Artwork for podcast Be EPIC Podcast
Exploring the Mind of A Venture Capitalist with Earnest Sweat
Episode 22931st May 2023 • Be EPIC Podcast • Brent Williams
00:00:00 00:29:15

Share Episode

Shownotes

This week on the podcast, Matt sits down with venture capitalist Earnest Sweat. The conversation begins with Earnest discussing his journey from traditional investments to alternative investments and how he became interested in venture capital. Earnest then dives into how he became an investor in FreightWaves and Platform Science by going through his process for deciding where to invest. The conversation concludes with Earnest walking through his involvement with his portfolio companies as well as advice for young entrepreneurs.

Transcripts

Earnest Sweat:

Like, what do you want the first conversation to

Earnest Sweat:

be is like an amazing trailer, where you understand the story

Earnest Sweat:

and plot point, you understand this huge problem, and you

Earnest Sweat:

understand why your hero is selected to then go go after and

Earnest Sweat:

solve this problem.

Matt Waller:

Excellence, professionalism, innovation and

Matt Waller:

collegiality. These are the values the Sam M. Walton College

Matt Waller:

of Business explores in education, business and the

Matt Waller:

lives of people we meet every day, I'm Matt Waller, Dean of

Matt Waller:

the Walton College, and welcome to the Be EPIC Podcast. I have

Matt Waller:

with me today, Earnest Sweat, who is a venture capitalist. And

Matt Waller:

he grew up in Little Rock, Arkansas. He then went to

Matt Waller:

Columbia University, for undergraduate, and then he

Matt Waller:

received his MBA from Northwestern University. And

Matt Waller:

since then, he's been involved in the finance industry,

Matt Waller:

especially venture capital for quite a long time. But you you

Matt Waller:

started your career more in equity research, is that right?

Earnest Sweat:

That's right. Yeah.

Matt Waller:

And what made you decide to move over to

Matt Waller:

alternative investments from traditional?

Earnest Sweat:

Yeah, so for me, well, it makes a lot more sense

Earnest Sweat:

now, after now that I'm here and found what I believe is my

Earnest Sweat:

calling, being a venture capitalist. But taking a little

Earnest Sweat:

bit further back, you know, growing up in Little Rock, I had

Earnest Sweat:

two people investors as parents, like, I feel like they would

Earnest Sweat:

have been amazing venture capitalists, because they

Earnest Sweat:

invested in people. And it wasn't just something they told

Earnest Sweat:

me and my sister to do and with volunteering, they actually

Earnest Sweat:

their professions were investing in people. So my dad is a CS

Earnest Sweat:

grad, ended up working for the Workforce Development Agency in

Earnest Sweat:

the State of Arkansas, becoming a Director of IT. And, you know,

Earnest Sweat:

if that's not enough, he was also a full time pastor since I

Earnest Sweat:

was 10 years old. And then my mother, just retired a couple

Earnest Sweat:

years ago, she's a science teacher for Little Rock public

Earnest Sweat:

school, in middle school. And so those two lived out kind of one

Earnest Sweat:

of our big ethos, or, you know, values, which is equipping

Earnest Sweat:

others, yeah, obviously, education was really important.

Earnest Sweat:

But making sure that in careers we have, they can be, you know,

Earnest Sweat:

give us a good well being, that we're acquiring knowledge that

Earnest Sweat:

can help others reach their self actualization. And so fast

Earnest Sweat:

forward. Venture capital for me, is living that out. And so, how

Earnest Sweat:

I came from equity research on is like, equity research is a

Earnest Sweat:

great foundation for me. I remember, at 22, I was deciding

Earnest Sweat:

between sales and trading, or investment banking, and I had a

Earnest Sweat:

lot of friends that kind of put a, you know, a line in the sand

Earnest Sweat:

and what they do. But for me, you know, being the, just like,

Earnest Sweat:

fully on Capricorn, and just like, how do I, you know, become

Earnest Sweat:

the best person I can, how do I use my skills and improve my

Earnest Sweat:

areas of opportunity, like growth, I always was good at

Earnest Sweat:

communication, but I wanted to get even better at it,

Earnest Sweat:

especially when from a business sense. But I knew I also needed

Earnest Sweat:

to have those financial technical skills of being able

Earnest Sweat:

to read a P&L, read a balance sheet and interpret how that

Earnest Sweat:

business is doing. And so for equity research, it was the

Earnest Sweat:

perfect balance. And so that career was a perfect balance of

Earnest Sweat:

understanding that every industry has a science, and that

Earnest Sweat:

you have to bring together both these the micro of what is

Earnest Sweat:

happening with the company with a macro of going on. And so I

Earnest Sweat:

covered REITs, starting in 2007. So, yes, that was a crazy time,

Earnest Sweat:

but was there from 2007 to 2011. And the reason why, ultimately,

Earnest Sweat:

we can talk about this more, but the reason why I made that shift

Earnest Sweat:

was I was making recommendations to hedge funds, fund to funds,

Earnest Sweat:

all these different portfolio managers, but I wasn't putting

Earnest Sweat:

skin in the game. So it's really just kind of like a theoretical

Earnest Sweat:

exercise of saying, hey, if I did invest, I would either short

Earnest Sweat:

X, hold y, or buy Z. But that's it, you know, you put not your

Earnest Sweat:

opinion and set but you're not putting any skin in the game.

Earnest Sweat:

And so that's what really kind of energizes me to make this

Earnest Sweat:

switch.

Matt Waller:

So you're you're into value chain, broadly

Matt Waller:

speaking, in more traditional industries, like retail,

Matt Waller:

logistics. What made you interested in that particular

Matt Waller:

those particular verticals?

Earnest Sweat:

Yeah, I think it's the most amazing thing

Earnest Sweat:

about venture capital, to me as a profession, is literally no

Earnest Sweat:

conversation has to be worthless, you can learn

Earnest Sweat:

something from literally any conversation. Because everybody

Earnest Sweat:

has a different perspective and expertise. And you never know

Earnest Sweat:

you might invest in that area that they're talking about. And

Earnest Sweat:

so for me, even how I got into venture capital was how do I

Earnest Sweat:

leverage what I've learned in the past and not throw it away?

Earnest Sweat:

So many times in our careers, I can speak for myself, I thought,

Earnest Sweat:

I gotta create a blueprint. So maybe I need to learn how to,

Earnest Sweat:

you know, be an AI expert. And it's like, no, to get into this

Earnest Sweat:

industry, I need to know what I'm passionate about, what I

Earnest Sweat:

have a background in to create that and build on to the

Earnest Sweat:

narrative. And so for me, that was real estate. I cover REITs.

Earnest Sweat:

At 22, I was having, you know, being on calls, on quarterly

Earnest Sweat:

calls, asking tough questions to Fortune 500 CEOs. And so that

Earnest Sweat:

was a basis of like, I know, when a real estate company, and

Earnest Sweat:

they get big, what their problems are, and what their

Earnest Sweat:

pain points are, now just need to understand technology, and

Earnest Sweat:

how what types of technology platforms can solve those

Earnest Sweat:

problems. And so that was like the evidence of like me, coming

Earnest Sweat:

up with what I call value chain tech. And it's taking the HBS

Earnest Sweat:

perspective of value chain is a number of primary and secondary

Earnest Sweat:

activities that a company does to increase the end value or

Earnest Sweat:

value for the end user. And so I've just only layered that as

Earnest Sweat:

like a framework for identifying the most pressing pain points

Earnest Sweat:

that all enterprises need help on. And so, for me, the same

Earnest Sweat:

problems are happening for supply chain are happening to

Earnest Sweat:

retail are happening in manufacturing, essentially

Earnest Sweat:

happened to all of GDP. That's not the 19% of high tech. And so

Earnest Sweat:

those three issues are quickly one our business systems that we

Earnest Sweat:

typically centralized in the 80s, up until 2010s. Those

Earnest Sweat:

systems of technology and people aren't equipped to deal with

Earnest Sweat:

today's business environment, right? We have both

Earnest Sweat:

globalization and deglobalization happening at the

Earnest Sweat:

same time. Two, because of those, that complexity of the

Earnest Sweat:

business environment, company, business leaders and CEOs are

Earnest Sweat:

saying that their stakeholders, most important stakeholders,

Earnest Sweat:

their customers, and their employees, are demanding

Earnest Sweat:

transparency and speed at an unprecedented pace. And three,

Earnest Sweat:

we're in quite possibly the wonkiest labor market of all

Earnest Sweat:

time, right? I like to say, from cashier to ML engineer, we don't

Earnest Sweat:

