Episode #354: Shawn Merani, Parade Ventures, “The Seed And Pre-Seed Stage, You’re Betting On People”

Episode #354: Shawn Merani, Parade Ventures, “The Seed And Pre-Seed Stage, You’re Betting On People”

 

Guest: Shawn Merani is the Founder and Managing Partner of Parade Ventures, a pre-seed & seed stage-focused venture capital firm. Previously, Shawn was a co-founder and partner at Flight Ventures, investing in early stage software, internet and mobile companies across a variety of sectors. Additionally, he has invested in select later stage companies. Shawn’s investments include Dollar Shave Club (acquired by Unilever), Sapho (acquired by Citrix), Moveworks, Trusted Health, Clubhouse, Side, Plastiq, Jumpcloud and others.

Date Recorded: 8/24/2021     |     Run-Time: 1:02:50

Summary: In today’s episode, we hear what it’s like to invest at the pre-seed and seed stage from someone who’s invested in companies like Dollar Shave Club, Cruise, Stance, and more! Shawn walks us through what it was like to launch what he called a “venture partner program on steroids” on AngelList years ago. He walks us through his investment philosophy and why he focuses mainly on both the consumer and enterprise space.

Of course we chat about some names, including Inkbox, Homelister, and a company providing software to veterinarians.

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Links from the Episode:

  • 0:40 – Sponsor: The Idea Farm
  • 2:16 – Welcome to our guest, Shawn Merani
  • 3:45 – Shawn’s entry into the startup world
  • 4:59 – The initial vision for Liquidnet
  • 6:44 – The state of private secondary marketplaces
  • 8:22 – Shawn’s introduction to startup investing
  • 12:32 – Why Shawn started Parade Ventures
  • 16:01 – Parade’s investing philosophy
  • 18:36 – Why Parade invested in Stance
  • 22:37 – How Shawn thinks about selling
  • 25:11 – The advantage of communicating effectively
  • 27:36 – The thesis behind Shawn’s investment in Inkbox
  • 30:21 – The story behind Moichor
  • 34:42 – How Homelister is disrupting the real estate market
  • 37:36 – Parade’s success in the high-end real estate market with Side
  • 38:40 – Being a people driven-investor
  • 40:09 – Connecting with new founders
  • 43:45 – How Parade helps the companies they invest in
  • 45:36 – The evolution of the venture environment
  • 49:47 – Areas of opportunity Shawn wants to explore
  • 51:16 – Competing with other investors
  • 53:27 – Shawn’s advice for investors starting out with angel investing
  • 56:03 – Parade’s plans for the future
  • 58:08 – Shawn’s most memorable investment
  • 59:24 – Learn more about Shawn: parade.vc

 

Transcript of Episode 354:

Welcome Message: Welcome to “The Meb Faber Show,” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

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Meb: What’s up, everybody? Today, we got another killer episode. Our guest is the founder and managing partner of Parade Ventures, a pre-seed and seed stage-focused venture capital firm. In today’s episode, we hear what it’s like to invest at the pre-seed and seed stage from someone who’s done it, invested in companies like Dollar Shave Club, Crews, and Stance. I love their underwear and socks, and more. Our guest walks us through what it was like to launch what he called a venture partner program on steroids on AngelList years ago. He walks us through his investment philosophy and why he focuses mainly on both the consumer and enterprise space. Of course, we chat about some new names including my favorite tattoo shop, Inkbox, HomeLister, trying to disrupt that whole mortgage, home buying industry and a company providing software to veterinarians. Please enjoy this episode with Parade Ventures’ Shawn Merani.

Meb: Shawn, welcome to the show.

Shawn: Thanks for having me.

Meb: We’re going to talk about all things investing, startups. But first, I saw this in your bio so I got to ask because I’m god awful. It’s probably been a decade, and I don’t think I’ve ever won a single fantasy sports league ever. And you’d self-admit to being pretty good. What’s the secret?

Shawn: You know, just be a little smarter than the rest of the people in your league probably and have some luck. It’s kind of like startup investing. I don’t know, I’ve been doing it for a long time, same group of friends. And then the motivation is bragging rights. And so, you know…

Meb: It’s that or you just got not particularly bright friends.

Shawn: Well, all of them went to Berkeley in my main league. So they’re not that dumb. But, you know.

Meb: It reminds me in LA, they have a particular trivia night at an Irish pub, where it’s like all “Jeopardy” winners. And it is so impossible…like, I didn’t even understand some of the questions. And so I just kept going to the easier and easier trivia nights until at some point it was basically a middle school trivia and finally won one. Because I’m a Quant, my only sports, typical one that I win is, you know, the pick ’em leagues?

Shawn: Yeah.

Meb: Where you pick versus the spread. And it’s a closed community. And so those, there is a small edge you can have, which is if you fade the consensus…because if you’re in a league of, say, 50, people, often like 45 will line up on the same side. And so if you assume that either the lines are accurate and random, or there’s usually, at least in the academic literature, it says there’s a slight edge to fading the consensus, that’s actually a winning strategy. But the problem is that’s not the fantasy leagues, so. I’ll hit you up on draft night.

Shawn: There are some strategies in it, right? And I have some well held and a lot of it is based in mass and averages and where you can kind of make up deltas and then find value from other kinds of players and then take some risks. So I don’t think you’re wrong. I think I employ that strategy probably and, like, I don’t run spreadsheets. I don’t think it’s necessary. But there is a strategy in my head that I have always used. So I think that element exists.

Meb: It’s a good analogy, though. Like, you think about the competition, I mean, it’s a lot easier today than when it has like the auto drafting and it tells you like what the player maybe should be worth. Like, back in the day when you had to mail them in, like, that was where you could really come up with the orb. All right.

Shawn: It’s always how much spread you can get from the mean, right? And that will have you have the bias score over time and that’s what will get you to hopefully win more consistently, put up more W’s, get more points and then win the league, right? So it’s a little bit of all those things.

Meb: So you said you’re a Cal guy. Was your first stop at Liquidnet?

Shawn: No. I graduated from Berkeley, did five years kind of advising people in and around startups on the tax side, and then banking side first five years. Then I jumped over to the operating side of that company called Reach Local, and we were helping companies do online marketing. We were doing online marketing for SMBs, so search marketing, display advertising, and social media. I ventured back to startup, knew the founding team really well. I ran corp dev and BD. So did that for about four years. That company went public. So this was kind of in the time when Groupon, and Yelp, and all those kind of local startups were getting built. And we were selling these media performance products to SMBs globally. Twenty thousand SMBs were our customers. When I left, we were a 400 million top line business.

After that, we got backed by LiquidNet, me and my co-founder. We built a private shares marketplace to connect mutual funds to late stage companies. So companies were staying private longer. Facebook was a $100 billion private company with not one mutual fund on the cap table. And so we wanted to solve that with software. And that’s kind of when I started my first company before getting into venture in 2014 after that.

