🎧🍌 Why Founders are Moving to Chattanooga, Tennessee to Lock-in | Cam Doody at Brickyard
16x funds, building a startup insulator, scaling a local services business, why 5-star review systems don't work, and why Cam wants everyone to copy Brickyard
Cam Doody is the Co-founder and General Partner of Brickyard, the venture capital firm moving founders to Chattanooga, Tennessee to lock-in with no distractions until they find product market fit.
Brickyard is one of the most unique venture firms you’ll ever come across, and we get into how it how it was inspired by a 16x fund based in Chattanooga, why Cam and his co-founders started it during ZIRP, and why they hope everyone copies their model.
We also get into Cam’s startup Bellhops, which he started in 2011 and has since grown into the third largest moving company in the US. We talk running a local services business, why 5-star review systems don’t work, and how U-Haul almost killed Bellhops overnight back in 2016.
Thanks to Nader Khalil, Matt Harb, Austin Beveridge, and Spencer Levitt for their help brainstorming topics for Cam!
Timestamps to jump in:
3:33 Chattanooga: Dirty manufacturing city to high tech
5:23 Brickyard’s precursor, the Lamp Post Group (a 16x fund)
9:46 How ZIRP screwed up early stage investing
13:49 What is Brickayrd?
21:14 Getting Brickyard off the ground in 2021
26:25 100+ year old rug warehouse + maintenance nightmares
33:13 Cam wants everyone to copy Brickyard
36:31 Why economic development startup programs don’t work
38:59 YC teams doing Brickyard to escape the Trough of Sorrow
44:07 How Brickyard companies raise Series As
46:10 Nvidia acquiring Brev
52:18 How to deal with a co-founder breakup
55:45 Starting Bellhop to build a better moving company
1:02:27 How U-Haul almost killed them overnight
1:06:54 Marketing tactics for a local services business
1:12:05 Why 5-star review systems don’t work
1:18:16 How Cam’s view of VC’s changed after becoming one
1:20:37 Ways VC’s actually add value
1:25:05 The thesis for Bitcoin
1:39:21 Cam’s annual remote desert island vacation
Referenced:
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Transcript - (read on Rev)
Find transcripts of all prior episodes here.
Turner Novak:
Cam, how's it going? Welcome to the show.
Cam Doody:
Thank you, man. It's great to be here, Turner.
Turner Novak:
It's great to have you. I'm excited to learn about Brickyard. Can you really quick, just tell us about it?
Cam Doody:
Yeah, we're a pretty odd bird in Venture.
Turner Novak:
I think that's why people are listening. They're like, "What is this Brickyard thing? I've heard about it."
Cam Doody:
In Venture we're about three and a half years in at this point. I feel like, most people have heard about it. Usually the response is like, "Yeah, I've heard about that thing. Wait, what is happening down in Tennessee?" We're based in Chattanooga, Tennessee, which is definitively a desert island when it comes to tech.
Turner Novak:
You guys actually didn't even have high-speed Internet there recently, right?
Cam Doody:
Well, no. We've had the fastest Internet in the country since 2008 or 2009 I think, when the gig came here.
Turner Novak:
But didn't Comcast not build high-speed internet there originally or something like that?
Cam Doody:
Yeah, this is a whole different story. Chattanooga went from the dirtiest city in the country in the 80s and the early 90s. It was a manufacturing city, and it was just in bad shape in the 90s. There were a handful of local billionaire families that kind of came together and they made it their mission to turn the city into what it's today, which is the complete opposite of that. It really is one of the world's special places. But yeah, they started making investments in the infrastructure. We have a hundred gig fiber with a smart-grid now. We front ran Google for municipal fiber everywhere in the country. There were some early undercurrents took place that got the city moving in the direction where it is today, which is the way I've described it.
It's like the Boulder of the South. Super outdoor, outdoorsy, outdoor access, crazy, it's gorgeous. You're in the foothills of Appalachian, you've got the river running through downtown. But now it's a really clean and beautiful, wonderful place to live. We can get into when we moved here, but it's an amazing place. But Brickyard has nothing to do with Chattanooga, I want to be very explicit with that. This is not about economic development at all. I think that's one of the pitfalls that a lot of programs that may look like Brickyard at first glance, are just very different.
Turner Novak:
How do you describe it? If you're meeting a founder for a first time, and they're like, "What is Brickyard?" What do you usually tell them?
Cam Doody:
Brickyard is A traditional Venture Capital Firm. We invest it Pre-seed and Seed. We are like, a PMF or die shop where teams are coming here post-raise. We're not an accelerator at all. There's no programming, there's no demo day. If we get to the point of writing a check in your company, you are self-selecting to move to functionally the middle of nowhere to just lock in. That's what we really think matters most in the early days of building, is removing yourself from the noise. I think probably the best thing that I could do is like, "Why, why did we start right here?" So my background, I've been an operator since 2012, started a company called Bellhops, which we brought a new logistics model to moving and relocation. We can get into that later. We scaled our company to a pretty big business.
Turner Novak:
I think you're the fifth largest, within the top five moving companies in the US now?
Cam Doody:
Yeah. We split between number three and number four. What we did was we brought a technical operating system to an industry that was very old school. The only way that the industry scaled was by franchising, which caused a bunch of quality issues and scale issues and P&L issues, et cetera. But we moved to the middle of nowhere. The precursor to Brickyard was something called Lamp Post Group. Three founders started a supply-chain logistics brokerage three 3PL, that ultimately became a five or 600 million company. Totally profitable, they never raised any money.
It was kicking off a bunch of cash, and they were taking some of the profits, investing early stage companies, moving them to Chattanooga into this building that they had. We built alongside 10 other companies that they funded over a four-year period and it was the most magical experience that I could ever imagine As a founder. We were in a building locked in with a bunch of other people that were pushing just as hard as we were. We only had one thing to do. We weren't going to networking events or meet ups. We were just in the office.
Turner Novak:
It's like you said, PMF or die, build or Die.
Cam Doody:
Yeah. That ended up being, right now it's a 16X fund. I think seven of the 10 companies that they backed are a hundred to 600, 700 million companies.
Turner Novak:
Again, in revenue or valuation?
Cam Doody:
In valuation, yeah in valuation I'd say.
Turner Novak:
That's a pretty good hit rate.
Cam Doody:
It was an insane hit rate, but it was like, none of us were going to lose. We loved each other. We were around each other every day. We were all totally committed to this thing. It was like we were brothers and sisters, but we just wanted to dunk on each other every day. It was a very competitive environment in a very small form.
Turner Novak:
It's almost like brothers, super competitive, but you still love each other.
Cam Doody:
It's literally exactly that.
Turner Novak:
Brothers and sisters, obviously.
Cam Doody:
Yes. That was what Brickyard's beginnings came from, this thing called Lamp Post Group. Then when we sold part of our company right before Covid, my co-founder in Bellhops and I, we knew that we were going to do this again. But we were going to do it with, go bigger and do it with more resources. I think back to the why. ZERP caused all kinds of issues for early stage investing in my opinion.
Turner Novak:
What are some of the issues?
Cam Doody:
It widened the top of the funnel. The top of the funnel got huge, because there was so much money being crammed into Venture. There was too much money, not enough deals. So, I think the industry in large part had to start marketing itself as being cool.
Turner Novak:
Also, super competitive just to the point of very few real serious founders. You got to be cool and you got to market to those few people also, to stand out.
Cam Doody:
Yeah, the industry kind of shot itself in a foot in a way. I think widening the funnel was very great for series A, B, C, D, E whatever investors. Because they just benefited from, okay, as the funnel is just bigger, we get to see more companies that actually build something of value. But for Pre-Seed and C-Stage investors, there were all kinds of other reasons why you would want to become a startup founder now. It was like pop culture was cool, you want Steph Curry on your cap table.
Turner Novak:
The chain smokers are investing now, and they come and they perform. I'll actually sidebar. They're actually, from everything I've heard, very good, they're very helpful investors.
Cam Doody:
We know Alex and the Manus team well. Yeah, they're great. They're like technicians. The way they think about music is very-
Turner Novak:
They're like startups. Their founding story of the Chain Smokers is actually incredible. They did not just blow up overnight, they worked very hard for a very long time.
Cam Doody:
... 100%. Yeah, those guys are great.
Turner Novak:
I'm trying to get Alex on the podcast, so hopefully somebody sends this to him. They're like, "Alex, come on, come on."
Cam Doody:
Do it, Alex. Yeah, so, there was all kinds of new reasons why you'd want to become a founder. Like before, if you went to Harvard Business Schools, you're going to work for Fortune 500. Now it was actually a higher signal to go raise money from Andreasen, and try your hand at startups. It kind of came this project-base like, "Well, if it works out, great. If it doesn't..." Whereas before this, if you were a founder raising Venture Capital, the only reason you were raising venture was it was your only financing option.
Turner Novak:
Yeah, the cost on, if you think about the cost of the interest rate of debt, you might borrow like 10, 20%. If you actually do the math on the interest rate that you're technically paying on the cost of equity that you're selling, it's like 50, 60, 70%. It's extremely high.
