Troy Henikoff, Managing Director of MATH Venture Partners, on Fireside Chicago, April 9, 2020

All right, uh, good morning and welcome everybody to Fireside Chicago. We host fireside chats with prominent leaders from Chicago's business community. I'm your host, Tim Schum. I'm also the founder and president of my hourly recruitment firm, Lucas James Talent Partners. We're going to be live on Zoom hosting conversations and Q&A with all of the people that you can see on my screen right now, every Tuesday and Thursday at 11:30 Central Standard Time for the foreseeable future. Before we get into our first guest, Troy Henikoff, I'm gonna go over who we have on deck for April. Next Tuesday, Reid Lappin, founder CEO of Vocal Interactive. We're gonna be talking everything digital, digital transformation. Jeff Rossett, who's the founder and CEO of Sales Assembly. We're gonna be talking everything sales, pivoting your messaging. marketing integration. Then we have Matt Kunkel, co-founder and CEO of Logic8, one of Chicago's fastest-growing B2B technology companies. Then David Lozell. David is a subject matter expert in everything human resources, talent acquisition, talent management. We're gonna be talking jobs, unemployment, how to navigate and find your next opportunity amongst the COVID-19 mess. And then last but not least, Nick Moran, founder and general partner of his own venture capital firm, Newstack Ventures. He's also the founder and host of his own podcast centered around startup investing called The Full Ratchet. I'm gonna introduce Troy Henikoff real quick and we'll get to the conversation with Troy. Troy is a managing director of his own venture capital firm, Math Venture Partners. He's also very, very, very integrated into a lot of organizations here in Chicago— Techstars Chicago, Firestarter Fund, Chicago Entrepreneurial Center, He's also a professor of entrepreneurship at Northwestern University's Kellogg School of Business. Prior to his career in venture capital and education, he was a serial entrepreneur in his own right, either the founder or founding team member, CEO of several companies, including but not limited to SurePayroll, OneWed.com, Jellyvision, amongst several others. Troy, thank you so much for joining our first show today and welcome. How you doing today?

Thanks. No, it's great to be here and doing well.

Absolutely. Absolutely. So, we've had a chance to kind of prep a little bit on Tuesday. I guess first, if you wouldn't mind, just for the folks that may not know about you as much, can you talk a little bit about how you started Math Venture Partners, some of the businesses that you and your partners and your team are involved with?

Yeah. I'll roll back a little bit first, which is, you know, I consider myself an entrepreneur first. So, started a bunch of businesses. You mentioned SurePayroll being the most notable. And along the way, about 15 years ago, I got really interested in helping other entrepreneurs, and that manifested itself in a few different paths. One was angel investing, so directing— directly investing my own money into these companies and made 28 angel investments over time. Second was helping start an accelerator here in Chicago in 2010, 4 of us. started what was called Accelerate Labs, which ultimately became Techstars Chicago. I ran that for 7 years. And then teaching, which started with the undergrads at Northwestern, then I added the grad school at Booth, University of Chicago Booth, then I switched from undergrad to grads at Kellogg. So for a while, I was teaching at both Kellogg and Booth. I think I was one of the few people who have ever done that at the same time. But again, it's actually an important message because it's not about loyalty to a particular school, it's about helping entrepreneurs. And if I can help entrepreneurs on the North Side and the South Side, great. You know, the more the merrier. And then as I was running Techstars back in 2000, the end of 2013, Mark Ackler, who was the lead investor in SurePayroll back in 2000, so we've known each other for over 20 years now. Mark Ackler and I got together and said, wow, there is a lot going on in Chicago in entrepreneurship and there really isn't enough capital available. And we had this unique spot where I'm sitting running Techstars in the middle of 1871, the 150,000-square-foot coworking space in Chicago, seeing all these companies come through Techstars and helping, and Kellogg and Booth, and it just seemed like we were in a great position to start a fund. So we started our first fund, which closed in 2014. We named it MATH Venture Partners. That's capital M, capital A, capital T, capital H, because it stands for Mark Ackler, Troy Henikoff. It has other meanings as well. We're very data-driven, but, and we started investing in local companies, one of which is coming up on your future podcast with Matt Kunkel, and LogicGate is one of our portfolio companies. Matt's awesome. He actually went through Techstars my last year, and then MATH made a seed investment in them. But, so fast-forwarding to MATH. So today, I spend most of my time with Math Venture Partners. I still teach at Kellogg, and I do a lot of work with Techstars. I'm no longer running Techstars, but I'm what they call a venture partner. And so I actually mentor 3 of the programs across the Techstars universe. So Techstars has about 55 locations running across the globe today, and I mentor the managing directors of 3 of them, including obviously Chicago with Neil Sails-Griffin.

