Matt Mcllwain, Madrona Venture Group Managing Director [Forbes Midas List]

What a great treat it was to interview Matt. He's a good friend of Chris Scully (COO of a company I started in 2007, Killer Shark Marketing). In this episode you will hear Matt discuss how Madrona was an "Early investor into Amazon and many other great companies we all know and love." A fun fact about this episode, Matt broke a rib the day before while skiing and didn't want to cancel the interview! So, you will be hearing Matt speak with a freshly broken rib which to me speaks wonders about how he operates personally and professionally. Thanks, Matt for taking the time to come on the Interesting Humans Podcast. You certainly deserve a seat on the show! Here's Matts formal bio:

Matt graduated from Dartmouth College and holds an MBA from Harvard Business School and a master’s in public policy from Harvard’s Kennedy School of Government. He has been on the Forbes Midas list and Top 100 Venture Capitalists by CB Insights and The New York Times several times. In 2024, Business Insider named him to The AI Power List, which features the most powerful people in artificial intelligence. In 2017, Matt was named Emerging Company Director of the Year by the Puget Sound Business Journal in partnership with the prestigious National Association of Corporate Directors Northwest Chapter. In 2011, he received the Washington Policy Center’s Champion of Freedom Award.

Transcript

SPEAKER_00: 0:00

What I'm listening for is how passionate are they about the problem they're trying to solve? Then you're listening to see, do they understand why now? Why now can this problem be solved better than it's ever been solved before? And then the third thing is, what's the solution they have? Why this? How can they solve this problem? What's their vision? By the way, that's usually the thing that's least perfectly formed when we invest and then the most important question is why us why is this founding team the best team in the world to go solve that problem with these ideas you know in this way better than anybody else in the world i think the thing that i i i find maybe as a singular word that you really want to look for in an entrepreneur is it's curiosity. If you're genuinely curious, you're admitting, I don't know something. You know, again, you got to be sincere about it. You got to be genuinely listening. I thought the customer wanted X and they actually want Y.

SPEAKER_02: 1:06

Folks, welcome to another episode of Interesting Humans. And I've got a real treat for you today. I have Matt McElwain, Forbes Midas list, which is just so interesting. I'm going to have Matt unpack that shortly. But he's a managing partner at Madrona Capital. They were an early investor into a company you may have heard of, Amazon. Obviously joking, but he'll unpack that as the show goes on. And what I think is just so interesting about Matt, it's the combination of the business success with something very important. He makes time for family. And I think when you put those two together, it's remarkable because this isn't a business show about business success, et cetera. It's a show of interesting people. And Matt's story today, as he's going to unpack, is just that. So Matt, before we get started, first off, I do want to say thank you for joining us here in the show. Appreciate you.

SPEAKER_00: 2:06

No, it's my pleasure. Really delighted to be with you and excited to have this conversation.

SPEAKER_02: 2:11

Great. And it's going to help so many people, which is just the most important part, is the legacy. So thank you from the bottom of my heart because this is a passion project for me. So I appreciate you being part of it. Why don't you start off? Tell us, what is this Forbes Midas list thing about?

UNKNOWN: 2:27

Wow.

SPEAKER_00: 2:27

Well, you know, I mean, it's a, it's kind of funny how some of these things like the Forbes Midas list become, you know, things that you get known for, but you know, maybe are, um, you know, maybe over overly important to some. You know, it's very nice recognition. This is a list that Forbes have been putting out for, I think, over 20 years now, where they rank the or they select the, you know, the folks they view as sort of the top hundred, you know, folks in the investment venture capital world, really specifically venture capitalists. They kind of exclude, you know, angel investors and other kinds of strategic investors. And it's, It's individual focus, which I don't totally love because Madrona, our venture firm has very much had a team effort, a team culture, kind of a team incentive system. But, you know, when you are the lead investor and you're on the board of a company, you get sort of disproportionate credit for the success of that business. And so they look at all these different venture investors and they say, well, who's been having, you know, you know, in the companies that they've invested in and been on the board of, you know, the most success. And, you know, you end up, you know, you can end up on that list over time.

SPEAKER_02: 3:38

I can't wait to unpack that. We're going to hold off a little bit, but I cannot wait to come back to that. It's awesome. What I want to kick it off with is young Matt. I want to learn all about you. So tell us. Start off. What do you remember from your childhood, memories, etc.?

SPEAKER_00: 3:57

Well, maybe start with my parents. My dad passed away a handful of years ago. My mom's still alive. But the cool story about them is they met in the U.S. Army. My mom was a kid from Nebraska. She wanted to get out of Nebraska as quick as she could. And so when she graduated from high school, she joined the U.S. Army, you know. And my dad had grown up in upstate New York, a place called Utica. And I think back in that day, you know, kind of guys were joining the Army a lot. And so they met, actually met at Fort Knox, Kentucky, and got married. My dad, my mom never went to college. My dad was the first in his family to go to college. And he got a job with General Electric. So I was born in Utica, New York, upstate New York. And a lot of fun family memories are going back there in the summer times. But when I was five, we moved to Singapore. GE moved my dad and his job to Singapore. And that was really awesome for all kinds of reasons. It was beautiful weather, a lot nicer than upstate New York. And I also learned to play soccer, which became the sport that I've been most passionate about all my life there. And then we eventually came back to the States one short year in Illinois and then into Miami, Florida. And so I went to junior high school, senior high school in Miami, Florida. And of course, there I learned a whole different style of soccer. Most of the kids in Singapore were Dutch and British. And most of my buddies that were playing soccer in Miami came from a lot of different backgrounds, mostly South and Central America. So that's a little bit of an overview of where I live, kind of taking you all the way up through high school. And I went to... big public high school in Miami and played soccer, played football, uh, you know, loved the, the, the friends and the experiences there. It was a great place to be a kid and growing up. And, uh, I'll, I'll stop there if we want to dig any deeper.

SPEAKER_02: 5:48

Oh, absolutely. Uh, so books, any, were you a reader? What were you interested in? You said sports.

