Full Transcript: Comcast Ventures Catalyst Fund Managing Partner Kai Bond On GHOGH Podcast
They discuss the Fyre Festival being flagged during due diligence and Kai’s observation that most African-American entrepreneurs are under-negotiating.
They also discuss a Washington Post article suggesting Facebook is psychopathic.
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.
Listen to GHOGH with Jamarlin Martin | Episode 46: Kai Bond
Jamarlin talks to Kai Bond, managing partner at Comcast Ventures Catalyst Fund. They discuss the Fyre Festival being flagged during due diligence and Kai’s observation that most African-American entrepreneurs are under-negotiating. They also discuss a Washington Post article suggesting Facebook is psychopathic.
This is a full transcript of the conversation which has been lightly edited for clarity.
Jamarlin Martin: 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. Let’s GHOGH! Today we have the great Kai Bond on GHOGH. Welcome to the show.
Kai Bond: Appreciate it. Thanks for having me.
Jamarlin Martin: Kai Bond is a serial entrepreneur. Also he’s an investor for Comcast Ventures. We’re going to dive right in. Tell us a little bit about your background.
Kai Bond: Sure. I’ve been working in tech for about the last 20 years. Started off at what I thought was the cutting edge in mobile back in the late nineties. Traveling back to Botswana where my mom’s from and seeing everybody with the phone running around and I was just like, this is going to be the future.
Jamarlin Martin: Where’s your mom from?
Kai Bond: She’s from Botswana. And so I was traveling through Africa and saw what was going on in the mobile ecosystem there and the fact that in the U.S. at that time you couldn’t even send cross carrier text messages. And people were taking pictures and this is the point in time where I saw people doing mobile commerce in the 90s on the continent. And so I wanted to dive in. So I came back from that trip and was like, I’m going to get into mobile and started working on messaging, got a job at Microsoft. Spent a bunch of years there. And after about three and a half years in Microsoft I decided that I wanted to get back to New York. So I moved out to Redmond and came back to New York City, joined a few startups, and quickly realized that most of the people who are running startups that I worked with weren’t necessarily that much better at anything than I was. Whether that was business development, design, marketing. And so I decided I wanted to take the plunge. They had one skill that I didn’t have any expertise in, which is fundraising, which is a whole different ballgame. And I was like, all right, I got to master that. So, I founded a company in 2005, 2006. There was a marketplace for trading video games. We were trying to be the StubHub for the gaming industry. At a time when people were still getting Netflix DVDs in the mail, we had a peer-to-peer trading platform for used games. That business wound down after about two years. A lot of struggles, a lot of hardship, dead broke, tons of debt and pouring everything that I had into it, payroll not paying myself so I could pay everybody else. And after putting myself in that kind of debt and hardship, there was only one thing to do and that’s go back and do it again. So I started another company a couple of years later in the cash-gaming space. This was 2010. We fundamentally believed that the regulatory environment around gambling was going to change and 2012 was kind of our prediction. So we started a company called Cash Play Games. Those were chance-based casino games, like slots, dice and roulette tied to a sweepstakes engine. So we ran that company for a while. Another crazy journey as an entrepreneur. Got to a signed LOI to acquire the company for about $20 million. One hour before the LOI expired, the term sheet was pulled, they ended up acquiring a competitor. They were running a process, superstorm Sandy hit.
Jamarlin Martin: How much money was put in?
Kai Bond: $600,000.
Jamarlin Martin: Six hundred thousand, yeah.
Kai Bond: So it was a good outcome right at that point in time. And it was only nine months in. And so that term she got pulled, a lot of lessons there again, just pain.
Jamarlin Martin: I have a experience with that where there’s a deal on the table or someone’s talking some really big talk. You may even start due diligence. Can you talk about the mistakes with entrepreneurs counting the money before the money’s in the bank and essentially folks expecting some type of value to come into the company. They may start hiring, they may start looking at all these different things, but talk about that.
Kai Bond: The deal’s not done until the deal is done. We took our entire senior leadership team of this company out to Seattle. My CTO, the head of the game studio, myself, two engineers, we had Visa transfer agreements done. I looked over at the banker and I was like, “What’s good?” And he was like, “This a lay up, let’s go and drink”. And I’m like, “Nah, we’re not drinking tonight”. We’re not celebrating, term sheet doesn’t expire until Friday midnight. I’m taking a red eye home. I’m staying here. And I think the expectation, the excitement, people get carried away either with the money or the success, you know? And so, we were still running the business as if nothing changed. We knew that we had to execute and deliver. So when we got back, the best thing that happened was my CTO was in the room, when I talked about what happened and he had his laptop open, sad faces in the room. People were going to make million dollars. He just shut his laptop and was like, “F–k them. I didn’t want to be acquired by them anyway. I got work to do.” And he just went back to his desk. He was like, “I don’t even want to hear it anymore.” He didn’t care about the explanation or the reasoning and the logic or whatever. We still have a good business, let’s get back into it. But I think a lot of people have conversations. I’ve seen entrepreneurs get carried away, even if deals don’t go that far in diligence. It’s just like anything else. On the venture side, term sheets get pulled in the long diligence process. Term sheets get pulled in deep transactions for commercial partnerships late on in the game. And we need to realize is no matter what somebody is telling you, they may be a champion in the organization. The person that we were working with was a senior vice president, but the CEO had two competing teams looking at deals in the same space to satisfy the same slot that they wanted filled. And he got these proposals back to him and he chose one of the two, so the person who was the champion for our deal left a month later, he didn’t get the deal he wanted done. And so, these guys both reported to the CEO of the business. And so you got to get right to the top, and until it’s done, it’s not.
Jamarlin Martin: That deal doesn’t happen at Switch Games. What happens next?
