Friendraising: Angel Academy Conference Keynote by Cody Barbo

So I have two wonderful speakers here. They're up here together because they're going to tell you. So stay in suspense and we'll see why the two of them are talking together and why it's appropriate conversation that they're going to have about and relative to the San Diego Angel Conference and the Angel Academy.

Thank you. Thanks, Kathy. Thanks. How's everyone doing? Food was good. No one's asleep. That's always a positive, even with the lack of coffee. I miss Messing, Kathy. I'll never. I know there's coffee. The tea was great. My name. Juan's getting his mic set up here. My name is Cody Barbo. First and foremost, an Aztec, a proud Aztec. I was here 2007-2012. I feel so old walking around campus. Even at 35, I was like, okay, I guess I was a kid many years ago. But it's great to be back on campus. I mean, like, you can just feel the energy when you walk and step foot on this campus, whether you went to school here or you're just here for this event. And it gets me excited as an alumnus about what this all is and how to find ways to give back. And I know that there's some students in the back working on their projects, but that was the opportunity that I had when I was finishing my time here, was that there was this very small space, not this big, beautiful building just on the other side of this building. And it was great coffee, good chips and pretzels. But it was a space with resources for student entrepreneurs. And I didn't know that was a thing. And it was my first foray into startups. I massively disappointed my parents and not pursuing a startup that didn't pay anything for two years. But I'd floated some money from some stock investments. I made some stock investments during college, which was fun. But that first startup was really a premier learning experience. The things that we ultimately didn't solve for is we. We didn't have, like a traditional business model. We're kind of riding the social media wave. And it was a year and a half of time and money invested and that that startup ultimately failed. We, my co founder, Ethan and I decided to shut it down and we both moved on. And in that time of transition, you kind of lose a little bit of your identity as an entrepreneur. You're like, well, I spent so much time on this thing. What's next? So when I worked in fine dining in downtown San Diego for a little bit, I was making good money and we had re. We had opened A brand new restaurant with 160 people. And the one thing that was really odd was that I was on LinkedIn. I think as San Diego State made me create a profile 20 years ago, feels like 20 years ago and no one in the restaurant was on LinkedIn. And I would like where do I connect professionally with people that I work with if they're not on LinkedIn, know what LinkedIn was. So I was like, why is there not a LinkedIn for the hospitality industry? And that was the inception of my company industry that I co founded with other Aztecs. And there's a continuity between all three startups I've co founded with Aztecs, which is kind of cool. But that business we did go on to raise some angel money. We raised quarter million in angel money and then we ended up raising a $2 million, $2.3 million seed round in venture. And I spent almost four years of my life working on that business. It was, it was amazing. We'd launched 12 markets helping restaurants connect and identify with great talent. They had a visual profile so that a chef can show their food, a bartender their drinks or just somebody trying to get their first job, their foot in the door could have a little bit of a more unique way of standing out with photos and video. Sounds, you know, very obvious today, but at the time felt pretty revolutionary. It's almost a decade ago because restaurants have really high turnover and we scaled that business to almost a million run rate. All CEO raised seed money and June 15, 2017 I walk in on a Thursday to the office, knew that our investor was in town. I'm in the boardroom and it was pretty serious tone. It was kind of weird vibes to walk into a room like that because it was co founders and investor and I was handed termination papers and told that that was my last day at the company. And the reason why I'm sharing this and I'll stop on trust them all because we got a fun icebreaker. The reason why I share this story is that like it's keep going, keep going is this kind of voice in my head of like why to keep building this kind of rinse, wash, repeat, like I was let go. It's not anything nefarious that I did. I mean the business had a really bad investor and they tried to pivot it into a cryptocurrency play as real, real story Neil knows about and Kathy because I've told it here many times but like I did three and a half, almost four years of my life like taken away from me. In one instance, it was wild to experience that as a young entrepreneur. And I had three to four weeks of trying to get a little bit of, like, legal closure to figure out what I need to do. I was like, how do I even tell my fiance, my wife fiance at the time, my family, my friends? Like, I was just kind of embarrassed by it. And I wrote this LinkedIn post July 11th of that year. Like a month later. It was just like, here's the reality. I got fired. It sucked. But here's the 10 things that I'm most proud of. And I'm a free agent. Please hire me. No income. And in true fashion of how I operate, I was like, I could go get a job and make some money. I was like, startup sounds great. Again, no money until there's some venture or we start driving revenue. But it was within two months that we started working on trusted. Well, so three co founders. One's a Baylor Bear, the other one's an Aztec. So I'm biased towards Brian, but, you know, seven and a half years in. We've got a really fun story to share with you all today. So I wanted to open up with that quick intro. The dark. The dark side of startup, you know.

But that's like the real life of startup life. And we bonded over that specifically.

That's why I mentioned it, because I.

Had the exact same experience happened to me and my startup. So I built an edtech platform. Originally it was gonna be LinkedIn for engineers.

And Neil may have inspired us a little bit.

And we were out there, but we were out there at like same pitch competitions, like we were seeing each other. I remember LA Tech Week demo at the docks. Like all these events were actually were kind of like in parallel running and building.

Yeah.

And was always so impressed that Cody is like the total package of like amazing pitch, huge PR and the real deal actually behind the scenes building as well too. So always from afar, I'm like, oh, God, Cody's just awesome. And it's so stoked to see another, like marketplace builder out there and in San Diego making an impact. And that was like. And then we, you know, touched base and I had my own falling out with my co founders and then we reconnected. When you had your falling out with your co founder.

