20VC Why Cheque Size & Follow On DecisionMaking Does Not Matter, Why Intelligence Is Overrated & Why You Should Do Everything You Can To Make Other People Successful with Anthony Pompliano, Founding Partner @ Full Tilt Capital

Summary Notes


In this episode of "20 minutes VC," host Harry Stebbings interviews Anthony Pompliano, General Partner at Full Tilt Capital, discussing their unique investment strategy. Pompliano emphasizes prioritizing founders over ideas, focusing 90% on the individual's ability to execute and only 10% on the business concept itself. Full Tilt Capital aims to democratize access to investment opportunities for diverse, underserved founders, having completed 22 deals in 90 days without following traditional VC models. Pompliano, with a background in the U.S. Army and growth roles at Facebook and Snapchat, values EQ over IQ and seeks 'gamers'—founders who thrive under pressure and are relentless in pursuit of success. The firm challenges the accepted VC 'J curve' trend, boasting no business failures and an acquisition already under their belt. Additionally, Stebbings promotes Zoom and Viewedit as essential tools for business communication and video conferencing.

Summary Notes

Introduction to Anthony Pompliano

  • Anthony is a general partner outside the traditional Silicon Valley sphere.
  • He has experience leading growth teams at Snapchat and Facebook.
  • Anthony founded Full Tilt Capital, an early-stage venture capital fund based in Raleigh, North Carolina.
  • Full Tilt Capital has completed 22 deals in 90 days, aiming to democratize access to opportunities for underserved founders.

"And so I'm delighted to welcome Anthony Pompliano to the show today. So Anthony is the general partner at Full Tilt Capital, the firm that wants to reinvent friends and family invest by democratizing access to opportunity for the thousands of founders who are underserved."

The quote introduces Anthony Pompliano, highlighting his role at Full Tilt Capital and the firm's mission to provide investment opportunities to a broader range of founders.

The Role of Full Tilt Capital

  • Full Tilt Capital focuses on early-stage investments with valuations at or below $5 million.
  • The firm emphasizes founder qualities over business ideas, with a 90/10 focus on founders versus ideas/markets.
  • Full Tilt Capital seeks a diverse range of founders to ensure diversification in thought, perspective, industries, and experiences.

"From our perspective, we really focus more 90 ten. So 90% on the founders, 10% on the idea and market."

This quote explains Full Tilt Capital's investment approach, which heavily weighs the founder's capabilities and potential over the specifics of the business idea or market.

Founder Assessment

  • Anthony and his partner seek "gamers," or founders who are decisive and resilient under pressure.
  • They evaluate founders through hypothetical situations to assess decision-making abilities and comfort with taking unpopular decisions.
  • The assessment aims to identify individuals who are relentless in their pursuit of success and can turn weaknesses into strengths.

"We're looking for gamers, right? Who wants the ball at the end of the game?"

Anthony uses a sports metaphor to describe the type of founders they invest in—those who are eager to take responsibility and perform under pressure.

Venture Capital Philosophy

  • Full Tilt Capital's philosophy diverges from the common "founder friendly" approach, which often still balances the idea and the founder equally.
  • Anthony's method is distinct in its heavy emphasis on founder assessment over the business idea or market conditions.
  • The firm's investment strategy includes a strong commitment to founder diversity, which Anthony believes leads to a stronger portfolio.

"Most of the investors who talk about being founder friendly, they're talking about the investment terms, the way they interact with founders, et cetera, but they're still making decisions based on closer to a 50 50 on the company idea. And the founders."

This quote distinguishes Full Tilt Capital's approach from the typical "founder friendly" narrative by explaining their unique emphasis on founder attributes over business concepts.

Technology and Business Tools

  • Harry Stebbings endorses Zoom as a reliable video and web conferencing service, highlighting its simplicity, scalability, and Sequoia's backing.
  • Viewdit is recommended as a free video recording tool for personalized communication in sales, leadership, and customer support.
  • The integration of video in business communication is emphasized, with tools like Viewdit providing tracking to understand viewer engagement.

"Zoom, the number one video and web conferencing service providing one consistent enterprise experience that allows you to an array of activities including online meetings, video, webinars, collaboration enabled conference rooms and business im just to name a few."

Harry Stebbings provides a testimonial for Zoom, pointing out its versatility and enterprise-grade features that support various business activities.

"Viewdit is a free video recording tool that makes it easy for organizations to embrace the power of video for personalized communications."

The quote introduces Viewdit as a tool for enhancing business communication through personalized video messages, with tracking features for feedback on viewer engagement.## Decision Making in Venture Capital

  • Venture capitalists look beyond educational and professional backgrounds to assess founders' soft skills.
  • They recreate hypothetical situations to understand how founders might handle difficult decisions.
  • This process offers insight into the founders' motivations and decision-making processes.

