Imagine a gold rush where the nuggets hide in strip malls instead of mountains—car washes, HVAC shops, dental practices, niche manufacturers quietly minting cash while nobody on Twitter pays attention. Now imagine thousands of those business owners approaching retirement at the same time.
That’s the world Jon Staenberg walks into every morning.
You might know Jon from his decades in venture capital or his long list of angel bets. But these days, he’s betting big on something far less glamorous and far more reliable: entrepreneurship through acquisition—or what insiders call ETA. If you’ve never heard of it, don’t worry; most people haven’t. That’s part of the opportunity.
Below is the episode distilled into a clear, punchy guide—so you can grab the wisdom without listening to a single minute (though you’ll probably want to after this).
The Quiet Revolution Happening in Small Business
Jon grew up in Omaha, a place where Warren Buffett wasn’t just a legend but practically local folklore. His early exposure to entrepreneurs shaped his belief that wealth often comes from steady, simple businesses—not necessarily the venture-backed moonshots we all obsess over.
Fast-forward: after decades in tech investing, Jon now runs Agate Hound Fund, one of the few institutional funds dedicated to search funds and ETA. Think of him as a modern-day prospector who doesn’t dig for gold but hunts for profitable family businesses with no succession plan.
Why now?
Because America is experiencing a “silver tsunami.” Millions of baby boomers who own small businesses are retiring with no successors. Their companies are healthy, profitable, and often technologically stuck in 1998. To Jon, that gap screams opportunity.
What is a Search Fund?
Picture this:
A 30-year-old MBA grad raises a few hundred thousand dollars from investors—not to start a company but to find one to buy.
For 24 months, this “searcher” hunts for a sleepy but stable business:
• recurring revenue
• loyal customers
• minimal tech adoption
• owner wants to retire
If they find one, the same investors back the acquisition. The operator steps in as the new CEO. Everyone’s incentives line up. And if the operator makes the business better—maybe adds software, digitizes operations, or just brings energy—the returns can be shockingly good.
Unlike venture capital’s power-law model, ETA behaves more like a bell curve. Fewer blowups. Fewer zeros. More steady wins.
Why Jon Pivoted From Venture to ETA
Venture capital today is a crowded stadium. ETA, in contrast, feels like discovering a secret hiking trail with an unbelievable view.
Jon saw three big advantages:
1. Search funds produce strong returns—without unicorn dependence.
He loves that outcomes rely on execution, not hype.
2. The opportunity set is exploding.
Retiring founders. Under-digitized businesses. Massive generational wealth transfer.
3. Operators are hungrier than ever.
Immigrants, veterans, and first-generation entrepreneurs often make exceptional searchers—the kind of people who’ve had real jobs and real responsibilities.
Plus, after a career of meetings in glass towers, Jon found something refreshing about CEOs who show up in boots and manage teams of technicians.
A Life Beyond Cap Tables
One delightful detour in Jon’s story: he once started a winery in Argentina. Not because it made financial sense. Because it made life sense.
That theme runs through the conversation: you’re allowed to build a portfolio of experiences, not just companies. He talks about designing a life that blends work, travel, curiosity, and self-awareness. Meditation plays a big part, too—he practices daily and swears the world would improve dramatically if more people just sat quietly for ten minutes a day.
It’s a rare mix: hard-nosed investor + thoughtful human. You don’t see that combination enough.
AI Meets Mom-and-Pop America
Here’s where things get really interesting.
Jon believes the next decade of outsized returns won’t come from whatever the 2025 version of crypto is—it’ll come from AI-powered operators quietly transforming small businesses.
Imagine buying a $5M HVAC company that still schedules jobs in Excel…
…and then layering AI on everything:
• predictive maintenance
• automated dispatch
• AI-driven marketing
• dynamic pricing
Suddenly that business plays like it’s from the future.
Jon isn’t guessing. He’s watching operators do this already.
What Keeps Him Up at Night
Despite the optimism, Jon worries about inequality, worker displacement, and the fraying of social trust. If disruption keeps accelerating, he argues, we need leaders who bring empathy alongside ambition.
His own north star? Kindness. It sounds simple, maybe even soft—but after three decades in the arena, he views it as the ultimate long-term strategy.
Why This Matters Even if You Never Plan to Buy a Business
You’ll walk away with three big takeaways:
1. The best opportunities often hide in boring places.
Look where others aren’t looking.
2. Execution beats ideas.
Whether you acquire a company or start one, the grind matters more than the pitch.
3. Life compounding > money compounding.
The relationships, habits, and experiences you stack up shape everything else.
This episode offers a roadmap for thinking about career, investing, and impact with a little more clarity—and maybe a splash of Argentine wine.
If you ever wondered what the future of small business ownership looks like, Jon Staenberg has seen it up close. And his message is simple: the next frontier of entrepreneurship won’t come from building new things, but from revitalizing the things already here.
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Chapters:
00:01 Early Roots in Omaha & First Lessons in Entrepreneurship
04:12 The Stanford Journey and Discovering Venture Capital
07:45 What Search Funds Really Are: A Simple Breakdown
10:18 The “Silver Tsunami” Opportunity in Small Business Ownership
13:32 How Search Funds Differ From Traditional VC Models
17:05 Incentives, Alignment, and Why ETA Produces Steady Returns
20:41 Who Makes a Great Searcher? Traits, Backgrounds & Patterns
24:58 Jon’s 30-Year VC Career and the Shift Toward ETA
29:10 Building a Winery in Argentina: Lessons in Main Street Ops
33:27 Designing a Life With Curiosity, Adventure, and Work
37:14 Compounding Wisdom: Experience, Self-Awareness & Growth
41:52 Meditation as an Operating System for Better Decision-Making
45:36 The Story Behind Agate Hound & Finding “Investment Gems”
48:22 The Biggest Misconceptions About Young ETA Operators
51:03 ETA in a Tech-Driven Future: AI Meets Main Street
53:26 Closing Reflections on Legacy, Kindness & Long-Term Impact
Transcript
Brian Bell (00:01.294)
Hey everyone, welcome back to the Ignite podcast. Today we’re thrilled to have John Staenberg on the mic. He’s a longtime investor, search fund pioneer, a vintner, serial angel, Stanford trifecta grad, and probably among the few people who own both a wine vineyard and tens of thousands of ticket stubs. So we’ll find out about that. He lives at the intersection of small business acquisition, big ideas and passion projects. Let’s dive in. Thanks for coming, John.
John Staenberg (00:13.896)
Brian, great to be here. That maybe is the most poetic intro anyone’s ever given me on a podcast. So kudos to you.
Brian Bell (00:32.846)
No, it’s it’s chat GPT. And it’s it’s a bunch of prompting. You know, we’re on episode 200 and something now. Right. So like, I’ve built up this like nice intro prompt over hundreds of episodes. thank you, Sam Altman and team. I’d love to get your origin story. What’s your background?
John Staenberg (00:56.307)
Yeah, it’s a it’s very Mayberry RFD. Your listeners probably don’t even know what that is, but yeah, I grew up in in a place where you know, mom said come back for dinner. Otherwise I don’t need to hear from you and we didn’t. We kept the keys in the ignition and didn’t lock the front door and that was Omaha, NE when I was growing up and. It was it was kind of awesome and.
