With Founding GP Jack Crawford at CerraCap Impact Venture Capital: Bridging the Gap Between Market-Innovating Startups and Market-Leading Corporations 18VC Podcast · Episode 2 · May 5, 2026 Guests: Jack Crawford Source: https://www.18-vc.com/podcast/civc-jack-crawford Philip Zeng: Good morning, good afternoon, and good evening to our audiences, and a huge welcome to our guest today, Jack, who is the founder and the managing partner in the Impact Venture Capital and have recently merged with CerraCap Venture to form the CerraCap Impact Venture Capital. And Jack is also a professor in the USC Marshall School of Businesses. And just thank you so much for joining us on our second episode of the 18VC podcast. And for those who may not be familiar with the 18VC podcast, we are a student-run podcast featuring student founders, operators, and also investors who are backing the youngest and smartest minds. And the host today will be Philip, that's me, and also Lucas here. Lucas He: Hello, everyone. Philip Zeng: And we would like to start off a little bit about how I met Jack in the initial place. So it was beginning from the amazing class that's called the Venture Lab in the USC Marshall School, where Jack served as the instructor of the class and walked us through how to become a student investor with hands-on practice with our USC Marshall Venture Fund, during which we learned to set up our investment thesis. We learned how to do deal sourcing and due diligence, and also raising funds. And it's such a great honor to have you here on board on our podcast in our earliest stage. And- Jack Crawford: How'd you like it? How'd you like the class? Was it- Philip Zeng: Oh, it- Jack Crawford: It was sort of part class, part lab, right? I mean, it was- Philip Zeng: Yeah Jack Crawford: ... I thought it was kind of interesting. Philip Zeng: Yeah, I think it's extremely insightful, especially we got to listen to the ideas from the founders of different VCs, and the guys who already have very experienced, seasoned experience in the venture capital world. And we learn from different perspectives, I would say. For example, they are fund of funds, they are LPs, and they are different strategies. And also Daniel, which was two classes before, he has an extremely different path. Yeah, and we just found them so inspiring in either the investment strategy and also their story into the venture capital world. It's been so inspiring, yeah. Jack Crawford: Yeah, for any students listening to this, the Venture Lab course also included the head of investments at Google. It included the National Venture Capital Association, Kauffman Fellows as speakers. Many of these people, Philip, they came live, right? I flew down from Northern California to teach the class each week in person so that you guys could avoid Zoom. But also, many of the speakers came. Alan Taylor from Endeavor came from Spain to LA. So, it was quite an experience for me as well. Philip Zeng: Yeah, the Endeavor one is extremely, also, very insightful because they are investing in sorry, emerging markets, right? That's been quite different from all the other VCs who may have been focused on Silicon Valley as their major focus. Yeah. And now maybe we can start with your background and your path into the VC world. So, from our knowledge that you started as a CPA in PWC after you graduate from the universities, and then you founded one of the first internet service provider. And then along the '90s, you've been also founded other software companies, and also you was named the Entrepreneur of the Year by the Money Hunt in the 2000s. And then you also shared with us during the class that there was a kind of failure with the College Campus News aggregation site. And after that, you move on to be a manager of the venture capital fund in Oracle. And also after that, you start your own Impact Venture Capital in the days. Can you just walk us through your story prior to entering the VC world? Jack Crawford: Yeah, let's see. I'll start with, so graduated with a degree in accounting and thought I was going to be a CPA. Went to work for PricewaterhouseCoopers, and there was a pivotal Friday night when the managing partner at the firm would take all the associates, the new associates, out to appetizers and drinks and just kind of welcome them and thank them for working so hard during the week. And he thought he was being encouraging as he described to me the career path for my ability to get to become managing partner someday. He said, "If you work really hard as an associate for two years, then you'll be a senior. And if you work hard, just keep doing what you're doing, Jack, for another two years, you'll be a manager. And if you work really hard there, you'll be a partner. And then just two years after that, you could be running this whole place." And he thought he was inspiring me by providing me with a clear path to managing the entire firm. But what he did was the opposite, actually. I realized that I didn't want to wait 10 or 12 years to be in the corner office. And it was weeks later that I started working on my first startup company. And I remember writing my name and the letters CEO next to it. And I thought, "Oh my gosh, I made it to the corner office in 12 days instead of 12 years. This is incredible." Right? Philip Zeng: You did it, yeah. Jack Crawford: So anyway, that was my pathway into entrepreneurship. And as you mentioned, I launched one of the first ISPs in Sacramento. And then I had an e-commerce company and a web development company. I had a few small-scale successes starting companies and getting them acquired. And then the one sort of epic failure was I had an idea for replacing America Online, Prodigy, and CompuServe. These are companies that were the early sort of internet portals that you've maybe heard of but aren't that familiar because you guys are too young. But those were the three major portals. And my view was that the most active users of the internet were college students. At that time, not everybody had a computer, but they all had access to computer labs, so you'd go to the lab to use a computer. And I thought, "If anybody's going to take the internet to the next level, it's going to be college students." Philip Zeng: Mm-hmm. Jack Crawford: "I think what I'll do is launch on each college campus, effectively an internet portal." And my view was that I'll use the campus newspaperTo drive traffic to an online site. Because these campus newspapers have been around for, in some cases, 50 or 100 years. Philip Zeng: Right. Jack Crawford: Right? So it was sort of a cross-media strategy. So I went to the campus newspaper professor and team, and to make a long story short, one by one, I started signing campuses to these revenue share deals, and we got 118 campuses to sign revenue share relationships with us five years before Facebook. Philip Zeng: Oh, wow. Jack Crawford: We had a million students logging into websites that we controlled, and that were being promoted by these campus newspapers. It was a really interesting model. And as I went out for the next round of financing, we just had the beginnings of revenues. We didn't have a lot of revenues. We had the beginnings of revenues, and we had, I don't know, I think it was 60 or 70 people working at the company. So we had a pretty significant burn rate. So we just grew a little bit too fast, and instead of sort of perfecting the model with maybe a smaller number of campuses, I think we just grew so fast because we had so much momentum, and I was getting awards and the company was getting awards for what we were doing as innovative. Anyway, to make a long story short, that led me to a lack of a follow-on round of financing, and I had to wind down that company and sell off the assets. It was years later that I learned that Mark Zuckerberg and Edward Saverin apparently used some of those early contracts that we signed for revenues at Facebook. Philip Zeng: Oh, wow. Jack Crawford: And I was like, "Oh, wow." So we weren't going to be a Facebook company, but we were sort of in that space with a campus newspaper promoting a regional portal. So it was a really interesting model. But anyway, after that failure, I realized, hey, I really like working with early-stage companies. There's an incredible opportunity to create value in a short period of time, but I better do it in a little bit more of a diversified way, because I had sort of put all my eggs into one basket. Philip Zeng: Yeah. Jack Crawford: And it didn't work out that time. And I realized that I like working with seed and early-stage companies. Philip Zeng: Mm-hmm. Jack Crawford: Once they get bigger than that, there's not as much value creation in a short enough period of time. So anyway, that kind of drove me right into venture capital. And if I look back on it, many times you sort of look at people's background, and it's a convergence of their previous experiences. Philip Zeng: Yeah. Jack Crawford: So you have a finance and accounting guy that started launching technology companies. Okay, finance and accounting technology, maybe venture capital is kind of where I was sort of destined to end up at. Philip Zeng: Okay. Can you also share a little bit about how your startup experience kind of shape how you evaluate startups or founders at this day? Jack Crawford: Yeah, there's one major thing that my entrepreneurial experiences informed me about, and that's timing. Philip Zeng: Hmm. Jack Crawford: Because Campus Engine, that company, should've been a huge company. It was just a few years too early. Philip Zeng: I know. Jack Crawford: And it would've been amazing if we were generating revenue on 118 campuses across the country, in a significant way, and had a revenue share, with that as the internet was growing and as college students' usage was growing. We had this promotional engine locked up. It was almost a proprietary promotional engine. Can you imagine if you're the only portal that's being promoted by the campus newspaper, and it's got an established brand? And we had big campuses. We had Texas, and we had Ohio State, and we had some of the campuses with huge numbers of students. So anyway, the point is that it taught me about the importance of timing. And you can be too early, you can be too late, and in this case, I was just way too early, four or five years too early. Lucas He: You were actually managing a multibillion-dollar private equity and venture portfolio at Oracle. But after just three