Clay Finck (03:37):

When many people think about the traditional tech startup, Silicon Valley is what typically comes to mind for a lot of people. And 43North and what you do, you guys believe that tech incubators should be everywhere. Could you expand on that for our audience?

Kevin Siskar (03:54):

10, 15 years ago, you really had to be in Silicon Valley. New York has really had … it’s come up in the last decade. And then COVID really caused the whole world to switch. Investors were forced to take meetings over Zoom and the phone, and realized that people can really build a rapport. Investors learned that they can get access to more deal flow from anywhere in the world and founders realized that they can pitch investors from anywhere, not just their own ecosystem. And so you’re really seeing a rise of … Steve Case calls it rise of the rest. The whole rest of the planet. Everyone besides New York City and Silicon Valley is starting to come up. And I think that is definitely being cemented by COVID, but it’s something that started years ago. So we invested in ACV Auctions, which just IPOed this past year.

Kevin Siskar (04:39):

I believe their valuation is three or 4 billion right now. But that deal was done in 2015. And so the big advantage of being outside of Silicon Valley or New York City is really fresh eyes, I guess you would say. So ACV Auctions was a company that made software for wholesaling cars between dealerships, the auction block. And maybe you’ve seen the auction block out in the country side of your town or whatever, where all the local car dealers fill up the parking lot and they go to sell between each other. But they replaced that with software. And that’s a deal that I don’t know would’ve got done in the Valley initially, because it wasn’t a pure software SaaS play at the time. It had some physical inventory and it required actually some movement of goods. And the VCs came around to it.

Kevin Siskar (05:23):

Bessemer ended up investing in them, out in New York City. And they came around, but it did take some time. And so I think you get more diversity in the investment approach. And I think we all know that Silicon Valley could only benefit from more diversity in the investor class. So it’s a big advantage and it’s something that lets people outside of those regions spot opportunities that might not be seen otherwise.

Clay Finck (05:47):

You mentioned COVID benefiting many of these businesses in terms of being technology companies, and they’re able to get funding outside of their network just at Silicon Valley. And I’m curious, is COVID going to lead to more of a tech and startup boom in the coming years, just as these talented entrepreneurs realize that they can get talent anywhere in the world to work for them?

Kevin Siskar (06:10):

Yeah. I mean, I think if you could pick one theme of the ’90s through now, it’s essentially just the internet is being installed. You look back at the last century and you’re like, industrialization was the theme and machines increased efficiency everywhere. And right now that’s the internet. And even just a few years ago, less than 50% of the planet was on the internet and mobile was causing everyone to get cell phones and come online for the first time. And that’s still happening. So last I looked, we had just crossed that 50% threshold and that was probably two or three years ago. So you’re seeing now just the massive boom of what happens at the middle end of the internet being installed essentially.

Kevin Siskar (06:53):

You get things like Reddit groups disrupting Wall Street, you get things like governments being toppled. You get the good and the bad on both sides of this. And so I don’t think it’s stopping, I don’t think it’s slowing. I think we’re really just starting to see probably the beginning of it and the acceleration of it. And all the businesses that choose not to become technology companies will probably die off at some point, unless you’re a bagel store on main street. Then you might be okay. But if you’re a scalable business, you need to be adopting the internet and software and technology to survive, I think going forward.

Clay Finck (07:29):

Yeah. We live in a time where technology is developing as fast as ever, which can be very exciting as an investor, I’m sure. Have there been any companies or emerging industries that have just totally blown you away in what they could potentially lead to?

Kevin Siskar (07:47):

Yeah. I mean, I think FinTech and Crypto has blown my mind. So I mean, you get all these pitches and companies always pitch their market size. And this is a $6 billion market and you’re like, well, the size of Twitter is more than that, so it’s not that big. This is 100 billion market. And what you’re seeing is Stripe is still private and worth, I think, around 100 billion. The FinTech market as a whole is something estimated at 20 trillion. And so you’re like, oh, well, there’s already Skrill, there’s already PayPal, there’s already all these things. But there’s just so much opportunity in that space. So one of the companies we’re investing in right now, Vervent, supports and provides the rails for invoicing and payment solutions. So the FinTech market just blows me away with how big and fast it is really at the end of the day.

Clay Finck (08:38):

It’s pretty crazy that something as simple as payments can just have such a large market and so many players just fighting for that market share.

Kevin Siskar (08:46):

Yeah. And then to talk about Crypto a little bit, you went from people not even believing in Bitcoin or Ethereum a few years ago. And I think what it shows is, one, there’s just, kind of with the Wall Street path, there’s just so much demand for this. But also, it goes back to the internet thing. It’s not that this stuff didn’t happen before, the information and the accessibility to be able to do it was just siloed by a privileged few who took advantage of and got rich for themselves. And you’re seeing all this information being unlocked. Pandora’s box is being ripped open and everyone is getting access to this. Paul Graham actually, from Y Combinator, has a good article on this. It’s one of my favorite articles.

