This is episode 20 of The OpenVC Podcast. In this episode, Jonathan Hakakian, Managing Partner at SoundBoard Venture Fund, shares his journey from entrepreneur to VC and how he’s backed 50+ startups, including Jump (acquired by Uber for $200M+). He dives into how he identifies overlooked investment opportunities, the importance of strong investor-founder relationships, and key lessons from scaling high-growth startup
Harrison Faull (01:08.703)
Jonathan, Thank you for coming onto the Open VC. Welcome to the season one of the Open VC podcast. It's an absolute delight to have you on. How are you today?
Jonathan Hakakian (01:32.779)
I'm doing wonderful. Thank you for having me, Harrison. I'm excited.
Harrison Faull (01:36.265)
Perfect. Okay. So before we get into soundboard ventures and growing an angel syndicate into a VC fund, I want to go back in time a little bit and understand where you caught this entrepreneurial bug. So I understand that your parents were entrepreneurial and they ran a designer flooring company. Did you have much exposure to that as a child?
Jonathan Hakakian (02:01.292)
Yes, my siblings and I did and it was sort of by necessity, Harrison. We didn't know any better and neither did they. Neither did my parents. It was just, it was a business launch out of necessity. Traditional immigrant story coming in, not having much, needing to put food on the table and figure it out. Well, this is what we got exposure here in the United States. Let's just figure it out and hustle and
Jonathan Hakakian (02:30.635)
work our way into having the typical American dream or the traditional American dream. And I give my parents a lot of credit. They made it through a lot of challenging times. They were able to flourish because they relied on each other a lot. weekends and summers, we went to work. We didn't have what my children or other of my peers had as traditional summers. It was just like, hey, this is what we did. This is what we could do. We had access to.
We didn't know it was any different and truth be told up until about 15, 20 years ago, I didn't know that it was different. I don't want to use the word strange, but different that the dinner table, our dinner table was the board meeting. That was the first time of day that my parents had a chance to discuss what's going on in business. They had a chance to talk about strategy and things behind closed doors away from employees and vendors and clients.
Harrison Faull (03:09.96)
Okay.
Jonathan Hakakian (03:30.674)
And so we didn't know any different. Like this is just what we thought. Like, hey, this is how every dinner table is talking about business and strategy and how to grow the company. it wasn't until, yeah, into my adulthood that I realized, this isn't the typical childhood.
Harrison Faull (03:46.891)
Amazing. So atypical, but you're there, you're getting an MBA.
lessons every night at the dinner table. Something I want to pick on though, do you think your parents were particularly open during hard times or would they try and shelter you from that?
Jonathan Hakakian (03:55.549)
Bye, Aki.
Jonathan Hakakian (04:05.739)
I think
Harrison Faull (04:06.987)
So think that's one of the hardest things about having a family member involved. Typically an entrepreneur might be the male partner, goes to work, gets a hundred no's during the day, comes back to his spouse and has to pretend that things are okay. But you can't even pretend things are okay if your spouse is your business partner and your family are involved. So just with the mental health and having a work-life balance, do think they had a good relationship with that? Or would you recommend people handle it slightly differently?
Jonathan Hakakian (04:36.36)
So, you know, as kids, we're never fully exposed to everything going on with our parents. So, hindsight 2020, no, we probably weren't exposed and we didn't see all the conflicts and all the difficulties, you know, and I think that's pretty typical across the board. But as the years went on, my parents did share like, these were some of the struggles and some of the challenges that we went through, that we had.
Harrison Faull (05:05.893)
Mm-hmm.
Jonathan Hakakian (05:06.076)
So, you know, whether the storm threw. it didn't, we didn't know it at that point in time, but as we grew up into our teens and ultimately into adulthood, more was shared about how it actually works.
Harrison Faull (05:12.938)
Okay. Okay, amazing. So it wasn't glorified. It very realistic journey of a roller coaster for most entrepreneurs, ups and downs. And that didn't put you off because you tried to, launched your first entrepreneurial venture in college. What was it called and what was the idea?
Jonathan Hakakian (05:31.943)
So the initial idea was, and this is back in the 2006 timeframe, the concept was based around how as university students, we were buying books very expensive, selling them back to the bookstore for relatively inexpensive, and then they were reselling used textbook for a much bigger markup. And so we saw the arbitrage opportunity. They were like, hey, we can cut out the middleman.
Harrison Faull (05:56.277)
Yeah.
Jonathan Hakakian (06:00.864)
And so was literally a campus exchange. It was called Exchange on Campus. And a friend and I just said, like, hey, there's potential here for us to just live in the arbitrage. Between books, between furniture, class notes, anything that university students were using, but at the end of the year, they didn't need any more. I think at one point we even tried to do ride share.
Harrison Faull (06:13.858)
there.
Jonathan Hakakian (06:29.527)
very early days and very sketchy at the time. But what we were blind to was that at that time there were five or six other student groups or university groups in and around the DC metro area. MySpace and Facebook were doing it because MySpace was still the big one at the time. And then Half.com came and ate everybody's lunch. And so we didn't want to see that the bigger market forces were out there.
Harrison Faull (06:32.514)
you
Jonathan Hakakian (06:58.113)
But it taught me a lot. mean, that really was an amazing education in a year, two years time frame. When my business partner and I, we battled through a lot, we tried a lot. The one nice win that we can hang our hat on is that even though we all failed, we were able to have a few metrics of success, especially compared to the other local competitors. We built this business, we built that business on a shoestring budget.
Harrison Faull (07:11.651)
you
Harrison Faull (07:22.095)
Okay.
