Energytech Startups

00:00:00:00 - 00:00:28:21
Unknown
Energy tech doesn't move forward alone, and neither should you. Energy tech cipher brings together the founders, investors, operators and corporates shaping what's next. From innovation trends to data driven insights. This is where the ecosystem connects, collaborates and moves. Find your place in the ecosystem at energy Tech cipher.com. That's cipher as in Sci, pH. E.R. where we bring the community together online and in person.

00:00:28:23 - 00:00:50:12
Unknown
Hi everyone. Welcome back to Energy Tech Startup Podcast. And today I'm really excited to have with us Mitra miller, who is the current president of Harn, which is Houston Angel network. Thank you for being here, mija. I'm so excited. Thank you for having me. So to get started, tell us about how and what is it and how did it get started that.

00:00:50:13 - 00:01:28:00
Unknown
I love that question because actually, this is our 25th anniversary. We are the oldest angel group in the state of Texas and one of the five oldest groups nationally. So we started actually, we sort of started in 1998. There's a little backstory there, but we call the official formation of the group 2001. So we are a group of independent, accredited investors who get together and collaboratively source, screen and evaluate deals in energy, technology, life sciences, consumer and aerospace.

00:01:28:02 - 00:01:48:15
Unknown
In other words, everything Houston does. It's also easier to say what we don't do, which is we don't do real estate, restaurants and services businesses. That's what we don't invest in. But anything that is venture bankable, venture scalable, not that they have to go the venture route, but that's usually the metric that we use for what we're looking at.

00:01:48:17 - 00:02:12:07
Unknown
Okay, great. And tell us a little bit about, you know, before we dive further into like your background. And from my understanding, you were part of starting, hon. From the beginning. No. Oh, gosh. No, no. Okay. I'm not that old. Okay. No, no, no. But I mean, who knows? You could have just been in college. Thank you. I am, I'm old enough to have been there, but I was not an accredited investor when I was in my early 20s.

00:02:12:07 - 00:02:37:15
Unknown
Yeah. So, so I was in Austin back in 1998 as part of the.com boom. So I was in a venture development studio fund combination there, worked on a series of startups, helped co-found one of them, which was an absolute blast. Worked in several others as an executive advisor. Then I had kids, moved to part time and, then we moved to Houston.

00:02:37:15 - 00:03:00:00
Unknown
So my husband also did startups for a long, long time in Austin. And then he decided with two little kids. So for those of you who are in startups, typically the cycles are up and down and in a down cycle like post-Covid. He said, one of us needs a grown up job with benefits and a regular paycheck because, you know, we got these two little kids.

00:03:00:02 - 00:03:25:20
Unknown
So, he came to Houston, got a job here, and we just absolutely love Houston. We loved Austin, but Houston's fantastic. So that's what brought us to Houston. I continued working with startups, advising them. I started investing my own money in early stage companies 14 years ago. And about six, seven years ago, I realized, I love this. It's the natural evolution.

00:03:25:20 - 00:03:52:01
Unknown
Once you've worked in startups, you advise startups, you start investing in startups. Then you really want to get serious and you realize you're bringing that whole skillset together. So I leaned in. That's when I joined Hahn, and I've been incredibly active there, but also doing my own, some of my own work on the side. So and I guess, you know, your background having been, I mean, gosh, part of the dotcom boom, there must have been so much, learnings the hard way.

00:03:52:05 - 00:04:17:14
Unknown
Oh, yes. Yeah. Yes, absolutely. How do you take that back? And, and, one of my questions is, is are startups smarter now than they were before in terms of, like, we've know the answers now. So. Okay. Yeah. So in general, is the ecosystem smarter? In many ways, yes. Because we didn't have an ecosystem back then. And honestly that's back to when hand got started.

00:04:17:14 - 00:04:38:13
Unknown
So kind of coming back to not his earlier question here in Houston while I'm doing dotcom over in Austin here in Houston, they were creating. They knew they needed an ecosystem to support early stage innovation. And so that's when the Houston Technology Center got started. And one of the many initiatives that came out of that was the Houston Angel network.

00:04:38:13 - 00:04:59:06
Unknown
So our founders, our co-founders are actually Paul Zahn, who was the head of HTC and the chairman of HTC at that time, Lloyd Bentsen, the third. So we'll be honoring both of them at a big banquet later this year for our 25th anniversary. But the but the point is that when you're creating an ecosystem, they knew that you support the founders.

00:04:59:06 - 00:05:20:02
Unknown
You need resources, you need service providers, but you need investors. And if you don't have people who understand how to invest in this asset class, and that capital is mobilized and ready to go, you really aren't going to be able to build a strong ecosystem, and they have to end up going to the coasts for their money instead of getting it here in Houston.

00:05:20:07 - 00:05:44:18
Unknown
So that's how Harden got launched. And and my question was more, you know, with your own personal experience, how does that, influence your life now as an investor? What's the lens that it's giving you? You mean my background? Yeah. Your background on the product and launches. Oh my goodness. Yeah, yeah. So I actually think having been someone who's been in startups changes everything as an investor.

00:05:44:18 - 00:06:16:10
Unknown
While I love the fact that there are many people who are investors with deep expertise in their domain, and they have connections and they have a great checkbook. If they haven't had the lived experience of honestly all nighters. We're right. We were talking about all night all nighters, having to make payroll, what risk really is. And I think for a lot of people, if they've worked inside of large corporations where they avoid risk at all cost because people die, right?

00:06:16:16 - 00:06:48:00
Unknown
Energy, life sciences, people die when there's risk. We're in a in a startup, we're all about risk every single day. And it so having investors who understand and have a similar mindset and can respect that the founder needs to do that and can coach them through that, I think is really important. And so having been on that journey, I think some of the very best early stage investors are exited founders who can say, been there, done that, got the t shirt, I promise you're going to survive.

00:06:48:06 - 00:07:06:14
Unknown
By the way, call this guy, call that gal. They're going to help you. Yeah. It's interesting, I was just reading a quote that someone had posted on LinkedIn, from the CEO of Nvidia, where someone asked him like, you know what would you do if you were to start over 20 years ago? Like if you were to go back in time 20 years?

00:07:06:16 - 00:07:22:19
Unknown
And he said, I wouldn't start my own company. And I think he said that because he's like everything falls on your shoulders in the end. You know, like the board is always on you. Like if anything goes wrong, it's like all on you, like it's a lot of responsibility and accountability. And not everyone is cut out for that.

00:07:22:19 - 00:07:51:15
Unknown
And you have to kind of make a decision if that's the life that you want to live. Agree. And I think there are so many different paths for founders. So there's a, there's a local founder that I'll talk to. He'll remain nameless, but he's IP out and it's gone really well. But he said, you know, and he said, you know, at every single stage I thought if I just get my seed stage done, if I just get my series A done, if I just, you know, whatever.

00:07:51:15 - 00:08:10:12
Unknown
And then when I appear, it's all going to get easier. And you know what he's like every time it just gets harder. Yeah. He's like now I've IPO and let me tell you how bad, how hard this is. Because now I'm answering to the street and the analysts and all this. It's just harder than ever. He's like me.

00:08:10:12 - 00:08:30:08
Unknown
And the pre-seed stage wasn't so bad. But I think it's like life. Everything we go through prepares us for the next stage, right? If we think about where we are right now, we're all parents, right? If we hadn't had all the lived experiences that we had and all done things we did, we wouldn't be able to coach our own kids.

00:08:30:08 - 00:08:49:19
Unknown
So I think it's very similar with being a founder is every stage is preparing you. If you look at it that way, it's preparing you for the next one. But there are obviously a lot of founders who also don't want to stay in long term, and they turn over the reins to somebody else. And that can be a great way for the company to start to keep going and succeed that way.

00:08:49:19 - 00:09:08:18
Unknown
So, but yeah, I have certainly heard that from others. Yeah. It requires a lot of resilience and grit. Oh my goodness. Yes. So what do you tell, you know, as you're building you've been the president upon for how long now? Only about six months, but six months. Yeah. Your incoming for a while, and then it's been vice president for a while.

