Conversation with Andy Liu, Unlock Venture Partners

Matt sits down with Andy Liu, co-founder partner at Unlock Venture Partners. He has led ventures like Buddy TV (acquired by Vizio) and Net Conversion (acquired by Aquantip). His career includes roles at Active Voice, Safeware, Boeing, and AT&T. Andy holds a BS in electrical engineering from Seattle Pacific University and an MBA from Wharton. A Seattle resident and partner in The Fat Hen, he also serves on the board of Future Hope, supporting tech education for underserved communities.

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Transcript

00;00;03;25 - 00;00;08;09

Matt Watson

Welcome to Transcending Workspace, where we talk with leaders of organizations managing.

00;00;08;09 - 00;00;09;21

Matt Watson

The greatest rate of change in.

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Matt Watson

Human history. I'm Matt Watson, VP of development with Apex Facility Resources.

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Matt Watson

An integrated services company that.

00;00;16;28 - 00;00;55;26

Matt Watson

Delivers and manages workspace change for clients of all sizes. We hope you enjoyed this conversation. Today's guest is Andy Lu. Andy is a seasoned entrepreneur and co-founder partner at Unlock Venture Partners, where he brings a wealth of experience in building and scaling innovative companies. With a strong background in technology and leadership, Andy has co-founded and led multiple successful ventures including buddy TV, which is acquired by Vizio, and net Conversion, later acquired by a Quantum Is career spans a variety of roles at prominent companies such as Active Voice, Safe, where Boeing and AT&T.

00;00;55;26 - 00;01;18;10

Matt Watson

Andy holds a B.S. in Electrical Engineering from the Seattle Pacific University and an MBA from the esteemed Wharton School of Business. A long time Seattle resonant with over 40 years in the city. He's getting old. Andy is well versed in local food scene, and is a partner and a part time owner in the Fat Hen popular dining spot, where he can often be found enjoying a meal.

00;01;18;11 - 00;01;37;23

Matt Watson

In addition to his entrepreneurial endeavors, Andy is deeply committed to giving back to the community. He serves on nonprofit board of future Hope, an organization dedicated to providing technology and leadership education to impoverished and marginalized communities. In addition, Andy has two sons and a lovely wife. Welcome, Andy. 

00;01;37;23 - 00;01;42;07

Andy Liu

Thanks, Matt. So good to see you and thanks for having me on.

00;01;42;09 - 00;01;57;17

Matt Watson

Well, we've been shooting for you for a while. My friend, you're a heart guy to pin down, but we've got you pinned down from Taiwan. Everybody but tell us. Let's just start off with talking about Unlock Venture Partners. Tell us a little bit about your business and your partnership.

00;01;57;18 - 00;02;24;06

Andy Liu

Yeah. So Unlock Venture Partners is a early stage venture capital firm, and we write checks and investments into early stage companies, primarily in Pacific Northwest and in LA. And when I say early stage, it's usually pre-seed and seed stage companies. We write roughly 750 K to $101.5 million checks as a first checks into the company, and then we'll follow on into future rounds.

00;02;24;08 - 00;02;51;01

Andy Liu

We love investing in fantastic entrepreneurs. Folks are looking to make a dent in the world and mostly software related. So data and AI and we have a wide aperture. So we will invest in e-commerce, SAS, fintech, Proptech, healthtech, space and so forth. And it's been a really good journey so far. We started in 2017 and we're actively investing out of our second fund and always looking to meet great entrepreneurs and find the next big thing.

00;02;51;04 - 00;02;59;18

Matt Watson

So how do you meet the entrepreneurs and find the startups? Basically, you're an early stage investor. How do you find these companies and how do you find these entrepreneurs?

00;02;59;22 - 00;03;24;02

Andy Liu

Well, Matt, I actually started out as an angel investor, so way back in 2005. I was fortunate enough to kind of jump off the deep end of the pool with some friends of mine that were seasoned angel investors and started investing in early stage companies back then and over ten years, did about 95 angel deals. And so through that time I built a pretty good network of folks that would refer deals to me.

00;03;24;02 - 00;03;43;15

Andy Liu

A lot of the best referrals came from portfolio company CEOs that know me and and know kind of the types companies I like to invest in, the type of entrepreneurs I like to invest in. And so, portfolio CEOs are definitely a great source of referrals. We do get a fair amount of inbound from cold emails as well.

