July 1, 2020

Michael Redd — How Venture Capital & Private Equity Can "Empower Through Economics"

Michael Redd — How Venture Capital & Private Equity Can "Empower Through Economics"

Former All-NBA Shooting Guard and Team USA Olympic Gold Medalist Michael Redd joins The Game Plan to discuss his approach to venture investing and to share with us what he's doing to make a lasting difference in his hometown of Columbus, OH.

In this episode, we discuss with our guest how today's game differs to the NBA of the early 2000s. Listeners will appreciate Redd's humility as he shares his perspective after being removed from the NBA for over 8 years. Today our guest is an active venture investor which includes his own fund, Twenty-Two Ventures, as well as his involvement with leAD Sports, an early-stage venture capital fund backed by the Adi Dassler family.

We discuss how Redd was attracted to the idea of ownership over endorsement early in his career, and how that led him to a retirement-focused on alternative investments. We also dig in on the idea that pro athletes are becoming more aware of their value and the power dynamics at play, both on the court and off it.

This episode of The Game Plan includes a very open and honest conversation that shines on light on the Black Lives Matter movement through the lens of our guest, a former pro athlete who has dedicated his life to helping others and making a difference in his local community.

Make sure to follow Michael Redd on Twitter and Instagram to keep up with his latest efforts. Listeners should also check out his "Betting on Yourself" podcast on iTunes.

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 an automated service is used to generate this text*

high structured finance became really appealing to me because I found out that so often do our late, during our labor union disputes with owners, the narrative is always, well, the athletes are making so much money and then it dawned on me like no one ever mentioned the guy who writes the checks. Oh, the players, and their net worth and how they see the NBA or their teams as just a hobby, level of wealth. And I was more fascinated with that level of wealth than the wealth that a NBA player or MLB player NFL player makes great money blessed for sure. Grateful, but there's levels to this.

And so I was more intrigued with the, with the owner, writing the check more so than the player receiving the check.  Hey, this is Michael read NBA, all star Olympic gold medalist and CEO and founder of 22 ventures. This is the game plan.

So Jay, like you and I, our guest today is both a venture capitalist and a podcast host. However, Unlike you and I he's a 12 year NBA veteran and an Olympic gold medalist, Michael red, welcome to the game plan.

Thank you guys for having me glad to be here.

So I have to start by saying, I grew up as a kid, Milwaukee. He loved basketball and had a Michael red Jersey. So you're our first guest where that's the case. And to honor that we're going to release this as our episode number 22.

ah, wow. Wow.

yeah, it's, it's kind of wild to say that we're getting to 22 episodes, but, we are, we are so thrilled to have you Michael, and, and we're so excited to talk to you about your incredible playing career, your tremendous successes investor, as well as your new podcast, betting on yourself. , but let's start a little bit earlier than that as an athlete.

When was the first time that you remember having to bet on yourself?

Wow. , I remember, committing to a house state, when it wasn't the popular thing to do. And didn't know that it would be a foreshadow of what I would do later in life, as far as seeing, you know, a university or a company that is kind of distressed and comes in and wants to help uplift the program or the company.

So, , it was amazing, that time that it was not a popular decision to go to Ohio state. And it was a program that was down, had been out for six or seven years, just the Jimmy Jackson years. Jimmy Jackson was an NBA player, a great player. , but the program had been down and, it was to the point to where people were calling Ohio state, the suck eyes more than the Buckeyes and it got that bad.

so it wasn't very popular too, too, you know, go to that university at the time, obviously a great university from a basketball standpoint, it wasn't that popular at all. But decision. I saw an opportunity to not only go in and have a chance to play immediately, but also helped resurrect the program.

Yeah. Do you find the weight of that expectation that was on you? Or did you feel the weight of that expectation when you went to a program? New kind of the situation or state that it was in, but obviously had these larger aspirations to play in the NBA. Did you feel the weight of that expectation when you were playing or you not really think about it at that

Yeah, it was a stone age back then. that was 20 plus years ago. So it was a little different mentality that I had. I wanted to be a student, obviously, student athlete and, and achieve great success. College, more so than the thought process of, okay, this is just a platform to get me to the MBA, although it is.

I was just, excited about going to the final four and one of the big two championship and, you know, playing is top line, top of competition every night. So MBA wasn't as of course it's a golden dream, the ultimate goal and dream, but it wasn't on the forefront of my mind as much as being a college student.

Yeah. And so, you know, tell us a little bit, this is the game plan where we talk about all the amazing things that athletes are doing outside of sport. Tell us when you start to think about life. Beyond basketball, you know, not just post-career, but like while you were playing, were there key guys that, you know, were in the locker room with you that you look to for advice and remember like conversations that kind of led you to start exploring other things?

