Will Price of Next Frontier Capital // bringing venture capital to the rocky mountain region [CC059]

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Will Price 0:00
To me the most important role of a board member almost, you know, something it’s not obvious is that does the CEO trust you to the point where they can share their deepest vulnerabilities and fears in a way that they don’t feel they’re going to be judged, or demoted or lose their job because of it. Once you can establish that relationship, you end up getting to the heart of the matter much more quickly.

Jay Clouse 0:20
The startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them talk with them and discuss the upside of investing in them. Welcome to Upside.

Hello, hello, hello and welcome to the Upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Jay Clouse, and I’m accompanied by my co host, Mr. money no more moustache himself. Eric Hornung.

Eric Hornung 1:00
Mister money no more mustache. That’s like a double nickname. I no longer have a mustache. I do have very long hair right now. I mean, it could be no money because I’m I don’t have any money either.

Jay Clouse 1:11
That actually that nickname changed as I was saying it out loud. I was like, Ooh, this is a better way to go about it.

Eric Hornung 1:17
Like in your head. You had you were saying the word money and you were thinking mustache next and you realize I don’t have a mustache.

Jay Clouse 1:23
I was gonna say something like mister money guy himself. And then I looked and realized.

Eric Hornung 1:27
What a terrible nickname.

Jay Clouse 1:28
I know it wasn’t great. And then I saw that you no longer had the mustache and I was like, This is better. This is way better. And it happened in real time.

Eric Hornung 1:35
Yeah, so I no longer have the moustache. And I do have really long hair haven’t got a haircut since January of 2020. We’re recording this in July of 2020. The lettuce as they used to call it back in the day Jay that’s what they call that.

Jay Clouse 1:49
Yeah, when when the front is so long and you comb it backwards. It’s not quite a mullet because it’s from the front so they call it lettuce.

Eric Hornung 1:56
So lettuce just means long hair in blacks bro terms.

Jay Clouse 2:00
Cuz functionally it looks kind of mullety.

Eric Hornung 2:02
It does. Well that’s because you’re looking at it, you know, it’s pulled back and you see the little puffs out the back and I got the headphones on. So you’re not looking at the whole thing, right? I mean, if I, if I gave it a little swoop or something, you’d be like, oh, there’s, there’s just a lot of hair. It’s not a it’s not a mullet situation or a non mullet situation. It’s just a lot of hair.

Jay Clouse 2:22
I wish you guys could see what I’m looking at right now.

Eric Hornung 2:23
It’s beautiful, isn’t it?

Jay Clouse 2:25
Well, but the latest poll down of your bangs isn’t isn’t as good. It looks kind of more feathery than I think lettucesy like to me it looks kind of like the back of a chicken.

Eric Hornung 2:34
Like a like a little tuft of hair a little poof. Thank you. I take that out. I’ll take that.

Jay Clouse 2:40
It’s it’s much better than my hair. I mean, we’ve we’ve talked about that ad nauseam on this show, so I can’t speak down on it. But I do miss the mustache.

Eric Hornung 2:48
Yeah, well, I mean, Jay, you only got one life and my hair in this life is gonna be different than you’re hair in this life.

Jay Clouse 2:55
Speaking of only having one life Eric exciting announcement here on the pod. We have a new sponsor.

Eric Hornung 3:01
I love when we bring on new sponsors that can help the people that listen on this show.

Jay Clouse 3:05
As do I and that sponsor is Ethos Wealth Management.

Eric Hornung 3:10
Ethos is a wealth management firm in Cleveland. We won’t be doing full ad reads. Instead, you’re going to hear some slogan drops for the next few episodes as they have taken a long term sponsorship of Upside.

Jay Clouse 3:22
And that slogan, what you should know about Ethos Wealth Management is that they are helping people live the one life they have to live the best way that they can, and that is through wealth management.

Eric Hornung 3:33
Wealth management, financial planning, and you’ll be hearing more about Ethos over the course of the next year. But Jay, today, we have someone else on who is in the finance space, the alternatives finance space.

Jay Clouse 3:46
That’s right. Today we’re talking with Will Price the founder and general partner of Next Frontier Capital. Next Frontier Capital is a venture capital fund headquartered in Bozeman, Montana, with offices in Boulder, Colorado and Missoula, Montana as well. They seek to lead or co lead venture investments in the Rocky Mountain industries with high intellectual property values.

Eric Hornung 4:09
You know how much I have like a weird obsession with Montana. I love that we finally have a venture capitalist on from there.

Jay Clouse 4:16
We’ve been looking for Bozeman for a while we got Missoula with a company awhile back but shout out to Samantha who introduced us to Will Price after listening to the show. Samantha we thank you. We finally gotten to Bozeman. Eric we did it.

Eric Hornung 4:30
We did it. We are Bozeman Knights is that they call them Boze minars Boze Boze minions.

Jay Clouse 4:36
Boze, Boze Boze Manaeans Boze mansions?

Eric Hornung 4:40
Can you just be a Bozeman? Like a human?

Jay Clouse 4:42
Yeah, Boze men, Boze men and Boze women?

Eric Hornung 4:45

Jay Clouse 4:46
Next Frontier Capital was founded in 2015. They have 100 million dollars in assets under management. And they made 25 investments to date in early stage series A financings in the rocky mountain region.

Eric Hornung 5:00
It gives me a lot of flashbacks to our conversation with Greg Robinson from 4490 ventures who has the bay area experience and says, All right, let’s go do something more exciting.

Jay Clouse 5:12
We’d love to hear your thoughts on this episode. As you listen, you can tweet at us as always @upsideFM, or email us Hello@upside.FM. And we’ll get to that interview with Will right after this. This episode of Upside is sponsored by Tresta. Tresta is an app for iPhone and Android that lets you do business calling and texting from anywhere with no hardware, just a smartphone you’re already using. Tresta is the best business phone app on the market. Whether you’re a founder or freelancer, just starting your business or you’re already established. Growing your network and your business is all about communication. You’ve got to be available no matter where you are. Tresta offers the call management features that empower you to communicate smarter and more efficiently, like auto attendance, call recording user groups and more. And you don’t need any special equipment, just the smartphone you’re already using. Tresta is easy to configure. So you can set everything up yourself all online. Tresta’s virtual phone system makes it easier and more affordable than ever to set up a fully functioning mobile office is just $15 per user per month with no contracts. So start your free 30 day trial today at www.tresta.com/upside. That’s www.tresta.com/upside.

Will, welcome to the show.

Will Price 6:35
Jay & Eric. I really appreciate you have me. Thank you.

Eric Hornung 6:37
It’s great to have you on. On Upside. We like to start with a background of the guest. So can you tell us about the history of Will.

