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What's up, everybody? Welcome back to Capital University. Number one business podcasts in the world. I'm your host Bryce Hall. I have pomp with me. We have a really special guest today Pompey when introduced
them. What's up everybody? We've got an awesome awesome early stage investor Hunter walk. He is the co-founder and an investor at home brew. They basically focus on early stage technology companies.
They write seen check. So kind of million two million dollars in size previously. He also ran product for Google for about five years and P previously ran product for YouTube and he worked on Google AdSense. So Hunter definitely knows one or two things about technology and investing. This was an awesome conversation. Let's get into this so Hunter maybe just tell everyone kind of your background and how you got into investing full-time. Yeah. So, you know, we started up our firm Homebrew in 2013. So I guess about eight years ago.
During early stage investing, but I moved out to the Bay Area God, I guess 98 for grad school originally from New York and before Venture kind of got involved more on the product side. I was Iran product at YouTube for about five years after Google acquired it. I had been at Google before working on AdSense. So the joke was always that I helped Google make a few billion dollars on AdSense and I was going to spend a few billion dollars on video streaming and then I'd leave before I crossed into the
Sort of- dollar situation, but fortunately YouTube worked out. Okay, so I'm still allowed, you know back at Google for lunch and stuff.
I was going to ask if you were going to help me with my AdSense on YouTube because I need some help there.
I'll click on some ads that that'll help
that was it does a joke. I think I'm sorry.
It's all on the up-and-up I swear
so your investment strategy has been to make concentrated Investments throughout the year. Is that the best strategy for someone like me or should I make frequent smaller Investments throughout the year?
Yeah. Look, I don't think there's any
like one right answer. It really depends for each investor. You know how they're thinking about what we call their portfolio strategy, right? So like do they want to concentrate ownership and then work closely with one company or do they feel like they get exposure to lots of new ideas and are more comfortable making a set of smaller investments in things that they can help out in different ways, you know when you and I have talked it really seems like for these next few years given everything you've got going on and your ability to help these startups that maybe more smaller Investments probably make sense.
And then like double down on the ones that are working so you get a little bit of time to see who's really not just showing you a good slide deck or a good demo product, but can start to build some traction momentum and then maybe try to get a second check of third check into those companies as they grow.
So you do like eight to ten like just giant Investments. Yeah figure kind
of the way that we think about it. We concentrate our time. So we also contribute $1 like this is the only thing I do so I wake up each day and you know, my calendar is filled with
People that were you know, helping, you know week over week think about their companies as well as meeting new folks. And so we're usually I guess like in a seed round like somebody who raises their first. Let's say a few million dollars. We're usually putting in one to two million dollars of that essentially becoming co-owners of their company and really working closely with them for about three to five years what happens then is like you expect a certain number of them to go to zero like not everybody is going to build the company that they you know described you but the ones that the ones that win then like really win,
And so that covers the ones that didn't work and hopefully, you know, well above
that. Why do you focus on early-stage tech companies instead of other parts of the market?
Look I it's just what I love like, you know, I think so much of being a good investor over a long period of time is like figuring out who you are and who you're right for and who you're not I just love being on the Whiteboard with the founders. I love helping them think through what are their first 20 hires look like, you know people talk about company culture and everything and like your culture is going to form whether you're intentional about it.
It or not. So why not be intentional about it? Think about diversity in your high first 20 hires think about you know, besides skill enroll all that person's an awesome salesman that person's a great engineer. Like what are their attributes? Do you want to have so for example will have all those conversations with teams and I just feel like that's the place I belong that's where my experience was working at YouTube working at Google that type of stuff frankly like there's other there's other better investors than me for areas, like biology, you know, and
You know drug Discovery like your cancer, that's great. Like that's inspirational. There's there's a hunter walk, you know of that area. They should be doing that like I'm staying in my
Lane. So what are some common mistakes that like newbie investors
make man, I made some of these right so I'll tell you my own my own scars. I took my took my shirt off you could see it. So sometimes sometimes you get excited by what they call social proof right? Like you look at something like I don't get it like this doesn't make sense to me or I don't think these people this team is really committed.
But you look at the other folks, you've already committed to investing you're like, oh man. They're also smart. Forget it. I must be wrong. But I really think it's important to have, you know, sort of your own conviction. You can look at other investors and say oh it's this is great like talk to them about why they invested or why they chose not to invest but the end of the day it's about your own conviction. So if you don't believe in it, like don't do it. The second thing is sometimes people especially folks who are like get really jazzed and are just jamming with the entrepreneurs. They sort of realized that they invested.
