Jay:  Hey, Maxx. Thanks so much for joining us. We’re excited to have you on, and you bring a unique background and niche that I’m excited to speak to you about. Thanks for your time.

Maxx:  Of course. Thank you for having me.

Jay:  Absolutely. Maybe you, for the audience tuning in from around the world, you could give a little bit of background on yourself and what you do for a living.

Maxx:  Great. I am the co-founder and principal at BOLD Capital Partners. We are a Los Angeles and San Francisco-based fund. I currently am in Los Angeles today. I’ve personally been investing in startups for the last six years. I’ve probably made close to 15 investments so far — traditionally seed, Series A, Series B companies. This is the third firm that I’ve been with. I helped establish those two. I wouldn’t consider myself a co-founder of either but worked intimately with both funds. As of about two, two and a half years ago, got BOLD Capital started as co-founder.

I’m a double major in finance and psychology, which I think helps shape the way I invest. Fairly unique this day and age, most people are very heavily in the technical backgrounds, but as I tell you more about my thesis on the world, you’ll kind of see how those two play a role.

Jay:  Actually funny enough, thinking back on my own academic career, if I had to do it again, I think there would be some element of psychology that I would study because investing, whatever stage you’re at — early stage or even late stage, public markets — the majority of it is psychology. I think it’s very powerful to have that sort of background. I wish I had a better background on it because I catch myself making a lot of mistakes and trying to analyze human behavior because that’s basically what the markets are all about.

You personally are an angel investor, I guess, and have done a lot of investment.

Maxx:  I have been an angel investor before, correct. BOLD Capital is actually a legitimate $115 million early-stage venture fund with limited partners that have invested in the fund for a set period of time. These are people that have done angel investing on their own, sometimes still do but use our vehicle as a way to round out their angel investment activities. A lot of the time, we have high net worth individuals that will invest a minimum amount with us and have co-investment rights into deals that they wouldn’t be able to get into without the BOLD Capital brand behind them.

So I’ve done a lot of angel investing, but BOLD Capital is a pure venture fund, so that’s kind of the perspective I’ll be coming from which can be applied to angel investors. I have a whole section coming up if we want to talk about my thoughts on angel investing. It’s difficult, to say the least.

Jay:  Sure. Absolutely. Well, obviously BOLD Capital is more of an established, very, very established venture capital firm. The reason I was asking about your prior experiences is because, like you just said, angel investing is extremely difficult. I think a lot of people now have dabbled in it. I have certainly dabbled in it. It’s probably one of the most challenging aspects.

What I quickly realized was I didn’t know anything about angel investing. It’s extremely sexy and interesting when you dive in, and you can go around, and it makes for great bar conversation. “Yeah, I’m an angel investor…” But then you quickly realize that you don’t know what you’re doing. The learning curve is very steep, so it’s important, I’ve found, to take a step back and give my money to professionals like yourself that actually know what they’re doing and have the resources and access to make educated decisions.

Let’s talk about BOLD then.

Maxx:  Hold on for a second because I have a whole section on that. And don’t beat yourself up too much. Even the greatest, the smartest people out there, the ones that know everything there is about due diligence practices and all of that, angel investors still lose their money. Frankly, it’s because you’ve got to look at it from the other perspective.

If I’m an entrepreneur and I want to have the greatest… Dealing with investors is hard, and then you’re dealing with angel investors that do want to talk about this at cocktail parties — I like to call that high-profile versus high-quality deals — it adds more to your plate. And a lot of the times those guys or girls go on vacation for long periods of time, and they’re hard to reach, and they’re hard to move quickly. Even though their decision might have taken a week or a day, on the spot compared to a VC fund that might take six to eight weeks, it’s a different value proposition as an established institutional venture-capital fund that an angel can never really provide is one.

Two, the deal flow that you get is just, by definition, not going to be as great. So don’t beat yourself up, but there is a lot of things working against angel investors.

Now, that’s not to say that angel investors… You invest for two reasons. One, to make money. That’s first and foremost. I guess there are three reasons. To make money, to make a lot of money, and then to do it for emotional reasons. If you’re an angel investor, you get to take more liberty in what those emotional reasons are. Maybe you want to support a cause or see a problem get solved in the world.

