small, right? Pre-seed and seed, like, you just don't have the economics to go do, you know, 6 months of due diligence and hire a third-party accounting firm and all these folks and stuff like that. So anyway, I, I don't know. I don't know if that's a question. It is an observation where I'm like, I don't know if the world really realizes how this works when you dig deep into it.

Yeah, and I mean, again, I think it's a little less likely. Like, put yourself in the shoes of a, like, a scientist who has worked on this for 10 years. Like, this is, this is the vision they're— they want to execute against. And, but, you know, so many of these founders are mission-driven. Cash extraction is not really a short-term goal. Um, so I, you know, I think maybe deep tech is a little more protect in that way. I think there are some really interesting dynamics when you look at either deep tech companies or health companies. There are different dynamics there too. It's not just don't commit fraud, it's also don't hurt people, right? I think like when you look at, and this is, I mean, it's kind of all over the recent news, right? I mean, Juul's products just got banned by the FDA. Did Juul commit fraud? I don't think so. Like, I don't think there are any— anyone's implying that, but they, they certainly hurt a lot of people and they caused like a pretty serious digression in the public health of the nation. And I mean, there are other cases around, you know, some of these telemedicine providers prescribing Adderall and other addictive substances almost with kind of a blank check phenomenon. That's probably— again, I don't know any specifics on that, that case beyond what has been publicly reported, but that, that could be a little of both, but they certainly have seemed to have hurt people. Um, and if, if they're kind of incentivizing doctors to fraudulently write prescriptions as well, then, then obviously they're in the fraud bucket. But I think it's, uh, when you're dealing with health, you got to just be really, really thoughtful around, you know, can anything that we're doing either be misconstrued or at scale can it hurt, can hurt people?

Yeah, would you, would you have invested in a Juul or, uh, what's the, what's the people selling ADHD medicine online, Hims and stuff like that?

Absolutely not.

Every, every other ad on my Instagram and TikTok, by the way, is, hello, Mr. Middle-aged Man, would you like some, you know, uh, Viagra supplements? It's like, oh great.

Yeah, well, I think also the thing is those companies don't have any, you know, they're not commercializing any sort of scientific or technical innovation, right? That's, that's mostly regulatory arbitrage, which I'm extremely uninterested in. So that, again, outside of the dubious product that they're developing, it's just, it's off thesis for us as well.

Yeah. Yeah. Well, that, so that makes it easy. I was curious to dig into, I haven't figured out a rubric to understand, like, like when people say, like, are there deals that you won't do, Girdley? You know, I'll say I don't want to do anything shady. And they're like, okay, well tell me what that means. So like, I think at this point in life I'm trying to figure out an algorithm, uh, beyond like, uh, I would be embarrassed to tell my mom I'm involved in that. And maybe that's as simple as the— that's as simple as it is. Like, um, you know, uh, my, my buddy Bill D'Alessandro talks about, um, that you see these e-commerce businesses that grow like crazy and, uh, and He's like, oh yeah, they're always one of two types when they grow like crazy like that. They're either shapewear. So like, like the clothes that like bind you together that you like see late night on infomercials to make your, your figure more, more appealing. And the other one is supplements, right? It's like creatine, whatever, right? He's like, those are the two things they take off like, like lightning. They're super profitable, but it's nothing when you go ask those people like, what business are you actually in? Like 0% of them admit to being in those businesses. Businesses. Like, if you see somebody that's like, I make $100 million doing e-commerce, and they're like, they won't tell you what it is, it's because it's one of those two things. Um, so yeah, so I don't know what— so what is your rubric or algorithm for just being able to know? Um, I mean, I get the fun thesis, but it's like, what makes something shady? I'm trying to figure this out in life. Like, how do I know something shady beyond cocktail parties?

