EP01 - Exploring the Future of Work and Venture Capital with Greg Moran from Evergreen Mountain Equity Partners

EP01 - Exploring the Future of Work and Venture Capital with Greg from Evergreen Mountain Equity Partners

Ready to uncover how the future of work is set to change the face of business? We're thrilled to have Greg, a founder of Evergreen Mountain Equity Partners, guide us through the fascinating shifts in workplace dynamics. From automation to the globalization of the workforce, Greg takes us on a journey of the venture fund's focus on the future of work. You'll get an insider's view of the rollercoaster ride from investment to business exit, and the crucial role of an exceptional founder in navigating this adventure.

In this candid conversation, we delve into Evergreen Mountain Equity Partners' exciting portfolio. It's home to forward-thinking companies like Chatter Works, C-Pow, and Hitch, all of which are revolutionizing talent sourcing and workforce management. We discuss Evergreen's exceptional summer camp initiative, where founders gather to connect and support each other, offering invaluable insights for budding entrepreneurs. We also shed light on how potential investments can catch the eye of this venture fund.

Closing our deep-dive, we swivel our focus on the future of work. From the makings of a successful founder to the criteria that Evergreen Mountain Equity Partners seeks in potential investments, we dissect what it takes to impress in this evolving field. Explore strategies for startups to captivate their first five customers, understand the significance of displaying product-market fit at an early stage, and learn how to pursue the right customers. Whether you're fascinated by the future of work or the world of venture capital, this episode promises a wealth of practical advice and insightful perspectives.

Connect to Greg on Linkedin https://www.linkedin.com/in/gregmoran/ 

Transcript

Stewart Noakes: 0:46

All right, brilliant to have you here, greg, to kick off the series about investors and what you think about and how your deals work and everything. So you're one of the founders of Evergreen Mountain Equity Partners, right? And we know each other from one of the boards. Why don't you start by just saying what the thesis of the fund is, what you guys are trying to do?

Greg Moran: 1:06

Yeah well, first, thanks for having me on, stu. This is great. I really appreciate you including me in the series here. So, yeah, evergreen relatively new fund and we started it just about a year and a half ago I guess now or so but really it's a very thesis-driven fund focused exclusively on the future of work. So when we talked about that, that's where my background is, that's where my partner and the fund this background is, and we really try to bring that kind of expertise to that experience within that domain, to our portfolio company.

Greg Moran: 1:47

So when we talk about future of work, we're talking really broadly about the dynamics that are changing the way that people will have a career right and the way they go to work, the way they operate in a work environment, what kind of jobs will they be going after and how will we all work on a global level right? So if you think about things like automation, mobility, globalization of the workforce, freelance and gig work, ai and how that's going to impact work, those are the kind of things that we think about in the fund, that we think about within the fund. So that's our thesis. Relatively early stage. We typically are kind of what we would say is sort of C plus to series A typically, where you have to have some revenue but you don't have to have a ton and we just need some sort of early indicators of product market fit and right up to series A and we'll lead an investment, we'll follow on. We don't care much about that, but it's got to be within that core area of our thesis.

Stewart Noakes: 2:58

And I guess space bands the board we're on together. That must have been one of the very first ones that you invested in, right?

Greg Moran: 3:03

Yeah, very much I'm trying to think yeah, it was either I think it may have been the second or third investment that we made out of the fund, and space bands is a great example, right. I mean they're very much future of work, right they are. You know, this is a workforce health and safety, you know, built for large manufacturing environments to help keep people safe, you know, and in a working manufacturing setting. So very much within that thesis. But yeah, it was. I think it was our second or third.

Stewart Noakes: 3:43

So you're there in Denver, right, denver, colorado. These two guys from the UK rock up and say we've got this really great idea. How on earth do you analyze that and make a decision? This is the hardest part of your job, right? How do you look at that?