years, you quit the job and start your own fund with Eric Ball, the former treasurer at Oracle. Tell us a little bit about your journey and basically what drove the decision to quit and start your own fund. Jack Crawford: Yeah. So I went through the Kauffman Fellows program, a global leadership program for venture capitalists, and through that program, I met a number of interesting people, that were working in the corporate venture world. Some were corporate M&A. Eric happened to be corporate treasury, so he was managing $50 billion at Oracle. They had done 104 acquisitions. I thought that was really interesting. I just thought he was an interesting person. We had a chemistry quotient. We developed a friendship through the two-year process of the Kauffman Fellows. And one day he came and said, "Hey, I've inherited some additional startup companies." Lucas He: Oh, wow. Jack Crawford: "I wonder if you might sort of take a look at it. What would you do with this? You know a lot about startups." And I said, "How are you inheriting-" Philip Zeng: Yeah. Jack Crawford: "... startup companies?" Lucas He: That's a cool order. Jack Crawford: He said, "Well, we've done $8 and $10 billion acquisitions, Sun Microsystems, PeopleSoft, BEA, and a bunch of others, 104 acquisitions. And every time we acquire one of these corporations, they had previously made investments into some startups." Philip Zeng: Oh, wow. Jack Crawford: And so what ends up happening is the startup portfolio gets inherited by Oracle, and so they had 180 ownership positions in these companies, some of which had significant enterprise value and ultimately ended up having multibillion-dollar valuations. And so, it was really interesting. Oracle's ownership in that, that they had inherited was smaller, but it was meaningful. And so, anyway, I offered to dive in and take a look at the portfolio. Philip Zeng: Mm-hmm. Jack Crawford: And then when I looked at the portfolio, I thought there was real value there, so I proposed that I manage the venture portfolio for Oracle. And Eric, on the inside of Oracle, advocated for me to manage it, and so the entire portfolio was outsourced to me. And he and I ended up kind of collaborating on this portfolio. Well, along the way, we were having a lot of fun together and getting to know each other a little bit more and managing this portfolio, in effect, together. We said, "Wow, what if we could forecast the next 104 acquisitions by Oracle?" Philip Zeng: Yeah. Jack Crawford: That might be kind of an interesting investment thesis for an early-stage fund, right? And then we said, "Well, why would we limit ourselves to Oracle? Let's start interviewing other corporations-" Philip Zeng: Yeah. Jack Crawford: "... and see where are they excited to invest, where are they excited to acquire companies?" Philip Zeng: Right. Jack Crawford: And almost every corporate that we talked to, this was back in 2016, 2017- Lucas He: Yeah Jack Crawford: ... was saying, "We think we're going to do a lot of investments in AI over the next 10 years." Philip Zeng: Hmm. Yeah. Jack Crawford: We thought, "Okay, well, let's spin out-" Philip Zeng: Yeah. Jack Crawford: "... of Oracle, let's launch a seed and early-stage venture fund, and let's focus on AI applied to security, finance-" Lucas He: Right. Jack Crawford: "... digital health, and these other areas." Lucas He: Right. Jack Crawford: And so we were off to the races, basically, of CerraCap. Lucas He: That's so interesting. Jack Crawford: Yeah. Lucas He: That's so interesting. What's the current investment thesis of Impact VC? Jack Crawford: Yeah. So as you guys know, we merged together with- Lucas He: CerraCap Jack Crawford: ... with CerraCap- Lucas He: Yeah Jack Crawford: ... Ventures this last December. So the new firm, CIVC, is focused primarily on seed stage artificial intelligence companies- Lucas He: Mm Jack Crawford: ... applied to those industry sectors. Instead of just AI broadly, we're looking at infrastructure. I know you've got some questions about that later. Lucas He: Yeah. Jack Crawford: But yeah, that's the general thesis, and primarily investing in the US. Lucas He: And what was the thesis at the beginning when you first found a fund, and how was it compared to the current thesis? How has it evolved throughout the time? Jack Crawford: We were investing in seed stage AI companies, with a thesis that we would look at corporate co-investment into our portfolio. CerraCap Ventures was looking at seed stage AI, bringing in corporate customers. And so when we got together and started co-investing and we had a shared LP, the view was, "Wow, wait a minute. We have one heck of a corporate platform." So the strategy was less around stage or sector or geography, and more around the platform of value add- Lucas He: Mm Jack Crawford: ... that we could bring with corporate connections to investors and corporate connections to customers. Lucas He: Interesting. Philip Zeng: Yeah, I think that also answers my next question. I think that should be your edge as a fund that differentiates you from other VCs, that your ability to bring in, for example, enterprise customers for a startup or finding potential acquirers for startups, I think that should be a special value you are providing to them. Jack Crawford: Yeah. I think many VC firms have connections with corporates, and they make curated introductions. Philip Zeng: Right. Jack Crawford: I think the difference here is that we have partners that are actually helping them to close purchase orders for new customers, or collaborate on term sheets with corporates. So it's sort of more of a hands-on approach, because of the active corporate network of relationships that we have. Philip Zeng: Yeah, sure. I think you also mentioned about the strategic logic of merging with CerraCap is that you both have connections in either customer side or the co-investment side with the enterprise VCs. So you can see their synergies combining together and to do a co-investment, or just as a single entity. Then can you also share with us a little bit what's the kind of decision structure in your company? How do you make the investment decision- Jack Crawford: Right Philip Zeng: ... together with other probably managing partners inside the company? Jack Crawford: Yeah. So, everything starts with our investment team. They source deals. They do due diligence. As part of that, we oftentimes establish a deal advocate, and that's the person who's kind of the champion for that particular deal. When that advocate comes and concludes an investment memo, they come to a pre-investment committee meeting. They basically talk about the market, the technology, the team. They basically advocate for it, and they also highlight the risks. After it goes through pre-IC, then it goes to a formal investment committee meeting, and following that, the four partners at CIVC ultimately make the decision and vote, and we need three out of four votes to get an investment approved. Philip Zeng: Mm. Lucas He: I know that you're currently raising $250 million fund. All right? And that's a significant step up from 100 million fund. What's driving that growth, and do you think that would sort of change your investment strategy going forward in terms of check size and stage focus? Jack Crawford: Yeah. So when we invested out of our first three funds, if we look at the available amount that could've been invested, we had $500 million of follow-on capital from corporate investors. Well, we clearly could've written larger checks- Lucas He: Exactly Jack Crawford: ... right? And given them a little bit less- ... right, of that follow-on capital. So we could've taken full advantage if we had more capital under management. So our view is same strategy, same thesis, same team working together, just bigger, right, now with the merger. And so the view is to start to write slightly larger checks and to have a slightly larger portfolio. So instead of 20 companies in the portfolio, probably have 30. Instead of $500,000 to a million dollar checks, probably closer to $2 million checks into companies. And as you may know, oftentimes VCs will set aside 200 or 300%- Lucas He: Yeah Jack Crawford: ... for reserve- Lucas He: Yeah Jack Crawford: ... for follow-on rounds. Lucas He: Yeah. Jack Crawford: And so that's the strategy. I'd say the other thing is CerraCap was going out and talking with institutional LPs who were saying, "Hey, you're ready for a larger fund. You've got a smart team, you got a good track record." And Impact was doing the same thing. We were going out and talking with institutional LPs who were saying, "You guys are ready for a larger fund. You've got a smart team, you've got a track record." And so these institutional LPs oftentimes write minimum check sizes of $25 or $50 million. So if you're just going out with $100 million fund size, it doesn't really work. Lucas He: Right. Jack Crawford: Right? And so they don't want to be that big of the fund, that big of a percentage of the overall fund. Lucas He: Right. Jack Crawford: And so the idea was, hey, let's go out for a $250 million fund. We'll be able to... Speaking of product market fit- Lucas He: Yeah Jack Crawford: ... we'll have our firm sort of fit better with the community of LPs and the check sizes that they're looking to write. So we knew we could put more money to work- Lucas He: Mm-hmm Jack Crawford: ... because we're seeing roughly 3,000 investment opportunities each year. We knew the follow-on amount of capital that was required in some of these companies that we could've been providing that was outsourced effectively to mostly corporates. Lucas He: Yeah. Jack Crawford: And we knew that the LP community was writing larger checks. Lucas He: Yeah. Jack Crawford: So the combination of those two things, we were reading the market in the same way that the CerraCap team was reading the market, and we were like, "Well, if we get together, then we've got a larger team- Lucas He: Yeah Jack Crawford: ... that's ready to manage a larger amount of capital." Lucas He: Totally makes sense. Jack Crawford: Yeah. Philip Zeng: So I would like to go back a little bit. So why is it finance, security, and digital health specifically? Why these verticals instead of broader, I don't know, AI applications? Jack Crawford: Yeah, I think it was where our team had the most enthusiasm and interest, where we were seeing the most market demand. When you interview hundreds of corporates like we've done, you