Patrick Rainey: Venture Capital Investing | #18

Patrick Rainey is an Investment Analyst at Relevance Ventures. His firm primarily invests in startups in the software and preventative health care industries. Tom and Pat discuss his experience working at a VC firm and some of the startups that he has worked with. They also discuss topics such as fishing and mental health.

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Transcript

Tom 0:00

Hello friends, welcome to the Drive Fitness program. My name is Tom Driver, I'm the host of the show. And before we get started with today's episode, I just want to ask everyone to please go to Apple Podcasts, rate this podcast five stars, and also go to the app store and rate Drive Fitness, our app, five stars as well. That would really help us uh get noticed on both of these platforms, and I would really appreciate you guys just doing that small thing to help us out. Also, from now on, new episodes of the podcast will always be released on Tuesdays. There might not be an episode every week, it'll probably be two to three times a month. However, I will be posting on our Instagram story on Monday nights whether or not you can expect an episode on that Tuesday. I want to make sure our top priority is still the app. So as I mentioned, no promises, but we're gonna get consistent with the day of the week. You can always expect that new episodes will be out on Tuesdays. So just check in, guys, to see if we got one for you. My guest for today's episode is Patrick Rainey. He was a friend of mine from college. Patrick works for Relevance Ventures. He is an investment analyst who specializes in early stage venture capital investments. I really enjoyed my conversation with Pat because his firm specifically invests in software and preventative healthcare businesses. So it was really cool to hear him talk about their mission statement and the things that they want to do with preventative healthcare. It just kind of opened my eyes to the fact that investors, even though they're not exactly entrepreneurs, they're still trying to change the world and make the world a better place for us. And of course, you know, everyone has to make money, but you know, it was cool to hear about his firm, you know, actually trying to make a positive impact on things. So I really enjoyed that. And then Pat and I also talked about things like mental health and fishing. So interesting conversation. Uh, it was great to catch up with him, and I hope you guys enjoyed it because we had a blast. Last thing, I wanted to shout out Frank for making our theme song. Alright, guys, enjoy the episode. Peace.

Pat 2:43

I I don't know about calling it time off. It's been pretty crazy, you know. So graduated in 17 and moved out to Wyoming, you know, kind of on an impulse. For me, it was so crazy positive. I had a job that I was working as like a credit analyst up at a mortgage banking company in in DC area. And the day I graduated, I heard our graduation speaker speak and he was talking about corporate life. And I just was like, man, that sounds miserable. That sounds so awful. And I was sitting there and afterwards I went up to my parents and I was like, I don't want to, I want to take this job, I want to do it. You know, my parents were like, you should do whatever you want. What do you want to do? And I love cooking. That's you know, I did that all through school, and that's how I helped paid for my school. And so I packed up my bags, I drove out west, you know, applied to jobs off of the local papers, you know, uh classified. And two people got back to me, and one of them was at the Elks Lodge, and then the other was the restaurant I ended up working at, which they funny enough said, uh, we got a party going on on the eighth. How soon can you get here? And I was like, I could get there by then. And they were like, Yeah, we need you by then. And I was like, okay, sure. So I drove across the country. I went from DC to Chicago in one day, and Chicago to Wyoming in the next. I get there and they're having a party. It's legit. You know, I changed in the bathroom of a gas station into like a button-down shirt and you know, slacks and all that. And I get in and they're just like, you know, can you cook? I was like, Yeah, certainly. Like, I can definitely handle it. And then they were like, Do you have any normal clothes? I was like, Yeah. They were like, Yeah, t-shirt and shorts. I was like, Yes. And they're like, go put those on and come back in, grab yourself some food, grab yourself a beer. You're hired. You know, I was cooking six, seven days a week, but I was also fly fishing six, seven days a week. It was just great. I mean, it was like so nice. I was working out, I was just having a blast. I had great roommates, and you know, got to do and see a lot of things that I don't I don't think I would have been exposed to before.

Tom 4:37

A lot of people, especially in the northern Virginia area, they jump right into their career and they just do that same thing for years and years and years. And yeah, sounds like it definitely was a cool experience to switch it up.

Pat 4:48

And and the thing is too, is like once you start, it's it's hard to stop. You know what I mean? Once you start your career, it's hard to be like, hey, like I want to take a year off and go fly fish. Like, no one's gonna buy that, you know?

Tom 4:59

No, yeah, you basically have to quit your job and hope they would take you back at the end of that year. No one's gonna guarantee you a position, right, after a year off.

Pat 5:06

So no, and so I thought it was the perfect time and it really actually set me up well because working as a cook, I mean, they paid very lucratively. And so uh when I moved to Nashville, I actually had a pretty solid financial base um to start with. I mean, I wouldn't say it was great, you know, I have a lot of furniture for my first six months, but I was able to eat and uh, you know, pay for gas and go out and enjoy the, you know, Music City nightlife. So I think it helped a lot because when I got into my career, it kind of just hit in the ground running. You know, I got hired and before I had even moved to Nashville, my bosses sent me a deal to review, and it was a health and wellness company, a snack company that they were looking to put about $2 million into, and they were like, tell us your thoughts on this deal. So, you know, from day one, before I was even in the building, you know, they threw the book at me basically, they threw all this responsibility at me. So having that time off and kind of being mentally prepared to jump into something, I think it was really, really good for me, you know.

Tom 6:08

Yeah, no, that sounds great. What company did you end up working for? I know it's in Nashville, right?

Pat 6:12

Yeah, so I work for a traditional venture capital firm. We're called uh Relevance Ventures. So primarily focus on technology startups and health and wellness or preventative health care in the series A, Series B space, which is, you know, you've gained revenue and you've gotten traction and you're kind of showing growth, but you need more capital to really take it to that next level. So when you partner with us, you know, we give not only the capital to make that happen, but a lot of the members of our team are really well versed in taking a company that has a few customers or you know, a solid product and and not much and turning that into you know a company that's producing anywhere from 25 to 50 million in revenue.

Tom 7:00

Yeah, that's that's cool to have a standard job that works around startups, but not actually be in there because it's it's so much risk, you know, to start a company that it sounds like it's a very exciting job that also is kind of a little more stable, right, than actually starting that company, you know?