Or, you know, when was it that you really were like, okay, there's, there's so much more that I can be doing, or I'm going to, I'm going to start doing some other things beyond basketball.

was cognizant of that, , going to Ohio state actually, Obviously the coaches, staff was huge on life after basketball and where your brand would meet, maybe the strongest, , when you retire from basketball at some point, whether you play an NBA overseas. And so that was something that was kind of seated in me as a 17 year old to think about business opportunities, , here in Columbus, after going to a house state. So that was a thought process that I had then. And then obviously throughout my career, Being in Milwaukee. You heard about this guy by the name of junior Bridgeman. 

Oh, yeah.

become a successful businessman outside of NBA, who doesn't get talked about a lot, a lot, but, , he's a juggernaut man.

He's, he's done great things in the world of business. And so, , social media in the last 10 years has amplified. the notion that a player could be a brand, and the extension of being a brand beyond the game of basketball. So I was at the Genesis of social media. but along that timeframe, it began to Dawn on me about ownership, more so than endorsement.  there was things that were matriculated in my mind about, okay. When my career ends, how do I extend my brand beyond the game? ownership more so than endorsement opportunities. So, and then obviously the injuries accelerated that I had a knee injury to a new two knee injuries, ACL injuries that really et cetera at six elevated that, that, that thought process.

So, probably, you know, really mid, so towards the end of my career, I really took it more seriously. And then once I retired, it was like, okay, there's all these options to do whatever you want to do. I'm not at a place to, to do any of them right now. I'm going to place a play in golf and then I'll figure it out from there.

So that's kind of like the process.

Yeah. And, and as do you. Start to look at, you know, we, we have now seen, obviously today it's becoming a much larger trend. And part of the reason why Tim and I put the show together is because we've gotten to see all the amazing things that athletes are doing with their, their post careers. But I guess at the time that you were making that transition, it was maybe still a little bit, you know, nascent.

there was a few guys like junior Bridgeman, Roger Staubach that were like, you could look to as the beacon and the example. but it was still. You know, it wasn't as actively talked about, how did you find yourself educating yourself as an investor, trying to understand and make that transition into the investing world.

What helped you to make that transition?

Well, I think the core value of, my life is really to help people. And so the MBA was the vehicle to entertain people, to be an inspiration to kids all around the world, was able to achieve that to a degree. once I retired, I had to kind of refocus and go back to the core. Okay. The core is to help people.

So, you know, I've always kind of been fascinated with technology. I wanted to be a trailblazer. In, in certain spaces, in particularly with venture, where there's hardly no minorities, not at all, in that space. high structured finance became really appealing to me because I found out that so often do our late, during our labor union disputes with owners, the narrative is always, well, the athletes are making so much money and then it dawned on me like no one ever mentioned the guy who writes the checks. Oh, the players, and their net worth and how they see the NBA or their teams as just a hobby, you know, level of wealth. And I was more fascinated with that level of wealth than the wealth that a NBA player or MLB player NFL player makes great money blessed for sure. Grateful, but there's levels to this.

And so I was more intrigued with the, with the owner, writing the check more so than the player receiving the check.

It is interesting. I remember from my time working at the NFL league office, right, there was always this media narrative of billionaires fighting millionaires, but anytime it came to a CPA contract negotiation, and it was only after I got to the league office that I realized that that's actually played up by the team owners.

They do that because that power dynamic, in terms of public perception, shifts, and we as fans. have so much loyalty to the team, but now to your point in social media, that

loyalty is shifting, right? Because now players are moving across teams and LeBron's fans are moving from Ohio to Los Angeles because it's very personality driven versus versus team team-driven.

Is that something that you started to see as well as, as you've now built your social

personality? 

I think that's always been the case. I think players are just becoming more aware, that, that, that is the case. players are more cognizant of their brand. , there are influenced, there's a price attached to our influence now. Right? We're more aware of that. instead of taking a. You know, an endorsement check about stock options about equity within the company.

I think he longterm, and obviously we've been blessed enough to where the money has risen because of the digital world competing with the cable world. So money has risen over the years to where we can hold that leverage. so it's become, in awakening for athletes like, wow, we can actually own our influence in our brand.

And capitalize off of it, like the owners have for years. Right. So, you know, the NCAA is a little bit behind, they're trying to catch up, but I'm just proud of the, the, the, the progress that the modern athlete has made as far as finally like being aware and more educated on the game. Cause it is a game, right?

The game within the game.

Absolutely. I think I mean, you got paid, but like nowadays guys are getting paid that aren't even, you know, no all-star periods, whatever, like they're paid. So, and good for them, you know, go get it as they should.

with all the, , opportunity afforded to you via your, your profile as a successful NBA player, and then all the hard work you've put in, in terms of getting smart about venture capital, which we'll talk about in a moment, you know, how do you start to, how did you start to like prioritize your time?

Once you retired around what you were going to focus on and commit to certain things, and then hold yourself accountable to continue to do those things.

Well, I'm just committed to just helping people. And I know where I came from, which was a distressed area here in Columbus, Ohio. I've always let my life to pay a forward and to give back, I have two parents who are pastors. They've instilled that in me from birth, basically, to never forget where you come from.