Their version of the company like what was going on in their head versus what the entrepreneurs are actually thinking about building. So as much fun as it is to like grab two people start talking about what's going on ask them what their building and then start throwing in your ideas, like sometimes you have to shut up and listen a little bit and realize that what you're actually doing is investing in their company not the way you would build the company. So those are just two of the things like keep in mind as you start, you know, committing to some of these companies
that make sense. How do you evaluate whether a product has product Market fit?
It or
not. So product Market fit, you know, we sort of like PMS, you know VC Twitter. Everybody wants product Market fit. We're almost always investing pre product Market fit. Sometimes we're investing pre-product, you know, they haven't even started building at yet. So I think about product Market fit not as like some point on a graph where it's like, oh, they have a hundred customers or they've made a million dollars that's evidence of product Market fit. I think about product Market fit as when are the people using their product representative of let's say the bigger
10x, you know the customer base, right? So if they've gotten like 10 customers, but it's a weird 10 customers maybe two of them are you know restaurants and two of them are auto body shops and two of them are accountants. You're sort of like wait, that's a weird group. Like do I really think that you know as we grow that's going to look like our customer base. Maybe we should focus on one or two of these and make sure that we're building a product that you know, a thousand restaurants want not just to so I think a product Market fit a lot of like
When do you have enough information to know that the type of people using and loving your product today are representative of you know, the next hundred the next thousand the next ten thousand the next hundred thousand people are going to use your product much more important to have a small number of people who love your product and who look like larger group of customers, whether it be, you know, consumers you and me or businesses then to just try to like force growth a lot of times investors like just because investors like love to see that curve up until the right up until the right grow grow. But if
Cause if you're not growing and healthy ways, if you're not growing and finding that right customer eventually, you're going to hit a wall and like those outcomes usually aren't very good for investors.
Okay. So all three of us are invested in Stern. Can you tell us why you're so invested in stir as a Creator? I think it's important. Yeah, that's why you are
so it's company called stir. It's basically building tools to help creators manage their business, right? So if you think back and you think like all these great software tools that were built for the largest companies like the way Apple runs their business the way like General Motors making cars runs their business.
You started to see amazing software tools built for what you think of like small businesses, right? Like the restaurant down the street no longer has to just use like a spreadsheet to do their accounting tools or you know, they can pull out their mobile phone and check like hey, when are my what are the Thousand cups? I ordered coming into the restaurant but the next I think the next biggest most important area are creators what we call sort of like, you know, individual businesses businesses in one everyone on this call is an entrepreneur in their in their own right and so getting tools made specifically for you to help you figure out, okay?
You know, where should I be spending my time? Where's my money coming in from? How do I split that money amongst the people I'm working with all these sorts of things. You need tools that aren't just like built for Google or built for a restaurant that you're trying to use you need tools built for you. So that's what the stir team is doing. I kind of think of them as like square if Square was built for creators and influencers instead of for, you know, restaurants and coffee shops.
I'm glad we're gonna sit in it
a hundred. Maybe you can just explain kind of one of the Winds.
You guys have had and really underlie and explain kind of power loss of venture capital and why this is such an attractive investment opportunity for a lot of people. Yeah, so power law. So the idea that like one or two Investments out of all the ones you make are going to return most of the money, right? So in our first fund, for example, we have this company called chyme, they make debit cards or like a new kind of a new kind of bank for like people with average jobs who are tired of the city banks of the world, like giving them overdraft fees charging them for everything they do.
It's like a mobile first kind of bank. So we invested in their seed round, right? So their first few million dollars. We are meaningful part of that series a series be those next two rounds not not easy, right so it wasn't like right away. Oh, there are the winner in the space. Everybody wants to write them checks. It took a little while to get it started. Okay, how do we find customers? How do we convince them that this is actually like where the bank you want to work with as opposed to like just another crappy bank, but then it starts to work people start using it. They start getting their direct deposit their so and so forth all the
And you realize that like wow having a long-term relationship with a customer who's using you as like their primary debit card is pretty valuable. So bang like series see they're worth 500 million dollars series D 1.5 billion Series E. I guess like then it goes like 5.5 billion. They just completed a round at fourteen point five billion dollar valuation, right? So it like they're the most valuable fintech, you know Financial technology startup available right now so you can imagine that on
Paper when we invested in them when they were worth less than 10 million dollars. Now that you know, you can do the math. Right? So like that's you know hundred x 200 x 300 X on the investment. We wrote a second check a third check, you know at slightly higher valuations you add that all up and you have what's hopefully, you know fingers crossed right? Because they're still a private company. You got to wait for the IPO wait for the acquisition, but got what you call a fund returner, right? So our first fund was 35 million dollars and without sort of you know, like, you know giving away too many details like
Or our ownership in that company is now multiple times that 35 million dollars. So if we took 35 million dollars or originally from like wealthy people College endowments University endowments charitable foundations who are trying to invest money to like run their business like they are asking us. Okay. Are you going to give me back one ex that you're going back? Just my money back in 10 years like that doesn't sound like a very good investment. But if you can start giving them back 3 x 5 x 10 x their money.
