Sept. 23, 2020

Matthew Dellavedova — Lessons from Investing in Venture Capital, Angel Syndicates, and Trading Cards

Matthew Dellavedova — Lessons from Investing in Venture Capital, Angel Syndicates, and Trading Cards

NBA World Champion and host of "The Delly Podcast" Matthew Dellavedova joins The Game Plan to discuss his off-court leap into tech investing and podcasting including:

😇Forming his own investment syndicate on Angel List

🎴 Investing in store-of-value assets like cryptocurrency and trading cards

🇦🇺 Australia as a hotbed for sport science innovation

💸The one thing he wishes he had done differently at the start of his investment career

Dellavedova shares with Tim and Jay how he first started to learn about venture investing in Milwaukee of all places (while playing for the Milwaukee Bucks), and how his Aussie roots have influenced his investment interest areas in sport science and biometrics. We also discuss why trading cards have skyrocketed in value over the past year, and the influence the Covid pandemic has played on asset values.

In this episode, Dellavedova gets candid about the investment lessons he has learned over the years including one key thing he wishes he had done differently when he first started writing venture capital checks. We go deep on the things our guest looks for in a company when making an investment, and how important it is to align with the right people both on and off the court.

On the court, Matthew Dellavedova is best known as the point guard for the NBA's Cleveland Cavaliers where he won an NBA World Championship with LeBron James and Kyrie Irving in 2016. Dellavedova has been in the NBA since 2013, and prior to that, he played college basketball for Saint Mary's College where his number 4 was retired. He is a proud Aussie who has appeared for the Australian National Team in both the 2012 London Olympics and the 2016 Rio Olympics, as well as multiple World Cups.

You can follow Matthew Dellavedova on Twitter and Instagram (@matthewdelly), and subscribe to "The Delly Podcast" wherever you listen to The Game Plan!

Follow co-hosts Jay Kapoor (@JayKapoorNYC) and Tim Katt (@Tim_Katt) for all things sports, media, tech, and venture capital.

Follow The Game Plan on Twitter (@thegameplanshow) and Instagram (@gameplanshow) for show news and updates, to recommend guests, and for bonus content!


Transcript

*Please excuse any and all typos, errors and mistakes in the following transcript as we use an automated service to generate this text*

You have to, you know, build that chemistry, as a startup or, understand what what's going on, what motivates the founder, where. Where the going up, be able to overcome things and, and keep working. Cause it's just like sports, you know, it's not just, all right. I made the NBA and you just keep going.

Like, there's a lot of setbacks along the way. tough losses injuries, different things that you have to deal with, but you have to be able to continue to come back every day. And continuing to get better, and, and be able to compete. And I think there's a lot of similarities between, being a professional athlete and being a founder.

Hey, I'm Matthew Dellavedova NBA champion venture capitalist podcast horst. And this is the game plan.

Welcome to another episode of the game plan with Jay Kapoor and Tim Katt. Jay, I think this is episode 34. this time our guest is NBA point guard, Matthew Dellavedova. I'm sure many of our listeners know Delly via his heart on the court, his performances in the playoffs, even an NBA world championship, which he won with LeBron against the golden state warriors.

But I think what he's doing off the court is what's pretty unique.

Yeah. Shout out to my buddies from Cleveland, who I know are going to be listening in to this episode, but we did spend a lot of it, not talking about his Encore performance, but actually how he's syndicating deals. Through angel list. And that was a really cool thing for me, because I think deli talked about how he realized he had a platform and you realize that they had the reach, but how does he take that region athlete and then amplify it.

He goes, and he built a syndicate where he gets folks from all over Silicon Valley to come and back and hearing that story of how he did. It was super interesting for me.

Yeah. And we're big supporters on the game plan of any athlete investor, but what's different about Delhi is he is in it, man. Like he is actually meeting with the founders. He's digging in on the deals, even talks about how maybe he wishes he had done smaller checks to start out, which I think is a great insight for any athlete investor.

but I also enjoy hearing about the different deals he's done. some which are in biometrics, which is interesting because Australia is a hotbed for sports science excellence, which was another thing we hit on.

Yeah. See for me, that part was interesting, but it was even more interesting when we sort of pressed him a little bit on breaking out of. That whole like sports tech investor mode. Right. I think it's so hard. We all, as investors get worried about getting pigeonholed into a category that we've maybe done three investments in, and now everybody thinks of us as only investing in that category.

And deli had some really good reasons as a really good tactics that he used to break out of just being an athlete investor that only does sports and saying, look, there are categories in sports that I love and I share, but I also do all these other things and it was so cool to hear them talk about that.

Yeah. And let's not forget his podcast as well. He's coming after our territory. So with that, let's, let's get right into it. really enjoyed this conversation. Here is NBA world champion and investor Matthew Dellavedova.