Meb: Is LiquidNet still around? And tell me, what’s the status of that because I remember there used to be a handful of these kind of secondary exchanges. Is that what you would classify LiquidNet as or is that inaccurate?

Shawn: Well, LiquidNet had a core business, which was a software to enable mutual funds to trade public shares between each other above the public markets. That was their core business. They were PD-backed by some NTCV when they backed us. We built the marketplace as a sub, a subsidiary on the West Coast, so, you know, “independent” or that was the theory behind it. So we took it to $150 million in GMV. Today, you know, after we left, the goal was to get it to scale and that’s how they aligned incentives. But I think when the founders leave, you’re able to integrate and continue or not. So the business kind of eroded over time after. You know, we were the guys that knew the valley, and that’s what we were brought in to do. So I wouldn’t say they’re a major player. I mean, there are other marketplaces. You know, the way we were thought about it is, yeah, I mean, secondary. Back then, those days, it was like second market shares, posts, etc., or really, you know, investment banks doing private placements. Like, that’s a more offline way of doing it. We wanted to use software to make it easier, just like any kind of software product things that we invest in that parade.

And so, yeah, I mean, we built it and the intention was, yeah, it could be secondary to kind of catalyze that event, or it could be primary. It didn’t matter. Mutual funds want access to the cap table. And so the cap table is 100 points, 100%. It’s one pie. So they wanted a piece of it. That was not the motivation or the issue, but it could be catalyzed by, yeah, an early founder selling and that catalyzed the event. Or they were raising primary capital to drive the business, mutual funds or long term capital. Mutual funds invested in Amazon in whenever they went public, I think ’98 or something like that. They still own it to this day. They might not own the same amount, but they own some of it. They’ve always been long-term capital in the ecosystem. And so just they behave differently.

Meb: What is the status today? We’re already off topic, as usual, with my pods, but what’s the status today on sort of private, secondary marketplaces? It seems to me, and I could be wrong, that there hasn’t emerged to be a big winner. It seems still fragmented. It seems like there isn’t an offering that to me seems widespread. Are there reasons for that, or am I totally wrong?

Shawn: You know, I think one of the biggest ones I kind of took…and I know the founders, Forge, I forget what they’re called before that, but there was a YC company. And so they’re pretty big. We wanted to be like a B2B marketplace, right? Mutual funds being one enterprise buying from the company on the other side. We didn’t want to, like, share, I suppose, in second market. We’re tailing to the retail investor. Like, we will let the mutual funds deal with the retail investors. And so that was our go-to market. I think Forge is more retail investor-centric, but they might have a B2B play. I mean, I’m not that close anymore. But I’d say, you know, instead of the marketplaces, you have large pools of capital in the private markets in the late stage that are buying it for themselves, right? So it kind of defeats the purpose of having that marketplace or just less important, etc. Does that make sense?

Meb: Yeah, it does. I mean, we’ve had equities in on the podcast before, and they tend to be, I think, more individual retail focus. But it seems like…and maybe I’m just spitballing, you know, some of these SPV sort of companies that are emerging have the potential to kind of crossover. Anyway, it seems like it’s still a little bit of almost like a fragmented world, but I’m also not plugged into it as much as some, so. All right, startups, did you start sort of startup investing on your own? Did you join a shop? What was the intro?

Shawn: Well, you know, I built a marketplace for investing. And so there was a small, you know, what I perceived, so I knew the players pretty well. And there’s a small company called AngelList. I knew the CEO, Naval Ravikant. And my friend, Gil Penchina, was an investor in the company. And they released this small product called Syndicates, which were essentially turn-key SPVS. Back then, they had like a leaderboard. And Gil was a super Angel, and he was kind of one of the more active people. And so we sat down and we said, “Hey, we think we can build a new age venture from on top of this platform.” So 2014, when we started what was an app called…well, it still exists, Flight VC. We had an idea. We had our operator hats on. We were both entrepreneurs and operators, and we wanted to build something and disrupt venture. So, you know, we just wanted to do something different. And I had a point of view from what I’d built before.

So that’s how I got into venture. You know, I didn’t join the shop. I wasn’t like a super active angel investor. I’d started advising and investing in companies. But it was more of two friends having an idea and wanting to do something different. So we went and build a brand on top of AngelList and became the most active investor, I think, across that period, 2014 to ’17. And I still use AngelList for my SPVs. Maybe not in the same fashion that we used to leverage the platform back then, but we use them for our back office for SPVs now.

Meb: I mean, I’ve been essentially following you and Gil since that time. I mean, I started investing when AngelList started rolling out the Syndicates in 2014. Tell me a little bit about the methodology then, and we can compare that to what you do now. But also correct me, was Flight…did it have sort of like a multi-offering or was it targeted to sector? Because I remember there being multiple sort of Flight Syndicates. Is that right?

Shawn: I mean, look, we’re founders. So we were always trying to do something different and test different things and a couple of things. Like, initially, AngelList was a platform for investors, for consumers. It was a consumer platform. And so, you know, we wanted to build a brand that consumers would come to. You know, we wanted to give access to venture capital, this high-risk part of mass allocation. You’re an asset manager, asset guys, so you understand, and that’s inaccessible for the lay person. And so we wanted to give them access to Silicon Valley or technology. And so that was our thesis back then. Gil and I were pretty active within the community. And why we thought we could bring great deal flow is because we had done it. We had invested. We had spent time with people that were raising money from the top tier names in the valley, like the best firms. And so we wanted to give that access. We want to bring it to the people.

That was our initial kind of wedge. And then we had ideas that we would test like operators, test all the time. And so one of them was, “Hey, you know, just like people like a variety of mutual funds, going back to that analogy, you can invest in international, you can invest in India, you can invest in microcap, large cap, etc. They’ll probably want to invest in different sectors of startup land.” So we started creating syndicates around different themes. And then we would also bring in people that we’d said we’re experts in those themes to potentially run them. So sometimes, we’d run them ourselves and/or bring in deal flow that was consistent with the theme on our own. But we would co-run these syndicates with those people.

And really, we built out a venture partner program on steroids.

And most of these people were people that were just like us. And they were still full-time operators. They were doing some investing on the side. We gave them an avenue with our LP base to make investments. They were already writing checks with their own capital, but investing other people’s money and partaking in carried interest if the company did well. And so that leverage was pretty powerful. We experimented, and we had some success with that, you know, people that still use the platform like Zach Coelius. His first couple of investments were with us. Cruise Automation was with us. And so totally stoked to see where he’s taken everything. Like, he’s blown it out. But, you know, you need capital to invest in companies, and we brought a lot of capital to the table.

Meb: That’s great. So what is the timeline origin story with Parade? When did that start?

