Jeff Amerine is nationally recognized for the creation of lasting venture ecosystems and co-authored the bestselling book, ‘Creating Startup Junkies – Building Sustainable Venture Ecosystems in Unexpected Places’.
Jeff has held senior leadership positions in nine startups and multiple Fortune 500 companies, including American Freightways and FedEx Freight. He has made more than 90+ venture investments.
Jeff now leads several organizations and companies, including Startup Junkie Consulting, Innovation Junkie, and Cadron Capital Partners.
Jeff served as Associate Vice Provost, Research and Economic Development, and Director of Technology Ventures at the University of Arkansas until leaving to pursue Startup Junkie Consulting full-time in 2015.
Jeff still serves as an adjunct professor of entrepreneurship at the Sam M. Walton College of Business at the University of Arkansas.
What you will learn
- Uncover the secrets behind Jeff’s success, from his military upbringing to his pivotal roles in both startups and Fortune 500 companies
- Dive into Jeff’s insights on venture investments and learn where he sees the best opportunities for growth
- Explore the intersection of military discipline and entrepreneurial spirit
- Gain valuable lessons in leadership and team cohesion
- Learn about Jeff’s unique consulting model with Startup Junkie
- Jeff shares insights from his experiences in building, scaling, and exiting multiple businesses
- Gain practical advice and actionable strategies for navigating the challenges of entrepreneurship
- Plus loads more!
Transcript
Jeff Bullas
00:00:03 – 00:00:53
Hi, everyone and welcome to the Jeff Bullas Show today I have with me, Jeff Amerine and he spells his name the right way as in all Jeff’s should be with – a J. So Jeff is nationally recognized for the creation of lasting venture ecosystems and co-authored in 2021 the Amazon best selling book trading, start up junkies, building sustainable venture ecosystems in unexpected places. Jeff has held senior leadership positions in nine start ups and multiple fortune 500 companies including American Freightways and Fedex Freight. He made more than 90 plus venture investments and I’m curious about those and where he sees the best place to invest. Uh by the way, this is not investment advice. Jeff now holds startup junkie consulting and co leads innovation junkie and Kron capital partners. Jeff served as associate vice Provost
Jeff Bullas
00:00:53 – 00:01:24
research and economic development and director of technology ventures at the University of Arkansas until leaving to pursue startup junkie consulting full-time. In 2015, Jeff still serves as adjunct professor of entrepreneurship at the Sam M Walton College of Business at the University of Arkansas. Greff. Jeff graduated from United States Naval Academy in 1984 served as an Air force officer for six years and holds a Master of science in operations management, the University of Arkansas. Jeff. Welcome to the show. Great to have you
Jeff Amerine
00:01:24 – 00:01:28
here. Hey, hey, thanks for having me on. I appreciate it. Glad to be here.
Jeff Bullas
00:01:28 – 00:01:50
I almost actually mispronounced my own name. That was really embarrassing, but that’s ok. Um, so Jeff, I’m, I’m curious about, uh, you started your career essentially in the military. And what? So I’m curious about that. What led you to join the military? And how old, how old were you when you did that?
Jeff Amerine
00:01:50 – 00:02:19
Yeah. Well, the ripe old age of 17 when I showed up at Annapolis to be at the naval academy. And the impetus for that is I’d grown up in a military family. My dad was a veteran of three wars, World War two, Korea and Vietnam. He was a multi engine pilot in the air force for a bunch of years. And so for me, in many ways, the family business was the military. I served both my older brothers, my brother-in-laws, and my sister. We, we are all connected to it and, and we didn’t know it at the time, but
Jeff Amerine
00:02:19 – 00:02:45
back to before the revolutionary war in the US, there had always been someone each generation that had served. So that’s kind of what I grew up with. That’s all I knew. You know, I was uh very immersed in watching all the space programs and thought that aviation and the services was the way to go. And so I was kind of programmed for that. Definitely a lot different than where I ended up in entrepreneurship ultimately.
Jeff Bullas
00:02:45 – 00:02:47
So did you grow up in military bases? Is that, that was that
Jeff Amerine
00:02:47 – 00:03:12
part of what I did? So, for the first six years of primary school, I was in six different elementary schools, six different locations. I went to two junior high schools and then, and then one high school ultimately. But during that time frame, we lived in a bunch of different states in the U. SI lived for two years in the Philippines during the Vietnam war as well. So I got to see some of that stuff on a firsthand basis. But it was uh
Jeff Amerine
00:03:12 – 00:03:35
The one thing about being a military dependent is it tends to build an element of resiliency. You’re never anywhere more than a year, year and a half or two years. And so you have to make friends quickly, you have to be able to deal with chaos and ambiguity and just sort of uncomfortable situations. And I think that might be, that might be a good breeding ground for an entrepreneurial spirit because there’s a lot of that in entrepreneurship for sure.
Jeff Bullas
00:03:35 – 00:03:58
Yeah. And I think my military background brings a certain discipline into focus. Um I’ve certainly like, I, I was a sales manager for a while, and I remember, you know, we hired an ex military guy and he sort of brought, um, that sort of approach which is, you know, highly disciplined, which is really great for making Cold sales corps.
Jeff Amerine
00:03:58 – 00:04:39
Yeah, it’s, you don’t mind the grind and, and former military folks know how to show up on time and they tend to be, uh, a high, uh, high bias towards preparation and whatnot. But I would also say with discipline comes this concept that’s frequent in the military. If I don’t have direction to the contrary, I’m gonna go do something particularly, uh, in the western militaries more than others. I think that, uh, authorization to take the initiative within the rules of engagement is ever present. And that’s, that, that is also, I think maybe a good element for entrepreneurship. Yeah. But biased towards, uh, taking action versus waiting for somebody to tell you what to do
Jeff Bullas
00:04:39 – 00:04:42
because if you don’t take action, nothing happens.
Jeff Amerine
00:04:42 – 00:04:45
Exactly. Exactly. Right.
Jeff Bullas
00:04:45 – 00:05:07
So you, you’re in the military, um, any many things you know, like, what were some of those? Is there anything interesting or stands out for you at that time? You were in the military so could you share that? I’ve just because obviously the military taught you things. But what are some memories? Great memories that you had along the way? Yeah.