SPEAKER_00: 5:56

Yeah. Yeah. I, I, I, did like a few things. I was kind of a, I always loved the business world. And so rather than, you know, sort of books per se in that world, I, you know, got involved with a lot of different things. There was actually something called Junior Achievement, if you remember that. And I was a big... Pretty big fan of Junior Achievement and got involved with that and was always thinking up different business ideas and making dollars, kind of running my own little lawn mowing business and reffing soccer games and things like that. So that was one dimension. I'd say another dimension was, for whatever reason, I always loved kind of political philosophy. I know that sounds a little highbrow and stuff, but I was super intrigued. Really, I think that starts with human nature and understanding how humans work and think and act, and then why we choose to give up our rights to this thing called government. And then what's the role of government and what are the different thinkers and how they've thought about that over time. So even in high school, I took a class that was basically reading the great books, right? The Aristotle's and Plato's and John Locke's and people that over history tried to make sense of the relationship between humankind and government and political philosophy. So that's something I... I still love to this day, honestly. The third thing is, is, you know, I, at a pretty early age really found that my personal faith was an important part of who I was. And, um, and so, you know, went to, you know, church growing up, but then made a personal commitment to that. And that, well, I've been, you know, just like all of us, right. Had been far from perfect in my life's journey. That, that faith journey has been also a really important dimension to me, fortunately from an early age. uh stage and there's been a number of things over the years different different groups and and and friends that we've done different kinds of uh you know you know starting you know bible studies and fellowship groups over the years and all the different places i traveled post high school sure so that's another key part

SPEAKER_02: 8:02

okay so focusing on the time from let's just say five five six years old to Not to college yet. So let's stop before college because that's its own story. And I'm excited for that to get into that. Did you have any mentors at all through different phases? Anybody you walked with?

SPEAKER_00: 8:22

Yeah. So there was a guy that his name is Mike Kanjan. And he was my fifth grade Sunday school teacher. And he was probably 18 or 19 at the time. I was 10. And but I've thought, wow, this guy is both so much older than me, but but so cool. And and and he had some really neat things to say about this faith journey. And so, you know, he became a mentor. He, I think, then went off to college and he came back when I was in middle school, at least one summer. And, you know, was also our kind of our summer youth pastor there. And then we stayed in well enough touch that actually many years later, when I was 30 and got married, he actually was the minister who married my wife and I many, many years later. So he really had that influence over a lot of years. And we've still stayed in touch with each other. And so he's probably amongst the most... I would say the other one is I had a lot of sports coaches over the years that were... influential in different ways. I had a soccer coach named Dennis Hackett in high school. And he was, you know, picture, I mean, this is, you know, kind of, you know, late 70s, early 80s. And here's a guy that served in the Vietnam War. He'd been through a lot of hard things in life. And he really, I think, had been like a football coach that they said, hey, can you be the soccer coach for us? And he, you know, that had happened a few years before me. And he'd learned to be a He was just a great coach. He could have probably been coaching basketball or swimming, and he would have been great at it too. He just was that kind of a person. He just happened to be the soccer coach. And our senior year, we won the state championship in soccer in Florida. It was pretty competitive soccer. But there was something about him. And then further on, my college soccer coach, that's another story, of just kind of seeing how coaches like that have a positive influence in your life. You know, even a guy like that who had sort of a tough exterior, but you could tell that his heart was really into the players and our growth and our personal development, as well as our ability to work together as a team.

SPEAKER_02: 10:39

That's remarkable. What particular comes to mind? Like, put on the side, just like you said, his ability to help you grow in a sport. What did he pour into? I'm guessing he poured into you, you feel? Yeah. Helped you develop as a person? What

SPEAKER_00: 10:54

did he do? In Coach Hackett's case, I was probably one of the kids that loved academics the most on the team, and I did have a lot of passion about that. But I think he helped me realize that sometimes you can't overthink things. And to the extent that you're overthinking things, you're just not being your best. best natural self out on the field. Um, and, and that was absolutely the case. And I, I was almost over complicating things, um, it, you know, because practice was there so that you were prepared and understood the system and understood what we should be doing so that when you were just out there on the field, you could just like almost instinctively play the game. Um, and, and so he really helped me go from overthinking things to just, you know, kind of being out there and playing naturally.

SPEAKER_02: 11:49

Sure. Any, any particular mantras, encouragement, anything from your parents that you remember here? And is it, whether it was a child or all the way up into high school?

SPEAKER_00: 11:59

Yeah, no, that's, that's a good one. Um, you know, my dad was more, um, kind of understated, quiet person and his way of showing that he loved you is by doing stuff. And so he was very, um, genuine about the things that he would do for you. Um, you know, whether that was, he would always make, you know, brunch for us after church, we'd come home and I would make cheese omelets, you know, and, you know, and, and, you know, that was the thing. And, and you knew that was how part of how dad, He also loved golf. And I was really the only of the three boys. I was the middle of three boys. And I was the only one that really loved golf, too. And so that was a great thing that we would go do together. But it was more about doing it together than necessarily a lot of deep conversations. The only thing I remember about my dad is that he was really great when there was a crisis, you know, different levels of crises. Right. I had some, you know, my brother and I. who was only a year older than me, shared a car in high school and somehow I got it stuck in a ditch one night, like 1130 at night. And, you know, sure enough, my, you know, there was no cell phones then too. So you had to go into somebody's house and see if you could use the phone and call your parents and all their stuff. And, you know, no fuss, no muss. My dad just like, back to that doing, he came down, helped me get it out. Everything was okay, you know, and I had to get it repaired. I probably had to pitch in a little bit for the repair. Um, and then my mom was more the kind of, and still is kind of an energizer bunny. You know, she was just, you know, she was so engaged in our lives and making sure we were prepared for things and, you know, always there to be our champion. Um, you know, uh, you know, just in a lot of different ways. Um, I remember one time when I, we, we won the soccer game and, uh, it, it, this guy from the other team, when we kind of had done a good job, we'd beat him pretty sick. pretty handily, but he was not happy. He actually came up and popped me in the face and my mom went running out of the field, you know, happily some of my, some of my players took care of that, but, uh, but mom was out there on the field too, making sure this guy wasn't going to get away with that.

