Steven Levy - Unorthodox Ventures

Steven Levy: 0:05
As the mythology is told, the original name of the company was HVLS Fans, High Volume Low Speed Fans. As the story goes, Carey would get called up and he'd answer the phone and he'd go, HVLS Fans, how can I help you? And by the third time, the person on the other side would pause and they'd go, Hey, are you that guy selling those big ass fans? And he realized he didn't have probably the best name for his company, and he changed it to Big Ass Fans.

Giovanni Lauricella: 0:29
This is the MedTech Startup Podcast. And the purpose of this is to be an educational series. I want people to walk away learning something new. Unorthodox Ventures, it hit me. It's got to be a venture capital firm. It's not. You had let me know that it's actually a family office. So this whole particular episode, we're going to be talking about and demystifying family offices. I want to focus the conversation on you. What's your story? I want to know who you are, the guy on the camera.

Steven Levy: 0:58
My colleagues would be upset with me if I didn't tell you my, the true origin is which I grew up in Brooklyn, New York. If you put your finger in the map, it lit almost in the center of the borough. Areas that you wouldn't probably have traveled to back when I was growing up. I always thought about finance business as an interesting place to go into professionally, trying to recruit in October of 1987, as for those of us old enough to remember what happened then that people talk about bad markets and bear markets, that was a real problem. At the time that the Dow dropped about 20, 25%. I got a job in a management training program, did that for a couple of years, always knowing that I was going to probably go back for an MBA, which I did at the, after four years. And started working on Wall Street and Investment Banking and had that career for a long time. And it's, it's a tough career. And I could tell you a lot of things that are tough about it, but it's also an amazing career. I would tell anybody graduating from college or are not a lot of jobs where in your first two, three years as an analyst, you'll work harder than almost anything else you're going to do. You're going to get exposure to really smart, driven, focused people. You're going to get exposure to CEOs and CFOs of companies. What 22, 23 year old kid is going to get that opportunity? It's pretty rare. And you're going to be on a very steep learning curve for two and a half, three years, you're going to be on a steep learning curve. You're going to be working so hard. You don't know what you've done. And then you're going to look back on a figure out, gosh, I actually learned something, I did that for 25 years, working with private equity firms and then had the opportunity when Carey sold his business to come in and help start up Unorthodox Ventures. I'd known Carey for about 12 or 13 years. My background in the venture world is not so unique, but in our little ecosystem at Unorthodox Ventures is unique on a personal front, I know my wife since we were 12, we started dating at 16. And so here we are still together a bunch of years later with four children and three grandchildren, which is an awesome thing. Thank you. And I'm, I'm besides that, I bang around some golf balls and I, I like to ride. I fairly serious cycling. I wish I was better at it, but fairly serious cycling. That's my story and what I do.

Giovanni Lauricella: 2:58
How long has Unorthodox Ventures been around?

Steven Levy: 3:01
We started up about five and a little over five years ago.

Giovanni Lauricella: 3:04
So then the name itself, Unorthodox Ventures, is there a story behind the name?

Steven Levy: 3:09
There's a little bit of story. The story is. Carey has always been, um, a cut against the grain sort of person. Uh, he's always tried to look at things from a different angle. He'll tell you because he thinks it's a better way to do business. But I, I think his makeup doesn't allow him to do things differently. That's just the way he is. It's what attracted me. And I think most of the rest of the folks who work for him, to some extent or another, we all have that in us. Carey is the only true entrepreneur, quite frankly, among us, but we're, I think at some level, we're all entrepreneurial and again, it's what attracts us both to. The venture capital world and specifically to work in the, in the, in the group that we work with Carey and the rest of the team. The name came about because we were trying to work through names, what is the, that connotation of cutting against the grain? And we worked through a bunch of different. There's a Maverick Capital and a Contrarian Capital. So those names are already taken by hedge fund, mostly hedge fund companies. I said, Iconoclastic was going to be too difficult to say. I could barely say it here. And we were actually happened to be in Israel as we were starting the firm. We're walking along the beach from central Tel Aviv down to Yafo bantering around these names. And I threw out Unorthodox, which of course says a particular connotations outside of the investment perspective when you're in a place like Israel. And so that has its own, its own inside joke about it. But we came up with that Unorthodox, maybe Unorthodox Management, Unorthodox Partners and Unorthodox Ventures. About 5:30 in the afternoon, we came up with that name and that's the story behind it.

Giovanni Lauricella: 4:36
Actually, I, I didn't even know where I was going to take this or even ask because I didn't know that you also even named Unorthodox Venture, but I think it's pretty cool. I'm, I'm big into names.