00:09:08:21 - 00:09:25:08
Unknown
So. So what happens this week. So the vice president is the president elect. Okay. So I was on the board for three years than I was VP and president elect for two years. Now I'm president for two years and then I'll be board chair for two years. So that's our succession. Oh interesting progression. So yeah. So there's a line.

00:09:25:08 - 00:09:43:12
Unknown
So we know. So we already know who our current VP is and that she's going to be our next president. So if you all know Chantelle Jordan she's amazing. She's amazing. We're very excited. Yeah. You know you guys have a fabulous team. And everyone I meet at hand is super, super impressive. How do you work? You know, a lot of these people come from corporate.

00:09:43:17 - 00:10:08:12
Unknown
Yeah. Like ten, 20 years of great experience. And now they want to go into investing but not necessarily have that background but are curious. So how do you kind of train them and how do you help them start thinking differently about investing in a company versus like the way you invest in the stock market? Oh my goodness. So we Are so Hot is a nonprofit and it's very small.

00:10:08:12 - 00:10:29:09
Unknown
And we try to keep dues as reasonable as possible. So we do have some initial training. But everybody is a volunteer except our managing director Samia. So Samia is Wonder Woman. She does a lot, but she's our our full time person. I'm a volunteer. Everybody else you meet from hand is a volunteer. So what we do is we learn together.

00:10:29:11 - 00:10:55:00
Unknown
It's a it's an experiential thing. So we have some early training. But really what happens. And honestly it's like so much of life learning by doing. So get in and screen deals. Learn how to talk to founders. Follow. What we do is we pair people up with an experienced member so they can see. How do you ask what questions you ought to ask when you're screening, what questions you ought to ask, at a pitch, what questions you need to go into for due diligence.

00:10:55:01 - 00:11:13:11
Unknown
And then we do like the summer. We're going to have an online series of educational events for members to really go deep on some of these things. What is an angel portfolio? How do you think about it, given the risk ROI of angel deals? How do you do deep due diligence, and what are the basic questions you ought to be asking?

00:11:13:13 - 00:11:35:19
Unknown
So the Angel Capital Association is a national organization that all in almost all angel groups belong to. So it's a nonprofit and they actually have a lot of content as well. So as a member, all of our members, when they join Ha and get access to a lot of resources through the ACA, which is fantastic because that they give that to all the angel groups.

00:11:35:19 - 00:11:57:10
Unknown
So we are all getting similar education. Then we do our specific education within our group because obviously we're looking at different deals from somebody in other groups. But it's just really a learning by doing. And the it's truly I keep telling people, the more you dive in, the more you're going to get out of it. Like everything we do.

00:11:57:12 - 00:12:19:19
Unknown
And what I will say is it is radically different from almost anything else they've ever experienced. I mean, this is the riskiest asset class, full stop. Some people could say, oh, well, crypto, I don't know. But I will tell you that in normal business asset classes, this one's crazy. And Angel's even a little riskier. Potential higher ROI than even venture.

00:12:19:21 - 00:12:42:18
Unknown
Right. Because we're that half a stage right before they get to a VC. So they have to think about that and how to create a portfolio. That's where I'm not a financial advisor or an accountant, so I'm not going to be able to give them advice. But I can say based on my experience, I allocate a very small percentage of my overall portfolio.

00:12:42:20 - 00:13:02:06
Unknown
And here's how I've been diversifying over the years in terms of types of deals. How how the how long they're going to take to exit the risk factor, the potential ROI, etc., and how you build a portfolio. But then again, we just do that collaboratively. We all learn from each other. And so that's really how we get it done.

00:13:02:06 - 00:13:22:17
Unknown
We have a little bit of regular programing but it's an experiential thing. Yeah I know and I know everyone who's been part of horn is like kind of echoed exactly what you're saying that we just kind of learn together and learn from each other very much. I think that collaborative way of learning is also I think it just expands people's horizon a lot quicker.

00:13:22:19 - 00:13:38:01
Unknown
So one of the things one of the founders yesterday was asking me, you know, after we had our founders and founders, Fusion and Mitra was they're telling us a little bit about Han and how you guys operate. So they came up to me and they said, you know, yes. How do I know? How do I pitch to Han?

00:13:38:03 - 00:14:02:09
Unknown
And so how how would you respond to that? How do you get into that room where you're pitching in front of investors at Han? That is a great question. So first thing is actually on our website. So which is Houston Angel Network Dawg. And one thing I do want to say is we do work nationally. So any company in the United States that thinks that they fit what we're looking for can, can apply.

00:14:02:11 - 00:14:30:12
Unknown
So we have a little tool on our website where they can do a quick self-evaluation to see if they're ready for us. It'll give you a score and I don't know why some founders ignore the score. Like if you get a bad score, wait, go look at that. It's because most founders are men and they ignore the for one thing, it's interesting because it's like you scored a 22, like on a scale of 100.

00:14:30:14 - 00:14:51:00
Unknown
So maybe go fix some of those things before you apply. But that tool is there, so that can be very helpful. We do have a small application fee of $100 because again, we're all volunteers. So to apply we want people to be serious. So we want you to use the tool. We want you to know you're ready and then you apply.

00:14:51:02 - 00:15:16:06
Unknown
But to have success, to answer your question, nada is we want to see a company. That is what we would say is ready for investment or investable, and that would be they. And it's a little different in every sector, right? Obviously if you're a clean tech startup versus a life sciences startup versus a tech startup or consumer goods, very different metrics, right?

00:15:16:06 - 00:15:38:17
Unknown
And consumer, you need to be revenue positive and and at a certain level. Whereas obviously if you're building, if you're doing deep tech or energy or something else, it might be are you TRL 4 or 5? Right. It's going to be a little different. But what we do want to see, we want to see a clear vision. We want to see an outstanding founder.

00:15:38:18 - 00:16:04:02
Unknown
We want to see more than one person. So solopreneurs, that's not investable yet because actually, one of the very first tests for me personally, is the founders ability to recruit top tier people, to work with them on this crazy idea that they've got. Can they convince somebody, hopefully smarter than they are, to hitch their wagon to them and do this thing?

00:16:04:04 - 00:16:23:09
Unknown
And that tells me that a, you've got something real because you've got smart people who agree with you. And number two, you've got that leadership ability to get those people to come and do this with you. And thirdly, that you're willing to hire people smarter than you, right? And that you've got the humility to bring in those people.

00:16:23:11 - 00:16:50:00
Unknown
So when I see a founder who has surrounded themselves, I don't mean to be unkind, but with B minus players and all of them are like that. That's a warning sign right there. So vision founder team. And then it's going to be ability to execute on a profitable business. The bottom line is all of business.

00:16:50:00 - 00:17:09:20
Unknown
And and you all know this so well. But this is something that I think founders miss. They are so excited about the genius of their idea or the IP behind it, and how it's going to change the world, but they actually haven't figured out how to make money. The reason why these things work is because essentially, businesses to borrow a friend of mine sprays.

00:17:10:00 - 00:17:32:21
Unknown
They're cash flow machines, right? If you're not a cash flow machine and you don't have to be cash flowing today, but there needs to be a clear path to get you to be a cash flow machine, because that's where value comes in. And if you're not that and you don't have a way to show that customers really will pay for this with whatever a healthy margin is in your business.

00:17:32:21 - 00:17:58:16
Unknown
And that's different for different businesses, then you don't really have something that's investable. And then the final thing is going to be I always look at advisors and backers. I want to see that again. Have you attracted top quality advisors and backers who again understand your vision? They understand your industry and they're willing to get involved here. And probably write checks to support your vision.

00:17:58:18 - 00:18:18:20
Unknown
So all of those things come together. And there's a lot under every single one of those items. But I would say that's kind of what we're looking for in a nutshell. Yeah. So so if I can, push back a little bit, yeah. The application process, I think, anyone who, does enterprise sales knows you got to find your champion before you, like, put in an answer to an RFP.

00:18:18:22 - 00:18:36:21
Unknown
And so when we, when I look at the Houston Angel network, my first thought is, how do I find the person who's going to get excited about my deal? Or if I do score a 22, they're still going to, be the, you know, the standard bearer within the organization. Is that is that something that happens at horn is that something happens to angel groups?