SPEAKER_02: 14:15

That's incredible. So in this same timeframe, did it ever pop in your mind what you wanted to do in life?

SPEAKER_00: 14:25

Well, you know, I, I did really love the, um, the entrepreneurship elements, you know, kind of going all the way back to the kind of, you know, business and company building. But I did also love this, you know, if you go from political philosophy and eventually to public policy. And so that's actually been more of a tension in my life over the years between more in the, you know, private sector versus the public sector. I've leaned a lot more to the private sector, by the way, but there's been a few steps in the journey. In college, I was a government major and an economics minor. When I went to grad school, I did both a degree in business and a degree in public policy. But most of my professional career, really all of my professional career has been primarily in the private sector.

SPEAKER_02: 15:14

Okay. Then when did you know what school you wanted to go to? What college? Or did you sort of throw your resume out everywhere, your application? Or did you know exactly where you were going?

UNKNOWN: 15:24

Yeah.

SPEAKER_00: 15:25

You know, it was funny. I was completely naive on this stuff. And back in that day, I think there was a lot less sophistication in the world of applying to colleges and certainly what I experienced with our kids. And then secondarily, You know, I mean, I was a good soccer player, but I wasn't the best player on the team. And, you know, a lot of these schools didn't recruit down in South Florida all that much. They should have been recruiting more in that era, but they weren't. You know, I mean, some of the regional teams did, but not as much in the Northeast at that time. And so and candidly, I was probably I probably was better known as the kicker on the football team. And so I had a lot more people wanting me to try to be the kicker in their college football teams, but I love soccer. Um, so, but I didn't really get recruited at all and I had these good grades and stuff. So I applied to a handful of schools. Honestly, I thought that, you know, Princeton was the place that, um, yeah, that I thought was the best fit. Um, cause I wasn't so sure about like going up to college in the wintry, you know, new England. Um, but, uh, But I remember going to this event that some Dartmouth alum hosted in Miami, just a general kind of event about, you know, the college. And they literally remember those old little carousels of slides. They showed like the carousel of slides. It was just like beautiful place. And they served us like cider and donuts. Like, this is kind of cool. It's not Miami, but anyway. And so I just, I'm going to apply to this place. And, you know, very fortunate to get in. And so, but I only applied to a few places and it was probably silly in retrospect because I easily could have not gotten into any of them.

SPEAKER_01: 17:09

Right.

SPEAKER_00: 17:10

I didn't get into Princeton as an example, but I did end up going to, did end up going to Dartmouth.

SPEAKER_02: 17:17

Where else did you apply? Just curious.

SPEAKER_00: 17:20

You're going to be like, you are just crazy. The only other two places I applied was Duke and Harvard and got into Duke and got waitlisted at Harvard. So. Interesting. Went to Dartmouth.

SPEAKER_02: 17:29

which Harvard Harvard's down the road though for you, but you didn't know, you didn't know that was about to

SPEAKER_01: 17:35

happen. Right. Which is interesting.

SPEAKER_02: 17:38

Okay. So, so off to, off to Dartmouth, you go to what's day one like there. Uh,

SPEAKER_00: 17:44

well, um, Dartmouth's got this cool thing called, uh, first year trips. He's gone freshman trips. So you go and, uh, um, you meet, uh, you know, a bunch of students and you go on a hiking trip or a biking trip or whatever. And I did this hiking trip. And so, you know, I remember my mom took me and I was ready to kind of do my thing. And so she was there for a day and left. And, and I met this guy named Randy Jacobus, uh, and he was from New Jersey and we were just talking, it was sort of fun. Cause he was just like, I remember meeting Randy and realizing this, this guy's going to be a friend for life. You know, I can just, yeah. Um, and, and, and then another guy named Ross Jones that I met short, later after. And Ross and I played soccer together, which was fun. And so it just really felt like there was just a bunch of interesting people from different places in the world in this, you know, this was like August, you know, late August, beautiful place, beautiful time of year in New England. And then, of course, there was soccer. And so trying to make the soccer team. And so they had that whole dimension and all the folks that, you know, you got to know through that. So it was kind of fortunate, even though I was this you know, public high school kid from Miami who, um, you know, didn't know a lot about a lot of things. Uh, I found, I was able to find, you know, some, some good friends really, really early on. Oh, that's awesome.

SPEAKER_02: 19:01

So you're okay. You're in college now. Let's stop. Let's pause there. Let's look backwards in life. Anything pivotal that's, that stands out? Were you heading in a direction that And somebody grabbed you by the collar and brought you back. Anything pivotal at all up until college?

SPEAKER_00: 19:22

Yeah, I think that in the up until college era. You mentioned faith. Yeah, I mean, I think that decision to say I'm going to I'm going to. make a lifelong commitment to this guy named Jesus that did some amazing things for us and say that that's going to be a core anchor of my identity and what I want to try to do in life. Absolutely. That's a key thing. And, you know, I think a lot of people have, you know, really great faith backgrounds and different perspectives on faith. And I have a lot of respect and certainly, you know, out here in the West Coast area, You know, venture world, you've got great people with different perspectives. And I think I've had an opportunity to, you know, well, you build personal relations with people. You can you know, you can have a conversation about your perspective and their perspective. So that's been something that's been really important throughout throughout my life. You know, I think probably just the actual getting into one of those kinds of colleges right from where my background was. Sure. You know, I think that in and of itself was a sort of step function in terms of the opportunities it created, the doors that it opened, the relationships that, you know, I got some exposure to. And I think those are pretty key. kind of steps along the journey there.

SPEAKER_02: 20:45

Sure. And then what did you decide to study in school? Was it obvious from day one?

