Sparks Weekend, Entrepreneurship in Spokane, Angel Investing

Chris Kiefer (00:00.726)

Welcome back everybody to another episode of the Pursuit of Purpose. My name is Chris Kiefer and today we have Tom Simpson from Spokane. Tom, thank you so much for coming on today.

tom simpson (00:11.782)

Thanks for having me, looking forward to it.

Chris Kiefer (00:13.898)

And Tom, you are in a number of entrepreneurial and startup ventures and whatnot. I know that you are the CEO of Ignite. Tell me, just kind of for the people listening, bring me into the world of what Tom does, what Tom's passionate about, however you want to frame that.

tom simpson (00:34.522)

Okay, well that's a lot of topics there. I'll try to be brief. But I do wear a number of hats here in our region. One of which you alluded to which is Ignite, which I'm CEO of, but it's only a two person organization so the title CEO is probably a little too over the top. But anyway, what Ignite does is we fund, accelerate, and mentor.

explosively growing companies in the Spokane, Coeur d'Alene and Sandpoint region. And we have a number of funding mechanisms. We have our own internal capital that we can provide to exclusively growing companies. We have connections with a number of other sources of capital. In terms of accelerating, we put on a number of programs that are intended to help entrepreneurs and startups be successful.

have a proprietary group of mentors that we can introduce entrepreneurs to. So that's what we do. I also run what's called the Spokane Angel Alliance, which is a membership group of angel investors. And I've been doing that for nearly 15 years. And over that timeframe, the members have put about 70 million into, ironically, about 70 companies. So that's been a very effective mechanisms for emerging companies to secure capital in

And thirdly, I run a family of seed investment funds where I have my own pool of capital that I can deploy directly into companies in our region. So those are the three things that I focus on primarily here.

Chris Kiefer (02:15.746)

Awesome. So I think it's hilarious. So when we met, we were at the TEDx talks in Spokane. Do you regularly attend those? I assume. Have you been to them every year?

tom simpson (02:30.138)

Well now I've been invited to attend almost every year. For whatever reason, I've not been able to. So this is the first year I went, but I was really blown away and really enjoyed it and will be more purposeful about making sure I go and attend in the future.

Chris Kiefer (02:51.602)

Yeah, I have the same thing for me. I had like I knew that there was a TEDx Spokane, but it was kind of like, I don't know, in my head, I was thinking, the quality of speakers probably isn't that great, whatever, you know, it's Spokane, who are they bringing in? But I was I loved like, I would say maybe one out of the 11 talks, maybe two, were kind of like, it's okay. But the other ones were like, they're really good. So I was very impressed. But Jeff McLaughlin,

tom simpson (03:02.299)

Yeah.

tom simpson (03:15.918)

You know, Spokane has so many interesting people that are in this community that keep a very quiet presence. And I've been here for a long time, I know a lot of people, but I regularly get surprised by someone new that's in here in our community doing amazing things, but very quietly.

Chris Kiefer (03:40.754)

Yeah, 100%. I completely agree. I told Jeff McLaughlin, so he was the speaker that had everyone stand up and play the little game. And so I actually reached out to him and said, Hey, I really resonated with his style. I'm a pretty like playful. I like being silly and acting like a kid and just have making things fun. So I asked him for some just feedback on a talk that I'm preparing for in a coaching group I'm in over in Coeur d'Alene.

tom simpson (03:49.574)

Yeah? Yep.

Chris Kiefer (04:09.482)

And so I met with him and I told him, of all the talks, I probably remember, there's like five things that jump out that you can remember, because it's hard to remember after three hours of information at you, it's like, what are you gonna take away from it? I said, but I guarantee you, I am never ever going to forget that one guy made me stand up and grab Tom's finger behind me. Because I was like, and it's such a great.

tom simpson (04:21.798)

Yes.

tom simpson (04:31.858)

Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha

Chris Kiefer (04:37.358)

tool to engage the audience and be like, stand up, turn around, talk to people. And then I also said, told Jeff, like, obviously, who knows what happens with you and I meeting, but it's just like crazy to think how often you come into proximity with people, whether you're at a coffee shop or sitting next to them in the theater or you're in line at a grocery store and when we don't say anything, you know, so I think that's another cool thing to

tom simpson (04:42.032)

Yep.

tom simpson (04:52.924)

Yeah.

tom simpson (05:00.782)

Right.

