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Mac the VC on the Journey from Homeless To Becoming A VC | Full Interview with Harry Stebbings

McKeever “Mac the VC” Conwell II is the founder and managing partner of RareBreed Ventures, a pre-seed fund that invests outside of large tech ecosystems, with a concentrated portfolio approach being the first check with in with up to $250K. Mac’s journey into venture is nothing short of inspirational, Mac went from being homeless to being an engineer to founding his own companies to today, raising Rarebreed largely on Twitter. For more 20VC, check out the podcast: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-venture-capital-startup-funding/id958230465 In Today’s Episode withMac the VC You Will Learn: 1.) How Mac went from being homeless to becoming an engineer and starting his own companies? How did his time operating lead to his becoming a VC and building his Twitter brand? 2.) What are the biggest ways that venture is messed up today? Why does Mac believe it does not matter about getting into hot deals? Why does Mac believe that the brand of the VC that does your round does not matter? Does Mac see the leading venture brands investing outside SF and NYC? What elements of an investment compel them more than others? 3.) In the wake of the George Floyd event, who does Mac note did not say anything? How does Mac want to see diversity introduced at the institutional LP level? What does Mac believe institutional LPs care about? What can institutional LPs do structurally to allow themselves to invest in the next generation of emerging managers? 4.) Why does Mac not like AngelList Rolling Funds? How did he structure his fund in a creative way? In what way does Mac feel the requirements for GP commits needs to change? How did Mac use Twitter very specifically to raise his fund? Which people went out of their way to help him? What were some of the biggest takeaways from those discussions? #MactheVC #20VC #VentureCapital #HarryStebbings

Harry StebbingshostMac the VC (McKeever Conwell II)guest
Feb 5, 202242mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 1:47

    Intro

    1. HS

      (beeping) Three, two, one, zero. You have now arrived at your destination. Mac, this is such a joy to do. I've wanted to do this for a long time, having been a bit of a fan of your Twitter for a long time. So, huge pleasure and thank you so much for joining me today.

    2. MI

      Thank you for having me here, man. This is like a crazy moment for me to actually be on the 20 Minute VC Show, like, it's truly an honor.

    3. HS

      Well, I mean, listen, it is great to have you here. But I wanna start with a little bit of context because, um, you know, you've heard the show many times that, "Oh, I serendipitously fell into venture from being at Harvard Business School and Google (laughs) and it was just so surprising to me." It's not your background. So tell me, how did you make your way into venture and what was that entry point for you?

    4. MI

      Yeah, it's- it's weird. Like, so it's like, um, I was a software engineer and I was a government contractor for years, and then went on to be a two-time founder. But my second company wasn't a success, it was a failure. And so I ended up working at a marketing firm for a year and that firm ended up getting a client I didn't agree with ethically. And so I quit, but when I quit, I didn't have any plans. And so I quit on a Friday and the very next Monday, I get this email saying The Investment Arm for the State of Maryland's hiring. I'm like, "Okay. I don't have a college degree, I don't have a finance background, but I know startups and I know a lot of people in Baltimore. Let's go ahead and try this." And four and a half months later, they hired me.

    5. NA

      (laughs)

    6. MI

      That's how I broke in.

    7. HS

      I- I- I- I love that. Can I ask one thing which is like, you know, I- I've failed many times, you know, failed to get jobs when I was, uh, early. I got rejected by many venture firms which not many people know, but we're gonna have an open conversation today, so this is gonna be a fun one. When you failed with the startup, how did you manage that? A- and how did you deal with that personally? It's such a tough time.

  2. 1:47 – 4:06

    Getting burnt out

    1. HS

    2. MI

      Um, I didn't deal with it well, right?

    3. HS

      (laughs)

    4. MI

      Um, I basically got burnt out, told my investors, "Hey, thanks, but no thanks. Um, here's what little money we have left. You can all have it back." And I basically hid in my house for six months 'cause I didn't wanna see anybody or talk to anybody. Um, and I was basically depressed because to fail in such a public way, when you got all these people and supporters around you, everybody's telling you how great you are, how smart you are, how you're gonna be the next this, the next that, and then it doesn't work out. That felt terrible. Like, I spent all this time networking and being around people to like not wanting to see anybody, 'cause I didn't never have, I didn't wanna have to explain what happened. I didn't want anybody asking like, "How's your startup doing?" And me be fake about it and did the smile and be like, "Ah, we're doing okay." And so, um, I was, I was just stuck in my house. And then something incredible happened. I recognized that the people who truly cared about me and loved me didn't care. Like, whether or not I succeeded in that startup didn't change the way they thought about me or change how smart they thought I was or how much they respected me. Like, love and- and respect from your friends and your family members can truly be unconditional. And so when I looked up and everybody was like, "Yeah, you, m- so what? Like, you've done all these other amazing things. You had one thing that didn't work out. Oh, boo-hoo, like, it's okay. You have a great skill set. If you need to, you can always get a job. Are you coming over for the holiday dinner 'cause like we, everybody wants to see you?" It's like, "But I failed and I lost these people's money and, you know, I thought all these things were gonna happen and nothing happened, right?" And everybody's like, "Okay, so do something else, but let's go get, grab a drink, go to a bar and watch the game. Like, we miss you." And that helped me move forward and recognize like whether or not I succeeded in a startup or a venture or anything didn't dictate how the people around me felt about me. And so that was really liberating.

    5. HS

      I- I spoke to a couple of your founders before the show and they said that, you know, when it comes to the conversations they can have with you, um, they're a lot more real and honest than they are with other members at their cap table. What do you think it is that basically allows you to have that relationship of depth and intimacy with founders that maybe other investors don't have?

