How Normal People Invest In MrBeast, Oura Ring & Epic Games Pre-IPO

0:00 What are some of them? >> We're investors in Beast Industries. Everything from the media side to the Beastables and all the CPG and everything they're doing there. We got to invest in SpaceX, Magic Spoon, Ollipop, Oats Overnight. A lot of people don't know overnight oat high protein drink that's just crushing. Of course, a lot of people know Aura Ring Element, the hydration packets. >> Today's episode is one for the books. We sat down with Tim Holiday, who is the mind behind Space Station Ventures. And one of my favorite parts about sitting down with him is he breaks the mold of what you consider venture capital to be.

0:32 He is just like you and me. He didn't come from some crazy prestigious financial background. He was a business owner who started to learn about venture, got more and more into it, and has built one of the most impressive portfolios I've ever seen. Tim is a phenomenal investor, a phenomenal leader, honestly just a phenomenal man. We deep dive into all of it. He understands how relationships and how his team are the greatest asset that he has and how he utilizes those inside the venture capital world.

0:54 So whether you're a founder, a creator, you're curious about venture capital, whatever your story is, this one's going to have one for you because Tim Star, just like every one of us, and now is one of the most impressive portfolios I've ever seen. Let's get into it. >> Tim, thanks for coming on the podcast. This is going to be fun. >> I'm I'm looking forward to it. >> So, yeah, I've known you. When did we first initially meet? Is it about a year now?

1:15 >> It's been over a year. I think over a year. Oh, and and like many people, it's like I start like seeing this guy on my feed. Yeah. >> This tall dude with this deep voice, and it's just I know that's like often the story that you have with people, but kind of a similar thing, but but I have to say >> and I think you know the story, there's a little bit of competition. I'm partners with my brother Holiday.

1:35 >> Sean Holiday. He was trying to get a hold of this Braden Shaw and I was trying to get a hold of Braden Shaw and I for once beat him to the punch and got the connection. >> You're my intro into space station. >> That's right. That's right. So Tim owns space station and they have a venture capital arm. >> Yeah. And I am just just the venture capital side. My brother's co-founder of the whole space station >> and I run the the VC side.

1:58 >> The VC side. and we'll talk through kind of that story, how you got there and everything, but >> prolific investor. What you guys have done is absolutely incredible over there. >> top >> decile type returns in venture capital. So I'm excited to kind of jump in, dive in >> a little bit there. So, >> yeah, for sure. >> let's back way up. I know you're from Arizona. >> That's right. >> started a company. You walk me through kind of how you eventually got into venture at Space Station.

2:26 >> You know, probably the most random path. I think with venture, it's either your path is what I'll describe or it's like finance degree and kind of start working for VC groups. I'm a guy who you know small town Arizona then I went to ASU got a degree in engineering never an engineer ended up building and bombing a couple companies trying to just build something with my family I've got five kids like this whole kind of >> intensity and then built and sold a company with my brother Sean the same same brother there's five holiday brothers he's number four of five I'm the oldest so we're eight years different but have just been best buds and then now in the trenches for like 13 years building so we built this little company. We sell it. We're in Mesa, Arizona. And he moves out of nowhere.

3:11 It felt like out of nowhere, moves to Utah. And and by the way, there's again five brothers. Two had already moved up. So then a third defected to Utah, right? And so he was persuading me to come join him. He became co-founder of what is called the space station and eventually got me to to join and and and come up. We can get into the space station story, but we as we as I joined the space station kind of working on some projects. The very month that I joined, we had a chance to put a small check as an investor into this company called Magic Spoon. And as many people know now, you know, this high protein, low carb, no sugar cereal, basically cereal for adults. And you know, Sean was like, "Hey Tim, we we just invested a little off the balance sheet, a little check. Could you just be like the value ad guy?" So again, I I had, you know, worked building companies, had no thought, even at the time, we didn't have any thought of being like professional investors, just let's go help this one company, Magic Spoon, grow. Well, this is late 2019.

4:13 COVID hits, Magic Spoon becomes the fastest growing direct to consumer company of all time at the time. I mean, just bunch of middle-aged guys like me trying to get protein, right? And my whole job was to add the value. So, I'm literally they're shipping me pallets of cereal and I'm to send this out to a bunch of friends and homies that just happen to be creators, influencers, proathletes. The space station is built in the creator economy. We have very successful YouTube channels. We have an influence marketing agency and so I'm sending out these boxes. I actually I I love to take credit when I can because it's the most random thing you'll ever hear. Magic Spoon has a bowl and a spoon that they'll give to subscribers or that you can buy when you're checking out on their website. I accidentally invented the bowl and spoon and it was because I was trying to just give a little package to these creators that had a little something to it. And anyway, long story short, that one deal just I mean blew up during COVID and we just got really excited about venture. And so they literally we sat around a room and they said, "Hey Tim, you're the oldest guy here. can you figure out how to find other great companies like Magic Spoon and let's get after it. And so me and my brother side by side u with Shawn Durus with some others just started investing like crazy. In fact, we did in the first 52 weeks >> we did 52 deals. I mean just like >> that's insane.

5:32 >> It's in looking back like what were we doing? But that's that's how I got into day. It was a heyday in private markets though. Like that was >> it was frothy man. It was wild. >> Insane insane time. It really was >> inside of private markets and then you go through a really hard time in private markets >> and we've enjoyed that too. >> Which is fascinating. So yeah, from Magic Spoon to second investment. How long did it take you?

5:53 >> That was 12 months. In fact, we got into the seed round of Magic Spoon and I we may have only ever done that deal if they didn't invite us to join the next round. They invited us to join the next round of funding. We're like, "Yeah, I mean, yeah, we we love Magic Spoon." The the money had, you know, on paper massive markup, massive jump. We're like, "Okay, like we should have put more in." Incredible. but it was 12 months. We put in another check, but because I mean, we're not crazy flush with cash. They're raising a big round of capital. So, we said, "Hey, can we syndicate? Can we bring other people into this deal?" And the founders are like, "Yeah, yeah, go ahead. That'd be fine." So, I was tasked with the guy to figure out how to syndicate a deal. We put that together 12 months later. And then from there, you know, then it was like, you know what? We're doing this.