Very good, very good. By the way, team, Q&A button is below if you have any questions for Troy, put them in the Q&A section. We're gonna save the last maybe 6, 8, 10 minutes, uh, to go to those questions. We'll ask Troy those directly. So, make sure if you have questions for Troy, put them in there.

Yeah, the more interactive the better. This is for you guys, not for me.

Absolutely, absolutely. Uh, my first question while everybody else is doing that, you know, we had a prep call on Tuesday. You had mentioned 8 AM to 8 PM, half-hour, hour, 2-hour blocks. You're talking to business owners, Entrepreneurs, founders, C-level executives, you're on the board of several companies, lots of different industries, lots of different stages. Walk us through some of those conversations. What's happening in Chicago and beyond from your seat?

Yeah, so, you know, we all know this, that about 4 weeks ago the world changed, and it changed pretty dramatically, and it changed pretty quickly. And so, you know, MATH has direct investments in about 45 companies right now, And if you think about it, there— I failed to mention, so there is a third partner as well, Dana Wright. So Mark and I started the fund. Dana joined initially as an investor in the fund, then as an executive in residence, and then as she started working with our companies, we roped her in and she became an equal partner. And so for Fund 2, Math Fund 2, Dana, Mark, and I are all equal partners. So if you think that the portfolio is roughly divided Roughly divided in thirds, we each have roughly 15 companies that we're pretty actively working with. And so when the world changed 4 weeks ago, I thought, I'm going to be working from home, things are going to be more mellow. I'm not going to, you know, I live in Evanston. It takes me an hour to get to work, whether I take the train or I bike. I never drive. You know, an hour back. So I'm going to get 2 hours back of my day, no running between meetings. I'm going to have all kinds of free time. And it turns out that from that Monday, what was that, March 16th, I had back-to-back meetings from 8 AM to that, that week it was until 7 or 8 PM. It was like 10, 12 hours of back-to-back meetings, like literally not a slot open because all of these entrepreneurs were struggling with what do I do next? How do I handle this? Should I be, should I be cutting? Should I be leaning in? Should I be? And, and it was a little bit frantic on their end. And of course we want to help and You know, with, with our investment, sure, we can always help with capital, but where we've always thought we can add the most value to the companies is with our experience. So we've all lived through this, right? So, you know, Mark and I, I have some stories about SurePayroll. So we started that company in late '99. We went through the dot-com bubble, we went through 9/11, we went through 2008. You know, Dana spun up a division out of ConAgra in 2000, right before the crisis in 2008, lived through the 2008 crisis, had a successful exit later on. So we've seen this before and think that we can help them navigate these rough waters. What's fascinating is that it's not universally rough. That we have some companies where things are really hard. We have one that even has chosen to mothball the company for now. So what they've chosen to do, they have a bunch of cash in the bank and they said, wow, we could struggle and burn through cash for some undefined amount of time and then hopefully make it out the other end. But there really isn't much for us to do today. I won't tell you what their business is because it would reveal who the company is. But instead, we're going to put it on mothballs. And we have a set amount of cash today. And when we take it off mothballs, whether it's 2 months, 3 months, 6 months, or 12 months later, we'll have that same amount of cash sitting in the bank. And they've chosen to do that. We have others who have pared way down and, and had cost-cutting measures from, you know, reducing any expenses that are not necessary to cutting salaries to having to like furlough or lay people off. I mean, all the stuff that you know about. We have some companies that are doing really well and actually much better than they were before. So think about companies that are in food service delivery infrastructure. Like we got one of those and they're doing— he has 5 times the inbound leads that he normally has and they're closing at a 50% higher rate. Like that's nutty, right? We have another company that's in remote work. While they're supporting remote work, they again have 5x the number of leads. So there are companies, but still they have difficult decisions. You would think it would be really easy. But remember, fundraising is going to be very hard for a while. Right? Most of the people who have been investing in these early-stage companies, certainly the angel investors, all of a sudden took a 30% haircut. And they're really