06:14 —Kai Bond: Yeah. So, it was a tough time. Superstorm Sandy hit, we couldn’t raise money. At that point it was late. It was late in Q4, which is a terrible time to fundraise, right? You’re into November now. Nobody’s going to take a new deal and try to get it rushed through to committee before Christmas. So we try to bootstrap and keep the business alive and keep it going. We had O1 visas, we had H1 visas, so we couldn’t bootstrap because they can’t go down to zero salary based on sort of the structure of the language in these visa agreements. So we had to shut the business down. And that was devastating, right? That was one of the hardest times in my life. And I took some time off to try and reflect and I told the story the other day. I sat down in an office, I was getting older and I was like, man, I got to responsibilities. I got to figure out what I was gonna do…
Jamarlin Martin: I imagine you were in a deep depression.
Kai Bond: Yeah. It’s just, you’re in the funk, man. You’re in a haze. You go from what you think is the top of the world owning 50 percent of a business, there’s going to be a real outcome, to winding down a company in less than 120 days. And so the psychological pressure, the emotional pressure, I got sick. I was physically ill for a while and really contemplated what I was going to do. I sat down at an office and I took a job. I took a normal job again, which I hadn’t done for 10 years. And I looked around and I was like, I made a mistake. I had to go to the guy who hired me and walked down the hall. And I was like, “This isn’t going to happen. I can’t stay here. This isn’t for me.” He’s like, “What happened?” I didn’t make it to orientation.
Jamarlin Martin: I can see them saying this guy’s unstable.
Kai Bond: It’s crazy and I am so, cause I went back and did another startup. And I did a third startup. And this time it was, it was in the smart TV space. It was in the platform side and we had a very simple vision which was all broadcast television is the same. And when you sit in front of the television and you have another screen, you’re getting your custom personalized content directly from that phone or tablet or laptop. And our main vision was how do we take the content on a mobile device and put it directly on TV, custom Twitter feed, Instagram, whatever it may be. We ended up signing a partnership with CBS where we did fantasy football real-time. Your scores, your opponent’s scores, stats, league standings across the board as a custom ticker. And as we rolled that out, we knew that the interactive media teams, we’re loving it. We’re taking it to people who showing it to them. It was a WYSIWYG editor to get all of their second screen content directly on TV, sort of fulfilling this vision around custom content delivery. And what we realized over time was that there was actually a larger problem. There was a larger set of challenges that they had. And that was actually the fragmentation in the ecosystem that we saw early on in mobile was very similar, right? You’ve got Samsung, LG, Roku, Xbox, Apple, Playstation, Chromecast you go through the list, they have to support 10 platforms. And so we ended up taking our software and creating a WYSIWYG editor that allowed for rapid development of smart TV apps. And that was kind of something that we could sell. It was a SaaS platform. It wasn’t just a media play. And when we would go in and talk to the people that we’re spending $250,000 to $500,000 per smart TV app and telling them that for a 10th of the price, we can support 90 percent of the functionality, they bought it. And so we started selling this to large media companies. And once we started getting traction on both fronts, we had a meeting with the team at Samsung in South Korea. And we flew out and we met the leadership team there. A gentleman by the name of BK Yoon who ran their TV team as the CEO of the TV side for a long time. I think a lifetime Samsung executive. And he stopped me about halfway through the meeting when we were talking about our platform and was like, “Stop, we’d like to buy the company.” So we ended up having that transaction in the meeting real-time. And after about nine months of building we ended up selling the business after about 13 months.
Jamarlin Martin: How does that happen in a meeting where you start talking about deal terms?
Kai Bond: Yeah. We that was a unique case. They were building something that was very similar. They had the same vision and alignment. And so when we started talking, even though my Korean is nonexistent in their English wasn’t great, we were speaking the same language because we knew the value that we wanted to deliver to customers on TV. They were already working on an integration for custom content. There was a brother by the name of Ty Ahmad-Taylor, a guy, Jim Albrecht out in California in San Jose. And so when we had the right sort of core technical DNA and proven traction and they had the hardware and distribution, those two things came together and it was a no brainer at that point in time.
Jamarlin Martin: When you’re talking about valuation and maybe an earn-out, is that’s in that discussion?
Kai Bond: It wasn’t. There was a conversation and it was, we want to buy, and we were there being represented by some of the folks in the U.S. and they were like, look, we’ll take this discussion offline.
Jamarlin Martin: We want to hook up, but we’ll talk about the terms later.
Kai Bond: It was clear intent. We don’t want to just partner here, right? We see something more strategic. We were open to it. We knew how difficult to market was after having spent our time looking at the space and doing a market analysis, and the conversations took about three months to close the transaction because that was April, and that was a wild time because it was the World Cup. We were doing our largest launch ever around the World Cup and having this interactive content globally. And that’s really what kind of got everything going in that June timeframe to really push towards an August transaction.
Jamarlin Martin: And you’re not going to shop that deal with the buyer?
12:19 — Kai Bond: We had strategic investment from Samsung on the venture side and they had been great partners to us. Three months into the company, David Eun, who’s now the chief innovation officer at Samsung Next here in the U.S., he gave us a platform, right? People talk about corporates and strategics, but BK Yoon came to the U.S. for our office opening and we were 60 days in and David was like, “You’re going to give a demo.” And I’m like, “We’re not ready to give a demo. What are you crazy?” And he’s like, “You’re going to give a demo.” And we did, we worked around the clock to get this thing polished in a way that we could show something off and the app crashed. We tried to launch it or we tried to give this demo. We’ve been testing it all day and it worked. Of course we fired up the TV and it crashed. And people were like, “What the hell is this?” But nonetheless, that senior level exposure at day 60, then when we went back at 180 and showed him what we were doing, I mean it was crazy, you know? And so that was part of the nature of our relationship, the alignment and what we felt was right for the business in that time.
Jamarlin Martin: Was there any argument internally? Like, “Hey, you still need to shop this deal and you need to go through some price discovery.”
