Nap Dresses and Crypto | Sarah Kunst, Cleo Capital

[00:00] It's not taking itself too seriously. I was listening to another podcast today and I was like, wow, these people are taking themselves so seriously. And that's the opposite. Name and shame. I will not. I will not. [00:14] Hello, I'm Natasha Hoskins. I'm Dina Burke. And this is Boys Club. Wait, is it just Boys Club? It's just Boys Club. The Boys Club podcast? No. No. [00:25] Just boy stuff. [00:26] Hi. [00:27] Hey. [00:29] I think you should ask me what Boys Club is. What's Boys Club? [00:33] Boys Club is a... [00:35] Social Dao. [00:38] thinking about and building for the new internet. [00:42] We do that through podcast newsletters. [00:45] Newsletter, singular. I've been saying newsletters. I don't know why. I don't know what this is. We're manifesting it. We're manifesting many newsletters. We launched a zine. We have a Discord community where we hang out and talk and chat, and it's really fun. So join us at boysclub.vip is where you can check it all out. This is our podcast where you can hear about... [01:11] People... [01:12] building [01:14] And creating the world around us through interviews with founders, through talking to VCs, to hearing about Dina and myself, who are the co-founders of Boys Club, and all of the feelings we have about the work that we do. [01:29] How's that? Great. That's great. I think to give further context, a lot of what we talk about is...

[01:36] really looking at this intersection of technology and culture. So... [01:40] We just went to East Denver and we went to South by Southwest and to a lesser degree, South by Southwest, but certainly in East Denver. There's a lot of really cool technology that's being built by a lot of very smart people. Very cool stuff. Yeah. [01:54] Uh... [01:55] None of it matters at all if it doesn't show up in one way or another in our... [02:01] everyday things [02:02] normal human lives. And that's what we're interested in looking at at Boys Club. How does this cool tech show up in art and fashion and sports? Sport? Sports? Sports. I don't know. I'm kind of interested. Music? [02:20] Music. Yeah, sure. Payments. [02:23] Luxury [02:24] Time. [02:26] Those things too. So that's generally the... [02:32] themes that you'll hear. And Sarah Coons done the show today. Timely moment for her to come on. It's been quite the week in the tech industry. [02:42] wider tech industry, [02:44] I want to keep saying that this isn't a crypto story. [02:47] the SVB and Silver League call is not a crypto story. - Yeah, I had a coworker who was like, man, crazy week for crypto. [02:53] And I was like, no, crazy week for people who bank. Yeah, we need to change the narrative around that. Change the narrative. Anyway, Sarah was amazing. She's so smart. [03:03] She has such a like crisp and convincing perspective on the world at large and also how she invests and what it is to run and start a fund. So I think this is filled with nuggets of like insights and hard truths and some really interesting takes on why she's made investments in the companies that are in her portfolio. So.

[03:29] I think it's great to listen to if you're interested in being a VC, if you're interested in taking money from a VC. And I really enjoyed it. It was a lot of fun. [03:41] If you're ever interested in pitching, Sarah, this would be a great interview. Yes, this would be a really great podcast to listen to. [03:48] Do your research. Show up ready with some thoughts and takes from her podcast interview. [04:01] So on today's pod, we have Sarah Kuntz, who is the general partner of the venture capital firm Clio Capital. So Sarah, welcome to the show. Thank you. We are going to do a founder feelings episode with Sarah today. And there are a lot of feelings right now in the market. It's been quite the week. But before we get into that, I'd love to learn more about you. And maybe you could give us like a quick TLDR on... [04:28] how you started with Clio Capital, like just a bit on your journey and your career so far so that we can get some context and background. [04:35] Yeah. So I started Clio Capital in 2018. And, you know, prior to that had been an investor, operator and founder for about a decade. So from from Michigan, originally went to Michigan State, which today is the first day of March Madness. So I'm repping and St. Patrick's Day when we're recording this. So go green in all senses of the word.