00:18:36:22 - 00:19:04:01
Unknown
It can. So so horn is not just about capital. Yeah. Right. We're also about council, and connections. So we have extraordinary members and the whole point. And the great thing about having a huge group like ours with over 100 people with deep expertise is you might meet a potential advisor, but you can still so you can come in and you may not get the check, but you might find that one person who looks at it and says, I get it, I understand.

00:19:04:01 - 00:19:22:17
Unknown
Let me work with you on this. Yeah, and it might be 6 or 12 months before you're really ready for that check. But you find that person. Yeah. Or they might be able to introduce you to that person. One of the things that I do with founders is I frequently say, who's your dream advisor and who's your dream investor?

00:19:22:19 - 00:19:47:23
Unknown
And they always know who they are. It's like, do you know them yet? Have you found them? How do you get connected to them? If you go figure that out? And yes, it is hard. It is very hard. I'm not telling you something that's easy, but if you want to be successful, you're going to do way harder things than try to get in touch with this amazing person who happens to be in this role at this major energy company, right?

00:19:47:23 - 00:20:06:20
Unknown
Especially if they happen to live in your town. You can find them somehow. You'll find them. Stock them. Well, I try not to say stuff like that, but yeah. So my question is, how do you find that mentor within hand? Because, you know, you don't necessarily want to throw the, application in asking for money if you're really looking for guidance and mentorship.

00:20:06:23 - 00:20:31:17
Unknown
Right. So a lot of so I will say some of our members, many of our members are in other organizations where they can get those connections. Right. They're affiliated with ETN, they're affiliated with Greentown Labs or the Iron. They're affiliated with Global Energy Mentors. Right. I think there's so many places where you can find those people. But always think about the people you the characteristics.

00:20:31:17 - 00:20:55:06
Unknown
You're your ICP of your advisor and then figure out how to go find them. And you're right. Is there a way to get in touch with all of Hahn and kind of surf who we are? No, because it's a private organization, and even our pitch meetings, we don't publicize because the commitment we make to founders is only accredited.

00:20:55:06 - 00:21:14:17
Unknown
Investors will be in the room. This is a private pitch because there are SEC laws governing all of this. So we have to be kind of careful. So our members, unless they publicize it on LinkedIn and some of them do, but if they don't put it on LinkedIn, then then it's hard to find them. But most of us are like me.

00:21:14:17 - 00:21:39:02
Unknown
If if you say, here's the kind of person I'm looking for, Metra, if I know that person, I'll say, oh, okay, I'll make an introduction. I can't invest in all of the wonderful founders I meet. I cannot invest in all of the brilliant technologies that I want to see exist, but I can do five minutes to make a connection or give them a little bit of advice or say, go talk to Nada and Jason.

00:21:39:02 - 00:21:55:12
Unknown
They know me. So yeah, yeah, so, so maybe the advice here for founders who are listening is, you know, if if someone does self-identify as being a member of Hahn, it's sort of an invitation to to say hello, not necessarily to say, give me a check today. No, but it's it's a like this is how you network and build a relationship.

00:21:55:12 - 00:22:30:00
Unknown
So you can maybe find the right member who could be that, that targeted advisor within the ecosystem. That is so true. And you said a key word there, Jason, which is relationship. And while we have lots of founders come to us cold before we invest, we need to get to know them a bit. Relationship. I don't think people realize it is not a check, it is a marriage and these people are going to be nagging you for the next five, eight, however many years it takes till you exit and you want to have a great relationship with them.

00:22:30:05 - 00:22:52:16
Unknown
Spending some time getting to know them is important. And my best investments, the ones where I have the best relationships with the founders. Frankly, we've known each other for a while and sometimes I'm stalking them. Are you going to let me invest? All right. Right. So I'm like, hey, you opened up around and you didn't tell me yet.

00:22:52:18 - 00:23:20:01
Unknown
We want to get in. Yeah. So, so that. But relationships is everything in every business, but definitely in this business as well, because it's money and because we truly are invested in our founders success. Yeah. And it's funny, we're running a liftoff program to, to train entrepreneurs on, like, the process of raising capital. Yeah. And I was reflecting over the weekend as I was drafting materials that, a lot of investors talk about it as being a marriage.

00:23:20:03 - 00:23:37:03
Unknown
And when I was, 22 and told this the first time, I was like, I don't know what that means. Like, is that just, like, we're going to be together a long time. And now that I'm, gosh, whatever. I am 38 now, and I look back, you're an old man. There, dude. I look like I'm like, oh, this is what it means to be.

00:23:37:03 - 00:23:56:21
Unknown
Because I've been married now for a while and been with Yammy for, gosh, since 2012. And I'm like, okay, it's the relationship is is when, when relationships are good, they work really well. And it's a true partnership. And I don't think I understood that when I was younger, I just, I was just thinking, oh, it's just two people who are who are stuck together.

00:23:56:23 - 00:24:18:18
Unknown
But really the, the good relationships empower each other. Yes. And and but if they don't, oh then they can go that is toxic. Right. And then. Yeah. And I have seen too many toxic relationships between founders and their investors. Yeah. It can turn very adversarial and as bitter as any divorce you've ever seen. Yeah. And that is a tragedy.

00:24:18:18 - 00:24:41:04
Unknown
Yeah. And I think a solvable one with good communication and active engagement. Right. So if we want to, you know, so agree. Yeah. And and and having a scene like what a toxic divorce looks like, I'm like, okay, this is going to suck the soul out of anybody. And that's why it's so important to to qualify earlier.

00:24:41:06 - 00:25:00:04
Unknown
You know, what does a good relationship look like? And I and had the opportunity to listen to a few founders who raised a series B now and they they talk about a lot of times from their experience of raising capital, they want to understand how the investor thinks. So when things get tough, they understand that it is truly going to be a partnership or, you know, an additive relationship.

00:25:00:04 - 00:25:16:17
Unknown
And so when we come back to talking about, you know, finding those mentors and finding those those early investors, it is as much about finding someone who's aligned on like, mission and purpose. And it is more than just a blank check because it it's a relationship that has to take you to a exit or IPO where it is additive.

00:25:16:22 - 00:25:34:06
Unknown
And I think it's it's hard to really understand that the first time you're raising capital, that it is a relationship that's different, because when you're in corporate, it's like, no, I can get another job. Yeah, I can reach out to the part of your team. They're part of the team. It's really part of the team. And when you're building the team that yes, your investors are part of your team.

00:25:34:06 - 00:26:02:03
Unknown
Your advisors are part of your team. Your board is essential to your team. So are your legal counsel, your accounting people. Right. All of this is part of a team. And if you're not and your job as the founder or the CEO is to bring is like any great coach, you've got to know the strengths of every piece, every part of the team and bring in those players when they're needed and understand how to do that, to keep accomplishing the goal.

00:26:02:03 - 00:26:18:05
Unknown
So you with your board, you figure out what your goals are. When the other parts of the team, you figure out what to do. But the investors are a key part. Many times those investors are on your board. They are part of your advisors. And again, they've got access to additional resources that you don't even know about. Yeah.

00:26:18:05 - 00:26:51:13
Unknown
And if you're not communicating with them and building that relationship, you're losing out. And that also gets back to being frankly candid and vulnerable about all the news. Not just the good news, the bad news, right? Here's here's everything that's going on so that they can help you if you're not in in a marriage, in any relationship, if you're not sharing fully with your partner and something bad is going on and you're just kind of ignoring it and not talking about it, that turns toxic.

00:26:51:15 - 00:27:07:01
Unknown
And the same thing happens in business. Yeah. Yeah. Because I, you know, I mean what I'm hearing is like all relationships also work. Right. And then when you have like you have to work on your to invest in them like invest in them. Yeah. And you have to like that means you have to communicate. That means you have, like you said, vulnerable.

00:27:07:01 - 00:27:25:01
Unknown
Like vulnerable means that you kind of admit that you made a mistake or that, you know, we messed up. We did this launch. It didn't go according to plan. But just like keeping them, you know, that's how you gain trust is when you can be vulnerable. You can be honest with them. And you also should show courage because it takes courage to admit to a mistake.

00:27:25:01 - 00:27:43:00
Unknown
And most people are not able to do that. Yeah. Tell us about a time when you maybe invested in a company and you thought you knew the person, and maybe it didn't go according to plan. I'm sure that's happened. I mean, out of investments, you know, like you don't name anyone. We don't need to name. But naming any.

