00:00:01 [Music] moving the needle on founder failure one conversation at a time I'm your host Lukas polls and welcome to startup to point out by spark XYZ join us each week as we give you access to some of the top investors and entrepreneurs around the country 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 listening to its customers and just thinks it knows better than it customers

00:00:34 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 a big heartfelt thank you to Breck's who without their support this show would not be possible we've seen firsthand the difficulties accessing basic corporate credit without providing a security deposit or personal guarantee early on as companies grow managing expenses has become more difficult and time-consuming which is

00:01:09 why we've partnered with Breck's to offer a corporate credit card that is not personally guaranteed offers higher credit limits provides Auto reconciliation and integrates with ERPs using receipt capture Breck's is the credit card of a start ecosystem and we highly encourage you to check them out Jim thank you for thank you for coming on the show well thank you like this I appreciate it so typically where we like to start out is want to find out more about brain theory where you guys do kind of the whole whole shebang

00:01:44 I like to say that we're a vertically integrated Venture advisory which I know sounds like big words but I think that if you break it down kind of know exactly what what we're on about we're vertically integrated we have we have a lot of space we are going to be opening up some new space soon as soon as we are allowed back in Judy covered 19 we did experiment with co-working space but we've kind of done this ourselves about now and moving kind of us more of as a venture studio model mm-hmm in that

00:02:20 respect and then we have a space down at all to see at the Port of Los Angeles where we have some dockside space and a lot of warehouse space that we can kind of move around in this would be typically very good for our startups that need having more science or engineering beds that have larger equipment and and the use of water we have events Lucas you yourself have been a panelist at ignite 22 very large kind of event and kind of a slash food fest food trucks and you know different kinds of panels street festival kind of a thing

00:03:04 right this is nice nice vibe good feel but we also have 24 other events that we that we do including air about 22 pictures which are kind of a themed night 22 pitch competition commentary at the end of the year where ultimately we get to see about 36 companies pitch all up and then we've just had finished our quarantine series so we do a lot of other pictures that are virtual and online as well as doing work with star crime and sponsoring some of their pictures and events we also sponsor events at University of California San

00:03:50 Diego and and who you see on from Americans around science and engineering kinds of startups so where we are a blue tech focused or as long as they were science engineering focus with a bluetick bent so that kind of heavy industry science engineering and the enabling technologies that allow it to happen consequently we run kind of an advisory we do some consulting work with companies we have government contracts that we do accelerator programs with country of origin startups they come and do some

00:04:36 kind of market access and create a market readiness program for them we do a lot of that stuff what else do we do raise the fund that's scary and and soon we'll be deploying that capital so yeah um fun times yeah also anything anybody so that's why I made my building the integrated so a couple things I want to jump through specifically we just talked about so first let's walk through a little bit about bluetick because there aren't a lot of people that end up focusing specifically on that so can you give me

00:05:18 some of some examples of when a company that would fall under BlueTEC would look like blue thick is really broad right because it encompasses what I would classify as a kind of across a multidisciplinary science and from a tech area and then on the other side kind of a multi sector engagement so it could be anything from aerospace to agriculture and it could be only enabling tech as well so you know software software as-a-service apps apps on iphone apps on a widget on a desktop it could be a whole bunch of stuff but

00:05:54 ultimately the goal is to maintain a better downstream advantage for the ocean rather than rather than pollution or rather than overfishing or or you know ships putting a lot more stuff into their atmosphere carbon emissions so our focus is to look at technologies that are what some people might classify as detect and see if they have an ocean application or an upstream up with allows us to prevent some kind of pollution further down the line we also want to look at technologies that may and I'm using this term in a positive

00:06:43 way exploit the ocean for for some kind of positive beginning for example there is a compound in in most crustacean kind of animals in the ocean called hemocyanin it's blue blood squid have it it's kind of a composition of ink as well and horseshoe crabs have it loop it's have it all these creatures have this blue blood it's the reason why your shrimp looks kind of a purpley color before you put it on the barbecue and then kind of turn well I do Australian right so shrimp on the barbie thing right

