161: Venture Capital vs. Private Equity: What’s Right for Your Business? w/ Chris Van Dusen – 8FE

Are you ready to take your business to 8-figures and beyond? 

In this episode of Beyond A Million, Brad sits down with Chris Van Dusen to explore the best strategies for funding your business, standing out in saturated markets, building mission-driven teams, and testing your way to exponential growth. 

Chris, who is currently a Senior Partner at Solyco Capital, is a marketing and growth professional with extensive early-stage and capitalization experience. He has built multiple successful businesses, navigated highly regulated industries, and led a company to a $75 million exit.

Whether you’re looking for ways to fund your existing business or expert insights to get you started on your entrepreneurial journey, this episode is for you. 

Tune in!

Inspiring Quotes

• “The moment you take other people’s money, it changes the trajectory of your business.” – Chris Van Dusen
• “The outcomes you desire are a function of the incentives you outlay. If you want certain outcomes, incentivize for those outcomes.” – Chris Van Dusen
• “If you can’t explain your belief, it’s probably not your belief.” – Brad Weimert 
• “Just do it. You don’t need to have an old-school business plan written out. Just understand what you’re trying to do and the costs involved to get it off the ground.” – Chris Van Dusen
• “If you’re going to take other people’s money, the goal should be to generate a return for both them and yourself, which means you really have to have a solid plan for how you’re going to scale that business.” – Chris Van Dusen

• 00:00:00 Intro 
• 00:01:06 Scaling without external capital 
• 00:03:30 Digital marketing, CRO, and SEO 
• 00:07:11 Differentiation in saturated industries 
• 00:21:47 Marketing techniques and testing culture 
• 00:45:44 Regulatory challenges in the liquor business
• 00:51:12 California fires and government inefficiency 
• 00:56:56 Incentives and motivation in business 
• 01:04:46 Venture capital vs. private equity 
• 01:22:17 Venture capital incentives and fund performance 
• 01:32:22 Advice for entrepreneurs looking to raise money
• 01:40:50 Advice for aspiring entrepreneurs 
• 01:42:34 Best resources for entrepreneurs 
• 01:46:25 Outro

Chris Van Dusen 0:00
We have romanticized the idea of being an entrepreneur. If you as an entrepreneur want to go try something and even fail fast, you put your money, your time, your energy, your opportunity cost against this the minute you take money, it’s for a fully different conversation around the trajectory of your business.

Brad Weimert 0:19
Congrats on getting beyond a million. What got you here won’t always get you there. This is a podcast for entrepreneurs who want to reach beyond their seven figure business and scale to eight, nine and even 10 figures. I’m Brad weimert, and as the founder of easy pay direct I have had the privilege to work with more than 30,000 businesses, allowing me to see the data behind what some of the most successful companies on the planet are doing differently. Join me each week as I dig in with experts in sales, marketing, operations, technology and wealth building, and you’ll learn some of the specific tools, tactics and strategies that are working today in those multi million, eight, nine and 10 figure businesses, life can get exciting beyond a million. Chris Van Dusen, thank you for showing up, man. I appreciate you coming to Austin. Welcome. Thank you very much for having me. This is amazing. Yeah, definitely. So you have an interesting path that led you to private equity, venture capital, college, athlete, economics major, which brought you to sales, for some reason, I’m not sure, which quickly led to a marketing agency, CMO, for a CBD company that exited at 75 million meanwhile, launching a distillery in the OC back to marketing into venture capital. Yes, so I’ve got 1000 questions for you. The first is with your marketing agency. Do you wish you had brought on capital when you started it as the first business you’ve had no

Chris Van Dusen 1:43
that’s the quick answer. And the reason being is you got to ask yourself, what kind of capital comes into a service based marketing agency like that? In my opinion, if you look at established companies, the way they really grow in the marketing space, or any kind of really service based business, is not taking on capital. It’s slowly rolling up competitors around the same size or maybe a little smaller to add that extra ARR or MRR to your business, if you think about multiples, right? And that’s the business we wrote on. Is business does X amount of revenue, X amount of EBITDA or profit dollars, they have a value, and they’re probably value associated with that, right, as a company, whether or not you’re a new marketing firm or established traditionally, those service based businesses don’t trade on a really good multiple, right, maybe one and a half to three times. EBITDA, so what I mean by that is, let’s say you have a million dollar business right? A year that is doing $200,000 in free cash flow, profit, after salaries and expenses and all that. Maybe you’re getting 250 300 to $600,000 value for that company, which means any kind of capital I needed to scale the business, I’m giving away so much of it to do, right? And so versus, for example, if you roll up, you’re saying one to three on EBITDA at that size, I thought if you move from a million to 10 million, and that ten million company might get five to seven times EBITDA, maybe, or maybe a little bit more, maybe a little bit more. But at scale, the multiples increase correct at scale, the multiples will increase, but at that early stage, you’re not going to see the type of multiples you want. Yeah, therefore that’s really expensive capital. And so the way we set out with the marketing agency was, you know, I had been director of digital at an agency in in California, and saw this interesting opportunity between creative and at the time, this idea of growth hacking wasn’t there yet, right? I take no credit for that. It was just the idea of, instead of focusing on the real and the bait, meaning the acquisition of a customer right through paid means it was to look at the net, right? The idea of, if you get 1000 people to come to the site. There’s an organic conversion rate, right? X amount of people will physically follow through and buy your service, your product, whatever it may be. Well, if we can continue to make small iterative changes to that net, that page, that landing page, or that website, over time, if I can bring it from, call it a 2% conversion rate to three, I’ve added 50% to your business, and you haven’t had to spend more money on what I joke as the heroin drip of media. And if you really think about changes at meta changes in Google’s algorithm, which happens a lot, you can watch them pulse up and down how much reach and how much value you get on your return on ad spend. And so that is a really tough thing to continue to optimize on a return on ad spend perspective, not saying it’s impossible, many agencies do it, and we did as well. We just took the extra step to really focus on that net side, the conversion rate optimization side, that really wasn’t being done in 2015 at the scale it is now. And certainly, as you know, I. A really big backbone piece of what is a digital strategy?

Brad Weimert 5:03
Yeah. I mean, today, you know, 10 years later, the amount of content that’s being produced is out of fucking control, I mean, and truly it’s out of control, and people are putting out the dumbest shit ever, and it gets it clicks, it gets views, and all of that increases the net if done well. So a lot of people are investing in that today, when they probably weren’t 10 years ago, at least not the same way 100% one

Chris Van Dusen 5:24
of our businesses, you know, and I’ve got to tip my hat off to the CEO at the time. We started around the same time at the CBD company. But His strategy was SEO based, right? And, you know, that’s a four letter word in marketing depending on on who you are, right? Yeah. And, but his his thesis was, you know, we are xed out of meta, we are X out of Google, X out of a lot of advertising channels, because it was still regulated in the same way cannabis

Brad Weimert 5:52
is. But SEO wasn’t you drove growth as the CMO for what ended up being the second largest CBD company in the country at the time, as mentioned, $75 million exit. I have a bunch of questions on that. The first is, Is there good CBD and bad CBD? Uh,

Chris Van Dusen 6:07
I’d say the quick answer is yes. But at the end of the day, when you’re dealing with extracting CBD, right from industrial hemp, which is really where we played, once that is extracted, it is a commodity. CBD is CBD. Now you can get into whether or not it’s full spectrum, broad spectrum, isolate, and whether or not you know the entourage effect with all the other cannabinoids is better than just the isolate, but it still has point 3% THC. So you risk, if you’re in a regulated job, having some amount of THC in your system. So that’s why isolate is a great way to go. So like good cancer is CBD is CBD. However, theoretically, theoretically, however, what a lot of brands do is start adding stuff to it, right? Because when you do realize that CBD is CBD is CBD, then you have to have a differentiator in the market. So maybe it’s flavoring, maybe it’s essential supplements that you’re adding to it, yeah, and that can start to change the profile.

Brad Weimert 7:11
So to that, specifically, to that point when you’re in a so easy pay direct has been I mentioned this before we got going, but easy beta Act has been processing credit cards for CBD Since 2014 and really CBD. If you look at the any of the charts about the growth of CBD as a product, it really started to launch in 2016 so we were super early, and we were actually in cannabis in 2012 oh, wow, when you could process cannabis through Visa, MasterCard, you cannot today, currently, as of January of 2025 Yeah, you know, in a market that is that hot, there is so much competition, not only from advocates of the product itself, but just marketers that want to exploit a hot market. How do you stand out and market effectively in an area that is that competitive, you know, I think

Chris Van Dusen 7:59
you hit the nail, which is really 2016 is when it started taking off. My figures may be off here by a percentage, but I remember in the 2017 time, you know, CB distillery launched the end of 16. I joined in about February of 17. And we were originally, they were a client of my agency, and my partner, Jesse, and I were working on the business, and I stepped in as their CMO, and we kind of kept that train going, if you will, from there. But if you were to go back to that time, there were around 300 400 tracked brands, right. There’s this industry group that, you know, trade organization, that tracks all the brands that are selling a certain threshold right in the space, and they’re about three 400 in 2019 there were 3000 Oh, wow. And they had increased the tracking threshold to about 10 million in sales. So you start looking at the velocity of brands out there, post the Farm Bill, which would be the 2000 of 2018 the entire market exploded, yeah. And it was funny, because, you know, in any industry, there’s a consideration set right, the top three brands or top five brands, depending on how you want to look at it. And we used to look at comps and go, we’re really not losing business to each other in the markets. We’re losing business to local and regional brands, right? That are coming up. Because if CBD is CBD, and I can buy it in the open market and put it in a tincture, or buy gummies that are mass produced and put my brand on it, the cost of creating a new company is very low, and so they just flood the market, right? And were drive sales. And so you saw these kind of fly by night, and I don’t mean to be disrespectful, but these companies that came in, you know, a month before saying we should start a CBD brand, sure, picking a label on selling generally produced things, sure, label and stealing incremental, small bits of the business, right? And that’s where we saw, essentially, the market eroding over time. It wasn’t competing at the top level. All, but being in early, you know, the end of 16, early 17, launching the brand, and how we went about it was really kind of the key differentiator, because CBD was so new. And I would say the input material, meaning distillate, was more expensive than it was. And, you know, pre, pre recording here, we had talked about it being a commodity, right? If you look at that commodity pricing naturally starts high supply and demand, sure, then it gets over produced, which the market did in 18 and you watch it just plummet from a raw input material cost perspective. And then all the growers go, Oh, my money. So they stop growing. And then you watch it start coming back up, and then it settles into the equilibrium. And so when you look at it, at first, we understood where the market was going from a pricing perspective. And 1000 milligram tincture for most of the other brands, would have been $120 for us, $60 Oh, wow. So we started by saying we know where this is going. We are going to democratize being able to buy CB at a reasonable cost from a brand that’s so funny, that is trusted. We were the first the industry to come out with lab reports, which became an industry standard. So for us, it was always to do something right by the consumer and be the most trusted brand in the space. I was

Brad Weimert 11:21
talking about how it bothers me when people gouge just because they’re first to market. And ironically, that’s exactly what your your company did not gouge very much in alignment, yeah, that’s awesome. I think the the other thing that was happening simultaneous to that was you mentioned white labeling and the ability to white label products across the board, but specifically supplements blew up in 2016, 1718, 19, so a whole bunch of manufacturers basically rolled into full blown three Pls. Pic, Pack Ship companies where you could basically find any type of supplement, CBD, protein powder, you know, taurine, whatever it is, and in some cases even formulate, but really like off the shelf, pick one, and they would white label it for you, and they would ship it for you. And now that idea of white labeling is all over the place, but that was the beginning of it. And so it made the entry to the market very easy. My question on that is knowing what you know now, if you are trying to get into a space like CBD or anything, I guess it applies to lots of products. If you’re starting a product company, a CPG company, super package, good company today, do you white label or do you try to reinvent the wheel and do it totally uniquely yourself?

