From Star Apprentice To Leading Venture Capitalist With Kelly Perdew, Managing General Partner, Moonshots Capital, Part 1

 

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Kelly Perdew is the Co-Founder and Managing General Partner of Moonshots Capital. Kelly shares his journey from high school in Wyoming to West Point, his military service, and his transition into entrepreneurship and venture capital. He highlights Moonshots Capital’s focus on investing in extraordinary leadership and how military veterans often bring valuable qualities to the business world.

In this episode, Zack and Kelly discuss:

1. Mastering Media: Lessons from Working with Donald Trump on The Apprentice
2. Smart Funding: Extending Startup Runway to Ensure Survival
3. Startup Survival: Outrunning the Bear and Navigating the Valley of Death
4. Unlocking Growth Potential: How Venture Debt Fuels Startup Success
5. A Decade of Dedication: How Reputation Powers Investment Success
6. From Battlefield to Boardroom: The Unique Strengths Veterans Bring to Startups
7. How Military Bonds Shape Game-Changing Venture Investments

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From Star Apprentice To Leading Venture Capitalist With Kelly Perdew, Managing General Partner, Moonshots Capital, Part 1

Leadership And Veterans

This season, we’re focused on bringing in the leading investors in innovation. In this episode, I have with me Kelly Perdew. Kelly is the Cofounder and Managing General Partner of Moonshots Capital. Kelly, thanks for joining.

I’m happy to be here, Zack. Thanks for having me on.

You’ve got an incredible background, incredibly diverse. You’ve done so many interesting things.

I went to high school in a beautiful state that was not very populated. It was called Wyoming, which is definitely a flyover state. I got a nomination to West Point from the sole representative since there’s only one population-based representative. Dick Cheney gave me my nomination to West Point. I went off to West Point, North of New York City, about an hour. People don’t know where that is. It’s amazingly beautiful. It’s scenic, right on the Hudson River. It’s a phenomenal place to visit. When people see it, it’s one of the most popular tourist destinations in the United States.

However, in February, when you’re standing in formation and the wind whips off the river, it’s about 12 degrees. It’s not as scenic. I spent four years at West Point and got what I believe to be one of the best educations you can receive in the United States. I did some really fun stuff, like learning how to jump out of airplanes. I did a summer at something called Cadet Troop Leadership Training. I went over to the Fulda Gap in Germany.

I replaced a platoon leader from the regular Army who came back because his wife was giving birth. For six weeks, I was on the Fulda Gap looking across the Soviet. This is during most people’s college. I spent a summer in a program in DC working with the House Armed Services Committee. I had a top-secret security clearance at the time, so I got to fit in on markup hearings. I had a really amazing experience as part of that four years at West Point.

Upon graduation, I was commissioned as a second lieutenant. I went in to serve active-duty military in the Army to the 7th Infantry Division at Fort Ord. I spent three years at Fort Ord before I was able to take advantage of a program that they offered early outs to a few people in classes. They were doing base closures. President Clinton and the crew were closing bases in the US. I went to Law and Business School at UCLA.

I thought that program would offer me up the most optionality on a go-forward basis. I ended up aligning myself and finding more in common with the business school crew that was in rather than the law school side. I finished law school but never took the bar, so I started my first startup while I was still in that four-year JD MBA program. That entrepreneurial bug bit me hard and I never really looked back.

I’ve been a part of the founding team or senior executive team on ten different companies. Some have been successful and some have been not so successful. I’ve got a lot of stories about my credit card no longer working at Ralph’s when I had my shopping cart full of tuna and ramen, figuring out, “Now what do I do?” The tough tales of an entrepreneur.

Over the years, I started really engaging empathetically with my friends who were also founders. As I became older and more wisdom and had a couple more bucks to spare, I would start investing as an angel first and then with my cofounder in Moonshots Capital, Craig Cummings, who’s also a West Point grad. We founded Moonshots Capital and started investing as the lead of a syndicate in 2014. In 2017, we started raising committed funds.

