Building a $10 Billion Dollar Company with Karl Alomar, Former COO of Digital Ocean

On today's episode of Business Lunch.

And what's beautiful is even a couple of years after at the ipo, you know, all credit to the new team that came in. But at the IPO point, myself and the founders would be sitting around looking at all the, you know, numbers and seeing exactly how the company is developing and just very clearly recognizing the growth trajectory that we had put in place. The machine that had, you know, provided such a significant amount of growth from the point my leaving, for example, to today, where the run rate is probably closer to 450 million or perhaps even more at this point. So you could see there are incremental pieces that have been added, but the core machine really was like a runaway train. And with everything, there's always a component of luck. But I would say that the formula was built to really create a perpetual engine that would grow. So the biggest challenges we had was how do we operationally support that? We had to grow our team incredibly fast. And there was a lot of debate in the early days about how we do that. I was always very supportive of, let's be structured. Let's think about a layered approach. You know, we're growing, like, over these hurdles where the business changes. And obviously there's mixed points of views, mixed amounts of experience across the team, across the founding team. And we ultimately really kind of just went headfirst and hired like 100 engineers in a year. But as a result, we had essentially a cultural crisis in the organization. I'd say in late 2014 and 2015, the first six months at least, was a period where we were retrenching and building structure around our whole organization. And so one of the key learnings that I would pass on is it's never too early to think about how you're going to grow your organization.

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Hey everybody, Roland Frazier here with Business Lunch. And I am excited today to have as our guest Carl Alomar, who is the managing partner at M13. Is it M13 fun, Carl?

It's M13. M13 Ventures. Yeah. Nice to be with you, Robin.

Yeah, welcome. It's nice to have you here. So you've had a pretty cool entrepreneurial journey. I like to start like right now, we've got you and I want to ask you about things that you're doing at M13. Before that you were chief operating officer over at Digital Ocean for five or six years, was it?

Yeah, about five and a half, five years, nine months to be precise.

And let's, let's go back before that.

Because I know you did something with China Export as well, right?

Yes, I did. I did so before I joined DigitalOcean. So I was an entrepreneur like back from the late 90s is when I first started and I started my first company back then. But that company was a company called Clearview Network. So it's like a video networking company, kind of like a nest or ring of today. But back when you had the beginnings of DSL and you know, dial up modems and trying to figure out how to pump, you know, video images through a pipe, which wasn't so easy. But we ended up exiting luckily in and around the bubble burst timeframe. So 2000ish. Yeah, like mid 2000 is when we did the exit. So we got out, which was great. I stayed with the company for another year, but obviously, you know, we were already on the kind of downswing of value and stuff. So all the big lofty valuations that were, were kind of ahead of me, I just about missed on. But that's a whole story in itself. Then I did an MBA at Columbia Business School. So I was originally an engineer from Imperial College in London. And then I, after that first experience, I did my mba. And then after my mba, I started this fintech business which was basically financing was kind of a buy now, pay later concept, which we see a lot of now, but based around people sourcing goods from China. So this is when Chinese manufacturing was kind of really booming and all of the financial systems in China were completely antiquated. They're probably a bit better now, but back then it was definitely a disaster for anybody that was sourcing from China. And so we really built a whole electronic system to facilitate that, provide open credit terms and really manage the whole kind of documentary, documentary relationship and transactional relationship between the suppliers in China and the CPG type brands in Europe and the US.

And then from there was DigitalOcean.

Yeah. So we built that company to about 140 million revenue and then exited in 2010. And then I did actually spend a couple of years kind of making small investments and sitting on boards and advising and working with founders. That was kind of my first exposure to the investment side of the business until I was introduced by a VCIA in New York, introduced me to Ben Uretsky, who was the founder, one of five founders, but the founder that was CEO of DigitalOcean. And then from that, you know, I agreed to kind of just come on board a little bit, just to help them really get themselves set up and organized for the funding round that was coming. It was their first money and it was the very, very beginning of the business. They just launched their first. But in the three months or so it took to really get the business kind of structured and kind of build all the foundational pieces and set it up for growth, you could already see just the groundswell of what was happening in the market around the brand. And so felt really exciting. And I agreed to join on as COO and work alongside Ben and the other founders and build the business, which we did over the next six years or so until I left.