Chris Van Dusen 12:44
So it may answer two ways. One, I’ll go back to the CBD before I answer the other side, which is the irony in the whole thing is, there were many established companies, both in and out of CBG. Some were electronics companies in recovery who decided to come out with a CBD brand, or, you know, I make the joke Brookstone, or Bed Bath and Beyond, we’re trying to sell it right, like everyone wanted to hop on the craze. What folks didn’t realize and it negatively impacted their brands. And so this is the first piece of I don’t give advice. I give opinions. Right? Opinion would have to own the advice, but if I give it, but as an opinion, would be truly look at the regulation around the product, because a lot of these companies had amazing businesses outside of CBD, and they wanted to add it as a SKU What they didn’t realize is, the minute they added it to their shop page, their entire site then was blocked for me, being able to Do any of the advertising they were doing before by places like Google and meta and everything else, because they would crawl the pages, see CBD and say, You can’t advertise. They’re like, but it’s just one product, yep. So what became interesting is how it negatively affected many brands, which means they spent all this time, energy, money to buy their minimum order quantity, right? And were stuck with it because they couldn’t sell it, or they had to start a new site. And you, as well as I know, you start a new site, you get none of the love from the old site, and now you’re driving on the heroin drip of media to get it sold. And it never works

Brad Weimert 14:13
out. Yeah, specifically what you’re saying is that you’re chasing ROI by spending money on ads.

Chris Van Dusen 14:19
And then I go back and ask the same question that you just brought up around any other product, right? If it’s not new, novel or something interesting in the market, if you’re just creating another copy, then where’s the true value? Yeah, there were brands, and I’m using that in quotes for a reason, that were sexier and cooler, and drove towards the time the millennials right where it was fun and they were just, you know, action sports, and I don’t know, just think about like a Red Bull montage, and it paying off a CBD like, so cool. Yeah. I looked at it and said, who are the true users of CBD? Like, who. Needs this. Yeah, that’s 45 plus. We’ve got the normal aches and pains of being alive and maybe stressed and want to calm down and relax a little bit or improve the sleep quality. These are, like, the use cases, not just it’s rad to take CBD. And so when you started to look at that, these cool brands didn’t hold any water or weight, and then you also had to look at it and go, Wait a second at a time. And I haven’t done the research lately millennials, and it’s very similar with a women demographic as well, or the female demographic love trial and exploring. Well, why would I build my entire brand around a group or a cohort of people that want to try something, and then try the local one, and then try the sexy one, and then try another one and maybe come

Brad Weimert 15:48
back. Yeah. I guess the larger question for me, then to that end, is, do you have to have a true unique differentiator as an entrepreneur in the marketplace, or can you go into a market that’s so big that even if you carve out a sliver and sell based on being the cool brand that’s enough to build a good business depends on

Chris Van Dusen 16:08
what your ultimate goal is, yeah, are you building a lifestyle business for yourself, or are you building a business with true enterprise value that you may need to raise capital for? Right? Because CBD, or any manufacturing company is capital intensive, whether or not it’s, you know, doing po financing on one side or having to raise capital to support orders, you’re gonna need capital. So, you know, are you doing it just on the brand, or are you doing it for pure enterprise value? And I don’t think it’s also really important, I apologize, to truly understand the market. And I think you know, specifically around CBD, that you know 300 400 to 3000 within a two year period of track brands doing over 10 million, the vast majority are out of business right now. So you got to say they may have had a few years of fun, but did they build up real business with longevity? My answer would be no, and I think it’s because they didn’t truly understand how hard it was to build a CBD brand, yeah?

Brad Weimert 17:04
Well, I guess so. I’m 100% with you. I also looking at, you know, looking at our client base today, we have, we probably have 10,000 companies a year that come through, that apply with us. Roughly, when I look at the mix of businesses, we see a ton of young entrepreneurs that blow up quickly. And the pace of zero to a million, or zero to 10 million is so much shorter than it was 10 years ago. And a lot of that has to do with the fact that the road maps are out there. A lot of it has to do with the fact that it’s easier to get information out, and there are different forms of media you can push now, it used to just be a few channels that you could push things out with. But I don’t know if I think it’s necessary for everybody to do all of their homework on the front end, or if it’s better for young entrepreneurs to just try something and fuck it all up and burn the brand and burn the company Three years later, even if you know a lot, a lot of them will build to 100 grand a month or a million a month and make no money. So, you know, don’t be confused when you see the kid that’s got a rented Ferrari that’s saying, Hey, we’re doing 10 million a year. He probably still doesn’t have any money. Probably, probably, and what’s interesting, but it’s a great lesson, right? Or, or is it not or, or is it a better path to do your homework like you just said, and learn the market and think about what you really want, and put all those things in place so that when you take a swing, you are doing it with intention for what the outcome is supposed to be,

Chris Van Dusen 18:39
I would say, on one level, and I’m biased, this is what I do for a living. Depends on whether or not you’re taking OPM other people’s money, if you’re taking other people’s money or in the are in the pursuit of it. And I would hope individuals who invest money, like myself would be able to sniff out the difference between what you’re trying to achieve and not but if you’re going to take other people’s money, the goal would be to get them and yourself for return, which means you really have to have a solid plan on how you’re going to scale that business, trying things. I mean, you started with the intro that I’ve had the three exits, but I have eight gravestones right along the way of things I tried, but never took OPM. It was always mine, or, you know, mine and a partner’s dollars to try to see if we could get it to a place with the plan we had had set out for right to execute, and then getting it to a place to go. Okay, now we’re ready to go take other people’s money or raise capital around this, right? Yeah, and so I think it’s important to truly understand what you’re trying to do now to your other question of, is it okay to go into an established market and carve your place. I still think there needs to be a meaningful differentiator. Yeah. Now, with that said, I can go make that whole thing a little wider outside of just CPG and say self storage is not new, right? And people are building self storage all over the place, right? And you’d say, well, it’s already set. Traded. I don’t want to do it. Well, sorry, there’s a lot of growth in great areas that still need storage. So guess what? It’s still a viable plan to do without having to reinvent the fact there’s three doors, or, sorry, three walls, a door and a light bulb, right? Right? Boring business, but cash flows wonderfully, right? So it really just depends on kind of going back to understanding the market and what you’re trying to achieve? Yeah, there’s a great quote, and I use it quite often, from a GP, a benchmark, which is another venture firm. Most entrepreneurs want to sell you and back IBM side marketing via versus Apple speeds and feeds. They want to show you how fast this thing goes and how quick this is, and how amazing. And if you think about Dell and IBM and the traditional kind of PC market, that’s how they sold. Apple came around and said, How does it make you feel? Yeah, very different marketing. Well, in the same way when you’re when I sit across the table, and the quote that this gentleman at benchmark gave, which is, as an entrepreneur, your job is to sell me the wind, not the boat. And so he goes through this analogy to say, this great sailboat with amazing rigging, and the beams this big, and they use leather here. And it’s like, yeah, it’s great. But if there’s no wind, it doesn’t matter. But if there is wind, it doesn’t matter how shitty your boat is, it’s going to be able to catch some sail to it. So it’s figuring out truly understanding the market that you’re in, how you’re going to play and why you’re positioned properly to take advantage of that, and if you will, that’s, I think, the most important thing. And when I sit across at the table from founders who truly don’t understand the market, they understand their product. And it might be the Ferrari, as you said, right? But if you have a Ferrari and not one paid Road in your town, I think it’s a great paperweight that goes vroom, vroom in the garage, right? Have

Brad Weimert 21:47
my own issues with Ferraris, but yes, yeah, I guess I like all that, and I like to fancy myself a very deliberate person and very thoughtful person, and as somebody that assesses businesses as you do professionally, or us through well, both are underwriting, but for different purposes, I have to be doing that. I’m conditioned to do that. I also, at the same time think that so many people make the mistake of not moving forward because they’re waiting for things to be perfect. And in many situations, I’d rather see an entrepreneur, including myself, just go fucking do it. Yeah, and Bezos, Amazon has a great framework that we’re that I’m pushing through our organization now, which is one way doors and two way doors. You are encouraged to take action quickly if it’s a two way door, and you are discouraged from making movement at all. If it’s a one way door, it has to be much more thoughtful. Meaning. If you can walk out the door and turn around and go back through the door, fine, walk through the door. But if you’re going to walk out the door and it’s going to be hard to get back in afterwards, you should probably think about that decision ahead of time.

Chris Van Dusen 22:56
Well, so that’s great. And the way you brought that up, think about, I bring back the term OPM right? Other People’s Money, if you as an entrepreneur, want to go try something, and even using another one, fail fast, right? You go try it. You put your money, your time, your energy, right, your opportunity cost against this. And as it starts to take path, now you have the one way door, which is the minute you take money. It’s for a fully different conversation around the trajectory of your business. But you can start slowly, methodically with meaningful or reasonable amount of money, depending what that is for you, and be able to shut it down and walk back through the door at any time, the minute you take money. It’s very different conversation. Yeah. So I think it really comes down to understanding what you’re trying to build.

Brad Weimert 23:39
Let me ask you about your journey a little bit that I want to get back to venture capital. So you I’ve heard you say that you apply your marketing playbook to the new ventures that you go into. Yet you’ve got marketing agency, you’ve got CPG, large CBD company, then you’ve got a distillery, and now you’re looking at, you know, technology and health companies. What are the marketing elements that you can apply across the board, no matter what business you’re in, being

Chris Van Dusen 24:09
an owner of an agency back in, back in the day, right? Started in 15. Actually merged it with my wife’s agency in 2018 she started one in in 2013 different thesis, hers is very full service. Mine was really focused on that CRO and media side. It was funny. We were just doing a lot of work together anyway. It’s all worked out nicely. But being an owner of an agency, you learn a lot a lot about the difference between B and B, B and C, right? B to B to B, B to C. What’s interesting is, when you sit down and go through it. Everything is B to C, even though, as a business buying it’s still a human that you’re talking to. So it’s figuring out how to resonate, how to get the value propositions across, how to truly position a company in a way that your potential customers will understand in that kind of 25 Words or Less is we’re talking about value proposition, being able to really explain what’s in it for them. And if you can get that across, and you can frame it that way, you’re already leaps and bounds ahead. And I go back to the speeds and feeds, because if you’ve gone to some sites that don’t have a great marketer, all they’re talking about is the quality of this product. Like bam, bam, bam, bam. Every feature, there’s a great mix of being able to say, yeah, here’s the features. I need to kind of check the box on some things to make sure people know you have as good, if not better, than everyone else. This is the big difference. Here’s the thing you need, and you didn’t know. You didn’t you didn’t know you needed yet, right? So that’s one that’s really a positioning and messaging perspective. The other thing is, great founders traditionally aren’t great marketers. That’s why they focus on speed and speeds. They are so proud of what they’ve built. They want to almost like an attorney. And for the attorneys who are my friends or your listeners who are going to hear this, they can yell at me, but I’ve never seen an attorney with a red pen that didn’t use it right. And usually what it comes down to is they want to get it all out, everything out at once. It’s not necessary either. And so most founders are going to position their company to make sure you know all the amazingness they built. And that doesn’t necessarily resonate. It’s