We raised and deployed a Fund 1 raised and deployed a Fund 2, and we’re in the process of deploying out of Fund 3 now. Our thesis is there are a lot of different technologies that evolve very quickly and quicker and quicker as we watch. Our thesis is that leadership wins at the end of the day. We’re looking for extraordinary leadership that can understand what’s happening in the marketplace. Pivot is required to really grow a business to massive scale. So far, it’s going pretty well. Knock on wood.

In terms of leadership, obviously, West Point grads are known to be great leaders and a lot of military veterans make excellent leaders. Do you guys have a mandate to invest in veterans or can you invest in any type of founder?

We do not have a mandate that it has to be a military veteran. On our current, about $200 million AUM, a little over a third of that is in companies that have a military veteran as part of the founding team. We definitely lean in heavily when there’s a military vet on the team. The extraordinary leadership for us, like the reason military is near and dear and authentic to our background, the only place in the world where millions of dollars is spent training you individually on leadership per se is the military. Not just leadership but how to train leadership.

The military is the only place in the world where millions of dollars are spent training you individually on leadership. Share on X

Craig and I have been through that program and served active duty. Craig served seventeen years active duty after graduation. To us, the leadership traits that are developed and honed in the military have direct application to the same battlefield that is being an entrepreneur with an early-stage tech company.

I love what veterans bring to building startups in terms of intangibles and leadership, but it’s really the intangibles that impress me the most in terms of persistence and commitment and the ability to solve tough problems that other people might not be able to solve, but also be very adaptable. What are some of the things that you think veterans bring to the equation that other founders that don’t have that type of background?

Two buckets. There’s one, what you just described as intangibles, I actually think they’re tangibles. The training about integrity, it’s not an option. If you say you’re at a grid, you better be at that grid, or somebody could drop ordinance near where you’re not and blow you up. It’s trained into you along the way. The attention to detail that’s required to write an operations order. The flexibility nimbleness that’s required in the US military, a lot of people think, it’s like, “Yes, sir. No, sir,” do whatever you’re told and you’re kind of a drone. Nothing can be further from the truth.

In US military doctrine and training, it’s like, “Okay, you, Company Bravo, take that hill.” It doesn’t tell you how to take the hill. You’ve got to coordinate with the leaders on either side of you, and you’ve got to figure out with the resources that you have, which are usually not as much as you would like in a timeframe you don’t like. Not only do you have to take the hill, you’ve got to frequently convince people to run into bullets. When you compare the level of severity associated with doing that leadership challenge with figuring out how to get people to follow you around a vision around building a company, I would say one of them is a lot harder than the other. You’ve had really good practice at a lot of that stuff.

The other thing that’s really important that I’m not sure most investors are aware of or think about is that as a country, we trust our sons and daughters with these military leaders in combat, and we trust them with their lives. The officers and senior enlisted that are in charge of our sons and daughters in combat take that very seriously. Interestingly, the founders that are military veterans that we back, they treat other people’s money the same way. It’s like, “This is amazing that someone’s given me this opportunity, and I’m going to treat this money as if it were my own or maybe be more careful, even if it were my own.”

Those are really important factors. For us, we’re pretty heavily marketed that we do like and lean into military veterans. You think about the ecosystem. Right now, say Techstars New York, say there’s fifteen companies in that cohort. You and I right now on a whiteboard could probably be 90% accurate on what sectors they’re in. There’s going to be an overabundance of AI right now. There’s definitely healthcare. There’s 2 or 3 FinTech.

We could walk through them and be pretty accurate. For each one of those, there are literally hundreds of VC firms that focus on that sector-specific. The cadre of Techstars is like, “PitchBook that analysis. Here are the top 70 to go after for trying to get your next round of financing.” If one of those fifteen companies in that cohort happened to have a former Navy SEAL or a fighter pilot or somebody on the team, they’re going to go, “You should talk to Kelly and Craig at Moonshot Capital.”