SPEAKER_00: 20:49

That's a great story, actually. I love that question. I started out as an engineering major. Now you're sitting there going, wait, you just told us all about business. And my dad, you know, this was one of the few times he did put his finger on the scale a little bit and said, you know, you know, I wish I, you know, I wish I had gotten an engineering degree. You should really think long and hard about that. And so I tried that for the first two years. And, you know, my second sophomore season, And soccer wasn't very good. It was a tough, tough time. My mom's mom passed away that fall. And I was a little bit burnt out. Happily, you know, Dartmouth was on quarters and all the Dartmouth students, you know, that were sophomores all were on together for the sophomore summer, which meant you could take another quarter off. And so I took my sophomore winter off because I was a little burned out. It's cold up there in Hanover in the wintertime.

SPEAKER_01: 21:47

And

SPEAKER_00: 21:48

I work as a waiter at the Breakers Resort in Palm Beach, Florida. And that was awesome. And then in the spring term, I was studying in Spain. So I was basically away from campus for six months. And studying in Spain was not the hardest thing I did in college. But I came back and I took this class. from this legendary professor. You can talk about mentors and people that helped change trajectory. His name was Vincent Starzinger, and he was the head of, in the government department, sort of the political philosophy kind of area. And he had an introduction to political philosophy class that he happened to teach that summer. And I took it and loved it, did really well in it. And I remember writing this letter home. Yeah. You know, the old fashioned writing this letter home. Dear dad and mom, I've decided to change my major to government. And here is why. And I hope you understand, you know, and all of this stuff. And I think that especially my dad thought I was crazy and making a big mistake. But it was I think, you know, a lot of people ask all the time about college experiences. And I really do believe it's about, you know, learning how to critically think and be able to communicate how you critically are thinking through things and listening and learning from others and doing that within areas, domains that you are passionate about. And it almost doesn't matter what that domain is, except for the fact that you better be passionate about it.

SPEAKER_02: 23:16

That's it. Right. Did you, did you finish college playing soccer?

SPEAKER_00: 23:21

I did finish playing soccer. Um, and actually our junior year, they, uh, the coach retired and a new coach was hired and, And his name is Bobby Clark. And he is still to this day, he's kind of a legendary soccer coach in particular in college soccer in the United States. He went on from Dartmouth eventually well after my time to coach Stanford and then Notre Dame, eventually won the national championship when he was the coach at Notre Dame. But what was really neat about the experience, we were kind of a turnaround story at Dartmouth and he was the coach that turned that program around from a, okay team to uh really a national power again well after my time we were the early days of the turnaround but he was the thing i learned from bobby and he was a scottish guy who had been the goalie for the scottish national team come to play in the old nasl soccer in america and um he uh he really there was a role on the club for everybody and you might not love the role that you had as much as the role you thought you deserved but he made it a community thing and so and i got injured pretty bad and didn't get to play as much as i wanted and some different things but he kind of embraced me and so many others of you know there's at least a role for you on this club on this team um if you want that to be that you're willing to put in the work and you're willing to make a difference and he had just some great expressions that, you know, I still remember to this day, you know, like when you ran a bad drill, you know, he would say, Achlads, would you do the same thing, only different? Which basically was like, you didn't do that. You didn't do that very well, but, you know, try it again. You can do it a little different. It's going to be a little better. I believe in you. And so he built this sort of real community club approach to the program. And, you know, not only has he been incredibly successful in, You know, one of his sons has this incredible nonprofit that a bunch of us have helped out with over the years. And there's a whole lineage of people from that Dartmouth soccer era that's very, very special. You know, the other thing I would say about that is I think that's, you know, you know, one of those, you know, you try to share with your kids that they're going to be amazed and surprised over life who kind of shows back up. And, you know, and so treating everybody with respect just because you should do that, but also because, you know, you just you're going to be surprised and hopefully delighted and amazed at how these different folks, they're just not sort of a short chapter of your life. They often come back in and different and surprising and wonderful ways. Sure. I hear that. Yeah. Yeah.

SPEAKER_02: 26:15

I hear an interesting theme. So. The characteristics of this coach that you're explaining are similar to one that you've had way, way, way back. Yes. That you said was much more about just developing you as a player. Yep. Would you agree? That's right. Would

SPEAKER_00: 26:30

you agree with that? I agree. I think that the, I was very fortunate to have some really terrific coaching mentors with different dimensions to them. And then probably some, what I would call more teaching mentors, you know, in a lot of ways that Mike Kangen, who is the the youth pastor, you know, or I had a guy named Mike Mason in New York when I was first in investment banking after college who really taught me, you know, a lot about investment banking. You know, a couple of great mentors and other, you know, you know, times in my life, career wise, kind of Tom Alberg here at Madrona over the last 25 years, you know, as well on just, you know, how do you think long-term about building, building companies and could go on. But, uh, you know, Jeff Kemp is a guy that, uh, you may have heard of, uh, he, uh, his dad was Jack Kemp, who was the, um, you know, pro football, they're both pro football players. And, but Jeff and I were in a men's Christian fellowship group for many years. And he's just been a great mentor because he's, you know, five, six years ahead of me in age and, you know, um, and, you know, parenting and probably one of the friends that I've looked to most to, Hey, can you give me, you know, I'm at this stage of being a, trying to be a good dad and be a good husband. You know, what, what do you got for me?

SPEAKER_02: 27:49

Right. So you, so, okay, let's fast forward. You, you, you're walking on the stage, you're graduating Dartmouth. Did you, did you know what was next or is there a little period of time of a little holding period?