Brad Weimert 26:17
not that. It’s not necessary. It’s horribly detrimental, horribly, you can’t vomit, even butterflies and rainbows on people for effect, it’s still vomit, still vomit, right? You have to do one thing at a time. I think, you know, I think you can tell if somebody has a clear grasp on a subject, if they have the capacity to simplify it, and if they don’t, they probably don’t. And I think that’s super important. And the other thing that I heard the other day, that I thought was I thought was beautiful was, if you can’t explain your belief, it’s probably not your belief. You probably grabbed it from somebody and are regurgitating it. And it’s crazy, like on I think surface level, that sounds almost offensive, but I think that the reality is that even the smartest people, you hear something and conceptually it sounds good, so you grab it and you adopt it without actually doing the due diligence on it, yeah, and saying, does this actually make sense before you go out and regurgitate it? And I think part of that is that regurgitation is a process of education and training, right? So when you spit it out to somebody else, you’re sort of working through. Is this the right thing or not? But then, if it sounds good enough, you’re like, Yeah, fuck it. That’s now my belief. And before you ever evaluated, you’re saying it to 15 people. And, you know, three years pass, yeah, you

Chris Van Dusen 27:33
know, it’s funny, because I didn’t run on a platform, nor do I really run a platform. Now, of what I mentioned before, this great determination adding hard things to your life. Certainly, that’s something I’ve heard over the years from many people much, much smarter than me. But when I kind of do this post mortem on why the hell at 44 I’m sitting here today, I’m like, Oh yeah, that getting kicked in the nuts all the time with different things during work, right? You could easily just throw the towel and say, the world’s against me. Yeah, no, you just keep moving. You keep progressing. And so it’s one of those things well articulated by someone else. You go, yeah, that’s what I that’s what I believe this whole time. I just didn’t know the words for it, yeah. And so I think that’s the the opposite of what we’re saying. But still, in the same vein, is sometimes like words get unlocked for you to truly be able to hold on to totally but yes, I know a lot of people who hear something and then that’s now their thing. They’ve done nothing to understand it.

Brad Weimert 28:28
In in our underwriting, we have, we have to, we have KYC, right? Know your customer requirements, federal regulation, the federal government makes us get a bunch of shit to know our customers, right? So when they go through underwriting, we have to collect docs. It’s a pain in the ass, so our job is to make it as seamless and smooth as possible. If we ask them for a whole bunch of stuff at once, maybe it expedites. But really it freaks people out, bugs everybody down Absolutely. So if we could ask for one thing at a time in a conversation, not a back and forth, an email, that’s going to drag out for three weeks, but in a conversation, right then it’s going to be more efficient and more effective. But that is an ongoing game, and it’s an interesting one from a marketing perspective, and something that I would encourage everybody to test, because the answer really is, will this work? I don’t know. Let’s test it.

Chris Van Dusen 29:16
Yeah. And so first of all, it’s a great saying that was this almost the core saying of our agency, which is, I would sit across the table from CEOs or CMOS, right? And they’d say, Oh, no, we got to do this. And I’m like, we’ll absolutely test it. They’re like, No, no, we need to do it. And I said, when you brought us on, we made an agreement. The agreement was, there’s no bad ideas. They’re like, Okay, so we’re gonna test them all, and the best ideas are going to win, yeah, not our own internal bias. So let’s let our clients, customers, determine the success or failure of the test, not your bias, not your belief. Yeah, right. I love that, and it’s funny, because sometimes they’d be right. That’s great. We now had. Proof and validation of it, and sometimes they were wildly wrong, and they would get frustrated, but they realized the business and success was more important than necessarily their thought. So testing culture is a very good culture, in my opinion. I

Brad Weimert 30:12
think it’s mission critical. Now what you test is another question. Do you have any sort of process for what bubbles to the surface and hits the testing criteria, because there’s a never ending list of things you can test. You can do split tests where you’re like, Hey, I’m going to change the color of the button, and then you wait until you get enough traffic to make an adequate assessment. Or you can say that’s not a relevant enough thing for us to test right now. We need to test something broader. Where do you start?

Chris Van Dusen 30:37
Yeah. So, you know, I had a partner at the business at Park on media, Jesse Leonardi, and what we would build is these growth matrixes. So we take all the ideas and then we would measure them as how much of an impact Do we believe it would make. How hard is it to implement? And what I mean by how hard is time and cost, right? You want to redo an entire website for a test. Great, that’s time and cost. So what can we get done? And the thing that most people don’t realize is they want to start doing so tests, and they get 1000 visitors a day, you cannot reach statistical relevance, right? So let’s say you have 1000 unique visitors a day, and you’re converting 2% right? So what is that? 20 sales per day? I need 1000 to go through right before I have any of the same pathing right on a split test. I mean using that as a representative example. How long is that test going to be in market before I hit quite a while, especially because I need 1000 through both sides. Well, if I’m getting 10 and 10 per day, we got a little while. Yeah. And so that becomes this issue of people make decisions, typically around testing before they’ve reached any meaningful statistical relevance, yeah, because they want to get to the next one or the next idea. Yeah. And so, you know, brands like the CBD brand were very easy. Large apparel companies already in flight in market and successful, very easy. And why I say easy is there’s enough traffic that we can run multiple tests per month and iterate and see meaningful traction. Without that, it becomes much tougher because you’re trying to wait for this full test to run. Yep, and if you have multiple SKUs now you have multiple issues. Back to your question on where to test. I looked at it as as bookends. What I mean by that is the majority of your visitors are going to come to two places, a dedicated landing page, off ads, or straight home page, boring home page that comes up, right? So what is the traditional pathing through the site to purchase a product? Right? And it’s going to start at a home page. It’s going to go through product pages, potentially, or right from the home page, if you’re lucky enough to get that right to the cart right. And so carts have gotten so much better over the last 10 years, especially Shopify, and what they’ve been able to do on the, you know, their proprietary checkout funnel, but really understanding from landing and then closing, where can I make meaningful changes? That’s really where we spend a lot of our time. And then we build campaign type, level things off ads with landing pages or any of organic content. How to work them through funnels. But you know, that’s all secondary or tertiary, compared to just clean up where the majority of people go. I love it and optimize that.

Brad Weimert 33:21
So what I think I heard was wherever you’re sending the traffic, so whatever the landing page is, wherever they’re learning about the product, predominantly, and that could be a homepage or a landing page you’re driving specifically to for a product from ads and then the checkout process, because ultimately those are the conversion areas that you can focus on.

Chris Van Dusen 33:37
Yeah, right, even down to and I’m sure people in the industry have realized it, but I’ll ask everyone go to Amazon and check out. Yeah, what you realize is, the minute you get into your actual cart, every bit of the site’s gone.

Brad Weimert 33:53
Yeah? No distractions. No distractions. Yeah. Well, to to your point, Shopify, checkout is significantly better than it was. There are also now tons of third parties that latch on to shop Shopify checkout to improve, to allow you to do order bumps, to do split testing, all sorts of stuff we work with. We have an easy beta rock as an integration of Shopify also to a whole bunch of these third party plugins that alter the checkout process, specifically for optimization of conversion through the checkout process, because Shopify has a pretty locked down. So if you’re using Shopify, you’re using their checkout specifically. And there, there are handful that will branch you out so that you can do more testing and more nuanced stuff. And for uh, significant marketers, that’s a godsend. I mean, you can play all day in that sandbox, but I go

Chris Van Dusen 34:43
back to you need to have enough traffic to be Oh, fully Yes. And that’s where most people fall down. The other one, I’ll say on on checkout, just for fun. And I haven’t seen any studies in some years. But when we were doing it back in 2015 trust seals, trust badges. Oh yeah, just adding a trust badge. Around where you input a credit card. Huge conversion. Lift, interesting. So it’s little things like that that you test and you try. How much do you

Brad Weimert 35:08
think so that’s if you if you’re circling back to 2017 How much do you think the trust badge impacts you today in 2025 versus 2017

Chris Van Dusen 35:18
I think we’ve all become accustomed to the type of checkouts we have. I think it was a lot different back in 15 to 17. I think people expect it to be SSL, locked down, show you the little badge and and feel comfortable or be checking out on a site like Shopify, right as you well, you

Brad Weimert 35:36
don’t always know. I mean, you often don’t know. Actually, very few consumers would know, if it’s a Shopify site, I

Chris Van Dusen 35:42
think what you feel is, if you’re an avid online shopper, you get to this place where it feels familiar, feels normal, and then add in, and again, I’ve been out of this side of the business here for a few years, to this level, but the shop right where you put in your email or your phone number, and immediately it comes up, sends you a code and fills out all your information, shop, pay, shop, pay, yeah, things like that have sped up the process, no question. And what it does is it removes a little bit of the need for the trust badge, yep, because that seal already said, Oh, they are already playing in a place where I know I have protection, yeah, that’s true. And you go back to 15 and 2015 and you’re just checking out on a random website, yeah? You’re like, I have no idea.

Brad Weimert 36:29
Yeah, that’s a good point. I think that I could, I could tell you 1000 different shopping carts, checkout products, right? Like, that’s our world. I don’t have an affinity for one in particular, but I think a takeaway for people in general is build a product, build a checkout process, a site and checkout process that looks at least follows the same framework and structure of the things that are commonplace today. Because if you’re too far out, there is a lack of familiarity that could cause a lack of comfort and purchase. There is an

Chris Van Dusen 37:04
old thing. So we mentioned in the intro, I was in sales for years. I still think everyone in every job role, if you work at or for or own a company, is in sales, right? So it’s probably a good skill to have to start number two, there’s an old thing, and I forget who penned it, but the idea of when someone says Yes, and you’ve got your pen and paper, you slide it over, and you sit back and Don’t say another word, yeah, the correlator that digitally is the minute they go to check out, remove every just don’t try and upsell them. Then that’s why there’s post right. Purchase conversion, the minute they’re in there, leave them alone. Yep, have them focused on the one thing they should do, and no more. Because if not now, they have the paradox of choice, or they’re like, well, there’s three things I can do right now. I can add something, I can upgrade, I can subscribe, or I can check out, you know what? Oh, my phone just rang. I’m gonna do none of them. Yep, my kid just cried. I’m gonna do none of them. Dude,

Brad Weimert 37:59
I can’t tell you how many times I’ve abandoned cart because they tried to push me into a 1015, 20% discount. If I put my fucking email in, freaks me out. The pop up comes up, and it’s like, enter your email or phone number and you’ll get 20% off. And I’m like, I gotta go. I just I was, I was, I was already there. I was already buying, already buy. But I don’t want to opt in to you right now, and I’m afraid that if I x out of it, I’m going to lose the discount, so maybe I’ll just come back later and deal with it. And that’s exactly what you just said when you got in the way of my purchase path Correct. Just let me buy it. It’s

Chris Van Dusen 38:30
fine. That’s easy. We try to over complicate it. We really do. So

Brad Weimert 38:33
normally I interrupt the show to promote EPD to tell you about credit card processing. But today I’m going to tell you about our partner program. If you know other business owners that accept credit cards and you refer them to easy pay direct, you will get paid a percentage of what we make for the life of the account, as long as they’re processing. You can build a residual for doing nothing just the introduction. You can do that by going to epd.com forward slash BAM partners, that’s epd.com, forward slash b, a, m partners. A lot

Chris Van Dusen 39:05
of times it’s like, we need to record podcasts. And I’m like, Well, I’m in X, Y, Z city, yeah. So I have my little kit, yeah, right. Little mic, yeah. I also travel to those Apple vision pros, Oh, yeah. Unbelievable technology. I know everyone I

Brad Weimert 39:19
have one. Oh, it’s the best I have one. I never travel with it, just because it’s too big. That. That’s why I would switch to the, Oh, interesting. Yeah, the duffel, the duffel, okay? And so, you know, that’s fun. I would use it on the road, yeah, totally. So what

Chris Van Dusen 39:31
ends up happening is, I’m a hardened 60 days on the road, so I get to a hotel room, I pop that in, build the instance, right? You spend enough time on the road. Usually get nice little upgrades. I have my little sitting area. Then you know that, yeah. But I’ll put that on, create the whole instance, yeah. And then need to go to dinner. Just take it off, go, come back, put the instance back on. My emails up. My computer’s brought in. Oh, sick. All the rest of the apps are going and then want to go watch satellite, Netflix before bed. You just walk into the room. Lay down, wash your Netflix, the instance is still up in the other room. Yeah, that’s

Brad Weimert 40:03
interesting. I have a hard time transitioning from the the laptop control to the hand gestures on the apple. Vision Pro, yeah, just like you basically, when you have you know, you can do a another screen in the Apple vision Pro, and use your laptop to navigate between screens. But if you want to use the other windows, they’re hand control. And so I always have a head fuck around like I’m on my computer. And then I go to look at a window, and I try to scroll to the window, or I try to grab the extended laptop window with my fingers. I’m not there yet. Do I just need to use it more?