start to see patterns of what they're interested in co-investing and what they're interested in acquiring. And ultimately what we're trying to do is elevate our investing IQ and how we're investing in these seed and early-stage companies so that it's better aligned with an exit path. Right? Philip Zeng: Mm-hmm. Jack Crawford: And so ultimately we're taking these patterns that we're seeing by industry sector from all these different corporations, and we're reducing the risk of these early-stage investments because we feel like we know- Philip Zeng: Yeah Jack Crawford: ... what the market is interested in. But we're doing something else that's important. We're shortening the timeline to exit. Philip Zeng: Mm-hmm. Jack Crawford: So most of the time when you invest at the seed stage, it can take eight, 10, 12 years- Philip Zeng: Right Jack Crawford: ... to get to an exit. So what we're trying to do is have so much market insight, so much corporate intelligence, if you will, that we end up shortening the timeline to exit. Philip Zeng: Does that mean the majority of the exits comes from acquisitions rather than IPOs and the other? Jack Crawford: Yeah. I don't know what the numbers are right now. I think it was like 19 acquisitions for every IPO- Philip Zeng: 19 acquisitions Jack Crawford: ... or something like that. It's crazy, right? But clearly our strategy is more around aligning the investments we make with acquisitions that are done by corporates. That's our strategy. Philip Zeng: Totally. Jack Crawford: Yeah. Philip Zeng: I remember during one of the panels, there was a mention about capital efficiency. I think that also kind of correlates to this acquisition exit strategy. Jack Crawford: Yeah, I think as a smaller fund, if a company requires $400 million to get to cash flow positive, then it's going to be difficult as a smaller fund to invest and protect your ownership along the way. And so one of the factors to take into account is capital efficiency. How much capital does it take for one of these startups to actually get to cash flow positive? And we're not going to fuel them all the way there ourselves, but it can't be such a big number that our ownership at, I don't know, let's call it 10% initially, gets diluted down, diluted down, diluted down because we don't have enough follow-on capital, and it keeps requiring more and more capital, right? So we have to look at the capital efficiency of the company for sure. Philip Zeng: And there was a LP panel that you host the other class. Can you share a little bit more about who are your LPs, and have they influenced the investment strategies you have? Jack Crawford: Yeah. Let's see. So our LPs, like some of the institutional LPs include... And they've given us permission to share this, so the University of San Francisco's endowment, and SK Hynix from Korea. I don't know if you know the corporation. MarK IV is a large family office down in Southern California, and then the Papal Foundation is actually an investor in our fund. And so those institutions I think were primarily looking for investment returns, but in the case of SK Hynix, they were looking at more sort of co-investments in the deep tech area. Mark IV was really looking at co-investing alongside of us in seed and early-stage companies. So they were actually looking to experience share, sort of here's what we've been doing with regard to investment memos or due diligence, here's what they've been doing, so we're learning from each other. The Papal Foundation and USF, they're really sort of institutional investors. They sort of make the commitment and then they play more of a passive role. The family offices that are LPs in our fund are very active. They want to be connected to national labs. They want to be connected to universities. They want to share ideas on key industry sectors. And so the family offices have been incredibly active with regard to sourcing deal flow and other things influencing some of the strategy. Philip Zeng: Oh, yeah. So I remember that one of the LPs in our panel mentioned that they would rather take a larger share from a smaller fund rather than a smaller share in a mega fund. Can you share a little bit more insights about that? What are the nuances, and how did you build the trust with these LPs? Jack Crawford: I think family offices want to have a little bit more influence over the process, and source deals and view the venture group as a true partner. When they're an investor in a billion-dollar fund, they're really just a passive investor. They're not going to get a lot of access to information. They're not going to share experiences. You're not going to collaborate on a lot. So when they're a larger part of a smaller fund, they're a true partner. We're exchanging deal flow. We're exchanging ideas on due diligence. We're looking at portfolio management. They're inheriting our network of relationships, right? They're getting connected to the corporates that we're connected to. They're coming to events with us, those kinds of things. So they're true partners. They're almost an extension of our firm. So I think that's why they're excited about playing a larger role with these smaller funds. With regard to the second part of your question, sort of developing trust, I think we've done a pretty good job of looking at anything we say we're going to do, we do it. And it sounds pretty simple, but sometimes it's hard to do, right? You have to be careful about what you say you're going to do. And I think if you consistently say you're going to do something and then always follow up, you start to build some credibility- Philip Zeng: Yeah Jack Crawford: ... with the relationship. I think that's part of the dynamic that we've created with these family offices and with other LPs. I also think that we've done a pretty good job of reporting to them what's going on with the portfolio, so they're regularly hearing from us. We have a combination of, well, they get a K-1 tax form each year, right? Annually. We have two limited partner meetings that we do each year. Each quarter, we're hosting some kind of-... a virtual event, some kind of webinar or something like that, and there's a report that we're putting out. And then each month they get a newsletter. Philip Zeng: Mm. Jack Crawford: And then each quarter, I try and do a one-on-one call with our top 10 LPs so there's a voice-to-voice discussion, if not an in-person meeting. That's a lot of touch points. Philip Zeng: It is. Jack Crawford: Right? And so you start to build up some real trust and rapport- Philip Zeng: Yeah Jack Crawford: ... and a friendship, candidly, with a lot of them. So you know not only about how they're thinking about venture, but you know what's going on with their families. Philip Zeng: Right. Jack Crawford: What their other investments... Oh, they just sold a big piece of real estate, and now they've got a bunch of liquidity that they're looking- Philip Zeng: Yeah Jack Crawford: ... at putting into either other real estate or maybe into venture. Philip Zeng: Yeah. Jack Crawford: Right? And so keeping in touch with them is really important. It's about building that relationship and looking for other ways to collaborate beyond just investment- Philip Zeng: Exactly Jack Crawford: ... returns. Philip Zeng: Exactly. Jack Crawford: Yeah. Philip Zeng: Yeah. I think also from the LP panel that I learned that there was something, in my point, kind of special relationship between the LPs, family offices especially. So some of them, they also do deal sourcing for you. Some of them have their expertise in certain industries, so they also help you do the due diligence. And also, I see that some of their father-children kind of relationship, they want to inherit their family wisdom and wealth. To some extent, they are kind of training and teaching their children to do the investment things. Is this a special thing about your VC, or is it a common thing also in other VCs? Jack Crawford: I think we do a pretty good job of developing- Philip Zeng: Yeah Jack Crawford: ... relationships, but that panel that you talked about, I thought it was fascinating- Philip Zeng: Yeah Jack Crawford: ... because you had the Mishra family on there, right? You have a father-son team. And the father has been involved in two very sizable exits within the data center space. A technical genius, deep tech, top 1% of the top 1% of people who know about data centers, right? And then you have the son, who's kind of the next generation, who's learning about wealth management, interested in venture, but kind of interested in the music industry, right? Interested in other technologies. So father and son are collaborating on things. The second part of the panel was the Patterson family. And so you had Dan, the father, who's had wild success in the private equity world, and his son, who's just graduating, is looking at what's happening with national labs across the country, and how can he get access to this cutting-edge technology. And so the combination of the son working on sort of innovative new trends and the business expertise of the father, I think makes a pretty interesting combination. Not to mention that it's kind of a fun way to live life. If you're growing up with and sort of collaborating with your son on things and generating investment returns, that's a good way to spend some time. Philip Zeng: Yeah. I think you can move on on the contrarian. Jack Crawford: Oh, absolutely. Philip Zeng: Yeah. Jack Crawford: Just in terms of investment strategy, what does being a contrarian in the VC setting mean for you, especially in an era where everyone is trying to pour money into the AI space? Yeah, I think for us, just about every VC firm, even the billion-dollar funds claim that they invest at the early stage, right? So that's not a differentiator. Just about every VC firm is investing in AI. Philip Zeng: Yeah. Jack Crawford: That's not a differentiator. Just about every VC firm is investing across the country. So geography, so most established VC firms are kind of like those three things are almost exactly the same. Philip Zeng: Sure. Jack Crawford: So the question is, how are you going to differentiate and maybe do something a little bit different? I think we're doing things differently in two areas. Of course, we've talked a lot about the corporate platform. Philip Zeng: Yeah. Jack Crawford: We created a corporate intelligence platform. We're gathering as much insight as we can. We think we're