Pat 7:18

Yeah, no, definitely. I mean, it it's it's you know, there is risk being the investor considering you're taking people's money, but you're not on the front lines. And and that's kind of the way we view ourselves is just, you know, we're here to provide the advice, the guidance, the assistance, you know, but we're not on the front lines. And so it is nice because I do get that exposure to the high risk, high reward lifestyle without being exposed to the you know, lack of you know, pay or whatever that, you know, when people exchange sweat equity, you know, for in exchange for your services, I got I have a consistent, you know, paying job, which is nice, but I do also get to go visit them and really like spend time with them. So I see it and I get to experience it, but I don't have to take that risk myself entirely.

Tom 8:05

Yeah. And then if you ever do want to take that risk, though, you've you've gotten a lot of hands-on experience seeing that company grow from, I guess you say like a small size to a mid-sized company, usually in my time there in the last three years, you know, we've done everything from a company making 25 million in revenue a year down to a company that literally was an idea in a napkin, and we've watched them grow.

Pat 8:25

And and it's really cool because I really love the early stage. Um, we kind of have access to deals across the the sectors, but the early stage ones are the best because it's like you see somebody who is just so passionate about changing the world, about making this big impact. And they're just like, man, I just need one shot. And it's so fulfilling for me because I work on the front lines for a company. I'm I'm doing the sourcing and the inbound. So I get to see these people from being like, dude, please just give me a chance to talk for 15 minutes up to, you know, now I'm making revenue. Now I'm like everything I said, I'm I'm putting it together, I'm proving it. You know, it's not just on paper anymore. And um I think that's the favorite part of my job is just you get to see these people who really know what they're doing and really give a damn about what they're doing. And you kind of give them the platform, and then you just say, run with it, you know, and that is really great because in a lot of jobs I feel like you don't get that opportunity to really empower people. And so that's fun for me. You know, I I like kind of that teacher, and you know, you knew me through college, like being in a leadership role or whatever. I I found that I really like the the teaching aspect of it and the assistance. It's not as much being at the head of anything, it's just like, man, what can I do to make to pour you know, gasoline on this fire and make it a real bonfire?

Tom 9:51

Yeah. So when you guys are looking for startups to work with, what are some criteria? What is what is something that really stands out to you? Is like this is a company that I want to I want to work with.

Pat 10:01

So I think there's you know three or four key things. And and you know, at first in Inventure, there's like always this conversation of, you know, would you bet on the horse of the jockey in an in a situation? And for me personally, it's I would bet on the jockey. I the the people who drive the business is much more important than the business itself, you know, because a A plus manager could manage a C plus situation into an A result, right? They could have an okay idea, but really know the industry that they're involved in and change up as they go along. And so that's really important. It's it's not only their expertise on the the subject and the industry and the experience they have, but it really is just the the ambition and behind it, it's the self-motivation to actually take a thought, put it into the market, and see it create change. And then, you know, outside of that, you obviously have to look at, you know, the financials and the market that they're entering. And so, you know, it's a really like when people ask me what I do, a lot of people don't know. I say, Have you seen Shark Tank? And they say yes. And then I say, Okay, I do Shark Tank in real life, like the non-reality TV version. Wow. You know, because that's what you're doing is you're investing money for equity. It's funny, but it is really, you know, there's the business aspect of it of, you know, they have a good market and a lot of potential and their financials are good and their metrics are good. But I think that most of the deals that we've done, the one common theme is that within the first 15 minutes of meeting them, I just look at them and I'm like, yeah, they they know what they're talking about. They're not there's no ulterior motives, they're really here to just make change. And that's that's exciting, you know, is when you find those people.

Tom 11:38

So when you pick out a company, then is it you pick someone that you can be hands-off with, like I trust these guys to do what they're gonna say, or how does your firm then provide guidance? Because I know you had some sort of startup program that provides guidance. What kind of help do you provide then after just giving them the investment?

Pat 11:58

We're very hands-on. So, you know, for example, things that I've done is we've had companies, they're not just beginning, they have customers and they have some revenue and some traction in the market. But, you know, I've done everything at my job, and and that's something I'm it's also something I'm very grateful for, is like I've helped design marketing plans, everything down to like here's a one pager on your company that you can use for sales, or you know, I've worked on HR plans on how to manage employees, take on employees, how you, you know, do it dealing with compensation packages. You know, we're real hands-on, we're just not controlling. So what we really try and do is just say, hey, you know, this startup life, as you know, is is full of trials, tribulations, uncertainty, questions, and cash constraints and the lot. And really what I think we do best, you know, and I I don't exactly want to speak for my company, but from what I see as someone who's kind of in the low ranks is we really provide that steady hand that, hey, if it seems like it's hitting the fan, you know, we can tell you that sometimes it feels like that, but it's not. And there's a lot of things you can do to to come out of this stronger. So I would say we're definitely hands-on, and and we're definitely not just a passive investor where we give capital, sit back, and wait for the return. You know, we'll do anything you ask us to with if it's in reason to help you. I mean, that's what we're here for, that's what we get paid for. It's to help you get to where you want to go. You know, me, I was an analyst until the last two weeks, three weeks ago. I'm now an associate, but as an analyst, it was just like I got so much exposure to every side of business and got to you know help people improve that. And so it's been rewarding.

Tom 13:42

Yeah, I was gonna ask next what your personal position is and what's expected from you and your job expectations. You said you used to be an analyst and now you're an associate. So would you review the company's sales projection numbers and things like that? Or what kind of are you doing on a day-to-day basis?

