Lessons - The Investor Behind Lyft, Pinterest, and Warby Parker | Courtney Reum - M13 Co-Founder

In this lessons episode, explore how successful startups are built through a blend of intuition, pattern recognition, and strategic execution. Discover how to identify product market fit through real demand signals, understand why building with an exit in mind creates optionality and leverage, and uncover how a lining vision, momentum, and consumer insight drives scalable and investable businesses. So I'm assuming like we didn't even bring it up yet, but the book that you just wrote, shortcut your startup, that's learnings from I'm assuming all the way back to Goldman Sachs, all the way through to building V, all the way through to M3rd, like these are learnings along every single function of an entrepreneur raising money, raising capital, selling a product, product market fit. So I mean, it's interesting because you've done all of it. You've been the advisory, you've been the operator, you've been the capital allocator. So the lens that you see entrepreneurship through is super vast, which is awesome, right? It really is awesome. And I think that when you build out like your first company, I'm also curious about one thing in your first company because I think that if I read this correctly, this was one of the first companies to ever, if I'm not mistaken, be a carbon neutral spirits company and you donated 1% of all the sales environmental causes. So this now is not so abnormal. This is very common, but back then this was sort of new, innovative. When you look at what you did there, I'm assuming you still have the lens of looking for companies that are doing things differently, doing things in a novel way, finding new ways to resonate with the audience in the market. How do you source out that thing that could move the market, make the brand more trustworthy with who they're trying to sell to, like ultimately create that evangelism because that's what brand is. Can you, can you knight that evangelism in your customers, right? Yeah. Yeah, I think, you know, that is, it's funny because our, for my current holding company called M13, which is you kind of point out, I like to feel entrepreneurial. I like to also invest and I like to just build things and so it kind of gives us a container where our, you know, the main thing we do is consumer tech focus venture capital funds, but we've also launched a bunch of our brands, which I'm happy to talk about, and I think for me and my brother, especially, it's a lot of fun to some days be more entrepreneurial, someday have your investor had on, and certainly it's the virtuous cycle of being an investor has made me a better entrepreneur and being an entrepreneur has made me a better investor. And to stay entrepreneurial, iron sharpens iron, like when I'm talking to someone about a company we invested in a lot of times I can say it from a place of like, I've tried this recently or I failed at this recently, not just, oh, I hear everyone talk about this, but I'm pretty, you know, pretty hands off and pretty removed. And I think that's kind of mindset we have for our whole firm, which is, which is pretty unique and really important. And I think, you know, in terms of our, so our north star, what we're looking to, to be the best at with what we're doing is future of consumer behavior. And so there's not like one way to describe it, but I would say, you know, in the world we live in the information is here, it's just not evenly distributed. And so to the extent I can have some information, a symmetry on anything, you know, I see some trends myself. I talk to other people, I'm lucky to know xyz person, you know, like, I mean, it used to be something where like, you'd go to the athletes to get the latest supplements or take whatever it is, we try and do that in a myriad of ways. But I do think just a little bit of that, I'll put it in hockey terms for, you know, where the pump is going is, is really important, really hard to do, but really important. Yeah, I love that because I think that, you know, whenever you see somebody that has multiple successes and you're not just an investor now, now you spin up your own companies, like, I love to ask about the playbook. And I want to understand like what the playbook is for a successful startup because now it's not just grit. I mean, I mean, it will be a lot of grit, but hopefully it's not great and a little bit more tactical execution after, after doing it a few times, but then there's also nuances. So like, you know, in any industry, it's not going to be the exact same playbook. There's similarities, there's a checklist, but there's a lot of things that are like niche and industry specific. So it's like the mindset of sourcing for the knowledge is going to give you that advantage or give you insight into the consumer, build those feedback loops. I think that's like a super, super valuable lesson for entrepreneurs because there isn't just one playbook that works for everyone, but yeah, and I do want to clarify because you said, you specifically asked about first company and to your point, I do think it was grit, you know, and I do think I want to clarify something I said earlier, because I do think like some of the hustle culture stuff is a little is is real good and bad. And I don't, I don't believe in kind of hustling for the sake of hustle or busyness with a why, if you will. I believe in kind of velocity, which is like speed, but with direction. And you asked specifically about the first company, which I don't think we had any velocity because we didn't really know where we're going or what we were doing. So that was kind of more like trying to will it and grit and a little more hustle. Now I think to your point, almost everything we do has some ability, some, some element of like repeatability or pattern recognition along with some newness because if we're starting or investing in something in the metaverse or web three or AI, not many people have done much with it, right? So we're building the plan as we find out. So we'll go into that in a second. I want to, I'm not going to spend too much time on on, on, on the first startup, but I do want to just walk through that first startup was a success. You, I mean, you, you eventually exited it. I wanted to speak about that journey. So as a first time entrepreneur, building a company, first company, two, two exes, not common for most people. So the process of building that up, when did you understand how you'd like to carry that company, you know, what was the milestone or the revenue number where you're like, hey, this works, we have product market fit. Let's continue to grow. We don't need to playbook for the entire cycle of growth. But what's that product market fit point when idea is validated? And then also, after that, walk me through the exit, the acquisition, and then pivot into M13. Sure. I mean, I think the, you know, one thing that really attracts us to spirits on paper was that because innovation was so hard, like I won't go into all the reasons it's really hard, but it's, it's really hard for new incumbents. It's really hard to get distribution. There's no pivoting to some other