Cam Doody:
Extremely high. Yeah, and so the only people that even entertain that financing option were founders that were neurotic about a problem that they absolutely had to solve. They needed the capital to be able to burn for multiple years, to get to the point where they could start right-sizing their economics.
Turner Novak:
Yeah, because the point of this is you build a business, at the end of the day, that throws off a lot of revenue, throws off a lot of cash flow, and it's valuable. It's real company, a real business.
Cam Doody:
What a novel concept. ZERP, a lot of ways, it caused this sort of golf-swing breakdown of Venture Capital with the founders. Because now Pre-seed and C-Stage investors, when we were writing Angel checks before Brickyard, we felt like Rolex dealers in the 80s. Our first job was identify the fakes. But the fakes started getting really good. There's all kinds of materials out there with YC, and how do you build a deck, and what words do you say, and what metrics are you tracking? There was this huge swath of noise that was introduced into Venture Capital, which made the job of the early stage investor really hard.
So, we wanted to build something that was wholly inconvenient and a sacrifice. A filter at the top of the funnel that would only produce folks that just had one thing that they absolutely wanted to solve, and wanted to focus every watt of their energy around building it. We started Brickyard in the beginning of the bubble of '21, '22. It was becoming more and more clear that the rot in the founder perspective, it was reaching a fever-pitch and you had a lot of hype. There was just a bunch of reasons why founders were getting in the space, and capital allocators were throwing money around, et cetera. So, we were like, "If we do this, we want to build something that, I only want to have conversations with founders that are absolutely in it with purity of intent."
I want to build a really, really massive company. I understand what venture is and I understand what it's going to take to get there. We built Bellhops, the most operationally intense, difficult grind of a build you can imagine. Thousands and thousands of contractors that are walking to people's homes, and moving their personal belongings, and very high impact. It was very hard, the whole thing was just hard. So, our background, our style was really cut around, if you're going to build something great, you got to be completely 100% all in. What Brickyard is at our core is, we're a traditional venture firm investing Pre-seed and Seed. We're writing three to $500,000.00 checks into usually one or 2 million rounds.
Teams are coming here after their raise is done or almost done, and it's an execution house. They're picking up, they're leaving where they're from. We've made 42 investments, one of them was from Tennessee so these teams are coming from all over. There's something about removing yourself from the situation that you're in, putting yourself in a place where you just have one thing to do. That helps us thematically with Brickyard and that, the only founders that even take second calls with us are founders that are like, "I think this would actually be really good for us as a company to get to PMF faster."
Turner Novak:
Is there a time commitment or a specific goal you have to hit to graduate kind of, or do you stay there forever? Are there going to be 10 public companies in Chattanooga in 10 years because of Brickyard?
Cam Doody:
Well, so, we have 13,000 square feet in our building. We bought this building. There's this super cool, old, Persian rug warehouse that we turned into what Brickyard is. We can only host 20 to 25 teams at a time here. When teams start to get to that scale where they're really thinking about scaling their organization, that's usually when we're starting to have conversations around, "Where do you need your company? Where do you want to HQ your company? Where do you need to be?" And for 80% of our teams or more, "We need to be back in New York. We need to be in the Bay Area, or we need to be in..." You name it.
Then we start working with them on helping them arrange their off... But there's no time obligation, teams come here to get to a million in revenue, a million in net ARR or net revenue. That's the buy-in, and you know that from the first conversation that we have. Is you're coming here to get to a million as the minimum buy-in? A lot of our teams stay longer than that, a lot of our teams stay until series A or close to it.
Turner Novak:
Nowadays, that can be three or four or 5 million sometimes, that can be pretty high number.
Cam Doody:
Right.
Turner Novak:
Before you could raise a series A before you had any product back in 2021.
Cam Doody:
It's funny, it was even 24 months ago, if you had a million in ARR, you were contender for a proper series A. Yes, teams are mentally coming here. We're going to be here at a minimum, we're coming here to get to a million in ARR. That just frames the expectation as it's a forcing function. We are going on a mission to get this thing done. Our belief is that the only things that are really creative to founders in this stage in the Trough of Sorrow, are being around other founders that are in your exact stage, that are sort of pushing you. Having this radical focus around not having anything else in your life that you really need to think about.
Turner Novak:
You guys do an interesting thing too with kind of public accountability and sort of this leader board. Can you explain that concept?
Cam Doody:
Yeah. There's one rule at Brickyard, and you post your numbers. It's just out frame, but we have a leaderboard, it's like a top-gear style, like magnetic strip leaderboard, where you post your revenue from two months ago, and you post your revenue from last month. Everybody's just competing against month-over-month growth, and you watch these founders every time they walk by the leaderboard, they're just, they're eyeballing it.
It's one of the drivers. We want our teams to really understand where everybody else is so they can help each other. They understand when teams hit a plateau and is grinding through some product-change they have to make or something. It just allows the community to function in a much better way. But our teams are in this building constantly. They're here in the morning, they're here late at night. We've put in a full gym and locker rooms, and there's an ice bath and a steam and a sauna, and we have a trainer three days a week.
Turner Novak:
A gym, right, with squat rack, fully built-out gym, right?
Cam Doody:
Yeah. It's a fully built out-gym. Founders can go from being completely dialed-in, locked-in at work, and then five seconds later they can go and have an outlet to get their mind off things. That's been really a great thing for getting founders sort of out of the grind, so they can have those conversations that are much more personal.
Turner Novak:
How did you decide what to do... Or maybe actually you rewinding just a little bit. You mentioned you bought a rug manufacturing ware... That's pretty crazy, tell us about it. I think I want to hear, you decided you're going to start Brickyard. You left Bellhops, you're in this phase, you started Angel Investing. How did you just get this all started? Very first couple investments buying the warehouse, take us through all that.
Cam Doody:
Yeah, okay. Well, all right, so when we started we were in the bubble. We kind of saw it coming like, my god, there's so few serious people both on the investor side... It was just like a mania, it was just a crazy time in Venture.
Turner Novak:
This is when we were investing someone have a discord group with a hundred people with crypto, and they would raise 50 million for a discord group. That was insane time-period.
Cam Doody:
Totally, totally insane. It was like, okay, the whole Lamp Post precursor was making a ton of sense. But we didn't know if we could actually attract top-tier founders to move functionally to a desert island.
Turner Novak:
Yeah, because it sounds insane. It's like why wouldn't I just go to San Francisco or New York? Like, Chattanooga, I've never even heard someone mention it. Before I met you I was like, I didn't even know there were startups there.
Cam Doody:
Yeah, right. We couldn't do this in SF, we couldn't do this in New York. There would be no sacrifice there. It would be a co-working space.
Turner Novak:
Don't you want to go to a networking event, or recruit people, or meet investors? Don't you kind of want that if you're in SF, or isn't there value to it?
Cam Doody:
My take is, the most serious builders even in NSF are not leaving their apartment. They are totally dialed in. They're leaving their apartment to maybe talk to customers, but they're not going to the meetups. They're not going to the startup events and all that stuff. That's like a trap for your founders that don't really understand that this is like a do-or-die scenario. The capital that you raised might be the last Capital that you ever raise that puts you in a position to be financially independent. There's just a level of seriousness that we see with founders that really understand. They aren't allocating any time to anything other than cracking their problem. Obviously, there are hyper-successful founders that leverage the networks of some of these major tech-hubs and do really well.
Turner Novak:
You probably have founders that leave and do that, that move after they hit their milestones.
Cam Doody:
Are you talking about in asset?
Turner Novak:
Yeah. I'm saying you probably have some founders at Brickyard that do exactly that. They build for a while, then they go to SF, they activate that network.
Cam Doody:
Most do and you should. When you're in the trough, you're not scaling headcount. You shouldn't be, you have figured out product market fit. But once you crack it and you've got a product the customers really want, most of these teams need to be elsewhere once they're in the scaling portion of their build.
Turner Novak:
It's really like, you go to Chattanooga, no distractions, work on your startup all day, every day, seven days a week, I don't know, 16-hours a day. Sounds like maybe a little more, maybe a little less on the margins, but it's all you do.
Cam Doody:
I think you talked to Spencer Levitt. Did you talk to Spencer?
Turner Novak:
Yeah, I talked to Spencer earlier today actually.
Cam Doody:
Oh, did you? Yeah. Spencer is the CF Coast. They're doing insanely well. They're in the scaling portion of their build, they have a wildly exciting company for API first companies, it's really interesting. Spencer, so we bought a house right next to Brickyard. It's an 11-bedroom house and it's basically just like a hacker house. It serves as short term or long-term housing for founders that are coming from other areas that just need a place to land. Some ended up up staying there for a year or two or however long they're here. But a lot of others, it's just a landing pad. Spencer and Austin, the co-founders of Coast, they would get to the yard at nine AM, okay, and they would leave at three AM every single day, seven days a week for a year straight.