worried about their capital. So they're not eager to be writing checks. They thought they were really rich because the stock market told them they were, and they were really comfortable writing checks as their— the value of their portfolio was going up. But when the value of their portfolio took a 30% dip, wow, did they clam up. So fundraising is going to be hard. So now you have this company that's doing well, all of a sudden has an opportunity to grow 5 times as fast. But growth in most cases takes capital, right? In this particular case, they need implementation people to help with the implementation. They have to pay commissions to the sales reps. They have, right? There is a cost to it. It's actually cheaper than it was last month, you know, a month ago, but it still is a cost to it. And so they're weighing how much should we lean in? How many additional people should we hire? How much should we increase our burn? Because that's gonna shorten the time we have until we have to raise money. And what if the markets haven't opened up yet? So great, we've got all this growth, but if we don't have— if we run out of capital and we need capital to run, we're going to be in real trouble. And so universally, the default, without knowing anything else about the businesses, we're trying to get all of our companies to scramble to the point where they're in control of their own destiny. Because if you can be cash flow positive in these times, you are in control. And I believe That most of our companies and most companies, not just uniquely to math, that have real business models, that have real revenue and happy customers, are going to do fine at the back end of this. Right? The economy is going to get going again. You know, some things will be forever different. I think commercial office space will be forever different. You know, potentially bars and restaurants are going to be different, at least for a while. But if you get there, you're going to take off again and you're going to be fine. But you have to get there. You can't burn all of your fuel and be only halfway through the tunnel. And so there's this very difficult balance of, especially for the companies that are seeing the opportunity.

So let's say you're talking to, you know, 10 different companies. I'm sure it's more than that, but, you know, they're all at different stages. They all have different things going on. You mentioned, you know, companies that are increasing during this time, but it's affecting most of of us in a negative kind of fashion is like, what's your format? What's your template? What's your playbook? Are there like certain things that you look at in each business to check off from a finance, a sales, a people lens? Like, walk us through when you're evaluating and before you give the advice to some of these CEOs, what are you looking at in their business?

Yeah. So each business is unique. And I'm going to take a couple of different passes at this. The first thing, when everything started to change 4 weeks ago, the first thing was take care of your people. Absolutely take care of your people. And what that meant was, if you— if there's any way possible, get them to work from home. You know, get them set up with the equipment they need to be able to safely work from home and to be able to do their job without putting themselves at risk. So people were number one. Then The second thing was figure out what your cash position is, because cash is your safety net. Cash is your buffer. Again, if you have enough cash to get through this, I believe you're gonna do well in general. And there are only 3 levers you have with cash, right? The 3 levers are revenue from customers, outside capital, and we can talk about PPP if you'd like in the SBA program, but that or investment and cutting expenses. You either get more capital in the top or you spend less on the bottom. That's it. And there are only 2 ways really to get more capital, right? You get an investment or a grant in, or you sell more product. And so it was really hard in that next, you know, we got people covered in the first, I don't know, I'd say 2 to 3 days. And then it got really, hard when we had to make some difficult decisions about cash because everybody's cash position is different. As I said, even the companies that were growing really quickly had an issue with cash. How much should I spend? How much should I lean into growth? How much shouldn't I? Should I pull back? How much? And there— and so it was definitely interesting. An interesting thing I observed though was not only did the companies come from different categories in terms of, are they growing, that we had some that were level, or are they going down, but also the stage of the company. So some early-stage companies, so picture you have a startup, you're building some technology, you're expecting to get a couple beta customers, but your plan calls for real revenue 12 months from now. You're on the same plan.