There is a time and place for angel investing. It’s basically Vegas. So if you are interested in that but have a lower risk tolerance, I would take your advice and let professionals handle the money.

Jay:  One of the early pieces of advice that I heard when I started angel investing was essentially it’s difficult because when you’re that early on the company growth curve, it’s hard not to just have these moonshot visions of “Oh, I can see this,” and extrapolate out earnings and all this sort of thing or potential growth. It’s usually growth at that point. There’s not even earnings.

But the problem is when you look at a company at the early stage versus a public company, you have to view it as a what-could-go-wrong before what-could-go-right, which is kind of the opposite of what most people… They like the think about the potential, but they don’t think about the fact that 99 of the 100 companies will probably fail.

Maxx:  It’s really hard being an entrepreneur that’s also an investor because being an entrepreneur, by definition, you’re overly optimistic, and being an investor, you need to be overly pessimistic. So it is definitely a difficult mix to have.

Jay:  Absolutely. Given your background, let’s talk about BOLD. You obviously had a few funds, different ventures that you’ve been involved in. BOLD is obviously what you’re working on right now and what you’re most excited about. So let’s talk about that. How did you get involved? How did you come up with the idea to launch it? Obviously, you have a hugely high-profile name, Peter Diamandis, who is one of your partners. How did that all come about? Give us a rundown on BOLD Capital.

Maxx:  Great. The creation of BOLD Capital is maybe best started with stepping back a little bit and also telling a little bit more about my history. I’m glad most people know Peter Diamandis’ name. He’s obviously the founder of the XPRIZE. What’s most relevant is he’s also the co-founder of Singularity University, which is a partner with us in BOLD Capital as well. Between Peter and SU, we have established this fund on top of this 5000-plus person network that the two of those entities bring.

And we’re an early-stage fund — 110 million, like I said. This is our first fund out of BOLD Capital. I’ve been around for about two years, have made close to 19, maybe going on 20 investments.

We’re a fairly broad fund. We invest in areas such as healthcare, security, autonomous vehicles, communications, ARVR, again tech, synthetic biology. That’s what we like to call something called exponential technology. I’ll get to that a little bit later.

Our thesis is we invest in companies that are solving a solution to a global and important problem while utilizing these exponential technologies. So we might be invested in an agriculture company that’s using synthetic biology to recreate the way that biopesticides get delivered. But at the same time, we might be investing in a 500-pound payload drone.

So we are a broad fund, but we believe that this thesis of being able to solve big problems using exponential technologies can’t be contained and is going to be constantly evolving. So that’s kind of the reason we are partnered with Singular University, and I’ll tell you about the Peter story in a little bit.

But they have I think, if not the best, one of the best networks in the world with this sort of theory on technology being able to solve these big problems. I think you pair that with Asia, which has the largest market and a lot of problems that need to get solved and are looking for outside innovation, it makes for a great place for BOLD to start — or we have already been looking at lot closer into.

So I think it’s a great mashup we have today, and I’m excited to tell you more. But let me go back to your question on the founding of BOLD Capital and how we got Peter involved. It actually relates to angel investing.

I met Peter about eight years ago working on my own startup eight, nine years ago now, working on my own startup. Through that, got a little bit involved with the XPRIZE. Found my way immediately after that into venture capital. Really was focusing on if I’m going to get involved in a venture fund. I didn’t want to go to a new fund. I want to start a new fund — that was 2012 at that time, 2013, something like that. Let’s just say that the tone of the conversation was changing from Twitter dominating the headlines to all these really amazing technologies starting to happen.

So I reconnected with Peter and Singularity University about four years ago through a mutual friend that had been working with Peter directly and said, “You should come take a look at what we’re doing.”

My first conversation with him was “We need to start a venture fund around you and Singularity University. You guys have the network,” like I was talking about from angel investing. Network is everything. “You guys are going to get incredible deal flow. You’re branding is huge.” I laid out all the points that I thought were valid.