Kevin Siskar (09:21):

For those listening, if you haven’t read this, go to Paul Graham’s website and look up an article called The Refragmentation. It basically talks about how actually the last decade was the anomaly. The fact that our parents and grandparents had three types of bread and three TV channels, and the fact that they were so in line on absolutely every aspect of their life was the blip. That was the rarity. All of society shows that you have the shoemaker and you have the king and you have the surfs and you have all these different various aspects across countries and cultures. And so I think that’s what the internet is unlocking. It’s this ability to let everyone carve out their niche. And we’re almost going back to this 1800 style with technology, of people being declare self ownership and own their own place in the world. It’s a really good article.

Clay Finck (10:11):

Yeah. That reminds me of just the trend we’ve seen to working from home. Many people have found out after COVID that they enjoy working from home. They have much more flexibility, they have more flexibility of when they work, they’re able to do things around the house and just cook at home. So that’s just another reminder of just technology democratizing for everybody.

Kevin Siskar (10:31):

Yeah. It’s giving everyone access. And I think it’s easy to sometimes get demoralized or down about this or that, because we’re also amplifying all the negative. And you see January 6th and other things that are happening. But if you look at the overall trends, like Steven Pinker, I think his last book did a good job covering this, where overall, society is improving and there’s less violence than ever before, infant deaths are at an all time low. And so overall, the world is improving. Not to say there isn’t a lot more work to be done, there certainly is, but it’s definitely happening. And I think it behooves people to figure out how they can take advantage of the internet and find ways to craft their own meaning within it.

Clay Finck (11:16):

Now, you have a background in studying human behavior, as you majored in cognitive neuroscience and minored in philosophy in college. How has understanding human behavior helped you as an investor?

Kevin Siskar (11:31):

So I think that’s all investment is, to be honest. And it’s funny because when you’re a kid, you think like, you see the movies and you’re like Gordon Gekko on Wall Street and you think it’s like all this engineering and smarts. But it’s honestly just so random, it’s incentives at play, really is what it is. And I remember reading Freakonomics in college and the whole first chapter is all about how incentives drive the world. And it’s never not rung true to me. If you can figure out what people’s incentives are, you can understand the way money is going to flow, you can understand the way the world’s going to work. And cognitive neuroscience was a lot of that. It’s the combination of neuroscience, learning the brain pathways, anthropology, philosophy, psychology, and looking at where all of those intersect with linguistics and everything, and taking a holistic view of the world.

Kevin Siskar (12:19):

And the more and more I’ve gotten into business and investing over the years, it’s really just that. I mean, it’s a founder might be really good at software engineering, but they’re probably not that good at sales. And it’s not that that’s wrong, it’s just that our strengths also lead to our weaknesses. And we have to have the self-awareness around that in order to figure out how to fill those gaps with other team members or growing out our team to build a strong company in order to find a good investment opportunity. And so I really, in hindsight, I’m really glad that those are the degrees I got. I was originally a nursing major and I switched to that in my final two years, and I’m glad I did. It’s been very intellectually stimulating. So it’s good.

Clay Finck (12:56):

Speaking from personal experience, I was someone that was very drawn to investing because I loved math. And I’ve enjoyed the investment process even more after I learned about the qualitative factors, such as the people, the brand and like you mentioned, the incentives. It’s easy to look at a spreadsheet and say, yeah, they’ve grown at 5% a year. We expect them to continue to grow at whatever percent. And you can anticipate what might be able to happen, just looking at the incentives of how the business works in the way the world is moving.

Kevin Siskar (13:28):

And in some industries, the mathematical approach might be the good approach, but I’ve actually seen a lot of people with MBAs or Wall Street try to come into venture capital and they’re bad at it, because they tried out intellectualize it. I had a few friends who were … I won’t say the name of the company, but it was early stage and got finance degrees and they had started a fund. And I brought this founder to them who I had seen just run through wall after wall. I had been tracking him for months through the accelerator I was running. And every time he said he was going to do something, he did it and he crushed it and then he hit the next one. So at a certain point you’re like, all right, this guy is going to do everything he says. It might take him some time, but he is going to do it.

Kevin Siskar (14:06):

So I bring him into the fund, he pitches, they start digging into all the due diligence and looking through the financials, and they basically talked themselves out of the deal. I think this at the time was like at an $8 million valuation. They were like, come back when you have more traction. So he goes, he gets more traction. He does what he does. He runs through walls and he hits everything, comes back a year later and they’re at a $12 million valuation. And so now the firm talks to him again, but the valuation is too high this time. They talk themselves out of the deal on a technicality. I was like, “Guys’, he is crushing it.” And so this past few months they just raised, I think, 100 million, had a few hundred million dollar valuation. And would have been one of the few unicorns to come out of that fund.

