How Steve Greenfield Built Automotive Ventures From Scratch

I didn't come from the VC background, you didn't, and we needed to know like what is it? Luckily you were able to do that research. I think the first email I have where we committed was July 28th of 2020 where we said we're gonna do this thing and we're gonna start a fun. That was official. And then yeah, literally six months later we had done our first clothes, we made our first investment and we're off to the races. Today I have my partner in crime Justin who has collaborated now for Justin more than five years on these funds and I'm really excited to kind of dig into the origin story and talk a little bit more of the inner workings and sausage making of what we do day to day. So how are you? Good, good. No, it's about, I think this has been a long time coming so it's exciting, this will be fun. So take us back to the origin story here. What do you recollect about when you and I first met and how the relationship initially evolved from there? Yeah, no, that's good. Well, we've got some time here so I feel like I might go further back than we typically do. I mean, when we're meeting founders or folks for the first time, I think I give them somewhat of the kind of sanitized view for a better way of saying it. But I mean, I've known you Steve for pretty much my entire career so this is actually like, you know, we can go back a little further. I think that, you know, the one thing in terms of just like giving folks a little bit more of a preview into like at least my background and my psyche, I think that I would mention a couple things. One is, you know, I came from an immigrant entrepreneurial family who really like, they got to see the American dream play out for themselves as a function of like building a business. So, you know, the, you know, subtext for me has always been that at some point in time, I want to do that for myself. I want to build something myself. I was a 90s baby so I got to grow up as the internet was taking off. So I think that, you know, that impulse was also paired with knowing that I would be building something in and around technology, probably the internet if that, if the trend continues, which obviously it did. So, and that's where I would kind of fast word to where I consider our journey actually starting. I don't know that you would have considered it where our journey started. This was my senior year at, was what is undergrad business school at Emory in Atlanta, which is where, you know, you are an alum as well. And I was taking one of many entrepreneurial classes at that time. I think it was probably what Charlie gets. So shout out to Charlie. And you were speaking and I think you were kind of giving a little bit of a preview into some of the cool startup e things that you were doing at the time at the Atlanta Tech Village and in around auto. And so it was like one of, you know, five presentations that day, but like I stuck with me that Steve Greenfield guy is like pretty cool. He's working on cool stuff in Atlanta Tech Village. And so you made an impact on me that day, even though we didn't, we didn't officially meet until a bit later. And that later was really like, I graduated pretty quickly thereafter. I had my first job lined up. And this I guess is where it gets maybe a little bit funny depending on if you're me or my parents. So I start my first job. I'm like a weekend. It was an internal consulting gig at AT&T. So I guess the sad part is I knew what I was in for. I had interned there and you know, don't get me wrong. Super smart team like it was like internally they were taking over a workstream from McKinsey to like lots of clean shooting around procurement and stuff for I guess McKinsey people in the know. But it was it was fine. I mean, it was it was a it was a great first job. But you know, a weekend, I'm like, this isn't this isn't going to this can't be where I end up. And so I you know, and just a I guess frame up where my head was at at that time. I I was wrestling with a startup idea of my own. I again had the context or feeling that I was going to to end up doing something and startup land at some point. And so, you know, again, just a weekend, I'm like, okay, I need to do something here. And that something was reaching out to Steve Greenfield. So I reached out to you again as a as a function of that kind of, you know, talk you gave at at Quizweta. And then before you before you quit your job. This is before I put my job. So this would have been like one weekend. You for some reason responded to me. We then went and grabbed coffee like a week and a half later. So this was this would have been at the Atlanta Tech Village. And for folks not in Atlanta, it's kind of the sexy startup, the co-worky ecosystem that has really built quite a roster of successful startups around it. But anyhow, I'm I'm meeting you for coffee. And like just the energy that I'm getting from from you from like the environment, knowing you, you probably introduced me to like three other founders while we were having coffee. All of that just like bubbled up to be like, okay, definitely validated that like I need to get into this ecosystem. And so again, for better or for worse, I went into work that day and I quit. After our coffee, after our coffee. Yeah, exactly. It would have been it would have been a couple hours later. I don't even know who I technically reported to in that team, but I had a meeting with like the head of the team. And I was just like, I actually have something to talk through. And then I quit. So. And then yeah, anyway, that was that was that. And when did you tell your parents in that sequence of events? Yeah, so that's like the interesting part. I think I probably told you before my parents. So I guess what? But then yeah, no, I told my parents and yeah, it did not go over well as you can imagine. I mean, I previewed the whole immigrant family thing. But with my mom in particular, I think the context I can add is that she raised me as a single mom for a bunch of my childhood. And so like immigrant single mom never had the opportunity to like start adulthood with a four year degree. She had me when she was 21. I kind of empathize that like here's this not known kid that just got this great education in his three weeks into his first job and can't can't crack it. And so. So yeah, my parents didn't talk to me for nine months after that. And I, you know, I really remember the nine month period because I like frame it like a pregnancy of rental disapproval. It's pretty pretty pretty awful. But how much did you, if I can ask, how much was spent in entirety on a four year undergrad degree at Goyzeweta at Emory? Well, this actually, well, actually this is a humble brand because I got a four year full tuition scholarship. Maybe not a humble brand. Maybe it's just a surprise. It was an opportunity cost of time, less than money. Yeah, well, and you know, I shouldn't downplay like, I mean, those places charge you like a grand a month for like splitting a dorm with like three people. So it's not like there wasn't any cost. But, but yeah, I mean, the opportunity cost, I think, is what, you know, the focus was. But I mean, it ultimately worked out. I think it got smooth over with