Chris Kiefer (05:04.926)

address or it'll just point out about Jeff's talk in particular, but I'm curious because of you probably have to be one of the most networked individuals in Spokane and I'm sure that you are frequently You're very aware of that I assume and you're probably on the hunt just kind of like trying to be open to who might cross paths with I maybe I'm projecting but it seems that way from just talking to you and

tom simpson (05:14.098)

I'm going to go ahead and close it.

Chris Kiefer (05:33.418)

seeing who else you're connected with on LinkedIn. Like there's, we have 15 shared connections on, or 17 actually on LinkedIn. But yeah, and you've got many more on there.

tom simpson (05:44.558)

Well, you're making me sound way more important than I feel, I believe. But I grew up in Spokane. I've been here for a long time. I love the city. I am in the good fortune that a lot of the things that I do enable me to meet a lot of people. But I enjoy it. I mean, it's one of the most fulfilling things that I do is just meeting people, hearing their ideas. And I love...

I love, oftentimes, a few years after the fact, people come up to me and say, hey Tom, you may not know, but when we met a couple years ago, you suggested this or you introduced me to this person and it's really had an impact on my life. And that's really where I get my most fulfillment. And so, yeah, being kind of involved in the community that I'm in is very rewarding. My grandmother always said, blossom where you're planted. I am aware. It

though. I mean when you have visibility in a small town you can sometimes be controversial and I try to be aware that if I may disagree with someone or particularly if someone's business plan doesn't really excite me, still try to communicate.

make comments that are constructive and helpful. If I don't particularly am a believer in a business plan that is presented to me, rather than saying it, offer suggestions or other things or guide the conversation to, here's what you presented me, but how could it be better? What could we do to really make this interesting? Because a lot of people come to me for funding, and the truth of the matter is, I only fund a small percentage of the people I meet, and if I act like,

the way the sharks do on Shark Tank, nobody would ever come back to me. But if I can give people value after I meet with them, that doesn't include capital, hopefully people will walk away and say, you know, I didn't get an investment, but I did get an introduction, I got these ideas, and walk away feeling good about the meeting.

Chris Kiefer (07:51.946)

Yeah, how many other types of groups, well, just like in the investor startup world, is there any other group in Spokane or Coeur d'Alene that exists that you're not a part of? So you mentioned Ignite. Well, I already forgot the names of the other ones.

tom simpson (08:09.138)

What is Ignite, the Spokane Angel Alliance, the Kickstart Funds. But there are a number of other entities and organizations that operate in our region that are work that are whose objective is to help startups and entrepreneurs.

Chris Kiefer (08:13.432)

So are.

Chris Kiefer (08:27.146)

Okay, because I was going to say the one of the things that I was we were thinking about going to, but we're actually going we're godparents for some friends of ours baptism in Boise, so we will not be in town for Sparks weekend. But I was like, I almost I almost requested or had Natalie asked them if they could move the date. I was like, Okay, they asked us first. That's fair. We'll keep it. But tell me and everyone listening.

tom simpson (08:42.586)

Bummer.

Chris Kiefer (08:56.458)

What is Sparks Weekend? It looks like it's 21 days from now on November 17th. Yeah, fill me in on what Sparks Weekend is.

tom simpson (09:01.169)

Yep.

tom simpson (09:05.574)

Well, Sparks Weekend is a weekend long event, 54 hours, and the really objective of Sparks Weekend is to provide the opportunity to anyone that has an idea for a new business that hasn't been incorporated to present their idea and have the opportunity to...

Then develop a team of people that might be developers or engineers or graphic designers or marketers to spend all weekend refining the idea and to be paired with a mentor such that your idea gets better flushed out, maybe you build a minimally viable product, maybe you do market research and then ultimately present it to a panel of judges on Sunday night

tom simpson (10:02.988)

be chosen as the winner and that team will be eligible for up to $50,000 in investment capital. Now, it's a little sharp tank like in that the commitment would be made, but it's still subject to due diligence and negotiation of terms.

Chris Kiefer (10:19.287)

Hmm.

tom simpson (10:20.162)

And the way the weekend is formatted is on Friday night, we started off with a keynote speaker. And this year's keynote speaker is Martin Tobias, who's initially from Seattle, very successful entrepreneur, started a couple of very large companies, moved to Spokane. Now he's a very active angel investor, really worldwide. So he's our keynote speaker to kind of kick off the weekend. But after that, entrepreneurs will have a chance

And typically we have 30 or 40 people who will stand up and present. You got one minute. No slides

And after that is done, the 10 best ideas are self-selected. They're voted on. And everyone gets to vote. And in the room are the people who pitch, the people who want to join a team. And then a lot of people are there just to spectate, to watch the action. And they all get to vote on their favorite idea. And 10 teams are selected. And once those 10 teams are selected,

teams around those.