Kevin Siskar (14:45):

So I had to text my friend and say, “I told you so.” So I think focusing on founders and people and psychology and human behaviors at the early stage of venture capital investments is important. Obviously that’s a very different skill set than real estate or stock options or something like that.

Clay Finck (15:00):

That’s got to be exciting, to find those founders that seem to defy all odds and continue to just crush all projections year after year.

Kevin Siskar (15:11):

My advice for that is literally just like, if you want to get into venture capital, just surround yourself with founders and just spend time with them. Go get drinks, go hang out, go help them with their … Just do whatever you can to just spend time together and learn how they think. And that’s honestly one of the better ways to get into the space.

Clay Finck (15:28):

So when you’re analyzing a company, what are some of the first things you look for that allow you to quickly disqualify a business that might not be up to par?

Kevin Siskar (15:39):

At the earlier stages, it’s that. It’s typically like, I am very … And every fund has a different investment thesis, they would call it, that they pitch to their LPs when they raise their fund. And some are more qualitative, some are more quantitative, but I’m very founder focused. I want to be able to bet the jockey, because if you bet the jockey, they’re going to figure out the sales, they’re going to figure out the product. They’re going to run through those walls to set up their team, fill their gaps. Versus some sort of technicality of, oh, they don’t have their revenue yet. It’s like, well, can this person get the revenue? Can they figure that out? Are they willing to have the self-awareness to know that they suck at sales and they’re really good at products, so they should maybe be the CTO and not the CEO and bring in someone over here?

Kevin Siskar (16:18):

And so you really want to, for me, you want to focus on the founders at the early stage. And so if that isn’t a fit, that would maybe be something that makes something not at par for me. And then if you did have to pick a technicality, I’d say market size. So we saw a really good business, but it was in a space where the entire market cap was under a billion. So it’s like, even if they crushed it, that just isn’t enough. So in that solution, they probably shouldn’t raise venture capital. And that’s fine too. Those guys are going to make a ton of money building a really good mainstream business and they will be filthy rich. And that’s also a great outcome.

Clay Finck (16:54):

So you put a lot of focus on the founders and it reminds me of a book I’m currently reading and that’s Good to Great by Jim Collins. He talks about this a lot where, where the company is going might change. So if you have the right people … He uses the analogy of a bus. If you have the right people on the bus, then they’ll be able to make the right decisions and adjust the path to make sure it does what it needs to do to be great.

Kevin Siskar (17:22):

100%. I would agree with that. I mean, it’s almost never what you think is going to be setting out of the gate. Your customers are going to give you feedback that take you here. You should always listen to your customers. You should maybe take some investor feedback with a grain salt. You might have to do some sifting from investor feedback to figure out what’s worth your time and what isn’t, if you’re pitching your company to VCs. But yeah, 100%. A good founder is going to have the gut and the instinct to know what to pay attention to, what not to pay attention to, and drive the bus in that direction.

Clay Finck (17:50):

I’d imagine when it comes to the venture capital space, these companies are much smaller and potentially higher risk. With that, I’m sure you have learned many lessons over the years. What do you wish you could tell your younger self about investing in startups?

Kevin Siskar (18:05):

It comes down to that determination. So one of my mentors and actually I used to work for him, Adeo Ressi, he was also Elon Musk’s roommate in college. And Adeo has built a portfolio of 4,000 companies. But one thing he would always say that’s stuck with me is, “The only time a company dies is when the founder quits.” And when you think about that, it’s pretty powerful. And what he talked to me about in that is, I’ve seen founders who, the company is dead, the company is DOA, they don’t quit. They’ve burned the company down from 300 people back down to four or one person and rebuilt it back up, because they’re just so determined to keep this thing going. And I think that grit and that determination, it’s very hard to have. I mean, imposter symptoms at an all time high. And you don’t want anyone who’s cocky or arrogant either. It’s a determination in the right way, in a serious but smart way. That I think is something that I would look for more now.

Clay Finck (19:02):

Shifting gears, I’d like to talk more about just being a worker and how someone can be a more effective worker and have the right mindset. So when a person is early on in their career, they might have a lot of options with the direction they might want to go with their life. Some possibilities might be going to graduate school, working at a large corporation, or even a startup. As someone who is very familiar with the business world yourself, could you tell our audience about the differences between working at a larger established company and working at a startup?