Sounds 

Your podcast prom and you should be giving us the tips. So,

Nah, I'm I, sorry, I can't clip it all. We just gotta roll with it. You.

yeah, but actually I think that's a great place to start. So. Six months ago, I think today is when the NBA went on its hiatus, which is pretty wild to think about. They were kind of the leaders, not just in sport, but really in America in terms of saying we got to hit the pause button and really make sure we get our arms around this virus and what it is.

So what's that six months been like for you? I imagine this is the longest break you've ever had from competitive basketball. You know, what, what have you been doing to keep busy? what's going on.

Yeah, no, it's, it's been, a very interesting six months, definitely the longest I've ever had, you know, not playing any games, usually in the off season, I'm playing with the national team representing Australia. so, yeah, I've spent a lot of time. My family have a 10 month old son, so that's been awesome to spend every day with him.

And then I've really tried to use this time effectively. I've always wanted to start a podcast and I thought if I don't start it now, I never will. so have been doing that it's available and YouTube, Apple, Spotify, if you just search the deli podcasts. And then I've also been getting into venture capital and angel investors the last four years.

And I've viewed my next step in that as, starting at Angeles syndicate, and syndicating a deal. And I was thinking maybe a year or two down the line. but when the pandemic hit, I thought if. The perfect deal came up. I would go for it. And, I've actually syndicated two deals so far. And, that's been, been gone really well.

Yeah, so it sounds like you've been really busy and making the most of that time. one of the questions we always ask our guests is when did you first start to think about. Things outside of the game of basketball and that's clearly your focus, you know, you're constantly trying to make sure that you're performing at your peak, but you clearly have so many interests with now starting this podcast, which I imagine is born out of just natural curiosity you have.

And then kind of same on the investing side. When did you first start really thinking about wanting to do some of those things?

Yeah. So, back home, I'm from a small country town and my dad has been involved in real estate and he's always tried to teach, my sisters and I along the way. different things. And, obviously it didn't didn't have a, any money or a significant job until I got to the NBA. So, yeah, it became a bit more realistic and I became a bit more interested in that once I started having my own money too.

Invest. and then I had financial advisors, you know, coming into the league. So every time I would meet with them, I don't ask a lot of questions and, learn about, you know, stocks and bonds. and then after I signed a contract with Milwaukee, had a bit more exposure to venture capital and started learning more and more about that.

set up a few minutes and, really found it. interesting. And, that's what I've been getting into a lot more the last four years and what I want to be involved in, when I'm finished playing.

So it's funny because I think a lot of the guys on, especially the warriors are out in LA, you see them getting involved in private deals. You don't really think of Milwaukee as the, as the startup hub, but seriously, that's where you got your start. How did you start to educate yourself on these deals and sort of get immersed in this world of early stage venture capital?

Yeah. So I I'll go from my financial advisors. they're based in San Francisco, they have a lot of connections. so they set up some meetings for me. I got connected on Twitter with Jason Calacanis and he's been very helpful and I've been to his, incubator a couple of times. And then, I posted a little blog posts, like I was getting into venture and, had an Ozzie venture capitalist, Nick Crocker reach out and, have become really good friends with him.

And he's been like a mentor to me. you know, helping educate me, introduced me to a lot of people. I'm in San Francisco where you used to work. And then from there, those people introduce you to more people and it just keeps going and going. So, I don't think the location really matters anymore, especially, you know, everyone getting used to zoom, during the pandemic.

No, I think you're, you're absolutely right. And it's funny the way you're talking about it reminds me of like my start in it, which is, yeah, you just. Five people and you say, Hey, who else do you know? And now suddenly you've got this really great network of investors and folks that you can reach out to. I guess, on the flip side, you've also played with guys like LeBron who now have all these, you know, adventures that they're taking on off the court.

Or is there anything that, as you were saying, watching how he operated or even other guys that you played with, how they operated that you looked at and said, yeah, that's something that I know I would like to do off the corridor or, you know, just even sort of in my free time.

Yeah. I mean, I'm, I'm always trying to learn, you know, from my teammates and especially in different veterans I've played with. And I think the cool thing about the NBA is, you know, Veterans really take an interest and try to help educate the younger guys on the team and not just basketball or how to deal with the season, taking care of your body, but also off the court stuff.

you know, investing money. how to tell people no, just things like that. And, you know, I always tried to pick LeBron's brain when we're sitting in the cold tub together and he was super generous with sharing different things. Like how we. viewed the blaze pizza deal. you know, after I think he was sponsored by McDonald's, but, you know, shifting more to the ownership side.

Yeah. Things like that. Steve Novak in Milwaukee, would sit next to him on the plane, Andy Virgil, when I first got into the league. So, lot of very helpful people along the way, who. And, shared their knowledge and, you know, that's what I try to do now with, with guys coming in. If they have an interest in it,

I think the allure to venture capital can so often be we see these unicorn companies, these massive valuations, Oh, it's so easy to make money who wouldn't have bet on Facebook early on, you know, all of these 

kinds of 

things, 

but the reality is most startups fail and that's what makes venture capital. pretty big, re or risky proposition, especially if you're not in it a hundred percent of the time and completely focused.