those best ideas. And the people who formed it to join a team might be people who presented but weren't chosen, or there are others in the audience that specifically showed up to join a team. And then they spend all weekend long working, again with a mentor, to refine the idea and then pitch to a panel of judges on Sunday night. But it all takes place at the Catalyst Building on the U District campus, a beautiful new building

Chris Kiefer (11:32.994)

Mmm.

tom simpson (12:00.864)

years ago. We feed everybody all weekend with a selection of meals from local restaurants and wineries and breweries. And so it's just a fun event. It's a productive event. Looking back over time, it's now called Sparks Weekend. It used to be called Startup Weekend Spokane. We changed the name along the way, but one company here in Spokane called Spiceology. They were one of the first winners of this. We've had a couple of companies go on and present on

an effective means for people to present an idea and ultimately take that and turn it into a successful business.

Chris Kiefer (12:39.966)

So I'm curious the, I didn't realize that when you say like make an MVP, like I'm thinking how much can you actually get done in 40 hours or however many hours it is?

tom simpson (12:53.142)

It's really quite amazing what can be done. You know, one of the winners several years ago was a 14-year-old girl by the name of Brooke Martin. And Brooke presented an idea for a interactive dog treat dispenser. I won't go into all the details on how it worked, but over the weekend, so she presented on Friday night, she was one of the 10 winners, and she spent the weekend, and she really built a mock-up of the product

Chris Kiefer (13:20.639)

Wow.

tom simpson (13:22.856)

present to the panel of judges on Sunday night. But on top of that, you can do market research, you can do competitive analysis, you can maybe build a website, you can do pricing. So it's amazing really what happens over the course of the weekend to bring the idea along. And for those who don't want to present an idea and don't want to join a team, it's still fun just to watch. It's fun to go

Here are the 30 or 40 ideas presented and then come back on Sunday night and see how they have been refined and developed over the weekend.

Chris Kiefer (14:02.598)

And basically, so these people that like, if I pitch an idea, people are joining because this is it is my business. It's my idea. But people are just like, I'm just going to give a bunch of energy and an effort and whatever resources and knowledge I have to helping this. And then at the end of it, if that person won, all the people that were on the team are just kind of like, hey, good luck. Let me know if you need anything else. But it's not like a business formed right then with your new employees, you're just like,

tom simpson (14:10.083)

Right.

tom simpson (14:30.778)

There's no obligations and you know a lot of people that join the teams are just doing it for the fun of the weekend I mean it does replicate the life in a startup because you know what we've got beer and pizza And people are working late, and it's frenetic and it and it really does Replicate what it's like to be in a startup you have you have you have time pressures you have deadlines you have objectives You're excited

Chris Kiefer (14:37.879)

Yeah, yeah.

tom simpson (15:00.452)

know a lot of people who are joining the team aren't really doing it because they believe they're going to join the team of a next startup that goes on for the next several years. They've got, they like startups, they got a particular skill set and they just want to you know be part of this fun weekend and the energy and the innovation that goes with it.

Chris Kiefer (15:20.033)

That's awesome.

tom simpson (15:20.098)

Now for the founder, for the individual pitching the idea, however, you know, they are doing this because they believe they have an idea, they wanna get chosen, they wanna develop their idea, they want the $50,000 in capital.

Chris Kiefer (15:33.854)

Yeah. And then the other part of me is wondering like, this is, these are assumptions. You can't come in and like pitch, Hey, I want to start an HVAC company or some like just a, like a everyday run of the mill thing that's already exist. It's, this is more of like a new product, a new software, a new thing that has never existed before. Correct?

tom simpson (15:56.078)

Well, I'm going to correct that a little bit. You know, this is the Spokane region. I mean, if we were in a bigger city, you might be able to have more specificity about the criteria for the company. But we're drawing from a smaller region. So frankly...

You know, I don't want to discourage anybody with an idea for a new business. And it may be HVAC. Now, one thing that's common, a common saying or quote in my industry is, and it's a little tongue in cheek, but you'll get the essence of it. People will say, frankly, there aren't a lot of new ideas. There's only new execution. So there might be someone out there with an idea for HVAC that is better and newer and better than what's done before.

or they have better execution. So I don't wanna discourage anybody with a new idea from participating.

We've had one individual that routinely shows up at a startup or at Sparks Weekend. His name is John, he's a plumber. He sometimes go by Stinky John. And he's had a plumbing device that he has frequently pitched every year. And occasionally he's been one of the 10 winners. And he just loves the experience of going through the weekend.