have enough people to fill the demand. What that really adds up

Earnest Sweat:

to is, whether you're leading the SMB to a Fortune 1 company,

Earnest Sweat:

you're expected to do more with less resources over the next 10

Earnest Sweat:

years. And so instead of the Silicon Valley, kind of, you

Earnest Sweat:

know, ethos of like software is going to eat up the world

Earnest Sweat:

actually kind of put it on top of his head software is going to

Earnest Sweat:

enhance the world. Because of those three things I mentioned,

Earnest Sweat:

there's not going to be the negative connotation of like,

Earnest Sweat:

it's going to take away jobs. I said, we don't have enough

Earnest Sweat:

people, we need it, so people can be more efficient.

Matt Waller:

It's amazing how tight the labor market really

Matt Waller:

is, in so many different ways. And, you know, a record number

Matt Waller:

of factories being opened right now that are highly automated.

Earnest Sweat:

Yeah,

Matt Waller:

You know, it's gonna take a few years to bring

Matt Waller:

them online. But

Earnest Sweat:

Absolutely.

Matt Waller:

I've seen some data that is astounding, that the

Matt Waller:

number of factories being put in place, you have that on the one

Matt Waller:

hand. And then on the other, you know, you've got generative AI

Matt Waller:

that is going to solve part of the problem. I, I know, you

Matt Waller:

know, I constantly hear about how people are able to get a lot

Matt Waller:

more done responding to emails, making posts,

Earnest Sweat:

yeah.

Matt Waller:

Converting one type of media into another.

Earnest Sweat:

Yeah.

Matt Waller:

Using generative AI. And not only that, but even

Matt Waller:

helping from a planning perspective. And if you think as

Matt Waller:

you know, so many of the value chain companies, the companies

Matt Waller:

involved in traditional value chains, a lot of times their

Matt Waller:

weakness is planning. So I would imagine over the next few years,

Matt Waller:

we're going to see a lot of new generative AI applications

Matt Waller:

within the value chain space.

Earnest Sweat:

I think. Yeah, I would agree. I think it's going

Earnest Sweat:

to take special entrepreneurs who identify what those key pain

Earnest Sweat:

points are. So pain point one, pain point two, because those

Earnest Sweat:

are going to get traction when it comes to sales. Again,

Earnest Sweat:

because you can't just when companies like Microsoft and

Earnest Sweat:

Uber, who have a pretty big war chest of cash when they're

Earnest Sweat:

contemplating, hey, do we need 100 software vendors? And so

Earnest Sweat:

it's critical now that you're solving a real pain point that

Earnest Sweat:

people need today, or need yesterday to be quite honest.

Earnest Sweat:

And so although there's a lot going on in generative AI, we're

Earnest Sweat:

going to have to have specific, it's really cool stuff now, and

Earnest Sweat:

all those things you mentioned. But how do we really productize

Earnest Sweat:

it in a way that it's solving specific industries problems.

Earnest Sweat:

And so what I look for is like, these archetypes of

Earnest Sweat:

entrepreneurs, when they're looking to enhance or accelerate

Earnest Sweat:

a foundational industry. And so it's like, typically two and

Earnest Sweat:

possibly a third coming up, one I call the innovative insider.

Earnest Sweat:

So that's somebody who's worked in this industry for a long

Earnest Sweat:

time, has faced a problem, and sees that technology can really

Earnest Sweat:

solve it. And they have the ability to mobilize

Earnest Sweat:

technologists and product people around them to go along with the

Earnest Sweat:

vision. The second archetype is the humble outsider. So having

Earnest Sweat:

somebody who's typically maybe they come from Silicon Valley,

Earnest Sweat:

maybe they come from, you know, some some tech background. And

Earnest Sweat:

they identify, hey, that's I've done research, that's a problem.