6:39 Like, we're going to let's let's keep doing that. Let's keep finding high like high value consumer deals. >> Let's syndicate, but when we put together our group of investors, let's make sure that we're bringing in creators, proathletes, Olympians, you know, to invest with us and we're going to add a ton of value to these consumer companies. That's really what that's kind of our thing. >> Okay. So, there is so much to unpack there. I feel like inside of venture capital, >> there's kind of the OG venture capital companies, the iconic ones that everyone knows, and they're going to get phenomenal deal flow and honestly provide phenomenal value through their network because of what they have. Okay, you have the Sequoas and you have the like >> for sure >> these massive massive companies. Then there's this huge void in my opinion and there's tons of venture capitals down here in this this smaller trunch >> and their their problem and and my issue as an on the investor side is they couldn't provide tangible value.

7:35 >> That's it. >> And so it's either these companies get gobbled up by the the behemoths, >> but the deal flow that makes it down to this smaller tunch is usually not as good just because they know that like oh it's just money. It's dumb money. like that's kind of a term inside of venture capital historically, >> but you guys didn't do that. You you did something different. >> You know, all VCs claim that they have some kind of value ad and and and I don't mean to I'm not trying to disparrage any that that claim they >> phenomenal firms. That was very very simplistic view, >> but you're right in that everyone's going to claim they have value ad. Some really do and some like the Sequoas and the A16Z's they build out 400 person teams and they like that's a whole different model. That's a different model. but you're right, there's a lot of there's a lot of more approachable VC groups because you and I we can't get into to to Sequoia, but there's a ton that we can get into now, but the value ad just is like, oh, I got this incredible network or whatever. And it's like it's just it's kind of light.

8:33 So, we really emphasized a very unique value ad, which is we can bring these creators, this influence, this audience into your round in into your company as investors. by the way, these are check writing people and then we can put them to work to really help you grow your consumer company. And that that value ad, as it turns out, wasn't like obvious obvious on the first couple deals, but after executing for some number of months and now years, >> it's like, yeah, that's a powerful value ad form. They love it.

9:02 >> Yeah. So, you're starting to run Space Station Ventures. >> Yeah. >> and starting to deploy capital into it. >> Yeah. 52 deals in 52 weeks. Where do you get is this family and friends? Where are you raising capital? How are you doing this? Like walk me through those first couple deals structures. Who are the LPs on it? Walk me through kind of the bootstrap. >> It truly is. It's I I'm glad that you said that word. That's what it feels like. I I having built and bombed then built and sold the company. It's like this feels like a startup. I mean we are like trying to figure this out as we go.

9:36 you know, the literally the first 20, 30, 40 investors that join us are just exactly that. Friends and family, people in our network, you know, we'll serve up we, you know, our next deal was Lollipop. And Lollipop, I mean, it's crushing, right? And and we had no business being in that deal, but fortunately, >> two for two and and I mean, so many people love Lollipop. They're like, "Oh, I we drink it all the every day. Like, we love Lollipop. Like, can we cut a 20k check, a 10k check, a 30k check?" And so it was just this closed network of just friends at first, but then they would be like, "Hey, my buddy would love to get in. Is that cool?" And and it really just kind of very organically grew deal by deal as we just kept progressing more opportunities also like in different slightly different areas, you know. So we're we're of course like we started off with really great CPG, which is consumer package goods. So you know, consumables, magic spoon, lollipop, slate milk, oats overnight.

10:32 But then we started to get into our next deal that wasn't food was the aura ring. Again, a great deal now looking back and even then it was awesome. But you know the sleep tracker ring that brought in a kind of another a different group even of of creators. We started to bring in you know some really fitness focused creators and and they got really excited about it. Keep in mind the space station overall lived it was born and lives in this creator economy. You have Shawn McBride goes by Shawn Durus. Shawn Durus and my brother. Shawn Durus top on Snapchat, moves to YouTube, builds out incredible YouTube channels. My brother joins as the business guy and immediately they built this influencer marketing agency. That agency has been around eight years. So, we've connected with hundreds of top creators, dozens of brands. So, when we would serve up an opportunity, part of our network are these creators and influencers. and that that early beginning of that group, this space station kind of group really became powerful and now we've we have about 800 people in that group.

11:34 >> - which is which is wild and exciting. Yeah. >> So let me break down a couple terms that we've said just so that everyone can kind of stay along. So syndicating an investment. So when a company comes let's take an Aura ring. Okay. Aura ring when you invested >> was a 60th of what it is today or something like that. I don't know the actual term or number, but >> much much smaller, but it was still a large company. And so the idea of of Aura Ring coming and you saying, "Hey, let me go put 40 people of my friends and family on your cap table." They're never going to allow it. Okay? It's messy. They have to deal with >> the paperwork and accounting and just everything. And so what you do is you create what's called an SPV or a special purpose vehicle. Basically, a company >> that all 40 people invest in and then that one company then invests on their cap table. And so it it allows exposure from a bunch of people. That term is called syndicating. You're bring you're syndicating a group of people together to make an investment as a single entity on the cap table of these companies.

12:34 >> And that's kind of what you started doing. And so SPV syndication, we're using terms. I'm just trying to break it down for everyone. >> And and for anybody watching, I mean, >> I I had to just learn this. So like this this is like I I want to like expose that, you know, venture investing is not >> it's very accessible. It's doable both as as a as a you know a manager like like myself or as an investor like it's a very doable thing. I had to learn it too. We figured it out. You've learned it. but that's exactly what it is.

13:04 And that gives that gives more people the ability to invest in a group in into a company that they otherwise wouldn't have access to. What what's part of the magic here is that because we are become higher profile in that we bring some really interesting people into the round as as investors that group of people may be just a percentage of the overall number of of investors that we bring into a deal. Like you said, we bring in 40 people. Maybe 10 of them are very strategic. The other 30 are people like you and I, you know, you know, build companies, may have a little bit of liquidity, real estate, whatever the case is. But we get to join in in this one entity with one check. And that that's been a powerful tool that we've now done over a hundred of those.