Greg Moran: 3:59

First of all, half of our investments today within the fund are outside the United States. There was never something that we anticipated. We are a US-based fund, never anticipated that, but we don't care where somebody is. But how do we make that kind of determination in that setting? For us, it's all about the founder. The founders, our fundamental belief. My partner is a great saying in this where he calls them find-away founders. Right, it's the founder that basically or in the case of Space Band as a founders that they're going to figure out a way to build a successful business regardless of the challenges that they're going to encounter. Right, and that's fundamentally what we're underwriting at an early stage is the founder, it's not the business. We know that the business is going to pivot 10 times along the way. We know that whatever business plan or financial plan they put in front of us, the 5% of it is going to be right if we're doing great right.

Stewart Noakes: 5:09

If they're watching this now, can they accept that as a norm? You're fine with it being a bit flaky, is that what you're saying?

Greg Moran: 5:15

Absolutely. You can't not be right. I mean, I'm an operator, I'm not a finance guy, right? I didn't come at this at the VC world from with the finance background and the traditional Ivy League degree and all the other stuff that most people running venture funds have. I was an operator. I've started multiple businesses. I've been fortunate along the way to have a couple successes there, but I can tell you every single one of those successes came on the back of what we perceived at the time to be failure after failure after failure after failure.

Greg Moran: 5:55

And I was joking with somebody yesterday we were talking about this before we started recording and I have my own podcast and I was talking about this when we were doing a podcast recording yesterday and I was joking with my co-host and also the guest and said the only thing that sort of got me from the point of starting the business to the point of exit is nobody had actually told me how many times that, like the business had fundamentally failed just repeatedly, except I wasn't smart enough to figure that out and nobody actually told me that.

Greg Moran: 6:26

So I just kept showing up to work the next day and this stuff. You just don't know how these things are gonna evolve right. But if you've got a great founder like we have and Ronan and Harriet Space Bands and other founders that are in our portfolio when you've got a great founder, they're going to figure out a way to make this thing successful, and what we really try to do is just kind of help them along in that journey. So I mean, that's what we're looking at. I mean, yeah, certainly the idea has to be good, it's gotta be within our thesis, it's gotta make sense, you know, it's gotta be somewhat capital efficient so that we don't feel like we're gonna run out of money over and over and over again. But that path, from the day we invest to the day we were no longer invested in that business, that path is gonna take so many twists and turns. We don't pretend to be able to know how that's gonna work.

Stewart Noakes: 7:23

And so you're a GP in the fund, and Ira as well, right, so it's just the two of your GPs.

Greg Moran: 7:29

We actually have two other GPs in the fund. One is our internal legal counsel, who's a GP, and then we've got somebody else who comes out of the private equity world, but Ira and I are the two founding partners. We're the two founding GPs of the fund.

Stewart Noakes: 7:45

And how do? How do four of you make a decision Like do you all have to agree on something, or do you want one of you sponsor the startup into the fund? How does it work?

Greg Moran: 7:55

Yeah, you know, with all four of us and we've all worked together for a long period of time, so we know each other really well. So this is probably not a very formal thing. But you know we do have an investment committee. One of us really Ira and I are the ones dealing with the companies and sort of forming our opinion of you know if we should proceed, how we should proceed, things like that, and then we'll take it to the investment committee. One or both of us We'll take it to the investment committee and make the argument. Our general rule is Ira and I. This is an informal rule, but Ira and I both need to be on board with the investment before we go ahead and do it. I don't think we've ever made an investment where I've been really supportive of it and Ira has been against it or vice versa, where we've actually made that investment Although in the hope that Ira is listening to this there have been new. I've been at favor, he's been against it and I've been proven right. I don't think that's ever actually happened.

Stewart Noakes: 9:09

We just underlined that bit in the show notes. That's right.

Greg Moran: 9:11

Yeah, that's just the pullout quote from the recording. But yeah, I mean both of us really need to be on board with it. Then we bring it to our investment committee and make the argument. Yeah, we don't have a necessarily a formal voting process, but if there's anybody on the investment committee that really believes that this is the wrong move to make, we're probably not going to do it.

Stewart Noakes: 9:37

So any no is a no overall. Is that how it works?