Awesome. And was that an exit to private equity or public?

No, we didn't exit at that point. It went public, actually. So we were getting ready. We were going through IPO readiness. I was running a lot of different aspects of the business, different times. I was running pretty much every. Every part of the business is a different point in the business. But in that year, 2018, we really focused on IPO readiness. And so we were getting a lot of things together, looking to bring in a new cfo, looking to bring a new CEO, you know, all these different pieces, once we find found that new CEO, Ben obviously left the business. And I was the last of the early executives to be there. And at that point, you know, for me, I was fully vested. And, you know, I really felt like the business would be in great hands if we had a great team that would take it public. And that's really what we did. So ultimately, the company did go public in March of this year and has been a pretty good success story. So its valuation is kind of, I think, peaked at around 14, 15 billion. So pretty good outcome.

Nice.

Nice.

So, so many questions I'd like to ask. You've got a lot of really diverse experience that I think would be interesting to people who watch and listen to this. The first thing I kind of like to ask is you were an entrepreneur first, and then you went to business school, right?

To Columbia.

So what was good and what was bad about that? And would you do it again?

I would do it every. Every day and twice on Sunday. Okay. Quite a bit out of it. It was very funny because I, you know, I had an engineering degree, but back in those days, they didn't really integrate business education or anything around that. It was just purely an engineering degree. And so when I went into building this business, I was with three other founders, and they decided to designate me as a CEO, which may have been a great decision, may not have at this point. You know, it is what it is, but at the time, I really just kind of built the business just from kind of guts and glory and just kind of digging and making things happen. But I. I came across so many situations where I really didn't understand what was going on. I mean, at the time, I probably validated it to myself somehow, but I really didn't understand what was going on and. And, you know, I just fought through, and we made it happen, and we grew the business and we got it sold. When I went to do my mba, the first three to six months of the program is really just the basics kind of foundational things. And through that whole experience, I daily would go through educational Processes where I'm kind of like, oh, that's what they were talking about. Oh, when this happened, that's what it was. And then we started doing like marketing and other types of, kind of functional components of business operation. And as every time I was doing any of these programs, I was relating it back to my experience with the business and it just brought so much understanding and logic to the reasons why we were doing things we were doing. I mean, I, I embarrassed to say I could hardly read a financial statement properly when I ran my first business, but post, you know, post mba, I just felt so much more professional, efficient. And then I put that all to work with China export finance. Really honed my, my craft and just became very, very good around a lot of the fundamentals which I, I was absolutely missing in my first business. And so yeah, I would, I think it's an amazing education. You know, there's all the other sides of it, which is networking and everything like that. But honestly, for me, just purely having that general grasp of business concepts was really, really helpful. And by the way, a lot of people get that from their undergrad. So I'm not saying that it's right for everybody, but for me it was right.

And you mentioned you were engineering and hadn't really had any exposure to formal business education.

Right.

So that's a big deal.

Yeah, I was a classic nerd in the 90s.

So you were in fintech before fintech was cool with the China export thing?

Yeah, it feels that way. Yeah. We did some pretty innovative things. Again, it was a lot of trying to figure out how to make things work where there wasn't a solution. Which I think, by the way, is the beauty of kind of ingenuitive founders. So we were doing electronic signatures on financial documents which back then didn't exist. We actually had to go through a whole legal process to validate that that actually could carry in a court of law. We introduced a documentary process which related to what was called the Bill of Exchange. And it was a document actually that was used for trade back in the early 20th century, in the early 1900s. And we revived it and made it electronic because case law proved that you could actually get a summary judgment on this transactional document without having to go through a full court system. And as a result that allowed us to get it underwritten much easier and kind of facilitate a lot of the banking that we needed. So it kind of turned it into commercial paper of sorts of. And so we did a lot of. Even in China, there was really no Licenses for anybody to do this type of thing, unless you were a big bank, you know, basically spending hundreds of millions of dollars in the country. So we were the first non banking entity to get a factoring license in China. So there's a lot of things that we're just breaking new ground on, and obviously now a lot of them are commonplace. But back then, when I look at what we did, it was just. It was pretty innovative. I'm pretty proud of how we built the whole system and got it to work.