13:48 >> That is so cool. >> Which is wild. Even as I look back to any venture firm and say that they'll even think you're crazy. >> No thanks. >> You didn't do a fund till a 100 SP. >> Kind of wild. Yeah. >> Yeah. That's crazy. okay. So as I think your first investment is a lot like my first investment and will be a lot like their first investment in that it's a very uneducated investment. >> Oh yeah.

14:09 >> Like my first check I looked back I was like I was an idiot. Worked out great. Like got super lucky. >> >> it's so true. >> But most people don't conceptually understand how to do real due diligence on underwriting on deals. And that's okay. Now >> the goal is to get there. Yeah. And like that's that's my mission is to educate online financially to try to help people have confidence in their investing whether no matter where that is in their life.

14:36 >> But a lot of it is just taking that one step into the dark. >> So true. >> So that you can at least start getting access to these types of deals because the returns are so outweighed. So many people think their pension or their 401k is going to retire them. >> And it it's so much more difficult to do that way 6% of the time, 8% of the time when in venture you can go get 20 30 50 I mean shoot >> literally >> 10,000% returns if you if you do the right companies.

15:05 >> That that's exactly right. We we very much want to make venture approachable and so you know of course that's why you trust a fund manager, right? It's like, you know, as you do an SPV, each individual person has to decide, I went in on this deal. Here's my check. Thank you for letting me in. I did my own diligence. I'm checking off that I'm doing this thing and I'm in. but you're still trusting the the diligence and and the the drive of the manager to do so. But yeah, you don't have to have it all figured out. You really don't. We did.

15:38 >> What's the minimum check size for you guys that usually do? >> We we try to do like a $5,000 minimum, which is like wildly low in most cases. I think the difference is us as a fund manager, we're comfortable dealing with hundreds of people. Many others like, oh, I I don't want to deal with, you know, >> they just want to go to get that one family office that writes >> that writes a massive check. It's like I, you know, I don't know. I just have a bit of a and I know you share the same vision. It's like this is access to this type of investing. I I didn't have access to myself for the first 40ome years of my life. And now that I've found access, I realize that it isn't rocket science. It's doable. when you're working with the right people that can bring the right deals and it doesn't also have to be some massive six-figure commitment. You can get into venture at a lower rate than you think and then build from there. You build your own conviction. You also build your own kind of wealth and can start to allocate more and more into venture. As you know, most people have exactly zero in venture. Yeah. So even a 5, 10, 20k check here and there can be real meaningful when you start to see that 10x 20x potential return. It's like, >> okay, I'm going to press you with a couple hard questions.

16:46 >> Push me. >> What a lot of people will say is, "Oh, that's so risky." >> Yeah. >> Okay. Yeah. >> Walk me through your 100 plus deals that you've done. >> How many have gone to zero if you know that number? >> Yeah. and what how do you derisk inside of venture capital for someone that's like I don't have millions of dollars to just go chuck at a 100 deals. I've got >> maybe I'll be able to do four deals a year at 5,000 bucks a piece or two deals a year. Like how do you diversify that risk? How many deals have gone to zero?

17:17 Talk me through some of that stuff. Yeah, I mean there's no doubt as an asset class versus real estate versus just putting cash in the stock market, you know, venture is highest risk, highest reward. So, there's no doubt. But >> I I'm not some guy who's trying to live on the edge with my five kids and my wife. Like, I you know, I also want to have a return and be able to minimize my risk. So we work really hard to make sure that we even in our higher risk profile are minimizing that risk it for for the industry in in many kind of venture capital angel investing right it's like a third of the companies die a third of them give you you know a 1x maybe.7x return you know almost got my money back got my money back got a little back you know a handful of them will do a 2 3x and then one runs and it's a 20 20 bagger as they say, right? Some massive return. fortunately, we're tracking a little bit above that, actually a lot above that, which is awesome. So, we've had 17 companies of our 120 that have died, which is about double the the industry in terms of loss rate. So, that that's good that we've lost fewer. I do think part of that's because we are in consumer.

18:29 >> consumer products and services and and things are just a little bit harder to build. you know, you're building physical things, takes some more capital to get up and running, therefore they can be a little bit more stable. So, we've had a better loss rate. and yeah, we're tracking great returns. you know, a a worldclass venture, return for our vintage, which is like our starting year when we started investing 2019 2020. in that vintage, you know, if you're if you've got if you're in a venture fund that's returning you a 2.3x.

19:07 So, so annualized over 10 years, that's like a 23% return annualized. You're feeling great. As you know, that's a that's a great return profile. That's a top quartortile, top decile, 2.6x. I mean, our number sounds ridiculous. It's like a 5.6. Like, we're we're really tracking well. And it's partially because, you know, we're able to get into deals that we probably don't have business being in otherwise. And you're, as you know, those higher quality deals, higher quality opportunities that are very tough to get into, if you can get in, they tend to just just multiply like crazy.

19:43 >> Yep. Yeah. Fascinating. I love this world. So, >> you do 52 deals. >> Yeah. >> when do you start building a team around you to help facilitating this? Like >> not not early enough. >> I was gonna say, did you do all 52 of those? >> No, no, no. I I was Well, probably about 25 25. So, and it was it was crazy. It was also a time. So, by the way, we're doing both syndicating and just cutting a check off of our balance sheet, which are a lot quicker, right? So, you can get conviction. We got to get on this deal, cut a check. You can literally do that within a week. syndicating takes a little bit more time and effort as you know.

20:20 >> Yeah, >> we about 25 deals in I I am drowning. >> You call uncle. >> And by the way, and by the way, like this is all self-inflicted. There's no crying here. Like this is pressure is a privilege. >> It was a privileged position to have access to such good deals. We were excited. We didn't have a ton of cash just sitting around to invest. So, we had to syndicate. Like that was our model is we put in our check and then we bring other people around us. So I fortunately it was a cold outreach to me on LinkedIn. Jackson Stewart had worked got a degree in finance from from the U had worked in a with a couple venture firms and noticed that very quietly because we've been very quiet too quiet really about everything that we're doing until now. He's like hey you guys invested in Magic Spoon, Lollipop and Aura Ring three of my favorite companies on the planet deep user of all of them. Can we chat? I'd just love to learn what you guys are doing over there. And hired him within well it was a couple months of kind of going back and forth and figuring out like less of like I mean I was very quickly like he's the guy.

