Listen to GHOGH with Jamarlin Martin | Episode 08: Marlon Nichols
Jamarlin talks with Marlon Nichols, co-founder of Cross Culture Ventures, about the culturally-themed fund he started with Troy Carter.
You can listen to the entire conversation right now in the audio player below. If you prefer to listen on your phone, GHOGH with Jamarlin Martin is available wherever you listen to podcasts — including Apple Podcasts, Spotify, YouTube, and SoundCloud.
This is a full transcript of the conversation which has been lightly edited for clarity.
Jamarlin Martin: Ok, you’re listening to GHOGH with Jamarlin Martin. We have a go hard or go home approach as we talk to the leading tech leaders, politicians, and influencers. Today we have the co-founder of Cross Culture Ventures, Marlon Nichols. Thanks for coming on.
Marlon Nichols: Thanks for having me. It’s good to be here.
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Jamarlin Martin: Alright we’re going to dive right in. There’s been some talk here in Austin at South by Southwest about this robot named Flippy. Flippy essentially is looking to disrupt folks who flip burgers. There’s some political backlash about some of the investment flows out of Silicon Valley where you go into automation, artificial intelligence, robots, and you’re going to impact a lot of low wage workers, people of color. Do you believe VCs need to consider how the technology could likely impacts society later on? Do you believe that that should be in the VC mandate to kind of look at that?
Marlon Nichols: I think it’s within any creator’s mandate to think about how whatever it is that you’re creating affects society and the world that we live in. That said, you know, there is a natural evolution, right? So there was a time where if you take auto manufacturing, for instance, where you had a lot of folks on those assembly lines putting those cars together. Now that’s primarily robots. Flippy doesn’t sound much different to me than that. So I think yes, we want to be responsible, yes, we want to make sure that what we’re building is actually good for the environment and good for society, but we also don’t want to, slow progress and efficiencies and things like that. I haven’t met Flippy…
Jamarlin Martin: Yeah, yeah. But if a black founder came to you and said, look, I’m looking to create a robot that’s going to flip burgers, a billion dollar opportunity with this technology. Are you taking a look at that considering it could displaced a lot of workers, and in terms of the view that, hey, it’s more about progress, those workers are going to be alright? It’s going to figure itself out.
Marlon Nichols: I mean, that’s like saying investors shouldn’t look at autonomous vehicles for instance, right? Because theoretically a lot of Uber and Lyft drivers make a lot of business. I think we’re a ways from that and I think there will still be pockets of drivers, and I think what usually happens is there are other types of jobs that are created as a result of this technology. And so it’s also incumbent upon the consumers as well as the workers to figure out what’s next, what kind of training do I need, things like that. And so, you know, I’ll plug one of our companies real quickly, a company called Catalyte based out of Baltimore, and they’re essentially a tech consultancy, but what they’re doing is they’re changing the face of software engineering, right? And they were doing this by recruiting from Craigslist and community colleges as opposed to the MITS and the Stanfords of the world, and they’re leveraging artificial intelligence, and they give basically an aptitude test that says, ‘Jamarlin, are you going to be a good coder? Do you have the aptitude for this?’ And if yes, they train you for six months and then hire you. So I think, you know, instead of complaining about Flippy and those jobs going away, we gotta focus on what’s going on, what’s the next opportunity, how do I get trained up to do that and how do I put my family in the next tax bracket up as a result of this.
Jamarlin Martin: A young white girl received millions of dollars of investment, or this company that the ad showed a white girl. But this company, their innovation is bodega in a box. And I know you’re from New York, you could appreciate a good bodega, but a lot of people on Twitter, social media, they gave this company a really hard time because they feel like, man, you know, these investors, these venture capitalists out of Silicon Valley, they’re investing in things that are essentially for the people in the community. They’re going to be weaponized to kind of undermine their own business interests in the hood and kind of in certain communities of color. Did you see that?
Marlon Nichols: Yeah. Actually we released, I think it was in December, we released a report called ‘The State of Culture, Culture as Currency’, and we actually talked about this very company and it’s not that, where they went wrong and it was their approach, right? They weren’t there, they weren’t actually familiar with the communities where these bodegas exist, and the benefits that they provide to the folks living there. And so their technology completely ignored all of the social cues and the important aspects. It’s one thing to say, hey, we’re going to put essentially vending machines on every corner so that you don’t have to go into this store and have these interactions. But there are a ton of other things that are just part of the community. They didn’t consider that. Also, a lot of this stuff that you buy from a bodega like eggs, milk, like perishable goods that can’t live in a vending machine for that long. And then it’s just the human interaction around it too, like you’ll have a group standing outside in front of the bodega hanging out. Like that’s their spot, right? It’s like community building. And they ignored all of that and just said, hey, we want to shut down all bodegas and for that community it’s not something that they want to hear or that they are going to embrace.