Jeff Amerine
00:05:07 – 00:05:35
You know, one of the, one of the big things and I think you’d hear this from a lot of former military people that have had long careers in the civilian world is you, you take for granted when you’re in that is free de corps, a team cohesion, the fact that a shared purpose, particularly in operational units and when you get out and you get into the corporate world, in particular, it’s very difficult to recreate that. I mean, the best high performing businesses tend to create that. But in the military, for sure, when you’re in an operational unit,
Jeff Amerine
00:05:35 – 00:06:03
there’s the shared pain struggle, the shared commitment to mission and, and that’s hugely important and, and something that you can rally around that’s not always present in the corporate world. So in, in the startup world, I think one of the key things is to try to build that sort of culture where there is strong team cohesion and commitment to a common goal. And those are some things that I picked up in the military. There’s also some good life lessons. There was a young guy, probably five or six years older than me. That was an instructor in some of my initial training.
Jeff Amerine
00:06:03 – 00:06:33
And he said the secret to leadership, his name was Tom Cullen. The secret to leadership is when things go well, pass along all the credit and when things go poorly, take all the blame. Now that people say John Maxwell and whatnot, that’s not necessarily a great formula for getting promoted in some corporate settings. But it’s a great formula for building a team that’s gonna follow you anywhere because they know you’ve got their back and you’re gonna do right by them. So, those are some of the key things I think that I picked up along the way.
Jeff Bullas
00:06:33 – 00:07:00
Yeah, I think, um, certainly in having my own team and being a sales manager and sc, over a couple of different businesses, um, is that, yeah, taking ownership and I think, um, and also getting out of the way you, you hire people to do a job and to trust them to do it and let your ego get out the way and let them do it. And, uh, and people will constantly surprise you generally for the good and that’s what I really love. And, um,
Jeff Bullas
00:07:00 – 00:07:19
and, yeah, praise them constantly. I think the other thing too is like, um, job well done and, um, be grateful. And I think that’s the other thing that, um, I’ve certainly learned now. So you’re in the military, what was the, you know, the inspiration and the call to actually do what you’re doing today. Where did that come from? Yeah.
Jeff Amerine
00:07:19 – 00:07:51
Yeah. And again, with the context being, I didn’t come from an entrepreneurial family. I mean, my parents were both sort of Depression era people from rural areas that were World War Two and all the military brought kind of lifted them up in many respects. And so I didn’t have it on the brain that at some point I was gonna go out and start businesses. But I was taking some graduate work while I was still in the military and I took a new ventures course. It was part of the MBA program that I was pursuing at the time. And, and as I went through that I realized this is,
Jeff Amerine
00:07:51 – 00:08:17
This is the kind of thing that scratches an itch. Something that I’ve been looking for that I haven’t found in other large organizations and kind of built a project, built a, a plan for a new business. And I got excited by that. I mean, it was something that was touching something in me that I hadn’t really realized was there. And so consequently, completed that program, got out of the military, went to a large corporation Westinghouse Electric, was building satellite and,
Jeff Amerine
00:08:17 – 00:08:41
and defense electronics, both for commercial and, and the Department of Defense. And along the way, I had this kind of nagging feeling that I wasn’t ever gonna be a large organization guy for a career. And, and, and I harken back to that class and I thought I could go do this and I was wrong at the ripe old age of early thirties. I was ill prepared to actually go out and start anything. And if you roll the clock back 30 years,
Jeff Amerine
00:08:41 – 00:09:10
there weren’t mentoring groups, there weren’t really angel funds, there weren’t entrepreneur support organizations, you were on your own. And most people thought you were crazy for leaving a company with a good job to go start something. But that’s what I did because I knew that that was something that I needed to pursue. I was compelled, I was called to try to go start businesses. And I did that a bunch of different times primarily in technology and telecom and the early days of voice over IP and a variety of things like that and software related stuff.
Jeff Amerine
00:09:10 – 00:09:53
What led me to doing what I’m doing today was the fact that that was a really hard journey. I mean, it was taxing, grueling and financially difficult at times, financially rewarding at times. And so startup junkie is a sort of manifestation of uh mckenzie quality consulting plus event management company that offers those really important services to start ups and entrepreneurs that they couldn’t afford to pay for if they had to pay for them. And we have a structure where we’re third party funded by groups like the Walton Family Foundation, the US Small Business Administration, US Department of Commerce or against the Economic Development Commission. And we can provide those services to these companies at no cost to them
Jeff Amerine
00:09:53 – 00:10:23
in a way that we can help them get through that one year and then five year survival rate. And if you do that, all the studies show that there’s good economic outcomes in terms of additional employment and new products created, et cetera. And so it’s this weird business model that allowed us to provide the kind of services I wish I had had when I was running start ups that I didn’t have in a way that hopefully will help propel some of these uh aspiring entrepreneurs on to realize their own dreams.
Jeff Bullas
00:10:23 – 00:11:13
Yeah. And that’s true for me. And II, I started my first business. I was in my early thirties and uh I was, I was quite a good salesman, but salesman doesn’t prepare for managing cash flow and all those and capital capital, like I just grew a business. I grew it so fast that I needed a lot more working capital. In other words. Yeah. And uh yeah, that was a painful lesson. That one. Um I grew the business to 2 million turnover in two years and uh had a team of 30 doing installation of structured cabling systems again. So telecommunications were deregulated in the early 19 nineties in Australia. So uh that was a painful lesson. Um So uh that’s why you need someone to guide you, don’t you like you guys do
Jeff Amerine
00:11:13 – 00:11:45
exactly that the questions that you don’t, you don’t know what to ask in some ways that, that ignorance, that sort of wow, that child like mind you bring to it is a good thing because you don’t realize, hey, what I’m about to undertake is gonna really be difficult pain, but you might not do it if you knew all the answers. But if you can turn to a group that they’ve got the scars and they’ve walked the road that you’re trying to walk down. They can help you in so many ways. Not by saying, don’t do this or don’t do that, but just by asking the questions, you don’t know what to ask.
Jeff Amerine
00:11:45 – 00:11:58
Yeah. That’s, we do, we do the Socratic Method a lot whereas we don’t give the answer but we ask hopefully all the right questions and make them. Yeah, I really ought to be thinking about that. Or I didn’t consider that et cetera, that type of thing. Yeah,
Jeff Bullas
00:11:58 – 00:12:19
it’s, yeah, I, I think some, some comes down to the counseling method. Really, the Socratic method, isn’t it? So, let you find your own answers. But because then you’ll own them. So, it’s really, really important. So, what was maybe, well, maybe some of your biggest wins. So, what was the first business you started?