Will Price 6:44
Yeah, history of Will. Exciting. So I was born on an Air Force Base in Germany. My dad was an Air Force officer. And then I had what I’d call a peripatetic childhood. So I lived in Germany, Ireland, Northern Ireland, Nigeria, the Ivory Coast, Taiwan, Hong Kong and London all before I got out of high school. So I’ve learned over my life to fit in quickly and new places to adapt to change, I think and struggled also at the same time with a sense of my identity. And when people ask me where I’m from, or it’s a very difficult loaded question, if you just have asked, I went to Harvard undergrad and studied East Asian Studies and thinking I would focus my career in China learn Mandarin, and went to Nanjing University, and then ended up working in Hong Kong and Singapore. And of course, I live in Bozeman, Montana today, at some point along the way, I realized like maybe the most populated place on the planet is not for me and ended up back in the bay area after going to Kellogg Business School at Northwestern and spent 15 years in the bay area working in tech, always around kind of commercialization of early stage technology companies either as a financier or as a venture capitalist or as a CEO of two companies. And for me, like the greatest joy is working with small teams of four to eight people to try to take a product to market learn how to do that. And that’s been really fun. So that’s basically been my my professional career and in 2014 at 42 I had, you know what some people would prefer to call a midlife crisis or I woke up one day realize like the barrier wasn’t for me. And I was looking for a way to live a more balanced, nature centric outdoor centric life while still doing exciting, meaningful things. And my family and I moved to Bozeman, Montana in 2014, where we’ve been happily ensconced for last six years and started Next Frontier Capital six years ago. And I can talk more about the company and time but we’re very happy, happy living in Bozeman, Montana now. So that’s, that’s me in a nutshell.

Jay Clouse 8:29
What brought you into tech? You’re traveling all over the world. And at some point, you went to Kellogg, you said, and what drew you into the tech space?

Will Price 8:38
Well, I wish I could say it’s appeals. I have a you know, tinker’s interest in technology and what have you, but really, I think it’s I graduated Kellogg’s from 1999. And I went there in 97. And that essentially was the beginning and the boom of the internet era, where I think as a young person, you’re attracted to dynamic growth, to change in how we live and work and tech to me is really represented those trends of excitement, newness, innovation, Excel, you know, crazy growth and so graduated 99′ with tech boom going on. And my parents had retired and they were living in Singapore at the time and they moved to Marin County, I went to the Bay Area. And you know, I guess if you’re in Houston, you’re probably in oil and gas or in New York, maybe in finance, if you’re going to be in the Bay Area, you know, tech is really the game of the game. So, for me, I think it’s just about the potential, you know, zero to beacon, how you can see things change overnight. And for me, tech was just something that was like the shining light those like, you know, as a young person is just really exciting to be part of and then as a business person trying to find your way into tech and like where the value add can be was a little bit more of a challenge, but that really was the genesis of it. I think it was just the era and the promise of that era that was just so captivating.

Eric Hornung 9:47
Why the venture side versus going out and going after some upside on the operation side.

Will Price 9:54
So for me, I was not in venture right away. You know, I’m kind of got into it accidentally, so out of Kellogg did a company called Embark Solutions that was acquired by a portfolio company at P Quad Capital Management and P quad. People don’t remember that name was the largest hedge fund in the country in 2000. And had made a they noticed a real reputation and financing growth. And after the sale was complete, I was really kind of man without job and this is 2002. And those are pretty rough years. And so they offered me a job and their ventures team to help them on the west coast. Look at deals. For me, I was it was a combination of a couple things. One, I’ve always been interested in venture, I think, intellectually, two in 2002, I didn’t really have another plan and felt like a good place to be. And so I spent three years at peak lab ventures, which was the venture arm we had about 2 billion under management of peak like capital and worked on a variety of exciting companies. And then really was attracted to series A stage and so I joined Hummer Winblad Venture Partners which had been a co investor with diquat in a company called scaling systems that ultimately I think was acquired by Dell and I was at Hummer Winblad for three years and made general partner there. And then a 35 or 36, I had this crazy idea, which basically was, you know, the people that are most meaningful at the board meetings when you listen to them that have this most sage advice and move away from cliches and kind of business school speak, to really get into the substance of the challenge, or the operator. So the people that had been in the trenches and suffered the entrepreneurial journey. And so I had this insight that 36 that I kind of got my career inverted, like rather than, and there’s a big classic debate and venture about it was venture vocation that something that you learned coming out business school over your career or something you do after you’ve been successful as an operator, we want to pay it forward and continue to have your be in the game. And I straddle both sides of that equation and try to work it out. And obviously those great examples of venture capitalists who fit both model, but for me, particularly in the early stage, I felt like the operator of venture capitalists was the one that added the most sage advice to the CEO was probably most likely to be trusted by that CEO and whether there was a lot of challenges in the business. You know, the way I kind of think about is like, if you’re a traditional business school venture capitalists, a lot of what you do is kind of prescriptive thesis driven investing, where you come up with a thesis for the business. And these trends is x plus x plus y equals z, and you kind of make a declarative statement about the way the business is going to be. And then when it doesn’t map to the thesis, you know, you’re kind of like dealing with the surprise, like jeez didn’t. But if you’re an operator, mentality is more that you have this theory in the moment, but you’re, you know, it’s subject to change. And like any war plan, when it meets, you know, combat starts, everything goes out the window. And so, it’s not a question of like, you know, if something’s gonna go wrong, it’s like, when does it go wrong? And how do you react to that? And if you’re fundamentally a thesis driven investor when things go wrong, it you know, questions, your thesis, the questions, your judgment, and it’s a surprise, like, that’s not what we expected versus I think an operating venture capitalist knows that that was just a best guess at the time. And that when you run a trouble, that it’s a natural state of startups, that trouble is gonna happen, and it’s about how you respond to that trouble. And so I just started grabbing getting more to that operator mentality and realizing I didn’t have that as an operator. And so in 2008, I, before the meltdown, I took a CEO job in one of our portfolio companies, a company at the time was called Widget Box that was rebranded Flight over time, and I spent six years there. There were very challenging, difficult years, but I feel like I really developed an empathy for the entrepreneurial journey and that and and really, I think I’m better as a person and as an entrepreneur as an investor. Because of it, that company ultimately acquired by Snapchat. But you know, so to answer your question, I got into venture almost accidentally, but I think if I was to look for people to become successful venture capitalists, I do subscribe to that operator venture capital perspective, which, you know, I think it depends on the stage, of course, but if you’re doing early stage, I think it’s imperative that you have some of that experience.

Jay Clouse 13:46
One of the things that’s attractive to me about venture capital as an entrepreneur, is the idea that you can kind of jump in and see a lot of different businesses and kind of, you know, spend your time thinking about different things. Whereas as an entrepreneur, you’re really just mired in the challenges of the day for your business. Did you miss that when you jumped into that operating role?

