A venture fund with the heart of a bootstrapper

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I’m talking to an entrepreneur who built and sold a company in public. The company was called Storemapper. We’re going to talk about how he did that but I also want to know more about what he decided to do afterward.

Today, Tyler Tringas is the founder of Calm Company Fund, an ecosystem of founders and funders of profitable and sustainable businesses.

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Tyler Tringas

Tyler Tringas

Calm Company Fund

Tyler Tringas is the founder of Calm Company Fund, an ecosystem of founders and funders of profitable and sustainable businesses.

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Full Interview Transcript

Andrew: Hey there. Freedom fighters, Andrew Warner coming to you from Austin, Texas. It is so hot here, but Tyler, Tyler drinkers is with me. I’m going to introduce him. And then I got to ask him about him and then talk to you about where I am in like in my life journey right now. But, um, Thing that I’m excited about what Tyler Tringas, is he’s an entrepreneur who had a company called store mapper.

And the story behind store mapper is that he, he coded up the first version of it on an airplane from, uh, Buenos Aires, I think to San Francisco. Am I right about that? um,

and that sounds like a cute origin story. I want to get a little bit more meat on that, but the idea was, Hey, sometimes you buy online, but you don’t want to actually complete the purchase online.

You just want to understand it online and then go into a store and put up money after you try the product or see it in person. And so his software store mapper allowed online stores to put a map up on their site where people can find a local shop where they could buy the products. He built it. He kind of built it in public and then he sold it in public.

And then he created a. Well, one of the things he followed up with was the creation of the comm fund. And he says it’s funding for bootstrappers, which is a contradiction in terms, but I get what he’s going for here. It’s how do you fund somebody who doesn’t necessarily want an exit and wants a fair relationship?

Whether they just make a profit for years to come, or maybe they do end up with an exit. And so that’s what calm fund is about. Um, and we can do this interview thanks to two phenomenal sponsors. The first is master works. I’m going to tell you later on that if you’re investing, you should be considering investing in art.

And I’ll tell you later also why you should go to masterworks.art/mixergy. And if you’re hiring developers, go with lemon.io/mixergy, and I’ll tell you about those later, but first Tyler, good to have you here.

Tyler: Yeah, thanks for having me. Um, I’m actually really excited to be here. I’ve been a Mixergy fan and listener since like way back at the beginning of my entrepreneurial journey, like 10 years ago. So it’s great to be here.

Andrew: Thanks. I’ve been following you for a long time. I don’t know why I didn’t have you on, um, I think what caused this interview was someone said that we just don’t know enough about the comp fund. And you said, all right, I’m going to try to let people know more because it is a little bit of a different creature.

And so that’s what brought the on, but I’ve got to tell you, I’m fricking boiling hot. I’ve been enjoying Austin, but this Airbnb that we’re in has terrible, like air conditioning over here. But this is going to be my last interview from an Airbnb in Austin, Texas, because we bought a house here and I’m going to get to do it from my house in Austin with proper air conditioning and a nice big outdoor space.

So maybe I’ll do it outdoors, my own space. I’m really excited about that.

Tyler: Huge upgrade. Yeah. Well, you should definitely come and take a trip once you’re settled into Mexico city, where, where I live now, it’s a really awesome short flight from Austin and the weather is pretty much always perfect.

Andrew: Why are you in Mexico city? I remember being there for my marathons, where I was going to run a marathon on every continent. I did it and interview entrepreneurs in every city. And the thing that I, that I liked about Mexico city was it was a very international city. Felt like being in Europe, but dude, there’s soldiers everywhere with heavy machine guns all the time.

It felt like being in a military state.

Tyler: Uh, yeah, I mean, so we’re here because, um, my wife works for the state department and has a job at the embassy here. Um, so, you know, calm, fond, and every company I’ve built for the last decade is just fully distributed, fully remote. So I just kind of go where you know, where her job takes her. Um, it’s interesting.

I don’t know. I’m not sure when you were here last, but it is much safer than the public perception is of it, especially, there’s a sort of central core of a couple of really nice neighborhoods that most people come to Mexico city we’ll spend 99% of their time. Area, and it’s extremely safe. I mean, we walk home by ourselves at two in the morning, like all kinds of stuff and, you know,

Andrew: Can you sit in a coffee shop with a laptop and not worry about it being taken.

Tyler: Yeah. Yeah, for sure. For

Andrew: All right. You know what, and it was 2019, maybe it was also just a weird period there when that was going on. So that explains it. Is that why also, while you were running, um, store mapper, you were posting photos from all over the world.

Were you traveling because of your wife’s work?

Tyler: Uh, sort of, yeah. At the time she was, uh, my girlfriend. So, um, I sort of B prior to that had started kind of just digital nomadic in general, back with the sort of first wave of that was going around. I was like, this is a great idea. My rent in New York is really expensive. I can work from a laptop, let’s go see the world.

And along the way, um, started dating who’s the woman who’s now my wife, um, we were sort of like travel dating for a while. So, so her job was taking her all over the world and we would kind of meet up in different places. Like when we cited a suite, we hiked Machu Picchu together, went to the Galapagos together, like all during the first couple months of dating.

Um, so that was part of it. Um, but yeah, it was kind of hopping around for a while there for a couple of.

Andrew: You know, what I couldn’t figure out about you, Tyler is how seriously were you taking store mapper? I feel like you had a SAS product that worked, that was producing money, that it gave you all this freedom and had all this potential, but sometimes you post like handstands or headstands in random cities.

You talk about randomly firing off an email to someone saying, does anyone want to buy my company? You talk more about like the lifestyle of running a business in the business. How seriously did you take the business? And maybe I’m just trying to use a framework that doesn’t apply.

Tyler: Thank, you know, maybe I didn’t take it that seriously. I think that’s a fair sort of assessment of it. You know, at the time where I was in life was I had just spent a couple years, um, working on a. More of a venture scale kind of startup, um, in the clean tech space. So we were building software, uh, to help people put solar on their roofs, kind of like a rocket mortgage for solar kind of thing.

And it was a pretty painful experience. Um, you know, we were sort of naive and thinking like, okay, we have this business, we need some money to launch it. We need to raise some capital, I guess let’s go pitch VCs. And then we spent two years basically like raise a little bit of money, but then just pitched and pitched and pitch to pitch, to pitch.

And it was exhausting. Excruciating. I lost all my money, you know, so I was in this mode of like, let’s just build something simple for that. But, um, you know, I think one of the things I did learn is that. It’s easy to underestimate. How big of a business, even like the most kind of comically niche things can be because even with door mapper, it started off, it’s just a little side hustle, like experiment, and then it turns out, oh, Hey, there’s like some really tough problems around sinking the inventory from e-commerce to in real life.

And the distribute distributors don’t have good data and all this kind of stuff that it was like, there was a rabbit hole down there to create more value from what superficially seemed like. It could be just a sort of lifestyle business, basically.

Andrew: Ah, so you’d gone from like taking things super seriously, had to be a billion dollar business. From what I remember about the solar company had to raise money, all that stuff didn’t work out, lost the business, lost the money. And then you said, you know what? Maybe I could have a different attitude here and enjoy it and have a side hustle that explains a lot about it.

And I told you, I went back to the internet archive to see what the first version looked like. The first version was essentially a Google maps with virtual pushpin. So I can just say here’s the stores that have it. And then put that embed, that Google map that you create for me on my site, you charged, you charged what?