Yeah, it's like the most like professional, like how we got married. How did we meet?

Let's pick up on what happened after that. After an icebreaker, we thought we'd share a little bit of a fun thing. We've already told our dark stories let's tell an embarrassing story.

Yeah.

So you got a worst pitch you've ever done.

Yeah.

So there's, there's two quick ones, but the one that I'll share with this group. So I feel like I look 35 now, but until I was 30, I looked like I was 18. And I. I'll never forget this pitch was at Extraordinary Desserts, which is not a great place to do an investor pitch, FYI. And this is from my last business. And it was like warm intro from my co founder to this guy who invested in restaurants. And I go down there, you know, I'll put 100% energy into any pitch. It can be 6 in the morning, 10 at night. Zoom. Real, real. You can pitch me. I'll pitch anybody, anytime. I'll pitch you guys here today. But we meet at Extraordinary Desserts, and this guy was giving me weird vibes from the moment we sat down. It like immediately started to feel more like a date than an investor. And like, when you're an entrepreneur kind of dumb, your blinders are on. You're just like, let me tell you about my business and why we're going to be a huge company and you're going to make a lot of money and why I need your 10k. Midway through this 30 minute meeting that was scheduled, this guy, like, was making some kind of uncomfortable comments. And I was like, what's going on here? And I was like, there's no eject. We can't just end the Zoom call in real life. So I was like, what do I do here? And he like, I cannot make this up. He reached across the table and touched my face before I could grow facial hair. So a very boyish charm. And I was like, yeah, I'm out. So I'm like, hey, man, this is not what I was setting up to do. I was like, just looking for money and it sounds like you're willing to give it, but for other reasons. So I bailed. Uh, it was super awkward. And I shamed my co founder at the time for that. For the rest of our lives. We're still friends today. But that was. That's my weirdest angel pitch. It was odd.

I mean, it happens, you know, it happens. Yeah, but in person's real. You learned a lot from that.

I've never told that story, by the way, really publicly. I didn't even tell my fiance. My fiance at the time, I was like, I had a really weird day.

Similarly, I had a pitch where I was like, I should have screened this verse as well, too. So I cold outreach. Someone said, hey, love to take you on a hike and show you our product. It's like, let's do it. You know, get some exercise, get out there. And you ever like meet someone within like 30 seconds, you're like, oh, like I shouldn't be here. You just feel it. And I was like, and we're about to go hike on a point to point kind of thing.

Like we're together.

But immediately he like puts the product in my hand. I've got like this soap and I can't get it off my hands. So for most of the hike I'm just like, uh huh, okay. He's I think ahead of me talking so I can kind of hear. And I'm just like working the product off my hands. I'm like, what did I sign myself up for right here? And you know, realized like, all right, I'm already out. I'm not, I'm not interested in investing per se, but what can I get out of this, right? And so you know, thought through like, who do I know in soaps who could I connect them to? Who, you know, actually has built a soap product and in the end, you know, made an intro to pass them along the way and said, I'm out.

Did it end in a high five? Like a city, Like a. Great to meet you.

Another hour. We just stood in the parking lot just trying to unconnect.

I love that.

Yeah, yeah, you never know. But I think the big thing about angel investing for a founder and for investors, like, you got to get out there, you got to like talk to people. Just like you got to validate your product. You got to validate founder investor match to a certain regard or founder investor product market fit to a certain regard.

Investor market fit, investor market fit, if you will.

You've taken hundreds of pitches or you've done hundreds of pitches for money, maybe.

Thousands, probably thousands is the fair now.

And you're just as much checking out the other side as they are you. Yeah, right. So we'll talk through a little bit of that. Should we say the end point of why we are here together, what ultimately happened. And so Cody and I, right after he had his falling out with his company, we met up and you're really more asking for just like, what should I do when you have a co founder breakup? Like advice, feedback. I remember where I was, it was at the mission in the restaurant over.

There in East Village.

I remember you said to me, I think I'm gonna like do some part time like consulting. Cody Barbo Consulting.

I did.

And I was like, he's not gonna do that. He's gonna start another company. And for a while, it took me a while to realize, did I write the check there? Did I say it out loud? But in my head, I wrote my check to Cody Barbo at that point. Breakfast. I was like, whatever you're on to next, which you didn't have trust in, will it next. I was like, I'm in on whatever he's building next. And so a few months later, or maybe even, I think three days later, you had your meeting with Daniel.

Yeah.

We looked at our calendars.

It was quick.

August 2nd, 5th. And somewhere in between, we had breakfast.

Yeah.

And the two of them were like, let's do this thing. I remember the ampersand logo suddenly was like, it's happening.

Designed by an Aztec. Still in use today.

Yeah.

And really, the pro. The reason you actually, like, hustled it. I mean, hustled to do it was for Techcoast Angels.

Quick pitch, right?

Yeah.

So once I kind of. I wrote that LinkedIn post, felt a little bit more comfortable about, like, what is the next opportunity? I did launch consulting, and I made no money. And I was like, all right, I'm gonna do something else. I'll do a startup that pays great. But the idea was to get my groove back, and I'll share this amongst friends. My other company idea was like a smart toilet. Like, don't judge me. I wanted to call the company Flush. It had a full health care play where it would measure your stool and urine samples to look at your health biomarkers and give you daily updates for, you know, diets and nutrition and vitamins. And there's going to be a smart toilet paper dispenser that would measure your usage and get you free, you know, toilet paper. And then you'd have wipes and spray. It's a package deal. Yeah.