Jonathan Hakakian (07:28.46)
with no investment capital, just hustle, sweat, asking for favors from friends to build us a website, to test it out, to work on it, to help us with marketing campaigns. Meanwhile, the university themselves and other student groups spent tens of thousands of dollars, if not much, much more. And we were able to out-compete them and were nimble enough to acquire more users and more posts than all of them.
Harrison Faull (07:56.283)
Amazing. I think being capital constrained is very much a blessing in disguise, especially for second time, third time entrepreneurs, because you have to innovate and your creativity comes front and center. You don't have any other option other than to be disruptive and to think differently. So that's amazing. Okay. So you had your first foray into, into startups and then you went back into real estate development and construction.
Jonathan Hakakian (08:11.906)
Yeah.
Jonathan Hakakian (08:19.287)
Yes.
Harrison Faull (08:20.708)
But you ultimately came back to your passion, startups, and started an angel investing group. Can you talk us about how that started? What did you create and how did you go about starting a syndicate?
Jonathan Hakakian (08:35.938)
So we actually backed out our way into starting our first fund in 2012, which was a combination of a fund and syndicate model, Harrison. We saw at the time, and this is now, I joined with my partner Richard Maggett in 2010 to sort of build on the network and experience that I had as a more traditional startup entrepreneur with his background 25 years in leadership development and management consulting.
Harrison Faull (09:03.5)
Good morning.
Jonathan Hakakian (09:04.224)
And Richard's always worked with mature stage entrepreneurial led companies to get to their next level of success. And so we were trying to bring that level of support and advisory work down to the startup early stage level and the network that I had built. And that was 2010. And what we realized was this is great. They need that advice. They love the advice, especially in this New York metro area, which had not really been hit by the startup bug just yet.
Like there was a, it was in its infancy in those days. And it started growing and we started seeing that more and more companies are coming in. at the end of it all, what they need more than anything is capital. And it was an interesting time in the world where entrepreneurship was growing in the New York metro area, but so was this desire for the high net worth population to put money into startups.
Harrison Faull (09:36.554)
Okay.
Jonathan Hakakian (10:02.644)
I think back then Shark Tank had had a couple of seats and so it was starting to become more accepted. We saw the rise of Facebook and Facebook's IPO in 2012 and all these things started coalescing where we saw like, hey, there's this great potential for us to bring these amazing entrepreneurs together who have succeeded. So these are the high net worth individuals.
Harrison Faull (10:06.695)
Okay.
Harrison Faull (10:15.141)
Yeah.
Jonathan Hakakian (10:28.18)
They've been entrepreneurs before, they've raised money, they've sold their business, they're at the peak of their careers, or on flip side, they're intrapreneurs. They've been working in a large corporate and they've had enough exposure, enough of their career has been in running the ship and guiding the ship, not just working underneath somebody that they all wanted to give back. But they didn't want to just invest in a blind fund in a mutual fund kind of way where like, hey, here's the money.
Harrison Faull (10:43.621)
So, thank
Jonathan Hakakian (10:57.375)
I'm good, give me my quarterly or annual report. They wanted to participate and be part of the process and mentor and advise and support the entrepreneurs and startup companies. So they wanted the experience, but they also at the same time didn't want to have to make every decision on their own. So they didn't want to be a syndicate angel investor at the start. And so what we did was we brought these two together and we had amazing mentors and advisors who helped guide us on that process of building the first fund.
But was truly very collaborative and very democratic, where we had about 35 investors in that first fund, and they were all invited to be part of the process as we investigated and ultimately invested in each company.
Harrison Faull (11:40.142)
Okay, so from day one, you've got Soundboard Ventures and Soundboard Consulting working together. So you've got some value-add services and you've got capital backing you as well. How does that relationship work today for founders looking to raise capital from Soundboard? Are they encouraged to take on services from the consultancy? Do you have to keep things separate?
Jonathan Hakakian (11:44.808)
Correct.
Jonathan Hakakian (12:01.662)
We definitely keep things separate. The way we leverage the consulting work that Richard's done since 2000 is that now, and especially, we leverage it during diligence. Because what we can do is that, as we all know, the early stage pre-seed and environment is very dependent on the leadership, on the people behind the business and the team. The entrepreneur, the founding team, the co-founders, however you want to frame it, it's about...
Harrison Faull (12:24.079)
Okay.
Jonathan Hakakian (12:30.226)
them because everything in a startup life can change from early stage all the way through exit. The market can change, customer sentiment can change, there can be global pressures, tariffs can come in, COVID can happen, like all these other things that are out of their control. But the one thing that will always stay static are the people. And so we really emphasize that and in our diligence process, we leverage the learnings that Richard's brought in over the past.
Harrison Faull (12:33.187)
Yeah.
Jonathan Hakakian (12:59.613)
25 years and we focus on understanding who the people are, how they resonate with us, do we resonate with them as investors because we do see diligence as a two-way street and one of the things that we've implemented is having the founding team or the core executive team of the company take a series of assessments and these give us an eye into who they are, what motivates them, how they operate and
Harrison Faull (13:20.455)
Signing.
Harrison Faull (13:28.455)
Okay.
Jonathan Hakakian (13:28.752)
why they're doing what they do. And it adds this objective layer, this data set, to our intuition, toward the subjective gut instinct of like, hey, do we like this person? Do we trust this person? Do we want to invest and go to battle with this person? And sometimes it validates it. More often than not, it validates the gut instinct. But once in a while, it contradicts it.