with some time. Have you ever thought about how many undergraduate students from business school quit in their first week? Yeah, probably not too many. I mean, at least I at least I got the diploma. I mean, you know, we talk, we talk to a lot of startup founders that, you know, tell us that they dropped out after a couple of years wanting to be the next Zuckerberg or whatever. So, yeah, sure. True. Yeah. So, so you go through this and then so what is, I mean, this is becoming your entrepreneur early journey, which is great. So, so what's next? So you, you, you decided that you, the big corporate world is not fortune 500 or fortune 50 or whatever isn't for you. You quit on your first week, you're like, I'm getting the heck out of here and you decide the entrepreneurship is for you. But then what, like, what's the exploration look like at that point or are you just like sort of like, I'm just going to go figure out what the heck I'm going to go to do. Yeah, I mean, more of the latter, I mean, it's a pretty like silly juncture to be at in retrospect, right? Like, I just graduated from school. So like, naturally I'm broke. I literally think maybe like three, four weeks of like runway in terms of like being able to live. My parents are not speaking to me. So and then yeah, I didn't have anything lined up. So I, again, I probably gave you a call and you were probably like, what's wrong with you, but like good for you and good luck. But you know, lucky, again, maybe this is turning into like a, you know, Emory and Atlanta tech ecosystem commercial. But you know, another thing I got to do while at school was interned for a couple startups and one of those was a company that you would remember Steve out of the Atlanta tech field called decision link. So I, I got to intern with that team seed stage startup. And so I gave the CEO Jim Berryhill shout out to Jim a call and he's like, oh, okay, I mean, he was super gracious. But like I think his first response was, you know, we don't, we're not hiring for, for anything right now. But I mean, let me, let me give it some thought. And, you know, he ended up making a role for me and I was starting on that team like three weeks later. So, and, you know, I think from here I can maybe fast forward a little bit. But I guess I will recognize that I dodge the bullet there. I mean, I had a job probably like within a couple of weeks of, of running out of cash. Again, like probably using credit cards to like fill the delta between like running out of cash and my first paycheck. And it all worked out and the thing that I will certainly underscore is that I'm now in the same building as Steve Greenfield. So I got a gig in the end. tech village and started that job, which was great by the way. I mean, you know, Jim and team were great. I got to sit next to the CEO and report directly to the CTO of a seed stage startup that's like going through the thralls of like figuring out product market fit and you know, figuring out how to, you know, how to scale and keep the lights on and I got to kind of be like have really a front row seat to that. But then I'll say, I mentioned this before, but I was also kind of twang with the startup idea in the back of my head at the start of this journey and, you know, working at the Atlanta tech village, working for that startup, it really gave me a good opportunity to start to like kind of moonlight and build out what I was working on in parallel. And I think that's where, I mean, you were there for the entire entire journey. So I started working out of that tech village. We started meeting for coffee probably once every couple of weeks. I think you were most interested in like what I was working on on the startup. You fast forward, you've passed forward a year. I had like built an MVP, had a little bit of initial traction, raised a bit of angel funding, both from folks in the wine industry, but then I should probably say that the startup was in the wine industry, B2B marketplace for bulk wine and grapes. So raising from a few folks in the wine industry, raising from a few folks in the Atlanta ecosystem, which I think you introduced me to. So I was kind of like really feeling like I'm on the edge of going at this full time. And then the last piece that really did it, which is probably the biggest shout out was to my long-term girlfriend at the time, who I just moved in with and who was my currently my wife, luckily. You know, I think convincing her and then myself that hey, now's the right time to just jump in full time and give this a shot. So like Jim and team know they were all very gracious about it. Of course, you were there again from day negative 365 and then I was off to the races, at least with my own startup journey. Off to the races. So basically you stalked me. Yeah, for sure. And like in a very real way. Yeah, I mean, and I struggle to like where's the right time to start injecting this, but like, I mean, you are a very special human being and I just like there were so many, I was grateful to be able to last special needs probably before the day. Probably should edit that part out. Well, there you go. So yeah, no, it was it was I was I was thankful to have so many things line up in the right way and for us to have kind of naturally built this relationship to where like, you know, you were there from day one on that journey and then you were there for that entire journey, which I mean, I could probably frankly that could be like its own podcast at some other time. But like three to four year journey of trying to build my own startup again, market place in the wine industry, you know, the the punchline here is that that startup didn't end up working out. But you know, I got to like, I mean, the typical cliche, right? But I mean, it couldn't be more true. I just learned so much throughout that experience, mostly like what not to do. But again, I got to make like every single founder mistake that you can kind of imagine anyone's that I didn't make were as a function of having folks like you in my orbit. But, but yeah, I ended up winding down that company. Now we would fast forward again, like three years, four years from that point. So this would have been really cool. We'll go back on track. But let me take you down a rabbit hole for a second. So given you felt the experience yourself, right? And I do too. So I put myself in the same bucket of a failed entrepreneur that didn't didn't make it, right? We didn't achieve our dreams. And now that you're investing, you know, we've made now 55 investments after five years. And we talked about like how many entrepreneurs every single day we look at 300 companies a month, invest in 10 a year. Do you think it's a more a more valuable experience to be an entrepreneur that failed or an entrepreneur that had success? He pauses. He pauses. Yeah, well, I think it really depends on the journey. I think that I think the trope is that you learn more from your failures. But I don't know. I mean, I think a lot of the successful entrepreneurs that we talk to or that now are mentors to our founders that are LPs and are fun that are just like in our orbit. You know, they had several instances of like near death, you know, like company near death experiences. And so it's not, you