Brian Bell (01:03.884)
I barely know what that is.
John Staenberg (01:24.776)
I was a tennis player, so I spent a lot of time at the courts and had a really tight-knit group of friends who played tennis with me every day and liked school and liked my family and liked my friends. And, you know, that’s my origin story. Having said that, I also came from a family of entrepreneurs. My dad was, I think, the first garden up. apartment developer in Omaha, Nebraska, which means he figured out you ought to put a little pool in the middle of apartments and that made it a garden apartment. Yeah, exactly, exactly. And a couple of shopping centers and and then my mom later took over that business and she put on she even when timeshares were a thing, they were going to be a clearinghouse for timeshares. So always a lot of ideas, a lot of our own version of startups.
Brian Bell (01:58.83)
So low rise kind of suburban apartments. Yeah.
John Staenberg (02:20.825)
So was always comfortable around people willing to take risk and pursue dreams. so I had good models for that. And then the other piece that I always mentioned is Warren Buffett being from Omaha. And he has influenced me my whole life. We were lucky enough to go to Uncle Warren’s house before Warren was Warren. We didn’t know he was going to be who he became, but. But just being around that was cool. My mom was close friends with his wife. So I think all those things are very much part of my origin story. And then when I went to college, it was really a very simple choice. It was how far from Omaha could I get? I’ve always been kind of a traveler. Yeah, well, right. Either it was gonna be East or West, basically.
Brian Bell (03:09.278)
limited by the oceans.
John Staenberg (03:16.601)
And, but that’s more about me being a traveler and wanting to see the world. And so I ended up on the West coast at Stanford and that was super eye opening. And again, it put me in touch with and surrounded me with entrepreneurship and people doing cool things. I’m easily inspired. I don’t know if that’s a good thing or not, but I truly, I’m a journalist at heart. and I want to hear everybody’s story. I’m kind of jealous that you do podcasts. It’s something I’ve always thought I would love doing.
Brian Bell (03:49.006)
It’s so amazing. Why don’t you do a podcast? I mean, you should totally do it. Even if you think you might like it, you should just try it. Give it 10 episodes, you know?
John Staenberg (03:55.879)
I have thought about that. may come back to you on that, especially because in my world of search funds, honestly, searcher stories are amazing. They’re amazing.
Brian Bell (04:07.716)
What’s your favorite Search Fund story to tell?
John Staenberg (04:10.597)
Well, there’s a version of a search fund story that I’ve heard more than once, which is someone who grew up in a small town, let’s call it Mexico for this version, tens of thousands of people, if not less. Nobody had ever gone to college. They end up being the first to go to college and then work their way up to Harvard Business School or Stanford Business School. They’re doing this because they want the American dream. The American dream is alive and well. They want to take care of their family. They’re driven. They’re gritty. They’re motivated. That’s my that’s just my favorite version. Like I don’t get tired of hearing that version all day long, all week long.
Brian Bell (04:57.442)
That’s my version, but I went to Berkeley instead of Harvard and grew up.
John Staenberg (05:01.926)
It’s the harbor of the East Bay.
Brian Bell (05:05.378)
Yeah, so Harvard at the East Bay. But yeah, that’s my origin story, right? Growing up poor, welfare, know, expelled from school. Like, how did decision make? Do I want to like end up like my mom who’s all messed up and kind of go that path or kind of do something else? And it was like really a breaking point in sophomore year when I got expelled for the latter half of the year. Yeah, well, I’m a pretty good VC. I’d like to like to think, but yeah. Yeah.
John Staenberg (05:25.36)
Well, you’d probably be a good search funder. You’d probably be a good searcher. Yeah, no, but you get it. Like you recognize those traits in others. And at the end of the day, people always say, yeah, yeah, that ship, like I’ve got something to prove. Right.
Brian Bell (05:36.269)
Right. I recognize like the chip on the block, like that driven. Yeah. Yeah. And you can be cool. You could be cool and a nice guy, but you just have something like some fire in your belly. There’s something in there where I can. And it’s hard to explain that to like my LP is when I talk to them. They’re like, what makes you like special or different? And I’m like, well, let me tell you my story and how that makes makes it so I can identify great founders. Right.
John Staenberg (06:03.93)
I love that. I love that because I don’t always have the easiest time explaining search funds to people. I also will, you’ll hear me call it. I was just gonna say it is off. is also.
Brian Bell (06:12.75)
What is this? Yeah, what is this search fund? Yeah. I mean, I think I know, but like, let’s explain it for the audience. Yeah.
John Staenberg (06:19.366)
Yeah, yeah, because I’ll probably be talking about it a fair amount, but I’m also going to call it ETA, which is entrepreneurship through acquisition. And so what is it? Let’s start there. And then we’ll go back to how I got there. But it’s really the notion, especially the way we do it, which is very narrow and very niche, is the notion that you go to one of the better business schools, Harvard, Stanford, Booth, Wharton, blah, blah, blah, and you take the class. So you learn what it means to go and do this search that can take up to two years trying to acquire a good, boring mom and pop business that you will then run. So what that means is I’m looking for electricians, plumbers, dental clinics, med spas, that sort of lot. mean, yeah, we don’t generally do laundromats, interestingly enough, but that could be for sure. Yeah. We’re generally looking for...
Brian Bell (07:21.07)
laundromats.
Brian Bell (07:30.232)
Yeah. I might be like more like roll up private equity. Yeah.
John Staenberg (07:34.617)
Yeah, and also we’re not doing roll-ups generally. I’ll call us the micro PE play. The micro PE play with an extraordinarily good playbook, with extraordinarily good people around the table investing, coaching, mentoring, training the entrepreneur to success. And I think people, you you made the comment, people don’t understand sometimes when you say you get it, you see it. If I could take everybody to the Harvard ETA conference and have them meet 20 searchers who would have the origin story we’re just talking about, they would get it immediately. And I need to figure out maybe the podcast is the right way, like you said, to help people show this story. But it turns out in America, and I did venture for a long time, we can talk about that, but what I love about America is it does a few things extraordinarily well, and small business in America is the best in the world. And if you come in and you say, I’m gonna work my you know what off, and I’m gonna follow the rules, the system generally works for you, right?
Brian Bell (09:00.086)
I mean, the tax code is kind of written for small business owners and real estate owners. you know, the regulations are pretty minimal on small business, you know, much more onerous on. Yeah.
John Staenberg (09:04.631)
Right. That’s right.
John Staenberg (09:09.421)
Yeah, you can get things done quickly. That’s right. That’s not true in most of the world, by the way.
Brian Bell (09:14.926)
Right, yeah. Well, in some places in world, if you fail in business, they’ll throw you in jail.