Well, I mean, you know, I think a lot of the rubric that a lot of companies apply for themselves is It's called the front page test. And it's just, you know, if, if what you were doing at the company was on the front page of a major newspaper, like, would you be embarrassed or would you stand behind that and continue that policy? You know, I think that's a decent one when you first invest in a company of, okay, would I be comfortable with this on the front page of X or Y or Z saying, hey, the net benefits outweigh the cost? It's tougher when you're trying to extrapolate 10 years down the road. I think in those cases, it comes down to, you know, it comes down to trust in the founders and whether or not they are long-term incentivized to do the right thing. In terms of like a rubric for actually saying what is like, what is bad and what is good. I mean, I do think it's, it's kind of a case-by-case basis, right? I think the ones that people have been nervous on over the last 5 or 10 years, you know, one industry is defense, right? Like, where do we where do people draw the line there? If you're making weapons that are, you know, uh, counter-defense, you know, if someone stages an attack, can we respond appropriately? You know, I think that's on one side. More targeted, um, attacks on enemy combatants, you know, that's another thing. Developing just more powerful weapons overall, that's maybe a third bucket. So I think like those, you know, I think everyone kind of has to have their own framework. Every firm has to have their framework for how they're, they're assessing them, but I start with just a simple, like, would I be proud to support this company, um, regardless of, of kind of what the initial announcement of it was?

Yeah, well, then I think there's one even harder than defense, which is like nuclear, um, or I guess people are trying to call it elemental power generation now, which I think is a genius rebranding because it sounds like you're one of the elementals from, you know, from a comic book. But, um, where do you guys stand on, on doing nuclear or elemental type stuff?

Yeah, I mean, definitely, definitely pro-nuclear. I think like a, you know, really— it's a really clean energy source. Some of the advancements there are looking very, very promising and is a way to get us off fossil fuels in the honestly, the not too distant future. So, I mean, we are certainly pro-nuclear in, in that regard. We haven't done one yet. Um, I know, you know, those are a couple really big bets out there, but definitely an area we're interested in and very comfortable investing in.

Yeah. So one of the, one of the choices you've made and is interesting to me, and having, you know, I, I told you I kind of went through the same process launching a seed stage venture fund with partners and went through several funds, um, and really enjoyed it. But we came out as much more generalist and more geographically focused than I think you've done. Um, and then, you know, as I would have gone back to talk to us, um, back in the day, I think I would have encouraged us to have more of a thesis around, okay, this is the way the world's going to work and we're going to narrow down and become really good at this kind of relatively narrow niche and pick a niche that we would be as comfortable as possible making really narrow, right? So we could just get good at that because, you know, I, the question I have for you and, you know, I think you've done that once, like you've double-clicked on the idea of, okay, I'm going to be pre-seed, seed. I'm going to be based in LA. Um, I've got to focus on deep tech stuff, but then that's still to me, like relatively general. Like, how do you think about, you know, the trade-off of like what you're doing right now is like, is it, is it generalized? Do you think? Is it too generalized? Could you be more specific and just say, okay, I'm going to focus on, you know, the one, you know, the defense angle, right? Or, or nuclear or anything like that, or something kind of matching what you guys did with your first, with your first business. How do you, how do you think about it?

Yeah, and I think there are some— I think when you're dealing with fundamentally nascent industries or industries that are about to, you know, if we think are about to have some serious turnover, you know, if they're early enough, you don't want to be over-indexed in that particular area unless you're very, very sure that it is going to have just a massive growth outcome, right? So, you know, there are some funds for interest for instance, that are focused purely on applications of synthetic biology. You know, really interesting companies in that space. We love synthetic biology. We have several investments there. We're going to continue investing in that area. We think it has massive, massive long-term potential. But the synthetic biology market size is just not huge at this point. And the applications are not as ironclad as I think a lot of people would have believed even 5 years ago, right? So I think an overly concentrated approach in the deep tech world, you know, I think it makes you a little bit more fragile. Now, you know, we don't have a super wide focus, we invest in 3 areas: health, biological sciences, applied robotics. Those are frankly areas I know very well. All like I've worked across all of those areas, I've invested in companies across all those areas. And that's, that's where I feel comfortable kind of pivoting from. But yeah, you know, I had a lot of those debates. You know, should we, should we just be a general purpose deep tech fund? Should we go even narrower? Should we just focus on health applications? Like, there's a lot of, a lot of really interesting companies to back there. But ultimately, I decided to orient it first in what areas do I know well, it's kind of a Venn diagram, what areas do I consider myself an expert in? And where do I expect the highest growth potential over the next 10 years? And I think the last part is, you know, where do I see the highest societal impact? And I think that the intersection of those three is how I landed on my three focus areas.