It gets a little differentiated at that point. The next step is because of our network, I can back channel on that founder and that founder can back channel on Craig and I through the military connections like, “Is this somebody you want in your foxhole or not?” You get pretty unaudited feedback. It’s like literally real feedback on somebody. Assuming that passes the test, now, when we start the VC entrepreneur dance about the total addressable market, what is your unique South Lane proposition? What was the founding origin story on why you’re solving for this problem?

What is critical is that background check and the same common shared serving something bigger than yourself is an instant bond. If we end up liking each other and wanting to do the deal and leading a round, it’s very possible that that military veteran founder trusts their lead investor as much or more as they trust their cofounder to be in their corner to do the right thing. That’s really powerful when you start talking about how we make really critical decisions. How do we make decisions quickly? All the things that occur as a startup are growing. For us, it’s very compelling.

You hit on some really key points there. The point that I like the best is the integrity that’s instilled in veterans. That’s the most important thing. When you’re investing in startups, you have to wonder, “Is this founder and is this team going to do what they say they’re going to do?” The probability of them doing what they say they’re going to do is much higher when they have a background like you do and like the founders that you invest into. I think that’s a key point.

Part of the initial interactions and due diligence that is also critical from Craig’s and my standpoint is something we call coachability. Craig and I have run startup companies before. We don’t want to run the founder’s company. That is not what we want to do. It’s like Michael Corleone, “They keep pulling me back in.” We do not want to be pulled back into run it. We have learned a lot over the years, both as operators and as investors. We’ve seen this movie many times before. We wanted to know, in this early engagement due diligence process, part of what we check on is the coachability of that founder. They have to have very strong convictions loosely held so that they can take feedback from us.

If they can’t ever even hear us, we want them to hear us and know that, “I heard you, Kelly. I’m deciding to go this other direction for these reasons.” I’m like, “Okay, it’s your decision. You’re making a decision.” More probably than Craig, I reserve the right to say, “I told you so,” if something doesn’t go how it’s supposed to, but at least we know that the feedback’s getting through and that they’re incorporating it into the process. That’s really important for us.

One of the things that I love about military veterans is they’re constantly trying to learn. It doesn’t stop. There’s this constant, “What am I learning? How do I do it? What’s happening on the battlefield? What’s my competitor doing?” If you keep that up as a founder, any type of founder, wherever you’re from, it’s really going to be helpful for you.

Military veterans are constantly trying to learn. Learning doesn’t stop. Share on X

The other thing you hit on that I think is key is the network connectivity. What a lot of people forget when it comes to early-stage investing is that you’re not just betting on the company, you’re betting on what other investors will think of the company at later dates in the future. You could have a great company, but if the market, for some reason, doesn’t love it, they’re going to have a heck of a time raising capital, or it’s going to be very expensive to do so and that could really crimp the business growth.

What I love about the veteran community, as you already alluded to, is that when you call, they pick up the phone. If you’re a veteran, you call another veteran, and they not only pick up the phone but also give you the inside information. They give you the good stuff that they might not tell everybody else because you already have that bond of trust.

Dual-Use Technologies

That, to me, is critically important. You don’t see that with other groups of founders. It’s very rare to be able to say, “I can get this information that nobody else can get, and I can get access that nobody else can get unless they’re in this group.” I think that’s incredibly important. The last thing I’ll note is that some of the sectors that veterans tend to gravitate towards, I think, are very investible. You think of cybersecurity and a bunch of other applications that are called dual-use technologies that might have government applications, but they also have a lot of civilian applications. Just any thoughts on dual-use technologies before we dive into to broader themes?

A big piece of our investment out of fund three is focused on dual use. For people who don’t know what dual use is, a business model and application, whatever the company’s building has, it’s focused on both. It can be applicable to both the consumer market or commercial market, like the regular companies that are out there in the world. Another part of it is DoD and/or government.

A good example of this would be ID.me. We’ve been invested in ID.me since very early, and it’s online identity verification. Blake Hall’s a military veteran founder. We’ve invested in Blake since inception. The company’s got about 113 million credentialed US citizens that allows them to act as record to the treasury, military veterans to act the VA all online, increasing the capability of the ability to identify who someone is.