Chris Kiefer (17:17.49)

And so, and then he...

Chris Kiefer (17:22.014)

That's awesome.

tom simpson (17:23.334)

So I don't want to discourage anybody. They're the real, they're really owned. The only primary dividing line is if you've already incorporated your business, if you've already formed it, you already have a business license, you're too far along for us.

Chris Kiefer (17:36.638)

Yeah, yeah. Awesome. And so, yeah, what, like, so Sparks Weekend, that's exciting. What else, as far as like entrepreneurship in Spokane and North Idaho, what is like, you said at the beginning, or maybe I read this on your bio, but obviously I believe this as well, that like entrepreneurship is like one of the core building blocks for like a growing.

and prosperous community, right? If you don't have jobs and businesses that are starting up, your community can only grow so much. I mean, the digital world that we live in helps to some degree, but you still need healthy, vibrant businesses to employ people that want to move here. So tell me a little bit about like, what has been exciting or surprised you about, like in the last...

tom simpson (18:06.61)

Yep. Right.

tom simpson (18:23.333)

Yep.

Chris Kiefer (18:32.118)

15, 20 years, I can't remember how long you said you've been doing this, but how has things evolved and what has been really exciting to see?

tom simpson (18:34.972)

Yeah.

tom simpson (18:42.703)

Um, you're dead on. I mean.

Entrepreneurship and innovation is critical to the vitality of any region. You know, think of it as a portfolio. Every region has its cash cows. It's successful businesses that have been around for a number of years. But you need to have your rising stars, too. The companies that over time are going to take that position and be the new leaders. And sometimes it's...

It's challenging to educate a community on the importance of having that portfolio, of having the rising stars, because we oftentimes people focus too much on the established businesses and believe that they will be there forever. But the real innovative cities realize you need to have a complete portfolio. In terms of, and again I have been doing this for a while. I grew up in Spokane.

Chris Kiefer (19:38.99)

Hmm.

tom simpson (19:44.32)

a number of years in Seattle on the East Coast and came back here. What I used to often say was a couple years ago, but now it's been a long time. I came back to Spokane in 1895. Spokane's changed a lot since I came back.

And I probably won't go over the farther out history, but it's really changed a lot in the last three years. The pandemic has been really, really good to Spokane for two reasons. One, a lot of people who because of the pandemic were afforded the opportunity to work wherever they wanted to because remote work was embraced. For lifestyle reasons, chose Spokane and they left places like

Seattle or the Bay Area or other cities and came to Spokane. And again, many people have moved in here quite quietly, but I meet them because they want to become angel investors, they want to become mentors, they want to serve on boards. So we've had all this influx of incredible talent into this community that has helped our startup community. On the flip side, one of the common complaints about companies in Spokane is,

Can you really build a team? Can you really hire people? Can you find the right talent? And frankly, that was somewhat of a legitimate concern. But now, again, because remote work has been embraced, companies in Spokane now can recruit worldwide for people. And a number of my companies now have people that are working for them, but they're based all around the world. So the pandemic has really changed

of Spokane in a very, very positive way. And I'm seeing that really kind of in the increase in the quality and the number of new opportunities that I'm evaluating.

Chris Kiefer (21:41.59)

Hmm. So I'm curious from seeing so many deals. What is the I don't know if you have like the top three list of the what the pitfalls but like Of all the businesses that you've invested in you said that the one group has invested in 70 You probably have another you know other ones that you've mentored or whatever You've seen a lot of startups and I don't even remember the statistic. It's like 95 percent or some ridiculously high number of startups

close after a couple of years, right? What is the reason that you think businesses fail? And I guess I'm also assuming that you're probably trying to filter those so that you're picking the ones that are less likely to fail, but even those, I would assume, still fail at a high rate.

tom simpson (22:26.854)

Yep.

tom simpson (22:30.234)

Yep. Well, that's a topic for probably a five hour podcast. There's a lot of variables in why companies either succeed or fail. I think most people in my business will say it ultimately comes down to the company's culture. And...

assuming the idea was only reasonable and that the market was only reasonable if you've got a culture of tenacity and creativity and respect for the team and you make you know some wise decisions your odds of success are better they're never guaranteed but no you're really look for culture where

Everyone feels empowered to show up every day and be excited and to work hard and to think creatively So culture is really you know, if you're gonna pick one variable now the next variable I would probably say too is Budgeting carefully for cash a lot of companies Go out of business because they ran out of cash and

Maneuvers always believe things are going to happen faster than they often do. And they believe funding sources are going to be there. But there's a lot of forces in the market that result in timing being longer than people expected. And then we have market cycles where cash is not as prevalent as it might have been. We're in one right now. In 2021, it was very easy to raise capital.