Like 20 bucks a month for it, 200 bucks a year, somewhere around there. And you saw if anyone would bite.

Tyler: yeah, yeah. Ridiculously simple. Like I said, I built the, the entire first version, like the minimum viable product on a single international flight and it, it worked, you know, like people were paying for it, uh, the next day. Um, so it started

Andrew: you get anyone to buy it?

Tyler: Um, so basically after I shut down the previous venture, um, along the way, the one good thing to come out of that, um, in addition to having a much better understanding of how venture works and, and mostly how not to raise capital, um, was that I taught myself to code.

And so I was doing freelance work, uh, for Shopify clients, basically back end, front end stuff, um, just on an hourly basis. And so I had a bunch of clients in that e-commerce space, and that was a time period where, you know, a bunch of people were like launching a Kickstarter to start their brand, setting up a Shopify store to start getting sales.

And then they’d get distribution in, you know, one or two chains or like all the whole foods in new England or these kinds of things. And so they were all having this problem of like, how do we transition from pure D to C to. A mix of DTC and in store sales. And so I just had a couple of clients all say the same thing and I thought, well, okay, well, let’s, let’s productize this.

Um, so I shipped a quick product, send it to like every client I’d had, um, over the course of about a year. And that’s where we got like the first six clients or customers for, for the product right away.

Andrew: How did you like being a consultant on the Shopify platform? It felt like such a difference for you from trying to build this monster company, to taking people’s direction on how to adjust their Shopify store.

Tyler: Yeah. I mean, it, wasn’t my favorite thing in the world, you know? I mean, I’m a self-taught developer, but basically out of that one period of time, like I’ve always as quickly as possible gotten other folks involved because you know, I’m not that great at it. And, uh, I don’t love. Um, the good part about it was, you know, I mean, I was pretty public about this, but in the process of shutting down the business that I was working on and launching the next one, I accumulated like a humongous amount of credit card debt, um, which is sort of part of my motivation to wanting to help fund entrepreneurs at that phase of their business.

But, um, that was super stressful and it was really nice to have this skill that I could easily bill out an hourly rate of like a hundred bucks an hour just by having only done it for a year and a half. Um, so that was cool. You know, it, it did give me some, some financial security, especially as I was nomadic and like my costs might be a thousand bucks a month.

Um, so it was able to kind of dig out of that hole pretty quickly. Um, but yeah, I mean, I, I’m not built to be a consultant that’s for sure.

Andrew: Man. I remember interviewing people around that time, actually before about how they were doing the digital nomad thing and running their companies. And I remember all my skepticism pouring out in the interviews. It didn’t seem like you could concentrate. It didn’t seem like the internet was dependable.

It didn’t seem like this. It didn’t seem like that. And then I said, all right, let’s try it. And it was as good as people said. I think a lot of people also get tired and burned out, moving around. And I got a little bit of that, but for the most part, it was fantastic to be able to do it. And the price is really were dramatically lower as you moved around to other, other places.

Tyler: Yeah.

no for sure. I mean, I, I did it for a couple of years then. I mean, I don’t know. I think my life would have been very different. Had I not made that decision because the, you know, there’s a sort of thing as I guess, accepted wisdom now, which is one of the best things entrepreneurs can do is keep their personal burn rate really, really low because it just lets you stay in the game.

Right. You know, if you have a huge mortgage and you have all this kind of stuff and you hit a wall, while you have to just go get a job, you have to do something to, to solve that. If you can keep your costs, like under a thousand dollars a month, you can kind of stay in the entrepreneurial game, which is exactly what happened for me.

You know, I was able to not have to go get a job because I had left New York and it was living in Argentina, Thailand, et cetera. Um, yeah.

Andrew: your girlfriend at the time think, am I getting involved with a loser here?

Tyler: Uh, yeah. You know, it is funny thinking back on that time, because, you know, I think I did an okay job of sort of hiding the fact that I was like a broke entrepreneur. Um, and you know, we were just enjoying sort of traveling for awhile, but, uh, fortunately I was able to kind of like get out of the tailspin fast enough in the relationship that I had some credibility, but, uh, yeah, I’m sure she was a little skeptical for sure.

Andrew: I wonder, I wonder how you kept your confidence up considering

Tyler: Yeah. It’s a good question. I don’t know. I mean, I think, um, you know, I think one of the stories. Super powers of being an entrepreneur is kind of just being a little bit naive to the overall kind of risks and things that you’re taking, especially when you’re, when you’re younger. Um, and I was definitely a beneficiary of that.

Right. You know, I mean, I, it didn’t matter to me that I was still just like doubling down on this whole, like build my own life. And, you know, I had like $0 in a retirement account and a bunch of credit card debt. And I was getting older. I was just like, you know, this is, this is kind of the path for me is doing my own thing.

And so let’s go for it. Um, yeah.

Andrew: all right. To launch pad mop. mapper, you then went out and told your previous clients, they signed up, you started getting revenue. What’d you do beyond going to the people you already work with? How’d you get more customers.

Tyler: Um, but one big thing is that we were lucky to be very early into the Shopify app store platform, which is, you know, something that. We subsequently have sort of, you know, built into a bit of an investment thesis, right. Is looking for folks who can kind of hop on those waves early enough and be the default kind of go-to there.

Um, cause I experienced it firsthand, you know, Shopify was growing like crazy, um, about I guess, eight years ago or something like that. So it was like peak growth for them. Um, and you know, we were just the beneficiaries of all their customer acquisition,

Andrew: that Shopify was growing. You went, I didn’t realize how quickly you got into the Shopify marketplace. So you got in there, they helped you get more customers. Got it. In the same way that one of the companies that come fund invested in maker pad got into the no code world really early. They started teaching people, creating community, et cetera, in that world.

Right.

Tyler: Yeah. Yeah. Yeah. There’s a lot of value in, you know, getting in at the beginning of a bit of a wave of, of market momentum. Um, and it’s, it’s definitely something that we started to look for and that, you know, sort of advise entrepreneurs, Hey, if you see that opportunity, you know, really pounce on it, if you think K this, this underlying thing is going to grow really fast.

And I can be one of the main beneficiaries of that if I get in there and become the de facto, um, associated product. And that’s how it was with maker, pat, it was like they got into no-code Ben tassel, the founder got into no-code when like practically invented the, the terms slash category, um, and, you know, just became sort of synonymous with the sector.

And then it started growing a ton as well. So, um, yeah, they benefited from.

Andrew: They were fantastic. And they really got a good group of people in their community, people who could, and they were so good about welcoming people who can use advanced tools, but also things I think even like notion and air table, they welcome those people in. So you could come in, create your first date.

Using something simple, like notion and then keep progressing to no code solutions. I really admire what they did there.

Tyler: Totally.

Andrew: And they were in the education space.

Tyler: Yeah. Education and community. Yeah.

Andrew: What do you see now as the next big wave like Shopify was and no code kind of still is, but was undiscovered about a few years ago.

Tyler: Yeah. It’s interesting. I mean, so in our fund we have a couple of. Theses that were operating on. Um, one of them is this idea that, um, basically pushing modern software into every niche in the economy. Right. So the idea that like you can now build software for a lot of these very specific industries that they’re never going to.

Salesforce. Right. But they currently have like, you know, checklists and spreadsheets that they’re using to run their business and you can launch a SAS business. So cheaply, now that it makes a ton of sense to build, you know, for random industrial applications or commercial real estate or even smaller markets.