21:23 he was figuring out kind of how to navigate some things and the number one hire of of of really of my entire career is Jackson Stewart. So Jackson joins 25 deals in. we also have other partners that work with us. my brother's a partner, a guy named Chris Bennett, incredible builder and investor. we have we are partners with our agency. So Tra McBride who runs that is a partner. Braden Shaw, you've become a partner. Like we have some great people around us now. And that's the only way. We have admins and others. And but we're actually a very lean team. That's that's kind of the the thing too is you don't have to have some massive team. We never intend to be something massive A16Z. We know our lane. We do it really well and we have a blast.

22:05 >> Awesome. So, let's list I mean you you've listed some of the companies. >> I'm trying to think of other ones that I know that you you're in. I mean, if you were to list top like 10 household names that you guys are in, >> what what are some of them? >> We, you know, talk about Magic Spoon, Lollipop, Oats Overnight. A lot of people don't know. Overnight oat, high protein drink is just crushing. of course, a lot of people know Aura Ring, Element, the hydration packets.

22:32 we're in it's called Hyper Ice, but a lot of people know know it as Normachch, which is like this the sleeve sports recovery. I know you did invol. >> we we got to invest in SpaceX, which was which was kind of fun as well. A lot of people know SpaceX, of course. >> And then there's like companies, some consumer companies like Graasa Olive Oil that people are pumped on. Painterland Sisters Yogurt's incredible Slate Milk. recently, the last few deals that we got to do are really exciting. we're investors in Beast Industries. So, that's Mr. Beast's kind of whole world, everything from the media side to the festivals and all the CPG and everything they're doing there.

23:08 >> and that's very high-profile. >> you know, one that people will know soon, Garden Cup, as you know, is an incredible meal delivery salad company. >> we're in fintech, we're in, health tech. We have like two fertility companies that are exciting, including Plan A, which is one to keep on the radar for for the future. So >> yeah, a lot of great exciting companies that are providing great returns here in Utah. >> you know, we're about 10% invested in Utah. Pura, >> incredible company here. Crew, which is a great family bank service. So yeah, just it's it's all consumer, but we define consumer so broadly that we're able to really get into a lot of interesting >> categories of companies.

23:50 >> Yeah, I keep talking third person like tell us what deals you're in. Yeah, >> I'm in every deal with you. >> Brings in everything. He's and we've loved that. It's been great. okay. So, inside you're running space station. >> Yeah. >> When do you know you need to do a fund and why did you decide to do a fund? Like you had done a hundred SPVS at this point. >> Yeah. >> >> why the fund?

24:09 >> We actually decided not to do a fund. So, day one we're like I mean we're we're I guess we we know we spun up some number of SPVS like hey this is a blast. We we love doing it. By the way, I I absolutely love what I get to do. It's taken me 20ome years in my career to finally find something I'm pumped on. really really love it and so we're loving it and and immediately the thought is raise a fund but we didn't feel like we had the network to to to to raise a proper venture fund the even the deal flow although it was really exciting we didn't have yet the confidence that like we can keep replicating this for another 20 to 30 companies so it's like we kind of held off and then we just got so heads down in 2021 20 we just got so heads down that we just kept doing the same model it was working And and so it was about a year ago they're like, "All right, we're well over 100 companies. We've deployed over $40 million into these companies." Like that is basically a fund one. Like many venture groups, if you do a 30 $40 million fund one, you're that's it.

25:10 >> Yeah. >> And so it was about a year ago like, nah, it's time. It's time now. The network's there. The deal's for sure there. but we took our time really making sure that we built it right, that we kind of have the right setup, the right partners, the right legal, the right thesis and approach. >> Yeah. >> And and we launched in June, started fundraising. >> I think it's really important for people to understand the difference between an SPV and a fund and the pros and cons of both of them.

25:36 >> Yep. >> And so I'll give my opinion then I want to hear. Oh, an SPV. like we talked about, you invest in LLC or a special purpose vehicle which invests in a specific company. You say, "I want to invest in Graza, Pura, Element, something." You're investing in a specific company. And so, you write your $5,000 check in that $5,000. You buy $5,000 worth of >> Magic Spoon. And then if Magic Spoon goes from a hundred million to a billion, >> Yep. very simple math. You go from 5,000 to 50,000 assuming >> that's right.

26:05 >> Yeah. no delusion and stuff like that, but it's very specific to a deal. A fund on the other hand is kind of a blind invest. It's asking a little bit >> blind pull investing. It's it's asking a lot of the investor, but you're saying, "Hey, trust me. >> Like, look at my track record. Look at what I've done. >> Give me your money." And they will say, "Okay, I'm going to give you $100,000. I'm going to give you $500,000. I'm going to give you a million dollars."

26:30 And over the next three years, you're going to take that money and you're going to invest it in 20, 30, 40 different deals. >> Exactly. >> And so, as an investor, it's easier and harder to do due diligence because there's no due diligence of companies or financials or anything. You're just you're >> you're diligencing the management >> space station. Yep. >> >> that's right. >> And so, it's honestly an easier, but it's a a little bit more faith-based.

26:57 You're like, well, I sure hope you can. >> The reason I love it diversification is how you derisk venture capital. That's right. if you actually look, I'm going to get into some numbers, statistics, probably bore some of you, but it's fascinating. If you actually look at the stock market, someone fact check me. I'm going to slaughter it, but if you look at the stock market from 1996 to today, I think it's 52% of all companies have gone to zero that were listed on the stock market in 1996.

27:21 >> 50% have gone to zero. >> Venture is more risky than the stock market. Okay. If we were to look at every company formed in 1996 today, Yeah. be real rough. But the reason the stock market is considered less risky over a 10-year horizon isn't necessarily the fail rate. It's actually the ease of diversification. You can jump in and write a single check into the S&P 500 and get 500 companies immediately. If one, two, five, 10 of those go to zero or get delisted >> doesn't even doesn't even hit the radar.