Chris Van Dusen 40:36
Yeah, it’s all it is. So I bring the computer instance in, right? Yeah. So I can do Excel sheets and all the things I need to do, because the native stuff is not as good as no naturally doing on your computer. But now, instead of 14 inch, you know, MacBook Air That I travel with, I have 140 inch screen, perspective wise, that I can go do all the work I need to do with the keyboard mouse on the computer. And then I know this sounds more dramatic than it is, but like, spit in the chair. And now I have the rest of the stuff that isn’t that Excel sheet fucking

Speaker 1 41:08
control room. Yeah, yeah, exactly, yeah. So is the Apple vision pro dead.

Chris Van Dusen 41:15
So that’s what I’m hearing. They’re gonna come out with another version sometime. Who knows when? Again, this is what I’ve heard and read that’ll be lower quality than what this one is, yeah, but you know, probably more at the $1,000 price point, yeah, more accessible. And then sometime in the future, they’ll make the pro again and kind of keep leapfrogging back and forth, if you will. But

Speaker 1 41:36
what you’re saying is, you still use the shit out of it right now, I still use it all the time,

Chris Van Dusen 41:41
yeah, now it’s very personal, right? So, like, I have a 10 year old that I, you know, married, and so, like, I want them to try it. Now, you’re in guest mode, and it’s never the same. Like, is a very personal it’s

Brad Weimert 41:52
so hard to have somebody else use the apple vision pro because they don’t have access to all your shit, and they can’t have access to all your shit, correct? Get I can’t have you put it on and be in my text messages and in my email Oh no, no, I know. And I can’t see what you’re doing. I’ve done it a few times where you can put it up on an external monitor. That’s where I can walk them through. That’s what I do. Anytime I have anybody else use it, I’m watching what they’re doing on an extra monitor 100% Yeah, because it’s kind

Chris Van Dusen 42:15
of like, here’s my computer unlocked, like, knock yourself out. Oh no, no, I don’t think so. No, there’s anything to ferry is it’s just more like there’s company stuff, personal stuff, with your family and all. Yeah,

Brad Weimert 42:25
I’m single. I don’t know what text message is we’re coming

Chris Van Dusen 42:29
for, but no, that’s been a really interesting piece of technology, and I hope it keeps going. I mean, I don’t want to tin hat here, like that show severance, right? Apple TV. I

Brad Weimert 42:39
can’t wait for the new season. It’s so weird. It’s

Chris Van Dusen 42:42
so weird. But this idea of like this dystopian future where you just go to a blank, white row of cubes that all have a headset, and you just put it on and log in, and now your entire workspace is built, like you’re in this studio and you work, and then you take it off, and you’re back in the white with nothing but Stark walls and UV lights coming down, and then you go home, yeah? But you could do that anywhere,

Brad Weimert 43:06
yeah, for sure, right.

Chris Van Dusen 43:08
Okay, now you’ve, you’ve inspired me to go play with my abolition pro again, I will tell you. And now we’re getting nerdy and totally off topic, uh, put on the beta updates, okay? Because the functionality on the new beta allows you to do a lot more than you were able to do on the old software.

Brad Weimert 43:27
Okay, cool, yeah, I think that. I mean my what I’ve heard, and what makes sense to me is that Apple has just refocused from the vision pro full board to Apple intelligence, because AI caught so much wind in the last year and a half that they feel like they have

Chris Van Dusen 43:44
to No, I don’t disagree saying beta software on my MacBook Air and all my iOS devices and that Apple intelligence built in is pretty darn cool, isn’t

Brad Weimert 43:57
okay. So I deliberately don’t do beta stuff on my iPhone, because I feel like it’s going to piss me off. Because, like, the beauty of Apple is that it just works. Yeah, right. If I actually wanted to fuck around with the most cutting edge stuff, I would probably go Android IBM or Android PC, yeah. But I don’t. I want everything to work, and when it rolls out, I want it to actually work. Yep. Do you have a lot of issues with crashing, with nonsense when you run the beta for Apple. I’ve

Chris Van Dusen 44:23
done the betas for years, uh, this actual one, this new beta, meaning this whole series, right? Since I’ve been gearing up for this launch, I’ve had no issues go back three or four iOS, you know, versions before, there’d definitely be times I’d have to restore it back from my last backup when it wasn’t on beta and things like that, especially on the iPhone, iPad, things like that, a little bit different

Brad Weimert 44:47
when you restore it from your backup. Scratching my own itch here, when you restore it from your backup, does it clear things like text history, it isn’t all that. Son of a bitch. See, that’s my problem. I’m not. I lose that. Could you do? Could you do, like, beta on the phone, but not beta on your Mac to keep message history? Yeah, absolutely. Okay. 100% well, then I feel better about this, yeah, and I

Chris Van Dusen 45:11
I’m gonna get over my skis here, because I haven’t done it in years. But if you think about how iCloud works, the minute that you restore it to an old backup, if everything is somewhere else, somewhere else, it should fill in the gaps, because your email is going to come in from IMAP or exchange, right? Your text should catch up, but maybe well notes, depending on if it seems like it should all come back, yeah, but you’re bringing it back to something however long ago, before you did the update. So you’re in free, you’re in your own world. Freaks me out, but I haven’t any problems with this one. It is pretty cool. I love it.

Brad Weimert 45:44
Okay, so you launched a distillery, I think is where we were. Yeah, we had some technical issues here, but you launched a distillery because you’re a glutton for punishment, correct? You did raise money to do that. What kind of liquor was it? And why did you launch a distillery? So

Chris Van Dusen 45:57
I met the we’re considered founders. My wife and I, with another couple, they were really the true founders. They built a small, 1400 square foot distillery in Huntington Beach. I met them our creative director at the agency, my life’s agency. It was his brother who started it, amazing brand called surface. He still works really cool packaging. Understanding as a marketer, what it takes to be successful the liquor world really comes down to forcing trial. And what I mean by that is, is your brand interesting enough that someone’s going to look at this large assortment of bottles on the wall right and go, oh, I want to try that. Right? That’s the discovery process. And I thought what they had was, was wonderful, uh, forcing trial

Brad Weimert 46:38
makes it sound like you’re just forcing people to do shots in the in the grocery store or something. Store

Chris Van Dusen 46:42
or something? Well, we could do that too. They don’t. They frown upon it, but you can do that at bars. Hopefully. What was interesting was, this was back in 2018 saw the brand, fell in love with what they had, knew nothing about liquor business. Zero, yeah, it’s great. It sounds terrible. It sounds terrible. Uh, as we talked about earlier in the podcast, though, sometimes you just need to say, I’m gonna do it and try. So my wife and I put our money where our mouth was, wrote a check, basically bought in. It was very early stage. I don’t think they filed their taxes yet, meaning, this was a brand new company, and what we basically set out to do is, we said, I have connections in the liquor industry, even though I don’t know the liquor industry, I guess brands really special. We’re going to figure out how to get customers and scale. Very similar to CBD, you can’t use the same type of advertising you would. There’s a lot of regulations around it. There’s a three tiered model. So you think about retailer, distributor, manufacturer, and not one can own the other. If I want to sell a product, it has to first go to the distributor and then that restaurant, bar, liquor store, grocery store buys from the distributor.

Brad Weimert 47:58
Liquor, wine and beer all work a little differently, 100% different, but they’re all fucked up. Yes, why does the government mandate that you have to have these multiple tiers instead of being able to sell any of those products direct to consumer? So

Chris Van Dusen 48:11
I will be kitschy and say the spirit industry had horrible lobbyists coming out of Prohibition era, but beer and wine was much better because you can sell beer and wine across state lines. No problem. Yeah, in sell direct consumer spirits, you can’t interesting.

Brad Weimert 48:24
So you think this is all just a failed sales pitch through the regulatory change,

Chris Van Dusen 48:30
I would say again, to have fun with it. Yes, but there’s a lot more reasons, and I think it’s almost analogous to where I see the CBD and marijuana market going long term, just thinking out loud here, uh little tin hat slash, postulating here, which is if you think about the fact that a beer has five and a half, four and a half, five and a half percent alcohol. Wine has 14 ish percent alcohol, but vodka has 40% right? You go up or down from there to pay cask strength, which we had bourbon. It’s 111 proof, right? Like you’re getting up to this like 55% alcohol. Yeah, that’s a much different drinking and liability experience that’s fair than buying a 12 pack of beer. Still gonna get drunk. Don’t get me wrong, if you drink 12 pack of beer, depending on who you are, however, I think there’s a, I don’t want to call it a safety issue, but you could see where high test versus low test, there could be different decisions around regulations. Yeah. I think also, when you really get down to the nuts and bolts of it, the government taxes at many steps, the production of 30 liquor dirty and so if you think about state of California, where we were, gets their fair share with the TTB Tax and Trade Bureau, but then I want to ship it to Arizona. What was Arizona getting? Okay, anything? Yeah, so. So I can’t just ship it to Arizona. They want their pound of flesh, if you will. So now I gotta get a bonded storage or a distributor that’s gonna house it so that when it sells, they understand what’s being sold in the state. So it just becomes a little different on the kind of interstate commerce with with

Speaker 1 50:14
cigarettes. So really, this is like most things with government regulation, which is an ability to tax more accurately Correct? Oh, that’s so dirty,

Chris Van Dusen 50:22
correct. I mean, and again, I don’t want to get over my skis here, because, yes, as an owner of a distillery, but also I was more helping raise capital, do the overall marketing, right, like the things that are in my wheelhouse, and my partner and his wife were really the distillers, and we hired a professional distiller and did all that. But I know whatever comes out of the still is taxable at that moment, and so to defer that, or to not have to pay it at that moment, you write off your waste, because there’s always waste, and then it sits in bonded storage before it’s ready to be taxed. Oh my god, right. And when it’s pulled out of bondage storage and sold. Now you realize that tax, yeah, it sounds like a nightmare. Yeah, pretty much I didn’t. I didn’t realize, okay, I mean, I’m not gonna geek out on this too much more. I might

Brad Weimert 51:12
be the only one that cares, but I think I mean going into a new administration right now, in the beginning of 25 all the talk around Doge and government efficiency, or the lack thereof, at the moment, is an interesting topic, and then combined with it, since you are from California, we’ve got the Santa Ana winds right now kicking up and burning down Los Angeles and the surrounding areas. Actually, more accurately. Do you personally think that the California government is to blame for the damage that’s been done with the California fires.