Like we recently invested in a company that builds software for food production facilities to manage their, their health and safety stuff. This would not have made any sense 10 years ago because it took millions of dollars to build even a basic SAS platform. But now it’s so cheap and so fast to launch that you can start to just pick off all of these industry is kind of one by one.

Um, so that’s a big opportunity is to be the first mover in a particular, um, a particular industry. Another thing that I’m really excited about is the transition away from what I call like empty SAS or empty software, which is, um, you know, we have a lot of these tools that you go, you sign up for the software and it’s on the user to really make it valuable.

Right? You get a CRM, it’s just a bunch of blank fields. Now you have to upload, you have to fill it out. You have to do all this kind of stuff and you get, QuickBooks is just blank. You’ve got to fill it with your transactions, all that kind of stuff. And we’re starting to see a wave of folks, do everything from just adding services to, you know, using machine learning, to have something where you sign up and it works right out of the box.

Like it does the thing that you want it to do. Right? Most people don’t want bookkeeping software. They want their books closed. Right. And so that’s that one’s kind of already come and gone because you’ve got pilot and bench and stuff like that, but we’re starting to see folks take that model and apply it to.

Other opportunities where you take less of the, um, take more of the burden off of the user. Um, even if you have incumbent software there that that becomes so much more valuable because you’re actually doing the thing they want it done.

Andrew: So software and services, but basically we’ll use our software to do the thing you’re trying to do. And I see how in bookkeeping that work really well. And I guess I could see that also done in CRMs, maybe even for project management at first, or for, I see that in a documentation world where if you’re going to create a user manual, instead of giving people a blank document, go create your manual.

We’ll do it for you for fee.

Tyler: Yeah.

Andrew: all the stuff’s in there. That’s really clever.

Tyler: But you can imagine all the like help chat apps, right. There’s a gazillion different things that you can do, you know, support chat, but all of them are, bring your own people. Right. But you can imagine like a version of that, that actually you drop it in. And there’s support that’s baked in. So they are just answering your support tickets as soon as you sign up, right.

Or

Andrew: I would even say if they could put all the documentation in for you, that’s a huge win. So you don’t have to redesign their site to make it look like your site, add all your content, create all your macros. They do all that for you in the setup. And then, uh, and then you’ve got software that just works.

That’s a really good, uh, that’s a really good approach. Alright, let me take a moment and talk about my first sponsor. And then I want to come back and find out, like, what did you do to systemize the company so that you could have your company be a calm company and allow you to go and do headstands all over the world.

But my first, actually, you know what, why don’t we talk about lemon.io, dude? I had the sense. So lemon.io is a great place. We go and hire developers. They get developers from Eastern European countries, places where it’s an expensive, um, to, to work, but the developers want to work there. And frankly, sometimes they can’t get, get, they can’t get into the U S and can’t get into markets where they get paid more.

And so you get great developers. If you’re willing to work with remotely, with them really low price, I’ve been giving them free ads for weeks because they’re in Ukraine. He’s trying not even to make a profit. He just wants to make sure the founder does that. He’s getting enough money to pay his people no matter what, even if for some reason they can’t work because they’re out of Ukraine’s, it turns out the company is growing.

Despite all that he is now in the U S he’s continuing to pay his people. And he then came back and he said, Andrew, you don’t have to give us free. We’ll buy more. And so I was on the phone with them before you came on and buying more. I have to say the other thing that I noticed about him. So yes, things are going well.

I’ve never seen the fricking guy look more tired. I usually, if I talk to.

him after we’re talking about work about kids, he and I have kids roughly the same age and all that. He’s Just eager to talk about. You looked exhausted. He looked like he was not at all interested in having a further conversation with me.

He was happy that he signed up and now Andrew let’s get back to work. So anyway, all this to say, they’re doing really well. They signed up a bunch of people from Mixergy ads, so that I’ve got to tell you, this is before even I started running the free ads they’d already been doing well. And so I’ll tell you if you’re listening to me and Tyler, if you know anyone as part of your portfolio, who’s looking to hire developers.

The beauty of working with lemon is they will match you with a developer. They’ll do it quickly. They won’t just throw a bunch of people out. You don’t understand what you need. And then they’ll find people who are going to be the right fit, right. They’re inexpensive. But if you use my URL, you’ll get even, even a lower price.

Here’s a URL, write it down, share it with your friends. Um, and please don’t post it online. It’s lemon.io/mixergy. Even if you’re not looking to hire from them, I urge you to connect with them, check them out so that you’ll understand them and use them as part of your hiring. Lemon.io/mixergy.

Tyler: Just want to throw in an endorsement for this overall strategy. I mean, we have about 70 portfolio companies now, and we’re seeing lots of them leverage specifically limited on IO or, you know, many tools like them to build kind of global development teams. Um, and it’s such a valuable strategy, you know, either to build out as your first couple of engineers or to support an add leverage to, you know, some, some local based engineers that you might have maybe in more senior roles, um, it’s super effective and really gives you a lot of optionality to be able to build those teams out in a way that’s like a little more affordable than hiring folks in the U S so you don’t end up with this sort of massive overhead of, uh, of a US-based engineering team too fast.

Right. Um, so yeah, big thumbs up for me.

Andrew: Thanks. You know, when you did it, it was back at a time when there was a big belief that all people, especially developers had to be, in-house had to be fully on board and full-time employees. And I remember talking to an entrepreneur at the time who said at the end of the interview, thanks for mentioning the, the investor of our company, but I’ve got to tell you, he and I are in a big fight because we will not do, will not do the full-time office five days a week, all that stuff.

And he’s insisting on it. Cause that’s the only way to build a cult. When was the first person you hired a developer? Was it support person?

Tyler: Yeah, developer. Yeah, for sure. The first person I hired. Cause like I said, I’m you mean I’m not, I’m an, I’m an okay. Like I can get the job done kind of developer, but you know, I need support pretty quickly. Um, yeah. And I was hiring remotely. I mean, I was a big fan of. Um, you know, some of the stuff from the folks at like WordPress, you know, and, and they were talking about how to build remote companies and base camp and some of the, the sort of people at the Vanguard of that.

And I was like, this all makes sense to me, let’s go for it. Um, so I was hiring remotely and, you know, building sort of asynchronous first and interviewing people over slack and get hub pull requests because that’s how I was going to be talking to them mainly, you know? So, um, it was kind of all in on that.

Uh, you know, like I said, about 10 years ago,

Andrew: How did you manage that? I know that you did you from the beginning have like a build to sell company where it was all organized enough that if you needed to sell it, it would be organized enough to pass or not.

Tyler: no, definitely built that along the way. Um, you know, one of the good things about running a remote asynchronous first company is it forces you to do a lot of that stuff, right. You really have to do quite a lot of. You know, documentation and business processes and things like that, that you can kind of get away with slacking off on if you’re all in an office and you can just holler at someone like, Hey, did you do that?

But in your complete 24 or 12 hour time zone difference, you know, it’s, it’s really a big drag on the business not to have it all buttoned up. So we definitely had to build that, um, as we, as we built out the team. Um, but I, you know, I, wasn’t the type of person who had that going from day one, you know, for sure.

Andrew: And so how did you start organizing it? I know that that was one of the intentional things. You want it to be able to travel? You want it to have it organized, and frankly, it seemed like you were really intent on having a four hour workweek, Allah, Tim Ferris. Am I right?