Jamarlin Martin: For the vanilla institutional VC firm out of Silicon Valley, do you think it would have mattered though if they actually studied the potential impact on communities where bodegas are treasured? Would it have mattered if they did study the impact in terms of versus the profit incentive? This is a big opportunity.
Marlon Nichols: But you can’t have one without the other, is the point, right? They didn’t understand it. And if they understood it, they’d see that this thing can’t be profitable and these communities, this is gonna be a negative thing in these communities, so no one wants to invest in a losing proposition and the way that they went with this, it proved to be a losing proposition.
Jamarlin Martin: If it was a profitable proposition, a big commercial opportunity, and they studied it and it had a big impact, you wouldn’t see any issue with that?
Marlon Nichols: Coal, oil, gas, these are all examples of things that are harmful to our environment. And you know, they are multi-billion dollar industries, or at least they were at one point. So someone’s going to invest, someone’s going to make money off of it if they can.
Jamarlin Martin: So if it was a profitable opportunity and it added a net negative impact on the community, would you invest?
Marlon Nichols: Well, no, because we take a different approach, right? We actually care about how our investments impact the world. Essentially. It’s just a part of our ethos, but we’re not every fund.
Jamarlin Martin: OK. Tell us about your story up until you started as a VC at Intel.
Marlon Nichols: Yeah. So I did my undergraduate studies at Northeastern, I studied management information systems and leaving Northeastern, I was fortunate enough to land at a startup, it was an enterprise software company called Frictionless Commerce based in Cambridge, Massachusetts. And I joined them to basically lead global implementations of their software. And within a year of that we started seeing a lot of traction in Europe and so one of the co-founders just tapped me one day and said, ‘hey, I’m moving to London because there’s so much business in Europe. We need an office there. You want to go?’ I said yeah. I never lived in London before or anywhere close to Europe and it does sound like a great opportunity. So I did it and it was great because while I was maybe employee number 12 or so at Frictionless, and in London, you know, it was like I was a co-founder because you had to do everything from sales, pre-sales, customer support, all of it growing that business. And ultimately the company was purchased by SAP and I left England and moved back to the U.S., to Harlem actually. And the thing that I learned from that experience was that, you know, while I love technology, I don’t love operating, the same company for three years or some long stretch of time. That just wasn’t me. I felt like I needed more breadth. And so I chose consulting after that. First it was like management consulting and the Blackstone Group was my first client and you know, it was the real estate division. So I was helping them create shared services organizations and basically putting together everything that needed to be in place once they bought a few entities and needed to run them before they sold them. And that went really well for a while. And then I got tapped again, the consulting firm I was with wanted to create a strategy practice around media and entertainment. And so I got the chance to go and launch that practice. And so I worked with McGraw-Hill and Warner Music. I’m helping them figure out, you know, how do they leverage the Internet for the benefit of their business. And so that, while that was fun, I learned something else about myself and was that I need to be more engaged in the implementation. Like I didn’t want to operate a company for a long period of time, but I wanted to have some exposure to operations. And so then I started thinking, OK, well, you know, what is the profession that fits that, right, where I could interact with executive level folks. I could be a part of a operational strategy, conversations. I can have a true vested interest in the outcome and I would be a part of cutting-edge technology. And so for me, that was venture capital. And so there I was sitting and I was like, how do I get into this thing? Two things. I needed to get a better grasp on finance and I needed to build a network in the space, and so for me that meant going back to business school and I landed at Cornell. I was fortunate in that Cornell has the MBA-led pre-seed fund that I had the opportunity to lead while I was there and that kind of catapulted me into a career at Intel capital.
Jamarlin Martin: How many black VCs do you know have more experience than you in terms of their, their kind of active right now?
Marlon Nichols: That’s kind of a relative question, right, because we talking like direct investing experience? Cause operating experience matters too. So direct investing and maybe doing it longer than me, maybe Charles Hudson.
Jamarlin Martin: Just a few right?
Marlon Nichols: Just a few that I can think of. There was an all black venture fund I think out of Philly or something like that years ago. Those guys have been doing it for a while, but yeah, probably Charles.
Jamarlin Martin: What are the top two lessons you learned working at Intel as a VC?