Those dual-use companies, as you said, frequently, especially with the DoD side and/or the government side, are like a whole other language for somebody who’s never lived in it or been there. Craig’s and my backgrounds, having been in the military and operated there for years, open up that network to the founders focused on that sector. Anytime you can leverage that type of background, it’s super helpful both to the founder and to winning deals. If you’re the entrepreneur going after a really hot deal with a great founder focused on that market.

AI

I think a lot of people don’t realize that AI, as hot as it is, actually has its most powerful applications when it comes to the military, in my opinion. There’s some very cool stuff going on with the ChatGPT, but if you think about where this is headed, there’s an arms race going on right now, but it’s really an AI race because whoever has the best AI is going to be very hard to compete against or beat. What are your thoughts on that?

I believe that it’s true. Nobody wants to be in second place when it comes to their DoD side. You don’t want to fall behind our adversaries, particularly China. I think that some of the existential fears that exist are also around this. They’re likely not around ChatGPT taking over, but they’re around potential military applications where if something goes wrong or the system tries to do something that it seems to be right, but a human would not do, that’s where a lot of the fear components come in. Absolutely, for everything from targeting drone manipulation, even think about joint management of a battlefield and how quickly a human thinks versus how fast the machine can move, solving things in ways that we haven’t thought about before.

There are many applications of AI. We have invested in one called Red 6 that raised a $70 million Series B. Dan Robinson, when we invested in him, wasn’t a US citizen yet. He was the first non-US citizen to fly in F-22. He’s like Blake Hall of ID.me, an epitome of the leadership style that we like to invest in. A big problem in the United States is a lack of training capability for pilots. Resources are constrained. The price is incredibly high. We don’t even have near peer aircraft that we can use to dog fight against, for instance, or run simulations with. The initial target for Red 6 was to enable augmented reality in one of the most dynamic places on the planet, which is in the cockpit of a fighter jet, and they have successfully done that.

If I’m flying my F-22 in training and I’m up in my 1 mile by 1 mile cubed airspace, I can look out through my visor in my helmet and see an ally maybe from France or wherever in their airspace, but it looks like they’re in their 1 mile by 1 mile cube over France, and we can simulate working together. I can see surface-to-air missiles coming at me. I can practice refueling all without having any of those other things there. It’s a pretty spectacular use case that Red 6 is solving for, and it has a lot of downstream ramifications for the entire battlefield.

Journey To The Apprentice

Before we dive into the broader VC landscape, I have to ask you, how did you get onto The Apprentice? You actually want season two of The Apprentice, and I’m curious how that came to be.

As I said, I went to business school at UCLA Anderson. My next youngest brother also had gone to business school there. Mark Burnett, who’s the producer of The Apprentice, in addition to the mail your application in online, the city-by-city tour that they did to have Donald or Ivanka or somebody come and then everybody would walk through and try to interview to try to get slot on show. Mark Burnett ran closed casting calls at the business schools in Los Angeles. This email went out to alumni that said, “If you want to try out for The Apprentice, there’ll be a closed casting call at the school,” whatever. I was like, “I’m not going to do that. Delete.” My brother forwarded to me the same email and said, “You have to go do this. That show was made for you.”

I’m like, “All right.” I went and acted the fool. There were 300 guys in ties in the auditorium at Anderson filling out forms. They broke us into groups of ten and asked us questions in front of people. I acted silly a little bit and aggressive. The casting agent tugged on my sleeve jacket and said, “Come here afterward. We want to do a follow-up interview with you.” They sat me in a room for an hour with the Sony beta cam and two people asking me questions about all parts of my life and everything. That went well. I made it to the Final 50. They did a really interesting analysis of us everything about our minds, our intellect, our predispositions and everything else.

I got down and selected to the final eighteen. A week later, I’m flying to New York, and they take all of our logos and our wallet with our info and our money and everything else. You’re given a task every three days that you have to go perform with a group of people where I think Burnett probably picked 3 or 4 people that could be the winners. The rest were a psycho demographic of the US trying to make it entertaining, which he did a very good job of, and we went at it for about six weeks.