Kevin Siskar (19:38):

Working at a larger company, you’re going to be more niched down into your silo, essentially. You’re going to be hired to do a task, you might have some flexibility in the left or right of how you do that task, you’re doing that task. That’s what you’re there to do. And the bigger the company, I’d say, probably the more true that is. There’s a few anomalies at the high, big end. Maybe Google and some of these other tech companies have figured out culture in a certain way, but I would argue that the GEs and the IBMs of the world probably have not. In a startup, you can really do whatever you want. I mean, you can’t do whatever you want. If you’re hired to do marketing, you do marketing. But you have so much more freedom to explore and maneuver and just test and experiment and find things that work for the company.

Kevin Siskar (20:22):

And typically, it’s really that freedom of experimentation and that freedom to test and play. And when I say that, I say, test, play experimentation, I’m talking more about running with it. Because you’re technically, you’re probably getting equity at this earlier stage company, that you wouldn’t get at a later stage company. And so you are aligned less on just collecting a paycheck and sitting there, and more aligned on actually wanting to see the business succeed. And so you really want to be doing the things that drive the business forward, you’re directionally aligned to do so. And you’re going to be probably given the freedom to maneuver and figure that out. It’s a lot harder. There’s not as much job security, there probably aren’t going to be good benefits. But when that equity hits, I would look at that from an investment perspective.

Kevin Siskar (21:05):

I know some people in Silicon Valley take the stock options, as soon as they invest, they quit and go get another job. And in 10 years they’re like, oh, I can get three or four different companies under my belt and maybe one of them will hit or whatever. Maybe that works, maybe it doesn’t, it really depends on how good you are on being an investor and picking companies as an employee, I guess. Who’s getting stock options. But those are really the big differences. But almost putting both of the smaller, big aside, I think when people burn out and get sick of a company, it’s when they stop growing. And people stop growing when they stop having opportunities to learn. And so if you’re not improving yourself or your own skill set, people get bored. Repetitive task wears them and they go find something else.

Kevin Siskar (21:47):

And so I would encourage people, whether it’s big or small, to just position yourself somewhere where you are growing yourself, your own skill set, you are learning. And if you’re doing that, I think you’ll really be happy 10 years from now when you look back and you’re like, yeah, I had a job, I made money. Hopefully you took some of that money and put it into a company that you started and reallocated it to your own investment in yourself. But also, you’ve grown your skill set and you’re learning. And so that’s just something I would encourage people to optimize for, is this constant ongoing state of learning.

Clay Finck (22:20):

I really like that. And I think it’s important to hit on that there is really no just one right answer. Different people have different preferences and different life situations and different demands of what their work schedule looks like or where they have to be at a certain time and things like that. So just work flexibility is another big piece of it.

Kevin Siskar (22:41):

I would agree with that as well.

Clay Finck (22:43):

How does the short term and long term perspective differ between a smaller and a larger company?

Kevin Siskar (22:50):

So again, I’m going to almost strip the larger, big out of it. I would encourage everyone listening to take a 10-year long term perspective on anything you’re doing. And maybe if you’re going with a large company and you know, hey, I can do this for three years, which I think statistically is the average time millennials tend to stick around a job until they stop learning, get bored and move on and go to the next one. But even if you think you’re going to be somewhere for three years, take a 10-year approach to it. Reverse engineer where you want to be. So I would encourage you to have … I’m not a fan of putting people on the statue, on the pedestal, in the sense of like, they say never meet your hero. So you don’t want to put them too high up on the pedestal.

Kevin Siskar (23:32):

But you should have someone that you look up to in your industry and you should probably be trying to reverse engineer how they got there. And that’s why listening to podcasts like this are great, because people often share their stories and you can start to reverse engineer that. But I would then take a 10-year long term perspective approach to it and figure out like, does what I’m doing right now get me closer to that? If the answer is no, it might be painful, but it’s probably time to stop doing what you’re doing and go do something else. If the answer is yes, keep going. Rome wasn’t built in a day and it’s going to take you some time, but you’re on the right path.

Clay Finck (24:03):

Now, many of our listeners likely work a job and collect a steady paycheck. And being in this situation might lead to many people just becoming more complacent with their situation because all their needs are taken care of in the short term. How would you recommend someone in this situation take the extra step and shift their mindset from being a worker to being an investor in developing more of a growth mindset?

Kevin Siskar (24:31):

I think you just have to do it. I’ve helped some people get into angel investing and investing in startups over the years. Even just as an employee getting equity at a company that maybe didn’t offer equity before, but through knowledge … and this comes back to the internet, giving this knowledge out. You have to hear about it, to know about it, to do it. People who didn’t know that equity was an option, and then they just asked their boss, hey, is this a thing? He’s like, oh yeah, I’ll do that. Saves me money. I’ll pay you a little bit less, but yeah, sure, 100%. And so I think the mindset shift I would like everyone to make is ownership. And whether you’re taking that long term perspective or you’re working a job or you’re investing, investing is magical because it makes you feel ownership.