SPEAKER_00: 28:01

Yeah, no, I, uh, it's funny. I, I was, fortunate to be graduating from college when the economy was booming in the mid 80s. It was 1986, 87 was when I graduated. And so I went to work on Wall Street, you know, I went to work in investment banking. And, you know, on the one hand, it was great. In fact, the interesting thing was, I, you know, did a lot of interviews with investment banks and got a lot of opportunities there. I went and also talked to all these management consulting firms, you know, the BCGs, McKinsey's, and they were all like, you're a good guy, but you're just not right for us. And so, you know, it was important to see, like, I got some pretty clear signal, right? Like which direction to go at that point in my career. And so I went and worked on Wall Street, loved it. That was also the year of the big market crash, if you remember, the kind of Black Monday, 1987. I still remember my dad, who didn't reach out very much. He was kind of the quiet guy, calling me and saying, is everybody OK there? Is everything going to go right there up in New York? I'm like, we're doing just fine, Dad. We're going to make it through. But it was like a 25% drop in the stock market that day. It was just crazy. So that was the era that I was in investment banking for a couple of years. And then I ended up going back to grad school. And then the irony alert is that coming out of grad school, I ended up going to work for one of those management consulting firms. They all liked you. Well, I guess the grad school finishing was necessary or something.

SPEAKER_02: 29:34

Right. Where was grad school and why did you choose it?

SPEAKER_00: 29:39

Yeah. So, you know, back to this interest of both, you know, business and entrepreneurship, a growing interest starting around then, too, and some technology areas, and then government. So I went and did a joint degree at the Kennedy School of Government at Harvard and then the business school at Harvard. And so this was, you know, 89 to 92, just from a timing perspective and, you know, loved them both and had great, you know, great, you know, growth learning experiences. I was super interested in something called privatization. A lot of these big, you know, countries internationally and some in America too, were trying to get rid of government owned assets. They owned roads and airports and electrical, you know, kind of utilities and things that they didn't necessarily need to own. And so how do you, I almost went back into banking to do more of that. I actually spent a summer at the World Bank thinking about that kind of stuff, but got interested in this management consulting area and ended up in Atlanta, actually, working for McKinsey for a while.

SPEAKER_02: 30:50

Okay, and that was after... After Harvard. The joint. That

SPEAKER_00: 30:59

was after Harvard. And you get like a master's in public policy from there. And so I did those both at the same time, which meant that I could, you know, get through them without quite as much student debt. How

SPEAKER_02: 31:25

long

SPEAKER_00: 31:26

does that

SPEAKER_02: 31:26

take?

SPEAKER_00: 31:26

How many years? It was three years for those two programs. What's

SPEAKER_02: 31:30

it like? Was it more in school? Was it more in class? Was it more out and about intern kind

SPEAKER_00: 31:36

of stuff? Back then it was more in class. Back then it was more in class. I mean, you know, There were some applied things, but it was a lot of classroom. There's a lot of community events and programs. For instance, I had a professor at the Kennedy School, a guy named Stephen Breyer, who went on to be a Supreme Court justice. In fact, I think he just recently retired, if memory serves me, but a terrific Supreme Court justice. You had some really great exposure to You know, on the business school side, some of the key leaders, you know, the Jack Welches at GE and whatever that would kind of come on campus and at the Kennedy School was more, you know, folks in the public sector by and large. And, you know, you kind of remember, too, I mean, there was this was an era where people were really worried that the United States had lost its way and were advocating for more top down government policy, so-called industrial policy. That was not a philosophy that resonated with me, not to say there isn't a very important role for the federal government. And the worry was that we were losing competitiveness to know japan in particular because we couldn't make tvs as well as they could well in the meantime we had things like the internet brewing we had things like biotech brewing we had things like you know um some interesting telecommunications styles of businesses that were cooking up and so i was a little more confident that america with entrepreneurship and some of these emerging technologies was going to um carry the day but You know, that gets back to that some public policy, political philosophy stuff that I like so much.

SPEAKER_02: 33:13

Sure. So the same company that passed on you the first time. Yeah. Did you apply to them the second time or did they poach you? Did they find you? How did that all work?

SPEAKER_00: 33:22

Yeah, they there is a pretty robust corporate recruiting. And one of the nice things of doing the joint degrees is I actually had these two summers to work internships. And one, as I mentioned, was at the World Bank in D.C., And one was as a summer intern at this McKinsey. And I think that was great because they could kind of try me on, see if I knew what I was doing in that construct and, and I could do the same. And it was a really neat office. It was a pretty small office for, for McKinsey at the time. And Atlanta was this up and coming place. I mean, this was just after Atlanta got picked for the 1996 Olympics. And there was a lot of excitement and it was a much better cost of living than any of the places up in the Northeast. And my family, um, my parents had actually moved from South Florida to, um, uh, to Minnesota, but they were about to retire and move back to Florida. And I kind of knew that was likely to happen too. So, you know, being in, um, being in Atlanta was kind of a nice place to be.

SPEAKER_02: 34:20

Sure. So you go to McKinsey, what, what do you start off with? What's your role?

SPEAKER_00: 34:26

Yeah. You know, you're the whole thing about these management consulting firms is there, um, there's really a couple of skill sets you can really learn there. One is how do you take a complex problem that a client has and break it down into manageable pieces and go get data and bring it all back and work with the client to kind of figure out, okay, do we have this right? Do we have the right kind of plan to solve this problem? You know, I worked with some great companies, you know, UPS, you know, was a client that actually one of my favorite ones. And, you know, they had a problem where they were really the best in the business, but somebody else was sort of kind of taking them on within the very large customers. And so they had to come up with a whole strategy to serve their large customers better. And a lot of the answer was deploying technology in different ways. And so we really helped them think about that and shape, like, how can you use shipping systems and tracking systems and other kinds of next generation customer service tailored to your most important customers, your biggest ones. And so there was really cool projects like that. And then over time, you kind of move from doing a piece of that work to kind of being the quarterback, integrating that work, you know, across both the client teams and the internal McKinsey teams. It's, it's a, it's a great learning experience. I went from there to go work for a big operating company. And this is kind of a funny story because people ask me all the time, like, well, where did you, how did you get into venture capital? And I like to say, well, I like to say, well, I was selling auto parts. And, and the story there is I had, I had another company, terrific mentor, a guy named Doug Ellis, who was kind of a business mentor in Atlanta. And he introduced me to the senior execs at this holding company called Genuine Parts Co. And they had Napa Auto Parts was their biggest business. And they had other office products, industrial products. So I ended up going to work with them. This was right around the time the internet's becoming a thing, you A lot of the job I ended up doing there was helping think through, how do we embrace these new technologies? How do we think about new business models? Who are our new partners? Who are our new customers? A lot of those turned out to be folks that were backed by these people called venture capitalists, and they were startups. That were the companies that we were talking to. Then Madrona, the venture capital firm that I've been a partner with now for 25 years, was an early investor, as you mentioned, in Amazon. And so we looked actually at one point at doing a joint venture between Amazon and Napa Auto Parts and Madrona in the late 90s. It would have been an absolute disaster. I mean, this was way too early. Oh, my gosh. It could have worked at some point in time, but probably 10 years later. Right. Long story short, we didn't do that. But then after Madrona raised its first real big fund at the end of 99, they called up and said, hey, how about coming out, moving from Atlanta with your four-year-old and your one-year-old and your amazing wife and coming to Seattle? And that's how we got out to Seattle almost 25 years ago.