Earnest Sweat:

But I'm gonna check with customers. And I'm going to

Earnest Sweat:

bring on advisers and employees who understand the nuances of

Earnest Sweat:

those industries. So I'm not frightening my customer a lot of

Earnest Sweat:

times from this, like long term vision, but I'm able to, you

Earnest Sweat:

know, bring them along and grow with it. And so I think that's

Earnest Sweat:

the second thing. And then the third is, for lack of a good

Earnest Sweat:

name yet, I'll take suggestions. But I think essentially a person

Earnest Sweat:

I call like a bridge. This is somebody who is highly

Earnest Sweat:

technical, but also has maybe a family background in, in an

Earnest Sweat:

industry, maybe their family always had like, let's say, for

Earnest Sweat:

a construction tech company. A family has had a construction

Earnest Sweat:

company for the last four generations. And then they went

Earnest Sweat:

to MIT or Caltech and have just now say, hey, I can bring these

Earnest Sweat:

two worlds together. So that's the third archetype, but you're

Earnest Sweat:

going to need special entrepreneurs, which I think

Earnest Sweat:

despite all the uncertainty that's going on, we're going to

Earnest Sweat:

start to see that next wave of awesome entrepreneurs going

Earnest Sweat:

after really big problems.

Matt Waller:

I noticed, just diving into a little detail. You

Matt Waller:

were a Series A investor in FreightWaves.

Earnest Sweat:

Yeah.

Matt Waller:

And I also am impressed with FreightWaves. I

Matt Waller:

met them about the time you were investing in them a few years, a

Matt Waller:

couple years ago. But I loved the vision of them becoming the

Matt Waller:

Bloomberg of logistics. What a brilliant, it's such an easy

Matt Waller:

vision to get. And if you've ever used a Bloomberg terminal

Matt Waller:

or read Bloomberg media, you get it. And, you know, they've got

Matt Waller:

this tool called sonar, which clearly is analogous to a

Matt Waller:

Bloomberg terminal. And then you've got all the news for for

Matt Waller:

logistics. How did you, so I'm asking this to kind of try to

Matt Waller:

understand how did you learn about them, and how did you

Matt Waller:

decide to invest in them?

Earnest Sweat:

Yeah. So I learned about them through,

Earnest Sweat:

like, my job is so it's funny, because most people when asking

Earnest Sweat:

like, what a venture capitalist does, have some friends is like,

Earnest Sweat:

that's not real work, just like have coffees and talk to people

Earnest Sweat:

hear people's pitches, and talk to LPs and ask for money, right.

Earnest Sweat:

But it's a little bit more nuanced than that. And so having

Earnest Sweat:

a prepared mind when I joined Prologis, which is the largest

Earnest Sweat:

warehouse owner in the world, yeah. And I joined as a founding

Earnest Sweat:

team member of their venture group, this first time they ever

Earnest Sweat:

had a venture capital group.

Matt Waller:

Oh, I didn't know that.

Earnest Sweat:

And so yeah, I'd been there for at that point,

Earnest Sweat:

probably a year and a half. And so I developed you know, I saw

Earnest Sweat:

that we had a thesis around logistics and particularly

Earnest Sweat:

seeing that there was so much cost associated with delays due

Earnest Sweat:

to not having efficient trucking and not really having data

Earnest Sweat:

around it. So we built a thesis around how can we get more data

Earnest Sweat:

within trucking which could take out a lot of the delayed costs

Earnest Sweat:

that are associated with waiting times. Anytime I was talking to

Earnest Sweat:

a seed or pre seed investor who also followed that vertical, the

Earnest Sweat:

logistics vertical, I would mention it. And you know

Earnest Sweat:

eventually we spoke with Fontinalis, which was an early

Earnest Sweat:

investor in them earlier than us. And they mentioned that you

Earnest Sweat:

should guys, you guys should meet Craig. And so brought him

Earnest Sweat:

in and, you know, loved the team loved, like you mentioned, the

Earnest Sweat:

vision was clear. And I would say he was a, if I go back to my

Earnest Sweat:

archetypes, he was an innovative insider, you know, comes from a

Earnest Sweat:

trucking family, or actually probably even pushing more of

Earnest Sweat:

the kind of bridges I mentioned, because having experience, you

Earnest Sweat:

know, looking at technology, and then coming from a family that

Earnest Sweat:

built one of the biggest trucking companies in the

Earnest Sweat:

country. It just merged both worlds. And so given we knew his

Earnest Sweat:

expertise, and then another thing we always look for, and I

Earnest Sweat:

always look for as an investor is, am I the right investor that

Earnest Sweat:

can actually help them get to the next stage, whether that's

Earnest Sweat:

sitting on their board, being a board observer, making the right

Earnest Sweat:

relationships, and then also looking at the strategic value

Earnest Sweat:

that we could possibly add. And so there was just a lot of

Earnest Sweat:

synergies between what Prologis, you know, their footprint in the

Earnest Sweat:

entire world. And how many trucks go to their, their

Earnest Sweat:

warehouses. And what FreightWaves was trying to solve.

