Brendan Aronson - OpsForYou Episode 1

Brendan Aronson is a Marine Veteran turned CEO and Investor. He helps veterans connect with jobs at The Military Veteran and can also be found at Paintru.

You can find him here: https://www.themilvet.org

Here: https://paintru.com

And here: https://www.contextvc.com

Enjoy the episode!

Transcript:
Some short QA - August 01

VIEW RECORDING - 30 mins (No highlights)

Rich Fly 

How have you seen your skills as a Marine officer, translated into your role as an entrepreneur?

Brendan Aronson

That's a good question, Rich.

I say in the military, you're often told to figure it out. Sometimes there's an expletive in there as well.

as an entrepreneur, that's all you do, right? It's just figuring things out. It starts out with identifying a customer problem, figuring out how to best solve that problem.

And there's no playbook. So you can read the case studies of past entrepreneurs who have been successful in their endeavors.

There are business models that you can study to understand how to apply those in a way that will make sense to build a business around.

But for the most part, you're left to figure it out, how to solve your client or your customer's biggest problems.

So I would say like being able to think outside the box and having a will to win, I would say, is also something that's very

I would say that those things have really benefited me and continued to benefit me as military veteran entrepreneur.

Rich Fly 

I really love that the will to win. You kind of see that will to win also helping you in the context of context ventures as well, of doing VC work, and then even in your past, at Goldman Sachs.

Brendan Aronson 

Yeah, I would say so. I think what makes very much fantastic employees is that will to win tenacity, ability to learn new things very quickly.

We're constantly moving around as members of the military and learning a new job every year every two years, every year.

And so being able to transition that same soft skills you develop. Welcome to the service into the hard skills that you need in a civilian job.

Bringing those soft skills with you can be very beneficial.

Rich Fly 

And then with your time as a Marine, so I know you kind of brought up that will to win.

Do you think there's been any other unique advantages that you had over your peers? Even if we wanted to go kind of even back to college, I recently saw that you posted today about kind of like all the stuff you've excited about, war and MBA, a Goldman Sachs and everything else you've done.

Do you think that that time in the Marines gave you any unique advantages through all of those spectrum of things?

Brendan Aronson

I mean, I would say most military veterans, if you read my resume, I think it reads, it makes sense and there's like sort of a logical progression, but it certainly doesn't feel like that in the moment.

We talked to a lot of transition veterans who are trying to figure out what the next steps are going to be and I encourage them to think about the fact that everybody's story makes a lot of sense in retrospect, but there's a lot of failure along the way.

See that with folks transitioning into business careers, and you also see it with entrepreneurs especially. People talk a lot about failing as an entrepreneur, and I failed a lot.

I mean, constantly. In my business career as well. And so I would say, you know, in the military, you know, your failures.

I had a great mentor who told me that the key to great leadership is allowing your subordinates to fail without becoming a failure.

And so I think that that is also applicable to entrepreneurs because you're going to fail a lot. And when I tell people when they're transitioning out of the military or they're starting a company is oftentimes the more that you're failing, the more you're actually succeeding as well because it means you're hitting a critical amount of quality.

You're getting enough repetitions at whatever the skill set is. So as an entrepreneur, if you're selling a product, you're going to fail a lot.

People are going to say no all of the time. It's very common in any kind of sales environment. And so, but if you're failing a lot, that means that you're learning a lot.

You're probably, hopefully, iterating very quickly and then you have a volume in your funnel that you're hopefully getting to get to a lot of the time as well.

Rich Fly 

With all that, what are some ways that like, I mean, starting paint through and paint through today as like a CEO and co-founder there that you found yourself, maybe in the beginning kind of like failing and like, what were your learnings from those failures.

Brendan Aronson 

I would say one of my biggest learnings from paint through and early innings was around sales and marketing. Coming out of the MBA program, they teach marketing from a very academic perspective.

so my co-founder's got sick of me telling them, you know, we should build some kind of like scalable repeatable funnel.

We have to figure out how we're going to do our advertising. And, you know, one of my business partners there is probably one of best business people that I know.

know, told me, he's like, yeah, that's great. But in the short term, like pick up the phone call some people that you know that need great gifts for something and make some sales.

And that is. A philosophy that it took me a little bit of time to learn and I think I carry it forward to this day in my current endeavors because I understand that perfect is the enemy of good and you're not going to have a perfect plan from the inception.