Will Price 14:08
Yeah, I did. I think if you’re if you’re someone who loves to learn and listen and study, you know, human beings, markets, adventure capitalism, incredible job because as you described and like you like it, like I like Vikram, like who, you know, ran in EA for years, like, you know, he was there when, before PCs, you know, mainframes and two PCs and the client server, then the Internet, and then the Internet of Things and mobile. And there’s all these waves of technology that come and you’re constantly reinventing yourself. And I kind of describe it as like, there’s just me being an NFL running back and a golfer like NFL running back club, a great career for three to five years. They dominate the sport, and then they’re done and a venture capitalist, you know, you can play on the PGA Tour, then go on the Masters tour. I mean, your skill set is evergreen in some sense, and as long as you can continue to connect with LPs entrepreneurs, you can continue to play it for a long time. The other thing I really took away from it is that a lot of people aspired entrepreneurship, maybe out of the need to one have that experience. And a lot of business schools now are teaching entrepreneurship. And the thing I’ve come to realize about entrepreneurship is, it really is something that has to be finally mission and passion driven. It’s such a difficult thing to do to create a company to convince people to work for you that if you’re not inspired by the sense of purpose or mission, it becomes an exercise in pain and suffering. And when you suffer, and you don’t have the inspiration to continue to persevere through it, you end up doing a feelings like guilt, responsibility, obligation, which are really negative motivations, obligations to your employees, to your investors, as opposed to thinking that well, the world deserves to have this thing and it without it, the world will be a lesser place. And so my takeaway from my entrepreneurial journey was, was really that I think fewer people should be entrepreneurs, rather than more. And there’s two things from entrepreneurship. One, the power law of outcomes that we’ve all kind of come to appreciate to Marc Andreessen his writing, which is like it’s a winner take all market, typically So the risk returns are not awesome. And the second thing is unless you’re really doing it for the right reasons where you’re aligned with your sense of purpose, your mission, your destiny, it can become just overly painful. And it’s hard to persevere through that. So, you know, the people that we look for that we want to finance really, we’re looking for that sense of purpose, a sense of mission, what’s the founding origin story, and a why someone why someone working on this, you know, is a deeply meaningful to them, as opposed to, you know, a checkbox on a resume or journey in life.

Eric Hornung 16:28
You mentioned this classic debate on operating experience and venture capital. Another kind of question or hot topic in the VC entrepreneur, at least Twitter debates is what makes a great board member or board observer and how do you weigh the perspective of yourself as a operations and founder guy versus you as a venture capitalist?

Will Price 16:54
Well, I’m going to use a strange word. I think intimacy is really important and NMC comes from vulnerability To express vulnerability. And so if you can imagine a conversation where you ask someone how things are going, and they go, it’s going really well, we’re killing it, which is a typical kind of response for an entrepreneur. If you can push past that and be like, well, that’s interesting, but you know, where I’m having some really difficult times right now. And you know, X, Y, or Z part of my life, it allows them to then share their vulnerability without judgment. And so to me, the most important role of a board member almost, you know, something it’s not obvious is that does the CEO trust you to the point where they can share their deepest vulnerabilities and fears in a way that they don’t feel they’re going to be judged, or demoted or lose their job because of it. Once you can establish that relationship, you end up getting to the heart of the matter much more quickly. in an environment where the board doesn’t have trust or people don’t trust one another, you end up often seeing board presentations that are about basically positioning and it kind of like they’re managing the message in a way that everyone feels like everything’s going really well. I think you’ve got to get past that and be like, Look, we totally understand that this is a high risk startup. There’ll be a lot of setbacks and challenges. It’s the speed by which we react to those challenges that will guarantee our success, we all have to get to a position where we trust one another, to be able to share true vulnerability and and challenge. And in those in that sharing of vulnerability, the right answers and the solutions cart start coming independent of judgment. And so what I try to establish with our CEOs and boards that we work with is that level of intimacy and trust and you know, what you aspire to, I think, as a board members at like 9pm, Friday call, you know, where the CEOs driving home and they’re just wrestling with some really, you know, whether the VP sales isn’t working out or, you know, a partner just announced a competitive product or their number one competitor, just raised $50 million, whatever, whatever the challenge of the day is, I think that’s the call you want. And then the board meetings I kind of come to realize are almost exercises and creating social capital, because if you see things start to fraying, what ends up happening is people interpret an email or a text or someone statement in in the worst way, and it’s it awesome you know you go from a coalition to fragmented set of constituencies that are misunderstanding one another. Fundamentally, it’s almost like that book normal people on if you’ve read that Hulu episode but this series is all about how little miscommunications can then transpire into massive challenges. So for me, like a lot of times board meetings are about reestablishing connection, rebuilding up the social capital, the human capital reserve, if you will, so that when you do earn a challenge, you have a lot of goodwill to draw down on to avoid dysfunction. So, to me, there’s a lot of expertise you can bring to a board, like I’m good at finance, sales, marketing, all those things, but the underlying tissue that connects people together, can fray very quickly under duress. People aren’t their best selves in stressful situations. And so if you can not assume the worst of people have pre established relationships of trust and integrity, then when you hit those rocks, you’re flying down the river, you know, you don’t see the frame to the point where you end up with the dysfunction that you read about too often.

Jay Clouse 19:57
If you’re looking to experience It’s that vulnerability with the CEOs that companies you invest in. How much of that is something that you expect that you can cultivate over time? versus is a filter when you’re going through the diligence process?

Will Price 20:12
Yeah, great question. I assume that I can develop it. I mean, I think that there’s certainly things you’re looking for the diligence process, which are like, you know, I kind of often joke that the number one predictor of someone losing their job as a CEO is not being able to listen effectively. And people who listen well, a lot of times what ends up happening in a board dynamic is someone will, as a board member will make a comment that may not be factually accurate, either about the product and acronym they’re using, or some number they’re trying to recall. And so the CEO will focus on the the basically the inconsistency of that comment and the fact that’s not technically accurate versus the substance of the message they’re trying to convey. And so you end up seeing these board dynamics where CEOs are defensive. They’re challenging people’s comments really quickly and pointing to some specific inaccuracy in their comment rather than the substance of the message. And so what I try to tell a CEO is like, Look, you’ve got, you know, people around the board that have years of experience and their pattern matching constantly. They’re doing their best to articulate in the moment what they feel strongly about. Don’t focus on the fact that they don’t remember the name of your product, or the number or the name of the VP of Sales focus on the fact that they’re trying to tell you something meaningful. I think the best way to kind of protect the CEO from losing their job is to make sure that the board feels heard that their feedback is considered that the CEO will go early and reflect on it and not make a snap decision. They can come back later and say, Hey, I really listened to you, Eric, or Jay. And you know, I appreciate your perspective. But here’s why I think you’re wrong. But it’s the day after the week after to have that conversation. And in the moment, it can be really difficult. So I always assume that you can develop, you know, intimacy and trust. There are people that aren’t great listeners, and that could become out of insecurity or come up come out of overconfidence. But just to kind of assume that most people are well intentioned. They’re trying to do the best thing for their companies that under incredible stress and duress, and they may not always be their best selves, but you know, fundamentally they’re good people and try to get to a point where people can listen to one another without prejudging the fact that it’s an implicit criticism of their character or their quality. And everyone just wants the best. Now, every now and then you run into a bad actor. And those are difficult situations. But I’d say 99% of the time, that’s not the case. It’s just a, it’s a question of some weird toxic mix of insecurity, pressure, stress that’s making people hate behave badly. And if you can just stay in through that you can develop the trust that we’re talking about.