The finale was live. At the end of six weeks, I’m in the final boardroom against my nemesis. They go, “Okay, that’s it. Everybody, come back in December.” Five or six months later, I had to be quiet for six months about where I was, what I was doing under threat of everything that I ever owned and my firstborn go to Burnett. The show aired, and then, obviously, everybody knew where I had been and what happened. As the season progressed, it was edited to what it was edited. The finale was that the Lincoln Center in New York, and Regis Philbin was the emcee and they had the band playing Money, Money, Money. A three-hour finale, and I won. Who would’ve thunk it?

You never know until you try. That’s unbelievable. What did you learn from that, actually? What were your big takeaways, looking back on it now?

There was a lot of strategy to show. There were about three levels of gameplay going on during the entire time. Remember, I had been in the military, Airborne Ranger qualified, and I’d been through law school. I think I was one of the oldest contestants. I was like 38, maybe, when I went on the show. It was back-to-back. The audience on TV sees every week, like there’s a new episode. Everybody’s gone about their lives, had slept, played, done whatever, and watch it next Thursday. When we’re filming, it would cost a lot of money to keep us all occupied for that time. Literally, it’s back-to-back. Plus, it gets more fun because everybody gets more tired and starts making mistakes, and there’s no sleep and everything else.

We’re crammed into this little apartment studio thing where the beds aren’t quite long enough. You’re filmed everywhere except in the head. The sound is on at all times. There’s no alone time, there’s nothing, and there’s very little sleep and there’s high stress, and people are being sent to the boardroom and fired, eat on your own. I’m like, “This is way better than Ranger School.” There’s no like makeup artist for any of this. They know they’re going on 10 million to 20 million, and 30 million people are watching them every night. It’s like trying to put your makeup on and get your hair right and do everything else on top of all the stress, so it was, to say the least, a very interesting exercise.

It was easy for me from a process standpoint. The tasks were difficult, there were different challenges, but what I watched was, it’s not like Survivor. If you’re by far the strongest person on Survivor, you get voted off immediately because you’re a threat. Trump act like a backstop for that because if there were people starting to gang up on a strong player. They were just as likely they’d be fired for doing that as somebody was for losing the task. Everybody had to play straight and you just had to perform. It was one of those, strangely enough, significant. It was very much a meritocracy as you were evolving through the show. I’m not saying there weren’t some politics in play into different stuff that happened in the suite that kept people on their toes differently.

If you’d asked that crew, I think everybody would’ve probably voted the final four as the final four internally, and then it would be up for anyone to grab. I did learn a lot working with Donald in New York for the year after the show. His ability to manage/manipulate the media was amazing. If you remember, out of the blue, he would say something about Rosie O’Donnell or Martha Stewart or something. All of those were explicitly timed in 2 to 3 weeks before the next season of The Apprentice would start to get the whirlwind effect going on with everything happening. He’s a deal junkie. He doesn’t drink, he doesn’t smoke, he doesn’t gamble. He loves the deal.

Any given time between like 6:00 AM and 10:00 PM, there’s like 8 to 10 people different deals waiting to go into his office. Two or three assistants, doors open, and you can hear him negotiating different points. They’ll have 2 people, 2 different buildings negotiating in front of each other, different deals. You can see the line moving. “Get me a tiger. Let’s play down in Florida next week.” It’s like, “What?” It’s just constant. It was amazing to see and understand of what he did with those deals and using the media to impact them. I learned that you better be using the media as the founder for your company, for your brand or your competitor will be.

It will happen. You need to understand it. You need to be using it because it makes you fight way above your weight class, whatever you’re doing. My business partner, Craig Cummings, calls The Apprentice the gift that keeps on giving. Remember, this was 2005. I actually met Craig. He’d finished his PhD at Columbia to go back and teach at West Point when the dean, because of the spike in applications leading up through the finale of The Apprentice, said, “Kelly, I think you’ve done so much more for the military out of it than you ever could have in it.” I was like, “I think that was a compliment.” I got to go back to speak to cadets and faculty, and I met Craig on that. He drew the short straw to be my handler for that trip. That’s where we met and eventually became business partners. I

I learned a lot about that year watching Donald Trump operate. I asked him, “What is the leadership trait?” I wrote a book called Take Command: 10 Leadership Principles I Learned the Military and Put to Work for Donald Trump. He wrote the foreword. I was like, “What leadership trait would you consider to be the most important when you’re hiring?”