We have this old analog ACME timecard punch clock, and it's really just like an aesthetic. We got him to actually clock in his last week here, which was no different than any other week that he was here, and he clocked 117 hours in Brickyard. That's just hard to do when you're in another place where two hours of your day is involved in a commute. We attract a different breed. But anyway, to go back. We bought the building, it was an old Persian rug warehouse. It was a shell.
Turner Novak:
Was it safe, was it contaminated? Did you have to do a EPA safety environmental test?
Cam Doody:
No, it was good. Honestly, we were worried about what kind of issues with the roof or whatever. It's a super sound building. These beams back here, are like a hundred years old, and it's built like a tank. We basically just built out boxes for breakout rooms, and conference rooms, et cetera. The only thing about Brickyard is there's no insulation. And so in the winter and the summer, the heat is running nonstop. And so we actually, I just went on Facebook marketplace and I bought a wood burning stove, one of those old school cast iron stoves.
Turner Novak:
You just plop it down in the middle for a heat thing?
Cam Doody:
Yeah, it's literally in the middle of Brickyard. And so hopefully that helps.
Turner Novak:
And you're paying the heating bill out of the management fees, right? It's free to use Brickyard when you guys invest, right?
Cam Doody:
Exactly. Yeah. There's no cost to Brickyard. Fully subsidized by us. Obviously, everybody's like, "Why don't you charge these teams for this?" And it's like, we're just doing this because this is what we want to be doing every day and we don't ever want to be in a position where we're providing a paid service for these teams.
Teams are here on their own accord. They bought into our style of building. They're here, we're all sort of in the same mindset of this thing and we wanted sort of that organic community of this is their place. This isn't something they're paying for, it's something that they're just a part of.
Turner Novak:
The community, as much as that word's been kind of bastardized over the past couple of years, but it's like a hardcore community for people who want to lock in and get shit done.
Cam Doody:
For example, we carved off a 10th of our carry and issue class B shares of the GP to all of our teams that come here and spend at least a year here. That's sort of like the vest. And that's not to keep teams here for a year. It was just like we had to put something on it.
And most of our teams, our average teams, are here for about two years. But anyway, every team that comes to Brickyard actually has upside in each other and it's 10% of our carry. I mean, if we 10X, 20X is fun, it's not going to make our founders rich.
Turner Novak:
It'd be like a nice six figure check in 10 years if you guys crush it.
Cam Doody:
Yeah, exactly. It's more like how do we get our teams to really have that depth of community? We want to build a real community where founders are not posturing and constantly, "Oh, we're killing..." We want our teams to be able to share their darkest days with each other and they do because they're here every day.
Turner Novak:
Okay, so darkest days. You mentioned this house across the street. I've heard it's actually the only house in Chattanooga with a rooftop pool. Something happened to that pool one time. What happened? I think it was Austin told me about this. Someone told me about it.
Cam Doody:
I mean, Brickhouse has been a maintenance nightmare from day one. I think we're at a baseline now where we have a lot of the issues fixed, but the roof is one of those flat roofs and there's a rooftop deck and there's a rooftop pool and whoever we bought the house from before literally put the deck on and then screwed the screws straight through the membrane on the roof.
Turner Novak:
Oh, wow. Okay.
Cam Doody:
The first week we owned it, the whole house was just leaking constantly. So it wasn't actually the pool that leaked, it was the roof
Turner Novak:
Because of the deck that they just screwed through the roof?
Cam Doody:
Exactly. So anyway, so we had to put a new $40,000 roof on the thing. But yeah, I mean to get back to your point earlier, yeah, we're fronting all of the cost of Brickyard out of our management fee.
Turner Novak:
And this was all personal originally too? You guys had started this before you had a fund, right?
Cam Doody:
Yeah. So we self-funded our first 16 companies in Brickyard, because we didn't know 21, 22, can we get top tier operators to buy into this? And we didn't want to raise anybody else's money until we actually proved that we could get top tier teams to do this. And by the sixth or seventh company that we backed, it was clear we were pulling on a string.
These founders really understood there was mania in the market. For the right founder it was like, "Thank, God. This is a serious shop." And so we self-funded our first 16 companies and then we raised our second fund, which is a $20 million fund.
Turner Novak:
Oh, first outside capital?
Cam Doody:
First outside capital. Yeah. And we're still investing out of that. So we have about another 15 investments that we're going to make over the next 18 months or so and then we'll be raising fund three, but we're always going to keep these funds small. We're not doing this for the management fee, we're doing this because this is just what we want to be doing every day. We're chasing that early stage drug of how we felt in 2013, '14, '15 when we were building Bellhops. Those were the wildest times.
And every team that we bring into Brickyard is in that exact stage and we kind of just get to be a part of it. And so we just love what we're doing. Like I mentioned, there's no programming, there's no demo day. We don't even have standing meetings with our teams, but all of our teams are constantly grabbing us, bringing us, pulling us into rooms, tactically thinking about how we can help them work through problems and stuff. We try to stay totally out of the strategy and just stay as tactful as we can be.
And it's just a bunch of builders that have all kind of found this oddball thing in the middle of nowhere and we're all pushing super hard.
Turner Novak:
And one thing you've mentioned before is that, and you just said it again, you don't want a big fund, you don't want this to get super big. It seems like, oh, if I'm listening to somebody's like, "Oh, this sounds amazing. This should be everywhere. This should be huge. Every serious founder should do this." Don't you want it to be big? And so it kind of sounds like an oxymoron.
Cam Doody:
I want this style of whatever you call this thing, like the insulator or whatever you want to call it. I want there to be camps like Brickyard all over the country that are started by other exited founders that are real, that really understand the business, that are kind of in a stage where they want to be sort of giving back in a way, but more so out of selfish ambition of I just want to be around really gifted, ambitious people. And I don't think you can scale that.
And so I wish you would start a Brickyard in Ann Arbor and put your own style to it. We're very much like the hard-nosed, super capital efficient, put the work in, remove all distractions category agnostic fund where we're finding founders that are just...
Our thematic approach is find really serious people that are building venture backable things that we're also excited about, but find the real junkyard dogs and imagine a world like 10 years from now where there's 10 or 15 of these camps that were all started by different styles of operators that have their own expertise or their own perspective on company building where founders can come out of an accelerator or get to the point where they've got early traction, what they're building, but they want to just lock in somewhere in a community of other founders that are in their stage pushing super hard.
We have experienced investors that can really help with a lot of the tactical decisioning in their early days, et cetera. That would be amazing. I think we launched a Brickyard Austin, the magic dies. This place is really special because we're here every day and this is just what we're pouring. It's a labor of love in a lot of ways.
Turner Novak:
So you can't kind of have these, I don't know, helicopter, boomerang in like, "Oh, I'm there twice a month." I think you guys all... Don't all the GPS, I think there's three or five maybe?
Cam Doody:
Yeah, there's five of us. Yeah, Matt and I run the day to day, and then Ted, Alan and Barry who started Lamp Post are more in the background.
Turner Novak:
But they work out of the office, right? They're there all the time, right?
Cam Doody:
Yeah, this is their office.
Turner Novak:
Okay. Yeah. So it can't be like a satellite office kind of like, "Oh, I'll be there next month if you want to catch up for office hours." It sounds like the magic is like, "Hey, just stop by. Just come and walk and say hi to me if you need something." Just in two seconds, I'm ready.
Cam Doody:
That's a hundred percent. That's it.
Turner Novak:
And then there's an interesting angle too though, and maybe we were talking about this before we started recording, but kind of the economic development angle. It seems like there's a lot of times you might say, "Oh, the state of Tennessee wants to invest X amount of dollars to juice the economy, get jobs." Et cetera, et cetera, and that's not what you guys did. Can you just explain why you're not really that excited about the economic development angle? Even though that's kind of what you're kind of developing the economy a little bit anyways.
Cam Doody:
Honestly, if that happens, great, but we have no... That's not why we're doing this at all. And I think the reason why there's a graveyard 10 miles long of civically funded incubators or whatever you want to call them, their priority is economic development. It's not generating fund returns and-
Turner Novak:
Building companies.
Cam Doody:
Just if we said, "Hey, you got to move to Brickyard, but you have to live in Chattanooga for five years and we've got a bunch of terms that are going to keep you here and there's a clawback."
Turner Novak:
Yeah, you got to hire some students from the school.
Cam Doody:
The best founders in the world are so radically selfish in this period of company building, because they're literally dying. Their company is dying, and every decision they make has to ladder up into like, "Are we going to get to PMF or not?" And so the best founders, the second they smell a whiff of economic development or ulterior incentive, they're just gone. You're never going to get that. And so we don't have anything to do with economic development. We make that super clear upfront.
Our job is to provide fund returns for our investors and to build really awesome companies. And if we had some quote of like, we've got to invest in five of this type of company because we got some sponsorship from TVA or something that wanted us to invest in this space, it would really pollute our decisioning process. And so we didn't have any strings and so that's why we didn't do it.
