July 18, 2023

From Music To Venture Capital - Jon Keidan | BCL #304

Jonathan is an entrepreneur and investor who has focused his career on the intersection between consumers, media and technology. He is the co-founder of digital media company InsideHook, and the founder of Torch Capital, an early-stage consumer venture fund focusing on mission-driven, next-gen consumer brands and tech platforms. Jon was an early backer of a number of top consumer start-ups including Acorns, Sweetgreen, Ro (Roman), Compass (NYSE: COMP), Zoc Doc, Digital Ocean (NYSE: DOCN) and Tia.

He started his career in the entertainment business, where he founded a music talent management company, developing and directing the careers of high-profile artists, songwriters and producers.

Jonathan has an MBA from Columbia Business School and a BA from Washington University in St.Louis. He is a founding board member of the Bronx Success Academy 1 elementary charter school and a life member of the Council on Foreign Relations and the Co-Trustee of the George Gershwin Family Trust.

Jon:Some bad times may end up resulting in much bigger wins, and you just reallygotta roll your sleeves up and stick with it. Some bad times may end upresulting in much bigger wins, and you just really gotta roll your sleeves upand stick with it.  

Julian:Hey everyone. Thank you so much for joining the Behind Company Lines podcast.Today we have Jon Keidan, founder and managing partner at Torch Capital. TorchCapital is an early stage venture fund with a primary focus on how technologyis changing consumer behavior and investing in mission driven consumertechnology companies.

Jon is so excitedto have you on the show. I mean, not only have we had previous founders thatyou've invested in, but also companies you've worked on and different projectsthat you've been a part of. It's so exciting to actually have you on the showand, and. Go through a lot of those experiences, the stories behind those, butyou know, obviously you've done a bunch of these, so I don't wanna come outdry.

And I want to bridgethe gap for the audience, being that you have this interesting backgroundcoming from music and talent management and then, entrepreneur to founder toVC. How has the experience of assessing talent from a music and artiststandpoint, how has that influenced and impacted the ability to, to assessfounders when you're investing in their companies?

Jon:Well, first of all, thanks for having me. It's it's really fun to be there andhave these discussions. So yeah, I had a very circuitous path to venture. Startingas a talent manager, as you said in music started in college and basically thejob of a manager. In music, it's a little different than even an agent.

You're really thepartner of the artist. You find them early, you see a path for them. You sharetheir vision and you help them build it. And you really are a partner throughgood and bad, thick and thin. A manager, unlike an agent, is responsible for ahundred percent of everything going on with their artist versus an agent who'sreally just cutting your deals.

And there are a fewthings that that have really stuck with me through that. A, you've gottarecognize talent early and pick the right ones cuz you're putting a lot ofenergy into it and a lot of time into it and resources. Two, it's reallyunderstanding what they're trying to do and why they're trying to do it.

So you can be ashelpful in the right ways as possible. And then also you've gotta be reallycomfortable with, with with, with all the ups and downs and, and often, the,the hardest paths end up with the greatest results. And so nothing is eversimple and easy. And there are many stories in the music business withdifferent artists who, everyone passed on them and one took a chance.

And, this happenedand that happened. And, by a miracle, they ended up becoming the biggest artistin the world. It was never quick path. And so, I think that's always in theback of our head, both for me and and our team here about when we work withfounders, that you're really in it for the long haul.

Some bad times mayend up resulting in much bigger wins, and you just really gotta roll yoursleeves up and stick with it.  


When you thinkabout those the times when, when there's a missed opportunity, whether it's amissed investment or a found or, or an artist or founder feels that, peoplemissed or passed on their opportunity, is it a lot of times the fit between,whether it's a manager, an artist, or opportunity and said founder, or is itsome other variable that, whether it was preparedness or timing?

Are there otherthings that you know allow, or that I guess, Come, come in the way of, of,making those deals or transactions or investments or, or moving forward in apositive.

Jon: Ithink a lot of it, it's timing and fit, which are the two most nonobject,subjective elements have so much to do with it.

It's gotta be, it'ssort of, it's not that dissimilar from finding a significant other, right? Likeit's, you've gotta be in the right mindset and the right time to receive and understandand feel each other out. But also there's certain things that I look for thatI'm maybe attracted to that others may not be, and therefore I see somethingothers don't and vice versa.

And so sometimes wedefinitely passed the course, unfortunately for us on some great companies. Butwe've also found some things before others did or, or, or other. Areas whereeveryone passed and we saw something that others didn't. So there's always abalance, but I think timing and fit which is really chemistry, always playedvery heavily into it.


And what kind ofsignals are you looking for in particular? That or that, that, signal thatthings will go in a, in a strong direction? Is it the preparedness of thefounder, their ambition, the way they communicate? What are these components?Totally all, all of it.  

Jon: Ithink determination. Grit, passion, focus are just on both.

Both as an artistor you know it. And that's the thing I think I really respond to. Yes, I haveto get the creative vision to see the opportunity on both sides, but. Knowing,like having that really good sixth sense of someone who's got that inner innerstrength and sort of has is, is going to accomplish this in their soul.