Chris Van Dusen 51:50
Oh, that’s it. My quick answer is they have an absolute heavy hand in the responsibility. There’s like all these things to triangulate right? One is they did cut funding to the police department to the tune of 17 million in the or not police department, the fire department, and the head of the LA Fire Department, went on camera and on record talking about that and how that had a dramatic impact. I saw the news here over the last 48 hours that the water reservoir and the Palisades right, which got hit, and continues to get hit pretty gnarly, had been emptied for repairs. You know, the month before Jesus, I know they were out of water, meaning water was coming out of hydrants like these are all big, meaningful issues that I don’t know where the fall comes. I think California is in a really tough spot overall, politically. You know, I I struggle because I don’t want to get into a whole big political conversation here, especially on the state that I live, not taking I’m not taking the bait. But, you know, I mean, I think there, once this gets solved, and we look back at a post mortem, I think you’re going to see a lot of inefficiencies by the local kind of LA and state government around this. I think the second wave of inefficiencies will come on the process of rebuilding, if you look at the permitting process just in the city, oh yeah, LA, or the county of LA. And again, I’m not an expert, so I want to be careful here, but I think you’re a year, 18 months of permitting before you’re even allowed to rebuild, right? That’s just how long it’ll take to get through the process. So you think about all of these displaced families, and if you’re older in age and have a $30 million home, I realize no one feels bad for you, but you have to move somewhere, and, oh, by the way, you’re still responsible for that mortgage.

Brad Weimert 53:44
Well, look even worse, there is the $3 million cap on fire insurance for people. Yep, if you had it, if you had it, which is, which is also a state imposed cap on insurance. So that’s an issue. Maybe, maybe it’s just that California doesn’t charge enough in taxes to cover these things.

Chris Van Dusen 54:02
Look at it. Oh, wait, no different way I do 45 yes, there. That’s a little spicy. Let’s just say no. But you know, I take zero credit for this. I heard this second hand. But Friedman, who’s on the all in podcast, was talking about, talking about the programs of insurance in California. And again, I’m going to get over my skis very quickly, so I want to be careful here. But if you look at the fact that there’s a group in California that didn’t want to allow free market charging for insurance, so they had a cap, and they kind of retarded how much they could raise rates, right? Well, what does that do? Right? You’re gonna have to pay it some way to use his statement, right, instead of as a consumer to owns this home paying more because the liability or probability, I should say, of your house going on fire, has gone up, right? They’re keeping it low. Then they built this fund. Right in California to help, basically supplement. But what that did is allow houses to increase in value, right, without the fact of the probability of fire happening, right? Right come into play? Well, that means the state could get more tax revenue, right, to get more things without having the property values

Brad Weimert 55:19
go down. Yeah. So I also, I also listened to that, a big fan of all them and the, let me see if I can summarize. So basically, by having insurance, fire insurance, capped at 3 million, it kept the cost of fire insurance down across the board. So whether you had a $1 million house, whether you had a $3 million house, ten million house, or a $30 million house, you still could only pay so much in your fire insurance premium. So if you bought a ten million house, your insurance wasn’t 10 times or if you bought a $30 million house, your insurance wasn’t 10 times as much, right? It was the same price. If it was 10 times as much, the price would never have inflated to 30 million in the first place, correct? Because the market would have pushed it back down, and nobody would spend 30 million in the house in addition to what it would cost to insure it for fire. You got it. So in the incentive for the state was, if you let those real estate prices rise, they get a shitload more in tax revenue. And it makes it look like the economy is good. So these indicators that the economy is doing well, but really it’s a false cap in the in the free market, well.

Chris Van Dusen 56:23
And again, use his words, who ends up paying at the end of the day? The taxpayers right? And when? Again, to use theirs. When are the rest of the taxpayers who aren’t in $30 million homes go to go, Wait a second. Our tax dollars are now subsidizing the build when they haven’t had to pay the adequate amount of insurance. So ultimately, the rest of the citizens of California are underwriting, or, I should say, subsidizing, yeah, that lack of cost, meaning someone has to pay it eventually, right? It just happens to be the masses instead of the people who are in those homes. Yeah?

Brad Weimert 56:56
Well, I think that. I mean, I think that the as I used to just turn a blind eye to politics entirely and think it doesn’t impact my life at all. And certainly, as you make more money, you just can’t do that. As you as you make more money, it does impact your life, really directly. But either way, I think that looking at the incentive problems in the world are tremendously valuable in business, and if you do not look at where’s the incentive on a routine basis, you’re doing yourself a tremendous disservice.

Chris Van Dusen 57:25
Well. So there’s a great thing. The outcomes you desire are a function of the incentives you outlay. If you want certain outcomes, incentivize for those outcomes, right? If not, this is a wider view of just people, sociology, I would say, or psychology. People, traditionally, not all, not everyone, are going to work to the level where they can retain their jobs, but not necessarily much more. Yeah, if you can incentivize a certain outcome, you’re much more likely to get that outcome. And I think that a lot of jobs, there isn’t really an incentive to do the thing that the company needs the most. It’s just to go do the thing that is needed when they were hired, right? And so if you can control or build incentives towards the outcomes you want, we’re all going to see a much better place, whether or not it’s work or personal or whatever. Yeah,

Brad Weimert 58:19
I totally agree with you. I live most of my life. I’m still very slowly learning this lesson repeatedly. I generally speaking, make a huge effort to spend time with people that just want to be good at what they’re doing. And over time, I’ve realized that I have a fairly direct, abrasive personality, and part of that is that I try to be good at communicating difficult things for the outcome. For the sake of the outcome, I’m more concerned about the outcome than I am tiptoeing around something right? A players tend to do very well around me, because it brings them up. B players and below tend to get crushed by it, because I make them feel bad about themselves, and that’s a really interesting realization for me, and also a point of reflection as a leader, because you need B players on the team for certain things you do and

Chris Van Dusen 59:16
you can’t. So a couple things. One, you can’t treat everyone equal, and two, you can’t, as the owner and founder of your business, put the same values on people who work for you. I know it’s tough, man, it’s tough. It’s tough. You want to have ownership mentality, but at the end of the day, yeah, they’re not, they’re not incentivized in the same way, right?

Brad Weimert 59:34
Yeah, I was, I was, uh, talking to a good friend of mine that’s now multiple rounds in I think his last raise was 80 million, and he I was talking about performance of employees, and I was sort of venting to him, and not really, but I made a couple comments that would be interpreted that way, and he responded, and he said, it’s not that they’re stupid. Yeah, it’s that, and I don’t think I use that language, but he said it’s not that they’re stupid, it’s that I might have just said people are stupid, because I do like saying that, yeah, but he said it’s not that they’re stupid, it’s that they will never care as much as you do about the business. And I thought, Oh, that’s a really important thing to realize in a really important reframe. The

Chris Van Dusen 1:00:18
one way I would say it becomes a tad askew, or there’s outliers to this is when you build a business with a core mission that everyone can own, yeah, that’s fucking hard. Oh, it’s hard, right? Like you get into it. I use the old school one, the toms, right? Yeah, model, right, when there’s truly a mission. And I’ve got to tip my hat to not only the rest of my executive team at a CBD company, but certainly everyone that worked there were mission focused. Our entire focus was to bring CBD to the masses, yeah, so democratize what you put in your body to make choice. And that was something people rallied around truly, and the passion from everyone, whether or not they were on the cap table or not, you could feel through the entire building. But that became now a mission, right, and something to stand behind and to get up doing more than just earning a paycheck, which really, the other day, is why we as business owners do what we do, because we want more than just that. Yeah, and I think that’s probably the only outlier I see, other than just a players who want to get up every day and do a great job. Yeah,

Brad Weimert 1:01:34
no, I think that’s totally accurate my, I guess my one of the reasons it’s hard is because, if you try to lead with Mission First, but in your head, that’s not the case. You’re gonna fuck it up. Oh, you’ll fail miserably. Yeah, yeah. And I think, like, you’re better off being authentic in your purpose and cause than trying to be mission first if you don’t truly have it, and it’s fine to not have it, like people rallying around a mission, you might not have that kind of company. And one of the things that bothers me a lot is when I meet an entrepreneur who is trying to force a mission driven concept into an arena that’s just, it’s just not, it’s just not relevant. You know, like you’re trying to do it for the sake of PR or marketing or trying to get the team to rally, but you don’t really care. And it seems evident that you’re just trying to bring that mission statement in to make it be something that it’s not because something told you you needed it exactly, exactly, or you saw somebody else perform at a really high level, and you’re like, I’m going to replicate that. But that’s not actually who you are. I think, yeah, I think both are fine and without question. If you find yourself in a position or able to architect something that you truly care about, that you’re truly passionate about, where you can rally behind that sentiment? Yeah, man, that’s you’re right. That’s where that power is. That’s what

Chris Van Dusen 1:02:51
power is. And you know, good, bad and sideways. And I won’t give a full opinion necessarily, because I think it truly depends. We have romanticized the idea of being an entrepreneur, to have a startup, and I think that’s great in so many ways, because it gives so much optionality for many right, to go do something, right? I make the joke I’m this accidental or forced entrepreneur. I wasn’t planning on it, right? But 75 days after I moved to California, company came out for one out of business. So I’m looking around. I know my brother, and that’s about it going not what I’m going to do. Yeah, this is beginning of 2010 so it’s not like there were a lot of great real estate opportunities coming out of the financial crisis, right? And so I think there’s just this level of whether or not you found a startup, or you join a startup. By the way, we use this word startup, but like, you create a company, yeah, that’s what you’ve done, and then you need someone to do work. You hire them to do the work, right? We’ve just now seen so much of these, you know, out of the Valley startups where everyone gets equity packages and everyone’s an owner. And, right? Yeah, that wasn’t normal. No at all, at all. Right, like as the entrepreneur, as the founder, you took all this risk, and now you’ve got it to a point where I need to hire someone to do work, and I’m going to pay them a fair salary wage to do that work, and that was where that conversation ended, right? And I’m not saying there’s anything wrong with giving I think it’s smart, but it shouldn’t be. Just because I joined a startup that’s doing 100 million in rev I should get some big percentage of the company because, you know, it’s a startup, yeah, that I’ve always kind of struggled with, because there was a group of people who sat here who got it to this place, and yes, you’re gonna be a step function to the next. But it doesn’t necessarily mean you have shared in all of that risk upfront.