Kevin Siskar (25:16):

That’s probably less true if you were like, I’m Robinhood buying stuff in the stock market. You maybe don’t feel ownership of Facebook because you bought four shares of Facebook, whatever. But I guess what I’m just trying to say is, if you’ve never felt that, if you’ve always just felt like you’re selling your time for a paycheck, it is a very different thing to then take ownership of something and make money in that way. So I guess two things I would think about there, make investments, find ways to get ownership and things, so you’re aligned and you have that mentality. That’s a very powerful shift. And the second thing I would encourage people to do there, I’m not saying everyone should side hustle, but even if you just do it one time, make a dollar, make $10 by not selling your time.

Kevin Siskar (25:59):

And some people, that blows their mind that they’re like, oh, I could sell a thing? I could sell PDF that I made in Canva as a weekly calendar on Etsy that someone paid me for a digital copy of? It’s just the idea of making that first dollar. I was talking to one of my really close friends from middle school last year and I told him this very thing. He actually went and set up a t-shirt store. He used Printful, which lets you upload designs and then they handle all the drop shipping, all the t-shirt printing, all that. And you can connect that to your Shopify. And it’s a very easy side hustle. And so he used, I think, Printful plus Etsy to bail his first store. He put it up for sale and I think I was one of the first or second people to buy the t-shirt.

Kevin Siskar (26:42):

But he texted me afterwards, he was like, “Dude, this is incredible.” People haven’t felt that before. I’m sure many of the listeners of this podcast have because they’re incredibly smart and intelligent millennial investors. But for those that haven’t, go for it. Go find ways that you could feel that ownership mindset shift and think about even just making money doing anything that isn’t selling your time is going to be incredibly powerful to your mental mind state. And what you think is possible going forward.

Clay Finck (27:13):

It reminds me of Naval’s quote, “You won’t get rich selling your time to someone else.” It’s essentially getting to your point where you have to own equity in something, whether that be your own business or someone else’s business that maybe you’re working for, or the stock market. So today you work with many startups. I’m curious, from your perspective, if you think it is easier or harder to start a company today than it has been in the past.

Kevin Siskar (27:42):

Well, it’s a double-edged sword to most of my points here today. I’ll make both sides of the argument here. It’s easier than ever in the sense that 15 years ago you had to buy a server, put it in your closet, it cost you a few million dollars to get going up with a website. Now you could use AWS, you could fire up a business for probably less than five grand. You strike that list, you incorporate for 400 bucks. It’s easy to get going. You have more resources than ever, you have more go-to market strategies than ever, but you also have more competition. Now, that being said, that’s also just like internet SaaS businesses. Some VC funds are starting to pivot towards climate tech a lot. And so that frontier tech still has a huge upfront cost.

Kevin Siskar (28:28):

Like, how are we going to pull scrub carbon out of the air that’s going to be a massive RND investment? And so I think venture capital tends to follow that. So I almost feel like venture capital tends to follow that frontier tech, lag behind it a little bit and then also keep making investments in that past phase, like SaaS businesses and that. So the reality is, it’s definitely easier to build a SaaS business. It’s still very hard to build a climate tech business. But as venture capital moves through an industry, it brings down that barrier to entry because people start to build the infrastructure tools for that industry. But it’s definitely easier than ever. The fact that my friend can upload a JPEG to Printful and then sell t-shirts that drop ship automatically and he doesn’t have to do any shipping labels. It’s easier than it’s ever been and I would encourage everyone to go make some money online, 100%.

Clay Finck (29:24):

After reading through your blog and doing some research on your background, I came across a quote you shared from William Gibson. And that quote is, “The future is already here, it’s just not evenly distributed.” We somewhat alluded to this idea earlier. Could you explain to our audience how this quote applies to our world today and give some examples of how this idea is coming into fruition?

Kevin Siskar (29:49):

This is a blog post I wrote at the start of COVID. It was really the first time we saw that trend of things were accelerating. Things that had already been in the works for years were really starting to pick up steam really fast. For example, Zoom and video conferencing. For years, it was in the works, Skype sucked, then Zoom was better and WebEx and all this. And what we really saw at the start of COVID was this acceleration. And so there was always this quote that was well-known by William Gibson, that the future is already here, it’s just not evenly distributed. What I saw during COVID was basically that it was being evenly distributed and it was accelerating.

Kevin Siskar (30:23):

So it’s funny because I wrote this at the start of COVID, now there’s research showing that we’ve basically accelerated, I think, two to three years into the future. So had COVID not happened, Zoom probably still would’ve hit half a billion daily users, but it might’ve taken them a little bit longer. The normality of taking web conference calls and then people building and adopting Slack and all these things that had really been growing steadily just vastly accelerated. Clubhouse took off, all of this. And so what I think it means essentially is, technologically we’re probably where we would’ve been in 2023 in some industries, but we’re there now because COVID really accelerated a few of those spaces.