Turner Novak:
I think you mentioned something, too, that sometimes people will go to YC to Y Combinator, it's an accelerator pretty popular in San Francisco, and then they'll come to Brickyard. So someone might hear what you're doing and say, "Oh, you're competing against YC." Or, "Why would somebody pick Brickyard versus YC?" But just knowing what I know about it, you've almost counter-positioned against YC in a way. Can you just talk about, I don't know, somebody... They might do both, just why did they do that?
Cam Doody:
Yeah, so about a third of our companies are YC teams that we either backed before they got into YC or we backed after they came out of YC. And so YC, you know the trough, Paul Graham's essay on the trough of sorrow. It's actually... I don't know if you can see this that I have. Well, this right there.
Turner Novak:
Oh, yeah. Ooh. That's like the logo. That's kind of the Brickyard logo on the website too, right?
Cam Doody:
Exactly. So YC gets you to the first little spike, the peak of disillusionment where you've raised capital and you think you have the answers to the universe and you think you're just going to be going straight up forever. But it's almost a startup law. You have to fall into the trough of sorrow and you have all your initial assumptions tested and you have to reach all those false summits and to really understand the root of what does the customer want?
And that usually from the first peak in the trough to product market fit is usually three years in some cases, but for Bellhops, we really didn't have pure product market fit until probably almost five years into the business when we rolled out our full service trucking option. And so our job is to get founders through the trough, like YC and all the other... YC does an incredible job at what they do, but their job is to get teams to their first raise.
Our job is to get you from your first raise to product market fit. And so everything in Brickyard is really designed around what benefits you in that stage. It's radical focus and it's being around a bunch of other founders that are pushing harder than you are.
Turner Novak:
And then you guys also don't do it cohort-based, like most accelerators kind of accelerator 101 is like there's a cohort, there's a demo day and then we do it again. You guys don't do a cohort. Why not?
Cam Doody:
We don't. It would be tough for us to have a pure diligence process if we were scrambling to back to 10 teams at a time all at once. We want to be able to see everything. Last year I think we looked at 7,000 decks, we made 10 or 11 investments and if we were on a clock, it would sort of, I think, corrupt our diligence process. Now, there is definitely benefits to cohorts in that starting everybody off in the same point.
There is a shared bond of being in a pledge class together, but we're a revolving door, but we actually think this is the right fit for what we're doing, because our newest teams that we're backing really early stage companies that are coming in, on day one, they're seeing the team that's been here for two years that's at one and a half million in ARR, $3 million in ARR, about to raise their series A.
And they're like, "Oh, wow, they came here, they were us two years ago. We can do this." So there's sort of a hierarchy inside of Brickyard where you have examples that you can kind of follow around, "Okay, we can do this too." So there's pros and cons to it. I think it'd be really difficult for us to run cohorts. It would be a cohort of folks that are signing up for two years at a time. It'd be pretty tough to overlap that.
Turner Novak:
Yeah, and it's interesting because the analogy of the older sibling or you're just learning, you're just kind of working out in the founder that's two years ahead of you, you're just lifting together and there's just a little bit deeper maybe of a bond and it's like, "Oh, I have this employee that wants to quit or get a raise or had customer issue." "Oh, yeah. I also dealt with that a couple of months ago."
Cam Doody:
Exactly. Yeah, 95% of the value of Brickyard is the community of teams that are here. Because this isn't like a 10-week boot camp where you kind of get to know everybody, but nobody gets vulnerable. Everybody sees how hard everybody else is working here and those organic bonds that happen over multi years, it just allows for a deeper connection between our teams.
Turner Novak:
So then how do you get follow on investors to care? Because that's kind of the value YC, it's like we've got that saw for you. There's the demo day, everyone likes looking at the YC companies, pays attention. You guys don't necessarily have that.
Is there a way that you've kind of solve for, hey, good investors that you want to meet that aren't going to fuck up your company? Maybe they'll add a little bit of value if you're lucky that you raise your series A from, we'll get them to care about what you're doing.
Cam Doody:
So we have... Yeah, mean the beginning of that answer is the best investors will invest in a great company no matter where they are and so what is your traction? It just comes down to have you been a good capital allocator of the money that you raised in your first round and do you have work that you can show that is exciting to a follow on investor?
And then I guess... So that's everything that we're focused on, but when it comes time for any of our teams to go out for a second raise, we have 200 investors that we've known from our own days building a venture plus for the last three years, getting to know other investors personally on deals that we send that we're doing. And we're curating a list of folks that we like and trust and just like any other investor.
And when it comes time for any of our teams to go and raise, we can write an essay and send it out to folks that really understand the types of founders that we back and when we really lean into something and the company has built something really exciting, normally we can get a lot of that round kind of started. Very typical for us to make 50 investor introductions for series A's or for Seed Plus, et cetera.
Turner Novak:
And you actually have had some success stories. I mean, I know you're only a couple of years in, but I think you've had two companies get acquired. One of them was Nader at Brev. I think NVIDIA bought them maybe six months ago, a year ago. What's the story with Brev?
Cam Doody:
So Brev was our fourth investment in our pilot fund and we didn't have the building. We barely had anything and that was actually cold inbound. I think they inbounded, we took a call. Nader is one of these truly special guys that was just very clearly the exact type of founder that we're looking to back.
Turner Novak:
He was like, everyone wanted to meet me on Zoom. And I was like, "I want to meet someone in person. I don't want to do Zoom."
Cam Doody:
Yeah, so we flew... Our process, when we get excited about a team, after we've done back and forth diligence, whatever, we fly every one of our potential teams to Chattanooga for a final partner meeting. We spend a full day with them and so we flew the entire Brev team in. We didn't have a building, so we met in this old YMCA building in Chattanooga and it was just so clearly what they had... They were originally building dev tools, which ended up being completely different than what they ended up landing on.
Turner Novak:
Classic pre-seed of totally different products at the end of the day,
Cam Doody:
Completely. And that's every company that we have backed. Almost every one is so materially different a year after we invest and so that's a core part of our thesis. When we met Nader, it's like, "This is somebody that we need to bet on. This is a person that's going to figure it out." Do they have everything figured out today? No, but that's what pre-seed investing is and so...
Turner Novak:
You actually send a... So for people who don't know if you've ever tried to fly to Chattanooga, there are pretty much no direct flights. You got to go to, I think Nashville or Atlanta and then I think you have to drive. Are there even connections? You guys even have an airport in Chattanooga?
Cam Doody:
We do. Oh, yeah. We've got an airport and we have a limited number of directs. We got one to New York, we've got one to Austin. But the airlines are such a mess right now, personally, if I'm trying to go somewhere and I don't want to be delayed or whatever, we just... It's an hour and a half to Nashville and an hour and a half to Atlanta.
My partner actually bought one of these... It's like the tour bus that Taylor Swift's zipping around the country on. It's super over the top nice bus. And he basically gave it to Brickyard and hired a driver and all of our teams have access to book it whenever they want. So our teams are taking that bus there, Nashville or Atlanta airports constantly.
Turner Novak:
And it's like wifi, bathroom, food service. You guys are pretty stocked, right?
Cam Doody:
Yeah, it's high class for sure.
Turner Novak:
Is this Ted?
Cam Doody:
This is actually Alan. Alan Davis. Yeah.
Turner Novak:
But then you have this other thing called Ted Tours, right? Part of your closing process?
Cam Doody:
Ted, so Ted was CEO of access. And so Ted, Alan and Barry are three other partners in Brickyard. They all started Access America together and they started Steam Logistics and a handful of other companies, Supply Chain, that have all become huge successes. Ted is like the de facto mayor of Chattanooga.
I mean, he knows absolutely everybody and so whenever we fly a team in a Brickyard, Ted's one job is he drives them around Chattanooga and just shows them the ropes and goes into a bunch of the companies that he owns and handful of companies that are Brickyard, companies that are out of Brickyard now but are now headquartered in Chattanooga. But he's a wildly special guy.
He's truly world-class connector, top 1% of the 1% on folks that can just really make you feel like the most important person in the room. He's an amazing guy.
Turner Novak:
And then it's called the Brickshot? Is that the name of it?
Cam Doody:
Yeah. Yeah, the bus. So Isaac from June, one of our early companies that we backed, named it the Brickshot and it stuck.
Turner Novak:
I think Nader was telling me, it was kind of like peak COVID, I think it was like 2021-ish where it was like people were still not really doing much in person stuff and they flew in, you picked them up, brought them back to the YMCA and then they... Did they live in Chattanooga or were they one of the teams that didn't actually live there?
Cam Doody:
So we didn't even have a building at the time and we had some temporary space in Bellhop's offices that we were using and so the first 10 companies that we invested in out of Brickyard were sort of like pilot companies. They didn't fully do the full Brickyard commitment, burn the ships thing, but Nader and the Brev team basically have been here for the last three years, once a quarter almost.
Turner Novak:
So they treat it like an offsite, almost?
Cam Doody:
They treat it like an offsite. They come here to get deep work done and all of our teams that they were all out of Brickyard come back to Brickyard to do executive offsites or weak sprints and stuff like that.