Brad Weimert 1:04:46
I think the equation really is getting back to the baseline and then asking the question, what’s going to incentivize behavior? You don’t need to necessarily do the minimum to incentivize behavior, but you don’t need to do the maximum either. And there is. Certainly a point where giving away equity does not incent the behavior anyway, and and people are only going to be as good as they’re going to be, yep. So it’s, I think it’s a tricky game. I mean, incentive packages, to me, have been one of the most difficult things to drill into and get to work for a lot of reasons, and one of them is that it’s easy to create perverse incentives without thinking about or without realizing it incredibly easy. There’s always somebody trying to game the system. And if there’s not, there might be and so when you’re thinking through incentive structures, you have to plug this hole somehow. Okay, so I want to talk about what you’re doing today. Let’s start with the difference between venture capital and PE Yes, because you kind of position yourself as both, or I’ve heard you speak both terms and private equity. PE,

Chris Van Dusen 1:05:46
yeah. So we’ll look at, I try to look at everything as a supply chain, right? So let’s look at venture capital as being earlier stage. So we have in our industry what I call alphabet soup, right? You have pre seed, seed, A, B, C, D and A, extension, A, B, like, there’s tons of different nomenclature around the rounds, but when you look at venture, they’re traditionally at a level that would be pre M and A and pre or pre IPL, okay, and what I mean by that is you’re giving growth capital, traditionally as a minority investor, right at a set valuation, or there’s many different vehicles try to make sure I don’t blow the ocean here, right on, on everything. But you know, you’re to find a company you’ve agreed that they’re worth 30 million and you’re going to put in 6 million, right? So now it’s a $36 million post money company. You’re a minority investor, and that’s where you sit. May get a board seat. You may be there to help and advise, but you don’t necessarily have a role within the company, right?

Brad Weimert 1:06:49
So you used about 15 terms that people that aren’t involved in VCs are like, What the fuck are you talking about? No, this is really important, because, you know, growth equity minority. I think people get post money, pre money, different stages of capital, all these things are super confusing if you’ve never raised money before or never gone through the process. So I want to break down, when you say you’re a growth investor, what does that mean? And how is that different than anybody else that’s giving you money? And let’s let’s just start with, let’s say there’s a $5 million company. They’re doing 5 million a year in revenue. Yeah, right. And they’ve never taken money before, so they bootstrapped to this point, but now they want money to grow. Is venture in. A lot of people get into venture capital from day one, right? There’s seed capital, and they are independent on people to infuse money, specifically in Silicon Valley, to launch the company. How is that, I guess? How is that different in the mentor world, versus somebody that bootstrapped to 5 million and is trying to raise

Chris Van Dusen 1:07:45
money from there? Yeah, it’s not what ends up being. The difference is, what type of business do you have? What are you trying to achieve, right? So let’s take a step back. Say we want to build a consumer electronic company, right? The great new device that we want to build, well, I got to do R and D, right? I got to build it, right? So that has a cost. Maybe I have enough money to do the R D and I build it and I have a prototype. Maybe I now need to raise money. So now it’s a pre seed, meaning I have done the R D, and now I need money to go make units, to go get sales. Someone’s going to take a risk. There’s a lot of execution risk there, right? So meaning that the

Brad Weimert 1:08:26
person that’s giving you money, the risk, that is the risk for them, is that you won’t be able to execute on the deal.

Chris Van Dusen 1:08:32
Yeah, the risk is substantial, because you have huge, zero market traction. And what I mean by that is, you’ve not sold a product yet, right? You don’t have POS or contracts from retailers to actually purchase this. You’ve said, I’ve built this thing, and I want to build more so I can go do all that. Right? Then, let’s say you do that, and you’re now in market. You’re selling online, you have a couple smaller regional shops, maybe you’re negotiating with a Best Buy or some big retailer, and if that comes through, you need to produce 10,000 units. Well, there’s a cost to those units, right? And so I need to go get money to fulfill the building of those units to sell. So that’s a different stage. But now I actually have what I would call some semblance of product market fit, meaning there’s people who want to buy this. I’m selling, I’m in revenue. That’s where we want to come

Brad Weimert 1:09:27
in. That’s digital capital comes in traditionally. Yeah, that’s awesome. That’s really

Chris Van Dusen 1:09:32
helpful. And by the way, the fun slash, I’d say, somewhat infuriating part about this, because everyone uses different nomenclature for these rounds, yeah. And one company’s pre seed is different than their seed than another company’s, and their a round is different than another C like it becomes more of where do I want to take the risk, no matter what the round is called, and what’s the valuation of that company at that point? Yeah. And why do you want to take the. Risk. Why? Right? What do you see as a market opportunity? Yeah, and I think so when when we look at venture capital funds, typically what you hear is, what is the funds thesis? And that, for anybody that’s not going down this road, the thesis is the set of beliefs that the fund has, that they’re leaning all their investments towards. IE, a company that’s gotten to this phase, that is in this vertical, just needs capital to grow, and we have resources internally that might help them grow, or whatever the case might be. Yeah. I mean, let’s take you know, years ago FinTech, which Fintech is still alive and doing great, depending on the company, right? But sure, we want to do a fund in FinTech. So we’re gonna raise $100 million we have not necessarily identified any companies yet, but we believe over the next five to seven years, there will be mass consolidation and growth and adoption and all this right around fintech. So we’re gonna raise $100 million and we’re gonna identify, let’s call it 20 companies, right at 5 million a piece. And it’s not usually that linear, but you get it right? Yeah, that we’re going to invest, because we believe this space is hot. But instead of taking one deal and putting 100 million in, we’re gonna put money in a bunch and then, traditionally, in a fund that

Brad Weimert 1:11:21
all have a similar approach, that’ll have a similar proof, and that’s where the thesis comes in, right? That’s where the fund is raising $100 million and all the investors, uh, rich people, or slightly less rich people, whatever range of money you have, you put some money into the fund, and what you’re banking on is the people that run the fund are competent in executing things and picking the right horses in the race the right companies. And you’re sort of backing their thesis. You’re saying, Hey, I agree with you that in FinTech, specifically FinTech companies that are leveraging AI that are already to 5 million in revenue, I agree that you’re probably capable of picking the right ones and identifying those so I’m gonna invest in your fund, correct?

Chris Van Dusen 1:12:01
Now, what kicks in? And it kicks in in most financial products. So this isn’t right that are aggregating multiple things. Think about a mutual fund the same way they’re picking a bunch of different stocks, right? And saying, We believe in this sector, right? We believe in this tranche of stocks, but we just don’t know which one’s going to be the banger and which one’s going to underperform, but we believe, since we’ve mixed these together, that they’re going to give us a return profile that looks like this. That’s how they work. So in venture and again, this isn’t prescriptive. This is just one way to look at it. You’d say, Okay, we made 10 investments. We know 40% of them are probably going to go away, meaning they’re just going to fail, or they’re going to be bought at what we invested in, meaning rolled up. Then, traditionally, I need one of those 10 to return all of the money I raised. So $100 million fund that one’s going to return 100 million to the fund, and then in between. The other five are going to be singles, doubles and triples. Maybe the IPO, maybe they sell to a strategic you know, they’re going to give you a good return, and that’s going to give you your overall return being in that fund. The interesting thing, however, is where you started, there was saying, I have a thesis, and I’m going to go raise capital against the thesis, then I’m going to identify the assets and I’m going to put the money in. Then it’s going to sit for five to seven years as they grow and scale, and things happen both positively and negatively, and at the end of the last sale or last write off, right? Depending which way you will look at it,

Brad Weimert 1:13:38
now you have your total return for the fund. And I want to point out a couple things with most, most venture funds here. So one is that you typically then are locking up your money for the liquid, yeah, you’re totally illiquid, so that once you give the money to the fund, they’re using it, and that’s the agreement, and you might get a distribution, you might not, but they’re you’re locking it up for five to seven years or something. The other part are the common terms on a fund, which are usually two and 20. Can you explain two and 20 on a venture fund?

Chris Van Dusen 1:14:04
Absolutely So. 2% is a management fee annually, annually, and 20% is what’s called carry or promote. That’s how we as venture as a venture firm, makes money. Now I’ll say that with an asterisk and that that’s not how we it’s like, oh, make our money.

Brad Weimert 1:14:22
Not Ignore the 2% either, relative to how you make money. So the rationalization of 2% for a venture fund is that it helps keep the lights on. That’s what they like to say, correct?

Chris Van Dusen 1:14:31
So you raise $100 million every year. You’re making $2 million as a firm, venture firm, right?

Brad Weimert 1:14:36
And if you have a billion dollar fund, you have a lot of money coming in, and your firm’s not necessarily that much bigger.

Chris Van Dusen 1:14:44
No. Now, let’s be a little honest here in that when you get up to a billion dollars, the sources of capital go from high net worth, ultra high net worth, family office, to now in. Institutions, yeah, yeah. And then you’re starting to play with those management fees you’re giving write downs and things like that, right? Okay, large group wants to come in for 50 million. Yeah, they’re typically not going to. So

Brad Weimert 1:15:10
correct be okay, correct with 2% 2% okay, so correct me, if I’m wrong here, and I just want to restate for PDF, because it gets confusing. But so in smaller funds, high net worth individuals can put in 100 grand, 200 grand, there might be a minimum, might be half a million, might be a million, whatever. When you get to bigger funds, you mentioned institutions, and I think a lot of people don’t think about this, or don’t know how it works, but you’re then looking at maybe, you know, city governments, retirement funds, pension funds, pension funds, right? And that’s where you’re getting money. The pitch is totally different to them. And what you just mentioned is, if somebody’s putting 50 million in, then they’re going to negotiate the terms that they buy into the fund at correct.

Chris Van Dusen 1:15:54
And traditionally, it’s on the management fee, not as much on the carry, although there is sometimes, you know, negotiation on lessening the carry for their dollars, on site agreements and things like that. And again, how does the carry work? The carry would work is, let’s say we had those 10 companies, and at the end of the deal, right end of the fund, it returned 100 million. It’s supposed to go to all the investors, right? I mean, the fund was returned 100 million, meaning it was just a 2x you raised 100 made 100 Yep, the first 20% there would go to the firm that sponsored it, meaning built it. Then the 80% that’s left is distributed to the investors, right? So, you know, I have a, I don’t say a problem, but I certainly think there’s a lot of inefficiencies built in the two and 20 model. So one, when you raise a fund like that, you’re traditionally on a mandate as well, from a time perspective, five to seven years with one time traditionally three year extension. So let’s call it a 10 year fund, of which you’re making 2% per year. So as a firm, you’re gonna make 20 million before an investor sees a penny, right? Let’s start there. Yeah, I think that’s there’s some inefficiencies. And you’ve raised 100 you’ve raised a hundreds, you’ve

Brad Weimert 1:17:09
raised 100 so over the course of 10 years, you’re taking 20% of the money that was raised, just to quote, unquote, keep the lights on in the firm, correct? Now

Chris Van Dusen 1:17:17
it, it usually isn’t that linear, right? It’s, again, being in finance, you’re looking at it going, sure there’s an upfront management fee, and then you’re going to defer many years while you’re waiting, and then when there’s a distribution of one company selling here to catch up like so it’s not as linear, but it’s also that’s the way that the firm’s making money. If the firm wants to grow, they have one fund for 100 million. They’re capped at the 2 million per year. So what ends up happening is, you fill a fund, deploy those funds, and then raise your second, right? Let’s say it’s another 100 million. So now you have four right? Then what ends up happening is you want to raise the third and you want to make it a two, $50 million fund. The question is, what’s your historical performance? You’ve had two funds in market? Well, I might be four years after the first fund, so now I’m starting to focus heavily on getting the companies in fund one sold. Yeah, maybe it’s the right time. Maybe it’s not, but I need performance. So are we aligned with our founders now, maybe, probably not. Now, I’m talking to this level of anyone in ventures. Listen to me going, he’s not wrong, but he’s painting us in a bad light, right? And I’m not to do that because, look, there have been massive wins in venture Yeah, but no, because we were to take the last 20 years and take it the average, right? The mean venture fund, yeah, and see how did it perform against the S p5 100 over the last 20 years? It’s 1.6% better than just keeping your money in the S p5 100. And it’s 100% illiquid, 100% illiquid, right? I would contend that premium of 1.6% per year would not be worth having my 100, 200

Brad Weimert 1:19:02
$500,000 locked up if it’s your total portfolio. And I would say that that becomes a question of kind of asset distribution, and I want a total alternative

Chris Van Dusen 1:19:10
portfolio. Yeah, exactly because, again, and I’m not a financial planner, so I want to be very careful here. This isn’t investment advice, but if you were to look at Portfolio structure, you should have, as an individual, as an individual, you should have exposure, depending on, on, if you’re, you know, high net worth, ultra high net worth, a certain percentage in illiquid alternative investments, right? They are going to be a little riskier, yeah, but they’re going to have a much higher reward if successful, right? But it’s also we’re talking about, and again, just, you can look this up. It’s just a standard portfolio, about 5% of your investable dollars, yeah. So if you’re putting in ten million to about $500,000 yes, right, yeah, goes in there. And of that outside of real estate or, you know, fixed income and things like that that are also alternatives. You could look at it and say about 20 to. 5% of that 5% should actually be in these type of things. Yeah.

