20 VC 055 VC Done Right with Jonathon Triest @ Ludlow Ventures

Summary Notes


In an episode of the 20 minutes VC, host Harry Stebings has an engaging conversation with Jonathan Triest, the unconventional founder and managing director of Ludlow Ventures. Triest shares his atypical journey into venture capital, starting as a designer rather than the usual tech or finance background. They discuss Triest's learning curve, investment strategy, and the importance of hustle, as well as Ludlow Ventures' founder-centric approach and the firm's unique strategies for sourcing and supporting startups. Triest emphasizes the value of relationships with both entrepreneurs and LPs, and the symbiotic dynamic with larger VC firms. The conversation also touches on the significance of advisors in the industry, with Triest highlighting the mentorship he's received from figures like Brad Feld and Eric Ries. Stebings and Triest conclude with a quick-fire round, delving into Triest's personal preferences and his insights on the future of the industry.

Summary Notes

Introduction to the 20 Minutes VC Show and Guest Jonathan Triest

  • Harry Stebings introduces the 20 minutes VC show as highly entertaining, with Jonathan Triest as the guest.
  • Jonathan Triest is the founder and managing director at Ludlow Ventures.
  • Jonathan is not a traditional VC - he was not a startup founder, Google employee, consultant, or investment banker.
  • Jonathan has a unique view on the venture community, which is discussed in the interview.
  • Harry personally endorses products featured on the show, such as hiring screen, which he used to hire an assistant.

"You are listening to, of course, the 20 minutes VC with your host Harry Stebings. And the funniest guest is Jonathan Triest."

This quote introduces the podcast and the guest, establishing the tone for the episode as both fun and informative.

"Jonathan is the founder and managing director at Ludlow Ventures. And what I love about Jonathan is he's not the traditional VC in many senses."

Harry highlights Jonathan's unique background and approach to venture capital, setting the stage for a discussion on his non-traditional entry into the VC world.

"But before we dive into the show, the podcast startup by Alex Bloomberg discussed in their latest episode whether it is right or wrong to personally endorse products in product placements."

Harry addresses a topic from another podcast, relating it to his own practice of personal endorsements on his show, which provides context for his mention of hiring screen.

Jonathan Triest's Unconventional Path into VC

  • Jonathan Triest shares his non-traditional background, not coming from a prestigious business school or a high-profile company.
  • He was a designer who transitioned into venture capital due to the increasing competitiveness in the design field.
  • Jonathan had some capital to start with and decided to invest in companies he enjoyed working with.

"My story is actually a little bit strange compared to most VCs, I imagine."

Jonathan acknowledges his atypical journey into venture capital, contrasting with the common backgrounds of many in the field.

"I was a designer and I loved making and working on interfaces for technology products."

This quote explains Jonathan's original career path and his passion for design, which eventually led to his interest in technology companies and investing.

Early Investing Strategy and Learning from Mistakes

  • Jonathan admits to initially having no investing strategy and making numerous mistakes.
  • He emphasizes the importance of learning from these mistakes and hopes to continue learning.
  • One specific mistake Jonathan recalls is not being persistent enough when told an investment round was full, a practice he has since changed.

"In the beginning, the beginning was like, learn. I didn't have a strategy. I had zero strategy."

Jonathan reflects on his early days in VC, highlighting the lack of a clear strategy and the focus on learning through experience.

"If I get sorry, our round is full, I fly to wherever that company is and bang on their door until they let me in."

By sharing a past mistake, Jonathan illustrates how his approach to investing has evolved to become more proactive and determined.

Ludlow Ventures' Philosophy: "VC Done Right"

  • Jonathan discusses the motto at Ludlow Ventures, "VC done right," and his views on the traditional VC approach.
  • He describes how some VCs can be perceived as bullies and the importance of treating entrepreneurs with respect.
  • Jonathan believes in a founder-first approach, fostering transparency and close relationships with the companies they invest in.

"The motto at Ludlow Ventures, your VC firm, is VC done right. What do you think is wrong then with the archetypal VC?"