I would invest in that.

I went so deep into the history of toilets. Like, I could. This is eight years ago now. Like, I could still pitch that business because I was so committed. I've seen some players try to dethrone us. I guess he got it, but it was just like, I pitched that to Wolf. There's another angel town. He's like, he's one of our investors. Very wealthy Mexican guy. He's like, I do not like this idea. And I was like, okay. He's like, what else do you got? And I said, we got an estate planning company we're thinking about. He's like, this. I Like, and you and Wolf are our first two, first two commencement. So the idea for, for, trust me, we're the nation's leading online estate planning platform today. At the time, and still true today, the real vision was just to build a turbo tax for estate planning, make it easy and affordable for everyday families to be able to set up an estate plan online, to be able to come back and make updates. And then it's not this kind of like draconian, offline, old school experience. We're like, we're trying to bring it into the digital age, especially as all of my friends are getting married and starting to have kids and watching our parents retire and start to age or losing grandparents. So just like kind of the sandwich generation that's applies to most of this room here. And I was like, how do we make this easier for people? They just, most people never set up an estate plan. And it just so happens generally wealthy people, a lot of you in this room don't have estate plans. I was like, man, what a perfect pitch to people. Shame them for not having an estate plan, then ask them for money for a product that I know they'll pay cheaper than what the attorneys would charge them for and ask them for an investment that maybe they'll make some upside on it. So it was crazy that we had this quick pitch which is still the, it's evolved, I guess from there, but it's the largest pitch event in San Diego for startups. And out of 200 companies that applied similar to the numbers Kathy ran off with Techstars. We made the top 10, top 10, went on to speak at Qualcomm headquarters and the big auditorium. We took third place, got a big 5k check. Our third co founder, Brian, got fired because of it, because he was still working his job. His boss was like, what is this? Yeah, it's a real story.

Yeah.

I don't know if you shared that, if Brian spoke Kathy here before, but that's a true story. So it was kind of like, it kind of was like, and Daniel had been fired at the previous employer and him and Brian worked together. So I was like, all three of us got fired. It's like, great story to tell. So that's what brought us together and we took third place. And it's so funny, we weren't incorporated, so we had all this buzz. Like Ryan Cooter from techstars came up. He's like, hey, you know, we're launching this techstars anywhere program. I think you guys should apply. We had angel investors, you're already committed. But we had angel investors wanting to come and you know, learn more about the business. And we had people that wanted to use the product. And I was like, wow, what a great validation in a night. Like literally it was October 6th that year, 2017. So within three weeks, incorporated and we're off to the races to get product live getting accepted into techstars. And I vividly remember, I don't call it easy money because we had the friendship bank. So I call it friend raising versus fundraising. Yeah, but you know, we pitched 90 angels and 26 came in. Those checks range from 10k to 40k was the biggest. And all the other pitches were nos. Like they were just, they were out for XYZ reason. And then there's one that ghosted me, which I'll still. This guy in Alaska, I'll never let him lit. Sit down. I was like, I'm going to put a billboard up in Anchorage when we go ipo. Like this could have been you.

Do you text them your PR releases?

I sent him a number. I sent him monthly investor updates for five years. And it's really satisfying for a founder to like if somebody who ghosted you because like your time matters too. On the founder side, even an investor's time matters. You don't waste anybody's time.

Yeah.

But just to like slow drip. The success over five years felt really good. And then we changed, we changed our investor update format. But the point being is like as a founder, you know, I went through my network and I mostly pitched people that I knew. We got a couple of warm introductions from folks that I never met. But all those meetings are in person. And some of them, it didn't even take more than a breakfast. And others it took five or six meetings that were 30 minutes or an hour. And like we didn't have a product yet, we didn't have revenue. So convincing why somebody should give us a check. And for some of those, they were first time angel checks. They'd never written a check into a software company. It's like walking them through the mechanics of a priced round versus a safe note versus a convertible note, which we raised a convertible note at the time. You know, not giving up board seats at that stage for a lot of obvious reasons, but like really trying to break the mold of like, this isn't a shark tank style investment. So encouraging them to go read the book angel by Jason Calacanis. Like, if you want to get familiar with this, like go read up on it and be as educated about angel investing as you can about investing in me, not the company, trust them well, but in me, Daniel and Brian. Because you're betting on us that we're going to try and make something work here. And the first year was a slog. I mean it was five of us. Three of the five were Aztecs. We had an estate attorney. Of course, he's our most expensive hire. But we needed someone who would check the credibility box that we're going to go do legal services as a non law firm. And the first year we did like 20k in revenue but we understood who our customer was and enough that we got our pitch dialed in and feedback from our angels that we went to market in the fall of 2018 to raise a $2 million seed round. And since today's focus is mostly on the early stage, I'll try to keep most entered. But today We've raised over 50 million in capital. Business itself is doing about 50 million in revenue this year. Got 100 employees, cash flow positive for my investor and we're on hopefully a three to five year IPO window. So the goal is to keep building this thing as far as we can be IPO ready, hopefully doing north of 200 million in the next three to five years and if we can take the company public. Bigger check Kathy for me in the future for sure and Dan, but I love San Diego State for so many reasons and I found my confidence here and the fact that this program exists even with you guys here for this angel academy, it's the real deal. And there's a lot of Aztec entrepreneurs that are starting to get celebrated and they're building companies that are doing millions to hundreds of millions of revenue. We're having younger entrepreneurs selling their companies exiting for the first time. And it's just, it's really special something in the water here in San Diego, specifically at San Diego State. And it's not beer from a frat. So.