Shawn: So over the four years of Gil and I investing together, we’re not only operating and building out our brand, but figuring out who we were as venture investors. And so I loved spending time with companies. And I did all of our deal execution. I would touch every company. So over those four years, between Gil, myself, and our venture partners, we invested in 140 companies, put $60 million to work, mostly seed stage. And so I would touch hundreds of founders. And so they would come to me. And then I build relationships with them because I’m pretty good at that. And they would ask me for help. And I’d love to help founders, you know. And, Meb, you’re a part of this and you know the structure of these SPVs. There’s no management fee with these SPVs.

And so it’s really hard to run a business when you have no working capital. Imagine a startup if they had to do that. It’s like you have no money and you’re “Go build. Go create value.” You have to hire people. And so, you know, I was spending a lot of time with these companies, and I love that part of the business. You know, there’s really two parts to venture. You know, a lot of people said, “Where are you getting your deals from? You know, how are you sourcing them? How are you winning them?” and that is a part, making investments. But the second part is value add and, for me, was spending time with the companies. And that’s just not scalable as one person. And so, you know, we needed some infrastructure. We needed to build it. And so I got together with Gil and I said, “Hey, we need to take this. We’re kind of too big for this platform. It’s not built for what we…” You take risk when you build on top of someone else’s platform. You’ve seen it with Zynga and Facebook. You’ve seen it with a ton of other examples. And that was a risk we took, and it was very fruitful.

Lots of those investments are doing very, very well. I think you’re part of some of those SPVs. And I realized that we needed to raise a traditional vehicle with management fees to be able to scale our effort. So we got together and put our heads together. And when you raise a venture fund, the difference between the SPVs is it’s a commitment. You’re managing that pool of capital that you raise for that fund 10, 12 years until it’s done. And so it is a really long-term commitment. And by the way, when I started Parade, I didn’t even know if theoretically I was a good venture investor. I was getting into investments. They were showing progress of series A, B, and C rounds, but, you know, what makes money is not just IRR on paper, it’s returning money to your investors. And that turns out that takes a lot longer than four years.

We were super lucky. You know, I invested in Dollar Shave Club, and we did create DPI for some. We invested in Crews and a couple of other companies. But the best outcomes when you’re a seed investor is the longer you hold, they become billions and billions of dollars of value. That just takes time. And so our best strategy at that point in time was to raise outside capital. And Gil just didn’t want to…that was a commitment for him. He’ll say it today. And so I think he was also the co-founder of a company that was doing very well called Fastly, and they were about to file to go public. And so it was kind of, you know, we just sat down and he said, “Take over what we’ve built, or I’ll be your first check in whatever you do,” and so eternally grateful. We had a fun run. We worked together for four years. But that was kind of when I thought long and hard there are pros and cons to both. And I decided to start Parade. And so Parade is just the culmination of everything I learned over the previous four years under the Flight VC banner.

Meb: Awesome. So this got started, about, what 2018?

Shawn: Yeah, we launched Parade in 2018, started raising, closed the fund in 2019. Same stuff, focused on seed investing. And because we spend so much time with the company it’s like high conviction, high partnership. You know, we meet our founders every other week. And so we take large ownership in most of the companies we invest in, to around 10%.

Meb: This is exciting. You’re now on to fund two, and congratulations on that. Let’s talk about the framework. What’s your philosophy? What are you looking for? What types of startups? You mentioned you’ve done over 100 over the years, have they been in particular industries or approaches. What have you been funding?

Shawn: We like to build relationships with people. You know, we like to get to know them and we spend a bunch of time. And so, part of our diligence process is like really building deep partnership with the people that we work with. And that’s what enables us to win. And then we take large ownership in these companies. And so we’re writing check from 300k to 1.5 million to get our 10% ownership, you know, like a traditional seed fund. My work experience, you know, as I kind of mentioned, has all been B2B. And towards the end of, you know, investing in Flight VC, I mentioned the Dollar Shave Club investment. But, you know, it’s kind of 50/50 consumer and enterprise. And towards the end, I was kind of focusing on enterprise companies, so things like B2B sales, motion, high margin, subscription revenues. And even like a Dollar Shave Club are a hook, Twitch is one of our companies. You know, they’re subscription products. And so they have a lot of enterprise feel to it in kind of the way you’d measure them and think about the business. That’s why Dollar Shave Club had such a high multiple on exit. It wasn’t just a razor blade that you’d buy at a store, it’s something you’d subscribe to and they had high retention, etc. Those are characteristics you look for in enterprise companies.

And so we’re an enterprise themed fund. We’d like to help a lot from that perspective. And so within enterprise, have been pretty flexible. You know, we’ve done kind of DevOps and ML Ops. We’ve done vertical SaaS companies. We were pretty flexible from that perspective. We can move faster when we really understand, like, the space deeply. And then there’s, you know, other areas. Like, I invested in a veterinary diagnostics company called Moichor. They just raised a series A. I don’t have a dog, so I had to learn about the veterinary space. But, you know, they are using AI and machine learning to take complete blood counts, to take a blood sample, turn it into data, leverage that data set to get faster feedback and results and better outcomes for veterinarians and pet owners. That I can understand. I can understand turning things into data and building models, but had to learn about the sector a little bit before investing.

Meb: I’m sure most of the listeners will have heard of Dollar Shave Club. There’s another one I would love to hear you talk about. I don’t know if this was at Flight or more recently. It’s 50/50. I haven’t looked, but I may be wearing a Stance underwear. I mean, this is probably TMI for the listeners. I love their socks. By the way, I can tell you have good taste because you’re wearing…is that a Champion sweatshirt?

Shawn: Champion sweatshirt. Yeah, there we go.

Meb: I went to high school in Winston Salem, North Carolina. Hanes headquartered there, so like one of the two or three companies in Winston Salem, so definitely close to home. But Stance, one of these breakout brands. Talk about your thesis there. I mean, it seems like in this day and age, socks are kind of on the other end of the exciting sort of rocket ship SaaS startup. What was the concept there?

Shawn: Love the product. I love the product. I had access to the CEO. I had met Jeff a couple of times. I mean, this is actually a later stage investment. And I was like, got to know him. I love the way he thought about brand. And I thought it was crazy that he was charging $20 for a pair of socks. Like, you know how much these things cost, so the margin profile was like a SaaS business, like, you know, very high margins. And I thought the potential to introduce things like subscriptions, etc., and then other products around the brand made sense. They were one of the earliest people to leverage influencer marketing, to drive grassroots adoption. So, like, I was just fascinated with the team that they had built. I was just like, “Let me invest whenever you have a round open.” And so they did, and we cut a check. And so, yeah, it’s doing pretty well. It’s done pretty well since. And, yeah, I’m an avid user of the product. I think I’m also wearing their underwear.