And my whole notion is I want to get as much resources as possible. To be able to help educate people, finance people, finance opportunities, and, and particularly people that looked like me, you know, and women and minorities. , and where's that at? Where's the resources. Oh, wall street. Oh, technology. Oh, Silicon Valley, Silicon beach, Israel, you know, and so beginning to connect the dots of where I could really kind of find a way to get access to that level of wealth, in deal flow and opportunities and beginning to use the leverage that I gained in the NBA has been an all star, Olympic gold medalist and leverage that and to meeting whoever I wanted to meet I'm in business. Post-career.

And so that's what I was able to do, but the notion was always to just not make more money for the sake of money. I don't need it for that. I needed to go back and help our people, you know, and, and, you know, put a whole foods in a distressed area where there was no healthy food. you know, and so I'm, I'm discovering that I'm those things more.

I discovered those things meant more to me than anything. And so, but I had to access that level of wealth. And so MBA money is fantastic is incredible. but again, like I said earlier, there's levels of this. And so I want to be able to access that, that level of wealth so I can go back and help, our neighborhoods.

That's excellent. And so early on, when you were starting to get into venture capital, you spend time at a group called NCT ventures where you started as a general partner and a third wave digital as well. This was early in your venture career. What drew you to those groups and really, what did you learn early on at those two funds that made you want to continue on and start your own venture fund?

22 ventures.

Oh, wow.  well, NCT was local, Venture is pretty nascent or was nascent at the time to Columbus, Ohio. and so, why NCT? I learned a lot and met some really good people.  and then I, I began to,  Again, leverage who I was and missing really influential people in California.

Allen Debevoise who's the general partner of a third wave is who's deigned as like the godfather of digital media. and so we connected, we vibed, and then begin to learn from him and learn from our other partners as well. Tony Jans, who was a partner at Carlyle at one point oversaw their Asian corridor.

and those guys begin to really, really, you know, porn to me. And give me,  some really, really key, wisdom on venture. And again, I think there's an assumption sometimes that, because you were senior in one space that you automatically are entitled to be a senior in another space. And so for me, it was really humbling.

Not that I thought entitled, but it was humbling because I was really junior level of executive, when it comes to venture and still to this day, learning more about it. the nuances of it. So. I just was willing to like in basketball, watch game film, and study and learn from people. Who've done that at a high level.

And that has been a hallmark for me. From my rookie year, I had a great mentor and Ray Allen, who I just spent all kinds of time with. , and then it went from there to spend time with all the great players in the NBA, Kobe. We spent three years together during the Olympic run. I'll work it out in off season and learning from great players and watch a film.

And so that skill set can translate into other spaces as well. And so for me, you know, I wanted to be the, the dumbest person in the room.

Yeah, it is. It is interesting. You say that we had, debt left shrimp on the show a couple of weeks back, and he was talking about the fact that humbling yourself is almost the hardest thing that you have to do when you leave the NBA. And he, because he said, look at the education level that today's NBA players.

You know, come in, they've done a year of college at most. Some of them finished their degrees, some don't, but then they want to come in and they want to start at that, that rung. Whereas I think what you've said really beautifully is like having that learner's mindset. Right. And always just coming in with that, that curiosity is what allows you to sort of like humble yourself that way, at least from, from where you're starting.

But still say, you know, look ahead to all the stuff that you have to learn. So I guess, what I'd love to ask is, as you've been educating yourself as an investor, what do you look for in an early stage investment that gets you excited? What are the sort of, what's your checklist

look like? 

I would say team, you know, the qualities that you, that you would, that you exert, you want to see that in a CEO, humility, you know, within the CEO, is he or she a coachable? are they flexible? or do they suffer from the lone genius syndrome where they're the smartest person in the room?

so those are some of the characteristics I look for in a team is a team cohesive. are they aligned, do they have chemistry? the business plan. What's the strategy? What's the market look like? Is it a fit in the market? team business plan product. Do people like it, people like the product, you know, so those, those are some of the things that I've looked for. I've learned to look for. is there an inflection point? Is it about to blow up? This is going to grow, the potential of the company and all of that. So I look at a number of things with inside of that, but those are the main things, the team, the product, obviously, and the business.

plan. 

what stage are you typically coming in at? Because I guess that checklist changes, right? Cause, cause that team matters so much more at the early stage and then the product and the maturation and the customer base matters a lot more if you're coming in closer to growth equity. So, what stage, and I guess also what categories, like what, verticals of companies do you get most

Yeah, no, I think, I think series a round now is where I'm at now with, with advantage, the sports tech fund, , which was launched by the audio's family. and also our crowd out out of Israel. Been privileged to become a venture partner within that fund now. so companies that are evaluated between that five to 15 million range, , they have traction, they're going to hit an inflection point.

so that's like the series, a round of a perspective that I've been involved with. , you know, I'm really intrigued with, But sports tech in particularly with, , recovery and, preventative technologies. , obviously we know AI and big data is a huge part of that. , but you know, it's almost funny because I, I see what's coming out right now from a tech standpoint.

and I kinda get like little jealous, like, man, I'm like 10 years behind, because I've had access to this level of data. I could have prevented an injuries that I've suffered, you know, over the years, all my correctives, my core things of that nature, all the measurements of that. it's really. Yeah, exactly.