00:07:27 it goes pink pinky orange color that's the hemocyanin and he messiaen is a really really important chemical in biotechnology in fact without hamas ions we may not have a viable vaccine for code 19 because we use this to test for bacteria that may into the the vaccination process so it's another michael women so it's it's it's a really important step in how we validate a good good drug that's entering the market these are the kinds of things I mean by exportation I admit that negative way in a positive way so that we can create a

00:08:13 much more sustainable future for the ocean nice super exciting and this can include shipping or it can include biotech you can include logistics and supply chain water quality all those things apply awesome cool very honestly very interesting and diverse field that you guys have looking at fun yeah much different technology than some of the b2b sad stuff but I like some of the b2b says that we need that so we need that to improve or optimize supply chains or whatever it might be yeah no no it's awesome

00:08:53 you said that you were raising a fun so what let's walk through a little bit about that so when you when that does happen what are you looking to deploy like are you sighs yeah target like area stand and the stand because the questions right and every scholar was that I much how much money where you focus on okay so our focus is going to be on blue text obviously we will be looking at exercises from between $100,000 to about 400,000 dollars we want to keep it under a million we won't lead every every round but we definitely

00:09:34 want to try to decode as many as we can we have trusted investors that we know have domain experience or can bring something to the table for a blue tech company so we like to go to them first so we broaden the scope and and potential success for that start we don't want to create barriers for the startups obviously we want to create a smooth pathway a smooth transition to commercialization where sometimes there has been barriers and difficulties you know part of that is we have this advisory side that does

00:10:12 a lot of consulting part of that is to look for under lutherans for startups that can kind of kick kick the fundraising even down the road a little bit so if they're doing a rolling round or if they're doing you know some other kind of financial instrument that maybe requires them to ramp up an additional area of their prototype maybe they don't have a bridge round maybe they these do enough a couple more pilot projects to get some data around around a project then I think that that's a significant area that we can assist the

00:10:51 startup certainly with grant money it's that's that's always important but but also we've got space and and soon we will have some prototyping that we can we can do electronics prototyping as well we'll have the venture students a lot they'll be there will be some they'll be some additional kind of office space they'll be there'll be this space down and also see again we're moving back into all to see we were there and we have to move out because it's construction so we see the pines for the startups particularly in the

00:11:37 ocean space and we like having this vertical integration I think it's important for startups to to move the long meet commercialization phase yeah no I don't agree so so you brought up something that's I always find interesting so my due diligence for a much simpler company is significantly easier right it's oh I can call I can call a customer I can just look at bank statements a little bit different but when you're dealing with deep tech and biotech like how are you leveraging like advisors like are you doing all the due

00:12:14 diligence specifically yourself there I feel like there are when you get into very nice specific areas it can be difficult to validate maybe the potential of technology yeah inside like so let me do that hold it I'm a little bit selfish right so let me know what I know what I like to know and I know what I want the problem is as my Canadian system you know that's on she says you know we've got to try and find a way of getting all the stuff out of your head and on paper or you know my creative program will tell it to someone else

00:12:51 educate other people know I know what I want to know what I want but so so you're asking me to do something huge goal is inside my head and there's the gears are going around right okay right I do look at things a lot differently I have kind of before my first three steps I want to look to make most maintain that they've got the good defensible IP I want good technology there's well validated I want some data around that because one of the biggest things that we that we see in the sciences and engineering areas when it goes to it

00:13:31 might work in the lab works great in the lab and then industry says we're really interested because you claim you know your value proposition says you claim 30% increase in or decrease in this or an increase in that and we want to make sure that we actually hit those targets so what works in the lab sometimes doesn't work out in the environment so we we want to make sure that people have validated those ideas so that's the first thing second thing is while others are looking at kind of team in the story

00:14:03 we see teams specialists scientific teams have a domain experience all of their own so they're I would much prefer them go to a course or or move to a different role within the company then allow that expertise to disappear and and and so it's not as easy as just you know saying well let's look at the team let's look at execute there are a lot of moving parts when it comes to the science and engineering fields and moving into industry so so while we're not looking at that we really really do want to make sure that you've got a very

