00:00:01 [Music] moving the needle on founder failure one conversation at a time i'm your host lucas poles and welcome to startup 2.0 by spark xyz join us each week as we give you access to some of the top investors and entrepreneurs around the country to help you think through and overcome some of the top challenges that startups get i think there's no better place in the country to be investing than los angeles what is the problem that you're solving and for who like what is that specific pain point sometimes when a company is not

00:00:31 listening to its customers and just thinks it knows better than it customers has a really really hard time finding product market fit i want to see somebody that that isn't gonna stop you know this person you just feel like they're gonna they're gonna they're gonna make it work [Music] tim welcome to the show great to be here so uh you've done some amazing things uh in your career uh you're currently managing director of the csun incubator and so we'll end up diving into that but i guess first as we kind of before

00:01:13 we dive into some of the uh the red flags that founders face would love to find out a little bit more about you and your background uh and just a nice uh high-level overview sure um so i was a failed scientist i uh valued like your first love is you know for me it's molecular biology molecular immunology so i went to grad school for that and my advisor was running out of money he said just go get an mba i can offload your stipend on the business school so i i did and uh boy you talk about culture shock you you

00:01:50 have you know this is a long time ago but you had very conservative business school culture and very liberal medical school culture and i just had to know who my audience was walking between the two um you know long story short i i left there um and got a job with uh bear corporation uh working in their pharmaceuticals and ultimately diagnostics group nice awesome um so then let's uh how did you end up at uh at csun it's been a long strange trip so uh bear corporation that thing we were able to grow the product line i

00:02:32 ultimately took over as managing director uh for the for a brand of products and you know we were killing it uh and right around the time we asked them to build a factory for us they loved us and then then they sold us because we were asking for money um but it but it gave me some early exposure to hey here's how evaluations work here's what we really care about um and it's not the sound bites but but different audiences have different considerations and and it was it was great to be exposed to that and

00:03:11 and build a foundation from the customer uh to the technology to the revenue line to the shareholders stakeholders um i'll never forget that experience so i go from there uh it's you know that business got sold but i went to work for motorola in a startup they acquired some technology out of caltech um and so my role there was you know commercialization and business development so ultimately we got that through fda um before motorola decided they didn't want to be in life sciences anymore the self the cell phone market was a

00:03:49 little bit uh touchy back then um so then i went to work for an investment bank um did that for a couple years then um worked for us another startup then started doing my own startups worked at usc and tech transfer so you know if you want to try to put an organizational theme behind this it was trying to click off just the different sections you know how do you finance a venture what's the r d you know the it was great work at usc um uncovering not every patent is a good patent um what are the countries you know how

00:04:32 do you are you claim sets how do you get down to that nitty-gritty and and does it really protect anything that's worth protecting from a commercial perspective um how do you raise money how do you put together a team how do you make teams accountable so in after those sort of experiences i started doing my own startups i did one in um it was a therapeutic for food allergies and another one in um cell separation for car t therapies uh so now moving into uh csun and running the incubator it's it's sort of a natural growth because

00:05:14 having done it a couple times in a non-academic fashion right there's a lot of people teaching theory but but what i really enjoy is pointing people and saying you got to go see this guy he's going to talk to you about this you got to go to this group they're going to talk to you about funding like this and here's what you're going to have to have ready beforehand and if you're not ready for that don't burn this contact don't do it too soon um and and the beautiful part of this is csun's been a fantastic stream of

00:05:48 people who are hungry um and and i i think the hustle that they show the hunger that they show is is really what keeps me juiced every day that's uh that's true i've been fortunate uh to work with uh some people that you were fortunate to work with and uh a lot of hustle uh out of csun and something i greatly appreciate uh uh i live there um so i guess jumping to the next question so you mentioned uh i guess you touched on a little bit the the academic kind of theory versus reality right so uh how how maybe is a university