Brad Weimert 1:20:03
So, yeah, I want to take a moment to sort of separate, conceptually, a couple things. So we are, we’re going down the rabbit hole right now of picking apart how a venture capitalist thinks about funds, what their incentives are to raise money. And then we’re touching a little bit on as an individual, which is the bulk of the people listening, entrepreneurs, what you might want to invest your money in. And it’s important to kind of separate those two concepts when we’re talking about portfolios and investment and where the money goes. But I think it’s super helpful in one of the things that you’ll and by the way, I want to echo that, that there are, there’s a tremendous amount of wealth made in venture capital. There’s also a tremendous amount of money lost, but that, and that’s actually what’s dangerous about it, because, like you said, the game plan is one of 10 returns all of the money. And if you, if you end up in a venture fund where that one doesn’t hit, well, that fund is fucked, and then you don’t make any money and you lose it, yeah?

Chris Van Dusen 1:21:04
And, you know, you’ve got to look at it and say, What is success and failure look like, right? So I think most venture firms would endeavor depending on where they’re at, right seed versus late stage right now, let me meaning clear. I think what kind of companies they invest in, yeah. So, you know, there’s some, I’ve got some great friends who have these, uh, true venture funds, but they do really pre IPO work. So you’re talking about valuations in the hundreds of millions, and they are focused on getting in. Think about it more as a cash on cash return every year, what we would call an IRR internal rate of return. So they’re going to peg in at 18% so the idea being, when this thing goes you’re not going to be in something that 40 x’s, but where they’re at from a stage the risk reward kind of seesaw has changed, where the risk is still there, but it’s a lot lower. But so is the absolute return, right? But if I were that check in that pre seed R D company we talked about a few minutes ago, and they blow up and they blow up, I could see a 40x on my 100,000 Right, right, right? So you’ve got to understand also where and what stage you’re investing, yeah,

Brad Weimert 1:22:17
well, I want to, I want to just close the point on venture incentives. Because a lot of the time when you’re talking to somebody for any entrepreneur that’s looking at investing in a fund of any kind, and this could be, you know, a real estate fund, it could be a technology fund, whatever, if they’ve raised, you want to look at the history, and you want to look at a closed round if, in maybe, maybe you can a closed round that has performed. So when I say a closed round, that’s also sticky language, because you’ll hear people raising money say, Oh, we’ve closed that fund. And what they mean is we’re no longer taking on money. It does not mean that that fund has gone full cycle, correct, right? And so what you need is for to see the performance of the assets inside the fund. When the fund is done, so did it return capital to the investors and in before funds have gone through multiple different funds, they will sell you on how quickly they filled up the fund, or how quickly they raised the second fund, or how big the fund is, right? But until you see it perform, it’s up to you as the investor to be able to do your own homework on whether or not you trust the people that are running the fund and you’re behind the thesis. Does what they say makes sense to me, but I think it behooves everybody to educate themselves as much as they can, to be in alignment and not be sold on a fund. And that’s why I wanted to dig into the details of

Chris Van Dusen 1:23:40
it. Yeah, I’d say one nuance though, that I’d build on that is, track record is extremely important. You do have this thing that’s uncontrollable, which is, time, I can’t speed it up, necessarily, right? Sure, unless I wanted to do things disruptive inside of the portfolio. Well, too You’re selling too early. Exactly

Brad Weimert 1:23:57
to your point, you’ve got an incentive as a as a venture capitalist to close the first round so that you can show performance when you’re raising a new round, even if it’s not to the benefit of everybody involved, but it is to the fund. Yes. So tell me how you’re different. Because this I want to, I want to dig into your specific because I started by asking you the difference between venture capital and PE, yeah. And so you are sort of a private equity company, but I hear you say that you operate like venture capital, or what’s the difference between the two? And how do you operate? So let’s, let’s

Chris Van Dusen 1:24:26
inverse that actually we’re more venture today. And the reason is, if you look against our 34 companies that we’ve invested in, they were all seed through B right. Go kind of back to the alphabet soup, earlier stage, right? Yeah. The difference being, we start at the asset and then go find, come, find capital. So that is, first of all, we just flip the model so we don’t have a fund. We don’t go raise $100 million fund and then go

Brad Weimert 1:24:56
identify so you’re letting people invest in the company. You’re excited about. Basically, instead of just investing in you, hoping that you’ll pick the right ones, you got it so

Chris Van Dusen 1:25:05
they can, I make the joke, touch it, taste it, feel it, do the whole thing. Meet the seat gross. Meet the CEO. Look at the forecast like they can look at the asset before they make that investment. Love that. So that starts. The other thing is, you know, I, I’m one of 11 partners. There’s a few of us that do more traditional venture roles, right? So raise capital, find new deals. Speak like I am today, right? What I call power broking in our ecosystem. So, like, who needs to meet? Who? How do we get things together? How can I add kind of asymmetrical opportunities for certain companies in our portfolio, like that’s all what we’re focused on. And so the other partners, the majority, though, other partners and our staff, are really running a management consulting firm. So when you look at private equity, the difference between venture and private equity is private equity. We’re going to do a minority or a majority recap. Now, what does that mean, right? Let’s say a company is worth $50 million just using this as an example, I might go buy 51% of that company. Now I’m in the control position. I quote, unquote, own it. I may bring in an entire team of proven operators to go scale that asset that now I own. To do that, it’s a very different role than in being an early stage investor, where I put in money, I sit on the board, but the founding team is driving it forward. And again, when I go to private equity, it doesn’t mean you have to replace the team, but the idea is now I control it. I own it, part of my portfolio. Yeah. More influence, more influence. And so traditional full control, or full control, and I’m going to put traditionally teams of people, and I’m going to make decisions on optimizing EBITDA, meaning optimizing profit, right? I may roll up other companies to add revenue and then remove a whole bunch of overlapping administrative costs make both companies more profitable. So I’m making decisions on how to build something over a three to five year period that I can then sell for a higher multiple, but I’m in full control. What we do is we take those teams of individuals just like private equity would, and not mandatory, but a lot of cases, will drop them into these early stage companies. So we started the podcast right. I’ve had three exits all around marketing and growth. Well, there’s no reason why I couldn’t if I needed to go into one of our companies as their Chief Revenue Officer for six months and help them get in order what needs to get done. And I actually did my first year at the firm, spent six months in one of our portfolio companies acting as their Chief Revenue their chief revenue officer. They didn’t need one long term but at that point they needed someone to come in, work with the board, work with the rest executive team, and really kind of drive efficiency around marketing, sales and strategy around product. So I spent that time doing it. We will charge those companies for that time. So the other thing is, if we’re starting with the asset first, and going to find and match capitals with our LPs and in market LPs, meaning, yeah, invested in the Fund, then we’re going to structure our deals very differently. And so we don’t run a two and 20, we’ll have either no management fee, or we will have a much larger product, a fixed management fee, right, a certain percentage that is fixed, much lower than on a 10 year 2% or 20% right might be four, might be six, but that’s a one time, and it’s done. And in a lot of cases, we use that capital to help us get the raise done for that deal, because we have this management consulting firm that’s generating revenue. So it’s a very different model. I’m not capped by my management fee on how much our firm is able to drive in revenue and build the team around. So I’m not correlated to, Oh, I gotta go raise another fund, because I need to add more revenue. So

Brad Weimert 1:29:02
internally, you have another revenue source, which is management and consulting fees for the 34 companies that you have, 34 companies, and outside third party got it. So you’ve got the a big, a big asset here, inside of the firm, is that you have a, basically a bunch of operators in the firm that companies you’ve invested in can tap and say, Hey, we’re in or you might suggest it probably. And you say, Hey, you’re having a hard time with growth. Let us put somebody in place. Let from our management consulting firm to do the growth for you, or guide the growth and make it happen, correct, or whatever other area you’re deficient in, that’s right. Let’s have a CEO or CFO come in and help get the financial picture and the forecasting in place and help you grow to the

Chris Van Dusen 1:29:48
next level. You got it. Help with modeling, help with strategy, and if you think about it, traditional venture. And again, I’m not picking on anyone, but you know, let’s call it me and you. We start a venture firm. We go raise $100 million we have a couple admins. Then a person that helps us with due diligence, you couldn’t, nor do you have a staff member that could go sit for the next six months inside of one of those companies, right? Because, guess what? You have other companies that also have your needs as well, right? And so for us, very differently, we have this big, robust team of operators, right? Who can go spend the time to go help scale? I love that, and what it allows us to do is, again, really focus on finding what we believe is a unique and defensible company in the market that we believe has great potential, and then put together why we believe it’s great through our due diligence process, through our full investigation of the opportunity, make a recommendation on how much we want to invest and what value, and then go out into the marketplace to our investors and say we have something we believe is really interesting. Here’s how we’re going to support or here’s how we don’t need to, because they’re already doing wonderfully, and here’s the cap. We need to get it over the finish line. And they may choose to participate or not. That’s one. Then we also can take, like we have in market today, 13 companies, put them in $100 million product. It’s not a fund, right? Sec, registered product, and then go, if you want exposure to these 13 companies, here’s how your money would go into these companies, and here’s where they’re at. Here’s their forecasts, here’s their teams, here’s everything you’d want to see, right and now you can look at that before you ever stroke a check, instead of saying, Okay, I know AI is a hot topic right now, so I want to go invest in the best AI fund I can. I can. Well, no, AI deals really gone full cycle at this point. So what is the best AI deal? And for me, I look at it as a great corollary to, you know, the tech bubble back in early 2000s right? There’s a lot of money made in there and a lot of money lost. And if you look at the really big funds that are focused on AI, it is an absolute shot cut approach, yeah, it is. We’re gonna just put money in everything, because one of them will hit 100% I’d like to say one more truffle picks. We go find that great deal, yeah, and then put time, energy and money against that, and then we might have five or six other deals. And then we’ll bundle those together, and then you get access to all of them. Cool with your same dollars.