Eric Hornung 22:27
I want to put it to the fund when you were raising to the most recent fund. What kind of pushback if any, did you get when you said, Oh, yeah, I want to raise this fun, but I want to do it out of those men.

Will Price 22:38
So I created the first one in 2015, Montana Venture Capitals and Oxymoron, like military intelligence, you know, so the first thing you have to get to get a sense of is like, Okay, well, Who the hell is gonna be crazy enough to do this? There’s two things that I ran into that are very important to talk about. One is, is that regional venture capital has for many years been a pejorative concept. So if you say regional venture capital, you’re talking about flyover country you’re basically saying went to California and take Seattle, Washington out rent a Massachusetts out and take New York out. And if you looked at the history of the venture returns, almost all of them have come from those markets. And so you’re basically like, Wait, you’re going to be in venture capital, a long duration asset class with high volatility, and you’re going to take out the top markets and invest outside of them. Like, that’s crazy. And so one of my early bosses told me in order to broaden the appeal, you narrow the focus and narrow the focus, broaden the appeal. So you’re talking about niche marketing, you’re trying to say basically, to some people that, hey, these markets are worthy of capital. They have great entrepreneurs that secular demographics are in their favor. The people are looking to move out of major cities is all pre COVID. Place like Colorado and Utah blaze the trail for us. And so what we did we raise the first one, which was a Montana specific fund. Going back to that narrowing the focus, broaden the appeal part as I look for people that had a priori evidence that they were interested in cared about this part of the world. And so for me, that was people that were homeowners sheer ranch owners, you know, resort homeowners to serve on nonprofits. Like the Montana land reliance, the travel limited chapter of Montana, the Nature Conservancy chapter for Montana. These are people that not only are putting their time and energy in the state, but volunteering their time and energy to make the state a better place. And so then it was a question of just getting access to those people. And so for the most part, I just start cold calling board members of these nonprofits. What I found quickly was Montana is a place that in genders great love and affection and so if you go to someone and say, Hey, are you interested in a small portion of your net worth investing in the potential of this state and its future? Most of them would say, Yes, I am. And then you’ve asked them uh, do you have the time and energy to find those deals to diligence those deals to prosecute them to manage them? They’d say no, and that’s okay. For basically I’m offering you a financial product which can take a minimum of $250,000 of your net worth investing. This is a concept invest in testing, whether the thesis whether people are gonna want to live and work in Montana and build great companies. And if I could get that meeting the success rate of that that was extremely high. If I went to a foundation or an institutional investor or professional money manager, and I said, Hey, do you want to invest in Montana? They probably won’t let me get past that first comment before they just hang up or say no. And the second fund was a continuation of the first fund. So the first one was 21 million, we raised that in 2015, raised 38 million in 2017. We’re currently raising our third fund, which I’m not allowed to talk about based on sec rules that this fund is going to be a pan rockies fund. So we’ve essentially the strategy that I’ve kind of come to realize is that venture capitalists will invest anywhere in the country today. And that’s new. I mean, Don Valentine used to say I want to invest outside of my area code. So now, there’s a lot of capital, they’re looking for businesses across the country that willing to go on airplanes to do so. But what we’ve discovered is as a binary line below which there’s no interest and above, which have this lot of interest, and that’s somewhere between $1 to $3 million of trailing AR. And what why that’s the case is that when you evaluate a business, let’s say it’s 1000 miles from your office, you want to normalize your evaluation and the risk, evaluate them based on a set of consistent metrics that you can compare Company A to Company B. And those metrics tend to be in SAS, for example, like LTV to CAC, and churn ratio and, and things like that sales rep performance. Well, in order to generate those metrics, you know, your real business at that point, you’re not a startup, you’re not a concept. And so you probably have, like I said, one to 3 million of trailing revenue, and you’ve probably raised 3 to 5 million to get there. That is our opportunity. Because what that means is that below that 1, 2, 3 million, let’s say your company doing $50,000 a month, there is a null set of national investors that want to invest in you. And so that’s pressure for that entrepreneur as well. How are you gonna raise that 1 to 4 million to then get to the point where you have metrics, they’ll become financeable on a national scale. And so we look for companies that aren’t Angel companies like whether they have a concept. They’re in market, they have some product, they’re, you know, 10,000 a month in revenue of 75,000 a month in revenue. They’re just not yet ready for the big time. But they still have a really cool business that’s that’s doing that has proven itself and they need to raise That money to get to the series I so in some ways think of us as like completion capital sitting a little bit to the right on a timescale of seed and the early Angel, but before the series A and it just turns out there’s a lot of companies that fit that description. And the second thing about it, I would say is that series A’s today are not like series A’s of the past and specifically in the size of the series A their $8 to $12 million financings and the fact that most venture firms now don’t syndicate anymore, so they want to take the whole thing. So it’s a zero sum business either win the deal, or you lose the deal at where we play in that wonderful million dollars of capital. None of the seed funds are really big enough to want to take that whole thing down. And so there’s a lot more likelihood that they’ll be syndication available. So you don’t have to be the winner, if you will, you can be a co investor and complete the round. We’ve done a lot of work, for example, at matchstick ventures and in Boulder, that’s a $25 million fund in Boulder, Minneapolis. A lot of these funds are in that $25 to $30 to $10 to $15 million level and they want to write $500,000 or $700,000 checks if you’re raising $1-$4 million round, there’s a lot to go around. So we’ve kind of found a place in the market where we’re below the national competition, or within a regional center syndicates that are more likely to share versus pig out and try to take the whole thing. And so we try to position ourselves as just a partner of choice for both either the the entrepreneur who’s looking for a lead, but almost more importantly for the syndicate that’s going to come together where they know that we can be good citizens and help them complete the financing. And that’s been a very effective market position for us.

Eric Hornung 28:27
Talk to me about this trend of most venture capital firms don’t syndicate anymore.

Will Price 28:33
If you look at series A’s today, he used to be when I see on the business, he was like two handed deals always was like you’d be the lead, you’d sign it up and then you would work really hard to get the second lead, and that that’d be equal each end up with like 20% of the company. So it was like 40% of the company’s being sold in the series A and it was a and then you’d have a board typically have both people we got a board seat. Well, a couple things have happened, I think is you know, entrepreneurs have gotten wise to that dilution game. They’re like why am I selling 40% my company at the series A, and I’d rather sell 20% of my company, or 25% of the company, and then to the funds have gotten so large now that in order to meet their deployment goals, you know, the reason that used to syndicate in the past was, you want to de risk the investment, you want to have a partner things went wrong, and you wanted a brand on the shoulders, if you will, to carry that you know, yoke over your back. But when you $100 million fund that’s really more importantly of an $8 million fund that’s less important. And so whether it’s deployment goals, ownership goals, putting the the entrepreneur focusing on dilution, the market, or starting around, I’d say like 2008, 2007, 08′ started really changing where the series A’s were no longer syndicated in the first room. I think many cases they’re always a first with Sequoia, I started seeing them do that, where they’re like, Well, why do we have a partner? You know, we don’t need a partner like we we have our own judgment. We’ve looked at lots of deals, we don’t need someone to validate our work. Second thing is we got big enough funds now to take it all. And if if there’s only 25% available in this round, let’s get all of it. Like why share it. And so I think as the industry is growing, there’s less pressure to make sure you have a syndicate partner to help both. But you know, basically credit your work. Yeah, did you do a good job and diligence that I can subscribe to your investment thesis, to have your capital to help make sure you can complete the financing and then be there and things in case things go wrong? All three of those are no longer operative concerns of venture capitalists. And now they’re like, hey, if there’s a $12 million, let’s just do it. Let’s do it ourselves. Why would we let someone else and maybe they’d be like a little bit allocation to an entrepreneur, you know if we can help them or but there’s no longer this kind of two handed deal mentality of most series A’s.