At the very base level, what it does is it creates a lens that ultimately we have this conversation with the entrepreneur, like, hey, this is what the data shows. Forget what we think or what anybody else has told you. This is the data from these assessments. How does it land on you?
Harrison Faull (13:57.04)
Okay. Yeah. Have you ever had someone that's done so badly it's been an instant red flag? Has there been a memorable moment of someone doing so?
Jonathan Hakakian (14:20.794)
There have been red flags and that sparked a lot of conversation. And there have been times where we've walked away from a deal because we're like, yeah, this is how we experience the entrepreneur and it's in the data too. It's not just how we felt, but they don't want advisory help. They're uncoachable. They're stubborn and bullheaded. And that's great. Like I'm not saying that's the wrong way to build a company.
Harrison Faull (14:23.622)
WAP
Jonathan Hakakian (14:47.63)
It's just not the way we see it. It's not the way we want to invest. There is no right way or one way to launch a company and succeed. It's just what's our preference versus ours.
Harrison Faull (14:56.872)
Your appetite for that founder, it's better to know it on day one than to find that out three years down the line when interests start diverging and actually bigger arguments can happen. Completely understand. Okay, so these assessments, they gamified? Are they surveys? What kind of things could a founder expect if they wanted to get investment from soundboard? How long would they be assessed for? Are there more assessments than just personality assessments as well?
Jonathan Hakakian (15:25.305)
It's across three different continuums. One talks about, I don't want to use the word personality, it's more about the characteristics and it balances the work and the how somebody shows up in their personal life. It balances the two. What motivates them. And then we're starting to also implement EQ. So there are several that we assess. Each one takes about 15 minutes.
Harrison Faull (15:54.44)
Okay.
Jonathan Hakakian (15:54.678)
And it's just a survey kind of question, like multiple choice type assessment. And what's really great about the way Richard's put these together is that it analyzes each individual, but then it can also layer the entire team on top of itself. But not only do we see the information and the data about the CEO, the COO, the CTO, whoever it is,
Harrison Faull (15:58.409)
Okay.
Jonathan Hakakian (16:20.075)
But this is how the team is today as a whole. And again, I say the word today because we don't expect that any startup team is complete, especially not at the early stage. It's just, hey, are we going in eyes wide open? What do they value? How do they complement each other? Do they know where their blind spots are? And how do they take this data in? Are they sitting there and being like, no, is bogus, is hokum, not going to listen to it? Or do they?
push back and say like, hey, this is really interesting. I've experienced this in my own work life or in my peers around the table. You know what, maybe there's nothing we can do about it today, but I'm gonna park it in the back of my head and when we make that next critical hire, we're gonna come back to this. Or as we expand the team or as we look to work on the next piece of strategy for the business, this is gonna be really integral. It's all about the conversation, not about there being a perfect team because there isn't a perfect team for a startup.
Harrison Faull (16:56.383)
Yeah.
Harrison Faull (17:19.488)
No, I think that makes complete sense. The amount of uncertainties that happen, the resource constraints, it's unrealistic to expect that. VC funds investing a bit later might have that luxury.
but there's still going to be problems. Okay, so you've given us really good flavor there of the kind of due diligence that you're doing, particularly for characters and personality traits of founders that you like. Can you tell us a bit of how that has actually worked for you in terms of portfolio success to date?
Jonathan Hakakian (17:50.537)
So we find that the entrepreneurs that have these characteristics that we're looking for, that are open, that are transparent, that are actively seeking out investor advice, coaching, they perform better, but more than that, they're much more transparent, especially with their investor base. And we firmly believe that the more transparency you bring, it breeds a better relationship. And ultimately, if you're
Harrison Faull (18:11.069)
Yeah.
Jonathan Hakakian (18:19.865)
If you have that relationship with your investor, it's going to permeate through the others, with employees and with vendors. And so that will ultimately build better success just by standing up and being a more authentic, genuine, transparent entrepreneur.
Harrison Faull (18:26.259)
Okay. Amazing. Okay. And then for your LPs as well, there's a big advantage for them.
Do you still currently have the syndicate or is it just a fund at the moment? It's just a fund.
Jonathan Hakakian (18:45.845)
So we started as a syndicate in 2012. When that fund was fully deployed, we launched an angel syndicate for about two years, which was a great effort, a lot of lessons learned, a lot of investment. But it's a challenge because as the manager of the syndicate, I have very little control because it's all based on what people want to invest in on that day, in that month.
Harrison Faull (19:07.384)
Yes. Okay.
Jonathan Hakakian (19:13.829)
So we always knew we wanted to get back to a fund and in 2021 we launched our second fund. So the fund has been the core of what we've done. The syndicate was just a bridge for about two years.
Harrison Faull (19:25.547)
Okay, amazing. So if I frame it like this then. Okay, so soundboard ventures to date. Have you deployed something in the region of $7.5 million? Is that higher? Okay.
Jonathan Hakakian (19:34.823)
More, more. We're probably close to about 12 to 15 at this point.
Harrison Faull (19:40.731)
amazing. Okay, so with that capital, what has been maybe the largest paper gain and maybe the largest exit to date?
Jonathan Hakakian (19:51.507)
So one of the things about our strategy is that we don't have a lot of paper gains the way the traditional West Coast VC would. And the reason for that is when we look at entrepreneurs, we are often seeking them out in these atypical areas of the United States geographies that traditional VCs may not go after or in industries that they may not go after or archetypes that they may not because
Harrison Faull (20:10.22)
Okay.