Harry inquires about Ludlow Ventures' philosophy, prompting a discussion on the firm's approach to venture capital and its differentiation in the market.

"But there was this common feeling amongst entrepreneurs that VCs were bullies and the VCs would start negotiating with entrepreneurs and they would back them into a corner."

Jonathan criticizes the traditional VC approach, emphasizing the negative impact it can have on the relationship between investors and entrepreneurs.

"So when we started, we said, this is backwards. The entrepreneurs are the ones who are doing the work that enables us to do our work."

This quote encapsulates Ludlow Ventures' philosophy of valuing and supporting entrepreneurs, recognizing their central role in the venture ecosystem.

Size and Growth of Ludlow Ventures

  • Jonathan shares that Ludlow Ventures started by putting about a million dollars to use in 2009 as a learning experience in venture capital.

"We put about a million dollars to use in 2009. That was kind of like our figure out what on earth it means to be a VC."

Jonathan provides insight into the early financial commitment of Ludlow Ventures, indicating the firm's beginnings and its exploratory approach to understanding the VC industry.

Initial Fund Success and Profitability

  • The initial fund turned a profit, which was attributed to luck rather than sophistication or knowledge.
  • Some companies from the first capital allotment are still operating successfully.
  • A number of exits from the initial capital have contributed to the establishment of a track record and brand.

because it is not because we were sophisticated or knew what we were doing, we were able to actually turn a profit on that money. And that was, again, very fortunate.

The quote emphasizes the element of luck in the profitability of the initial fund, suggesting that success was not solely due to expertise.

Fundraising and Relationship Building

  • Fundraising is not just about capital; it also helps build networks and friendships.
  • Fundraising can be advantageous by expanding networks, compared to firms that do not fundraise and have smaller networks as a result.
  • The process of fundraising fosters connections that would not have formed otherwise.

You're building a network and you're building friendships with people throughout the entire process.

This quote highlights the value of fundraising beyond financial aspects, emphasizing the importance of networking and relationship-building in the venture capital industry.

Limited Partner (LP) Strategy

  • The fund's sweet spot is high net worth individuals and family offices, not institutions.
  • Building strong, meaningful relationships with LPs is a priority, similar to relationships with founders.
  • As a small fund, they may not be the best fit for institutions due to size and relationship dynamics.

Yeah, I think our sweet spot is really still with high net worth individuals and family offices.

The quote indicates a strategic choice to focus on a specific type of investor that aligns with the fund's relationship-driven approach and size.

Competing in the Funding Environment

  • The fund does not directly compete with larger firms like Andreessen Horowitz or Sequoia Capital.
  • There is a collaborative ecosystem where the fund refers companies to larger firms and vice versa.
  • Differentiating from other seed funds is a challenge that requires attracting the best talent and founders.

So we don't compete against Andreessen and Sequoia. They're more upstream.

This quote clarifies the fund's position in the market relative to larger firms, highlighting a cooperative relationship rather than direct competition.

Differentiation and Sourcing Deals

  • The key to success for seed funds is attracting top talent and founders.
  • Differentiation involves surfacing deals before others and offering unique value propositions.
  • Being based in Detroit requires creativity to engage with companies in major tech hubs like the Bay Area, New York, and LA.

It really becomes like, who do they want to work with?

The quote underscores the importance of being the preferred choice for founders when they have multiple funding options, emphasizing the need for a unique approach to win deals.

Innovative Initiatives

  • The fund launched "Sandwich Fund" in collaboration with Adam Lisagor of Sandwich Video.
  • The initiative involves producing promotional videos for portfolio companies in exchange for equity.
  • This creative approach allows the fund to see deals earlier than competitors and provides valuable assets for the companies' launches.

We launched this thing called Sandwich Fund, where Adam Lissiger, who is a creative genius in LA, he runs sandwich video.

The quote describes an innovative partnership aimed at providing strategic advantages to both the fund and the portfolio companies, showcasing a unique method of adding value beyond capital investment.