Right. Yeah. So the convergence between technology and sports has been. Incredible. And that market is growing I'm excited about the horizon of, of that whole space, but, you know, it's, it's funny because I, I, my partners and I, we, we joke all the time. Like, man, I'm just like five or 10 years late, but it's really cool to see what's happening with modern athlete.

I think the longevity of their careers, well, what happened more? we're often.

So you mentioned the advantage sports tech fund, which is with the ADI Dassler family and the group out of Israel, our crowd.

Tell us a little bit about your whole view on sports tech investing. Obviously that's interesting to you as a former professional athlete. But what else draws you to that space? , from a pure investment standpoint, not just getting excited about, you know, how it could have been applied in your career as an athlete.

Yeah, I think, I think again, I mentioned earlier, that the market is deemed to triple over the next couple of years. we see the advancements with eSports, gaming obviously says cobot, that explosion what's been happening there. And then you have, the gambling aspect, legalized gambling that's on the horizon.

So there's massive opportunity within the convergence of sports and technology. you know, I know old school coaches are not big fans of data, but I think telling the story behind the data, Is important. And there's a massive opportunity within that telling the story of data. , so I know in the NBA, there's a mixed crowd of people who love analytics, who don't like love analytics.

but yeah, I think there's massive opportunity with that. we know VR. plays a major part in the future going forward. AR technology, VR XR technology in general, is, is going to make, make a big play in big splash in the years to come. So there's a lot to get excited about, , when it comes to sports technology.

with, with a group like advantage and also just your reputation and experience. How do you view like the value you can add? And how that relates to the investments. Cause one thing, Jay and I talk a lot about, you know, I ran a venture studio program with the LA Dodgers and major league baseball, major league soccer and others.

We would always look at investment opportunities as, or I should say our involvement with companies as like the jet fuel that can pour onto a company that you would, that you would want to invest in any way. Right. And that's where like, into like true strategic advantage is not. to say, Oh, we're going to make our break.

This company is to say like, no, we're just going to help them get there faster. So what kind of things, you know, do you do, or does advantage do to help accelerate the companies that you work with or invest in.

Yeah. I think there's a level of mentorship. That's provided to these companies. , I've been around the block a little bit now. , obviously, investment opportunities, The network that I've built over the years, being able to expose companies to the NBA, to Ohio state different universities.

I know a number of ads around the country that are really, really, you know, bent on it, being on the cutting edge of sports technology. So I have an expansive network that I can help with these companies. And so I look at those three categories as being the primary, ways to help companies.

yeah. One of the things that, I was reflecting on as you were, you were talking about, you know, the sub categories within sports. Sort a really interesting and tying back to the earlier point about athletes recognizing the power of their brands is we're also starting to see a lot of current and retired players start to create their own media entities.

And that's a really interesting opportunity as well, because what you're realizing is like, You know, the outrage driven ESPN sort of Fox thing. Like it's not really telling the stories that you want told. And now, like with the democratization of what, you know, what we're doing of having your own show of having your own podcast, being able to have these conversations in a long form format, it kind of defies the old media model.

And I think a lot of athletes have gotten smart to that and said, Hey, what the hell? I'm going to start an undefeated. I'm going to start a player's Tribune. And I get to tell that story. So I guess dovetailing that into what you've been doing with the podcast. Tell us a little bit about why, betting on yourself, why that was the theme that you wanted to go with and what the show is really about.

Yeah, content is King, right? Content is King. And, and for, for the show, we not only interview, obviously athletes or celebrities, but we also interview entrepreneurs and it's almost like a biz dev opportunity for these startups. And businesses, they get access to an audience that they may not have had access to before.

, so I love that. I love that they have opportunities. So it's another way I can help companies as well, these platforms with the podcast and things of that nature, but bettering yourself as organic. , my whole life I've been able to, beat the odds and, and that. I took a lot of risk, , leave a school from a house state was a risk.

but I bet on myself and I believed in myself, , you know, signing back with Milwaukee, it was a bet on myself and then retiring and transitioning into business was a bet on myself. So my whole life has been betting on myself and learning that the secret to my success has been me more than anything.

And so we really get. Really in depth, the guests that have been on the show so far, , and they can really identify pivotal moments in their life where they've had to do that. , so I think more than anything to your point, Jay, people want to hear real stories, authentic stories, and the behind the scenes of how a person got to that level of achievement or success.

And we try to do our best to dig into that.

Yeah, I love the concept of it, especially because I think there's a lot of people with great ideas and, you know, we talk to entrepreneurs a lot that have great ideas. And at the end of the day, what we realize is like, execution is what matters. Right. But, but. To, to execute. You sometimes have to take more risks than you've ever taken in your life.

More risks than you really comfortable with. And the fear of failure is actually what keeps people back from, from achieving that. So I think the, the fact that you're sharing those stories and, you know, normalizing it like, Hey, listen, it was probably scary for you to make those decisions, but you took them.