So I think the other misconception is, you know, as a professional athlete, you just have unlimited money and, you know, yes, you've made a lot of money more than the average 

person, but.

It's still with that venture capital and the risk profile there. It doesn't mean you can just go spend it all on VC and you know, like that's a sustainable way to invest.

So how do you think about that? How do you manage it within your portfolio of

investing? 

Yeah. I mean, you, you need to, set boundaries, limitations, have a budget, and it's not like you're going all in on venture. Like it's a, it's a smaller part of your overall portfolio, but it's something that I enjoy being hands on in.

And. Phew as, you know, a career path when I'm finished playing. So I think that's, you know, the first thing that people, if they're getting into it. Sure. Yeah. Try to understand. And then I think, you know, coming from a competitive sports background, you have a lot of confidence and, few deals you see, you're going to think they're amazing.

Like this is going to be massive. especially if it's something you think you could have an impact on. but I think you need to try to calibrate. What's a good deal. What's a great deal. and try to see a lot more deals before. I'm committing to invest in any. And when you start investing, just putting in as smaller check as possible because, quite often a fund or a startup will say, Oh, this is the minimum check.

But, if you say, well, I'd like to come in for five or 10 K they'll make an instance, the option for you. So you don't have to. go all in on a, on a few startups, because like you said, it's, you know, most aren't going to succeed. There's going to be a few hits and you want to try to spread it around a little bit.

Help us understand or help our listener understand what you think makes a good deal.

I mean, it depends, you know, what industry, what stage, I've mainly been doing earliest stage stuff, seed and series a, a couple of series T's mixed in there. So it depends on the deal, but I think the number one thing is you, you have to believe in the founder. and think, you know, that they're going to be able to figure it out because, you know, I've had quite a few companies go down one path, but then, you know, they have to pivot and, and take the business in another direction because that's what the market's telling them.

And so you can't get too caught up in, but idea if you love the idea, but you're not a hundred percent sure on the founder, you, you have to pass on that.

Yeah. In some ways it's like you could put a super team together, but until they get on the court and they react, you're never really sure how it's gonna play out.

Yeah. I mean, it's a similar thing. You have to, you know, build that chemistry, as a startup or, understand what what's going on, what motivates the founder, where. Where the going up, be able to overcome things and, and keep working. Cause it's just like sports, you know, it's not just, all right. I made the NBA and you just keep going.

Like, there's a lot of setbacks along the way. tough losses injuries, different things that you have to deal with, but you have to be able to continue to come back every day. And continuing to get better, and, and be able to compete. And I think there's a lot of similarities between, being a professional athlete and being a founder.

So to your point about really trying to understand the founders, the people behind it, that's who you're 

making your bet on

with each deal that you do, will you take the time to sit with, or in this Covidien, take a zoom with the founder and really kind of go through their vision and what they see. Or do you turn to others in your inner circle, so to speak, to have those conversations and kind of help you get 

there with the founder?

I think it's a bit of both. I mean, I always talked to the founder and, and see, try to figure out what they're about and, how they see things going and, you know, their previous experience that, Has brought them to this point. And then, I'll talk to, to either some references or other VCs that are mentioned on the cap table or previous investors and, you know, get their understanding and feedback on the company.

And I think that's really helpful.

Yeah. So I want to talk about that angel this piece before we get into some of the specific deals. Cause I think it's such an interesting thing. We're, we're hearing a lot more about rolling funds these days, but I think before that came the syndicates and I, and there were a lot of folks that. Had access to deals, but didn't have the ability to go out and raise whatever, a 25, $50 million fund to get start.

And it seems, I mean, I looked at some of the LPs that you, you got on there. Some, some really well known names. So maybe give us the origin story a little bit. How did you know, where did the deli syndicate come from and how did you get involved in it?

Yeah. So I've been an active investor on angel list, personally, and I think that's a really great place for, for people to start, especially if they're in have, you know, access to deals. Deals or can put bigger checks in because quite often you could put in one or $2,000 into a deals and, you can join a lot of different syndicates and, just get more deal, Florida, help calibrate what is a good deal, what is a great deal?

s

So I was, you know, pretty active investing on there and that's where I thought. You know, there's a gap between being an angel investor and being a venture capitalist. But I think having a syndicate or syndicating and deal is kind of a step for that. I'm sorry. Or I actually co syndicated my first deal with somebody I'd invested in pretty regularly.

Peter Livingston at unpopular, ventures. He was super helpful throughout the process, as well as the people at Angeles. and then for the second deal I did, Coast's indicated he does that with, Brian Rosenblatt. And I think that's, that's been very helpful to, you know, have someone to talk to along the way.

they also send it out to their syndicate members, which helps, you know, bring people to my syndicate and see what I'm doing as well.

How do you find those LPs? Is it you specifically reaching out to some of these folks and saying, Hey, join my syndicate. You know, be a part of the deals that I'm doing. Or is it primarily like they'll, they'll seek you out and say, Hey, I know that name. I remember he played, you know, on this team. I want to get into deals with them.