Pat 13:59

So the way I like to kind of describe it is I do a lot of different things. You know, I've built websites for our company, I do marketing, social media, but the primary job description for me is as an analyst, it was to conduct due diligence, do the research on the market, build rebuild their financials, evaluate their financials, you know, call reference calls, basically get a complete understanding of the business and the people behind it, put that into digestible reports, whether that's you know, Excel spreadsheets that break down the you know, financial metrics of saying, like, okay, this is their gross margin, this is their even margin, this is how much they're growing year over year. As they scale, these are the costs that they're gonna incur, and this is how they're gonna offset them to create a profitable company. But now I'm an associate. So my roles basically I'm still doing the same thing in the fact of evaluating companies and then when they're in our portfolio, helping them and monitoring them. But I've picked up the additional responsibility of kind of joining a the deal sourcing front, where I'm going out proactively searching out companies who need investment, who fit well within our investment thesis, as well as uh operating kind of on the fundraising front, which I did before as an analyst, but it was more so doing research that would aid them in the fundraising efforts. And now I'm proactively going out and searching for high net worth individuals, family offices, and other types of funds that would contribute, invest with us and partner with us. And so I think adventure every everybody is kind of a Swiss Army knife, and the industry is kind of made to be like that, where you have to have your hands on a little bit of everything. And so for me, now that I've been promoted, it's more I had my hands everywhere, but now I'm kind of getting more control, more responsibility, more you know, in-depth on it. So it's good for my career, obviously. And it's also fun for me because you know, when you get involved with these companies, you know, you get really you get really enthralled with it. It's almost like you become obsessed with watching the people succeed and the valuations grow and just you're creating value and you're doing something that, in my opinion, and and what really killed me with that credit analyst job is I felt like I would never do something that really mattered, or I wouldn't see the impact of my my effort. And with this job, it's every day I get to see that. And so the more responsibility just means more access to more control over how we do things, which is great.

Tom 16:40

Yeah, that's awesome. And you're seeing some of the benefits from your hard work and actually making connections, better connections with these companies. Yeah, that makes things much more rewarding. Yeah. So this is kind of a question I feel like I have to ask, you know, it's kind of sad to ask, but with COVID, does that change the type of companies that you're looking for and the way you guys invest your money? Because I know we can probably talk about it later, but at Drive Fitness, we had to adapt to COVID and make some changes. And I'm just curious, you're saying that you're looking for new companies. What kind of companies do you look for? And has that changed maybe with the kind of new economy we're working in these days?

Pat 17:19

Yeah, I mean, I think that we definitely had to reevaluate the particular sectors we were looking at, but I don't think it fundamentally changed our investment thesis in any way because the two things that we prioritize, which is the scalable software, you know, whether it's fintech or enterprise software, e-commerce, or any of that, COVID only aided that. It's been awful and it's been tragic and it's been so disappointing. But, you know, we were always kind of committed to the idea that software would continue to take over, you know, and then we focus on preventative health care, which the pandemic kind of showed um, you know, a lot of the people impacted had pre-existing conditions that weren't treated. And so, you know, the healthcare system in the United States as it currently stands is a disease management system. It's where if you get sick, we will cure your symptoms. And our premises, if we help through our investment, get access to healthier eating, healthier living, healthier sleeping, stress management, anxiety, depression, attention, getting doctors or specialist or any physician to contact those people, the health results are so much better and the costs are so much lower when you don't have to fight against those additional factors, right? So nothing I think fundamentally changed. The process in which we did it did, you know, obviously we had to move to digital and virtual conferencing, but the premise has always been the same, which is that we invest in good people who want to do great things, who have good ideas and are are willing to listen to outside voices and are honest. The best companies that I've been with and I've talked to, the founder or the CEO, they're open, they're honest, they're passionate. No pandemic could change that. I think there's these people in the world who are willing to take risks and chances and put their name on the line or, you know, their money on the line and back it up. And no set of circumstances, in my opinion, is going to stop that. I've seen more companies pop up in the last year that are working to make financial literacy more accessible or make banking more accessible because that's some of the major issues on that side of the market that we focus on is just, and that I see as a huge issue is that everybody kind of assumes that, you know, you have a bank and you have a phone, right? But there's a good percentage of America. I mean, I want to say like 25%, not positive on that statistic, that is on banked. It's 20, 25%, and about the same that doesn't own a phone. There's ways to use technology to get those people who are underserved or don't have access to the right resources, access to them and in an affordable way, in a way that they can understand. And so I think when we look at an idea, that's kind of what we're looking to do is to take those groups of people who can't access it right now because the status quo didn't let them, using capital, using technology, using networks and relationships to provide that in an affordable way. I think with COVID, the one thing it it's highlighted for me is just that technology is definitely going to be super pervasive through our life. And all this pandemic did on the business side of the impact is just expedite that trend that software has to be basically a human right or close to it. You know, I don't know what the right terminology is, but everybody deserves access to that, in my opinion. And I would stand by that is you deserve access to a bank without heavy fees and you deserve access to the internet. It's a knowledge center, and the most powerful thing in this world is knowledge, right?

Tom 21:02

Yeah, I was thinking more of what type of industries are you guys looking at at this point. But if you guys were already focused on software and preventative health care, yeah, then yeah, like you were saying, if anything, those industries just need more attention than they did beforehand.

Pat 21:16

Yeah, so those are those are our two areas of focus. We don't really branch outside of that. So it's it's been kind of consistent.

Tom 21:22

So what type of I understand preventative health care, things like therapists and fitness and a bunch of things that could help you deal with issues beforehand, but what kind of specific companies in that preventative health care industry, can you give me a specific of of how a company executes something like that?