know, they come with a wealth of I think experiences. I would find it at least from my experience, like kind of a rarity that someone just happened to strike gold on their first try. So the honest truth is probably successful entrepreneurs on balance are still more helpful. And probably have like learned more. And I think that at least demonstrated more of the right attributes to kind of get them to success. But there's no doubt that, you know, you learn a ton in your failures. And I guess that connected back and contextualized it for us as a fund. I mean, we talked to second time founders all the time. And we still wait folks who have tried and failed like pretty highly. I mean, it's certainly like it's it's again, maybe it doesn't cash in as high in terms of like, you know, the terms you receive on your safe note as if you were a second time founder with a great success. But it's a big check mark for us. No doubt. Yeah. Okay. Cool. So sorry for the route hole. But let's go back to you. So now fast forward. So you get to the end of your entrepreneurial journey. Yeah. I get to the I get to the end. And so I'm it's it's actually again, funny isn't probably the probably the right word. But interesting timing that, you know, we we wound down the company. We sent like letters to our customers on March 1st, 2020. So if you can kind of put your head back into what was happening. Right. On March and April 2020. I can't actually blame COVID for the demise of my startup. There are a number of other reasons, but I can't blame COVID. But yeah, I would I wound down my startup. You know, in parallel, I know we were chatting. I was chatting with a number of folks. I think I was staying very close to all of my investors as you'd expect. And, you know, a couple of my investors and you threw me some some kind of like project work, I think. And that was like, you know, it was a good transition from, you know, feeling like the death of my baby to like, hey, like what's next? I know I want to try something else, but I don't I don't know exactly what I want to do right now. So let me kind of keep myself busy with interesting things. So, so you and I started actually like working together. I mean, beyond just kind of the mentor, mentee company advisor type relationship, we started doing actual work together. One of those I know you were you had a board role on on a company and we started looking at some strategic work there. But the more interesting one was what at that time I would have considered kind of a passion project. I thought like Steve's given me some like, I don't know, pity work on a passion project and just to just to kind of lay the foundation for for everybody here. It was obvious to me then, but it's even more obvious now, clearly that, you know, Steve over your career and I mean, we should transition here to you. I'm hugging the airwaves, but you've really become like the startup guy for automotive and that was already clear to me then and I wasn't even like really sucked into your orbit yet in that in that way. And so the context was you were making angel investments, but more so you're already like a super connector in the space and the thing that you basically kind of, you know, presented me with his like, Hey, Justin, there's I'm kind of I'm a midst a bunch of chaos here where I'm constantly talking to early stage founders, which I love some of which need funding, some of which need to talk to customers, some of which need like channel partners. And I'm trying to do my best to connect them, especially the folks who need capital, but like beyond like if I just am instantly drawn to it and want to make an angel investment, I'm like trying to introduce them to other potential investors, but then balls get dropped. I'm not following up on it. This is kind of a mess. Let's try to do something like one to make my life easier here, but also like I think there's an opportunity in the ecosystem to like fill a gap for these really early stage entrepreneurs like in terms of helping them find capital. So I think the explicit mandate from you was what would it take to start an angel network? So that was like I think I think that's what started this this exploration. And we started looking into it. I think we started having you know weekly meetings. I was like talking to all of the big angel networks and not to not to jump the gun, but I think what we came to realize, and this is no this is no like crack on angel networks. I think they serve a great function, but for us, I think what we started to realize is like if the point is to be as like entrepreneur friendly and solve as many of the entrepreneurs problems as possible, sometimes angel networks make that a bit challenging, right? Like you as an entrepreneur go pitch an angel network. If it's a if it's a really good one, they try to like like aggregate everybody's questions for you. So you're just talking to one person. They help Keral kind of the funds. They have a good sense of like what check size they can hit, but often it's pretty much hit or miss. I mean some angel networks, you have no idea if like one person is going to raise their hand or if 12 are and again, you're kind of triaging, you know, however many people's diligence questions. And so in that amidst that research, I think we started to see some angel networks that started to raise like complimentary funds and then started making a core investment out of their fund and then tagging on an SBV on the side. And then I think I feel like I remember the exact call that we were just like, should we just raise a fund? Like, isn't that the best way to like solve this problem for entrepreneurs? I mean, if we have the committed capital, we don't have to work on trailing people or you know, like we just were like a one-stop efficient shop. And then that project turned into something totally different, which is ultimately where how we got here. Yeah, so you're doing research. We're evaluating Angel Network versus Fund. And then sometime in July of 2020, we decide, nope, we're going to do this. We're committing to raise a fund. And then six months later, we did our first call, close on the fund. And we did our first investment. And here we are now later with three funds and 55 investments. And we're on a nice trajectory. Yeah, so I think it's probably good for me to pause here and just like, where was your head at amidst all of this? I mean, I clearly, the background for me was always like, here Steve, pseudo celebrity status in auto and having such like an awesome career in network in auto. But like, at that exact juncture, I think you were at TrueCard, you were contemplating your next steps. Like, how are you kind of interpreting all of this in real time? Yeah, so let me rewind a little bit for me. So I got to 2014 and I had spent almost 15 years at Cox Automotive, which was Cox Automotive at that point. Prior to that, I spent 10 years at Manheim and then five years at Auto Trader or almost five years at Auto Trader. About a year after they decided to bring those two companies together. And I was one of the only employees that had spent time at both to build a much larger company. And then that platform now has acquired a bunch of companies. I started, I'm out of here. At that