  3. 4:06 – 6:01

    Relationship with founders

    1. HS

    2. MI

      I mean, the fact that I'm a former founder helps, but I think it's more just I'm okay having any and every conversation with them 'cause we're people, right? Like, I'm a people person, I'm somebody that people can talk to, and I'm- I wanna be a true supporter because like I remember as a founder just like how hard it was, how lonely it could be. Like, yeah, I had a team, but as the CEO, I was still lonely, right? Like, the arguments me and my teams would get into after pitch competitions because I didn't talk enough about their background (laughs) and didn't point them out enough. Like, you know, I remember these arguments and these issues and like just how hard it was. And then also like when I got started, like, I was like a 24-year-old Black guy in Baltimore who was an engineer who didn't know anything. Like, I didn't know what startups were, I didn't know what VCs were, I didn't know what networking was, right? (laughs) Like, like, the first time somebody told me I was networking, I thought they thought, I thought they were talking about me running wires.

    3. HS

      (laughs)

    4. MI

      Right? (laughs) Like, I was so confused. And it's a really vulnerable place when you're in an ecosystem like this and you don't know. And so for my founders, I w- I want them to feel like they have somebody they can come to and they can come to me for anything, right? Because we're all just human, right? So just the same way like a good friend of mine is gonna call me and tell me how, you know, him and his wife just had an argument, one of my founders can call and pick me, pick up the phone and call me and be like, "Yeah, you know, I'm having a hard time. I'm trying to juggle it all." And we can have a conversation about it. Um, I don't know, that's just who I am.

    5. HS

      No, I totally get you. A friend of mine always tells me, "Everyone is fighting a battle you know nothing about." And I always think back to that. Uh, I do wanna ask this. So, you- you know, you obviously go into the investment world and then you decide, you know, I'm gonna do RareBreed. Talk to me about the decision to do RareBreed and what was the thinking behind raising a fund on Twitter, Mac?

    6. MI

      (laughs)

    7. HS

      I mean, this is not conventional fundraising.

  4. 6:01 – 9:33

    Why I quit my job

    1. HS

    2. MI

      So, I think, and there's one thing f- for- for context, there's one thing I should point out is that...... my career in venture has been sparked by the k- the killings of two Black men here in America. Right? So when I mentioned that I quit the marketing firm, it was because, uh, Philando Castile, which was a, a Black man here in America who was driving around with a legal firearm and told a police officer beforehand that he had a firearm in his car, was shot and killed by that police officer. And that was the same week that my organization started soliciting the National Rifle Association for a contract, which has a history of not supporting Black gun owners. And that's when I, I quit my job and end up seeing that email where I apply for the Investment Armistead of Maryland and break into venture, right? Fast for- and that's in 2016. Fast-forward to 2020, I had been thinking about, you know, a structural fund or wanting to start my own fund for like a year and a half, almost two years. And then George... the killing of George Floyd happens, and that was around the same time I started tweeting more and like the Twitter thing started happening. And I had met a founder in Dallas, Texas, a, a gentleman by the name of Roberto who has a company called, uh, RoboAmp, doing some really incredible things, but nobody wanted to support him because he was a Latin guy in Texas. And so I decided like, okay, like, I'm gonna put an SPV together and I'm gonna invest in this one guy and I'm gonna support him 'cause I couldn't do anything else, I was a state employee. And as I started putting the SPV, one of my mentors, um, somebody I respected immensely said, "Hey, man, I don't want to invest in this company. I want to invest in every company you ever find. So here's 250,000, go raise a fund." I'm like, "I don't, I don't want to raise a fund, it's a pandemic, things are crazy, you know, life is wild." And he's like, "No, you should do that. And there's a moment in time where people are looking for managers like you." And I was like, "Great." And so then I was like, "I'm gonna raise this fund" (laughs) and I started going through my network and I got the 400K and I was like, "Well, 400K is a far cry from 10 million."

    3. HS

      (laughs)

    4. MI

      What do I do? Well, I didn't know what to do, but at the time, I started tweeting consistently, and I noticed other VCs were following me. And so I was like, "Okay, whenever I see a VC follow me on Twitter, I'm gonna send them a DM and ask them for a meeting 'cause I need to learn how to raise a fund." And as I started doing that more... like, as I was doing that more and more, I started having these conversations where these other GPs would be like, "Well, I really like your strategy, I like the way you're thinking about. What's your minimum?" And I wasn't prepared for that. I'm like, "Well, my minimum's 10K," and you know, really w- you know, trying to meet some folks. Like, this conversation is not about that, but you know, if you know anybody who'd be interested. And o- one of the first people to say they would be interested, I don't think she knows this, is Elizabeth Yin from Hustle Fund. And that gave me the spark of like, oh, GPs will back other GPs.

    5. HS

      Mm-hmm.

    6. MI

      I can do this. And so I just doubled down on the strategy of staying on Twitter. And so, uh, I've told the story before, but between June, the middle of June 2020 to September 2020, I had over 1,100 meetings, which allowed me to soft circle my first 2 million and kind of gave me the confidence to quit my job and really go do this thing.

    7. HS

      I mean, I absolutely love that. There's a couple of points I have to unpack there. On the DM strategy, I love it. How many responded and how many didn't? Like, what was the ratio? And were there certain people who went out of their way to really help?