Yeah, I dig it. Well, so switching gears a little bit, you know, how do you think about the shift in kind of the venture flows that's going on right now? Like, venture capital is pretty much frozen. Been up as an asset class since May of 2022 here and probably will take us, everybody getting through their holiday vacations in France in August to start to loosen up again in the fall. Like how do you think about how that affects the type of like high capital requirement deals that you're putting money into?

Yeah, I mean, you know, obviously late-stage stuff is frozen. What we're seeing now is Bs are, are certainly tougher to come by. Series As are still definitely happening. We've had a handful of companies close Series As in the last 3 months. I think Series As are taking longer, both to get that lead investor on board and especially to fill out the rest of the round. And I, again, that's a lot of times the either the firms or the individuals that fill out those rounds you know, they're more susceptible to market dynamics. Like if it's a, you know, a wealthier person who's putting in a $500K check or a $250K check, their net worth has gone down by 70%. Maybe they're writing a $50K or $100K check at this point. Right. So those are some dynamics we've seen play out at the A. At the seed and pre-seed, you know, I think those deals are taking longer, but they're certainly still happening. We've seen prices come down a little bit in both of those areas. Founders, I think, just getting a little more thoughtful in terms of not necessarily the first round price, because I think they could still raise at basically the same level as they could a few months ago. I think it's them looking ahead to if they need to raise an A in 12 months, and if you've raised a seed round at $30 million post-money, that's a kind of a high wall to clear for your Series A in a year, given where Series A investors are underwriting a lot of their investment. So, you know, those are the shifts we've seen. I think, like, I view it as a pretty opportunistic time for, you know, a group that has the long-term horizons we do. We're going to keep investing in pre-seed and seed companies. We'll probably end up looking at quite a few seed extension deals. We haven't done one yet, but especially when the prices are coming a little bit more down to earth, and those companies just need a little more time to get to the the next phase. You know, I think we'll definitely look at some of those. I think one thing we did, which was, you know, I guess looks smart now is we are big believers in time diversity for our fund. So we had a 2.5-year deployment schedule. I think a lot of funds were moving to like a 9 to 12 month. And so because of that, you know, we're about halfway done deploying this first fund. I think we're going to get some some pretty good diversification, both from the bull market side of things as well as the bear market. So I feel, I feel very good about, about where we are, about where our portfolio companies are. I think it's just, I mean, it's the same thing that, that I've been preaching to them since, you know, February, March, which is caution, caution, caution, like runway, runway, runway. I think the one additional thing I often say is, yes, have your Series A plan in mind, but also have enough capital if the Series A doesn't come together to be able to make more progress and go out again 6 months later. Uh, and I think that, that double dip approach is, is super important now.

Yeah, super cool. Um, so I would say like the number one question I get asked and cold emails from is like people who are, who basically are younger folks and they say, I want to become a venture capitalist, like as a profession, like, can I come get advice from you? And like the, the, I, I give them certain advice, but I'm curious to hear your story and maybe like how people can learn from that as a path path to like go do VC? Because by and large, the jobs that you get in VC are like, they're— it's a really small industry. People, I think, are surprised when they learn there's, you know, maybe 1,000, maybe 2,000 venture capital professionals in the United States. Like, and I'm maybe exaggerating on the low end, but like, it's really small, like, compared to real estate and other stuff like that. So, you know, just curious how you thought about it. Like, you got experience, built a network, and then, you know, how did you say, okay, here's going to be my strategy to go create a firm you know, versus maybe joining one?