Pat 21:39

Yeah, there's multiple, and I can give you two or three good examples. The first of which it's our biggest, and you can look it up. It's called Sunbasket. They're like HelloFresh competitor, they deliver healthy meals, but basically their emphasis is on a providing for specific dietary needs. So, like if you're a diabetic or Or you are vegetarian, a vegan, you follow the paleo diet, whatever that is, they can curate a meal plan based on your needs. And they deliver it to your doorstep at a price point that is comparable if you shop at a grocery store. So that's great because it makes healthy eating accessible, easy, and affordable. So it says, you know, I'm gonna deliver it to your doorstep, that's easy. I'm gonna give you a recipe with you know exact instructions with the right amount of ingredients. There's no ifs, ands, or buts. You can do this. And it's affordable. And so that's one of them. Another one that we have partnered with is called Lemen. They have the good patch. So they are a plant-based and CBD. So hemp was legalized through the 2018 Farm Bill. It went from being tied in with marijuana, obviously, to being considered a weed, which means it can be grown in any 50 state and any product that's derived from it is legal. So CBD obviously became legal across the states with no question. So what they do is they deliver these transdermal patches that you put on your wrist or the back of your neck or you know, above your waist, basically any venous area or area of discomfort, and they put these things in there where it helps. So, like they have a sleep patch which has melatonin CBD, or you can get the CBD free. So they have two different lines, but they also offer patches for being awake, which has B12 in it, and a couple other things that help stimulate the mind. They have something even down to feminine health where they have a menopause or a period patch, and it basically releases stuff that helps reduce pain, you know, muscle relaxants that are all natural, that's that's nothing that could be harmful. There's no prescription type meds that basically makes the end user or the buyer feel better, relieves stress and promotes good health through natural ways. You know, and if you want to wake up in the morning instead of drinking, you know, a crappuccino from Starbucks or chugging a Red Bull, you can put this patch on and naturally get your energy delivered through the day. So, you know, we have other companies that do healthy foods. We have telepsychiatry companies that utilize platforms like this to connect with patients in both emergency departments as well as you know, an outpatient situation. So it's it's kind of a spread. And I think the things that we really focus on is, you know, mental health is a huge issue right now. It's something that's very personal to my heart and something that since I've joined relevance, I've pushed very hard. I mean, you know me, like I've dealt with anxiety my whole life. I've had depression, I've dealt with this stuff so and I know the resources there are so lacking. So that's the great thing about my company is that they've actually been responsive and I've been like, hey, this is a major problem for millennials. Millennials don't have good mental health and they don't have the resources to cure it. Finding ways that you can deliver that solution from an affordable price point where their co-pays 20 bucks and they can go see a psychiatrist for an hour and that's all they have to pay. And then, you know, the insurance covers it. I mean, that's that's huge. I know it's mine, you know, numbingly painful. And so if there's a way that I can push this deal through our process and fight, you know, pound my fists on the table for it, I'm going to because if they get to a million users, that's a million people who previously wouldn't have access to a psychiatrist that now do and that can afford it and are not going to have debt for it. So we kind of cross all spectrums, but really it's kind of preparing you mentally and physically as you age to incur potential, you know, health issues. If your body's better prepared, then you'll be more likely to have a positive outcome.

Tom 25:48

Yeah. That company does what with psychiatrists?

Pat 25:51

They provide people maybe an online option, or I didn't really Yeah, so it's a telepsychiatry platform. It's basically Zoom for psychiatrists. Okay, yeah. So we have a couple, we have two of them, but basically the premise is so there's a huge shortage of psychiatrists in the country. They're the oldest, uh, one of the oldest physician groups, I think 60% of practicing psychiatrists in the U.S. today, the active ones, are over 55. They're aging out. They're not even in all states, and they're certainly not in even over half the counties in the U.S., they're basically headquartered all in California or the Northeast, Boston, New York. So using technology to meet the psychiatrist where they're at and at the same time meet the patient where they're at is a major, you know, solution to a huge pain point. Because, you know, if you think about a rural community like even Harrisonburg is a great example. If James Masson wasn't in Harrisonburg, they most likely would have one, maybe two psychiatrists in the town. And with a town of 10,000, 20,000 people, that's a lot, especially during a time like this where COVID's plaguing us all, and you know, with GameStop and everything, everybody's distrusting of the economy. It's it's important to provide access and the software's the way to do it.

Tom 27:12

Yeah, that sounds awesome. It definitely seems like more convenient to go to like a therapy session or something like that over your Zoom. I think for a lot of people, you know, if they want to go make that connection with someone, then they should. But if it makes a difference between someone seeking help and not seeking help, if they can seek help from their house and that's where they're more comfortable, then we should offer those platforms and give people that help. Because I don't know, sometimes it's more embarrassing if you have to take time out of your schedule to go travel to a therapist or something where you know you might just feel more comfortable jumping on your computer. And even if it's maybe if it's not as helpful as that in-person meeting, as long as more people are getting access to it. I mean, it could be just as helpful, but either way, I think that if more people are getting access to the help they need, then that's going to be a great solution, you know, for a lot of people.

Pat 28:05

It definitely does a couple things where it's you know, it removes the stigma where you don't feel embarrassed that if you know someone saw your car up front of your psychiatrist's office.

Tom 28:14

Yeah.

Pat 28:14

But back 10 years ago, that would be a huge social, you know, pain point for you. That would be a huge social problem. It removes the stigma, but it also makes it feel a little bit more comforting because you know, for a lot of people, it's you're on your home turf. And that's one of the most daunting things is not being on your home turf. And people are creatures of habit. So I think providing it where they can do it in their home is huge because that's your home base. Like even, you know, for me, or you know, you it's like you have your girlfriend or your dog or your area, and so it makes it a lot easier to kind of open up, and that makes the treatment more effective when they seek it.

Tom 28:51

Yeah. This might be a little personal, but you were saying that you've, you know, had some mental health issues over the years. So that's what made you drawn to do work like this. What has helped you get through your issues with anxiety or something in the past? Because you seem like you're in a great place. Do you have any words for someone who's struggling with that currently?