point, I had spent almost 15 years. And I like you, although it took me 15 years in the corporate world, realized I did not want to be a cog in a big machine. And I wanted to go there and establish my own thing, whatever that would be, which made me leave. I left in April of 2014. And shortly thereafter, around that time, I started Automotive Ventures and registered that URL in that company, which not knowing that then ironically enough, yeah, great name to start a venture capital firm 10 years later. But we had to rate it through a bunch of ideas. I raised money early, as you know, back in 2014, 2015 from a bunch of people. And we were building solutions back then for other car shoppers and or it evolved into more dealer-facing tools. And by the time I got to 2018, it was a grind. I mean, entrepreneurship is a grind. And you know, I both have a lot of respect for entrepreneurs because it is like, it's painful. And the truth is, you feel like you're on an island and no one can understand what you're going through as an entrepreneur because it's like, it's very, very lonely being an entrepreneur out there. So we do have a lot of empathy for entrepreneurs. But I didn't want to go back and get a corporate job, but I kind of was forced to. I maxed out my credit cards. My credit score was low as a result of that. And like, I was like, okay, well, where's Ksenaria? I guess in the back of my mind, I always had like, I can always go back and get a corporate job, which thankfully I did. So I went out and spent a couple of years on a true car on the West Coast. Kind of reset that company. Paid off all my credit cards, got my credit back to a good standing and was lucky enough to get back and ready to have another go at it. So I like you. I resigned just before COVID. I didn't know it was coming. But I think it was like March 1st of 2020 when I resigned and said, hey, look, I'll stick around for another month, but that's all I'm, you're going to get from me. Not knowing that in two weeks, we were going to close the offices out in Santa Monica. The truth was my lease was up. The two year expiry of my lease was up early April. So I kind of timed things. So like, I was going to get the heck out of Santa Monica and get back to Atlanta. And I did, although I ended up renting a Hertz minivan from LAX and you know, at that point. Like April 3rd of 2020, there was no one renting minivan from Hertz. There was nobody renting from Hertz. So I went to LAX Airport the night before I was going to leave LA. And I mean, they were shocked to see anyone was renting anything at that point. And I remember distinctively going on Amazon, if you remember that point with COVID, you couldn't buy swipes, right? Antiseptic swipes because there was a run on them. And I had to buy a $25 bottle of alcohol and I rented this Hertz minivan and I wiped down all the interior surfaces because nobody knew what we were dealing with with COVID, right? So I was like, Hertz has said they've disinfected this minivan, but I also then took half an hour and I disinfected all the surfaces inside this minivan. And the next morning, you know, I packed up my stuff. I put three cats in the back of this minivan and I drove across country and I left LA at 10.30 in the morning on Friday and I pulled into Atlanta at like 6 a.m. on Sunday morning. And I had three very unhappy cats in the back which motivated me just to drive all the way, Cannonball run style across the U.S. But yeah, anyway, to answer your question, I came out of that corporate experience, luckily having, you know, a pretty massive reset. And I had three hypotheses that I kind of ran down that year and you helped with one of those hypotheses which ultimately ended up where we were. And so I had three different business models that I wanted to potentially test, which we did. You and I did for the first six months of the year. We decided to focus on this VC fund and then the last half of that year, after we trimmed the other two branches, you and I went all in. We got committed. We ended up raising a very small fund, a $7 million fund and got started. And you know, the rest is history I guess or at least the first phase of history that were 55 companies in. But it was serendipitous that one, you had sadly, we're winding down your company, but that you were available to work with me the first half of that year to kind of research, what would this look like? Because I didn't come from a VC background. You didn't. And we needed to know like, what is it? What's needed to stand up a VC firm? And luckily, you were able to do that research while I was toiling around with these other things that I was potentially going to do. And then we committed. I think the first email I have where we committed was July 28th of 2020 where we said, we're going to do this thing and we're going to start a fund. That was official. Yeah. And then yeah, literally six months later, we had done our first close. We made our first investment and we're off to the races. So, and here we are. Midflight on what has become like quite a journey that you and I are on and it's pretty exciting. Yeah, no doubt. So this is a little bit maybe disjointed, but one thing I don't want to lose track of is an important kind of framework for us at that time I know was we were looking at your angel portfolio. And I know us looking at that and kind of hypothesizing like, well, if this was how if this was a fund, how would it have done? And there was like, it was very much a power law type situation and I feel like that was part of like the arc of us actually deciding to commit to this. So maybe this is as good of a time as any like, is it worth chatting about that investment a little bit? Yeah, sure, sure. I mean, so there, we haven't really talked much about this, but you know, over the years, I had a chance to make a few angel investments and it was nothing that I focused on too much. But there was it's worth relaying this story just to show how much now we index on the founder themselves. So back when I was at Manheim in 2006, I started a role, a new role for me there and I was overseeing international expansion for Manheim. And I think my boss at the time was more than happy to we were getting a lot of inbound leads from all over the world wanting to partner with Manheim and bring Manheim into new countries et cetera. And he was more than happy to hand that off to me and I had quite a nice run until the financial downturn of 2008 flying around the world negotiating and establishing joint ventures in a bunch of different countries. Well, any other request that came in that were international related would come to me, which was great. It was good. I was in pure learning mode about automotive and the global ecosystem of automotive et cetera and I learned a ton over the couple years. One of those inbound was from a gentleman in India who was running the equivalent of Carmax in India, a gentleman named Vinay Sanghi and he was running this for corporation. It was Mahindra, one of the largest manufacturers in India and they built quite a business under him. They were up to over a hundred locations, some owned by the corporate entity, some franchise and he really had modeled this around how Carmax had emerged in the US. It