00:06:29 incubator gonna differ from one that is actually in the ecosystem and then we're gonna dive into a little bit more around uh what you think some of the pros and cons of theory versus uh reality kind of offer yeah so it kind of depends on where your own mind is right there are kinesthetic learners right and these are people who need laboratory practice they they have to feel it in their hands and in their bodies some people can learn perfectly fine you know butts in seats reading what's up on the

00:07:09 board and never having to apply it but i think the idea from the university's perspective is to address all types of learning all type of learners and even if they're not going to put it into practice today you know what really sinks it in into their heart and soul for the long term so that when the opportunity arises sometime in the future you're like oh yeah i know how to do this so we've been the university the business school nazarian school of business and economics specifically has been putting together programs um

00:07:47 both undergraduate and graduate and you know some of them um you know they're very very new they're very very cutting edge and as soon as you start thinking wow we'll see how things respond people just they absorb it they and they attack it and i think that builds a thirst then that says hey i wasn't really sure about this at first and then we find all these students moving in developing their own ventures and coming into the incubator coming into our i-corps programming uh the summer accelerator so it's been

00:08:18 great yeah no that's uh honestly it's a really good point because i hadn't really thought about it that way where like i'm personally a learner where like i have to do it i have to try it i have to be in it but if i'm staring at something on the board like audible learning for me is just awful like in and out so the yeah i mean the idea of actually uh getting your hands to it and trying it out well think about like chemistry labs biology labs your dissecting stuff chemistry webs you're blowing things up

00:08:53 physics labs engineering labs these are things where the the personal power of observation and and setting up and asking the what if questions okay well now we can do this in a business setting um and if if you look at icord it's the national science foundation program they even approach it from a scientific hypothesis pose a hypothesis now you know set up the experiment and you conduct the experiment by interviewing statistically relevant numbers of people out in the field it's perfect it's hard perfect that's

00:09:30 true it's uh what do you think maybe are some of the downsides of that and so when when you're because the even with i-corps and being able to the idea of like the business model campus and being able to like go out and actually interview these people i feel like it can be challenging to get the right information i know that i did business model canvas before when i was at sc that a lot of the time you can end up getting the answers that you're looking for rather than the actual answers that you should be getting uh

00:10:09 and so there are specific challenges uh i mean is that one of the downsides are there ways to get better or be i would say not better because it's not necessarily better it's just more i don't know being able to to interview uh people without forcing them down the path if you want okay so look you you nailed the biggest one there right which is um i have an ugly baby but i want you to tell me my baby is beautiful and so if you tell me my baby is ugly you were the wrong interview yeah and even though so we work

00:10:51 a lot about interview methods and and posing neutral hypotheses and and honestly for the first 20 to 30 you don't even get to talk about your baby no you just you got to understand what their needs and ultimately what you want your baby to do for them that's a big one um the first two years and this is like true confessions we had a we had a big number of people trying this we also had a lot of people dropping out and it was the usual discussions right so i i'm not afraid to go talk to people afterwards i don't take it as a

00:11:29 a personal affront but like hey why did you drop well we had problems with this we had problems with that and ultimately a lot of them were learning that their idea wasn't valid but enough of them and this was my aha moment we're saying it was just too hard to get those interviews from the right people so for the next couple years i started putting together groups on linkedin you know make sure everybody's got a profile um uh we put together csun venture advisors people who would be hey i am a willing guinea pig and i will

00:12:02 open up my network of people just because you're in this program at csun uh protopia does another one called ask a matador basically it's let's create as many avenues for you to get external facts and data from the real world and get those stupid assumptions out of your head so you can't put old heads on on young bodies but but we can make the the learning ramp a little bit easier for them to access so those are so there's some of it we we have some other issues that we kind of deal with but i'll say those were the biggest ones

00:12:38 just to get people moving yeah that's understandable do do you ever i've seen some people starting to kind of adopt this and like maybe it's past the conversation phase on the let's kind of test before we invest any money right so like let's actually throw up like a square space website for seven dollars and see if we can actually get people to to put down their credit card because that to me is the that to me is one of the bigger factors because even if you do the interviews you might end up getting the false