I did. Yeah.

Freshman year.

Yeah.

My a PI my calls me an alum of sdsu. And so I'm, I'm an alum for sure.

I'm in aspect of life.

And so take us, I mean in the beginning as a founder looking for capital to really you're not, you're looking to just keep the engine going to satisfy the customer. But you need capital and a lot of times a lot of founders take any capital. How did you, I mean, and how did you. When did you decide that not all capital is created equally?

Yeah, so I had, I felt the burn from that last company. I mean like we took Money from a legitimate vc and I didn't do enough research on the specific partner and like, who you take money from matters. I think for entrepreneurs, we forget that it's our company, it's our cap table and you're giving the investor the opportunity. And I share this with all as an advantage that like, it's a privilege to join a company's cap table. And if you know that going into it, the impact that you can have on that entrepreneur, success is meaningfully more important. And there's some cases where as a founder, you like, you're desperate. Like, the business may not make it if we don't raise cash. Like, we almost miss payroll. Between that pre seed and the seed round, we were going to pull our own payroll for founders to pay Eric and Patrick at the time, but we made that first 100k check happen. First seed round, and then the rest of the money followed it pretty quickly. But you know, the relationships with most of my angels, even aside from Neil, was like, these are people. I trusted them and I was very clear with the communication. I was like, look, you have to assume this investment goes to zero. I was like, because if it does, I hope that we're still friends and we can maintain that relationship. And you're not going to come give me the old Soprano shakedown. Midnight on a dark street. You wouldn't do that to me, right?

Never.

Yeah.

So with that, with that expectation up front, I think it's really important that as an investor, you got to set the same expectations with the founders. Like, hey, if you want me involved, like, pull me in as often as you need help. If you need a call at late night or you're dealing with something stressful like pull me in, just maybe I'll provide some perspective. But if you want me to be a ghost investor and you're setting that expectation up front, you're setting up the relationship for success because the last thing you want to do, and this drove me crazy about this one previous investor, is micromanaging an entrepreneur when they're trying their absolute best every day to run that business, take care of their team, take care of payroll. The first two years are so hard and you're just trying to break a couple hundred thousand or maybe a million run rate in the business. So I felt like it was really important to me also to as I'm trying to get money from these people, like, hey, if you're willing to meet with me once a month, zoom or in person, let's set that cadence up now. And you're Basically prepping that entrepreneur for the next opportunity. It doesn't mean they have to go raise more capital, but if they plan to, like, let's get that entrepreneur in the best shape possible. Because you have entrepreneurs that they may have the network relationships to get that pre seed or angel round, but venture might be completely new territory for them. And it's like if you walk into a VC firm and you're not prepared, you don't have a very polished pitch deck. That pitch practice is dialed in. You know, the hierarchy from associates up to general partner, you know the fund, you know the stage that they play at, the themes that they invest in, you know that they're actively deploying capital. Like, you can be such an advantage to that entrepreneur. And that's where Neil and a couple of our other angels were extremely helpful. We had two angels that had taken companies public so aspirationally, that's what we wanted to do and still hope to do. And you have guys like Neil who's like his entire network is everybody they want to pitch. It's like every VC fund in California and beyond. And I was like, what a better person at least, like, run through that Rolodex with as we were prepping for the seed round, because the seed round was more brutal than the Angels. 120 pitches, six came in, and those were meaningful checks. And two of the six were from the previous company I'd known and pitched them. So those relationships can carry over through multiple companies. I think that's one of the things that Neil and I really want to hit on for you today is like, even if it's a no on the entrepreneur and the investment, but you really like the entrepreneur whether their business fails or not. Like, that relationship can carry over to the next opportunity. And sometimes it does take the time. You got to go through these kind of like these tumble cycles to build up your. Your thick skin to actually be successful. And I feel like that's been, for me personally, a big reason why Trustable has had success.

Yeah, I mean, it's interesting because from an angel, like, I feel like I am 100% investing in the person. The only way to do that is to get to know the person and really for as long as possible.

Right.

Like, if you give me 10 years to get to know you, I know you way better than you pitch me today and say, make a decision.

Right?

Yeah.

It's interesting to think about the other way around too. Like, just as much to know how to utilize your investors. Like, we can only say, how can I help so many times you gotta also tell us, hey, I need your help with blank, right? You do great monthly updates. I try to every single time reply. It's tough to but always it's like, even if it's just like a great job guys or I see your ask, I'm working on it. Where else do you need help? Is that every investor or what's the investor relationship after you invest?