00;03;43;16 - 00;04;05;13

Andy Liu

And then also, since we started the fund, many of our limited partners, investors in the fund refer deals. And then our partners that we work with also are for deals. So a lot of referrals. And then one other source is that we also will create companies from the ground up. And so we have our own venture studio where we'll actually create companies and create our own kind of deal flow as well.

00;04;05;14 - 00;04;14;01

Matt Watson

Wow. Interesting. So if somebody has an idea, you may seed that company and help them start that business and kind of incubate them, so to speak.

00;04;14;04 - 00;04;31;08

Andy Liu

Yeah, we'll do two models. So one is perhaps there's an entrepreneur that we really like, but it's just too early for us to invest. And so we can partner with them to co-found the company and build it from the ground up. And then we will also build our own and try to find CEOs to run it as well.

00;04;31;08 - 00;04;32;11

Andy Liu

So we would do both.

00;04;32;12 - 00;04;36;12

Matt Watson

I see so Andy's got an idea or Roz's got an idea. Somebody had an idea on your team.

00;04;36;13 - 00;04;37;19

Andy Liu

That's right. Exactly.

00;04;37;24 - 00;04;52;07

Matt Watson

I didn't know you did that. So I know you and I were talking a week or two ago about kind of the tusks. You know, the money isn't flowing like it used to in that industry. And the venture funding industry, you know, last couple of years has been fairly challenging. How do you view us going on right now?

00;04;52;07 - 00;04;55;24

Matt Watson

Is it rolling back a little bit or is it going to be tough for a while?

00;04;55;24 - 00;05;17;19

Andy Liu

Yeah, yeah, it's a great question. It was a very, very hot space during the zero interest rate environment, and it felt like you could do no wrong as either an entrepreneur or as an investor in the sense that there was as long as you showed a little bit of progress, you could raise the next round of financing, and that's just no longer the case now.

00;05;17;19 - 00;05;40;29

Andy Liu

So what's going on in the environment is that there is still deals being done, but they're done at the highest quality of deals and that stage. And so for an entrepreneur that's looking to raise a seed round, they're competing with all the other companies are looking to raise. And they need to be really, really high quality. Because any sort of challenged perception those deals are not getting done.

00;05;40;29 - 00;06;01;16

Andy Liu

And that's for every stage. And so series A, a bar is really, really high. And so it has really made entrepreneurs have to create optionality for themselves. And what I mean by that is they can't just assume there's going to be another round that's going to be around the corner. They have to build a sustainable business but give themselves as much runway as possible.

00;06;01;16 - 00;06;17;16

Matt Watson

Yeah. So they're just not throwing money like they used to. I mean, I guess they're not. That's why I came in because I know we've talked in the past, you know, you and I go back almost 20 years now. And when we would talk, I'm in a traditional business, you know, with what we do. And we have to pay our bills and make money to pay the bills.

00;06;17;16 - 00;06;29;02

Matt Watson

We've got nobody funding us so. Except ourselves. And you were always saying, yeah, man, it's it's a different world. This technology fundraising venture capital world is a completely different space.

00;06;29;06 - 00;06;47;12

Andy Liu

It is, it is. And it's a different mindset. And and one of the things I tell a lot of entrepreneurs that come and pitch is that the majority of companies really should not go on the venture capital track. It is a very different business model. 99% of companies can be very successful and should never take venture capital money.

00;06;47;14 - 00;07;08;27

Andy Liu

Venture is one where you are putting gasoline on a fire and you really care about growth. You want to see a company grow and hit new milestones, but eventually turn into an IPO or a very, very large acquisition. The only way to do that is to take pretty decent sized risks and be thoughtful about how do you grow very, very quickly.

00;07;08;27 - 00;07;11;22

Andy Liu

That's just that's just not for everyone for sure.

00;07;11;26 - 00;07;33;27

Matt Watson

Yeah. So you've just said that, hey, you better have a really strong pitch and an incredible concept that's going to make money or don't come in. Right. Don't come in and pitch me. What are you looking for in the businesses? You know, I mean, new innovative, creative idea. I know there's technology base, majority of investments. You're making this technology based and and we talked a little bit about AI and some of the things you've seen in AI.