Yeah, I, I think lesson number one is running a business doesn't necessarily teach you how to be a good venture capitalist. I think a lot of people conflate those two because you have so many ex-founders who have started VC firms or joined VC firms, but I think that that is a little bit of a warped perspective in terms of one is just, you know, the skills you need at each of the respective jobs, and the other— and this is more from just like a human, what do you want to be doing with your life perspective, you know, they're very different jobs. The cadence is different. As an operator, you know, everything depends on you. You are successful, like, you are entirely— your company is entirely dependent on you to, to succeed. Um, I think as a VC firm, you know, you have dozens of portfolio companies. Your ability to move the dial on the success threshold for any of those companies is it's actually not that high. I think a lot of investors have like an inflated perspective on the degree to which they can drive change at any company. And sure, you have tools at your disposal to do that, but especially at the early stages, more likely than not, if you try to drive any big change, it'll just, it'll just get in the company's way. So I think knowing that you're going to have a backseat role as opposed to a driver's seat role as you move from, you know, operating to investing is I think is a really good perspective to have. I think in terms of breaking in, I feel like every VC that I talked to says I had an unconventional path to get into VC.

I—

that is kind of the world because it is such a small network. There's not a normal career path that tracks into that. The most common one is joining a firm as an analyst and working your way up in the industry. That is normal career path 101, or joining after maybe business school. There's a few firms that hire directly from there, but that's pretty rare. Most of the others are individual driven. It's operators who have worked with VCs before, and the VCs eventually say, hey, you're pretty good at this, why don't you come on the investing side? Or it's extensive angel investing, where the person says, hey, I think I'm pretty good at this, let me put more capital behind it and execute a new strategy. So I think those are like the most common paths. Like, you know, most VCs, as I just mentioned, mine was fairly unconventional. I did run a VC-backed company that went through YC, that, that path I think is traditional. But when I moved down to LA, I didn't know what I was going to do next. As I mentioned, my friend Rob was starting this venture fund, MarsBio, at the time, and he said, hey, why don't you come by and work with some of these companies? And I viewed MarsBio as, you know, an opportunity to determine what company I wanted to join or start next as almost a launching pad for that. And along the way, found out I really loved it. I loved investing. I loved working with the companies. I loved, strangely enough, I loved a lot of the back office stuff that drives a lot of VCs crazy. And, you know, about a year in, I just started, decided to start my own shop and was lucky to have some, some really supportive early investors that, that helped get it off the ground. So again, I, unfortunately, there's not a single path to get there. But yeah, that was, that was my, that was my journey.

Yeah, dig it. Well, it's— that's how I got into it too. I talk to a lot of these people and they're like, I want to be VC. I'm like, okay, well, like, how are you going to make that happen? And they're like, well, no, no, you're going to hire me and teach me how to do everything. And I'm like, oh, do you know how many people ask exactly the same thing? So it's an opportunity. It's one of those jobs where you, you know, it's truly the apex of the advice, like you should go start doing the job in order to get the job. You know, writing about companies, networking, finding deals, like doing the things that a VC does just on their day-to-day, like that's the best way to actually become something valuable, you know, in the job market for VC. And, you know, I think it's lost on most people. They expect it to be one of those submit your resume, get hired, and somebody's going to, you know, take care of you type situations. It's exactly the opposite.

Yeah, and I think it's also what kind of VC do you want to be? Do you want to start your own firm or Do you want to join an existing firm? And I think if you say, oh, I want to start my own firm because I have this vision of the world, I think I'd be really good at investing in companies, or I have had some success, I think not enough people ask themselves, do I actually want to do that? One of my mentors before I started the firm said, when you start this, you should expect to fundraise for the first 10 years, like that just on an ongoing basis. And I think that was, that was a pretty good gut check around, you know, it's, it is literally kind of a constant grind for the first decade to realistically get a venture fund off the ground.

Yeah, that's, that is exactly true. It's so much work. I think if somebody has a chance to go join some existing fund, uh, that's easier.

Yeah, especially in this market, it's, you know, it's, it's way more palatable.

Much, much easier. Much easier. Um, but then you're not the boss, which is part of why a lot of people do it. Um, cool. So one of the things that you did which was very fascinating to me was your response to when COVID came along. And I guess because you're a scientist, like, this was pretty easy to do. So, you know, as just a jerk IT guy, like, I just hung out in my house like everybody else. But like, I really want to dig into, you know, well, A, what you did when COVID came along in terms of building this task force, but then like number 2, like what you learned from kind of doing that. So really curious how that went down.