So I'll give credit to techstars because I didn't do this with my last company. But techstars, when you go through the three month program they have you do these weekly updates. Kind of a pain in the ass because you're like trying to build the company and like make and go to all the stuff you're making me go to. But like it's really helpful from a muscle memory and building that kind of core processy where when we graduated Techstars which is April 2018, every single month, every single investor that I pitched, I had a spreadsheet categorized by like type of investor, angel seed, Series A. And my goal was to obviously we sent out the same email to everybody for four years. Then we switched it from cap table versus non cap table. But it was basically like core metrics. I had an ask if we were hiring. I put the job listing, please send us requests or reply to this email. We had marketing updates, product updates, BD or sales updates. Every business a little different. And then travel, it was like I'm going to be at this conference like if you know anyone there and I'd send that out almost religiously the first day of every month for years. And it was amazing because every single investor that had passed on us was getting those drips. That's my like know jab. Hey, this could have been your, you know, markup but on the upside is like for that next rounds investor for the seed. When we were pre seed for the Series A when we're seed stage, it was building that excitement that like hey, we're being super consistent with everything that we pitched on. We're going to deliver on and this is why you should consider investing in the next round. So like it was crazy for our Series A, you know, we went and pitched 45 VCs, did a five week tour of duty from New York to Boston, SF Bay Area, LA and then a couple virtual pitches. We got three term sheets within a week. We ran a super tight process and even one of the Series A investors who passed on us, they pre let our Series B less than a year later because the business took Off. And it's like, that's why I go back to friend raising. Like, you could still have this relationship, you know, like, every investor that said no broke my heart. Still does. We got no's. We got no's this last year. But we have a lot of yeses, big yeses, Stay tuned. But it's part of the process. And I think that was the other thing that you also have to help unlock an entrepreneur is like, this is a professional relationship. Like, you're pitching me for real money. You need to kind of have the tough love conversations sometimes with them. Like, if you don't like things about their business, like, don't sugarcoat shit. Like, you need to be really honest with them, especially if you're an expert in what they're talking to you about or you have some professional knowledge or if you know someone who is that expert, like, introduce them. Not to say, hey, this is part. You need to say, it's part of my diligence process. You got to talk to my expert friend. But it's, it's really helpful validation. And one things that Neil and I were talking about as part of the prep, like, the most powerful thing you can do for an entrepreneur is be able to tell them no, like this, like, as early as possible. This isn't a good fit. I don't know anything about the space. I see the upside. The market seems huge. Tam, blah, blah, blah. Like, if, if it's not going to be a good fit for you, like, tell them no upfront so that you're not wasting your time and they're not bugging you through text, email, phone calls, LinkedIn message. They'll find you everywhere. As I found my investors that I wanted money from everywhere. Don't show up like their house like that. That's. That crosses the line. But, like, I know where your office is, just on their address, it's on their website. But it's just, it's really helpful to give that time back to the entrepreneur and to give them pretty honest feedback. And we had, we had a couple investors who did pass on us, never actually invested. And those were some of the most helpful conversations we had in kind of forming the strength around our business model. Go to market. And I, in the time, you know, you're frustrated as an entrepreneur, but I can look back on and be like, you know what? I'm actually happy that we had that. That tougher conversation.

Yeah.

Some of the investors I know early, like Melanie Spiegelman, had some deep industry expertise concerned and showed that I'm guessing right away before she even wrote the check. What's the value transfer that happens before Cash transfer with an investor and a.

Yeah, if you can really provide value I would anchor. That's why sometimes you are going to be a competitive motion. You might not get allocation into a company's round, right? And it's like it's a fast deal, you might want more time but like you have to go as deep as you can as quickly as you can to research the space that the company's in. The other competitors, I think that's probably the hardest pill for entrepreneurs to swallow. We'll talk about your competition. If they can't talk about their competition, do not write them a check. They should know every detail about their competitors at an obsessive level and how they're going to beat those other companies. Because I still get asked about competition, I'm like we're bigger than all of our competition today and I can still talk about every one of them. Down to a pre revenue, pre funded company that just launched because they got Google Alert set up and an investor who's like oh, what about estate planning IO and I'm like reached out to the founders on LinkedIn. Like I've heard of every company now in our space and we're big enough for. I mostly don't care but if they hit revenue scale we can acquire them. That's the investor pitch I get to give now. Well, what happens if they compete with you at this thing? And I'm like we can outspend them because we got eight figures of cash, but we can also buy them. That's a viable option for us now. But it's like these are the conversations when you're having entrepreneurs. Like if you see the company going all the way to an ipo, fantastic. If you see the company towards a potential exit path, like help help walk through that timeline with them too. Because you're one trying to think when is, when is my money going to come back? That's the hardest thing to an entrepreneur to tell an angel because I got asked that from a lot of our angels, not Neil. But they're like how much equity do I get? And I'm like, well it's this convertible note and when it converts not, it's like not I didn't say if but when it converts like it could, it could convert to this based on the price of that, that round. But you know, it was really like the position trying to think of like a phrasing like positioning to an angel investor how much money they're going to make on investing 10k into trust mo and it was like pre revenue, pre product is like, I don't know. That's why you should just assume it goes to zero. So if I bring a million dollars or $10 million, Neil, we super stoked on that day.

Yeah, that's like a great. That was the next question I was asking is like every investor is joining for totally different reasons per se. VCs have a very specific reason. Yeah, there's a return that they expect for me, I view it as I'm.

Writing you a check.

It's like my ticket to ride. Right. Like I want to be along for the journey and I know that you're the one I want to learn from along the journey and just get a.

Peek into it, you know.

And so in that regard, like there isn't an ROI potential. The ROI is the journey the whole time of just like learning from you, learning from how the company has grown. And because of that it's turned me into like I feel like chief cheerleader, you know, Like I, I think probably the most worn clothes I've got are all, trust them all shirts and jackets, you know, everywhere.

Yeah. Make your, make your company's print swag go cheap. There's a great place in TJ. It does it highly recommended, like 3 bucks a shirt. But yeah, company swag, like put there, put it on your LinkedIn Angel Investor in that company. Like do everything you can with your network and your reach if you have a social presence to help promote that company. If they send monthly updates, great. If they don't, encourage them to and like always have them have an ask in those monthly updates. It's so powerful because we have invest. We had people that weren't even on the cap table that would come through and deliver on intros and new hire opportunities.