Eric Hornung 30:29
You mentioned that the first fund was Montana only. How long did it take you to get through and meet or identify every potential startup in Montana? Did you make it through that before new ones were being started or like, one thing I think about is like the limited deal flow in Montana, if you reviewed a couple hundred deals in a year, where that still walked me through that.

Will Price 30:52
You make a very good point there. There’s the kind of installed base of companies that timezero already exist and that you know, there’s a lot more of those right and then there’s like the organic rate of new companies being created every year. So we the first one had the benefit of basically being able to turn over every rock and find out everyone was out there. And typically when in Montana, what had happened was people that either they couldn’t raise venture money, so they either bootstrapped, which you know, is great, or they take an SBR and STTR loans from the SBA and become quasi government contractors that kind of pursued this random walk of research availability of money. And the problem with that strategy is that there’s the more that you become a SBA, SBA funded company, the more likely you are to just chase research for the government, you never develop a customer centric approach or develop product, if you will, your product is research. And so those companies were difficult to finance because they’ve never developed the DNA to serve customers meet their needs and be product oriented. But there’s a bunch of companies that are bootstrapped and so we were able to kind of meet those companies, and we’re able to, we’ve put nine Montana companies in fund one, we have one other one outside of Montana, in the second and third fund, we think there’s probably two to three companies, new companies a year that are being created that are eligible for financing. And so that’s kind of the absolute sense of, of where we think the market is. And you’re absolutely right. It’s a small market. And that’s kind of those two things have kind of led us into Colorado and Utah. One is the fact as I said earlier, that we believe there’s this kind of Nash that whether it’s Chattanooga, Tennessee, or mass, Wisconsin, there’s this reality that these companies that are sub 2 million and trailing revenue, have this challenge. And there’s an opportunity there, we pick the Rockies as our way of expanding our strategy because we think we can compete effectively in for more states, of course, increases deal flow that’s available, but also creates these kind of bilateral syndicate relationships that’ll that allow us to cobble together financing like we’ll do a deal in Utah, they’ll help finance a deal here or both to work on one in Colorado. But I think what what ends up happening that the net result of your very excellent question is the fun sizes have to be of a size that’s appropriate for that native rate of new company formation. And so this will never be a $200 million fund. You know, it just at some point, there’s only this it’s like a sponge that’s fully absorbed of water, you can’t put more water into it. And that’s kind of the way I think you’ve designed these funds is, what’s the responsible, appropriate size of the fun that is appropriate for the strategy you’re trying to pursue? You know, we think it’s in the 10s of millions that that possible not to hundreds of millions and so it’s a niche strategy, but that’s okay for me. I enjoy that.

Jay Clouse 33:22
Here in Columbus drive capital, which got started similar time as fund one of Next Frontier Capital. They’ve moved a bunch of companies into Columbus and invested in them without moving here. Have you moved companies into Bozeman or Missoula?

Will Price 33:38
Yes, we just Twin Threads is a recent example. They’re moving to Bozeman, the summer there. There’s a predictive IOT company. What’s really changed, I think, and I don’t know what the implications of this is COVID you know, like I just had this morning with a Wilson Sonsini partner this living in Bozeman right now, while you know they see through COVID last week I went mountain bike riding with a guy works for Apple self driving car unit. His wife works for Airbnb.

Eric Hornung 33:59
John Mayer, John Mayer just moved out there so.

Will Price 34:01
John Mayer, in fact I saw last summer I was walking to the Livingston I saw a guy smoking on the street. I’m like, Oh, that’s interesting. Guy smoking. And he had like little European man purse on and I was like, that’s interesting. And I was like, Oh, it’s Dave Chappelle. You know, Dave Chappelle was walking to and then I was like and there’s a homeless guy walking with the Dave Chappelle a nice job. And as I said to someone who is that they should probably like, yeah, that’s john mayer like, Oh, yeah, john mayer, he gets every now they get seen, but it was fun to see those two guys. But my point being is that I think the rules are being rewritten right now, which is that you know, you know, you take a company like Apple that was always a got to be in the office now working from home, we’re now distributed company. And if you guys remember Miss Marissa Mayer, when she took over Yahoo, kind of ended the work from home thing and made everyone come back to the headquarters. But now when Zuckerberg says, Hey, you know, 75% of Facebook employees are asking to move, you know, Twitter square stripe, are all saying we’re going to move to a distributed organization and Shopify is ready distributed. I think what’s going to be fascinating to see what happens next is a lot people are waking up. We’re probably great entrepreneurs. We’re like either A, let’s put some people in Bozeman. Or maybe our one of our co founders will be in Bozeman, and Missoula or Boulder, or let’s put our company there. And so to me that I think that’s that. I don’t even know what’s gonna happen with that. But I think we’ve kind of gone from like, gee, that’s an Achilles heel to being a backwater to people now in COVID going well, maybe that’s where I want to be, too. And I’m not sure if they’re, you know, a lot of people were questioning I think the value proposition of, of extreme urban environments, whether it’s taxes, commuting, being a real estate costs, the fight for labor that leads to bidding of salaries, and those are always been traditional knocks against urban environments, but it’s always been, yeah, but there’s such a network effect here that overcomes any of those costs. The pros still outweigh the cons. I think that there’s a reassessment of pros and cons now where, you know, the con list is getting a little bit longer. So long story short, your question like yes, we have more people here pre COVID, but I think post COVID we’re going to see a much more fluid concept of what a company is that you know, no headquarters multiple polls if you will, like multipolar companies where they’re spread out everywhere. I think that company markets like ours will be great beneficiaries of it. And I don’t even mind if they’re not entrepreneurs day zero when they come here, but if these got, you know, great tech 100 executives move here, and they’re still working for their company at that gives us more fuel to hire them for our businesses or to you know, they may be the kind of people that have been here a year or two. So you know, what, you know, stripe just went public, I’m rich now, I’m gonna do my own thing be either be an angel investor or start a company. So I think that you know, not not that I wish Covid on anybody, it will be a catalyst for change for the acceptance in corporate America, S startup America or conventional America to say when you say I live in work in Bozeman, Montana stead of people going you’re a nutcase. Like why do you do that? They’re gonna go, I wish I could live in Montana, and that felt like a really good idea. And that’s happened like, like, I’m moving we’re moving here. People I call it to death, your career, like Do they have shops in Montana? Like, is there an airport there? You know, to know people are like, wow, yeah, that was that was a prescient move. And we may not be too far behind you.