Marlon Nichols: I think it’s the lessons you learn at every big company. You’re never going to completely get to do what you want to do and there’s going to be a lot of bureaucracy. So you learn how to navigate that to make a space for yourself that you feel comfortable in, those are probably the two biggest things.
Jamarlin Martin: You’re running your own fund now. What is the size of your fund?
Marlon Nichols: So we’re a sub-$50,000,000 fund and we’re three years old now where we’ve got 20 companies in the portfolio and we’ll make another 14 to 17 investments before we finish up fund one.
Jamarlin Martin: And what’s the minimum check size you would expect for your next fund?
Marlon Nichols: We’re still having that conversation internally now. We’re probably not back out on the market until the end of this year. So we’re having those kinds of strategy conversations now. What we do know is that right now our sweet spot in terms of the checks that we write is anywhere between a 125k and 250k, and you know, we have up to a million in some companies, but what we like to be able to do for this next fund is for our sweet spot to be 500k to a million, and then all in into a company 1.5, maybe two. And so it’s Kinda backing into the bigger number of how large the fund should be, how many investors we want and then we’ll figure out what’s the smallest check size we will take.
Jamarlin Martin: Can you tell our audience who Troy Carter is and how you met him and developed a business relationship with him?
Marlon Nichols: That’s my brother. So I met Troy as I was developing the concept for this fund. I went and I sat down with two people that I respect and in a major way that I thought could help me think about the fund as well as potentially become investors in it. And that was as mentioned, Freada Kapor, Kapor Capital. And they loved the idea, the concept of the fund. And I said, I’ve known them for many years and you know, they believe they wanted to back me, but what they said is, ‘you know, we’ve done a number of deals and have a pretty good relationship with this guy, Troy Carter down in LA’. At the time I was living in Silicon Valley, ‘and we think that this would really resonate with him’. And so they set up the meeting, flew down and met with them. And that meeting was really supposed to be about him becoming an investor in the fund. And so we had that conversation, which he said no to. He was doing direct investments off of his company’s balance sheet, at Atom Factory, and so it didn’t really make sense for him to take that money and give it to someone else to invest for him. So he said no. But we kept in touch and one day he reached out and he said, ‘I can’t get this out of my head. It’s really interesting and I feel like we should figure out a way to do it together’. So then we started the conversation of how do we build a fund together, what does it look like? And that was about a six to eight-month process. And then we put pen to paper and started raising money, but Troy’s a famous music manager, or he was credited for helping launch the careers of Lady Gaga, John Legend, Meghan Trainor and a number of other folks. And through working with some of those folks he got introduced to technology and fell in love with it and started investing. So he’s an early investor in companies like Uber, Lyft, Spotify, Warby Parker, ah, Dropbox, a lot of the kind of brand name companies from a Silicon Valley perspective. That’s who Troy is. As he was working with those companies as an advisor, he kind of built a reputation of being someone that could, that is knowledgeable, particularly in the arena of marketing and storytelling. And so more and more opportunities came to him as a result of that, and his company, the Atom Factory grew into more than just a talent management agency, became a talent management agency and an angel investment kind of entity. And so today Atom Factory feels more like a holding company and he’s doing some things with Prince’s estate and stuff like that. And we do all the investing or the lion’s share of the investing out of Cross Culture, the fund.
Jamarlin Martin: Does he still have a commercial relationship with Spotify?
Marlon Nichols: Yeah. And that grew out of his relationship with them as an advisor and early investor. He’d been helping them for years. I think it was about maybe a year ago or something like that. The CEO reached out and said, hey, we really need you to spend more time with us and it will be great if you took on this title. So he’s the head of creative services there. And essentially what his group does is figure out what can Spotify do better in terms of working directly with artists, and the ecosystem around those artists to create more value for them. So that’s what his team thinks about. So, you know, he does a lot of work there and then he’s passionate about investing in technology. So then he does a lot of work with my team on the venture side.
Jamarlin Martin: If you like what you’re hearing, you can check us out at Moguldom.com. That’s m o g u l d o m.com. That’s Moguldom.com. We have the latest information on tech, crypto, the business of Hollywood and economic empowerment. You can also check me out on Twitter at Jamarlin Martin, let’s get back to the podcast. Does your portfolio have any exposure to companies leveraging the blockchain?
Marlon Nichols: We haven’t made any blockchain-centric investments yet. Part of it is trigger shy. Part of it is not having done enough research on it. We’re talking to a couple of them now and getting smarter on the space. It’s a volatile space, especially when we think about the currencies. So it’s just a lot to think about, a lot to learn there. It’s interesting. I don’t think it’s going away, but I’m not sure yet what it ultimately will be.