00;07;33;28 - 00;07;42;05

Matt Watson

What do you view as a greatest opportunity really in what you're doing right now? You were such an investor beforehand as a part time guy. Now you're a full time guy.

00;07;42;09 - 00;08;07;25

Andy Liu

Yeah, yeah. That's right. So it is a fairly complex set of criteria that we look for when we make an investment decision. But I'd say it boils down to really two areas. One is the quality of the management team. When we invest early, we're looking for really fantastic entrepreneurs. We go through kind of artful process, both qualitative and quantitative, evaluate portions of the entrepreneur themselves.

00;08;07;25 - 00;08;26;24

Andy Liu

And we like to meet as many entrepreneurs as we can. But I would look at the entrepreneurs and a couple of things that we're looking for. One is kind of resilience and grit. As you know, building a business is not easy. We're looking for folks that have shown and demonstrated a tremendous amount of resilience and grit. They will run through walls and make things happen.

00;08;26;24 - 00;08;52;02

Andy Liu

They've got this. It's almost like this is their calling on their life. This is their life's purpose. They live, drink and believe in their business and their family and friends really understand that that's who they are. I try to look for whether or not they get energy from the business, too. Because it's one of those things where if you're constantly coming home and you're tired and you're burnt out, this is not for you, the venture side.

00;08;52;02 - 00;09;08;18

Andy Liu

So I want to see are you thinking about the business? It's like a puzzle. It's like a game in at 10:00 at night, you're like, hey, I want to read what my competitors are doing. I want to think more deeply about the business. What can I do better for my customer that's actually enjoyable to you? And if that is, that's the type of person we want to invest in.

00;09;08;18 - 00;09;27;08

Andy Liu

The second one that we like looking for in the entrepreneur is this notion of is there really founder market fit early on? Does the entrepreneur have an insight into the business? And we're very different from what I would call a thesis driven venture capital firm, where they say, hey, we believe that robotics is going to be a next revolution.

00;09;27;08 - 00;09;50;15

Andy Liu

So we're going to go find a robotics company we lead with who's the entrepreneur we want to invest in, and we want to hear about their ideas and hopefully there's a match between, hey, they used to work, for example, at Robotics at Amazon, and they have this unique insight regarding where the market is moving and why they are uniquely able to enter into that market and be able to build a substantial business.

00;09;50;17 - 00;09;56;27

Andy Liu

We're looking for that sort of insight and founder market fit. Those are some of the things that we look for on the entrepreneurial side.

00;09;57;00 - 00;10;14;10

Matt Watson

I was talking to a young guy this morning at one of the breakfast I was at, and I was saying, hey, you know what? More than anything else, you got to have a software muscle. You got to be able to suffer more than your competition. Maybe also that subject matter expertise. It shows up so interestingly in different people with different categories.

00;10;14;13 - 00;10;21;04

Matt Watson

You know, I'm finding the fit between market and an entrepreneur. Must be a yeah journey. Yeah.

00;10;21;05 - 00;10;39;28

Andy Liu

Absolutely. Absolutely. And what makes it fun Matt too is I'm constantly learning because, you know, the entrepreneurs come in with new ideas and it gives me a lot of energy to hear kind of the optimistic side of the world and seeing things through a new lens just shows that there's just unlimited opportunities. Even if we don't make an investment.

00;10;39;28 - 00;10;47;17

Andy Liu

I think it's a wonderful business to be in because you're constantly optimistic about all the folks are reimagining what the world could look like in the future.

00;10;47;19 - 00;11;16;24

Matt Watson

You know, we spoke really briefly when we first talk, and I asked you a question around work from home and how your portfolio companies are managing and leveraging hybrid workspace strategies. And you kind of explain to me that you're not really looking at businesses who aren't kind of collaborating together and in face to face scenarios. Tell us a little bit more about your thoughts on work from home versus, you know, this distributed workforce strategy that a lot of people seem to have and are leveraging?

00;11;16;27 - 00;11;37;14

Andy Liu

Yeah, it's a fascinating question because I think it has popped up more often than most people believe in the boardroom. So a lot of these conversations with existing portfolio companies, how do we handle remote? Do we hire remote? Do we do a hybrid? Do we bring people back to work? It is a complicated question. I will say, for our new investments.