You're going to have to try a lot of different things, see what sticks, and then reinforce success when you see it.

You're also just going to have to pick up the phone and get sweaty with your sales efforts.

Rich Fly 

There's just no way around it. Do you think getting sweaty with the sales efforts has helped you in transition and not just from pain true but to working with context ventures where it is just a lot of you're getting outreach and you're doing outreach and then with Milvet kind of that same idea because totally correct me if I'm wrong is Milvet more of a business or is it also more of nonprofit.

Brendan Aronson

Reminders, I just for some clarification. Yeah, it's a for profit business. All of these you actually are spot on in recognizing that great.

Sales processes rely on two methods of customer acquisition. There's outbound sales where you're reaching proactively reaching out to people.

It could be hold outreach, could be to someone that's warm in your network that you already know that's an position to potentially be a buyer.

And then there's inbound as well, right? So when you generate marketing, when you market your products, get people reach out to you because they might be interested in it, right?

And so for all of these different endeavors for the Milvap where we help companies hire military veterans, we are employing that same sales principle in multiple ways.

We have employers that were bringing on to our company who need help hiring veterans. We are acquiring those employers both through the marketing efforts.

our posts on LinkedIn and social media that draws people that might be interested to us. So we have inbound there and then we have outbound.

So we reach out to employers who we think might be interested, tell them the value of hiring veterans and then we're to bring them on clients.

We apply that same sales philosophy on the other side of the equation. I'm not an employer who's looking for a veteran with a specific set of skills.

We rely on inbound, so we post to social media and say they might be interested in this role and outbound.

We're proactively going out finding candidates because a lot of times the best talent is passive. They might not be looking for a new role.

So we're employing that same sales methodology there. And then for venture investing, it is a similar thing, right? We have inbound that we create our marketing efforts.

A lot of times, you know, see us host these live events. That's to help spread the word about what we're doing to help us meet new entrepreneurs and to bring entrepreneurs to us who might be interested in raising capital from us.

And then there's outbound as well. So we see a great company will reach out to them to learn more about what they're building.

So all sales processes really do rely on those spring works and they are so applicable to everything, everything in business to sales, right?

If you're selling, it's obviously a sales process. You're hiring, right? You're selling an opportunity to someone and trying to attract the best.

That's how it will. If you're funny. Raising, that's a sales process. You're going to have to reach out to a lot of investors and generate hype about your company so that investors can reach out to you.

But they're all different practices of the same discipline, which is sales.

Rich Fly

Awesome. Yeah. So one thing I think that people often don't realize is how much sales kind of happen inside of VC itself.

So I thought it'd be something that'd be really interesting to kind of dive into here is like how you see that like getting sold to, you know, buy someone trying to get your money.

And then you trying to raise money as well for your fund. I think that'd be like an interesting kind of thing that usually kind of sits outside of what people are thinking about.

They're thinking about that business side, which you kind of brought up.

Brendan Aronson

So I'd love to dive in there. That's okay. Yeah. mean, I think, you know, would be my business partner, Sam, who's the general partner of context ventures, be a better person to ask questions.

frankly, just because you've more experienced than a kind of analyst, but I'll say if you think about it from an industry perspective, the venture capital industry is extremely competitive.

And you're you correctly at. Done by the venture capitalists are both raising capital from institutional investors. They're called limited partners or LPs.

So they're going out and executing that same sales process to raise capital from people who are looking to deploy capital into the venture asset class.

And then they're also running a sales process. You know, great deals are competitive to become an investor at them.

If you there are only a handful of unicorn companies been to every year. And so, you know, if you think back to when those companies were raising capital in their earlier stages, those are the ones that you want to find that you want to get an obligation for.

Because venture investing is a there's a power law distribution where most of the returns are actually concentrated in very few companies.

And so being able to successfully get into those rounds as an investor is a really critical skill set.

Rich Fly

If you can't get into good rounds, you can't be a good venture investor.

Brendan Aronson 

And with so much capital flowing into the space in the last, you know, call it like 15 years. It has gotten really competitive for VCs to be able to get into deals.

So, yeah, I mean, You find that same sales process in venture capital quite a bit.

Rich Fly I think you correctly identified where. Do you think you could share any examples maybe when you're looking at an investment, like you said, right?

maybe make 500 investments in a year. Just use big numbers, right? But only five of those are getting to give you a real return, right?