Yeah, I think, I mean, it's trite to say COVID changed my life, but it did in some pretty, pretty major ways. So, you know, I think like a lot of people, I was following a lot around. I was following a lot of the early reports of COVID in the end of 2019, early 2020. Balaji Srinivasan, who used to be at Coinbase, was one of the early people who was kind of flagging, hey, this virus that's kind of spreading. For me, my, my early awareness, I remember seeing there was a video out of Iran in February that just showed these— it was like a grainy video of these body pits being dug. And at that point, I was like, we have entered, we have entered a new world. We need to start preparing for this. And then Europe came along and hospitals were overflowing in Italy. And I just, I kept seeing why, why has there been no initial response? Why is there no planning? It just seems crazy to me. So, and maybe, maybe the most selfish reason that I, that I really started focusing on this was I was supposed to run the LA Marathon. And, you know, there was going to be thousands of people congregated in a very tight space. I'd been training for months for this. I thought, is this even a good idea to, to run this marathon? So anyways, I became super fixated on this. I ended up calling up about a dozen epidemiologists and virologists, many of whom remain good friends to this day, to just start a task force to help back projects that we thought could maybe be helpful in battling the pandemic when it finally hit the U.S. And so, you know, those were things like getting gallons of hand sanitizer to nursing homes in Los Angeles when there's a shortage there, It was helping design a better N95 face mask. But the project that really took off was an early-stage diagnostic testing company called Curative. And I had known the founder for about 6 years. We had gone through YC together. And, and the founder, Fred Turner, called me up one Friday and said, hey, I heard you started this task force. We think we have a working diagnostic test for COVID-19, but what we don't have is a CLIA lab, which is a lab for the production of medical devices. You know, can you help? And so I called up a few people, we found him a lab in Los Angeles. And, um, you know, about 2 weeks later he had moved his entire company down. A week after that they had a deal with the, the city of Los Angeles, and at this point run the majority of drive-through testing sites across the United States, have expanded into vaccination. So anyways, huge massive success on the testing side. And that really kind of rolled into what eventually became the C19 Coalition, which is a full nonprofit that I started with an entrepreneur named Eric Ries, who wrote The Lean Startup. He's the founder of LTSE. And so Eric and I, we started working together on a really on like a daily basis to get this nonprofit off the ground. And the core purpose was just to get PPE to frontline workers. At this point, the supply chains were totally atrophied. Nothing was kind of getting off the ground in China. There were blockades. It was an absolute mess. And so Eric and I worked to kind of align a lot of the stakeholders at every function of the supply chain from manufacturing floors to China, all the way through to hospital systems via freight forwarders and many other groups. So that, that was a pretty intense period. There is a— it was about a 3-month period where we were working, you know, 100 to 120-hour weeks just to help solve some of these supply chain issues. The C19 Coalition eventually moved into things like vaccination equity, helping with test kit ramping up, and a variety of other things. So that was a pretty unique experience in my life. I was not expecting to be running kind of this pseudo-task force nonprofit for the majority of spring 2020, but it's what we ended up doing. I think it's— on one hand, it feels like we did accomplish a lot. Like, our partner organizations helped get about a billion units of PPE to frontline workers. On the other hand, COVID still happened. A million people have died. It's hard to claim any measure of success there.