Pat 29:10

Yeah, I do. I mean, so it's kind of a twofold answer. So, you know, when I went out to Jackson, it it really was eye-opening for me because I got really healthy. I started exercising, which I didn't do in college, was living a lot healthier of a lifestyle. And also, you know, I still dealt with stuff out there, and I realized as I got, you know, I'm like in the happiest spot I've ever been, but I still am fighting these demons. And so I think when you, you know, and it's a totally personal journey, but when you're dealing with these issues, you know, you gotta have the ability to forgive yourself for dealing with them and and what you're thinking with at first, is just you gotta accept that, you know, you are who you are, you know, me, I'm chunky guy, always have been, probably always will be, no matter how hard I work out. It's just how that's just me. And you're not gonna be like yeah, you know, I'm fine with that. And it's really just a being willing to accept you for you, which is tough to do, but the way I did it is just find stuff you love. You know, for me it was fishing. You know, I got a sense of peace and serenity being out in nature, not being around my phone, and then also doing things I love and finding a job that gives me purpose. Um, because a lot of times when you get into a depressive episode, it's tough to do just daily activities. I mean, shit, man, a shower feels like a marathon sometimes with because you're just like, man, I'm gonna sit in my head for 20 minutes. I don't want to do that. You know, a lot of it's just believing in yourself and saying that it's kind of brick building every day. You know, Will Smith said it, you you put down a brick and all you're trying to do is build a wall or build a house or whatever it is, but every day you just make those baby steps because, you know, for me, like when I left college to who I am now, you know, when I left college, I was struggling financially, struggling with my mental health, struggling with my physical health. And when I got to Jackson, I just started taking this day-by-day approach. And then I think the second part of it is limit your access to technology in the fact of social media, texting, all that stuff. And, you know, because for me, when I lived out there, I didn't have self-service in my house most of the time, didn't have self-service at work most of the time, I didn't have access to a phone really. And it was one of the best things for me is I never had that feeling of I have to be glued to my phone. And the social media problem is twofold in my mind. It's something that I don't use a ton and I don't ever want to use. And the reason is is A, it's designed to capture your attention and it's designed to release certain kind of feelings in your head. And most of the time, if you think you're not good enough, you're dealing with this financial burden, which most people and especially in our generation are, is that you know, they see people who are super wealthy and they're living their best life on a yacht in some town or some island. You get kind of this, I'm not doing enough shoved in your face constantly. You know, we're in a pretty bleak economic moment, and then outside of COVID, you know, and we really, you know, came out of the 2008 recession. Most millennials were dealing with this recovering economy. And so it kind of twofolds degrades your mental health by saying, you know, I'm not as pretty or as handsome or as built, but uh, it's also like I'm not as far ahead of my life or as wealthy or you know, accomplished as all these other people. But, you know, everybody's on their own journey, you know, right? You got to be proud of where you you're at because of where you came from. And and so with the mental health battle for me, it was just saying, you know, and actually Sarah helped me realize this is that I was talking the other month. I was like, I'm really stressed about just money, you know, we're looking to buy a house soon, kind of sell down. And I was like, I just can't, you know, it's it's hard to put together all the numbers. And she was like, Well, listen, like, this is the richest you've ever been. Like, you've never had more money, you've never had more savings, you know, and it's making yourself realize, yeah, I've actually come a long way. Five years ago, if you told me I'd be sitting right here, would I believe you probably not? Like, actually, no, like, would I be sitting in a two-bedroom house? Would I have the job I have, or have just bought a new car? No, I would not have guessed any of that. And so I think just being able to appreciate yourself what you've done and and all those steps that you've taken to get there is hell important to growing as a person and to combating your mental health issues.

Tom 33:41

Yeah, I like that you brought up fishing because we kind of skipped over that for a second. Obviously, the venture capitalism is is a cooler conversation, but a lot of times on here, I like to talk about activities that are similar to fitness but are not exactly strict working out because when it comes to someone who is looking towards fitness to fix a mental health problem, right? I feel like telling them to go run five miles a day or to lift a bunch of weights, if they are struggling with mental health, that's not always what they need. They might need to go play some basketball or to do something like fishing, right? So I think fishing seems like a very, it can be very meditational. It's still a physical activity, though, that gets you out of the house, gets you moving, but doesn't come with that stress of, oh man, I gotta work out five miles. I, you know, I gotta lift more weight than I did yesterday. It seems like an activity that if you're struggling with mental health or something, is more suited for that issue than trying to go lose 10 pounds on the treadmill, you know?

Pat 34:43

Yeah, no, I think I mean I've always been drawn to fishing. I I fished my whole life. I fly fished really since college, and fly fishing is basically all I do now. I mean, in the summers and here in Tennessee, I'll, you know, we go canoeing and I'll do some catfishing or bass fishing off the back of a canoe. But fly fishing for me is so beneficial for a lot of reasons. First, you know, people think you're just standing in the water doing nothing all day, but that's not true. If you've ever tried to hike three miles upstream in a pair of waders fighting current, I mean, that's no, that's no joke. I mean, that is that is some effort. And uh the other thing is, is it really teaches patience, is because the whole time that you're standing in the water, you're fighting the current. Your legs are planted deep in the ground, you're fighting against it, and you're constantly casting, which is a bicep movement. So at the end of the day, your neck and shoulders, because you'll cast with both hands if you if you practice enough in something I do. And it really is a workout. Like you are dead tired after a day of fishing because not only do you have to hike up the stream, but you have to hike down the stream, and you, you know, it can get up to chest high, and you're fighting current, you know, at the top of your waders, carrying your pack, your rod, everything, and you're having it over your shoulders. And then you're right, like it's totally a meditation thing where you can go to a spot and you can find a hole where you're like, all right, I know there's fish there, I can see them, but I don't know what they want to eat today. This process of constantly casting and offering different types of flies to the fish, finding what they want to eat that day, and then you really have to go at it. And if they get tired of it or they move, then you have to move and you have to change your fly. And so when people ask me about fly fishing, my common response is it's just driving stick for fishing. It's like bass fishing, you just have to control a little bit more and you have to think a little bit more. But it it is um so cathartic to get out on the river, regardless if you catch anything, because you know, it's peace and quiet. It's the only thing I'm focused on is finding whatever these fish want to eat and how they want to eat it, how they want to present it to them. So it's very, you know, it is almost spiritual when you get out there. It's like, man, like I'm not gonna look at my phone, I'm not gonna be bothered. The only thing that I have to do today is enjoy smoke a nice cigar, catch some fish, you know, drink a beer, go home. And that's uh real, you know, in today's day and age when you're just overloaded with information, days like that are really a saving grace.

Tom 37:18

Yeah. A lot of times at the gym, you can sit on your phone half the time, right? And it seems like when you're in the heat of those fishing moments, you don't have that option. You got to focus on that fish or you're gonna lose it, right?

Pat 37:29

Yeah, and there's really no break because even if you say you're not casting, you're still standing in the middle of a river, you know, waist deep. You're not you're not really concerned about bringing your phone out because if you drop it, your day's done.

Tom 37:42

I was about to say you're gonna drop that.

Pat 37:44

Yeah, yeah. So um it is cool.

Tom 37:48

What kind of fish were in Wisconsin?

Pat 37:50

So out in Wyoming, there is it's it's mainly was it? Yeah, Wyoming. So Jackson, Wyoming, where do you know Patagonia's logo? The mountain range?

unknown 37:59

No.

Pat 37:59

So if you know if you if you look up Patagonia's logo, it's a mountain range, is the Tetons, which is the mountain range that's uh in Jackson. It it splits Wyoming and Idaho. But out there, there's it's mainly trout. So they have rainbow trout, which is native to the area, which on the underside of their throat, there's a red line. Looks like someone cut their throat. So they got the name cutthroats. There's rainbows, there's browns, there's brookies, there's white fish. But mainly what you're you know going for is is the trout. That's considered a good catch. And you know, you're looking for the big browns or the you know, the big brookies who are fighting you. The cutthroats are you know more common, I guess, on the big rivers. And so they're a lot of fun to fish because they will give you a fight, but they're not like you're sitting there for 45 minutes with one on the line. It's like I can get one in in 20, 30 minutes and feel really happy and have had a good fight and get a good size fish. So that's what's really standard of the area. I'm sure there's others in the lakes and stuff that are around there, but in the rivers and the streams that I fish, that's mainly primarily what I was going for.