gathering it faster and at a deeper level than any VC firm in the US, and we're using that information to elevate our investing IQ at the seed level. That's one clear differentiator, right? A second differentiator, I think, is instead of just thinking about AI, I think we're looking more at infrastructure and sort of, okay, well, what happened in the early days of the internet? Before there were all these sort of individual applications and consumer use, there were sort of infrastructure and foundational technologies that were built out. Well, what is that today with regard to AI? Hmm, that's probably high-performance computing. Philip Zeng: Mm-hmm. Jack Crawford: It's probably AI chips. Philip Zeng: Yeah. Jack Crawford: That's probably security. Some of these foundational layers in the infrastructure area are quite interesting. So we're spending a little bit of time investing and thinking about those types of companies. Philip Zeng: Interesting. But do you think in terms of the application space, that it's a little bit overhyped or oversaturated, or not? Jack Crawford: I don't know. When you look at some of these valuations, you're just like, "Oh my gosh." Philip Zeng: I know. Crazy. Jack Crawford: There's Series A rounds of financing being done at a billion-dollar valuation, right? But the bottom line is there will be three major innovations during our lifetime, right? It's sort of the internet, the iPhone- Philip Zeng: Right Jack Crawford: ... and now AI, right? Philip Zeng: Right. Jack Crawford: And so we're all sort of looking around trying to figure out how is AI going to make its way into a humanoid? How is AI going to make its way into the data center for high-performance computing and low power consumption? How is AI going to make its way into digital health? How's it going to make its way into the drone industry? Philip Zeng: Yeah. Jack Crawford: I don't know where it's going. It's fun to kind of research and explore. Philip Zeng: Yeah. Jack Crawford: We're sort of trying to learn as fast as everyone else. Philip Zeng: Yeah. Jack Crawford: We just believe that we might be in a position to learn a little bit faster because we're tapping into the R&D budgets of Fortune 500 companies across- Philip Zeng: Sure Jack Crawford: ... the country in a systematic way that gives us market insight into where some great companies might be built. Philip Zeng: Yeah. Jack Crawford: And so this idea of being a bridge between market-innovating startups and market-leading corporations is kind of an interesting place to sit, and that's what we're trying to take advantage of. Lucas He: And also, no matter what industry you're trying to empower using AI, you're still eventually going to need infrastructure and foundational technology like security, like finance to support that. Jack Crawford: Yeah. I agree with you. Philip Zeng: Then I want to bring our discussion on to the due diligence part of the fund. Jack Crawford: Mm-hmm. Philip Zeng: So, can you walk us a little bit through how did you do diligence in your VCs, and also what are the most valuable criterias or things that you are looking at during the process? Jack Crawford: Yeah, we talked a little bit about this during the class, right? Quite a bit, actually, during the USC Venture Lab class. So I think most VCs go through a pretty systematic process. Philip Zeng: Yeah. Jack Crawford: I don't think there's anything overly creative. Looking at the market, looking at the technology, looking at customer traction, looking at the team, and then looking at the financial aspects of the company. Right? The only thing we overlay is how can we add value beyond capital with- Philip Zeng: Mm Jack Crawford: ... our corporate network of customers and corporate network of investors. And so if we've heard corporate customers talking about the need for a particular type of technology, then we're going to get more excited about that opportunity. If we've heard corporate investors express a lot of interest in investing in a particular area, then we feel like we're well positioned to add value. But I think most VCs go through those areas pretty systematically and look for an independent attest function to validate what the entrepreneur is saying. So the entrepreneur says, "This market is 1.8 billion." Okay, how can we validate that? Are there market research reports or can we do a bottoms-up sort of analysis to validate that? The entrepreneur says that they've got the ability to patent this technology. Okay, can we talk to an IP attorney and see is this really unique and novel? With regard to customer traction, I mean, Philip, a lot of what we talked about during- Philip Zeng: Yeah Jack Crawford: ... the due diligence process was, hey, how many customers did- Philip Zeng: Yeah Jack Crawford: ... each team talk to, right? And so I was pounding the table a little bit in that class about, hey, listen, you guys need to go talk to customers to make sure we understand do they want to buy this product, how much will they pay- Philip Zeng: Yeah Jack Crawford: ... how many will they buy, what is their buy-in cycle, who's the decision-maker? All those kinds of things. You learn a lot from talking to customers. The team is like reference checks, just spending time in a professional environment and a personal environment with a founding team, but then also doing extensive reference checks. And then the financial model is just understanding, in line with our conversation earlier, how capital intensive is this? Or how big could revenues actually get in the next three to five years? I think it's less about the accuracy of the forecast and more about the thought behind it, that showcases that the team actually spent time navigating through a logical set of assumptions- Philip Zeng: Right Jack Crawford: ... to get to a rate- Philip Zeng: Right Jack Crawford: ... of forecast. Philip Zeng: Right. Jack Crawford: Right? Philip Zeng: I have heard also in the class and from other sources that they've been emphasized about early stage investments about team, team, team. Jack Crawford: Yeah. That's what everyone's talking about. Philip Zeng: Can you share a little bit more insights in that part? Are you also putting a heavy weight of your decision criteria on the team or the other aspect? Jack Crawford: I personally think the earlier the investment is happening, if you talk about a late stage company, maybe the team is important, but not as important as early stage. If you talk about an early stage team, it's certainly very important, but it's even more important at pre-seed- Philip Zeng: Yeah Jack Crawford: ... and seed stage. Philip Zeng: Yeah. Jack Crawford: How hungry is the founder? How ambitious are they? How thoughtful are they? Are they a continuous learner? Can they build a team? Can they sell? Can they recruit co-founders? Those kinds of things. And so, yeah, I think the earlier in the financing food chain that you're talking about, the more the team gets weighted. And so if you're pre-seed, there aren't any customers. Philip Zeng: Right. Jack Crawford: There's no IP, there's no technology. You're really just betting on a person- Philip Zeng: Yeah Jack Crawford: ... to make a bunch of smart decisions and recruit other people to help them, right? And can they be inspiring, and can they get to customers? Can they get to investors? Can they get to the media to promote their company? Can they rally the resources in an area where they're operating with resource constraints? It's those kinds of things. Philip Zeng: Can you share with us about an experience, maybe you are just betting on this person so much that whatever he start doing, I will back him up. Is there any of these founders that make you feel like that? Jack Crawford: There are some founders where you meet them and you realize, wow, they're going to work on something interesting. Can I point them in a direction where I think they have the highest likelihood of success? And most of the time it's an area where they have proprietary knowledge or insight. Philip Zeng: Mm. Jack Crawford: Or they're just incredibly passionate about something. But yeah, you definitely meet people that have a level of energy, ambition, skill, thoughtfulness. They're sort of self-aware. You definitely meet founders with those types of characteristics. And I think that active listening, I think that are they coachable? You're making these investments and it's unlikely to be a one or two year relationship. It's likely to be a seven, eight year relationship, right? So you have to have some level of a chemistry quotient with the founder. You have to be really excited about wanting to work with him or her. And so, yeah. To me, I think there are some characteristics that sort of shine through. Oftentimes, they're willing to extend their credibility with their friends and family, too. They're willing to put their own money into something. They're sacrificing either a salary at a big corporation, or they're putting maybe even a small amount of money into a company to get started. They've brought friends and family in, so they have reputational alignment as well, right? They want to do well for themselves, but they also want to do well for their family. Philip Zeng: About the coachability part- Jack Crawford: Mm Philip Zeng: ... I want to ask more about how much influence do you have on the founders? Jack Crawford: Yeah. Philip Zeng: Do you tell them what you should do, or how much level of freedom do you give to the founders? Jack Crawford: You just let them go. Philip Zeng: Yeah. Jack Crawford: Yeah, so I think most founders start a company because they want a level of autonomy. Philip Zeng: Yeah. Jack Crawford: Right? They don't want a boss. Philip Zeng: Right. Jack Crawford: They want to sort of manufacture a job instead of applying for a job, right? And so they create a job and a company that they want to work with, and they try and establish a culture. So when they're bringing in a venture capitalist, I don't think they suddenly want to have a boss that they're reporting to. Philip Zeng: Yeah. Jack Crawford: I think that the vast majority of the venture capital community try and do things to coach and be helpful, and some subset... view the role as a bit of a compliance role. Philip Zeng: Mm. Jack Crawford: "Hey, I'm a fiduciary of other people's capital. I need to come in here and make sure you're doing things right." And I think that can be a bit heavy-handed. I think we absolutely do have a fiduciary