Yeah, well, I mean, when you started that How did you think about any measurement of success at all? Like when you— it feels almost like you're rushing in kind of to boil the ocean there and you don't even know how big the ocean is or will be, you know, as it continues to fill with water. Like, how did you guys think about that? Or was it just like, look, we have to do something and that's the emotional space we're going to— we're going to live in? We—

our basic philosophy was keep helping until people tell us to stand down. And at first we thought that'll be within a weekend, the supply chain issue will be solved. And then it was, okay, maybe this will be a couple weeks. And then it was, okay, maybe a couple months. Uh, and eventually it became a couple years. So our, that was our philosophy all along was at any point, if any federal group, any state group says we've got this covered, you know, stand down, we don't really need the help at this point, then, then we'd pull back. We just, we kept not seeing that. Um, and after being in it even for a couple weeks, we knew more than 99% of the people on the ground, right? We had just, we had talked to all the stakeholders. We knew how the markets were functioning. We knew it was broken. We knew how to fix it. Um, and you know, we actually, we ended up having some interactions with the, the White House task force on accessing, uh, PPE supplies at a time when they, they were totally stocked out. Now, you know, the task force has had some pretty obvious failings there during that first year. And we, you know, we had similar interactions where it was just really some missed opportunities to, to stem the crisis in a major way early on. But, but yeah, we just kind of, we kept going. And I think the, the impact kind of multiplied over time.

Yeah, dig it. Um, so I mean, what— as you look back on that experience, like, what, what was— what's your best memory of it? And I guess a lot of it's still going on, but your best memory, and then secondarily, kind of worst, worst memory or regret from— you know, really, I think what was awesome was just like turning around and like saying, I'm gonna go do something about this. And I didn't, I didn't do that as a human, so that's why it's fascinating to me. But as you think about it, like, best memory and kind of biggest regret from the from the process dating back to 2020?

I think, I think the best memory is similar to if you talk to any founder who's going through a really critical period for their company or difficult time or a pivot or anything else, the best times are going to be your— the relationships that you built and the people that you worked alongside and who helped you get through to the other side. And that's the same with us, right? Working with Eric, working with We worked pretty closely with the Schmidt Futures team and a number of other groups. The camaraderie built there, I think, is pretty rare. And that'll certainly be my best memory of that period. I think the worst is a lot of organizations just aren't built to respond to crisis. And so I think a lot of people that could have helped during that time who had the resources to help, either by providing expertise or capital, or both, you know, maybe they had a couple months where they were helping respond to COVID. By the summer of 2020, most of those groups had pulled back and weren't actively deploying resources anymore at the worst possible time, right? I think like that was the reprieve we got was the summer of 2020. We could have prepared for the winter wave, and instead all the groups pulled back. They pulled back their people and their resources, and we just got, we just got slammed. And then we entered into this almost never-ending cycle of of COVID on and off. So, you know, the biggest regret or the saddest thing is just that, you know, a lot of those organizations didn't exist. I think it's a fundamental problem, right? I think just that the way incentives work at organizations, they're not built to respond to long-term crises, right? It's they respond in the moment because they feel like it's needed, but then they pull back as the crisis stretches on and on. And I think we need fundamentally new crisis organizations to deal with this sort of thing, especially as it's happening more frequently, whether it's pathogens or climate change or, or energy crises. Like, this is going to keep happening. I think we need a fundamental shift in how we think about organizational design if we're going to respond adequately.

Yeah, well, that's, that's very difficult for bureaucrats to take the risk to kind of get set up for that sort of stuff. So you think the, the private sector needs to be kind of thinking ahead and trying to anticipate that stuff?

Yeah, but I don't think it's necessarily that companies are the best vehicles for that. Sometimes they are, right? If the incentives are super aligned and it's, you know, they can generate some sort of revenue by providing those services, then yes, sure, private sector, like that's a very motivating thing. But I also think we need new hybrid structures to emerge here as well. I think we need different ways of designing organizations that, you know, probably mix a little of public and private. I worry too much if it's purely in the public sphere that you can have administrative blocking like what happened in, in the Trump administration. I think, you know, you don't want to be too reliant on the public side, but nor do you want to be too reliant on donations from the private side, right? Like, you want these to be resilient organizations that can adapt when a crisis happens and then change as it shifts over, you know, the subsequent months as it extends longer and longer. So yeah, I think it's, um, I think it's privately funded organizations that are more, uh, that are more tailored to actually respond to crisis.

