In this episode of Venture Studio, we hear from Paul Martino. He is the founder and General Partner at Bullpen Capital (one of the pioneers in post-seed round funding) and has a way of thinking and talking about the venture ecosystem that is uniquely his own, and unapologetically contrarian.
Paul founded Bullpen in 2010 and his data-intensive approach to investing in companies such as FanDuel, Namely and Life360 has resulted in what will perhaps be one of the all-time great first-time funds.
Prior to starting Bullpen Capital, Paul was the founder of four companies and an active angel investor in companies such as Zynga, TubeMogul, uDemy, and PayNearMe.
Paul and I cover a lot of ground in the episode. In his infinitely quotable manner, Paul talks about how the herd mentality of most venture investors presented a huge opportunity for Bullpen, discusses how to effectively manage your board, and shares some insider experience on what it's like to be coached by the legendary Bill Campbell, (behind-the-scenes guru to Jobs, Bezos, Brin, and so many of the Valley elite).
Some of the most memorable quotes were:
On raising money:
"Once you get ten ‘no’s’, you know you're going to get 50 ‘no’s'"
"Don't be 10% better, be different.”
On the problem with traditional funds:
“Many funds are momentum players and when the music stops they go home and don't do any deals…[they’re] already playing golf.”
On the people doing it right:
“Floodgate, First Round, Felicis and True, these are three or four of the absolute best seed funds… those funds are the next great generation…Those funds will be the names in the pantheon.”
On learning how to be a CEO from the great Bill Campbell:
“Being a CEO…is lonely, it’s scary.”
“One of the things he said in that first meeting [I had with him] was, ‘CEO’s get paid for judgment. Do you think you’re good at that or not?…Two to three times a year you need to tell your board of directors that they’re 100% wrong.’”
“[You need to ask yourself:] what are you uniquely qualified to do in this particular business? Is this something you were born to do?”
“There are certain kind of people, I don’t care how much money you make or how successful you are, you kinda still have that hard-work, blue-collar, chip on your shoulder mentality. That’s who Bill is, and that’s absolutely who I am.”
On Bullpen’s subversive strategy:
“We [Bullpen] ignore venture mythology…we do the deals that people are scared to do.”
“VC suffers from a herd mentality…[But] it’s so much more fun to make money when you're right being contrarian than when you're 10% better than anybody else.”
“Almost all of our deals have a little bit of a contrarian streak to them…when everyone’s in the category, that’s exactly when we don’t want to be there.”
"Most venture people wake up in the morning and go ‘I’m gonna go to Y Combinator’s [Demo] Day, and the prettiest company at the dance is the one I’m gonna invest in.’ That is the opposite of what I’m gonna do.”
“I conceived of Bullpen as a bear market fund…the fact that we made this work as well as we did in a bull market, is in some ways the surprise. This is the market condition we always assumed where our fund would flourish.”