Meb: This hits upon a topic that I think is an area that I focused on over the years, where the majority of the investments have been sort of pre-seed, seed, and Series A investments. But there’s a special category of like this old Peter Lynch methodology, which is like know what you own, you potentially have an edge, and then in your world, essentially, inside information from the company on metrics, inside being a good thing in private startup world, as opposed to my world where it’s illegal. But this concept of products you love, and it could be a little later stage, but I certainly would have put Stance in that category. But ones that are kind of early stage breakout, I still think that’s an area that individual investors, as well as institutions, of course, can have an edge in sort of being able to see those trends and see a brand before it really breaks out.

Shawn: Yeah, and I think that’s right. I think that’s right. It’s like following your instincts. That is asymmetry of information. I mean, even as a seed investor, right, like I’m the first investor usually. I’m usually one of the highest owners and sometimes board member. And so, by definition, you build a relationship with the founder. So you have all kinds of asymmetry of information and even an advantage to invest more capital in the business, regardless of any contractual right that you have to invest in the company. And I think savvy the investors, and historically that’s been the case, they take advantage of those edges to your point. So we tried to do that very actively. One of my LPs, he called me the other week, and he was talking about just the idea of compounding, everything you get taught about compounding. A penny can turn into a lot of money if you save and save a penny every day and compound is an interest.

But what about compounding relationships?

So when you invest in companies, take advantage of that edge instead of looking for net new. If you have something that’s working, why don’t you compound on those relationships? So I think that philosophy is super important. And, you know, I think about it actively. It doesn’t have to just be monetarily driven.

Meb: Yeah. We’ll come back in some companies in a second. But while you mentioned this, it’s such an interesting area, how do you think about portfolio management and the concept being…obviously, it’s easy to deal with the losers. They go to zero.

Shawn: Not really, not really. I still can’t get used to it, man. I’m not good enough to accept them. I get emotionally attached. I’m the first investor. I love it. You know, I love the people.

Meb: On an emotional psychological side on one side, but I mean, on a mathematical pure return side, the most you can lose is 100%, right? What I was going to ask you is how do you think about the big winners? And I understand you may have a fund that may just distribute the shares if they go public or whatever. But just as a sort of happy hour coffee talk about how do you think about it personally, but as well as just thinking about it in general, where you have a company that breaks out. So you have that magical unicorn, amazing, but it looks like things are still going right, and so it has the potential to go billion, 10 billion+. What’s your approach to eventually selling? How do you think about it in terms of your entire portfolio and context? Any hard and fast rules, any soft rules, all that good stuff?

Shawn: Well, I think first and foremost, like especially, I mean, the two exit scenarios of old or M&A and IPO, so those things happen over time, usually, as a first investor, and then not always the biggest investor going forward. You know, you have less influence on that. It’s really going to be a founder’s and a board’s decision. And we take board seats sometimes, but we’re probably not going to be on the board by that point. So it really is going to dovetail to your relationship with the founder. And so I think where you’re going with it is like how do you manage like secondary, we even talked about it earlier, you know, how do you manage secondary sales potentially. You have a great relationship with the founding team, you know, I think you always have an avenue and edge to sell shares or get their support, and we’ll be able to navigate that. As I mentioned before too, there’s only a fixed amount of access to a cap table. So if a company is doing really well, there should be access demand rather than supply of shares on the cap table. So I think that’s only beneficial for a seed fund.

So I think giving the asymmetry air play, and it’s important for us to manage the capital appropriately, I don’t want to spend too much time on it in this call, but there are tax implications, you know, as well, not only for myself, but for more importantly our LPs. And so we are thoughtful of that as well, and so holding the shares for a sufficient amount of time. We have a couple that we’ve held for five years that are big positions now from before that we are looking into. Yeah, how can they reward because right now, you get to look at that investment and it’s like, if I can pull money out and reallocate some of it, take some of those gains and reallocate somewhere else so I can get another 20, 30, 50x, as opposed to eking out another 2x that can make…what’s a 75, and these are like real companies I’m thinking about right now, that could be at 150, might just reallocate that back and try to get another 60 and then pocket some cash, you know.

Meb: Yeah. And so, like, it’s an interesting thought experiment. And I talked to a lot of public market investors about the same thing. I said 99% of my friends in the investing world talk about the buy decision. And this applies more to stocks than kind of the private. But a lot of people don’t think about the sell decision in the off chance and looks it’s a good problem to have, that you have a company that goes full rocket ship, so obviously happening a lot more in the last couple of years. But even if you had, just for example, a stock portfolio of 10 stocks and one goes 10x, well, all of a sudden, you have one that’s half your portfolio. And the challenge that I was kind of referring to is, but let’s say you’re just stone cold, still bullish on that company. You’re like, “My God, it’s only just now seeing it’s like J curve, and this could easily be a 10x from here, or 100x from here.” Anyways, it’s just I was trying to like walk through like…

Shawn: I mean, I think communication is important. I think communicating that instinct with clarity and assessing that risk and communicating that with your LP base. And I think hopefully, over time, you built up some level of trust. And so I’ve seen it go both ways. I’ve seen where someone owns a bunch, and they have a point of view, and they’ve sold out, but they’ve returned to…I’m thinking of another person and scenario, but they’ve returned a ton of money to their LPs. And so I’ve seen in that scenario, and could they have held and had an even better fun. Now, if you go ask those LPs, they’re never going to be mad at you for making them money in a short period of time. I think as long as you communicate effectively and have a point of view, they’ll afford you to be wrong. And we’re talking about wrong relative to what? Relative to a big gain you’ve already made. And so there is some wiggle room to be “right or wrong.” You don’t have to be in those scenarios. You’re going to be right some of the time and you’re probably going to be wrong some of the time. But on a show like this, or in a podcast, you’re probably only going to be talking about the rights more than the wrongs at the end of the day. So I think also like framing and understanding that from a viewer or consumer of information’s perspective is pretty important.

Meb: Yeah. I mean, we also tell people that psychologically speaking, there’s so much emotions wrapped up with money, trying to avoid the temptation to be necessarily all in or all out and have that hindsight regret, where no matter what happens. It’s like a coin flip, either you sell it and it goes up or goes down. Half of the time, you’re going to be probably disappointed. So there’s potential to, like, scale in and scale out or sell some.

Shawn: I was like it’s not even a binary, like are we selling or are we owning, right? No, we can sell a little bit, you know, and pay back our principal, right, over time. So I think yeah, I think there’s many flavors of gray to answer that or to play that scenario out.

Meb: Well, listeners, the takeaway for me is think about it ahead of time because once the emotions creep in, it gets a lot harder, particularly when money is involved. Let’s talk about a couple companies, maybe use them as case studies. There’s a few I know I’ve had been pinging you about over the years that I love. I’ll let you kind of pick and choose, but I thought we got to talk about InkBox, one of my favorite startups ever. What was the original thesis there? Tell the listeners what it is and of course, how this come across your plate, and what was the invest decision?