00;11;37;14 - 00;12;07;16

Andy Liu

We're very intentional in the sense that, again, like I mentioned before, we think it's very hard to build a business. Number one. And then number two is the team that's putting together the early parts of building a business. If they are remote, it just adds another layer of complexity. It can be done. And there's been plenty of examples of remote startup teams being very successful, but we just think it's adding another layer of complexity that makes it more difficult to be successful early on.

00;12;07;16 - 00;12;29;02

Matt Watson

You know, we worked with you at buddy TV just before the acquisition with Vizio. Throughout all the businesses that you started, a very intentional focus on cultural identity within your team structure. That's not to say you didn't have outsource services at one point or another. You personally saw to it that there was a cultural fit for your organization.

00;12;29;05 - 00;12;51;24

Andy Liu

Absolutely. I think culture is much easier to build in a face to face environment. There's just a lot more serendipity that can happen when you're working together in the same environment. I would also argue it's easier to make decisions in a face to face environment. It's just too easy on zoom to say, hey, you know what, let's take this offline and come back to it.

00;12;51;24 - 00;13;13;15

Andy Liu

And sometimes you just don't come back to it. Whereas in a face to face situation, we just say, we'll take it offline, we'll just go grab a coffee and boom, you know, we can actually make a decision and move on. And so there's just a lot of benefit to being in person. So I think we're unlikely and not to say never unlikely to do an very early stage startup for their entirely remote.

00;13;13;16 - 00;13;35;17

Matt Watson

Yeah. Yeah. I remember early in my career I was fortunate enough to work at a smaller company where I became pretty good friends with the owner. He was a young president, and I'd go out to lunch with them 2 or 3 times a week and just listen, you know, to them challenges and objections and the things he was overcoming and what he was trying to manage and control and what it was out of his control.

00;13;35;17 - 00;13;52;24

Matt Watson

And I learned really quick so much about the business just by those lunch it that really. Yeah, yeah. That process and I know you your entrepreneurship probably started coming out of the AT&T experience as a kid knowing kind of very early on, do you want to work for the man or do you want to be the man, you know, kind of thing?

00;13;52;24 - 00;14;03;10

Matt Watson

And then those people in your networking community, I know you're very deeply involved still in EO and y yo, is that right? Yes. And we both know the people we've met in those orgs are just.

00;14;03;10 - 00;14;03;24

Andy Liu

Yes.

00;14;03;24 - 00;14;04;07

Matt Watson

Off the Hook.

00;14;04;07 - 00;14;18;28

Andy Liu

Absolutely. And again, I would say the best opportunities to learn, even in those environments are in person, as you know. And yeah, four or more events and so forth. It's just not as personable when you're entirely online.

00;14;19;02 - 00;14;32;01

Matt Watson

Well, let's talk a little bit about you, Mr. Lu. Now, you've been on this track for, what, four years? Five years now. You live part time in Taiwan and part time in the US?

00;14;32;05 - 00;14;33;02

Andy Liu

Yes. That's right.

00;14;33;05 - 00;14;34;12

Matt Watson

Tell us about your schedule. How does it work?

00;14;34;12 - 00;14;55;15

Andy Liu

During the pandemic, it gave us an opportunity to kind of reevaluate some of the decisions we've made in the past in terms of having to be located in Seattle. We decided to make the move for a year to Taiwan. It turned out to be a really good place for our family. And then also opened up a lot of doors on the business side as well.

00;14;55;16 - 00;15;14;08

Andy Liu

And so we since just kind of said, hey, let's do another year and another year, and it's now four years in and I have a place in Taiwan and Seattle figured out, like summers in Seattle and a week, a month in Seattle. It's a long commute, but it's turned out to be a really beneficial piece, both for our family and for business.

00;15;14;10 - 00;15;16;11

Matt Watson

Now you have two sons. How old are your sons?

00;15;16;15 - 00;15;17;12

Andy Liu

Nine and seven.

00;15;17;12 - 00;15;19;24

Matt Watson

And they're both going to school full time in Taiwan.

00;15;19;24 - 00;15;21;02

Andy Liu

They are, yes.