Jamarlin Martin: Could you see Cross Culture Ventures coming out with your own token, making investments in liquidity easier for investors out there? Can you envision Cross Culture Ventures having a token, a security token, and where it’s trading and investors could have liquidity?
Marlon Nichols: No, not today. No, it’s not even something that we’ve given thought to.
Jamarlin Martin: When you pitch potential investors in your fund, what are the top two reasons they tell you ‘no’?
Marlon Nichols: Who knows?
Jamarlin Martin: Based on your experience, you have to say, you know, things kind of come up…
Marlon Nichols: They just don’t get it. I think they don’t get it. And this is just a little bit too different than everything else, right?
Jamarlin Martin: Yeah. Can you talk about your theme in terms of what they don’t get about your theme that you’re investing in, in terms of cultural changes and arbitrage?
Marlon Nichols: I can’t speak for someone else as to why they don’t understand it. Our thesis is cultural investing. And for us, what that means is studying popular culture to get to what’s driving consumer behavior and then ultimately predicting where consumers are going to spend their capital in the future. And a lot of diverse communities typically drive global culture. It starts from a smaller place, but it bubbles up and it becomes popular culture. So we do a lot of studying in diverse communities and things like that and a potential LP doesn’t necessarily understand that, or it’s a new concept and they’d rather be more risk averse and sit it out and see how this one goes, and then come in. Because I think in general money managers tend to try to mitigate risk as much as possible. Right? Like, you don’t want to lose your client’s money, right? So you try to take as much risk out of it as possible. And here you have something new, you have a team that doesn’t look like every other team that you’ve invested in this space. So these flags are going off, maybe not necessarily warranted, but they’re going off. And they make the safe decision, which is to say no. That said we have a lot of LPs that said yes. I mentioned Alphabet, it was now transferring over to Plexo Capital with Lo Toney, the Kapor Foundation, Conde Nast, Calvert Investments, Pi Investments, which is an organization that changed the name to Candide, which manages a couple of Pritzker family offices. So we have a nice WTI, we have a nice group of investors ranging from institutions to family offices, corporations and high net worth individuals. So a lot of people got it, right? But some didn’t. Maybe they will in the future, maybe they won’t, but not something I can really spend time on.
Jamarlin Martin: I totally get focusing on the positive. You have some great names backing you. Have you left a meeting feeling like, hey part of it is I’m coming in black. I don’t see a lot of black guys like Marlon, and it makes you maybe a little bit more risky. Have you ever felt that way leaving a meeting?
Marlon Nichols: You know what, before we sat down for any meeting they saw a pitch deck right, and our pitches are front and center. So if the main reservation was, you know, these guys are black, then maybe we wouldn’t be in the room for that meeting. Right? So I don’t know. It doesn’t help me to spend time focusing on things that I can’t control. So I focused on the things that I can control, which is building a kick ass team, investing in companies that performed really well and generating returns for our investors. That’s all I care about.
Jamarlin Martin: But you haven’t thought about it like, hey, you know, what’s up with this in terms of some feedback you received or anything like that?
Marlon Nichols: There was one conversation we had with an investor, and his comment to us was, I like you guys and I know you’re capable, but I want to know that you’re going to keep investing in Lyfts and Ubers and Spotifys and not necessarily, you know, black founders and so we kind of looked at each other and it’s like, does that imply that a black founder can’t create a billion dollar company? And so the response was that we’re looking for the best founders focused on opportunities that we deem as multi-billion dollar opportunities and they’re bringing a differentiated approach to it, period. But that was the only kind of overt, I guess, question around our thesis and, again going back to our ethos is like investing should be bias-free, right? You should be investing based on talent, vision and experience and all that other stuff is bullshit, frankly.
Jamarlin Martin: The founders that are listening, what would be your top three checklists in terms of, hey, you need to have your game tight in these three areas before even considering stepping to me?
Marlon Nichols: I would phrase it a little bit differently. So the three things that are most important to us is the opportunity. Is this a really big opportunity and not a mom and pop type opportunity. Like can this be a multi-billion dollar company? Can this be a publicly-traded company period? Is there a route to get there? And then it’s, well what does the competitive landscape look like and how are you different? What is it about your approach, your technology, whatever, that is going to give you an advantage that lasts for a long enough period of time where this can become a very unique and big company before others kind of pile on. And then, and this is probably the most important thing, is who’s doing it? Right? Who’s the entrepreneur? What does the team look like and are you actually capable and do I believe that you have the ability to do this because if you’re going to have an incredible idea and a very weak founder, this thing goes to zero very quick because it was poorly managed. Right? And on the flip side, you can have an incredible founder that changes the direction of a business because he or she realizes that the potential that they initially saw here is not here and now you can have a great outcome. So at the end of the day where we’re founder-centric, it’s going to be about the people, especially at the early stage of investment where the opportunity can change four, five, 10 times before it actually becomes a big company.