Eric Hornung 37:05
If one of your companies came to you and said, Yes, we’re headquartered in Bozeman, but we’re gonna do a distributed strategy. How do you think about that, from a advice perspective? Given your answer earlier about building up social capital by meeting in person?

Will Price 37:19
I’ll give you two examples. One, we’re doing a CEO search recently, and I met a guy on zoom. And I was thinking myself, wow, this guy, I don’t know, you know, I just can’t tell if it’s a good fit. Like it really didn’t get a sense of who he was on the phone. It was all stilted stiff, and then I met with him in person, I it was a wonderful person to meet in person. So I, the takeaway there for me with like, you know, zoom meetings are awesome. If you know somebody, I’m sure you, you and Jay know each other really well. And, you know, getting a zoom call is not that difficult for you. But when you’re trying to build that relationship to your point, Eric, you know, I think zoom doesn’t not create the intimacy that fills up the social capital tank. I think you still have to find ways to meet in person. I think that’s going to be a challenge. I think what I’ve seen is a is act a little more, I don’t have a data on this. A lot of companies that are not renewing their real estate leases. Let’s say they have 10,000 square feet, now they’re going to go to 2000 square feet, you have a series of conference rooms for people to be able to meet and go through product plans or planning sessions, but then have a distributed be a distributed company, obviously, COVID, you know, certain states is kind of mandating that here in Montana, we’re open again. But even there, people are still thinking that maybe I don’t need an office the way we traditionally thought of an office where everyone has a desk, you know, the concept of hotelling and sharing office spaces around for a while, but I do think it’s gonna become a reality. My view is, I think it’s one thing to be fully distributed. Like, I think someone said this the other day, if you’re all zoom tile, you know, it’s different than you being the single same tile and everyone else being around an office table. When you’re the you know, kind of stranger, if you will, outside of the org. I think companies that are go distributed, have to really invest hard and making remote workers not feel like second class citizens. What’s happened over the last three months is that we’ve all been remote and we’ve all realized like, Okay, this does work, especially where you have pre existing relationships. If we can be productive and effective, and I think there’ll be a greater mindfulness of, of human, if we go back to some people being the office on appeal being remote, like, what were the things we’ve done, for example, our partner meeting, if we’re all going to do it on zoom, even though some of us are in the office, we all take it from our individual offices. So we’re all zoom tiles, you know, versus like, you know, three of us around the table and other people off because it just if you’re on the same page, it doesn’t feel weird. But if you’re the odd man out, being like, Hey, I can’t really hear you guys, can you get close to the mic? Whatever the conference called drama is. So I think we’re about to go in uncharted territory. But I really feel like for us, it’s going to be a catalyst to our business because whether it’s Utah, Colorado, Idaho, Montana, Wyoming, we know we continue to see massive interest in people relocating, and it’s fuel for talent for companies and also hopefully be fuel for new ideas I get that get created.

Jay Clouse 39:51
With the oxymoron of regional venture capital still being a fairly new experiment, if this really does catalyze much more distributed teams, and your mandate to LPs is to invest in Montana. Does this broaden the scope of who you can invest in? Does this make that more difficult? Like what does that mean for the regional venture capital thesis?

Will Price 40:14
Yeah, I mean, for us, I think it makes it easier. I mean, like, let’s say, for example, we have, like, for me, the company has to be, you know, headquartered in Montana, or, you know, they need to have people on the ground, this needs to be like, it’s out there. If there’s a nexus of people that are here, I think it increases the pie of companies that are eligible, of course, because they’ve got key employees here or in our region. So I think honestly, like, I would say, from a startup perspective and a funding perspective, like it’s going to create a lot of opportunity, where the real challenge for someone like us is is like, LPs, big LPs, endowments foundations, as a rule, want to make $25 to $100 million LP commitments. And the reason for that is the work they do for $5 million commitments, the same work they do for $75 million commitment, and the overhead of all these managers becomes difficult. So the trend Venture Capital right now is reduced the number of managers that you’re working with increase your allocation to those managers. And that’s leading to bigger and bigger funds, because fewer LPs want to give fewer people more money. They all recognize that emerging managers historically have outperformed the venture index that are recognizing to some degree that there are these regional economies that are emerging that like, like you said, Utah that may be worthy of more capital and they’re receiving but what’s broken in the industry is that they don’t have a product to allocate capital there. And historic historically fund, the funds have played that role. Like they’ll take $100 million from a big LP and then split it up into you know, $25 million allocations. But even the fund of funds now don’t really have an emerging manager practice in the regional venture capital space. So the biggest challenge for someone like myself is that how do you raise money? Historically, most venture funds are funded by endowments, foundations, pension funds, etc. Those pension funds have gotten larger and larger, their minimum LP commitments are creeping up and typically they don’t want to be more than 10% of the fund. So the math pretty simple. If your minimum LP commitments, 50 million and you want to be 10% of the fund. It’s a $5 million fund. We’re trying to raise, you know, 10s of millions of dollars. And so it really creates a terrible AMEC where, for me, I feel really fundamentally like you guys like capital has been exclusive. It’s been exclusive to a few numbers of states, it has not been evenly distributed to opportunity. And it’s created this bifurcation, our country where there’s certain economies that feel like they have, they’re tied to the economic engine of innovation of wealth creation and other parts of our country that feel adrift from that and resentful, frankly, of that. And you seeing in the Rust Belt you’re seeing in the southeast, you’re seeing in the Midwest, you’re seeing it in the Rocky Mountains, I do think there’s been some fundamental societal implications of that, which is like, if you’re a software developer in the coast, you know, you’re making hundreds of thousands of dollars if you know, if you’re living in, you know, Columbus or Bozeman, it’s not as easy to tap into that wealth machine. And I think there are political implications for that. I think there’s income inequality implications for that there. There are a lot of other things that come out of it. So for me fundamentally, I believe that capital should be more evenly distributed and you what are the capitals pulled right now, there’s not an efficient way to allocate capital and smaller chunks to the markets and the managers that are going to drive returns in the future and create a more evenly distributed set of prosperity in our country. And it’s very frustrating because everyone says they want to support diversity, geographic diversity is important, as well as you know, other types of diversity. And yet, there’s no i don’t think LP commitment to do that, that I can see or discern any meaningful way to find ways to allocate emerging managers, whether they’re, you know, of people of color working in remote regions. And so I think the big challenge for the LP community is that the way it’s set up right now that it’s a winners game, the bigger funds are getting bigger and bigger allocations are growing larger and larger. And that’s obviously, you know, evidently true. And yet, there’s a lot of people in the country that are left behind because of their emphasis on writing bigger checks when the market notes, some of these funds, maybe 10 million, maybe 20 million, maybe 30 million, and so the answer there historically has been you find high net worth people, family offices that are willing to support these emerging managers and write smaller checks to create these funds. But I do think ultimately, the kind of economic potential of our country is limited by the fact that institutional LPs don’t have a meaningful way to allocate to these regional entrepreneurs. And because that that of dislocation or the lack of ability to do so I think we’re leaving a lot of money on the table and leaving a lot of companies underfunded or entrepreneurs undiscovered. And so I’m really would love to see a product emerge where there are more fund to funds that are tied to that regional thesis. I think, for example, if you came up with products that want to raise $200 million, I want to put no 20 $10 million and 20 funds, the best fund in Columbus, you know, the best fund in Chattanooga, the best fund in Madison, the best fund in Phoenix. I think that’d be a great product. I’m gonna be a lot of family offices and institutions that would want that because it solves that translation exercise for them. They can still write a large check, but then they don’t have to deal with the underlying small checks that have to be allocated out. So to me The regional venture thesis is a great one. But yet there’s not an institutional way for them to participate in a meaningful way, which I think is disappointing.