Jonathan Hakakian (20:18.258)
I never wanted to compete against the West Coast. There's a great ecosystem in the Valley and in the Bay Area. They've got great investors, great entrepreneurs, just generally great talent. They don't need another micro fund coming out then. Instead, and this goes back to when we launched in 2012, we were focused on New York Metro because there wasn't a lot of activity here. And so as we've grown and as the region has really excelled and become the number two startup economy in the country, we've started looking
Harrison Faull (20:18.859)
Okay.
Harrison Faull (20:45.132)
Okay.
Jonathan Hakakian (20:48.153)
elsewhere into economies in the US like Chicago or St. Louis or Virginia or upstate New York where they don't have as much access to the traditional VC capital. And what that forces is that they don't just put investors in valuation at the center of their company. They put customers and revenue at the center. And again, there's no right or wrong way to build a business.
But this is the way that resonates with us is if you put customers at the center and revenues, then you build a long-term sustainable business that doesn't need these tremendous cash injections year over year because you're bleeding money. Because they don't do the growth at all cost model. They're really focused on sustainability and growth and scale all at the same time. it's slow. It's slower the growth than the traditional West Coast.
Harrison Faull (21:30.635)
Okay.
Jonathan Hakakian (21:44.762)
company or the traditional venture model, but it's there. So I say that because we don't have these like amazing 300 multiple returns within two years because that's not what we're aiming for. You know, some of our best companies who are carrying maybe at seven to 10X, we know ultimately it's going to be bigger. The exit will be larger, but they haven't needed to raise the money.
Harrison Faull (22:09.033)
Okay. So you like to... So you have a focus on unit economics from day one. You need to see...
Jonathan Hakakian (22:17.616)
Mm-hmm.
Harrison Faull (22:19.388)
business model that makes sense and founders that are grounded in reality. Amazing. Okay, so for the founder that fit that bill, what can they expect from soundboard ventures? What are your typical investment sizes? And what kind of value add services can they expect after you've made that investment?
Jonathan Hakakian (22:38.191)
So our investment model is, our target first check is 250K US into around a five to 10 million. That's our target, that's how much we want to invest. We have a little bit reserved for follow on, but really the initial check is what we're focused on. When it comes to post investment, we are not the heavy handed investor that says, we gave you some money, you've got to put us on your board. We don't believe it works like that. I don't need more companies to
What we do is that because our diligence is so thorough and we do peel back the layers and we do dig in with the entrepreneur, with our team, our diligence team, which is comprised of several LPs as well. At the end of the diligence, I turn to the entrepreneur and I say, hey, we're about to make an investment. How do you see us working together and who is it that should represent Soundborne as the conduit?
Harrison Faull (23:30.35)
So
Jonathan Hakakian (23:35.531)
And what does that relationship look like? So we really customize the relationship based on the needs of the company and the entrepreneur more than our needs. Because our needs are pretty simple. Like we just want good communication, know, a monthly or quarterly call about the good, the bad, the ugly. This is what's going on and where the company needs help. But more than that, we want to support more, but it's got to make sense for the company because it can't be intrusive. It can't be an obstacle to growth. It has to be
in addition and supportive. And we work together with the entrepreneur to say like, hey, this is the person who's going to play that conduit role. This is the meeting schedule. If you want them on the advisory board, great. Otherwise, like this is how we can support.
Harrison Faull (24:18.311)
Okay, so a very founder-friendly, relaxed approach. need to adapt to different founder requirements. Are there any good examples of founders that have fallen in love with the consultancy side and really had that double oomph of Richard's experience and also the capsule from Soundboard?
Jonathan Hakakian (24:24.588)
Yeah.
Jonathan Hakakian (24:37.388)
Yes, we've had several that have come back to us after we've invested, after they went through the assessments and said, you know what, this is a great tool and learning that we should use with our entire team. Or, you know, we're ready to hire a leadership coach for the executive team, for the whole team, whatever it is. like we want to go through the same process with the next key hires so that we're looking at
Again, like I said before, the assessments can analyze the entire team. How does this person fit into our team from the data set, from the data layer and the assessments? So yes, they often come back and want to use it.
Harrison Faull (25:17.142)
Awesome. Perfect. So you're able to upscale your founders hiring resources from the get-go. And hiring is one of the most important things that a founder can get right or get wrong. Okay, amazing.
Jonathan Hakakian (25:23.935)
Yeah.
Harrison Faull (25:36.525)
In terms of your deal flow, what are the main streams? Do you like collaborating with other investors and how does that work?
Jonathan Hakakian (25:47.035)
Yes, so warm leads definitely take priority because it means that somebody used the entrepreneur has used their social capital to get to us. So that means that they've paid a cost somewhere to for that lead. know, whether it's one of their existing investors, an entrepreneur, friend, you know, somehow they've been able to identify, hey, soundboards are the right fit. This is why. Can I make an intro?
Or can you make an intro? And when that intro comes in, it's usually with the caveat of great individual, amazing, like top notch, or I know the industry well. I may not know the individual, but their solution seems pretty solid. So they're able to get at a level of recommendation to a beyond just like, do you want to meet this person? Or if it's an investor, like, the investor has invested.
Harrison Faull (26:38.286)
Yeah, perfect. I like it.
Jonathan Hakakian (26:43.197)
On the flip side, we do look at cold. We do actually do our own outsource and reaching out to entrepreneurs just based on all the deal flow out there. The trouble with cold is that oftentimes entrepreneurs get it wrong and they just mass solicit every investor and every email looks the same. Dear investor, and even if they use chat GPT or some kind of AI,
Harrison Faull (27:03.825)
Yeah.