Steven Levy: 4:44
I'm going to say I named it with Carey cause otherwise I'll get into trouble.

Giovanni Lauricella: 4:46
I don't know, but you guys were walking towards the office. It's a cool story. Who is Carey Smith and talk about the story of unorthodox ventures. What are you guys?

Steven Levy: 4:54
Sure. So maybe we'll start with Unorthodox Ventures and then we'll work our way into Carey and the rest of the firm. So we are actually for practical purposes, an institutional venture capital firm. But as you suggested, as opposed to most firms, which are typically. Run by a general partnership and limited partner investors. All of our capital comes from our founder, who is this gentleman, Carey Smith, that we just referenced. Carey was a serial entrepreneur who had several companies. His last one built up over a period of about 22 years, made very large commercial ceiling fans. The biggest ones are about 25 feet in diameter. And the name of the company was Big Ass Fans, because literally he sold Big Ass Fans. As the mythology is told, the original name of the company was HVLS Fans, High Volume Low Speed Fans. Uh, cause they did big fans, they spun very slowly, but moved a lot of air. As the story goes, Carey would get called up and he'd answer the phone, because that's all there was at the beginning. They'd go, HVLS Fans, how can I help you? And by the third time, the person on the other side would pause and they'd go, Hey, are you that guy selling those big ass fans and he realized he didn't have probably the best name for his company and he changed it to big ass fan. So that, that was his background. He, he built that up, as I mentioned, over 22 years, had about 1400 employees, nearly$300 million of revenue, and ultimately sold it for half a billion dollars, which is in and of itself, a great story, but what's amazing about it is he bootstrapped the company himself. Which did two things, one, it forced him to really learn all the pieces of the business and to go through all the stages by himself. He didn't have outside advisors. On the upside, it also left him with all the equity value of it. So when he sold it, he got all the economic benefits that came with it. Other than he had committed to a bunch of employees to, to share a portion of that, which he did. And as a result, when he started Unorthodox Ventures, his goal was based on his own experience was to say, if I can help companies and, and more importantly, entrepreneurs. And building their business, not just by providing capital, because there's a bunch of folks who have capital out there. But can provide real tactical operational support to them. I think that would be really fun and interesting and cool to do. And that's what we are. We've lifted out a core team of folks that work for Carey in advance. When I say in advance, prior to UV, worked at the fan company with him. We operate globally, primarily the US, Europe, and Israel, and we provide tactical operational support to companies, everything from product design and engineering through to manufacturing. Branding, marketing, sales, operations, and logistics, et cetera. And if you came to our offices and people are welcome to see them in Austin, we actually sit in warehouse space. The front third of it is built into office space. The back two thirds is still warehouse space where we do everything from, have a 3PL operation for some of our portfolio companies to a light assembly line for one of our companies. And then we have a little lab and, and test areas. We also have a little gym and a ping pong table. So we have a little fun every now and then there too. As a decision maker at an institutional fund would typically, are you that analogous person? Carey's really, ultimately every check is Carey's check and he's really the decision maker. But there's, we run a pretty flat organization. So I'm certainly one of the voices that, that chip in and have a say in a lot of the things that we do, both at the investment level at the pre, pre investment level, post investment level involved in the companies and in how we do a lot, bunch of the things, but it's a pretty group oriented environment. I probably sit on about half the boards of our companies, heavily involved, but it's, it's a very flat organization. Literally we, none of us have titles. And I had a little discussion with Carey about it and I said, for me, it's less important, I don't care. I've done what I've done and I'm old. And at some point I'm hopefully not going to work anymore. But for young folks coming in, it's important to see that progression. He goes, I just don't want that culturally. I don't want that at the firm. People get all focused on, on this is my title and that's that guy's title. And this is my office and this is somebody else's and we're just going to avoid that all. And that's what we do. And so it's a very different culture. I think of the firm that you would find in most traditional, whether that's, by the way, at a big firm or a fairly small venture capital or private equity firm, you see that sort of progression. It's not, I wouldn't say perfect, but it has a lot of benefits and creates a different. Again, a very different environment to how we all work together. So you're also doing the sourcing of the deals and all the diligence and all that stuff with him. So we have different people focused. So we have a couple of people who focus only on sourcing. We have a couple of people more focused on the diligence pieces of it. A couple of people who are focused. We have a bunch of those folks who have functional expertise, like the engineers, who they're really both in the diligent stages and then the post, post investment stage, who really help on a functional level. Most of us do a little bit of everything. I spend a lot of time on, as I said, I sit on a bunch of the boards. I spend a lot of time around the deal execution. Uh, I do some of the sourcing. So, so I do a bunch of, a lot of stuff. Yeah.