They worked out for you. I guess what I'm curious is if you don't mind me asking, let's flip it the other way. When was the time that you bet on yourself and it didn't work out. And how did you, how did you deal with that?

I think we got to redefine what failure is. What risk is. So for example, , the media, after a game particular game asked me, well, how did it feel to not hit the game winning shot? How does it feel to fail? And I gave him a macro perspective. I said, well, I'm playing an NBA. Number one, number two, on the starting to garden, the Milwaukee bucks.

And then number three, my teammates and coach trust me to have the ball at the end of the game. Okay. I actually shot the ball where I wanted to shoot it from. and I happened to miss it. So did I fail? Right? And so he looked at me and he was like, Great way of looking at it. I said, you know, I don't look at failure as how some people may have looked at it, or look at it.

it's an opportunity more than a failure. And so I think that has translated into my advice and mentorship to companies as well. But no, I live it. I love the challenge. I live my life to encourage, our nonprofit team and also, our companies to, to, you know, strap it on and let's go, you know, there, there is no such thing as failure.

Okay. We need to pivot. Okay. it's tricky because you can become delusional. there's a line between optimism bias and being delusional. Right. And so I try to be as realistic, as realistic as possible, but also be positive, with that perspective. So, you know, you're going to miss shots.

You're going to make some, but the real success is that you get to shoot them.

Wow. I love that perspective and I don't think I've thought about success and failure in that way before. And I think it's probably worth pointing out too. Like not only was it a success for you to be able to take that shot and be in that position. But the other reality is that you did everything you could to be prepared to take that shot.

And ultimately it just did not go in. And that's what happens sometimes despite whatever preparation you put in. But with that, I'd actually like to take the conversation in a bit of a different direction. Now that ties back to something you said earlier about caring for people and creating opportunity.

If it's okay with you, we'd love to get your perspective on black lives matter and everything that has come out of what happened to George Floyd.  

I appreciate the heartbeat of black lives matter, but I think matters is the floor 

Hm.

black lives are loved. They're adored. There's purpose. There's destiny. There's meaning there's mountain to climb there's so it's more than just matters, right? We're fighting for matter in this country, right.

To matter. So, of course I was angry.  still angered, but it's being channeled to now being focused and being resilient through this, which black people have been resilient their whole time in America. And so, yeah, I've had a wave of emotions. I was angry. And it's funny. Cause I had a lot of my white brothers and sisters and white friends call me to kind of like subliminally, make sure I still like them and love them through their conversation with me.

Like does he still like us? No, I don't hate my people. I love my brothers and sisters and I hate the system and I hate, the spirit behind. Why things happen, more so than hating people. And I think of course I was angry. Of course I was, frustrated, then I became disappointed and then it like shifted from me in a sense where I'm just more focused now than ever to platform minorities, particularly black people, through business.

I think one of the great a solutions to racism is the transfer of wealth, economics. we've learned over the centuries that whoever has economic power and political power and institutional power makes the rules. And so I think, supporting black owned small startups, is critical. I think, empowering people, platforming minorities, women, all races and colors is, is, is the key to breaking racism back.

So. The firm I have now is called 22 ventures. And it's an acquisition entrepreneur play where we are actually from a private, small private equity play, where we are actually looking to acquire companies. That have been around for ages, have a great customer base, solid EBITDA's, they're making money cashflow positive, but they just have data, CRM systems, data, POS systems, data, marketing, and branding, and we're bringing them into the 21st century.

And so, and, and automating them basically.  but with that, we want to help minorities. Who've been kicking the tires in the startup world. And say, Hey, listen, we'll give you a salary. We'll give you benefits, but we want your skillsets that you used and kicking tires, innovation, and use it in something that has infrastructure and that already has momentum.

And so, the core of that is again to platform people and help people and have black people as executives and leaders and CEOs within companies and having board memberships. that's the way we're going to cure, in my belief. racism in our country is, is not a level playing field.

I mean, it's, it's such a beautiful way to say it, that that empowerment has to come from the economics. Right? You can empower people with policy and laws, but. Perception is still not going to change until the economics are there. And, , it is, it is really, really hard to get the attention to people that have been the ones holding those economics, because the incentive for them to change is just not there.

So there has been a lot of conversation amongst the tech and venture community over the last couple of weeks on what that industry could be doing to better empower. Black and Brown founders, minority founders in the ecosystem. You know, we hear what you're doing, we love what you're doing, but how can the rest of the industry catch up to that and what can they do to help bridge that gap as well?

Care. Care, Care enough to hire care enough to forfeit power and authority care enough to invest. . Racism is not a nascent thing to our culture. It's been around for 450 years. You know, there's been this notion, , of integration. Right integration, like integration has been like the aim and goal of America forever. Well, it's not an aim and it's not a goal. It's a fact, it's a fact that has been received, refused to be received and embraced. So we've got to transition it from being a goal and an aim to actually being awakened to that. It's a fact, we've gotta be able to empower minorities and we've gotta be able to have minorities at a powerful position because the lens begins to be widened and it becomes expanded.