    8. MI

      It was like

  5. 9:33 – 12:21

    Who helped me

    1. MI

      70, 75%, because at the end of the day in the world of venture, we're all happy to meet each other because everybody's looking for deal flow. Right? So if you see a name, Mack the VC, you assume I'm an investor, so you'll try to take that meeting. Um, so that worked out. People who reached out, uh, you know, r- like Elizabeth was really helpful. Niv from Shrug Capital was really helpful. Marlon Nichols from Mack Ventures is like a mentor of mine. That, that dude has been great. Like I've known him for years. Um, Lo Toney at Plexo's been amazing. Um, Hunter Walk early on, you know, really helped. Um...

    2. HS

      Can I ask you-

    3. MI

      ... Jason from SaaStr, he was the first guy who like really looked at my deck and beat it up and was honest with me about it. Like, I don't know if he understands like how impactful that was in my journey, but just a lot of people helped.

    4. HS

      Do you think the traditional fundraising process is fucked up? You raising a fund so successfully on Twitter, do you think it's like, "Fuck, why do we do it the way we do?"

    5. MI

      100%, but that's how I feel about half the stuff in venture. Like, one of the things that happened for me as I was raising my fund was I ha- I had this career and I learned all this stuff, I'd gone through these trainings, I've read these books, and it was like, venture's done in this like specific way, and like, this is all the rules. And then I started raising my fund up, and I was like, "I don't care about any of these rules." Like, fuck the rules. Like, these are all just legal structures, they can be changed. So like most people, they close, they say, "You should have like 30 or 40% of your fund, uh, closed for your first close." My first close was at 10%. Right? (laughs) People are like, "You know, you should only have this many closes." No, I do a rolling close every three weeks. Like, I bring my LPs in batches. Like, I want to access the capital so I can start deploying 'cause I need... I wanted to build up some momentum. You know, um, "You need to do traditional capital calls because you don't want to mess up your IRR." Nah, I gave my LPs three options. You can do 100% upfront, 50% each year over two years, or 33% over th- each year over three years, with the minimum being 10K per year. So if you gave me a 10K check, you gave it 100% upfront. And it's like, I'm just gonna hold the money in escrow and get it when I need, 'cause I'm not chasing anybody down for 10K checks. Um, and that was actually inspired from the way 500 Startups did their fund one, where there's 50% upfront and 25% each year over the next two years. And so like, as I was building the structure and putting it together, I was like, "I don't care about any of these rules (laughs) like at all. I'm going to do what I think is best for me to manage this fund as somebody who was a broke VC." Right? Like, when I started raising the fund, most people don't know this, I'm broke.... like, I'm-

    6. HS

      (laughs)

    7. MI

      ... sitting at home-

    8. HS

      Look-

    9. MI

      ... just raising a fund.

    10. HS

      How did you afford legal fees? 'Cause this is the other thing that frustrates me. It's like, one is legal fees are expensive, and two-

  6. 12:21 – 15:09

    Fuck the rules

    1. HS

    2. MI

      (laughs)

    3. HS

      ... GP commits, like, I mean, it's a f- it's a lot of money.

    4. MI

      So remember when I said, "Fuck the rules?" So I had no GP commit. I didn't have the money for it. I wasn't even an accredited investor when I started raising my fund. Right? Legal, I actually... This is, m- r- remember now, like, I'm getting popular on Twitter. I'm tweeting a lot. My lawyer actually found me on Twitter and chased me down and said, "What I gotta do to be your lawyer?" He's never charged me. (laughs) He's been my lawyer for over a year and he's never sent me a bill. And I'm like, "Yo. Hey, Jason, I love you, brother." Like, "You can send me a bill now." Like, "We've raised some of this money. I could pay you." He's like, "Oh, no, no, no. We'll get to it one day." I was like, "All right." So, like, it just all kind of fall- fel- fell together for me.

    5. HS

      No, I- I love that, 'cause also, you said, uh, like, one of many things you think are fucked up. What else do you think is fucked up in venture?

    6. MI

      (clicks tongue) It's this, it's this idea, like if you talk to a lot of older school VCs they tell you, especially as an emerging manager, like, "You need to become friends with folks at Sequoia, or First Round, and see if they'll let you onto these cap tables." And I'm like, "So you mean to tell me the only way I'm ever gonna be able to do a good deal is if I'm friends with these top tier funds, 'cause only the top tier funds see good deals? So that means you mean to tell me, fundamentally, if I don't work in a big fund, I don't have the ability to get into or find a good deal?" And really, but they're not talking about good deals, they're talking about hot deals. I don't give a fuck about a hot deal. Hot deals don't mean anything. The deals that matter are deals that return capital. And every hot deal we know doesn't return capital. So why are you telling me to use a mediocre sh- uh, strategy? It doesn't make sense to me. You trying to tell me I don't have the ability to pick a good company? I'm a pre-seed investor. I give companies their first checks. So I gotta be good at this. Like, if you can't see that already and this is the advice you're giving me, then you don't understand what I'm doing. And I just think that's so stupid.

    7. HS

      (laughs) Do, do you know, do you know what it's predicated on though? It's predicated on future fundraising, 'cause if you get into the super hot company with Sequoia or First Round, you go to your LPs and you say, "Hey, I got into these five super hot rounds. Look at me. I can get into the best."

    8. MI

      (laughs)

    9. HS

      And it's so long for it to work out or not, but no one knows.