So how they'regonna do it, maybe up for question, but they're going to do it, being able torecognize that and plug into that is really key. And so, yeah all of thosethings, the termination, grit. Passion, focus are really critical. Preparation.Many people can be prepared that don't have the others and they're not gonnaget through, but if you're not prepared, you're definitely not getting through.But I feel anyone who has those four things is going to be prepared. They'regoing to be ready, they're going to have their best foot forward for what theycan do at that point. And if they don't, then you can never want it more thannative.

That was anotherbig lesson. You couldn't, you, you, you can't want it more than, than theperson you're representing in music, and you can't want it more than the personyou're investing in. Or the team you're investing in. And so if they want itmore than anyone, they'll have all those other things and preparedness and soon. Ready to go.  


Do things changewhen you're assessing, say, co-founder relationships when investing incompanies, do you prefer. Is it, is it better when somebody is at more of aleadership position, more front facing versus, their counterpart is more on thebehind the scenes and, and on the operation side?

Do you look forthose things or are those, do those impact decisions on investing when it's notjust a solopreneur or, or, solo founder, it's someone who, it's two people ormultiple people who share vision, and how do you assess that when it, it seemslike it would become a little bit more complicated.

Jon:Yeah, that's actually a key part of, of diligencing and really understandingyour company and founders. When they're multiple founders, what's driving them?Are their ambitions aligned? Are their perspectives on themselves aligned? Aretheir perspectives on their colleagues aligned? All those are really critical.

I think, look, wehave no rules. We back many solo entrepreneurs. We back. Three, four personteams. I mean, it, it really, there's no sort of perfect system, but I, I havefound that when there's two people that really respect each other and arealigned, the ability to have an equal to bounce ideas off of and also to shareresponsibility is, is really, is, is generally beneficial.

The risk there isthey can also at some point become unaligned in fight and it's verydestructive, but, We've gotten pretty lucky. I mean, I think for the mostparts, our founding teams have stayed very tight and have been like workingtogether and they've worked out this stuff ahead of time, what their skillsare, what they wanna be focused on.

And once that'sworking comp in a complimentary way, it, it, its scales really nicely. Yeah.But I also think when you see. When, founders are finding out a lot aboutthemselves as they're going through this process, and and you never know. Andso sometimes one founder thinks they wanna be the inside person and they wannabe the outside person.

And so we're alsoreally trying to, to really get in the mindset and understand what's importantto them and what's important to them in the long term to see if we can suss outif, if that they, they're aligned, that they, that they mean it, they're notjust saying it, but they, that that really is, that is there for the long haul.


How much has thejust, the strategies and decision making changed in terms of the, the, thefounders? I guess, maybe even toolbox, I would say, being that the externalmarket has been, cha changed so much from, crypto winter to, challenges withSVB to so many other things that hasn't real, haven't really challengedcompanies.

In the recentyears, obviously 2008 was brutal. And there was other events, after that, butthere's a lot going on for, for companies. And how much has their toolboxchanged, from, from what you've seen in your, in, in, in your experience?  

Jon:That's a great question. And we're getting back to adventures. Supposed to be,as with Ben Lair from Lair Ventures last night and we're, we both startedcompanies around the same time. And then he's a new venture a lot longer than Ihave, but, but we've both been around this world for a while. This is what itis. It's hard. Venture is hard. It is very hard to build a company and we'reback from off.

Unfortunately, itwas a very quick slide that founders had to adapt to of growth at all costs.Easy capital. Cheap capital. You made mistakes, you could pay for it over byraising more money or. You had a lot more flexibility to make mistakes and yourstrategy was different. You're just trying to grow market share and all of asudden screeching halt, stop the presses now.

Forget about growthat all. Costs survive and gets profitability. I mean, it's a complete oppositeheadset and very, very challenging for any founder, let alone young founderswho haven't seen cycles before. So we luckily have been around for a minute.I've been investing since 2008 and been with Startup World directly as afounder since 2000.

We're not a founderinitially, but on a founding team since 2011. I I've seen some of these thingsgo through and, and it's sort of like, okay, what do we need to do to helpconvince and make sure first the founders understand the current situation inreality, and then work with them to s how are we going to adapt, or how arethey gonna be able to adapt and us help them with, yes, you're gonna have tocut costs, you're gonna have to slow your burn, you're gonna have to rethinkyour strategy.

It's, it's really,really tough. But I think the, the skill sets a good venture partner has is inmany of these areas, they're helping. It's not just for us. It's not justrethinking their marketing plan. It's rethinking all their financials. It'srethinking their spend. It's rethink, rethinking their product roadmap.

It's rethinkingtheir hiring. There's so many components that all play off each other. Youcan't just focus on one. And I think a good venture. Partner to a founder isreally helping them think through all these things and all the pros and consand results of these decisions and helping them get to the right decisions thatthey need to make.