Jeff Amerine
00:12:19 – 00:12:44
Yeah. Yeah. Well, so there’s, there’s the first one I started and there’s the first one I would admit to. Right. So, the first one I started was, it was a sort of an offshoot of this NBA project that I had done when I was still in the military and it was a sideline, total side hustle business that I did with my wife. And we thought it’d be a great idea to have a business that did costume balloon deliveries.
Jeff Amerine
00:12:44 – 00:13:06
Where we lived in sort of metropolitan Washington Baltimore and Annapolis area. And so the idea is got a Bart Simpson outfit. You gotta have a ninja turtle outfit and you deliver balloons and candy or whatever you go to kids parties. It was a, it was a side hustle type of thing that we thought, gee, this will be a lot of fun and it’s something my wife can do and I can manage all the back office stuff. Well, it turned out it was a labor intensive,
Jeff Amerine
00:13:06 – 00:13:49
uh, business with a lot of angry customers if you know, the character wasn’t as entertaining as they should have been. And so we learned a lot about what not to do in business. I think from that first one it had a kind of a goofy name. It was called Phony Balloons. In other words, you phone up and you get balloon, phony, baloney, phony Balloony. That was the name. Terrible marketing. I didn’t know anything about marketing at that time, but we ran that and we learned some things about listen, we’re gonna be better off doing businesses where there’s kind of higher order thinking and expertise required where there’s more leverage in it than what you can get just by virtue of growing a force of people to actually do deliveries for. You didn’t enjoy that too much and had some really
Jeff Amerine
00:13:49 – 00:14:19
kind of scary stories based on some of the deliveries that we got to do in places that we probably wouldn’t ever go back to. Uh, but, but anyhow, I mean, so that was the first, the first real business I ran was a consultancy. It was, uh, it’s called FCT Consulting. We live near a place called Fort Creek. So it was Fort Creek, uh, consulting FCT consulting. And, and we, I was doing exactly what I was doing when I was at Westinghouse for business development advice and guidance, sales support, marketing support for technology businesses.
Jeff Amerine
00:14:19 – 00:14:45
And then from that, we’ve run across some really interesting technology that would allow for call reversal. And you, you may be familiar with this. There was a time when direct dialing from one international location to another was prohibitively expensive because of the tariffs and monopoly Telcos. And so there was this call reversal system that came in vogue in the late eighties and early nineties that would allow you to call into a switch telecom switch that was in the US
Jeff Amerine
00:14:45 – 00:15:11
and then you’d hang up and it would place, it would capture that call information, it would place an outbound call to you and allow you to do a bridge call somewhere else. And those two US originated legs were cheaper than calling direct. It was total arbitrage. We’ve been a business doing that for a number of years and I learned some of the vagaries of the hustle associated with reselling minutes and having large carriers as your partners. And
Jeff Amerine
00:15:11 – 00:15:38
You know, we caught a little bit of the Asian flu through that. One of our partners was a big player out of South Korea and they decided to go bankrupt in the middle of our deal. And so it was, it was, uh, it was the business where I really learned all the things I would never do again in terms of spending money on things that didn’t matter, hiring the wrong people, having expenses out in front of revenues. But uh but that was, that was one that set that I call that one FCT telecom and we call that FCT University
Jeff Amerine
00:15:38 – 00:16:20
because a whole bunch of us that grew up went off to do many more things that were pretty consequential along the way. But I like talking sometimes about the things that didn’t go well, like FCT Telecom as much as the things that did because you learn a lot from those failures and those things that didn’t go right. Well, there were several of them where we built uh telecom related things and had exits. You know, we had license rights and international location in the Dominican Republic and we sold the rights to that. It was uh based on speculation. It was a land grab as telecom deregulation began to occur, I helped set the foundation for a company that ultimately went public
Jeff Amerine
00:16:20 – 00:16:44
and I was there in the early days and took an early exit. Um did another software company that was aimed at motor freight, automating some of the things associated with delivering products and services for motor freight carriers and tracking hours of service. And that software ended up getting sold off to a hardware provider out of New Zealand actually. So I had several of those kinds of experiences along the way.
Jeff Bullas
00:16:44 – 00:17:32
So, you’ve been doing this for, what, 30 years now? Is that correct? So, I think we’re of a similar vintage, like just over 30 now, aren’t we? So you’ve seen, I suppose business change and so have I, and we’ve moved much more from, you know, bricks and mortar type businesses to where you have a lot of digital start ups and so on. So, and you played in the telecommunication industry obviously. And that cos and because the telecommunication industry was a big monopolist that got broken up, I think AT&T got broken up into baby bells, didn’t it? So, um but so what are you seeing
Jeff Bullas
00:17:32 – 00:18:01
Today in terms of start ups? Where is the interest and passion lie for the people that come through your doors? I’ll be interested in what you’re seeing and based on, yeah, in the last, let’s say, 10 years, social media came out and started to really hit its straps in about 2008. And so, what have you seen in the last decade? Do you think? I’d be curious about your observation of what people are wanting to do as side hustles or start ups.
Jeff Amerine
00:18:01 – 00:18:33
Yeah. And we, and we see, we see every, probably a couple of 1000 ventures a year total between the stuff we look to invest in in the, in the companies we help, we see everything from conventional businesses that you can imagine. Like new restaurant con concepts, food trucks. Uh, we see food, food and beverage and consumer packaged goods deals. The stuff that I think is most interesting to me is the ones where they solve a really interesting problem and they can do it in an incredibly capital efficient way. So I’ll give you an example.
Jeff Amerine
00:18:33 – 00:18:55
Uh I had the good fortune of being an early investor in a fund that picks off the best of the best Y Combinator companies. And Y Combinator is kind of the penultimate start up Fulcrum here in the US, highly selective. And one of the companies that was in the batch that we invested in was called True Bill.
Jeff Amerine
00:18:55 – 00:19:22
And True Bill was this very simple concept of they would get you out of subscriptions. You didn’t know you were still in, in a very seamless kind of automated way. And so that was one where uh uh rocket Finance ended up acquiring them for, I think it was $1.7 billion a couple of years ago and we got in early at a $12 million valuation. So the reason why I bring that up is not to say, gee, it was a huge hit, which it was,
Jeff Amerine
00:19:22 – 00:19:42
but to say they solved an understandable problem. It was easy to explain. And it was ultimately a must that people had all these subscriptions to things that they really didn’t need anymore and they had no idea they were even paying for them. And so with that, as a model recently, our fund ca capital invested in another one that’s very similar called Privacy Hawk.