was called first choice Mahindra. That was the brand and it still exists. So anyway, so he reaches out and he wants to bring some of his executives over and they're particularly interested in seeing some of the auctions. So of course, he gets introduced to me. So I think three different events at times we had him over once in Toronto, my original auction where I grew up and I started within the Mahindra network. One I think was Mahindra. Pennsylvania, which is the biggest auction in the world. And if you haven't seen that, at some point in your life, you got to go up there. There's like 400 acres that are paved in the middle of the farmers, Amish farmer fields, just outside Philadelphia. And you need a one time in your life, go up there and see that auction, because there's nothing on the face of the earth that's like it. And then I can't remember where the third one was. Some other, maybe it was like Riverside, California, which was a big auction on California. But you want to really understand the DNA of manheim and the auctions, et cetera. Because part of what he eventually built was auctions over in India. So anyway, so fast forward a couple years and somewhere around 2008, he reaches out to me via phone. And so Steve decided to leave Mahindra, and I'm going to start a business. I was like, that's great, Vene. That's really great. And he says, we're going to raise a small round, like a friends and family round. And I wanted to see if you wanted to put some money in. And I was like, Vene, I've never made any investments before. I wouldn't even know. And I don't have a lot of money. And he said, well, any amount would be fine. And so I asked him, what are other people putting in? And he said, really, any amount would be fine. We're going to raise a very small amount of money to get started. And I said, well, great. I'll put in $5,000 if you'd accept that. And I did. In hindsight, obviously, I should have put a lot more in than $5,000. That $5,000 was into a company called Motor Exchange India. And I've been on this interesting journey with Vene. He's still running that business. Now that business is called Cartrayed India. It's the largest classified marketplace in India. It's the largest auction company in India. He's built a whole suite of software around it. But he was a truly talented human being. I knew that at the time. He's about my age. He might be like a year or two older or something. But it's been fascinating now. So here we are, whatever that is, that's 18 years later. It's hard to even imagine. But I've never sold. And every time Vene would raise more money. And he raised a lot of money over the years. He would reach out to me. And he's like, Steve, I'm going to raise more money. And this time, it's from Temasek, or it's from Warburg Pinkus, or whoever it's from. And all the blue chip VCs invested over time in what became Cartrayed. And he said, do you want to sell your shares? And I eventually told Vene. I said, look, Vene. Here's the deal. If you ever want me to sell my shares, I will. But if you're continuing to run this company, and you don't want me to sell my shares, quit calling me. Because I'm not interested in selling my shares. Remember, it was a very small amount that I invested. At the time, it seemed like a lot. But it was a very small amount I invested. And I just left it in. So the interesting thing is he went through, I think, up to Series J, like however many rounds that was, 10, 12 rounds of funding. Eventually IPO the company. It's publicly traded now over in India. Interestingly, along that path, I introduced him to one of his board members, Chip Perry, who I worked for at AutoTraitor, the founder of AutoTraitor, back in the day. So chips on the board. And then more recently, I've joined the board. I never sell it so in my share. So I've got something like 25,000 shares of Cartrayed India. And that $5,000 investment is worth, I don't know, a million dollars now or something. And it's still over there in shares in Cartrayed India. So I still know that Vene very well. He's a formidable entrepreneur. And I would say that you know this very well, Justin. But there are very few humans that can start a company from scratch and be a very, very successful public company CEO. Like you can probably name them on one or two hands. Because typically, the company's outgrow your ability to be able to execute, right? I mean, your skill set that brought it to this point isn't going to be able to get it to the next point. And Vene is one of those unique human beings. If you spend time with them, you'll realize his brain isn't wired the same way as most humans. And interestingly enough, that's kind of what we're looking for now to invest in. But I'm still a shareholder. I am now on the board of a public company over in India, the largest and dominant classified site in auction company over there. Thrill do have had that journey now. It's been a long journey that Vene and I have been on. But it did to your point. I mean, I guess if nothing else that experience really opened my eyes to what the potential is, if you are able to identify a founder who's truly talented early on, who's hunting some really, really big idea, has related experience, which is important. And has an articulated plan for how to build a company and then build the responsibility around it, which ironically enough are important traits that we look for today as we're investing others, people's money in our funds. Yeah, no doubt. And I mean, again, when we were doing some of that modeling, you don't need too many 150 to 200x outcomes to make a really, really great fund. So I think double clicking on this a little bit, one thing that I think is worth noting, because it's really, it's what I feel like is the Automotive Ventures brand, but it's really like the Steve Greenfield brand. And I just try to live up to it. But I think the idea of getting access to that deal and having Vene, like being on that list of calls that Vene makes when he was looking at folks to partner with, I mean, maybe I'll turn that over to you, Steve. The, I would consider it like paying it forward as a part of the Automotive Ventures brand and it's still what we could try to do. But I mean, you've been living that for a long time and it's really opened up so many of the great relationships and opportunities that we have in our firm. So I mean, how, I guess, kind of walk through that dynamic and like, I guess how it's also, how we try to scale it as a firm now. Yeah, yeah, that's good. I mean, I don't know if I learned this from my mother, which I imagine that I did or just being brought up in Toronto. But it seemed to me that you need to kind of pay, pay deposits into the karma bank before you can extract them. If you try to do the opposite, then things typically don't work out too well. And so that's kind of how I've indexed, right? We've, I've always, I think, over the course of my life tried to figure out how I pay it forward as much as I can. And then, you know, you then be very judicious with what you ask for in return. And I think we've taken that same sort of like mantra or philosophy here at the fund. We spend a lot of time thinking through every juncture, whether it's when I'm traveling or when we see a