Eric Hornung 45:07
You have this concept of VCs as either asset pickers or asset managers. Can you explain what that is and describe where Next Frontier sits on that scale?

Will Price 45:22
I think the simple way to think about would just be like this value at create at the moment of investment, and your ability to to successfully pick the greatest possible investment based on the merits of the time, or can you make almost investment in put largely in anything and then steward and nurture it to a great outcome? You know, I think that I think the answer is it’s a complicated one, of course, but I think it’s really hard to pick bad markets and make good outcomes. And so I think if you you know, if you’re in a good market, you may not pick the right instance of an idea but you know, you can evolve over time to something meaningful, like what are some bad markets like, you know, furiously ad texting are very very difficult market to make money. We have basically two monopolies that control the economy rabbit advertising with Amazon still entering the market. And so like if you look at the net dollars available of growth, I think like 90% of go to Facebook and Google, right. So that’s a bad market. So you could pick the best team possible and they’re just in a tough market. You know, you think about markets that are much more open, less controlled by an incumbent that are growing quickly. I think SAS vertical fast is a great example of that, where it just is there’s a massive adoption of these technologies. There’s a lot of workflow products for verticals where Salesforce doesn’t really care about necessarily but you know, people are moved from client server to SAS. And so to me, I you know, Warren Buffett says the market bath last and one things I really come to learn is that the margin for error in a high growth market with a lack of income and control and relatively few gatekeepers to the consumer can lead to great outcomes and you could miss pick the idea but you can recover because the market is great. But if and so I kind of add a third lens, I guess, to your question and just say, to me, it’s all about the market dynamics and the ability for new companies to emerge successfully in those markets. And then you can course correct within them because the markets are growing so quickly. In a shrinking market, you know, the best team is still bailing water will probably sink.

Jay Clouse 47:19
Well, this has been awesome. Well, if people want to learn more about you, or the work that you’re doing at Next Frontier Capital, where should they go after the show?

Will Price 47:26
Well, we have a website nextfrontier.com, my email is will@nextfrontiercapital.com. That’s certainly welcome. any follow up on Twitter at price W, and I’m a big champion of regional venture capital on the ABC board right now. And I spent a lot of time and energy trying to make sure that regional markets are represented by the institutions and the organizations that make this industry a great one. I think that we’re in the early innings of of greater acceptance of our importance, because I do think we’ll be financing some of the great companies tomorrow and helping these economies and these in these cities and towns. retap into the wealth creation that’s been really limited to the coasts and and hopefully shrinking income inequality in our country and while doing so.

Jay Clouse 48:10
Hey listener, have you ever wanted to get a message in front of the upside audience but weren’t sure how to sponsor the show or weren’t able to do a long term sponsorship? Well, now you can just go to upside.fm, slash classifieds. And let our audience know anything that’s going on in your world, whether it’s an event, an application, a special coupon, or deal, or just letting them know who you are, what your company does. All you have to do is go to upside.fm/classifieds. And you can place an ad on this show. That’s upside.fm/classifieds.

Eric Hornung 48:49
Alright, Jay, we just spoke with will from next frontier capital. Did you feel the Montana vibes?

Jay Clouse 48:57
What are Montana vibes? What would that feel like?

Eric Hornung 49:00
Big, big spacious, spacious, relaxed, like it takes a long time to get from one vibe to the next.

Jay Clouse 49:08
I felt very calm through the interview which I would credit to Will’s demeanor and if that is a Montana vibe then I felt it.

Eric Hornung 49:15
Alright cool.

Jay Clouse 49:16
Well then this interview did its job before we talk about will and next frontier capital. Gotta let the listeners know that before we started recording this segment Eric’s back talking about dyeing his hair blonde.

Eric Hornung 49:28
I am. Yeah. Okay. Let’s not take away from Will here. Yes, I’m talking about dyeing my hair blonde. If you think it’s a good idea, send me a tweet @ekhornung if you think it’s a bad idea, send Jay a tweet @JayClouse. I don’t want that negative energy.

Jay Clouse 49:37
I want you to tweet at me if you think it’s a way to say everything. It’s a good idea to tweet @JayClouse.

Eric Hornung 49:46
No bad idea @JayClouse. Good idea. @Ekhornung.

Jay Clouse 49:49
All right. All right. All right.

Eric Hornung 49:50
Tag upside in both.

Jay Clouse 49:51
Alright. Alright. So Will, his story which I didn’t expect began in Germany.

Eric Hornung 49:57
Yeah, people have stories of getting different countries.

Jay Clouse 50:00
Lived all over the world, Germany, Ireland, Nigeria, Taiwan, Hong Kong, London, went to the Kellogg business school and spent 15 years then in the Bay Area working in tech. That is a winding road to land in the valley and spend quite a bit of time in the valley. But after a midlife crisis realized that wasn’t where he wanted to be, and moved to Montana to start next frontier capital. Eric, that happened about the same time. You know, you mentioned the intro reminds you a little bit of Greg Robinson happened about the same time that we saw some of these Valley investors move to different areas of the country, including Greg Robinson, in Wisconsin, and the team at drive capital moving to Ohio, all that seem to be happening kind of concurrently, a small cohort of investors that most of their peers thought they’re crazy.

Eric Hornung 50:48
And I guess that thesis is still to be played out. They probably look a lot smarter here in 2020 than they did in 2015. But you wonder how much is the chicken before the egg is that the phrase egg before the chicken.

Jay Clouse 51:00

Eric Hornung 51:01
I forget the phrase, like, Is it because they move there that those regions are now better? Or is it because those regions were getting better? That when they move there now it looks better? You know, it’s like, were they the catalyst? Or were they the benefactor?

Jay Clouse 51:09
What do you think about these very specific regionally focused funds? Eric.

Eric Hornung 51:19
I think that they will have their place for the next decade or so the next few kind of turns of new fund creation. My specific take is that eventually, it will be harder to compete on just geography unless you really niche down. But to have to own all of Montana probably isn’t as possible five years from now, as it was five years ago.