Has there any sort of. Skills or tactics that you use in that decision making process or even maybe kind of like that will the win to try and get to them early?

Like when you're out there just kind of hunting on the web or whatever it may be for that, that new bright, cool thing.

Brendan Aronson 

Yeah, I think there's a couple questions there. First is how you evaluate deals, right? And then how you convince a founder to let you join the team as an investor.

You know, 500 investments would be a lot for funds. They're going to make fewer investments than that. But. I mean, to answer those two questions, first, when thinking about a deal from a venture capitalist perspective, I think there's a lot of.

of misunderstanding about what venture capitalists invest in. I have been guilty of this in my first startup, right? The venture investors typically look at a very defined and limited set of companies that make sense.

They're looking for a company that can scale from zero to say $100 million in revenue very quickly like a limited amount of time, five to seven years, which is there's only a limited number of companies that can scale that quickly.

They tend to be, you know, businesses, businesses. A lot of them are Or B2B SAS, like something like 80% of venture investment dollars go into B2B SAS because it is like the business model that can rapidly scale like that, right?

There are other business models that make sense like marketplaces, marketplaces or businesses that benefit from network effects. There's a fantastic book by Andrew Chen, who's a partner in interest in Horowitz, called a cold start problem.

I really recommend it if you're interested in network effects. It's like a dissertation on it's fascinating. But think about businesses that will count.

A lot of people are already on it. So creating the conditions for those network effects can be really challenging.

Uber is another great example. You need a critical massive driver and consumers on the app at the same time, same location.

Otherwise, there's no benefit to the app. Which is why Ryshare has similar characteristics to other network effect businesses. You tend to see those businesses end up very, very concentrated, meaning that 70, 80% of the market share is captured by whoever is able to generate those network effects.

That's why there's Uber, there's Lyft, and then there's tiny, tiny players on the map. Uber having like 70% of the market.

So those types of businesses make for interesting venture investments. So when a VC is evaluating a deal, they'll think about that.

Three things in the early stages. They'll think about the founder. What is the strength of the founder, the founding team?

Because really, you're investing in the team, understanding the business model itself might pivot. You'll think about the market. Is it a massive market that's growing?

A great entrepreneur in a market that is declining or small will do worse than a decent entrepreneur in a large market or a market that's growing very quickly.

So you've got the founder, you've got the market, and then you've got the product or idea. Does it solve a real pain point?

Are there customers that are interested in this solution? Are they dying for this product? So those three things people will sometimes use the analogy horse race.

So they'll say track, horse, jockey. So the track being market, the horse being the product or idea, and then the jockey being the founder.

So those are a little bit like a news framework. I think it's pretty helpful, but you also obviously have to consider the choice of business model.

Because only certain business models make sense for veteran investors. And you're back in many be. to ACNSC this opportunity for me

I mean, look, I think a lot of this relies on reputation. think venture investing is very reputational first business.

So you have to be someone that a founder wants to work with first and foremost. You know, I don't claim to have like a very deep track record of venture investing.

And I'm fairly new on the contracts, that your team. But I would hope that over time, build relationship and reputation with founders that, you know, someone that will go to bath for them, someone that will be with them, not just do the great times to take credit for their accomplishments, which I think we see a lot of VCs do unfortunately.

But rather someone that is there in hard times when it really matters. So, you know, that track record just takes time, it takes time to build that kind of trust and reputation.

But like all great things in life, when it comes to reputation or relationship building, you know, I think it's a byproduct of trying to do the right thing for people, regardless of what the outcome might be for yourself.

Personally, there's a great book called Give and Take, which I really strongly recommend by Adam Grant, which is about the power of being a giver and someone that tries to help people as much as possible without any expectations of precipitation.

So, probably a long minute answer to your question, but hopefully helpful.

Rich Fly 

No, that was great. There are tons of good nuggets in there. I think at that kind of transitions to this other question, you brought up, the investment is kind of a new side for you.

And I think there were a lot of things in there that you brought up. Not a lot, but towards the end there about how some founders might find it are looking for trust.