Kai Bond: Yeah, we probably should have. And we had that opportunity. For us, the unique nature of the alignment and where we were going post acquisition was a huge difference. Ty was running the division, he was a brother who I knew for a long time and I’ve seen, I worked in MNA right at IEC, and we acquired a bunch of businesses in the games space when I was there. And seeing post merger integration go wrong and people not hitting earn-outs and leaving, we were in a unique space where they were acquiring Boxee, the guys who had created the smart TV hardware box, they were moving into an office on 18th Street. We didn’t have to relocate. Our lives were going to be upended and have to move. And so there were a lot of things that were aligned outside of price that we knew that would dictate the success and happiness of the business. And me as a person and going through two failed startups and knowing that price isn’t everything for me at that point in time. Money’s great, but it’s not going to buy you happiness. And so that part of the equation was key for us.
Jamarlin Martin: Got It. And so how do you get to Comcast after this deal?
Kai Bond: Yeah, so I spent a year sort of integrating our software and our stack into this larger division and org. We launched, it’s now called Samsung Extra it was launched at CES. There was a big event around it, it was great. After a year, I’m a terrible, terrible employee. I’ve been managing my own business for 10 years. I was now in 180,000-person division in a 300,000-person company. And I was traveling back and forth to Seoul once a month. I was on the west coast once a month. It was just physically taxing. And I had the conversation that I wanted to leave and they were fortunate enough to say, why don’t you come into Samsung Next which is our software innovation fund in the U.S. and run our accelerator in New York. And I was like, “Word. Early stage. That’s where I’m at. I love New York. I know how to navigate Samsung for strategic.” And this was right around VR when they were rolling out the headsets where there was a lot of AI and smart home technology and just different segments of the market that I was interested in. I’d always worked in mobile and gaming and media and entertainment. And so I wanted to get more into some of the deep tech side of the house. And so I spent a year running that program and I got an opportunity to meet the Comcast Ventures folks. And I’d known them for years in the New York ecosystem and pitched them several times and always had a good experience working with them. And they reached out.
Jamarlin Martin: They turned you down?
Kai Bond: They turned me down three times but I went to work there regardless because the way in which they were thoughtful and engaged in the feedback… I actually went and read all the emails. So when they turned my business down.
Jamarlin Martin: Were we’re pitching to Crowder?
Kai Bond: No. So at the time I was pitching to Sam Landman and Andrew Cleland in New York. Andrew was on the board of FanDuel and I was doing a cash gaming business. So he kind of knew what was going on and Sam had done a bunch of the interactive media stuff in streaming. He was an investor in Cheddar TV and kind of understands the new form of media that’s coming out. So when I was pitching my most recent business and Pixie TV, I talked to him and I read all the emails and how they turned me down and why, what they thought was going to go wrong and issues. And they were right, in some of the challenges and market size, right. Some of those deals, it was a good outcome for me because we only raised a couple hundred thousand dollars. It’s not an outcome that is going to be a fund-maker for one of them. Right. And so had some conversations, they had this opportunity to join in New York, which was really a unique role. It was, sort of, a two-sided role. One of it was running Catalyst Fund, right? So that was, that’s really what I came into Comcast Ventures for is to manage Catalyst Fund. That’s a $20 million fund focused on African American and Latino founders. Right? We all know the stats. Less than 1 percent of venture capital goes there. $130 billion of venture capital in the ecosystem last year. Only 26 female founders of color have raised more than a million dollars. Right? The disparity is crazy. And so I knew how hard was for me over the course of 10 years raising money as a founder and I figured that what better position could I be in then to coach and mentor and advise on the things that I’ve done well and done poorly, distribute capital to phenomenal founders and sort of try to help manage those two successful outcomes. So I had the opportunity to join. I jumped at it. An investor who invested in my business and I worked at Hatch Labs during sort of the investment in tender and ran Cash Play out of that accelerator. Dinesh Moorjani, he’s the managing director out in L.A. and he joined a couple of months prior to me and knowing that the guys in New York were good. Dinesh was on my voting committee, so everything came together and we were able to kind of take it to the next level. So I’ve been there now for about two and a half years.
Jamarlin Martin: Do you have the autonomy where I want this deal and hey, I can’t get vetoed.
18:43 —Kai Bond: Yeah. So every fund is different and there’s check writing and discretion at various levels. I have an investment committee on the Catalyst Fund side. It’s a three person committee, majority rules. I don’t have 100 percent discretion of, I can just go and cut a check. But the investment committee is supportive because I’ve developed specific themes and philosophies around sections of the market in direct to consumer, in gaming, in marketplaces that are well defined. And so if something falls within that wheelhouse and we have capital to deploy, we’re going to go after it aggressively and the likelihood that that deal gets done is damn near 99 percent, unless there’s something really hairy about the deal or an issue.
Jamarlin Martin: So 99 percent, if you’re bullish on something. You’re pretty much, it’s a go.
Kai Bond: Yeah. At the end of the day the committee is there to provide support feedback, these are smart people who have been working in venture for a long time. And having that lens and that feedback is important to get to the right outcomes.
Jamarlin Martin: What’s your average check size?
Kai Bond: Last year it was about $450,000. We say about $500,000, but we did a couple of smaller checks as well. We target 500k at the seed as a sweet spot for us. If we can invest in and try to push towards 10 percent ownership at that phase, that’s great. But if there are outsized returns with larger rounds and specific founders or an opportunity to get into a space where we can add a tremendous amount of value, a market that we know, we’ll make exceptions for sure. And so checks can go up or down. We did a $3 million check into an AI company up in Toronto that’s disrupting the legal space. And so that came partially out of Comcast Ventures and partially out of Catalyst Fund. Right? And so we have this ability to work together. The way that we try to structure everything now is we have autonomy at the seed to really do what I want. But if I’m trying to really push it in Series A and be supportive of a business, that’s what we did with ROSS Intelligence, right? We did the seed out of Catalyst and then we wrote an even larger check at the A with the support of Comcast Ventures so we could come in and buy real ownership, and these are our businesses that we all believe in.