And then you'll see change. I was around, I was 12 years old when Rodney King was beaten was around. It's been 30 years. It's the same cycle. Right? And when you look at it from an economic standpoint, again, I mentioned earlier, whoever, whoever has the institutional power controls the narrative and there's over 2000 billionaires in the world today, there's only four African American billionaires, David Stewart, Robert Smith, this to equities, Oprah Winfrey, Michael Jordan. Until that gap shrinks. We're going to continue to see this cycle happen because with diversity at the top, there's more of an empathy in our distressed neighborhoods, on education, on access and opportunity. So that's my soap box, but I believe that's where we can start.

Yeah, no, Michael, I mean, this is, , a lot of important stuff for us and our listeners to reflect on, especially as we really see. And I think the world sees the need for the systemic change. And it's not that. , it's, hasn't been talked about in the past. I was listening to a Emmanuel Ocho, , who did this really great sort of, , analogy where he said he's out for a bike ride.

And he was yelling to the woman ahead of him that he, that he's coming up on her left and he kept yelling as he got closer and closer, and she had her headphones in and didn't hear, and they collided and, and the analogy he uses that we're at that collision point right now, because. One side hasn't listened.

And I think the, bare minimum that we can all do right now is to listen and to educate ourselves and to understand the barriers that are impacting a significant. Percentage of our population and our community. So one just want to thank you again for having that conversation with us. I know this is a little bit of a hard pivot, but we want to make sure that, we do understand from you looking ahead, as you look at the next couple of years for Michael read for 22 ventures, what are you most excited about and where are you going to be spending most of your time in the next couple of years?

Well, I'm excited about, helping people obviously. but I think, there's a new reality of among us, obviously with the COVID situation, , people have been working from home. I think investing in things around the house, might be, A priority now, automation around the house, around the offices.

I know what sports tech in home fitness is becoming a hot thing right now. So those are some of the things I'm excited about focusing on. but there is a new reality and some of my advice to entrepreneurs has been, find the pain, find the pain of where people are hurting right now. and find a solution.

Find the pain to find the solution in this new reality of investment. I think venture will look at this, look a companies differently now. investors, angel investors will look at things differently now. so it's a new reality and to deny that, , would be kind of, kind of missing it a little bit. 

Yeah, no, that that's great. And I think the last question we have relates to other athletes out there that are maybe listening and could learn so much from you given your career. And now what you're doing off the court, how do you, especially as it relates to like an interest in venture, And you don't have to go like too deep on the financials of it all, but like, how do you look at things from a portfolio perspective?

Because obviously with venture comes a very high risk, and you want to build wealth and that's, you know, venture creates opportunities for that, but you also want to make sure you're managing risks. So how do you evaluate things as it relates to your whole whole portfolio? And you know, what part of does venture play in all of that?

I'm a big alternative investment guy and alternative investments really historically, I've done the market actually, So, I would encourage guys to look at their portfolios. I look at their fees, how much they're being charged, and really study their portfolios and create a family office, and take their finances a little bit more seriously.

we get thrown so many deals. I mean, I, I want to throw my phone in the toilet. with so many opportunities, it's like, I get flooded. And so you gotta have a strong team around you, which I do now. cause I have a big heart. I just didn't have big brains around me. as, Oh, of

so it's easy to see the potential.

Absolutely. I'm a visionary, I'm an optimist.

You're exactly right. So I've led for a lot of time in my early investment, span of having a big heart, but I didn't have big brains around me enough to say I get it. you know, we got to move on and pass from that opportunity. So I would invest guys too. It's a psychological thing with athletes because when you're used to making millions of dollars, when that stops, you think.

Big opportunity, big opportunity, big opportunity, you know? Oh, this exit, Oh, we, we psychologically struggle with that as athletes. Right? So it's a deep thing and we're accustomed to having big checks. And so you gotta have the right people in place to analyze opportunities, , and do a deep due diligence on the PR opportunities are coming your way.

Yeah, that's great. And actually the comparisons Dysport continue because if you put in the same rigor and effort that you did all those years to become as successful as you were as an athlete, and then you combine that with great team or coaches. Or, you know, the right people around you, then you can have success, but if you don't do that and you just show up, you've never touched a basketball before, guess what?

You're not going to make the NBA. So, you know, you've got to approach the other things in a similar

You're a hundred percent right. Or get, or get, or get smashed in the process. there's sharks in the water, , and athletes are liquid usually. So, at a venture firm, say to me, if you invest $10 million into our firm, we'll make you a billionaire. And just logically rationally, I looked at the GP managing partner said, you're not doing there.

So, how are you gonna make me a billionaire?

What'd he say? What'd he say?

red, dark red or red. So it's interesting. you know, the game is really, it's really interesting. So to your point, you got to study it.