So they do getthrough a period like this. Because as things are much more challenging now,there will be more, wind behind us and those who survived. This will obviouslyend up doing really well.  


One random questionthat popped into my head is, thinking, obviously hindsight's 20, 2020, butthinking about how a lot of companies had to readjust and, and move towardsprofitability, which means honestly taking down a lot of testing from differentfeatures and products, really just focusing on one singular a profitableproduct.

How often do youthink a lot of founders I don't wanna say regretted, but just saw that theywere investing time and, and. Really inefficient parts of, of, of growth forthe business versus actually, maintaining steady growth towards profitabilityand expanding on it.  

Jon: Alot, a lot of regret, lots and lots of regret.

Enormous amounts ofregret, and they see it themselves. You don't need to tell them that. So regreton, on having a lot of capital not being as thoughtful that it could be endingsoon. The, the, the ability to raise that capital and so spending on things. Ifyou, if you'd said to most of these founders, you have nine months of capitalleft to prove yourself, what would you do differently?

They would've donea lot differently. They would've cut the science projects, they would've cutthe experiments and the testing, and they've gotten to be gotten down to the key,most important thing, which is focus. As Torch we think about that too. Whatare we focused on? The sectors we're focused on, the stages we're focused on.

It's, I tell theteam all the time, you only win by focus. And we tell our founders the same thingand, and the good ones, they know this, so this has forced them to focus. Butwhat it's enabled them to do is find much better profit margins in the process,create much more stable businesses in the process, and really build a strongfoundation that will.

Earn them theright, not they get to do it cuz they can, but earn them the right to go createnew things and create new experiments off the core foundation of the business.Mm-hmm. But they have to find that they have a real business. And that they havea foundation of people or customers that are coming back and consistentlygrowing, even if it's not at the crazy growth rates.

It was before, butit's now stable. And again, you win by focus. And so the founders that havethat regret all come back and they're like, we're focused and they are. Butthere's a recalibration period and then a time wasting period. And so, I, I,luckily our portfolio companies are. Through that now. But it's been a toughcouple years for everybody.

Lot of, lot ofmidnight calls from c not that different than managing artists. Midnight callsfrom CEOs, panic discussions before board meeting, before dealing withsituations, dealing with EM employees. And look, these, these are sadsituations. It's not just focusing and make a company successful to do that.

You're lettingpeople whose livelihoods depend on you go and is necessary. But it's, it's,it's very emotionally taxing and Founders care about their employees and, andthere's a lot, there's a lot that goes into it to get that fact of focusresult. But once they get there, I think then they have got a much betterchance, really good chance of success.

Julian:Yeah. And when I think about focus and, and this adjustment period, I thinkabout focusing on a singular product that, has product market fit, has, hastraction, has consumer feedback, maybe even narrowing down within that pool of,of consumers on some, some hyper consumer. And then I'm thinking about maybereadjusting my brand changing my marketing channels to see what's being moreeffective.

What am I missinghere? Because, there must be more to that formula when I, when I think aboutrefocusing, what am I missing?  

Jon:So, I mean, you got a bunch of the areas. I think the first one is, is justreally focusing on product and then, well, I guess there are a couple things.One, your existing consumers, you may be able to do more with them.

Right now, one ofthe biggest issues facing companies is getting new consumers or customers ismore expensive than it's been in a very long time. It's costing a fortune. Sothere are two things that come to play, and again, this goes also back to themusic business about really your audience and your fans and, and overdelivering for them and making sure they're gonna be on this journey with you.

Double it. Firstthing is doubling down on your proposition for your existing consumers. That'sreally critical. Like make sure that they aren't, you're, they're not on thedefensive bag, that they love you and you're doing the things to make them loveyou. The second thing, Is if they do love you, then you may be able to offerthem some more things.

And you get it fromfeedback. You have a very direct understanding of what the next couple thingsyou may be able to build for them. As long as it doesn't take the company in adifferent direction and you can build off that, you can increase your revenueper user in a, in a real way. So, I was saying the first thing is don't forgetabout your existing customers and consumers. They're such a critical part. You wantto make sure they love you in times of uncertainty. You want to double down,and that's one of the most important things to think about is really bearhugging and over-delivering for your existing customers.

When you do that,they will also be more willing to go. On a journey with you or buy more thingsfrom you, or you create opportunities to cross sell and upscale and increaserevenue, but also value for them and revenue for you. But they have to be, youcan't take them out of the equation. You can't just say, we're gonna raiseprices or something that won't work, so that you have, they have to feel extravalue, but you could probably get paid more for it.

And so, Whenacquisition costs are so expensive as they currently are, that's one very importantstrategy. And there are a number of our businesses that have done thatbrilliantly. Acorns is one, they are always thinking about the end consumer.Noah and Jeff built an incredible brand. Even with the market volatility.

I know you'vespoken to Noah. Yeah. And the market volatility, the retentions through theroof, people trust them. They love them. That's because they very thoughtfully,every decision they made say, how is this going to help our consumer? So onceyou do that, that's really key. And then you need to start very carefullyexperimenting with who else you could be talking to.