obligation to our investors to make sure that we're guiding and reporting back on how these companies are doing. But I think that we can do it in partnership with the entrepreneur so that it's more of a collaboration between peers as opposed to a manager-employee- Philip Zeng: Right Jack Crawford: ... type role. Philip Zeng: Relationship. Jack Crawford: Right. Yeah. Philip Zeng: Yeah, and diving into also the due diligence part, you mentioned the importance of independent attest, and I see a news saying your VCs have recently investing in a quantum sensing company. Jack Crawford: Mm-hmm. Philip Zeng: It feels like a very deep tech. I don't know what that is doing. How do you evaluate this kind of technology if, for example, we don't have a PhD in the domain, or how do we do our independent attest? Jack Crawford: Yeah. I think there's a couple of different ways that we've had some success. First of all, we have a number of people on our team that do have deep tech experience. Philip Zeng: Mm. Jack Crawford: And that's a great starting point, but we don't stop there. There's oftentimes university professors that we have access to that spend their entire time focused on one little niche of technology, and so getting an independent attest from a university professor is ways in which we perform due diligence. Also, we're quite well connected with national labs. There's somebody on our team, Hobby, who's incredibly well connected with national labs, and so we can always find that deep technical expert, that independent expert that can give us some validation for what we've found, and see if it's interesting and worth funding. Lucas He: You were just talking about traction when you walk us through your due diligence process. Could you talk a little bit more about what is considered sufficient traction in the early stage? Jack Crawford: Most of the time what we see is the beginnings of some product market fit with some beta projects, where a couple of companies have said, "Hey, we'll try this. We'll use it." And so those beta projects are good. When they're paid pilots, it sort of gets a little bit more credible. Philip Zeng: Yeah. Jack Crawford: And if they're actual paying customers, that is really good, right? And so many of the companies that we're seeing, even at the seed stage right now, have the beginnings of some annual recurring revenue from paying customers. That's pretty impressive. I can remember 10 years ago, it would just be basically, "Hey, we have a slide deck, we have a minimum viable product-" Philip Zeng: Right Jack Crawford: ... "and we're talking to customers." Philip Zeng: Right. Jack Crawford: And investors would come in and invest in that. Now, I think many companies are coming, and they're basically saying, "Hey, we're deployed in these eight customers. They're paying us a tiny amount now, but once we validate the value of our product, there's an agreement where they basically pay us the full amount." And so that's five times the amount. So you can start to forecast, wow, this land and expand strategy of having beta customers that go from pilot project to actual paying customer could lead to a million dollars in revenue in the first year, or $5 million in the first year, or something significant. And so that's what we're looking for from a traction standpoint. We just went through this same exercise with the student investment fund for USC, where we were looking at Philip and his team and a bunch of the other student teams all created detailed investment memos, after looking at tens of companies across the USC's campus, and came up with what we think are maybe the top eight companies at USC right now. And one of the factors that you have to weight is revenue traction. Philip Zeng: Yeah. Jack Crawford: There's a couple of companies there that they're USC affiliated companies that have $900,000 in- Philip Zeng: Oh, wow Jack Crawford: ... annual recurring revenue, and you're like, "Wow, okay. That's real-" Philip Zeng: That's real customer traction Jack Crawford: ... customer traction." Philip Zeng: Yeah. Jack Crawford: There's some technology that's deployed on 300 nodes in 20 countries. Okay. Well, these aren't just student projects anymore. These aren't just science projects. These are actual- Philip Zeng: Yeah Jack Crawford: ... deployments. Philip Zeng: Right. Jack Crawford: So anyway, that's the kind of revenue traction that we're looking for. Lucas He: What about market size? How big of a market size should early stage startups be targeting? Do you sometimes turn down startups because they have not enough market size? Jack Crawford: Yeah. I think oftentimes the minimum level of market size is a billion dollar market. Lucas He: Billion dollar. Jack Crawford: If you have every customer out there, then you generate revenues of a billion dollars. Okay, so can you get a percentage of that billion-dollar market? There are some companies in our current portfolio that are going after $10 billion markets, and I think there's three that are going after what might be 50 or $100 billion markets, right? So we're in a new wave of innovation, and so some of these markets are just huge. But yeah, if you have a company that's targeting maybe a market of a few hundred million, it's probably going to get turned down. With that said, I think it's smart sometimes to target a niche market initially- Lucas He: Niche market Jack Crawford: ... and then show other markets behind that. And so you may have heard it referred to as kind of a bowling pin strategy. Philip Zeng: Mm. Jack Crawford: The lead pin might be $300 million or $500 million market, but the two markets right behind it are a billion or 800 million and 500 mi-- So if you add up all the markets that the company's going after, it's definitely north of a billion, right? But they're focusing on dominating a niche first and getting real traction there. I think that's the fastest path to- Philip Zeng: Yeah Jack Crawford: ... revenue and to validation for investors. Lucas He: Totally. Jack Crawford: So I love this idea of the bowling pin strategy. Go knock down the lead pin, and then go get the next two markets, and then go get the next three markets. Lucas He: Makes sense. Jack Crawford: Yeah. Philip Zeng: And- Jack Crawford: Yeah, you can go Lucas He: ... actually some of my founders friends are unclear of the difference between a VC investable business versus those that are not. Could you maybe walk us through the differentiation between these two? Jack Crawford: Yeah, I think market size might be part of it. I think a product versus a service. I think oftentimes where it's really difficult to invest in a services oriented business. It's really difficult to invest in a company that doesn't have a technology as its base. I think most VC firms are investing in a tech-based business. Lucas He: Yeah Jack Crawford: I think those are oftentimes, if I look at our pipeline, market size is too small, non-tech, it's really not a technology company, or it's a services-oriented business that we can't really get our arms around and we don't think it's going to scale fast enough. That's the difference between sort of an investable company and a non-investable company, at least at our firm. Lucas He: Totally. Jack Crawford: Yeah. Philip Zeng: And as you mentioned, the seed stage now already, some of them already have tractions and they're having paying customers, and we have been seeing some of the companies are going to IPO much more later. These OpenAIs or Anthropic, they're going 1 trillion valuations already. How do you see that change the VC landscape, actually? Jack Crawford: It's been interesting because when will the IPO window kind of open up, and will more companies stay private longer or is there some significant advantage? I think what's happened is the secondary market- Philip Zeng: Mm Jack Crawford: ... has taken off. So sometimes companies would want to maintain control over their own destiny, so they would march toward being a public company, and then the founders would be liquid and everybody would be wealthy, right? Because they'd have these shares. Well, what's happening now is the secondary market has basically introduced itself and said, "Hey, instead of going public next year, if you founders want to sell some of your shares, we'll buy some of them at that valuation." And so the founders and early employees and early investors are getting some liquidity even before the company goes public, right? And so it sort of changed the dynamic. I think that's an interesting trend to continue to watch, is these secondary firms providing a pathway to liquidity. Philip Zeng: Yeah, sure. And let's move back a little bit to the moat. In your opinion, what is a defensible moat? And is an IP a real moat? What's your opinion on that? Jack Crawford: I think there's a stacking mechanism here where you look at a sustainable advantage for the company. If the three of us are starting a company today, our sustainable advantage is I have you two guys on my team and the rest of the world doesn't. So it's just our team. If we bring in three key advisors, and those advisors are advising our startup and no other startup in this space, they're a part of our advantage, right? Then you look at, okay, all of us start coding like crazy, and we create a lead time advantage with code. So maybe we have a little bit of an advantage because of the code that we've developed that the rest of the world needs to catch up on, right? I mean, what Cursor's done is amazing, right? Philip Zeng: Yeah. Jack Crawford: I mean, their speed and the recent acquisition there by SpaceX, I think it's $60 billion. I mean, it's just amazing what they've done. The next wave is sort of do we have an intellectual property portfolio where we can actually file patents and get issued patents and build up an intellectual property moat. That's the next. The next or additional element that I've seen is sometimes you can build a network of customers where everybody wants to use that platform. A simple example is there's a company called MaxPreps that was acquired by CBS, and what MaxPreps did was they were reporting on high school athletes, their performance in different sports. And once they got a few of the high schools as customers, well, then many of the high schools felt like they were missing out. Philip Zeng: Yeah. Jack Crawford: So they wanted to be on that platform because all that information was being reported. And so MaxPreps had this really