Turner Novak:
That makes sense. I think he also told me, I don't know the exact context on this, but he said you gave him some pretty good advice. He had a little bit of a co-founder, I think it was a little bit of a co-founder breakup, he said to bring it up. He's like, "How would Cam talk me through that if I'm having a breakup with a co-founder?"
Cam Doody:
That's the unfortunate thing about early stage companies that you just can't avoid is it's really, really difficult to find somebody that is ready to be evenly yoked on a co-founding team and endure the pain. We talked about it before, but everybody wants to be a startup founder until they're a startup founder. It's incredibly painful. The uncertainty is so high, the anxiety that you feel, the volatility in your ups and downs.
It's really hard. And I didn't come from the military, but I can imagine soldiers probably very... It's like everybody says that they're going to be brave until the bullets start flying and that's a part of early stage company building, it's really hard to get right. And so my advice to Nader and every other team that I'm an investor in that have come to a fork in the road where one co-founder might not be right for the team is it's totally natural for this to happen.
This is a totally unnatural thing. These companies are growing at totally unnatural rates and you kind of have to be a wild man in order to sign up for hanging on to the side of a rocket knowing that you're doing everything in your power to keep up with this thing that has been taking on a life of its own and it's just not for everybody. And so I think that the best way to go into those conversations, just a very empathetic, like, this is natural, this happens all the time. And co-founding teams that can amicably find a way to allow a co-founder to step out of the business, is usually, you just want to get them there. You don't want to get litigious and you don't want to get to the point where people are name-calling and pointing fingers and stuff like that, because it's such a distraction in the business. And so, I think just having those difficult conversations that sort of warm the conversation into a, what's the decision that we all need to make here? So, I think empathy is just the most important part of those conversations when they come up.
Turner Novak:
Makes sense, and then they got acquired by NVIDIA. Can you share much about, what are you allowed to say? I don't know what's even public, I haven't actually looked at this lately.
Cam Doody:
Yeah, I can't really share anything, honestly. Although it was a great outcome, Nader and the entire co-founding team did very well. I'm sure, I would tell Nader, they were taken out early on in their journey. I think the interest from NVIDIA was going to be there forever, but I don't want to say that to discredit anything, that it was an outstanding outcome and it was an offer that they couldn't turn down.
Turner Novak:
Yeah, that's fair. And I do want to talk a little bit more about Bellhops. Going back to your kind of early days. You mentioned briefly what it was, but can you just again just really quick explain to us what Bellhops was?
Cam Doody:
Yeah, so we took on the moving and relocation space, which is the worst space. It's like the three most dreaded tasks in life are death, divorce, and moving. It's literally the three most dreaded life events.
Turner Novak:
And the other two probably have pretty high margins, right? Divorce and death. You can print money if you operate in those industries.
Cam Doody:
Yeah, moving is a lower margin endeavor.
Turner Novak:
But maybe you do it multiple times. You only die once and hopefully you only get divorced, maybe some people get divorced more, but moving, some people move a lot. So, maybe you got some retention there?
Cam Doody:
The headwinds in moving, if traditional moving companies, the biggest hurdles for traditional moving companies, if you want to get really big, you have to franchise.
Turner Novak:
Well, yeah. Why is that?
Cam Doody:
There's huge capital expense in buying the trucks and getting real estate for the trucks to park, and then spinning up all these independent operations.
Turner Novak:
You basically need multiple offices in each city and you need to be in every major-ish city in the country, right?
Cam Doody:
Exactly, and so that's one thing. What that leads to is a huge degradation in quality across a brand. So, take moving company A, let's say they have 500 franchises across the country. Johnny on the north side of Atlanta might be a great operator driving around moving company A's trucks, but Jimmy on the south side of Atlanta is a terrible operator, but they're driving the same trucks. And so, I think that's the reason why moving is such a dreaded thing.
We saw an opportunity to build a technical operating system that allowed us to stay centralized and manage performance on every move from one centralized OS performance management platform. And we built a new logistics model in moving where if you are a moving company, you have 10 trucks, 70% of your moves happen between Labor Day and Memorial Day. So, it's a highly seasonal business, it looks like a bell curve on the year. And if you only have 10 trucks, you can only do 10 trucks worth of moves, and then the next year you grow 10% or whatever, you buy an 11th truck, and then that's how you grow the business.
And what we did was, we built this performance management platform and matching platform, where we figured out how to onboard carriers and final mile logistics that are driving these 26-foot box trucks, but most of their business is at night, going from Amazon distribution centers to UPS warehouses, and their trucks are sitting during the day. And so those operations need utilization in their fleet, because they just want to keep these trucks moving all day.
Turner Novak:
Yeah, it was like free cash for them, free money if someone else is using it when they're not.
Cam Doody:
Yeah, exactly. And so it's funny, when we first started, this is before we developed this model, we started leasing trucks and scaling leases up to peak and then offloading the leases in the off season, etc. It was a huge pain. We had 20-year-old kids wrecking trucks and taking the tops off trucks, and how do you keep these things maintained, etc? And it was an operational nightmare.
And so we went to this entrepreneur in Southern Alabama, Dothan, Alabama, and this guy had one contract in final mile logistics and we went there to ask him, "How do you maintain these things? How do you train your drivers and maintain these trucks?" And 10 minutes into the conversation, he was like, "Wait a second, guys." He had like 7,000, 26-foot box trucks and he had one customer, which is Amazon. He goes, "Why don't you just onboard me as your driver? Why don't you onboard me to handle the transportation component and then your Bellhops do all the moving, the loading, the packing, etc, and we'll just meet on site?" And we were like, huh, that's interesting. And so, within 60 days, we had this third party trucking model had taken over our largest market in Atlanta, 100%.
And then over the next year, every single one of our cities across the country, our matching algorithms were assigning a moving crew, and then assigning a contracted carrier to just meet on location. And so what we did was we took what has traditionally been a fixed cost for moving companies, we turned it into a variable cost. And so we were not supply constrained during the peak of busy season when everybody else was. And then in the off season, we didn't have a bunch of underutilized assets sitting in a parking lot somewhere. And it took the capital expense out of the business, where when we launched in DC, we turned on our performance levers for Bellhops and then our levers for carriers, and six weeks into that launch, we had the capacity of every moving company in the entire DC area. And so, on no cost, no capital expense. And so-
Turner Novak:
When you say turn on performance, running some Google ads, get college kids to sign up to deliver or something or be the movers?
Cam Doody:
We have a slew of different levers that we pull on performance, whether it's ads or ambassador programs, etc.
Turner Novak:
Yeah, probably go to a college, "Hey, want to make 15 bucks an hour? You can move, get a workout."
Cam Doody:
Exactly. Yeah, so you turn that on and then all of a sudden it allowed us to have much more continuity of quality across the business, where we know every bellhop's own time rate and damage rate and their peer reviews from the other movers, because it's a team sport. I'm anonymously reviewing you and you're anonymously reviewing me, and so we're getting all kinds of data on who's actually great. And that's what really matters in moving is, what kind of experience can you provide on moving day? And Bellhops is just such an amazing company because of that, because we're able to run a much more acute performance program than our competitors.
Turner Novak:
I know you had an issue, speaking of trucks, you had this issue once with U-Haul. I don't know if this was before you figured out this negotiate or this agreement, or if it was at some point after. What's the story with the thing that happened with U-Haul?
Cam Doody:
Well, all right, so 2015 or '16, before we had developed this trucking model, we were just booking U-Haul trucks and then assigning the confirmation number to the captain of the move and the captain would go pick up the truck, show up with the truck, do the move, and then take the truck back.
Turner Novak:
So, was this before or after you'd kind of figured out this scalable model?
Cam Doody:
Before, this basically led us to figuring that out.
Turner Novak:
Okay.
Cam Doody:
And so July of 2015, I think it was, we had 2,500 U-Haul trucks booked for the month of July, and it's like June 25th or something.
Turner Novak:
And this was in a bunch of different markets?
Cam Doody:
Yeah, we were in 80 something cities at that point, or whatever. And so we get a notice from U-Haul that we have to provide payment in person now at all of their locations to pick up a truck. And they literally changed their corporate policy to removing a corporate card and your ability to book a truck totally online, to you actually had to bring a credit card. And this was before all the pre-funded cards come out, so there's no way for us to actually book trucks anymore.
Turner Novak:
Wait, so why would they do it? It seems like bad idea for them.
Cam Doody:
So U-Haul has a labor marketplace called Movinghelp.com, which is literally just like you and me could sign up to be movers on U-Haul's site or whatever, this is a pure two-sided marketplace, and we were killing that company. And so they saw it as like, oh, we're creating a monster, we're creating a full service moving company.
Turner Novak:
That's using our trucks.
Cam Doody:
Yeah, exactly, and so they shut us off. And the craziest story was, here we are, we have 2,500 moves, we don't have trucks.
Turner Novak:
Like in a couple weeks, it sounds like.