00:14:49 good business case so we want to we want to say a good a good go to market strategy and well I mean a good go to market strategy I want to see what it looks like that market latency is really really important for startups in our area because these these technologies don't always create demand immediately these have demand phases that are kind of future demand so that latency period is really really important for us to see how we can compress that kind of nasan where they're still in the lab all the

00:15:29 way to that demand phase and so the more we can compress that timeline that latency time alone the there it is and that's really important to us and then finally product market fit you know I want you to go out there and I want you to interview as many industry people as possible and I want you to get feedback and I want you to put it in a chart and I want me to tell me what it looks like so those are the three key areas Lucas that we really really focus on and I think that unlike most other most other tech

00:16:04 areas I think that this is a these are the kind of the vital signs here if you like you know this is the kind of the heart bring brain activity and and the pulse kind of ladies kind of hopping the and the breathing of the startups that we see right awesome super interesting so because you end up dealing with a lot of blue tech biotech the area that are very science focused by yeah yeah do you do you end up running into more homogeneous teams where it's like all scientists that maybe don't know how to

00:16:41 put together and go to market strategy and don't know that's I so you know I've had to put in a bit of work on this and and while most most investors will probably take a pass on those kinds of companies or they might you know wait around for them to mature we actually likes a little do a little bit of hand-holding you know I've got I've got some companies that I'm really interested in that I I hope coach to get them to a to a phase where they're when they're ready for that kind of critical go to market

00:17:31 strategy and commercialization pathway so I'm not afraid to kind of quit in some kind of free time in order to get them prepared for what comes next with that I think that that's pretty cool the second part of this is to create kind of the hopper right I guess you can call it deal flower you call it kind of a long-term pipeline I come out to call it a hopper because I like to that funnel shape you're right you there's more in the top than there is that comes out of the bottom and see it's kind of showing it around a bit so

00:18:05 we've got see what kind of assistance they need and see if they need a second chance you know if their teams of too many scientists and you know not enough people who have got some business acumen I much rather than either go off and do some courses or we can reshuffle the teams well we can we can add to the teams you know we based most of our stuff on evidence based on the producers but when we are at parents of evidence based on the printer ship so startups that come to us should have really good

00:18:44 evidence to support where they are anyway and and that includes what their business model looks like how many customers that they have you know through the customer interviews they should have a really good understanding of what the customer needs are and the customer expectations and then they should really understand what that market looks like and how it's changing over time they should have a good competitive analysis they should have a really good revenue model so all these things all these things matter you know

00:19:21 there's actually a really good article today that came out in nature magazine I know that's not common on everyone's list but I did post it to my facebook account and it's the Francis Crick Institute one of their Eli's wrote a really good article on kind of what's needed for science and engineering startups and what's missing well what are the gaps no it's the and the gaps are exactly the three areas that I just said that we focus on for our fund right which is the go to market strategy and pro market

00:19:59 food and defensible I think so you know if if you don't have those you know if you don't have a good scaffold from which to hang you know it's not gonna work yeah no super very true it's actually really interesting so I was at a meeting once it's slowly mighty slow and you know I do work at Cal State Fullerton's incubator mm-hmm and I help out there I'm one of the ambassador's I'm quite proud of that I'm a Cal State graduate myself so I I like the system and I like to give back when I can and so I was at a meeting at

00:20:36 Sloan and Sloan turned around me and said so Jim you know you've had all this experience with ichor and and you helped out all these student teams and everything particularly the science engineering teams how do you get these science and engineering teams to come across the business school and I looked at them when I said hang on a minute guys you guys are on my team especially the smartest guys in the room if you guys don't know how are we expected to get right and honestly this is actually a problem right because the there's

00:21:02 sometimes these two departments don't really they don't agree and and they don't always see eye-to-eye on things that that they should have common ground on yeah and and so it's it's been a difficulty it's going to remain a difficulty I don't see any way past it except to continue having people and from the business side people have had experience exiting companies and really it doesn't matter what kind of company that you know experience in even even if they've got a current company it's really important to go and you know