You're good.

Nothing changes, right? Your revenue might be a little less than you thought, but instead of $2,000 a month, it's $1,000 a month. It's not that material. And so those earliest-stage companies seemed be doing okay. Now they are worried about fundraising and they're worried about their future. And the companies that are much more mature and have a strong balance sheet, so we have a few companies in our portfolio that have raised literally tens of millions of dollars in the last 6 months, they're generally okay too because they have a war chest of cash. They are, a couple of them that have a lot of money, are making cuts because they don't have the customers so they don't need the the salespeople, customer service, etc. But they're trying to right-size their staff to match where the revenue will be, but they have enough of a war chest to go through. The ones that feel the pain the most, in my opinion, are the ones that are— we're close to cash flow positive, we're probably doing $100K, $200K a month, whatever it is, and all of a sudden that got cut in half or got cut by 75% in some cases. And they weren't relying on outside capital to survive. They were relying on their own revenue and their own revenue just got cut dramatically. And that is a really difficult place to be. And they're the ones who are feeling the pain the most.

Sure. That makes sense. Yeah. For everyone attending, I would venture you, if you're not following Troy or MATH on LinkedIn, definitely follow MATH Venture Partners on LinkedIn. Troy puts out videos on a fairly consistent basis. You know, he's a professor at Northwestern. They're very impactful videos on how to lead a company during these times. One of the takeaways that I've had from your videos is to really model your company out. So, you know, what does the cash look like? What are your forecasts from a sales and marketing standpoint? What's your CAC, your cost to acquire a customer? I would imagine that everything that was done up until this point had to get thrown out the window. How should companies be really modeling the next 6, 12, 18, 24 months, throwing a layer of risk and conservatism in there given the uncertainty.

I just had a conversation last night with one of our CEOs. So he has a company that's been hit pretty hard and he had a great financial model and we worked a long time on the financial model with him and it was really pretty good. He has taken to putting a layer on top of it, which is how much he thinks his revenue is going to degrade. And so he had taken cuts of 70% for the months of April, May, and June. And then he says 40% in July and August, 20%, and he gets it back to zero by December. That's his approximation of the impact that that the pandemic is going to have on his business. His underlying model was similar, but he just took what his revenue stuff was going to be and dropped it by that quantity every month. So far, he seems to be pretty accurate. So one of the things that we're looking at is how well is he modeling what's happening in reality. And one of the things that we know for sure is the only thing about a financial model we know for sure is that it's wrong. And so how do we, how do we Continually improve it so that it's more and more reflective of reality.

Gotcha. That makes sense. That makes sense. Yeah, I think like, you know, for our business, it's, you know, it was hard to model during good times. And, you know, we're an hourly recruiting firm that helps companies hire. So we had good times and then You know, at the end of this, I think as companies lay off, unfortunately human resources and recruitment is gonna get hit. So there's gonna be an opportunity for us to keep things— for companies to keep things variable and we'll be in demand then. But we're kind of in this uncertain period and I gotta imagine there's a lot of other companies kind of in that stage. For me, the SBA and a lot of the nuances of the CARES Act are gonna help us immensely. and that's gonna impact the model pretty immensely. I get the sense, I'd love to hear your take, I just feel like the government moved pretty quick with the stimulus actions, as quick as they could. I personally give them a lot of credit. I think they tossed a lot of money at this thing with a lot of, with not a lot of restrictions, but I don't know if it'll be enough, and I don't know if they see that either. How is the CARES Act PPP affecting maybe some of the venture-backed technology companies that you're involved with?