Who else could be anatural fit for you as you get new consumers. Cause just spending money formarketing is not gonna work in this environment. It's way too expensive. Yeah.And so, I guess the main, one, main thing I would add is just be very, veryfocused on on yeah. Who your audience is and on over delivering to them.


And, and one thing,that has come about, a lot of that I've seen with a lot of companies is thisinteresting brand repositioning. And I don't know if it's, by influence of webthree getting a really close relation, becoming a kind of really close, closeto related to their customers building community and focusing on that.

I think a lot ofcompanies are being influenced by that. But when you think about like brandrepositioning, what do you. Wh where does your head go in terms of the, thestory you're trying to devise? Are you still thinking about how you're,approaching your customer? Say if you're trying to regain traction, you're,you're trying to increase some momentum.

How do you go aboutthat process and, and realigning with whether it's your customer or brand,when, when you do go through like a brand transition?  

Jon:So again, core to Torch, we are always thinking about brand. And brand for usreally equates to trust a good brand, creates trust. Trust with consumers,create loyal customers and and so on.

So you only need togo to a brand refresh if you're trying to change your messaging or, or you havefeedback that you need to approach something in a different way. Maybe yourvalue proposition wasn't strong enough. Maybe you are focused on the wrongthings of how people's need to change in this environment versus two years ago.

So. The thing, thefirst, again, think about it goes back to focusing on your core consumer andyour core value proposition. Why are they customers of you? What do they wantfrom you? And then can you frame, and where is their mindset today? And can youframe that better? And I think it really starts coming with the mess, the, themessaging of the value proposition of the number one thing that they like andwant from you and what they need.

And then, and thenyou can move from there, but you've gotta, you've gotta nail that. And then interms of, Sort of the more fun elements is just sort of design and, and, and,and pro sort of the UX side. I mean, I think again, you're looking at at onone, it's a mix of art and science. Venture is such a, a core early stage issuch a core mix of art and science.

Some of it's feeland some of it's data. And those who are really able to balance the two,understand data, but have perspective like Steve Jobs, it is even say youdon't, customers don't know what they want until you show it to them. So youhave to understand both sides leading them, but also taking their opinions andperspectives into account.

Julian:Yeah. Yeah.  

Thinking about thetraction, obviously you've been at this for a while and, and you've invested insome amazing companies so far, what do the next generation of companies thatyou're looking at look like? The next fame companies that are out there who arereally delivering value and, have a unique value proposition, maybe have some greattiming, have a unique piece of technology that you know that, that is fairly,productive or, or substantial in a certain area.

What do those nextcompanies look like to you? What it look like today.  

Jon:So one of the ar Yeah. One of the areas we're really excited about is thefastest growing part of the US economy are small businesses, which includessolo printers and freelancers and gig economy. People's side hustles turninginto their main hustles, and it's never been easier to start one of thesebusinesses.

And so there are acouple really interesting characteristics of this consumer base. We think ofthem as consumers building businesses, not enterprises, and that's a really keydistinction. Because they're really someone who's doing something that theylike doing or are good at it and make money from it.

They're not lookingto build like a massive business of it, day one, or they don't know how to dothat. And so the tools they need, the simplicity resembles a lot more likeconsumer tech products and tools than traditional enterprise. And also theyneed a lot of help in just figuring out they don't know what they don't know.

So all of a suddenyou start a yoga studio. You were, you were doing it on the side. You start aproper yoga studio, you build a website. We have a company durable that will,that's just focused on bringing people, new business founders from zero to one.Service businesses could be a long mowing business.

It could be sellingsomething online, but all the different elements, they take you through them toget you up and running and then help you manage your businesses, like a onestop shop. And they also use generative ai. And so, AI is going to be a majorfactor, especially for this audience because it'll enable them to do thingsmore quickly and cheaper than they could before.

But you, you stillhave to be delivering on a, on a core value proposition of a pain point you'resolving for. And then AI helps you do that. It's not just invest in ai. So thiscompany durable, is fantastic. The key thing that they use AI for was justbuilding websites in under 10 seconds. You, they can build you a beautifulcustom website that takes payments and tracks your customers in 10 seconds.

So that all of asudden people, that's something tangible. People understand. They feel, okay,wow, I actually have a place I can send people to now and I can start marketingand and so on. But then they'll help you continue through that journey. Sothat's a whole segment. And durable is just one example of a company that'sreally serving.

Again, it's thefastest growing part of the US economy. It's gonna be a massive, massive. Valuecreation for, for people's income, for generating new businesses and so on. Sowe really love that space because it's the perfectness of, of business. Andconsumer.  

Julian:Yeah. It's interesting,  

and I'm curious tohear your perspective on this. We've had some com where a lot of companies whowork within this space offering so many different types of tools, whether it'shelping on the accounting part of a business or customer acquisition oroperations or bringing them into a social media or no, not social media. Amobile application.