Greg Moran: 9:41

Yeah, pretty much. Like I said, it's not so much a formal process. I don't think that's actually written anywhere, but that's functionally the way it pretty much works. These are all really smart, accomplished people who have a lot of experience, and if somebody there are things all kidding aside, there are things that I but I read jokes all the time that I've never met a founder who I haven't fallen in love with, and that's not like literally a romantic thing, that's very much a it's an energy thing, right, it's a founders like thing.

Greg Moran: 10:17

That's right, and you become infused with their passion for the business. And I was the same way, even though he won't admit it, and I think it's good to have those individuals on the outside of that decision making process that can say guys, I get what you're seeing, I know you love this founder, I know you're really exciting about it, excited about it. But there's parts of this that aren't adding up Because ultimately we have to represent the interest of our LPs and we've got to make sure that we're giving them the best possible chance of getting a meaningful return on that investment. So there are things that we, you know quite we're humans and you know you start to form an opinion and you really fall in love with that opinion and it takes people outside of that to kind of bring you in.

Stewart Noakes: 11:05

Sometimes that's your bubble right. Sometimes it needs it. That's right. So you mentioned the LPs and stuff. You know where have you brought the capital in from and how much did these guys trust with you in the first fund?

Greg Moran: 11:17

Yeah, we're, you know we're lucky. I mean it's a small fund, it's a $10 million fund. You know it was our first. Ira and I are not, you know, we don't have a track record as fund managers. We've got strong track records as operators. Because of that, you know, we have made. We've been, you know, really lucky to have made a lot of people a lot of money along the way In our, you know, in our careers, in the businesses that we've run. So our LPs are I think I'd have to go I mean probably 90% of them, 80 to 90% of them are long term investors in businesses that Ira and I have run in the past.

Stewart Noakes: 12:02

Starting to change Because of history and a trust and an understanding between you.

Greg Moran: 12:05

Yeah, they know us. We've been successful for them before. They trust us and they probably know.

Stewart Noakes: 12:12

Some tells as well right, If he's blinking.

Greg Moran: 12:26

They've got all kinds of they know the. They know the good and the bad for sure, but they've yeah, I mean there's, you know, and that's what investing in this is right. When you're a first time fund manager, it has really unique challenges Because you know the big LPs, the family offices, large family offices, big institutional funds of funds and pension funds and things like that. They're not going to look at you Typically. They just have rules within their, within their operating model that basically say we won't invest in first time funds. So you know you, you really you know. You really are out there building this with the people who have invested in you in the past.

Stewart Noakes: 13:09

Okay, that's very cool. I think my experience with you guys from being on the Space Bands board has just been amazing. So far, you really do, for me, personify that operator mentality that you're there asking hard questions and challenging everybody, but you're also there helping at the same time when you sound and you kind of feel like in the discussion somebody who's trod through the same mud as well, which is really nice to be part of. I great respect for both of you and the way you've helped the guys in Space Bands.

Greg Moran: 13:37

I just really appreciate that.

Stewart Noakes: 13:38

Wondering what sort of other companies have you invested in? Are you able to name any on today's interview?

Greg Moran: 13:45

Sure, yeah, we've got a number in our portfolio. We've been fortunate Again. We just made our first investment just over a year ago. We're early in our whole period on everything that we've invested in, continue to make investments, I think a few of them.

Greg Moran: 14:02

Chatter Works is a company a really interesting one that we invested in that's really changing the way again. Everything we do is around future of work, really changing the way that companies source talent and connect with talent. It's really focused on selling to the staffing industry primarily and really helping to connect, using predictive analytics to really connect an individual recruiter with their talent and some potential talent in some really unique ways, using social media and things like that. That business has been, is a great performer, continues to really incredible founder, continues to really just do unbelievable things and really innovating around the talent sourcing space.

Greg Moran: 15:02

We've got a company called C-Pow, which is a really interesting one a little bit later stage and we would normally invest, but super interesting Again, focusing on it's an ATS and workforce management system that is based largely out of India and is probably the fastest growing applicant tracking system and combined with a vendor management system. If you look at the way that companies hire, it's not uncommon for a large enterprise company to have thousands of staff and companies that are providing talent to them on a contingent or permanent basis. What this really does is it helps large enterprise organizations or staffing firms manage those vendor relationships with all of those staffing companies and then manage the flow of talent coming in from those companies.