Remember, this is a guy who used a twenty-year bodyguard to be the lead real estate person for the Trump Hotel and Resort in Vegas. Not surprisingly, he said loyalty, but I thought it was fascinating that that’s how he that’s how he operated. I’m like, “What about super high IQ or maybe knowledge of the law or whatever it is?” He is like, “No, loyalty’s the most important thing. You can’t you can’t replace it. You can’t do anything without it.” It was interesting to hear him say that. I’ve been approached so many times over the years from all sides trying to get dirt, trying to get this, and he was great to me. I’m one of probably the few people that didn’t get fired ever. It was a really great experience for me.

I think about it a lot in terms of Trump’s ability to market and whether people agree with his policies or not or the way he acts. When we talk about his marketing, I would say he might be the best marketer of all time in my view. It’s hard to find somebody who’s better. When I think of individual brand building and the ability to develop a following, I’ve never seen anyone better in my lifetime. There are some people throughout history, I’m sure, but very few it that come close.

It actually has a number on it. This is a while ago, so I don’t know what’s transpired since. It probably hasn’t hurt him being president of the United States, but prior to that, people would come to him with real estate development projects wanting to put Trump’s name on it. The only reason anybody would want to do that is to increase the value.

The average value increase from putting the Trump brand on it, plus some QA, like some quality control and I think some shiny gold and black stuff in the lobbies and stuff, but superficial, not massive or significant cost changes, is over 50% increase in value. There are enough people who associate Trump with success that it literally changes the value of a piece of property by only putting the name on it. From a brand building standpoint, it’s pretty unbelievable.

Brand Value And Investment

It’s interesting because that actually feeds into one of the things that I wanted to talk to you about on the VC side would, and I’ll spring it up now because we’re talking about it. I feel like when a good investor who has a very strong brand invests in a company, the value of that company immediately increases and, almost exponentially, increases its probability of success. It opens up so much visibility and connectivity to resources, whether capital or other resources. It’s just something I think a lot about. People always talk about product, but I think what we’re seeing is there’s a lot of value that’s derived from the brand and the marketing around products, almost as more so than the product itself.

It’s a danger in that, too, in the sense that if there’s a lot of hype. We’ve seen that a lot over the last couple of years where there’s a lot of hype and most of it has not materialized. I do think that if you build a reputation like you have at Moonshots as being a very good investor with access to a lot of resources and a lot of deep experience in the space, it actually attracts better investment opportunities for you because companies know that when you invest in them, it’s going to increase their value and increase their probability of success.

Thank you for saying that, but I think the key part of what you said is reputation. It’s years of work doing things a certain way that develop that reputation that with a few, maybe even one major error you can completely screw up. That reputation piece is incredibly important. Every deal that we invest in is highly competitive. Craig and I believe that a differentiator on how we operate is the level to which we engage with the founder. We’re early stage, so we’re seed round. It’s like an ID.me. When I joined the board in 2011, it’s been many years since I’ve been like this with Blake. It’s a marriage when we engage. We don’t have a spray-and-pray strategy where we fire $250,000 into a whole bunch of deals and hope one of them turns into Google.

Reputation is years of work that can be completely screwed up by one major error. Share on X

That is not how we attack it. We’re what we call investing with conviction and pulling our resources behind those companies we invest in with conviction. Hopefully, it looks like we have a great track record. Is that because we’re good pickers, or is that because we’re good helpers after we invest? It’s a self-fulfilling prophecy, like what you just described. I think it’s a little bit of both. I do believe that we get to see better deals over time because we’re in flow because our co-investors like that we don’t have sharp elbows and try weird stuff during deals. We do what we say we’re going to do, and we add significant value in a lot of different areas, and we do that continuously.