There and, and oneof the common factors, it seems as though there's this kind of a ceiling to thebudget that a lot of these businesses have. So they really focus on newcustomer acquisition. And when you talked about how you know much morecompetitive that is now, being that so many channels are just conflated with.

Pay, pay per ads. Imean, there's so much competition out there. How do you then get thosecustomers if you can't get them at the regular cha in their, in, in those kindof usual challenges that they visit if you're an up and coming startup,  

Jon:the, the budget. So yeah, you've gotta be creative.

This again, art andscience, creativity, it all really has a huge impact. There are so many ways tomarket to people. When I started in the music business, there were a hugegrassroots Marketing Street teams. They were called, they were on collegecampuses. They were delivering flyers, they were hosting parties.

It was literallyhand to hand combat, and they would convince you in person like that. There'scommunity marketing, there's content marketing. My last company, inside Hookwas a digital media company in. From the top destinations for, for lifestylerecommendations for guys over 30. We did all sorts of different types ofmarketing with our brands for ourselves.

Product-ledmarketing is another huge one. One of my early investments was digital Ocean,which is now public. They were creating cloud, like a much simplified way toget your, your cloud infrastructure up and running for, for individuals andhackers. Make sure for small businesses and for engineers and so on.

They didproduct-led marketing, community marketing. They know where those people weregathering, and they would get in front of them and, and, had a very goodunderstanding of their mindset and what they'd be interested in, and then theysort of jumped in that flow. They never had an enterprise sales team until theywent public or before they went public.

So there's, there'sso many other ways to do this, like I said, from literally handing out flyersand creating events to PR and press. To community marketing, content marketing,product marketing. There's just many other ways than social media marketing,which I think everyone became too comfortable with and just created a lot ofnoise and it made it very expensive.

Even media, I mean,you can go get radio buys in, in some of the, the less populated parts ofAmerica, very, very cheaply, probably way more cheaply than it cost to dosocial media, and they can be very effective. You have to understand, again,who your audience is and what the value proposition is there. But there's somany ways that people haven't thought of and maybe a bit of an advantagebecause I came from the media and entertainment world my whole career.

But to me there'sinfinite ways to do it. You just have to get clever, creative, and, and belooking way beyond what the most obvious opportunities are.  

Julian:Yeah. Is there some recent strategies that have surprised you on how effectivethey are?  

Jon:Yes. I, it's so funny cuz everything is so expensive. It's going back down tothat grassroots marketing.

There's a couplewe're looking at in London and one of the founders is the ops guy and he's gotall the numbers and the other one worked with the creative marketing guy and hewas just talking about he's going do some really fun things like get a. Likecolor a a little truck, and he is gonna go around neighborhoods and I'm justlike, we're back in like hiphop marketing with like, you know what Bhu Tangused to do?

Orang mix tapes.Mix tapes, and so on. So, the more you go forward, the more things stay thesame. So, that was pretty creative when I was like, wow, I haven't heard aboutthat sort of marketing in a long time.  


Yeah. Do you thinkit's just, is it just people finding a better way to, connect, with their, withtheir consumers and like build that trust?

Yeah. And it'sjust, it's connection. It's just wherever that stuff is gonna go. Right?  

Jon:Yeah. But connection is really critical. Like, where are you genuinely gonnaconnect? I mean, I used to work with Dave Matthews, and one of the key insightsthat they very strategically had in front of them was that, we're a band.

We're notcelebrities, we're not rock stars. We're not in this to do this. We're in thisto be musicians and play music and share that connection with our audience. Andso, I don't know, 25 years later, they're still selling out arenas every singleyear. Doesn't matter if they have a hit song. Doesn't matter if they're on thecover of a magazine, doesn't matter if they're dating someone famous, theydon't care about that.

Stuff's not everwhat they thought about. Their focus was on that connectivity with theiraudience and everything else was like nice to have. That was their must haveand it's, it's given them enormous longevity and success. And so yeah, I thinkit's just, again, back to focusing on your end consumer and the connectivity,understanding their mindset and figuring out where they are and meeting themthere.

Julian:Yeah. And also it sounds like in addition to that, just knowing what yoursuperpowers are or your value, or what your abilities are, it sounds like forthem they knew so well about who they were as artists, how they connectedalready with their, their audience, that they, they, it didn't make sense tochange because it was working.

It just may havenot been, on a similar timeline or a conventional. It's so interesting to thinkabout how those situations come about and.

Jon:I'll give them more credit because when they, when they were very, that becametheir strategy. It was at a time in the earliest two thousands when every otherartist was on magazines and, and celebrities and rockstar.

The whole rockstarthing's a cool, to be like a very flamboyant rockstar. They, they were, it wasso differentiated at that point. I think Dave Matthews and Pearl Jam were thetwo that really just sort of like shut that out. And just focused on like whatthey loved, knowing who they were and so on.

But everyone elsewas very wrapped up in that. And so it wasn't just like completely it, it wasorganic. They already were there, but they were smart enough and aware enoughto recognize this special relationship that they had and that that was the mostimportant thing. And the rest of it didn't really matter.