Jamarlin Martin: Yeah.
Kai Bond: The lens that I want to go through is, I don’t care if it’s a black or brown founder, the deal should be good enough that everybody in the main fund wants in on this. Right? And you see that with a multitude of tier one VCs who have invested alongside us with Catalyst.
Jamarlin Martin: What has been your toughest no, where you went home and maybe thought about that a couple of nights. That was a tough one or have you had a tough one?
Kai Bond: I have, yeah. I can’t name the specific deal. It was a larger deal. It was a $250 million check that I wanted to push through.
Jamarlin Martin: $250 million. Wow.
Kai Bond: Yeah. And so it was even beyond the scope of Ventures and take it up a level to corporate. It was a huge check. It was tough. It was a tough time to get it done. Obviously we had gone through a large transaction with Sky TV. We have some of this capability when you look at some of the investments we’ve made, with even NBC and Comcast, as an example something like Snap, right, where we come in pre IPO with a $500 million check, right? These are the types of deals that are going public that will be real market movers. And so it was exciting to work on because I focus on the seed most of the time. And so it was exciting to work on something larger and later stage. And it was very difficult to, to hear the no, because a seed deal you might work on for two or four weeks you’re going to get to a no, you’re going to wire out pretty quickly.
Jamarlin Martin: Yeah.
Kai Bond: When you take our full quarter to do diligence on one deal and you shut everything else down to kind of move forward with it, it’s frustrating. And when you think it’s the right thing for the business, it’s frustrating. But at the end of the day, I understand the logic behind it. And I think there’s no venture capitalist that you will talk to who will either say I regretted passing on a deal or regretted a deal that I couldn’t get pushed through committee in some way. And so I don’t think it’s unique to me in any way, but I felt my lumps on that one for sure.
Jamarlin Martin: There were reports that, I don’t know if it was your fund or Comcast Ventures was looking at Fyre Festival. Of course Fyre Festival has been in the news. There were flags raised in the due diligence process. Can you talk about anything about that?
Kai Bond: Sure. I mean, look, we see thousands of deals a year, right? The reality is I see about 400 to 600 deals on an annual basis depending on the year and repeat founders and how you count new, when you talk about a partnership of eight and principles across the board, we’re looking at thousands of deals. And there’s a reason why you due diligence the way that you do and dig into company financials and understand the flow of capital and what’s going on. We did our diligence and we passed. Right? And I think there’s a lot that’s misrepresented in the media about what the ins and outs of that were. I can’t speak at length to it. But what I will say is we passed and I think at the end of the day, what gets caught up is that oh, we were looking at this, like the ticketing business. We looked at one section of it, we had an exploration into the other. We passed. And that was that.
Jamarlin Martin: How does that, someone’s pitching a festival to you. II mean before you get to the due diligence, how were you looking at it in terms of its tech orientation or was there something kind of more tech that people don’t know about?
24:19 —Kai Bond: Oh, yeah. Yeah. I mean, I don’t know if you’ve seen the documentaries, but there was a business there that was really a lead gen business around booking and a marketplace business and that was what was most interesting to us. Right? We look at marketplace businesses, we haven’t done events businesses or festival businesses. That’s what gave us the most pause anyway. Why would we get into this? If you have this other core business that’s great over here. So, it is what it is. Like I said, I can’t talk at length about it given the communications plan on our team, but that’s all I’ll say on it
Jamarlin Martin: Before an entrepreneur steps to you with a pitch and they’re fortunate enough to get an introduction or talk to you, based on your experience, what do they need to know absolutely before they think about stepping to you?
Kai Bond: Yeah. I always say it’s easy to do research, right? Everybody has a Twitter feed or a LinkedIn profile or a blog. People come to me all the time and they’re like, “So what do you guys do here?” And I’m like, it’s so easy to come out and research. And they’re like, “So what are you investing in?” Well, it’s all public. It’s all out there. You can look on the website, like immediately, you haven’t done your homework on this. That’s just sloppy, right? There’s no excuse for that. You can do that walking from Broadway, Lafayette stop to our office, 250 feet. You could pull up our website and see what we’ve invested in, the last five deals we’ve done. So that’s a red flag for us. Not knowing the fund in our focus and what we’ve invested in, not knowing my background and listening to the podcast that I’m in. If you’re really serious and you want to build a relationship with somebody, I’m doing the same stalking online before everybody else comes in. Who do we know? Who are we mutually connected to?
Jamarlin Martin: I would call this the lack of seriousness flag, where entrepreneurs are pitching to 100, 200 people and people coming to you and they don’t understand the severity of this meeting in terms of, that may be one out of a hundred that says yes, but they won’t do the research.
Kai Bond: It’s simple and it’s sloppy. And I see it happen too much that people just don’t do their homework on us as a fund or don’t do their background checks on the people they are talking to. It goes along the way. I think the other side is, when it’s clear that a founder doesn’t have a really good understanding of the unit economics. The deals that I’ve done and the investments I’ve made, you can look at it and it’s like, we know our CAC to LTV, we know our conversion rates, our funnel, our pricing, where there are levers, what we can change in our distribution system as we scale to gain more profitability. And most of the time I’m investing at the seed, right? And so I this is the entire goal of a seed process, right? Understand your unit economics. When you get to the A, it’s just pouring fuel on the fire. And so when someone comes to me and they’re like, “Well I’d have to go back and get that stat.” When I was a founder, I was living and breathing those numbers every day. That was breakfast, lunch, dinner, midnight snack, looking at and running a custom profile of analytics and trying to figure that out. And to me, if somebody doesn’t understand that as a founder, I feel so distant from them because that just seems so core to the mission. And so unit economics and understanding their business just inside and out to me, instead of just selling the vision, right? But I do think there are a lot of people who get focused too much on this myopic nature and forget to think about the big picture and sell the vision, right? And tell the story and the narrative. And I think that is an important component because you’re going to be telling a story to your venture investors, a story to your employees. if you go public to Wall Street, right? And so you have to have this balance of the creativity, the storytelling as well as the fundamentals. And those to me are the people who make up the best profile for CEOs.