00:13:14 positives and it's like okay well what uh cool give me your credit card information like if you if you think it's it if it's actually a problem and you think that this is a vitamin versus or this is a painkiller versus a vitamin then uh okay cool here's a website let me get a pre-order going forward has that approach started entering the university ecosystem or not yet you know it definitely has and here's the telling thing um a couple years ago we just used to talk about it and i'd point the way

00:13:45 okay and only a couple people walked forward and did it now i'm like here it is um if you if you progress past this point i want you in in order to keep this program going you have to put this up don't worry about the money i'll cover the money you just have to put in your time yeah and if you won't do that well now i i smell a rat yeah that's a good uh that's a good test on them too [Laughter] oh god all right awesome no i mean it's super encouraging because it's uh i mean it can be i don't know to

00:14:30 me that that's one of the bigger found the challenges that i see with early stage entrepreneurs is that i'm like look they're like oh i need to hire a dev team and i do this i'm like no you don't one of my favorite portfolio companies literally ran their company they were up to 30k mrr and they had a website and then they had an excel file on the back end and they were just doing it entirely manually because they're like we didn't want to invest money into this because we didn't know if it was going to actually work

00:14:56 and so started working uh they raised money with it and then they started actually building the product um and i don't think uh i think that too many entrepreneurs now were faced with like oh i have to do all this first and then uh i can try doing the other stuff later it's like if you have traction if you have revenue it's a it's a way different story able to tell to an investor so and and think about all the other great things that come from this right because okay we put our website together

00:15:28 and and we put it out there oh wait now we got to talk about marketing and driving people to the website yeah but why don't why don't i just buy some you know facebook ads or all these different ads oh because you don't have any money yeah okay so how are you going to do it oh my god and every day is like i you know i love the the analogies to the movie the martian figure it out here's your resources you okay it's too hard you won't do it there are 10 people in line behind you who are willing to do it and that's

00:16:03 where grit and hustle matter if you're easily frustrated if you've got you know the the hundred thousand dollar um investment banking job waiting for it yeah you should go do that because this is really hard work yeah this is uh one of the toughest things that you'll uh you'll end up doing for sure um no and i i i like that approach too because way too many times do i see in uh pitch checks like oh or go to market strategy is facebook ads and instagram ads i'm like that that's not a go to market strategy like as much

00:16:39 as i appreciate that like i want to see the growth hacking for you to be able to prove that this actually works and then sure you can start dumping money into marketing but not yet like okay you you need to show me there's a big enough problem that there people are out there looking for it that you can figure out a way to reach them without spending money uh because then you'll start developing channel partnerships and a bunch of the things that you've been never thought about and all of a sudden

00:17:06 uh you have much more exponential growth than you did if you're like oh we're just gonna buy facebook ads like that's uh if it was that easy anyone would have done it and and look uh and this brings it back full circle to um the interviews if you haven't if you say oh these people are too hard to too hard to reach to interview well you're never gonna sell to a man if you can't figure out where they live how they behave what really floats their boat forget it yeah no it's true uh 100 so i i appreciate uh i appreciate

00:17:44 that approach for sure um awesome so i guess let's talk about the uh the less big elephant in the room now but uh what we've been going through for the last year um so let's talk about uh let's talk about cobot and i guess let's bring it back maybe some of the stuff that we talked about uh earlier before we actually jumped on uh how has it actually uh affected uh the students within the university from an entrepreneur's standpoint positive and kind of negative so um look i know covet has been terrible for huge swaths of the economy

00:18:22 and population but from where we stand in terms of the numbers of people and the types of people that we're getting um you know first of all here's the baseline that i hold myself accountable to csun has 40 thousand students and about i'll say seventy percent of them are are latino uh it's a hispanic serving institution uh fifty percent of them are female uh seventy percent of them are pell eligible which means family income somewhere in the range of 20 to 40 000 we we also have the largest population