So he said, “Alright, why don’t you work for me, prove yourself for a little bit?” So I managed his angel investments for about a year, kind of co-invested with him in a number of things. That’s where we really cut our teeth learning let’s not waste our money at the angel stage.

Peter has the good fortune of being perceived with his value that he can come on as an advisor to a lot of companies, so I kind of transitioned from investing capital to investing for sweat equity and realized we needed to get this fund started earlier than expected.

I worked with him for two years mobilizing the network that we will then kind of eventually build BOLD upon and realized we were missing an incredible management team.

We’ve got the front of the funnel. We’ve got an incredible deal flow, but going back to the conversation on managing optimism versus pessimism, Peter is one of the most optimistic people in the world. He’s got optimism in abundance, and you’ll see that overwhelmingly. So we had to balance that out with a set management team that’s been investing for 30-plus years together in one way or another.

Found them about two and a half years ago. Spend a little bit of time making sure we liked each other. There were a lot of strong mutual connections. It was just perfect timing and fate. For a first fund, went out to raise about $100 million, was able to go past that, which we were really excited about. We got some really exciting investors. While we have a number of individual investors and high net worth families and stuff like that, we were really focused on corporations and other value-add investors from around the world.

We wanted to create this global platform where our thesis is to take solutions that are solving problems in the US and take them abroad where the markets might be bigger or the need might be stronger. And so we’ve partnered with a number of amazing LPs of which we’ve got several in China, Japan, and Singapore right now.

I’ve been working with them on bringing some of our companies and technologies and innovations to the Asian countries in the Asian markets with their help. That’s where I think a lot of background on my information on investing in Asia comes from, a lit bit about BOLD Capital, and then how we got BOLD going, and the collaboration of Peter and Singularity and this great management team.

Jay:  That’s a great overview. Thanks for that, Maxx. Maybe you could give just a little bit of intro on Singularity for the people that may not be familiar with. We’ve had a few alumni on. If you explain that, I think it will help the audience understand the backdrop of how your deal flow and the ideas that you guys are targeting.

Maxx:  A hundred percent. Well, definitely look it up. It’s hard to explain in a few minutes. But Singularity University, SingularityU.org, for those who are not familiar, it’s essentially an organization that consists of about 70 experts in every technological area from artificial intelligence to self-driving cars and synthetic biology and 3-D printing and nanotechnology and you name it, they have an expert faculty member, generally a handful of them, that are either entrepreneurs in the space or professors or come from the corporate innovation or just an expert in some way to the point where they’re able to provide us cutting-edge information on deal flow and the ability to do due diligence on deals that a typical venture fund doesn’t have the in-house capabilities for that.

We, as a small nimble team, are able to capitalize on this SU faculty resource. The next element of Singularity is the faculty puts on different events, different length events for different audiences. Those events consist of things like executive programs which are week-long in Silicon Valley to corporate programs which happen twice a year for Fortune 500 corporations on their strategy. The price tags of these events are generally high, and that’s really to quality the group of entrepreneurs and people that go through these programs. 5000 highly qualified people around the world is extremely valuable. We’ve been looking at an idea of doing an online SU program to extend that base by tens of thousands, but creating that core group organically has been really valuable to ensuring the deal flow that we get is extremely high quality and not making too much noise.

It’s really just an established, qualified community of people that have gone through these programs, have this mindset, are wanting to change the world after you leave one of these programs. They also have these events four or five times a year that you can check out. The bottom line is a group of experts talking about how technology is going to make the world a better place, essentially.

Like I said, we get a lot of deal flow from people that have gone through these programs, that are presenting at these programs, that are the faculty that are putting these programs on. SU, Singularity University, also has an accelerator and an incubator which provides maybe 40, 50 interesting deals a year to look at as well.

That’s the SU ecosystem. Peter is a co-founder of that ecosystem plus other nodes. But I think that summarizes it.

Jay:  Yeah. Basically it’s probably the only partner given the uniqueness of SU that could actually provide that constant deal flow.

Maxx:  In this area at least.

Jay:  Right. You mentioned they’re a partner. Obviously they’re a partner. It makes sense. Do they also get involved in the actual selection and investing, or is it more, okay, they have their platform. They’re providing this constant source of deal flow, and you guys then come in and you do your due diligence, and then you cherrypick the investments off of that?