Jamarlin Martin: How often do you get in a situation where the founder comes in and they’re so nervous it makes the meeting difficult. They’re tripping up over stuff. They’re fumbling, they’re uncomfortable. That’s a big meeting for them. How often does that happen?
Kai Bond: Not as much as you’d think. I think hopefully people don’t feel threatened or whatever. We try to create an environment and tell a story of my failures and be very transparent that I’ve been through the hard times, just like any other founder. And so the founder’s struggle should be something that’s natural and okay. Because we all go through it. But I tend to find that most people are confident or if not, they can at least mask it for that hour they’re sitting across from me.
Jamarlin Martin: So, very rare?
Kai Bond: Yeah, I’m not important enough.
Jamarlin Martin: What market segments do you have a unique thesis on in you’re fund, where you’re really looking at, hey this is an underserved or a segment that’s really interesting?
29:24 —Kai Bond: Yeah, so we’ve done a bunch of direct to consumer investments. One of them is LUS Brands. They’re based up in Toronto. It’s a haircare product for African American women that focuses on curly, wavy and kinky hair, shampoo, conditioner and all in one. It’s a product my wife uses and, I had a conversation with the founder and I was like, “There’s nobody out there who’s creating a brand presence here in this space around haircare for the segment and curly haired women.” And so I think the way that I look at it is, is there an underserved market where needs aren’t being met and there was an authentic voice and product being created by the CEO. Weshave is one that we recently did with Karen in New York focused on female care. I think she’s a phenomenal CEO. So certainly direct to consumer is one of those that we formed a hypothesis around the care space. Gaming is another one. Our thesis in gaming is really around three things. Core IP. We look for people who are creating original IP that’s unique, that goes across platform focused on multiplayer. We did an investment in a game studio called Kite and Lightning that’s based out in L.A., that’s making a Battle Royale game that’s a fighter. So my generation, we had Tekken and Street Fighter, Mortal Kombat.
Jamarlin Martin: What was your favourite player?
Kai Bond: I’ll get back to that, but this studio is creating what I believe is the Fortnite version of a fighting game, right? Free to play, monetized in app purchases across platform. And I think that there’s a huge market potential there, right, and that they’re creating. And we have that social layer around community that we think gaming, if you saw what happened last week in Fortnite, one of the largest concerts in the world happened, 60 million people are sitting there flying, hovering in, being spawned, participating in a music concert, not even playing Fortnite but on the platform. And so we do think that there’s going to be a lot of social and community elements in and around gaming. We invested in Players’ Lounge, which is head to head wagering on games of skill. So if you and I want to go and play a game of Madden right now, I could pick my team you pick yours, wager $10 each, platform gets a 10 percent cut, the winner takes the rest. So that’s the second component. And then the third component is a really around tech and tools in infrastructure and gaming. I’ve been spending a lot of time in the cloud gaming space most recently. I think we’re going to see the same things that we saw on the film business and the movie business going from physical purchases going to the cloud. You’re already starting to see that. But there’s more and more opportunity there. So for every single market that we go in, direct to consumer, whether it’s gaming, we develop our philosophies around those verticals and try to find the best founders. All of the founders that I’ve mentioned there, African American, Latino founders doing something really unique in their market, in their vertical.
Jamarlin Martin: Back to Street Fighter II
Kai Bond: I was a Tekken guy. I don’t know, so…
Jamarlin Martin: Did you guys look at Bevel? You mentioned you invested in a hair products companies. Did you look at that deal at any point?
Kai Bond: I think that they looked at it prior to my time coming into the fund. Obviously given Dollar Shave Club, we had a lot of familiarity with the market. I think that we always look at it as a portfolio construction, density and where we’re putting our dollars to work. And we had a good amount of money allocated into a business already and obviously Dollar Shave was a phenomenal outcome. I think was a $1.6 billion exit, so it was a great return for the fund. But I don’t have much exposure into that one.
Jamarlin Martin: Do you guys have any initiatives where, okay, I’m looking for all these things in terms of unit economics, you need this understanding, this is not a charity, but there’s a cultural deficiency in terms of the legacy of white supremacy and racism in the United States where Black America is a bit behind in terms of other communities. So, to get the community up to the level where they have a higher probability of getting a check from you, do you guys do anything internally to provide knowledge stimulus in the community?
Kai Bond: Yup. So I sort of think of this one as hand to hand combat when I talk about it, right, as opposed to bringing in the army, we kind of send in the special forces. And so we do things, as an example, with Gunderson Dettmer, office hours around legal and what to look for in term sheets. And what are the gotchas and side letters and expectations at the seed versus the A and how do the cap tables work? And so we’ll run workshops where we go and set up and identify office hours, whether it’s at Black Tech Week or Afro Tech or just in New York, right, on a Friday afternoon where we bring people in. So we’ll do this around cloud services where we have partnerships with all of the major players in this space where we’ll offer up special credits. And the reason why I got into the, into venture investing was really to help founders, right? That was my goal. Deploying capital is great and cutting checks, but I know that out of the 500 meetings I’m going to take in a year, I’m going to invest in five or six founders.
Jamarlin Martin: You’re taking 500 meetings a year?
Kai Bond: Yeah. The other 495 or 493 that I take, that’s just about building, right? It’s trying to have an honest dialogue. How can I be helpful? Do you want feedback on your deck? What does that look like? So we have some things that we’ve done that’s sort of an institutional level where we have office hours and workshops and work with partners. A lot of it just comes down to spending time with founders. I feel like that’s where you get the most value is those one on ones. We do founder dinners, we do venture networking events. It’s busy. We’re always just grinding, trying to help.