I've been working for two years on getting a marketing leader in your org. So we will make it happen with Kai eventually. I know it. Kai wants to be there so bad. And that's like the part that I look at as hopefully a value add to prove that we're worthy the whole time because you're increasing the value of the company. I feel like I still like I should be working when you're sleeping kind of thing because I'm on the cap table and a lot of that is like forward thinking. Like who are the people that you're not asking for that need to be in your orbit?

Right.

One of the times that you know when I can reshare Repost to very specific targeted group.

Right.

Like when can I help organize a panel that's about wealth tech to make sure that you're in the room with people that is your audience. You know, those are some of the things that like come to mind. For me it's just like constantly thinking where can I be helpful to a certain regard?

Is it worth the things we're talking about, like the evolution of your role to where we are now as a company? Sure, yeah. So one of the things I was thinking about this as a talking here. So one of the things that's weird, I'm very transparent with our team, with all of our investors. But like just the, the reality like they're at a certain point the company starts to have trade secrets, whether it's ip, actual business metrics, performance, big deals that they're going to sign. And like I think that part of the value add is as early on as possible is like building that trust, ensuring that trust. You know, we've got 50 to 60 shareholders on the cap table and I spend most of my time now with our larger shareholders. That's the board. We have a lot of large corporates like American Express, ubs, Northwestern Mutual, aarp, their investors in the company and some of our largest partnerships. But we shifted our monthly newsletters to two lists which was Cap table Investors versus Non. And then we shifted it again to quarterly updates to get more in this kind of public company motion. And we're way more selective with what we're actually putting in those two. And it's like it feels weird because like if I get on a call with New York, I see him like before talking to them about like things that are in the pipeline. Like I did shared some really good news. But you know, the importance of that level of trust, even though it's been seven and a half years on our journey, it's like you have to also be okay with letting go of the visibility that you may get into the company. Like you're not going to have board level visibility. You may not have information rights if the company starts to hit more scale and success. And I think if you're comfortable with that, that's a good problem to have because it means your company's doing pretty well, your investment.

Cool.

Let's tell a story. It's been in the back of my head for a long time about that when I overshared.

Oh, okay.

Remember, so I had a weekly newsletter that shared who raised rounds at who raised capital in San Diego, Fresh Brewed Tech. And we share Whatever is publicly available out there. Take a press Release or a TechCrunch article. All right, here's who raised today, by the way. Cody is like, text me that I actually get a lot of the sources from Cody. Cody's two hours ahead of me now. And text me from the same newsletter from Fortune being like, hey, did you.

See that 6am Central Time, 5:30, you're getting the 4:30 got sold.

We're like, oh, yeah, we'll share in the newsletter today. So great deal sharing from that regard. And one time when you announced your raise, I think it was your b. I knew the amount of valuation, but it wasn't public and I put it in my newsletter. And you immediately were like, dude, cannot do that. It was immediate deletion, immediate put down. But I was like, whoa. Yeah, you're right. Like, what? What was I thinking?

Yeah, it's weird. It's weird how VCS have particular reasons for it, but also myself, like, I like a little bit of mystery for our competition too. And it's weird now that, like, the eyeballs that I. I look at, if you have your LinkedIn on a premium account, you like, look at who's looked at your profile and it's kind of weird. Like, it's kind of like. It's like you feel good. You're like, oh, look it. It's like CEO of big company checked out my profile. Cool. To send them a request if it's competitor, like, what are they looking at or what? Like, and I'm. I try and calculate, like, okay, if I see competitor, CEO look at my LinkedIn, that's how weird I am. And then I go look at their hiring careers page and like, how many roles they got up and like, do they have a round in motion? Or if I look at once a month, I'll look at the CEOs of our competitors and be like, who are new mutual connections that we have? And if it's somebody that we've talked to but don't have a deal with, are they now also talking to that same person or company? And this is the level of tactics that as an investor, you could really encourage your investment. Your CEOs go deep, go really deep all the time and challenge them to report on this stuff for you just to get them in that muscle motion of a quarterly board cadence. If they are going to prep for a seed round, do you want to do a mock board meeting? Even if it's just the two of you? What a powerful thing to do. There's a lot of really great public content. Sequoia's got a great public format of board decks for VCs and like the earlier you get your entrepreneurs in that motion, it's such a value add for them. I had the experience with the board, the previous company, but Even coming into TrustML, I think that a couple things that I learned and you have to encourage your entrepreneurs to do this, you gotta protect them like especially as an angel investor, like they're a little more family than business contact. And when we started trustmill for three co founders, put in some provisions when we raised our first venture round, took out an outside board member where if I was ever fired, knowing that I and I have complete peace, like my company's not my identity, like I could get fired today. Hopefully not, I just move on. But you know, I, I wanted a way to replace myself with common C board vote. Wanted to protect my co founders with accelerated pay, investing and benefits. Like if I got fired, I have two kids, I'm like, I want benefits for six months. But like as your, your entrepreneurs graduate to these more senior levels, they may not be thinking about these things like it becomes less of their company with the equity dilution. But if you can kind of give them a peek around the corner based on your own experiences or other deals you've done that have hit maturity. I share this as just importance because I've gotten this coaching from Neil and a couple of other angels before. I needed to really think about doing it like actually putting it into plan. But just to have that framework of understanding was really powerful. That's what I shared.