00:19:04 of deaf and hard of hearing students at any four year public university really yeah it's crazy so if if my if i and then look um typically you know vc-backed entrepreneurs you know they're 95 white they're 90 male um their their stem background you know 90 and and they all generally have um a background or connections they they know how this is done so for me that's the deal but but for my programs if all i'm doing is pulling out the same uh demographics as being done at the the private four-year research schools

00:19:50 um then i'm not really moving the needle i need to i need to move csun students so that's my obsession with with kind of tracking and demographics um and i'm just thrilled that when covid struck um we had to cancel the uh summer accelerator it was planning was already well underway we'd accepted teams but the university wasn't lying letting anybody on campus and we hadn't set up any different ways to manage it yet so um come the fall we've got a bunch of things in place and we you know digital marketing for us

00:20:28 marketing our programs and doing the outreach and in the fall i was able to bring in the biggest class ever and then the demographics were fantastic i was able to get um demographics more in line with the csun average um so this last round uh that i finished up in in the spring we have 60 percent 60 of our students in that cohort were from eligible families they're working right but they're they're still doing this program because they appreciate it we don't give academic credit they're doing this because this is a way

00:21:09 out for them and they sense it intuitively so for me it's been very very gratifying um i'm able to do more programs and reach more people in the off hours really tailor it around their needs and and people are responding really really well to it it's super super encouraging [Music] i guess the the online the zoom has uh meetings has helped flatten i guess the curve a little bit from that standpoint and that just from accessibility uh because you're right i think people that kind of go into that hybrid

00:21:51 entrepreneurship kind of model where they are working and they're still trying to do something else it can be uh yeah i mean it can be it can be tough to juggle both if you don't have to commute especially in la it makes lives a lot easier there's one more feature this and you know this is from national science foundation it had been a foundational item interviews have to be done in person well they were faced with the same thing everyone else was right oh my gosh kovac you can't do that there are no conferences to go to what

00:22:26 what are you going to do how are you going to do it so um i mean i'm in touch with a lot of these folks they say the same sort of thing they're seeing people they may never go back to an in-person model again and the interviews the content and the number the quality of those interviews has only gone up because you're not burning time driving to this appointment and driving to that appointment you can crank out you're just more efficient this way yeah you're also going to get access to different people

00:22:56 who you might not have been able to get access to previously because i mean it's it's it's time uh if all of a sudden i'm not driving three hours a day it means i have three hours of extra time where i can sit down and chat with people and do other things so uh yeah i agree awesome so let's jump to uh i guess let's jump and jump to a little bit around due diligence so especially as you're kind of bringing these uh these portfolio companies in uh to the actual program uh like walk us through the process

00:23:30 of who you're actually looking for whether it's that grit that drive uh but let's walk through some of the stuff that you are looking for and then some of the red flags so before csun here's what i learned at usc right there's a lot of faculty members who would come in with inventions and say yeah we want you to spend twenty thousand dollars patenting this and it's a lot of money and there's no guarantee that they're going to pursue it so when i was managing those portfolios what i said was well look you do x y

00:24:07 and z first low threshold items and then i'll do a b and c yeah and and i'll write checks and i'll spend the money and just by putting a couple prerequisites up front over half of the requests went away right and these are people who would have you know gone to their graves saying you're burying the best invention ever until i have to do something [Laughter] so so for me it's this sort of it's not gatekeeping right so my my strategy is i'm trying to build up an incubator um that obviates the need for them to do

00:24:55 a lot of fumbling around i'm going to give them resources i'm going to give them training and mentorship but show me that you've done something show me that you've done a little bit and and so we have a number of on-ramp programs where short periods of time you'll you'll get together um a five-sided pitch deck you'll you'll have done a couple interviews you'll have validated competition in some ways stuff that can all probably be done in one to two days but put in a little skin and and if they won't do that that's a red flag