Maxx:  Good questions. That’s where I was getting with we needed a management team. I would say SU and Peter are the front of the funnel, and they bring in everything. Having them as any part of the decision-making process automatically creates a bias towards them and limits the size of our    [inaudible 0:19:33] essentially. Then it gets filtered through a series of filters to our core management team that does the decision making. And after that, we then re-pass it off. It’s a funnel like this. We re-pass it back off to the SU and Peter universe for the business development opportunities.

The simple answer is no, they don’t get involved to a high degree because, like I said, it creates bias. Also, if they’re involved with companies that are incubating or accelerating, and they say no to a company, it automatically creates an unneeded bias toward that company. So they don’t. But we definitely lean on them for decision-making in terms of due diligence from the experts and things like that.

Jay:  Let’s talk a little bit about exponential technology, which is the area that you guys invest in. It’s basically, when you think about the world, I always correlate it to these guys are like the rocket scientists, the Tony Starks. This type of technology is what you guys are investing in. Different types of VCs have different mandates, obviously. When you think about companies like Y Combinator, they’re very specific, and they actually will come out and say, “We only want to invest in the next billion-dollar company, and that’s it. So if you’re just a little company that wants to change this little part of the world, then you can go somewhere else and get funding for that.”

You guys have a very specific mandate. When you think about exponential technologies, it’s huge. There are so many moonshot ideas that could potentially change the world. When you work yourself through the filter of SU and then when it gets down to your level, what are some simple metrics that you use, if you’re allowed to share a little bit with the audience?

Maxx:  We have a few factors. Going back to what we said, the optimism versus pessimism is a big thing. We love the concept of moonshots, but we invest in very few of them. I think people get really excited about the idea of exponential technologies, and SU does a great job of predicting how they can affect the world over the next three, five, seven, ten years. But we are looking to make money a lot sooner than that for our investors.

A lot of people don’t realize that exponential technology has been around for a long time. Let me just do a quick background on this, and then I’ll go to how we process all of these opportunities.

Exponential technology is really the concept that the world is changing at a rapid pace. Technology is changing. Every industry, small teams of people can how do what only governments and multi-national corporations could once do. They don’t realize that the three main components driving this is not just Moore’s Law. That’s just one element of it. It’s computing power, which is doubling every 18 months and getting cut in half in cost. But it’s also the increased bandwidth and connectivity and the decreased storage costs.

There is a great graph out there that shows back in 2000 the average cost of a startup was $5 million. Then with the platforms being built around servers and broadband, it moved down to $500,000, and with AWS and with storage costs and computing power continuing to slide down, I think it got down to $50,000 by 2015 when this graph came out.

So the bottom line is these technologies I talk about — AI, robotics, 3D printing, even self-driving cars — they’ve been around for decades. People don’t realize that. But they’ve only been accessible to multi-hundred billion-dollar corporations and governments to use.

Now with these three components that I talk about — AI, robotics, self-driving cars — they’re actually able to dramatically rewrite what’s in an entrepreneur’s tool bag, and that is what’s creating this explosion of exponential technology that we’re seeing from a distance. But it’s actually really these three core components that are driving all these other changes, and it’s actually the entrepreneurs and the corporations that are able to understand this is who we’re investing in. It’s not the technology. We’re not really investing… Maybe 5% of the investments we’re going to make are going to be in hard-core, real, new technology, the “moonshot” technology. Other than that, we’re investing in the people that are making this happen.

So going back to the psychology major that I did and that we talked about, the whole thesis we described in the beginning of this conversation, the way we look at all of this deal flow is in four categories. And it’s funny. Technology is actually at the bottom of this category. So going forward, number one is people is by far and away the most important. Generally repeat teams are valuable for us. Really testing how a team is able to work together, attract talent, attract capital, and manage the exponential technology curve that’s happening but not trying to really be a major part of it. So being adaptable. A lot of this technology is being commoditized every day. If I’m an entrepreneur, why would we invest here when I know it’s going to be here in a few years. It’s going to be way cheaper and way more accessible. Let’s invest in the technology that surrounds what’s already being developed.