[05:05] Chanel. So in marketing at a luxury fashion brand, it was 2008. And so 2008 felt a little bit like last week has for the tech world in that the great financial crisis hit and working in luxury fashion was not exactly the best timing. And so, you know, I ended up in startups. I made the leap and startups then just like early stage startups now, you know, they weren't laying people off because [05:35] the people kind of getting spit out of the corporate job market into the startup market. And so, you know, took a job working for the Winklevoss twins at a startup they had prior to their crypto days. [05:47] called Guest of a Guest that they had co-founded, that Cameron co-founded with Rochelle Ruska, who's an awesome entrepreneur who went on to start Lingua Franca, which is a really cool line of sweaters and knitwear. And so, you know, was working for them and kind of doing all things product and biz dev and sales. Really interesting learning experience to just jump into a startup where they're like, hey, this startup doesn't currently have any revenue and it's your job to figure that out. And so that was a lot of fun. [06:17] you know, ended up working with other, you know, digital media brands in New York, consulting for legacy media brands, and then eventually ended up at a Y Combinator back startup, the big, you know, Silicon Valley accelerator. [06:31] where I was, it was a fashion startup. We wanted to use AI to fix fashion. And we were

[06:37] About 12 years too early, but, you know, we gave it the old college try and raised money from Y Combinator and others. And, you know, I was leading product in biz dev there. And, you know, we built a mobile app that was all about sort of, you know, shop the look of your favorite. You know, at that point, there were not influencers yet. They were they were street style bloggers and people like that. [07:07] a fund and you know [07:08] They were in Silicon Valley. I was in New York. They were like, you know, we want to understand more about what's coming out of New York in terms of fashion, media, all of these areas to potentially invest in. And so I ended up in VC. And in general, there's sort of two paths into VC. You either are like a complete box checker, which I say in the most loving way possible. So, you know, you do not have a Michigan State shirt on. You have your Harvard shirt on. Right. And you went to your Ivy League school and then you went and you worked in investment banking or, you know, Bain or whatever. [07:38] Ivy League school or maybe Stanford, and then you get recruited into venture capital. And that is a path that a lot of people take. The other path tends to be used. [07:47] super random. You know, every VC, almost every VC who doesn't have the box checker path will basically be like, I was walking down the street one day, [07:57] and somebody was tripping and I helped them and it was a VC and then I started talking to them and I don't know now I'm a VC and so it tends to be really one or the other and so it was definitely in that latter bucket but I liked it you know it turns out that that biz dev I always joke I was in a sorority in college um cap alpha theta and I always joke that you know

[08:18] And sororities really taught me what I needed to know to be a VC, which is just shopping and gossiping. And so, you know, that was the training. And because I was so good at shopping and gossiping, you know, VC was sort of always a natural fit for me. [08:48] Um, [08:49] And so did that. And then, you know, as that was winding down after a few years, I'd become a scout for Sequoia. So Sequoia, the big venture fund was was financing my angel investing because I had no money. And, you know, I decided I wanted to be in venture, you know, in a more serious way. And so launched the fund. And, you know, throughout that, I was also, you know, I helped out a bunch of different venture funds. I would mentor at a bunch of different, you know, Techstars programs. [09:19] or into things like venture funds on a limited partner board at Michigan State University, their foundation board. And so I had done a whole bunch of things that like weren't full time jobs, weren't things where I was getting a paycheck necessarily, but that helped me sort of learn more so that when I wanted to jump into venture full time, I had a pretty deep sort of bench of experience. [09:41] I love an investor who has been and was an operator and has started their own businesses. Like so much respect for investors who have done that. And I think really shapes the relationship you have with your portfolio companies because you know sort of what it takes and the type of skin in the game that requires. Okay, so I'm sure for a lot of people, launching a fund is like a dream. They hear that and they're like, that's the goal. That's what I want to do. So I'd love to hear from you, like what does that...

[10:10] take for it to come together like high level, what are the things in place that you [10:14] had to do to like have that fund, have Clio Capital come to life. Yeah, no, launching a venture capital fund is a terrible idea. It's like genuinely one of the worst ways to make money in the world. Because you nobody there's no natural constituency to invest in early stage venture funds, right? Or sorry, emerging manager funds. So like fund one, fund two, whatever. Right. [10:34] So the natural constituency to invest in venture broadly are massive pensions, massive endowments, who need to write $50 million, $100 million checks that can't be more than 10% of a fund. So they need to write a $50 million check into a $500 million and up fund. And they need that fund to have been around for years, if not decades, have a long track record of companies that have IPO'd. It takes, in general, over 10 years for a company to IPO from its founding. [11:04] You know, they need partners who've been together a long time. They need, you know, the Sequoias of the world to deploy capital into. And the reason why they want venture to be a very safe bet for them is because if you're a pension or endowment, you know, you're managing the retirement money of [11:19] you know, [11:20] Janitors and nurses and teachers, and it's not a good idea to just, you know, sort of YOLO that. Right. And so that's sort of what venture has historically looked like. Or if you're incredibly wealthy, you can start investing with your own money and then maybe get some of your friends who are probably also incredibly wealthy to put some money in and you can do it that way.