That's really cool. So a couple of things there. One is you had not only to go to a place that you didn't necessarily have great experience or relationships or anything overseas, but also you had a business model that was replacing the status quo with something, and you needed to go find actual legal precedent to convince them that this could work. When you're going, like, for people that are in our audience that are facing something like that in terms of they are being innovative and they're coming at something that's really changing the way people do business, but bringing them up to date, because that's the case in many industries that are out of date. How would you say is best to approach that?

Well, let's first say nothing ventured, nothing gained. Right? If you're not breaking glass, you're not really building value. I mean, you can. Anybody can do the normal stuff. That's easy. The stuff that's not. That's outside the box is the stuff that creates great businesses. So I really believe that. And I really support and kind of admire founders that have the guts to go out and try and figure out how to make the world different. You see it in stories like Airbnb, and you see it in a lot of different places, but it's really interesting.

That's the true entrepreneur, right? You're actually creating something.

Yeah, absolutely. For me, it really comes down to I've heard a million crazy ideas, and honestly, they're crazy. And I'm like, you'll never get that done. And then I've heard other ideas that sound crazy. But when you think about it logically, there is a journey that gets you there. So to me, I think maybe the best approach is think about what you want to get done and think about mapping out the journey of how you get there. Is it a logical journey? It may not make sense in the standard, like expectations of the current market, but how is the market changing? What are the key component parts and do they connect and is each one realistic? And if you can figure those out, then there's no reason why you can't go make it happen. And that's kind of how I've always seen the world and have always thought of the world. You kind of imagine what you want. It could be crazy. But if you can map it out and you can logically figure out a pathway to get there, then there's no reason why you can't build it.

I like that. I like that approach a lot. Now, how about the. Because there are a lot of people that want to go international, even just to sell international, but it's very, very intimidating. And you went to one of the most challenging markets, especially at the time, to do that. How do you do that when you don't know anybody? What is that process?

Yeah, that was interesting. I will say I had the advantage that before I started my first company, my first engineering job for about three years out of college was for a larger engineering firm. And I was kind of an international kind of business development person. And so I was doing projects in across Asia and China. So I was kind of already really exposed to these crazy international cultures that were just so different to what it. What we have in the US and being brought up in Europe, you know, obviously I was exposed to a lot of different cultures in Europe too. So I think I had a sensibility for it. And that's probably the first lesson is when you go into a different market, you got to recognize it's a different market. Don't think you can sell the same thing you're going to sell to someone in the U.S. even in a specific part of the U.S. like, it's just not going to be the same. So you have to understand your customer and you have to understand the market you're going into for an abundance of reasons. But for me, I literally trying to think how it all. I remember I literally was building the business concepts. Actually, I partnered with a friend of mine in London who was doing a lot of sourcing. He had a big company who was doing a lot of sourcing from China. And he was the one that kind of illustrated the problem for me. So he and I partnered. He took kind of a chairman of the board seat. He was running his own company, and I was CEO. Okay. So I kind of sat myself in his office. I was watching his operation, how he was procuring out of China. And I built the model out of London when I was in that office. That's what we worked with the lawyers, we worked with the underwriters. We, we did all the initial banking setup like that. All that was done in London. Once we had the framework built and we were ready to start building tentacles in China to launch the business. I remember flying out to China, flying out to Shanghai, just being put up in a hotel. And I'm trying to remember how I did it, but we sourced a handful of kind of local managing director type talent.

Would they be people that he already had a relationship with?