Jonathan Hakakian (27:09.201)
it's very easy to see through it because every single one of their emails looks the same. It's like, saw you invested in such and such company from 10 years ago. We're so much like them. Would you please invest in us? It doesn't work like that. You've got to really do the homework and pay the cost of understanding like how does your company fit the thesis? And any entrepreneur who actually does that work does get a response. It's the, those that are trying to automate it and treat it like a...
mass email list that those usually fall through the cracks because we just don't have enough time to look through every single deal. We try, but it's an impossible monumental task to look at everything.
Harrison Faull (27:49.889)
I agree, and that's a big problem. So I'm going to shamelessly plug OpenVC.app as a tool for founders to raise when they're looking to actually target the investors they're looking to reach out to. Investors don't like it, and it's a waste of time for founders.
Jonathan Hakakian (27:54.184)
Love.
Harrison Faull (28:05.538)
using a free tool like OpenVC, you actually can upload your pitch deck and you'll get an instant score matching your pitch deck against the thesis of each VC fund. So you'll instantly know how much of a fit you are to their particular investing criteria. Sorry, just had to get that in there.
Jonathan Hakakian (28:19.911)
Love it.
No, no, that's perfect. That's exactly what we want is like, you know, show me how you're a fit for my thesis, not just that you're a startup entrepreneur looking for funding because we get a lot of stuff that's just not a fit. And if you took 30 seconds to look at the website or to listen to this podcast or go onto the OpenVC platform, know, entrepreneurs would be able to suss that out pretty quickly.
Harrison Faull (28:46.343)
Okay, I love it. love it. So coming back to Soundboard's initial thesis, which is investing in overlooked, untypical VC models outside of standard market. Let me rephrase this. So Soundboard loves to look into overlooked Soundboard loves to invest into overlooked geographies, founders that aren't looking to the West Coast VC funds and the East Coast VC funds.
Can give me some examples of the biggest wins that you've found and why they might have actually had an advantage being built in those geographies instead of hyper-competitive markets?
Jonathan Hakakian (29:29.094)
I'm gonna have to think about that because I hadn't thought nobody's phrased the question the way you did, So the question is...
Harrison Faull (29:31.407)
Okay.
Harrison Faull (29:40.495)
Is there an advantage to building in these geographies that you're looking at?
Jonathan Hakakian (29:45.733)
For our model, yes, because it pushes the entrepreneur to focus on the customer base and listen more adeptly at what are they asking for, what do they want, and supporting the customers to get where they want to go. It's not this build it, will come model. It's very much focused on, hey, I'm an entrepreneur, I got a great idea.
Harrison Faull (30:05.331)
Okay.
Jonathan Hakakian (30:13.028)
And there's one of my favorite entrepreneurs is Doug from Charged Spot out of Philadelphia. Very simple concept he came out with about 10 years ago, which was all around charging stations, phone charging stations, leasing them to retail stores so that customers of the retail store can go and charge their phone for free. Amazing thesis, brilliant, did very exceptionally well.
Harrison Faull (30:31.859)
Okay.
Jonathan Hakakian (30:40.845)
but he kept hearing from customers they wanted something more. And then COVID happened, retail shut down, and he realized he had to evolve the business and start listening to his customers even more than before. And what he learned was the back of the house, the employee devices, not the customer devices, is really a huge problem. And so over the past four or five years, he's evolved his company.
to now address their back of the house needs, and that's been a super high growth area for the company. So by being in those.
Harrison Faull (31:15.771)
Amazing. Could you tell us what kind of problem is he able to solve then with the back of house phones? Is it communicating to each other?
Jonathan Hakakian (31:23.595)
No, it's charging them and keeping them accountable and monitored.
Harrison Faull (31:29.554)
Okay, so you're having people on their phones less, making sure they're serving staff, maybe shortening their, making sure that they take... Okay.
Jonathan Hakakian (31:34.806)
No, the employee devices. You're at a retail store, you have the retail devices that the employee is walking around to help price check, to help show where things are. At the end of their shift, they're responsible for returning that back. But there's been no good way other than paper and pen and a power strip up until ChargeSpot came out with their locker system.
Harrison Faull (31:43.249)
Yes.
Harrison Faull (31:49.148)
Okay.
Harrison Faull (31:52.468)
So, thank
Harrison Faull (32:03.825)
Awesome. Okay. I like it. I like it a lot. And probably a misconception people have is that these geographies have less sophisticated investors that have less ambition than anyone on the coasts. So something I'd like to hear a little bit more about is Trix Robotics, because they look like they have a really interesting product that's absolutely on fire in terms of traction.
Jonathan Hakakian (32:28.885)
Yeah, wonderful entrepreneur, one of my favorite young men who came out of a PhD program at the University of Delaware, incredible hustle on him. I mean, he, you know, just what I was saying before about going and talking to customers, he would drive across country because all his customers were based in California, the strawberry fields, and he'd go and talk to farmers. And he's one of the only people I've ever experienced who
Harrison Faull (32:51.059)
All right.
Jonathan Hakakian (32:57.237)
He's got the PhD, so he's got the technical knowledge. He can talk very authentically to investors and seek out not just advice, but also the criticism and ask about, where are the pitfalls? And then can also go and talk to his customers, which are farmers. He's able to maneuver and manage through all of that seamlessly.
Harrison Faull (33:21.609)
And the product just for the audience that don't know.
It's a robot that goes through a farm deploying ultraviolet pest control. So it reduces crop wastage and helps the yield of a particular field.
Jonathan Hakakian (33:31.871)
Yes.
Jonathan Hakakian (33:37.628)
It does, and it also doesn't use pesticides. So it's flashing this UV light on the crops, on the strawberry fields, that's where they're focused right now, that will kill the pests without using chemicals. Yeah.