And again, they'rephenomenal guys, and, and that's who they are as people as well. But theyeasily could have been, let's try to get the next single right and this andthat. And they're like, no, we play music, we play it for our fans. We wannamake them feel that we love them and that they love us.

And that's what'simportant. And that connectivity is the key.

Julian:Yeah. Yeah.  

Being that there's,not even just now. I think over time there's always been just external, whetherit's distractions or variables that. Challenge businesses. What do you feellike is some of the biggest challenges that founders will have to face today outsideof obviously a different, funding market outside of the, kind of the, thethings we've heard in, in the popular, in the news what are some things thatyou think will challenge them more in the near future?

Jon:So this is a really hard time to build a business. Okay. If you're not best ofthe best, you're, it's gonna be very, very hard to succeed. There's no room formediocrity here. Capital's part of that. I think there's a lot of burnout justin the industry, and I think there's a lot of noise just in terms of gettingnew customers, consumers, et cetera.

Everything is sortof working against the founder right now, which means a couple things. We likethis environment. We love this environment. This means. Founders that we'reseeing are much more focused. Again, back to focus. They have enormous passioncuz no one's gonna do this for fun as like a maybe it'd be fun.

Start a companyright now. Right? They're gonna get scar tissue much faster because they'regonna really have to fight for every win that they have. Yeah. And they'regonna have to be very realistic. And that's where capital has multiple effects.It's not just you have money, it's if you raise less money, you have less moneyto prove yourself, which means you have less time, which means, again, You justhave to get to the core thing and you can't really mess around with anythingelse.

You have to makegood hires. If you make a mistake hiring, you can't afford to keep that person.You really, it just forces everyone's hands where everyone had all this room tobe loose before, and that tightness does a few things. Hey, it gets you closerand quicker to see if you have product market fit.

If you do, the pathto getting there has already started to, to influence your thinking of seeingwhat made you successful doing that, and you'll continue doing that. Which isagain, being disciplined, being aware of, of what are the key areas that you'retrying to, that you have to prove out for the next step and just be going,methodically through it.

And then also the,the, the, the magic side. You've gotta create some buzz and magic around whatyou're doing. Again, to get your first customer, to get your early consumerbase, to get other, to, to hire people in this environment. That knowing howmuch risk there is, you've gotta have that magic. And so for us, the next twoyears I think, are gonna be a phenomenal vintage because founders that can bothharness the intensity of the current environment and able to, to focus that,that like a laser at the same time infl, influence and, and, and inspire peopleto come join them on this very, very challenging journey.

A founder that hasall that can do all that is gonna have a really good shot at success.  


And thinking aboutyourself, being that a lot of, early stage venture companies, the, the firstmeasure of success is, can I build a, hyper scalable or be a part of a hyperscalable company?

And, and you'vedone so already, so being that, that box is checked off, how do you measure successnow? Is, is it the types of technology you're, you're helping build? Is, is itthe amount of impact? How you, how do you measure impact? What is it, what doyou focus on in terms of long-term vision?

Jon:That's that's a good question. Definitely it's helping founders build somethingthat moves the needle for people. We focus on the consumer ecosystem. It's bothconsumer facing companies, but also the tech platforms and infrastructure belowit. And if we can help companies that are using technology create bettercustomer and consumer experiences, That's a win.

I mean, some of ourfavorite companies, I mentioned Acorns RO Roman incredible telemedicine companymaking medical care, different conditions. They're treating simpler, easier,cheaper, more convenient at scale. We have Tia, women's Healthcare Companythat, that we co-led the seed and have been very involved with all the waythrough one of the fastest growing women's healthcare companies in the country.

They're rethinkinghow the relationship between women in healthcare and they can offer gynecologyand primary care and mental health and. Held with fertility and wellness all inone place and, and in, in a, in a much more impactful way. One example for themjust to show how powerful these companies can be, right?

They opened theirWilliamsburg location and 800 women signed up the first week. This is in thenew, like Taylor Swift, tickets on sale. 800 women signing up for healthcare ina week.  

Julian:Those are physical signups. Those are not like views, those are not,impressions or whatever.  

Jon:No. Those are women literally signing up to be a member and, and, and, andsetting an appointment with the clinic.

So that just showshow power, most the pain point here, Katie, on my team and I work closely onthis deal, but you know, what she taught me was just, women have a, a verychallenging time in the healthcare system. And there are many, many reasons forthat. And Carolyn Felicity, the founders of tia, brilliant.

Really recognizethat and they, they sort of wipe the slate, say, what is the perfect experiencethat we could imagine and how can we create that? And so I think they, theyhave 30,000 members now in New York, la, San Francisco, and Arizona. I mean,it's, and it's, it's growing like this. But yeah, again, it shows.

They had a verystrong value proposition that they could overdeliver for their consumers. Theyhad cur phenomenal branding that like fit the mindset of who they were speakingto and made them feel that connectivity. They delivered amazing experiences tothe women that come in as patients to the point where the patients are and themembers are the evangelists.