Jay Clouse 51:48
Yeah, I agree. Because, as we’re seeing right now, in the midst of a pandemic, the world is becoming just more remote distributed, location independent. And so you know what I think the key insight here was from well was, that was a compelling pitch to get people to invest in this fund in that region, because, of course, we want to help the prosperity of our region. That makes a lot of sense to me. And if that’s the way that these funds get started, and that’s the way that people start opening their checkbooks and funding startup companies. I love that. But I agree that long term, it feels like it’s a tough position to defend. And honestly, it just feels like you brought up the question of deal flow. For a regional fund, it seems like you’re going to see most or all of those companies very quickly.

Eric Hornung 52:36
Yeah. And it comes down to how many new companies can be created in that region. I mean, right now, we’re looking at launching a network of podcasts for upside, and you have to have deal flow for the podcast as well. So when we look at Cleveland, can that support 52 episodes per year? That’s a question we have to answer. It’s the same question that a venture capitalist has to answer except with a venture Plus, if they look at 52 companies in a year, they’re only maybe investing in one of those maybe two. So it’s a little easier for a podcast, but it’s still the same thing as what is the what is the total number of things that I can look at. And if I run through those too quickly, and there’s not new ones being created, what happens to my thesis? One of the questions that I want to get your take on here, Jay, cuz I have an opinion, but I don’t actually know your opinion on this. We talked about the long time debate in venture capital that board members should or should not or need or needed, not needed as a fun word needed.

Jay Clouse 53:38
Not needed is actually a contraction of need. Not so you’re saying need it need not not?

Eric Hornung 53:43
I am Yeah, I’m double negative thing with a bunch of alliteration. Very fun. Look, linguistics on the podcast. Anyway, the operator versus non operator VC debate. Where do you stand on this?

Jay Clouse 53:57
Well, I’m an operator. So I’m biased Towards operators. However, I think that most companies, pretty much all startup companies are doing something very novel, or they wouldn’t be a startup company. And so the danger that I think an operator like me would have on a board is what you don’t want on your board is someone who is overconfident that they know the answers because they’ve seen something like it in the past in a novel situation. And so for an operator on the board, you would want that person to Sure, I think, have some experience, close to the problem. I think that’s valuable. But you also need them to be humble enough to recognize how that experience may not perfectly map to what you’re doing, and not be prescriptive in their advice. So if you had a balanced, humble operator, former operator on your board, I think that’s ideal, because they can have some real experience to relate to it. But because it is new, I think they have to realize that that may not actually be totally valid here and we’re going to trust you found To figure out what to do with this data or giving you and make the best decision you can for your business.

Eric Hornung 55:05
I’ve been thinking about this a lot lately, and I’ve kind of developed this little theory in my head that investors who are also operators tend to be good enough, most of the time, like 90% of investors who are also operators and have operating experience, you know, they they’re going to be, if you rated every investor in the world from 99th percentile to zero percentile, operating investors are going to tend to cluster in that 40 to 80 range, like just naturally because they have that operating experience. And I think purely financial investors, ones who don’t have operating experience, they don’t have like that natural foundation to where they can step in and just be good originally, but they do have a competitive edge in their ability to focus on investment returns. So they can be either the best in the world or value diluted by being involved. So There’s more volatility with a financial investor versus a operating investor is my new theory. That’s what I’m thinking about right now.

Jay Clouse 56:06
I also think a potential risk of an operator on your board is that they might get too concerned with the details. You and I see this in our dynamic all the time where you have an idea, and it’s a great idea. And it makes a lot of sense. And I’m just like thinking through step by step what’s going to take to make that real and I get too sidetracked with Well, that sounds like a bunch of work. And on your board, you don’t necessarily want somebody who’s getting really caught up in the details, and especially how you are going to walk through the execution of something you want someone to buy into the vision helps set the vision and help clear the course. But again, if that operator is humble enough to recognize that and not do that,

Eric Hornung 56:45
I think that’s great. I like the concept from next frontier, that they are market pickers. I like when venture capitalists lay out very explicitly what matters most to them. You know, there’s the old dynamic of team product or market and a lot People will go team first. Some people, especially in the high, our r&d areas will go product first, and like progress first. And then we’ve heard now from Dr. capital and next frontier that they are market first, they lead with making sure the market is big enough, making sure they are, it’s hard to pick bad markets and make good customers was a quote that he said, I like that or make good outcomes. So I like that. There’s some transparency around market comes first here.

Jay Clouse 57:32
I also liked his perspective on vulnerability with founders, to their investors and his confidence that you can cultivate that relationship with a founder over time, which supports that market picking stance. You know, he’s saying we pick markets we think we can develop strong relationships with and help guide our founders got to.

Eric Hornung 57:51
Yeah, it all seem like a fairly cohesive string of logic there. I just enjoyed this interview in general and the best part about this interview j Was that after the interview? We got promised that if we go make it out to Montana, we get to go fly fishing. He’s gonna take us fly fishing.

Jay Clouse 58:07
There we go and a little public accountability here on the pod loving cash those chips in my friend. We’d love to hear your thoughts on this episode. please tweet at us @upsideFM or email us hello@upside.fm. We are now Bozeman, and if there are companies in Bozeman that we should talk to either Bozeman or Bozewomen. Please let us know. You can tweet at us @UpsideFM or email us hello@upside.fm. We’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at hello@upside.fm or find us on Twitter @UpsideFM. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. That goes a long way in helping us spread the word And continue to help bring high quality guests to the show. Eric and I decided there were a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding parties of the upside podcast. At the time of this recording, we do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duffin Phelps LLC and its affiliates on your collective LLC and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening and we’ll talk to you next week.

Interview begins: 6:36
Debrief: 48:89

Today we’re talking with Will Price the Founder and General Partner of Next Frontier Capital.

Will founded Next Frontier Capital to partner with mission-driven, talented entrepreneurs to build Montana technology companies of impact, utility, value. Will’s career spans venture capital investing as well as operational, transactional, and advisory roles at both public and private companies.

They focus on leading seed to early-stage Series A financings in the Rocky Mountains, with a preference to invest in rounds of $2-4m.

With a Montana family history dating to the 1850s, Will is passionate about investing in the state’s promising future.

Key points:

  • Getting into tech – 8:29
  • Venture side versus Operating side – 9:47
  • Importance of intimacy – 16:54
  • Taking risks for fund – 22:27
  • VC’s not syndicating anymore – 28:27
  • Regional Venture Capital – 39:50

Learn more about Next Frontier Capital: https://www.nextfrontiercapital.com/

Follow Will Price: https://www.linkedin.com/in/pricew/


This episode of upside is sponsored by Ethos Wealth Management. Managing wealth with an eye toward the future demands vigilance and skill in today’s global economy. Over the years, Ethos Wealth Management has worked with clients and their other professional advisors – including attorneys and accountants – to create comprehensive wealth management plans designed to make the best use of their wealth today and help ensure its endurance for future generations.

They can do the same for you.

Visit upside.fm/ethos to learn more.

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