Harrison Faull (33:41.127)
Over.
Harrison Faull (33:53.665)
Amazing. And how did you discover? Did he come to you or was that a bit of outreach?
Jonathan Hakakian (33:58.3)
honestly I don't remember at this point. It was just because, you know, we've got a good brand in the local network especially, like in this, the mid-Atlantic region. A colleague said, hey, Adam's a great entrepreneur, he's really early, would you talk to him? And I said, of course. We'll talk to anybody with a great idea.
Harrison Faull (34:15.038)
Amazing.
I like it. I like it a lot. Just to tuck into two more portfolio companies then, could you give us an overview of autonomy and then maybe applied impact robotics as well?
Jonathan Hakakian (34:34.302)
Sure, anything specific you want me to share there, Harrison?
Harrison Faull (34:38.601)
What stood out about either the founder or the idea to give you guys enough conviction? The founder looking to actually apply and putting themselves in the same shoes as the founders of those two companies. What resonates with you as the investor?
Jonathan Hakakian (34:53.95)
And so with autonomy and the founder's name is Jan, he is somebody who we knew from early days, he's going to carry the company by himself if he has to. He just had that wherewithal and that conviction that he's like, I'm going to work to my very last breath and my very last dollar to get this as far as humanly possible. you know, it's got its ups and downs.
And it's an insure tech, is definitely a challenging industry. And he's learned a lot along the way, but he has stepped up every single day and every single year in that role of, I'm going to do the most humanly possible in order to move this company along. And I give him a lot of credit for that.
Harrison Faull (35:43.286)
Wow. Okay. So great. And you're able to get strong signals from that at the very earliest of applications because you're testing for it. you ever compare someone's scores to other people's? Do you retain that cohort data to know when the next down comes along?
Jonathan Hakakian (35:50.876)
Yep.
Jonathan Hakakian (36:02.074)
We are working on something hopefully for the next fund to be able to create baseline data, but we don't compare entrepreneur to entrepreneur because there so many other factors that go into building a company or that will lead an entrepreneur that it's not fair to just say like, let's look at these two in comparison.
Harrison Faull (36:21.088)
Maybe that makes sense. Fine, fine. Good answers.
Jonathan Hakakian (36:22.524)
We want to get to the baseline data so that we know what resonates with us. This is where we like to see things, but if they're off, it's okay. It's again just eyes wide open.
Harrison Faull (36:35.318)
Okay, I like it. So you're very disciplined in terms of the founder style that you want. Does that translate into the sectors that you invest into? Because with your portfolio, I'm able to see quite a broad range of sectors, quite a broad range of technologies. How do you feel about, yeah, are you sector agnostic or are you open to any particular sector?
Jonathan Hakakian (36:58.811)
We're somewhat sector agnostic, Harrison, and I say somewhat because there are definitely some areas that we don't touch. We've learned this over the past 13 years. We're not good at the consumer place, whether that's consumer software, consumer product, or gaming, social media, or crypto, anything kind of that's building a brand. There are much better investors with deeper influencer networks and ability to...
support the many rounds of capital they need for marketing expense, they're better suited for it than us. So we stay away from consumer. And similarly, we stay away from med device, biotech life sciences for similar reasons. They're way smarter people than me to evaluate those that know the sciences really well. So we know our lane as this early stage five to 10 million pre-money US market.
Harrison Faull (37:48.179)
huh.
Jonathan Hakakian (37:55.96)
B to B, B to B to C. We'll do hardware, we'll do software, we'll do industrial products. And the common thread are, number one, as we've explained, the people. Like we have this tenacity, this grit, this hustle, but also this ability to build a real sustainable business. And then that it's an understandable business. And what I mean by that is we have about 50 LPs right now. And I'd say about two thirds of them are active with us in any one.
We do bring them into the conversations and diligence and screening meetings so that it's not just Richard, myself and a small team or our smart team reviewing the companies, but it's really like this collaborative effort where we bring four five people onto the diligence team. Collectively, we look at it and we always have a champion and we try to have a contrarian and a subject matter expert on each diligence team so that we have this broad range of perspectives.
so that we're asking the really deep questions of the entrepreneur. At the end of it, we do have to as a whole understand what the business does. So if it's frontier tech, it's not gonna be a fit for us.
Harrison Faull (39:04.952)
Okay.
Harrison Faull (39:10.833)
So, okay. How long does it, would you say the typical due diligence timeline takes? You found a company that you really like, they've got in touch. How long did it take from that point until actually sending capital?
Jonathan Hakakian (39:24.354)
So I will always say that we are not the fastest check in the West Harrison. I have friends who they've, he's literally met a company at a cocktail party and the term sheet was written on the back of a cocktail napkin and the money was wired the next day. I love him dearly, he's amazing, it doesn't work for me. We like to take our time because we want to really understand
Harrison Faull (39:42.286)
Okay.
Jonathan Hakakian (39:50.655)
not just the business, but the people behind the business, how they operate and how they work things. And like I said before, diligence is a two-way street. The entrepreneur has got to be comfortable with us as well, because this is a long-term masterclass. We're with them and they're with us for five to 10 or sometimes even 12 plus years. So we have to build the right foundation for a relationship now. And you can't do that off a quick phone call.
Harrison Faull (40:02.298)
All right.
Jonathan Hakakian (40:18.304)
The way to do that is to take our time, get to know one another. And our diligence process is usually, from the point of we're saying like, hey, this is officially in diligence and we're gonna allocate real resources and put a team together, six to eight weeks, depending on meeting schedules and what else is going on in the pipeline. We can accelerate a little bit depending on the round, but that six to eight is really what we try to do.