Like, how do you actually like market out your deals when you work with these folks?

A little bit of both. I think code syndicating definitely helps, you know, being pretty active on LinkedIn, trying to get people to join the syndicate there. and then just pick different people. I know, I say let them know that I've got a deal going on angel list. and you know, if you'd like to check it out, here's the link.

Yeah, that's great. So tell us about some of the deals, if you can, that you have worked on through these syndicates. And I guess, you know what you've learned as you've done those deals and then maybe even looked at kind of the traditional venture model, you know, how has investing in one versus the other different.

Yeah, I think, When you are just writing a smaller angel check, you, you can move a lot faster. and it's less commitment, on the founders end. if you want to get an allocation to syndicate on angel lists, you know, the founder has to be, cool with that. Understand how the process works. It's going to take a little bit longer.

for them to get their money, they're going to have to be comfortable with sharing certain information to people who might not invest, in the deal. So that, that would be the differences I would say.

What are some of the deals specifically that you've done through angel list?

Yeah. So the first one I did, was simple lab. it's a water testing company, you know, for homes and businesses where they'll mail, you. you know, the water test, what you need to do with, the box with the shipping label, to go to the lab. And then on the lab side, they have, different. labs that they work with, they have a software system for them, which makes it easy for them to take these additional water tests because, you know, I can't just get a water test and send it to the lab down the road because it's not worth their time to deal with one customer when they're running, you know, a thousand test, you know, system, and deal with one customer that they have.

they might have 30 or 40 spaces left on that one test. So by working with simple lab, they can just get additional revenue, for the cost that we're already running. So that one has been really cool. got that one through Brian, right? Margaret Croft. He introduced me to Johnny and, yeah, the they've been doing really well and.

yeah, it's, it's something, obviously your home water, is something that you drink every day, but you don't really think about it. but putting something into your body every day, you want to make sure that it's clean and it's healthy. And what's interesting. it's a super fragmented market.

Every state has different regulations and levels of what's allowed in the water. so they're, getting a lot of data and, I think they're going to be able to do some pretty cool things down the line with all of that.

Yeah. You mentioned the data bit. Was really excited to have you on the pod, because I remember back in 2016, you made a ton of headlines across the MBA because you had worn a fitness tracking device and the Lee came after you. They said it was an absolutely slapped you that hefty fine. We won't ask you what the exact number was, but, The, you know, it seemed like a pretty big deal that you did that just, you know, what even drove you to do that.

And now that'll help lead us into some of the conversation around your other investments in like levels and eight sleep as well. I imagine.

Yeah. So I think it might've been a suspended fun because I was a, I was on the minimum then, and I'm definitely. I would have remembered getting hit with a big fire. Maybe it was the team, or they might've hit the roof with a fund. But, you know, I was just trying to understand what my body was doing in games.

because you know, you can wear a heart rate monitor in practice or, all the different tracking devices. They have to see, you know, how much cheer, accelerating, change your direction, jumping in practice. you know, I wanted to see. What, what was going to happen during the game? And I heard it taped over and, It was, I thought it was pretty safe, but yeah.

Got the, got the, don't do that again. So I haven't, haven't done it since, but, I think the interesting part of that is, if that had happened now, You know, I would have tried to talk to the whoop CEO and, you know, figure out more about the company, maybe try to invest or, or do a partnership with them.

but I just didn't know that this whole venture capital startup world existed. and I think that just comes with experience and, you know, everything you see, On TV, I'm in a shop everywhere. It's a company and somebody built it. so I've, I've really enjoyed just trying to learn about different business models of, of, of everything.

Where do you think your perception on that kind of shifted? Like w why didn't you think maybe back then to go try and reach out to the whoop CEO? You mentioned too, you're on like a league minimum contract. So back to the point about like, Hey, I gotta focus on what's going on here on the court, but you know, what kind of changed for you to start thinking that way?

Oh, I like this product. Maybe I could talk to the company about doing something with them.

I think after signing, the deal I got in Milwaukee and then talking with my financial advisors and having an allocation to venture capital, because before that, I just didn't know it existed. And, it's funny. I always talked to my wife, when there's an ad on TV or. even like a Peloton or blue lemon, I'm like, man, did you see Lulu lemon went up 20%?

And she's like, yeah, I was wearing that six years ago. And I'm like, you gotta tell me these things. You're, you're an early adopter. You, you might be better at this than me. So, yeah, I think it's good to just get different perspectives 

I do love that you have to listen to the voice of the customer as an investor, right. And see where, where things are trending. You know, I did notice, and Tim mentioned this, that a lot of your investments. Do you have some connection to health, wellness, nutrition. so, you know, levels is one sleep, you know, which is, which is again, another growing company,  I'm curious, when you look at your categories of what you invest in, are they all pretty closely related to things that you look at as an athlete? Or do you go out and look at sort of software deals and things like that that maybe aren't necessarily related to your you're on the court persona?