Matt Waller:

And then you also invested in Platform Science.

Earnest Sweat:

Yes.

Matt Waller:

Which is another impressive company.

Earnest Sweat:

Yeah, the thesis around there was still like, how

Earnest Sweat:

do we streamline trucking? And we made a few other investments

Earnest Sweat:

as well, like why systems which helps with automating the

Earnest Sweat:

routing systems for commercial delivery, as well as trucking

Earnest Sweat:

companies. But ultimately, it's like, how do we streamline this

Earnest Sweat:

so we can make this more efficient, we're not wasting

Earnest Sweat:

gas, obviously, and, or diesel. We're not hurting the

Earnest Sweat:

environment, and we're getting the most out of each truckload.

Earnest Sweat:

And platform science actually was also a, you know, thesis was

Earnest Sweat:

built around the ELD mandate. So we knew there was a point where

Earnest Sweat:

all trucks needed to have some type of electronic system to

Earnest Sweat:

track how long truckers were on the road where they are all

Earnest Sweat:

those things.

Matt Waller:

So Earnest, you know, I first started following

Matt Waller:

venture venture capital in the mid 90s. And, you know, I've

Matt Waller:

seen a lot of ups and downs in the business, there's times when

Matt Waller:

it's really hard to raise money for a fund. And there's times

Matt Waller:

when it's easier. It's never easy, but it's easier at times.

Matt Waller:

I'd love to hear your thoughts about the current state and what

Matt Waller:

you see for the next few years.

Earnest Sweat:

I understand how things can go. And never to get

Earnest Sweat:

too high on the highs. And so, you know, but from our venture

Earnest Sweat:

career, pretty much.

Matt Waller:

That's true. I mean, you you started at BMO

Matt Waller:

Capital Markets, July of 2007, so you have, you've been through

Matt Waller:

the tough stuff,

Earnest Sweat:

And seeing companies that were around

Earnest Sweat:

hundreds of, or 100 years

Earnest Sweat:

So that was my entrance into the workforce. I

Matt Waller:

disappear.

Matt Waller:

was like, oh, it can go like this. And, you know, took that,

Matt Waller:

you know, people don't have advice, they usually say, when

Matt Waller:

facing tough times, they're like, it builds character. So I

Matt Waller:

just kind of embrace that. Okay, this builds character, you have

Matt Waller:

to, actually, what I really get it boils down to is you got to

Matt Waller:

find value for your customer base, despite what's happening

Matt Waller:

in macro. And so I take the same application to now right when

Matt Waller:

things were so up and then we realized in 2020, oh, we don't

Matt Waller:

have to meet founders, they can be anywhere, we can just give

Matt Waller:

term sheets in over Zoom. That took a run up. We also had

Matt Waller:

obviously well documented a lot of tourist investors who hadn't

Matt Waller:

done much early stage or even growth stage doing more of that.

Matt Waller:

And so prices went up and it seemed like a lot of people

Matt Waller:

could get money, not to mention, you know, VC firms were raising

Matt Waller:

a lot of money as well. But now things have changed as we've

Matt Waller:

seen the continued. People like to go to the denominator issue

Matt Waller:

for LPS, right like their public stock or their public portfolio

Matt Waller:

is so far down that is they're not at the levels that they want

Matt Waller:

of, of allocation versus you know, now venture could

Matt Waller:

represent when it's only supposed to be 10% of their

Matt Waller:

entire endowment now it's 25-30%. And so because of that,

Matt Waller:

we've definitely seen a drawback on on valuations or just a stall

Matt Waller:

and in, in raising capital, especially towards the end of

Matt Waller:

22. And it's still been slow, I would say in Q1. But things are

Matt Waller:

getting funded, I think it's a great time to raise or start a

Matt Waller:

company and raise at the early stage. So I'm talking about pre

Matt Waller:

seed seed, and even seed to A, because you have an

Matt Waller:

understanding of what valuations actually are today, where I'm

Matt Waller:

seeing a lot of trouble is A to B, especially if you got a

Matt Waller:

really high valuation in A in from in 2020, or 2021. And you

Matt Waller:

haven't really grown into that valuation. I think you're just

Matt Waller:

going to have an influx of more people starting new companies.