SPEAKER_02: 37:36

Wow. Okay, so they found you. Did you have a contact inside of Madrona that you worked with in the past? Or how did they hear about you, I guess, or how did they know you?

SPEAKER_00: 37:45

Yeah, no, we had so we had worked together on that potential joint venture that I mentioned that would have been between, you know, Amazon and Napa. I'd also worked with them on another company that that they had backed that was partnering with one of our businesses. And so I had gotten to know them actually pretty well by this point. And, you know. Again, at Madrona, there's just been some incredible mentors, actually. Jerry Grinstein, who actually ran Delta Airlines for a while in Atlanta, but he was one of the founders of our firm. This guy, Tom Allberg, who helped build a company called McCaw Cellular that became AT&T Wireless. So these were folks that were really accomplished business execs. And Tom had joined the board of Amazon by that point. And so, you know, had a kind of a front row seat to what Jeff and the team was doing there. And so I've learned a lot from them over the years on company building and investing and taking a long-term perspective. I think one of the things that we've been able to do well is get involved really, really early when it's, you know, two people and a dog. That's about it, you know, and an idea. And then having those conversations You know, sometimes they just don't work out at all. Right. You know, you lose all your capital and you spend a bunch of time and you wish things went better. And sometimes they're successful. Sometimes they're, you know, companies like, you know, Snowflake or Smartsheet or Appdio, which are names that people may or may not be familiar with, but ones that we've helped build over time.

SPEAKER_02: 39:20

Now, what's what's your philosophy getting involved with a company?

SPEAKER_00: 39:25

Yeah. So I would say our philosophy is something that you could call founder market fit. And so when a founder or founding team, it's usually a team, comes in the door, what I'm listening for is how passionate are they about the problem they're trying to solve? And it's a problem they've often experienced themselves. It's a problem that's really frustrating to them. It's a problem that they believe there's a better solution.

SPEAKER_03: 39:55

Then

SPEAKER_00: 39:56

you're listening to see, do they understand why now? Why now can this problem be solved better than it's ever been solved before? And the why nows can be societal. The why nows can be technological. The why nows can be some kind of major events. I know COVID, right? COVID led to a bunch of things that people wouldn't have been willing to try or adopt at scale five years ago, but now have. And so what's the why now story here? And then the third thing is, is like, what's the solution they have? Why this? How can they solve this problem? What's their vision? By the way, that's usually the thing that's least perfectly formed when we invest. But you're then looking at that triangle of problems, or why, you know, why does this exist? Why now? Why this? And then the most important question, which is where the founder part of Founder Market Bit comes in, is why us? Why is this founding team, you know, the best team in the world to go solve that problem with these ideas, you know, in this way, better than anybody else in the world? And so it's a little bit of a, you know, framework, if you want to call it that, and a philosophy of what we're looking for in high potential founders that could fit a certain market opportunity.

SPEAKER_02: 41:13

Sure. What in addition to capital do you guys offer?

SPEAKER_00: 41:18

Yeah. If anything. So, yeah, no, I think it's, yeah, I think that, you know, we think that capital's pretty accessible. If that's all you're offering, there's lots of places to get it. We have this long-term commitment approach. We actually have a phrase, we call it being there from day one for the long run. The long run means there's inevitably going to be ups and downs. Every company, no matter how successful it's been that I've been involved with, has had days where they had near-death experiences. how can we take our collective set of experiences and help navigate through the highs and the lows over the course of time? Then the other thing is, is, you know, you've got to be really well plugged into, you know, the technologies and the business model evolution that's mattering now that somebody is going to write about five years from now, but we're living today with our companies. And not surprisingly, one of the big hot areas is applied AI. Well, we started investing in AI recently. in 2011. So almost 15 years ago now. And we have a whole set of reasons why and how we were doing that. And then there's this access to the companies and partners that can matter. So happily for us here in Seattle, we've got a long history with Amazon. We've got actually a very strong and long history with Microsoft. And there's actually pretty big offices for Google and Facebook Meta and Apple here as well. So There's your sort of five highest, you know, kind of by market cap companies that all have either their headquarters here or big presence here. And so we can really help you navigate what they're doing and how you might be able to partner with them. And so this is kind of that rolling up your sleeves and adding value along the journey with your experience and your relationships and hopefully a little bit of know-how.

SPEAKER_02: 43:14

That's awesome. Tell me a story when it didn't work as planned and then what'd you learn from it?