Yeah. I was, I liked looking at all different kinds of deals and, I. I didn't want to be kind of pigeonholed as just a sport, or even health investor. But, I was a lot of those deals get sent my way, so I see a lot of different things and, I'm really excited by eight sleep. I got in later into that deal, but, have had Mateo on the, on the podcast, the CEO and, Sleep on it every night and think that is amazing.

Cause I'm a hot sleeper, levels. I'm really excited about a constant glucose monitor. I think it was going to help a lot of people, not just athletes or people looking for high performance, but you know, people who are unhealthy or, or if a Wade or died Vedic, I think it's going to be a really, really, important company.

but I, I like to do all kinds of deals, of, I got into keeper, like a automated, bookkeeping company, block five recently, you know, crypto company. so all kinds of things.

I'm curious, a lot of fans here in the States don't realize this, but in terms of sports science, Australia is just way ahead. Is any of your interest in biometrics and tracking and that those categories tied to being from there and being exposed to that?

I would say definitely. And I think, it's great that you know that because not a lot of people, know that over here, but there's actually a lot of. sports science or head of medical, of the different NBA teams that are from Australia. and I think a lot of, yeah, but it comes back to the Australian Institute of sport, which is a elite training facility that try to produce Olympic athletes in different sports.

And, I was lucky enough to go there, from the of a 16 to 18 and a half. Before I came over to college, and they really, Oh, they just try to educate you on how to take care of your body. whether it's nutritions, in the, in the white room. and yeah, and really teach you all these different things.

And you've got some of the best physios, sports scientists, nutritionists in the world to learn from.

Yeah, I want to touch back on the, on the piece you were talking about there about not wanting to be pigeonholed as a, as a sports tech investor and Tim and I both got our starts as sports tech investors, although we've also expanded into other categories. Do you believe that there is a market for these sports technology companies to be venture backable or.

You know, sometimes we hear the rationale that, Oh, it's too small. It's only about, you know, a small subset of teams. What is your viewpoint on that? Cause it is a category that even though it's not the only thing you invest in, you still do invest in it.

Yeah, no, I definitely think the is enough upside and for it to be venture backed, you know, I mean, underdog fantasy. so I'm really excited about that. star stock a sports card marketplace, and I think the, alternative investment world is going to continue to get bigger. So I definitely think it's big enough.

 Cause I think there's like a difference between, you know, like a underdog fantasy or a star stalk versus like I've seen, I've been pitched maybe like 10 or 20 different like white measuring force things that want

to pitch to. 

Like the strength and conditioning coach with the calves. And I might like that, like working with teams, like teams, aren't going to pay for it.

They expect things for free. They're not They're not 

going to pay for, and there's a finite number of teams, even if you literally captured every single professional team and every college team with, by the way, you know, this better than us, every strength and performance coach has their own methodology. And so they're like, Oh, yeah, those plates are bullshit.

I need this system,

when they leave, you know, like the next person coming

in is bringing their own system. They're not going to use the old ones. So 

it's just a brutal market to be in, I think.

 

 

, I just personally didn't want to get. Just pigeonholed into that because I want to learn about all different kinds of markets.  And that's one of the things that really drew me into ventures. you get to talk to a founder who's, you know, committing to investing, you know, possibly the next 10, 15 years of their life into this one thing.

And you can talk on the phone or over zoom with them for 45 minutes. And. Pick up a lot of the things that they've learned. and I think the cool thing is now, but, you know, I'm invested in quite a few different companies and get to speak to different founders. I can take, lessons that they've learned and share it with other founders or business models that, they might be able to apply to their startups.

So I think that's, that's been really fun as well.

Yeah, you and I were texting about this earlier about how there's just become this boom in trading cards now. And, and Tim and I are just fascinated about this. So if you wouldn't mind would love to learn just, you know, as you've been educating yourself on this, what you found out. But as I understand it, it's like, you know, it was the nineties and then they kind of went away and then really, it feels like in the last year, year and a half, it's just really picked up, especially during the pandemic.

So what's happening in the trading card space.

Well, I think, like you said, in the nineties, it was big when I was growing up as a kid and. the access to cards in Australia was pretty limited, but when I saw, you know, a packet cards at a news agent, I tried to by them. But, I think. You know, we're all what in our late twenties and thirties now, and have jobs and have disposable income.

So I think it's only natural for, for that to, to almost come back into fashion and, you know, raise the prices. So, I think it's an exciting space. You, you want to be careful and do your research before jumping in and, but I I've learned a lot, So far, and I think star stalkers has done a great job and they're, they've got a lot of, different info on their side of, you know, the prices things have sold for, even on eBay and different things like that.

So you can kind of calibrate the process. cause I think EFA, eBay takes 10% and then, is a PayPal take two and a half or 3%. Ben you have 77. A boosting Fe and then the shipping and handling. And then it takes what, three to seven days, depending on shipping together, star stocks takes 5%. Then you couldn't sell it, you know, later that day.

maybe the riskiest. Part of the strategy. So to speak is a bet that people don't actually like, feel like they have to have the card in their possession.