Shawn: Yeah. We’re talking about a lot of consumer businesses. It’s kind of countered to my current thesis. But no, I mean, you know, InkBox, when I think about consumer startups, especially that have a CPG component, you know, I always think of like, what is the moat for the business and is it defensible over the long term? And so immediately, you know, my friends at Golden Ventures were spending time with InkBox. They’re based out of Toronto. They have been spending time with Tyler, the CEO, for a number of years. They’d mentioned the company to me and immediately kind of was like, “I get this.” I have zero tattoos, by the way. I mean, I have thought about it over time, just never pulled the trigger. So I understood like the concept of try before you buy or I’m experimenting with it. And I just thought expression from a millennial and Gen Z perspective was an area that was just growing. Like, they were expressing themselves. It could be online. It could be with clothes. And, yeah, I thought that tattoos are on the rise generally. And so that was just a big industry.

And so I thought we would never be able to quantify this industry that they were thinking about, which is temporary tattoos. But what they had built was proprietary. The patent pending ink that if you put it on was temporary but looked real. So like that whole concept with all of these narratives that were bubbling up for the youth and even older people, the thesis so I thought was very sound. And then going back to things like unit economics, the things we do think about from an enterprise perspective, a very high margin product, very strong CAC to LTV metrics. And so they were very strong from a metrics perspective when we analyze that. And the CEO just had this vision. And so, yeah, it’s been quite a ride. You know, the company is doing a significant amount of revenue today. We invested in the seed round. We’ve participated in every round since. And it’s been a heck of a ride. And we think this is still just the beginning.

Meb: For the listeners, they have this entire suite of beautiful tattoos. They last a couple of weeks. And for everyone that’s probably over the age of even 30 remembers…or even 20, I mean, I guess the status of the quality before this was always these like terrible temporary tattoos. You know, you rub them on with a sponge, and they would last like an hour. It flake off. And these look like real tattoos. The thing that we need to convince them to do, and I do it on Twitter every once in a while, that I pinged you about, I was like, “You got to get these guys to start a subscription model box.” I was like, “I would love to just get a handful of tattoos each month in the mail.” So InkBox, if you’re listening, that’s Meb’s suggestion. I’ll be your first subscriber.

Shawn: Exactly. Exactly.

Meb: So here are my preferences. I like floral. I like animals. Just give me the potpourri, whatever. Just send me some. Anyway, listeners, check it out. My son loves it.

Shawn: I love it.

Meb: Let’s shift away from consumer then. Pick one that you like that you think is a fun case study, either one that you’ve thought out recently invested, or one that it’s in the works for a while.

Shawn: Yeah. I mean, we fortunately have a bunch of companies that are tracking really well. This is a very new fun. So, you know, a company I mentioned before was Moichor, which is for AI machine learning to interpret blood counts for veterinary diagnostics. And so, when we met them, they’re a team of three. Two were graduating from undergrad at Penn State. And so, like, no one cares about Penn State here in the valley. I went to Berkeley. People don’t care about Berkeley. They care about Stanford. They care about the big name schools, and just it is what it is. And so people definitely do not care about a small school on the East Coast that’s not Harvard. And so, you know, we got to know them. We met them through an Angel investor. We got to know them over five months. Sectors are very important.

But ultimately, at the seed and pre-seed stage, you’re betting on people, and the way they make decisions, and the point of view that they develop.

And that point of view can come from experience at a big company, an experience in a prior life or a built up accumulation of study, right?

And so they had a point of view that they built up starting with analyzing the CBCs in the lab at Penn State, which has a very strong lab and research component to that school. And so they were pre-med students. They had this thesis, and then they started applying it to pets. And not only cats and dogs, they started applying it to an area of people’s pets, which are birds and reptiles that were very overlooked. And so, you know, people bring in these animals, it could be a dog to a reptile, and they want to know what’s wrong with their pet, right? Because just like even with a human, if something is wrong and it’s terminal, every minute counts. And so faster results can only help the outcomes. Unless you were a big veterinary shop, you’d have to buy these, and then you could afford these big machines to put in these blood samples to get results. There are literally vets that are mobile vets. There are vets that are, you know, one vet per office. And so, by definition, the P&L that they run, they can’t afford these big pieces of machinery. So oftentimes, when they take these blood samples, they have to send them in somewhere. And so they wanted to kind of flip it on the head and give them faster reading. So I got to know them over a few months. We led their pre-seed round. They built out the software. And now, they raise their series A early. They graduated from YC. They finished, they raised their series A earlier this year. And it’s just been awesome.

Like, I actually had dinner with them last night. So I went and saw their new office. And they moved out from Pennsylvania to Oakland. Now, they just recently moved into their office in San Francisco. And it’s just amazing to see their growth as people. And they’re still only 23 or 24. So I don’t know what you were doing at 24. I definitely was not a CEO of a company. So seeing their growth and what they’ve accomplished, super awesome. It makes me very proud. I mean, just to see their traction, and their sales, and they’re growing like weed, that brings me joy. And so I don’t know what the future holds. I think it’s going to be great. But I think we’ve already done…and I always say this, like, celebrate the mini milestones because… And I remember, one final thing with them is like when we were raising that last round of financing, I told Chevy, the CEO, I said, “Hey, man, take a breath,” and just like, “Can you believe you’re raising this, like, so much money and like…” And he said, “Yeah, it’s crazy.” And I was like, “I mean, I can’t believe it.” He’s like, “I can’t believe you funded us.” Just like that interaction and that celebration is just it’s pretty powerful. It’s worth more than any dollar that I can make on that company, or any dollar that I’ve made. And like that brought me tremendous joy. So that’s a company that’s doing really well.

Meb: I was laughing when you were just saying, “I don’t know what you’re doing when you were 23,” because I distinctly remember visiting Penn State when I was 23 because my buddy opened a sandwich shop up there, right out of college. And I remember thinking, “Man, it’s cold up here. Holy cow.”

Shawn: That’s why you spend a lot of time in the lab and you test CBCs.

Meb: A hundred percent I was like, if you’re going to do engineering or med and devices, what a perfect location for it, somewhere where it’s cold.

Shawn: Exactly.

Meb: That’s a fun spot. All right, what are some other themes? I know of no more antiquated industry that has a significant amount of fat and frustration, sort of what I call frustration arbitrage where the way that it’s done is so antiquated than the real estate space. And the one I’m thinking of is HomeLister. They’re publicly out of beta, right? Is that company…?