00:27:43:00 - 00:28:03:14
Unknown
Yeah. No no no no. Yeah. I mean, you know, because I mean, I'm sure there are times when you're like, man, why don't I see this before, you know? Okay. That's why many of the things that I said about spending time getting to know each other is so important because everything sounds great in the dating phase. Right.

00:28:03:14 - 00:28:29:09
Unknown
Everybody's on their best behavior. Everybody's charming. But there are always these signs that maybe they're inflating things a bit. They're exaggerating things a bit. And what I said earlier about ego and that ego does prevent them from admitting a mistake if I just work harder or if I just do this next thing, it's all going to be fine.

00:28:29:11 - 00:28:57:01
Unknown
So yes, I am invested and I will say it's earlier. And part of that is I feel like I've learned a lot and I was I'm a better investor. I'm a better judge today than I was 14 years ago when I started. Right, I made it I definitely made some mistakes. And however I will. The other thing is, and this is true for all investors, it's easier to look at those things from 14 years ago.

00:28:57:03 - 00:29:24:16
Unknown
I could be me. I'm making new mistakes today and I don't even know what they are. Right? I could still be misjudging all kinds of things, and I won't know for another 7 to 14 years. And but but really, it's around making sure that I get to know the person better, asking them more about who they are as a person, why this is really essential to them, why they would rather I jokingly say they would rather lie down in the street and die than have this fail, right?

00:29:24:16 - 00:29:44:08
Unknown
That they have to make sure this succeeds no matter what. And in other words, what's truly driving them, what's what their why is I think that's really essential. And is it because there are a lot of people who get into this thinking, I'm going to make a bunch of money, I'm going to be famous and isn't going to be great.

00:29:44:10 - 00:30:06:09
Unknown
And that's not why a why is this is something deeply personal, something that you're committed to, something that if you never get an ounce of glory, you still want to see it succeed. You're never going to be on the cover of any magazine or anything else. But you still want it. You're still passionate about this. I think that matters a lot.

00:30:06:11 - 00:30:26:09
Unknown
I think that, like, the last thing you said, really, I think if people could understand that, that they're not doing it for the glory or being on the front cover one day because a lot of people like, would want that, right? But a lot of times the people that we invest in or want to bring out for interviews and stuff are because they have some kind of something charming about them that people generally like them, and people are attracted to them.

00:30:26:15 - 00:30:47:05
Unknown
But how do you kind of peel back that layer behind that charm that you might be seeing to like, what's really the essence of this person? What's the real motivation behind what they're doing? You know, it's interesting. I've had the pleasure, because of the times 25th anniversary of meeting some of the most successful entrepreneurs and investors in Houston's history.

00:30:47:07 - 00:31:08:16
Unknown
These are gentlemen who are mostly in their 70s and 80s now, and they are some of the most humble people. I'm saying we want to honor you. They're like, no, I really didn't do anything all that important. Like, that's fair. You had a multi-billion dollar company in the 90s. Yeah, yeah, it's kind of a big deal. No, no, no, you really ought to go talk to this person.

00:31:08:16 - 00:31:30:16
Unknown
And for that person, it's fascinating to me how some of these incredibly. And they, they happen on covers, they write they been on CNBC. They've done all the things. But actually deep down they're so humble. Boyd Benson Oh my goodness, what an extraordinary man. And so humble I mean just and I could go on and on, you know.

00:31:30:16 - 00:31:48:00
Unknown
And those are the qualities that make them succeed, right. Because they're able to let other people be in the limelight, and are able to empower and enable others. And that's really what you need in a founder. And that's what you said earlier about, like, can they build a team around them because a lot of people struggle with that.

00:31:48:02 - 00:32:08:18
Unknown
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00:32:09:00 - 00:32:34:19
Unknown
There's a free tier so you can start today at no cost. That's c y r o n.com. Now thanks. And back to the show. I want to go back a little bit and I'm curious like how do you see how do you see the passion. Because I you know, I think you're talking about like there are people who are charming and some people who are really good at putting on a face of like, see the Chameleon or saying the right things, like, they'll say all the right things.

00:32:34:21 - 00:32:55:16
Unknown
How do you And I because I just love all the founders, sort of like, oh, this is the best thing. And, you know, and sometimes I feel like I'll meet a founder who's, like, so excited, and they're like, the consummate salesperson about, like, why their thing is the best thing since sliced bread. Yeah. And and then three months later, they're doing something else, and I'm like, oh, I'm just a terrible judge of character.

00:32:55:16 - 00:33:15:18
Unknown
Like, how how did I not see this? So I think I think there are very famous researchers who will say that actually none of us are is good at judging characters. We think we are. And I'm going to put myself in that category. What I will say is one of my mentors, a very experienced VC who's been doing this a long, long time.

00:33:15:20 - 00:33:39:21
Unknown
He insists on spending. So you get to know them through the first few meetings. But then he goes and he spends at least a full day and challenges them on everything. And he wants to see, because one of the things that we've heard and so I'm quoting somebody, but I don't remember who in 90 minutes, anybody can hold up a facade.

00:33:39:23 - 00:33:59:18
Unknown
It is much harder in three hours, four hours, five hours lunch, afternoon dinner to go through all of that. So remember, when you go on a car trip with someone, that's where you really get to know them. Same idea, right? How are we going to spend? And so he does that in person with them the diligence. And that's an essential.

00:33:59:18 - 00:34:23:15
Unknown
He won't invest without that usually because that's for a large check. This is not for a small right for an angel investment sometimes. But if you for a larger check and I would say even for horn if we're because we will lead a pre-seed maybe a seed, depending if there's something that we know and we love. You know, we could put in, you know, a half $1 million or $1 million, right?

00:34:23:15 - 00:34:43:22
Unknown
If we get really excited about something. And at that point, if we're leading, you better believe we're going to do that kind of due diligence where we're really going to get to know them. And that's. So that's my best guess. And again, I'm stealing that from somebody who's smarter than I am. But, I do think long durations.

00:34:43:22 - 00:35:03:12
Unknown
The other thing that they talk about and they do this in interviews as well, they say make sure that you meet them at least three times, three different days in three different environments. Don't go into the same room three times. One time should be coffee, one time should be in the office, another time should be dinner or something like that and experience them.

00:35:03:15 - 00:35:24:13
Unknown
Watch how they're treating the waiter. Watch how they're treating the coworkers. Watch how they're treating everybody and you'll see something there. So again, it's about the amount of time and engagement and remaining alert and attuned. But I'm with you, Jason. I want to invest in everyone, every everything in the first five minutes. I'm I'm I am such a Pollyanna.

00:35:24:13 - 00:35:49:12
Unknown
I'm like, everybody's going to change the world. It's going to be great. But now when you do dig in, the thing about being a venture investor is you're trying to find the red flag as fast as possible, and that can be the arrogance, and that can be the fact that they don't have a great team or that can be whatever it is, but you're trying to find a red flag and get to know as fast as possible so you can move on to the next thing.

00:35:49:14 - 00:36:08:09
Unknown
And that's actually I think they don't realize that, that that investors need to do that because we're literally being approached by hundreds of people all the time. And so we need to get to know fast because we're not going to if I'm going to look at hundreds of deals this year, I'm going to invest in 3 to 5.

00:36:08:15 - 00:36:26:21
Unknown
Yeah. No, it's funny, I was, just talking to, the folks at Decatur Partners and their private equity, like, they're big. They're deploying $100 million checks. Same same, thesis for them as they, I was asking, why don't why don't you use AI more? And they said, well, we need to be good at finding the red flags fast because we have too many opportunities.

00:36:27:02 - 00:36:48:19
Unknown
And so even at that stage, a lot of the things you need to do are still the same. And when you're kind of in the venture side of things. So it's just very funny, that, that skill you learn at the seed stage still applies, even as you get to larger check sizes. So. So I was curious to know, I mean, you've been within, in a startup all your.

00:36:48:21 - 00:37:18:16
Unknown
Well, you know, your early career was within startup. Then you entered investing. Been doing that for 14 years. What do you think has changed from, like, when you first started investing in terms of what you see, startups doing, founders presenting what investors may be measuring today versus 14 years ago, 14 years ago or 25 years ago, I would say so from when I was a founder.

