20VC The Chainsmokers on Raising Their First $35M Fund and Entering The World of Venture, Dealing with Vulnerability and Insecurity Today & How Music and Venture Compare; The Similarities and Differences

Harry Stebbings welcomes Grammy award-winning Alex Pall and Drew Taggart, founders of The Chainsmokers and the new $35 million venture fund Mantis, to "The 20 Minute VC." The duo discusses their transition from music to investing, leveraging their industry insights and fanbase to add unique value to their portfolio, which includes companies like LoanSnap and Ember. They emphasize the importance of relationships, both in music and investing, and share their approach to supporting founders, aligning with their personal experiences as entrepreneurs. Drew and Alex also touch on their other ventures, including a tequila brand and a production company, highlighting their broader entrepreneurial ambitions beyond The Chainsmokers.

• Harry Stebbings introduces Alex Pall and Drew Taggart, founders of The Chainsmokers and Mantis, a $35 million venture fund.
• Mantis has support from notable figures such as Roncom Cuban and Keita Boy.
• The fund is managed by Milan Cock and Jeffrey Evans.
• Drew and Alex are also involved in other business ventures like a production studio, Yaya Tequila, and Yellow Heart ticketing platform.
• Thanks are given to Christian Garrett for the introduction and question suggestions.
• Harry also highlights other businesses: Hello Sign, Digits, and Routable, emphasizing their user experience, financial management tools, and business payment solutions.

Welcome to the 20 Minutes VC with me, Harry Stebbingson to the show state. And we have a first, our first Grammy award winning guest. Their music's fueled many a peloton ride for me. And just last week they announced their new venture, Mantis.

This quote introduces the episode, highlighting the significance of having Grammy award-winning guests who have recently launched a venture fund called Mantis.

• Drew Taggart mentions that both he and Alex Pall had entrepreneurial ambitions from the start.
• They approached their music careers with a growth hacking mindset.
• They initially gained traction by remixing indie artists found on Hype Machine.
• Alex Pall would personally email hundreds of music bloggers to promote their remixes.
• Their early promotional strategy was based on forming strong relationships with music bloggers.

Yeah, I think Alex and I, when we first met in 2012, we obviously really bonded over dance music, but we also had a lot of entrepreneurial ambitions that I think has really played a key role in making us successful in addition to our passion for creating the Chain smokers as a music project.

Drew Taggart explains that their shared interest in dance music and entrepreneurial drive were key to their success in the music industry and beyond.

• Drew and Alex recognized the importance of relationships and partnerships in the music industry.
• They focused on the human aspect of their interactions with music bloggers.
• Their approach contrasted with the generic promotional emails typically sent by labels.

And I think that was probably the first thing that we did of really just acknowledging the people that we mutually needed each other to help each other. They needed stuff to post and we needed them to post us.

Drew Taggart emphasizes the mutual benefit in their relationship with music bloggers, highlighting the importance of recognizing and valuing each other's needs in business collaborations.

• Alex Pall explains their initial use of technology in crowdsourcing tours with the platform Tilt.
• Their business manager advised them to look into passive income streams, leading them to invest in businesses like Ember.
• They realized that their investments and endorsements were adding value to the companies they were involved with.
• The Chainsmokers began actively seeking investment opportunities in areas of interest beyond consumer brands.

Yeah, so we already kind of mentioned the beginning of how we use tech. We also crowdsourced a couple of our early tours using this platform tilt, which was like a really cool idea to like, hey, let's not go places that people don't want us. You know what I mean? Let's go to the places where they really want us.

Alex Pall describes how they used technology to ensure they toured in cities where there was a genuine demand for their music, showcasing their innovative approach to leveraging tech in their careers.## Transition to Venture Capital

• The Chain Smokers, Alex and Drew, have diversified their business ventures beyond music.
• They have started a TV and film production company, a tequila company, and are now moving into venture capital.
• They recognize the alignment between their various businesses and their personal brand.
• Alex and Drew emphasize their thirst for knowledge and the opportunities they've had to learn from diverse industries.
• Their extensive touring and hosting events provided them with a network of tech industry contacts.

"We've started a number of businesses that are related to the chain smokers. We have a tv and film production company. Our first film just came out in theaters called Wards on Bathroom Wall, which we're really excited about. We started a tequila company, which is... I think the alignment with the chain smokers is pretty clear there."

The quote explains the different businesses started by Alex and Drew that are related to their music brand, The Chain Smokers, including their ventures into TV, film, and a tequila brand.

"We have an insane thirst for knowledge, and we have this incredible opportunity to learn about all these different industries and meet all these incredibly smart people."

This quote highlights Alex and Drew's desire to learn and their ability to meet influential people across different industries due to their fame and networking opportunities.

• The duo acknowledges the nervousness associated with entering a new industry like venture capital.
• They are aware of the high stakes and the "live or die" nature of their venture investments.
• Alex and Drew find comfort in the similarities between the entertainment and tech industries.
• They have spoken to various successful individuals and realized that there is no single formula for success.
• The Chain Smokers focus on investing in businesses that resonate with their fan base.