Matt Waller:

But when it really drills down to now of understanding what

Matt Waller:

your narrative is, why are you starting a company? Why are you

Matt Waller:

uniquely equipped to solve this problem? Why do you wake up

Matt Waller:

every morning wanting to solve this problem? And then finding

Matt Waller:

the right investors.

Matt Waller:

So would you mind walking me through your due

Matt Waller:

diligence process? What, how do you go about?

Earnest Sweat:

Typically, a process is first meeting with a

Earnest Sweat:

company, that first conversation is critical with me, and the

Earnest Sweat:

thing I'm getting at, sometimes I don't even want to go want

Earnest Sweat:

them to present the deck. But I just want to understand like who

Earnest Sweat:

they are, what drives them? What's the origin story of this

Earnest Sweat:

company? So that's the first conversation, then I'll request

Earnest Sweat:

some, the data room, so their financials, I love looking at

Earnest Sweat:

the financials, what they're thinking, understanding, and

Earnest Sweat:

I'll dig into this, why I use my equity research background

Earnest Sweat:

digging into their assumptions, what assumptions are they

Earnest Sweat:

making, I love to look at their product roadmap and any

Earnest Sweat:

technical IP just to understand what is maybe defensible, if

Earnest Sweat:

they're leaning really on the kind of technical risk. And then

Earnest Sweat:

the other thing is, I like to look at the sales, sales deck,

Earnest Sweat:

because how you're positioning yourself to your customer base,

Earnest Sweat:

is really where I like to lean in. Obviously, coming from a

Earnest Sweat:

pretty technical family, dad, a CS grad, sister is a data

Earnest Sweat:

scientist. I've picked up a lot of stuff and have a strong

Earnest Sweat:

network and stuff. So I know what to ask and who to introduce

Earnest Sweat:

them to to get even more technical diligence. But I think

Earnest Sweat:

a lot of the lacking in the industry or areas of opportunity

Earnest Sweat:

is like understanding, even at the early stage, what is the

Earnest Sweat:

business risk? And so where I like to take that in the next

Earnest Sweat:

step of diligence, after you know, asking the questions I've

Earnest Sweat:

seen from the data room, I like to point out two to three people

Earnest Sweat:

within my own network that can feel that persona. Because

Earnest Sweat:

there's one thing to get, you know, do customer references,

Earnest Sweat:

once you've gone down a path and looking to do it, you know,

Earnest Sweat:

writing up a term sheet. But who of those customers who have

Earnest Sweat:

agreed to do that aren't going to say amazing things that they

Earnest Sweat:

use in the product? Well, actually, sometimes they don't

Earnest Sweat:

say the most amazing thing. That's when, when everybody's

Earnest Sweat:

entrepreneurs, if you have somebody on your reference list

Earnest Sweat:

as a customer, let they need to say that NPS is like 15 like

Earnest Sweat:

that, at a bare minimum. But for me, I like to have a win win win

Earnest Sweat:

where I have a trusted executive that I've known for a while they

Earnest Sweat:

can be a buyer of this technology. And so they get to

Earnest Sweat:

understand what's out there, the founder gets to actually have a

Earnest Sweat:

chance to get a sale. Even if I don't sign up to you know,

Earnest Sweat:

invest in the company or not, they get a shot on goal. And

Earnest Sweat:

then I get unfiltered feedback from that executive. And then

Earnest Sweat:

lastly, the entrepreneur gets to see hey, this is what you get

Earnest Sweat:

from me, starting day zero. I like to help with leads on

Earnest Sweat:

customers, because that actually has impact on revenue. So

Earnest Sweat:

that's, that's really

Matt Waller:

So that's part of your big value add.

Earnest Sweat:

I love doing that. I love like meeting

Earnest Sweat:

people. I love understanding what they've dedicated their

Earnest Sweat:

lives for. And I like being a bridge. That that's why I left.

Matt Waller:

A lot of value.

Earnest Sweat:

Yeah.

Matt Waller:

What what's your approach to the board

Matt Waller:

involvement in governance with your portfolio companies?

Earnest Sweat:

You learn something new every day. I'll

Earnest Sweat:

say that being open to that. I think a good board is like a

Earnest Sweat:

great basketball team. And maybe the better equivalent is like a

Earnest Sweat:

great AAU basketball team. Just understanding different boards

Earnest Sweat:

will have different constructions and you need to be

Earnest Sweat:

able to flex different roles based on who's there. And

Earnest Sweat:

ultimately, it should be about serving the company and that

Earnest Sweat:

founder and helping him or her make the best decision for the

Earnest Sweat:

company and grow.