When we’re in a very competitive situation where we want to lead a round, if we can get the founder to do the correct due diligence, and it’s good to know if they’re not. If we can get them to talk to 4 or 5 of our founders, whichever ones they want, we’ll give them 2 or 3, but go find 4 or 5, we win the deal. If they do that due diligence, we get to lead the deal. I think that is exactly what you just described, but the 10 to 20 years come before you have the reputation where you make that valuable.

I always love the expression it takes years to become an overnight success. I’ve got so many examples that I could bring up. It’s funny when people ask me like, “How do you develop credibility?” I’ve had a lot of employees that have worked for me that have said, like, “Zack, how do I build credibility? How do I become relevant?” I tell them, “Really it’s about being a really hard worker and delivering consistently over a long period of time.” There really are no shortcuts. I remember one time I was in the gym. This is an anecdote. This is years ago. I was on the bench press or something, and I was putting out pretty big weights back in those days.

This college kid came up to me. I think he was in college, a young guy, and he said, “I would love to be able to be able to lift that much one day. How do I do it?” I said, “I’ll give you the plan and then I’ll see you in ten years.” That how you do it. It’s going to take you 10 years of working out 5 days a week, and then you’ll do it too. It’s achievable. In fact, I can give you the plan that will almost guarantee that you’ll get to this level, but it’s a hell of a lot of work. Most people, when they hear that, don’t want to put in the work.

People have asked me, “Why have you gotten so many degrees? You have an MBA from Chicago, you have a Master’s from NYU, and you’re getting a Doctorate from the University of Florida. You’re a CFA charter holder. Are you insecure?” I’m like, “No. Yeah, I’m insecure in the sense that I never want to be poor.” When I was growing up, I had no money. I said, “I’m going to work my ass off so that I will always have fallback options and I’ll never stop working.”

It takes a lot of people time to recognize that. Over time, the people I do business with now are people that I’ve known for years or who have seen me work so hard for so long. I have credibility with them because they know nobody works harder than Zack. I’ll make mistakes at times, of course, like everybody does, but nobody’s going to outwork me. I’m probably, on average, going to make better decisions because I’ve gotten so many reps in over the years. I’ve learned from my mistake.

You’ve collected more data, you’ve got more scar tissue. Your gut is smarter. That is really important when you’re decision making. As we’ve invested in companies, and 112 companies now, our advice to these founders as they’re thinking about an outside board member or the next round of financing and which of the partners they want to be on hopefully they can push for another one partner or another based on things operating experience for us is absolutely critical.

The only way that somebody has actual empathy for what you’re going through is if they have been in the seat before. You can read case studies, and you can become very smart as an investor over time by watching what transpires, but there’s still a disconnect of full empathy. That empathy helps read a lot of trust, which is, as we said, super important for between the founder and the board members.

The only way someone can have actual empathy for what you're going through is if they've been in your seat before. Share on X

I think that, in the long run, that’s going to be what sets ARI apart in the venture debt space in the sense that I’m a founder. I built this from scratch. It was just an idea in my head and every single detail of the business I’ve built, essentially, or been a part of building. With that comes the trials and tribulations of every founder. Everything that founder is absolutely going through, I’ve gone through it, too. I’ve built this from nothing. I raised capital. I know how hard it is to raise capital. Not only operate capital, but go try raising a couple hundred million dollars of capital for a fund. You know. You’ve done it too.

I use the word competitors lightly. I don’t really think of competitors. I think the space is big enough for everybody, and we’ve all got our own niches, but others in the space don’t have that experience for the most part. You go to a bank, you’re dealing with a 28-year-old VP who doesn’t give a crap, quite frankly. They’re going to be off to something different in two years. They have no experience. They have no idea what it’s like to be a founder. They have no idea what you’re going through mentally or what you’re going to need to go through to actually build that business because they’ve never done it.