    10. MI

      But that, how stupid is that, that LPs actually think that means anything? Like a hot deal does not mean a good deal. Right? Why does it matter who was the follow-on investor, right? If, if some no-name private equity firm ends up leading a Series E somewhere, does a SPAC, and my company exits, is that not as good as somebody (laughs) as, uh, a company that got with Sequoia money and exited it? No. At the end of the day, we're just here about returns. So why are you qualifying my returns based on somebody else's previous success? Stupid. I-

    11. HS

      And it's am I-

    12. MI

      I'm sorry.

    13. HS

      ... I- I totally, listen, I- I'm totally with you on the hot deals not always being good deals. What else is fucked up? I'm too interested, man. This is great.

  7. 15:09 – 16:21

    Diversity

    1. HS

    2. MI

      I mean, we talk about diversity in venture, right? And everybody saw after the killing of George Floyd, there was all this conversation around, you know, "We're gonna invest in minority founders. We're gonna invest in Black founders. We're gonna invest in Black GPs." All this stuff came out. But I always tell people, when you go back to that time period and you look at it, pay attention who didn't say anything. Institutional LPs. Name one pension fund that said anything. The first people to say something was really Yale, like five, six months later. And even then, nobody was saying anything, 'cause they don't have to say anything, 'cause nobody knows who they are. So if you wanna talk to me about diversity, let's talk about the top of the food chain in this industry. They didn't say anything. I don't know how much they actually care about diversity. I know what they do care about. They care about good returns. And so, that's what I'll focus on. And if it just so happens that 77% of my portfolio are underrepresented founders, just happened that way. At the end of the day, I'm a unicorn hunter, so I'm looking for returns all day, every day. But if you wanna talk to me about diversity, let's start at the top.

    3. HS

      So what, what needs to change is the investment committees and the decision makers at institutions, like pension funds, like corporates.

  8. 16:21 – 18:33

    What needs to change

    1. HS

    2. MI

      A lot of that stuff needs to change. And then also, we need more... (inhales) There needs to be more allocators along the asset class, right? 'Cause when you think about it, if you're go- if you're going to raise a fund, and you're a first-time GP, you're raising, say, a $10 million fund, those institutional LPs can't even write a check small enough to invest in your fund. Right? And so, even if a large institution comes out and says they wanna be about diversity, well most of us diverse emerging managers are raising micro-funds. (smacks lips) And they can't write checks that small. So then it's like, "What can you do to support us?" You probably should have a division of, of fund-to-fund divisions just for emerging managers that write smaller checks. You can write... Like, if you're an LP and you don't have the ability to write a one, somew- somewhere between, like, a one to $5 million check, (smacks lips) eh, you might miss out on some things. Right? Like, you're just hoping that when I get to fund three or fund four, if I'm doing really well, that you'll get a chance to get allocation, or you're gonna have some consultant who's gonna meet me at a conference who's going to then tell you that I'm great and that's how I'ma get in front of you. Like, I get it, right? Like, the deal flow is crazy on the LP side just like it is on our side. But there needs to be more creativity around how we give money to emerging managers. And look at folks like Insight Partners or, um, Alpaca VC or Plexo Capital, where they're making, like, they're doing these type of checks, and because of what happened with George Floyd, you know, Insight and Alpaca did these diversity initiatives where me and some of my peers got funding at stages where we normally wouldn't be talking to folks like that.

    3. HS

      Hm.

    4. MI

      And that's made a big difference. And that's great for us emerging, diverse GPs, but why don't we just have that in the ecosystem overall, for all emerging GPs, right? Like, th- th- I, I think it's a smart strategy.

    5. HS

      Do you know one thing that frustrates me is that, hey, we're embracing diversity in every way, gender, ethnic, education, whatever, and then a VC firm adds two associates that are ethnically diverse, socially di- whatever, in some diverse manner. And it's like two associates, and then there's like five white guys who are all the GPs. And as a white guy, I'm totally laughing at myself here saying this. But (laughs) like it... That pisses

  9. 18:33 – 22:40

    Diversity for diversity sake

    1. HS

      me off.

    2. MI

      It's annoying, but I think the bigger thing is don't do diversity for diversity's sake. I know several diverse individuals who got those associate roles who aren't being valued at their firms. Like trust me, I get as an associate, a job can suck sometimes. It can be thankless, you're doing a lot of work, you're not investing in stuff that you always like 'cause your job is to get stuff to the partnership, not really just because you like it. But I've seen some folks have to go through hoops and do extra work and go above and beyond what their counterparts have to do because people are making the argument that they're new to the venture. But you hired them 'cause you thought they were qualified. They've been there for over a year. You haven't done a single deal of theirs? I... In one case, I had one of these associates, they've sourced three deals for me. I've had another one source two. And I know they're good deals, follow-on funding showing they're good deals, so why don't their firms appreciate the deals they're bringing them? Like you gotta question something when things like that happen. (laughs)

    3. HS

      I, I, I totally get you. Can I ask, man, but RareBreed, RareBreed I.

    4. MI

      Mm-hmm.

    5. HS

      What does that... you know, y- you've listened to the show, you know I love kind of portfolio construction, what does that look like for you? You've got 10 million for the fund.

    6. MI

      Mm-hmm.

    7. HS

      How do you want to allocate this? How diverse in terms of, you know, concentration? How do you think about check size?

    8. MI

      Yeah.

    9. HS

      What do you think it is?

    10. MI

      So checks are 250 to 100. Really the strategy was really doing just two 50K checks 'cause really my strategy's around doing larger checks at pre-seed. And when people ask me about ownership, I tell them it's not so much about ownership as it is about multiples. What we know is you get the highest multiples at pre-seed to C, and then every round after that the multiples go down, so you need to put larger dollar amounts to get higher returns. So really what we're trying to do is put in the largest check reasonable as early as possible so that we have the potential to get a large enough return to return the fund every, in every investment we do.