I mean, all thethings I've been talking about on this podcast. All are in play and you seewhen all those things work cohesively together, you get a massive company. Andit's companies like that that make what we do really rewarding because you canwatch from scratch the impact that these founders and these companies arecreating.

And that'sdefinitely why we do this and what we love about it.  

Julian:Yeah. Yeah, I love that. I love this next section as well.  

I call him myfounder faq. So obviously we'll remix it up since you, you, you, you've been afounder, you've been a managing partner. You, you've worked so closely. So, butI'd still like to ask you some rapid fire questions and see where we get, soSure, let's do it.

First question Ialways open it up with is, what's particularly hard about your job day to day?

Jon:Tricky from a fire hose times a thousand. The amount of people for what we dothat you have to be interfacing with all the time, it's, it's, it's insane.It's exhausting. So you gotta have a lot of energy for this job. I love it.It's never boring and you meet fasting people, but think about it. You'remeeting new founders, you're meeting your existing founders, you're alsotalking to your LPs and, and the investors in the fund.

You've got otherexecutives in other funds that you're chatting. That you have to be constantlyin touch with your and then there's your own team. I mean, there's just so manystakeholders to make work what works. And so the hardest part by far is there'snot enough time in the day to see and touch all the people and things that youwant to do.

So you have to bereally, it's, it's very tough to manage all that and to triage all that.  

Julian:Yeah. Another question I had was,  

is it morechallenging to assess a new founder or a founder who's had, not say, like, notnecessarily a successful pedigree based on prior businesses that they've, theyrun, who's harder to assess?

Jon:I'd say new founders hard to assess because a founder, even if they're fa, afounder who had a company that failed, there's a lot of experiences that youcan probe into and you can understand by their answers how they think and howthey're thinking and how they react to certain situations. A new founder's justmuch more improving.

I mean, if they hadheld jobs somewhere one of the things I was joking with another VC about was,they're people you can reference check, and they were, they have a terriblereference at whatever company they were at. But then if you actually scratchthe surface, that's what's gonna make them a great founder.

They were,opinionated. They didn't listen to this, they did their own thing, all that, sothey could get a bad reference, but they could be an amazing founder. So it'svery hard to balance those two things cuz it's not just like box checking atall. And that's again, where the art comes in. So it's definitely morechallenging to assess a new founder that they, how they're going to interpretand be able to handle all the, all the crazy rollercoaster of situationsthey're gonna be encountering and getting to understand if they're gonna reallybe able to persevere through that.


When is VCinvestment not a good move for a, for a company?  

Jon: Ithink if you have to be really realistic as a founder. Is this truly a scalablebusiness? And it's something we're often thinking about. If it's, you can havea very profitable, nicely growing, we would call lifestyle business, that's agreat business.

But is is ventureinvestment gonna be able to grow exponentially? That's really the key thing.Now if you require a big engineering team from the onset then the answer is youdon't have any other, yes, of course it's your only option, but hopefully thebig engineering team, you're doing something that can create exponentialgrowth.

Mm-hmm. But ifyou're creating somethings much more linear growth, I think it's a really goodquestion. Do you need venture investing? Can you do it through debt? Can you doit through, I mean, the music business where I was trained and came up, as amanager you get a piece of your artist, so. If you don't get your artistsigned, you don't have any money to build a company with.

And so I got myfirst artist signed, I took that money and I started the company and then gotanother artist sign. And you get them another deal and, and you really eat whatyou kill, which is the way businesses traditionally been built. That's still agreat way to to, to, to create a business. But if you think the extra capitalwill help you exponentially grow a business and that generally is a bigbusiness at scale, then venture makes sense.


what are just someof the best practices when you're founder thinking about deployingcapital?  

Jon:So, I think it's really important to have a clear plan that's pressure testedand realistic. Plans change. We know that they know that any early stage mentorperson knows that, but at least once you have a plan, you can react to it andyou can, you can react to the changes in the environment off a core basis soyou're not floating in space.

So it's reallycritical to have a, a plan, not just of what you think as a founder, butgetting. Other founders' input and your investors' input, who, if they've had experiencein this to really all agree on this plan, and everyone knows this couldcompletely change, but that starting point is critical because then you couldsee where things are deviating and where you wanna allocate resources todifferently.

So, yeah. Yeah. Themore specific, the better. And again, everyone knows this, it's gonna change,but if you don't know your starting place, you don't know where you're going.And so you've gotta start with that starting place.  

Julian:Yeah. Yeah.  

Thinking about,your career and, and what's been impactful in, in, in your life, whether it's abook or a person, what's had a lasting impact that even today you referencedand, even, even advise other founders and, and share the wisdom.

Anything you canshare with us in our audience today? Any books or, or people who've inspiredyou and left something.  

Jon:Oh wow. Well, I mean, I'll definitely mention Jack Welch cause I got to workfor him. His book winning. There are some core fundamental aspects of buildingany business that are incredible.