So people are so important. Being able to read the market is so important.

Number two is the market, the size of the market, the need in the market, the value prop. That’s pretty clear, however, you have to throw in the concept of disruption of industries, which is a difficult thing to analyze with not decades and decades of data. So we do a lot of actual market intelligence through our corporate partners at SU.

Number three is financial risk. Being a somewhat small fund, we have to understand how we play in the evolution of the fundraising that’s needed, make sure it’s a good deal, things like that.

And then number four for us is technology. We have to, obviously, before doing all this work, make sure that the tech works and is real and is needed, but we have to make sure all these other things are in place first before we spend the time or potential money on employing one of these faculty members from SU or another expert from our network to do the hardcore due diligence into the technology because we look at that as technology is a short-term competitive advantage. It’s not a long-term one.

Jay:  Interesting. Thanks for breaking that down. It’s important, I think, that you made the distinction that, look, we’re a venture capital firm. We’re here to make money. There are strict rules that you need to abide by for your shareholders, for your LPs. And first the foremost, of course, it is the money. It’s nice to have the crossover between SU and the exponential tech that you guys look at and the exciting opportunities that come along the way, but, again, I think it’s important that as a VC, your interests are aligned with your shareholders.

That said, I know that you guys just did a big trip over to this part of the world, and since we’re excited to talk about opportunities in Asia, maybe you could give us a rundown about your recent trip with Peter as well as some of the other team members there. What did you guys find in Asia? What excites you the most after you came over here?

Maxx:  Yeah, I’ve taken three trips in the last six months — two to China and one to Japan. A combination of groups of people that have come with me, including some of my investors in the fund that are curious about China specifically but have no way of understanding the investment opportunity.

I’ve spent several weeks there now and am in no way an expert. I still have so much to learn, but my general takeaway is we’ve been so excited. And you can go to Peter’s blog and read a lot more about the details of what we did, who we met, what his thoughts are.

But for me, I’ll summarize my independent view, breaking them down into three regions. China is obviously exciting for all the reasons that you can read in the newspaper. The market size is huge. The government is ready to move on things. There are tons of problems to be solved. All the typical things that you think are exciting about China, we definitely lived.

But the two most interesting and valuable things for me are one is the work ethic. The 9-9-6 work ethic. And I think Peter does a big blog about this, but it was still what really sat with me. Working from 9 AM to 9 PM six days a week is the norm. That should scare Americans. That should scare the rest of the world. That sort of work mentality is extremely encouraging for a country that is meeting a couple of different trends. It’s vying to become the world’s biggest superpower and really kind of opening itself up after the last 20, 30 years. So there’s that kind of national excitement.

There is the work ethic, and there are these huge opportunities and the fact that the world is becoming more global, so it’s a great time to be looking at China in terms of investments in the companies there.

I met a VC whose company went from 0 to 500 million in revenue in 18 months, which is just impossible in the US. Not impossible, knock on wood, but it’s extremely rare. And I think that has to do with the work ethic of the teams.

The second interesting part about China is it’s extremely hard to break in. You think “I’ve got this perfect fit. I know the right people. I’m going to go in and just make my way in and culturalize it, and that’s it.” You really need a joint venture partner. You really need a clear, established channel with branding and all that stuff already in China. And you’re not going to be making the decisions in terms of deals. What we learned in deals, it’s a two-third, one-third split toward the local JV partner. That’s really your only way to enter such a market. If that’s how it works, it’s great, and it makes things easier if you want to think about it that way. You don’t have to go establish all this. But at the same time, more difficult to find those relationships.

Not only did I get excited about the opportunities, bringing in opportunities, while difficult, as long as you have a roadmap of how do it, it was exciting.

We also were in Japan for a little bit, just over a week. I have family experience, have been in Japan before. My family did some exporting out of Japan in the ’60s and ’70s. And so I kind of have been familiar with the market since they opened up to the Western world. So it’s been exciting to go try to figure it out myself.