Jeff Amerine
00:19:42 – 00:20:10
And Privacy Hawk is a business that you could find. It’s west coast based. That does the very same thing with your private information, it goes out and kind of scrubs the web and finds all the places where your private information is still held and cleans it out of there. And the thing I love about that business is they’ve done, they’ve like 10 extra revenue, profitably year over year in the last three years and last year they did 2 million this year. They’re on track to do 20.
Jeff Amerine
00:20:10 – 00:20:54
And when you think about capital efficiency and this is an overall statement about how, what technology can do. We asked the founder, we said, listen to go from 2 to 20. How much headcount are you gonna have to add? And he said five, they’re going from 10 people to 15 people to go from 2 million to 20 million in revenue. Now that that’s probably kind of an outlier case. But the thing that I think is interesting to see within the world of artificial intelligence is the amount of leverage that you can get from automated systems to where it’s not all a function of adding additional people in order to be able to get the growth. And what we look for in the investments that we are most interested in are those that are really capitally efficient and
Jeff Amerine
00:20:54 – 00:21:22
they’re not just burning up money on a kind of buying market, they’re doing profitable growth a long way. So they’ve got all kinds of options after a particular capital raise, they’re in, they don’t necessarily have to raise because they’re going to be profitable. And so I’ve seen a trend in 23 and 24 back to fundamental economics that says sales growth is awesome, profitable, sales growth will keep you in the game and that we’re starting to see a lot more of that quite honestly.
Jeff Bullas
00:21:22 – 00:21:47
And it’s just, you know, it blows you away sometimes to see the valuations and people paying for something that are huge loss making ventures and don’t look like they’re actually going to make much money. Like, um you know, I don’t like talking about Trump or politics, but, you know, truth social, the new Trump publicly announced that the launch doesn’t make any sense at all.
Jeff Amerine
00:21:47 – 00:22:15
Yeah, the valuations, it’s, it’s a head scratcher and some of these things, you know, the, the markets value things in ways that you’re, it’s a herd mentality and we’ve seen what that herd mentality can do. They drive up valuations and eventually it’s, it’s kind of like musical chairs. Somebody says, well, this doesn’t make a hell of a lot of sense. And then everybody sits down and the air comes out of the bubble. We’re seeing some of that. We’re seeing some of that, you know, A I is in a, a sort of next
Jeff Amerine
00:22:15 – 00:22:54
growth path. The difference I would say with artificial intelligence right now versus 34 and five years ago. And we were all looking at it is, it’s been democratized in a way that guys like us can access it and can do productive things with it. Whereas before it’s like, yeah, A I and machine learning are great but dragging the data scientists because otherwise you’re not gonna be able to make use of it. So that democratization is one of the trends that we’re finding is beginning to have a kind of consequential impact in a lot of different verticals. So we’re, we’re looking really closely at that kind of stuff where they’ve got a good business case, not A I for the sake of A I.
Jeff Bullas
00:22:54 – 00:23:27
Yeah. Yeah. The interesting thing about um you know, there’s fads and there’s, but there’s trends. So um yeah, and I started, you know, a media company, a blog um which um I just did in 2009 because I saw the rise of social media. I said there’s something going on here. So I said we’ll just write about it. So that passion project became a full time business. Um And it was really a side hustle I did while I was, you know, working at a digital agency helping you sell websites. So,
Jeff Bullas
00:23:27 – 00:24:20
and today, um it was in, I was in Lake Como, I’d got this link from a friend of mine who was talking about, you know, the rise of how you could use artificial intelligence to do copywriting. And um I’ve been to Ray Edwards. He’s from the USA and I’ve been to his workshops and masterminds before. And uh he talked about this new chat G BT thing that I’d sort of heard of and chat G BT. Uh what I love about it. And it’s actually similar to what’s happened with the, you know, the web browser, chat G BT gave a user friendly face interface to A I that hadn’t been publicly released before it happened. Yeah. And whereas, the internet was given a friendly face through the web browser, right? So it, it,
Jeff Bullas
00:24:20 – 00:24:38
The web basically was opened up because it was given a simple interface to use for everyone. And that’s what happened with Chat G BT. Um And now we’re just seeing the explosion of this and it is changing the world as we speak. But at a velocity I’ve never seen before in technology.
Jeff Amerine
00:24:38 – 00:25:17
Yeah, it’s, I think I, I mean, they talk a lot about Moore’s Law, that idea of computing power uh doubling every 18 months, I think we’re totally off that curve and, and to the extent that there’s fear around ultimately where A I ends up and, and how much autonomous, autonomous activity there really is. And, and what that means for humankind. Now, I’m not as worried about it as a lot of people. I think those sorts of things can be sorted out. But what I do think about is when you’ve got particularly in the western world, declining birth rates and a shortage of skilled talent, we have to have these kinds of productivity tools that are gonna allow us to do more with less just because
Jeff Amerine
00:25:17 – 00:25:42
we can’t line up the people to be able to do all the work, the higher order work that’s required. And I think anytime you can put people in the mode of being an editor or an analyzer uh or somebody that’s able to critique work rather than doing that research and that authorship directly. Good things will happen. II I think, I think ultimately good things will happen from this and productivity will go up.
Jeff Bullas
00:25:42 – 00:25:51
Absolutely. So what do you think coming across your disc uh in terms of A I startups and ideas? Is that, is that bubbling along or is it,
Jeff Amerine
00:25:51 – 00:26:11
it is, it is most and when there’s some, you know, it’s kind of you and I are like you said, are a similar V and I can remember when the most conventional businesses in the world would attach.com to the end of their name and magically they were the sort of omni channel.com thing and they weren’t at all, but they would attach it just because there was no associated with it.
Jeff Amerine
00:26:11 – 00:26:40
There’s still some of that where people are like, oh, it’s an A I play and you, you know, and it isn’t really, but the best A I companies have really gone deep on specific use cases. So a good example would be one called Omni Key, which is based in San Francisco that we invested in. And it’s essentially a marketing content generator and a can I mean, you could say, well, this is gonna be the ultimate disintermediation of large agencies like Mars and Sati and all those other big players.