00:37:18:18 - 00:37:42:02
Unknown
There were there were not angels like me. Angels were people like Michael Dell. And you know, those people and it's I will say 25 years ago, I thought you had to be a billionaire to be an angel investor. Yeah, right. And it didn't. And then I knew people who had big exits, and maybe they had a couple hundred million bucks and they were investing.

00:37:42:02 - 00:38:02:12
Unknown
Right? Okay. They were doing it to. But it wasn't sort of normal humans like me. I really never saw myself as that unless I had a huge asset. And it took a while to realize that becoming an accredited investors, I kind of woke up one day. I was like, oh, I've been one for a while. I didn't even know it right?

00:38:02:13 - 00:38:29:13
Unknown
I oh, I get and and then the evolution of I can do now I can start investing. And that I have something in addition to a check to bring. But you asked about what the changes are, so rephrase the question. I mean, I mean, I can imagine there's like a change in the generations of founders that are coming forward to like how you know, millennials are can be as founders versus like maybe Gen Z's.

00:38:29:15 - 00:38:48:04
Unknown
Our Gen Z is founding companies. Yeah, yeah, yeah, yeah. I mean, those are the new. Yeah. Mark Zuckerbergs or like, you know, Gen Zers, I remember what he famously said was right. Don't trust anybody over 40 and now he's over 40. Oh, no. It's like, yeah, there you go I wonder. Yeah. So I mean there's like you know I'm thinking there maybe there's a generational gap.

00:38:48:04 - 00:39:14:04
Unknown
And I'll give you an example. I was at my college reunion this past weekend and I was asking my professor, like, what do you see different now versus like when we were in college because it is a different generation. And she said, you know, we have to almost I had to scrap almost half to one third of my curriculum because this new generation doesn't have the attention span of the previous generation, and things just have to be taught very differently.

00:39:14:06 - 00:39:34:05
Unknown
Like, it has to be very visual, short bits and sizes, like the way she's running the TikTok and like, you know, and I'm just like, okay, so we were taught way more, in our time than like, what these younger generation are being taught today. I can't wait to tell my kids who are in college now, I just heard you know, that much.

00:39:34:05 - 00:39:49:21
Unknown
And you know, and what she also said was like, Covid changed everything too, right? Because they had to take a step back in Covid. Everything went remote. And then like that transition back, like maybe it takes time for it to like go back up again because it's still like they will never be the same. Oh, maybe it'll never be the same again.

00:39:49:21 - 00:40:09:00
Unknown
Yeah, I agree, I do think there's a difference between what they're having to deal with in college. So I'm an associate at my alma mater as well. And I talk to the professors and the administrators there. And there's a huge change, right? Literally, students call them in the middle of the night. Oh, wait, I can't take my exam tomorrow morning.

00:40:09:00 - 00:40:29:05
Unknown
First of all, they call them. Second of all, in the middle of the night. Third of all, asking not to take an exam. And half the time they say, okay, yeah, we'll let you reschedule. I'm like, none of that happened. Yeah, none of that happened. It was a sink or swim environment. And you know what? I am so grateful because I don't think that's doing them any favors whatsoever.

00:40:29:07 - 00:40:55:05
Unknown
However, the founders that I know, regardless of age, they can't be like that. That's not a founder, that is not a founder. I actually think regardless of age or stage, that great founders who are 22 or 40 2 or 62, they all have passion, they have grit and they have tenacity and they have the creativity to keep solving the problem.

00:40:55:07 - 00:41:13:07
Unknown
And if they don't, they get out pretty darn quick right there. So we all know we meet tons of founders all the time. There are so many people who do it for a year and they're like, crap, this is hard. I'm not doing this anymore, right? It's because it's even harder than they thought it was going to be.

00:41:13:07 - 00:41:36:03
Unknown
They all say, oh, I know it's hard of course it's no, it is way harder. It is ten x harder than you think it is. And so the people who succeed and I know, I mean, we all know 22 year olds who are doing this right. We can name some and they are not like their peer group. Then again, the great founders of 25 years ago were not like their peer group, right?

00:41:36:03 - 00:42:01:07
Unknown
Yeah, founders are different and they're also and I also I talk to people an entrepreneur is a broad category. They're lots of small business owners who are creating great businesses. They're not venture scalable. They're not venture back. Well. So in my world, that's not a founder, right? They are entrepreneurs. They're business owners. They're doing great things. It's a different kind of a business.

00:42:01:07 - 00:42:20:21
Unknown
They can capitalize with bank loans and lines of credit and friends and family money. And then they, you know, do their cash flow and it's all going to be fine. And God bless some of them, grow to huge, wonderful companies. You know, I was talking to someone about, you know, companies like that that then IPO. So in spirit right.

00:42:20:21 - 00:42:42:01
Unknown
Was not a venture backed company. But when it was admin staff, you know they they probably had some I don't know the full story, but they grew eventually IPO. So I was talking to one of their former executives from when they from the IPO team. They weren't venture backed. They didn't need to be. They just grew a great company discipline and I owed.

00:42:42:04 - 00:43:08:13
Unknown
And there's still a great company. And they never had a nickel of venture money or I don't know if they had P money or anything else, but they were able to do that as a organic business and that is a great path. Not everybody should be coming after venture dollars. And I, I even think in the world of innovation that we live in, not every single company needs to go after venture money, because again, there are high expectations.

00:43:08:13 - 00:43:32:13
Unknown
You're not only getting married. I'm expecting an extraordinary return. I'm looking for a 100 x return. Yeah, that's a big scary number. Yeah. And I think a lot of founders don't realize that. I mean, we've had, you know, even yesterday a founder came up to me and said, you know, yeah, I went up to this investor and said, and I told him my, my goal isn't to become that billion dollar company.

00:43:32:13 - 00:43:46:19
Unknown
And he said, okay, then you don't you know, that I'm not going to invest in you. It's just a transaction. It's not personal. Then I'm not going to invest in you. So and it's and it's saying that, you know, that's okay if that's, you know, because you can still be a really great company and still make a lot of money.

00:43:46:23 - 00:44:04:02
Unknown
That's why not take VC money and it gives you that freedom. So it's like, you know, that awareness of how else can you find your company. I mean, bootstrap it as much as you can, have it, you know, some kind of consistent cash flow that can allow you to grow, but like you said, in a disciplined way.

00:44:04:04 - 00:44:27:11
Unknown
Whereas when you're saying, I'm going to go the VC route, you are going for that, you know, rocket ship and you're saying, I'm going to ten x 100 x in a very short period of time. And I think Shark Tank and other similar programs have done a disservice because it's made it so sexy. Oh man, I get these investors and it's all going to be great.

00:44:27:13 - 00:44:52:15
Unknown
And the reality is it's not sexy at all. It is a grind. It is hard. And yes, the exits can be extraordinary. But that's also why when investors keep telling, you know that it's okay. It just means there's another way that you need to get this done. And I will say a lot of founders, I feel like when when all the investors say no, they're like, well, then I don't have a business.

00:44:52:15 - 00:45:10:05
Unknown
And I'm like, then you are never a founder. Because a real founder would go find another way. And they would, they wouldn't give up because if they got the grit and the passion, a lack of a check is only going to drive them harder to find a different way to do it. They find the money somewhere else.

00:45:10:05 - 00:45:34:17
Unknown
Some, I mean whatever it has to be, sometimes they go start a different business to fund the business they really want to do. Right. We've seen that. Absolutely. Yeah yeah yeah yeah. And yeah. And it's you know, sometimes, you know, we call it a pivot and a pivot could be. Yeah. Just starting a whole new company because whatever you were doing in that company that maybe did not succeed, you couldn't see a path to profitability and getting the revenues that you needed.

00:45:34:19 - 00:46:03:01
Unknown
But it pointed you to another direction that allowed you to maybe build another company. So it's like understanding that, you know, you can't be. I mean, at least when I'm looking at founders, it's like you can't be too rigid on the value that you're bringing because you don't know, because it's going to change with every interaction with the customer as the as you get feedback on what is it that the market wants, what is it that the market values and it changes from year to year too, because the market changes?