Giovanni Lauricella: 9:56
So you mentioned a few places, Israel, New York. We're here in Texas right now in San Marcos, but Austin's about an hour away. And that's fundamentally where the headquarters of Unorthodox Ventures is. And then you mentioned to me earlier that you also have an asset over in Switzerland. What's the story?

Steven Levy: 10:13
Sure. Carey, he had built his business in Lexington, Kentucky. When he sold it, he really wanted to be in a place that would be better for this kind of venture world. And he thought about the coasts, both New York, and he'd been interested in New York and then maybe California at one point in his life. He lived in California and he really thought for a bunch of reasons, those weren't the right places. Uh, in terms of being in the center of the country, in terms of the environment, in terms of the ecosystems that, that, that were there. And so he settled on Austin as a really interesting place. In terms of New York, he ended up, he has a residence. We have an office there and I was based in New York. And when I joined up in the team that by definition created a little bit of, of a point for us there. I had historically done a lot of business in Israel and he had done business there. Well, they had no culture, other cultural affiliations. He had done business there and he understood how entrepreneurial of a country it was and the guy who ran his basically, sales and marketing efforts in Israel, he thought very well of and thought could be a great part, great person to have as part of our team. So a lot of opportunities in Europe, and we now have about a third of the portfolios invested in Europe. And so we said, gosh, we really should have somebody on the ground there too. So we've just added very talented women based in Switzerland, but really covering Europe from a sourcing perspective for us, so that's really how it's evolved over time. Particularly for the areas we focus on medtech being, being one of them.

Giovanni Lauricella: 11:36
Had mentioned to me earlier that medtech happens to be a sizable portion of what you guys invest in an unorthodox, why?

Steven Levy: 11:44
Yeah, so we evolved into MedTech and there's kind of two questions in there is how do we get to MedTech and what are the, what are the differences a little bit in terms of how we operate versus traditional, the traditional LP VC firm. So let me deal with that second one real quick, which is the nice thing about our setup is we are unrestricted. We don't have an agreement funding document that, that dictates what we have to do and how diverse we have to be and how much money we can put into any asset, et cetera, et cetera. Or what sectors we invest in. So we really have a lot of freedom to operate in terms of, of what we want to do. And I would say from an, a startup company or an entrepreneur's perspective, it creates a lot of flexibility and makes us, I think, in many ways, a better partner. So for example, we don't have a specific time horizon where we have to return capital. We're not trying to raise our next fund. So we're not on this hamster wheel of invest money, get money, put in dollar one, get three or more dollars. After three to five years, so that I can give my LPs back three dollars, get two for, so I can have my next fund be 2x, my first fund, and we're all driving that way. And it's this funny hamster wheel, the opposite, the, the, the reciprocal version of that for the company is. Raise cash so you can generate revenue so you can raise more cash so you can raise more revenue so you can raise more cash. And it's just this financing game. And it's again, hamster wheel that a lot of entrepreneurs are on. And so what we hope to do is provide a little bit of relief for entrepreneurs from being caught in that hamster wheel. Instead of saying, let me just generate revenue so I can, I can raise my next financing, my next funding. Let me actually build a business. Let me think about the things I need to do to build a business. And if I need to take a pause, I could take a pause because I have a partner who's not looking to return capital in three, four, five years, you know, we could take a much longer term view. This comes from Carey. We want to build, be part of building great businesses. Like at this point in Cary's life, that's what he wants. He wants to be part of building great businesses. If we build a great business, we'll get great returns. I think if we were a traditional VC firm, you have to, you have a fiduciary duty. So it's, I'm not saying it's bad. It's just the nature of what the beast is. You have to generate those returns for your LPs. It's your obligation to them. If, if that's not your first priority, you're not doing what's appropriate. We have the luxury because of who we are that we don't have to be like that. So again, our focus is build a great company, be part of that, help them do it. And out of that, good things will happen. We're not worried. So that was the part about the difference. And then your second

Giovanni Lauricella: 14:07
Why MedTech?