And you having your own entrepreneurial background, you're like, it's just going to be hard, and sometimes it's not. having that in your back pocket, do you think in working with current investments that's ever helped you kind of like

Brendan Aronson 

Entrepreneurs that we work with, all business is hard, like all of it. There's nobody that is in business that's like, oh yeah, it's pretty easy, straightforward.

got it. Because, I mean, you know, it's funny because as early stage entrepreneurs, I think we often think, well, when I can just get to X milestone, then it'll be a lot easier.

And it is true that getting, you know, your initial revenue, that's a huge milestone, right? Being able to pay yourself a salary is a huge milestone.

And that helps alleviate some of the existential trend, but it is always hard. I talked to a founder yesterday who just crossed 2 million in ARR, and he told me that how shocked he was, you know, for years he had gone to a million dollars in ARR in the previous business, he had been, I think, up to 2 million dollars in ARR in our previous business.

And he said how shocked he was at how difficult it was to get from 0 to 1 million, how the things that they did to get from 0 to 1 million did not get them from 1 million to 2 million.

And what got them to 2 million is not going to get them to 5 to 10. That's a long way to way of saying entrepreneurship is very hard for every single person.

So, yeah, I do think that having some of those challenges myself and I've failed a lot and continue to fail a lot a lot a lot.

And I do not think of myself as like a successful person. I think that's something that will hopefully be measured in decades instead of years.

But, yeah, I mean, does allow you to have a direct relationship with someone when you can say like, hey, I've been there like I've messed up too.

And I have made those same mistakes.

I do think that that adds like a level of authenticity and trust with our entrepreneurs. So people do come to me when things are challenging or they're going through like personal problems or they are curious about what the next phase is going to hold.

And I'm able to kind of shoot it to them straight. I mean, quick answer is it's always hard.

Rich Fly 

So, yeah. With the. Kind of different skill sets, which I mean, kind of for the investor and the entrepreneur, it sounds like almost from kind of that you talked about it.

There's a lot more similarities and differences, right, because you're kind of always looking at the same things like, I'm going to start a business.

What are the market trends, right, is the market going to pull me there, I'm an investor is the market going to pull me is the market going to pull our investments there.

And then for the Marine Officer hat, right, that's kind of like a very different one. just like, I want to win.

I'm going to kind of chase down that market, maybe. Do you ever find yourself kind of like second guessing the market trend, We saw like a in the past year, a huge amount of, you know, kind of layoffs and everything happening and wondering, you know, are those always the best decisions and like, how do you kind of.

Take that short and long sighted view when I just like, I want to win today because right there, there might not be another pattern tomorrow, right.

If I don't win, if we look at from. I guess the Marine or military side.

Brendan Aronson 

Yeah, I mean, I think you have to take a really long term view on all of these things. I think one of the challenges of building a venture-style company and investing in a venture capital deal is that you have a limited time horizon.

sort of accelerates the outcomes. Venture capital is best applied when it's going to accelerate someone to the next phase very quickly.

And there's a company that's ready for that. So there is this element of timing the market that's really important.

If you look at a key differentiator between venture funds over the last 15 years, one of the most key differentiators is what's called its vintage, right?

What year the fund was launched? So the funds that launched right after the financial crisis had a chance to invest in companies at a discount evaluation, meaning that they have an outsized ownership stake when those deals matured.

Whereas venture funds that were investing in very frothy market conditions, meaning that the market was doing very well. Those funds, they maybe got a smaller slice of the ownership structure, they may be over deployed capital too quickly, which can be really challenging when they go harvest those contracts.

So, yeah, mean, the market cycle is certainly important to consider adventure investing, and then on the company building aside, I mean it's critical for all the reasons that you mentioned, right, you want a great market that's growing.

But I do think that if you don't raise venture capital, you can take a little bit of longer time horizon, right, you can build a little bit slower.

But it's still really critical to select a great market and a great business model, like, if you have a, if you don't have a good business model where you're trying to sell customers that can't pay you.

That's basically hard to build a business doing that, you know, so, you know, I think choice of market selection and the timing of the market is important.

That said, like you can't time the market right I mean if you're a value investor. You're going to be wrong more than you're going to be right if you try and time the market.

So, I think it's important to temper thoughts around market conditions with a really long-term mindset and the understanding that you can only really control certain things that are within your control.

And if you can't control them, it's probably best not to agonize about them. Or if your market is collapsing, it's time to pivot.

So, hopefully that was helpful.