Yeah, so the CARES Act, you know, the initial $349 billion that was allocated to helping the Payroll Protection Program is— seems to be rolling out. It was slow initially. The banks were not ready, frankly, because the government had to do its thing. And then this is— the money is delivered not directly by the SBA, but through the actual banks. And so initially, they were not ready. They were all supposed to be up last Friday. And only one or two of the major banks was up last Friday. The rest weren't. I've been hearing lots of, lots of horror stories from people because it's easiest, by the way, for those of you who are listening, if you have an existing banking relationship, if you have an existing loan, especially if you apply through that bank, you only get to apply once. So you can't apply to multiple banks. The SBA doesn't have time to be figuring out, did I allocate you or not? You're only allowed to apply once. So who do you have the strongest relationship with? And if your bank wasn't up and ready to accept applications initially, that was really frustrating for a lot of people. It seems that part seems to have calmed down. The SBA has also broadened the, the number of avenues. So I know Lendio is now accepting applications. There are a couple of people like that that are accepting applications, and they're trying to give you more avenues to come in. They were talking about maybe even PayPal. So, you know, the $349 billion, it's first come, first served. There was some fear that the $349 billion would run out. There was supposed to be a vote in Congress today about allocating another $250 billion to the CARES Act for this PPP. So that would be great to see more. So the idea behind the whole thing was, listen, we as government, and I'll use government generically, are gonna have to support these people, whether We support them through unemployment and unemployment insurance, or at the end of the day, we're gonna have to support them. So wouldn't it be better if we did it by helping them keep their jobs than by paying them when they're on unemployment? Because if they keep their jobs, it's better for the companies, it's better for the employees, it looks better for the economy. There are a whole bunch of reasons. And so that's why they're doing— my opinion of why they're doing this. Now, there was a very controversial clause in the SBA loan program referring to affiliates. And the SBA loan program is designed for companies that have fewer than 500 employees. I put an asterisk next to that because depending on your category— so if you are a chain of restaurants, it's 500 employees per location. There's some details about that. But in general, for the kinds of companies we deal with, technology companies, it's 500 employees. or less. But they wanted to make sure that they weren't funding divisions of big companies. And so they have this notion of, well, 500 employees counted between you and your affiliates. And affiliates were defined as if anybody owned more than 50% of you, then anybody else that they own more than 50% of gets counted in that. But there were also some control provisions. And so what happened for venture-backed companies, if I had taken an investment from a venture If I, as an entrepreneur, had taken an investment from a VC and that VC had control provisions over ordinary business operations— we're not saying they have blocking rights to sell the company, that's not ordinary business operations— but if they could set salaries, if they could do hiring and firing, even if they just had blocking rights on those things, they were deemed to be an affiliate. And if they had the similar stuff with other investments they had made, I would have to count all my employees and all of those employees together. And if that was over $500,000, I was not allowed to apply for the PPP. And so there's been a lot of interpretation of this. There's been a lot of scrambling. And what's been happening and what the, the SBA came out and said is totally fine is if your investor relinquishes those blocking rights with a side letter, it's fairly easy. Your lawyer can do it quickly. Then they no longer are an affiliate and you are free to apply to the SBA. And so, the lawyers are ridiculously busy right now trying to figure out which companies have this situation, which don't. By the way, for people listening, if you've taken money from an investor in the form of a SAFE or convertible note, there typically are no control provisions at all over day-to-day. Those are just loans. And so, you don't have to worry about it at all. It's equity investment and it's in the section of your investment or in your term sheet called protective provisions, where many times there will be some provisions. So I have personally signed off on at least 5 in the last week where we are relinquishing a protective provision that was in there that, you know, it wasn't a big deal, but we don't need that. And then that company qualifies for the SBA's PPP program. And I think it's really important because without doing that, that company would have laid off a bunch of people who would have gone on unemployment, who would have been in a difficult situation. In order for the company to get the cash from PPP, they have to maintain— to get the cash from PPP without having to repay it, they would have to retain those employees for a period of time. And this is to try to get them through that dip. Now, whether that period of time to the end of June is long enough, whether we need to have more of it, none of us know.