I mean, companies were going public, people were doing SPACs, venture capital were writing checks frequently. It's completely different now than it was in 2021.

tom simpson (24:35.546)

So I would say, and this is one thing I'm advising a lot of my companies is, you know, budget very carefully. If you've got some cash, make it last as long as possible. Build cushion in there. So I would say the two things that, you know, enhance the probability of success is really a very thoughtful culture and prudence on expending the capital that you've raised.

Chris Kiefer (25:03.626)

Mm. That's good. The I'm wondering the for the culture piece that obviously, I mean, I, my experience is that is directly a result of the founder. Would you agree with that?

tom simpson (25:18.926)

Yep. Yeah, the founder or the founders. I mean, it's the individuals who started the company and what is their DNA, what's their philosophy, what drives them, how do they communicate, are they honest? But they, the imprint, it's like parents. I mean, it's a genetic influence that founders have on their team.

Chris Kiefer (25:43.678)

Because I, my again, I don't know how far along these companies that you're investing in are. But obviously, if you've got a 50 person company, you can kind of walk into the office and feel like how what's the vibe, you know, talk to people. And that would be an easy way to audit. How do you audit a culture of one person or two people or five or whatever, because you're really

tom simpson (26:03.235)

Yep.

Chris Kiefer (26:10.642)

Like I agree completely that the culture is the thing, but what are you doing to analyze the person who's going to make the culture to see if they have what it takes or can you coach them or whatever?

tom simpson (26:13.286)

Yeah.

tom simpson (26:19.854)

You know, it's just having been around a lot of entrepreneurs and a lot of startups, it's a gut feeling. You know, I guess the feeling's no different than it might be. Let's say you walk into a bar.

and you might meet a couple of people and your first impression may be, hey, I don't really like that person, or hey, I really like that person. And if I were to ask you...

why you made those observations, it would be a subjective response, customized to who you are, and the type of friends you've had in your past. And that's, you know, it's really, for me, it was all, I always, for me, it was called the Robin Test. And my mom's name was Robin.

Chris Kiefer (27:01.656)

Hmm.

tom simpson (27:14.082)

and my mom knew nothing about business and capitalism bored her. But she was a very good read of people. And so I always would envision before I invest in a company and I still do, an imaginary dinner with my mom and the founders. And I probably don't say anything during the dinner. My mom talks and they talk. And after dinner, I just ask my mom, did you like those people? And if in my mind she says yes,

tests.

Chris Kiefer (27:45.322)

Hmm. That's awesome. So it's it. I mean, that makes sense. I this is making me think of this. I made a connection this summer through a friend of and it's the man. This guy, I won't say his name or his business, but he's the managing partner of hedge fund in New York that has like three point five billion under management right now. So he's built this thing from he and his partner from scratch basically. And.

I'm talking to this guy who likes to, he has a low profile, doesn't really, you wouldn't know who he is, you know, but he was saying that they basically invest in like 10 companies at a time, and they're all public companies. And the way that they decide to invest is a hundred percent on the management team. That's like one of the largest factors. He's like, obviously there's like, what's the product, whatever, but they basically look, you know, the classic jockey or the horse.

tom simpson (28:19.716)

Yep.

tom simpson (28:34.394)

Yep.

Yep.

tom simpson (28:41.082)

Yep.

Chris Kiefer (28:41.546)

They go and they do personality assessments, interviews, past history, and their only thing is, even if the business is struggling right now, is their team like a team of all-stars, and do we believe that they can figure it out? Because you could also be on the flip side, the team's crushing it right now, but next year, these unforeseen circumstances are gonna wipe out their revenue, and do they have the agility and the capacity?

tom simpson (29:05.147)

Yep.

Chris Kiefer (29:09.602)

to pivot and still be successful. And they've done this over the last 20 years and he's been massively successful and it's all because of finding those, the people.

tom simpson (29:11.816)

Yep.

tom simpson (29:15.899)

Yep.

tom simpson (29:21.805)

Yep. He's that it makes it makes absolute sense.