Jamarlin Martin: You’ve probably read about, over the last month or so, there’s been about 2,000 layoffs in the media industry. So Buzzfeed, McClatchy. There’s a depression, right? A lot of deflation in the media industry. When you think about the duopoly of Google and Facebook taking up to 80 percent of mobile ad dollars. They have the market on lock in terms of their scale, their political lobbying, lack of regulation. Do you feel like they should be held accountable for the bear market in media where it’s harder and harder for people to get quality media and for, we saw Cambridge Analytica, that political issue with Facebook. But it’s getting harder and harder to provide quality information that’s ad-supported. And so politically, how do you think that should be addressed, particularly with Facebook and Google?
36:24 — Kai Bond: It’s an interesting time to be in media, right? This is a disruption that started 15 years ago and you saw print subscriptions dropping and online lagging, and now not being able to keep pace, from a fund perspective we’ve done investments in things like The Athletic, which is subscription-based content. And I do believe that most people are willing to pay for quality product. I believe in that. You look at New York Times, right? They had, I think they just announced $800 million quarter in digital this year. There’s a great founder who started a company called Nickel, and what they’re doing is taking different types of bundling content. So let’s imagine you don’t want to subscribe to the New York Times for an entire year, but you think that their political coverage leading up to the elections are great. You can just take that part of the content, bundle it up, use the rest DK and have that coverage go on for a 30-day window leading up to the primaries. Right? So I tend to think less about the regulatory environment in my shoes. I’m sure that other people spend more time there. The place where I spend most of my time is thinking through what are either tech and platform solutions or lasting media businesses where people are willing to spend time and money? And I believe those investment opportunities are out there and we are going to see a rise o,f what we’re seeing happen in streaming video, and now with taking content and creating something that’s compelling that people are willing to pay for.
Jamarlin Martin: Yeah. Let’s try to take you out of the Comcast Ventures VC seat and say, hey, look, if Google and Facebook are going to take all the advertising money or most of the ad money, and where other entrepreneurs or media companies are going to have to all go subscription because they’re going to take all the ad money. Structurally, there seems to be issues because there’s so much app space on someone’s phone or there’s going to be limitations of everybody rolling out a subscription. And so what does that mean for the degradation of people getting information efficiently where I believe that that could become a systemic risk to democracy or certain things that we’ve become used to.
Kai Bond: Right. I was just actually over at the Knight Foundation talking to their team about this exact issue. And they do a lot of work around this particular topic of honest, statistically-relevant factual news, right? And reporting and trying to start initiatives where funding local news that will allow you to get this type of access. I think there’s probably two areas to unbundle there. One of them is, what is going on in the advertising space? Where’s the flow of dollars? And how does that revenue distribution go back to independent publishers who might not be able to roll out large sale subscription offerings, and then generate a profit in that way. I don’t know what the right answer is from a regulatory environment. I feel like oftentimes big tech is an easy out, right? For people to say, “Oh, I’m going to blame these companies for all of the problems that are happening in advertising.” Well, you talk to a lot of people out there. They’re still buying users and buying traffic from those entities. And it’s the most effective way beyond TV and radio. So you have the same people complaining about lack of monetization on a platform and at the same time, they’re buying users, right? So, there’s a little bit of that.
Jamarlin Martin: Well everybody’s locked in. I mean, once the, the duopoly or monopoly has been executed and the users are locked in, I call it the question of conventional views of choice, where if everybody is concentrated on these platforms, the amount of choice people or businesses have are limited. So I’m gonna give you a couple of reports and facts. So one, it’s been reported that the senator out of New York, Charles Schumer, his daughter works at Facebook also. It’s been reported by the New York Times that Mark Warner wanted to investigate Facebook and Charles Schumer told Mark Warner to back off. Chuck Schumer, Charles Schumer, he has relationships, it looks like with Sheryl Sandberg. Nancy Pelosi, her family, they own millions of dollars of Facebook stock and they’ve been buying the dip, of course, Facebook’s share price has dropped and they still been buying. All the scandals, but the Pelosi family, mostly I guess you could say her husband is buying Facebook stock. Because under the Obama administration there was a lack of regulation, there wasn’t, we didn’t hear about any kind of consumer privacy report. There wasn’t any real legislation to police big tech and Silicon Valley, like a lot of Black and brown people are policed in the streets. Meaning that, the corporate behavior, I believe was not regulated. Do you have any feelings about the coziness of mainly corporate Democrats and Silicon Valley where, hey, we’re backing a lot of the Democrat politicians, they’re friends, they have elite networks in Cory Booker’s case, a lot of the elites invested in a company that was sold. Some people are skeptical, but do you believe there should be fundamental distance between our politicians and corporate interests that are looking to lobby and impair regulations where their interests come before the public?
42:33 —Kai Bond: Absolutely. Absolutely. I mean, when you look at it, that problem’s not unique to tech. Going out to industry, right. And lobbying on behalf and then getting a cozy job post a term serving as a politician, that’s been going on for years. Right. And I think the revolving door problems that we have are terrible.
Jamarlin Martin: So would you be skeptical, Eric Holder, justice department, DOJ, there’s not a lot of talk about Silicon Valley, of course, Obama and Eric Holder in the bed with Silicon Valley, but he goes and starts getting checks as soon as he leaves out of Silicon Valley. Silicon Valley companies are now paying him to do work.
Kai Bond: Yeah.
Jamarlin Martin: Do you have an issue with it?
Kai Bond: I mean, this has been going on for years. I don’t think it’s unique to the Obama administration, I think it goes back, it predates that, right? It’s a problem. And I think there’s a couple of solutions. One of them I actually think, pay politicians more, right? Make it a compelling job that kids want to go into. Right now if you talk to people who are like, oh, I want to go in and be a politician, right? Look how many kids are coming out of high school saying that they want to go into industry. Pay the right amount of money to attract the talent so that people don’t have to rely on lobbyists when they get out of office. Right? I actually think that there’s an argument to be made.