Steven Levy: 14:08
Yeah. So we got into MedTech. So we started and Cary's again, coming thematically out of how he looked at the world. He's a big believer in brands of which we continue to be. But we were very focused on that and it led us initially, if you think about brands purely as brand, it leads you down this pathway towards consumer. And I had spent a lot of my historic career in consumer. And so we started and Carey had part of his business was, the core business had been a, a B2B commercial business, but he had developed a line that was a residential product and he started dealing on a B2C sort of basis. And so we said, gosh, we should look at B2C opportunities. And it. It's very hard at early stage startup to invest in B2C companies because there is no brand yet. There's potential for brand, but there's no brand yet. And there's no, it's very hard to differentiate. There's no real barrier to entry mode that you can create. And then we ended up finding a company that we thought could have appeal at a kind of inpatient end consumer level in the med tech world, which is a company called Vibrant, which happens to be based in Israel. Really neat company. It's a non pharmacological capsule for curing chronic constipation. And if you actually look at our portfolio, you'll see a thematic relationship to some other things were involved in. But the core idea we got excited about was it was a real opportunity to flip from what were pharmacological chemical solutions. To a mechanical solution, which we think just at its core is, is healthier, better for people and has all sorts of advantages as a result. And we also thought there was an opportunity ultimately when we would get FDA to drive adoption at the patient consumer level, not just at the doctor level, and that was interesting to us because we love to have that opportunity to educate markets and that's what Carey did with the fan business and it's one of the things we think we bring to the table. We got involved in it and what we really learned from it was, gosh, when you have health problems. It's, many of them are big problems. The, if you can find a solution, you're, it's a real solution. It's not like, gosh, I'm going to have a better tasting seltzer or, or alcohol or whatever it might be. This is something that really changes people's lives and has huge impact. There's real technology to it. There's other barriers to entry, which include intellectual property, include an FDA process. We said, gosh, there's a much more interesting sort of sector to get ourselves involved in. And so we've really spent the last two and a half, three years. Uh, and I'd say, tell you, we're still on the steep part of the learning curve because it's a very steep curve, but we've made a lot of progress and. And, uh, we just decided it's a much more interesting place. The other interesting thing about MedTech in particular, when I say MedTech, meaning medical devices, hardware, is a lot of folks don't like to do it. Cause it's hard. And so we think that creates real opportunity, right? And you, whenever you talk to folks in the venture capital world, it's interesting because a lot of people actually say, Oh, it's nice to have, instead of saying, Oh no, there's another fo another other folks here who are competing with us, they actually say, Oh, it's nice to have another partner, potential partner here to have at the table. So it's a little bit of a different environment because it is a hard sector to do well. And that makes it more interesting. Again, being contrarians by nature, it makes it by definition almost a more interesting space for us.

Giovanni Lauricella: 17:16
They call family offices silent money. But you have multiple locations. You have a website. Most family offices don't have a website. So that unorthodox theme keeps on popping up. What's the idea or what's the goal behind Unorthodox being louder than silent money typically is?

Steven Levy: 17:32
Um, and we have to separate a lot of family offices are generally managing the family's money in its entirety. Unorthodox Ventures really is a direct investing arm for Carey and his family. He has other assets that he has folks managing independent. Again, it's why I said at the beginning that at Unorthodox Ventures, we really do operate the firm as an independent venture capital, traditional institutional vet, venture capital firm, just that we have a single, single source of our capital and that's Carey and he's involved in the business. Again, this is how he wants to spend his time when he sold his business. As we always tell folks, he wasn't interested in playing golf or playing tennis or buying a yacht and sailing around the world, his passion. Is really about entrepreneurship and helping entrepreneurs. So that's what drives us. And so if you put us in that category, you say, of course, we'd want to help people understand our brand and who we are and how we can help folks so that we can attract the most interesting companies to be excited about working with us. That's really what it's about. And that's why we put it out there and we have nothing to hide. There's no reason to hide it, but it's really to promote what we're doing and to hopefully try and attract. The most interesting entrepreneurs and interesting new startup companies to work with us.

Giovanni Lauricella: 18:46
And then from a family office perspective, it doesn't tie you down. Like institutional investors, they typically have a very defined thesis. And then they stick to that thesis. And they're very apt to say no to a lot of startups that approach them because they don't fit in that thesis. But family offices have this fortune of being agnostic on what they invest in. They can invest in food. They can invest in elevators if they want, they can invest in life sciences.

Steven Levy: 19:11
Of which we've done all of those things.

Giovanni Lauricella: 19:13
We hear a lot about this idea of good money or bad money when you're an entrepreneur and a startup looking to bring on capital, you don't want bad money. Good money is adding value. You talk about this vertical integration that you guys have. Is that the key stake that when you guys are making investments into companies, is that your value add and proposition of why take our money?