And, and I guess where, where we'll wrap up and where we'd like to really wrap with our guests, because we know the folks that are listening to this show are not just entrepreneurs and business people, but also, professional and college athletes. we'd love to ask you Michael, looking at your career as an athlete now as an investor, what is some advice that you would give your younger self that you wish you knew back then?

What advice I would give my younger self and I've asked this question on my podcast and I haven't had an answer yet for myself. , I would say keep tracking, keep staying humble, stay humble. , surround yourself with smart people, but yet be true to your convictions. Your resolve, , have vision.

Continue to have vision because I believe vision has kind of protected me. Vision has kind of governed my decision making. And so I think it's important for young people out there who are listening to have vision and let vision kind of dictate what decisions you make in life. , without vision people usually perish.

And so begin to surround yourself with smart people, , that are credible. And I've done it for a long time, but I wouldn't, I would tell myself to continue to keep tracking, keep, keep tracking. You're a great kid, the little knock kneed Khrushchev vertical a little bit, but, you're going to be fine.

well, Michael, we appreciate you coming in to join us on the game plan, sharing your wisdom, , giving us your honest takes on all things. it was our pleasure.

Thank you both, man. It's been fun.

This has been great. Thank you, Michael. 

 

well, Jay, I really enjoyed having Michael red, join us on this week's episode of the game plan.

I think the most interesting conversation that we started to dip our toe into, and I think we're going to have to have Michael back on and a little bit at some point to talk about it is this whole idea of cashflow businesses versus venture capital. And you sometimes hear VCs talk about, Oh, this is a lifestyle business.

And it's used in a little bit of a derogatory sense. And now, especially in today's environment, I think that conversation is shifting and it's shifting in an important way, which is that VC is just one way to build a business. It's not the end, all Beale. And unfortunately, you know, the way the media covers it, the way pop culture talks about it, it seems like that's the best way to build a business.

But in fact, there are a lot of great companies that have the aspiration for the owners to, or the owners have the aspiration. To own as much of the business as possible to raise a little bit of debt, maybe give up a little bit of equity and get to cashflow and profitability

pretty quickly. 

I think that's interesting. So give our listeners an example or two.

Sure. So let's use direct to consumer as one potential Avenue where you can see those two types of businesses. You know, one is the typical direct to consumer business that you're probably familiar with a Casper Warby Parker, farmer's dog. I mean, all of these different categories. And traditionally what these companies have done is they have gone and raised.

A ton of capital to fund their growth because they started with a niche audience. And then they realized like, okay, well that niche audience is only going to spend $300 a year with us. So now we've got to go and acquire more and more customers to acquire those customers. We need to have venture capital.

And if we have venture capital, we dilute our own ownership, but that means that we have to keep growing to justify the investment that we've taken. But what if we flip the script and say, You started a direct to consumer brand. You found a niche audience. And instead of actually trying to increase the top line, you actually try to focus on the bottom line.

How do I get this product more efficient? How do I get to cashflow and profitability quickly? So that would be a sense of like a direct to consumer brand, like a. A Casper that grows to a multibillion dollar valuation and has to continue raising capital because they have to continue funding growth and they have to continue showing markups so that the series a investors can feel good when the series B investors come in or, you know, there there's new models right now.

whether it's a clear bank or any of these folks who are, providing some kind of revenue based financing. And say, Hey, there are capital sources available to you to build these businesses. And it's not like a lifestyle business as a derogatory term in venture capital because VCs can't make money off of them, right?

Like they just don't follow venture scale return models. But for you, the entrepreneur who owns 80% of an apparel company that didn't have to raise venture capital, that could probably be a pretty solid business for you might even be a solid

exit for you one day. 

so, so where does an entrepreneur like that even start 

especially as it relates to funding.

yeah, I think you have to think about what your capital needs for that business are and whether or not venture capital is going to make sense based on those capital needs venture capital. If you're interested in a, in a, in a brief history lesson, venture capital made sense because of the semiconductor industry.

Semiconductors require a tremendous amount of capital upfront because you have to create all the machining and tooling to build that shit. And then once the machines are done, now you start churning out the semiconductors and you eventually recoup that capital. So you need 10 million to set up initially selling a portion of your equity upfront and working with an investor who has a eight to 10 year horizon makes a lot of sense, but in today's world of.

E-commerce of AWS of all of these tools that are available to you, where even the least tech savvy person can stand up a business where you don't need a tremendous amount of capital upfront. You may need a little bit, and maybe there are some sources that can get that to you, but you don't, you're not building semiconductors.

You don't have to build a giant factory. You can go and figure out ways where maybe you don't own your own supply chain, but you're still able to stand a product up and get it out to a customer and start to

generate revenue today.

But if you are building a physical product, you still need capital to get that off the ground.

Sure, sure. I'm not saying you don't need capital. The question becomes how much and from whom, right?

yeah, I think the challenge there is like, It's like, where does lock-in occur? Like if, if you've gone to the lengths to build a semiconductor business, like that's pretty defensible, it's pretty hard to like break into that for all the reasons you were just listing about getting into it. Whereas like, if you're creating a new D to C company with all of the digital tools you mentioned, even on the physical side, like everything's changed from a manufacturing and supply chain chain standpoint where it's easier than ever to.