Jamarlin Martin: A lot of these people like Nancy Pelosi, we’re talking about multimillionaires, a lot of these politicians. Eric Holder. I don’t think it’s the question of, “Hey, can they make a sufficient income? It’s, hey, I can make five or 10 million by consulting for Goldman Sachs or doing this stuff, or going to UBS or whatever that it’s great. Hey, I make a living and I’m going to go grab the biggest check, but I think there needs to be a movement to break up this coziness with corporate interests.
Kai Bond: I agree. I mean, when I look at these type of political and social progress, right? You talk about the fact that marijuana is now decriminalized or legal in many states, and there are people making a ton of money, millions of dollars off of this cannabis industry and there are hundreds of thousands of people locked up for low level marijuana crimes in the country, right? So how can we say, as a society that it’s okay now, passed some point in time and date, “Hey, guess what, you could have all the weed that you want and make money off of it.” But this kid was caught with a nickel bag and is going to spend six months in Rikers until the trial comes up. Right? And so I think our system is fundamentally broken in the way that change is slow, and what we’re seeing in society and technology is outpacing the ability of politicians and the people are that are dictating and making policy or either self-serving oftentimes or don’t understand the fundamentals of how the technology is impacting society. And that gap is causing some of these issues.
Jamarlin Martin: If Cory Booker and Kamala Harris, who are both running for president, if they came to you and sat with you for kind of two hours to better understand Black America and its relationship with technology in the new economy, what can be done from a policy perspective, whether it’s congress or the new administration, a Kamala Harris or Cory Booker administration. Where would you start in terms of, hey, there needs to be a policy that tackles this inequality because if you don’t tackle this inequality that’s coming out of Silicon Valley, you’re going to see more activity like the yellow vest protestors in France or Brexit or Trump, that this causes risks to the society including economic risks, if you can’t think about a policy solution to address this?
Kai Bond: Yeah, I mean disinformation is a form of warfare and we’ve seen the cyber policies of states acting against the interest of the U.S. Right? And then intentionally spreading this, I mean, it’s factual. Our national intelligence services have validated that, whether people want to believe it or not. When you talk about the relationship of African American population Latino population as it pertains to tech, I think there’s sort of three components that I think about. One is access. We need to start thinking of internet access more as utility access, like clean water. Like we think of it as any other basic human rights. The digital divide is still very real. People need access to the internet, right? And so there needs to be policy around access. I think the second component of that is around education and ensuring that as the RPA and AI type solutions come out that are automating low level tasks that you don’t have a generation of people who were typically in service level jobs that are now completely wiped out and left behind. Right? You need to have computer science, engineering backgrounds that are pervasive throughout the Black community in order to reduce that gap moving forward. And then the third one is really around, it’s fascinating to me what came out of the #metoo movement, right? And what came out of the #metoo movement and the flow of dollars on the private equity and venture side is actually fascinating. So you have a lot of large pension funds, family offices, high net worth individuals that are contributors that said, look, we’re against any of these issues, we want to ensure that venture funds have a female partner, have a seat at the table, right? We’re no longer gonna fund venture firms that don’t have female partners. And you’ve seen a lot of female partners being hired at places, large funds, they’re being promoted.
Jamarlin Martin: Some of the top firms were kind of, hey don’t tell us to hire a female partner, that’s not really helping anything. And here’s our case.
49:01 —Kai Bond: So where are African American and Latinos in that? When I see who’s getting those positions, and I’m not saying it’s a bad thing at all. Women should have a seat at the table, African Americans should have a seat at the table. Latinos should have a seat at the table as well. But the same sort of institutional change isn’t coming down. Right? And so I think that type of policy, when you look at how is the flow of capital, which is directly pension funds owned and run, managed by states who can impact this and say, you need to have African American and Latino partners or we’re not going to provide the same level of funding and anchor checks in some of these funds.
Jamarlin Martin: What about going a little bit further and saying, look, when we look at auto loans and we look at the mortgage industry, when you look at most industries in the United States, the government itself has found systemic discrimination. All right. So the government looking at Google, identifying discrimination against women. The government looking at Oracle, the government looking at Palintir finding racial discrimination. Do you believe there needs to be a national policy where investors, venture capital and private equity, they have to be transparent about the numbers in terms of the people coming in the doors, the check sizes, and that data needs to be opened up? We’re not forcing anybody to do anything, but you can’t trust it. Meaning that, based on the pattern of racism and discrimination at minimum, you need to open that data up. You need to track that data.
Kai Bond: Yeah, I think overall I think transparency is the right thing and it’s important. I’m always leery of using policy to impact private business, right? In a way, because it sets a precedent for other aspects of managing private businesses that does make sense, right? Where you want to keep things about your cap table or whatever, makes sense, private. Right? So as an investor, I feel two ways about it, right? It’s like, I definitely don’t want to be forced to open up my books to the world. Right? And that’s why you run a private entity. At the same time as an African American in the tech ecosystem, I want to know those numbers for damn sure. Right? And I want to make sure that everything’s being done to change them. Again, I don’t know if I have the right answer right. And what the solution is, but what’s not going to change on it’s own.
Jamarlin Martin: Yeah. Particularly we’re seeing that, they have to be embarrassed or they need government or they need something on them to change. They’re not kind of changing on their own. So speaking of Facebook, there was an article in the Washington Post. The writer said Facebook is psychopathic. And for the audience as a reminder, this is the definition of psychopathy. Psychopathy is traditionally a personality disorder characterized by persistent antisocial behavior, impaired empathy and remorse and bold, disinhibited, and egotistical traits. Okay? So this writer in the Washington Post says that as a culture, Facebook is psychopathic, meaning that there’s a lack of empathy, right? Antisocial behavior. And so if organizations like Facebook are going to act like governments in terms of, they’re hiring lobbyists, they’re enforcing how communications happen, they’re regulating privacy where no one’s really kind of looking at them. What type of risk to society would be caused, if that’s true, meaning that you have large, influential organizations, where psychopathy is in the culture. There’s a lack of empathy. It’s hard for them to connect to human beings. So if they’re building products and we want to move fast and break things and we need to be worth $1 trillion and we don’t care and we can’t connect with human beings, what type of risks does that pose for society?
