Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. As tech Crunch reported last month,
Speaker 1: or next, guest Low Tony has some ideas about how
Speaker 1: to really bring venture capital into the twenty one century.
Speaker 1: That story caught our attention. He is was, excuse me,
Speaker 1: a partner at Comcast Ventures and g V which is
Speaker 1: of course formally Google Ventures, and he now is founding
Speaker 1: managing partner of his own firm, Plexo Capital, and he
Speaker 1: joins us on the phone in Los Angeles. Low, it
Speaker 1: is nice to have you here with Jason and myself.
Speaker 1: Welcome to Bloomberg Business Week. Well, thank you so much
Speaker 1: for having me. It's an honor to be featured. Well,
Speaker 1: you know, we have been talking a lot about the
Speaker 1: investment world, obviously the impact of the virus, but we've
Speaker 1: also been talking a lot about the need for you know,
Speaker 1: diversity and inclusion within the investment community, and we've done
Speaker 1: a lot of stories about what's been going on in
Speaker 1: Silicon Valley. First up, what's been your experience working within
Speaker 1: Silicon Valley Because it tends to be still a lot
Speaker 1: of white men making decisions, that's true. I think it's
Speaker 1: a commonplace for someone like myself black Mail. I grew
Speaker 1: up in Oakland, California, went to a historically black college
Speaker 1: in Hampton, came back to go to cow and I
Speaker 1: got used to being the only black person in the room.
Speaker 1: It's just common. So I think that's a common experience
Speaker 1: that many of us have. But I've been increasingly hopeful
Speaker 1: about the changing complexity that I've seen in some of
Speaker 1: the generations that are coming up behind me, and I
Speaker 1: believe that we're at a point where we've reached an
Speaker 1: inflection point where we've been able to shine a light
Speaker 1: and visibility, and I'm I'm pragmatically optimistic about the prospect
Speaker 1: moving forward. And so there are a number of aspects,
Speaker 1: as you know better than we do, low in terms
Speaker 1: of the investing landscape to venture capital landscape, sort of
Speaker 1: where the money comes from, who invested, and then where
Speaker 1: it goes. I know you've been working on all aspects
Speaker 1: that I do. Wonder if you could tell us a
Speaker 1: little bit more about what you're doing around the general
Speaker 1: partner level, because I think you are rightly very focused
Speaker 1: on that piece of making the investors, not exactly that,
Speaker 1: not just what Carol described, which is you know, a
Speaker 1: bunch of rich white dudes making decisions about where the
Speaker 1: money goes. Yeah, it's interesting. When I was a partner
Speaker 1: at Google Ventures g V, one of the things we
Speaker 1: wanted to do was to get access to more deal flow.
Speaker 1: So we had this really interesting thesis that when we
Speaker 1: started to look at some of the smaller earlier firms
Speaker 1: that were investing at that initial check level, we saw
Speaker 1: much more diversity than at the larger firms. And so
Speaker 1: we came up with this thesis that, wow, you know,
Speaker 1: the the indirect path that many black venture capitalists have,
Speaker 1: like myself, produces really interesting networks and provides a different
Speaker 1: lens to be able to evaluate opportunities and entrepreneurs that
Speaker 1: might not have the same understanding traditionally on sand Hill Road.
Speaker 1: And so we decided to make investments into these venture
Speaker 1: funds to get access to their deal flow. And I
Speaker 1: took that one step further and created Plexo Capital and
Speaker 1: expanded to not only black gps, but other gps of
Speaker 1: color and female gps. And really it was an alpha
Speaker 1: strategy right to identify inefficiency, use and information and identify
Speaker 1: opportunities that others were missing. And what I also noticed
Speaker 1: was that well, you know, actually, this has a much
Speaker 1: broader implication to the to the vertical ecosystems for black
Speaker 1: for black entrepreneurs, for people of color that are entrepreneurs,
Speaker 1: and female entrepreneurs, which is, if we can get capital
Speaker 1: into the hands of a diverse set of investors, the
Speaker 1: data tells us that their portfolios end up being diverse.
Speaker 1: So if they've got diverse portfolios, those diverse founders are
Speaker 1: going to hire diverse teams. And if there's a successful
Speaker 1: exit that creates wealth generation for those employees, well, lo
Speaker 1: and behold, you have a diverse set of execs that
Speaker 1: are going to write angel checks. Likely to diverse entrepreneurs.
Speaker 1: They'll have the financial stability and comfort maybe to take
Speaker 1: that risk and start their own company, or maybe some
Speaker 1: of them will even become venture capitalists themselves. But more importantly,
Speaker 1: it starts a wealth creation pattern. And then wealth is
Speaker 1: also transferred back successfully to those initial investors, and if
Speaker 1: they were diverse, they go down the wealth creation and
Speaker 1: then capital is returned to the original limited partners for
Speaker 1: the investors into those venture funds, and once those limited
Speaker 1: partners see that positive signal of dollars coming back, they say, wow,
Speaker 1: this is working, Let's deploy more capital and so that
Speaker 1: creates the flywheel within that vertical ecosystem. I mean, it's
Speaker 1: not dissimilar to how we see geographic ecosystems develop outside
Speaker 1: of Silicon Valley in places like Seattle, New York, and Austin.