27:50 >> Doesn't doesn't even give a bluff. >> Exactly. Right. >> In venture capital, it's that that doesn't that doesn't exist. And so the closest thing you're going to get to that is a venture capital fund where I can write a single check. They'll deploy it across 20 30 40 different companies to give me that diversification because now the law of averages can start kicking in. If 30% of that fund goes to zero, 30% I might return my capital. 30% I might get a little return. Then you have those one, those magic spoons, those elementes, those runners >> that quite literally, I mean, you have some in your portfolio that are 250x like >> guys, 250 times your money.

28:26 That's mindblowing. Okay, >> that's wild. >> But if you, but when you have that diversity across 30, 40, 50 different companies. >> Now you're like, I'm really comfortable saying your average is going to be 25 30 35 40% returns over the course of the next seven years. >> And that's why I love funds. But you need to understand the difference pros and cons of both of them. >> The the biggest risk I think that an investor who says you know yeah I want to get into venture like I want to get in and if I have access to a magic spoon and an aura ring like I want to be able to cut a check and that's great. If you would have invested in just the first 10 deals that we did you'd have done really well. All the ones that I've mentioned are in that but we lost on three of them right and we're and we're above average performing. So the the reality is what if you would have chosen two of the three >> right that lost. That's what ends up happening is you don't cut enough checks as an angel investor in venture to be able to take advantage of the law of averages and see an actual return. Now, if you're personally pumped on magic spoon or a ring, cut the check and enjoy it. Have fun. Get in there. You got some information rights. You're seeing some updates like you and you can tell your friends and family, I'm ringing. Dope.

29:30 Like that's fine. That there's different reasons besides financial to invest in a cool company. But if you are trying to have that plus an actual return, we're just finding that you need to either by your own effort of getting into 20 or 30 SPVS, which you can. >> Yeah, >> you can do that or you trust a manager, let us do our job. Honestly, I think it's for for it's just choose your own adventure. If you want to look at every deal and are pumped on the diligence, you love that part of it. You love the game on it. It is so hard.

30:00 >> It is a ton of work and you've looked and you've been looking at deals with us for months and it's like just the time and effort to talk about them, >> let alone really dig in. But some people love that. Let them do it. That's great. >> But we actually offer what we're trying to offer is a little bit of both. So it's like do commit a check to the fund which by the way like committing a a check to a venture fund. Many people don't realize it's a schedule over the course of three or four years that you're actually deploying that capital that you're that we call that capital from you. So, you're not cutting a 250K check on day one. It's called over four years, quarterly, roughly, whatever, >> $15,000 a quarter.

30:35 >> 15, 20K, a quarter, something like that, right? >> Yeah. >> But what we like to do, and a lot of venture groups do this, is we also offer a co-invest opportunity. So, you're in the fund and you can literally like fulfill your capital calls and never talk to us again, and we will just return a great return for you. And good job. Also, you can follow along every deal that we do. And if you're particularly pumped on a deal, you can put a little bit more cash into that in most cases, not every case. And so now you get to do a little bit of both. And I think that that's a nice offering for many investors who are excited about the hunt of the a venture, which is fun.

31:10 >> Yeah, I think it was a the investor group that I work with inside the growth circle a little bit different than your normal investor group. And I think it's been a little eye opening. I have to apologize to Jackson on the regular just >> it's true. but what I think is really cool is also another capital place that people overlook often is your IAS and 401ks. >> Yeah. >> so many people think your IRA and 401k have to be in stocks, bonds, mutual funds, and ETFs. Like that's what you're taught. That's what you're told.

31:39 >> And it's not true. >> No. >> you can self-direct your IRA. You can self-direct a past 401k. You can self-direct whatever you want into venture. And we did it I don't even know how many times. Probably 30 or 40 times in the last month. >> Yep. We have helped people set up self-directed IAS, move that money or a self-directed 401k, move that money into a fund or into an SPV to actually invest in a venture. And so so many people are like, " I don't have the money."

32:02 >> Yeah, can't do it. >> You probably do. You just need to learn how to unlock it. >> We we had a couple of your growth circle investors that that were grateful for the the that insight and said, "Wait a second. You know, my 41k, my IRA is like super illquid. At least the way that they think of it is I'm not going to touch that forever. venture is illquid. That's why you get such great returns is that you're locking up your capital for we always say 10 years. It can be less. It can be a little more 10 years. So, one of your growth circle investors like I love the idea that I can use what I already consider illquid capital to fund an illlquid asset and we love that pairing as well. It's a great way to go.

32:39 >> Yep. It's awesome. cool. So, fund is launched. Where do you want to take space station like five years down the road? >> Yeah. Where do you see space station? What does your day-to-day look like? What kind of investments are you getting into? Are you still making investments? Are you on the dayto-day? >> Oh, we are we are so deep in it and and love it. I'll finish my career here doing this. you know, a lot of venture groups will just continue to launch new funds every two to three years. They have fund two, fund three, fund four. We'll follow that same pattern, but often they get into the they get into the venture kind of model of, you know, first fund is 50 mil, then 100, then 150, 200. I see us really loving and living in this early stage consumer. And so to do that properly, we just will keep focused on early stage.

33:26 So we're talking for those that you you know understand kind of private markets preed seed stage up to series A. So these are companies that are typically doing you know less than 10 million in in in revenue sometimes much less sometimes pre-revenue. We just we love to live there. We love exposure there. We know how to underwrite it. we know how to add value to it to help them grow. We just want to live there. So I see us in five years from now on fund three. you know having deployed into just some of the top consumer companies helping hundreds of investors join us and and getting into venture especially like you know look I all venture I think can be interesting people love cyber security people love B2B SAS that's great honestly consumer venture is a blast because literally we are investing in companies that you know that you use that you love and we just want to help more and more people get access to that just to just to get get their feet wet in this asset class. And if and if after five years we have a very lean but world-class team with unparalleled access but helping hundreds of other investors join us. I mean that's the dream.

34:35 >> Yeah. And I think it's true. Like I I actually filmed a story. I haven't posted it yet. Don't know when I will. But >> I was walking into Costco and my wife asked. She was like, "How many brands do you think you own in Costco?" So I literally looked at the camera. I was like, "Let's go see how many brands I own in Costco." >> I love it. And then I'm just looking around and like right at the start there's Aura Ring like passing it >> and then I see Lollipop and then I got Graza then I got Magic Spoon and then I got over there was in there >> and I just kept going down the line and it's there's something fun to it.