Tyler: So, I mean, I don’t think I was totally all in on the idea of four hours a week. Um, but for sure, I mean, I was with this particular business. As many entrepreneurs are, I was really optimizing for freedom, right. I wasn’t necessarily trying to at all costs, maximize the growth and value of the business so much as I was trying to balance the growth of the business with making sure that I was able to do what I wanted with my time and where I want it to be in the world.

And so that meant. Some trade-offs right. So for example, we probably passed on some enterprise, you know, white glove opportunities, because I was just like, I don’t want to build a team and I don’t want to personally be answering the phone, you know, for, for, for customers. Um, so definitely made some trade offs there for sure.

But, um, and I think there’s a bit of why we kind of like created this, this concept of calm companies is the idea that, you know, for awhile, I think there was a false choice. It was like you either built a venture scale rocket ship, or you built a four hour workweek sit on the beach and drank my ties and, and, you know, kind of slack off.

And there’s no middle ground, right. It’s one or the other. And we’ve sort of been trying to reclaim this middle ground, which is how I think most entrepreneurs think about their business, which is a balance between, you know, growth and the economic part of it. And making sure that, you know, lifestyle, stress, burnout, all of those things are, are also making.

Andrew: I don’t know. I guess I feel like most entrepreneurs are almost too all in on the chaos. And I know that I was like, I would not settle down and not take space because I felt like it was a mistake and it was going to weaken my company. And even if I would create busy work, which at some point I learned not to. I would value the busy work because it meant I was at least working on the thing. Are you finding that there are enough people who are both ambitious and eager and believe enough in their ideas and at the same time, willing to take some time at the end of the day, to do nothing to, I don’t know, watch TV, play video games, play the guitar, go out with friends and not think about.

Tyler: Yeah, we are definitely finding that. I mean, I will totally agree that the, the overall sort of. Zeitgeists and advice around entrepreneurship was very skewed towards, you have to be all in. You have to be, you know, up at 5:00 AM, grinding more than everybody else, a hundred hour work weeks, you know, all that sort of stuff.

That was pretty much dominated the conversation around how to be an entrepreneur. But I think in their hearts, many entrepreneurs want, you know, much more of a balance, especially once you’ve been in the game for a little while you actually start to feel the effects of burnout, you start to realize that what you’re doing is not sustainable.

And then you start to make kind of drastic changes. And maybe those aren’t even the optimal changes, but you have no choice, right. Because you’re just completely burnt out. One of the ways I like to frame. The idea of a calm company is what I call being long-term ambitious. Right? So if you are ambitious, you have big plans on what you want to do over a 10 to 25 year time horizon.

And you start to think about what are the main things that are going to prevent you from getting to those long-term goals. Actually major burnout is one of the biggest risks, right? Like if you have a 20 year plan, one of the biggest things is going to be, you completely burned out, you wreck your personal relationships, you know, you wreck your relationship with your family and all of a sudden, you just completely veer off course.

Right. And so. Proactively preventing burnout, preventing that stress overload is actually a form of being ambitious. It’s about, I want to make sure I stay in this game for the long call, like with our fund. I want to do this for the next 30 years. I want to invest in thousands and thousands of companies.

There’s no way I can work a hundred hour work weeks and, and, you know, go at, you know, 11 out of 10 for 30 years. Right. It’s just not, I’m not going to get there. And I’m actually less likely to get there if I try to do it. Um, so that’s kind of like the basic theory of, of calm companies. And we’re definitely finding a lot of folks.

I mean, we have a hundred percent of the companies we fund come inbound. They find us fill out our application form and we invest from there. Um, so yeah, anyway,

Andrew: I do like the name, calm fund. I, what was the previous name?

Tyler: We called it earnest capital is what we launched as.

Andrew: And you’re still on. LinkedIn is earnest capital, which made finding you on LinkedIn, such a pain. And you got to go back and change that.

Tyler: I know I’m not a, I’m not a LinkedIn power user. That’s for sure.

Andrew: I’m not either. And I’ve got some friends who are on it all the time. They’ll post videos of themselves with like little life advice who has the patience for that. But, you know, they’ll, they’re right. They have some followers there, but it does really help for searching. And frankly, I think you even come up when I use superhuman with, uh, with what was the previous name?

I keep forgetting it

Tyler: Ernest Ernest

Andrew: earnest. I know earnest capital. means white.

Tyler: I mean, it was just, you know, it was so earnest as an E R N E S T um, you know, just like trying to find some of the right terms that resonated for this overall vibe. Right. And so, because the problem is like the predominant term that folks might use to describe these kinds of companies might be bootstrapper, but bootstrapper is this mix of.

A bunch of different things around how you value and prioritize different things in the business. And also really tied up in this idea of not ever working with any investors, $0 of outside capital. Right. So we said, okay, that’s not the right term. What’s in this space that kind of is the vibe and earnest.

And I kind of do a little pond where we underline the ear in, right. Like emphasizing that these are companies that actually make money, you know, as opposed to eyeballs or ads or whatever. Um, and so, uh, th that was the idea behind it, but honestly, you know, I’m very into just shipping things quickly. So I’m pretty sure I like sat down in the weekend and was like, okay, let’s name this thing.

Let’s look for some domains that exist, you know, let’s go for it. Um, and we rolled with it for a little while. Yeah.

Andrew: Ernest Ernest capital does kind of evoke that deposit that you put now that we just bought the place. There was Earnest money that you have to give as a deposit. It feels like someone who’s going to clearly care and put their money into the thing they want to be a part of. So I get that come way better.

All right. Let’s let’s just continue with this story. I want to understand store map or close it out and then find out how you got into calm and then how the business model works. How much of your own money you’re putting in and so on. But as store mapper developed, I saw that you were getting a lot of your customers from Shopify.

I think the majority of them were coming from Shopify, which is why you weren’t able to show your, your bare metrics revenue publicly. At one point you said, can’t show this anymore because it’s not accurate. It only includes our Stripe money.

It doesn’t include any money we’re getting from Shopify. Where, what else did you do to grow, to get more customers in?

And then let’s talk afterwards. How you systemize a business.

Tyler: Um, yeah, a couple of strategies. So one, we just replicated the, you know, what people call like integration, marketing, right? So th that’s what I think that the general category of, you know, get listed in the app store, build the authentication with Shopify. We just did that with every other e-commerce platform we could find, right?

Just one by one, crank through whatever we needed to do the simplest possible integration and, and get listed in their, their app stores. Um, that was one lever of growth. The second one was. Looking for, well, basically integrating a viral loop, right? So, I mean, this is pretty common, but sometimes people still overlook it, which is having like a powered by.

Right. So the good thing about our product is it was public facing, right? You would actually install it on a page on your website. You would promote that, you know, you would try to push people to that page. And so that was a free source of traffic for us was to basically push, to put that tiny little thing there for, you know, the people who are motivated to say, Hey, this is cool.

I need one of these, you know, let me find it. Um, that ended up being like a big source of, um, uh, of customers. And then, uh, the third big chunk was basically just SEO, essentially the power of claiming a niche, uh, on the internet and being the first person there. Um, you know, there just, wasn’t a lot of there weren’t a lot of independent products, uh, like this.

And so, you know, Getting in early, having a very like, um, on the nose, says exactly what it does, name and domain and all that kind of stuff. Uh, we were just sort of the number one search result for a bunch of very relevant terms, like, you know, store locator, software, stuff like that for, for quite a while.