Clay Finck (31:05):

When I read that quote, I can’t help but think of Bitcoin. It’s not technically run by any one individual, but anybody in the world is free to use and transact Bitcoin. Do you run across a lot of companies in the Bitcoin space?

Kevin Siskar (31:21):

Yeah. So I spend a lot of time in this space. So my company, Finta, has software that helps founders with the fundraising process. We also help investors, diligence companies as well. And before that, we talk about wandering … The bus changing lanes. Before that, we were actually equity token. And so we were looking to securitize equity as tokens to essentially replace shares. And so I spend a lot of time in this space thinking about it. We pivoted away from that because in the United States there’s lots of SCC laws that regardless of whether you’re a token or a stock certificate, you’re still subject to SCC laws and not much changes. But with regard to Bitcoin, I would say COVID 100% accelerated that. I think with regard to Reddit and what you’ve seen with WallStreetBets and podcasts like this. The access to this information was so locked down. In the 2000s, you had Rich Dad Poor Dad and maybe four or five other books. You didn’t have a lot of this information out there.

Kevin Siskar (32:16):

You guys are here pointing it out every week. Think about like that is disruptive. That’s very disruptive to the way that the world has worked for the last thousands of years through Kings and monarchs and you’re changing a lot. Even just access to venture capital and how that can change an industry and change an economy, change a city. We’ve seen here in Buffalo what 43North investments have done, not just for our own returns, but for a city. We have one of our skyscrapers downtown is now full of companies that are growing and thriving. Those people at the successful companies are now quitting their jobs and starting more companies, because they made money on stock options on their equity.

Kevin Siskar (32:59):

And so you get this flywheel that just gets kicked and accelerates over time. And that’s also what happened in Silicon Valley. So you hear about the PayPal Mafia. So you have, PayPal as a success and then Elon spins off and does SpaceX and Tesla. Peter Thiel comes out, invests in Facebook and does Palantir. This is how economies get built. So it’s really powerful and it’s a great thing you guys are doing. And it changes the world, for sure.

Clay Finck (33:26):

Warren Buffett has said that he’s a better investor because he is a businessman and he’s a better businessman because he’s an investor. You’re in a unique position that you invest in startups and you run your own business. Have you experienced that lesson yourself as you’ve run your own companies?

Kevin Siskar (33:46):

Yes, 100%. And I think what it comes down to is empathy and understanding. So coming back, to bring this podcast full circle back to cognitive neuroscience and understanding people’s incentives. The more you can put yourself in their shoes from your own experiences and realistically understand what’s going on, the more help you can be. Every VC on this planet runs around saying how value add they are. I can tell you a lot of them just write checks and then don’t really help. And so I think, for me, it’s always been like, I want a founder to be able to come to me and say, hey, I’m really struggling with figuring out my growth model and I don’t know how I should be thinking about prioritizing this and scaffolding out my sales team and all that.

Kevin Siskar (34:25):

And I want to be like, okay, this is how we did it in the past. And to that point, I think the best investors, if you’re a startup founder out there listening and you want to fundraise for your own company, the best investors were once operators. So they have that empathy, they have that understanding. They’re not just trying to write a check and get a markup, they really do care because being a founder is hard. And once you’ve been through it, you know and you just want to help the other people going through it. And so I would just encourage people to look for operator investors, people that have been there and known it.

Kevin Siskar (35:01):

And then I would also encourage people who have found success, pay it back to the other founders. They will be internally grateful. And then, life is long. And you take a 10-year view on things and 20 years from now, you’re all friends and everyone is successful and you help each other out on the next business venture. And so there’s a lot to say about karma and goodwill and helping people and how that plays out down the road.

Clay Finck (35:24):

It reminds me of how some of these larger companies can become complacent because the people running the business have climbed the corporate ladder and they weren’t actually business operators in their former jobs. It reminds me of say, Amazon. Jeff Bezos started Amazon and was a CEO for over two decades. I think it’s important when you’re investing to understand how capital can be allocated efficiently for that particular business.

Kevin Siskar (35:51):

I would say, if you look at the stock market, pretty much all of the most successful stocks right now still have the founders leading the companies. And I think you could see it’s not played out well in the past, like Apple being a case, and this is a while ago, the ’80s and ’90s when they took out jobs. What happens when you try to take them out and you put in the Pepsi executive to try to take over and it just doesn’t play out well? And so now I think time will tell, I think what happens with Amazon. I think Tim Cook has done an excellent job replacing Steve Jobs, but he worked with Steve for all those years before and was very groomed for that situation. It’s working out for Microsoft right now, but it did not work out when Steve Ballmer was there.