company or have an entrepreneur, who might benefit from meeting this person or who might benefit from this company or who might be a good investor for this person. And this is very typical. Like, we have calls with entrepreneurs and we aren't talking about investing in their company. We're like, how can we help you? Like, who are you trying to meet that we can introduce you to? And then we go to work. We try to like really help these folks because we can prove to them that we're going to be valuable after we invest. Then we might actually earn the right to invest. So there is an interesting dynamic. You know, you and I just want to discuss it a lot, but we should talk about this as like for the audience. We are lucky enough now to see like 300 companies a month. And I don't know there are a lot of funds out there that see that volume of companies. And not to say that they're 300 high quality companies a month, but they're 300 companies a month. And our job is to, from that sourcing of companies, pick the ones that we want to invest in. So I would say of the 300, Justin, you know better than me, but we probably actually talked to 15 to 20 of those in any given month having an initial call, right? It's something like that ratio. And then from those, you know, I would say most of those don't earn the second call. But I like it too. And people might not like this analogy, but I like it to sort of dating. After you've dated for a while, then when you find the person, you're like, okay, like drop everything else. And that's the person now. I need to go hunt and pursue this person. And investing in startups is not too dissimilar from that. It's like, you know, we may filter through 300 a month, but you got to find the gems. But the interesting thing is, and you know, entrepreneurship think about this is like, in some ways the role is kind of reverse. When you find the really, really, really talented entrepreneurs who are chasing down really, really good ideas, and somehow they're uniquely positioned to find success. Whether it's, they've had a role in the past where they discovered this problem or they've got related experience or whatever it is. I mean, Justin and I can tell you, like it's within like the first three minutes of a call. You're like, whoa, hold on a second here. I mean, now the light bulbs are going off. And we're saying here's a unique human. And typically the best entrepreneurs are a little abnormal in one way or another. They have related experience and they have some way of thinking about attacking this problem that's unique. And it's those times when you realize it may actually be hard for us to convince us on to prune or to take money from us. And that's when I think it's paying it forward really, really coming to the play. And I'm sure Justin can tell you all kinds of stories and I'm sure he laughs behind my back when Steve flips into this mode and suddenly, like, I start hunting the entrepreneur. And I'm like, I need to do as much as I can on the remaining 27 minutes on this call to convince this entrepreneur to have the next call with us. And I start brainstorming with them, like, what do you need right now? What can I do right now to help you? And then I guess that's paying it forward. But I'm trying to earn the opportunity, earn the right to get onto their cap table through an investment. And it doesn't happen very often, but when it does, for me, It's kind of exhilarating and exciting, 'cause it is kind of like dating, but we are only going to marry or couple with 25 investors per fund, or like 10 entrepreneurs per fund, or 10 entrepreneurs per year. So we are super selective with who we actually go pursue, but I'm happy to signal to an entrepreneur just how hard we're gonna work on their behalf to try to make them and the company successful. So they know what they're getting into, should they decide to enter this marriage with us and allow us to invest in their company? It is a little bit of art and science to make sure that you're signaling to the entrepreneur just how valuable we can be if they decide to take money from us. And so it is a bit of an interesting dynamic, but just to give you a little bit of inside baseball, but what our lives look like, I'm always very excited when we actually get on a call with one of these unique entrepreneurs and then try to hunt them down and convince them to allow us to invest. - Yeah, and the piece that may be I'll underscore because this is more the case when we talk with folks outside of Venture, or even some, frankly, even like RLPs, I think most folks don't recognize that internally, like our posture is being extremely grateful to talk with entrepreneurs. Like it is true that we see 300 deals per month and we can be very selective now about who we invest in, but to your point, like the great entrepreneurs, they don't need our capital. I mean, there's a lot of money sloshing around right now, so it really is about like kind of these, you know, the value add that we can provide, and I think we have to kind of like win the right to be on the cap table. It is funny that you mentioned that like it's, I think maybe stories for one-on-one conversations, but sometimes Steve is known to have misfire a little bit, but there are these strong signals. When we see them, I think we've seen enough deals now, I don't know what the total number is, but we've seen probably close to 10,000 deals, maybe more at this point, and I think that we've gotten enough data under our belt to really zero in on the phenomenal entrepreneurs and opportunities. That does make me think, I'm honestly a few of that. - You can't dangle the misfire or turn without giving some, the audience some examples. So, how can you understand how to Steve misfire? I'm gonna like this. Put 'em on the hot seat. - Yeah, that's a good question. Well, I'm gonna frame it. First, I'm not gonna be too specific here for obvious reasons, but I'll also turn it into maybe some more like, I think widely applicable learnings that we've gotten better from. Like there are a couple of things that, when we first started out, you know, again, towards the feeling of gratitude. I mean, we were grateful to be seeing any companies, right? And we were just taking every call. And we were, I think, by default, so positive. And optimistic about the companies we were talking to. And I think maybe drawn to some signals that probably aren't, like we've learned aren't the best signals. You know, there are some things, there are some things like, for example, I think who's on the cap table or who's investing in the round, right? Like this is actually, I think, a trope of venture in general that like, you know, these, he's wait to find like a lead that's top tier one or two. And then they all just like kind of, they're like flies to poop or whatever. And I think that's, that's, it's not untrue, but I think just, you know, giving ourselves a little bit of grace in the early days, you know, there were some investors in our short list that we were just like, like we, we were like, it's inspired to be like them, right? Like, or at least we thought we did. Like these are phenomenal investors that we want to be like. And, you know, when we would be seeing deals in the early days, I think we