Chris Kiefer (29:27.475)

Yeah, so I.

tom simpson (29:29.378)

The one thing I would add though is where I do filter people out, one way I can, an easier way to filter people out is oftentimes, well, one of the first questions I ask people is why are you meeting me? Why are you here? Why are you starting this company? And I try to elicit some huge passion they have for the product or service that they've

And I want to see the same passion that perhaps Howard Schultz had when he started Starbucks, when Phil Knight had when he started Nike, when Bill Gates had when he started Microsoft. Those individuals had just this crazy passion for a product or an idea.

and that's what drove them. The prospect of becoming a multi-billionaire wasn't one of them. They just loved their product or service. So I try to flush that out because being an entrepreneur is really difficult. You have way more dark days than happy days. And if you're not driven by this sense of passion, you're not gonna get through the dark days. And if all you're thinking about is making a buck at the end of the day, that's probably not gonna be enough to get you through

really dark days when employees are quitting, you're running out of money, and your customer just fired you.

Chris Kiefer (30:55.638)

Mm. That's good, yeah. I always wonder like the passion, like you just mentioned these very like celebrity level founders, and how often or how many days did they have the passionate days? Obviously like if you're gonna go pitch and get some money, you better have gone for the run, feel good, like you wanna make sure that you're showing up in the right way, but also like the, just the...

Like the people that, the stuff that you're putting into your head, the way you think, all that stuff, just your mindset is so critical to get other people to buy into the vision, you know?

tom simpson (31:30.767)

Yep.

tom simpson (31:34.987)

Mm-hmm.

Chris Kiefer (31:38.759)

Yeah, so what else like entrepreneurially? I guess my I have one this is another thing that's coming to mind When a business is considering or when would you say that a business should or shouldn't Look for investment capital Because what's the uh, yeah, I guess i'm curious if you have any um litmus tests i'm kind of like If you meet these criteria

you might look for it. If you meet these, you might not, or you don't meet these. You probably need to do something without investment yet, or whatever.

tom simpson (32:15.49)

Well, sometimes companies don't have a choice. I mean, I guess I might refine your question, not to be when, but how much and how to structure it. I mean, some companies may not have friends and family or their own personal resources, and to get started, they just have to raise money.

tom simpson (32:43.842)

So the question is not so much when, but how much and from whom.

tom simpson (32:56.718)

I always tell companies that, you know, for your first capital raise, make that amount that you need to raise an amount that is probably reasonably attained based on the nature of your idea and your background. Now

put some meat on that. If Jeff Bezos wanted to go out and raise money tomorrow, he could probably raise a billion dollars in two days. Now if some grads, some student from Gonzaga University with no background had an idea for a new business, he couldn't go out and say, hey I need to raise a billion dollars because it's unlikely. So he's got to pick a number that is probably reasonable for someone at that stage and I don't know if that's 250,000,

hundred thousand or five hundred but it's certainly not three or five million dollars so he's got to kind of right-size his plan and his expectations for an amount that someone with that background

could reasonably choose. Now, back to your HVAC thing. If this Gonzaga student had an idea for AI, which is super hot right now, versus maybe an HVAC company, so the person's got to choose an amount of money that is reasonable to be able to attract based on who they are, their background, and what the product is. So you gotta kinda scale your... Now, if you perform...

Chris Kiefer (34:06.243)

could get.

Chris Kiefer (34:29.742)

Hmm

tom simpson (34:36.002)

and you deliver in the next 12 or 18 months, you'll have more traction, you'll have more credibility, and then you might be able to raise more. So I advise people raise a reasonable amount.

And do it so that you can last 12 to 18 months such that you don't run out of money in three months and have to go back to the coffers and give yourself enough time to hit milestones to gain credibility to go out and raise that next round. Or or come up with a business model that you know what? The business model is so clever.

Chris Kiefer (34:59.826)

Right. To be successful.

Chris Kiefer (35:07.458)

Hmm. And then what

tom simpson (35:16.314)

that you don't need to raise a lot of capital. Now, I know that doesn't happen a lot, but I often, you know, people often applaud the companies that just raised, you know, a lot of money in a Series A, but there are companies that go out there and prosper and succeed without having raised a whole lot of money. So the venture world doesn't really teach you that, but I always try to inspire people to think as creatively as they can in terms of their business model to raise a nominal amount of money.

you'll be successful.