Jamarlin Martin: Have you had any discussions with any endowments or pension funds coming in?
Marlon Nichols: No, I think we had maybe a couple of kind of informal conversations, in and around our network. But the reason we didn’t really focus on them, it’s like I said, we’re a sub $50,000,000 fund, so they need to deploy larger checks. And in many cases they can’t or won’t be more than 10 percent of your fund. Right? So, I mean, it’s kind of hard, they need to write like a $10,000,000 check. Right? And so sub 15, do the math, right? It doesn’t work. So we didn’t focus on them. And then also, there’s a reputation there of not really having an appetite to invest in first time funds for those pension funds or large funds as you described investing in first time funds, they want to make their job as easy as possible.
Jamarlin Martin: The statistic that, less than one percent of the VC dollars going to a black founders, would you hold the endowments and pension funds accountable in terms of what’s supporting that horrendous stat?
Marlon Nichols: I think you got to hold the entire ecosystem accountable. It is the limited partners. Alright, so those institutions that you mentioned, making sure that they’re funneling money into funds that will actually invest in those types of founders or invest without racial bias, then it’s also the fund managers, the GPs, right? They also have a responsibility to at least understand and make an effort to make decisions, in spite of that bias. Then you also have entrepreneurs, some of which are building incredible companies and deserve to be funded and some that are not building such great companies and do not deserve to be funded. Everyone in the ecosystem. You’ve got banks, right? So sometimes these startups need loans, before they’re ready to get venture financing if there’s an asset that they can leverage for that. Banks have to be willing to do that too. So they can get to a point where it makes sense for an institutional investor to participate. The actual community is another one. So what is often missing from black and brown startups is that friends and family round, you know, those high net worths in your community that can collectively contribute that first million dollars to get this idea into a product and start to show some traction. So I think if it was a simple problem, it would have been fixed a long time ago. It’s hard and we all have a responsibility and just need to step up.
Jamarlin Martin: What percentage of your first fund dollar for dollar are black dollars, black folks investing in you?
Marlon Nichols: It’s small. Really small. Yeah. I cannot give you a percentage but maybe less than 10 percent.
Jamarlin Martin: If the needle is going to move on that statistic. I get it. Like there’s a lot of things going on. Very complex. Where should the focus be if we had to prioritize one thing in terms of attacking this issue, what would you give the highest priority to?
Marlon Nichols: Give Cross Culture all that money. But yeah, I think there’s somewhere between one and two percent of black GPs make one to two percent of venture capital and then that statistic carries forward when you look at black and brown founders that are being funded. I think there’s a relationship there, right? So it makes sense to fund not only black and brown GPs, but GPs that are of the mindset that there’s value in looking at challenges within those black and brown communities. So making sure that the dollars are going to the folks that actually want to have an impact, not for the sake of having an impact, but for the sake of recognizing that there’s a big opportunity here and we need to be playing there.
Jamarlin Martin: You mentioned an endowment, a big endowment. I’m talking like a Harvard or Yale or Princeton. They need to write a really big check and that may not make sense for you, but what about subscale endowments where, for example, Howard, Morehouse, Spelman, you throw them together in aggregate, their endowments are about 800,000,000. Should they be writing you a check or getting exposure to this asset class?
Marlon Nichols: I think everyone should be writing us a check, just to be a hundred. But yeah, you know, I think with them it’s risk mitigation and risk tolerance. Right? And venture is a risky asset class. I think seven to 10 years probably before you see liquidity and in addition to that, as an asset class, the returns are negative, you know, somebody said scared money, don’t make money. Right? So if they’re going to take a risk on venture capital, I would prefer it be with a fund like ours.
Jamarlin Martin: Yeah. And if you look at Howard’s asset allocation in 2016, it looks like less than one percent was in private equity. And you know, the endowment has over 500,000,000, Howard’s. Is it fair to say that, hey, if the best and largest HBCUs are not in these streets talking to people like you investing in a lot of black founders, why would the black community go to Silicon Valley and complain about not getting checks from the Harvard endowment or pension funds, when the HBCUs won’t even nibble on private tech deals?
Marlon Nichols: Do you have a similar stat for the Harvards and Stanfords?