And the commitment that I make to the entrepreneur from day one is that if at any point I see that it's going the other way, that we're unlikely to invest, we will be very transparent and let them know because I don't want their time wasted or my time wasted. So we have this process that's continuously building on itself, getting closer and closer to a yes.
Harrison Faull (41:05.371)
Awesome, I like that. And it's very different to some aggressive VC funds that wait for startups to use all their cash flow, sorry, to run out of their runway. And then they'll renegotiate terms because they know that they've got leverage but
They designed that leverage intentionally by having an exclusivity period, which isn't the right way to operate.
Jonathan Hakakian (41:24.98)
No, we actually prefer to be about 10 to 15 percent more entrepreneur friendly on terms because my belief is that that will work out better for everybody in the long run. If the entrepreneur is better incentivized, we're going to make money. If they're not incentivized, if we keep chipping away at their equity, it's going to backfire and ultimately they're going to throw their hands up and say, well, why am I doing this?
Harrison Faull (41:37.518)
Good.
Harrison Faull (41:51.638)
Yeah. Awesome. OK, well, it's rare to hear that. it's a good brand you're building, but it's costly in the short term, but good in the long term.
Jonathan Hakakian (41:52.027)
And so for backing the jockey, if we're trying to find the best people, we should incentivize them. And again, if that means we're giving up 10, 15 % valuation, it means a lot more to the entrepreneur than to us as one investor.
Jonathan Hakakian (42:11.857)
Now I've.
Jonathan Hakakian (42:15.995)
Yeah, I've coached a lot of entrepreneurs that they need to be very wary of the valuation because of this. And a couple of them have actually increased their valuations, tremendously, but incrementally to make sure that the dollars they're taking in keep their ownership stake at a reasonable percentage for long-term incentives and long-term, for their long-term ownership.
Harrison Faull (42:43.256)
Of course. Okay. I like it. And that's the perfect segue into my next question, which is, what do you typically see founders getting wrong when they're looking to get professional investment? I know you've touched on the past about not doing enough due diligence into an investor and not taking enough time to make sure that it's a good fit.
Jonathan Hakakian (43:04.434)
Yes, so that is definitely one of the key things is know the investor, know their thesis, know whether it's going to be a fit and do the diligence on the people and how they show up and who they are. But the thing that I see more often than not at the pre-seed and seed stage is the entrepreneurs pitching the product. We're not buying the product. If you want us to, great, pitch us the product and we'll be a customer. But the entrepreneur should be pitching the business.
Harrison Faull (43:23.9)
Okay.
Jonathan Hakakian (43:34.103)
and how the business is going to scale and grow and be an amazing, know, home run grand slam win for the investor, not all this amazing features that a customer is going to want to use it. We want the story of the business because that's the underlying asset that we're investing in. We're not buying the widget or the software or the tool. And more often than not, honestly, we're not the key customer. So,
early on in our investing days, I actually created a rule for myself that I would never test the product before we met the entrepreneur. Because I wanted to give them the leeway of, I'm not the target customer, why should I be testing it before talking to them? Or it is a seed stage or pre-seed stage company, so it's gonna be buggy. So why should I let my one experience change the way that I feel about
Harrison Faull (44:07.679)
Okay.
Jonathan Hakakian (44:28.955)
the entrepreneur or the prospects of the company. So I never tested out until after I've met with the entrepreneur.
Harrison Faull (44:36.55)
Okay, so it's a very measured, you've got a very measured approach, which is great, and one that think more investors need to take on. So two follow up questions to that then. What founder has done the best due diligence on soundboard? Are there any tangible examples of them asking
your LPs or asking other portfolio companies for advice, what kind of things do you want to see a founder doing?
Jonathan Hakakian (45:02.423)
The best example is actually somebody we're in diligence with now. She has reached out to our investment, our due diligence team to have one-on-ones with them to understand who they are, how they operate, and what value they can bring. So one of the things I learned from Mike Maples is the open kimono approach to diligence, where as we're doing
Harrison Faull (45:15.46)
Okay.
Awesome.
Jonathan Hakakian (45:27.179)
diligence on the company and we're asking them, hey, we're going to look under your hood, send us your data room and all your documents and your references. When we make that ask, we also send out our reference list of all the entrepreneurs that we've backed over the past 13 years. So they are welcome to reach out to any of them or they can ask and we can put them in touch. And so this particular entrepreneur, she asked for introductions to three and we made all three introductions.
And she had very targeted questions like what did soundboard do? How did the investment work? How did they show up post? You know, are they still in touch with you? Like what what's happened?
Harrison Faull (46:06.694)
Amazing. And that's not ordinary.
Jonathan Hakakian (46:10.287)
You'd have to ask other entrepreneurs, Harrison. I like it when they do that because it shows that they're really in this for the long run with us. That we're, again, we're doing diligence on each other to make sure that this is a long-term, long-lasting relationship built on the right foundation today.
Harrison Faull (46:13.212)
Thank
Harrison Faull (46:18.992)
Yeah. Okay.
Harrison Faull (46:29.508)
Perfect. No, I like it. And I think because founders do this scatter gun approach when they finally hear one yes, they're very resistant to ever testing how strong a fit that partnership would be because they're very keen to get that money in. Whereas actually it's worth taking the time because you're to be together for the next 10, 15 years. Okay. And speaking of the future, what are
your grand plans for soundboard. Say in 10 years time, 15 years time, where do you want to be as a fund, as an investor?