John Staenberg (09:16.479)
And in fact..That’s 100 % correct. And we also have this extraordinarily, we have this moment with the greatest wealth transfer in the history of the world, right? The silver tsunami, the boomers needing transition. In most countries, there’s a boomer demographic and most countries, they’re just gonna shut their doors. We’re lucky in this country because people who have spent a know, generations in some cases, but have spent decades building up a business, they actually will get to see the fruits of their labor, the value that they have created. But that’s not true in most places. So it honestly, people have asked me, why am I doing this? Because it’s not a big fund and I’ve had a good career. I’m doing it because I so believe that it can change the world. It is people who actually have hope that if they do the rule, play by the rules, if they do follow the path that is well laid out, that they can get ahead. They can obtain the American dream. They can take care of their family and they can be part of the social fabric of what is America. for me, it’s in, you know, I had this conversation today with a military veteran. I said, The people that we generally see who want to do this, because most people don’t, it’s hard as hell. People who do this are generally first generation immigrants, military people who can follow a playbook by like nobody else, and who understand what it takes to climb the mountain, or kids of small business owners who at the dinner table would talk about what that meant, or they would go work in that business in the summer or whatever exposure they might have. So those are the types of people I get to be around and invest in and work with. And it’s just sheer joy for me to do that.
Brian Bell (11:30.19)
That’s super fun. Well, let’s talk about the mechanics of a search fund versus a VC fund. How are they similar and how are they different?
Jon Staenberg (11:38.115)
Yeah, so Agate Hound, which is the name of my fund, is the world’s only institutional fund of funds for search. We all hate the word search fund because it sounds like that’s a fund like a VC fund. It’s not. The mechanics are I graduate from, make it up, Stanford. I’ve taken the classes. I’ve been to the conferences. It’s my second year, I’m graduating, and I say, okay, I’m gonna raise my hand and I wanna do a search fund. I have to go find 12 to 15 investors to put on my cap table who are gonna put a smallish, say $50,000 check in, who basically are buying an option on me and the acquisition opportunity. And they give me up to two years to find a company to acquire, run. Over a third of the time, the searcher does not find something. And that’s them doing it full-time, day in, day out, grinding on it. So as an aside, when people say to me, I think I’ll go buy a small business, I just look at them and I say, good luck. Yeah, what are you gonna get in your newspaper, know, biz buy, sell? Yeah, yeah.
Brian Bell (13:02.894)
You’re gonna buy somebody else’s problem most likely.
Jon Staenberg (13:04.906)
Yeah, yeah. And so the magic of our niche is that we’re the Y Combinator of micro cap private equity. What do I mean by that? We filter for the best by going to these great business schools. We then make sure anybody who thinks they want to do us, we scare them off, most of them, by showing them how damn hard it is. And if you still want to do it, you got to go find and convince 15 very experienced investors. And they’re basically almost always the same investors. These guys, it’s not like venture where there’s 10,000 fund managers. There’s a very small, maybe 50 investors who invest in these searches. And so what that means is by the time you get a search fund done, you’ve gone through that whole thing. And then those people around the table who have looked at collectively a thousand deals, who have worked together collectively for hundreds of years, are not going to let you sneak one past because your two years is running out. They’re going to be like, no, no, no, that does not look like a good deal to us. And we’ve seen a lot of good deals.
Brian Bell (14:27.318)
Interesting. So it’s more like a syndicate model in a way where you’re kind of forming the syndicate. It’s kind of like an accelerator. You find an operator and then you kind of put the operator work to go acquire a business. And then you have a pool of capital to go put the equity up and execute the deal. Yeah. But the syndicate gets to choose now. I will put my 50, 100K, 250K, whatever I committed to this, like the search fund to go acquire this business.
Jon Staenberg (14:42.858)
That’s correct. If it’s a good deal. Right. That’s exactly right.
Jon Staenberg (14:57.055)
Right, but so the 50 then gets first right of refusal on the larger check. So they say, okay, I love you as an operator. I love this opportunity. I like the multiple on EBITDA. I like the recurring revenue. I like the growing profitability. I’m gonna put 500 to a million in the actual acquisition. So I bought the option here. I got to know the entrepreneur, the searcher, and then I get to look at the ultimate acquisition. you asked me, the question was, how is it different from venture? Well, I assume in my telling of that, you can think of a lot of ways that’s different than venture. No, you know, 24 year old showing up saying, hey, this is a really hot deal. If you don’t want to sign it today at these terms, at my made up valuation, that’s fine. I’ve got 20 other people who are going to do it.
Brian Bell (15:53.976)
sounds like why I demo day.
Jon Staenberg (15:55.701)
Yeah, exactly. But you know, I’m overstating it to make the point, but you understand exactly what I’m talking about. And I think part of the thing that’s frustrated me over the years with venture is that there’s a bit of a misalignment. And the example I like to give is I’ve been an angel investor in a lot of and hundreds, as many probably as Ron Conway, but a lot.
Brian Bell (16:17.646)
How many deals? What’s your hundreds? Yeah, nice.
Brian Bell (16:25.944)
I aim to out invest Ron Conway at the end of my career. I’m up to almost 300 now. So yeah. Yeah. And I’m five years in. So, but I’m accelerating. I’m accelerating. Yeah.
Jon Staenberg (16:31.008)
Oh wow. Okay. Yeah. Oh yeah. Yeah. So as you know, one of the great things, this is the power law. When all things work, it works great. We don’t have a power law in search. You know, if the graph in venture is fail, fail, fail, fail, maybe a little win, and then you get the one or two, right? Ours is very few fail, lots in the middle, two to five, six acts, and maybe one. Yeah, yeah, right.
Brian Bell (17:04.664)
More of a bell curve, yeah. More of a normal distribution versus like this power law, yeah.
Jon Staenberg (17:10.398)
Yeah, because you’re buying a profitable company. We don’t have burn rates. We don’t have second rounds. And the alignment, one of my favorite things is that the entrepreneur gets generally 25 to 27 percent equity at the end of the day in the deal if, A, they acquire, they get a third. They get another third if they’re there for X amount of time, say, four years. And another third, and this is my favorite, if the investors get 25%.
Brian Bell (17:50.094)
Interesting. let’s break. Yeah.
Jon Staenberg (17:50.952)
IRR, by the way, which is time-based. So we don’t have 20-year holds. The entrepreneur or the searcher is saying, this is going well. I need to get this sold and get my investors their money. So I get my money. We’re all aligned. So I love that.
Brian Bell (18:11.022)
Interesting. So what’s the time horizon look like? So you got the two years of searching for a full on liquidity event. So that’s pretty attractive to LPs because you’re kind of capping both the upside and the downside. What’s a good search fund look like in terms of multiple over that five to seven year?
Jon Staenberg (18:14.771)
Five, five, five, five, six, yeah.Yes. Well, the thing I would encourage you and or your audience is mandatory reading is search for the Stanford primer on search funds and the Stanford study. The primer talks about the mechanics we’re talking about. The study is an updated every two years, updated, just happened this year, about if you took every search fund from the last 40 years, those that acquired, those that acquired and failed, and those of course that acquired and had a good exit, if you had done every one of those deals, and we’re talking actually less than a thousand deals over all that time, you would have an ongoing net 35 % return. So the upside is better than any other asset class I know. The downside is better than any asset class I know. And what I tell people is, If you’ve got any thought towards asset allocation, this is pretty non-correlated to your crypto, to your stocks, to your real estate. I would encourage people to have this as a piece of what their overall asset allocation.
Brian Bell (19:46.36)
Totally makes sense. How big is the industry? Yeah.