Jamarlin Martin: You know, most of these universities now are looking to replicate David Swinson out of Yale, and they call it the Yale Model. They put a premium on illiquid assets. They believe that if you’re going to have an outsize performance on your asset allocation, most of that outperformance is probably going to come from an illiquid asset class. Hedge funds, private equity, venture capital, they’re heavy getting exposures there. David Swinson credits a lot of the alpha from getting access to the best managers and private equity and it seems like the HBCU portfolio strategy is inverse of what everybody else is trying to do. Not Saying that they should be copying, but it just doesn’t make sense to me. I get it that times are harder. There’s been a lot of disruption in the the academic endowment environment. But what about the nineties and the 2000s? It just seems like investment strategies are not where they need to be. I feel like somebody needs to be at a place like this talking to founders about opportunities.
Marlon Nichols: I don’t know that I have an answer for you. What I will say though is that private equity is a big space, right? I would love to better understand what percentage of that is like real estate or energy versus venture capital or even buy-outs and things like that. I don’t have a great answer for you. I think if it were me and I were running an endowment, I think I’d want to protect the capital because obviously university kind of needs that in order to provide value to his constituents, but I’d also be looking to grow it. It’s not my space, so I can’t say this is a wrong strategy, but if there are clear examples out there of a strategy that’s a bit different from yours and it’s working, it might make sense to at least dip your toe in the water and see if you can make that strategy work for you.
Jamarlin Martin: Yeah, it definitely seems that your thesis at Cross Culture is very relevant to HBCU endowments developing a competitive advantage where they’re close to the black founders, right? The graduates of the institutions where they can develop relationships and deal flow and develop a competitive advantage with the specific market. So do you think that’s a big opportunity from a competitive standpoint versus other universities to really kind of have superior connectivity to the black tech segment?
Marlon Nichols: If we’re talking about endowments, they’re not going to invest directly into companies they’re going to invest into managers that would invest directly into companies. So I think there’s an interesting value proposition for students that can be created here, because I think if you’re an investor in a fund, I’m gonna answer the phone when you call me and and request that I take a meeting with a student that’s creating this novel idea, like I’m going to do that. So I think it could be an incredible value proposition. But again, they’re not going to be picking the companies directly that they get the investment. So they’re going to be a step removed from that.
Jamarlin Martin: I would challenge you in saying that they’re there, obviously you need a lot of skill to have this expertise in-house, but Howard, Spelman, why couldn’t they bring in-house their own Marlon?
Marlon Nichols: There’s only one Marlon? But no, I mean, sure you can, you can try to create a venture fund. I mean, I come from a corporate venture firm, right? Intel Capital is where I really learned investing and at the time it was the largest, the most active incorporated VC in the world. And then, you know, shortly after I joined them, you started seeing like this pouring out of corporate VCs trying to model what they did, but the DNA wasn’t there. They couldn’t exactly replicate the approach and it’s harder, you know, it sounds easier to do than it actually is, but they could hire a team and say, hey, here’s x million dollars, go invest it directly in companies. Then the other thing is like when you invest in a fund, your exposure is across a number of portfolio of companies. When you invest directly in a company, your exposure is in that company, right? So as an endowment, I would think that you’d want to. We talk about risk a lot in this conversation. It’s a way to de-risk or mitigate the risk associated with venture.
Jamarlin Martin: Yeah. I’m assuming if they’re investing directly that they’re spreading their bets though, in percentage terms, you’re not gonna be too concentrated and of course they’re going to build out their own portfolio.
Marlon Nichols: Sure. But again, that requires a team, right? So if you’re going to distribute your focus like that, you’re going to need people that understand each of these places or areas that you’re going to be planning to deploy capital.
Jamarlin Martin: If you’re out there right now and you’re active with your alumni at Howard and Morehouse or Spelman, get the word out about Marlon Nichols in Cross Culture Ventures. We need to establish better connectivity in the community between what’s going on in black tech and how we’re managing our endowments. There needs to be some connection and we’re not saying, hey, you know, put five percent of the endowment in private tech companies, but we need to at least have some conversations. Peter Thiel, he’s on the board of Facebook, he gave Mark Zuckerberg 500,000, so he’s been riding with him from very early on, but Peter Thiel also wrote a book attacking multiculturalism and affirmative action, while he was a student at Stanford. He’s a big time Trump supporter. How do you view personally Mark Zuckerberg, Facebook backing a guy like that. Facebook is a very influential enterprise. How do you feel about Peter Thiel being on Facebook’s board?