"So, yes, we are nervous. This is a new space and there's a lot riding on this, and it's very live or die for us to make this work."

The quote expresses the nervousness and high stakes involved in their transition to venture capital, emphasizing the importance of success in this new endeavor.

"Everyone begins to contradict themselves... you're like, wait, okay, so no one knows anything, and we're all just trying our best."

This quote reflects the confusion and contradictions that arise when seeking advice from different successful people, leading to the realization that there is no clear path to success.

• Alex and Drew are cautious about investing in music tech despite their industry background.
• They prefer to invest in companies that provide value to their fan base, such as Loansnap, an AI mortgage lender.
• The Chain Smokers identify with their fans' life stages and seek to invest in companies that address their needs.
• They aim to leverage their unique position and distribution capabilities to provide value to the companies they invest in.

"We actually are pretty bearish on investing in music tech companies... We invest in this company, Loansnap, which is an AI mortgage lender that operates on blockchain to process loans in about half the time that rocket loans... can process."

This quote outlines their investment strategy, which includes being cautious about music tech investments and focusing on companies like Loansnap that can benefit their fan base.

• Being a good partner to founders is crucial for Alex and Drew.
• They have intentionally curated a list of LPs to add value and advise on smart investment decisions.
• They avoid short-sighted value-add strategies like social media posts, preferring meaningful contributions such as introductions and networking.
• The Chain Smokers view their investment as a way to support founders and add value alongside other VCs and investors.

"For us, being a good partner is the most important thing... We really curated our LP list in a very intentional way where we kind of have a guy for everything that's a respective leader in their industry."

This quote emphasizes the importance of partnership and the strategic selection of LPs to provide comprehensive support and advice for their investment decisions.

• The competitive nature of VC has led to allocation challenges for The Chain Smokers.
• They focus on early-stage investments and look for opportunities to partner with leading firms that value their unique contributions.
• The Chain Smokers do not typically lead rounds, which allows them to collaborate with other firms and founders effectively.

"It is, it's the most competitive time ever to be in VC, as we've recently learned, as we're new to the space."

This quote acknowledges the competitive challenges they face as newcomers to the venture capital industry.

• Alex and Drew prioritize direct involvement with founders, especially in the early stages of their investment.
• They draw on their own experiences as founders to relate to and support the entrepreneurs they invest in.
• The Chain Smokers and their LPs are committed to going to great lengths to assist the companies in their portfolio.

"We really love to be on every call. I mean, I think that's really important, especially at the beginning."

This quote highlights their hands-on approach to building relationships with founders and their commitment to being actively involved in the companies they invest in.## Investment Philosophy and Approach

• The speakers emphasize the importance of personal stories and motivations behind the entrepreneurs they consider investing in.
• Early investments are seen as investments in people, not just businesses.
• The speakers look for founders with a "chip on their shoulder," signifying drive and determination.
• They value ambition and hard work over pure intelligence.
• The idea that there are no shortcuts to success is highlighted.

"And it's almost like a storytelling session where it's like, tell us how you got here. Why are you here? What led you to this point? And those stories are so inspiring to us because you're learning this person's life story of why they've led them to this moment, to create this business that hopefully is going to change the entire industry they're in."

This quote explains the importance of understanding an entrepreneur's journey and motivations when considering an investment, as it can be indicative of their commitment and potential to create industry-changing businesses.

"We're not the smartest guys in the room, but we know the work that it takes to accomplish things."

The speakers acknowledge that hard work and dedication are more critical to success than being the most intelligent person in the room, emphasizing their investment philosophy that values determination.

• Alex Pall shares a personal story about his father's passing and how it motivated him not to become a negative statistic.
• Both speakers have a strong work ethic and continually push each other out of their comfort zones.
• They believe in continuous improvement and striving for bigger and better achievements.

"I refuse to be, like, a statistic for a child whose father passed away when he was young, and now he's screwed up or something."

Alex Pall explains how a significant life event and external doubt fueled his ambition, which is a driving force in his personal and professional life.

• The speakers believe that venture capital is not just about intelligence but also about how one makes others feel.
• They stress the importance of being supportive and maintaining positive relationships with founders and others in the industry.
• They emphasize the long-term approach to relationships and opportunities, even if immediate collaboration isn't possible.

"BC is not about brains. It's about one simple thing. It's not what you say. It's not what you do. It's how you make people feel."

This quote underscores the idea that emotional intelligence and the ability to make people feel valued are critical in venture capital and business relationships.

• Alex is described as a persistent communicator, regularly following up with potential partners and keeping lines of communication open.
• The speakers highlight the importance of persistence and not accepting a "no" until it's definitive.
• They acknowledge the need to balance creativity with getting things done.

"It's not a no till it's a no in my eyes. And I think that's really important when you're dealing."