    11. HS

      Yeah.

    12. MI

      Um, and so really we're gonna do somewhere between like 40 to 45 companies. Um, and, you know, we're going to probably... You know, I'm trying to be the next lowercase, so we'll see how those returns come out. (laughs)

    13. HS

      A- a- and so, so 40 to 45 with no reserve strategy?

    14. MI

      No, no, so we're going to do... So we're going to do somewhere in the neighborhood of like six to 10 follow-on.

    15. HS

      Yeah.

    16. MI

      But mostly most first checks, and we'll also do a f- a few off-thesis investments. You know, we got about 5% of the fund allocated for off thesis, and I'll tell you, it's funny, I, I have a pre-seed fund. I invest super early. Well, it just so happens that we got to be a, a small check in the second round, the Main Street. For those who don't know, Main Street's second round was a $60 million round. I got to put a 100K check onto that round. Do you not know that is the deal that gets most LPs excited? (laughs) Like it's not even my strategy, it's just the fact that for me, it's all about quality of deals. And so if it's a quality deal, I need to take a look at it, and Main Street was amazing, good quality deal. Uh, so, yeah, the strategy is some off-thesis things for like really opportunistic quality investments, but mostly it's companies outside major tech hubs, outside of Silicon Valley, New York and Massachusetts, North America, South America and the UK. For these founders, they're just typically overlooked, and sometimes founders that aren't overlooked but just building great companies. Like for me, people ask me sometimes, "What makes you... what makes RareBreed different and unique?" That's like, we invest in everybody. Like the idea that I could say that's even incredible as a differentiator, but like I invest in everybody. It doesn't matter. Doesn't matter to me. Right? One of my top performing companies right now is a company based out of Memphis, Tennessee called beautybyme.io with a founder who changes his nail color three times a day and go play his basketball after work every day. And he's incredible. Charles is incredible. The company he's building mi- is, is going to truly revolutionize the beauty industry in ways that I don't even think he understands, and he's just in Memphis, Tennessee trying to figure it out.

    17. HS

      Uh, I, I, I love that. I do have to ask you, when you had RareBreed in your mind and you-

    18. MI

      Mm-hmm.

    19. HS

      ... think about what it would be like,

  10. 22:40 – 24:31

    Biggest Challenges

    1. HS

      what's the biggest challenges and what were the biggest surprises?

    2. MI

      The biggest challenge was getting over my own... getting over my feelings of being inadequate. Right? Again, like I don't have a college degree. I don't have a finance background. You know, I got into this in a really unconventional way. And so for a long time I was concerned about whether or not I could do this, or if people are gonna respect me, or if people are gonna care about my firm and I can get follow-on funding from my companies. And that was just me inside my own head. The other thing that was a challenge was like finding LPs. Like I didn't have a network of LPs, so like thank you Twitter and thank you 506 (c) . Like if not for 506 (c) and my ability to publicly solicit, like I don't know if this happens. And I think the last thing was, I mentioned being a broke VC. I figured that if you gave me 24 months and I could talk to enough people, I could figure out a way to raise 10 million. Like I f- you give me enough time, I'd figure it out. But one of the issues that held me back early on was I didn't have the money to do the traveling to raise the fund. Like the, like, you know, COVID being what it was and everybody being stuck in the house actually helped me, because I had all my meetings over Zoom. I didn't have any in-person meetings so I didn't have to travel. So I got to save that money. If it wasn't for that, I actually wouldn't have had the money just to go to like meetings in New York every other week or fly across the country to go meet with... Like I didn't have that.And so, that was-

    3. HS

      (laughs)

    4. MI

      ... that was, I got lucky for that.

    5. HS

      Can I, can I ask, on the feeling of inadequacy side, I- I've had a similar, I- I, no idea how to figure out a spreadsheet. I mean, Jesus, whenever I open Excel, it says, "Sign in or register." And I'm like, "Ooh, don't like this." Um, but my question to you is, what helped you get over that? Was it the Twitter accreditation? Was it the support from GPs? What allowed you to break that barrier?

  11. 24:31 – 26:23

    VC Unlock Program

    1. HS

    2. MI

      It was a... was... was... was a little bit of all that. You know, the Twitter thing was very reassuring, meeting with other GPs and, you know, talking shop and realizing like, "I can go toe-to-toe with everybody here." But I also think, um, in, in August 2019, I went through, um, 500 Startups, uh, VC Unlocked program, based in Stanford. And it's basically, you know, for two weeks, you and a bunch of peers are learning from these Stanford professors about venture. And while I was there, I recognized very early on, like, I knew most of this stuff. You know, I- I- I could do all of this. I'm having conversations with these professors far beyond what we're doing in the class. And, you know, one of the professors, Trevor, pulled me to the side one day, he's like, "Man, you could do this." He's like, "You know, you're as good... You can do this as well as I can. You know all this material." He's like, "If you wanna raise the fund, I don't understand why you haven't already." And that, that validation in those moments was so impactful, right? Having somebody who I look up to and respect and it's already been in venture for years being like, "Yeah, you can do this. Like, you know this." Like, and being in these classrooms and like, "Oh, yeah, I understand all these concepts." It reminded me of the time I actually went back to school. Like, there was a time I went back to school and I went to Strayer University, you know, online college, and I took a database administration course. I was like, everybody in the class is like, "I'm, I'm taking this class 'cause one day I wanna be a DBA." And they got to me like, "I'm a DBA trying to finish school." And I'm just sitting in the class like, "I could have taught this class."