Shawn: Yeah. They’re in over 15 markets. Business is booming. The real estate market is on fire. So what they do is, you know, they take out the sell side realtor, and they’re kind of like an online realtor. It’s not compass. It’s completely online. You can go sign up. And people that live in big cities, you know, it’s probably not relevant because there is volatility in pricing and you might need a realtor for higher-priced homes. But in small towns, or in Las Vegas, where in a community usually, you know, there is not much delta or separation in the price per square foot when something gets sold, like within the same neighborhood, even within like a short period of time. And so what is the theoretical value of that sell-side realtor? You know, it’s like, you need to put your house up. It needs to be syndicated across like appropriate platforms, most importantly, you know, traditionally, the MLS, maybe across, you know, other online mediums like Zillow, etc. But other than that, there isn’t tremendous value around pricing especially. So they kind of want to do that at a lower cost rate. You know, we think that that’s something that we think the timing is perfect because there used to be heavy regulation when it came to state by state and city by city, in working with kind of the legacy agencies.

And so those issues are starting to pass. And so we think the timing is right for HomeLister. And funny enough, I met that CEO, Lindsay McLean. I met her five years ago. I talked to her last week, and I’m like…she’s just a cockroach. And I don’t say that in a bad way. I mean, she just hasn’t died, never recapped the company. But what’s a big piece of success for startups? It’s timing. And so she’s just been so greedy and so determined that she didn’t let anything kill the business. But time has changed the industry to make her, I think, poised for a ton of success. And so still a ton of work to do, but we think the business is well-positioned. And we’ve had success, you know, kind of in the higher end with a company called Side that I did the pre-seed in 2016. And they just recently announced, you know, $2.5 billion valuation of funding round…

Meb: Wow. Congrats. And what do they do?

Shawn: …a couple of months ago. They’re kind of the opposite of this. They work with the realtor on the high end, where they need more software to build their business, where the high end realtor…actually, their brand is what’s most important, the person’s brand or their team’s brand, less about the brand of the agency, a Remax, or a Keller Williams, or a Century 21. It’s actually the people are more important. And so they empower these realtors that are at the top end of the market to build their own brand, stand alone. And then they are a virtual online brokerage, and they empower these high-end realtors, and they give them a ton of technology to make them run their business. It’s like high-end real estate in a box and help them scale their brand, hire other people, have more output. So they’ve been tremendously successful as well. So that pattern recognition really helped for HomeLister, in addition to knowing the CEO for one.

Meb: You mentioned this interesting topic and observation, which is this concept of timing. And we say this about the investing world, where over the course of 10 years, half of the mutual funds close, which is an astonishing number of just attrition from…ends up being survivor bias. And obviously, the same thing applies to entrepreneurship and startups too, where we say that the biggest compliment you can give anyone in our world is just surviving. All right, the fact you keep the doors open and can make it is already like a huge compliment in itself because it’s so hard. And capitalism, free markets, that’s the thing, and like creative destruction is everyone’s in the arena together. And it’s tough just to even keep not drowning, so to succeed is even more rare. But a lot of it, you know, there’s an element of luck and timing too in addition to hard work. I don’t want to keep you too long, but let’s keep chatting about a few of these themes. Anything else we haven’t covered as far as the companies and ideas that you’re particularly interested in here in the end of summer 2021?

Shawn: I’m a people-driven investor, so we’d love enterprise, and we love that top-down approach. And there are certain areas that we look for. But oftentimes, I learned a lot from these people. You know, I’m talking about the Moichor example, you know. It’s like you learn from their insights, and then you understand them and how they think about it. And you can make a decision right or wrong, if you think that approach is right. But ultimately, we’re betting on teams and people and those people’s ability to hire other great people. And so I think oftentimes, we focus on industry size or potential. But, you know, really, if, to your point about timing and grid, if they don’t have it in them, they don’t have it in them, right? And so I think that’s why we get to know people when we spend time with them. And we do references and we do all of that stuff before writing a check because we’re investing in people. And so all of that is the data that we create around us, in addition to the time we spend with them, right? So, you know, we need to see why also, right, by doing that work. And so I think so we’re very bottoms up from that perspective as well.

Meb: I imagine, at this point, the largest percentage of your…correct me, I could be totally wrong, of your introductions, interactions has been through probably your network of meeting people for the past decade. How often is it that you’re seeing startups from a random cold e-mail? Or what’s your process for unearthing all of these, like the 22-year-old founders? How do you come across a lot of these? Is it through friends of friends or is it through all sorts of angles?

Shawn: Yeah, I mean, I’m pretty easy to reach. Like, literally, you can go on our website, and to your point, send a cold email. If you have like half of a brain cell, you can probably figure out what our email address is just from knowing the URL of Parade website. But you’d be surprised.

Meb: Not to interrupt you, this is one of my favorite. Like a day does not pass, where people will ping me on Twitter or elsewhere and say something, I’ll respond and just say, “Okay, great. I’d love to email you. What’s your email?” And probably, like, I have the easiest email on the planet to find and then never hear from them again. It’s like, not…

Shawn: Yeah. Yes.

Meb: …only is it easy to find, you can also, listeners…like there’s, what’s it, RocketReach, or any of these services that will just, like, tell you someone’s email. So it’s like, if you don’t do this very tiny, bare minimum of effort, it’s like, I can’t help you anymore, so.

Shawn: Well, like I said, entrepreneurship is decision making. It’s resourcefulness. It’s all of those things. If you can’t find my email, then, you know, we have other problems. And I also think, hopefully, we met a bunch of people over time. You can probably get an introduction, even from someone that I don’t know super well. But an introduction is better than no introduction. But no, I mean, I respond to cold e-mails. I respond to every email I get. I do it as a source of pride, you know. But I think if you go that route, make it a pretty compelling email, right? To your point, I’ve read probably on my website that I like fantasy sports, and people have like addressed that. But I wouldn’t say, like, that’s enough to, like, make me take a meeting and use my time. Like, we want to spend time with founders that come from higher signal, right, like angel investors that we work with. Like, I’m going to take a meeting from a founder if a founder introduces me to somebody that’s their friend or someone that they’ve worked with. Like, I’m obligated almost sometimes to take some of these meetings.

And so, like, you’re just going to have lower conversion if you come in cold. I think of everything in terms of conversion, and so your first milestone of conversion is getting a response which I said I will do, but then the next thing is getting the meeting, and so I think articulating, telling your story in the right way. Like, I know other investors that have invested off of cold e-mails. It’s definitely not a majority of their investments. It’s probably like one or two in the history of all their investments. And so I think bias is the killer in our business, especially at the stage that we invest in. You know, you have to figure out ways to take risk. And so I always try to have an open mind. But I think as a founder, to best position yourself for conversion and success, it behooves you not to find the right intro to the person. It’ll just set you up on the higher side of the decision tree to hopefully put you on a track to getting a yes, rather than climbing yourself out of the lower section of the decision tree to get to that yes. You don’t want to come out of the loser’s bracket. It’s way harder.