  

Yeah. You know what I mean? Like, cause they don't have the card, which I feel like is part of it, but maybe that's overblown. Right. It's just a store of value. So like if I know the store value is safe with somebody else, like that's fine.

 

ruined 

or any shipping and handling 

SAR. I think the biggest. Risk is, you know, somebody coming in and basically getting more cards on the platform, but the more cards they get on, , you know, I think there's something to having the like, Set up them to send it back, which they can do, but I think less than 5% of cards ever get shipped back.

So there are, when I invested those 60,000 cards on the site and now they're up to 150, there are 3000 a day. 

So are they buying packs of cards or they're going out and buying high value cards.

no. So they're just the marketplace. So sellers are sending cards to them. , and then they have their own. You know, our mini grading system or, and then I just list them on the site, put them in a, a store room. , and then if you buy my car, it stays in the same spot, but just on their system,

He's put in a shoe box. No,

something like that, some of them, but, 

 

yeah. The biggest thing that was crazy for me to learn that this wasn't happening before and only started happening recently is that the league signed exclusive deals with the card companies. So now you know who the official card is. So when you buy a Mike trout rookie card, you know that there's not going to be 600 other Mike trout.

Right. You know, it's like supply and demand, right. At some level. There has to be that. And it seems like, yeah.

Jay. I like how you say when you buy Mike trout rookie card, which literally just sold for $3.9 million. Maybe, maybe that's Delhi's disposable income that he was talking about,

No, that's a 

that's 

that's why out of my league as well, but, I mean, you see a number like bat or, Bron rookie card selling for, I think at 1.8. Which you know, is crazy to think about, but, you know, I guess that creates the headlines and gets people, at least looking back into it. And, you know, I've listened to Gary V a little bit and they've got a great, I guess begin article for people trying to get back in, I think on a 1:00 PM 37 or, so check that out, but, Yeah, it's been a lot of fun to relive a bit of the childhood there.

Yeah, that LeBron card you mentioned was a Jersey patch card. I bet you're wishing that you had a scissors with you after you guys won the NBA championship. You gotta cut a little piece of his Jersey off. 

I don't know if he would have liked that. Probably wouldn't have liked 

Nah, I think that, that one's probably in a safe place. No, one's cutting that up.

Well, listen, we don't want to take up too much more of your time. So we just have a couple of questions. We always like to ask our guests and feel like it's a good way to wrap. And one of them is, you know, what's, what's some of the things, or what's one thing from your career as a professional athlete and your career in sport that you feel like really applies well for you in the world of investing.

I think I'm just. Starting in the bottom and just trying to get a little bit better each day, for a long period of time. we'll eventually add up and, you know, I've played basketball since I was four years old. It's always been my favorite sport. You know, I was a pretty good player growing up in my small country town in Australia, but, and dreamed of representing Australia in the Olympic games and playing the MBA, but didn't know if it was realistic or not, but I just tried to get a little bit better each day.

and I think that's. The same lesson that I'm trying to imply to the investing world. You know, I'd love to be really successful at this and, you know, get into the best deals with the, best companies and best founders. But I know that's, going to be a process, but I'm willing to work at it and do is continuing to get a little bit better each day.

Is that a similar learning that you've had now getting into the podcasting world where you're what 10, 12 episodes in now, have you been getting better episode by episode?

Definitely. I initially you go back and look at the first episode I did with my best mate, who I went to college with Mitch young of God, a terrible background. I need a haircut. Designing is bad. I didn't have a microphone like I have now. so I just, that has been really enjoyable to start, you know, at the bottom, start from scratch and just continue to, you know, learn and try to build it up.

So it's been a fun experience so far.

 

 

 

Content Edit

Yeah. So before we get to our last question, I want to ask, what is your hope for the show? Is it to become its own platform? Is it something you're doing for fun to educate folks? I mean, what is the mission of the daily show?

, yeah, so the daily podcast, just, I want to use it to just try to. Learn as much as I can. And, you know, have interesting people on either that I know or don't know, in the sports business venture capital world, to, to be able to pick their brain and hopefully it can get big enough where I could, you know, cold.

outreach to whoever and get them to come on and be able to pick their brains for 40 minutes. That's that's the end goal. And, it's interesting, like a lot of different opportunities and connections have already come from. And so it's already been a worthwhile experience.

Yeah, no, I absolutely love that. And it mirrors a lot of the experience. I mean, Tim and I have not been doing this that much longer than you, but it really mirrors the experience of a, when we think about our first 10 episodes, we're like, Ooh, man, like there's a lot. We would have, we wished we could have back.

So I.

listeners shouldn't go back

and listen to 

Listen. They're all great. But you know, we definitely feel like we've gotten better too. So anyway, we'll, we'll close where we plan to close, which is, we love to ask our guests, knowing what you know now, whether it's about investing or anything else. What is some advice that you would give your younger self?

I would say, start out slower, write out smaller checks, and with the different. Funds that you joined? I think a great way to get into venture as an athlete is write a small check into a fund and just try to continue to learn, of that fund manager, how they evaluate deals, go and spend some time with them in the off season and sit in on some pitches.