probably over indexed on that, right? Like, oh, those, that investors in and then we would get all excited. And, and then, you know, it's only once peeling back layers of the onion that you're realizing, like, oh, okay. (laughs) Maybe, like the reality for a venture, like Steve mentioned, we have 25, we have 25 investments in our portfolio. You know, just realistically. - Perfect, perfect. - Perfect, perfect, yeah. And, you know, the way that our economics shape up is that like most of the returns are made by a few companies, right? Like it's really an extreme power law dynamic and just the reality of seed and preceded stage investing is that like a huge number of your portfolio companies don't make it. I mean, everything could have been right at the outset, but just like so many things can happen, right? And start up planned. All it takes is just one of those. The market can move in a weird direction. You know, one of your key customers could fall through. And so we all in our portfolios have the companies that are struggling and we love all of our babies equally, right? So we do our best to try to like make sure we support them to the best of our ability. And what I'm getting back to is being on the other, you have to recognize when you're on the other end of that, right? When you're talking with an investor that you really respect, but they're selling you one of their lower performers, not one of their higher performers. Just say it. So let's do all here for a little while. So tell us a little bit about red flags. What have you come to recognize in terms of red flags? You're on an initial call with an entrepreneur. What red flags do you look for? Yeah, that's a good question. Well, there are a few. I mean, I think that-- well, I mean, there are probably a bunch. Some are obvious. I think that the clear implication is like everything that's the opposite of what you said earlier, those would all be red flags, right? Like if we don't see the unique kind of insight or reason for the entrepreneur doing it, it's not-- maybe that's not a red flag, but it's a reason for us not to get excited. I think in terms of true red flags, entrepreneurs not being calibrated to the type of fun they're talking to. I mean, this is maybe a separate subject we should spend some time on. But we invest that precede in seed. So this won't be surprising to you. But I mean, how often, once a week, once every two weeks, we get on with the founder and they start pitching us about how they're going to exit in two to three years and give us a 5x or whatever. They're just not calibrated to the right type of investor. And that can be for totally harmless reasons. I mean, there's a learning curve in this ecosystem. But whether that was reality or it's the truth, then they wouldn't be a fit for us, right? We're really long-term capital. We're partnering with early stage companies and for the entire duration of our 10-year fun life. And we know as well as anyone that the 10 years isn't even really accurate, right? I mean, 10-year funds are now 12-year funds with the extensions. And so we're really in it for the long haul. And so if an entrepreneur is optimizing for a quick exit, and that's what they're pitching us, that's clearly a red flag. So just for the audience, this benefit, then if 5x doesn't satisfy you, what are you trying to underwrite? Yeah, well, it actually turns out not to boil down to a perfect figure, but it really is more directionally like 50 to 100x. I mean, what we need to accomplish is a fun returning outcome. So for what that means for us is that every investment we make, so every one of those 25 needs to have the potential to return the whole fund. So again, our check size currently out of this most recent fund is right around 500K. The fund is sub 20 million, so you can kind of do the multiple math. But there's other complexities based on follow-on funding and all of that. But essentially, based on reasonable probabilities, we need to understand that, hey, if this really hits big, and there's a tam to support it, the total addressable market to support it, this can be a big outcome that returns our entire fund. And then the bet is that we'll have enough of these types of outcomes to then give us a top performing fund, which for us really is like north of a four times net of fee returning fund to our LPs. Cool. And why you spend some time there too? Like, why four times? Why does that number matter? It's a good question. Yeah, I mean, it depends on timing of distributions, obviously. But really, what that boils down to is us delivering a north of 20 IRR fund. And so when you're thinking about our limited partners who spread their capital across a bunch of different asset classes, they're clearly making the big concession to put some amount of money into VC. That's very liquid, very high risk. So we really need to be performing much higher than them being able to kind of put that money into the S&P 500. And so for us aiming for four X net of fees gets us around that figure. And importantly, too, in the asset class puts us at top quartile or even top desial, again, depending on the timing of cash flows. So I mean, we clearly aren't here to be like average. And actually, maybe not to spoil things, but the average VC fund does pretty poorly. So we're certainly here to be top quartile or top desial. So that's what we're shooting for. Very cool. I'm not good to add flush to that. So talk a little bit about what we've learned over the last five years. We've made 55 investments in three funds, but you go ahead. >> Well, before I do that, we kind of quickly got off of the whole Red Flag's piece. I feel like there's probably some more juicy things there. What do you see as the Red flags that we try to avoid, especially in the first fall? >> Yeah, they're just knock out things. Like, you can't have an entrepreneur that's got a full time job in doing it as a side hustle. or straddling a couple of things. at the same time. So we're very clear with entrepreneurs. Like you got to be 100% in this thing. In fact, it may be dysfunctional. I like entrepreneurs that don't really have a lot of hobbies either. They're going to work on this thing and obsess about this one thing. And it's binary whether or not it's going to be successful or not. And they should feel a tremendous sense of urgency to go execute whatever this thing is that they're working on. But definitely can't be straddling another job or doing it on the weekends and the evenings. That's just, you know, I don't know. Elon Musk is the only human being I think that can be managing be the CEO of two or three companies effectively at the same time. And maybe he's the exception that actually proves a rule that you got to be 100% on it. So I think that's it. You know, I think that, as you said, Justin, I think that, you know, having somebody who's got some related experience, we meet entrepreneurs frequently as you know that, you know, say, oh, I had a really painful experience buying a car last week. So I'm going to go try to solve that problem. And that's great. But you kind of want somebody who has felt the pain of the problem and has felt it for some time and dwelled in that painful problem as opposed to somebody who just like has been looking