Um, and that was pretty much it. I mean, I think those were the three main drivers of, of growth. All of which, you know, were pretty organic zero costs and, and compounding over time. Um,

Andrew: about all that entrepreneurship writing that you were doing at the time, sharing your numbers, talking about the journey posting, what it’s like to have that lifestyle. Was that helpful at all?

Tyler: It was 0% helpful for the actual business. There was almost no overlap in the audience for that writing and, uh, our customers. Um, but it had much bigger long-term benefits of, of, you know, blogging very transparently kind of helped me like build an audience to help me meet a ton of entrepreneurs, you know, because one of the things about this world of kind of bootstrapped private profitable startups is it’s very nebulous, right?

Like Patrick McKinsey calls it like the dark matter of the economy. It’s like, it’s there, it’s having all this effect, but no one’s tracking it. You know, people are not that motivated to publish. Like we have a $20 million a year business, you know? Um, and so by writing about it a lot, I was able to create.

Beat the bushes, you know, and meet a bunch of people who were ahead of me in that journey who are sort of my peers building similar companies. And then the, the huge mass of people who wanted to build these kinds of businesses. I was able to meet a lot of those folks either, you know, at scale, through a newsletter, through Twitter or through whatever or one-on-one.

Um, and that was the main benefit which later rolled into, you know, the fun. Like there’s no way I would’ve been able to launch the fund. Had I not done five years of blogging about building these kinds of companies? Yeah.

Andrew: All right before we get into why and how you sold the systems, the organization. How did you keep the company running in such a calm, organized way?

Tyler: Yeah. I mean, it’s hard to kind of sum it up, right. So one is just becoming kind of power users of some of the core. Software stack that you need to, to run a remote company. So we have always used like a sauna for task and project management. Um, at the time we use like an internal WordPress theme, which now we use notion for sort of just like documentation, SOP is all that kind of stuff.

So just getting really good at that. And then one of the things that we tried to create, uh, was, was this kind of loop, right. Which is always looking for documentation. So when the support team would answer a ticket, the last step of answering that ticket was not, it wasn’t like, oh, I answered this question, click close.

Right. There was a last step, which was, did we have a support article about this? Either internally documenting it or externally facing for customers? And if, no, you know, should we, is this an extremely esoteric question that we’re never going to see again? Okay, fine. But like, for the most of them, like, Hey, we should document this.

Right. And

Andrew: And they would do that. They would go back in, I think you call them support heroes at the time. Right? The support heroes would actually go back in after each email and then update something or write something that kind of.

Tyler: Yeah. Or at a minimum it’s like make a task. Right. So recognize that this question was asked, we don’t have internal documentation, boom, like task to me to write up our, our theory on this. Right. How do we process refunds that are denominated in euros and have a transaction fee, you know, or something like that.

Right.

Andrew: So they’re going to handle it in the moment and then say, Hey Tyler, can you figure out how we’re going to do this in the future? And then put it into, I guess back then it was your internal WordPress that only you saw.

Tyler: yeah.

Andrew: Okay. All right. Now, why did you sell the company?

Tyler: Um, I sold the company for a couple of reasons. Um, you know, one was that, um,

It was a, the way I described it was, it didn’t really have enough of a gas pedal on it in the sense of like, you know, I’m, I feel like I bring a lot as an entrepreneur to the table and I was trying to sort of push the business forward and while it was growing kind of on its own organically, not much of what I did really was changing the trajectory of it.

So it was kind of like not seeing dividends to my own energy in the business, which I think is just a function of how niche it was. Right. Sometimes businesses get to that point where it’s like, there’s just not, there’s not a gas pedal to make this thing go faster. Uh, so it’s just going to kind of grow on its own.

Um, and so that I think lends itself a lot towards, maybe it makes sense to sell it right. Cause there’s people who will, you know, help you. De-risk that fact, right. If it’s not really growing fast, you’re not adding much unique value to it. Maybe they can. Um, and so that, that lended sort of led me down the road.

And then the other thing was just sort of like, um, I think specifically, I read the book about, I forget the name of it, but it was about, uh, the founding of Twitter. And there’s this exchange in there between like, uh, EV and biz two of the co-founders of Twitter. And they were talking about, um, when the original version of Twitter, that was a podcast startup.

And one of them says, like, if we pull this off, we’re going to be the Kings of podcast hosting. And then the other one asks like, do we want to be the Kings of podcasts? And the other one says, no, we don’t. And that was when they pivoted the business. And I kind of read that and I asked myself the same question.

It was like, do I want to be the king of store locators? Or do I want to put my energy into something else? And the answer was definitely, yes, I want to try something else. Um, so, you know, it was definitely time for the next act in the play, um, which pushed me towards like, okay, let’s run a process. And so.

Andrew: I know you’re not going to say how much you sold it for. We talked about that before. Um, you said it’s life-changing how, how would you describe it? Let me understand how, how it did.

Tyler: Yeah. I mean, I know it’s annoying, but it’s just, you know, a lot of, uh, the, the funds. So we sold it to a fund culture. So of capital, a lot of the funds all have the same policy. They don’t want the purchase price getting out there. Cause it kinda just gives people the wrong impression because they have this, we do the same thing.

Now when we invest in companies, it’s like you, if you put the purchase price out there and now you have this very specific number in terms of, you know, investing or valuation or how, you know, how the company was sold for, and then you have this ambiguous sort of aspect, which is what, w what was the business dynamic?

Like, how fast was it growing? All that kind of stuff. So it’s just easier, I think, for everyone to keep those, um, quiet. But yeah, I mean, I called it a life changing exit. I know that’s kind of a little bit cliche. Um, you know, for me, I really think there’s like two categories of exits. One is literally never work again.

You know, this would be maybe like tens of millions for most people, um, where they can just see, I can actually just retire now and never really care about money for the rest of my life. Uh, and then there’s kind of like level up exits. Um, and I, maybe I stole this from, from ADP NAR, um, from, from Conversio and Kasi, I think either we had a conversation about this, but, but that’s who I’m picturing having this discussion with, but this idea of like level up money, which is that, Hey, a whole new sort of array of options are now on the table for you, um, that worked before, but you know, it, you still kind of do need to do something with the rest of your career.

Um, and so that’s where it was, you know? Yeah,

Andrew: Would you say in the millions, but not tens of millions.

Tyler: yeah, yeah.

Andrew: Okay.

Tyler: Seven pickers.

Andrew: What’d you do with the money?

Tyler: Um, I, what did I do with the money?

Andrew: I don’t picture you being a real estate guy. A lot of people that I interview will then buy a bunch of properties. That’s their thing. They need to touch the assets. I don’t picture you putting it all in NFTs.

Tyler: um, so it’s really interesting. I mean, yeah. So I went through this sort of phase that I think a lot of entrepreneurs go through after they have their first exit, which is, you know, you’ve kind of been scrapping by your probably like long-term financial picture was a bit of a mess. And you weren’t really spending a lot of time thinking about investing because you are focused on building equity in your business.

And then all of a sudden you have this pile of cash and you need to figure out what to do with it for maybe the first time in your life. Um, and I was definitely in that space. Um, I guess the one thing, I mean, I did buy my parents a house and help them retire, which that was my only real estate investment.

Um, but you’re right. I definitely did not go out and buy a bunch of, uh, fourplexes and stuff like that. Um, the main thing being that I was like, There are a lot of people. It’s a very competitive market, like buying real estate and renting it out. And I’m not sure I’m actually that good at it. So why do I want to like, sell this business and take this capital and get into another business where I might not actually be in even the top 20% of people doing it.

