Thanks Zecca Lehn, for the fun conversation on your Posit2ive podcast!
EPISODE32: A Thin Edge in Angel Investing
Tobias, Angel Investor from the Northwest [7/15/2021]
Note: References with links are listed at the end of the show notes.
1:00 Talks about his love for things that solve problems, stemming back from his childhood. Talks about the drive Entrepreneurs have to try things that others won’t do. Shares experience with beginnings of downloadable software. Has started over 3 companies. He’s an investor in startups, and also a Limited Partner.
SECTION1: Reducing Friction
3:20 Shares his thesis driven approach to investing in startups that he believes correlate with higher returns. Points to software as a friction reduction inherent in software – uses his IPO investment in Amazon. Talks about the comparison with Walmart versus Amazon, and how software was the value creation for the consumer–Amazon 3x rate of growth of Walmart for 20 years. He was also an early investor in Docusign, and how fax was the way to make digital signatures—which were not even legal in many states.
6:30 Shares how some investors are actually taking a passive money strategy in venture, by being so crowd driven. We discuss the new market approaches, for examples like Uber and Docusign – where a market didn’t even exist. Reducing a pain point, with low friction that create categories, gets Martin excited; he also sees the real outsized returns this way. Discusses the need for a thesis to be counterintuitive and right.
13:00 Shares his experience helping to build the largest biodiesel refinery in the world with Emperium Renewables. Also talks about the struggle with competition with the oil industry. Also shares some of the economics surrounding tax credits in biodiesel, and how the subsidies flipped in 2009. Discusses the levered price per barrel of oil, and how it impacted the clean-fuels market.
18:00 Talks about his experience starting Tipper as a follower to Groupon. Learned the difficulties of operating to compete with the industry leader. Talks about 7 meta themes of software (see links below for incisive.vc). Uses the software-eats-industry example of Uber eating the taxi industry—talks about the complexity of some companies not being this disruptive.
22:00 Talks about weightings in his investment criterion. Discusses management as a primary signal to decide on a company. Talks about companies failing because of poor execution, and has developed a measurement system for gauging Founders. Highly encourages rebooting for Founders—e.g., meditation, nature hiking, and other relaxation techniques. Shares the need to focus on platform before feature, and another thesis about American laziness using the Amazon example.
SECTION3: Counter Intuitive & Right
27:00 Shares connection Upgrade Labs, and how influencers are able to drive attention to products in a new way in the BioHacking market. Shares biohacking opportunities, such as his investment in Levels. Shares real estate example of WeWork, regarding the software-eating idea as not working, because of promotion as a software company, that wasn’t adding scalable attributes (like a REIT).
34:00 Talks about his investment process at the earliest stage. For outsized returns, he points to the need to go with more thinking. If everybody believes the same thing, the returns will be lower—in Martin’s view. Shares his story about reviewing Levels, and the non-diabetic masses. Shares how he spoke with all of the competitors. And his experience with the CEO Sam led him to invest. Talks about coachability as a possible weakness. Looks at the structure of the org, and how the people in the pressure cooker may feel about the structure. He likes people with startup experience, and not necessarily people from large tech firms.
Talks about his Goldie Lox State: Where innovation and customer adoption are leading to significant growth – can be PreSeed or PreIPO. Looks at innovation is the driver for leading the charge of growth – with Bird example without innovation. Shares his view on opportunities going forward out of the pandemic.
-Martin Tobias [LinkedIn]: https://www.linkedin.com/in/martintobias/
-Incisive Venture: https://incisive.vc/
-E8 Angels: https://www.linkedin.com/company/element-8-angels/
-Anderson Consulting story: https://en.wikipedia.org/wiki/Arthur_Andersen
Echosign Acquisition: https://venturebeat.com/2011/07/17/adobe-acquires-electronic-signature-startup-echosign/
-Emperium Renewables: https://www.seattletimes.com/business/local-business/imperium-renewables-biodiesel-plant-sold-to-iowa-company/
-Upgrade Labs [Bio Hacking]: https://www.upgradelabs.com/
-Peter Attia podcast: https://peterattiamd.com/podcast/
Aquired podcast on WeWork: https://www.acquired.fm/episodes/the-wework-acquisition-with-dan-primack
-Juiceroo story: https://fortune.com/2017/04/19/juicero-investors-hands