Greg Moran: 16:05

Really interesting, it's like supply chain management for talent and that business has done, continues to do, really well to Coast City, who we're really proud of called Hitch and they Hitch like the movie Hitch, just like the movie yep, and they are basically a suite of applications for SMBs all over Latin and South America that help small businesses in Latin and South America hire talent more effectively and at a reduced cost. So, you know, definitely have a smattering of stuff all over the place. Like I said, it's very international portfolio but certainly you know it's on out there that we're incredibly proud of.

Stewart Noakes: 16:53

And I know you've just run like your first summer camp, bringing all these people together. What was it like? Was it a car crash when you got all these different personalities in the room, or did? They nurture each other or you know. These things come work both ways right.

Greg Moran: 17:05

Not a car crash at all, it was. It was really, honestly, an incredible experience. One of the things that Ira and I set out to do when we started Evergreen Mountain was to honestly be the venture partner to these companies that we always wanted to have right and one of the things that we always that I always wanted to have. It was just amazing to me that, you know, over my career I think I've raised over 400 million or some 350, 400 million in capital and you know, for the various businesses and one of the things that I worked for some great firms and really incredible top tier firms but one of the things that I always wanted to have and very few of them really offered a way to do this was a connection with the other portfolio companies Because, you know, with the other founders in their portfolio, some of them did okay at that.

Greg Moran: 18:03

Some of them, honestly, it felt like they were intentionally keeping us apart, which is something I'll never understand. Whether they were or not or just was giving off that vibe, I don't know, but that's the way it felt and what Ira and I wanted to do was to provide an outlet for these founders to come together and share their experiences, create their own connections with each other, to be the support system for one another. So you know the magic of that. There's this magical thing that happens to, and you see this all the time right, you stick a bunch of founders together in a room and just crazy stuff starts to happen, right they?

Stewart Noakes: 18:42

start doing stuff right. They start doing things Well, they get super competitive with each other right. That's the other thing.

Greg Moran: 18:48

That's right. That's right. But in this case they're not. You know what they're really. You know we're very fortunate to have a group of people that just sort of very quickly connected with each other. And you know, by the end of this three days they were. It wasn't about anything that Ira and I were teaching them, it was very much about what they were teaching each other and you know, it was an incredible experience. I can't wait to do it again next year. But yeah, it was super fun.

Greg Moran: 19:21

I'm in the mountains of Colorado here. We've got a large piece of property stuck up in the middle of the mountains here and the funniest part with this, you really test the metal of somebody when they show up. We did it at my house and we rented a bunch of RVs. I don't know if Ron and Harry told you about this, but we were running a bunch of RVs and just stuck them all over our property. So everybody was like sleeping in RVs on my property. It was. So we said it was summercap. It truly was summercap. I mean, this was not a high-brow experience. I can tell you that.

Stewart Noakes: 19:52

I love it as well, cause if you don't like your spot over here, just move the thing. Right, that's right.

Stewart Noakes: 19:58

That's right exactly Amazing, amazing. So one of the most important questions we're asking in these interviews is about when founders approach you, like how you want to be approached and when you want to be approached in that cycle, cause every investor that I've spoken to has a different mindset for this. Some want to be talked to early, before the money's even being discussed right. They want to understand the person and the idea. Some want to know when you've got proof points and don't come and talk to me before that. Where do you guys sit on the spectrum? How do you want to be approached? What kind of company should it be that comes to you and what kind of founders should it be? What kind of questions should they be asking?

Greg Moran: 20:33

You know we love both I and I love founders. There are people, there are tribe. These are people that understand us and we understand and if we are always willing to spend time, even if you're not in our thesis area, we are always willing to spend 30 minutes beating up an idea, with a giving you kind of thoughts, and that's something that you know. I know both of us are certainly always willing to. Willing to spend some time Doesn't mean we're going to invest, but we're certainly willing to provide any guidance. You know that we can If you believe you're in our thesis area.