Yeah. I appreciate you going through that because it's— I got my application in a week ago. There was a lot of changes kind of throughout that process. So it's, it's good to get your perspective for the technology companies that are out there. Let's, let's move over to the Q&A for the last 8 or 10 minutes of this. Troy, we have 4 questions, I believe. I'm gonna try to get to all of them. First question from David Fox. What's up, Dave? What areas do you think will emerge as attractive investment opportunities from shifting corporate and consumer behaviors post-COVID-19?

Yeah. So as an investor, we're thinking about this all the time. So I'll give you a contra-example. And one contra-example, I think, is commercial real estate. Not that we ever invested in commercial real estate, but we did look at a bunch of investments around software to help manage commercial real estate. The world of commercial real estate has changed. Right. So we had companies that had 100 people in an office in downtown Chicago on March 13th, and on March 16th, they had zero. And they figured out how to operate and how to work well. And all of a sudden, they realize the value of that property, that rent that they're paying every month, probably is less than they thought it was. And so, when they start expanding, when they start about thinking about options, the value of commercial real estate is going down. And so, things around that space are probably going down as well. Right? There are a bunch of obvious things like food delivery. And when I say food delivery, I'm going to use a story of a company that's in Techstars right now in Techstars Chicago. So it's all kinds of food delivery. It's the Instacarts, it's the Grubhubs, it's all of those, right? All that infrastructure. But we talked about restaurants going out of business. So we had— there's a company in Techstars Chicago called GoNanny. And what GoNanny was doing was they were providing a software layer that allowed daycare facilities, childcare facilities, to leverage their teachers for transportation for those families who had 2 working parents and couldn't transport their kid to and from daycare. And so what that looks like is, as a kid with— as a parent with a couple of young kids, you probably wouldn't want to hand your kid off and put them in an Uber, a little 2-year-old, to go to daycare. That's, I mean, probably illegal. But certainly not appropriate. Sure. But if one of the teachers who was at your daycare facility, who was already a trusted teacher taking care of your kid, if one of the teachers showed up to pick up your kid with a car seat in the car, you'd be more than happy to hand the kid off to the teacher and have the teacher come in. And so what it enables the double-working parents to leverage daycare, not have to pay for an in-house nanny. It gives the teachers a little bit of extra revenue because they get paid for it, and the daycare facility gets more customers. It's awesome. Except 4 weeks ago, all daycare centers closed. They're done. They're— well, not done permanently, but they're out of business for now. And this is an early-stage startup that was counting on that revenue, and they just shut down. And the CEO, Patrice, was obviously very bummed. And then she had an aha moment. And the aha moment was, wait a minute, I'm hearing about all these restaurants that don't do delivery that are going out of business and shutting their doors. And they can't get on Grubhub and stuff quickly and it's hard and they're not even appropriate for that. They're more sit-down restaurants. What do they do? And she's like, well, wait a minute, my software is not a kid delivery software. It's a logistics— it's a delivery software platform for logistics generally. So now mirror everything. The daycare— the software GoNanny has been adapted for restaurants. The restaurants are now up and running. Cooking food, selling food to consumers. The servers who were out of a job when the restaurant was shut down have become the delivery drivers, just like the teachers were the delivery drivers. And now consumers are getting food, restaurants are in business, the servers have a job, and Go Nanny has to look for a new name. But they're, they're operating. So it's awesome to see the creativity that comes around this and And it's highlighting where the opportunity in daycare, childcare is probably down. The opportunity in serving delivery infrastructure is way up.