Meb: It’s way harder, way harder. You’re still young in this game, but you’ve been a part of a lot of deals, by number, at the seed stage. Can you look back and reflect on the ones over the past decade almost? Obviously, they all pass your filter in the beginning to the check stage. So you’re excited about them. How much sort of retroactive analytics could you apply to the ones that actually had the breakout success and attribute it to any particular variable, could say, “Look, having done 100 deals, I can look back and see that these things were clearly of utmost importance,” or, “Hey, there’s a fair amount of randomness, I don’t know. It’s hard to make any conclusions about the eventual outcome?” Any general thoughts?

Shawn: I don’t know. I just try to focus on simple things. Like, I help them get off the ground. I help them like build teams. I help them like find product market fit. And like, I just try to focus one foot in front of the other. And we’re excited. But I try to trust the math, like you mentioned before, and try to get less emotional about it. It’s really hard when you invest day zero, oftentimes. I try not to overthink things. You know, everyone says, “Oh, you know, as an investor, it’s like the people, or who you bet on, and they’re going to, like…” The outcome is going to be the outcome. I don’t take credit for any of it. But it’s a team effort. And our job as investors is not to run their business. Like, I don’t want to run anyone’s business. But it’s to give them anecdotes of things that we’ve seen to help them make better decisions, right? And so I’m hoping, over time, that I have, like, given tidbits. And even if it’s, like, on the margin, margins add up, you know, over time. Hopefully, we do make some level of a difference and that CEO says, “I was happy to take Parade Ventures’ money.”

Like, that’s all I want, right? I don’t want credit. I just want them to feel happy with the partnership. And so, like, I think we do add value. And so I just focus on those little things, whatever it is. Every team is different. Some people just need someone to talk to, right? Some people need help with fundraising. Some people don’t need help with fundraising. Like, they’re all different. I don’t know anything about, you know, the vet space. I do know what future investors are looking for, so I can help them, you know, think through that, what KPIs they should probably track to tell a compelling story. I know what a good story looks like. So there are areas that I can horizontally share information from a cross-section of our companies, throughout, you know, now over seven years of investing, to your point, touching hundreds of companies, and we can probably share a thing or two that can be helpful to a business. I focus on the small things. Like, I don’t know when the markets going to crash, when the bull markets going to continue. Like, I’m not smart enough to figure that out. Maybe you are, but I’m not.

Meb: What’s the state of venture today? You kind of just lead into this one, you know. There’s been a big evolution over the past 10 years. As you mentioned, syndicates didn’t really exist in the form that they do now really a decade ago. There’s been this huge proliferation of people that are kind of earlier stage, whether it’s individuals. Obviously, you’ve had valuations go up across the board for everything. What are some general takeaways that you have, if any, about the environment over the last 10 years, as well as the last year, how things have evolved, good, bad, in between?

Shawn: I think this is the funnest time I’ve ever had as an investor, or probably it’s not a better time to be an entrepreneur. Great companies are being..I think, I mean, it’s still early when you just invest, but they’re getting created every day. There’s ton of capital out there, smart capital. Valuations might be high, but I was talking to somebody yesterday. He had his prior firm wrote a check into Canva, which is, you know, worth whatever multiples in billions. And I was like, he was like telling me it was the first round of funding. He told me the price, and I was like… My reaction, I won’t get into the numbers, but I was like, “That was expensive.” So, like, it’s all relative. Things have been expensive also up and down for the past, like, 10 years. We find value in the market, sub $10 million valuations. People are like, “How do you find that?” We do. It might not always be here in the Bay Area, but I think there’s opportunity out there. And I think it’s a great time to be a seed investor, a Series A investor. It’s awesome to see, you know, the tigers of the world. And Andreessen is even raising later stage vehicles to support founders. And so I think people also have to remember, like, I come from, like, building a marketplace for mutual funds to connect with late stage companies. Like, mutual fund capital is in the trillions of dollars. People can talk about the increase of venture financing. It’s still a rounding error.

Meb: A rounding error of a rounding error, speck of sand.

Shawn: I know you’re on the Twitter, and I love Twitter, but the noise to reality ratio is pretty high and the tech Twitter is pretty loud. So, you know, it’s probably a little louder than it needs to be or what it is relative to the impact that it has from a dollars perspective. And so I just think I always try to keep that in mind.

Meb: Yeah, I mean, it’s astonishing to me, the consistent innovation that I see on a daily basis from so many of these startups. It kind of floors me. And the nice analogy I like to give is because we’ve been trying to educate and encourage our investors over the years to at least get interested in this world, whether they do an angel investing, just to dip your toe in the water and pay attention because one of the biggest benefits is it’s so optimistic, right? You’re looking to the future. These young people, old people, could be both building amazing companies, trying to change the world, all this stuff. But it definitely gives a foil to watching financial news networks, where people weren’t screaming and shouting and pessimistic all day, right, like the world’s ending. And so it’s a nice balance between the two to try to at least feel out both sides.

Shawn: In my area of the world, we go from zero to hopefully around a million in ARR, and then we bring on other smarter people that are able to take them from million to 5, 5 to 10, 10 to 15, whatever those jumps are…

Meb: So you guys don’t do any traditional follow on?

Shawn: We do. We do, but then you’re following on by definition of what you just said, right? And so there’s a new lead. So when we take our lead position, we know our job, and that’s the most important part of our job. Of course, we always continue to support the company, both financially and as partners. But the main part of our job as a seed investor is to get them to some level of product market fit and raise more capital, and raise the Series A hopefully next.

Meb: Are there any type of opportunities as far as either companies, industries that you haven’t allocated to or that you would love to allocate to but you just haven’t seen the right company in the space that you’re excited about? Is there any themes that you’re like, “Oh, man, I would just love to do X, but it’s just nothing’s there yet?”

Shawn: I mean, I’d love to do more in like crypto. I mean, we are allowed to. And maybe not like crypto, crypto, but like crypto applications and understanding that. And so, we have, over the years, like we hadn’t had a crypto or it was called Bitcoin syndicate in 2014, like me and Gil under Flight VC. So, like, not new to it.

I always like try to figure out where’s our edge? Why are we winning deals? Like, what are we seeing or understanding that puts us in position to want to invest that people aren’t seeing that’s worked for me before, you know, and taking that risk?

So I think there are areas like that, you know, we want to figure out. We did our first investment in Latin America earlier this year, so going international. So we’d love to do that in India. I’m talking to a team in the UK right now that’ll probably close soon. And so, you know, just broadening our aperture in a variety of ways, it could be sectors, it could be GOs. And I think from a GO and a deal evaluation perspective, COVID has been very helpful with that because you could be in Timbuktu right now, like I wouldn’t know, right? I know we’re in the same state. But it matters less than it did before.

Meb: Yeah. You mentioned the value add is the main benefit. You think the relationship with the founders…like, when you talk to one, if they’re to say, “All right, look, I’m deciding between you X, Y, Z, X, Y, Z…” I don’t know how often that actually happens if you’re actually sourcing and digging these up, if that is rare or if it’s common in 2021, but to the extent it is, like, what do you tell them? Like, how do you kind of say, “This is who you should pick for the prom?”