And he is gottenbeat up on the press for some very. Being a public company CEO and so on, buthis core thesis on how you, how you conduct business is incredible. And some ofthe key things include, sharing a vision and, and, and, each brick layer, youtalk about the chapel.

Each brick layerneeds to know that they're, they're pushing each brick to build a chapel. Likehow do you get buy-in? How do you get people to share your vision? How do youshare successes with the team? How do you make sure everyone feels. Thatthey're developing on their, on their career path and, and balancing all thesethings.

He's the best atthat. So that book winning was phenomenal. I had a professor of business schoolthat sort of took those thesis and even took them further. Michael Finer, finerPoints of Leadership was a really great book. Yeah, I learned a ton on themusic business. I mean, that's a gangster industry. That's, that's the oppositeof tech in many ways. It's, it's sort of, it's all deals and relationships and,and influence. So I, I learned a ton there, but I also got show, I got a lot oflessons from some really terrific people.

I mentioned DaveMatthews and their manager, core and Capshaw. I think there, there are Lyor Cohen,who, who, who built Def Jam and then ran Island, CEO of Warner Music. He's seenit all. Signed Jay-Z and Kanye. And now that he's sort, now he's global headhead of global music at. But getting his perspective that he's out of the coreof music business, the rough and tumble gangster society.

He's not in thatanymore. Learned so much from him about like where to be aggressive and wherenot to be aggressive, and to think about the bigger picture and, and reallytreat people well. Even, even, you, you should be able to always find commonground, which he would admittedly say he didn't do back in the day, but now hewishes he did.

And that's how he,he runs his life now. I mean, There's a lot of colorful people who, who I'velearned from. But those are a couple of them.

Julian:Amazing. Jon, I know we're at the end of the episode. It's been such a pleasuretalking about your experience here back on what you've learned, what otheradvice you would give founders and, and how you really see a lot of differenttrends even currently now.

That will beexciting for us to see how they will play out. But last little bit, I alwayslike to ask, is there any question we didn't cover, anything I didn't ask youthat I should have anything left on the table here today?  

Jon:Oh wow. We've gone through a lot.  

Julian:We can go through more though. It, it, it's, it's a lot of stuff, but yeah.

Any, anything thatyou wanted to touch on before we end today?

Jon:Well, I think,

I think you mentioned a lot of things. I mean,I think, look, everyone's always is talking about the hype of ai and that's onething I, I'm happy to chat a little bit about our perspective on that. AI isrevolutionary. We are still very, very, very early.

And Google wasn'tthe first search engine. It wasn't the third search engine. It was like, Idon't know, the 15th or 20th or so. It was way beyond. And so, the, I thinkwe're still a bit of a ways of, of real commercialization on it. We're justseeing the, the tip of the iceberg. And so, at least for Torch, we're beingmuch more thoughtful.

We're looking atwhere's that real commercialization going to happen And we're looking forcompanies solving pain points and AI can maybe help them do that, like durable.We have a few other companies But I think just people should keep in mind,founders should keep in mind unless you've been doing AI for 3, 4, 5 or moreyears just as you saw Web three and crypto, it's not all equal.

It's not oneindustry. It's literally, it's a means to an end and can impact a lot ofindustries and will impact a lot of industries. But just cuz you stick AI on itor say you're using AI is, is not necessarily something that we will get usexcited. We still wanna understand what pain pointing are you solving from who,why, and if AI is a huge, capability enhancer, accelerated that amazing.

But then we'regonna wanna know how yeah. But I just think it's you're hearing it on everylist of everything that's going on out there. And every fund is talking aboutit and, and it's the hype is real from the perspective. In the long term, thisis gonna change everything. But we're not there and we're not there tomorrow.

So I just, we'revery thoughtful about that.  

Julian:Yeah, it, it's funny, a lot of these businesses are really, really well, wellrun and have great value props. But it is, it is. Pretty funny how a lot ofcompanies have been doing AI before. It was cool. They're like, oh, we, we'vebeen in AI since 2012.

And I was like, Idon't, I mean, I know the journey doesn't really make sense, but Okay, sure.And we'll still go through. But no, it's an interesting and exciting where,where that's gonna have an impact. And, and, and how it's powerful as a tool.But Jon. I've taken enough of your time. I won't take any more.

Thank you so muchfor being on the show today.  

Last little bit iswhere can we find and support you and, and the things you have to say. What areyour LinkedIns, Twitters? Wherever we can find you and hear your voice. Pleaseshare with the audience.  

Jon:Sure. Or LinkedIn. My LinkedIn is you know my name, Jon Keidan.

Find me on Twitter.I. I think it's Keidan J and then we have at Torch on Twitter and and onInstagram. And yeah, we're, that's, that's really, we're, we're, we're outthere. And more, rather than us spending our time putting things out in the, inthe e in the author, we're much more focused on what we're doing.

So we're alwayswilling, it's easy places to contact us. Or on our website it's probably thebest, which is torchcapital.vc.  

Julian:Amazing. Jon, thank you so much for your time. I hope you enjoyedyourself.  


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