35:06 You know what I If I own some B2B SAS company, >> yeah, >> could return well, could not return well, but I honestly have no idea and don't see it for 10 years until a check shows up. And so there is something kind of rewarding about >> no just physicality. And honestly, like I think also there's an argument to me to be made that that consumer venture >> can be just as powerful on on the return side. We kind of get a little bit of a bad rap in the industry somehow that I mean that's kind of cute and fun. You guys are playing in consumer, but like really big returns are in AI.

35:34 they're in and by the way believe that in B2B SAS and and and whatnot but but you tend to have to hunt unicorns. You have to find that one runner and it'll take you to the moon and the rest kind of don't even matter. I think insane valuations so early that your losses are >> so tough. >> We have we see a very robust return profile in companies that can build from zero to 200 mil valuation you know 500 million a billion and we have we have you know five unicorns in our portfolio too. Those are great. We love them. But there's a return profile in the middle there that can be very powerful for the founders, for early investors, if you're early enough and have the right entry point and aren't diluted, too bad.

36:18 that can return and we're proving we'll return great for our investors. So consumer is a great place to be. Yeah, there's actually I was nerding out with Jackson the other day and we were looking at >> proportion of companies that are on that are public on the stock market >> and what percentage are SAS, what percentage are CPG, what percentage it, all of them. And then what percentage of raised capital goes into each of those ecosystems >> and the biggest disparity of all of it was CPG, consumer products. It's I'm going to slaughter it. Yeah, dislocation >> 7% of venture goes into consumer and 21% of publicly traded companies was goes into venture or something like that.

37:00 >> >> and it's fascinating because it does get a bad rep where so many people are like, "Yeah, how do you choose the next soda?" Like there's a million of them. You know what I mean? But I'm like, >> but there's not many people playing in this world. And when you know the right founder and you have the marketing team and when you have >> a 100red million subscribers behind you, you're like, you know what? I really like lollipop. It tastes really good.

37:21 It's got a phenomenal founder. So here you go, Mr. Beast. Drink this in front of a camera. You know what I mean? Like >> it's so true. And and for us, like it's very much at these early stages in consumer. It is three things. It's number one founding team, people. It's three these three Ps. It's people. You have to have the conviction there. That is the art of the deal. we think that over time we've gained some kind of pattern recognition having watched these world-class founders go from early stages to, you know, multi-billion dollar companies. Second, it's like the product itself. You know what what what is it? Is it something that's interesting that we can kind of see? And when you're in it long enough, you start to see the trends and the push and the protein and everything.

38:00 >> Say you got protein everything in your portfolio >> and it's cranking. It's crushing for us, right? So protein everything, creatine's coming up, clear protein, like all these kind of things. We get to see that and follow it. We also get to see that like it would be near impossible to recreate an Lollipop today. So it was a moment in time. We hit it just right. Very blessed. unfortunate. I don't think you could build another lollipop today and have it be as successful.

38:22 >> So, there's that factor of time. And then the third thing is just the progress and where they're at and then how can we add value. So, as we stack up the diligence and look at those things, >> you know, that's that's I mean, that's why you trust a manager. That's why you trust a great real estate professional or a great, you know, any kind of professional in their in their world. They just they they're in it and they know it. We just gotten in this. So, you don't you Braden Shaw doesn't need to find the next lollipop. We'll find it.

38:45 Look at it with us. put your insights, give us your thoughts, but we'll find it. We keep finding them. >> Awesome. Fascinating. Okay, it's fun. at the end of every single podcast, I ask all guests the same five questions. I don't know. I should be nervous here. Bring it on. Let's >> No, we can rapid fire. >> All right, bring it on. Bring it on. >> It's fascinating because I've had quite literally people worth over 10 billion dollars on the podcast and people that are much lower than that.

39:10 >> It's not this one here. Just be clear. >> People that are much lower than that and to watch their answers varies really, really fascinating. So, first question. if you only had $5,000 to your name and you had to start a company, what company would you start today? >> Wow, that's a good one. >> You see a thousand companies a year across your desk? >> I do see a ton. And it's like I know that consumer because we're so deep into it. Yeah.

39:33 >> Five grand isn't going to get you much yet. I'll I'll tell you one that's not in consumer that my son and I have been thinking about working on, which is >> Cyber Cab, RoboCab. He he we both love kind of the concept of autonomous vehicles. >> And for a pretty low entry point, you can get into a vehicle that eventually, this isn't legal and ready yet, except in Austin and I think San Francisco, but you could build a little fleet. And I think you could start with five grand.

40:03 you where you could basically put five grand down on a Model Y, >> get that thing making cash. Within a month or two, it's cash flowing enough to buy your second and your third and you just go from there. >> Yeah. >> So, I think that's one example of Yeah. maybe a company and just because it's top of mind. My son and I have been talking about it. >> Love it. Okay. What is We'll go worst first, then I'll let you do best. What is the worst investment you've ever made?

40:26 >> Oh, that's tough because it's like that's tough. It's tough to name names. I'm trying to think of one that that Well, I I'll tell you, >> you can keep them nameless if you want. >> Well, I might have to to not to not get too >> blacklisted by but but at the same time, it's like it's real and it is what it is. >> I mean, we invested in a a a food company meat that just it was too early. We were too naive at the time.

40:59 it was only our own cash that we put in on that one. >> Yeah. >> Because we weren't quite sure. and it just didn't work. I wouldn't call it the worst investment. I I will say actually a deal that we didn't put money into, but it was an investment in financial investment nonetheless. ended up being a rough situation here in Utah. Ashure Ashure was a group that that would run your SPVS. They would handle all the taxes, all of everything and very publicly imploded. And we invested countless dollars and hours.