I would say if you're a company, a leader, a manager that's not looking at this and saying, you know, what was my messaging? What was my buyer? What did my buyer look at our product or service in terms of the value pre-COVID? and then make some assumptions and predictions about what it's gonna be like post-COVID. And if you're not pivoting what the value drivers of your product or service are and then speaking to those, I think there's definitely a missed opportunity. To Dave's question, it's probably a lot easier to maybe think of some of the industries that are gonna get hit the hardest, and it's probably almost like yet to be seen where the, like, the actual opportunities from an investment standpoint. So, leading to our next question, it's a little bit longer from Tom Dillon. I'll just paraphrase. It sounds like Tom is a kind of a pre-seed company, pre-revenue, got a pilot going on. He is looking for maybe advice on how to fundraise for maybe people in his shoes or what they should be thinking about.

Yeah, so the reality is that pre-seed is going— likely gonna be much harder, especially if you're expecting to get money from angels. Because most angels, individual investors writing checks out of his or her personal accounts, you know, they've seen the value of their portfolio go down and they're not excited about putting more checks out right now, in general. If you happen to be in a really hot market, so one of our other companies that's in food delivery infrastructure business has had a bunch of inbound from serious investors. These aren't angels. This is a company that has 100 employees. but who are looking to make an investment because they said, aha, I see this. The future of the world is food delivery. We wanna invest in food delivery. That's a sector we wanna put time into. And so they found one of the best and they're doing inbounds now. But from your question, and I glanced over it out of the corner of my eye, it sounds like you're in the restaurant bar industry. That's a tough industry to be selling into right now, as we know, 'cause restaurants aren't operating the way they used to. They're doing delivery only in Illinois, at least. Bars are closed, although some bars are doing delivery of both their— if they're a microbrewer, of their beer, and even some have their kitchen open. And one of our companies, Second Kitchen, which is in that bar restaurant space, has pivoted their application from delivering food to the customers in the bars to allowing the bars to use the platform to deliver food and beer to their customers remotely. Kind of interesting. But so it's gonna be hard in the next month or two. I think that what's gonna— you're gonna see happen is you're gonna see a lot of these companies that we're expecting to raise pre-seed and start to take off are gonna hunker down a little bit. And they're gonna continue to be funded, either self-funded or maybe small friends and family. They're not— they're gonna really pull back on spending, pull back on hiring, get the product right, get the tech right, do whatever you can to be ready so that when it does open up again, You're in an even stronger place. And I think we're going to see a lot of that. There are a lot of awesome companies that have come out of downturns, and especially a time like now where there are a bunch of people who are laid off, who don't have an opportunity to get another job. So they're going to sit down and they're going to start working on that business that they've always dreamed of, right? Doesn't take a lot of money to start coding and start building something. Doesn't take a lot of money to start building marketing materials. Doesn't take a lot of— And if you're gonna be sitting at home anyway, now is the time. Take that, you know, you only have 2 super valuable resources, time and money. Take the time that you have because you don't have an opportunity cost and put it into your dream. And if you think about it, there are some amazing companies that came out of it, that have come out of downturns going all the way back to, you know, Microsoft in the '80s when, you know, inflation was at 17% and the market was— that's when Microsoft was started, right? Google was started late '90s but lived through the whole dot-com bubble, all that stuff. Like, you know, Facebook really took off right around 2008. Like, it's pretty crazy. But big companies have been started in downturns and there's a reason for it.

Uber, Airbnb, for sure. I think it's a good message. Last question, Troy, we'll let you go. I think, you know, if you put yourself in the shoes of everyone, whether it's a know, an early-stage entrepreneur looking to raise capital, someone that got laid off, maybe someone that's graduated in 2010, '11, '12, that's all they've experienced is a 10-year bull run. There's got to be a lot of uncertainty, sleepless nights, thinking about scarcity, fear. What advice, just given that you've been through recessionary times before, would you give those people in terms of how they should be looking at this, whether it's short-term or You know, medium term before we get out of this thing?