Right. Um, and so I kept kind of running this process. It was like, what do I do with this money? I was like, man, you know, the thing I know really well is software companies. I wish I could invest in software companies. I sort of looking at that and really the only ways to do that were on the real traditional venture capital model.

Right. You could go on angel list, you could invest in startups, alongside VCs, that kind of stuff. And I was like, well, that’s not what I want. What I want to do is invest in these kinds of companies that I really know. And I couldn’t find any way to do that. And that really led me to this concept of like, Maybe I should start a fund.

Maybe there’s other people in my position that also want to invest in these companies that are looking for a way to do so. Um, so I ended up investing, you know, most of the capital, um, in my own funds, you know, uh, you got to kind of like reserve some for each and every fund, but you know, for sure, by the end of, you know, a year or two from now, significant majority of my net worth will be in my own funds.

Um,

Andrew: and the thing that you wanted. Was what, what’s the type of entrepreneur, the type of business that you wanted to invest in.

Tyler: I mean, at the time I would have used the word bootstrapper right, because. These folks building profitable, sustainable companies that were growing under their own customer revenue at, you know, sort of sustainable pace. And, um, generally were, you know, majority owned by the founder and all that kind of stuff.

Um, I really experienced firsthand. Even these kinds of businesses. Once they get to a certain scale, they can grow under their own revenue, but it is really painful at the early stages, right? Because maybe you’re having to do it as a nights and weekends thing for like an entire year, as you grow from a thousand bucks a month to 15,000 bucks a month, and you can finally quit, you know, your job, um, you know, or maybe you are doing everything.

You’re writing code, you’re designing product, you doing marketing copy. You’re doing support tickets. You know, all of that for like, which was what I did for probably at least a year and a half. I think I was doing a hundred percent of the work solo. All that’s like really painful and a relatively small amount of money can make that part of the process much, much, much more efficient and really shrink that time.

Right. Where you can get to where you would have are you would’ve gotten there anyway, but you get there in six months instead of 18 to 24 months. Right. Um, and so that’s basically the gist of it. It was like, these are great businesses and. I want to invest just at the kind of early stage and get that upside.

And as long as we don’t invest too much money, you know, the kind of exits that these companies might want are still going to be great returns for us. Right. So if we only vest a little bit, they don’t go on and raise millions more in, in future capital. And then they sell for $20 million. You know, we might get a really strong return out of that.

Um, which is, you know, in traditional early stage investing, that would be like a failure. If you’re an angel investor, you’re looking for these billion dollar outcomes. Um, you know, and so something sells for 20 million and you’re like, oh, I don’t, this is a write-off for me, basically. Um, yeah,

Andrew: Because so many of them go away. So many have these really ambitious ideas. They’re going to do something that’s never been done before, and then they just can’t pull it off. And so they go away and you need one really big one to make up for all that.

Tyler: exactly. The classic. Thinking in terms of early stage investing, which most people doing, angel investing or venture capital think of is almost all of these things are going to fit. You know, and so I’m going to need to have a Facebook and Uber and Airbnb in my portfolio to make up for all this failure, that’s going to happen in the portfolio.

And a lot of folks treat this as like it’s a law of physics, right? The failure rate of any early stage company is going to be very, very high, you know, so you have to do it this way. And our theory is that, um, actually there’s a bit of a feedback loop, which is, if you are really aggressively trying to build a $10 billion company, you are getting advice from people who only want you to build a $10 billion company.

You’re going to do a lot of stuff that is going to increase your chances of building a $10 billion company. You’re going to hire really aggressively. You’re going to raise a lot of capital. You’re going to spend a bunch of money on growth, right? All that is going to make it more likely that you do create a really big company, but it’s also going to make it much more likely that the company faced.

Right because you’re taking on so much risk, so much expenses, all this kind of stuff that if you don’t hit that perfect trajectory, you might shut down. What could otherwise have been a pretty good company. And we’re seeing a lot of that actually in the market, um, right now. Um, but that’s our theory is that you can actually, that’s a, it’s not a law of physics.

It’s, uh, a dial that you can turn where you can take less of those risks and increase your chances of success.

Andrew: How many of the companies you invested in closed up,

Tyler: So far, we’ve had zero companies shut down out of about 70 portfolio companies in three

Andrew: and this has been over three years.

because when you invest in them, how do you know that they’re going to be a right fit, that they’re going to produce a profit.

Tyler: Yeah. I mean, we have a, at this point we have a pretty elaborate investment process. We have, you know, some different theses on which kinds of markets we think are attractive. Um, you know, we look at, does the founder have like unfair advantages? So, you know, for example, if you are going to launch something in the podcasting space, you know, I would mark that down as like unfair advantage, right?

Tons of trust built up in this market, big audience of relevant people, you know, all that kind of stuff, much more likely to succeed than a random person with an idea in the podcast space. Right? So we’re looking for those kinds of unfair advantages. We analyze the underlying markets. So we have very specific opinions on.

Um, what I call the ability to build a micro monopoly. So we’re looking for folks who are going after markets that are big enough, that they can build a great business in them, but actually small enough that they’re not going to get a ton of competition from, for example, huge incumbents or, um, you know, tons of venture capital

Andrew: give me an example. Like what’s one. That let’s say, as you’re explaining this, maybe you can give examples of these types of companies. So who had an unfair advantage who, and then who had a micro monopoly?

Tyler: Oh, I’ll give you a, maybe also a negative example. Um, so. Uh, in terms of what kind of markets we try to avoid, because it’s basically the opposite of the traditional angel investing approach, which is all about going after really, really big markets. Um, at the beginning of the pandemic, we had an opportunity to invest in a couple of really smart entrepreneurs at their early stage building virtual conference software.

Right. So, awesome timing. Right. You know, virtual conferences in the middle of the pandemic, um, they’re going to do great. We actually passed on all of them because we were very, very. Serve in that VCs, we’re going to put humongous amounts of capital into folks in this space. It was just too big of a market, too much momentum.

And, you know, lo and behold, right, you saw, um, hop in basically in the raising hundreds of millions of capital and in 18 months. Uh, and unfortunately like they really did swamp out, a lot of the, you know, more calm company bootstrapper types in the market. Um, and so we proactively. Those kinds of things. So earlier on, in terms of founder unfair advantage, we were talking about maker pad, which is one of our investments.

Um, that’s, uh, one of the things where we definitely were excited to invest in, because, you know, the founder, Ben had been one of the first people building all of these incredible things with no code that no one had ever seen before. Right. An Airbnb clone, a fully functioning Airbnb without code. We’re like, okay, he has an audience, he has credibility as trust.

Um, we’re gonna be excited to back that. Um, some other stuff would be like we’re investing. I mentioned a lot of like industrial applications. We were investing in a lot of like full stack SAS for X industry. Like the film production industry, the food production industry, the, um, short-term rental industry, like, um, a lot of these things.

So, um, those are the kinds of markets that we really like where you’re just not going to see a humongous amount of competition. Um, And then, because they’re just perceived to be a little bit too niche.

Andrew: I get that. I think you have a testimonial product

Tyler: Yep.

Andrew: I wished for years, if someone would make it easier to get video testimonials and just to be able to send someone an easy way to do it, I can’t imagine a lot of players getting into that space, even loom that is adjacent to it. That has a big footprint in the video.

Just not jumping in. All Right.

Let me talk about my sponsor. And then I want to come back and understand things like what’s. What about taxes, taxes, work against you when you’ve got this model? But, uh, first my sponsor is masterworks. Do you know how master works works?