Jon Staenberg (19:49.294)
Small. I mean, as I mentioned, there’s been 900 acquisitions to date, maybe, I don’t know, 1,400 searches. There’s been, I’m going to be slightly off, but just to give you scale, less than 2 billion invested. I mean, there are venture funds that are 100 billion, single invention, right? And, you know, there’s been something like eight billion returned. But for sure is having a golden moment because of the company. Yes, yes.
Brian Bell (20:24.226)
Yeah, I’m hearing the term more out there, right? And I have MBA colleagues. I got an MBA from Berkeley, and I have at least two off the top of my head are trying to do this. So maybe they’ll be the right entrepreneur for you to make an intro to. Yeah.
Jon Staenberg (20:34.386)
Yeah. Yeah, love to talk to him. I am very, very by, you know, a search fund generically is someone who says I’m going to go find a small business and buy it and run it. We believe in the YC playbook version of this, the ETA, Stanford, Harvard. But the truth of the matter is as jobs change in the world, as options for MBAs coming out change in the world, as people are getting laid off. People are saying, hey, maybe I should go buy a company. I honestly think 95 % of the people that say that to me have no clue. That’s probably strong, but really underestimate how difficult. I’ve actually owned, I owned a chain of car washes, I’ve owned a winery, I had college businesses. I know what it takes. You don’t see me saying I need to go buy a business. I want to go find the people.
Brian Bell (21:37.551)
Oh, I had a small business with, I had a sunglass store in Waikiki, little, Brian Bell lower here. had two locations with 30 employees and it was like really tough to run. It was really tough to run. And I was like killing myself to make like 10 grand a month. You know, just like so much work. And I was like, I think I’ll just go work in big tech, you know.
Jon Staenberg (21:53.808)
Yeah, yeah.
Jon Staenberg (22:00.537)
Well, and honestly, my gratitude is one word, but my just overall how a good manager is just such a rarity, such a superstar, such a and less and less in this world that we live in. Do people understand what it takes to be a great manager? It’s been de-emphasized, I think. And so, you know, what what happens is You take this entrepreneur and sometimes it’s two now people partner on these searches, but they go in there and they acquire this company and then they have 10 people around them who have all actually run companies before. know, YPO has that forum concept. More of us in life should have forums, should have people we can call upon for whatever, right? But
Brian Bell (22:56.212)
Tell us more about that. What is that the YPO form concept?
Jon Staenberg (22:59.517)
So, Young Presidents Organization is basically a group of successful business leaders around the world. And they’re generally located in the cities or towns. as part of the program, everyone joins a forum where there’s six to ten people meeting on a monthly regular basis. And they share tough stuff. And they share their businesses. And they get... It’s a mastermind group and they are without doubt one of the most effective ways for people to continue to be successful and to get the resources they need when times are tough. Because I guarantee it, is nobody gets out alive in that sense. Everybody’s going to go through tough times. so having support, having a support group, having people you can trust is extremely important. And it’s institutionalized into ETA.
Brian Bell (24:00.822)
amazing. How did you end up here? mean, you had a variety of degrees from my notes from Stanford. Maybe you could talk about that and then like talk about that journey and what was, you know, the bridge from studying all these things, disparate things to doing what you do now and what happened in the middle. And yeah, I’d love to hear that whole backstory.
Jon Staenberg (24:21.883)
Yeah, I have always gone to where others are. What they say, know, hit them where they ain’t is a baseball expression. I’m a sports fan. so when I gosh, so.
Brian Bell (24:34.61)
go Dodgers. I’m just joking. The Mariners, I’m from Seattle and the Mariners are so heartbroken, but yeah. Yeah.
Jon Staenberg (24:42.111)
So pain, you have no idea, it still hurts. But the concept, I went into venture when venture was not a term. When you would literally go in San Francisco and say, I do venture and people would look at you like, what does that even mean? It wasn’t that long.
Brian Bell (25:00.012)
You’ve where you would where you adventuring? What are you talking about? Like Indiana Jones or something like what does that mean?
Jon Staenberg (25:03.513)
Yeah, right. And then you tell people, yeah, I fully expect to lose my money on most of the deals we invested. And then they get that like, you’re from Mars, you have three eyes or some kind of look like I don’t understand. And we fast forward to today and people are like, yeah, venture. Got to do venture. That changed, but I knew 30 years ago, I just knew, I knew it was gonna be a big thing. I knew technology rollout was at the beginning. I knew the world was gonna change. And so just based on those obvious trends to me at the time, I inserted myself into that world. And I never had huge funds, but I was around for an awful lot of interesting moments and investments and people. And so I’ve always said, been lucky as hell to have a front row, the diamond club seat for the changing of the world through technology. I kind of feel like search funds are that moment right now. They’ve been around for a while, but because of the boomers, because of AI, which is going to change small business, and because people are going to have to start thinking differently about what their career path is, this is an opportunity. And no one has done a fund of funds. And so I’m like, I’m going to be that person. I want to be in the middle of it. What’s interesting is the people who have invested in search funds are kind of the same people that they’ve been for decades because they’ve had it so good. And they actually honestly, we’re probably pretty happy not to have anybody else know about it, be involved with it, because they were making a lot of money and they did a great job. mean, they deservedly made a lot of money. They supported smart people and had a model that is extremely good. But I think the word’s out. The word’s out. And what I mean by that is up until 13 years ago or so, Only Harvard, only Stanford taught ETA. Today in the US, I think there’s 27 business schools teaching it. It is being taught on six different continents. I just got back from Oktoberfest where I, yes, I did drink a little beer and as one does, but I was also out of a glass boot, glass boot and I
Brian Bell (27:45.122)
Nice. As one does. Out of a glass boot.
Jon Staenberg (27:58.026)
actually talked on search funds there. And I’ll be going to a conference in Barcelona later this year. And so it’s happening all over the world and people are starting to say, okay, that’s a pretty interesting path that I didn’t realize was even available to me. So I think, you know, how did I get here? I did venture for 30 years and I said, great run. I’m not sure I know how to do venture in the way I used to do it. I don’t know that I have the same energy for it. I mean, you’ve already done 300 deals. That’s kind of wild. And, I think back to when we were doing enterprise software deals where the first couple million dollars was nothing more than buying servers and racks, right? Just to get the website up. So that world and truthfully, venture today has so many moving pieces and so many emerging managers that I give people who can navigate that a ton of credit. It’s just, I didn’t feel like I had an edge. That’s always been my question. Like, what’s my edge? Why should someone interact with me on this? And I’ve now done search funds for eight years. been to 20 search fund conferences. I’ve done a ton of podcasts and speaking and some teaching. I think I know it. I mean, I’m always learning to be clear. That’s one of the things I love about it. That’s one of the reasons that’s always been part of whatever path I have chosen has been the learning element because I get bored not easily, to get bored. so I like learning. And then I just am. I like the game of business. And this is a really fun game of business. And I like the people I’m involved with. So, I mean, that’s kind of how I got here. And I can. It turns out. I have this idea that I want to live in Europe for part of the year. can do that there. can help propagate it in Europe.
Brian Bell (30:04.994)
abouts in Europe.
Jon Staenberg (30:07.057)
I’m going to get my golden visa, think, in Portugal, mostly for my daughter, who may at some point in her life want to live and work over there. But it’s Spain or Portugal. It’s probably my place.