41:32 That was our fund manager system for the first 13 deals and we're still paying for the challenges that that created. So that was probably our worst >> interesting >> our worst investment. >> Okay. What do you think is the best investment you've ever made? >> I I think I might know what you what you want what you're asking but I I'll give a bit of a contrarian which is is in my team. >> Yeah. So like we can talk is it really we can talk about lollipop and we ring come on >> but it's investing in ourselves and our team from from a >> you know education perspective all that but but also just empowering and enabling each other trusting each other spending the time and effort to really get to know each other and what strength weaknesses all that that has been just returns way more than I probably any venture deal will do. Yeah, for sure.

42:25 >> I think it's kind of sad Colin's back here. We we often laugh because the content that I sometimes want to make the most is invest in yourself and how to invest in yourself and ways to improve skills and improve the people around you. It flops every time. No one wants to hear it. >> I know. I know. >> I feel like it's such a it's such a cliche thing to do, but >> every person on my podcast has said the same thing that it's the college education didn't teach it to them. They had to build a network. investing in the network, investing in themselves, investing in their team, whatever it was.

42:54 >> But I think it's because that's what it's hard to like it's not a nice packaged answer. It's it's like I I don't even know if you would asked me that five years ago before I started this group, I might have instinctively thought that, but I couldn't have articulated it. Even now, it's hard to articulate, well, Tim, what's it mean to invest in your team? Like, >> it's it's tough. So, I understand why people may have a hard time, but it is the truth. It is the network. It's the people you know. We were in a meeting earlier today where it's like crazy access because of people that you know.

43:19 >> Yep. Yeah. >> And it's >> I think networking is a skill that so many people don't >> any skill can be learned. Any skill can be grown. you guys are some of I've given you this compliment multiple times. >> You guys are some of the mostworked individuals I've ever met. >> And the people that I meet that are that way and I've been very blessed to run in some insane circles. >> But they're always tends to be three, four, five people where I can walk in any room, mention their name, and they're going to be like, "Oh, there's one. We had one today. I'm gonna shout out my uncle for a second. That's exactly.

43:52 >> So, we were in a room today >> at this meeting >> and they said a common name that I knew that my uncle had a connection to. I was like, "Do you know Dan Shaw?" And they immediately go off on how great my uncle was in a very positive way. Very positive way. >> They immediately connected you with positivity. They were just meeting you for the first time. That's the magic. It's like the I think it was it Steven Cvy that wrote the speed of trust. Like it is just instant >> y >> connection and trust. And if I was to name one thing that my uncle has done and this sounds from someone with a manipulative frame of mind sounds bad, but he does it with the purest of heart.

44:26 He walks into every relationship saying, "What can I give so that everyone owes me a favor?" >> And it's not because he actually wants, he's not going to ever call that favor due, >> but he just has a mantra of, "I will help everyone." That level of commitment in constantly. Yep. >> Yep. That level that I love that >> and it's the littlest stuff. Like I even remember my dad growing up one time we were on our way over to Uncle Dan's house and he told a story on how he had to have his first interview to go to an investment bank in Salt Lake. My dad didn't have a suit and so his brother took him down and bought him his first ever like nice suit. He went and got the interview and like >> 40 years later he's telling that story but that's my uncle Dan. You know what I mean? And so >> all this to be said I think investing in your network so many people say that's so intangible. How do you actually do that?

45:09 >> Yeah. It's not when you really put in the effort to learn the skill and make an effort to utilize that skill and grow your network. >> I'll match with one brief story. There's a guy in our network, young hustler of a guy. I'll I'll shut him out. Cutler. >> Cutler. it's just a guy I we my brother and I spoke at some event. He comes up after. Again, there's no skill in this. He literally walks up to us and is like, "Guys, thanks a ton. That was really cool. Like, thanks for what you said and all this and that." Just a compliment is all he did. and he he we kind of just briefly had a little conversation. We connect. My brother gave him some really awesome advice on LinkedIn and he ran with that. My brother's really saw it on LinkedIn.

45:49 Anyway, so we've had just this back and forth with Cutler as he's just constantly trying to add value to us. Guys, what can I do? How can we, and this is related to you, we wanted to give this is when we wanted to we wanted to give Braden a package of a number of our portfolio companies. >> Remember this package? >> I know this story. Yes. >> And you may not know the back end. I I don't know if we told you.

46:12 >> We are driving from Davis County down to to the stadium to to watch a BYU game with you and and some others. >> Like we got to get Braden something to take home. Like just he's got a taste and enjoy all this stuff, right? So we had the whole box and we had everything put together, but we are looking at the time. The traffic's heavy. We're not going to have time. We were going to try to like plant it in your car somehow.

46:34 Hey Braden, can you unlock your car? I don't know how we're going to do it, but how are we going to do this? And so we're we're like, "We need to get this to the airport. We need to get this to your plane. You you flew in. Let's get this to your plane." And it just be a fun surprise. How are we going to do this? Couldn't make the timing work to get it to You're like, "Bummer. It's just not going to happen." And then my brother's like, "Wait, I know a guy Cutler."

46:54 >> Literally call Cutler so cold. Cutler, dude, you watching the game tonight? >> Friday night, too. >> Friday night, like 30 minutes before the game starts and like thinking he might be at the game. >> Yeah. >> He's like, "No, no, I'm just going to watch it from home." He's like, "Bro," he's then this is what he said. "I on speakerphone." He He said, "Call, you going to the game tonight?" And he's like, "No, I'm just going to watch it from home. What do you need?" So he said, "What do you need?" Like, "Boy, we need a little favor, bro. Can you?" And literally asked him to drive to the stadium where we parked, pick up the box, drive it to the airport, and somehow get it on your plane, which is a little sketchy as I look back, right? Like your pilot's like, " what's this mysterious box?"

47:30 And Color did exactly that. Delivered for us. He's forever a homie. We actually invited him to VidSummit. he joined us there and he was there. So >> anyway, you're you're so right. That didn't take any money. It took some time of his, >> but it took like thought and effort. Any of us can do that and and that is the beginning doing that not over days or weeks or months, over years and even decades is really building that valuable network. anybody can do it.

47:55 >> I love it. I love it. >> Okay. >> I think there's like questions. >> What? I know. I think we're on four. I'm trying to remember these. I got these memorized. Okay. If you were to go back to your future self or sorry past self and give yourself three pieces of advice or if an entrepreneur was just starting out and you can only give them three pieces of advice, what three pieces of advice would you give them?