interesting sort of community of customers that they were building as a competitive advantage, and you couldn't just jump to another network. Philip Zeng: Right. Jack Crawford: Right? It's not unlike what Facebook's done, right? I mean, it's really hard to create another sort of Facebook at this point because they have critical mass. They've built up a community of customers. So that's another. And then I think there's data. Once you load up all your information into a stock tracking, if you have a number of public stocks that you've invested in, once you load it up into one platform, do you really want to switch? The cost of switching is going to... And so you have sort of data that provides you with some stickiness and some protection of keeping that customer. So again, I view it as stacking. From starting with the team, advisors, code, IP, you just start stacking more and more competitive advantages, and that's the true sustainable advantage that you end up having. But I don't think it ever stops. I think sometimes even when you're a big company, they look at strategic partnerships- Philip Zeng: Right Jack Crawford: ... that they have. There's other ways that you can build up a moat. Philip Zeng: Do you see the speed of moving a key moat there? Jack Crawford: Do I see is speed important? Philip Zeng: Yes. Yeah. Jack Crawford: Yeah. I mean, I think that sometimes you can develop a lead time advantage, but if you're a small, under-resourced company, if you raise $1 million and start moving really quickly, there might be someone that has twice the size of the team and raises $5 million and moves twice as fast, right? Philip Zeng: True. Jack Crawford: I think sometimes you can do a lot before people realize how big- Philip Zeng: Yes Jack Crawford: ... of an opportunity something is. And so sometimes, yeah, certainly speed in the early stages to go out and get a lead time advantage is important before the world finds out what you're working on or what you've uncovered. Philip Zeng: Can you also share a little bit more about the team aspect? If you are able to create an ideal founder, what are the characteristics you would have on there? Jack Crawford: I think obviously most of these companies start with someone who's pretty deep in technology, but sometimes it's a salesperson who really understands the customer need and then connects with the technology person to go build effectively what those customers need. I think oftentimes there's someone who really understands finance and operations as well. So I think the perfect number of founders is three. Philip Zeng: Three. Jack Crawford: I think the perfect skill sets are technology, sales, and then someone who handles finance and operations. I think if you have those three people, you're on your way to building an interesting company. That's assuming you have all the sort of even more important things, like the chemistry quotient between the co-founders, the same sort of core values, the same level of ambition, the same work ethic, all those kinds of things, because that culture in the early days sort of sets the stage for the company. And you're going to have good decisions and bad decisions that are made by all three of those founders, and you've got to basically have each other's back. Have enough respect and appreciation for everybody sort of doing their best that you just kind of keep moving forward. Being able to have debates without arguments. Philip Zeng: Right. Jack Crawford: One of the things that I really like about my partner, Eric Ball, is that he and I have had some pretty significant debates about things, but it's always very professional, very respectful. But we can start on completely opposite sides and just debate something, and sometimes we get stuck. We're like, "Oh, what do we do?" We're both kind of looking at each other like, "What do we do?" One time he said, "Why don't you argue my side?" Lucas He: Oh. Jack Crawford: "And I'll argue your side." Lucas He: That's interesting. Jack Crawford: And I thought, okay, wow, this is interesting. So some new ideas came out of that, right? Lucas He: Yeah. Jack Crawford: Other times it's like, "Hey, okay, we got to stop emailing about this. We got to have a voice-to-voice discussion because obviously this email is we're going in circles, right?" Philip Zeng: Yeah. Jack Crawford: But you figure out little nuances of how you can debate with your co-founders to get to a better answer. I think we've pressure tested some ideas and made some really good decisions together because we were able to debate it out. Philip Zeng: Yeah, sure. So there was one question that I personally was very interested in, that is because we are kind of trying to write our own grant to some of the founders who we brought on our podcast, and personally, it's been hard for me to say no. So how did you say no to founders in a respectful and constructive way? Because someday maybe they just come back to be a very successful people, or in their journey just need some more experience or pivots that until they find it correctly. How do you navigate through that? Jack Crawford: It's a really good question. I think that how you say no is critically important for a VC firm because you're going to say no 99% of the time. Philip Zeng: Yeah. Jack Crawford: And so your reputation, and your brand is going to be influenced by how you say no. Most of the time when we provide details as to why we didn't invest in a particular company, it's actually not helpful. Because you end up in a debate with the entrepreneur- Lucas He: Exactly Jack Crawford: ... where it's point counterpoint, and it ends up just being a downward cycle. In an effort to provide the utmost respect for the entrepreneur, we oftentimes explain that we're passing on this round of financing, and we're not saying it's a bad idea, we're not saying it's a bad market, we're not saying it's a bad team. We're just saying we're passing on this round of financing, and keep us posted on your progress. And then we try and do one step further, and that's we try and do something to be helpful. If our team just had a discussion about the market size being way too small- Philip Zeng: Mm-hmm Jack Crawford: ... I might have a one-on-one with the entrepreneur where I say, "Hey, listen, we're passing on this round, but I would strongly encourage you to go take a look at this other market because I think the size of that market is bigger and your technology directly applies." If I met with you and said, "Hey, you're a genius technology guy," but our team was really worried about sort of sales and finance and other things, I might not provide all of that information to you, but I might say, "Hey, we're passing on this round, but have you ever thought about getting a co-founder- Philip Zeng: Hmm Jack Crawford: ... that's really good at sales, that could help you increase the number of customer conversations you have?" Those kinds of things. Sometimes if we feel like it's just really interesting, but it needs a little bit more customer validation, we might say, "Hey, I'll make a couple of introductions for you. We know the people at Hitachi or Thomson Reuters or Google or this one. Why don't I just connect you with them and provide a couple of introductions?" So even though we're passing, we're trying to figure out some way to be helpful. I think if we consistently do that across the 99% of the time that we say no, we can do it in an efficient way, that doesn't take too much time, because obviously you can't spend all that time. Lucas He: Right. Exactly. Jack Crawford: You have to go find the people that you're going to say yes to, right? Philip Zeng: Yeah. Jack Crawford: But you want to try and do something to be helpful because Philip, you make a good point. Sometimes that company or that founder pivots into another area. Philip Zeng: Yeah. Jack Crawford: And all of a sudden it becomes a very interesting company. Philip Zeng: Yeah. Jack Crawford: And you want to make sure that they remember a positive experience- Lucas He: Exactly Jack Crawford: ... with you, yeah. Lucas He: Exactly. In your experience, what do you see are some of the biggest mistakes that founders make when they're pitching for funding? Jack Crawford: Yeah, in meetings with our firm, what I find is that the founder is adamant about getting through their slides in the sequence that they've set them up because they've kind of polished their script. Philip Zeng: Yes. Jack Crawford: And so their view is that, oh, I know these 10 slides really well, and I'm going to talk about market, technology, customer traction, team. I'm going to go right through this. And what they don't do is they don't realize that this is actually less about fundraising in an initial meeting. I would think about it as sort of free consulting. Lucas He: Mm-hmm. Jack Crawford: Someone who's got a lot of experience is going to give you candid feedback on your deck. So instead of trying to basically sell them through your 10 slides and leave just a little bit of time at the end of the meeting for questions- Lucas He: For Q&A, yeah Jack Crawford: ... listen to what they ask about. Listen to what they pause on. Listen to what they comment on. And if someone says, "Oh, that's really interesting," and oh, why is that interesting? Why is that interesting? Oh, because we invested in this other company and it did X. Oh, well that's pretty valuable information, right? But if you don't respond to comments that they make or questions that they have- Lucas He: Mm Jack Crawford: ... then two things happen. One, you might miss out on a critical piece of information that would've been helpful to you, if it's a comment. If it's a question, maybe it's a concern that they have that you haven't addressed in slide two. And another thing that I've seen happen is a founder will say, "Oh, I have that on slide eight. Oh, just hang on to your question, Ruben." Well, now I'm waiting for six slides with a concern that's just hanging over my head on why we would never invest in this company because of this one concern. And if I'm distracted and then I get to slide eight- Lucas He: Right Jack Crawford: ... and they actually did address the concern, but I've been distracted for the last six slides. Philip Zeng: Yeah. Jack Crawford: So I'm a big fan of answer the questions that are asked when they're asked, and try and extract-more information when someone makes a comment about something. If they say, "Oh, that's interesting," or, "Oh, yeah, that's