Introduction to Media Platform for Launching Companies

  • Jonathan Triest discusses a high-level media platform designed to launch companies.
  • The platform is still under wraps but is expected to be exciting and influential in the startup ecosystem.

"It's a high level, it's a platform to help launch companies through media, and I think it should be very exciting."

This quote outlines Jonathan Triest's current project, emphasizing its focus on using media as a catalyst for launching new companies and its potential impact on the industry.

Approach to Attending Accelerator and Demo Days

  • Jonathan Triest enjoys attending accelerator and demo days primarily for networking and supporting current investments.
  • He believes that investing in companies before they enter accelerators like Y Combinator (YC) is optimal, as post-accelerator valuations may be too high.

"Our goal is to find the companies before they get into these accelerators and kind of ride the momentum once they're in them."

Jonathan Triest explains Ludlow Ventures' strategy of investing in companies before they join accelerators to maximize their investment potential and leverage the accelerator's momentum.

Ludlow Ventures' Deal Flow Strategy

  • Ludlow Ventures focuses on investing in exceptional founders across various sectors, excluding life sciences and medical devices.
  • The key criteria for investment are the founders' ability to communicate, articulate their vision, and rally support.

"All that matters is that the people we're investing in are stellar."

This quote highlights the importance Ludlow Ventures places on the quality and capabilities of founders, which is the primary factor in their investment decisions.

Identifying 'Eye of the Tiger' in Founders

  • Jonathan Triest looks for founders who can inspire and energize others with their presentations, indicating a strong potential for leadership and market impact.
  • Passion, enthusiasm, and sector knowledge are all important, but the ability to captivate an audience is a critical indicator of a founder's potential.

"If you have a founder and he or she is speaking in front of hundreds and hundreds or thousands of people, when he or she is done, do people stand up and cheer?"

This quote describes the charismatic quality sought in founders, where their ability to electrify an audience is seen as a sign of their potential success and investability.

Storytelling and Design Influence

  • Jonathan Triest admires Johnny Ive's storytelling ability, which he believes is a powerful skill for founders in selling their vision both internally and externally.
  • Ludlow Ventures enjoys contributing to product design discussions, although implementation is at the discretion of the portfolio companies.

"That guy can talk about mud, and you'd be like, I would love to eat that mud, because I won't. Yeah, it needs to be mine."

Triest uses Johnny Ive's persuasive storytelling as an analogy for the type of communication skills he values in founders, where even mundane subjects can become compelling through effective narrative.

Securing High-Profile Advisors

  • Jonathan Triest secured advisors like Brad Feld and Eric Ries by showing genuine interest in learning and building relationships without seeking capital.
  • He emphasizes the importance of surrounding oneself with experienced and intelligent people in a rapidly changing industry.

"I didn't need capital from him, which probably put me in a separate scenario immediately, a separate category immediately."

Triest explains that not seeking capital from potential advisors like Brad Feld likely made his approach more appealing, as his primary interest was in gaining knowledge and mentorship.

The Role of Advisors in the Industry

  • Jonathan Triest considers advisors to be the most critical factor for success, especially given the constant changes in the venture capital industry.
  • He values the insights and time spent with industry veterans, which helps him navigate challenges and grow in the field.

"This industry changes every single second. And if you surround yourself with smart people, it's certainly to your benefit."

The quote stresses the dynamic nature of the venture capital industry and the significant advantage gained by having knowledgeable advisors to provide guidance and support.

The Value of Mentorship and Learning

  • Jonathan Triest emphasizes the importance of seeking guidance from industry leaders and learning from them.
  • He acknowledges that despite his own experience, he gains clarity and knowledge from others who have achieved significant success.
  • This reflects the continuous learning mindset necessary in the venture capital industry and the humility to recognize the expertise of others.

"I mean, I'm not pretending at all to know more than anybody else. I learn every single day from these people, and I feel very fortunate to say that."

This quote underscores Jonathan's humility and his commitment to lifelong learning from more experienced professionals, which is a key to his success.