Speaker 1: But in this case, it's vertical around black entrepreneurs, female entrepreneurs,
Speaker 1: or other people of color. So I feel like our
Speaker 1: our model, even though at the outset the purpose was
Speaker 1: to deliver alpha and returns, it has this additional benefit
Speaker 1: of being able to help to accelerate these ecosystems on
Speaker 1: a vertical basis. We're going to talk more about that.
Speaker 1: And I love this idea of wealth creation because you know,
Speaker 1: we talk about this being ultimately a financial and you
Speaker 1: know poverty, you know issue in terms of bringing more
Speaker 1: blacks and minorities kind of into the existing structure. We're
Speaker 1: going to continue talking with Low Tony h He is
Speaker 1: the founding managing partner of Plexo Capital. Below Tony is
Speaker 1: with us. He is founding managing partner at Plexo Capital.
Speaker 1: He joins us on the phone in l A. It's
Speaker 1: a good sign. Low, by the way, when we're fighting
Speaker 1: over a guest. So that's how you know we're excited
Speaker 1: and not just like sitting back me like you go,
Speaker 1: you go, I don't get. So what's interesting is you
Speaker 1: just described kind of this strategy for identifying opportunities, creating wealth,
Speaker 1: wealth creation, and you talk about creating this fly wheel.
Speaker 1: So what are the signs that it has really worked
Speaker 1: in kind of what you envisioned. Yeah, the key signs are,
Speaker 1: without question, the increasing the dollars that go into the
Speaker 1: black entrepreneurs, entrepreneurs of colors, female entrepreneurs. You know, the
Speaker 1: numbers are so low that you know it's really not
Speaker 1: hard to to increase them. But we are seeing promising signs.
Speaker 1: You know, we're seeing more firms led by black GPS,
Speaker 1: people of color and women at these venture capital funds,
Speaker 1: and we're seeing more dollars go into the companies that
Speaker 1: are diverse led. Ultimately, the barometer of the yardstick, the
Speaker 1: best way to measure is when we start to see
Speaker 1: companies that are getting acquired or that are going public.
Speaker 1: I mean the staff, like the stepping stones are you know,
Speaker 1: get the initial investment, get some follow on investment. Companies
Speaker 1: start to grow in scale, hire more employees, increase their
Speaker 1: red the news. But you know, ultimately what we need
Speaker 1: to see our companies achieving liquidity via the public markets
Speaker 1: are by a large scale em and a transaction. Well
Speaker 1: and Low, it's interesting I was thinking about as you
Speaker 1: were describing that flywheel in the early part of our conversation. Mean,
Speaker 1: that's the PayPal mafia model, right, I mean, that's exactly
Speaker 1: sort of what gave rise to this whole network of
Speaker 1: companies and angel investors that has been at the center
Speaker 1: of basically the last ten to fifteen years of Silicon Valley. Right, yeah, absolutely,
Speaker 1: And you know again, I like using the relationship for
Speaker 1: the analogy to a geographical ecosystem, and that's absolutely right.
Speaker 1: You know, we believe that there are network effects inherent
Speaker 1: in deploying these types of strategies, and I think the
Speaker 1: PayPal mafia is, without question one of the classic case
Speaker 1: studies of you know, what happens when a group of
Speaker 1: super intelligent and driven people came together and then the
Speaker 1: relationships that spawned over time. I mean you just see
Speaker 1: a lot of companies that came from that DNA. Right.
Speaker 1: So just to follow in that briefly, Low, I mean,
Speaker 1: one of the things that we know about Silicon Valley
Speaker 1: and I was just reading a long I believe it
Speaker 1: was on medium post about this is. You know, serendipity
Speaker 1: has been at the heart of this. You know, these
Speaker 1: sort of like inadvertent collisions that happen either a company
Speaker 1: or a neighborhood or whatever it is in in what's
Speaker 1: a relatively small geographical area there in Silicon Valley, in
Speaker 1: this remote world, how do you ensure that all the
Speaker 1: right people are getting together? Great question. I think we
Speaker 1: need to be more intentional, you know. The good news
Speaker 1: is that there is no one geography that has a
Speaker 1: monopoly on the best idea. That we're seeing ecosystems develop
Speaker 1: in other regions, which is a good thing. I think
Speaker 1: we have become more comfortable within Silicon Valley with distributed teams,
Speaker 1: and there are many companies that have a portion or
Speaker 1: all of their team distributed. So I think now everyone
Speaker 1: else is really kind of catching up. And for a while,
Speaker 1: my mentor, Kim Coleman, used to always tell me, if
Speaker 1: you want to be an actor, go to l A.