[11:42] You know, the reality is that that raising a first time fund is incredibly painful because it's [11:49] It feels as risky to a lot of investors as investing in a startup, but it's not as fun, right? So you invest in a startup and you get to be hands-on, you help the founder, you know, you're in the trenches day to day and it's fun and it's exciting. You invest in a fund and you're like, I invest in this fund. [12:06] And then they have to keep raising the fund for like another year and then they'll start making investments into companies and you can't like. [12:13] walk up to a founder and be like, hey, I'm 0.5% of the fund that's 0.5% of your venture round while we have this great relationship, right? So it's a lot more arm's length. [12:27] which is fine. Again, if you're a massive pension whose job is just to hedge risk, it's not so great if you're somebody doing it because you're excited to be involved. And so to that end, it's really hard to raise a fund if you don't already sort of have a lot of money or you don't already have a lot of people to give you money. And so when people ask, how do [12:51] Make a list of every rich person you know, ask them for money. And if they give you money, you have a fund. And if they don't, you don't. And for some people, that's really easy, right? If you know a lot of rich people... [13:03] and you're a slightly convincing salesperson, you can probably raise a fund. That doesn't mean that you're necessarily a good investor, that you have great deal flow, that you're a great fiduciary. It doesn't mean anything other than you have by luck or birth or hard work, ended up with a network of a bunch of rich people.

[13:22] I love you breaking it down so simply because it honestly, like it's so refreshing to hear because you can read like a million blog posts about like starting a fund and fund one or fund two or whatever. And that was just like straight to the bone. I really appreciate that take. Okay. So let's talk quickly about your portfolio. So Hill House, we're going from the nap dress to crypto with Gemini. Talk to me about your investment thesis and really what drives your conviction around the bets that you're making. Yeah. I mean, that's really the investment [13:52] crypto. What more does a girl need? I love it. I mean, we're here for it. Totally. I'm fully in, fully supportive. No, I mean, for me, it's two things, right? One, it is great. It is great for [14:03] founders, [14:04] who fundamentally have an understanding about the world and an ability to bring that understanding to life in a different way. And so for Hill House, I don't do a lot of direct to consumer, I do functionally no direct to consumer Hill House really is my bet in that area. And and with Hill House, you know, the bet was [14:24] Now, I'd worked in luxury. I knew that the luxury consumer is aging and quite frankly, dying. Right. You have examples of, you know, years ago when when, you know, every rapper would would talk about Cristal, which meant people bought Cristal before that. No one was really buying Cristal. And then, you know, the president or whatever, the Cristal company was like, we don't really want those people. Those people using our, you know, talking about and drinking our champagne. So Jay-Z was like, oh. [14:50] Okay, if you're going to be racist, I'll make ace of spades and make way more money, right? And that shift

[14:57] And the way that it was happening was so clear to me that the historical luxury brands were struggling to understand what to do and how to stay relevant and that it was going to take a very smart, [15:12] sort of next gen consumer mind to understand, you know, that bridge of both what is luxury, what is real luxury, you know, what does it mean? You know, what are people looking for in terms of, you know, the cuts, the styles, the sensibilities, like who is that customer? And then I met somebody like Nell and she very much is a, [15:33] you know, the luxury customer like Google her wedding, it's [15:36] I like knew her through mutual friends and I saw her wedding on Instagram and I was like, I'm obsessed with that girl. I'm obsessed. It's like the most magical, like you can't Google her wedding. Thank me later. And so it was like, this girl clearly understands luxury, [15:48] But she's also out there, you know, donating to, you know, a lot of the early proceeds from the company and they still do support like the Women's Prison Association. Right. This isn't. [15:58] some, you know, a girl who says, look, you know, I had the chicest wedding in the world, and now I'm going to turn around and donate to like, I don't know, the botanical garden. She's like, no, I'm going to help incarcerated women who are mainly low income black and brown women. And and I think that that dichotomy that range [16:15] is really does reflect who the new sort of luxury consumer is. It reflects, you know, who the Beyonce's of the world are. Right. And that is kind of what [16:26] were aiming towards in terms of, you know, when you look at the demographics of who's starting to make more money, of who's driving culture, all of those things. And so it was really compelled by the fact that Nell understood