Brian Bell (30:20.258)
Yeah. Great. Got a couple of friends in Portugal now actually. And a third friend on the way. Yeah.
Jon Staenberg (30:25.271)
yeah, well I’ll be there for Web Summit. we’ll have to sync up on that. It’s lovely and it’s just different. I love our country. I’m not about to abandon America, but it’s nice to have that perspective too, the historical perspective of centuries that they have. I appreciate the pace. I appreciate some of the tranquility and I’m a foodie and... As you mentioned, I have a winery, so I like to indulge in those things.
Brian Bell (30:58.476)
the winery? What’s the backstory there? How did you come to get into wine and
Jon Staenberg (31:02.168)
You know, I have a pretty high risk tolerance. I guess that would be part of how I got here too. And I remember going, my goal has always been actually to try at least one new country a year for as long as I can still travel. back in, just I want to get a different perspective every year. And I don’t care.
Brian Bell (31:24.334)
That’s a great goal. I love that.
Jon Staenberg (31:31.192)
where it has, I’ve been to approximately 100 countries. So it was 2007 and Argentina was kind of hot. Friends were like, yeah, go to Argentina, it’s cheap, it’s fun, it’s sexy, the food, the culture, the vibe. So I’m like, all right, let’s go. So I went down there and looked up a Stanford classmate and he said, yeah, come out to my winery in Mendoza. And I’m like, that’ll be easy. And then I realized that actually wasn’t that easy. It’s far across the country, but I’m like, all right, this will be fun. It’s an adventure. And I do like to bring adventure into my life. And so I went out to see Santiago at 10 AM, at 4 AM after five bottles of wine and a sallow, which is a barbecue.
Brian Bell (32:25.518)
I mean, not five bottles to yourself. I there’s other people there, I hope. Yeah.
Jon Staenberg (32:29.336)
Don’t ask, don’t tell. I said, Santiago, your wine is the best wine I’ve ever had in my life. The land here is beautiful. The mountains here are beyond beautiful. If I bought a little land, would you make the wine? And hand of God was born. And it’s been a great journey. mean, truth of the matter is it is.
Brian Bell (32:55.928)
So you met some people down there and you’re like, Hey, I’ll fund this. If you, if you guys will go grow this wine.
Jon Staenberg (33:00.791)
Yeah, yeah, that’s essentially it. We started with a plot of dirt, actually a pretty big plot, but and I’ve sold off most of the winery and most of the land. But if anybody listening to this wants to go to Argentina, be sure to hit me up and I’ll give you some. Brian’s putting a trip together.
Brian Bell (33:24.366)
I haven’t been. Yeah, I haven’t been. I’ve been to Chile. We had it. Yeah. And the wine there was amazing. I’ve been to Peru. I’ve never been to Argentina. Colombia.
Jon Staenberg (33:28.503)
Chile’s beautiful. Yeah. Yeah. Yeah, yeah. so, you know, again, running a small business, I had to figure out all the logistics of making the wine and forming a business there and distributing it. Hand of God. It is the most iconic World Cup name in the history of the world. It’s when in 1986, Diego Maradona hit a ball off his hand.
Brian Bell (33:47.982)
Where’s the person name come from? Yeah.
Jon Staenberg (34:03.927)
and Argentina won the World Cup, but because there was no instant replay, the ref was shielded from the play. And so afterwards they said, come on Diego, that went off your hand. He said, no, no, no, that went off the hand of God. Which is a very funny statement because he often thought of himself as God. So you don’t actually know in that reference if he’s talking about. It is a double-edged sword. Yeah, yeah.
Brian Bell (34:20.259)
Great. It’s probably a double entendre. He’s like kind of poking fun at himself a little bit. Yeah. But also kind of, you know, stroking his own ego. Yeah.
Jon Staenberg (34:36.928)
So it’s fun. I’ve been in it for 18 years. I’ve great people. I’ve hosted literally thousands of dinners. I opened a restaurant around it. I’ve been lucky to imbibe with some other winemakers and great wine. I call the business kind of a lifestyle pornography business because you get to see the rich and famous, not that I was, but... just to be in that world was really fun. And as you know, my friend Zach, we do these dinners in San Francisco. So of course I always serve hand of God. So it’s led to a lot of great relationships and a lot of fun dinners. And that was the goal. I was gonna integrate it into my life. Like I like doing things that integrate into my life. Just like I did in venture, just like I’m doing with search, just like I did with that. So that’s, yeah.
Brian Bell (35:31.896)
Really wise. Yeah, I like that. It takes a long time for people to figure that out, I think. you have that figured out in your 20s or at what age did you figure out all the integration?
Jon Staenberg (35:43.093)
Good question. I think that I knew early that I was never gonna do one straight path, one thing. I wasn’t gonna be like the Boeing lifetime employee of 50 years. And I also knew that I have an insatiable appetite for doing things and seeing things and experiencing things and overall learning. So how could I, I was always going, how? put this together with that and it could all be this. And it’s probably not the way to create the most amount of wealth or business success, but it’s been so much fun. right.
Brian Bell (36:21.676)
Yeah. Yeah. For me, it’s been brute force, like, you know, just brute force trying things, you know, I’ve probably had a hundred different, 200 different things I’ve done in my life, you know, just trying things. And I was like, don’t like this, you know?
Jon Staenberg (36:35.882)
Yeah, you and I, that’s true for me, Brian, and that just means our risk tolerance, that our fearless belief that, okay, so we fail, get up and do something else, we’ll figure it out. And even, you know, having been doing business for a long time, I still think that. I mean, honestly, I do a lot of things not knowing what’s gonna happen in step three and four. I can kind of see out there.
Brian Bell (36:55.951)
yeah, like I.
Jon Staenberg (37:05.557)
So actually my lack of vision and naivete maybe has been the thing that’s gotten me through some of these things or I would never have done them. But I’m okay with it. I always ask that question, what’s the worst that’s gonna happen? We’re gonna be okay. We have friends, we have family, we have skills. We’re gonna be okay. So let’s go try this.
Brian Bell (37:33.57)
Yeah. Yeah, I love that. You know, I spent half of my 20s unemployed traveling around the world, so I can definitely, you know, see myself doing that again. And I also, you know, lived out of a suitcase and a backpack for so many years that, you know, none of this stuff really matters, you know?
Jon Staenberg (37:55.677)
Right, that’s right. That’s right. You know, my daughter, I’m encouraging her very strongly to take a gap year before she goes to college. It’s so obvious to me, but of course, you know, the brain of a 17 year old is different than someone who’s been there, done that. But I just, agree if you’ve, like the Australians go on their walkabout, they’re grounded by the time they’re done. Like things have a different perspective. What’s important changes, right? You see other people and you see conditions that you can say, that’s different than mine. And so I am such a passionate believer in the power of getting outside your comfort zone, seeing the world. That’s been a big part of my life and continues to be.
Brian Bell (38:46.754)
Yeah. How has your thesis for investing evolved over time? And what I mean by that is, know, 30 years in venture, now doing the search fund. You know, you’ve gone from evaluating founders to evaluating entrepreneurs. And what are some commonalities and differences? you know, how did that how did you refine that ability to pick winners over time?