That's a good share. Why don't you share about Daniel's mom? Like just kind of the early angels who.

Yeah, yeah. So I, my parents have supported my brother and I our whole lives. They're great, but I didn't ask them for money and I love to ask anybody for money for this business. So we asked Daniel's mom and she was our biggest angel. Check my co founder, Daniel's mom, Mickey, she's a sweetheart. You know, most of our angel checks were like 10 to 15,000. She came in with a 40k check. And it's, that's pretty close, family related. There's a family dynamic that's also like a little uncomfortable there. If we fail, that's your mom's retirement money. Like what are we doing? Are you still gonna be, you know, her son or is she gonna have two kids now, not three? So you know, she, she came in with a very generous check and it was amazing. And Like, I was laughing because she was at Daniel's house a month ago. Live in Dallas. He does too. And she's in the kitchen cooking. They've got three kids. And I'm like, hey, Mickey. I was like, do you know. Do you know what our company's worth now? And she's like, oh, no. Like, Daniel tells me about all the fun stuff you're working on. She's like, I log into my trustmill account. And I was like, yeah, but you're an investor. I'm giving an investor update. So I give her in the kitchen of Daniel's house, kids running around screaming like a formal investor update. And I was like, I gave her the math on her equity, the assumptive math on like what it's worth today. It's worth a lot. Four times meals.

Seven figures.

But I think seven figures. And I was. And you know, like, her reaction is the same as it was when she first invested, which felt really special. She's like, I don't care. And it's weird to hear that. She's just like, I just believe in you guys and want to see you be successful. And like, that's, that's the thing is like you invest in a startup and you're with them until they die or they go public or they sell. And it could be like a 10, 15 year journey at minimum. So we're half, you know, seven and a half years in. And it was really refreshing, you know, have Neil here today and have Daniel's mom as an angel to have that level of commitment to the business still now, even though, you know, the business do much better today than it was when we started.

Do you still have that one printer? Is that like been bronzed?

Yeah.

So cost savings hack. We print. We've created over a million estate planning documents and every set of estate plans we ship out is like 40 to 80 pages in it. So the coworking space downtown works, which was like our home for two years, had a clause. If you're a co working space member, free unlimited printing. I was like, fuck, yeah. So we had an in wolf. The owner of the coworking space was one of our angels. We'd have like a real awkward conversation. We're like, it's in the legal agreement, like. And we were, we were like, we took over the printer. We called, we called the printer Fresh Prince, like Fresh Prince of Bel Air. And every day we'd take like, I don't know, like a mountain of papers up and down from the printer down to the office. We Were hand packaging in our own office. The co working space for like the first three years.

Like four of you guys and a printer in an office.

We were basically running like an actual sweatshop. It was. We probably. Everyone who else worked there is probably like, what are they doing? But yeah, you know, you find little hacky ways to get around things, and that was one of them. So as an angel investor, find creative ways to save your founders time and money 100%.

And then when you do invest, put your shares in your trust. You should put them intrust on trustimal.com.

Yeah.

Oh, nice plug.

Yeah.

Why don't we take time for some questions? We had questions from the audience at all. Ooh, no more stories.

All right.

Yeah, I have a question. There was another company, similar space called yeah, yeah, I wanted to ask you. And then you immediately start talking about competitive intelligence. So I think you're kind of that company on the date. So I'm just curious how you used that company to sort of benchmark your.

Rates or what were those? Yes. So we had. So we started the company trustmill, looking at a competitive lens. So the default in the United States, most countries, people don't do estate plans, period. Like, anyone not having a state plan in here. It's okay.

We're.