Jeff Amerine
00:26:40 – 00:27:22
But in fact, what, where it enables brand managers and other marketers within large companies to kind of do a bunch of that content generation. They would otherwise have to pay graphic designers and copywriters to do it also is a force multiplier for the agencies because they can do more with fewer people. So omni key is a really interesting one and, and the thing that I love about it is all that time consuming work with coming up with content or logos or images or videos, it’s all kind of there and then you can get into the mode of what do we like? What do we critique? Where do we add the human element into it? That’s one we’ve seen, that we invested in that we really like and we think does some really interesting things. Yeah.
Jeff Bullas
00:27:22 – 00:27:32
So what’s your um so you, you’re doing the consulting and helping people? So what are the others? So obviously you’re investing as well? Is that personally or is that a group or is it your capital
Jeff Amerine
00:27:32 – 00:28:02
some of both? So there’s occasionally if something doesn’t fit the investment thesis of catering capital partners, which is our sort of conventional uh uh venture capital fund that we have, I will invest personally if there’s stuff that where it’s either too early or it doesn’t quite fit the investment thesis or it’s in a, in a sector. So occasionally I’ll make an investment in something that’s interesting to me that isn’t a fit. So a good example would be there’s a uh uh penetration testing as a service cybersecurity company
Jeff Amerine
00:28:02 – 00:28:32
that was in our accelerator that was raising around. They were a little bit early in terms of where they were in revenue growth for what our fund would look at. And I invested personally because I like the founders, they had some interesting deals in place with Godaddy and other large players. You could see it scaling and you could see the potential and, like it or not, fear based sales cybersecurity and the overall geopolitical threat is not decreasing. I mean, it’s a more dangerous world now, maybe in many respects than it has been,
Jeff Amerine
00:28:32 – 00:29:10
even during the Cold War. And so that was a business that I got involved with directly as it relates to CD R. We tend to look for businesses in general that we understand where we can add value based on the enterprise connections we have and where there are already a couple of million dollars in a RR $4 million in annual revenues. They got a lot of traction. We tend to invest as a follower, kind of a strategic follower. We’ll write smaller checks than what would typically be expected for a company that looks at a little bit later stage stuff. But we get invited in a lot of times because we have access to really interesting enterprises that most people want to sell to. Ultimately.
Jeff Bullas
00:29:10 – 00:29:52
Yeah. So, yeah, the whole venture capital area was on a real tear, wasn’t it? Two or three years ago until interest rates started going up and it was easy to get money. It was cheap. Now, what he observed is that basically the whole investment industry in America and around the world literally not, didn’t grind to a halt, but it’s actually slowed down because like, I think it was investment funds available, like half of what it used to be. What are you seeing today with interest rates though, being topped? What are you observing today with uh you know, venture capital and investing?
Jeff Amerine
00:29:52 – 00:30:22
Yeah, it it’s, it’s a really good question. In fact, uh we were at the consumer electronics show and I had to give up. We were there with the Korean contingent. I had to kind of give an outlook on venture capital. We did a little bit of research with pitchbook and with the, uh, national Venture Capital Association and others. And the thing that was really interesting is 22 and 23. And I would say early part of 24 the funds were having a really difficult time raising capital from institutional players, from uh uh public institutions, from corporations.
Jeff Amerine
00:30:22 – 00:30:51
And part of the reason why was you have no risk assets that were essentially paying 78 9% interest. So they look at that kind of return based on the interest rates being elevated versus we’re gonna put money into this risky stuff, this asset class that’s gonna have some zeros that are much more speculative. And so you saw a kind of a natural flow of some of that big time limited partner money into a less risky asset class.
Jeff Amerine
00:30:51 – 00:31:19
And so we had a hell of a time quite honestly with the CADR fund too, getting that fund raised. Now, we ultimately did, but we didn’t raise as much and we didn’t raise it as quickly as what we thought now that trickled down to uh ventures at every stage because the, the later stage ventures were like, oh my God, our growth equity partners are saying get the profitability ASAP, even though they’ve been driving top line growth. And so a bunch of them had to take whatever capital they could take,
Jeff Amerine
00:31:19 – 00:32:02
cut, staff, cut heads right size, the business, maybe something they should have done all the way along bottom line focus. And I think that was healthy in a way, but it was also really daunting. You have to look at your portfolio and say, gee we gotta keep some dry powder to be able to keep these things alive as we get through this period. It seems like it’s settled out a little bit. There’s still plenty of capital available. I think the valuations are looking a lot more reasonable from an investment standpoint. But as those interest rates stay high, it’s gonna continue to have a little bit of a slowing effect in general on the raising of new funds and on the, you know, particularly precede seed investments, a lot of that capital is going to later stage stuff.
Jeff Bullas
00:32:02 – 00:32:14
Yeah, because basically with some Saturdays come back to the marketplace really best in, in the company that is actually making money. Exactly. That’s showing. Right.
Jeff Amerine
00:32:14 – 00:32:16
That would make sense.
Jeff Bullas
00:32:16 – 00:32:39
Yeah, let’s invest in a company that makes money rather than just buying into the dream and the myth. So uh but sometimes people see opportunities that do tend up, but that quite often it doesn’t work out like companies are raised a billion dollars, they rent the most expensive offices and they burn through cash at a rate which makes your eyes water.
Jeff Amerine
00:32:39 – 00:33:09
Yeah. Yeah. Plan for a capital incineration is something we avoid. We really, I mean, it seems stupid and obvious but looking at founders that are frugal and that they don’t spend money on stuff they really don’t need is, is one of the key things that we look for. We, we, we’re not interested in paying, we’re not interested in paying for rent in really nice offices or cars or trips or a lot of other BS, you know, they better be focused on building product and sales and then delivering on that and, and not, not a lot
Jeff Bullas
00:33:09 – 00:34:00
else. There’s one area that I, I certainly um being involved in, are digital type businesses and software and so on and media. A lot of companies are moving towards a subscription model like even in retail. But so do you s what I’d be interested in your opinion on what you think of subscription models per se in that. Typically it, they tend to be, have higher valuations, don’t they? For, for one, they’re much more predictable. Um Anything that’s sort of like project sales based means it’s gonna be lumpy. Whereas subscription can be as long as you keep the churn down um can be much more predictable and also have higher valuations I’m interested in your um view because you must see quite a few subscription business models come across your
Jeff Amerine
00:34:00 – 00:34:22
desk. We do. We do. And I and I grew up in, in kind of the client license model where it was a bunch of Capex. They, they, whether it was software or hardware or both bunch of Capex on the front end and then it, the only long tail in the business was maybe maintenance or warranty support, that type of stuff. Really lumpy, episodic sales, long sale cycles, et cetera.