Steven Levy: 19:35
It really is. As I said before, there's a lot of money out there, there still is, and even though we're in a little bit of a period where a lot of firms are having a little bit of a harder time raising capital, there's still a lot of money out there to be put to work. Our view is, if you have all the answers, and you just need money, that's great, you should go talk to some other folks. But if you need some help, and I think most people do, and even Carey, who figured it out and got to the end game, what he understood from that is if we can help people, it's not get to the right answer. If you're smart and you're willing to work hard, you'll get to the right answer. The question is, how long does it take? How many mistakes do you make in the way and how much money does it cost you to pivot? So our goal is not to. To make an error free environment, but it's to, to help reduce those mistakes by 50, 60, 80%. And when you do have the bump in the road and ever again, everybody's going to have it and whether we're an investor of yours or not, trust me, you're going to have those bumps, but can we help you make the right pivot decision? Make a better decision, make a quicker decision and get on to the next, uh, in a more effective, efficient and effective way. Yes, we always tell people and I kid around with folks. I say, I don't know if we're smart money or dumb money, because that's usually the contrast. I say, I know we're not passive money. We go in to try and help and really help roll up our sleeves. And we do that.

Giovanni Lauricella: 20:50
I want to go back to the. The ROI component that we talked about a little earlier, ROI versus impact. There's this big buzzword of impact, investing, et cetera. And I've had a lot of side cocktail conversations of people talking about, and we have Carey to use an example, not saying it's him, but let's just use them as an example, family offices. When they have a lot of money, if you have a hundred million dollars,$500 million, a billion dollars, and you have all these startups coming to you asking for, okay, I'm raising a seed round or maybe a series A, they need$1 million of your money or maybe$2 million. In the grand scheme of that family office amount, it's not a lot. And even if you were to do 2, 3, 4X, that 4X is not going to move the needle on that family office in the grand scheme of things. And if I'm wrong, you got to correct me. The whole point is. The idea of family office caring that much about ROI versus impact and that proverbial cocktail black tie event where they would feel better about telling their friends that they invested in this next thing that's going to save constipation or heart failure or whatever it may be. If the father of the family office passed away from heart failure, they're investing in the concept of improving that not necessarily caring about getting their$1 million turned into$4. Is that true?

Steven Levy: 22:07
We. I think that's true for a lot of folks. I was, I don't think Carey owns a black tie or the black tuxedo that would go with it. And again, uh, we, I mentioned before he was not into playing golf or tennis. He's not a country club sort of guy. So I understand that world a lot. And a lot of people do like to do, to go to the club, the dinner, the local charity board that they're involved with and sit around and say, I. This is what I did on our investments that really isn't our game. And when Carey thinks about impact, I thought you were maybe going to ask a little bit, cause there were a lot of family offices, they are mixing philanthropic endeavors with business endeavors. And so they've gone into, I'll use the term ESG as an impact orientation. And we're very non ESG folks, not that they're, everybody should do what they want to do. I think if you came to our offices and you were looking at, I think a lot of things that fall into ESG categories. People would be surprised, we probably rank actually pretty well, I think if you actually looked at, at what we do and who we do it with and all those sorts of things, but it's not how we're driven. We really are driven and it has a little bit of a, I think a bad issue to the current environment, but it shouldn't. We are capitalists and we're very merit oriented and we don't care gray, green, purple, pink, red. If you have an interesting idea and you're a smart person and you want to work hard and you're looking for partnership, that, that gets us excited. And and coming back to financial impact, we were trying to do something and as an example, we weren't able to, we still may be able to do something in this vein, but we weren't able to do it. We were trying to work with a local kind of government institution to get funding and create an incubator. And what got Carey most excited about it was the opportunity in that environment to actually build manufacturing facilities. He thought the opportunity to create jobs for people, independent of what those people, how, what their look preferences, this doesn't make a difference. We were going to create jobs and that would have impact on that local environment, not because we gave them charity. We did because we gave them jobs. That was, that would have been awesome. That would have been as big of an important thing for him as anything else that we could have done. And when we do the health stuff, the fact that we're going to help people, constipation, nobody wants to talk about it. It's not, as I always say in our world, in the med tech world, there's cancer, there's coronary disease. That's what's sexy to people. That's a, we don't, God forbid anybody should get cancer, but when you can cure it, what do people say? This is the greatest thing in the world. It's the greatest thing since sliced bread. It's a cure for cancer. That's literally the analogies. And what are we doing getting involved in, in, in something like constipation? But it's a real problem and it affects people's lives. You have a crappy life if that's a real problem, and it, by the way, happens to skew heavily female, and I can't tell you from, by definition, from personal experience, I can't tell you, uh, women's experiences in the healthcare field, but you hear stories about women not getting heard as much in that world, and here we have a problem which is, again, not sexy, it makes people laugh, constipation, all these sorts of things, by the way, we're in the, on the consumer side, we're investors in a bidet company. So again, we can thematically run through all of our connections, but, but this, it's a serious problem and it needs serious attention. So again, it's something that gets us excited that we will help people. We'll help people. We're going to help some wonderful entrepreneurs. We're hopefully going to create a big company out of it and all those things. Yeah. And financially we're going to do, we're going to do fine. If we end up achieving it. Carey will tell you, by the way, out of the box, he goes, look, and he's a pretty simple guy in terms of how he lives his life. So he's a. It doesn't make a difference. If I make more money, don't make money. He's not a scorekeeper sort of guy that way. So again, my background, I'm the wall street guy at the firm. I always tell people if, if you make half a billion dollars and you work on Wall Street, you know what you want to do next. You want to make a billion dollars. If you make a billion dollars, you want to make 2 billion dollars. He's not driven that way. And so it doesn't make a difference to scorekeeping. He wants to win cause he wants to win and be competitive. But whether he ends up in 30 years, four years from now with. In the same spot with half a billion dollars or a billion dollars, two billion dollars, it doesn't make a difference. It just doesn't make a difference to me.