00:21:42 cross the line go and talk to some science and engineers we've got some startups maybe they might learn something so that's still critically important I cannot stress enough how important that is hundra's and agree but you're you're right it's not gonna yesterday was fund raising universities it's white all the disciplines that are siloed is because they want their specific wind and so trying to cross together there's a whole nightmare yeah I wish more universities concentrated on more multi discipline

00:22:16 activities yeah and then I think I think that you know at least my entrepreneurial class could be relatively compulsory right you know if I say relatively fall sorry at least you should take basic economics class yeah you know microeconomics probably better be for business but yeah I mean I think any other anyone who is thinking about open aerial pathway it should definitely think of if they're in the sciences definitely think of dying economics 101 B or whatever it is for microeconomics thing or another production class yet so

00:22:56 we talked about maybe some of the red flags that are there like what's a company that might get you super excited like you is it just to have all the boxes ticked like what is that next like the next play like wow like oh my god what is this but I you know I got my wish lists right I've got I've got companies that I really have a wish list and and I've so I do a lot of power to her you know pounding the pavement I kind of knock on University Professors doors and I ask them what they're doing sometimes I get the door shut on my face

00:23:34 but sometimes most of time most people want to talk about what they're doing will working what they're working yeah so so I I I always ask them also where do you see yourself in five ten years or which direction is your assertive going or what's going to be important in the next five years in this field and they tell me and so I write it down diligently write it down and all this is awesome or I got it thanks one well make a mental note of how that's going to fit in with all the other companies and so

00:24:12 the things that are really jazzing me right now because I can't say that there's that there's a clear kind of stand out on a business side but I mean if there was a company that stood out on a business side as long as I had those three things and they could really articulate product market fit business model you know go to market strategy and a defensible IP I would be like super excited but if there are in areas like solid-state batteries high-density solid-state batteries that would really jazz me out for a number of reasons

00:24:46 because we can we can shrink the size of the battery down to you know the size the credit card and that would be enormous for things like satellites carrying payloads and putting payloads underwater that would be terrific for drugs and small vehicles it would be absolutely tremendous although sometimes I might get looked at the funny way if I say this but to the defense industry definitely I asked head of innovation for Lockheed Martin what she saw as being most important things in the next five years and she said if you can bring

00:25:25 me companies that are miniaturizing energy storage great job that box right so yeah that those are the kinds of things that that jazz me out on the other hand you know I want to I want to travel the Mars and if I want to and maybe I won't ever get there but because I really want to hey those are the kinds of things that I you know you're gonna have to overcome a whole lot of problems in order to get there so so I want to know I want to know cool things that startups are doing for that space that can be applied to

00:26:03 the earth yeah and you know applied to healthcare or feeding lots and lots of people upwards of a billion people not going and curing people providing energy for people here on earth so I want to see how those things can be used here on earth as well and I think that we need those kinds of moonshot or an hatton project or a polar project kind of kind of activity because sparks creativity it sparks discovery you know imagination those are the things that I think are important I think if someone came into my office and

00:26:50 had more imagination about way that I think that their product could go I'd probably be more jest about that awesome not super exciting cool so let's let's kind of jump back to kind of now so we've been in Kovac for what four months now close you know yeah so I feel like a lot of the initial kind of shock has worn off but what what are you advising startups right now who kind of pretty maybe for the next year like what like what are the questions that maybe they're coming to you with what are you

00:27:32 talking to them about like what was giving them an overall game plan you know you sometimes the market is always going to be a moving target in included times it's getting targets so always you know always re-interview customers if you need to pivot now so you know we'll create a pivot program you know allows you to to move towards a pivot target if that's if that's too difficult you know if you've got the runway you can suspend operations I guess for a little while and kind of hit a reset button when

00:28:16 everyone goes back no I have heard of some startup companies that have done that some have retooled and done some stuff for covert 19 its horses for courses right I see I see it very well I don't want companies to do is probably the easiest way that these fighting is a dumb one companies to stagnate I don't want them to atrophy in any way I want them to maintain the momentum so that means continuing to pitch continuing to call people up call call investors and ask hey you know I got really cool can