What drives their decision making? What are they motivated by? Some of these things that are more soft skills, right. That are really hard to tease out just based on what school you went to or where you've worked previously and things like that.

The quote explains that venture capitalists are interested in understanding the intrinsic motivations and decision-making processes of founders, which are not evident from their resumes alone.

Vision vs. Stubbornness in Founders

  • Founders that venture capitalists invest in are transparent and self-confident, not arrogant.
  • They are determined to reach their goals despite not having a clear path and are willing to adapt as needed.
  • Understanding current position, resources, and the end goal is crucial for founders.

Absolutely. So think that it's one of these things of inevitability, right. In the sense that I know where I am and I know where I'm going.

The quote suggests that successful founders possess a strong sense of direction and inevitability, knowing their current status and ultimate goals, which helps them persevere through challenges.

Venture Capital Investment Strategy

  • The only factor that correlates with outsized venture returns over the last 30-35 years is being early in the best deals.
  • Portfolio diversification is key to their investment strategy.
  • Their portfolio includes companies across different cities and a significant percentage of female founders.

Absolutely. So we went back and we looked at data before we started the fund. And if you go back and look at about the last 30 to 35 years of venture returns, the only thing that correlates to outsized returns across different economic boom and bus cycles is being early in the best deals.

The quote highlights the importance of being an early investor in successful deals as the primary factor that correlates with high venture capital returns.

Challenging the J Curve in Venture Capital

  • The J curve is a common belief in venture capital, where early investments often fail before yielding returns.
  • Their data suggests they may have eliminated the J curve with early success and no business failures.
  • They acknowledge the need for a longer timeline to truly assess their success.

Our data shows that we've eliminated the J curve. So we've already had a company that was acquired that isn't public yet, and we've had no companies go out of business.

This quote indicates that their venture capital fund has experienced early successes that challenge the traditionally accepted J curve in venture capital returns.

Venture Investment Process and Mathematics

  • The investment process is based on mathematical analysis to increase the probability of success.
  • They believe in a disciplined approach to the investment process derived from this math.
  • The process is designed to improve the chances of successful outcomes.

So I think that we're very disciplined in our investment process, but we believe that math is also really important in this.

The quote reveals their belief in a disciplined investment process informed by mathematical analysis to improve success rates in venture investments.

Dark Deal Flow and Investment Strategy

  • They have invested in deals that are unknown to other venture capitalists.
  • The team actively incubates new ventures internally, leveraging their operational experience.
  • They believe in the power of being the first to know and support founders from day one.

Yeah. So there's a number of deals that we've invested in that I'm 100% confident there's not another venture capitalist in the world that knows about it, because we were there from day one and we know that the founders never talked to another venture capitalist about it.

The quote emphasizes the advantage of being the first and possibly the only venture capitalist to know about certain deals, which can lead to unique investment opportunities.## Proprietary Deal Flow

  • The concept of proprietary deal flow is challenged and deemed misleading.
  • Serendipity plays a significant role in some investments, where personal connections lead to unique opportunities.
  • Deals that come from outside the traditional venture capital networks can appear proprietary but are often the result of serendipitous relationships.

"So I don't think that proprietary deal flow is, I think it's a misleading term, right."

This quote from Anthony Pompliano expresses skepticism about the term "proprietary deal flow," suggesting it may not accurately describe how some investment opportunities arise.

Picking vs. Building Investments

  • Picking investments involves financial engineering and selection based on competitive analysis, which is often flawed due to human bias and imperfect information.
  • Building investments focuses on backing founders and providing them with extensive support to overcome challenges and grow their businesses.
  • Anthony Pompliano emphasizes the importance of supporting founders beyond just financial investment, including personal involvement and advice.

"What we basically say is, again, we're looking for gamers, we want people who want the ball and we're going to ride or die with them."

Anthony Pompliano explains their investment philosophy, which prioritizes the determination and drive of founders over competitive analysis when making investment decisions.

Support and Involvement in Portfolio Companies

  • Anthony Pompliano illustrates the level of involvement by sharing an anecdote about traveling to Nigeria for customer research.
  • The commitment to support portfolio companies is seen as a vital element for their success, especially in the early stages.
  • Providing straight, actionable advice and connecting founders with relevant contacts are part of the added value offered to portfolio companies.

"We've got a company that I went for a week to Nigeria with the founder to go do customer research on my own dime."

This quote exemplifies the hands-on approach and dedication to supporting portfolio companies, highlighting the personal investment of time and resources.