Jon Staenberg (39:13.628)
My flip answer is that I’m always surprised. I can’t tell you, and I’ve actually asked this question to a number of very sophisticated search fund investors and even venture investors. And on podcasts like this and interviews, people always want, what’s the secret? What’s the exam that you give someone and you’re gonna know if they’re great? I think it’s the intangibles. What I’ve learned is never hire on the basis of the recorded answers. Meaning everybody can show you a good resume. Everybody can do a half an hour interview. I want to get them outside. I want to know how, and this is often used, it’s not just me, how they treat the server, how they treat the waiter. I want to know... how comfortable they are going for a walk if that’s not something they normally do in an interview. I want to know what’s the job that’s not on their resume. I want to know what their family situation is. And by the way, a tough family situation doesn’t mean they won’t succeed, often quite the opposite, as you know. But I want to know what their tolerance is for risk. I want to know their self-awareness. At the end of the day, I want to know if they have integrity and if they’re a nice person. So, and that’s not different between the entrepreneur and the founder, those qualities. But as you and I both know, there’s got to be that chip. There’s got to be something that’s driving this thing hard. And I look for that. why?
Brian Bell (40:54.883)
Yeah. It’s also like your life experience is all wrapped up and integrated in what you do now, right? And it’s hard to tell somebody, yeah, just go live my life again and you’ll know, right?
Jon Staenberg (41:08.275)
Yeah, I don’t know. It is all wrapped up in it.
Brian Bell (41:11.726)
Yeah. Yeah. That’s funny how like life, wisdom is a real thing and you only get it through lived experiences.
Jon Staenberg (41:22.419)
Yeah, and it actually is a lived wisdom, meaning it’s not like here are the 10, you know, I get so many of these newsletters, here are the 100 things to do in the next year, here’s the 10 things to practice this week. Sure, all those things are great. But so much of it is this conversation will leave me a different person. I honestly believe that. this is every day, I’m a believer in, A, someone once said to me, always allow people to wake up smarter in the morning, so don’t hold grudges. B, you’re not the same person you were yesterday or tomorrow, so just check in on that. Right? And C, have this irrational... for Clivity to smile, laugh, and be kind. But still go kick ass.
Brian Bell (42:18.456)
love that. Such wisdom. How do you balance all this stuff? I mean, you’re wearing all these different hats.
Jon Staenberg (42:25.779)
I’m not good at it, dude. I would say, get me an F. I failed. I’m working on it. It’s a work in progress. There’s just too many good things and fun things to do. There’s so much to do. I mean, you last week, yeah, there’s the last two guys.
Brian Bell (42:45.474)
Yeah, there’s always something to do. If you’re not excited, like this is what I tell young people. It’s like, if you’re not excited, like just out of your mind, excited to do what you’re about to do. It’s like I’m paraphrasing Steve Jobs, of course, but like just find something else to do. Don’t waste your life.
Jon Staenberg (43:00.018)
Yeah, and especially in this world where the choices are so abundant. I like that Japanese woman writer who talks about, is that item thing give you joy? I check in on that. That makes sense to me. If it doesn’t give you joy, why do you have it? Why do you do it? And then the other big piece for me that’s obvious, surround yourself with people that give energy.
Brian Bell (43:18.574)
I like that. Yeah.
Jon Staenberg (43:29.329)
take energy. That is massively important. If you’re going as hard as you’re going or as I’m going, you’re always low on fuel. So you can’t be around people that take your last fuel. You’ve got to give and you have to be around people that give you. that will be sustained. I do these dinners with Zach and people say, why do you do these dinners? I do it because I get fuel out of it. I got four emails this morning, that dinner was great. Thanks for doing that. I can’t wait for the next one. Good karma. I really love that people got something out of that. you can create fuel, but recognize, like you said, if that’s not giving you abundance of joy, move on. And you can create it.
Jon Staenberg (44:25.648)
And so that’s what I’m trying to do. I constantly think about, am I creating my best possible self and the best possible adventure? And that’s really, I check in on that regularly. Maybe not formally, but regularly. And so, I don’t know, I’m certainly not balanced in all of this, but I’m having a heck of a lot of fun.
Brian Bell (44:51.598)
That’s amazing. And I see the, is that a little Buddha figurine behind you on the shelf? Are you a meditator is like, is that your spiritual practice? Nice. What, what, what kind of meditation?
Jon Staenberg (44:56.634)
It is. Yeah. I meditate every day, every single day. It’s the I love Andy. I do a variety, but I really love Andy.
Brian Bell (45:13.279)
I’m Andy from PetSpace. I can’t do the accent, but yeah. He’s great. He’s great.
Jon Staenberg (45:16.145)
Yeah, I’ve done it for 10 years and honestly it’s gotten me through some rough patches and it definitely, I have come to believe that the world would be a better place if more people meditated. I really believe that.
Brian Bell (45:32.143)
100 % 100 % Yeah, I saw it out in my early 20s because of my troubled childhood. And, you know, I’ve gone through almost every major form of meditation at this point in my life. I’ve done the 10 day silent Vipassana retreat, you know, I’ve I’ve done Zazen, I’ve done, you know, VinSight, I’ve done, I went really deep into Tibetan Buddhist meditation for a few years, I was in a teacher training program doing the Lam Rim.
Jon Staenberg (45:47.58)
yeah? Course. Course.
Brian Bell (46:00.457)
the 21 cycle of meditation. And then in my 30s, did basically just insight, meditating on breath and sensations and stuff. then five years ago, well, four years ago, I got into transcendental meditation, which I always heard of, but never really looked into. And I wish I would have found that 20 years ago, because that’s been really incredible for me.
Jon Staenberg (46:24.084)
I don’t tell many people this, but I went to my first TM meditation session when I was 11 years old.
Brian Bell (46:33.827)
wow, you’re paying. well yeah Nebraska. That’s I mean. Yeah. Yeah.
Jon Staenberg (46:37.028)
Well, it’s actually Iowa. I know what you’re thinking of. Yeah, that’s their center. yeah, so it actually had a presence in Nebraska and my sister was into it I’m like, all right, I guess I’ll go.
Brian Bell (46:47.362)
Yeah, I introduced it to my son, my oldest when he was about 11 or 12. I think it was too early. yeah, I think, I think 14 or 15 is probably the right age, something like that. But they do, it just didn’t stick. You kind of just went with other meditation techniques.
Jon Staenberg (47:04.482)
It’s in the sense that I was clear that that modality was an important one to have as part of others. And I’ve always been open to the, you know, grew up Jewish, but spent a lot of time studying Buddhism. Just, I liked learning about a lot of Joseph Campbell myth writings. Look, I am pretty clear that there’s one reality here, but there’s a lot of others and I’m curious about them. And I do know this, we are way too busy in general and there’s way too many inputs in our life and just clearing your head and getting some of that blue sky is really healthy. I don’t react as quickly or as anxiously as I used to. I just check in with myself and just see what’s going on and honor that. And so I appreciate that piece. It’s really been, life savings too strong, but really helpful, life serving for sure.
Brian Bell (48:11.96)
Well, you know, what’s interesting when you start meditating is you, you actually realize that you are overreacting and getting super emotional. and then you’re like, was I always like that? Or is my meditation making me like that? You know I’m talking about? And then you’re like, no, wait, I’m now just aware of it. crap. I got really angry and I was kind of an asshole. Why did I do that? Like, you know I’m talking about? Kind of the self discovery. And I’m still guilty. Sometimes I just, flip out and I’m just like.