Rich Fly 

Yeah, I think one thing that you've brought up and then I've heard Tim bring up a lot too is not every company is investable.

Do you kind of have like any guidelines for people out there around like, hey, might not be investable versus this.

Are there any kind of sort of maybe like micro guidelines that you would use for that? Or do you just, we'll know when we see it?

Brendan Aronson 

And that's only a fair answer. No, no, no, I mean, I think we've already covered some of the questions around choice of like business model.

Some... Some businesses are just like, the business that I run, Milva is not a venture business, right? It's a cash-loing business.

So we would not raise venture capital because it wouldn't be the best application of that type of funding. It's also very expensive funding.

You know, people cut you a check for a percentage of your company and then they oftentimes they'll be accompanied by a board seat.

look at the same now it's run. Not always, but often. And so, I mean, it's expensive. Like you're going to give up a very big piece of your company for cash.

so, if you can organically grow, it's just like certainly a better avenue of approach for most founders. Unless you are in one of those markets that really relies on network effects.

So like if I was building LinkedIn at the same time, Revolpen was, and he raised a bunch of venture capital money, he's going to capture that market if he moves quicker and executes well, whereas I can execute really, really well.

But if people are not getting onto the platform with speed, then, you know, might not be able to get.

Established those network effects. So yeah, I mean choice of business model, I would say is a huge one. You know, there are other things that make a business not investable.

It's types of corporate governance. So like choice of business entity. If you're going to raise venture capital dollars in the VC work.

Can get into the nuance reason why that is the case if that's interesting, but an LLC almost will never raise venture capital money does happen, but you know, you usually have to put something in place to make sure that.

So the profits of those businesses are not going to flow through the venture fund to its limited partners, because those limited partners are oftentimes nonprofits, which can be a really big problem for them from a tax perspective.

So choice of entity is really important. The founders themselves so like if the founder doesn't have a clean record or has like, you know, some kind of history of misconduct or something like that.

It's just not investable because you're really trusting that person to be a steward of your capital. And those are the ones.

I come immediately to mind apart from the things that we already discussed around founder, market, the actual product itself, etc.

Rich Fly 

And then I guess kind of lastly, there anything that you want to share about kind of mill bed, context, true, just kind of kind of wrap it up?

Brendan Aronson 

Yeah, the company that I run, the military veteran, we help companies hire veterans, we help veterans transition into new careers.

We do that through hosting in-person networking events. Our in-person networking events are a fantastic way to come and build your network.

We bring in amazing speakers to talk about how they built their business careers, the challenges that they faced along the way and how they've overcome them.

So I think that being able to go to one of these events can be inspiring and educational. You'll learn about different career paths, you'll learn about different opportunities in business that you might not have been aware of.

And then you'll be inspired by virtue of the fact that you can succeed in business if you're a military veteran.

I wholeheartedly believe that. So the folks that come to our in-person events do leave feeling inspired and educated. The other way that we help companies hire and folks get new careers, this new direct placement.

clients, companies will come to us and ask us to help them hire for specific open business position. We'll advertise those roles in our newsletter.

So if you're not subscribed, go to themillthat.org, T-H-E-M-I-L-V-E-T.org.

Brendan Aronson 

Perfect. Thanks, Rich. This is our newsletter where we post new jobs every week. Context Ventures. want to invest in world-class military veteran business entrepreneurs.

So if you're starting a new company, it makes sense based on what we've talked about in the conversation about companies that make sense to raise venture capital.

We want to hear from you. Go to contextvc.com to learn more about our fund. We also listed the Military Veteran and Startup Conference, which is how we first met.

Hopefully, you can give an honest take on what that event was like. We think it's a great event. We hope that people will join us there.

That happens in February in San Francisco. And yeah, paint true. first business that I launched, we help people take their favorite photos and have them expertly hand painted by a professional artist to make great gifts for special occasions.

So if you're looking for a great gift, we hope you go to paint true p i n t r u dot com and check out our services.

They make really, really special gifts. People literally like me when they open them. So really thoughtful thing to do for someone.

Rich Fly 

Awesome. Yeah, thanks. I guess. That'll kind of wrap it up and I'll put all those links down in description of the videos, everything like that.

And yeah, I had a great time at the no that's our conference that I went to excited to go to the end of baby worry and yeah, I guess that's a wrap.

Brendan Aronson 

Good. we're looking forward to seeing you there.