This quote from Alex illustrates his philosophy of persistence and the importance of clear communication and follow-through in business dealings.

• Alex's "superpower" is his ability to be a great haggler and persistent negotiator.
• Drew's strength lies in his ability to envision the future and position themselves accordingly, as well as his talent for making people feel special.
• The speakers value their partnership and the unique strengths each brings to the table.

"Alex's superpower, too, is he's the world's greatest haggler and he'll just hassle people."

This quote highlights Alex's negotiation skills and persistence, which are seen as valuable assets in their business ventures.

"He can really clearly kind of see. I don't know if the future is the best word, but he has such an, that's a good, like, investing or even music in."

Drew's ability to envision future trends and his hospitable nature are described as his unique strengths, contributing to their successful partnership.

• The speakers discuss their various business ventures and the desire for a more balanced lifestyle in the future.
• They express a hope that their businesses will become more focused and synergistic over time.
• Mental health is mentioned as a central theme in their work, highlighting their commitment to impactful projects.

"And I hope that all of our businesses really find that synergy with each other in the years to come."

Drew discusses the aspiration for their diverse business ventures to become more integrated and efficient, reflecting a strategic vision for future growth.

• Alex shares his fondness for the book "Tao of Pooh" and the simplicity of its life lessons.
• Personal stories and preferences are used to illustrate the speakers' characters and values.

"I would say it's kind of funny. Tao of Pooh. It was like a simple book I read in high school. But there's something about reading the way that it just simplifies certain life lessons and values that I just find so powerful."

Alex's preference for a book that distills complex life lessons into simple narratives reveals his appreciation for clarity and essential wisdom in both literature and life.## Escapism and Philosophy in Literature

• Drew Taggart finds "The unbearable lightness of being" by Milan Kundera to be a peaceful read.
• He appreciates the escapism aspect and the philosophical discussions in the book.
• The setting of Prague in the 1960s and the way philosophy is woven through relatable characters are highlighted.

"The unbearable lightness of being by Milan Kundera. A couple of reasons. One, I like the escapism component of it, of thinking about being in Prague during the 1960s is fun. And then I also like all the philosophical nature behind that book and thinking about what really matters, if we really matter, what's the point? I think they have a bit. And just like how he tells all that philosophy through characters that you can see yourself in every single one of them."

This quote emphasizes the multifaceted appeal of Kundera's book to Drew, combining historical escapism with deep philosophical questions, all portrayed through well-crafted characters.

• Drew Taggart mentions using tequila to deal with nerves but acknowledges it's not always appropriate.
• He discusses learning from performing on stage and being open to the crowd's energy.
• Being humble, open, and willing to learn from others can help calm nerves during important meetings or events.

"Tequila is a good one, but obviously before a lot of meetings, it's not appropriate. But I think we both learned this from being on stage and how unpredictable a crowd can be. It doesn't matter if you're going to play a sold out show. You don't know what the energy in the room is going to be like until you're out there on stage."

Drew shares his personal method for dealing with nerves and relates it to his experience with live performances, highlighting the importance of adapting to the audience's energy.

• Alex Pall emphasizes the value of having a partner and supportive people to deal with challenges.
• He believes it's crucial to remain optimistic and not to overthink potential negative outcomes.

"Yeah, I mean, Tila is great. I think, you know, you're going to get through these things. I think at the end of the day, it's great to have a partner and people alongside you."

Alex underscores the significance of teamwork and companionship in overcoming difficulties, suggesting that a support system is vital for resilience.

• Alex Pall wants to create environments where people from the tech industry can connect and be themselves.
• He mentions the desire to move tech culture away from Silicon Valley, citing complaints about the culture there.
• Pall looks up to individuals like BB Nevo, who excel at bringing people together.

"I would probably, and this is on behalf of all of our friends we've spoken to in Silicon Valley. I feel like we want to remove them from Silicon Valley and move them somewhere else."

Alex expresses a shared sentiment among his peers to shift the tech culture from Silicon Valley to a more conducive environment for personal connections and authenticity.

• Drew Taggart talks about dealing with depression and anxiety regardless of success.
• He mentions the struggle with self-expectations and others' expectations, which he continuously works on.
• Alex Pall discusses blocking out negative feedback and remembering one's true self.

"Sure. I mean, the thing about depression and anxiety is it doesn't matter what is on your resume, it's about how you feel about yourself."

Drew Taggart's quote reveals that mental health issues can affect anyone, regardless of their achievements, and that self-perception is key to one's well-being.

• Drew Taggart aspires to narrow the investment thesis of Mantis to align with their identities and create synergy with their other ventures.
• He aims to make meaningful investments that benefit society, while also ensuring returns for investors.

"It's just narrowing our thesis to the point where the investments we make, the businesses that we have access to, will have great synergy with all of the other things that we do and who we are as people."

This quote outlines Drew's vision for Mantis, focusing on creating a cohesive investment strategy that reflects their personal values and contributes positively to society.