[16:38] where the luxury customer was going and where the world was going. [16:42] And I wanted to be involved in that worldview. And now I am. And so, you know, that's one example. You know, crypto is another example. I'd worked for the Winklevoss twins and, you know, was having dinner with them, you know, shortly after they got back from Ibiza, where they had, I'm sorry, Ibiza, that's how you have to say it. [17:12] I was like, or maybe like a year later, I was like, you know, [17:15] I should have bought some more Bitcoin when it was under 300. When do you think it's going to be back under 300? And Cameron's like... [17:21] Sarah. It's not right. So I bought a little bit at like 300. And, you know, I wrote an article in like 2013 or something for the Daily Beast. It was like, all baby boomers should put 10% of their gold holdings into Bitcoin. And it was like $1,000 a coin then. And it was one of those things where any baby boomer listens, they should thank me. And, you know, I was going around telling my Tinder dates to buy Bitcoin, which like if any of them listened, they need to pay me. Doing the Lord's work. They owe you big time. They owe you big time. [17:51] out there in these streets, profitizing for the coin. And so, you know, I just, once I got it, I got it. And I was like, this makes sense. But like, I would wire money to a crypto exchange in Canada, and it would take three weeks for a bank for my bank to clear it and be like 100 bucks, it was very poor, like 100 bucks, and then they'd lose it, right? Or I would, you know, had money in Mt. Gox, like, bye bye. And so when you know, the twins started Gemini, they're like,

[18:21] crypto exchange that you can trust that won't lose your money. I said, huh, that sounds great. What they didn't include was that wasn't a Ponzi scheme, but it turns out that's actually important too. And so, you know, when I had the opportunity to invest in Gemini, it was another no brainer. And now to go back to your actual question, which is sort of what is Clio invest in? [18:42] It's on our website, cliocap.com. You know, anybody can pitch us from our website. And we, you know, have links to kind of our thesis areas broadly. But I'm really interested in fintech. I'm an investor in LVEST. And Sally Krawcheck is like the goat of, you know, personal finance. And so it's been amazing to be able to invest in that. It's a robo-advisor, you know, focused on women because women live longer, but the models don't take that into account, [19:12] off of dog food for the last few years of your life because your retirement savings runs out. And that's not the best thing in the world. And so, you know, things like Ellevest that I get really excited about. You know, I'm in some AI companies, companies like Forethought AI, which is an enterprise, you know, AI customer service company doing really awesome things. I'm in some really interesting climate things. [19:33] I mean, a company called Kobold Metals, which is uses AI to do rare earth mineral mining. And the reason that matters is that right now, when you need more batteries for your Tesla or your iPhone, you literally are basically torn between going to the Taliban because Afghanistan has a lot of those materials you need to make batteries or going to the Congo where they use, you know, children to do the mining.

[20:03] And so, you know, it is a really important company. And it's doing really interesting things with really, really like amazing, well-qualified, awesome founders behind it. Planet Forward's another company I'm in. You know, the founder there, Julia Collins, is an amazing woman. And, you know, she started a pizza robotic company. And then, you know, it was like, this is interesting. It's doing well, but I'm going to actually leave because my real passion in life is figuring out climate so that my kids have a role. [20:33] to live in. And so now she has a really cool enterprise climate company that helps companies, you know, figure out the sort of impact of their carbon footprint all the way through to the end consumer and then do something about it. [20:45] So I do a lot of things. I have range. Cool. Yeah, you really do. And I love that there's just this through line of things that matter in the world at large in different and various forms. And that's really exciting to hear. One thing that... [21:01] you said that is sort of I'm thinking a lot about is [21:05] The consumer of luxury and how that consumer has evolved and sort of [21:11] changed over the last few decades. And then... [21:15] as well as [21:16] the emerging world of cryptocurrency and your experience with the twins and Bitcoin and stuff like that. And I'm curious from your perspective, we think a lot about culture and crypto and how those things come to life and what that consumer looks like. And I'm really curious that [21:32] what your perspective of that intersection of that consumer is. Like, do you think that luxury consumer is also the same consumer as the person who's interested in crypto? And as crypto becomes...