00:25:35 and if they do it poorly that's a red flag um so you know we've got a very wide funnel right i want to try to bring in as many teams as i can um because i can't fall prey to the same thing i'm pointing out for them my crystal ball may not be any good um my i want to make these programs accessible we're trying to equip people for the future my goal is not trying to make money my troll my goal is to equip people who are ready to learn and absorb but i can't have somebody in there who's just kind of yeah

00:26:16 you know i want to have you know i just want to talk about this uh at cocktail parties or it makes me feel good or i'm honestly i'm kind of bored of television so i'll hang out with you for a while all bad reasons um so i i think the the diligence process amounts to an application uh in which they can clearly articulate what they've done that they've hit any of some of the prerequisites beforehand and um like we do 10 weeks over the summer i say look what you tell me what can you accomplish in 10 weeks

00:26:56 and then i'll hold you to that yeah so not my words your words and um it's it's been it's been pretty good so far awesome well that's uh that's a good way to look at it 100 um so let's uh let's jump to uh as they're in i guess the program so uh in the program and after so what are some of the uh the challenges that they'll end up facing or some of the mistakes that they end up running through i know there's a lot yeah so look you know it's mark twain who said um it ain't what you don't know it's what you think you know that just

00:27:43 ain't so that'll get you so you know these assumptions that people are are making um i gotta raise money okay what for what are you gonna do with it no i don't know i just i just need money get in line buddy so so that and then you know getting people to think really quantitatively and in a granular fashion so you know i i believe in the fundamentals of um customer discovery business model canvas and rapid prototyping and we're for this summer accelerator we're kind of playing those backwards we're going to start with the

00:28:30 prototyping because that'll drive them into cost of goods and like okay go go get a quote from the vendor for these things and that'll tell you why prototypes are so expensive and manufactured goods you know with larger orders and deliveries that your your costs can drop yeah but but again until you're in that the first time through that it's an epiphany and the world seems really unfair but there you go um we try and do other things and this is where spark xyz has been really fantastic for us number one getting them to to commit to

00:29:16 a profile that defines who's they are and not just the big marketing speak no you tell me who's your customer and the value you're going to provide for them and and then with that in hand now you get access to these other um programs you know the free aws credits the discounted services all those things great you can pick and choose if you can make a case that you actually need for it and then um all these other competitions so sparkxyz has has really done me a solid because i used to have to spend a lot of

00:29:51 time fishing for those things organizing them getting people to apply and i said let dinner serve if you're hungry come and get it oh that makes me happy i appreciate that i'm glad that we're we're out there helping [Laughter] in in a in a dramatic fashion um because i said look this is just the tip of the iceberg these competitions yeah 20 minutes of googling you might find one that's better for you oh by the way here's um sbir.gov here's you know these these foundations that want to throw money at

00:30:30 not for profits yeah great but you you got to get out of you got to get out into the world yeah now it's a it can be a it can be a good bridge i guess because there are and that's also what i try to tell entrepreneurs is that you don't have to raise venture capital like don't raise venture capital like there's a lot of money out there that you don't have the the less strings attached i'll say that uh than with bc money and especially for the rate like uh if you can get a grant if you get a million

00:31:06 dollar grant like that i mean that is your seed round like like 100 non-dilutive like uh equity like that's a very exciting thing where you're actually gonna build uh and work through what you're actually doing and yeah to your point with the foundations and everything else that is out there there are a lot of resources that you can uh you can jump on and a lot of people it's very convoluted and it's very tough to find a lot of this stuff and so it takes a lot of research but yeah 100 they they are out there but i agree i've

00:31:39 seen some of the other uh universities actually leverage the venture profile for similar matters and that it's like okay here's where you start and then here are all the additional sections that you're going to need to understand as you kind of progress through uh your actual venture so you might not be thinking like you might have a great problem and solution you might have a customer that's actually doing it but you're taking ltv like does that make sense because just because it's a problem that you're