Kevin Siskar (36:33):

So the more that you have people who are technical and have that founder mindset, maybe we’ll call it the founder mindset even if they aren’t the founder themselves, that’s what I would be looking for. Is people who understand the product. Maybe aren’t coming at everything from like an MBA perspective, but really purely and genuinely understand what that company is doing and how they’re doing it.

Clay Finck (36:53):

I myself am a big believer in the idea of creating your own luck and that old saying that luck is when opportunity meets preparation. So the longer a business is able to stick around, the higher chance that they will run into luck somewhere along the way. How much has luck played into the success of the companies you’ve worked with?

Kevin Siskar (37:16):

I don’t like the word luck either. I do think luck equals when opportunity meets preparation. And I think a lot of that is just the only time the company dies is when the founder quits. It is a lot of being prepared to accept help. And if you still have that startup idea as just an idea in your head, no one can help you. So you’ve got to make things real, you got to make things tangible. You have to do the work, you have to incorporate so you can give your co-founder equity so they work with you and put time into it. You have to do the things that get you to the next step. And so I can’t stand when people come to me like, I can’t tell you my idea because you might steal it. It’s like, no, no, no, no one cares. Every other founder has already told everyone their idea and then struggled to get product market fit or grow it or do anything.

Kevin Siskar (37:59):

And just, no one cares because everyone is so self-absorbed in their own stuff. And so I think you really need to be putting yourself out there so opportunity can meet that preparation. And I think that’s a big, big part of it. Being in the right place at the right time, but you have to get yourself out there. You have to get your company’s brand out there in order for opportunity to find it.

Clay Finck (38:20):

I would argue that pretty much all companies are going to run into luck, it’s just a matter of capitalizing on those opportunities.

Kevin Siskar (38:28):

Even Portnoy from Barstool, he had a good interview, first ever non crazy actual founder story interview I had with him. Barstool started as a magazine, a zine that he would hand out on the subway in Boston. And he was doing that for years. And then finally one of the readers reached out to them through the contact page where everyone was like, “Hey, I’m the CTO at this tech company. If I built you a website, would you use it?” And a stranger built Barstool their first website. And then obviously Barstool media has become a behemoth from there. Because once he started putting the stuff online, he had the Drudge Report, Early Blog HuffPo fact go on. And so yeah, you just need to be putting yourself out there. And if you’re doing it in the right way, you’re being good-willed and good intentioned about it, the universe will find ways to help you.

Clay Finck (39:17):

That’s an incredible story. And I think it’s also worth mentioning that every company is going to run into good luck and bad luck. So you also have to persevere through the bad luck, and I believe that’s something that these great founders that you’re talking about are able to just continue to push through.

Kevin Siskar (39:38):

Yeah. And I think also I don’t want to give too much glory to it, because sometimes it doesn’t always come from … People who can endure have probably endured in some other way. They didn’t just magically start a company and learn in their late 20s to do that. Something else probably happened in their life that they learned that resilience and that ability and that perseverance to keep going. One thing that I’ve seen time and time again is that typically the founder was influenced at some point by another entrepreneur. The contagion of the idea of entrepreneurship spread to them, either from their parents owning a fruit market or their uncle having a landscaping company or something put that seed or that idea in them that they can’t help but think that way.

Kevin Siskar (40:22):

It’s almost like that’s just how they are, that’s their nature. And so there are definitely skills you can learn, but the journey of entrepreneurship is definitely not a quick one. It takes time and years to learn all of the different sides of the businesses and the skills. And it’s definitely attainable to learn, but you have to have patience as well.

Clay Finck (40:41):

Yeah. I just got done visiting the co-founder of The Investor’s Podcast Network, Stig Brodersen, and he was telling me a lot about the founding story of TIP. And he mentioned it was something like three years into the company was when he got his first paycheck. So him and Preston Pysh put in three years of putting out a podcast week after week after week. And they were high quality podcasts and it wasn’t until three years in that they collect their first check.

Kevin Siskar (41:07):

Yeah, that’s what I’m saying. And I’ve had some people who were early to some teams at some point and six months in they were like, I don’t think this is going to work. It’s like, well, this sometimes takes longer than six months. Too often people try to capture lightning in a bottle. And if they don’t do it immediately, whether they’re an investor or a founder, they’re like, this isn’t going to work. And I think that’s just the wrong attitude, it’s the wrong approach. It’s bet the jockey. Is this person going to figure this out? Can they navigate these waters to capture the lightning in the bottle eventually? Is really how I like to think about it.