for a problem to solve and comes across something an automotive or mobility. And then maybe a third one is just in terms of maybe related to the first one is just having a chip on your shoulder, right? Some internal dysfunction in terms of why you have to go do this thing. Like, you're going on the hero's quest and we talk a lot about drag and hunting that you're going to go after, you know, you're going to leave the cave with your weapons to go kill a dragon and vanquisher dragon. And one, the dragon has to be big enough. He talked about a total of the rest of the market. We aren't backing people or hunting with baby dragons like little dragons that even if you're successful, it isn't going to amount to too much. But there has to be like a plausible story in terms of like why why you're doing this? Like, you felt the pain or you know, I've got some weird complex with my parents that I need to prove or whatever it is. It doesn't really matter. But it has to be something where when we dive into the psyche of the entrepreneur, there has to be like a real reason that this person is going to like not, not let up until they are actually successful. And I think that's very important. Like the motivation of why I have to go do this thing is probably as important as what it is you're going to hunt and making sure that the dragon's big enough. And I think all those things kind of factor in jar calculus on the first call to really say, okay, you know, is this an outlier entrepreneur? Are they hunting a big enough dragon? And they got some unique insight about how they're going to hunt the dragon. And then why are they hunting the dragon? Because there's got to be some reason beyond just like, oh, you know, I want to have a dragon head on the wall. I will. No, it's got to be like some really deep down inside reason that you're going to like stop at nothing until you actually solve this problem. Will said, there you go. So I think we're just about a time here. So I don't know. Was there anything else in particular that you want to cover? We're going to have to do another one of these obviously, but do we not cover anything that you wanted to cover? Yeah, I mean, I think we're probably we're spending a couple seconds on it and maybe it's self evident based on everything we've talked up to now. But like, I think why invest at the stage that we're investing in and then why automotive, why mobility? I mean, adding maybe some color there would probably be helpful. Yeah, cool. So let me have a go. So one is automotive and mobility is all I've ever done. So again, just like we look at our entrepreneurs, why are we going to be a good fund manager? I can tell you, I would not be effective if I was trying to invest in Bitcoin or if I was trying to invest in the healthcare software. I mean, you might as well go find some other fund manager, but my whole career has been focused on learning as much as I can and networking as much as I can with an automotive and mobility. So if I have intuition in any area, that's the area in which I have intuition and then obviously Justin, I've dragged you into this. But now you've got at least five years, six years of intuition that you've built up around automotive and mobility. So we are specialists and then the then diagram, the concentric ring around early stages. I think that what we've learned is one, it gives you this unique opportunity to get these outlier returns. When you're investing in a company that's under sub $20 million or ideally sub $10 million evaluations, then you have a chance of getting a 50 or 100x return on that initial investment. And it allows you also to dwell in an area that I really like, which is the ambiguity of sort of seed stage entrepreneurship where they may have an idea of the idea that they want to go after. They may have a concept around how they want to go after that idea and may have related experience. But I kind of like the uncertainty, the fog of war that the early stage entrepreneurs in in terms of like, I haven't quite figured out exactly what it is that I'm going to go build and exactly how people are going to pay me and then exactly how I'm going to go to market and exactly how I'm going to scale. But that's okay. You know, a growth equity investor that's investing far later than us at Series B or C wants to know, you know, how many, I'm going to give you coins to put in the top of the gumball machine. And when I twist the handle, I want to know how many gumballs come out and what those gumballs taste like. Well, we're living in a world where we don't even know, is this a gumball machine? Never mind like what kind of gums going to come out the bottom. And that's okay. I think I really appreciate entrepreneurs at the stage, which we're investing. I think we're uniquely equipped to help entrepreneurs with our network, with our operating partners, with our experience to help them define exactly what it is they're going to go do and then work to build into a replicable machine that later investors then can put coins in the top of the gumball machine and twist. We're way earlier than even understanding, is this a gumball that machine that we're investing in? No, I couldn't, I mean, all of that clearly resonates. And as you note, I mean, you pulled me into this industry, but like I couldn't be happier to have been pulled in. I mean, it's funny because I don't, I don't even consider myself a car guy, even though I was the teenager who like saved up his entire life to buy the Mustang and then do all kinds of really stupid things to it, straight pipe it and slam it and all these things. But I think that, you know, everything that you mentioned, I think that, you know, we're not helpful or I guess not nearly as helpful on like really fine tuning a replicable like sales motion or something like that, but getting you your first few customers, I mean, like the amount of leverage I think we can exert with the type of machine that we want to build, meaning like the firm and being more like relationship driven, I think that it's just a great place in the ecosystem to sit and, you know, especially if you look outside of just automotive and mobility more broadly, we're at the intersection of like so many like amazing enormous trends, I mean, kind of an energy transition, autonomy, like all these things that are really coming in fast against the backdrop of, you know, in automotive retail, for example, like, you know, the second biggest purchase that most people will make in their life and just like that experience, there's just so many nooks and crannies of opportunity and inefficiency that like are kind of right-punting ground for the right entrepreneurs. 100% agreed. Well, it's a pleasure to be on this journey with you. I feel like we're only in the very first innings or whatever, but I think I'm really interested to see how this thing blossoms and grows and yeah, it's great to be on this journey with you. Well, I really hope you enjoyed this episode of Greenfield. If you're a founder or investor in mobility and something here sparked an idea, I'd love to continue the conversation. Please subscribe the automotive ventures Intel report and reach out to me. I read every message and respond personally. We'll see you next time.