Jon Staenberg (48:24.665)
Yeah, I do.
Jon Staenberg (48:33.891)
Totally, I totally understand. Are you kidding?
Brian Bell (48:41.938)
I just flipped out that that was bad. You this I’ve been meditating for almost 25 years and you know, I’m like, I really lost control there, you know.
Jon Staenberg (48:51.971)
I love the fact that they call it a practice. That it is something that you just have to practice your whole life because we practice the opposite of it every day, most of the day. Chatter, chatter, chatter. Right, exactly. So I love it.
Brian Bell (48:55.8)
Yeah.
Brian Bell (49:06.06)
Yeah. Scrolling doom scrolling, reacting, getting emotional. Yeah. Yeah. I’m actually inspired now to take another run at meditation with my, kids and get them on headspace at the very minimum to. Yeah. Yeah. Yeah. I’ll probably just go buy a family account and be like, install this. I could talk about meditation for an hour and I’ve had meditation teachers on the Ignite podcast before. So, yeah.
Jon Staenberg (49:19.119)
They have a good kids section on there by the way. Yeah.
Jon Staenberg (49:30.45)
you have? I’ll have to go back and listen. Great.
Brian Bell (49:33.228)
Yeah. Yeah. I had one of the famous TM teachers who taught, you know, all the Bridgewater folks and Ray Dalio. Yeah. He was on the pod like episode like 20 or something. was a long time ago, yeah. Where does the name a gate hound come from? What is that?
Jon Staenberg (49:38.624)
wow. wow. Okay. I will.
Jon Staenberg (49:49.656)
So you know how hard it is to name things these days? So I was trying to keep...
Brian Bell (49:56.569)
Well, you can team Ignite, right? Like, there’s an Ignite Ventures. Of course there is. But we’re team Ignite, and people keep calling us Ignite. I’m like, no, no, we’re team Ignite. Very specifically, it’s team Ignite.
Jon Staenberg (49:59.255)
Of course.
Jon Staenberg (50:05.614)
Well, the funny thing is I was going through like, what am I going to call this? I want to refer to Nebraska because Nebraska is important to me. Go Big Red. Go GBR. Huskers. I was trying to come up with variations and all of them were taken in some form. Like, okay, I can’t do that. And then I tried to do stuff with Stanford, but you can imagine Stanford has been taken all over the place. So a friend says, well, what’s the state? Rock of Nebraska, stay rock. And it turns out it’s an agate. So, and an agate is a kind of gem. And I like the idea, there’s a term called a rock hound, someone who goes out looking for gems. And what are we doing? We’re trying to find investment gems. And as a side note, agate is also the font in the newspaper for the baseball box score. Very, very small point.
Brian Bell (51:05.39)
It’s a very esoteric trivia. Someday I’m going to be sitting in a trivia and I’ll be like, I get, I get fun.
Jon Staenberg (51:10.638)
So, so yeah, Agate Hound and we had Irish Wolfhounds growing up. So for me, there’s a there’s a good memory in all of that for me and and it wasn’t taken. And when people ask me, wait, wait, wait, when people ask me, you know, what’s AHF and I don’t want to have a long conversation, I say, always have fun. So. Yeah.
Brian Bell (51:26.222)
You could get the dot com, yeah.
Brian Bell (51:38.222)
They’re gonna look at you, kind of. well, I could talk to you for another hour, but let’s wrap it up with some, some wrap up questions. I hesitate to say rapid fire because I’m okay with long, long answers. what’s an assumption in the search fund ETA world that most people believe, but what you think is wrong.
Jon Staenberg (51:45.783)
Alright.
Jon Staenberg (51:57.133)
That a 32 year old can’t run a company, can’t be successful, can’t buy a company, can’t run it, can’t be successful. Wrong, wrong, wrong, wrong. That a 28 year old, that a 30 year old, that’s just not true. They absolutely can, they can crush it.
Brian Bell (52:11.776)
You have to have so the myth or the misunderstanding is you have to be older and more experienced.
Jon Staenberg (52:16.907)
Yeah, people generally say, how is that person who’s never run a company who is that young going to be able to do this? They can’t because could we that’s part of them. That’s right. That’s right.
Brian Bell (52:24.898)
That’s, that’s, that’s part of the magic right there is figuring out who that yeah. Who that is. it seems to me that you would almost want to run like MBA, like grab people out of their MBAs. It’s that’s when people are like willing to really do some hard work. Yeah.
Jon Staenberg (52:39.893)
That’s when we’re doing it. Yeah, that’s exactly what we’re doing.
Brian Bell (52:44.226)
Yeah, you just go there and you’re like, hey, like, here’s this idea, you know, let’s go do it, you know, and they’re like, cool, because you know, it’s funny about MBA programs and I can relate because I did one as we talked about, is there really ambitious, but they don’t know what to do with it.
Jon Staenberg (52:48.545)
That’s our model.
Jon Staenberg (52:59.949)
That’s right. And the great thing is...
Brian Bell (53:01.538)
Yeah, they’re so ambitious. They’re super smart. They’re super hardworking. They’re willing to like break down walls, but they don’t know what walls to break down.
Jon Staenberg (53:08.812)
That’s right. And the other piece of it is an MBA, unlike any other graduate program, is all about letting you pivot as a person. You go into any other one that says, oh, you’re an engineer, you’re an engineer, you’re a lawyer, you’re a lawyer. MBA says, oh, what do want to be? That’s kind of great, actually.
Brian Bell (53:30.21)
I love that. Yeah, I love that. That’s so true. If you were starting in venture today, pre-agate obviously, agate, I keep saying agate, what would you do differently?
Jon Staenberg (53:40.972)
I would figure out what my edge was. I would figure out how am I differentiated from everybody else? And not only differentiate, but how can I add value? How can I source better and how can I add value better? If I can do those things, will eventually win because I’ll get the good deals and people, there’s a virtuous cycle in that. You know, I’m impressed with the people who are doing, for example, the Y Combinator funds, where they go in and they pick some of the best startups that go through the cohorts, because I feel like Y Combinator does get great people, does provide a platform and a set of resources. And there’s a really strong, it kind of reminds me of what Silicon Valley was 30 years ago. In the old days, Everybody knew everybody, right? Everybody was sharing deal flow. That’s kind of what happens in a YC these days. So if I was doing something in venture, I would do something around that concept.
Brian Bell (54:51.896)
That’s so funny. And you didn’t mean to make this a commercial for our YC fund, but we were on our second YC fund that were publicly raising right now. So if anybody’s out there looking to invest in a YC fund, that’s us. That’s our fund three. But yeah, totally. You’re fishing from an amazing pond of amazing entrepreneurs. It’s a great community. I’ve had a lot of success. I mean, my fund one is off the charts and you know, we, only did 36 investments and I’m sitting on a unicorn three years in on the fund that could two X the entire fund. I liquidate.
Jon Staenberg (55:14.412)
them. Wow, good for you. But that’s that’s funny, Brian, I did. I did not know that was not a setup for the audience. That was not a setup. I meant, I might have to invest in your fund. Send me the docs.