Jeff Amerine
00:34:22 – 00:35:08
The whole theory behind SAS and subscription based is you can get somebody on board out of their opex and they’re gonna be more likely a lower level to take a chance on that versus a huge capital outlay. And, and, and I’ll tell you those businesses that haven’t fully moved that direction where there’s still a big ticket on the front end. They have a devil of a time it’s in and they don’t have the benefit of somebody that’s gonna get in there where it’s 100 bucks to, you know, 1000 bucks a month. If it’s 100 and 50,000 or 250,000 or a million dollars upfront, the sale cycles are somewhere between six months in infinity and that’s very hard, difficult, uh very difficult business to forecast. So, yeah, we have a strong preference towards those. There are cases where you’ll see
Jeff Amerine
00:35:08 – 00:35:37
uh services oriented businesses that are enabled by technology where they get in based on trust and, and subject matter expertise. They can have very long contract cycles, those are fine too. But the valuations, they get a little more punished in the market rather than a 6 to 10 times multiple on revenues, they might get a 1 to 2 times at best. And so you, we can look for those things that have a lot of technical leverage and that typically implies subscription.
Jeff Bullas
00:35:37 – 00:36:09
Yeah, it’s, and um I’ve been involved with a company that moved to um I’ve basically been on the board for a while and also uh an investor and they did creative as a service. So in other words, uh and what worried me a little bit about that was, will A I basically produce competitors into the marketplace that are purely A I driven and um instead of a, a hybrid. But I, I think at the end of the day, I think
Jeff Bullas
00:36:09 – 00:36:59
business models are still going to be a hybrid of really smart people and leverage technology and it’s trying to find the sweet spot in that. So, uh and the other thing that I’m intrigued by is uh watching A I is, are the big players just gonna dominate because of the cost of training the big, you know, large language models or are we going to see a lot of smaller players come into the scene? So, for example, like there’s companies that are trying to compete with Canberra, for example, which is an Australian company that basically took on Adobe. And uh now it’s valued about, I think 40-50 billion. Um you know, Melanie Perkins, I’ve worked with her in the past. Uh she, they are producing sort of services within their platform that a lot of
Jeff Bullas
00:36:59 – 00:37:23
A I startups are trying to do just on their own. So I’d be interested in your thoughts on the mix of in the future as we watch A I unfold in front of us at incredible velocity. Um The mix between what we call the bigger players taking advantage because they got the capital and got market share versus the small start ups. They gotta go, you know, hand to hand combat to win market share.
Jeff Amerine
00:37:23 – 00:38:10
Yeah, it, I mean, and it’s kind of the, it’s kind of the classic age old question, the better capitalized larger players versus the scrappy working out of the garage, small shops that just have a few people. Then, there will be an ongoing advantage to agile teams that can do stuff quickly without a lot of governance without a lot of the typical overhead that you get in a larger corporation. I still think that that’s gonna exist in, in a, in a healthy way. Uh And in fact, I think a lot of the smaller companies can use the tools that larger companies and others have developed against the larger players and they can just move more quickly because they have fewer people. The decision making process is quicker. I don’t think there’ll ever be a loss of agility. Now that said
Jeff Amerine
00:38:10 – 00:38:41
start ups, by definition, you hear Peter Thiel say this, they’ve got to be 10 times better than an incumbent. They’ve got to really be differentiated or why is somebody gonna risk their career on something that’s under capitalized that has founders behind it? So it’s still gonna be highly selective. There’s still gonna be lots of failures, but they’re still gonna, the disruptors are still gonna come from the outside mostly because large companies have a very difficult time continuing to keep the pace of innovation going because it’s at constant odds with taking care of the existing
Jeff Amerine
00:38:41 – 00:38:56
products and services they have, you know, delivering on what they have today. So I think that will, that will, that will be an ongoing struggle, but I don’t ever see it being a situation where the large players are going to completely dominate. There’ll still be this disruption happening from the start.
Jeff Bullas
00:38:56 – 00:39:40
Yeah, I totally agree. And uh but it’s gotta, you gotta pick your, uh you’re gonna pick the right spot. Yeah, to do that well. And also, you know, using A I to scale like we’ve talked about is the leverage that A I brings is just enormous. Look. For example, I come across a book while reading and I’m going, I’ve got my chat GPT app on my phone. I’m going to provide a summary of the book, including major points and ideas for this book. And I’m going, wow. So I love slow reading, but also love quick synopsis. It’s like, it’s really, really cool. And, um, so
Jeff Bullas
00:39:40 – 00:40:08
The other thing I’m intrigued by in terms of the leverage side, which is where I was going, um, is Mustafa Suleiman who’s just had his company. I think inflection or whatever is bought, well, not sort of, it’s not really bought by Microsoft. So my staff sold, you know, deep mine to Google for 800 million, you know, about 2016. I think it was around that time. It was interesting his comment about, he sees a future where
Jeff Bullas
00:40:08 – 00:40:48
you’re gonna have businesses which A I is gonna be able do everything from ideation right through to operations. And I, I certainly see a future potentially where a company of two or three people might be turning over, you know, four or $500 million. I’d be interested in your thoughts on that leverage. And there are models that are certainly quite templated such as Amazon FB, a fulfillment by Amazon, which does all the heavy lifting in the back end, you know, from basically providing a website for people right through to actually delivering it for them. Logistics. I’m interested in your thoughts on that sort of leverage for what sort of style companies we’re going to see in the future. I
Jeff Amerine
00:40:48 – 00:41:25
I think you’re gonna see that across multiple sectors and anything that is uh what we call professional service or white collar type of work where you don’t have to turn wrenches or work with electricity or work with plumbing. I think there’s a high probability the degree of automation is going to be significant where you can have very large businesses that are highly automated all the way from the, if you think about customer journey from customer engagement with A I HUMANS that are very like talking to you and me. I think we’re gonna get to the point where it conversational unscripted,
Jeff Amerine
00:41:25 – 00:41:54
it’s gonna be very comfortable for people to go to a kiosk or to be online talking to someone and they’re not gonna necessarily know that it’s a bot. We’ve seen some of that stuff demonstrated. And so I think that customers journey all the way back to back in fulfillment logistics. I think much of that will be automated and to your point who knows how big a company you’ll be able to grow with a limited number of people. We were taken back by the privacy hawk example. They’ve got a high degree of A I and what they’re doing in their stuff
Jeff Amerine
00:41:54 – 00:42:26
and, and again to go from 2 million to 20 million and to go from 10 staff to 15 and when they go from 20 to 200 maybe they’ll be at 25 people. So to your point, it doesn’t require legions of people to build a sizable company anymore. And I think we’re going to see more and more of it. Now, the question is what’s everybody else gonna do? So, I think part of it is the societal issues with, you know, what are you gonna do if, if A I is handling all the stuff that we typically had people doing? Yeah.