Marlon Nichols: If I’m honest, I don’t really have an opinion because I’m not an investor in Facebook. I’m not an operator within that company, you know, Peter Thiel has shown that he is a smart guy. He’s a capable business person. I don’t know all of his opinions, but based on what you just said, he clearly has some opinions that differ from mine, but I feel like in order to move the needle forward, we’ve got to be able to listen to all opinions, tolerate them, and have the conversation and get to the outcomes that we want.
Jamarlin Martin: Can Facebook say they’re committed to diversity and be a big supporter of Peter Thiel, and have Peter Thiel on the board. Do think each member of your board should kind of sync with how you think about diversity?
Marlon Nichols: It’ll be great if that was the case, but that is not the world that we live in. You know, my hope is that that board is able to have these candid conversations, right? Um his views, they’re coming from somewhere, like I said, I don’t necessarily agree with them, but they’re coming from somewhere. So if you don’t have the conversation, you don’t know where those views are coming from and you can start to effect change if you don’t understand the origins of the other person’s perspective. So I think there can be some benefit there. Wouls I love for everyone in this world to embrace diversity and see the value that it brings. Yes, of course, but that’s not the world that we live in and I’m not here to tell some other executive how to run their firm and who to put around them.
Jamarlin Martin: If one of your founders within your portfolio that wanted to bring on Peter Thiel as a board member and they, they consulted you. Put his values and his politics to the side. This guy is really smart. Would you mentor that black founder that that’s a good bet there?
Marlon Nichols: So we invest in founders to run their companies. Right? And once I make that investment, I’m just trusting you to do what you believe is in the best interest of your company. So if that decision was made, I know that it was done in a very thoughtful…
Jamarlin Martin: But this founder’s coming to you for mentorship. Hey, what should I do? This guy’s super smart. Has a lot of connections. However, he has this other baggage.
Marlon Nichols: That’s way too hypothetical for me to answer.
Jamarlin Martin: Man, this show is called Go Hard or Go Home, and you got an answer.
Marlon Nichols: That’s too hypothetical. I don’t know. I mean there’s so many unknown variables that could be at play. I don’t know. I can’t answer that.
Jamarlin Martin: You wouldn’t answer that to one of your founders, CEOs, if the founders and CEOs are struggling with that.
Marlon Nichols: If one of my founders and CEOs wanted to talk to me about that. Then we would definitely talk about it, but then it would be a very real situation. It would be a real example where we would know all the variables at play and I can actually provide counsel. Right now you’re asking me to throw out some advice for a situation that I don’t know 99.9 percent of what the variables are.
Jamarlin Martin: You know what the deal is though.
Marlon Nichols: That’s the one variable that we do know. Everything else, I don’t know anything about it.
Jamarlin Martin: Fox News journalist Laura Ingram criticized Lebron for speaking out on political issues, attacking trump in so many words. She said, hey, you know, you’re a multi-millionaire, super successful. Just shut up and dribble. You know, we don’t want to hear your political views and we don’t want to hear you criticizing Trump. Do you feel that you have a lot of people in influential positions in tech, Silicon Valley who are shutting up and dribbling due to economic insecurity? A lot of folks are talking about diversity, complaining about diversity, but they’re not calling out any names like they’re not really. Hey, Mark Zuckerberg, hey Facebook, hey, Sheryl Sandberg, hey John Doerr, hey Michael Moritz. So there’s like this diversity boogeyman who’s creating these problems, who are discriminating, but there’s no real institutions or people I want to attach this criticism too. But have you seen instances where people are shutting up and dribbling?
Marlon Nichols: I’m sure. That said I’m not sure that that statement was a hundred percent accurate. I think we’re in a special time right now where the conscious consumer is alive and they’re using buying power and their social reach to hold some of these individuals accountable. So there’s a reason why Facebook is making changes to its platform. That’s because the public is saying this has to change. There’s a reason why Uber kind of changed its stance on immigration and issues that they were having around ethnicity and gender equality and stuff like that. So I don’t think it’s true that these companies and individuals are no longer being held accountable. I think that’s starting to happen and we’re seeing it more and more. Do I think that there are some people that do shut up and dribble? Sure. I’m a big sports guy, Michael Jordan for, you know, a hundred percent of his playing career shut up and dribbled. Lebron is a little bit different. He’s very vocal and a lot of different. Even Kobe didn’t talk much about political issues while he was playing, he’s much more vocal now. Some people calculate risk and say, hey, I can maybe do this in another way or maybe I just don’t want to do this.