Then you're doing a pretty good job. And the way that venture capitalist make their money is we get to take a percentage of those profits. So the better I do for my investors the better I do for myself are our interests are aligned as you said and then Hunter maybe you know in closing out Bryce has got this really unique opportunity where he's got a massive audience. He's making money. He's a young guy everyone kind of wants him and his friends to be involved in what they're doing because of the social influence that they have. What would be your advice to him or some of the things maybe he should think about as he starts looking at?
Your investment to the specific types of Investments or strategies that you think would be best suited given his kind of position in the market. Yeah, absolutely a few things come to mind first like your reputation is what matter and so that works both ways. Like don't work people to youth. Yeah don't work with people that you think are Bad actors, right? There's no amount of money that's worth selling out to them. And then the flip side is I always think you should kind of under-promise and over-deliver. So people are going to imagine that's like, oh hey, you know just because
He's got this big audience like he's gonna you know, spend 24/7 like pumping our products on so forth. It's like no like what I'm what I want to do is I want to introduce your product to my audience in like authentic ways. So let's create moments where like I can talk about how I'm working with you or what we're doing together what your product can do to them. But let's like let's create reasons for people to give a shit versus like me. Just tweeting tweeting tweeting tweeting. And so I think helping entrepreneurs understand like why they want to work with you and trust you figure.
Hang out how to bring their product to your audience is going to be what makes for the best long-term relationship. So there's a thing called the cap table, right? Like that's the list of investors in a company and when we're looking at a cap table, I want a cap table to be diverse. Right? Like I want a few people like me who just sit here and invest for a living. I want some people, you know who are angels who maybe are like still working at Google still working at Facebook but investing in their spare time, and then I want people like frankly like both of you who, you know got a lot of things going on got direct connections to audiences.
Has have different perspectives, right? Like the only way that these companies succeed I think is if they're able to reach into you know, this team around them, you know, the three of us and ask us for advice ask us for help. Sometimes asked us to solve some problems for them, you know, and then we'll all sort of, you know share in the outcome. So it's just, you know, it's reputations reputation going in and reputation coming out for me. That's like you can't go wrong if you start there.
So what do you think about someone like me getting into investing like overall? Do you think that's beneficial for the investment community?
Oh, I mean absolutely. You know, I think you look back 10 years when you know, quote unquote celebrities started Angel Investing and no matter what people say today and like all it's awesome. It's great. We've got sonar cap table 10 years ago. There was a lot of skepticism in the in the Venture industry and I think it was just because like it had been this Clubby little industry where you sort of thought like most of the investors are concentrated in this like one town in Silicon Valley called Menlo Park on this one road called Sand Hill Road, and everybody was very protective of the idea that like, oh, yeah. No.
Where the king makers but I think if we seen anything in the last 10 years like that investing has very much mimic startups, which is there's more and more Founders building more and more interesting pieces of software companies, you know, direct-to-consumer Commerce companies, they're coming from all over the world and they've got all different backgrounds. And so there's no reason to think that the investment side shouldn't look exactly the same more investors who look like the founders to look like the customers I think is only going to be good for these companies. So yeah like
Like let's figure out some things to work on together.
Heck. Yeah. I did looking forward to
that awesome Hunter. That's fantastic. Awesome. Thanks
guys. All right. Thank you guys so much for watching all the way to the end or listening all the way to the end. If you did enjoyed don't forget to like comment and subscribe. If you're on YouTube right the podcast 5 Stars leave a review. Thank you guys for tuning in. We're still number one in business. That's freaking dope. I learned a lot. We'll see you guys next time it will literally see you guys next time. Peace.