Tom 39:06

Nice, nice. I feel like we didn't talk a lot about maybe some of the software companies that you guys work with. Uh, is there one or two in particular that are you're really excited about where they're going and think that they're kind of doing something different?

Pat 39:21

Yeah, there's certainly a few. So there's one that is an e-commerce platform for small to medium-sized enterprises that does cross-border payments. And I think that is really exciting because I don't know if you've used DH Gate, Alibaba, or any of the sort, but a lot of those are basically big factories producing and then selling mass amounts of product. And a lot of the small, medium-sized businesses, particularly in China and other locations, don't really have access to the same kind of transaction capabilities. You know, they get higher fees because they're doing smaller sizes of shipments and all that. And so making that a more equitable process is super exciting because that gives a lot of financial freedom to a lot of people who otherwise wouldn't have it. And this platform is integrates not only the payment and the transaction process, but links buyers and sellers with mutual interests. So it's really gives a way for these companies who you know don't have the robust technology capabilities or the access to capital that the large players do, but it puts them on an equal playing field. So I think that's particularly exciting. And then, you know, another one I think is a micro-mobility company. It's basically a mobility transactions company that my company invested in and my dad actually invested in, so kind of got the mutual ties there, uh, coincidentally. But they manage every interaction for a city on transportation. So whether it was the bird scooters, whether it's parking, whether it's tolling. And basically what it does and how it improves the city is it provides a streamlined process for you to ensure that, you know, if you have a parking ticket, you get the revenue, which then can be put back into the city, or you know, tolling is more efficient, so you don't have to slow down, stop, pay. You can just roll through and it pings your phone and boom. And so that's really exciting because it's basically applying technology to a sector that has had no innovation since basically Eisenhower. I mean, yeah, you know, it's been roads and toll booths with coins and parking meters with coins, and you know, it's just like, man, I don't know about you, but every time I go somewhere and they have like a pay meter that I have to walk up and put my license plate into and walk the ticket back to my car. I'm just like, there has got to be a way that I can do this from my phone. And that this company does that, and so I think it solves a lot of pain points and it provides additional revenue to enhanced cities, and it's just goes straight to the bottom line, which is a real exciting thought. I actually would love to hear about Drive, how everything's gone. I know Mazas have been working on it, and it's super exciting. I mean, the fact that you guys are stepping out and doing that, you know, especially because it's super relevant to me. I've been watching the journey, I loved it, you know, and I'd love to hear about it.

Tom 42:13

Yeah, I'll tell you where we're at. And I was also gonna ask you if you have any advice for us as far as how we should approach investing in the future. So, you know that we were stepped into JMU's accelerator program, right, after college. And my big thing at that time, and it still kind of is, was I really wanted to open up a gym. The vision with Drive Fitness is to open up a gym and have this software we're building run in the gym and connect with all the equipment in the gym. And when it came to investing at that moment, they all told me not to open up a gym. That was a bad idea, and you know, I should try to sell my software to gym, maybe white label it, so maybe take a gym's logo, slap it on there, and sell it to them. And I didn't really want to do that, it just didn't really feel right to me. And I was pretty not ignorant, but I was pretty dead set on opening this gym. And so I didn't really want to work with any investors at that time. I just felt like they were gonna take what I built and do something different with it. And it's interesting because now at this point, I realize opening up a gym would have been a terrible idea because of the pandemic. You know, I still believe in that idea maybe in the long run, but for right now and for the next 10 years, I'm like, I'm not opening up a gym. That's a brick and mortar establishment is not the way to go at the moment. We ran a beta test that summer and we got a lot of great feedback. I was, you know, a lot of guys from the fraternity were actually using it that spring. And one of the biggest pieces of feedback we got was that we need to have like more structured workout programs. It was just kind of entering your data into this exercise or that exercise. So we kind of redid the whole app. And for the year and a half after college, you know, we built out a basically a different app that had the ability to build workout programs and to share and download and describe. Discover different programs instead of just exercises. And we also started building animations for the app so that it was more educational because a lot of people just having a name of an exercise didn't really help them, right? So at this point, we have about a hundred animations into the app, which you can view in 360 degrees, and they can show you how to actually do an exercise. So it's more educational now, and we have more structured programs in there. I have five of my own programs in there, but they need to be even more, I guess, educational. So I'm currently trying to get my personal training certification. So at that point, it's gonna, I think, really bring the app to a better level. And I might start getting clients and working with people one-on-one through the app, you know, instead of just having these general workout programs in there. So that's kind of where we're headed in the near term. But then in the long term now, I'm kind of changing my opinion on do we want to open up the gym to maybe we want to connect to in-home workout equipment because I still think the future is with these automatically tracked exercise equipments.

Pat 45:07

Yeah, like the box, the mirror, the stuff like that.

Tom 45:10

Yeah, yeah. Things like that. And so I don't know. We we we've talked about building our own set of dumbbells that can connect to the app, but I also there's a lot of sharing going on in the fitness community with data. Apple, you can connect to their data sources and Fitbit. It just benefits everyone, I think, to share that data some. So I don't know if we're gonna end up building some of our own equipment, or as the years go on, there's gonna be just so many companies that are building these types of workout equipment that maybe we can just, you know, be compatible with them. But I'm thinking about doing something where you can do GPS tracking automatically, right, in the app right now. That's like the one thing. And so I'm thinking of maybe setting up some challenges there and then trying to provide people with like a heart rate monitor next, and maybe either building our own or partnering up with someone who can do heart rates, then trying to connect up with some sort of automatically tracked strength training equipment, you know, which would be that would be a bigger step. And, you know, if we wanted to build that ourselves, we would definitely need some capital at that point, right? Or, you know, maybe we could find a partner. But yeah, I'm not really sure. I mean, maybe like down the road, once all the dust settles from COVID, open up a gym. But I think either way, I need to spend a lot of time making sure the app is compatible with anything that would go into the gym in the first place, you know, and some some sort of online marketplace through in-home gym equipment. I've learned that you need kind of like milestones, right, when you start a company. And me just trying to open up the gym right out of college, really it was just jumping to the end line too quickly. And so, some sort of online marketplace, I think, would give me different milestones where if we could sell a heart rate monitor, that would be way less complicated than when we want to build a set of dumbbells. But maybe we could have some revenue from a heart rate monitor prior to trying to build a dumbbell and then build a barbell or treadmills or whatever, you know, whatever the next thing is, it we wouldn't have to just jump all in at once. So I'm trying to find small milestones to kind of pick out, but I do want everything to be tracked automatically at some point, you know?