00:28:57 we can we talk we can organize the zoo meeting this is the time to do it customers are going to be a lot of industrial customers that we've gotta still there's then a lot of them are not essential so they're still gonna be at home call them up you can do a whole lot more and different customer discovery now than you could before you know you can ask them okay so how's their strap the customer you can ask the customer how's the strategy now compared to the strategy as it was before so that we can

00:29:29 learn from the behaviors of of changing what our focus is so I think I think there's plenty of things you can do there's no excuse not to not to look I don't come from the school of failure is okay you know especially if you've got investment money and it's someone else's money just you know be mindful of that and there's no reason to fail there are plenty of people to go to and talk to about look how I tell my business around well literally thousands I mean just even here in the eye ecosystem we've got

00:30:04 we've got a ton of people you can talk to so they're really just reaching out to advisors reaching out and say look you know and don't obviously we can't do kind of have a cup of coffee with you can pick your brain don't don't do that because we don't really have coffee but you know I don't mind spending a half an hour to an hour on the phone with a with someone exploring in a new area in the market I mean you know I might be a biologist but on the other side I'm also an economist to study economics so I can

00:30:34 talk about that I can talk about business models I'm happy to having to sit down with someone over a zoom meeting and have a chat so so I'm available if you need a second set of eyes over a slide deck geez the amount of you you know I'll take a look I might have to ask a couple of questions if I don't understand something but sure look I just don't think there's any reason to to fail look I mean we've seen big stories of in the past of companies that have made big pivots I mean one of the biggest pivots that I it's not recent

00:31:12 memory obviously but you know Kaiser steel was a steel manufacturing company they moved to healthcare and then call the Kaiser Permanente new no these are it doesn't mean that you know you'll lose is that kind of product integrity or business integrity that you had before in a previous iteration if you feel as though that business days to pivot somewhere else do it Thanks very good advice honestly and being generous with your time is also very kind a lot of people I don't think entrepreneurs realize that we have more

00:31:50 time now because I don't have to drive to have to drive I'm not sure what's gonna happen when we go back because now I just do meetings all day but there won't go back to like oh no I'm actually in the car driving to a new place I can't change like 50 meets right that's wrong I might actually I might actually only want to drive to work on only the days that have like a tea rather than rather than spending you know every day at work which has been I've done that and and you know there's only so much

00:32:38 driving you can do in Los Angeles I think since since permit I've realized how much and how much stress is places on the body you know so you know yeah definitely definitely I don't know I'm the the the the advantage I think of of all this time you know for me it's nearly four hours travelling but I do in LA on a typical typical day you know not just going to work but then also going to a couple meetings yeah I can probably look over about how a half a dozen slide decks in that time yeah so if there's a

00:33:24 half a dozen over over one day over over five days that's you know thirty slide decks in a week that's pretty good yeah so you know everyone out there if you want me to look at 30 slides slide decks in a week I'm putting myself out there so then perfect so I guess the best way to end it is how do people have people reach you you know I'm not great at emails it'll take me two days to get back to you by Reno but but that doesn't mean to say that you can't send me a slide deck and it will it will go into a box I've

00:34:06 already got a box that has attachments so as long as you send me a PDF or a PowerPoint no it could if you send me a link not so much it'll get buried but if you send me or if you send me an attachment it'll sit right in that box and I'll go to it if it's got a number next to it and tells me how many I'm still to read you know unread messages in this box is if and then I'll get it and I'll read it and I'll respond to you straight away I promise I promise pinky promise Sam I think you promised so what's your email

00:34:45 address yes sorry sorry Jim at break theory calm and you can find me on social media I'm either the ampersand spy for or or on Big Jim oh you know that's my two handles usually on I think on LinkedIn Fahmy on LinkedIn you can find me on definitely on Facebook and I'm the handsome Jim Cooper so when you're looking up there Ephesian fine and then and look for all snarky comments right and then you know follow me on Twitter I'm not really really hugely active on Twitter as much as I am on LinkedIn and Facebook so yeah awesome

00:35:36 send me those I'll come one day oh they will send you those decks awesome well appreciating the time appreciate all the work you did stops - not far too kind but yeah look or to it thanks again [Music]