Giovanni Lauricella: 26:04
So we've been talking about the Unorthodox Ventures team. I want to get into a resource that you could speak to specifically. How important is team when you are doing an assessment or diligence on a startup company, and what do you do to be able to support your investments, to build the best team, have the best access to resources? How important is team for what you do?

Steven Levy: 26:27
So the management teams at the companies we look at is critical and is a big debate for us because again, we have a very product oriented perspective. Carey comes to the table with a very product oriented perspective. We have a bunch of folks who are engineers. And so we think about it and we probably, it's not that we don't think about team as much, but, but we probably need to spend even more time thinking about it than we quite frankly do, but it's critical. Look, uh, my kind of analogy of it is, uh, bad product, bad team, you know, you're not going to make it. Great product, great team, of course they're going to make it. And so the questions always are on bad product, great team. Can you do something with that? And great product, bad team, bad product, great team, probably it's not going to work out. Because you just need some, you have to have something of substance to be able to sell. And you probably it's bad product. Great team is like having the second, a really good second best handed poker, which is really exciting when you have a flush. And then, but then you find out the guy next to you has a full house and you lose big when that happens, that's when you lose big and. So that's a tough play. If you have a pretty good product, a mediocre product, but at least good enough and a great team, you probably have a shot to win because if you have great execution, there's a lot of folks who've had me too products and copied and they do okay with it. So the trick is to make sure your product is at least competitive. I have a great team. I think you have a great shot. We're probably biased though, where we would have been biased before, which is great product, at least okay team. I think we're shifting that the team has to be at least as the team has to be great. And we've actually shifted. So that's one of the evolutions and the learnings we've quite frankly had in our firm as we've evolved over the last kind of five years. I think on the, how do we help? We actually have, we have recruited for many of our companies and help recruit folks, either from our own network or by engaging with recruiters and helping evaluate, we'll help set up. We have had people temporarily sit in our offices, especially we work, as I think I mentioned with a bunch of folks who are non US based, who are looking to expand into the US. And so we'll help if there's somebody, one of the execs who are going to be based in the U. S. and they don't have office space yet, or they need it, we'll set them up at a desk. This way, it just makes the decision easier to, to get somebody started. And then they can figure out where they're going to base, whether it's in the Austin area or not, where are you going to be based? What else do you need and, and, and provide that. But it, but it gives people a launch pad. So that it's more effective, more efficient and quicker to be able to, to do those things, particularly again, if you're not US based, but we've for, even for our US companies, we help them all the time, evaluate their own team and we'll give them feedback. One of the challenges, by the way, we've had, and we've looked into it. They have, there's a bunch of folks, particularly some consulting firms who will do a management evaluations. And we've really struggled. We've obviously, we spend time with perspective management teams to figure out. Whether we think they're strong or not, but we've tried to get a more methodical and data driven analytical process by which to do it. And there are a bunch of folks who claim to have that. Well, we haven't found a great solution that we think is efficient, but we, that's something we think about a lot and we'd love to have a great solution. I, I'm sure I'll be getting calls.

Giovanni Lauricella: 29:37
Where on the spectrum should an entrepreneur think about reaching out to family offices? For example, early stage, seed, series A, et cetera. When would you advise an entrepreneur to consider family offices versus traditional VC or even angels?