We, we source them pretty much from scratch. I think what we did is we identified connections that we did have in the country and found a recruiting source and then had that recruiting source find us a handful of candidates that I could meet with. So I flew into China, put up in a hotel and just basically sat in the lobby and was meeting all these different candidates. And we met this one candidate. His name was Mention Wong. He was fantastic. He had an executive MBA from Columbia. He, you know, he was very, he was mature. He'd been CEO of large corporation before. He was like, you know, pretty well established business person, but had really good Chinese roots. And I think for us, the core was if we were going to build a business in China, especially back then when there was this really amazing, incredible divide between the cultures and, you know, Chinese business people and the customers we want to work with, we're not really that comfortable doing business with foreigners. We wanted to create an entity that felt very local. And so that managing director finding that local person who truly understood the market was the most important thing that we could do to get off the ground. He was fantastic. He was a great partner for me. And I'm thinking he'll probably listen to this at some point, so he'll enjoy me saying that. But he helped me set up the Shanghai office and really built an incredibly localized culture and a localized feel to the business as a result. That's the reason we were able to get the factoring license. That's the reason we were able to get all the customers we got. Like everything we did, they felt like they were dealing with their own. And I think that's really kind of a core secret. When you go to outlier markets that are really that different, if you're in Europe, it could be a bit different, but if you're literally in China or India or places like that, making it feel very localized makes, you know, the customers or the customer base feel much more comfortable. And so it allowed us to do a lot more by, by building that. And again, we were in the banking world, in the fintech world, but, you know, the government, everybody was paying attention to Citibank and, and all these Other big banks who were trying to get into the market and kind of, they're making a lot of money out of those banks. And so everyone just left us alone. And, you know, we created these underlying relationships with government officials and figured out our way to get licensing applications in the right places and found our way to build a pretty decent sized business.

That's pretty cool. And then as you went to Digitalocean, when you went to DigitalOcean, was it a startup or at what point was it in?

So they launched their first product in January of 2013 and I joined in March. Okay. So they had about a year of development before I came. They actually did techstars in Boulder in I think the beginning of the summer of 2012. And that was really kind of the kickoff point of the business. And so I joined about a year into the business, but literally just as the product was being put out to market and then.

And you came in as COO at that time.

So initially when I came in, it was the intention was to help them set themselves up to receive funding. So I Ventures had given them a term sheet and basically we're kind of pulling back the cape and saying, hey, let's make sure this company has all the foundations it needs to scale before we can fund and continue do the transaction. And so I came in to help them do that. And in doing that, you can imagine all the foundational things to be built. So I had to rebuild the full financial model, rebuild kind of the growth plan and the growth model of the business, help them set up a bunch of leasing and financing platforms or capabilities to support that data center. Just all the fundamentals of how do you grow an organization Structure that their hiring plan and their kind of organizational structure, a lot of those different pieces. And so once we got that all done and they were really, we were kind of really set up on kind of a platform to launch the business. I made the investment and then it was pretty obvious at that point I'd become a pretty integrated part of the team. I could see what was happening. You know, they knew they needed someone like me as well. So it was just a very mutual kind of very happy decision to say, okay, let's do this together. And I jumped full time, but I was pretty much working full time right off the bat just to get them where they needed to be. But officially became full time about two, three months in.

And so, so I think it when you left, it was doing about 200 million a year, is that correct?

Yeah, about 250 run rate. ARR.

Okay. And when you came in, it was next to nothing, I'm guessing.

Yeah, like about $50,000 a month.

So you were there for some pretty significant growth. And I think that's really cool because you've got to have just some really fantastic takeaways in terms of operational. I know you've got a playbook now that you work at, you know, for your companies at M13. Would you share some of the big takeaways that, like, during that. That growth to actually achieve that? Because that's certainly something a lot of people in our audience are trying to figure out is how do I get to a quarter of a billion dollars or a hundred million? Right.

Yeah. Well, I think there's two parts of growth. Right. There's the things that drive growth, but then there's all the things that allow you to manage growth from this, from the perspective of keeping up with it. Right. I'd say more companies. Well, not more companies, but the companies that find growth failure is usually due to a lack of the ability to manage it.

So more of a scale challenge than a growth challenge, right?