I think about the 27-year-old version of me years ago. I was the smart guy. I was at Scotia Bank. I was managing a multi-billion-dollar loan portfolio during the credit crisis. I had no losses, but I knew crap then compared to what I know now. What I knew then would not have been enough to be a successful fund builder or entrepreneur or investor, quite frankly, at the level that I’m at now. I think being somebody who’s been an operator and been a company builder is incredibly important in this ecosystem. If you don’t have those credentials, I think you don’t really have the credibility, in my view.

Without the experience, you’re providing some advice. It’s questionable about what it’s based on. It’s just not as helpful. It’s harder to develop the trust. There are some great investors I’ve worked with who don’t have a lot of operating experience and they’ve learned it, listened, understood, and watched and are incredibly smart. There are other ways to help. It’s not every single decision that has to be life or death on whether or not you’ve operated.

Especially as companies grow to series B, C, E, D, I think experience with exotic structures on debt like this is something that you don’t have to have been an operator to understand where to go from that and how to get it. Where you start thinking about the most talented teams that exist to take companies public. What’s the banking process like for the roadshow? These are all things that are very important but aren’t necessarily grounded. I’ve been an operator before. As the company evolves, I’m less strict feeling about that advice, but early on, it is absolutely critical.

 

Important Links

• Kelly Perdew
• Moonshots Capital
• Take Command: 10 leadership principles I learned the Military and Put to Work for Donald Trump
• LinkedIn – Kelly Perdew
• Twitter – Kelly Perdew
• Instagram – 7in7 Show
• TikTok – 7in7 Show
• YouTube – 7in7 Show
• Facebook – 7in7 Show
• Twitter – 7in7 Show
• LinkedIn – Zack Ellison
• iTunes – 7in7 Show
• Spotify – 7in7 Show
• Work with A.R.I.
• DISCLAIMER

 

About Kelly Perdew

Kelly is the CEO of Fastpoint Games. Fastpoint Games is a leading developer of live, data-drive games that enable clients to engage, reward and monetize their users. Fastpoint Games leverages an award-winning, proprietary cloud-based platform to deliver clients customized games and integrated gaming solutions across any channel and around any set of structured data. The games-as-a-service model enables marketers, in virtually any industry, to offer their users an engaging, quality game experience quickly, without taxing their company’s resources. Fastpoint Games is privately held, and based in Los Angeles, CA. Investors include Allen & Co, Mission Ventures, DFJ Dragon and Sports Capital Partners Worldwide.

Kelly was previously the President of ProElite.com; an online social network that provides tools for combat sports enthusiasts. While Kelly was there, ProElite, Inc. raised over $40M, including $5M from CBS, and inked a 3-year exclusive deal with Showtime for airing its mixed martial arts (”MMA”) fights and televised the first network primetime MMA fight on CBS.

Kelly has held numerous leadership positions in such companies as CoreObjects Software; MotorPride.com, K12 Productions, and eteamz.com. Kelly was the President of the largest amateur sport portal on the web – eteamz.com – and helped build the company which is now serving more than 3.2 million amateur sports teams as part of Active Networks. Kelly was a Manager at Deloitte Consulting in the Braxton Strategy Practice and served in the US Army as a Military Intelligence Officer and Airborne Ranger.

After winning the second season of the NBC hit show, The Apprentice, Kelly spent 2005 as an Executive Vice President in the Trump Organization, where he managed several projects. Kelly earned a BS from the US Military Academy, West Point, a JD from the UCLA School of Law, and an MBA from the Anderson School at UCLA. Kelly authored, “TAKE COMMAND: 10 Leadership Principles I Learned in the Military and Put to Work for Donald Trump,” to provide guidance on how anyone can develop their leadership capabilities and he donates a percentage of the royalties to the USO.

Kelly is a nationally recognized speaker on leadership, technology, career development and entrepreneurship. He hosted a show on the Military Channel called “GI Factory” that looks at innovative military technologies and takes the viewer into the US factories where they are made and tracks them from raw materials to completed product. He is a celebrity spokesperson for Big Brothers/Sisters and The National Guard Youth Challenge Program. Kelly received a Presidential Appointment to the President’s Council on Civic Participation and Service in June 2006.