Chris Kiefer (35:47.446)

Right. What is the, I'm sure that they're generally, if you're gonna raise 10 grand, what is the value of the business for that? Like what's the ratio of like, if that's like.

tom simpson (35:56.738)

Hahaha

tom simpson (36:00.034)

It's so hard. It's so hard. I mean, it's, uh, um, it's. No, if you, if you have just a, uh,

I get myself in trouble. It's just all over the map. It just depends on so many different variables about what you know, the size of your market, what your background is, how if the markets are reprevescent or if they're in a bear market, you know, a startup company can be valued anywhere between a brand new idea could be anywhere from a half a million up to ten million dollars in terms of valuation. It's

Chris Kiefer (36:38.158)

Hmm. And then of the, so maybe that's the question. Of the valuation, what percent of the valuation do investors typically, what are you looking for as like an ROI of like, I'm going to invest 10,000 for 10% of what size business?

tom simpson (36:58.346)

Well, let's put the percentages aside. People like me, investors and early stage startups, typically want to be able to get ten times their money.

Chris Kiefer (37:09.835)

Okay, that's our...

tom simpson (37:10.566)

If I put a dollar in a business, I am hopeful, and hopeful is probably the right word, even though hope's not a strategy, but as you alluded to earlier, a lot of these don't work out, but I wanna see a reasonable path to getting 10 times my money in five to seven years.

Chris Kiefer (37:17.089)

Right.

Chris Kiefer (37:30.698)

Got it. And then you're doing that with, and if this is just what I've heard from other people, they're doing that with five businesses, 10 businesses at a time. So you take a fund, you find your horses that you're betting on, you divvy up the money, whatever percent, 40% or 60% fail, and a couple of them are huge and you still end up netting in that, right?

tom simpson (37:50.522)

Yep, yep, yep. I...

In my venture funds, I try to build a portfolio between 15 to 20 companies. So that gives me a higher, I mean, I once read a statistic that, what was it, 90% of the investment returns in a venture fund come from 67% of the investments. So that implies that it's really a couple that are driving the returns. So if I have a portfolio of 15 to 20, it gives me, you know,

Chris Kiefer (38:01.902)

Okay.

tom simpson (38:24.78)

you know two to four winners in there.

Chris Kiefer (38:27.55)

Yeah, yeah. Okay. Awesome. So what else? What else is on your mind about entrepreneurship or angel investing, whatever it looks like we got about maybe five minutes left before I head into my wrap up questions.

tom simpson (38:42.69)

Well, what else is on my mind? You know, I sincerely believe that this region is an ideal place for people to start and grow a business. You can find the talent. It provides a...

It provides a wonderful lifestyle for those that are otherwise super hardworking and tenacious developers or anybody on your team. Living in this region and going to the lakes, the golf courses, the mountains or whatever you enjoy doing is an extra way to be able to compete for really good talent.

You know, large companies, you look at the Googles and the Microsofts and all those, how do they compete for talent? They compete based on base salary, a bonus, and stock options.

One thing, but those companies are kind of based in Seattle and the Bay Area. Companies here are not going to compete on one more plane. This amazing lifestyle we have. So I think this region is a wonderful place to grow a company. You can find the talent. You can reward your employees by the advantages and the attributes of our region. A lot of investors are beginning to look outside of mainstream areas for opportunities.

with here in Spokane called Treasury 4 just attracted 20 million dollars from a very well-known venture fund by the name of WestCap. So I'm very you know

tom simpson (40:27.322)

bullish on the opportunities and the prospects for companies to start here in Spokane. And when I say Spokane though, I also mean Coeur d'Alene and Sandpoint. I kind of view this as 31 flavors of ice cream. It's a whole region. And some people might like Coeur d'Alene over Sandpoint, some people might like Spokane over Sandpoint or Coeur d'Alene, but this region here is ideal and you can pick wherever within the region to headquarter.

Chris Kiefer (40:53.666)

Totally.

tom simpson (40:54.518)

I just had another great example, a company out of Seattle that was spun out of a very prominent accelerator in Seattle by the name of Pioneer Square Labs. The company's name is SecureSafe. I was actually an early investor in that company and about a year ago, the CEO and the founder called me up and said, guess what, Tom? I'm moving from Seattle to Spokane. So it's not just me saying this, I'm really seeing demonstrable evidence of it.

Chris Kiefer (41:21.046)

That's awesome. So, yeah, let's move into the book recommendations.

tom simpson (41:28.306)

Okay, book recommendations. Well,

One of my, I sometimes teach at Gonzaga, and one book I love to have my students read is Zero to One. And it was written by, I'm spacing on the name right now, Peter Thiel, thank you, you know, one of the early investors in Facebook and has several startups to his name. But it's a great book. It's a short read. You can read it in an hour or two. But a lot of great pillars of wisdom

Chris Kiefer (41:44.738)

Peter Thiel.

tom simpson (42:03.244)

a truly successful startup needs to have.