Greg Moran: 21:18

Again, around future of work, you've got some revenue. When I say some revenue, probably I'd say you know our sweet spot is really probably a half a million to two million in ARR. You know we'll go a little bit lower than that, but you've got to have somebody is. Somebody needs to be buying your product. That's not like your brother or, you know, like your buddy or something right. Somebody needs to like within your target market. Somebody needs to be buying your product and I think if you have that, we have a lot. You know, if you follow my LinkedIn or you follow my Twitter either, at Evergreen MEP, there's a ton of content out there to tell you how to kind of put together a quick you know, a quick overview of your idea and of your. How much capital do you need and how long is that going to last? If you can basically tell us those four things, reach out and get in contact and tell me those things in an email.

Stewart Noakes: 22:40

Now you just froze out on the satellite just before you said those four things. If you just want to recapture me on those four things, I'll be super glad, yeah, sure.

Greg Moran: 22:47

What's your product? What's your target market? Who are you selling to? How do you sell to them? How much capital do you need and how long is that going to last you? Those are really the four things. You can spell it out in an email for us. You can stick it on some fancy slides I don't care if you've got it and then also tell us how it fits our thesis. Put it in an email and send it to me or send it to Ira. We're really easy to reach. It's Greg at emepio. It stands for Evergreen Mountain Equity Partnersio. It's Greg, jerry G or Ira IRA. If you misspell his name, you're out. That's the flunk IQ test You're out.

Stewart Noakes: 23:34

You guys answer your own emails. You're not going to screen these things in terms of there's not going to be somebody saying don't read this or whatever. You're just saying openly I'm happy to talk to people who are founders. Sure, absolutely Amazing, all right, why don't you close this out, greg, with the best tip you've got for a founder who's trying to start up right now and maybe not quite ready for you, but soon will be?

Greg Moran: 24:00

The thing it feels like I have this conversation with every founder I've come in contact with for the past 12 to 18 months. Keep narrowing your market.

Stewart Noakes: 24:12

They're trying to do too much for too many people. Is that what you're saying? That's right.

Greg Moran: 24:15

Yeah, don't try to do too much for too many people. Narrow it down, get down to the point and tell me, as an investor or know this for yourself who is that market that I can go after? That will believe, because it's so narrow that you built their product specifically for them and no one else. That's the market I want to know, because that's the person. The rest of the world you're going to be in this kind of competitive situation, but that's the individual who says my God, I didn't even know that this thing existed and it's exactly what I need and that's so you're going to be able to make all the time, because if there's one person that will say that, there's more than one person that will say that.

Greg Moran: 24:59

And that's all it takes when you're dealing with really early stage startups just getting to the point where you can get that little critical mass, that first customer, that first five customers, and have them so deeply embedded in what you're doing for them that they're willing to talk, and that provides those case studies, the customer testimonials, the stories that come out of those first five will then leverage you to the next five, then the 10 after that, then the 10 after that, as your market starts to expand a little bit beyond so many of the companies we talked to today.

Greg Moran: 25:38

They're going out and I don't know what business school taught this and I don't know what business, what fundraising pitch deck said you had to do this, but everybody starts talking about oh, my TAM is $4 billion or $14 billion. I could not give a crap what your TAM is. Tell me the first five customers that you're going to go sell to and show me how you're going to get to them. That's actually what's going to build your business the $14 billion TAM that's going to help you when you get to $50 million above in revenue. We need to try to keep you from going out of business and we need to try to prove product market fit at a really early stage, and that is about as narrow of a market as you can get to.

Stewart Noakes: 26:25

Amazing. What a great insight. Thank you so much for being on the series today. It's an absolute pleasure to be on board with you with SpaceBands. I really appreciate what you do for everybody and I really appreciate the things that you've shared today. It's going to be super helpful for the founders to watch this. Thanks, Craig.

Greg Moran: 26:39

Thank you, steve, really appreciate you having me.