Cam Doody:
Yeah, and moving is one of those things, all of these people's lives are on... It's not like taco delivery. You can't just not show up to a move.
Turner Novak:
Yeah, you plan your summer around, we're going to move in June, settle in July, get the kids ready for school in August. And if you mess that up here, that's not good.
Cam Doody:
So, yeah. So, all right, a month prior to this, my wife and I had gone on vacation to the Bahamas and we met this guy, it was an older couple that we just kind of met and we ended up going to dinner one night and getting to know them. They became friends of ours, and his best friend was Roger Penske. And so a month later this thing happens and I'm like, there's only one other supplier that can handle this, 2,500 trucks in a month, and that's Penske.
Turner Novak:
Oh, wow.
Cam Doody:
And so I call up my buddy and I'm like, "Hey, I got to talk to Roger or somebody in the executive team now. We need to book 2,500 trucks, ASAP." And then two days later, Penske's executive team flew into Chattanooga and we got them completely offloaded and we didn't miss a single move.
Turner Novak:
So, that could have killed the company.
Cam Doody:
Oh, it definitely would've killed the company, 100%. I mean, yeah. So that's when we were like, okay, we've got to actually own the infrastructure around how we run our transportation, or we have to have a decentralized option that will allow for us to be able to handle this at scale.
Turner Novak:
Were you 100% on U-Haul? You were just literally going to their website, clicking, booking the trucks, and that was the entirety of the trucks was pretty much just U-Haul trucks?
Cam Doody:
Yes. Yeah, in 2015, yeah. I mean, we were two and a half years into building the company, so, yeah. But that ultimately led us to our third party carrier model, which allowed us to build a category defining company in the space. And we never would've gotten there if we hadn't had that issue, so.
Turner Novak:
Yeah. So, how did you market this thing? What was the marketing to customers? Like a millennial that's moving, and are they Googling it, are they watching a TV commercial? How did you get in front of people and convince them to use it?
Cam Doody:
Well, I mean, everything under the sun, right? I mean, organic search is massive. So our content and SEO strategy was a huge part of our business. Our performance game, we had to bring on some really high performance folks in performance marketing, because the thing about moving is, you don't have a ton of repeat rate. And so you have to make money on the first move and so CAC is like, that's the most important thing in the business. And so performance, organic, word of mouth is just absolutely massive. Reviews, that's the most, that's the craziest thing. Driving reviews online was probably our biggest lever to pull in the early days to get our early customers. Now Bellhop's moving like 50, 60,000 people a year and it's just a different game now.
It's just, we've kind of a full stack of levers that we're pulling on, but in the early days we had eight college students that did nothing but make customers thank you videos. So, it was just like we would just film these one-off files and basically send a video file to our customers, like, "Thank you so much for using us. We really appreciate you taking the time." And so we really created a lot of endearment in space where we were all about service. I mean, it was blowing the customer's mind was one of our core tenets in the business. And so our call center would be listening for, why are you moving? Was it a divorce, is it a marriage? Is it a new job change? We could show up with... Do they have a dog that barking in the background? We'll bring dog biscuits. Little stuff like that. Really building a service business was a huge part of our growth.
Turner Novak:
And I there's, I mean, I think at least another question, you've kind described a little bit of a lower margin business, tricky, you got to nail it on the first order. What were some of the hardest parts about building that kind of a business, about building Bellhops?
Cam Doody:
I mean, yeah, so you're looking at a 55% gross margin business and you don't have a ton of repeat rates. So, it all boils down to CAC. Can you effectively drive low cost CAC? And then beyond that, the most important thing with our team was, we are a service business, period. We are not a tech company, we were, but every decision that we made had to go into the, is this product shipment, is it going to benefit the customer on moving day? It doesn't matter how snazzy your booking process is, your estimate process, or any of the communication before the move. It's like, you can do all that stuff perfectly right, like A-plus grand slam. And then you show up two hours late to a move and all of it just-
Turner Novak:
Yeah, just fuck up their entire summer potentially, if you mess up the move.
Cam Doody:
Exactly. Uber is like 95%, is it touching a screen, seeing the driver's five minutes away, just hopping into a car and getting to where you need to go. 5% of it is like, did they have a water? Did they have a charger? There's no real service aspect to it. We were totally opposite. We were 95% was, how great were we on moving day? So the culture that we had to build for our Bellhops was so important. How do you get that Ritz-Carlton like service mentality to bleed down all the way to your Bellhops that are in a city 1,000 miles away from headquarters that you've never met before, etc?
And so, another one of our core tenants was treat the Bellhops like kings. And so we set up a service line for our Bellhops where we answered every phone call like it was the Four Seasons. They were not just hired help, it was like we would do everything for these Bellhops when they called, when they had a payment issue or when they had a damage on a move or how to deal with a customer or whatever. And that's really what allowed our culture to bleed down into our workforce, and that's what our customers experience. If you go online and you read Bellhops' reviews, almost every review names their Bellhops by name. Like, Johnny and Jimmy were so amazing, they showed up and made it feel so... Our kids feel safe and this and that. And it was like, how do you scale that? And so that was the most challenging aspect of Bellhops, but the most rewarding as well. I think it was probably the thing that we did best.
Turner Novak:
I know there's a little of a gamification element. Was there a scoring or review system or a leaderboard of some kind? How did you guys do that?
Cam Doody:
Yeah, so in the beginning of the product, it was, Bellhops would go in and the review that we'd ask for our customers was like a five-star review, one to five stars, whatever.
Turner Novak:
And this is go on Google and probably leave a review on Google or a website or something?
Cam Doody:
This was, yeah, go on... Oh, no, this was internal. Google's obviously five stars as well, but our internal product, the data that we're feeding our algorithms, we rolled in a five-star rating and our own proprietary review system for customers and for Bellhops. Like you and me would be anonymously reviewing each other, and that's a huge part of this because it's such a team sport. If you cursed in front of the customer and you didn't have-
Turner Novak:
Gloves or something, or?
Cam Doody:
Yeah, it's like, I don't want to work with this person next time, and so, but in the beginning it was like Bellhops were giving five-star reviews to 99% to each other, 99% of the time. And it was like, I know that 99% of our Bellhops don't like each other, right? And what's actually happening? And so we ended up having hundreds of conversations. We'd fly to a city and interview every Bellhop in the city and they were like, "Yeah, we just don't want to be the reason that... I don't want to be the reason that Jim gets kicked off the platform and he can't pay rent next month or, I'm afraid of negatively reviewing him and then him showing up on a move with me in a week and being like, WTF."
And so what we actually landed on was, and then even then on the customer side side, the difference between a great Bellhop and a Bellhop that we should kick off the platform was a 4.6 to a 4.78. Okay? And so your entire decisioning process around who is good or not on your platform is an incredibly small delta, right? And so-
Turner Novak:
You get a couple four star reviews in a row instead of a five.
Cam Doody:
Yeah, right, but I more mean, in order to do our job well, our matching algorithms had to be really good at knowing who was okay, who was good, and who was extremely great. Right? And there was not enough, you didn't have enough data in that split to really understand that.
And so we moved to high-fives, like medium clap. So it's single increment, you tap how many high-fives do I want to give Turner from the move that we just did? And the second that we employed that and we made the cap like 25. The second we employed that, it pulled our distribution out from the bottom 10% of Bellhops got 2.8 claps, and the top 10% of Bellhops got 14.5 claps or high-fives. And so now our algorithms could actually know, who are than the top 10% and who are in the bottom 10%? And it removes the guilt and fear aspect of Bellhops reviewing each other, like I don't want the guilt, not being the reason that Turner could pay his rent next month, because I gave you three high-fives. That's not a negative thing. I just didn't spend the time to give you 15, right?
Turner Novak:
Yeah, which is not that different, but there's a psychological thing of, ah, I'll give you three, that was pretty good.
Cam Doody:
Totally psychological, totally psychological. And so, that's what really allowed us to... That was at the crux of, how do we actually get data that isn't a false positive? And that was key to scaling out Bellhops.
Turner Novak:
That's crazy. I would not have thought that that was that big of a deal. Have you seen that implemented anywhere else? Would you recommend if I have some kind of a review based system, should I try that?
Cam Doody:
Oh, this is one of my strongest held convictions, is the five star review system is basically binary. It's like five stars for anything other than extremely horribly bad, and then in those cases it's a one star. But in the average, it's a 4.8, right? And so it's like, this is not a bad Bellhop. So yeah, the product function of spending your time to more of your time to give another Bellhop or person a better review, even if it's an extra three seconds tapping your finger on the phone, that changed everything.
Turner Novak:
Interesting, okay. Yeah, that's super interesting. I'm interested if anyone's listening to this and has seen something similar that, I'd love to hear just any kind of spectrum of this review base. Yeah, because when I think about using Medium and giving someone, I sometimes give one clap. It's like a like, right? Likes are almost meaningless online, but it's like, hey, I hit it 50 times. I spent 20 seconds giving you all this support.
Cam Doody:
That's why, this came from Medium claps. It was like, that's actually what we need. We need individual increments, uncapped.