Jamarlin Martin: Would you connect HBCUs not getting more aggressive on venture capital, private equity over the years where, hey, I’m just going to be risk adverse. I don’t want to blow up the endowment or underperform folks in leadership positions, in a position of influence in Silicon Valley. I don’t want to take any risks. I don’t want to mess up my checks. Do you think that there’s a connection between those two in terms of the risk aversion?
Marlon Nichols: Yeah. I mean you just clearly stated that there is risk aversion.
Jamarlin Martin: But do you think they’re connected in terms of the endowment returns at HBCUs are most likely underperforming a lot of other universities due to the extreme risk aversion, now the executives and the black people of influence in Silicon Valley, they are very risk averse. They don’t want to mess up their checks. They don’t want to be blacklisted. So let’s call it the diversity returns or the economic empowerment returns could be less because there’s too much concentration on shutting up and dribbling. We’re not taking enough risk in terms of being vocal.
Marlon Nichols: Again, I don’t know enough about HBCU endowments to have an informed opinion on what they’re doing wrong. Would I like to get a check from a HBCU endowment? Sure. Invest in our fund and we’ll make some money, but I can’t say that I can sit here and equivocally say or unequivocally say or that they’re failing or they’re not doing as well as another endowment because their exposure to private equity is less. I don’t know that.
Jamarlin Martin: Let me frame it a better way. Black people specifically, we would get better economic returns in terms of our relationship with Silicon Valley if there was less shutting up and dribbling and more taking of risk, particularly with people close to power, close to influence. Things are going slower because too many of us who were kind of close to the system are connected to the system. To many of us are shutting up and dribbling. Some people believe it’s OK to shut up and dribble, but there’s too much concentration on that and…
Marlon Nichols: Who’s shutting up and dribbling that you’re thinking about? Who is an example?
Jamarlin Martin: Let me give you an example of someone shutting up and dribbling. The VP of Apple. The sister, I assume, was terminated. She was separated from Apple recently where she talked about diversity as being all about cognitive diversity. There could be a room of 12 white men and that could still be diverse. I believe her name is Maxine Williams at Facebook, another black woman. She’s come out and there’s a video of her saying we’re all about cognitive diversity. It pretty much saying the same thing as the Apple VP. It looks like the Apple VP didn’t really know her role was most likely heavily weighted towards PR. I believe that those black women are shutting up and dribbling. They’re there mostly for PR. They’re not there to shake things up.
Marlon Nichols: Colin Powell was an adversary of affirmative action. Was he shutting up and dribbling?
Jamarlin Martin: Colin Powell. He has spoken up within the Republican Party. Overtime they have disliked him more and more, but for sure, I think you know in the 80s for the most part, 90s, definitely Colin Powell would be shutting up and dribbling. I would put him in that bucket. You mentioned Google is backing your fund. Have you ever talked to David Drummond?
Marlon Nichols: Yeah.
Jamarlin Martin: Would you say that this is definitely someone who, he’s behind the scenes, you may have not heard anything, but he’s definitely not shutting up and dribbling in terms of his activism and pushing kind of the movement forward?
Marlon Nichols: I think David was instrumental in our fund getting the investment dollars that we got from Alphabet for sure. OK. He’s very instrumental in Plexo Capit rolling out of Alphabet to do more of this. So, I think he’s someone that’s leveraging his position and his influence to make a difference. Also I think that it’s almost irresponsible to judge someone off of a bad day or a comment unless we know the totality of what they’re doing. I have no idea what this chief of diversity, I don’t know what her name is, at Facebook is doing, but there could be a lot of actions that are taking place that we’re not privy to. What I would have liked her to say is that ethnic, gender, racial, cognitive, interests, thought, education, all these things, diversity of all these things is important. Yeah, that would’ve been much better. But I’m not going to sit here and crucify her for not saying that when I have no idea what else she did.
Jamarlin Martin: Do you believe that a room could have 12 white men and still be considered diverse in terms of how you define that word?
Marlon Nichols: It can be diverse in some ways. Is it the type of diversity that I would prefer to see? No.
Jamarlin Martin: Would you ever call a room like that diverse?
Marlon Nichols: Optically? It’s not, but in other ways it might be, but that wouldn’t be my definition of diversity.
Jamarlin Martin: What would be your definition?
Marlon Nichols: My definition of diversity is race, gender, thought and experiences.
Jamarlin Martin: Alright you heard it from Marlon Nichols, from Cross Culture Ventures. Thanks everybody for listening to GHOGH. You can check me out at Jamarlin Martin on Twitter and also come check us out at Moguldom.com. Be sure to subscribe to our daily newsletter. You can get the latest information on crypto, tech, economic empowerment and politics. Let’s GHOGH!
This interview has been edited for clarity.