00:46:03:02 - 00:46:29:13
Unknown
Oh my gosh, the market changed so much this year. Yeah. And it will continue. And honestly that's another thing that you're always talking to founders about. It's like can you survive when everything changes. Policy changes. Administration changes. Tax breaks change. Everything changes. So back to you. Are you building a truly sustainable business that can survive all that.

00:46:29:16 - 00:46:51:00
Unknown
Which means you have to be agile. You have to pivot. Right. Like because you could be building something that's for today's environment. But the tomorrow environment could be different. Exactly. That means you have to change everything. And the flip of a coin. Yeah, yeah. So, I want to ask, just honing in a little bit on Houston, you know, and the energy transition, like, we were talking about energy transition all the time here.

00:46:51:00 - 00:47:09:18
Unknown
Like it felt like a year ago. You know, the obviously since the, you know, Harden started 25 years ago, a lot's changed in terms of like we don't we don't even have HTC anymore, but we have the Iron District and we have all these things that are coming together. Where do we need to get to next I guess in terms of as an ecosystem?

00:47:09:20 - 00:47:35:00
Unknown
Okay. And I will say the organization that inherited the mantle from HTC is actually Houston exponential. Yeah. Yeah. So and obviously that does exist. And we collaborate a lot. We love working with Houston Exponential and the Iron and Green. So Harden works with everybody. We're the investors and everyone in the ecosystem. But your question was what needs to happen next in the ecosystem.

00:47:35:00 - 00:47:50:08
Unknown
Is that what you really. Yeah. You know honestly if you want to reflect on like where we are today and how that, how that has felt over the last decade, we can we can start there and then paint the future and like, what are you excited about? Yeah. Houston that's coming. Yeah. So I'm not it's not for me.

00:47:50:08 - 00:48:11:23
Unknown
It's not just Houston is Texas. Yeah I look at the whole state because when you put the pieces together of Dallas, Fort Worth, Austin, Houston, San Antonio and then honestly, the Valley in Corpus Christi and what's going on and now. But you put it all together. Abilene, my goodness, everything that's going on, you've got almost everything you need.

00:48:12:01 - 00:48:33:23
Unknown
When you put Texas together now Houston plays an essential role on, as we say, everything that's really hard to do. Right. We can scale. You know the joke is here in Houston. You know it's like okay you want a digital startup go do that in Austin. But if you want to build an island in the middle of the Pacific Ocean, the people in Houston can do that.

00:48:34:00 - 00:48:55:15
Unknown
They can build it. We can do that. You want to go put a colony on Mars? We could do that. Yes. These are the engineers, the doers, the builders who can make it happen. For great innovators to thrive here. I think when you look at where we were 25 years ago and where we are now, oh my goodness, the progress is fantastic.

00:48:55:15 - 00:49:20:11
Unknown
And yes, since, with Houston Exponential, the Iron District, all of these things, TMC has been doing amazing things. It's all still growing. What I try to remind people is, but we're not operating in a vacuum. While we've come an enormous way in 25 years, so did Detroit. So did Chicago. So did Los Angeles. So did it Lanta and Nashville.

00:49:20:11 - 00:49:49:00
Unknown
My goodness. Right. All of these communities are also growing and doing for us to be competitive in the spaces that we want to dominate in, we need to keep at it. Like, don't slow down, double down. And so I would say we need more programing for, for founders. We need more capital mobilized locally, not just in Houston but across the state.

00:49:49:02 - 00:50:18:23
Unknown
We have more venture capital than we did 25 years ago. Hallelujah. Do we have enough? No way. No. We need a ton more. The number of companies that still have to go to the coasts to get funded. Some of my favorite founders here in Houston, especially with, you know, five, seven years ago they were going to the coasts to get funded for things that are so Houston, I will not say the names because I don't want to call anything out.

00:50:18:23 - 00:50:36:10
Unknown
But but it to me, that's one of the big things that I want to see solved. So as part of our 25th anniversary, we're going to be doing a big dinner at the end to get more investors excited. We want to talk about where we were, where we are, and where we're going and get more investors invigorated and ready to do this.

00:50:36:10 - 00:50:57:07
Unknown
I think more normal humans need to do this. And then honestly, more of our billionaire class needs to get more passionate about this, but also is around to support the founders. So we're going to be doing some founder focused events. We want them to know what basically what you are, what this whole conversation has been. What are investors truly looking for?

00:50:57:13 - 00:51:25:00
Unknown
How can you be successful? What can we do to support you in this journey? So I think it's going to be everything we're currently doing, all of the different parts of the ecosystem continuing to expand and don't lose momentum. So when I when we look at startups, there's growth, there's momentum and then there's the acceleration. Right. And so we really and I think it's the same thing for our ecosystem.

00:51:25:04 - 00:51:52:14
Unknown
We don't just want to be growing. We want to accelerate our growth and make sure that it's not plateauing. And because I want to bring it back to energy because we talk about energy and climate. Yeah, yeah. Are there specific things around energy that we should focus on today? And, and, and maybe the caveat that a little bit, I think, you know, a lot of the trends we were talking about here in the last year have have shifted, right?

00:51:52:14 - 00:52:17:22
Unknown
Like there's been a big focus. And I guess the focus on hydrogen, there's been a big de focus on, carbon capture and storage. And but there's been a huge shift in focus on how do we power data centers, how do we build stuff in Houston? And, and I think as, ecosystem the last year we've kind of been looking at each other going, okay, what do we do next as, as an energy supporting ecosystem.

00:52:17:22 - 00:52:43:23
Unknown
And I'm curious, what have you been hearing or seeing that, is starting to react to get to that shifting environment? That's a great question. First of all, I think we always should have had an all the above strategy. And I think to get focused too narrowly on 1 or 2 technologies when we knew geothermal is happening, nuclear's happening right.

00:52:43:23 - 00:53:12:12
Unknown
All these that these are complementary technologies that we should have been focusing on all along. We obviously have some of that here, which is great, but we should have more. And I think, you know, my hydrogen is not going away. Carbon capture is not going away. It's just not the pure, huge focus that it was. And so I will say as an investor all along I was looking at all of them.

00:53:12:12 - 00:53:37:21
Unknown
I think, and I think we have to have a more holistic view of how we're going to, power the future. There was I don't remember his name, but there was a wonderful speaker I heard last year, and he was talking about energy needs to be abundant, it needs to be accessible, and it needs to be affordable, not just in the United States, but globally.

00:53:37:23 - 00:54:07:18
Unknown
And that, you know, people, you know, on other continents have the same need that progress. Their progress is completely dependent on them having access to plentiful, reliable, affordable energy. And how are we solving that? And that's got to be in an all of the above strategy. Now, if as long as we're going to keep using fossil fuels and that's going to be a while, especially natural gas, we want to do it in a responsible manner.

00:54:07:20 - 00:54:34:08
Unknown
But then on top of that, we can stack all these other things. And there's no doubt data centers and everything in the AI race. Yes, that means we need more power. It also means we need to get smarter about the grid. So so as an investor, we're looking at the technologies that can help us make our current power production more efficient and use it well.

00:54:34:10 - 00:54:55:21
Unknown
But also then obviously there are people who need to be building out new power infrastructure, right? That's going to be the, the nukes and, and, and everything else that's going to be going into that. And there's some really exciting things going on in Texas and beyond. But then as an investor, we're looking at obviously an angel check is not going to build a nuke.

00:54:55:23 - 00:55:34:02
Unknown
Right. You need billions of dollars. Not not. But like I said, not our not our million dollar check, but all the things that run those services, that load balance, that make it more reliable, you know, new battery chemistries, new storage, chemistries and things like that. That's all things that we're looking at. Anything around distribution. So basically how to, you know, as we talked about last night, the, the picks and shovels that are going to make the most out of these new, power production.

00:55:34:04 - 00:55:51:18
Unknown
Technologies that are coming and, and everything that goes around how to make data centers more efficient. So yeah, it's interesting you said angel checks out, aren't going to fund, the next nuclear system, but and, and these aren't angels, but, I saw some data come out at RBC that actually mean to build them.