I did that at craft, one off season with Brian Murray and, You know, it's a different kind of fitness to sit there for three or four pitches in a row. learning about completely different topics. And, so that, that's my advice. Just take it slower, brightest, smaller check as you can. and yeah, just try to learn as much as you can.

Cause it's a lot of fun.

Well, we appreciate that. It's interesting. We had Derek Morgan on our show who was a long time NFL linebacker for the Tennessee Titans. And he said almost the exact same bit about maybe starting out a little bit slower, but Hey, I think that's part of the learning process. And with that, we're just really grateful and thankful for you sharing your perspective with us, with our listeners, Matthew deli.

Thank you so much for joining us on the game plan.

Yeah, no, thanks for having me. That was a little fun.

 

All right, everybody. Welcome back to the partner rundown on the game plan. We got a lot to talk about today. Let's get right into it. So many professional athletes are becoming more active and more public as venture capital investors. Tim, what do these athletes need to know? 

Look, I love to see this, it's a long time coming. And I think the narrative of the broke athletes scared a lot of athletes away from alternative investments that combined with what their financial advisors were telling them. But the game has changed athletes, making more money than ever. They've got more talent around them in terms of how to protect and invest their money so they can take an allocation.

They can carve it out and say, Hey, I want to do some interesting things here. Maybe something with a little bit more risk, like venture capital, which by the way, as part of any sound portfolio strategy. So I think what we've learned from guys like Matthew Dellavedova, who's been on the podcast. Derek Morgan, the former Tennessee Titans linebacker is to start small.

Because that's a great way to learn. What do I need to do to source deals? How does a deal investment work? what's my relationship like with the founder? What do I need to have set up from an admin, a tax accounting standpoint. So by starting small, you can start to get exposure in some of that, and then really decide where you want to go.

Whether it's to continue to directly invest yourself, or maybe work with a fond and be willing to pay a management fee.

I think the important thing to remember Tim, is that when you get into an early stage venture capital deal, these things are commitments for six to 10 years as an investor. And we know that 65% of companies don't return the money that they initially take on, which means that even if you are going to see a return, it's going to be a long time.

And most likely, sometimes you're not even going to see a return. The other thing to remember that most investors do is that they focus on a couple of different areas. So if you were coming in as an athlete investor, maybe those focus areas are endemic to wellness, fitness, health, sports. Maybe they're not, maybe you have interest in deep tech or some sort of frontier tech.

All you have to do is spend time on that category and make sure that that's something that you become known for. Because at the end of the day, the one constant is that founders want work with investors who are knowledgeable about the space that they claim to be knowledgeable in. So you want to make sure that you carve that out for yourself and then at the end of the day, yeah, it should be part of a balanced portfolio.

Nobody is putting a hundred percent of their wealth into venture capital, nor should they be.

So similar to some of these athlete investors. I thought I was unique when I stood up my fund tack ventures in 2015, but now it seems like everybody and their brother is setting up a fund and becoming a VC, Jay, what exactly is going on and help us understand what a rolling fund is.

rolling fund concept that was rolled out by Angeles recently has to be contrast it a bit to what we know to be traditional venture fund. So traditional venture funds, they take months, sometimes years to raise, go. To institutional LPs and family offices. And there's also restrictions on how much they can market publicly when they're going out to try to raise, contrast that to a rolling fund where because of some sec regulation, folks can be more public about the fact that the raising of fund.

They also don't have to raise all of it upfront. They raise it in quarterly. Tronches. So now LPs who maybe aren't sure about a manager can put a small check in upfront and allow them some capital to get there. So Angeles, you know, whole ethos has been about transparency. And that's a really great way to give folks that maybe don't have the ecosystem power to go in, raise a $50 million fund from institutional LPs, allowed them to raise maybe a one or $2 million fund and get really active as investors early on.

I do think the one challenge becomes is that the LPs have to keep reappearing on a quarterly basis. So if your LPs decide to walk away from you, you suddenly don't have the money to maybe make your portfolio strategy work.

Look, I'm all about the democratization of venture capital investing, especially as public markets provide fewer and fewer opportunities for investment. But what I struggle with is I'm not exactly sure a rolling fund is the best way to do it. It gives you all of the downsides of a traditional venture fund structure without the flexibility of let's say an SPV or special purpose vehicle.

I understand the need maybe for a management fee, so I can have some walk around cash in my pocket, but the beauty of a SPV is it doesn't have to be your only endeavor. You can go advise other companies, you can go have a job elsewhere, and it's also on a deal by deal basis. So as far as your LPs are concerned, they don't have to pay a management fee and they can look at the merit of that deal.

So if you're going to go to all of the trouble of constantly re-upping with your LPs again and again, whether it's on a quarterly basis, like with a rolling fund or on a deal by deal basis, like with an SPV in my mind, you might as well just go the SPV route and stay more nimble for the long run.