Shawn: I mean, even though I’ve been doing this for a while, I don’t have a million Twitter followers, but I focus on my relationship with the person across the table or across the computer from me, and I focus on that and that alone. And I think if I do a good job of building that relationship, hopefully, they’ll want to figure out a way to have me around the table maybe as a lead or not. And if they don’t want me around the table, I haven’t done my job. So I don’t know. I think when it becomes a competitive situation, and usually you’re competing with firms of all kinds of different value add, DCs, brand, etc., size, you can be competing with Sequoia on a deal as a small pre-seed and seed fund, you know, that’s just going to be harder to win by definition. It’s not an easy decision. I don’t envy the founder in that. I do envy the founder, but I don’t at the same time, right?

Like, I remember before starting my first venture fund, interviewing with a company, a great company, and I was like I realized I didn’t want to go work for that company. But I said if I continue this process, I’m going to probably take the job. And so, you know, like, it’s hard as a founder to pick the partner that’s right for you. If you get a term sheet from the best venture capital firm in the world, Sequoia Capital, how can you turn that down? It’s not right for every person, every piece of capital down to the partner level, right? Like, finding that firm, partner, fit for your stage, like it’s not trivial. And especially for like a first-time founder, getting everyone telling them what to do, like, I know, that’s a hard decision to make. And so I try to focus less on that stuff and just focus on our relationship and what we can do to help. And then we leverage our founders that we’ve backed to support us and pound the table for us. That’s the best testament to help to try to win. But I don’t know if that approach is right or wrong, but that’s the approach that we take.

Meb: Prior founder testimonial is probably the gold star. If you were to chat with someone who’s on the other side of the table, so all these Angel investors, particularly the newer ones, any advice you’d give them as they consider putting money to work? And I’m not talking to like the big allocators that, you know, have been doing it for a while, but just in general, the people who are interested in investing in sort of startups at the seed stage. Any general thoughts for them?

Shawn: I mean, you know, it goes back to the math game, right? It’s like place enough bets to create like a regular portfolio. I’ve always said, like, what’s beautiful about AngelList is it’s not really tailored as much to, like, the long tail consumer now, but you can go sign up for a bunch of SPVs and put a thousand in a bunch of deals. Like, start getting your brain working towards it. Who cares if you have to be carrying? Who cares if you’re not sourcing the deal? Like, learn to pick. Picking is more important. You can put money to work real easy. You can see deals, and you have to invest in good companies. And so like just start getting that brain working towards that. You could literally do it via AngelList and start working and getting that venture experience and get your wheels turning. Like, I’ve been doing that with companies since 2005. So it’s like, you know, if you think about it as 10,000 hours or however you want to quantify it, it’s like, before AngelList, like, it didn’t even have that ability to do so. I remember, like, reading TechCrunch when I first started and be like, “Oh, that company is cool. I’d probably invest in it.” You know, that was my version of AngelList. And so I mean, I think there’s so many avenues to be able to do it. And you don’t have to go write a $5,000 or $10,000 check. You can do it on a shoestring budget with writing a $1,000 check. Like that’s pretty rad.

Meb: Yeah, yeah. No, we were telling investors that, you know…I looked back and just even the AngelList specific, and they have a stat on the, like, past deals page. It’s like you’ve reviewed 3,500 companies. And the fun part about that, in addition to, like, there’s so much you learn and can apply to your own life. Like, so many of these companies I never even invested in, but I’m like, “Oh, that’s cool. I could use that, or I’ll pass it to my legal buddy.” I’m like, “Hey, have you seen this?” And he’s like, “No,” or I’m like…most of my friends are sick of it now at this point because they know anytime they hear, “Hey, have you heard of it?” they’re like, “Oh, god, it’s another startup,” but hugely useful, even if you don’t invest. But I agree. You start to learn so much just from being osmosis of getting to read about it.

Shawn: It’s an intellectual curiosity, right? It’s, like, how much do you want to learn? And like, everyone thinks they can be an angel investor. But like anything to be the best, it’s hard. I don’t know. Like, people make it look easy, right? LeBron James makes it look easy. But that guy works his rear off, right? So, like, I think anyone in any profession does if they want to be the best. You can get lucky, for sure. But sustained excellence, it takes a lot of work.

Meb: As we look to the horizon, what’s the plan for Shawn and Parade and company? You seem to be in a pretty great spot right now. What do the next 3, 5, 10 years look like?

Shawn: Kind of do the same thing, invest in enterprise startups, be high conviction, high partnership driven, work closely with them, be aligned with their success, fund one, fund two, same strategy, nothing’s changed. So wanting to be known for something in the ecosystem, “Hey, we’re a B2B company, we should go talk to Parade Ventures,” or just even… We just want to help founders. We want to be super helpful, super responsive, founder-friendly. I know it’s overused, but like, I literally respond to every email I get. So sometimes it takes a few days, but we respond. Those are the kind of moral fibers and pillars that were built on. And so, yeah, we want to just do it with consistency. Consistency wins, I heard.

Meb: And that’s a parade.vc. You guys, if you can’t find his e-mail, that’s on you. Shawn, what’s been your most memorable investment? It could be good. It could be bad. It doesn’t have to be a startup, but just the one that’s seared into your brain that jumps out at you. Anything come to mind?

Shawn: Well, I mean, another one that’s raised a bunch of money that we’re in the first round in is Bhavin Shah’s company, Moveworks. They just announced a $2.1 billion valuation. And I’ve known him since his company before that called Refresh. He went from being a consumer founder to a hardcore enterprise founder, going through the ideation stage, working with them, being a part of that first round, and seeing them take it to a reality, you know, going back to the long feedback cycles. So, you know, we have Side and we have Moveworks to give us validation on, you know, Shawn Merani’s personal track record. That’s helpful. But it’s taken many years. But seeing people fulfill their vision, and people that we’re friends and/or have become friends, given the partnership dynamic, again, like going back to Moichor, like just seeing these people fulfilling their visions through hard work and some luck, but bringing other great people around them, like, I mean, it’s amazing. And there are multiple examples of that. And even companies that have gone from series A or B, like, it’s still early, but you got to appreciate every milestone. Each is hard in its own way. And I just love seeing that and empowering people to do that, and really fulfilling their potential. So there are specific examples, and it’s just nonspecific, but so lucky to do this job.

Meb: Yeah, I mean, it’s that special moment where you see something, particularly when it works, and it’s like almost it gives you chills, right? Like you see this happening in this perfect moment in time also because it’s so rare, but it’s a great feeling. Shawn, this has been a blast. Thanks so much for joining us today.

Shawn: Thanks for having me. Hopefully, a couple of people enjoy.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback feedback@themebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe to the show, anywhere good podcasts are found. Thanks for listening friends, and good investing.

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