Steven Levy: 29:54
And the quick answer is, of course, it depends, right? It just depends on, on what you're doing, where you are. And, and it, and so much of it depends on the family office. I mean, we operate again, more like, more like an institutional VC, although we have invested in companies literally that are back of the envelope. Back of the napkin ideas. And we've written relatively small checks in those cases. The question is, what do you really need and what are you looking to get? If you need a bigger check, most, there are some families who write huge checks. It depends on the size of the check you want, how much help you want, what type of validation you want. And what you can attract and what you can support is there, if there are some, obviously there are some big name VC firms out there. There are, they are validators, right? In the med tech world, if you have, you know, backing by a Mayo Clinic or a Cleveland Clinic, uh, you know, those are names. So, are you looking for validation out in the marketplace? Are you looking just for money? Are you looking for people like us who can actually help you operationally do things? You have to really think about what you want to do in terms of when to talk to folks, it's all, it's a, you gotta always be building your network. Always, we're happy to meet somebody day one and have a conversation with them two years later, because day one, they had an interesting idea, but we weren't prepared to invest in it. Uh, one thing we didn't talk about in terms of stage, we generally on the medical device side, think about things as post first in human trial. It depends on what it is. We might do something earlier. Again, all depends on circumstances, but that's a loose, loose divide line for us. But we're happy to talk to somebody pre that stage. And then they've gone and they've done a small. 10 person case, uh, trial, and they've started to show, hey, as I always joke around, we like to see that human trial because we want to make sure that the thing doesn't kill anybody and that it actually has some evidence it has potential to help. And so if we've spoken to somebody before that, and now they've gone through their first in human and they could show us the data, the preliminary data, and they show us the progress they've made, that's great. So it's almost never too early to have the conversation. I think people need to be realistic and efficient with their own time about what that means. You're going to talk to us and you're really early stage. You may want to just say, Hey, here's who I am. This is what we're doing. I'm going to come back to you in 18 months and I'm going to show you all the amazing things that I've done so that, you know, when I say I'm going to do X, Y, and Z, I'm going to do X, Y, and Z. That's a very powerful statement. I was used to tell people when I was a banker advising folks, I'd say the old adage in real estate location. And I tell my clients when they put out projections, I said. Hit your numbers and hit your numbers. Everything else is meaningless, right? If you're going to tell people when you, especially if you're a private company and you're going out and you're going to share your projections with them, you're a public, you're a public company for that six or nine months that you're in the sale process and people are going to be watching you and they're going to watch you do. And if you don't sell the company, because for whatever reason, the auction or your process doesn't work out. You're going to come back to the market a year and a half later. And even though you have an NDA and everyone says that they destroyed their material, they're going to pull out a book and they're going to say, gosh, you said you were going to do X, Y, this is what you're going to do in 20, 22, 23, 24, and you didn't do that. Or you did do it. And when you did do it, that's a very powerful statement. It's very powerful. When you could say, we actually said, cause so many people don't, it's a proverbial hockey stick. So many people don't hit their numbers. So when you could do that book, boy, you create real credibility. So if you could walk into a VC and say, I don't want your money now, but I'm telling you what I'm doing now, because in 18 months I do, and I'm going to tell you what I'm going to do in 18 months and you're going to see it. And then you're going to say, wow, this person, they've got it down, right? They know what they're doing. That's a powerful statement to make as a, as an entrepreneur, as a startup company. It's a great statement. So that I would say never too early, but think about what you really are asking for, because if you're going to come to us and, and again, you're not really ready to raise money from us, don't waste your time with us for, don't spend the next four weeks with us. Be quick and efficient about it. Create your, create that story and understand you're just like, we're going to invest in you in the longterm. You're going to invest in us in the longterm and you're going to prove out to us why you should be validated by our investment and where we're going to be great partners together.

Giovanni Lauricella: 34:02
So, then those likely listening in and me being a MedTech guy, when you say that you guys invest typically post first and human, that gives a sense of the size of raises that are usually being asked. Yeah. I'm assuming you're not jumping into$500 thousand a million seed round. Maybe. But my question to you is, typically, what are your check sizes?

Steven Levy: 34:22
Sure. So we'll tell people we write 500 thousand to million dollar check sizes are typical into five. Okay. We've written smaller, we've written bigger, but that's typical. And we have investments that are bigger than in our, not in a single investment, but in our total investment in a company that have exceeded that 10 million. So again, for us, it's, as I said before. Because we don't have offering documents that restrict us, we, those are just guidelines for us in terms of, even first in human trials, all of this for us is guidelines, it's not a strict rule that we have to follow, but it gives people a feel for the stage we're investing in. In this case, size of checks we invest.

Giovanni Lauricella: 35:00
So wrapping up, I want to get this notion of luck. What's your perception of luck when it comes to investing in MedTech?