Yeah, that's fair enough, Tim. So I remember a time where sports betting was an expletive in the halls of the NFL, but now everyday I'm hearing of a new protein setting, sponsorships with casinos or sports betting companies. 

Yeah, you're absolutely right. And the biggest thing that happened was in the summer of 2018, when the Supreme court struck down Pasa, which enabled States to make sports betting legal. And I think it's something like 19 States now where sports betting is legal. It's different in each and every state. The really interesting thing about these marketing deals and I'm calling them marketing deals between sports books are groups like draft Kings and there's different teams.

Leagues stadiums is. They're not actually sports books. So if I I'm in the state of New York, I'm in New York city, I go to MSG and I go to the draft Kings lounge. That's not actually a place I can place a bet because sports betting in New York is not legal. So DraftKings has been doing this for years, even before passport was struck down, they wanted to create as much of a beachhead as possible.

And it's really paid off as you've seen their stock price, basically five X this year with deals that they've announced with a, I believe ESPN as well. And so I think on the one hand, it's curious, cause I I'm in a drafting space and I can't place a bet. But on the other hand, it makes a lot of sense because at the end of the day, they just want to funnel as many people to their app as possible drive as much awareness as possible.

And they see once that gate comes down, they become the default choice for sports betting in those

States. 

yeah. The point you're making there is what I've actually always struggled with when it comes to daily fantasy sports betting companies, is that effectively, every single one of these becomes a race to the bottom on margin. They're their commodities products, right? The moment. Somebody launches a new way to bet the next company goes ahead and copies it and suddenly you're back to parody.

And so when you're a fan or you're a better, right, you're just, just looking for, whoever's going to give you the best deal. Whoever's going to give you the most money up front to go join their platform. That's why these folks are going into aligning with the teams, because they're hoping that through a marketing relationship, They're going to stand out in the eyes of the customer in some different way.

The biggest problem. And this is just with my investor lens on the biggest problem is that you have to create some sort of a customer loyalty or customer retention. Otherwise you're going to keep spending to try to keep acquiring customers that theoretically should already be yours. And that's the challenge that I always have as an investor in one of these categories.

Okay. So I promised-- myself, I wasn't gonna bring this up, but in my mind, Jay, you are mr. Celebrity. Co-investor. I noticed that Kanye released over 114 pages of the deal with his record label. What are we to make of this?

Well, I haven't read all of it, but the stuff that I have read is fascinating when it comes to the breakdown of his budgets and royalties with his record label, look, Kanya is highlighting. What I think is a massive shift in the world of content with the power shifting from producers and distributors to the actual creators.

And the reason that we had to have distributors and producers in the past was because. Production and distribution costs so much, but now when you can produce a really quality show on small budgets, I mean, look in the movie world, we've seen this with Blumhouse where they hit home runs off of pictures that cost less than 5 million.

We're seeing it in the podcast world when call her daddy had heard their dispute with Barstool and they realized that look, they're the number one podcast. Why do they need a studio again? And now we're starting to see that in the record label world, where folks that are creating really quality content are figuring out that they're the ones that can actually create digital distribution and they don't have to be paying 20% plus to somebody else to actually distribute their content.

So more power to Kanye man. 

Yeah, I think it's great that he's shining a light on these studio contracts and just how binding they are, especially as it relates to the masters. 

You also have groups like United masters powered by Steve stout and Ben Horowitz.

Which are, has raised $70 million and has created a platform for new musicians to come in own their masters, but experience the full distribution engine of a stood up label. What I think is really interesting is when you look at Spotify and say, well, why couldn't artists just go direct and post their music on Spotify?

They are really obliged to the labels as well, because they need all of that content, all of that music, all those catalogs on their app. And without that. They're not as interesting of a platform for listeners. So what have they done? They've gone and they focused on podcasts, right? They've gotten Joe Rogan.

They went and got bill Simmons from the ringer, because with those guys, they don't necessarily need to own the catalogs or the content. They just want to expand their reach, expand their audience for Spotify. And those guys have big audiences and can bring them in, in a way that doesn't really disrupt or upset the labels.

Yeah point Tim. And, you know, there are plenty of reasons that Kanye makes it hard to be a fan. But speaking up for the independent power of creators is definitely not one of them. So more power to them. We're going to keep tabs on that situation and we'll make sure to talk about it again on the rundown.

Thank you so much for joining me this week. Yeah.

 All right, everybody. That's it for this week's episode of the game plan, 

just wanted to hit on a few things 

before you go. First of all, a big thanks to our guests, Matthew Dellavedova for sharing his journey as an investor, love digging in on that and make sure to check out the deli podcast for even more insight from our guests.

Thank you goes out to Moshe. Lipschitz a basement fund for the introduction. And of course, a special thanks to our producers will Richardson and Meghan Rojas for all of their hard work in packaging up and promoting the game plan. We of course want to thank you as well. Our audience, this wouldn't be possible without you.

So if you've made it this far, please go find us on Twitter at the game plan show and leave us a five star review on iTunes. We'll see you next week on the game plan.