Scalability of Support

  • Investors who doubt the ability to scale support should not invest with the firm.
  • The firm promises to create a significant measurable inflection point for portfolio companies within the first 90 days post-investment, after which other investors or advisors take over.
  • A disciplined investment process and focused timeline enable the firm to support a growing portfolio effectively.

"Our promise to founders is we're looking for companies where we see a viable path to creating a significant measurable inflection point that changes the value of the company 1st 90 days post investment."

Anthony Pompliano clarifies their commitment to founders and the strategy for scaling their involvement with portfolio companies over a specific and intensive period.

Common Areas of Founder Support

  • Growth, particularly customer or user acquisition, is the primary focus area for founder support.
  • Strategy, marketing, and product development are aspects that contribute to growth and are areas where founders often need help.
  • The goal is to achieve rapid growth and momentum, which can lead to more customers, employees, investors, and media attention.

"The number one thing that we focus on is growth."

This quote from Anthony Pompliano identifies growth as the central area where founders receive support, emphasizing its importance for the success of a startup.

Operational Value Add Model in VC

  • The operational value add model, as seen in venture capital firms like Andreessen Horowitz, has various levels of effectiveness depending on the founder's needs and preferences.
  • Finding a match between the founder's requirements and the investor's model of support is crucial.
  • The firm is transparent with founders about their approach and the nature of their working relationship.

"I think that each model definitely has value."

Anthony Pompliano acknowledges the value of different operational support models in venture capital and the importance of aligning these models with the needs of individual founders.## Investment Criteria

  • The importance of a mutual fit between investor and company.
  • Necessity for the company to both want and need the investor's involvement.
  • Avoidance of being "dumb, quiet money" by ensuring active contribution to the company's success.

Because if you can't answer yes to that, you want this and two, you need it, then we probably shouldn't work together.

This quote emphasizes the need for a two-way agreement between the investor and the company, highlighting that both parties should see the value in the partnership.

We only want to invest in deals where we can put our expertise to work.

This quote underlines the investor's desire to contribute meaningfully to the company, rather than just providing capital.

Value of EQ Over Intelligence

  • Belief in the importance of emotional intelligence (EQ) for success.
  • The view that intelligence is overrated compared to EQ in achieving success.

I believe that intelligence is quite overrated and EQ is quite underrated.

Anthony Pompliano expresses his opinion that emotional intelligence is a more crucial factor for success than traditional intelligence.

Venture Capitalists' Value Proposition

  • Skepticism towards venture capitalists' promises of post-investment support.
  • The practice of offering help to founders even when not investing to build long-term relationships.

My alarm to every founder is the more a venture capitalist says, I'm going to be helpful after we invest, there's usually less likelihood that they will be helpful.

Anthony Pompliano warns founders about venture capitalists who over-promise support after investment and often under-deliver.

If you can help somebody, you should.

This quote reflects Anthony Pompliano's belief in the importance of helping others, regardless of direct investment involvement.

Reading and Learning

  • Endorsement of "Rich Dad Poor Dad" by Robert Kiyosaki for its eye-opening content.
  • Recommendation of Paulina Marinova's profile for in-depth insights.

Probably the first book that I ever remember reading on the business side and kind of changing my mindset was rich dad, poor dad by Robert Kiyosaki.

Anthony Pompliano shares the impactful influence of "Rich Dad Poor Dad" on his business perspective.

I'm a huge fan of Paulina Marinova's profile.

Anthony Pompliano recommends Paulina Marinova's profile for comprehensive profiles on various subjects, which provide valuable perspectives.

Advice to Industry Juniors

  • Encouragement to focus on making others successful.
  • Building a reputation as a supportive and helpful individual in the industry.

I think I would tell them to do everything they possibly can to make other people successful.

Anthony Pompliano advises juniors in the industry to dedicate their efforts to the success of others, which will, in turn, benefit their own careers.

Recent Investment Decision

  • Criteria for investment based on founder's determination and existing business strength.
  • The decision to invest in Everly Wellness due to the founder's qualities and the company's potential.

We just were like, she is a savage. And what I mean by that is she's the type of person that we wanted to invest in because we knew she wanted the ball at the end of the game and she already had a good business.

Anthony Pompliano explains the rationale behind investing in Everly Wellness, praising the founder's drive and the company's solid foundation.

Podcast and Business Tools

  • Use of Zoom for video and web conferencing needs.
  • Recommendation of Viewdit for personalized video communications.

My response Zoom, the number one video and web conferencing service, providing one consistent enterprise experience.

The host endorses Zoom as an effective tool for various online activities and highlights its ease of use and straightforward pricing.

Viewdit is a free video recording tool that makes it easy for organizations to embrace the power of video for personalized communications.

The host recommends Viewdit for its video recording capabilities and its role in enhancing personalized business communications.

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