Yeah, dig it. So, I mean, how do you think about kind of the way you responded to COVID personally, and then kind of in the context of your decision to be like a, you know, relatively early in life, I think, the decision to be a professional venture capitalist? So, and, and I'll give you my mental model on this. Like, I always think about operators like rush to problems, right? They're always getting their hands dirty and going to create things to, to solve situations. That's what you did for COVID. Um, but the other side, you, you've talked about VC being this thing where, you know, you're just part of a team, right? You're a supporting team for the operators who are the, the men and women in the arena. So, you know, how do you think about your decision to kind of do this as a full-time thing, you know, rather than go start another company and then how that compares to like your reaction to COVID and how you thought about it?

That's such a good question. Yeah, so for me, you know, I started a VC firm not because I had this secret desire to always be a VC, but for me, as I kind of mentioned, I, one, I discovered I really liked it and seemed to be fairly good at it from my kind of initial forays. You know, since I was at MIT, I had been mentoring startups along the way. So by the time I started my venture firm, it had been almost a decade of doing so. And that was always the most enjoyable part of my job. I think the decision to make the leap though stemmed from two different things. One, on like a micro level, I thought the early stage deep tech scene just was chronically underfunded. Some really, really intelligent people did not get the funding and did not get the operational advice they needed to actually execute on the vision. I actually, I didn't think the problem was a lack of scientific progress. It was a funding problem. It was a funding mismatch. It was an operational mismatch. Even if the companies got checks, they didn't have people working alongside of them that could give them practical advice on going from that embryonic stage up to their first institutional fundraise. So that was the micro reason that was always playing in my mind before I moved to LA, before I joined MarsBio, and certainly before I started my firm. And the macro thing was, I'm a huge Carlotta Perez fan, Technological Revolutions. Funny enough, we kind of became friends. Carlotta and I became friends during the pandemic. And I thought over and over again about the way that she viewed market cycles. And I became convinced that we were in a similar, really early installation phase for this, the worlds of deep tech and bioscience. We were having a huge influx of really talented founders. Federal funding was ramping up on a massive scale. Problems that founders didn't even know existed were becoming more and more apparent because of COVID So I thought it was going to be really this, this big bang moment. And the proxy that I always used was the space race of the 1960s, right? Space race, massive federal funding, um, a lot of— eventually led to a lot of private sector interest in the space, huge pool of technological talent. And that didn't just lead to rockets, right? It led to medical imaging, it led to kidney dialysis, it led to all these other— the virtual reality, it led to all these other industries that sprouted from this time. And so I started Undeterred with that as the core thesis, that COVID was a Big Bang moment in a sense, and that eventually the long tail effects would be fundamentally new industries in addition to ones that were already experiencing this acceleration event. So the macro and micro forces together led me to have the thesis behind Undeterred and say, this is where I want to spend my time and spend my career. It's funny contrasting that with the COVID response, right? Because that was just, people really need help and no one's doing it. Please, anyone else do this except for me. And from late night conversations with Eric, he would often yell the same things. Like, I mean, he's running the company with, you know, hundreds of people. It's— he's also in a kind of a different stratosphere there. He was like, I would love to hand this off to anyone, but there's no one except for us. And so that, you know, it just felt like a job that needed to be done.

Yeah, super cool, super cool. Well, awesome, man. Well, thanks for doing this. Like, really exciting to get to know you more and talk through some of this stuff. And, um, You know, I enjoy it a lot. How can my listeners and followers, you know, support you, follow along with your journey?

Yeah, I mean, I think the best way is just to, I think, to follow along with, with Undeterred Capital and myself. Um, you know, follow me on Twitter, uh, follow me on LinkedIn. You know, I do, I do posts on, on both of those. I think that's one. Um, I think the other thing is, you know, we've got some— we just had one of our first company announcements. Most of our companies are in kind of in stealth mode until they're actually publicly announced. One of our companies was just announced, uh, Vibe Bio, which is a pretty wild, uh, decentralized science company. We've got a number of new companies that are announcing their funding in the, in the months to come. So I would say tune in for, for those, uh, engage, ask questions. The more people engaged in those spaces, the better it will be.

Yeah, super cool. Well, thanks for being here. This was awesome.

Thanks for having me, Michael.