I was shocked by the lack of a startup community. I spent a lot of time with VCs over there, which there were not very many of and the most innovative corporations. There is the one major innovative corporation that you hear about every day, and they’re the ones getting all of the attention over there. And I think they want that to change. I think the rest of the companies want that to change. I think over the next two and a half years-ish, in preparation for the 2020 Olympics, there is a really unique, again, confluence of trends happening that can really help Japan. They’re a great independent market, but make them more interesting, kind of investment opportunity or investment area focus over the next two, three years because of a number of these confluences.

Breaking it down by those, those are my two biggest areas that I know about, but I spent a lot of time hearing how Indonesia is the next big market, but I don’t know anything about it. So if you want to tell me, I would love to know.

Jay:  Indonesia is on a lot of people’s radars. It’s kind of like your process. It kind of falls in third or fourth place when people look at Asia in general.

Quick question on Asia or just the world. When you guys look at portfolio construction, are there any metrics, geographical constraints that you guys work with when you’re allocating capital?

Maxx:  Yeah. Right now BOLD One is only North American-based companies. We haven’t decided for our second fund if we’re going to keep that or not, but I think we’ve been really happy with the results which is invest in companies that we could get on a plane with and be either in the same time zone… It’s very difficult — that’s another thing I learned working with my Asian investors is it’s difficult when you don’t have the same time zone, no matter what. You get over that.

Number two is it’s nice to be in-person. Most of my companies are a quick hour away, two hours away maximum. Also all the innovation is here, and I think there is a lot of opportunity to bring things to Asia. Our thesis is if we can be close to the companies and really work close with them and build that core technology or company or disruptive piece of business model — whatever it is — they’re not focusing on Asia, so if we can help create a way that doesn’t really drastically take them away from their current goals of building the US market and we can just add this additional layer of the Asian market, either China or Japan or Asia as whole with our own partners, that’s kind of the niche we’re trying to build.

Yes, obviously, we want to invest in North America, but we’re constantly looking at every investment on how would this play out in these other markets, if that makes sense.

Jay:  Absolutely. Maxx, thanks so much for your time. It’s been really interesting hearing about the great work you guys are doing there at BOLD. We appreciate you coming on and being pretty open about your process and what you look at. So we appreciate that.

Last couple of questions… Is there any exciting things you’re working on? Obviously every day is exciting it seems like for you, but particularly in the next few months, coming months, and what’s the best way that some of our audience members, if they want to connect or learn a little bit more about you guys, what’s the best way for them to do that?

Maxx:  Most exciting things I’m working on, I think I mentioned a little bit of it. I actually wrote them down here for you. The most exciting, personalized and predictive healthcare, health and wellness, autonomous electric transportation, and augmented reality with one of our portfolio companies with the Apple 10 phone have AR and Google and all that stuff, that’s all exciting.

The most needed areas, trying to rethink security and insurance are the two areas or industries that I’m really excited about but don’t know a lot about yet. So if any of your audience members wants to reach out to show me how they’re disrupting security and insurance and other areas that I’ve mentioned, frankly, I don’t take a lot of cold emails, so try and find a connection is usually best with me. LinkedIn me, and if you have some serious inquiries besides just wanting to connect, that might require a little bit of conversation. I’m going to direct them your way, Jay, if that’s okay.

Jay:  Yeah, sure.

Maxx:  If you’re wanting to learn more than just to say hi, do that on LinkedIn, and then if there’s more interest in other collaboration, please forward your information to Jay.

Jay:  Sure.

Maxx:  That would be great.

Jay:  Awesome. Yeah, I’ll screen them for you.

Maxx:  I appreciate it. Like Jay asked, we only invest in North American-based companies. I get multiple deals every day. A lot of them are from people around the world that I wish I could invest in. I don’t have a ton of time to make connections there, so if it’s super compelling, send it in a LinkedIn. Make it an interesting subject line, and maybe I’ll get back to you. Thank you so much.

Jay:  Awesome. Well, thanks, Maxx. Once again, really appreciate your time and your thoughts and your insights.

Maxx:  Awesome. I appreciate it. Thanks for having me.

Jay:  Take care.

Maxx:  Take care.