Jeff Bullas
00:42:26 – 00:42:37
Yeah. It’s, it’s fascinating because um and then it opens a lot of opportunity up for either the people to start a solid house will actually grow so, or we’re going to grow quickly because I don’t have to recreate the infrastructure,
Jeff Amerine
00:42:37 – 00:42:40
it’s for sure. Yeah.
Jeff Bullas
00:42:40 – 00:43:33
And you know, I came across a great interview with a guy called Jeremy Parker who had his business acquired by Custom Inc, which is basically about, you know, swag, you know, swag.com, which essentially sells, you know, swag gear for promotions, right? So promotional and uh what he’s done is really fascinating, the fact that he’s actually instead of the hand to hand combat of selling, you know, there’s 23,000 companies that do promotional products. I think in the USA, he’s basically written software to do all of that. And now they’re actually white labeling it under custom ink as a separate division. So anyone could actually become a, you know, promotional product and they will look after everything including the products themselves. Yeah.
Jeff Bullas
00:43:33 – 00:43:51
And you just look, you talk about leverage of capital, that’s I just when you talk about it, well, not only we’ve done this now, we’re actually gonna white label it. So, you know, a man can sell to a local school and we do everything for you in the back end using that technology from, you know, it just, I went, wow. Very cool.
Jeff Amerine
00:43:51 – 00:44:37
Yeah, it’s, it’s incredible. It’s incredible. We saw some of what was possible but there was a company called Apt to G and it was an educational technology company and they did something in a sector which is very hard to do. They were selling into school districts all across the US. And it was essentially a platform for unified communications and marketing such that through multiple channels, whether it’s social or conventional, a superintendent or coach or teacher could send the message out through this platform and it would go out in multiple different ways. Now, that was interesting and not necessarily revolutionary in the way they did it. But what was revolutionary was they took the template that Aaron Ross talks about in predictable revenue. His book about how to have sales development, reps and closers and BDRs and all the touch points.
Jeff Amerine
00:44:37 – 00:45:08
And they automated that in a way that they could push personalized videos to that contact, that lead, that qualified lead. That would be like they were talking right to that person based on having a de minimis amount of information on the front end. And that, that made a huge difference, the efficiency associated with their customer acquisition was so good that they were able to do something in a difficult vertical that not a lot of people could do. And again, it was because of automation of that sales process in a way that hadn’t been done before.
Jeff Bullas
00:45:08 – 00:45:43
And so a lot of companies are becoming what was, you know, just really heavy, heavy work, time consuming um technology and it doesn’t have to be a, I, it’s technology that does it for you and automates almost the entire process. Um It, it’s really, and I, I never cease to be amazed at the creativity of entrepreneurs that look, see a problem and then create an answer to it, that scales what they’ve learnt. And I continue to be amazed.
Jeff Amerine
00:45:43 – 00:46:09
It’s incredible. It’s an incredible time to be alive for sure. And, things are sometimes you feel like things are accelerating at an accelerating rate, you know, you think back to the eighties and the nineties and the two thousands and that somebody said, famously, software is eating the world, I think automation and A I in general really is doing that. And the question is, do we need to put brakes on some of that or is it, is it all gonna be, you know, positive and good? And so it’s a big question.
Jeff Bullas
00:46:09 – 00:46:17
Yeah. And the other thing that I’m intrigued by too is the guard rails are being put in place with A I that we should have put in place 10 years ago with social media,
Jeff Amerine
00:46:17 – 00:46:20
no doubt, no doubt, no doubt.
Jeff Bullas
00:46:20 – 00:46:38
And I think it’s lessons from social media that I think have enabled us to see with a little clearer vision in our eyes, the issues that uh IO I could potentially bring because it’s always gonna be good actors and bad actors. No matter what it is, this is the humanity we’re dealing with.
Jeff Amerine
00:46:38 – 00:47:17
Exactly. Well, and in getting to that base truth, you know, it’s there they say oftentimes, uh you can’t have your own facts, right? Although I think people would debate that. Yeah. So, so it’s, it’s interesting and, and, and to some extent, and we’ve seen some examples of that. I think A I, the A I that’s gonna win ultimately is that, that’s gonna take a neutral position on so many things. In other words, they’re not gonna build bias in WW, in either way, whichever way you think the bias should go because when they do it, it tends to give you answers which are kind of appalling. And I think Google was a victim to that
Jeff Amerine
00:47:17 – 00:47:41
with some of the stuff they did with Gemini. It’s like things that are statements of historical fact and you’re using Gemini for research tool and it comes back with stuff where you’re like, well, there’s no way that could have been possible and, and, and so it’s, you know, I think you, you gotta maintain the human scrutiny on that and just a good common sense point of view, uh, in, in injecting some of those values.
Jeff Bullas
00:47:41 – 00:47:45
Well, the funny thing about common sense generally quite often is it’s not that common.
Jeff Amerine
00:47:45 – 00:47:51
That’s what Benjamin Franklin said. Right. It’s the least common of all. No doubt, no doubt about it. Yeah,
Jeff Bullas
00:47:51 – 00:48:05
We can be very intelligent but sometimes we need to actually apply wisdom, which quite often generally comes with experience and years rather than comes out of the box.
Jeff Amerine
00:48:05 – 00:48:19
Yeah. Time on earth means something, you know, and I’m at a point in my life where I realized that some of the really stupid self absorbed things I did early on. You really only learn not to do them by a little more time on earth.