Yeah, it's gonna be hard. So, you know, in 2000, for those of you who don't remember, 2000, when the original bubble burst, I was on Sand Hill Road raising money for SurePayroll the week the bubble burst. And so while we thought we were gonna have an easy time and we had all these meetings set up on Monday, you know, for the week, on Monday they were taking them, on Tuesday they were distracted and looking at their phones while they were in the meeting. Wednesday, they were starting canceling. By Friday, we had no meetings. And that was because the market had imploded. All the investors were trying to take care of their own companies, scrambling, didn't know what was gonna happen, thought the world was coming to an end. It took us 8 months to get that round closed. That was April of 2000. We didn't close the round until January 6th, 2001. It takes time. And what we had to do in that time period, we had to pull back spending. We, the founders, went to zero salaries. I mean, we had to be really, really scrappy. We went into what we called cockroach mode. Right? Cockroaches can live forever and they can live through anything. We went to cockroach mode for a little while because that's what we needed to do to get far enough through that we started to see the light. And then we saw the light. We raised our first round and we started taking off. And then 9 months later, airplanes flew into buildings and it looked like the business world was coming to an end again. And September 11th, I will never forget. We actually were 9th floor office. We had a good view and all of a sudden the skies that used to be filled with planes going into O'Hare and you could see— done. It was eerie. And, and we didn't go into quite cockroach mode, but we definitely pulled back and conserved and then stuff came back again. And, you know, 2008 happened and there was another dip and it came back again and it's going to dip and it's going to come back again. The question is, how low is the dip and how long? And you have to put yourself in a position where you can survive that. And that's why we're, you know, with our companies, with our CEOs, but they're cutting back on expenses. They're cutting back on salaries. They're, you know, sometimes they're having to cut people. Many times they're having to cut people. But what's happening and what's interesting is I'm seeing— so a CEO who I talked to 2 days ago had made an announcement that they were cutting back. And in their case, they chose to cut back salaries pretty dramatically and not cut people. And the CEO and the co-founder stood up and said, we're cutting our salaries 45%. Depending on where people were in the salary hierarchy, how much they made, we're asking everybody to cut between 25% and 10%. The lower workers, the smaller amount, the higher paid, more. And, and it was hard at first and people were nervous. But by the time that day had ended, the CEO had emails from about a third of the company thanking him. Saying, I'm so grateful that I still have my job. I'm so excited for what we're building. We're all in this together. And it's really great to know that it's being led by, by you from the front. And so it was awesome to hear that this difficult time actually brought people together. And, and if done right and positioned right, you can use that message to bring people together, but you've got to lead from the front. And part of it was because he stood up and said, listen, I'm taking twice as big a cut as anybody else. And I think it's a time when people will band together, work together, and create some awesome, awesome things.

Very well said. Yeah, you'll get through it. I'm sure people have dealt with some adversity, whether large or small, in their personal lives. There's a light at the end of the tunnel. Economies have gone through this before. We'll get out on the other side. Troy, thank you so much for carving out some time for us today. Much appreciated. Check out Troy on LinkedIn. Check out Math Venture Partners on their website. Yeah, much appreciated. Well, I know we went over a little bit. We'll let you get to lunch.

All right. And all the videos that you referred to, we do post them on LinkedIn. They're also permanently on the Math website on the blog. So, if you go to the blog, you may have to scroll through a little bit. If anybody wants to reach me, it's just troy@mathventurepartners.com and I'm happy to send you links to all of that stuff.

Thank you so much. All right, Troy, have a good rest of the day. All right, attendees, take care. Have a good rest of the day and rest of the week. Bye.