    3. HS

      Sure.

    4. MI

      "Yeah, I'm not doing this college thing again." Like, like, ju- it's just not... never happening. It was just like the same kind of moment again. And so that was really helpful. Yeah, that's how I got over it.

    5. HS

      Can I ask you one? And it's, it's something that I actually struggle with a little bit, honestly, which is like, you know,

  12. 26:23 – 26:51

    Imposter Syndrome

    1. HS

      again, imposter syndrome to, you know, being more successful, you know, as you, as you are now. Um, it kind of got to my head a little bit actually, when I was probably t- three years in, maybe. Um, do you, do you ever worry that kind of, you can kind of believe the hype and actually this grit that you have in the early days and that, "I'm gonna make this work and it's just f- h- hell, fire, whatever it is, nothing's gonna stop me." You can almost become a little bit lethargic with success.

  13. 26:51 – 28:19

    Staying grounded

    1. HS

    2. MI

      Yeah, but I think I've had enough failures in my life to know I need to stay grounded. Like, even now, my portfolio's doing well, you know, we've gotten several early markups and everybody's like, "Oh, this is amazing. This fund's gonna be great." And I'm like, "Eh, until we get returns, none of this matters."

    3. HS

      Yeah.

    4. MI

      Right? Like, this all looks good on paper, but, like, what matters is returns. And so it could look good today, it could look good for the next three years, and it could all bottom out after that. And keeping that perspective and always reminding, you know, my, my team and the folks helping me, helps me stay level because it is easy to get caught up in the hype, you know. Um, when I was working for the investment arm for the State of Maryland, you know, we started this pre-seed fund for underrepresented founders, and it got all this hype and everybody's excited, like, "Oh, you're doing these amazing things." The first three companies we invested in went straight to zero. (laughs) Like my first three, straight to zero. The next six, all still alive today. Three of them are in my current portfolio, right? But that was a humbling experience. Like, "Oh, we could do this. We know what we're doing. We're going to change the game. We're going to do this amazing thing." First three, zeros, right off the bat, right? Like, you can't start off any worse than that. Like, you can only go up from there.

    5. HS

      I mean, to be fair, I think your first check is always gonna be a bad one. (laughs) I mean, uh, I know mine fucking was. Um, but I, I, I do wanna ask you, I said about the challenge there. What about the biggest surprise?

  14. 28:19 – 29:56

    Twitter

    1. MI

      The biggest surprise has been Twitter. Like, I've been on Twitter since 2010. Last June, I had 2,500 followers, right? Like, 10 years, 2,500 people. I went from 2,500... I think I just crossed 50,000, like yesterday, and it's been surreal. Um, having done the Twitter thing and, and interacted with so many folks over a short amount of time, I would have folks I've been meeting with telling me how all these people in their firm are talking about me. I'm like, "But you work at, like, a top tier firm. How do they even know who I am? Why do people care what I have to say?" I've, I've gotten on calls and, like, I've had people, like, bursting into tears 'cause they're meeting me. You probably have... you've probably had some of this before. It's like, I'm just another emerging manager trying to do good work. Like, I ain't special, I ain't a celebrity, nothing like that. That's been kind of... And then, you know, because of that, I've now gotten to have a podcast with Inside, and I've had, like, four or five different people reach out to me about doing TV shows. It's just like, just because I got people to listen to me on Twitter, like, my whole life is changing. That was, like, a crazy surprise.

    2. HS

      I, I mean, it, it's a lovely surprise and no, I, I have to admit, I, I do like it when you get a selfie request on a date and you're like, "Oh, this happens all the time."

    3. MI

      (laughs)

    4. HS

      "Don't worry, I'm just famous to a small group of nerds in finance." (laughs)

    5. MI

      Exactly. (laughs)

    6. HS

      It's hilarious. I, I do wanna ask you, you know, we spoke about RareBreed and the, the structure and the strategy. A lot of people are talking about rolling funds. They, how do you feel about the rise of rolling funds and why did you decide

  15. 29:56 – 33:30

    Rolling Funds

    1. HS

      not to do a rolling fund?