Pat 47:19

I mean, I think you have the right ideas there. I think that you know, I I don't think it's a bad idea to open a gym at all. I mean, the the thing that I think the big fallacy right now that is plaguing people is that they think COVID's gonna last forever and this whole, you know, at-home lifestyle is gonna be forever. But the thing is, is people crave, you know, interaction and they crave going places. I mean, half the reason people buy clothes is simply to look some type of way while they go someplace, right? Whether that's gym clothes or going out, you know, clothes or you know, suit, whatever it is. And so I think that opening a gym is a fine proposition. I think that with your technology, uh instead of trying to link it to a you know piece of equipment, I I think you have the right ideas that you use the app to visualize workouts because that is something that most people, like you said, they don't have a clue. Like you can tell them to do skull crunchers, not everybody's gonna know what that is. Providing a visualized way to do that and then providing them, you know, access to that and more plans through like a subscription-based model where you monetize it through that instead of trying to sell product, you're selling a service, is a great way to even serve as a Trojan horse almost where you say, We have the expertise, right? Like we know how to sell workouts. So when you open a gym, you already have the credibility, right? Like you would be, you know, certified at that point, you would have a list of programs that you emphasize, and then all the gym is is just putting a brick and mortar location into that to actualize it, right? To get to give it a physical, a tangible thing that you can look at. So I wouldn't put that too far in the back burner because I think two years from now, the outlook on brick and mortar and facilities people were telling me not to try to go for a gym before the pandemic, right?

Tom 49:10

People are telling me that that's a saturated market and I don't want to do that, and that so much money. And look at you, you're you're building software, you know, you should just stay in that lane.

Pat 49:20

But at the same time, though, I mean, think about how many gyms have been killed by COVID. Think about how the market's gonna be very much.

Tom 49:27

Yeah, there might be an opportunity, yeah.

Pat 49:29

And the other thing is that when you think about it from an investor's perspective, opening a gym when you're dealing with software says, I'm gonna have a big CapEx commitment to either purchasing land or I'm gonna have a continual rent payment, which means that every dollar I invest, a certain percentage of that is going to just rent, just to operate a facility. So from an investor's perspective, they're probably gonna sway you away because they say, You've got the software, why add that component? But again, I I have a fundamental belief that the landscape for brick and mortar and location-based exercise will actually be higher than it was before COVID because the moment this all ends and people can get outside. I mean, you know, the first two things they're gonna do, I mean, in my opinion, is party, exercise, travel. Those are the three things that people have been clamoring for. And it's like they're gonna go to the bars, they're gonna go work out at a gym, they're gonna stop running up and down the stairs at home or doing squats at home or sips at home. They're gonna be like, holy cow, I can get back in a gym finally. And then they're gonna travel. And I think the travel is also gonna be a really interesting point of change where people aren't gonna travel as much to party or to go crazy. When they travel, it's gonna be a real focus on fitness and relaxation. Um, it's gonna be a real prioritization of rejuvenating the mind, the body, the spirit through a trip. You know, go to a spawn resort where you get massages, where you eat really healthy, every meal that's offered, but you know, it's gonna be delicious, but it's gonna be vegetarian or it's gonna be, you know, Mediterranean diet, whatever it is, it's gonna be very good for you. You know, the the transition on people's priorities is gonna change, I think, a lot. But I do think that there'll be a large emphasis about getting back in the building with other people because that's one of the things I think everybody's missed the most, is just the people.

Tom 51:26

Yeah, I mean, and if I was wealthy, I would have bought a bunch of gym equipment and put it in my apartment immediately, right? But I can't afford it. And that also tells me that there's always just gonna be that need for the gym. I think we're gonna be living in a society where people, if they can, they're gonna want to stay away from germs, they're gonna want to not come in contact with as many people as much. We're gonna be a more clean, conscious society as far as like the spread of germs, but I think that there's so many people that even if they want to work out from home, they can't afford it. And a gym is just such a great way to congregate all of that equipment together and give people that benefit of sharing the equipment. I don't think that's gonna necessarily go away.

Pat 52:08

But no, definitely. And they'll find better ways to clean it too. That's the other thing is like where there's a problem, someone will find a solution where you can instantaneously disinfect every piece of equipment to the nines without problem at a low cost. I mean, that that solution is coming, it's out there, someone's building it right now, probably.

Tom 52:28

I want to make something that's fundamentally different than a gym, right? Connecting software using some sort of sensors and all the equipment. It would be a fundamentally different thing almost, like the difference between a car and a Tesla. You know, it's just a different beast. And so I want to take the time to kind of make sure that we can connect to all these different types of things. And some of them haven't been invented yet. You can't automatically track a bench press machine, you know, or uh there's certain companies I've talked to that have sensors you can clip on to cable machines and stuff, but I think it's all coming and it's not all quite there yet. So I'm willing to be patient with it and work on it. But at the same time, when it comes to investment, right? I don't necessarily want someone to come invest in my software company when I want it to turn into this brick and mortar establishment one day, and they're gonna have a different idea. They're gonna want to, no, no, no, let's just sell it to all the other gyms or let's just, you know, let's whatever's gonna make money, let's do that, you know? Yeah, and then invest they might have to invest a little bit of money into my software company because it's cheap for us to make software, and they might want to spend all their money on advertisements and stuff for my software, where it's like at the end of the day, I want to build this gym, this facility, and I don't know, maybe I'll just split it into two different companies at that point or something, right? But I get worried about working with investors, which is why I haven't worked with one yet. And I get worried about them not understanding what I want to do and why that is the right thing to do.