Jonathan Hakakian (47:05.581)
Back here with you, Harrison.
Harrison Faull (47:08.03)
Good answer.
Jonathan Hakakian (47:10.337)
Signed up. We have plans to continue building Fund 3 and Fund 4 in this smaller VC approach. We want to build a bigger fund, of course, but I like being under the radar of the big billion dollar funds. We want to scale up, but I don't have these grand plans of being the next.
Harrison Faull (47:29.63)
Okay.
Jonathan Hakakian (47:36.673)
and recent or Sequoia. We know our lane really well. We know how to operate and build a scalable VC fund within it. And we want to keep that formula and just continue learning and evolving as the market evolves.
Harrison Faull (47:52.357)
Well, the data shows, historic data on VC funds, that micro VC funds consistently outperform larger funds because it's harder. It's harder for the fund manager. You care more about each individual investment. Your social capital matters more in each deal that you make. So it resonates and actually helps your LPs in the long run when you keep things under control.
Jonathan Hakakian (48:16.737)
There's a lot of good data supporting this model, yes.
Harrison Faull (48:19.838)
Yeah, no term sheets on the back of napkins. Amazing.
Harrison Faull (50:49.95)
Yeah. OK, Jonathan, so at Soundboard, you've had plenty of exits now and some really successful ones. Are there any that are top of mind that resonate with you being really rewarding when you're able to actually return that capital back to your LPs?
Jonathan Hakakian (51:07.208)
Yeah, so we've had a couple really good ones and the one that really fits, that's worth talking about, is a company called Social Bicycles, which rebranded as Jump Bike and ultimately was acquired by Uber. And the reason why that one was so fulfilling is I remember meeting the entrepreneur at a meetup event back in 2012.
We ended up getting on the subway together and riding in and just talking and one of my LPs happened to be at that he's like Jonathan you got to talk to Ryan. I'm like, okay fine bike share. Not sure if it's something for us, but let's talk to him and we talked to him and he just you know everything that I've talked about in terms of having the right attitude the right leadership the grit and the tenacity he embodied and so we're like we have to do this and even the contrarian on that diligence team said Jonathan I'm gonna
Harrison Faull (51:36.896)
you
Jonathan Hakakian (52:03.737)
go forward with this investment because I believe in Ryan. I don't believe in the company. And I remember clearly he's like, I don't think this company is going to do anything, but I believe in him so much, I want to be his first call when he starts his next company. And when we were able to turn that one in and we got in at the seed, pre-seed level, and then as we saw the company grow, we supported him quite a bit in terms of strategic conversations and how to deal with vendors and partners. And when...
Harrison Faull (52:07.574)
Sorry.
Harrison Faull (52:16.335)
Wow. It was a bumpy ride, wasn't it? He had to pivot a couple of times and then some external factors from China really helped on the journey.
Jonathan Hakakian (52:38.821)
There were there was a lot of bumpy rides. It was not a smooth bike ride by any stretch of the imagination. But ultimately when he did get that exit it was so rewarding because we had been with him through this bumpy ride and we saw like hey, you know, he had this great idea but more than anything he was able to execute and evolve and do right by every constituent that you know the greater powers that beside.
Harrison Faull (52:42.017)
OK.
Jonathan Hakakian (53:08.707)
and ultimately acquired the
Harrison Faull (53:10.919)
It's amazing. Okay, can you remember what kind of scale they had when they were required?
Jonathan Hakakian (53:24.259)
So I'm almost positive that when we invested, they had less than 15 bikes because they had three pilots going. So less than 15 bikes. And I believe they were actually shipping the bikes across country to do each pilot. Like they didn't have enough to do them. And then when they got acquired, a lot.
Harrison Faull (53:48.466)
Okay.
Jonathan Hakakian (53:53.099)
I don't remember the exact scale, but it was way more. They actually had a, electric bike system in San Francisco was significantly more than 15 bikes. I mean, it must've been a couple hundred, I would think, but I don't know it's off the top of my head.
Harrison Faull (53:58.21)
Was it right, just in terms of remembering this, I think I've heard about their story, were they acquired somewhat for their innovation in UI and booking system?
Jonathan Hakakian (54:13.131)
Thank you.
Harrison Faull (54:27.156)
or was it for the bike assets?
Jonathan Hakakian (54:30.115)
It was for the bike assets and the way that they did their logistic, their, let me think, for their bike assets and their footprint.
Harrison Faull (54:46.882)
Okay, because they pioneered, I think they pioneered like booking bikes off on a map. Is that correct? Because they were the first electric assisted bikes.
Jonathan Hakakian (54:56.38)
I don't know if they were the first, but they were definitely one of the early successes in electric bike shares.
Harrison Faull (55:46.276)
Okay, awesome. I think maybe one last question then. So when he's selling to Uber and getting acquired, what happens to the syndicate? What's your process there? Does a big bank check hit your account as the syndicate lead? Do you get stock? What's the process?
Jonathan Hakakian (56:05.185)
So in the case of Uber, because it was acquired actually pre Uber's IPO, we got Uber stock. That was an interesting bumpy ride through their IPO.
Harrison Faull (56:46.276)
OK, so the founders that have listened that want to get in touch, where should they find you? Yeah.
Jonathan Hakakian (57:30.386)
You can email me, Jonathan at soundboardventurefund.com. You can hit us on our contact page or LinkedIn. I just ask anybody who does come from the podcast, mention the podcast. So, you know, not only give Harrison and OpenVC the credit, but it also kind of flags it for me about like how you got in touch with us and sort of what spurred you.