Turner Novak:
Yeah. Huh, that's crazy. Well, so a little bit of a different topic, but I thought you might have an interesting opinion on this, just you're kind of outside of all the other ecosystems, but you're still very much connected to all of them. Have you kind of seen, and also you've been a founder yourself through Bellhops, but have you seen the different, I don't know, types of VCs that are out there? Does anyone actually add value? What's kind of the spectrum there? How do you guys think about that as you're talking to founders?
Cam Doody:
I don't want to dog other venture invest... The thing that I came to really understand about venture investing after I'd become one. I thought I understood venture investing until I became an actual venture investor.
Turner Novak:
So, how did it change? What was the before and after?
Cam Doody:
I just don't think I ever really fully understood what a venture investor is, is having some unique insight, like thematic insight that you are going to place all of your bets. And at the end of 10 years, you're either going to be right or you're wrong, right? And so, there are way more successful venture investors than me that have a lot more experience in running this game, but I think the thing I understand is, is Brickyard at its core and our thematic approach to venture investing, is companies that pre-seed and seed are almost always unrecognizable a year after you back them. And so, however you underwrote the company, if you invested in the company for the idea, it's almost always not what... it doesn't play out how you thought it would play out. Right?
And it's getting harder because in the age of AI, stuff's moving faster, and so investors have less of a look into the future on, how's the market actually going to let... How's the consumer going to play out in this market, or whatever? But the thing that doesn't change are all truly breakout companies are built by totally neurotic, super focused, very serious founders that are going to give every ounce of their energy to solving this problem. And so that doesn't actually change at all.
And so at pre-seed and seed, we're just focused on, that's our unique insight, is 90% of our decisioning is like, is this founder going to win by any means necessary and do absolutely whatever it takes to stay alive until they figure out product market fit? And that's the bucket that we put all of our bets in. And so-
Turner Novak:
What kind of support is worth giving to founders then at that stage? Because A lot of VCs, they'll market about how much value they add and they do all this stuff. What do you think actually moves the needle?
Cam Doody:
I mean, again, I think the only thing that really matters for investors at this stage are your network of introductions that you can make to potential customers or talent or other investors. That's functionally the only thing that you can provide as an investor, because really for two reasons. One, if a founder is listening to investors at this stage, they're probably not great founders, because investors, no matter how smart they are, they have 1% of the context of whatever problem the founders have they're trying to solve. It's so often my initial gut on something, how often are you saying, "Well, have you thought about this?" And the founder looks at you like, "Yeah, you don't think I haven't thought of that?"
Turner Novak:
You have an AI strategy yet, or NFT strategy.
Cam Doody:
Exactly. So the best founders, they thought about their problem more than any of their investors, even if their investors are really great. They understand the intricate nuances of their problem more than investors.
Turner Novak:
Yeah, can you actually add value as an investor? Where do you actually? Where can you compete on that or move the needle?
Cam Doody:
Tactical value, right? Strategic value from an investor in a pre-seed or seed stage company is almost always just ill-informed. You might be really smart and you might have looked at a lot of companies that seem relevant to whatever they're building, but you don't have the context to really understand. You can share your opinions on things. "Maybe you should be thinking about this or worried about this." I think that is absolutely helpful to strategically challenge your founders. But the vast majority of it is like, "Can you make an introduction to this customer, or this recruit, or this investor?" or whatever. That's where we just stay with all of our teams. We just try to almost always just stay completely tactical unless they explicitly want to get in a room and have a strategy session or something.
Turner Novak:
I think it might have been Austin at Brickyard that mentioned this to me. He said he really values that, that you don't actually prescribe advice. You're much more of almost, I don't want to downplay this, but generic tactical strategy advice. It can kind of apply to anyone, but it's not like you're projecting down. You can give the same advice not having the full context on what's going on, and it's helpful because you don't give them the wrong advice or send them in the wrong direction.
Cam Doody:
Yeah, Which I think this is really important. I think most venture investors don't really realize that their founders do put them on a pedestal. They do overweigh their opinions because they're running out of air and the investor has the air tank. Even if it's subtly unconscious, making some comment that you had, some whimsical comment about strategy or this or that, you might have just sent that founder into a tailspin. I think that's an important part about particularly early stage investing is these founders solve the problems. Investors never solve problems for their founders.
Turner Novak:
They solve the money. Here's some more money maybe, but not really. That's the founder's job to raise money, too.
Cam Doody:
Exactly, exactly. At best you can be a crutch and at worst you can be harmful. But I think the most important thing is do your founders trust you? That's the most important thing. If your founders really trust that you have their best interest in mind, they'll listen when you say, "Hey, I really think you should just be aware of this thing that I'm worried about."
Turner Novak:
I know you're a big proponent of bitcoin. I'm doing this at the end of the podcast so we have a hard stop, so we're not going to spend four hours talking about this. But I think you've said before, you think it's the most important technology ever developed. I'm interested in just hearing your thesis. I get it. I'm not as excited about it as you are, but I'm open to being kind of red-pilled here. What's the thesis for bitcoin and why it's so important?
Cam Doody:
The funny thing is venture capitalists as a whole is probably going to be the last group of people to really understand bitcoin, because the incentives for carry and fees on it are like nil. But as capital allocators, this is how I would say it. Our job is to take monetary energy and give it to people that are going to be good stewards of that monetary energy. The founders that are building companies are building nuclear power plants of buying power.
The natural state of an economy with technology and competition is deflationary. We get better at doing all things each year, and prices fall to the marginal cost of production over time. So if we're building better products for less energy inputs, in a competitive market that means the consumers benefit from lower prices. So this is the nuclear power plant of buying power is what we are investing in and helping build.
The other side of that is the battery that stores the monetary energy that companies produce, and that's the money. What bitcoin represents is it's all of the world's production rammed into 21 million units forever. This is a money that cannot be printed out of thin air, that is accessible to anybody with an internet access all over the world, on a fixed monetary supply schedule, in a world where all of our monies are deeply indebted, and we have central banks that are just printing money out of thin air and diluting the monetary energy that we have all worked so hard to earn.
I believe bitcoin over the next 15, 20 years is going to reprice everything on Earth, because money always shifts to the next best money. Gold has been the best store of value for 5,000 years, but it wasn't portable and it was hard to store, and it was all these things that it didn't fully function as. It was basically a store of value. Bitcoin's a store of value, it's a medium of exchange. You can send it anywhere in the world for pennies instantly, 24/7 without an intermediary. And it's a unit of account. It has a ledger that everyone in the world can read, but they can't change. When you have all the productivity in the world ramming into the same number of units, that means that prices drop every year denominated in bitcoin.
I'll tell a quick story. This was probably five or six months ago. I was in Napa at Calacanis' LAUNCH summit.
Turner Novak:
Was that good, by the way? He's mentioned it to me. I've never gone.
Cam Doody:
Yeah, it was fun. It was a bunch of LPs and they did a live all-in podcast, and Chamath and Sacks and Jason were all there. It was a small group of people. It was a great thing. We backed a couple launch companies, so we were pumped to go out there and get to know those guys better. But anyway, so I knew that Sacks understood bitcoin. I don't think Chamath or Jason understand it at all.
Turner Novak:
Didn't Chamath make a lot of his money off bitcoin? He supposedly sold a bunch of Facebook shares, rotated it in.
Cam Doody:
Yeah, but just because he made money on it, doesn't mean you understand what it is. But anyway, just from listening to Sacks' podcast, I knew that he did understand bitcoin. Now he dabbles in Solana and some of these other shitcoins and stuff, but I do know that deep down he understands bitcoin.
After this all-in podcast they did, I went up to him and I was like, "Hey, listen, I think the thing that most of the people here are missing," and I looked out across this winery. There's a bunch of LPs and GPs, "is it doesn't matter how many great companies we build and back. If we maintain a positive inflation rate, everyone's lives get harder every year, despite all of the production that our power plants are creating in these companies." He looked at me and he grabbed my shirt, and he pulls me into his face and he's like, "Yeah, these people don't understand that yet." Then five months later, he was appointed as the AI and crypto czar for the Trump administration, and I was happy to see it. Now they're talking about a strategic bitcoin reserve, et cetera.
But what Bitcoin basically comes down to is it allows everyone on Earth to benefit from all of the productivity fully on Earth. If you think about Bitcoin and AI are like two sides of the same coin. On one side you've got the deflationary power producers, and then on the other side you have this perfect battery with infinite capacity, but limited in units. We wouldn't actually have modern day AI if we didn't build the GPUs to mine the first bitcoin. So they're connected at the hip in this thing. It's like a perfect yin yang. On one side you have infinite productivity, and then on the other side you have absolute scarcity. When that absolute scarcity absorbs this infinite productivity, that means anybody holding that asset is going to be able to do more each year.
I think the thing that's going to change in venture is our benchmark is the S&P 500. If we can't beat that, then we're not going to raise the next fund. I think the thing that bitcoiners understand is the hurdle rate is not the S&P. The hurdle rate is Bitcoin that's growing at a 55% average four-year CAGR.