Yeah. So it's a bit of both. The beauty of what we had, and I would absolutely credit the founders right out of the gate. DigitalOcean built a machine that was just organically building on it. So right out of the gate, the way they positioned the brand for developers, which was the first time any cloud company had done that, the simplicity of the model, the cleanliness of the offering, the relationship they build with the community, and then the content and everything that was layered on top of that in terms of content marketing, it was just an incredible recipe to create an engine that would build upon itself. And what's beautiful is even a couple of years after at the ipo, you know, all credit to the new team that came in, but at the IPO point, myself and the founders would be sitting around looking at all the, you know, numbers and seeing exactly how the company's developing and just very clearly recognizing the growth trajectory that we had put in place. The machine that had provided such a significant amount of growth from the point my leaving, for example, to today, where the run rate is probably closer to 450 million or perhaps even more at this point. So you could see there are incremental pieces that have been added, but the core machine really was like a runaway train. And that's with everything. There's always a component of luck. But I would say that the formula was built to really create a perpetual engine that would grow. So the biggest challenges we had was how do we operationally support that? We had to grow our team incredibly fast. And there was a lot of debate in the early days about how we do that. I was always very supportive of, let's be structured, let's think about a layered approach. We're growing over these hurdles where the business changes. And obviously there's mixed points of views, mixed amounts of experience across the team, across the founding team. And we ultimately really kind of just went headfirst and hired like 100 engineers in a year. But as a result, we had essentially a cultural crisis in the organization. I'd say in late 2014 and 2015, the first six months at least, was a period where we were retrenching and building structure around our whole organization. And so one of the key learnings that I would pass on is it's never too early to think about how you're going to grow your organization. How are you going to maintain your culture? You know, every business has these stepping stones. The first stone is I'm sitting in a room on my. All my team around me and I'm literally seeing them all day, every day. Second step is a cap growing a bit bigger, maybe now 20, 30 people, 40 people. I now have teams and each of the people are sitting around me are running different teams. And for the first time, I don't speak to everybody every day. I don't even speak to everybody every week. There are some people I don't speak to once a month. And so how, as a founder, do I continue to drive the culture and the setup of the business, the whole feel of the business that I want? And so your whole method of communication has to evolve, your whole method of work has to evolve. Beyond that, you start creating multiple layers. Now you have to think about autonomy. You can't run everything anymore. You cannot scale as an individual. So all of these, you know, it goes on and on. But the whole idea is just really thinking about the structure of how your organization grows right from the beginning is very, very important. And then also at what point do you start introducing? Because what you have to do is you have to set up all of your people to be successful. So setting up what point you start setting up, leveling, what point do you start differentiating between the senior engineers and the junior engineers and everything in between? At what point do you start separating between individual, individual contributors versus managers who are not doing day to day work, but they're managing big blocks of work. So all of these are kind of key components of how to build an organization so that you Keep it working at full speed. You keep it very, very optimized. And that, that's, that's definitely a challenge with the companies we work with now is definitely something I help them with, and I see them, you know, being much more successful than we were at the time.

Do you have some sort of framework for how to do that?

Yeah, yeah, there's a talk I used to give that's actually on my LinkedIn page that speaks about. It speaks about the combination of organizational change and cultural change that goes with it. And there's kind of a framework. The way that I approached it in that presentation is actually pretty, you know, documented. It's like a scientific approach, like name names of different types of organization. I think that when we do it for the companies that we work with at M13, it's a little bit more focused into the specific point of time that that company is in. So there's no point, you know, when a company's 20 people going to 50, there's no point talking to them about what they'll look like when they're 100. You know, we'll cross that bridge when we reach it. But, but just the ability to kind of focus in on here are the core things that are going to change in this next step of your growth is really, really helpful and kind of really allows them to think a lot of it is Also, you know, there's some interesting roles that typical founders don't think about, but are just so helpful, you know, in them growing and building a really efficient organization. And so that's part of it. So two come right to the top of my head is a head of talent. Nobody really thinks about it. Everybody, every founder is like, no, I can hire my own people. I can figure it out. Head of talent is not about hiring. Head of talent is about optimizing the performance of your organization. So you know, when you're growing to a point where you cannot, you know, physically touch every person in the, in the business, having someone that is focused 100% on the culture of the organization, the energy of the organization, the sentiment and the productivity of the organization is incredibly valuable. And without fail, a good head of talent is going to lift your delivery and your performance. 10, 20%.