Tyler: I have a general sense of it. Yeah.

Andrew: It’s a pretty freaking good idea. Right? I can’t imagine why nobody had done it before. The idea is this, you watch all these rich people, they invest in works of art. You think maybe it’s because they appreciate the beauty of it, but no, they don’t even put it in their own homes. They either store it. And there’s just one place I think in New York that they all get to store it and it’s safe and so on.

And then they insure, or they lend it to museums to, to put it up on their walls. But the idea is they don’t even want to look at it every day. What they want is to own it. And the reason they want to own it is because these companies come and go. I mean, no offense to the company is a comms investing in, but you’re not looking at a company that’s going to be around 500 years from now.

We don’t even know what the internet is going to be like 500 years from now. Right. But we have a pretty good sense that Picasso, especially considering how limited it is in production, how you items. It’s going to be around. It’s going to be as scarce, if not more scares to get work from this period. And so what master works as is, you know, most people can’t buy works of art because it’s too expensive.

There is a value in it. Contemporary art prices outpaced the S and P 500 total return from 95 to two 20 by 164%. So there’s scarcity, there’s growth. What if we just buy one and then we securitize it and let a bunch of people own it, and then we’ll have the ability to spread out the cost of it, and then also allow them to create a market in it.

And so on. Anyway, that’s the idea behind masterworks it’s been going great. They have over 400,000 members. It’s been a bit difficult to get into their membership roles, but if you’re interested in, you’re listening to the sound of my work to my voice, all you have to do is go to masterworks.art/mixer G masterworks.art/mixer.

June will always have a link to it on the site, along with this program. And when you go there, you can just schedule a call with one of their people. It’s not like you sign it, you sign in and then they immediately say, give you, give me your credit card information. We’ll take money out of your account.

No, they actually have a conversation with you and it’s an ongoing relationship. And if it works, you can do it pretty inexpensively. If it doesn’t work, you move on. Here’s a, a disclaimer, since I’ve just talked about numbers, I should tell you, you should get the disclaimers it masterworks.io/cd, and then go over to masterworks.art/mixergy and have a conversation and see if it’s a good fit for you.

The way it is for people like Oprah, Oprah Winfrey does it. It can’t be bad. Am I right Tyler?

Tyler: Big Oprah fan that’s for sure. Yeah. And generally a fan of this kind of thing. I mean, without giving specific investment advice, I do feel like individual investors have been locked out of far too many assets that were only reserved for wealthy people, including investing in early stage startups and things like that.

Um, so it’s, it’s really great to see folks having more options than, you know, just the things they can buy in the public market, um, like ETFs and stuff, which are great, but you know, more options is always.

Andrew: You know, at some point I do see, I remember some point, I see that a lot of people that I watched over the years are basically living off of their investments and that’s it. And one of the first people I saw who did that was this guy, Ryan. I interviewed him early on. He was Skye with a nose piercing, would scooter to work in Manhattan, which was kind of a weird thing to do.

And then, um, he just put his money into investments and was just kind of hanging out. And I don’t even know what he did. I know what he did. He decided to be a, do gooder in different ways. And he started going to these, I think atheist meetings and stuff like that. So he was getting to live that kind of a life.

But his money was coming from investments and partially it’s because he had access to early on angel investments and other, um, investments. And most people didn’t today. It is much easier to get into angel. If I wanted to invest in the comm fund as an LP, what do I do?

Tyler: Uh, if you go to calm fund.com C a L M fund.com, um, there’s a little tab that says for investors, um, and then there’s tons and tons and tons of information there, or pitch deck or historical performance, all that kind of stuff is public, um, which is pretty cool, re re relatively recent. Last two years. Sec rules changed where we can be.

Um, we can be public facing with, with all that information. You used to have to be very circumspect about it, but, um, you can go there and, and you can invest. Um, you do have to be an accredited investor, uh, which is I think kind of an annoying role that I don’t totally agree with, but, um, it is the law. Um, but the good news is that, um, Do your own research, but a lot of entrepreneurs can do not think that they are accredited investors because th the general rule is you have to have either, you know, I think it’s over $200,000 a year in income for two years or a million dollar net worth.

Um, but I will say, uh, in our opinion, uh, check with your lawyer, um, your ownership in a business can count towards your net worth, right? And so a lot of entrepreneurs have a business that is worth more than a million dollars that they own a hundred percent of, or, you know, whatever that math works out to.

And if that’s true, um, we have a lot of folks who’ve kind of verified as accredited through that format and we’re able to invest in, and we keep our investment minimum is pretty low. You just sign up for a quarterly subscription. Um, I think our minimum is either 10, 10, K U S or 15 K U S per quarter. Um, so you’re talking about like 40 to 60 K

Andrew: And stop anytime.

Tyler: Yeah, exactly. Yup.

Andrew: Are you doing it through angel list or are you doing it your own?

Tyler: Um, we, we originally started on Angeles. Angeles is great, big, big fan of their product, but they’re very focused on venture funds, uh, which we are not. So we sort of kept bumping into, Hey, we want to do this. And they’re like, no, we’re trying to productize this for a thousand other funds. We don’t want to do that.

And so we kind of mutually agreed to part ways and there was really a no hard feelings situation. So we have our own tech stack. What’s that?

Andrew: sorry, one of the weird things that you do is you’ll take an ongoing share of the profit before owner salary, which is the kind of thing that?

it’s not common. So you’re starting to talk about the stack that you use to run this.

Tyler: No, no, that’s, that’s a great example, right? Is that we’re investing in these companies that may become very profitable. It’s. I would say it’s after owner’s salary, the way we kind of define profits is that we, we lump the founder compensation and net profit together. And then if that number goes above a certain threshold, um, then we take a percentage of that incremental amount, if that makes sense.

So the founders are able to like pay themselves whatever they want. Um, it’s just, once it goes over a certain threshold than our share kicks in, but yeah, we have a bunch of companies now that are paying us, you know, relatively small, uh, quarterly profit share payments. And if you’re managing a bunch of venture funds, you don’t want to be handling all those transactions.

Right. I mean, it’s literally like hundreds of transactions a year that you have to process and then you have to distribute it to all the LPs. So, so we built our own kind of tech stack and then we’re working with a really great fund administrator, um, called, uh, Duro advisors, um, that they make sure that we do that whole process, you know, professionally.

Andrew: What about taxes? One of the pains for me is I have profit to the company and then I have to give away about half of them every year. And so you make this forward movement and then half of it goes back and you’re kind of forced by the system, by the tax system to go and invest in the future of the business.

Because if you invest in something, if you take a hundred thousand dollars profit and before it hits the bottom line at the end of the year, you invest in something that even adds $50,000 to your business. You’re, you’re kind of ahead.

Tyler: Yeah. Yeah, totally. I mean, you know, one of the ways that we’ve tried to structure our strategy and our investment structures and all that is to sort of be indifferent to. What decisions the founder makes along those lines. So there are going to be a lot of times where it makes sense to just reinvest all the profits.

And in that case, you’re not making a profit share payment because you’ve, you’ve just grown your cost base. Um, and we’re okay with that, right. Sometimes that’s the

Andrew: Well, I mean for,

you and your investors, they’re going to have to pay taxes on everything that they get.

Tyler: yeah, it’s true. I mean, th there it’s an unavoidable aspect of, um, income generating funds like this, of course, like. In general, the way it works is profit share payments would be income or dividends. And then you get capital gains if the company sells, right? Because we still have a little bit of equity in the business where we get a percentage, if they, if they liquidate and that’s treated as capital gains.