    2. MI

      I think rolling funds are another sign of the lack of innovation in our industry, right? Like, Angels List took something that had been around before that people weren't really using. They took a designation of 506 (c) , which had been around since 2013, that nobody was really using, and kind of pushed it together and made a product to help emerging manager or give another structure for fundraising, and it's like-... everybody's like, "Oh my God, this is so world changing." It's like, well, shouldn't we be doing stuff like this on the regular? Shouldn't we be thinking about how to come up with stuff like this often? Like, if this is the biggest innovation we can point to, that's sad. Right? But then the other thing for me was, I, I looked at rolling funds. I thought they were really interesting, they allow, they would allow me to take advantage of, like, my, my growing Twitter following and such. But what I didn't like about rolling funds were the way they do LP returns. Like, LPs have to continuously buy in the quarters to make sure they get allocation to the companies you invest in. So, if you're not an LP in a specific quarter and that's the quarter I make my best investment in, but you're an LP in the quarter before or the quarter after, you don't get access to that deal, or to those returns. And I knew for me that a lot of my earliest LPs were just gonna be people who truly supported me and cared about me, and some of them were gonna be writing small checks. So if you're writing me a small 10K check and you can only spread that across four quarters, then that means if I make a really good investment in quarter five or beyond, you don't get access to that. But in a traditional fund, you get access to every deal I do over the life of that fund. I needed to make sure I was gonna be equitable to all my LPs and I couldn't put them on a, on a wheel of, like, "Well, you gave me 10K for these first four quarters. If you want to get into the next deal you gotta put up another 10K." Like, I didn't want to do that to folks. Um, but I did still want all of the advantages and so I created a fund, this traditional fund. We used 506 (c) so I could publicly solicit. Um, we worked with Carta as our backend and so, uh, Carta, um, told us they were partnering with a company called Anduin Transactions, which turns your sub docs into a guided web form. And so we made a website that had a button that says, "Click here to become an LP." And if you do, and tell me you're accredited, you get access to my sub docs. It's that easy. Go to our website, just click a button, you get to our sub docs. You can start being an LP right away. Uh, I've had, I've had quite a few LPs sign up to be LPs without ever talking to me, and so I have to, like, double back and talk to them after the fact. And then I told Carta, I was like, "Look, I want access to capital w- from kinda like how rolling funds do. They give you that first quarter as you go." I was like, "I'm gonna do a rolling close every three weeks. So as our LPs come in I just want you to close one of them." I actually wanted to do it every week and they were like, "Can you give us a better cadence, like, every three weeks?" I was like, "Sure, we can do that." And so, very, quite quickly I had a traditional fund that gave me all the advantages of a rolling fund without any of the disadvantages 'cause all the disadvantages were structural. All the advantages were all, like, technological. So, just ran with it.

    3. HS

      Well, we spoke about the, kind of, structural lessons there. How you did that. Love that actually, and, uh, I'm totally with you. I think the biggest mistake people make is they don't take LP cash off the table and they leave it for too long, and then people forget about it and it's like, "Ah, I actually allocated it elsewhere." And, you know, you lose them then. You know, you've had a lot. From the challenges, to the surprises, to the lessons on the structure. When you think about advising managers today, what do you know now that you wish you had known when you worked at Maryland, when you were starting RareBreed in the first day? What's the, "Oh, I wish I had known this when I started"?

  16. 33:30 – 34:32

    Fundraising

    1. MI

      Fundraising is going to be one of the hardest things you ever have to do. Everybody's gonna tell you that and it's gonna be harder than that. So just know that going in. Understand that all the strategies and advice you're getting, it's all great, but you don't have to follow any of it. You don't have to do any of it. You can create your own structures. Like, the same way I decided I was going to change the way I was going to do my fundraising and my structure, you could do the same thing. You don't have to follow these traditional rules that everybody says we have to do. You can be innovative. You can be innovative with your funding, you can be innovative with your structure. I mean, you could look at somebody like Will Zell from Zell Capital. He created an access fund. He worked with the SEC to create a fund where you could publicly solicit and you could take as many LPs as you want. Like, from anybody, including retail investors. I mean, that's innovative. Like, Wh- Will's doing some crazy stuff. Like, you can put in the work to kind of structure a fund the way you want it to be. You don't have to follow all these antiquated notions of it and advice that you get. Um, so be bold. Be very bold.

  17. 34:32 – 35:53

    What is RAV

    1. MI

    2. HS

      Be very bold. What do you want to build with RareBreed? Like, if we do this show in 10 years time, what is RareBreed?

    3. MI

      So I love this question because I'm going to build the next NEA, the next Greenspring Associates, the next top tier firm. And I use those two firms very specifically 'cause what I don't think many people recognize is both of those are Baltimore based firms. Two of the three founders at NEA are from Baltimore. They used to have, originally NEA is a Maryland based firm. One of the founders of Greenspring is the son of one of the founders of NEA. And those are people who are my mentors, my advisors, the folks who helped me in my career. And so I am built on the shoulder of giants. And so you're gonna look up 10 years from now and we're gonna be building the next top tier multi-stage firm based out of Baltimore, and that's what it's gonna be.

    4. HS

      Final one before the quick fire. And it's that every firm says, you know, um, what is it? Um, you know, entrepreneurship is unevenly distributed and amazing people come from anywhere and all of this. Do you find that's the case? When you look at follow-on funding and you give it to your top tier Series As, Bs, Cs, do you find that actually they are fully embracing Maryland, Texas, you name your... I don't know America very well. (laughs)

    5. MI

      (laughs) It's okay.

    6. HS

      Name your place east or middle America. Or are they like, "Ah, mm, that's not a New York," or, "Not for us"?

  18. 35:53 – 36:44

    Macs advice to founders

    1. HS

    2. MI

      They care about money so if you have strong enough metrics, they find a way to get over themselves no matter where you're from, and that's all, and that's why I tell my founders, like, "Hey, there may be biases against you. People may say if you don't live close enough to us, or if you're not in New York or Silicon Valley you can't find top tier talent. But if you're growing by 40% month over month and you got strong margins and the business looks like it's unstoppable, you'll get a check from somebody somewhere. So if you focus on that, everything will be all right." And that way I don't have to think about what the Series A folks are doing. As long as I help my companies be as strong and grow as fast as they can, it'll happen.

    3. HS

      Yeah, I'd- I'd take 40% month on month.

    4. MI

      (laughs)

    5. HS

      That'd work, work for me. Thanks, Mac. (laughs)

    6. MI

      Absolutely.

    7. HS

      Uh, I do want to move into my favorite, as you know, the quick fire. So I'm going to say a short statement and you hit me with your thoughts. Sound good?

    8. MI

      Sounds

  19. 36:44 – 37:58

    Macs favorite book and why

    1. MI

      good.

    2. HS

      Okay. So you've listened to the show before. What's your favorite book and why?