00:32:08 actually solving if the metrics don't make sense like there's no point in doing it because it's just you can't execute on it so i'm glad that uh i'm glad that it's uh working out for you guys well and and look the vc money it's it's it's great it's a jet fuel right you better be fueling up a jet yeah otherwise you're wasting it don't waste your time don't waste their time you might have a really great sports car but if you put jet fuel into a sports car going to blow up maybe maybe this first time around

00:32:48 you're looking for a lifestyle business you're looking for like i've we've been able to help people who are working in the trades and and the same things apply right the discipline the learning um be really cash smart hustle get out there you don't you don't need a lot of things and and yet all the benefits of this training still apply to them um now have we we've been fortunate we've had a couple vc style firms get funded um who came through our programs and i'm i am proud of them but i'm just

00:33:25 as proud as the other people who said yeah we we got an sba loan and now instead of two people i'm employing 20 people yeah they're both wins yeah no i i agree and i think that they're and i'm not sure why i'm saying it's the tech media and everything else but like uh if i could have a a lifestyle business that was generating like 10 million dollars a year like in profit like what like like for some reason that is seen as negative versus like a billion dollar company that i own like two percent of

00:34:00 for uh uh that's vc packed it's like well like yeah yes and no like that for some reason lifestyle companies have gotten this this negative connotation uh that they don't need venture money and it's like why like why like lifestyle lifestyle businesses are the backbone of like this entire country they are great businesses where you can generate you can live you can do very very well there is no reason to to go down that path and i love your uh i love your analogy of the uh putting jet fuel in a sports car

00:34:35 uh because it's true i think that too many entrepreneurs are especially at the early stage like yep i need that jet fuel fuel and it's like well you have nothing to fuel so what's the point uh yeah yeah no it's uh it's a great uh it's a great piece but but here's the thing too right um our economy is changing our economy is changing at rates unforeseen right so the old methodology was well we have these displaced industries and we're going to retrain and redis deploy those workers into new areas

00:35:14 there's certain things that are coming ai machine learning um offshoring sort of perfect storm we're gonna see more and more industries displaced more and more workers who thought going into work today everything's just fine oh wait i'm out of a job and so if you've got a portfolio of i'm getting income from this job but i also have this as a side hustle and i've got these two or three other things on the side so that you know you can either be the victim of change or you can drive the change yourself

00:35:49 now hey my side hustle turns out that's a really good business i'm gonna leave what i thought would always be my day job because i can i can sustain and control this and i'll be happier doing it yeah so emotional levels personal income levels macroeconomic levels it it helps it it's part of the overall solution i i agree definitely uh it's uh it's an interesting point the the world is rapidly changing uh at this point and yeah a lot of people are going to be displaced and we're [Music] so segments of society right we

00:36:39 the united states is fragmented politically geographically economically educationally and and so specifically you know my passion is for taking people in low resource environments who justifiably have a lot of excuses well you know this and well that and and i'll take away all those excuses say look if if you're willing to walk forward i will walk with you but you know that was that was my attraction for csun and and as i've done work in vietnam um like those people you would talk lower resource

00:37:16 that's a little resource yeah but they have incredible hustle you know we were we were meeting it was um it was midnight their time and i never had in in any of the teams that i was mentoring not one person missed one session not one and these are people with all the excuses in the world so this this fall we're going to do the same thing in south africa where we're targeting people in in the townships and trying to get them um started with something and and all it takes is a little bit of energy to you know to create that spark

00:37:56 to get the fire going and and i i think it's better for everyone globally because you know if we can get these people who are traditionally underserved and and moving them towards self-sufficiency it it creates value overall but especially it creates value in that segment yeah no very true uh and honestly there's a perfect place to uh to leave it so uh tim uh appreciate you uh you coming on the show uh look forward to another chat again soon and uh yeah thanks again thanks [Music]