Turner Novak:
That's not good for a lot of VCs. On average, we're mostly below that.
Cam Doody:
Exactly. But I think that the top performing VCs I think of this decade are going to have some sort of a hybrid. As we move to sound money globally, and as these national debts become unpayable, et cetera, funds are likely going to take on... Let's say 10%, you put 10% of your fund in bitcoin, you waive fees, and then you take a heavy discount on carry, and then you use the 90% or the remaining amount of the fund to do your job. Well, that one allocation to bitcoin growing at, even if it's like a 30% CAGR, that gets you to a one and a half to 2X fund over 10 to 12 years.
So while every other capital allocator in venture is trying to claw back to one from zero, when you're starting at one from the beginning, that's going to allow for sort of a restructuring of how venture funds are structured. I think it's actually going to come from LPs. LPs are going to understand Bitcoin before GPs, and it may be something they require. Because, I mean, what are the stats on venture funds that don't return capital?
Turner Novak:
It's like roughly half. I don't know, everyone always debates. It's like, "Oh, it's actually not that bad." But I think if you say roughly half don't even get the money back.
Cam Doody:
Exactly. Take the LP bucket. The allocation to venture capital would be so much higher if you didn't have a 50% probability of not getting your money back. If you could all but guarantee you're going to get your money back, that changes the underwriting for LPs to allocate into venture investors. The new hurdle in venture now being bitcoin is if you can't beat bitcoin, what are you doing?
Turner Novak:
Wouldn't you, as an allocator, instead of having the fund do bitcoin, you just have a bitcoin allocation? Then instead of putting 10% of the fund in bitcoin, the fund is just 10% smaller or something. Wouldn't the LP do it at their level instead of inside of a fund?
Cam Doody:
I think they will be, but there's going to be a period of time between now and the hyper bitcoinization of the world adopting a sound money where I'm going to be pitching LPs that don't understand bitcoin yet. But they can look at me and they can say, "This person does. I've heard about Bitcoin and I think that it's this giant idea. Everything's downstream money. The TAM for this thing's bigger than anything on Earth if it turns out to be what we think it is." Then I'm going to look at them and say, "Listen, you could just take an allocation yourself and go and buy bitcoin and custody it, but you're going to have to go down the process of how do you custody it and how do you buy it, and all the questions you have to answer. Then you would have to hold it through its extreme short-term volatility through 1000X or 1000% increases in price and 50, 60% drops. This is going to allow you to hold it for 10 or 12 years without risk."
It also is providing an option for early liquidity to these teams, to LPs. Like in year six or seven, Adam Draper boosted this and he sold some Bitcoin that he bought in a 2014 or 15 vintage fund, and returned capital to investors when everybody else in 2022 was freaking out about holding their GPs. So this is a longer conversation, Turner.
Turner Novak:
Yeah, I know. That's why I strategically stuck this at the end, so I could just cut you off and be like, "All right, cool. We're all done here." No, but it's interesting though, when you think about just venture as an asset class is so illiquid. We probably have all had these companies where we invested in an early round, and they hit this huge valuation mark and you're like, "Oh, on paper, it's a 2X fund pretty quickly in." But you got to actually realize that value over the next... You got to build the company, you got to get to liquidity. It's kind of like a feature and a bug maybe at the same time.
Cam Doody:
Yeah. At the end of the day, we will be judged on our capital allocation. Did we return more buying power to LPs than we took?
Turner Novak:
Yeah, hopefully, a lot more. I don't think you can do a 1.1X, right? That you got to get-
Cam Doody:
The bar is high. Yeah.
Turner Novak:
Yeah, it's interesting. I feel like the baseline for good is a 5 X. But even then, over a 10-year period that's barely beating just the Nasdaq, if even. I feel like you got to get a 10X over a 10-year period. It's roughly 30% IRR. I think that's top quartile roughly. I think it changes all the time, but if you can get a 10X over 10 years, 30% IRR, that's pretty good, considering the liquidity premium that you have to pay of you're locked up. You're not going to get it back for a while.
Cam Doody:
Well, that's where the sound money thing comes into play, because a lot of GPs that raise capital today are going to benefit from nominal inflation over the next decade. They may have a 3X fund, but they're fund 3Xs, but they're actually returning, basically a 1X in real return. It's a 3X nominal return, but it's really I can buy the same amount of stuff that I gave you 10 years ago.
Anyway, I think that it's an exciting world in which when you think about the infinite productivity of AI that we're all looking at in venture, but storing that in a perfect money that can't be diluted, and how that benefits everybody. And how do we make good on that claim of we're backing companies that change the world? Are you really changing the world if the consumer is not benefiting from cheaper costs in all things?
Turner Novak:
Well, it just brings it back to you're backing founders that are going to create value in the world. They're going to solve problems for people. They're going to help them make more money at the end of the day. People are buying your product because they either get more time, or they save money, or they make more money. Then you're backing people that build products that solve for that thesis.
I had one more thing. You take these vacations once a year, you go to these remote desert islands. Tell me about this thing. It sounds crazy. I don't know why you do this.
Cam Doody:
Yeah. Three or four years ago, my brother and two of our best friends, it was like our life was just easy. We didn't have something hard that we were trying to overcome physically. There was a primal desire of I want my back against the wall, and I want to see if I can perform in a survival sort of situation. We ended up buying flights down to some of the out islands in Bahamas, and we brought camping gear. You're not supposed to camp in The Bahamas, so getting through customs was the weirdest thing.
Turner Novak:
Oh.
Cam Doody:
We were like, "We're staying on a desert island about two hours from here." Anyway, we get through, we rented a center console. Just on Google Maps, we were looking at an area that was just so deeply remote. We only brought spearfishing gear and we didn't bring any food, and we actually didn't eat any food the day before we left because we wanted it to be hard. So we went on this adventure where we went and found this hyper remote desert island, and we set up camp there. Then every minute we were on that island for four days was like, "We need food." So we were diving, and we weren't even experienced spear fishermen at the time. One of us had done it once before this.
Turner Novak:
It was potentially suicidal. What if you don't get any food?
Cam Doody:
Yeah. My brother, on the second day, we'd shot one lobster on that first trip. We were all in caloric deficits. Sean jumps off the boat on the beach and just face plants in the sand, just out, just unconscious for five seconds. He gets back up and he's like, "Oh, my God, okay." Anyway, what ended up happening on this trip was something came alive in us. When we get back from that first trip, all of our wives were like, "I don't know what you all did, but you're doing this every year." It was this feeling of gratitude of just everyday things that we came back for. Anyway, we've been back to this island for the last three years, and it's just a piece of heaven. We see nobody when we're there.
Turner Novak:
There's no electricity, there's no boat lines. You take a boat and you just like... No one's been there other than you over the last couple of years kind of a thing.
Cam Doody:
We're pretty sure. Okay, so we took a rum bottle and we ratcheted it to a tree on this island. Every year we go back, the rum bottle's still there. You look around and it's like, "No one has been on this island since we left it." So it really is that remote. When you're there for four days, you may see one other boat on the horizon zipping across the water, but it's very remote.
Turner Novak:
Is there a cell phone internet connection on this place?
Cam Doody:
That's the difference. The only reason our wives let us go back every year, you get five bars. Somehow we get five bars. We can literally FaceTime our wives and be like, "We're okay."
Turner Novak:
You're fighting for your lives, caloric deficiency, trying to spearfish. Like, "All right. Good night, kids." Say good night, you get to check in at least.
Cam Doody:
Yeah. Yeah, that's it. That's the only reason that we're allowed to go back every year. But yeah, it's awesome.
Turner Novak:
It sounds like probably you probably started Brickyard around that first time that you did that first trip, right?
Cam Doody:
Yeah, exactly. I think our first one was right off the backside of COVID. Yeah, I think 2021 was the first year we did it. Yeah, we're going to keep going back.
Turner Novak:
Cool. Well, I guess just wrapping up, what should people do? If somebody's still listening, we're like a good 90 minutes into this. If somebody's still listening. They're like, "Oh, man, this Brickyard concept seems pretty cool." Where can people follow you? Can they apply? You talked about this with this website. Where can people find you?
Cam Doody:
I'd say, look, if this is moderately intriguing, I'd go to our sites, justlaybrick.com. We're super direct about what we are. There's a very comprehensive FAQs there. If it's intriguing to you, send us your deck. That's all you have to do to apply. If it's something that we're interested in digging in on, we'll reach out and we'll start to get to know you.
Turner Novak:
Cool. We'll throw a link in the description. Throw a link to, I think you're on Twitter and LinkedIn a little bit too, right?
Cam Doody:
Yeah, yeah, both of those.
Turner Novak:
Cool. Yeah, we'll throw links if you want to check it out, and they can explore, put their deck in, see if Brickyard is right for them.
Cam Doody:
That's it.
Turner Novak:
Well, cool. This was a lot of fun.
Cam Doody:
Yeah, this is great.
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