    3. MI

      Favorite book and why? Why Should White Guys Have All The Fun? 'Cause Reginald F. Lewis, being a Black man from Baltimore who created a private equity firm and was a billionaire, is somebody who I look up to and respect. And just last... earlier this week, I got to speak at the Harvard Club where he was a member. And it was like a full circle moment to be in the same hallways that he walked and where he celebrated his wins. And even more cooler than that was, afterwards I tweeted about it and his daughter posted about it on Instagram, which is like kind of surreal for me. So Why Should White Guys Have All The Fun? Because Reginald F. Lewis was a pioneer.

    4. HS

      I love that. Um, tell me, when shit hits the fan, how do you deal with it?

    5. MI

      When shit hits the fan, I call up my friends, tell them we should go to Buffalo Wild Wings and go have a drink and have a beer or two and some spicy hot wings. Talk to my friends, vent about it, and go back and answer some emails.

    6. HS

      I think that's a lot cheaper than my therapist. (laughs)

    7. MI

      (laughs)

    8. HS

      Uh, he then tells me I'm fucked up and I'm like, "Yeah, I just paid you $200 to tell me I'm fucked up. Thanks, man." Um, tell me, uh, what's the hardest element of your role with RareBreed today?

  20. 37:58 – 38:52

    Macs hardest part of his job

    1. HS

    2. MI

      The hardest element of my role at RareBreed today is figuring out how to be present for my family.

    3. HS

      Hmm.

    4. MI

      This job is so all-consuming. Um, and once you decide you're going to start a firm, you're basically making a 20-year commitment, right? Fund one is 10 years. Two, three years later, you're going to raise fund two. That's another 10 years. Two to three years after that, you're going to raise fund three. You're now 17 years in that you're dedicated. And it's a hard job. It takes a lot of time and a lot of effort. And so it makes it hard to be present at home when you have a family, when you have a significant other, when you have children. And so trying to be a... Trying to make sure I give them the highest quality of time, because I know I can't give them the quantity of time, that's been a struggle.

    5. HS

      What would you most like to change about the world of venture? There's many things, I'm sure, but what would you most?

  21. 38:52 – 40:00

    Macs dream for venture

    1. MI

      I would love to change the world of venture in the way that... I would love for venture to be more diverse and also to be more giving and more... I want venture to be more diverse on the LP side, the GP side, all the way through. And I would love for venture to give founders, especially first-time founders and diverse founders, more grace for not knowing every little thing about this industry. Like if a founder gives you an NDA, don't go crazy on them, don't end the meeting. Use it as a teachable moment to explain to them like why we don't do that. So many VCs don't take just the simplest five minutes to explain why they don't sign NDAs. Like things like that I- I wish we would be, we would be more thoughtful about being people.

    2. HS

      Uh, listen, I totally agree. I remember as a like 15-year-old founder sending NDAs. (laughs)

    3. MI

      (laughs)

    4. HS

      So I'm totally with you. Uh, penultimate one, you can have a billboard anywhere in the world and it can say anything on it. What do you want on that billboard and where is it?

  22. 40:00 – 40:42

    New normal

    1. MI

      It's probably in New York City somewhere 'cause that's where most people are going to see it, and it's going to say, "Wear a mask, get vaccinated. Let's all do this together, 'cause I miss going to bars and clubs and happy hours and everything else I love to do with my friends and family. So let's all work together so we can get back to normal." I'm tired of saying new normal. I just want to go back to normal.

    2. HS

      Yeah. No, I'm totally with you and, uh, you should come to London. We're totally partying it up here. Seriously.

    3. MI

      (laughs)

    4. HS

      Restaurants, everything. It's great. I'm more than happy to show you around. But I do want one final one, and it's as you know. What's the most recent publicly announced investment and why did you say yes and get so

  23. 40:42 – 42:34

    Unspun

    1. HS

      excited?

    2. MI

      Most recently publicly announced investment was an investment in a company called Unspun out of Oakland. Um, if you go to their website, it shows that they make custom jeans. You get... They have an app that scans your body, you get jeans that are made to fit. And what they're actually building is, in the background, is they have, um, a hardware component that takes the information from the app of your sizing and basically 3D prints your clothes, um, in one piece with zero waste. And when I first met the founders, they were just incredible people, um, who were truly passionate about this, and they were building a tool that could revolutionize manufacturing all across the globe. And then they had a letter of support from like the head of design from Levi saying, "My job is to figure out how to make the best jeans and they do better than me." And I think, "Okay, I'm in." Like, uh, that, that works for me. Right? It's, it was, it's a combination of the amazing people, the ambitious goal, and then the support they have behind them. And I should also say that that company was sourced by my venture partner, Jonathan Kroll. Shout out, Jonathan. You know, he was truly bullish on this company and wanted to get it done. Un-... And so we were going to do it regardless because, you know, if somebody on my team truly believes that strongly, then I believe in conviction. Like if you have that strong enough conviction, I'll-

    3. HS

      Yeah.

    4. MI

      ... ride with you every time. But he was right. He was so right. They're such a great team.

    5. HS

      Listen, Mac, I, as, as I said, I- I've loved your Twitter for a while now. I'm so pleased that we connected over Twitter. I'm so pleased that we got to do this show. So thank you so much for joining me today and this has been a lot of fun.

    6. MI

      Thank you for having me, Harry. I really appreciate this. Again, like I can't believe I'm here. I'm on the show. Like Mama, I made it. I'm on 20 Minute VC. (laughs)

    7. HS

      (laughs)

Episode duration: 42:35

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