00:55:51:18 - 00:56:13:20
Unknown
Right? The huge capital intensive projects. Right. I was going to go somewhere else with this. Well, what's really funny is, they were showing the data on who was funding fusion. Yeah. And something like $13 billion has come into fusion. None of it from government and not none of it. Very small amounts of it for from venture. It was a lot of it coming from private capital, but obviously not angels.

00:56:13:22 - 00:56:35:08
Unknown
But like la la angels right there. Right. Mark Cuban's an angel. Yeah, right. We're talking about big angels who are doing the super angels. Right? That's super Angel, those guys. Multibillion. It is so funny that like as a as a vertical that one. And those are the people that need to be funding. Yeah. That's exactly right. That's they can take that risk and they can and, and to them.

00:56:35:08 - 00:57:00:22
Unknown
Right. Put $1 billion in that. Oh my God. The ROI would be will be insane. Yeah. When and when it comes out. And it's the lowest cost to produce the software to get what I mean. Right. That's what I'm funny. That's funny. But like, I also saw an article in the New York Times that showed how in the past 20 years, before, like, billionaires were like maybe maximum billionaires had like net worth of 20 billion and most of them were like 10 billion.

00:57:01:00 - 00:57:19:00
Unknown
The most that's the most. It was like the most. Right? Today it's 200 billion. Yeah. Oh, yeah. And like and if you see that, you know, I had a list of like the top ten billionaires in the U.S, it's like 200, 100 and 980. Like these people have like lots of billions so that they can invest 1 billion.

00:57:19:01 - 00:57:39:13
Unknown
Yeah. In, fusion which like a decade ago you could not do that. But it's just also is, the result of the accumulation of wealth that has taken place amongst private individuals versus like, you know, before the government would fund things like that. Yeah. Well, I still think, you know, obviously the government's going to keep funding some things.

00:57:39:13 - 00:58:02:18
Unknown
Right. You know, we've got NSF engines still still coming right there going to be not as many, but those are still happening. And that's really important have right. Yeah I know we need that to happen. Right. Absolutely. And funding is still going to universities for fund foundational research. So thank goodness because that's not my check. Right. They may say oh but we could do a lot with $100,000.

00:58:02:18 - 00:58:29:20
Unknown
But that risk and I have to wait 30 years now that that's got to be government money or or. Yeah. So so if I can actually be a little political, you said something earlier about this is about all of Texas. And. Yeah, when I, when I think about the support programs that the state of Texas provides, I think there's a lot of expectation, in Texas, that it's industry who takes takes the risk or it's, private investors who really support the companies.

00:58:29:20 - 00:58:48:03
Unknown
But then when I look at other states like, New York and I Serta is a is a fantastic funder of first of a kind pilots these like, things that are probably too risky for private capital in Boston. The mask I just saw in Louisiana, they're starting to support this Nexus program that has, like, both a private and public partnership.

00:58:48:05 - 00:59:07:23
Unknown
And I look at Texas and I think, it's almost like an allergic reaction. If you start to ask for for that kind of support, from the state level. And I'm wondering if this is, a policy challenge that needs to be addressed, or is this something where it's just this is the way Texas works? That's my slightly political question.

00:59:07:23 - 00:59:26:08
Unknown
Well, we do, of course, have separate. Yeah. But yeah, we do have we do have. Yeah. But I know it really is about bringing companies into Texas. And I think it's a good strategy, but it's also just constrained to like cancer research. And I care about energy and climate. That's my personal stake in this. Right? I don't have a good answer for you on that.

00:59:26:08 - 00:59:44:15
Unknown
I do know that other states have. And so I'm again, I invest nationally and I was I invested in a company recently and they're like, oh, we're going to get matching funds from the state of Oklahoma. Yeah. You are. Yeah. Oh know what they want companies to come in. Yeah. Well so it was federal money. Yeah. Right.

00:59:44:15 - 01:00:02:08
Unknown
And I don't understand exactly how it worked because again we don't do it here in Texas. So it was new to me. But they said every dollar you invest Mitra will get matched as an investment by the state of Oklahoma. I was like, oh wow. Yeah, that's pretty cool. And again, for some reason, Texas declined to do that.

01:00:02:08 - 01:00:24:03
Unknown
I don't understand all the reasons why. And it's way above my pay grade to to even surmise why. In general, though, I think, you know, I'm in favor of private capital doing these things. You know, I do think we need to get I think where we are very smart in Texas is about being business friendly and giving tax breaks when.

01:00:24:03 - 01:00:47:15
Unknown
So I, one of the one of my portfolio companies is relocating to the second Ward. Right. And he's he got tax breaks because you can show the job creation and everything else. And Houston Harris County, everything was wonderful about creating a pro-business climate so that he could move there and do what he needed to do. And I think that's where.

01:00:47:17 - 01:01:15:00
Unknown
So I'm going to lean into that. But I would, I would defer to the GDP on the other bigger question because because that that is, again, beyond my pay grade. So yeah. And I think I ate up and I don't I'm not going to pretend to know all the inner workings and positions, but, there's been a there was a focus on the early days of, of making sure that the ecosystem was strong and the place where the biggest impact can be is helping those kind of series B companies land, because they're at the phase where they're actually manufacturing things.

01:01:15:03 - 01:01:35:15
Unknown
That's where like a I think that's where you can get these, benefits for coming into an economic zone. Yeah. Can be very beneficial because you're starting to make stuff and you're hiring, you know, local talent. And, and so that that is the right strategy for where ghp should focus as an economic development engine, for the space and and again, why Texas makes sense.

01:01:35:15 - 01:01:56:01
Unknown
So one of one of the books that I really enjoyed a few years ago, the end of the world is just the beginning. Peters. And did you read that one? No. Oh, gosh, I really like it. So don't agree with everything in the book. And it's like, but he talks about and this is before all of the big changes.

01:01:56:03 - 01:02:19:19
Unknown
He talks about globalization and the impact globally but especially and how the United States is going to come out. It'll be relatively okay compared to everybody else. But as globalization happens and so much of it is actually happening, several years after he wrote all this, he did not foresee a second Trump administration and everything else that, that, that we're we're going through right now.

01:02:19:21 - 01:02:44:12
Unknown
But that Texas and Houston in particular is going to be the conduit to everything in the Western Hemisphere. Right? We've got the port, all of Latin America and everything else that this is going to be where goods and services are going to flow. And I think there's so much about why I'm very bullish on Texas overall. Do we need to be very smart and pro-business and making sure that we support all of our companies?

01:02:44:12 - 01:03:10:18
Unknown
You better believe it. So I agree with you there. But overall, I think there's when you see the the changes happening nationally, I feel very good about what Texas can do. As long as we stay smart and don't make stupid decisions. So I was thinking, I guess, to close it out, if you could kind of share with us what you're seeing in terms of deployment, especially when it comes to angels, and I'm sure you probably get some mean checks.

01:03:10:22 - 01:03:35:19
Unknown
Yeah, yeah. Checks being deployed for angels. I mean, from maybe this angel association also provides you with data because, I mean, we've seen over the past couple of years, at least in climate, energy tech. Yeah, I'll share like the fourth quarter last year, huge year, huge quarter for, capital deployment at the VC level. And then, I think we saw Q1, it shrank because of, a lot of the conflicts that emerged.

01:03:35:21 - 01:03:54:04
Unknown
And, and, we've also seen a lot of the, climate, energy, VC, focus on just fewer deals. So this just goes to bigger checks, bigger checks, later stage companies, VC money. So the question is, are we seeing different or similar trends at the angel level or the angel level. Yeah. Even with just within Hahn. Yeah. Yeah, yeah.

01:03:54:04 - 01:04:09:00
Unknown
And just your take on like yeah. What is it that our founders can expect in the year to come. Yeah. Also, I mean, given that we're we're going to ask you for the crystal ball. Yeah. I'll give you any advice that you might have. I think that would be valid. So bring me back. Don't let me forget to do that.

01:04:09:02 - 01:04:37:08
Unknown
So here, I'll just tell you what I think I'm observing. First of all, having done this for a while, there are cycles in capital where there's they, right. It rises and falls and what? And we are the beginning of that whole venture, pipeline. So what happens in venture is very important to us because we shouldn't be funding things that can't get funded past us.