Matt Waller:

How how do you prepare your portfolio companies

Matt Waller:

for exits?

Earnest Sweat:

I think that's a, I probably don't have a great

Earnest Sweat:

answer right now. But I think that's something that a lot of

Earnest Sweat:

investors and entrepreneurs should be thinking about. Based

Earnest Sweat:

on, you know, if you're at a certain clip or a certain stage,

Earnest Sweat:

is there a soft landing, or even a good landing, that doesn't

Earnest Sweat:

take you to like where you thought you want it to be? Or

Earnest Sweat:

you strive to be? Because I think I tell friends this all

Earnest Sweat:

the time. Even the most well informed kind of person follows

Earnest Sweat:

technology or, or tech adjacent companies. There's so many

Earnest Sweat:

companies that are still private, that you think are

Earnest Sweat:

public. Stripe. I forget all the time that Stripe is private. And

Earnest Sweat:

so there's just a lot of companies that are kind of

Earnest Sweat:

waiting on the sidelines until the public markets get better.

Earnest Sweat:

And then they'll finally have those exits. And so it's kind of

Earnest Sweat:

a waiting game.

Matt Waller:

You've given some really good advice along the

Matt Waller:

way, was during this conversation, but any other

Matt Waller:

advice you would give for young entrepreneurs?

Earnest Sweat:

Yeah, I think, you know, especially in this

Earnest Sweat:

environment, it's a safe environment and college where

Earnest Sweat:

you can just try out new things while you're in school, I would

Earnest Sweat:

say definitely exploring, what are you really passionate about.

Earnest Sweat:

And a lot of times, you can learn on someone else, like even

Earnest Sweat:

interning at a startup, to see if that's the right environment

Earnest Sweat:

that you want to either start your own thing. Or if it's like

Earnest Sweat:

a little bit later, where you're at, like a Databricks, or you're

Earnest Sweat:

at a a more growth company. That's still, you know, high

Earnest Sweat:

growth, and still has those elements of like, there's a lot

Earnest Sweat:

to learn. But maybe it's not so chaotic. So just being able to

Earnest Sweat:

explore the things. I was always told, I'm not sure it's great

Earnest Sweat:

advice or not, but like your 20s are about figuring out what you

Earnest Sweat:

don't want to do. And if you think you lucked out and figure

Earnest Sweat:

out what you liked doing that's even better. And 30s are what

Earnest Sweat:

you figured out what you like to do, and then in 40s and 50s

Matt Waller:

I like that. I see that.

Earnest Sweat:

Yeah, yeah.

Matt Waller:

Well, you know, you you mentioned, like doing an

Matt Waller:

internship, because so many times it seems like students

Matt Waller:

wind up going just with big companies for their internships.

Matt Waller:

But so we created this program called the Venture Intern

Matt Waller:

Program, which is specifically to help early stage companies

Matt Waller:

find interns. And, and pick interns and, and to provide them

Matt Waller:

with a format for providing an internship for a student. And

Matt Waller:

then making the students aware of these opportunities. So we've

Matt Waller:

been doing this for maybe, I don't know, four or five years,

Matt Waller:

I'm not sure the exact time. And sometimes then they stay on

Matt Waller:

permanently. They say I really do like this, or they say, no, I

Matt Waller:

think I'd rather work for a large company. But in either

Matt Waller:

case, they've really learned something about themselves and

Matt Waller:

what they like and even if they don't want to work in a early

Matt Waller:

stage company, I think that knowledge of what it's like, is

Matt Waller:

valuable for the rest of their career.

Earnest Sweat:

Yeah.

Matt Waller:

Well, Earnest, thank you for taking time to do

Matt Waller:

this. And it's been fun talking to you getting to know you. Look

Matt Waller:

forward to it.

Earnest Sweat:

Absolutely. Thanks for having me.

Matt Waller:

On behalf of the Sam M. Walton College of

Matt Waller:

Business, I want to thank everyone for spending time with

Matt Waller:

us for another engaging conversation. You can subscribe

Matt Waller:

by going to your favorite podcast service and searching Be

Links

Chapters

Video

More from YouTube