Another one of my favorite books is Shoe Dog. It's a book that Phil Knight wrote, all about his journey and starting Nike. And just one of those can't put down books. And that's an example of an individual who had culture. From the beginning of that culture, he just drove in the values, the guiding principles of that business. And he was just tenacious and creative and wouldn't take no. The third book,

in the Boat which is kind of almost a local story it's about the 1933 rowing team at the University of Washington one of the main characters George Rantz actually lived in Spokane for a while that's being turned into a movie but just a great story again and that one's another feature of culture and success and management is grit just grit and the boys in the boat just

tom simpson (43:07.464)

men that just came together in a boat and succeeded. So those are kind of the three books that I've read over the years and I've really enjoyed and taken a lot out of particularly as it relates to entrepreneurship.

Chris Kiefer (43:20.866)

Mm, that's awesome. And your favorite movie.

tom simpson (43:25.39)

Well, this is going to be very self-serving, and it's my favorite movie, although probably no one here has ever heard of it. I often tell people, people often come to me, and well, I often tell people that one investment areas I don't make is into films. But we all break our own rules every once in a while, right? Well, I once invested in a movie called Folk Hero and Funny Guy. A great movie. It's a tremendous movie.

made it to the Tribeca Film Festival, but for whatever reason it didn't have a whole lot of box office success. But I'm one of the executive producers of the movie. I still watch it. I love it. Goldie Hawn's son is in it. And so this is my favorite movie. I didn't make any money off of it, but it's a great watch.

Chris Kiefer (44:13.758)

That's awesome. I. That's awesome. And this was, was it produced in Spokane?

tom simpson (44:22.606)

No, it was actually produced in Atlanta, Georgia. But I was introduced to the opportunity for someone who grew up in the region though.

Chris Kiefer (44:26.35)

Okay.

Chris Kiefer (44:33.206)

Oh, that's awesome. I back in my, I have like an interesting path, but I had a marketing or media company and we made a documentary on Scotty Smiley. Sure you know him when he did the Iron Man. And so that was 2017 or something. Anyways, the making a movie is, it is like, there's so many.

tom simpson (44:49.21)

Uh-huh.

tom simpson (44:53.094)

Okay, yeah, great story.

Yep.

Chris Kiefer (45:01.602)

Talk about like starting a business and then the movie is like 10 times harder to get it quote unquote successful. Plus you've got the creative aspect which is huge variables. But yeah, we had it on, the funny thing about the movie, it's called Beat Feet and it was on Amazon Prime forever. We got it on there and.

tom simpson (45:06.79)

Yeah.

Chris Kiefer (45:27.186)

it made like a total of, you know, 37 cents a day or something, because they pay you based on minutes watched. But anyways, what happened was I, it was with this old company, and I never checked the email that I had made the Amazon account with, and there were some laws that changed in Europe for the way they'd, taxes or something, I don't know. And they had sent notices to all the accounts to like update your European, like,

tom simpson (45:32.808)

Right, right, yep.

Chris Kiefer (45:56.482)

tax credentials or something. And I didn't see this until the deadline had passed. So then they took the movie off Amazon Prime and now they're like, I'm like blacklisted so I can't get the movie on Amazon Prime again. So now it just exists on YouTube, but it is on YouTube. And anyways, it's just like one of those things where like such a stupid mistake that we spent so many, like we had a team, we hired like musicians and stuff and Coach K narrated it.

tom simpson (46:08.626)

Oh god, crazy.

tom simpson (46:21.859)

Yep.

tom simpson (46:26.214)

Yep.

Chris Kiefer (46:27.258)

And it was this work of art that ended up, again, literally, I think it was about a month ago after being super frustrated because people had asked me about where it went. I just dug open a hard drive and uploaded the video to YouTube. So it's just, at least it can be seen somewhere. But I'm not making my 37 cents a day anymore, which is really, really hard.

tom simpson (46:46.882)

Yep.

tom simpson (46:50.106)

Dumber.

Chris Kiefer (46:53.086)

Anyways, yeah, Tom, thank you so much for your generosity. If someone wants to get in touch, what is your preferred method that they do that?

tom simpson (47:01.982)

email and that's tom.

Chris Kiefer (47:10.018)

Awesome. Well, thanks so much, Tom. I know that we'll be seeing you around. And for those of you that are interested in the sparks weekend, well, I guess depending on when this gets published, I'm going to try and have my editors put this to the front of the line. So maybe there's one or two people that are listening to this before sparks weekend and are inspired to go to that event. But thank you so much again. And we'll talk to you soon.

tom simpson (47:31.878)

Thanks for having me, I've enjoyed it.