Is head of talent similar to HR or if not, how do they differ?

It is. I don't like HR as a word because humans aren't resources, humans are talent. I think words mean a lot. And when you look at your team, you don't want to look at them as a bunch of resources. Kind of bunch of, you know, zeros and ones. They're talented people and you're trying to get the most talent out of them. So it is the same department. But how, you know, some people call it people, some people call it hr, some people call it talent. For me, I've always leaned on talent because I just feel like it's reflective of how you think about your team. Nice.

And what's the second role?

The second role is a technical program manager. So a lot of organizations we find these days are trying to build like matrix type constructs where they have a certain set of vertical skill sets and certain set of horizontal tasks. And so they kind of run this matrix where different core pieces of the horizontal contribute to different pieces of the vertical. It's complex to run and often is relatively inefficient. Works really, really well when you're small and you ad hoc and everyone's got to do a bit of something. As you grow bigger, it starts becoming harder and harder to manage. So we hired pretty early on I ran kind of DevOps infrastructure, everything that was physical in digitalocean. And so we experimented before the engineering team did with the technical program managers who brought someone on pretty early. And right off the bat, the organization of our work and the organization of our allocation of resources was so much more effective. Again, another 10 to 20% lift in productivity. And so when you have an organization that's starting to get to that complex construct of multiple different talents, all kind of crossing paths, having somebody that's just sitting in the middle coordinating traffic and just making sure that we're ultimately on a core set of macro deliverables for the business is just an incredibly valuable resource. So those two roles I think both together kind of kick up as a business probably getting somewhere between 25 and 50 people. Those two roles really, really kick up the productivity of the.

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That's really cool. And then moving into M13 as an investor, what did you have to learn differently from your entrepreneur from Your initial entrepreneurial experience and your COO experience as you became more of an investor.

Yeah. So what I love about life is you never stop learning. You know, you always can figure out whether you want to or not. Go try something you haven't tried before and you'll find a whole bunch of weeds, weaknesses. So I think my tendency being an entrepreneur myself is always innovate and like, how am I going to fix how many make this work? How would I do it? How am I going to fix it? How am I going to make it happen? I, I do, you know, like to think or pride myself in some level of innovation and some ability to kind of figure my way through problems. What I, I think started with when I was working with companies is I was really, I was, I've always been. I continue to be very, very inspired by founders and by just the guts that they have to do the things that they do, how much they put on the line. But what I was finding myself doing right off the bat was, oh, my God, this is such a brilliant idea. This is how you could do it. This is how you could solve it. And I was creating this whole picture and image of how I would do it, but that's not necessarily reflective of how the actual people at the table would do it. And so if I was involved, perhaps it's a direction that would happen. But as an investor, I'm not never going to be at the table every day executing with this team. And so you have to really believe that at a minimum, you're aligned with the founders you're working with. And secondly, that you share a vision. You know, it's kind of saying the same thing, but they are going to address problems the way, not necessarily even the way that you would, but just in a way that you feel really confident will result in, you know, very positive outcomes. And so you have to, you just have to be. Believe in the team and the team's ability to do the work without you at the table. So I started relying on them telling me what their great ideas were, them telling me how they would solve the problems, them telling me where the innovations are, rather than me just layering on my own. They loved it when we had the meetings because they were always like, yeah, these are great ideas, these are fantastic. So great meetings. But down the road you start to realize, wait, they're not built that way, so they're not going to do it the way that I, I proposed we would do it. Nothing wrong with it, you know, everyone to their own. But I can't invest thinking that it's going to be how I would do it. I have to invest thinking what it's going to be the way they would do it. If that makes.

Was it hard to make that adjustment?