SPEAKER_00: 43:21

Yeah. Well, I'll tell you maybe two stories. So one is we had this company that we backed in 2007. And back then, that's 15, 16 years ago, maybe 17 years ago now. And their whole idea was, you know, why don't you try to collaborate, you know, on just work processes, work management, you know, basic kind of team project management type of stuff. And maybe we can just do that bottoms up and people can discover us online and we'll have a simple solution for that. They had a great idea. They built a great backend. They didn't build as good a front end. And then the financial crisis came along and they were kind of on their like last dollars of capital. And, you know, we, you know, kind of had a lot of confidence that they thought that they could build a better front end. And so we, we decided to put like a little bit more capital in. with them and uh you know they started to get things a little right and little by little and you know that company today is this company smart sheet that did a billion in revenue last year and when you sit there and go think about it 2009 without another million bucks of capital they would have been done you know and so um and the cool really cool thing in that case is that the the co-founders, one is still the CEO and the other one is still on the board. So they've been able to grow and learn themselves at every step of the way into, you know, building that business for the long term. You know, but, you know, on the other side of the coin, about that same time, we had a company that was some great computer science professors and, you know, they had this whole idea. This is like before, this is just as Amazon's cloud business is starting and we backed them and, you know, they grew a fair bit in revenue, but they, they couldn't find their way into like a real breakout business. And so, you know, we, in the end are going to, you know, kind of lose money on that one, you know? And I think that just, you just learn that, you know, you know, sometimes it's a leadership that can really matter and leadership that's continuously curious and continuously growing. Sometimes it's really getting the early product market fit, right? So you go from founder market fit when you back them at beginning to, what we call product market fit, which is when your product actually solves the problem through the customer's eyes and the customer's experience, the benefits they need. So at any rate, we could spend hours more talking about a lot of different journeys. I think the thing that I find maybe as a singular word that you really want to look for in an entrepreneur is it's curiosity. And you're like, okay, You know, why is that such an important word? Well, curiosity, in my view, is an act of humility. If you're genuinely curious, you're admitting I don't know something. Wow, that's awesome. And not recognizing you don't know is humility in action. And so, you know, again, you got to be sincere about it. You got to be genuinely listening. I thought the customer wanted X and they actually want Y. And if you're good at that, Or I thought my employees wanted X, but they actually want Y. Or my partner wants, my business partner, the company I'm working together with to take this product to market. So I think having good clarity of humility and self-awareness are really, that comes in curiosity.

UNKNOWN: 46:58

Yeah.

SPEAKER_02: 46:58

That's awesome. I wish you could sit in one of our meetings when we talk about that. We have that debate at the roundtable. Maybe next time we'll FaceTime you in. It's incredible. Like, what do you think are the most important? And you hear grit and you hear passion and you hear determination. And it's incredible just how– and I teach my own kids. So I have seven, five, three, and one. So I'm starting that language with them already. Yeah. And that's the word that Chris and I have landed on is you can have all the other things, but without curiosity to know, like, why is that the way that is? What made that? How did that get here? Right? It's incredible. It's almost like its own book.

SPEAKER_00: 47:44

Yeah, that's good. One of my buddies says he calls it the trail of wise. Well, why? But no, but why? But why? Why? You're just asking this trail of wise and eventually you get to ground truth on something.

SPEAKER_02: 47:56

I love that. The trail of wise. All right. Shark tank. I'm dying. I am dying here. So it's been around a long time. Yeah, it's good for many. Is it great for many? Is it great for all? What are your thoughts there?

SPEAKER_00: 48:11

I think it's clearly successful from an entertainment perspective. It gives you a little bit of glimpses into the realities of being an entrepreneur and risk-taking. I admire the financial terms they get. They're way better than the ones we get here on the real-world West Coast of technology investing. I think it's It's a sort of superficial version of what the realities of, you know, not only the process of deciding who you're going to partner with, you know, because, you know, again, if it's just capital, that's one thing. But if there are people that are going to roll up your sleeves and add value, what's the alignment around that? And then, of course, the hard part, which is the company building journey. You know, we spend time sourcing deals. We spend time seeing if we got that alignment, you know, and then a lot of the hard work is building the company over many, many years.

UNKNOWN: 49:08

Yeah.

SPEAKER_02: 49:09

But it's fun,

SPEAKER_01: 49:10

entertaining.

SPEAKER_02: 49:11

Oh, it is. Yeah, it is. And I think a lot of people don't understand that there's a concept called after the tank. Aha, yes. I don't know if you're familiar with that, but the way it actually works, those deals aren't done deals. Yes. have their meeting, they looked at his books and were like, we're not doing this deal. So he didn't get a deal. Yeah.

SPEAKER_00: 50:00

Well, look, that happens sometimes. I mean, you know, yeah. I mean, you know, it doesn't happen all that often in our world, because usually by the time you've been willing to give somebody a term sheet, you know, you've done enough of that kind of thing that, you know, the surprises are not very frequent, but they happen sometimes. Yeah, sure. But it's pretty

SPEAKER_02: 50:19

rare. I was just curious to hear from you. All right. What has been, what is your philosophy, and if it changed, great. Walk us through that on family with business and juggling all that.

SPEAKER_00: 50:34

Yeah. Well, I'll start with just family, first of all. My wife, Carol, is absolutely amazing. And then we have three kids, 27, 25, and 20. Girl, boy, boy. Okay. And I think one of the things that we've tried to model out again, we're far from perfect at this, is we have this expression around the house, which is that we love you no matter what. And we said that often enough that they now say it back to us. So it kind of I think it sunk in over the years. And I think one of the things we learned, oh, maybe, I don't know, five, six years ago, is that the kids really heard that as, you know, even when we make a mistake, you're still going to love us. And that's true. And we're glad they heard that. But we realized that, especially in this world that they are growing up in, where there's so much more pressure and constant evaluation, like your identity is being evaluated every day in social media in one form or another, that there's really nothing that they can do that's going to make us love them anymore. So we're not going to love them less if they make a mistake. We're not going to love them more if they are successful. My daughter is at Harvard Business School right now. I think that's awesome. Sure. She's got a very successful podcast. She was named to Forbes 30 under 30. I mean, I could go on.

SPEAKER_01: 51:53

Great.