53:05 —Kai Bond: Man. Lay it all out with the last question. I think it’s interesting that you focus on the empathy component. It’s the component that I try and I feel like gives me a differentiated ability to connect to entrepreneurs because I’m not just a VC sitting across the other side of the table. Right? And I think what I tried to do when I started businesses was develop a tremendous amount of empathy with every single person I ever brought onto my team. Right? And at the core of who we are as human beings is this desire to connect, right? Sit around a campfire and tell stories and that’s really what it comes down to. Right? I think any organization that lacks empathy will inevitably be a house of cards. You can’t sustain without it. It’s core to who every single human being is. When you take that and sort of put it on a grander scale, how lack of empathy impacts products and product design, I think a lot of the studies that we’ve seen come out around social media and the unhealthy nature with which either you post or consume and what you want that to mean in the perceived version of yourself as opposed to your true self, and that becomes detrimental. It becomes unhealthy. And that in and of itself can be a form of disinformation, whether or not you’re talking about bots and spreading of fake news or if you’re talking about individuals and how they represent themselves. And so, I don’t have a Facebook account. I don’t have an Instagram account. I had to sign up for one for two years when I ran a company because we had Facebook off. So you can’t actually develop tools on Facebook without signing up for an account. And so I realized, I think early on, sort of the hooks that they were trying to drive in and the authentication layer on the Internet. And we’re seeing a backlash against that now. And I think we’re seeing initial headwinds of how society feels and the perception of big tech when they feel like they’ve been misled and led astray and not giving 100 percent of the truth. And that’s impacted itself and shareholder value, that’s impacted itself in the form of engagement. And I think what makes this generation unique of seeing change in technology and digital, right? It took us probably 80 years in the industrial revolution to understand the impact of what burning fossil fuels will do on our environment. We’re just starting to learn what the impact of social networks and the massive spread of information in a moment’s notice can do to a society, with changing election results. And I think, the cycles in which we learn because of digital are getting shorter and shorter, but the impact becomes outsized. And so we’re the first generation who’s grown up as digital natives growing up on the Internet. And we didn’t know what sharing all of your information could do. We didn’t understand the ramifications that sharing all of your information for a free service could come back to bite you in the ass, and people are starting to wise up to it. Right? And that’s a change. And so I think we’re in for another generation of massive change for people who were digital first, online and social, and now fundamentally understand both the good and bad that that brings.
Jamarlin Martin: How crazy do you think this idea is? When the entrepreneur is closer to Zuckerberg, the character and moral psychological makeup, you have a higher probability of success, right? So there’s variance in cultures obviously. What would she say that Black entrepreneurs, Black people have the disadvantage culturally in the tech space, Silicon Valley ecosystem because of the cultural makeup in terms of empathy, in terms of the level of humanity in terms of the growing up, more people growing up in their church in terms of you’re not built culturally to move fast and break things and building things that could potentially hurt you. You’re not built to only look at how much, how big this thing can get and I don’t care, in terms of your connectivity with other human beings. Do you think it’s crazy that there’s a disadvantage culturally in Black America because we may score lower on a Zuckerberg-psychopath scoring system?
Kai Bond: Look, I can say that 90 to 95 percent of the Black and brown founders that walk through my door, ask for less than any other founder who sets foot through my office. They just ask for less money. They might have the same traction, they might have the same aspirations and dreams, they ask for less. And that privilege, that access, psychologically, culturally where it’s do more with less, the ‘hustle hard grind it out’ nature of everything, that plays on the psyche every single meeting that I have, guaranteed.
Jamarlin Martin: That’s an important point of asking for less. It’s consistent with studies in the mortgage market where they say that the discrepancy between the Black borrower or in the white borrower, is the Black borrower consistently under-negotiates on race. And we can see how in our culture, your’re programmed to be at a disadvantage and you’re asking for less.
Kai Bond: Privilege is real. People come in the door and they have no problems asking for $5 million sometimes. I’m like, “For what, you’ve barely built anything.” Somebody will come through with real traction and be like, “I need $350,000, so I can hire a couple of engineers.” And that’s the rift that I see oftentimes, it’s that big.
Jamarlin Martin: Are you conflicted from, hey, you need to represent your fund and get the best deal for your fund, but hey, brother and sister, you’re low balling yourself based on what the market is?
59:57 —Kai Bond: You’re always trying to buy up in value, right? At the end of the day you’re trying to own as much equity as you possibly can and a good business. And so, yeah there’s very few times in my life where I don’t feel conflicted as who I am as an individual and a human being. And ventures, part of the professional nature of that conflict, which is you want to be as aligned as humanly possible with every single entrepreneur that comes through your door, but you have fiduciary responsibilities to the fund that you manage in trying to return capital back. So the very nature of why I got in, how I work, how I operate and what I need to do in order to be successful, both from a pure happiness perspective in my life as well as a fund manager, those things oftentimes come in conflict.
Jamarlin Martin: Where can our audience check you out online.
Kai Bond: Twitter, https://twitter.com/kagisobond
Jamarlin Martin: Can you spell that out for our audience?
Kai Bond: Sure. It’s K A. G. I. S. O. B. O. N. D.
Jamarlin Martin: I want to thank Kai for coming on the show.
Kai Bond: Appreciate you for having me. Pleasure.
Jamarlin Martin: Let’s GHOGH. Thanks everybody for listening to GHOGH. You can check me out @JamarlinMartin on Twitter and also come check us out at Moguldom.com. That’s M O G U L D O M.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!