Steven Levy: 35:06
The quick answer is what's your thoughts on luck in life? And I would tell you there's, you know, there's a million things. There it's all three quarters is luck. You know, I'd rather be lucky than smart. There's always elements of luck and timing that go into all of this. And you try to be, you try to be as diligent as you possibly can and as smart as you possibly can and talk to as many people and learn from as many other people as you possibly can. Sometimes there are people who are not so smart by the way, but you could learn something really important from them. Sometimes you learn it in the negative, but a lot of times somebody say they're not the smartest person, but gosh. They had an insight into one little piece. And if you could take more, if you walk away and learn one little thing from them, that's awesome. And that's great. And maybe you also give them something back and they learn from you something. That's the other amazing thing I've learned in my career, by the way, which is I've seen a lot of people be successful coming up in a lot of different ways. Some people are great marketing people, some great salespeople, some great finance people, whatever it is, but they put together somehow a package that allowed them to be, to be successful. And when you see somebody who's successful for whatever it is, and by the way, all 99. 99 had a lot of luck in that to get where they got to and. But when you see those people don't get bogged down on the negatives of them, just figure out, Hey, they're really smart or talented in this way. And how do I learn something on that one little piece? That's like I said before, if that's the one little thing you take away, is they're really talented in this one little thing from that one little thing. I got something out of it. That that's great. I mean, you should think yourself lucky in that way and fortunate in that way. But in investing, look, you hope you're smarter than the bear. Warren Buffett says, if you could be right 52 percent of the time, you're probably going to, are going to make money. You work hard and try to do it. You hope you're smart and you hope you work hard and that increases your probability of getting lucky. So at the end of the day, it's all about getting lucky, but how do you increase your odds? And that's what it's a game of.

Giovanni Lauricella: 36:54
You mentioned that you saw a lot of stuff throughout your career and just in wrapping up here, anyone you want to give a shout out to who's mentored you that made an impact to where you are today?

Steven Levy: 37:02
I, I, I've had a lot of people that I've learned from, I'll say shout out to Carey Smith because I've shouted out to him and I'd get, as I joke, I'll tease that I'd get in trouble if I didn't, but Carey's actually an amazing person. He is an amazing person. And he sometimes sees things and has insight and it's actually real exciting to work with him cause you're part of that. And that's how, and I'll see things differently than other people. And sometimes that makes it messy. And that's something that makes it a challenge cause they'll see things differently. But when he sees certain things and he sees a certain way, it's actually really cool and fun. But I've had a ton of people that I've had either, I've worked for them with them. They've worked for me in some cases. Uh, I've had clients that are just really interesting and I could go through a list of folks that I've met with and talked to. And that, again, one of the fun, interesting things of my life, my career is just how many people I've had a chance to meet with. And, and like I said, that I've gleaned one little, one little thing out of them sometimes, but I'll remember that for the rest of my life and it's awesome.

Giovanni Lauricella: 37:58
So, for all those MedTech startup entrepreneurs listening in here. Learning how, what you've been doing with Unorthodox Ventures and how you guys can add value. If they wanted to reach out to you and they thought it was appropriate to reach out to you, how can they find you?

Steven Levy: 38:11
Me personally, you can get us, you can get me on LinkedIn. I'm out there. You can go to our website. We're actually very, again, it's this idea of we're very pro entrepreneur. We have a system you can actually go into and put in your information or it'll flow through. We have a guy who works for Carey. One of the things I didn't mention, I should have, we have a wonderful PR guy who works on our team, he worked for Carey, the fan business. And, and so he helps manage all those inbound, uh, inbound inquiries. And, and we really work hard to try to be responsive, even though like with these things, in most cases, 80%, 90 percent of it doesn't make sense for us, but we at least try to respond to folks as best we can, even where it doesn't make sense. You can, you can find us pretty easily on our website. It's, um, unorthodoxventures. com, and people are willing to submit. I'm on LinkedIn. And, uh, I think our information, contact information on the website too. But, but you can see what's there and connect up with all of us.

Giovanni Lauricella: 39:07
I am with Steven Levy and we just spent time talking about family offices and in particular, what Unorthodox Ventures does. For the community of entrepreneurs and innovation, I want to say thank you very much for the time.

Steven Levy: 39:20
And thank you. I really a lot of fun.

Giovanni Lauricella: 39:22
This is the Medtech Startup Podcast, where we discuss how to build really great businesses with a lot of hard work that take time to not only invest, but also build the businesses that help people. Thank you very much. This was a lot of fun. And this is the Medtech Startup Podcast, and we had drank some really great. Israeli wine. Thank you very much for the time.

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