big. Oh, have you seen something bigger?" Try and turn it into a conversation, a two-way conversation- Yeah ... instead of a one-way presentation. Yeah. Lucas He: That's so helpful. Philip Zeng: In terms of AI have reshaped the industry productivity, how did you see that influence a VC investor's role? And there have been arguments saying that because AI has been quite capable, they can do some of the desktop research already, and we have also seen some emerging trend that there are some solo GPs or solo VCs, like one-person VC, resonates with one-person company idea. They're just outsourcing some of the works. They're using AIs to help them do some of the research. Do you see that trend, and how has that influenced or changed the VC world? Jack Crawford: I'm not sure, actually. I think VCs are using AI in a variety of ways. I think we're probably just scratching the surface with regard to how we're using it for sourcing and for due diligence- Philip Zeng: Yeah Jack Crawford: ... and candidly, for even promoting your firm, right? Philip Zeng: Yeah. Jack Crawford: Right. Developing content, LinkedIn posts- Right ... and those kinds of things. There's AI agents that are helping with outreach on LinkedIn. Philip Zeng: Yeah. Jack Crawford: And you can get automated scripts to basically start to build out your network of- Philip Zeng: Mm-hmm Jack Crawford: ... relevant relationships. I just think we're just scratching the surface with regard to how we're using it. Do I see it sort of replacing analyst levels? Our firm's candidly just not that big enough yet. We don't have five analysts running around. We do have something that has been interesting. Each year, we try and bring in some fellows that basically do some research. These are graduate students or undergraduate students that are basically just doing some research for us while they're going to school, and that's been really interesting. They actually are probably most familiar with the AI tools- Philip Zeng: Mm Jack Crawford: ... that are out there, and so in a way, that next generation is educating us on how to use these AI tools. I'll share with you, in one of the sessions that I was in with a number of the university professors here, we just did a meeting with about 30 USC professors, and we were basically saying, "Hey, listen, how can we make sure that we stay ahead of all of the trends that are happening with AI so that we can be a valuable guide, and educator for these students who are learning at an accelerated rate about AI tools just by using them?" So there's a lot of discussions, I think, not only happening in the VC world, but in the university world- Lucas He: Yes Jack Crawford: ... about how to use AI tools. And I also have a little bit of concern with regard to how much we're interacting with computers and phones and AI. Everybody's sort of like... It's usually a parent-child thing where, "Oh, let's be careful about screen time." In our family, we're comparing screen time, and it's like, you'd think the kids are the worst. I think the parents are probably the worst, right? And so screen time is an issue. Human interaction is super important. Philip Zeng: Yeah. Jack Crawford: I find myself more hurried than I would like to be because of so much interaction with technology, and I think AI is accelerating my ability to access information, digest information, all that kind of stuff. And at some point, I think we might have to take a step back and just sort of figure out, okay, what are the right ways to use these tools? Because the world was building homes with hammers, and then someone created a nail gun. Now we're just building them faster, right? Philip Zeng: Yeah. Jack Crawford: That's what's happening- Philip Zeng: Yeah Jack Crawford: ... with these tools in every industry sector. And so this isn't something... Just like the early days of the internet, I think there was some view that, oh, well, this is an interesting way to communicate via email, or this is an interesting way to remotely access information. We were just sort of scratching the surface of what the internet would become and how many business sectors and how many consumer segments it would impact, and right now, the internet, we can't imagine what life would be like without it, right? I think we're just scratching the surface with regard to where AI is going, and I think VC firms are going to start to use it very different ways. I don't know what the answer to the solo GP. I think solo GP is less fun. I like interacting with and debating with my partners and- ... and so maybe it's more efficient. There's been a lot of solo GPs that- Philip Zeng: Mm-hmm Jack Crawford: ... built a $25 million fund- Philip Zeng: Yeah Jack Crawford: ... and went out, and some of them have done well. Many have not done well. I think there is something about building consensus through debate- Lucas He: Yes Jack Crawford: ... that is interesting with everybody sort of using those tools. So it'll be interesting to see how it all plays out. Lucas He: Now, you spent quite some time actually talking about venture AI startups. I want to temporarily take the ideas out of our own mind and just start talking a little bit more about your identity in life beyond investing in a role outside of being an investor. What would you describe yourself as in one word, other than investor? Jack Crawford: Yeah, I think I'm a mobilizer. Lucas He: Mobilizer. Jack Crawford: I think I rally people, ideas, and resources to take action and make something happen. I find that whether it's with my VC firm- Philip Zeng: Mm Jack Crawford: ... in collaboration with my partners, whether it's philanthropic efforts, or even here at USC, I think a big part of what I'm doing is taking ideas, people, and resources, and mobilizing them into action, and I think that's fun. And so sometimes that can be around mobilizing enthusiasm around an investment opportunity. Sometimes that can be back in my community in Northern California. We're hosting a high school business pitch competition. Lucas He: Oh, wow. High school pitch competition. Jack Crawford: So we have high schoolers from 20 different schools, 50-student teams of two to four students that are going to be pitching in a trade show environmentAnd then attendees who show up for this event that's hosted by the organization that we started called The Entrepreneurs Club. Attendees that show up will get five gold coins. Each gold coin is supposedly worth a million dollars. Lucas He: Oh. Jack Crawford: And they're going to go invest in these technology companies that are hosted by these student teams in a trade show environment. And then based on who gets the most coins, the top 10 are going to make it to the main stage, and there'll be about 400 attendees. So what I did was, I took some ideas that our family had been talking about for a while and successfully mobilized some really smart people and advisors and consultants and a philanthropist, and now we've got sort of the resources, people, and ideas to pull off sort of a large-scale event to support high school entrepreneurship and bring- Lucas He: Yeah Jack Crawford: ... STEM into high schools. So I'm really excited about it, obviously. But I think it's this idea of mobilizing- Lucas He: Yeah Jack Crawford: ... people for good. And whether that's finding interesting technologies that can change the world or mobilizing a group of high schools to- Lucas He: Mm-hmm Jack Crawford: ... help their students understand a little bit more about- Lucas He: Yeah Jack Crawford: ... STEM and entrepreneurship. Lucas He: Yeah. Jack Crawford: I think that's a little bit of a role that I'm playing. Lucas He: That's such a cool event, and when you were talking about a high school event, I was thinking about a Marcel Israel event that we're going to attend tonight. I think we're also doing similar things, right? Getting the coins and get to vote for the startups that we like. Jack Crawford: Very similar. Lucas He: Yeah. Jack Crawford: Yeah, it's very similar. Lucas He: So cool. Jack Crawford: Yeah. Lucas He: And just one question. I'm just curious, what are you still learning about yourself after 20 years of company building, investing? Jack Crawford: I think I'm trying to figure out, not time management, but mind share management. Lucas He: Mind share? Jack Crawford: Yeah. If I think about the stuff that I'm working on, there's my family and my health and friends and the venture capital firm, and I teach at USC. Lucas He: Yeah. Jack Crawford: And I've got some philanthropic efforts that I'm working on, and I wrote a book last year. Lucas He: Oh, wow. Jack Crawford: And I try and figure out time to have fun with friends and family. What I'm finding is that I feel like I'm managing my time pretty well, but I'm not managing my mind share very well. My brain is sort of spread across all of these different things, and I think what I'm trying to figure out is how to optimize alignment of how my brain is thinking about things with the activities that are most important. And I want to make sure in the busyness of life with business and philanthropy, that my wife is a bigger part of my life, that my kids are a bigger part of my life. Lucas He: Yes. Jack Crawford: That my friends are a bigger part- Lucas He: Yeah Jack Crawford: ... of my life, right? And I think what ends up happening is you get so excited and interested in things if you're an ambitious person. Lucas He: Mm-hmm. Jack Crawford: It's pretty easy to get spread across all of these things, so I'm still learning- Lucas He: Totally Jack Crawford: ... how to sort of guide my mind onto the things that are most important in life, and that's part of the reason why I took the time to write that book, is it was just sort of getting my own thoughts about how to live a little bit more of a proactive life instead of reacting to everything that's being thrown at us all the time. Because if you're ambitious, you're going to go, "Yeah, I'll do that," and, "Oh, this seems fun." Lucas He: Yeah. Jack Crawford: And, "Oh, I'll work a little bit on this," and, "Oh, I can squeeze that in," right? Lucas He: Yeah. Jack Crawford: And next thing you know, your dance card is pretty full, right? And so I'm still trying to figure that out. Lucas He: So the book is about how to manage a mind share as someone that's just ambitious and trying to allocate your time scattering around. Jack Crawford: It's mostly focused on strategic planning for life for entrepreneurs. Lucas