00;15;21;04 - 00;15;27;00

Matt Watson

The rigorous education. And tell us a little bit about kind of what their day is like and the routine.

00;15;27;03 - 00;15;49;28

Andy Liu

Yeah, it was fascinating. You know, I grew up in the States, and I remember fondly the education I had in elementary school in the US, and it was a very lively lifestyle. You go to school and then you get to play at home and have dinner and run around and so forth. It's a very different experience, both culturally and kind of focus on academics out in Taiwan.

00;15;49;28 - 00;16;02;20

Andy Liu

I would say the overall atmosphere, you have homework, you've got tests, you've got midterms, finals, even in first grade. And so it is a very, very different environment. 

00;16;02;20 - 00;16;06;25

Matt Watson

But what what's it like to the kids? Are they freaking out? Are they like, you're just.

00;16;06;28 - 00;16;24;03

Andy Liu

Well, you know, it's a good question. They actually started when they're two and four. And so, so really they've kind of just grown up. And so this is kind of the normal state of affairs, but very, very different kind of viewpoint. And it's been very enlightening to kind of observe how that actually impacts society too.

00;16;24;03 - 00;16;42;15

Matt Watson

And so in Taiwan and 3.3% unemployment, youth unemployment however, is 11.42%. So it's much higher. And it's even worse in China, where it's 21.3% unemployment for youth in China. And the other thing that you're seeing in Chinese, what they call lying flat. Have you heard about that phenomenon?

00;16;42;16 - 00;16;43;08

Andy Liu

No. Tell me more.

00;16;43;08 - 00;16;49;11

Matt Watson

So they have a, you know, kind of a philosophy is 996, so nine to nine. 

00;16;49;11 - 00;16;49;27

Andy Liu

Yes, I do know that one.

00;16;50;00 - 00;17;09;16

Matt Watson

Yeah. You're educational system is 7 to 7, right? Your kids are going to school. You're dropping them off at seven and picking them up at seven. And they still have some some homework to do. Right. Yeah. So I agree nine six culture is become a burnout. And Gen Z and the tail end of millennials are starting to reject it and they can't get ahead.

00;17;09;17 - 00;17;33;05

Matt Watson

There's people who are committing suicide. People who are working to, you know, basically having death related experiences at work. They're working so hard. You know, this nijon nijon, life is a zero sum game philosophy is being rejected, and the young people have given up and are choosing not to try to succeed the same way they were raised to succeed.

00;17;33;07 - 00;17;48;05

Matt Watson

Yeah. Have you noticed anything like this in Taiwan in terms of the rigorous work schedule, the nine, nine, six philosophy and all that? Or is it a little more laid back? I know you in Taiwan. They have incredible manufacturing, right? Yeah.

00;17;48;08 - 00;18;11;20

Andy Liu

Yeah. You know, I actually met I think it's a worldwide phenomenon, which is, few trends. One is it is extremely hard to hire blue collar workers no matter where you're at. So even in Taiwan, to find restaurant workers, to find hotel workers, to find folks that work in manufacturing, it's not easy. And so so wages have had to go up and it's the same thing in the US as well.

00;18;11;20 - 00;18;33;28

Andy Liu

Right now, it's labor costs continue to go up because it's a very constrained supply. And I'm actually curious why is that the case. And it seems like there's some the larger trends out work, which I think it's very interesting for you too, is more people want to control their schedules. And so this notion of the gig economy is becoming very, very standard.

00;18;33;28 - 00;18;51;27

Andy Liu

Folks would rather lower their standard of living and say, hey, I don't need that big house. I don't need that Porsche. But if I don't have to go in and have to have a boss and I can just drive an Uber, or I can do food delivery, or I can set my own hours and be an influencer, I'd rather do that.

00;18;51;28 - 00;19;15;17

Andy Liu

Now. That's putting a lot of strain in terms of the opportunities for employers to find that 996 or even 9 to 5 is really hard to find. So I would say one is kind of a shift in mentality. I no longer need to work for one boss 9 to 5 every day. I want to control my life and I can actually also control the spend too, which has been really interesting.

00;19;15;17 - 00;19;25;09

Matt Watson

Yeah, they say in Taiwan there is a huge skill mismatch. They have 82% of the young people in their country, 82% have bachelor's degrees.