Clay Finck (41:43):

Another quote I’ve run into quite often is that your network equals your net worth. So in a sense, it’s saying that the better network you have, the better off you’ll be financially. What kind of role has a strong network laid in not only building your own business, but also for the entrepreneurs that are building their businesses that 43North invests in?

Kevin Siskar (42:05):

I would encourage everyone to think about how they build out their network. Step one is, if you don’t have 500 LinkedIn contacts, LinkedIn says how many you have. So like I was just telling a friend the other day, it’s like, hey, it says you have like 31 LinkedIn contacts. So I don’t use LinkedIn. I was like, well, now everyone else looks like you don’t have a network. So everyone go get 500 LinkedIn contacts, and then it just says 500 plus. But as you start to get into the thousands of building out your network, a few things I would say, only connect with people you really know on LinkedIn. I mean, again, I should prefix that by saying that’s where I manage my network. Because other people will want to ask you for intros and you don’t want to look dumb and say, oh, I can’t intro you. I just connected to them because I thought it’d be fun.

Kevin Siskar (42:43):

You really only want to connect to people on LinkedIn that you know, so other people can actually leverage you in the right way. I also use this app, a startup called Clay that you can connect your email, your calendar, your LinkedIn, your Twitter, everything to it and it pulls in your whole network. So when a founder comes to me and they say, hey, I need an intro to so and so in this space at this stage, I can just search my network and find it, which is pretty great. But I think the biggest part about building a network is, when you’re a venture capital, it’s very important because you need to be able to pull people in to help you in specific ways. But I think you also just need to be intentional about how you can add value to your network. Just connecting with people and adding them to your Rolodex, that’ll work for a few months or a year or two.

Kevin Siskar (43:25):

But if you really want to take a 10-year outlook on stuff and you really want to think about how you could stay in touch with those people in a meaningful way, not just have them be Twitter followers or whatever, you got to find ways that you can add value to their lives. So something like doing a podcast like this, where they can listen to you from time to time. Or you’re doing a newsletter. You got to find ways to stay warm. Because when people don’t hear from you, it’s like the same thing when people don’t hear from your company, they just assume it’s dead. And so you want to be staying up to date with people, pinging them. Not all the time, once a year, twice a year or something, but doing something meaningful.

Kevin Siskar (43:57):

And then the other thing I would encourage is, take advantage of the internet. I can tell you working in venture capital, VC, Twitter is where it’s at. Everyone in venture capital is on Twitter constantly sharing resources, constantly talking, generally just willing to connect. And so I’ve invested in some funds and some of the kits and stuff over the years that were explicitly a result of Twitter friends that I ended up eventually meeting in real life and getting to know and becoming real life friends with.

Clay Finck (44:27):

Yeah. The internet has really made it so that pretty much anyone is accessible. Some of these really big shots, say CEO, you might message them and it might go to their secretary or something. It seems like there’s still almost a way to contact pretty much anyone, whether it be through Twitter, through LinkedIn, through email, through someone’s website and such. So I think that is just really powerful and that if you can figure out a way to add value to someone, then they will pay attention to you.

Kevin Siskar (44:56):

They will. I mean, I’ve had billionaires on my podcast. I’ve had Jonathan Abrams who started Friendster before MySpace or Facebook. You could really get in touch with anyone if you find the right way to add value to other people. And figure out how to give that value away for free, because it’ll pay you dividends down the road to, I guess, your original point around building your network and having that payoff later.

Clay Finck (45:17):

Kevin, thank you so much for coming onto the Millennial Investing Podcast. Before we close out the episode, where can our audience go to learn more about you and follow along with your work?

Kevin Siskar (45:29):

I’m pretty active on Twitter, so @thesiskar, you can check out. If you are a founder or you’re looking to get plugged into the startup scene, you could definitely check out 43north.org. We’re definitely starting to look for our investments for next year again. So you can also text me. I have a community number at (646) 907-6669, so you can text me. And then my personal blog is just siskar.co. So you can check that out. If you’re a fundraising founder, you can check out Finta at trustfinta.com as well.

Clay Finck (45:59):

We’ll be sure to link all of those in the show notes for those interested. Kevin, thanks again for coming onto the show.

Kevin Siskar (46:06):

Clay, thank you. Some great questions. I hope this helps all of you diversify real estate venture capital, do it all, Bitcoin. And thank you everyone. I’ll see you on the internet.

Clay Finck (46:17):

All right, everybody. I hope you enjoyed today’s episode. Please go ahead and follow us on your favorite podcast app so you can get these episodes delivered automatically. And if you haven’t already done so, be sure to check out our website, theinvestorspodcast.com. There you’ll find all of our episodes, some educational resources we have, as well as some tools you can use as an investor. And with that, we’ll see you again next time.

Outro (46:40):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investors Podcast Network. Every Wednesday we teach you about Bitcoin and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.