And you know, but sometimes you have these businesses where it just makes sense either for the founders personally, or just overall in the business. Hey, you know, we’re going to have a million dollar profit this year and we actually don’t have anything on deck that we want to reinvest that in. Let’s just take some money off the table.

Our goal is just to be aligned with that, but it’s true. You know, you do, your taxes are whatever death and taxes, right. It’s a sort of fact of life,

Andrew: one way to avoid it, or at least to reduce it is by going for capital gains, putting all the profits back in the business and then selling it later on. And you’re intentionally going against that.

Tyler: I wouldn’t say we’re intentionally going against that. So, um, you know, the way I think about it is we are interested in maximizing the optionality for the founders. So giving them the widest possible number of scenarios that are a success for them to be a success for us. Um, you know, if you look at our funds, now we’re 70 companies in the vast majority are still re-investing everything into growth.

And we definitely expect that, you know, when you, when all this totals and said and done on each of our funds, probably the majority of the money coming back to investors is going to come via exits, right? Because of, because of this dynamic, it just makes a lot of sense to reinvest as long as you’re comfortable with the risk as a founder.

And as long as you’re making good decisions, it makes more sense to, you know, grow your revenue. Especially if you have like recurring revenue businesses, where every dollar of recurring revenue is worth like five and enterprise value when you sell, you know? Um, so yeah, we definitely think that a lot of it will come from.

From the founders choosing to reinvest and then exit. Um, but we want to keep the other path open and not feel like we’re pressuring the founders to double down and play double or nothing every single year. Right?

Andrew: right, right.

Tyler: Yeah.

Andrew: So what you’re saying is, look, this is not going to be our biggest source of profit and that’s not how we’re going to make our money. How we show the, the founder that we will give them the flexibility to earn a profit, if that’s what they want and have a lifestyle business that goes on forever.

Essentially, if that’s what they’re looking for.

Tyler: Yeah. And it ends up being a nice mix for investors, right. Where. Like last year. I mean, I tweeted this, so, um, last year, our fund one, um, the first fund we launched it paid out like an 8% dividend through those profit shares and also doubled in value on paper. Right. You know? And so like, that’s the kind of thing we’re going for is this nice mix of like, Hey, you’re going to get some, some income from the profitable companies, the ones that are re-investing are going to grow in value, and then they’re going to eventually exit.

And so you don’t have all your eggs in one basket across this portfolio of companies, you’re going to get different exposure to different kinds of, of returns.

Oh man. I mean, I think I’ve found the job that I’m going to do for the rest of my career. Um, so, you know, we’re just continuing to do more of everything. I think we’re at a really interesting point now where. And when we first started doing this, it was just kind of weird, right? No, not many other people were doing it.

Um, and a lot of folks just kind of looked at it a little bit skeptically as like, well, this, this isn’t the way we’ve always done early stage investing. So probably it’s not going to work out. And we’re definitely in a phase now where, you know, the, the feedback cycles in this business are really long. It takes many, many years to figure out if you’re right or any good at it.

Um, but we’re starting to, yeah, it is. Yeah, no, I mean, I, I said for the first two years, at least we basically just had to keep going on faith alone. Cause you just don’t get enough feedback. That you’re actually doing a good job. You know, you get some, some little data points, like how well are the companies doing and stuff like that.

But what is this all gonna add up to a good return for my investors is something you don’t really get confidence in until many years in three and change years in. We’re just now hitting that point where we have really high confidence that, Hey, we’re actually roughly right. About a lot of this stuff, and we’re pretty likely to, you know, to, to prove the doubters wrong.

Um, so, so that’s translating into, okay, how do we scale this up? Because there’s so, so, so many companies out there that fit our model that want to work with us, you know, every month we invest in a few companies, but we could have invested in a dozen. Um, and we want to just keep scaling that up to meet that demand.

So I’m thinking about how to raise a bunch of more capital, how to bring on more folks, you know, to augment my investing decision. Uh, we have a scout program that’s kind of like our. Our training ground for future investors to join the calm fund, they can make some really good recommendations. And once you’ve made a bunch of those, we’re going to have some conversations about, Hey, do you want to do this full time?

Um, so that’s that’s

Andrew: I saw the scout option that’s anyone essentially could have it applied to be in it. And then if, if they send over actually, how does it work?

Tyler: Yeah, the way it works is you apply to be a scout. We’re, we’re pretty liberal about approving folks. It’s, you know, we basically just don’t want spammers and stuff like that. Um, so pretty much anyone can join as a scout. And then as a scout, you have two options. You basically find a company that you think is awesome for the comp fund.

You say, Hey, go. You can basically tell them one, you can say, just list my name as a scout. And if we scout that company, um, we’ll pay you like just a cash compensation, right? At this point it’s a $2,000 could change in the future. So, um, but there’s some amount of cash compensation. Um, or as a scout, you have an option to do a little bit more work, which is you can write an investment memo.

So we have a template and a bunch of guidance on how I write my own memos on really much more detail about why you think this is a good investment and why you think it’s a good fit specifically for our comp fund thesis. And they can fill that out. And if they do that extra work, which they can just do in our app, um, and then we invest in that company, then they can choose to have either a higher cash compensation or a carry share so they can have a share in the profits of that individual investment.

If it turns out, you know, to be successful one day shares, profits or exits, um, they’ll get some of that up.

Andrew: All right. The website is calm fund.com. I hate talking about investments because then I have to say things like do your own research. And I don’t even know what to say. People I’m not here to promote Jack. Well, I am here to promote the sponsors, but I’m not here to tell you what to do. Just to tell you what’s out there.

I’m fascinated by your story. As an entrepreneur, Tyler, I even feel frankly, the com fund as an entrepreneurial story is fascinating to me. And, um, I think that I think the companies and the tools you invest in are just so perfect for our world, that, you know, the section of your site That’s portfolio, the one suggestion I would have for you is.

I, I think that they’re so perfect for the kinds of companies that are, whose founders are listening to me, that I’d want to find a way to make them a little more accessible and just almost like a product on for your tools. You have selected these companies, not by up voting, but by investing in them, they’re phenomenal tools.

To be honest with you, there are a few times in the conversation where you kind of lost me because I was looking down and saying, oh, I know zip message, great tool. And then I said, I like that. I can do testimonials. And then there was this one thing, spark loop. And then I started looking at spark loops website because they’re phenomenal for newsletters.

I remember the founder of the, of, uh, the hustle sound Parr said that one of the ways that he grew was adding this viral loop to the bottom of all of his messages. And I said, wait, spark loop does that automatically. And then I said, what’s conversa fide. Anyway, I feel like you’ve got these really phenomenal tools in here.

And I just want to see more about them.

Tyler: That’s good advice. Yeah. Well, um, can definitely put that in front of my marketing team.

Andrew: Yes. And I want to thanks to sponsors who made this interview happened. Remember if you’re hiring developers and you’re doing the remote work thing, you really should be talking to the people over at lemon. Go to lemon.io/mixergy. And number two, when you’re ready to consider adding art to your portfolio, go to masterworks.art, art slash mixer D masterworks.art/mixergy.

I’m grateful to them for sponsoring and Tyler. Good talking to you, man.

Tyler: Yeah. Likewise, this was awesome. Thanks.

Andrew: Thanks.

Bye everyone.

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