SPEAKER_00: 51:53

You know, my sons have been very successful in their early stages of their lives. You know, my middle son lives in New York and he works for a big private equity growth equity shop and blah, blah, blah. Right. But we love them the same. We're trying to love them the same, you know, good days and bad days. And I think that that gives you a sense of identity and family and hopefully as well an identity in your faith because you know our family is never going to be perfect you know that it will sustain you in a world where your identity is always being challenged in the pressure of social media uh in whatever aspects of life that that is allowed in

SPEAKER_03: 52:29

sure

SPEAKER_00: 52:29

so that's a kind of a core thing um i think on the business side you know there's definitely been seasons where i've had too much on my plate and it's been harder to be present for each of them As much as I want it to be, but I've been intentional about trying to do that. And I actually got great advice. I mentioned this Jeff Kemp earlier. You know, Jeff, one of the things he shared with me when our daughter was about 12, he's like, you know, find something individually you're going to do with each one of your kids. And that's going to become normal. And it's got to be something they pick. And so with her, it was originally mornings with Madison. Her name's Madison. And so we would just go have hot chocolate and hang out. She's older now. Now it's sometimes it's drinks with dad, but you know, but we still do it 15 years later. Right. You know, which is the cool thing. And then with the boys, one with one of them, it's about sports and the other one, it's about performing arts. Cause those are things that they're into. Yeah. And, and so I think it's, it's, you don't want to be over-programmed about it, but being somewhat intentional of finding those one-on-one things with each one of your children, I think has been something that's been helpful. And then, you know, being a real great teammate with Carol, my wife on, on, you know, how do we, you know, kind of work together to help each of our kids in whatever season, you know, they tend to have their patterns of things. They, consult me more on and things they consult Carol more on. And then we want to be coordinated a little bit too on all of that.

SPEAKER_02: 54:03

Yeah. Oh, that's awesome. I've one finish, one finishing question. Um, but you mentioned something that's powerful. So the very last episode I did, we had a guy on by the name of Justin Whitmore early and he wrote a book. He's a lawyer in Washington DC and he wrote a book called Habits of the Household and And I think it's fascinating how what you just touched on, he has this system for bedtime that he recommends. And I've been doing it with our kids. I mean, it is bliss. It's unbelievable to watch and now to listen to how their minds have changed at not only bedtime routine, but during the day. So I actually did it with them before coming on this show right now. I go... Can you see my eyes? Because remember, seven, five, three, and then obviously the one-year-old. Can you see my eyes? Yes. Yep. Can you see that I can see your eyes? Yes. Do you know that I love you no matter what bad things you do? And the first 15 or so times saying that, you can really see them. And they brought it up, especially my seven-year-old. Really? Even if I do bad things?

UNKNOWN: 55:23

Yes.

SPEAKER_02: 55:23

And then very next question, do you know that I love you no matter what good things you do? Yep, that's great. Who else loves you like that? So I think it's fascinating that you've been doing that, but not knowing that author, which is incredible because he- That's really awesome. That's really cool. And you've touched on that. I love that, I love that. All right, finishing question for you. Looking back at your life there, like where you are right now, looking back at your life, What were the pivotal areas that truly shaped the human that you are today? Not just business, but the human.

SPEAKER_00: 56:02

Well, I certainly think, you know, Mary and Carol, that was a big one. Uh, you know, she's an, uh, you know, an awesome human being and amazing, amazing spouse and a great pair for me. And we have a whole long story where we met in New York and then we, we dated for a while and then we didn't for years and we both ended up in Atlanta and all that sort of stuff. So it's a, that's a long, cool story.

SPEAKER_01: 56:21

Yeah.

SPEAKER_00: 56:22

Um, In my 20s, I took some time to– well, in my 20s, two things happened. One was when I was in New York, a couple of buddies from college and a few other friends, we started this non-denominational– Christian Fellowship group in our apartment in Manhattan, Midtown Manhattan. And back to that concept of people and relationships, so many of the people from that group over the years, including that's where I met Carol originally, had been friends and shaped my lives, and hopefully we've had a positive influence on their lives. So having that community early out of college, I think was a really big, big deal. And then a few years later after grad school, I sort of created this sort of life mission of having depth in your relationships and the courage of your convictions. The depth side being your faith, your personal relationship with your creator, your spouse, your kids, your immediate family, kind of this concentric circles idea of relationships and trying to prioritize them that way. And then the other being, if you don't have a point, if you don't have like a set of values, then how can you actually have a values-based point of view on any issue of the day? And so that's having conviction about something. But then courage is, I think, having the judgment to know when and how to share your views and to really listen to others back to that curiosity point. And so, again, far from perfect on living out that mission, but that's kind of defining that in my 20s, I think, was pretty foundational to how I've tried to live out life since then.

SPEAKER_02: 58:03

Fascinating. So grateful that you were put in my path.

SPEAKER_01: 58:09

This was awesome. Thank you. It was

SPEAKER_02: 58:12

great. This was such an awesome interview. Thank you so much. So thanks for taking the time, Matt. Folks. This was a remarkable episode. Again, it's not a business story, although there's substantial business success in the Amazon thing, which is remarkable, but we have a family man here. And I think that's just what is so interesting about your story, Matt. So thank you again for joining us. Folks, as always, really, really appreciate if you can take a moment and rate us, leave us a review on whatever platform you're watching us. Brand new, this episode will be on YouTube. So Matt, you'll be the very second person now to be on our YouTube. And then lastly, so this legacy, I like to say it's a lot more than just a podcast episode. It's a true legacy. It's my passion project. You're going to have a dedicated place on our website with your own. It's like basically having your own website within ours, which will have your video. It'll have your podcast episode as well. It'll have the transcription and an entire blog post of just the personal connection that we made here today, the questions, because my vision for the whole thing is this lives way beyond where when my kids get older, they can press play and listen to these stories and just, I mean, it's basically like having, you know, I sit here and I take notes. I mean, I page after page. So I'm filling these notebooks up. So it's, it's special. So just want you to know that it's, it's, it's, uh, uh, I'm, I'm grateful personally that you, that you joined us. It's a lot bigger

SPEAKER_00: 59:53

than, well, thank you. Thanks for having me on and, uh, uh, look forward to spending more time with you in person down the road. Me as well, Matt. Okay. Thanks a lot.