48:17 >> Yeah, even my future my my past self for sure. I mean it was 10 12 years ago we started this company Crowd Mics and it was intense man. I I probably more than anything would tell myself you're gonna survive. It was it was so intense. I mean, later learned after putting in literally every dime we had. I mean, I brought my family to zero twice to zero. putting in again for the third time everything we had, my sweet wife, five kids, just had our fifth kid. Just wild, bro. You You get it. You appreciate it. And and just then my parents, our parents step in and like, "Hey, we we can let let us be friends and family. We can fund some of this." We didn't know that their check that they cut us, they mortgaged their house to cut us this check. We didn't know that until 10 years later. Ballers, right? Amazing.

49:05 And I don't not recommending that for all parents and kids. Okay. But >> not financial advice, >> but yeah, not financial advice at all. But it was really just it was such a show and such a sweet thing that they did. They they've been they've done great and they're fine. But it's just like it's going to be okay. So don't freak out so much because you have a you could you could really do some damage. My wife is the most amazing human I know. Her patience, her kindness, her loving keeping things together when things are chaotic. I would tell myself it's going to all actually work out. So, it doesn't make sense to be so crazy now. Like, put the grind in. Work hard, dude. But like this whole like founder grind, like 3 in the morning, two hours of sleep, don't talk to my family. My my kids will understand because I'm building a future for them. like it's okay. They're gonna get it when I can provide great college or when I can provide a car for them. No, bro. Chill out. So, that's number one advice. Number two, >> 100% index onto the into the network way more than I did back then. It's the network. Add value to people's lives.

50:10 It'll all return when it's all said and done. Number three, just you don't have to be a bad guy. That's not the right word. You don't have to be this intense, in-your-face, tough, rough human to be successful in business and family. Good guys, kind guys can win. And I would just remind myself of that.

50:40 I never was. That's not my personality. never has been. But I would just remind myself, don't be tempted by the just win at all costs, grind at all costs. These are all I'm realizing these are all like this is very much PTSD as you can sense. This this is all like advice that's all the same saying the same thing. >> Yeah. >> there's a lot of other little things, of course. But yeah, >> I think quick money around you tends to be what you said don't be.

51:09 >> Yeah. long-term wealth tends to be the kinder people that I meet. >> So true. >> money magnifies. We just talked about that on another podcast. Money magnifies. It makes good people better and worse people worse. >> Yeah. >> but some of the wealthiest individuals I ever meet are some of the kindest individuals I ever meet. And so many people don't think it's that way. It wasn't until I had the opportunity to literally sit down with billionaires.

51:36 >> Yep. and I I don't even know who I'm talking to and they play it down completely and then they'll they'll say one thing. >> I'm like, "Oh, you got it." Like >> your last podcast$undred million net worth. This is billion dollar net worth. >> That's right. >> But they're sitting there and they remember my kids' names and what sports they're playing and they're asking and and it's just a good reminder that that you are what you put out into the world you will attract.

52:00 >> Yeah, that's right. and most people don't realize that until it's too late, which is sad. And so I think that's great advice. >> Yeah. I will say another piece truly, and I this is this will feel very self- serving, but as I'm looking at you, I I I wanted to remind people that are watching, I myself, so I'm way deep in venture, right? That's last six years just so overindexed into venture. >> And another piece of advice I'd give myself because I'm feeling it now. my wife and I are feeling it now is to live by very straightforward financial principles that I don't think that we did very much living the entrepreneur build it kind of at all cost life that you teach and others teach which is a little bit more diversity you know in what you're doing that that can unlock capital and wealth to be able to do what I get to now do that took me 20 years to get here right you're you're you're definitely younger you figured out sooner and I would hope that my younger yourself could have figured this out 10 years earlier. And I could have honestly I believe I I mean I love the path that I took. Crazy, wild, whatever.

53:03 >> Don't regret, but I do wish that I would have listened to sound principles a little bit earlier >> would have would have helped. >> Yeah. Yeah. 100%. Okay, last question. and you just answered it basically. If you were to go back, is there anything that you would change inside your inside your path? >> The number one like just you know you you talk about principles. So I mean people should know like my wife and I are like in the growth circle learning as well and it's like those principles really are very simple straightforward and sound. You just you know your your savings your kind of liquidity emergency very lean doesn't need a ton. I can go out and figure out how to get more cash early or quickly if I need to and then building out the reserve to start to invest. I mean, I would have told myself, "Bro, why are you paying 30x% in freaking taxes?" Like, just stuff like that. Like, it's amazing these unlocks that I now know that I would have pushed hard on myself to just learn this. It's not it's not rocket science, but it it does take effort. It does take real time.

54:04 >> Yeah, >> you do have to have some trust. You do have to get professionals involved. >> we for the first time have a really great tax guy involved in our life. And I'm like, holy just this last year so much better situation, right? So it's like take time to set that up. The founder grind mentality that I had served me well except that >> my focus was so much on that that I didn't take care of some of the other parts of the house that now I get to.

54:30 Fortunately, I I would have done better. And I'm I'm trying to teach my five kids a little bit of that. >> I think everyone spends 280 hours a year working. That's 40 hours a week. >> Yep. that's the mortgage in me. I know how to calculate your yearly income. Really easy. >> they spend over 2,000 hours a year working on their job to make money. They won't spend 20 hours >> a year >> figuring out how to preserve and multiply that money.

54:56 >> And so many people like, "Oh, I'm exhausted. I can't spend an hour a week." I'm like, >> the an hour a week, if I can take your effective tax rate from 35% down to 15% over the course of your life, it's tens of millions of dollars. if I can help you educate so that you can get comfortable investing in venture capital tens of millions of like >> for me for my kids right like in terms of like mentality it's wild truly >> and and that's I mean that's literally my mission that's why I do what I do that's why I put stuff on social media but I completely agree so >> yeah we're with you we're with you on it man >> this is incredible thank you such a bless you are a wealth of knowledge inside an industry most people don't know enough and thank you for having abundant mindset and just sharing it >> yeah it's been a blast thank you to you as Thanks. If you loved this conversation, you're going to love my conversation with Jay Davis. Click right here to watch it.