01:04:37:10 - 01:05:07:20
Unknown
So what's happening there definitely has a strong effect on how we see things. I will also say personally, as well as for many of our members who have been investing for a while, the perennially slow exits that we have been dealing with, I have so much capital locked up right now. If I could get liquid on some of these deals that look good on paper and they look great on paper, I could then be deploying into a lot more.

01:05:07:22 - 01:05:28:01
Unknown
So that's just to kind of frame things up. The other thing that's happening and there's everything has a pro and a con, right? There's, there's a, there's a double edged on everything. So AI is sucking so much of the oxygen of all the deals. Right. We know, you know, six companies are getting the majority of it.

01:05:28:01 - 01:05:49:22
Unknown
But everything else around AI, there's a lot of capital moving into that. People trying to figure out what to fund there, which means energy and climate and life science and lots of other things are not getting funded the way that they used to. And so there's a pruning effect. First, a lot of companies are not able to make it.

01:05:50:04 - 01:06:10:05
Unknown
That's not all bad. Unfortunately. It's painful. We don't love it. But honestly, that pruning has to happen when there's too much capital in the system. And there has been periods then where funding things that are really speculative probably were never going to make it anyway. But people are like, I need to get in deals and they're throwing money into stuff.

01:06:10:07 - 01:06:38:17
Unknown
So some pruning. Unfortunately, it's painful but healthy. The things that are still getting funded. I will say from my perspective, we're getting to look at opportunities that normally we wouldn't get because they are in a bridge round. A couple of them are in a down round, but there's still great companies, and if we see a path to helping them get to profitability and an exit, then they're still fundable.

01:06:38:18 - 01:06:55:21
Unknown
Now, that might mean changing out some of the management. It might mean a few other things. But the neat thing is that we're getting to see some extraordinary companies that normally would not be talking to us slightly later stage. Also things that normally they just get money like that. Right? Or that's what it's been for the past few years.

01:06:55:21 - 01:07:21:11
Unknown
Now they're like, we're talking to you. Yeah, you like we're great. Come talk to us. Yeah. So then back to what you said, advice to the founders. So into this, number one, you've got to have that passion and that grit. I meant to what I said earlier. I truly believe that, you know, the famous statistic, nine out of ten startups fail.

01:07:21:11 - 01:07:42:17
Unknown
Everybody says it all the time. And that is actually a fact. I think that for good companies, the success rate should be more like 60%, because I think founder determination, founder, creativity and will and being willing to do whatever it takes. And that might be, hey, I can't get an angel check. I'm going to go find another way to fund this.

01:07:42:19 - 01:08:03:16
Unknown
As long as you can survive long enough and you care enough about what you're doing, you'll find a way. But you also have to make sure you really have a market, and you really have a way to make money. I think sometimes we fall in love with our technology, and we forget if the market keeps saying we're not buying, we're not buying, we're not buying.

01:08:03:18 - 01:08:30:07
Unknown
Something's not working here, you know, is there a way to pivot and change your product? So it's something they will pay for. You've gotta figure that out. The graveyard is filled with genius ideas that could make the world better, but no one will pay for it because they've got to answer to Wall Street, too. So if no one's going to pay for it, you don't really have a business.

01:08:30:09 - 01:08:54:05
Unknown
Yeah. So that is what my advice to founders is. You've got to have a way to know and really convince your investors as well. Customers are dying for this. They literally they're pining for it. They'll pay me money for it. You know, once we land, we can expand. They'll pay more for it and we can. And then there's some sort of an exit path.

01:08:54:07 - 01:09:16:11
Unknown
The exit path is really important as well. Again, it doesn't have to be an eight. Angels are looking for exits just like these are. However, there are other kinds of angels. We are there other kinds of investors, business investors, and friends and family who might want to invest in a cash flowing business. Do you really not want to go the venture route and go back to build a sustainable business?

01:09:16:17 - 01:09:40:10
Unknown
You know, some of the biggest and best businesses we know were started that way. They cash flow, everybody's getting dividends, and you own it for the rest of your life, and you pass it on to your children and your grandchildren, right. That's a beautiful thing. So I hope that answered your question. Yeah. Okay. Good. And I have a follow up question, because I think you had your friend visiting and we were talking about like secondary markets.

01:09:40:10 - 01:09:59:19
Unknown
And I know this is a thing that has to happen more in California. And and I'm curious like, is it, you know, if you need it if you wanted liquidity. There's always a decision between holding versus exiting in the secondary. And, I know nothing about it, but other than I hear a lot about it and I'm curious if that's a thing in Texas or if it's,

01:09:59:21 - 01:10:24:00
Unknown
It's a it's growing. Yeah. Okay. It's nascent. Yeah. It's growing. They're platforms designed that that are trying to design so that people can find a way to find liquidity for their private shares. It's going to be really interesting to see how that all evolves over time, and whether or not the SEC decides to start paying attention. Oh, okay.

01:10:24:02 - 01:10:41:14
Unknown
Okay. If you think about I mean, they're not they're not. Right. Because these are all accredited investors. These are private companies. But at some point, if it grows to the point where it becomes a true marketplace, which is what some of these startups want to do, they literally are creating a platform for people to buy and sell shares of private companies.

01:10:41:14 - 01:10:59:16
Unknown
Yeah. And it can be people like me right now. It's happening. You know, it happens at the billionaire level too. They're literally, oh, can I get pieces of OpenAI? Yeah, I've seen one of those secondaries come over. Yeah. Oh yeah. Well there's those are secondaries. But yeah, people are literally buying and selling and throw back behind the scenes and stuff like that.

01:10:59:16 - 01:11:19:17
Unknown
I got to get in. Yeah. So all that's happened again all AI companies right. Yeah. Right. Because that's where all the fanfare is and and where they think they're going to get big numbers. But if that happens, if we, if a if a marketplace is created, how do you mark to market. Private companies. Yeah that nobody knows.

01:11:19:19 - 01:11:43:03
Unknown
Right. Companies have that you know and I will say the the evolution of safes companies half the time our valuation is blank. I'm like I'm what is that based on. You said so with the safe says so. Right. And tomorrow it'll be double that I'm like really based on what we said. So and we found an investor who would sign it.

01:11:43:03 - 01:12:05:00
Unknown
And I'm like, well there you go. Yeah. So there's a lot. And I think that's so secondaries. Yes. I'm optimistic that there will be a way to start getting liquid in some of these things, because a lot of people don't want to IPO because of the burden of being a public company. It's expensive. Right. So we know lots of people who would rather stay private.

01:12:05:00 - 01:12:26:02
Unknown
Well, okay. Then for investors like me, we do need a way to get liquid or some or do something, at least sell part of my shares. That's happening more and more. It's usually happening in private transactions or people who specialize in it. They're also a lot of not so savory people involved, too, right? So there's gonna need to be a way to find a trusted way to do it.

01:12:26:04 - 01:12:43:15
Unknown
And that the company has some control because they don't want random people selling shares of their company out to who knows who. Right back to the relationship. They formed a relationship with me. If I sell my shares to Joe Schmo over here now, they've got to deal with Joe Schmo. Yeah. And he's got a position in this company.

01:12:43:19 - 01:13:07:19
Unknown
Yeah. So. And usually there's a restrictive covenants. They're private purchases. So the company there can be. But they're having to think about it now because 14 years ago that wasn't something everybody anticipated a different kind of an exit scenario. Secondaries were not something we were really talking about at that point. Now it's something that's being considered actively, but it's retrospective for those.

01:13:08:00 - 01:13:29:08
Unknown
Okay. Interesting. Well, awesome. Yeah. That's fantastic conversation. I learned so much. Yeah. This is yeah. This is great. Yeah I'm sure it's a wonderful. Thank you. Yeah. Thank you for being here. Oh it's been a pleasure and love getting to collaborate with both of you on all the wonderful things you're doing. So awesome. Thank you. Think that's being considered actively but it's retrospective for those.

01:13:29:11 - 01:13:46:15
Unknown
So interesting. Well awesome. Yeah. This fantastic conversation I learned so much. Yeah. This is yeah. This is great. Yeah I'm sure it's a wonderful. Thank you. Yeah. Thank you for being here. Oh it's been a pleasure. And I love getting to collaborate with both of you on all the wonderful things you're doing. So awesome. Thank you.