00;19;25;11 - 00;19;26;09

Andy Liu

82%.

00;19;26;11 - 00;19;32;00

Matt Watson

It's a major they're challenged with over education. There's not enough positions available for their skill sets.

00;19;32;00 - 00;19;33;21

Andy Liu

Yeah, yeah. Same in China too.

00;19;33;25 - 00;19;52;19

Matt Watson

Right. And China is having the same problem. So that combined is created a really interesting phenomenon I think in the US my children you know I've got to college really highly educated kids. And then I've got one my son who opted out can use a Porsche tech. He's one of 2000 in the world. And he love, love it like you are.

00;19;52;20 - 00;20;11;00

Matt Watson

Yeah. A master tech at Porsches. You know, 150 K a year, 175 K. Yeah, yeah. I mean, he's got a couple years to go and he's theoretically going to be there. So it's really an interesting phenomena with our youth. And then your next generation I don't know what they call the generation your kids are.

00;20;11;03 - 00;20;13;14

Andy Liu

I actually don't know the name, but that's right.

00;20;13;16 - 00;20;28;23

Matt Watson

So just wrapping up a little bit, just talking geopolitics for a minute. You and I talked briefly about that. What do you think and how do you feel. What's the cultural sense of China and what's kind of that threat level you like from China.

00;20;28;23 - 00;20;50;19

Andy Liu

Yeah. You know, it's fascinating. I think one part of the narrative around China and Taiwan really depends on where you live. You know, you live in the US, it really seems front and center. That's what takes the headlines. An economist says, you know, Taiwan is the most dangerous place in the world. If you live in Taiwan, you realize, like it's like, hey, just been going on for 70 years.

00;20;50;19 - 00;21;16;21

Andy Liu

We don't think there's anything imminent. We're all Chinese ethnically. It's a tale of two narratives, one that's inside and one that's outside. Right. I think the shared viewpoint, which is both China and Taiwan, is that there would not be any bloodshed, that there would be some, you know, peaceful resolution. But I think everybody is still, you know, given kind of how the world is still unpredictable.

00;21;16;21 - 00;21;22;09

Andy Liu

I think everyone is still a little bit on edge around the world, but definitely the inside. The feeling has been very different.

00;21;22;09 - 00;21;30;24

Matt Watson

Do you and your wife talk about I mean, you both are extremely analytical. Your wife was an actuarial. I mean.

00;21;30;27 - 00;21;32;21

Andy Liu

Yeah, yeah, yeah. That's right. I mean, yeah.

00;21;32;23 - 00;21;42;19

Matt Watson

She must be a great match for you because I know you're constantly calculating and figuring out, you know, you're a learner, you're you're always absorbing. And you guys have that dialog at all.

00;21;42;21 - 00;22;04;06

Andy Liu

Yeah, definitely in the back of our head, you know, and being thoughtful about, hey, what are the options and what would we do. And so we we have thought through some of those scenarios and hopefully we don't have to encounter those. Yes. But. Right. But definitely even though the percentage chance of something really bad happening in the US is still low, it's still in the back of your head.

00;22;04;06 - 00;22;10;20

Andy Liu

Whereas here there's no kind of cognitive load that I got to think through those things you just have to worry about.

00;22;10;21 - 00;22;18;29

Matt Watson

I mean, I love to come and visit. I know you've had folks for sure at the farm and all that and one of these days, but dude, thank you for coming on. 

00;22;18;29 - 00;22;19;29

Andy Liu

Yeah.

00;22;20;01 - 00;22;40;11

Matt Watson

I appreciate it. Insights and sharing. I know this is a really a podcast around managing and trying to deal with the rate of change, and it sounds like you have a pretty solid kind of grasp, understanding that you don't really control a whole lot, but you do know when you see it. That's right. 

00;22;40;14 - 00;22;41;12

Matt Watson

The right investments to make in people and companies. Thanks for sharing that.

00;22;41;12 - 00;22;44;13

Andy Liu

It's been a really fun conversation. I really appreciate it.

00;22;44;15 - 00;22;55;23

Matt Watson

Thank you for tuning in to Transcending Workspace. If you'd like to hear more, please subscribe to our channel. Visit apexfacility.com for more information about how we can help you build an adaptive workspace.