Investor Stories 492: Best Questions from Grant Emery, Ben Black, and Glenn Solomon: Market Truths, Enduring Value, and Founder Conviction (Demaree, Black, Solomon)

Nick Moran (0:00)

This episode is brought to you by Ramp, the spend management platform we use here at TFR. They're offering listeners $150 just to take a demo. We've never had an offer quite like this. Claim your $150 before this offer is gone at our partner link, ramp.com/partners/tfr.

Now on to the episode.

SPEAKER_2 (0:24)

Welcome to the podcast about Venture Capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

Nick Moran (0:40)

Welcome back to TFR. On today's special segment, we ask guests to share the best question they've ever been asked by an allocator.

Here's the segment called Best LP Question.

Nick Moran (0:57)

Grant Emery joins us today from the Bay Area. He's the CEO and founder of Onebrief, the defense company building the operating system for military planning. What's the best question a VC has asked you?

Grant Demaree (1:09)

This was in the early days. This was actually at the pre-seed. We didn't have any revenue.

I don't know how credible all my statements were there, but I can tell you, you would have gotten a really good return if you had invested that $5 million cap safe note. I got a question from someone who's a really big deal in defense tech.

He was genuinely very helpful. He passed. He was like, why is this O&M for operations and maintenance, go to market, going to work? What he meant was, we're selling into the department bottom up, and basically asking individual military headquarters to give us some money each year to use our product. And that's not really how good military sales work. He said, that's going to break in the small, single-digit millions. What can I say to that? Like, I don't have any hard evidence that's not going to. I can be like, hey, well, I have an intuition that we've built something that's fairly universal, that every military headquarters across the world is going to benefit from. Here's the price point I think they're going to end up at. I don't think that's going to top out anywhere close to there. But he was like, it's going to top out at that level. There is a sense in which he was right. The sense in which he was right is, first of all, I totally not thought this through. The second sense in which he was right is it did top out. We did eventually get to, you can't go farther on this bottom up individual units pay, but it topped out at more than an order of magnitude larger than where he said it was, and there actually was time to build the network effect from sources to build the product improvement. I guess the lesson there is, first of all, the conversations with investors who passed were actually really helpful to the extent that they gave a concrete objection because my thinking wasn't that clear until he said that. He was helpful. And second of all, you don't really know what the truth is until the market tells you. I can have my intuition, he can have his intuition, and then we go and do it, and we're like, well, we have now empirically measured where this tops out.

Nick Moran (3:20)

On today's special segment, we have Ben Black, Managing Director of Akkadian Ventures, CIO of PowerLaw Corp and Founder of Raise Global. Ben, what is the best question a founder or an investor has asked you?

Ben Black (3:34)

I love the questions when LPs talk to me about like long-term.

I think when LPs get into you and really like try to understand not just what you're doing in a day, but what you're building to, that's something I really like. It like really tells me that there's an LP that I want. If LPs are just like nitpicking me over like recent performance or decisions and are very backward looking, I think it gives you a different perspective. So I really love it when an LP tries to understand what I'm building, what I'm building towards. And a lot of LPs don't. They just are looking at like, do I have this current fund in a moment? And that's what I really look for. And I think it tells you a lot about an LP. I think those are the LPs you want.

Nick Moran (4:19)

Are you still managing expenses with outdated apps and spreadsheets? If so, it's time for Ramp, the leading US spend management platform covering corporate cards, travel, AP and more. All built to save time and extend runway. We use Ramp at TFR and it's been a game changer. As our preferred partner, they're offering listeners $150 just to take a demo. No need to sign up. Head to ramp.com/partners/tfr to claim your $150 before the offer expires. Now back to the interview. On today's special segment, we have Glenn Solomon of Notable. Glenn, what is the best question a founder or LP has asked you?