Get access to manufacturing and in materials and to create products. So even if you create the world's greatest backpack or, you know, whatever your D to C product is, it's not necessarily a defensible thing, especially cause there's just so much consumer choice out there.

Tim, do you think capital actually makes a business defensible, like just the sole, the sole presence of a big series, a check. Do you think that makes a

Are you, are you trying to get me to stay in for SoftBank here?

No. Listen, I I'm. I'm just curious, right? If. If that in and of itself creates defensibility in a business that you yourself have said, anybody can start tomorrow.

The tools and the picks and shovels exist for anybody to start their own apparel business tomorrow. But if you feel like you can start one today and you've got a niche audience that you can go to, is somebody else who has 10 million more dollars than you is is that defensible?

Yeah. And I guess what I'm talking more about, and this ties in with the another topic that came up in our conversation with Michael, which is diversity in venture and entrepreneurship is like, there are other costs associated with physical products or whatever the businesses that's being scaled. And even those tools, like while cheaper than ever, and more accessible than ever, they still, there are costs associated with those too.

Like for that very initial capital. You know, how, how did those entrepreneurs get funded or how did they get started? Especially for the, for those who don't have come from a family where they can afford not to take a paycheck and, you know, just pay rent and have, you know, food and whatever. So like, you know, the core basic life needs that, you know, that's what I'm trying to understand is like, where's the opportunity for them?

or where do they get started?

yeah, I think there is a, there's a deeper challenge there in terms of who this industry deems investible. And I think. What you're touching on in terms of what are your capital sources is maybe a separate question from is venture capital even accessible to you. Right. And, and, and I think we should, and right now is a good moment to have that second conversation, which is what Michael red was talking about around the idea that there are a lot of people that look like him.

That you just don't have those opportunities available to them. And he talked about it. And I think the concept that he was sort of illuminating on was like, you know what some folks call a search fund, which is you go and find existing businesses with existing infrastructure that are probably not software enabled there.

They're never going to be tech companies, but he mentioned CRMs and POS systems. Like bringing a base layer of technological innovation will bring your operational costs down will allow you to get to profitability quicker. And so you can take a. Boiler company or a mechanic shop or a lawnmower repair, you know, a company and you can get them into a point where they can be profitable and, you know, like a, like Vista equity start to roll them up.

Right. And, and, and a lot of these, you know, private equity firms that they do, they find a bunch of businesses that are undifferentiated that look like each other and they roll them up and they turned them into something that now has scale. And through that scale has defensibility. And so that I think is a really interesting conversation because.

Why chase capital in an industry that doesn't value you and over the last two weeks. And, you know, even before that, for those that have been listening like black and Brown people have talked about how their experience raising capital in Silicon Valley is just different. And. When, even when they come from the same old boys clubs and the big name brands and the big name schools, but especially if they don't, there is just a bias to whether that capital source is accessible to them.

So I kind of, you know, I really get what Michael is talking about, which is, well, don't do that. Don't chase VC, come do this thing. Come build a profitable, you know, local business. Because there's no shame in that you can provide a good living for your family. You can own decent equity in the business and you can actually build something for yourself, which to his point, empowerment comes from economics.

Yeah, I think it's pretty cool. His message and focus, which is just helping people. And how his aspiration to get to that next level of wealth is so that he can empower even more people and seeing like that big of a picture. And, you know, LeBron's did an excellent job of that with his eye, you know, doing things like as I promise school and like continue to just expand his platform to do more.

, I think it's great and we need more of it. So it's great to see Michael doing it.

Yeah. And the other thing is like the sports tech world is sort of an interesting piece of that puzzle, right? Because, , you, you spoke to it, which is so much of the wealth in the sports industry is built off of African American players and. We see a lot of pitchers in the sports tech industry where they're, you know, athlete adjacent or they're sort of athlete aligned.

And that's, to me, seems like a really great place for businesses to be built by minority founders that understand the culture, right? It's like if it's a consumer business built around sports, that means it's a consumer business built around black culture. And so the fact that Michael is an investor in that,  sports tech makes a lot of sense for him. To have as an investing focus because it directly ties to the community and the people that he wants to serve.

Well, most importantly, we're just grateful that Michael was willing to share his perspective on diversity, not just in venture and entrepreneurship, but in all things. And the best thing we can just do is listen. And also to offer our platform no matter how big or small to share that perspective. And so with that, I want to end on that reflection and wrap this week's episode of the game plan.

thanks, again for listening. And we'll see you next week.

So that's it for this week's episode of the game plan with Jake report and Tim cut. As always. Thanks so much for listening. A big thank you to Mike Sue at the snap yellow accelerator for introducing us to Michael. We really enjoyed having Michael red on the show to share it with us.

Everything that he's been up to make sure you follow him on Twitter and Instagram, as well as check out his podcast, betting on yourself. Hey, if you've made it this far, congratulations, you must really like what we have to say. 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.