Brian Bell (55:21.742)
It’s a great place to invest.
Brian Bell (55:28.46)
That was for the audience. He had no idea I have a YC fund. Yeah, I’ll send you the docs. No, it’s about half of what we do. Yeah, we love the community. They’re just so good at batch processing amazing entrepreneurs and sending them out with crazy amounts of traction. And then the trick is like, which ones do I have to invest in now? Which ones can I pass on investing later? You almost want to invest in all of them, frankly, because out of 150 companies, there’s probably 100 companies I would want to write a check into like as an investor, because I see everything else outside of YC too. And it’s like, it’s like, if you’re going to hire an investment banker, you’re going to go to, you’re going to go to Stanford or Wharton or Harvard. And you’re going to, you’re going to fish from that top 1 % pool. And YC is basically that. So that’s so funny. You said that like it totally was unplanned.
Jon Staenberg (55:58.849)
Yeah.
Jon Staenberg (56:13.419)
Right. That’s what it is. So that... Yes, it was.
Brian Bell (56:26.466)
that’s about half of what we do. And there’s we’re, you know, we’re not unique there. There’s a bunch of other great funds and I’ve had most of them on the podcast actually to talk about YC and it’s a great, it’s a great place to invest. The only thing is the valuations are starting to creep up to. Yeah. I’d say the average now is 25 or 30. And when I got started, it was like 12 to 15. And so it’s starting, you know, but again, you’re, you’re investing in companies. they become. That’s it. That’s it. So.
Jon Staenberg (56:39.736)
Yes, they are. Yes, they are.
Jon Staenberg (56:50.474)
You’re playing the power law, let’s be honest, right?
Brian Bell (56:56.078)
But the best, the best thing is, when you get in pre YC, so you get in at, you know, five, 10 cap, and then they get into YC and now you have a 30 cap markup, you know? Yeah. Cap adjusted, of course, it’s not priced usually yet, but, but, but still, uh, but you know, besides YC, what trends, what trends are you most excited about right now that few people are talking about?
Jon Staenberg (57:03.955)
Right. Right, of course, of course.
Jon Staenberg (57:17.331)
I think the value that will be created by AI, outside AI, is one of the reasons, one of the subtle things I don’t think people understand about why investing in small businesses in America is great. So the 30 year old coming out of Harvard, Stanford is already tech savvy, tech comfortable, and they will be implementing this immediately into these companies to compete with their 65 year old competitors who have no idea. And I think the opportunity for game changing vis-a-vis their competition will be astounding. So I am extremely excited about that.
Brian Bell (58:02.646)
And it’s the same thing that’s happening in startups, right? know, companies are growing faster than ever. I’m seeing companies get to a million of AR by time they leave YC. You know, they went from zero to a million of AR in months, two months, three months. The amount of growth and their second.
Jon Staenberg (58:10.474)
But right.
Jon Staenberg (58:17.002)
Yeah, it’s crazy. And with the number of people, right? They’re doing it with so few resources. Yeah.
Brian Bell (58:24.91)
Oh, it’s like three people. Yeah. I see founders not even, not even raise money and they start raising money at a million. Cause they’re like, Oh, we’re growing super fast. just 10 X revenue in nine months. We haven’t raised any money yet. We’re at 800,000 of ARR, million of ARR. And I think we need to like kind of build some infrastructure around this growth, you know? And that’s when they raise. So it’s just, it’s a whole different, you know, like you, talked about back, you know, 20, 30 years ago.
Jon Staenberg (58:28.426)
This is an extraordinary time.
Brian Bell (58:54.626)
two or three, five million just to get your website up. And now it’s like, well, don’t even come talk to me unless you have revenue.
Jon Staenberg (59:01.032)
Right. No, that’s what I mean when I say, like, was like, huh, this game has changed. It’s cool. But I like your approach because I’ve learned about it. But yeah.
Brian Bell (59:08.032)
It’s, it’s very different. Yeah, it’s a little different. Yeah. You got to move very quickly too, as an investor. But I want to circle back to the other comment you made about small businesses. Why it’s a great time is AI, there’s all these second and third order economic knock-on effects, right? Where now all these small businesses, businesses in general can run more capital efficiently. And that’s just not startups. It’s, it is your, you know, your chain of car washes. It is your.
Jon Staenberg (59:13.386)
That’s right.
Jon Staenberg (59:35.786)
Yeah, it’s your plumbers, your med spas, your dental clinics, your, yeah, your street clinic. I mean, it really, it really is going to be the most exciting, you know, interesting next 10 years. These next 10 years, I get so much fun. Like that’s why, that’s why I’m doing it. You didn’t even ask, you did ask me and really at the end, that’s a good conclusion, which is this is why I’m doing it. I want to, I want to be able to watch this.
Brian Bell (59:37.047)
accounting firms.
Brian Bell (59:50.05)
Yeah. So much fun. The best time to be an investor, best time to be alive.
Brian Bell (01:00:04.844)
Yeah. Yeah, it’s a really, really good time to be an investor.
Brian Bell (01:00:15.896)
keeps you up at night.
Jon Staenberg (01:00:19.623)
The disparity between the rich and the poor, the dislocation of the worker, the change that’s happening faster than humans can process it, the lack of civility, the lack of tolerance. We’re losing what keeps humanity together and we’ve got to figure that out.
Brian Bell (01:00:49.982)
Yeah, same. I share all those concerns. And it seems to coincide with technological and economic revolutions that we’re kind of in. You saw this back in the 20s and 30s. You saw this in the 1800s. I think you’re going to probably see it with AI. There’s going to be a lot of dislocation. And we have to manage that well. But I think if we do it well, what’s on the other side is amazing.
Jon Staenberg (01:01:12.999)
Yeah. agree. Yeah, but if we don’t that’ll unfortunately be amazing in a different way.
Brian Bell (01:01:24.428)
Last question, what do you want your legacy to be?
Jon Staenberg (01:01:29.704)
I’ve always, probably from my Buddhist training, never held myself in, I mean the notion of a legacy is kind of funny to me. You know, at some point in the world...
Brian Bell (01:01:44.878)
Yeah, you know what’s funny is nobody will remember you in 1000 years. Right? That’s a very Buddhist philosophical outlook, you know? Yeah, it is. Yeah. Impermanence.
Jon Staenberg (01:01:47.208)
I mean, yeah, that’s how I feel, like literally. But that’s true. It’s true. And so my legacy is only about really one thing. Did I leave the earth being a kind person? I hopefully impact people positively? Did my daughter feel that I was there for her? And most of the time, because certainly not always, I was a good dad. That’s my legacy. I’d love to, you know, the reason I want to make money is to give it away. Um, but no one’s going to remember me in a thousand years. And that’s probably optimistic, by the way, I think it’s way shorter than that. So.
Brian Bell (01:02:31.512)
Yeah, there’s this YouTube video I watched. was like, the last person to remember you was the title of it. I was like, you know, it’s some, you know, 100, 150 years, your great, great grandchild like dies. And, you know, that’s it. That was the last person ever had a thought of you alive. That was pretty amazing. Well, John, I really, really enjoyed you coming on. Thanks. Thanks. it was great to get to know you.
Jon Staenberg (01:02:36.22)
That’s great.