product. You've got something sitting in a bottle, you know, I mean, and you're really at the best large, I mean, we did spirits, which is a little different and wine, a little different than beer. So what I'm saying is, is pertains mostly spirits, but you can't really sell direct to consumer. So I don't really, I don't really, it's harder to get accurate data, especially then of whom I consumer was, what their purchase occasion was. I mean, all kinds of things you have to really, I would say in many ways, do by hand. And so one of the things that attracts us to spirits was there, there are companies that sold, you know, an average exit could be easily like eight to 12 time sales, because it's that hard to do. So to the picture goes to spoils and, you know, there's, of course, there's companies that sold for a couple of time sales, but there was, you know, Gregus, I think, I think Bacardibach, Gregus, I haven't said this stat out loud in a while, but I think something like 14 time sales, because it was that creative, because it was growing so fast and they need a vodka. I think multiples have come down and things have changed a little bit. That's what it was like then. So we saw that opportunity. Of course, we should have known there's a catch that the reasons I can go for 10 time sales is because it's hard to do. Still nothing, still in many ways, still nothing harder. I've tried to do with lower, lower odds. If you start from a, you know, kind of a standing start, I think if you have unfair advantages, which is what we're always looking for, or relationships. Thankfully, I do now, so I'm put a gun to my head to start a spirits brand, which might be about what it takes. But I think the point where we had something, it was, you know, we never had the total number of distribution points of like an absolute or a Gregus, of course. But we had, we were in the very high in places. We were in kind of like the trendier. We were very on-premise, which means we were in bars, clubs, restaurants in like major metros, New York, Miami LA, you get it. So we had it those places. And I think, I think the simple, simple metrics are stuff like reorder rates and same store sales because if people are actually reordering Veeve or calling for it, that starts to tell you have something. So that's kind of the anecdotal stuff. And then, you know, there's a whole bunch of metrics in terms of like cases sold in revenue and reorder rates that kind of let you know that, hey, you might, you might be in the ballpark of something that someone wants to acquire. The funny thing is, I would say, you know, we all read about these companies that like everyone's following all ourselves to buy and this and that. But the reality is, even most things that get sold and we talk about this in our book is like, most things are a nice to have not a need to have. And Veeve in all-candidance was very much that. Like, people were interested, but no one was willing to like, you know, give up their firstborn for it. So now it's a dance of like, making sure you, we, our last chapter of our book, shortcut, your startups talks about how assuming you think you might want to sell, if there's even a chance you might want to sell your company, you need to build it with that in mind so that you have the option, but not the obligation. And I think what a lot of people do is go, I don't think I want to sell it. And even if it's less than 50-50, then one day you decide you want to. It doesn't mean all is lost, but it means you have some work to do because there is a whole, you know, art to the, what I'll call kind of like, you know, we did some things to get noticed. We left the breadcrumbs one time. We bought a billboard right by our biggest distributor so that people saw, you know, stuff like that to kind of give the the appearance that we were doing well, even though we were, but if a tree falls in the woods. So it's a lot of, it is a lot of those breadcrumbs and it's a lot of, you know, I joined some industry groups and went to a couple conferences with people that I'd never met to try to build that relationship just so it wasn't like a thirsty cold email saying, hey, want to buy me a slide of number across the table, right? And there's, there's a whole, um, art to that which I don't think I've mastered, but I've mastered enough that they've been able to sell some stuff. But I think that's a huge, you know, some people I talk to get really, no one's called me to buy my company. I'm like, and no one probably ever will, but that doesn't mean it's not a good company. It doesn't mean someone won't buy it for a number that makes you very, very happy. You just have to put on the radar and make them, um, you know, it, it, Goldman, we always always say something the fact of momentum or the appearance of momentum. And, uh, you know, you just have to kind of create your unlock and create your own momentum so that people all of a sudden go, wait, I'm here about V of everywhere. Maybe I should, should call them and find out more, you know, that was, that was kind of the, the goal. Is that something that you look for now? Like when you put money into companies, do you look for owners that are building to sell that have that mindset from yesterday? Is that something you train over because they're just logging through like that? Well, I think what we do, you know, adventure, the goal in general is not to, um, with some exceptions like your, you know, I have a fund with a finite life expectancy. So it's not great if someone holds it for 20 years, something they built, um, even if it's, you know, even if it's a great company. So yeah, we, you know, we have to look for the quiddy, but I think the flip side is what, what we do look for is we want someone who has a big vision, someone who, as I said, we want to be at the, the, the, the forefront of consumer behavior. So those companies can be big. So I want someone with a big vision, um, and don't get me wrong. I've, I've sold companies in the tens of millions and the hundreds of millions that I've started, but I'm not, you know, for it to be a venture back company, like, I can't say, like, if it took one check and sold for 25 million, a lot of people will probably be happy. That's not how venture capital works. So it's, it's power laws. We have to, um, you know, back people who, who tell us they want to build something big, but we have to believe it because occasionally the person who says they want to build something big, they've got a little lightning of bottle and the first offer that comes across the table, then they want to take and you're like, wait, that's a lot. That's not, that's not as much. It's a lot for somebody who's never gotten the check before, but yeah, I got you. And that is attention. And look, we always want with best for the founders, but that's why we just try to be upfront about, like, what are, what are both our, our, our objectives, like, no one's trying to hang on too long. No one's trying to get you to do something that we can't do. But if you want to build something there, you know, there are those things that, who knows how big they can get like an open AI. Yeah. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.