Pat 53:52

From sitting on the other side of the table, what I would say is you A have to find a partner who's aligned in your vision, your ideals of the company. Now, you can do that with the understanding that you know maybe they want to really build out the software component and that's how they want to monetize, but your vision is to have gyms and they need to understand that. And if they don't, then they're not a good partner. And then secondly, it's just kind of finding that investor who has the philosophy of, you know, I'm active, but I'm not controlling, or, you know, and they're out there. I mean, there's there's an investor of every preference. I mean, there's guys who will just give you money and then just say, make it more valuable than what it is now. And there's guys who will say, I want full control of the company, I want ownership, I want a board seat, I want to be able to dictate the direction. And so in that regard, whenever you do pursue a fundraise, you know, when you map out a pitch deck, when you map out a deck outlining your company, have a roadmap. Tell them this is the end goal and you know, make it flexible, obviously, because business changes and life changes, and maybe you have a tuna heart, or maybe you realize that there's something more profitable in a different line of, you know, working in a gym. But if you outline your expectations at the start and you find a partner who's amendable to that, you can put the protections in place as the entrepreneur to ensure that they can't infringe on that vision. And a lot of times, guys who are willing to accept those provisions have no interest in doing that either way. They're there to give you capital because they believe in you and they want to see you succeed, and they also see the potential for a handsome return at the end because they believe that you're going to create value. You know, that's a lot of the areas where I think that venture industry has gone wrong, is the fact that it's just this money chase of find the hottest sector, the hottest model with the lowest cost. And, you know, there's definitely people who pursue that out there, but not all of them do. I mean, like my firm doesn't. I know a lot of firms who don't. I work with law firms who don't. It's not the end-all be all. I mean, there's people still out there who invest money in people and who believe in letting visionaries or you know, entrepreneurs or risk takers see out what they want to see out. And again, it's just kind of the philosophy of the partner and the ambition of you, the founder, and finding a way to match that up. But I wouldn't be discouraged in the fact that those guys told you that. It's just they're thinking about how to get you money. So, what's the way to get money is the low cost, high reward, consistent revenue model that is standard to venture investing for the last three to five years in angel investing. It's just people love software subscription, you know, SaaS revenue models. Yeah, they love that. It's it's guaranteed income year after year that they can build easy assumptions off of and establish a line where they're gonna make how much profit and it makes life easy, but it life doesn't have to be like that because it's not.

Tom 56:56

Yeah, it's definitely it would definitely be a safer journey if I wanted to just white label my app to other gyms, but I don't know. I I feel like that's not the approach I want to take with it. So we'll see if I can at some point find an investor who understands that the tougher battles to climb create the more value. So I would yeah, and so my my philosophy since then has just been build it up as much as we can with just the two of us until we hit that wall where okay, we can't do any more, we have too much to do with just us, you know. Yeah, but we just relaunched in January, actually. So we're still we have a very small user base at the moment. We're still trying to find some people to just jump on the the user input app and see how we can, you know, shape that into a perfect app that, like we were saying, provides workout programs, gives educational feedback on your workouts, and then really see if we can tear off into the automated tracking version of the app, which would be more expensive.

Pat 57:56

Yeah, yeah. Exactly. Ain't that true?

Tom 58:01

Do you have any more advice for me or just general advice for people who are thinking about getting you know that first round of investment or growing their company?

Pat 58:10

Or I work with incubators and accelerators, and I reiterate the same message to them. Don't be afraid to be yourself. I mean, being authentic and genuine is key to building a good relationship with anybody in business, but especially an investor. Don't be afraid to convey your vision. And then when you find what that is, just hammer it. I mean, execute and drive at it and don't quit. And if you fail, get back up. I mean, startups are like life, you know, you're gonna have your peaks and your valleys. But if you don't give up and you find someone who believes in you, just go out there and hammer it. It's like everything in life. You know, you find something you're good at, go do it. Why not? You got a little amount of time, and you don't have to be the smartest person in the room. Like I know most every room I enter, I never think I'm the smartest guy there. I know I'm not the wealthiest guy, I know I'm not in the best shape, but um everybody has something to contribute. So if you find something that's yours, go be the best at it you can be. And usually when you do that, the money's gonna follow because investors respect that. You know, they respect someone who not only cares about it and not only has invested the time to be good at it, but who is gonna put their neck out there to do it. You can be good at something, but you don't stick your neck out, then you're just another guy who's good at it, but you put your neck out there, you say, I want to be the best at this. People respect that. And um, I mean, that's my advice to people is like really find what value you can create and just hammer it. I mean, you know, just go at it. And you know, with you and drive, I think you've got a great knowledge base, I think you've got a great idea. I I I would not be discouraged by anything anybody has said about the brick and mortar. You got the stuff down, go hammer it. I mean, that's the way to do it, right?

Tom 1:00:02

Yes, sir.

Pat 1:00:03

All right, buddy.

Tom 1:00:04

Sweet. I think we're gonna wrap it up, but thank you so much, Pat. It was great. I haven't talked to you in like two years, so this was awesome. I know, it's it's been it sounded fun, but then you also delivered so much, you know, useful information here. I really I like what you're doing and appreciate it, man. You know, I I think from mental health to investments, man, you just you got a lot of great things to offer. So I'm glad that you took the time and yeah, man, shared all that with us.

Pat 1:00:30

Well, I appreciate you having me. I mean, I I love the fact that you and Matt are stepping out on a limb and doing this. I I mean, dude, that's you guys are the people who are gonna change the world. It's it's the people who take the risk. So I I appreciate the time and I hope I didn't ramble too much. And just really thankful, A, that we caught up and B, that I was able to have this conversation. I think it was really interesting and exciting for me to kind of hear from you and get to kind of talk on my soapbox about what I do and how things have been. So, you know, I look forward to catching up with you and best of luck with Drive. You know, I'm sure we'll be in touch in uh near future.

Tom 1:01:02

Thank you so much, and let's stay in touch, buddy.

Pat 1:01:05

Yeah, buddy. Have a nice night.

Tom 1:01:07

Peace. Bye-bye. Thank you guys so much for listening all the way to the end of today's episode. Please rate us five stars on Apple Podcasts and on the App Store if you have not done so already. I would really appreciate that. All right, have a fantastic day, guys. Peace, love, and positivity, and the wheel.