Altruism Among Successful Individuals

  • Jonathan Triest discusses the rarity of altruism among highly successful individuals.
  • He notes the difficulty of giving time and knowledge without expecting anything in return, especially for busy or preoccupied individuals.
  • The ability to give altruistically is highlighted as a quality that contributes to the success of industry titans.

"To really give and not expect anything in return is not easy. I mean, everyone struggles with that. These guys have mastered that craft, and I think that's one of the reasons why they're so successful."

Jonathan points out the challenge of true altruism and suggests that mastering this trait is part of what makes certain individuals exceptionally successful.

Personal Preferences and Inspirations

  • Jonathan Triest shares his personal preference for creative writing and fantasy worlds, which inspires him.
  • His favorite book, "The Thief of Always" by Clive Barker, was the first book he read completely and gave him a sense of accomplishment.
  • These personal insights provide a glimpse into Jonathan's interests outside of his professional life.

"No, I'm actually really inspired by creative writing and I love just kind of losing myself in these fantasy world and."

Jonathan expresses his love for creative writing and fantasy as a form of escapism and inspiration, which influences his personal life.

Identifying Industry Disruption

  • Jonathan Triest admits he does not focus on predicting which industry will be disrupted next.
  • Instead, he seeks founders who have a deep understanding of potential disruptions and can execute their vision effectively.
  • This approach highlights the importance of the founder's insight and capabilities in venture capital decision-making.

"I really want to find the founders who know what the next industry is and who can attack it at a really, really deep level. That's who I'm looking for."

Jonathan clarifies his investment strategy, which is to identify founders with the vision and depth of understanding to disrupt industries.

Future Goals and Aspirations

  • Jonathan Triest shares his love for his work and his desire to continue in his current role.
  • He expresses a hope to become more involved in philanthropic work in the next five years.
  • This reveals Jonathan's long-term commitment to his profession and his aspiration to contribute to society philanthropically.

"So I just hope and pray that in five years time I continue to be doing what I'm doing now, but potentially in a position to get more involved in philanthropic work. That would be my dream."

Jonathan discusses his professional passion and his dream to expand his impact through philanthropy in the future.

Personal Touches and Family Life

  • Jonathan Triest values the newsletters from his children's school as his favorite, showing the importance he places on family life.
  • This personal touch contrasts with the often impersonal nature of business newsletters and highlights the significance of family in his life.

"My favorite newsletter are my children's. What we did in school this week newsletters, awesome."

Jonathan expresses his preference for personal and family-related updates over business newsletters, indicating the value he places on his children's experiences and growth.

Investment Strategies and Decisions

  • Jonathan Triest discusses his recent investment in a company called Wrapify.
  • He explains that the investment is a bet on disrupting the stale outdoor advertising industry.
  • His willingness to take a risk on a company with uncertain future prospects but significant potential illustrates his investment philosophy.

"Invested in a company called rapify, wrapify and why? It's a play on to disrupt outdoor advertising, which is just so stale and gross."

Jonathan provides insight into his recent investment decision, focusing on the potential to innovate in an outdated industry.

Engagement with Listeners and Community

  • Harry Stebings announces an upcoming feature week dedicated to the Foundry Group, showcasing his engagement with the venture capital community.
  • He encourages listener interaction and values their opinions, treating them as friends.
  • This approach to podcasting fosters a sense of community and listener loyalty.

"And talking of wonderful people, the 20 minutes VC is delighted to announce that we are dedicating an entire week to one venture firm coming up in August."

Harry Stebings shares plans for a special feature on the podcast, demonstrating his commitment to providing valuable content to his listeners.

Product Placement and Recommendations

  • Harry Stebings discusses the role of product placement and his personal approach to recommending solutions to his listeners.
  • He shares a positive experience with Hiring Screen, a recruitment platform, and recommends it based on its effectiveness.
  • This segment reflects the influence podcast hosts can have on their audience and the importance of genuine recommendations.

"I consider my listeners my friends, and as my friends, I would always advise them on new products that might help them out with their problems."

Harry Stebings describes his philosophy on product recommendations, emphasizing the trust and relationship he has built with his audience.

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