He: Oh. Jack Crawford: So the idea is, if we're going to put together a business plan for a startup company- Lucas He: Hmm Jack Crawford: ... let's also think about putting together kind of a plan for our life, and live in a proactive way to ensure that we're spending our time, and ensure that our thinking aligns with things that are actually most important. And so if we have these tools that we use in business, like KPIs and strategic plans and other assessment tools, why don't we start overlaying that with the things in our life? Why don't we take that same tool set that we use in business and apply it to life, and see if we're tracking well? Lucas He: Yeah. Jack Crawford: Right? Just like we monitor financials with a business to see if it's performing well, well, what about how are our friendships going, or how is our health going, or how is our marriage, or how is our relationship with our kids going? Lucas He: Mm-hmm. Jack Crawford: All of those things, how are we measuring those? I think sometimes we take a bit of a passive role on those things, when this tool set that we use in the business world might apply pretty well to measuring how we're doing things. And so anyway, that's mostly what the book's about. Lucas He: I need to check this out. Jack Crawford: Yeah. Philip Zeng: Yeah, definitely. We would like to be the first bunch of readers of that book- ... when it's out, yeah. And probably we can conclude with two last questions. One is for the student founders, specifically. We have talked about the advice for pitching, but are there some other things that you would want them to know before they reach out to a VC, that they can prepare in advance, so that the conversation can be more efficient or in a way that fits better with the VC's role? Jack Crawford: One thing that I'm always amazed at is early-stage founders' lack of preparation for a meeting with a VC in two areas. One is they don't seem to work very hard to find a referral into the VC. They just seem to think, "Oh, I'll just apply through the website," or, "I'll just cold call." If I don't know the founder and I just get an email, it's probably just going to go into a file and it's not going to get a response. So finding a referral source into a VC firm, most managing partners at firms are pretty accessible through LinkedIn. You can see how you're connected. You can get somebody that you know in your network to make an introduction for you. So that's one way. The second way isI think that founders need to do a better job, in my view, of talking to customers. I think many, many times they haven't talked to as many customers as they could've before they started the business. I'll give you a specific example of something I did. I told you about Campus Engine, right? This idea of creating software for- Philip Zeng: Yeah Jack Crawford: ... campus newspapers to migrate from the printed newspaper to online portals. Here's what we did when we started that company. My wife and I started that company together. We took $10,000, which was a lot of money for us back then, and we went to a trade show that was focused on campus newspapers, and we showed up at a trade show with two big poster boards printed out of a product that did not exist. It was an architecture of a product. It showed the features, functions, it showed what the product would look like when we were done building it, and we basically talked about the value proposition on the other slide, and then we had a bunch of blank expressions of interest forms. And when people would come up to the trade show table that we paid $10,000... No product, just an idea, right? So much conviction around this idea. We wanted to talk to customers, so we went to the place where customers were at, and campus after campus came by and said, "What exactly are you? What is Campus Engine?" We said, "Oh, we're helping you get your campus newspaper from a physical newspaper to an online portal to allow all your students to effectively get online and access news and information in maybe a web-based portal for their email and sports information and connect with alumni." And, "Wow, that sounds pretty interesting. And is it available now?" "No, we're fine-tuning the product right now. Here's what it's going to look like. If we build this- Philip Zeng: Mm-hmm Jack Crawford: ... would you be interested?" "Yeah, I would actually be interested." "Okay. Well, if you're interested, then we'll train your students on how to sell online ads, and it'd be a revenue share relationship. Would you be open to doing a revenue share relationship for any new revenues that come in?" "Sure, we would." "Okay. Would you mind filling out this form that says your university, what your role is there, and would you sign it?" Well, there was like 74 universities that signed those pieces of papers that day, and I took that stack of 74 customers that I talked to to a venture capitalist, and I said, "Here are the customers that are ready to buy this product. Will you fund me?" And they gave me $5 million to start that company. Philip Zeng: Wow. Jack Crawford: And so to me, it was validation of, wow, if you're going to go talk to customers, figure out an efficient way to get access to them. Take a chance. Maybe put yourself in a room, in a trade show room- Philip Zeng: Yeah Jack Crawford: ... with them even before the company exists, and get validation. So anyway, talking to customers is the short answer of something that I've done historically that was successful and that I always look for, because customer traction is a big deal. Philip Zeng: Sure. And the last question we'll land on about the young people who are aspirant about the VC world. So, actually this consists of two questions. The first, do you have any advice or tips for young students or fresh graduates who want to enter the VC world, for example, as an analyst or a role? The other is, how about advice you would give to young GPs who want to close their first fund? Yeah. Jack Crawford: Yeah. I think that it's really hard to break into the VC industry, obviously. I guess you could start a podcast when you're a student. I guess that might be one way to break into the VC industry. I think that there's corporates that are offering jobs right now, and so I wouldn't just think of it as the VC industry. I think of it as corporate ventures now. I think 30 or 40% of all venture backed deals come from corporates. Philip Zeng: Yep. Jack Crawford: So I'd think of that as the ecosystem that you're operating in. Sometimes there's family offices that are making venture investments, so think about that segment as well. So some of them are hiring. Some VC firms do bring in interns or fellows like we do. And so that's a way to get some experience. With regard to developing a skill set, I wonder if just finding interesting companies in a sector that you're really excited about is a great starting point. Start finding great companies. Philip Zeng: Yeah. Jack Crawford: Maybe you don't get to invest in it. Philip Zeng: Yeah. Jack Crawford: I think there's a fascinating company. Are you guys familiar with Whisper? You know Whisper? Philip Zeng: No. Jack Crawford: Whisper, you hit a button on your keyboard. It's basically like a dictation tool. So you can anytime, instead of typing an email, you just basically hit the bottom left button on your keyboard, and even at quiet voices, it can pick up an accurate readout of exactly what you're saying, and it's much more clear than Siri. I think it's a fascinating company. It's got me thinking about human input devices beyond a keyboard. How else are we going to start to input information? Philip Zeng: Mm-hmm. Jack Crawford: Maybe the ability to talk loud or quiet, the ability to talk in a noisy room, the ability for it to pick up an accent, whatever it is. It's amazingly accurate. It's got my wheels turning. If I was a student today, I'd be thinking, "Maybe that's a niche that I would go after." Just looking at new ways to interact with computers with voice, and I would learn about every company in that niche and start to source interesting companies, and then I would sort of watch which companies take off. Philip Zeng: Yeah. Jack Crawford: Did the ones take off that I think were going to take off? Philip Zeng: Yeah. Jack Crawford: I just think finding sometimes a niche that you're excited about and doing some deep research, and then bringing a level of knowledge to the LP that maybe they didn't expect or they didn't know. Philip Zeng: Mm-hmm. Jack Crawford: And introducing that demonstrates your intellectual horsepower, your curiosity, your work ethic, your ability to do a deep dive. It just showcases your skills, right? Philip Zeng: Yeah. Jack Crawford: When you're floating around looking at a lot of different industry sectors, I think it's difficult. I think it doesn't just have to be by industry sector. It could be Philip, if you just said, "I'm going to find every great deal on USC's campus, no matter where it is. I don't care if it's Techstars. I don't care if it's- Philip Zeng: Yeah Jack Crawford: ... Venture Lab. I'm going to go to every event, and I'm going to basically be the source of USC deal flow." Maybe that's another strategy, right? Philip Zeng: Yeah. Jack Crawford: But I do think that focus is important, because otherwise you're looking at thousands of deals and you're not developing an expertise in any one industry sector or geography, or there's no sort of element of strategy behind it. But I do think you can develop some credibility with LPs by doing that. Philip Zeng: Yeah. I think that wraps up our podcast today, and thank you so much for joining us. Thank you so much, Jack. Yeah. Jack Crawford: Thanks for having me, guys. Philip Zeng: Yeah. Jack Crawford: This was fun. Philip Zeng: Keep track of Jack's new book that's probably coming soon, right? Jack Crawford: "The Great Perspective." You can get it tonight at the event. Philip Zeng: Ooh. Tonight? Oh, really? Okay. Jack Crawford: Yeah. Philip Zeng: That's amazing. Jack Crawford: We did a book launch in London with the Kauffman Fellows, which was awesome, in November, and then tonight, there's free copies for all the students that come to tonight's event, so. Philip Zeng: Awesome. Yeah. And we can get the book signed as well. Jack Crawford: All right. Philip Zeng: Yeah. Jack Crawford: Sounds good. Philip Zeng: Great. Awesome. All right. Thank you so much. Yeah. And remember to follow our podcast. Yeah. Thank you. Bye. Bye.