We're friends. Anybody? No estate plan. Yeah, this. There's more than a few that don't have. Okay. Yeah, it's okay. No, I'm not. I'm not here to shame. I'm not here to shame. No, no, no, we're friends. I. Yeah, I. I was getting married and I, you know, my wife, she lost her dad when we started dating. All that shit went through probate as a mess for the family. And I was like, I don't want that for us. Like, let's go do this. I got a quote for 3,000 and a quote for 5,000. I'm like, what's better about the five grand plan? He's like, that's just my rate. I'm like, why paying more for the same car at the different dealership? I'm like, why would I do that? And legalzoom it naturally, like, public at the time, private company. Today, public company doing 700 million estate planning is like A through Z of all the legal things they sell. And I was like, they sucked at estate planning. Like, I was like, their product was clunky. It felt dated. It didn't feel as modern as TurboTax or like a consumer fintech app. And when I look at the venture landscapes, I'm thinking like okay who's doing this? There's gotta be someone doing this. At scale with venture backing there's three startups, two of which don't exist anymore. Willing.com is one of them. Willing.com had raised 7 million bucks out of Y Combinator. It's like a huge stamp of approval like a techstars to get into YC and the founder, I didn't reach out to him at first but when we launched our company he did not like that we existed and he was not nice to me and I'm nice to every founder who's a competitor in our space. Even though have like competitive but like Rising Tide lifts all boats. Like if we're bigger than you we'll buy you. If you're bigger than us, maybe by us one day. And that's part of the relationship building. But willing.com free will and tomorrow were three startups. Tomorrow and Willing were both acquired. They were not good exits. YC company raised seed round sold to MetLife 34 years after they founded the company. And like the critique that I had of willing.com as an example that I'm at the time late 20s getting married. I go on the website, it's all people my parents age. It's totally fine only doing will based estate plans. I wanted to set up trust. I'm like who's doing wills and trust? And when I looked at Tomorrow Tomorrow was a free will and a cheaper trust. I'm like what's the catch? And you go through their product flow insurance life insurance was their, their moneymaker. So as you're going through if you don't have life insurance they're going to try and loop in to an insurance policy. Makes complete sense. They raised through series A they were acquired by a large insuretech also not a great exit. Maybe it's for the founders on both but like in total total that not, not a great return for the investors. And then freewill.com is selling through the plan giving channel so like San Diego State is a customer where they're paying to give free wills to alumni donors to hopefully get named in the estate plan. So that's the way that the sds you can check the box on the cost of that service. They're pretty meaningfully scaled business. They've raised I think about as much as we have 50 million and they're probably doing you know the tens of millions of revenue but when I looked at the landscape I was like none of these are consumer brands. Like that was the, that was the goal is like no one has built the TurboTax scale brand of recognition to go do estate planning. If somebody asked you where do you do an estate plan? Where you tell them go local attorney or maybe, maybe a legal sim. So for us it was like, trust them all, that should be the brand. And you know, this year we'll spend north of 10 million on TV ads. You know, we did game four, World Series spot, we will aspirationally do a Super bowl spot probably next year or 2027. Like that's the level of brand recognition that we want. So that was aspirational, very aspirational at the time because we weren't a company yet, but we wanted to beat people on brand. We want to deliver the best customer experience in market. LegalZoom was the leader from a scale perspective and their product was clunky. We competed, we copied LegalZoom's price, then we changed our price to get our unit economics better. And then LegalZoom copied our price, which is very flattering to get their unit economics better, I guess. But like we think we're surpassing LegalZoom's revenue scale today on estate planning, not their whole business. And that gives us confidence. If we have the upside, market upside today, how can we move faster? And that's where growth capital for us, like, you know, raising tens of millions of dollars at this stage meaningfully moves our business forward. Because now we're looking at AI platform expansion. We have unbelievable amounts of data that's helping us create better experiences for our customers. And we can do acquisitions. We've done one acquisition today. We're looking at two more companies as we speak. And yeah, and I think aspirationally having an IPO narrative helps a lot too. Just like we're swinging for the fences as big as we can that give a little context. Was there anything more specific you're looking for?

Yeah, I think you answered it generally and then maybe more narrowly someone answered. But in your pitches you clearly knew all about your competition. So you were differentiating.

Yeah.

Did you have any pushback from investors? Well, this company is raising at this multiple survive.

Yeah, I don't think valuation the valuation multiples of other startups wasn't ever a concern. I mean for five years, even still sometimes today LegalZoom is the only company that comes up in competitive analysis because they have scale public company. All. All of our startup competitors were. We are today the ones that are. There's new companies that have come into the space are doing hundreds of thousands to millions of revenue. They're too Small for us to care and investors now, the downside now is, you know, early stage, you get a speculative asset valuation. At our stage, we get like public market compressions. Have to, like, justify, you know, hundreds of millions of enterprise value to growth investors, which a little harder to do because they have your professional investors. Not that you aren't, but, like, they have like millions of hundreds of people, like, running every data set you've ever given them through models. And it's really. It's intense.

Yeah. Yeah.

And it's only going to get more on the way to ipo, which is what you like to. You love to, like, rise in. You want to give quarterly updates.

Yeah.

Monthly updates on monthly investor calls, if you could.

Yeah.

I hired a CFO with public company experience, Ron Wenger in San Diego.

Guy.

Great human being, if any of you know him. He helped from us. Yeah, yeah, of course.

Helping our fund.

Yeah, of course. And he's wonderful. Helps me sleep at night better.

Yeah.

He took viasat public, I think took viasat public.

He was at Classy gofundme as their CFO and was at Kula and another company here in town.

Yeah.

So there's consumers well, too. And tech, which is awesome. And you did it early and you're on a rocket ship trajectory.

Yeah, I know.

We only had one question. Can I ask you guys a question? Raise your hand if you've done at least one investment. One angel investment. Who's done? Anyone do more than 10? Okay, so this is a good. It's a good crew here.

Yeah.

I mean, my encouragement is like, curate the relationship. So I said, friend raising before your fundraising, like, if you see an entrepreneur that you feel the spark, like invest in the relationship first even before they ask you for money or if they don't know that they want to raise money, like, you could be that catalyst to kind of push them down that path. But I mean, I emphasize the relationship because for at least our 26 angels, minus four of them, I knew these people for months or years prior to even thinking about pitching them a business idea. And it's just like such a simple thing. But it makes a huge difference. On the flip side, once you've given them the money and how you can help them and go to work for the company every day.

Yeah.

I heard that we just miss investing. The Angel San Diego into conference is just mis Investing student timing in just a will. I heard that from a staff person.

In investment in trust. And. Well, hypothetically, if we had a round, that it was.

Yeah.

When you were first racing that it just was a timing issue. Otherwise you would come through the flow of SDAC.

You raised what, like January 20th for the seed round?

So we raised, we raised, we were raising from September to December 2018. That might be it.

Yeah.

That's the other thing too, is like, once the rounds close, like, it's a little easier in the early stage side to like reopen it to accommodate a great investor. At the later stage, it's a lot harder because you have to have to go get board consent, shareholder consent. Like, it's a, it's a process to reopen a raise in the early. That's why safes and convertible notes are a great vehicle because you kind of do an ongoing rolling close. You just don't want those notes or safes to stack too much because they can create a bit of a mess later on.

Did you end up going.