Jeff Bullas
00:48:19 – 00:48:48
So, um, just before we wrap it up, I’m gonna ask you a question too, which is about what brings you real deep joy every day and what would you do for, um, for free if you had all the money in the world, what would you do for free every day? I’ll be intrigued by that answer. So that’s gonna be my last question to wrap it up. But I’m just sort of setting the stage for you to maybe think about that a little bit. What are some of the top tips? You know, you’ve seen a lot of start ups come through, you’ve seen, I suppose a lot of success and a lot of failure
Jeff Bullas
00:48:48 – 00:49:01
come through your doors. What are some of the top tips for people? I want to start a start-up, and I want to start the journey of an entrepreneur. What would some of the things, you know, tips that you could share with our audience?
Jeff Amerine
00:49:01 – 00:49:23
I would, I would say one is sometimes you have to go slow to go fast. And what I mean by that is uh make sure you’re solving a problem that you, the intended customer really cares about all too often. Startups fall in love with their own ideas. They fail to be a consultant to their own ideas. They fail to be objective with what the market is really telling
Jeff Amerine
00:49:23 – 00:49:54
them. They tend to build confirmation bias into the kind of questions they ask to get reinforcement or they talk to friends and family. So, one bit of advice we give all of them is go into the approach with the uh with the, this concept that you’re going to try to kill this idea that you’ve fallen in love with and you’ll be better for that. And so using tools like lean canvas methodology and good qualitative inquiry, what it’s called customer discovery by asking good open ended questions. That’s a major tip. And I’d say the other thing is
Jeff Amerine
00:49:54 – 00:50:37
If you can follow the market in that way, you can get to the point where you might be onto something. If you really listen to what the market is telling you, it’s very difficult to do anything by yourself. So the very next step in some of that is to figure out how to surround yourself with the kind of team that’s gonna have the sort of culture and capability that complements what you’re good at most. Entrepreneurs are not good at everything. We tend to be good at our external stuff, at vision, at sales, we tend to not be necessarily great at details. So figure out, be honest about what are those other things that have to happen in order for this to be successful and then be coachable, you know, be coachable. Don’t be hardheaded. Uh And I and I, I balance that by
Jeff Amerine
00:50:37 – 00:50:53
coachable, but don’t be like a turnstile. Sometimes people will get mentor whiplash where they’ll talk to 20 smart people and they’re just spinning around trying to pick a direction your job as a good founder is to take all that data in from those,
Jeff Amerine
00:50:53 – 00:51:27
you know, good sources and that wisdom and then synthesize the truth that’s gonna be best for you. And the best founders I’ve ever had any experience with of any age are the ones that do that exceedingly. Well, they take a bunch of inputs, they think about it and if they’re really good, they’ll come back to you and say, hey, I listen to what you said. I also talked to these other groups, this is the direction I’m gonna set and here’s why. So I think coachability with a good founder filter and a good filter from the information you get is important as well. And those are kind of the key, the key things to at least getting started. It makes a difference.
Jeff Bullas
00:51:27 – 00:51:32
I think uh that has a lot of wisdom and um that’s come from years, hasn’t it,
Jeff Amerine
00:51:32 – 00:51:48
Jeff? It has. And it’s come from, you know, being a self abed young person that was highly confident and assumed I could figure it all out. And in retrospect, you can’t, you can’t, you need, you need help and you need to be objective about what the data is really telling you.
Jeff Bullas
00:51:48 – 00:51:52
And that’s the paradox between the beginner’s mind and experience, isn’t
Jeff Amerine
00:51:52 – 00:51:56
it? It is for sure, for sure.
Jeff Bullas
00:51:56 – 00:52:11
The beginners don’t know that it can’t be done because no one’s done it before, but they do it quite often and sometimes they don’t, on the other hand, sometimes you gotta be careful where you tread. So, um this is the paradox, isn’t it? Which is life itself?
Jeff Amerine
00:52:11 – 00:52:13
That’s, that’s true.
Jeff Bullas
00:52:13 – 00:52:21
So, Jeff, just the final question is, what would you do for free if you had all the money in the world, what would you do? That brings you deep joy.
Jeff Amerine
00:52:21 – 00:52:49
Yeah, I, so great question. I will keep doing exactly what I’m doing today. This was a 3035 year journey that had lots of different aspects to a military and large company and university and, and, and uh and working in start ups and, and I think the calling. What I have now is kind of a calling. It’s a spiritual calling where if you got the heart of an educator or a mentor or a coach, seeing other people succeed
Jeff Amerine
00:52:49 – 00:53:16
and, and helping them go down a path that you tried to go down or did go down yourself and watching them succeed. Brings me the most joy. That’s what brings me energy and I’ve set the business up today to where I can do the mentoring and the coaching and the guiding and the advising and, and that, that brings me real joy. That’s why I still teach at the University of Arkansas and work with the students working with the entrepreneurs. That’s great. And I hope to be able to do that until,
Jeff Amerine
00:53:16 – 00:53:44
You know, they flatline me. Right? I, I don’t ever really want to quit working because the last 15 years have been so enjoyable. It hasn’t been a grind. It’s been a real joy to watch the ecosystem grow, to watch great companies to be built and to see the kind of successes that some of these entrepreneurs have and, and you the greatest reward is not the fact that, well, maybe I had an equity interest or maybe I invested, it’s just to see him do great things and realize that maybe you were a small part of that along the way.
Jeff Bullas
00:53:44 – 00:54:00
So that’s fantastic. And so you are a leader that really is doing what good leaders should do and that is to serve and that’s what you obviously are doing and obviously you’re making a difference. And, um, that brings you deep joy and thank you for sharing that.
Jeff Amerine
00:54:00 – 00:54:06
Well, thanks again for having me on and I really enjoyed the conversation. We’ll have to do it again sometime I look forward
Jeff Bullas
00:54:06 – 00:54:11
to it, Jeff. Um, and maybe in somewhere in America,
Jeff Amerine
00:54:11 – 00:54:19
That’d be great next time you’re here. If you happen to, if you, if you can figure out how to stop the plane between New York and L A, we’re right in the middle of combining. See
Jeff Bullas
00:54:19 – 00:54:28
us. Yeah, so I am, I am flying over you in the next 24 hours. So, so uh but I’ll wave as I go over overhead. That sounds great.
Jeff Amerine
00:54:28 – 00:54:29
That sounds great.
Jeff Bullas
00:54:29 – 00:54:32
Thanks Jeff. It’s been an absolute joy.
Jeff Amerine
00:54:32 – 00:54:33
Yeah, same here. Thanks for having me.