Speaker 1: If you want to be an entrepreneur in tech, you
Speaker 1: go to Silicon Valley. And the good news is, as
Speaker 1: we begin to see more of the building blocks in
Speaker 1: place regionally, whether it be research driven institutions producing STEM graduates,
Speaker 1: whether it be kind of a few existing companies that
Speaker 1: have done well where there's a well trained workforce available
Speaker 1: to go and work for an entrepreneur at a startup um,
Speaker 1: and the availability of capital. So I think we're starting
Speaker 1: to see more of those building blocks in place. And
Speaker 1: the good news is when you look at some of
Speaker 1: these ecosystems like Atlanta, for example, or even New York, right,
Speaker 1: they are they are, you know, more diverse by the
Speaker 1: numbers when you look at ethnicity than in in Silicon Valley.
Speaker 1: So I'm very encouraged by the fact that, you know,
Speaker 1: we're getting to a point where good companies with great
Speaker 1: entrepreneurs and great teams can happen outside of so a
Speaker 1: current valley. You talk about pipeline, you talk about building blocks,
Speaker 1: but so much of this low has to start really
Speaker 1: kind of at the very beginning, in terms of where
Speaker 1: kids are born and getting great educations and kind of
Speaker 1: starting early on on a path that enables them to
Speaker 1: get into your pipeline eventually to maybe think about starting
Speaker 1: a company, to be able to make a pitch for money.
Speaker 1: How do we improve that. Yeah, the thing that I'm
Speaker 1: also really passionate about are the historically black college, Black
Speaker 1: Camping University because even though they're only three percent of
Speaker 1: the educational institutions in the US, they make up about
Speaker 1: ten to fifteen of all of the bachelor's degrees earned
Speaker 1: by by black students. More importantly, of all the black
Speaker 1: STEM holders received them from an HBCU UM. HBCU grads
Speaker 1: make up one of of m b a'sumty three percent
Speaker 1: of PhD holders with STEM degrees. And then you see
Speaker 1: that translating into the professional ranks as well. You know
Speaker 1: of lawyers of judges have an HBCU degree who are black.
Speaker 1: On the VC side, UM, this is really interesting, of
Speaker 1: black venture capitalists went to an HBCU. So even though
Speaker 1: by numbers absolute, the number of HBCUs are small, and
Speaker 1: even the number of earth percentage of Latin graduates, you know,
Speaker 1: tend of that's not huge. But what ends up happening
Speaker 1: is those recipients of HBCU degrees end up becoming leaders
Speaker 1: at the graduate level and in the professional world. So
Speaker 1: I'm a big proponent of making sure that we can
Speaker 1: increase the endowments of the HBCUs so that they can
Speaker 1: keep producing um great leaders. And so how do you
Speaker 1: extend that mode of thinking to your colleagues across the
Speaker 1: venture capital landscape. Is it just sort of showing that
Speaker 1: talent pool and maybe sort of revealing it in a
Speaker 1: more meaningful way. Yeah, you know, there's a lot of
Speaker 1: great initiatives happening. So there's been a great number of
Speaker 1: my colleagues from the venture capital world and the larger
Speaker 1: funds that have reached out trying to understand how they
Speaker 1: can improve the diversity of their teams. And one of
Speaker 1: the things that we're definitely promoting is the availability of
Speaker 1: internships and even scholarships geared towards HBCU grads to be
Speaker 1: able to enter the world of technology, so either working
Speaker 1: for a portfolio company of a venture capital firm or
Speaker 1: actually even going and working at the venture capital firm itself.
Speaker 1: So the good news is, and I'm open if anyone
Speaker 1: wants to send me any recommendations around, Hey, we want
Speaker 1: to host a student on an internship. I mean we're
Speaker 1: trying to organize as many of those as possible, working
Speaker 1: with great organizations like HBU UM, HBCU VC for example,
Speaker 1: and UH and others. So you know, that's that's how
Speaker 1: we're thinking of about this. Now. Look, there's great black
Speaker 1: talent everywhere, but you know, I went to a historically
Speaker 1: black college, so that's where my focus is. And yeah,
Speaker 1: absolutely more than happy for others that went to that
Speaker 1: are black, that want to do the same thing, and
Speaker 1: you know their schools, whether it be the Cows or
Speaker 1: the Stanfords or the Harbors of the world, I encourage
Speaker 1: them to do the same thing. Well. So great to
Speaker 1: catch up with you, and I hope we can in
Speaker 1: a few weeks or so check back again. Um. Just
Speaker 1: great to get your perspective. Low Tony he's the founding
Speaker 1: managing partner at Plexo Capital, joining us on the phone
Speaker 1: in Los Angeles. All right, for those of you listening
Speaker 1: in New York and San Francisco watching on YouTube, Bloomberg
Speaker 1: Business Week continues. If you're listening on Bloomberg, not even
Speaker 1: I want in d C Centum with Kevin Cirelli is
Speaker 1: next to hear more of his interview with Stacy Abrams.
Speaker 1: But what a great conversation and somebody who's actually doing
Speaker 1: it right. We talked about being deliberate taking actions. Low
Speaker 1: Tony is doing it,