Brad Weimert 1:32:22
Let me ask you a couple quick questions around from an entrepreneur’s perspective, if you’re an entrepreneur and you’re looking to raise money, what are a couple of the gotchas that you need to look out for from venture capitalists or PE companies

Chris Van Dusen 1:32:40
to start. They have a fiduciary responsibility to their investors, period. Hard stop during the dating process. Everyone’s best friends. Then you’re going to start negotiating on term sheet, and everyone’s going to get a little heated, but we really everyone’s going to the best outcome, then we’re back into the honeymoon phase, because we’ve just consummated the relationship. Our goal is to support, help, guide, mentor you, you know, add the positive word there. You to make this company the most successful possible. Our expectation is you live up to your end of the bargain on driving that company to be the most successful possible if that starts to falter, as much as we are on the board, and we are friends and friendly and all the things ultimately, we have, as a venture firm, taken other people’s capital to deploy in this opportunity, and it is our responsibility to help see that be the most successful possible the gotcha in that is this isn’t a frat house. This company needs to grow systematically focused with how step functions like it needs to be run now, professionally at a different level than you may have done before, and that level of sophistication sometimes does and sometimes doesn’t match the original founding team’s capabilities. And so while we invest in humans, that is, for me, personally and for our firm, a huge part of our due diligence process isn’t just, hey, how good is this opportunity on paper? But it’s getting to the founders. There are so many amazing ideas companies that just fell apart because the two founders started fighting. I want to understand that relationship. I want to take you out for maybe a drink or a cup of coffee. I want to see if you start talking a little shit on your co founder, right? Like, sure. I want to understand everything, yeah, because ultimately, I’m investing in you to steward this forward, this great opportunity forward, and so I think there’s just a little bit of you know, you. Everyone hears the horror stories of venture firms kicking out the helpless founder traditionally, I’m not saying always, but traditionally, that’s because they may not be living up to their end of the bargain on what was agreed upon, on how this company should continue to progress.

Brad Weimert 1:35:16
I think that most disputes in life come from poorly established expectations on the front end. And what I heard was, as a founder, if you want to take on venture capital, make sure that you establish clear expectations and understand that those expectations have to be met, and if they’re not met, what the recourse is in both directions, both

Chris Van Dusen 1:35:45
directions, we talk about a lot about the difference between true enterprise value and a lifestyle business. There’s nothing wrong with either. Yeah, it’s really hard, as a professional investor, to get investors the return on their capital if we build a lifestyle business for sure. Now I meet with many individuals, friends as well, who are like, if I just had a million dollars, someone could invest, I could scale this up to 2x you’re like, great. Then what for the person who gave you the million, right? Are they just going to get distributions every year? That’s great, right? Go find the private person to do that. Or maybe there’s some, you know, firm like ours, that just wants a cash on cash return, and not the large right return. I’d find that hard, because traditionally, that early stage company, right? We want a good return. And so if you’re building a company, just to double and add more money to your pocket as the owner or founder. It doesn’t necessarily match professional investors desires, but if you want to take this small company that has massive potential and you know, grow it into a nationwide big opportunity, then that’s when you bring in someone like us or another venture firm to help you do

Brad Weimert 1:37:04
so what entrepreneurs or types of companies should not bring on venture capital

Chris Van Dusen 1:37:12
service based businesses that have low multiples. There are other strategies to use. I think it’s incumbent on whatever business you have to understand enough about the market to understand, did companies sell in my market? Have other companies raised funds? What do those valuations look like? What do those multiples look like on my revenue or EBITDA? And then you go, Okay, well, again, back to an example. I’m doing a million dollars in sales and $200 million in EBITDA, and I get EBITDA, and I get a 5x let’s just say that’s why business is worth its revenue. If I want to, at that stage, raise capital that’s worth a million. How much do you need? I need 250 grand to do what I need to do, which, by the way, is not a lot of money, right? Right? Well, you’re gonna have to give away 25% of your company. You’re company, 250 grand,

Speaker 1 1:38:04
right? Or you look at debt or wreck, or you look at getting a loan, correct? Yeah.

Chris Van Dusen 1:38:09
Now that doesn’t sound as sexy as going to a venture firm, no, and you’re now liable, liable, and you need to pay your debt service on that monthly. So you need to bake that into your projections. But I think it’s truly understanding what the value of your company is and what you want to achieve. I mean, there are many companies that raise 10s of millions of dollars and aren’t even in revenue,

Speaker 1 1:38:32
right? Like Uber? Well, Uber is in revenue, but they’re net negative, right? Yeah, early

Chris Van Dusen 1:38:37
stage now, but what they had shown was they’re going to change logistics across the country, right? Meaningfully. This was an, you know, big, hairy, audacious goal that people said, I see what you’re trying to do, and I want to get behind that. Yeah, right. But I want to build a chain of laundromats, and I’d like to add more laundromats. That’s great, yeah, but are you building the next nationwide laundromat? Yeah, company. Or are you just adding more laundromats? Yeah, I think

Brad Weimert 1:39:06
that that goes back to your point in the beginning, which is attempt to get clarity on the outcome that you’re after. And if you do that and you look at what the how to align incentives around that, you get a clearer picture about what’s possible and what’s not and where the source of money could come from, might come from, should come from. I have a I opened the door with the Uber rabbit hole, but, you know, something like that that has meaningfully changed transportation entirely. I think there’s still this hope that that company will be transformed by or produce an exit through self driving, and maybe make it profitable. But I wonder in that instance, if you know if the fallback is, like government subsidy, right, like the airlines or like farming, where at some point you get to the situation where the government’s like, fuck, we need to keep this thing around. It’s. Private right now, but maybe we should help it so it doesn’t go away. Brewer

Chris Van Dusen 1:40:03
mill here. And maybe there’s some great articles I just haven’t seen. But I know there’s a lot of discussion about Tesla looking to build a Uber esque type force, right? Oh, yeah, of self driving. Do they partner with Uber? Because they already have, right? The entire transportation logistics done by I’m like, how does that all work? Right? I think there’s going to be, well again, not to get into political conversation, but new administration, new haircuts, new optimism around IPOs and M and A, which has been pretty stagnant over the last few years, I think you’re going to see a lot more wonderful M and A activity in the kind of capital markets, some consolidation. You’re going to see a lot of money, I think, start returning, and that’s where a lot of these type of opportunities start spurring from, because it trickles down through private equity and venture

Brad Weimert 1:40:50
as well. Okay, couple other quick ones, because I know we’re coming on time here. What advice do you have for an entrepreneur just starting out

Chris Van Dusen 1:40:57
today? I think you said the best advice, so I’m just going to parrot you, which is just do it with a couple caveats. You do not need to have an old school business plan written out right with beautiful spacing and this amazing I’ve never built one right for any of the companies I’ve started. But understand what you’re trying to do, understand the costing involved to get it reasonably off the ground, work on it before you ever take any extra money, with the exception of potentially friends and family. Because I always ask, well, if none of your friends and family were involved, did you try? And they said, Yes, go. Then they didn’t believe in it enough. Why should I? Or you haven’t spent any of your time, energy and money. I mean, I’ve had individuals who have introduced to who give me PowerPoint presentations, and I’m like, You want money now you’ve not done anything, right? This is a great like, this is a school thesis you built but like, go do something. I need to see something. So to your point, like, you just need to try right? Use the Amazon one way, two way doors, right? Like, traditionally, at this point you have a job. So when you’re done with your job for the day, go work on the thing that you believe is going to change the world. Do that, and as it starts coming to fruition, then go, Okay, now I’m ready to go, take the step to build something big. But you do have to just try do it. Do it. What’s

Brad Weimert 1:42:34
one of the top five books that has influenced your

Chris Van Dusen 1:42:37
life? There are quite a few loon shots is a great book. Forget the author negotiating with the devil. Another good one, then Chris Voss has another one. Never split the difference. Ever split the difference. Great book. I love all the Ryan Holiday stoicism books. He’s in Austin here. Yeah, he’s great. I was just spoke at an EO conference before him. Oh, nice. Where we Dallas,

Speaker 1 1:43:03
yeah, he’s great. He does like a fourth of July party every year. Oh, not with his goats,

Chris Van Dusen 1:43:08
some goats. Yeah, I would say those are some, some great books. My favorite, however, and I’ve got to give you just a tiny bit of background. I joined this group in 2017 it’s actually I met John Garcia, the founder, a co founder, of our firm. I did something. I joined this group called Alder, a, l, D, E, R, like the tree all around generational leadership, how to live your legacy today. So you asked me a book. One of my favorites is this book by David Brooks. He is a political commentator, but don’t worry about that. Wrote a book called A Road to Character, to kind of give you the quick synopsis, he postulates the question, which is more important to you, your political your professional CV, right? Your resume, or what people say about you when you die. Most people know what people say about me when I die. You know, great. What are you doing to live that legacy today? Most people go crap, right? Because we’re like, Oh, when I retire, I’m going to do that, or when I’m going to do this, I want to, I’m going to do that this. This group is really, there’s about 300 of us across the country that are focused on trying to do that today, trying to live some form of, some legacy, if you will, give back today. And that doesn’t mean you do something crazy. It just means what, what steps can I take to impact my local, regional, national community, meaningfully? Podcast,

Unknown Speaker 1:44:32
what podcast you listen to or watch

Chris Van Dusen 1:44:34
all in nationally, uh, listen to Rogan for for years. Maybe that’s the whole jujitsu thing kind of drove me into it. I like to call it micro learning. My wife calls it Doom scrolling. But either way, I see a lot of interesting clips right as I kind of go through different social networks. And then what I’ll do is I’ll either write it down or I’ll go subscribe to that podcast that I’ve listened to so. Blurbs on, yeah, and then go find other episodes as they come up to listen to. So I kind of like through discovery, get to find great things. Yeah, I think that’s a

Brad Weimert 1:45:08
really good takeaway for people that are truly do scrolling and not micro learning, is curate your friends, curate your connections on these platforms, so that you get to decide what the algorithm showing you and you’re not just watching your friends post a bunch of nonsense, unless you have a really, really strong group of friends that are producing really high quality stuff that is uplifting. You delete, delete, delete, subscribe to the people that are actually gonna influence your life in a good way, and then you’re scrolling on social actually adds value to you. 100%

Chris Van Dusen 1:45:41
I’d love to say that I have all these that I follow, but on a given week, I might listen to 30 and 20 of them I’d never listened to before, but it doesn’t necessarily mean I’m going to come back and listen to them again. Sorry, every podcaster, but you had someone really interesting that caught my attention, and I want to hear the before and after to that conversation, and then maybe I really enjoy your interviewing technique, tactics, whatever. Yeah, and you have someone else that I think would be really interesting, and I’ll listen there. But I think it truly is with the amount of content that we talked about before that’s pretty much produced daily. Yeah, there’s no dearth in being able to learn as much as you want. I think it’s finding the type of individuals you want to learn from. And again, these social, social networks are great for being able to discover if you curate it meaningfully, as

Brad Weimert 1:46:25
you said, Awesome. Chris Van Dusen, I appreciate you coming out, man. It’s been awesome talking. Thank you. Really appreciate it. This has been awesome. If people want to find out more about you or the firm, where should they go? Soleco, capital.com

Chris Van Dusen 1:46:36
so l, y, C, O, capital.com Also, I’m on LinkedIn, Chris M, as in, Michael Van Dusen, and the exact same thing on Instagram as well.

Brad Weimert 1:46:48
Love it, man. Thank you so much. Thank you. This is great. All right, the episode’s over. If you’re new here and you don’t know me, my name is Brad Weimer. I am also the founder of easy pay Direct, which is a payment processing company that serves a tremendous amount of our guests on the show and a ton of our audience, people like you. So if you’re accepting credit cards and you would like better service, better rates and a way to optimize the way that you’re accepting payments, you can check us [email protected] forward slash b, a, m, again, that’s epd.com forward slash, am you