It wasn't hard. I just had to recognize it. So I think that initially I was just so excited that I just went in and did it. And the problem with venture is it's a long game. You know, you could go 10 years without knowing whether you've actually created a great investment or if it's just been, you know, a red Herring for 10 years. But, but so how do you recognize that it's not happening the way you think it's supposed to happen? How do you make the adjustment quick enough? So luckily I, I have really great partners and, and you know, I'm able to debate with them in a way that allows me to start seeing where maybe I'm making errors and that. And I think that I'm forced myself to be open enough to accept errors because that's never an easy thing for anybody. But you know, by really looking for where I could improve, I could begin to see that wait a minute, maybe I need to back off on this. Maybe I'm doing this wrong. So I think relatively quickly I got accustomed to how I should be thinking, how I should be looking at Amongst, you know, 100 other things that I learned along the way. I feel like now, three years in, I've gone to a place where I, I feel like a really proficient investor. I feel really good about the investments we're making, really good about the teams we're working with, really good about the decision criteria that I think get me to where I need to be.

What are the most important things to you when you're deciding whether to invest in a company?

The most important thing is going to be and it's not just do I like them, but it's do I like the way they think and can I work with them? Is this going to be a two way relationship? And so that's got to be number one. And I think the second one to that for me is the core business model. So we go back to that whole idea of if you have a crazy idea, map it out and create a journey and figure out how logical that journey is. I go through that exercise mentally when I talk to companies. They may be crazy ideas, but then I start to map the things together. How's the industry moving? How is it, how's the world changing? How are people changing? How's consumption changing? Okay, now Is the process this team wants to go through to get to this end state? Is it actually a logical process? Can they actually get there? And then the third would be just what's the overall opportunity? So like what does the big picture look like? Is there volume, like is there an enterprise value to this? And I think those three come together to kind of help me make kind of the core decision. There are a couple of things though. Well, one main thing I've learned also to be very, very cautious of, you know, the hot white, you know, opportunity that everybody's in love with, like the flavor of the day. Because a significant amount of the time it's very short lived. And so I really try and focus on fundamentals. I think in the early days you get carried away that everybody wants to deal so you feel like you've got to be a part of it. But ultimately I've seen time and time again these hot flashes where companies do some big TikTok viral campaign or something happens that just blows them up in a very, very short space of time. But as fast as they've blown up, they dissipate on the back end of that. But in the meantime they've raised a crazy amount of money and they're trying to figure out how to use it. So that's something I've tried to be much more proficient about. Avoid situations where we're being fooled by kind of the cloud around a business rather than the fundamentals.

So assuming that you like the team and the business model maps out logically and you like the opportunity, what can happen that causes red flags or causes somebody that's that initially meets those three criteria to kind of blow the deal and not get the investment?

Yeah, I mean these are great questions. So we hold a really high bar for investment. So the three things are kind of the indicators and all they do is set you up for an opportunity, but they don't necessarily prove that it's a great business. You then have to dig in a couple of fundamental things, really get to understand the data of a business. Is the data telling the same story that the vision is telling? Does the data support that? Is the business model make sense? It may be losing money today, but what does it look like at scale? Maybe it's not losing money today, but what does it look like at scale? So you just kind of dig in a few layers deeper and just make sure that you're not making any silly mistakes, that the journey of mapped out actually makes sense and there's real scalability of this and then obviously just you get to know the founders better, you chip away, you kind of try and figure out is it real, is that initial impression really good, or are there actual things that are coming up as red flags along the way? So it's kind of a combination of validating this beautiful vision that you've shared with the founder and also kind of digging at red flags along the way to figure out if there's something you didn't see or didn't notice.

Awesome. Well, I really appreciate you taking the time to be here today. If people would like to figure out how to find out more about the way that you think and the cool things that you're doing over at M13, what are the best ways for people to reach out and connect with you?

Yeah, I think probably the best way with me is LinkedIn Karl Alomar at.

LinkedIn Karl with a K, right?

K E R L. And then also my Twitter handle is calamarnyc. But honestly, Carl Al Marlin is the best way to reach me. And yeah, I'm always happy to chat, always love creative, innovative people. So throw it at me. I'd love to hear what people have got.

Awesome. Well, thanks again. Really appreciate you being here today.

You've been listening to Business Lunch with Roland Fraser. If you're enjoying the show, let us know by subscribing and leaving a review. And for more information go to businesslunchpodcast.com thank you for listening.

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