[21:44] easier and safer and more fun to use, how the luxury consumer is going to continue to sort of like evolve with cryptocurrency. I'm just curious about your thoughts on that. [21:54] Yeah, so I am a I would say that I'm a utilitarian crypto maximalist, meaning that [22:02] You know, I don't necessarily think that you have to, you know, love the coin and celebrate pizza day and do all these things for crypto to be useful at scale. I think crypto is most useful at scale when you don't have to think about it, when it's something that's underlying. It's a rail that goes underneath. Right. Very few of us could live without electricity. I don't know how many of us are like, yeah, you know, whatever day, the kite, the thing like it. [22:32] scale. [22:33] I love the crypto community. I've been a part of the crypto community for a very long time. And I think at scale crypto wins when you don't have to be part of the community to use it and utilize it and have it be great for your life. Right. So the luxury consumer increasingly is coming from outside of the US. Right. And so if you are if you are. [22:52] you know, coming from another part of the world and you're traveling, you know, like, how do you, I, I, everybody has this experience, one of the first times you're in like Europe or really anywhere outside of America and you pull out your, your Venmo, right, with your friends. [23:07] And you... [23:08] you can't pay them because it doesn't work in other countries to other currencies right so if we're all sitting in new york we can venmo each other for dinner if we're all sitting in prague and you're in from china and you know i'm in from venezuela we actually can't pay each other even though we're sitting right there right and and so you know

[23:25] The killer app that makes those types of things possible isn't going to be great at scale because people are like really excited about the hash rate, right? Or the gas fees. It's going to work because it works seamlessly. And like the ultimate luxury, anybody can buy, anybody with enough money can buy anything. The ultimate luxury at the end of the day is time, right? Time and to some extent health. But like what's focused on time? [23:55] friction from the process, right? And to go into like the news of last week, you know, there were a lot of really rich people last week who were standing outside of banks in line before it opened because they needed a physical check because you cannot move your money from a bank without a physical check, right? And so things like that, [24:14] just showcase that, you know, [24:17] the limitations that we have in life tend to be, you know, [24:22] friction points, right, and tend to be, you know, how do we do things faster, better, whatever. That's like why people fly private, right? They don't fly private necessarily because like, I don't know, they want to smoke weed on their plane or whatever, maybe. But like the real thing is you can take off at any time, you can land at any time, you can decide where you want to go and where you want to be at a moment's notice. And that gives you more control over your life. I think that crypto does a lot of those same things when utilized correctly. And so, you know, will some rich [24:52] Sure. Well, some rich people, not sure. Right. But I think that the actual luxury is when you can make things even more seamless, when you can make things even easier, because that at some point is really what, um,

[25:06] the value of money is, I think much more than like, look at this, [25:12] gaudy thing that I can buy because when you can buy endless, I don't know, Hermes bags, buying an additional one is, it doesn't make a difference. I get that. [25:20] Okay, so we're in an interesting moment for the tech industry. [25:25] Between last week, SVB, Silvergate, layoffs this week, it's really easy to be very cynical right now. [25:33] And... [25:34] I am just hoping for some hopium from you. What's your optimistic take on where we're at and what advice for... [25:42] for founders do you have, if any? - Yeah, so I mean, I think that, [25:47] You know, there's a lot of toxic positivity in the world and I am certainly not here to contribute to that. So, you know, I'm not going to be like, well, when you think about it, it's great. No, like there's a lot of really fucked up shit. The world is not in a good place. Like the global macro is very bad, meaning that like, you know, take a, take a map of the world, throw a, throw a dart and wherever it lands, there's probably something very bad going on there right now. Like, I'm not going to be able to do that. [26:13] more than normal. And we're certainly experiencing that in the US. You know, the economy is not in a good place, you know, the banks are not in a good place. And that is very, very, very scary for a [26:24] But the reality, I think to some extent, is that, you know, it, it, it, [26:31] It's sort of like I used to watch a lot of celebrity rehab, which if you've never seen it, I highly recommend with Dr. Drew, who I think Dr. Drew is like kind of canceled now, but I don't know. But just watch old celebrity rehab.

[26:42] Anyway, you know, it's really hard when you're a celebrity to hit rock bottom because you have money, you have fame, you always have enablers around you. And then eventually when you hit rock bottom. [26:52] like it becomes an opportunity to like look around and be like, well, I can stay here and die quite literally again at Celebrity Rehab or I could decide to go up from here. And I think to some extent that's sort of where we're at as an industry and maybe as a world, right, whether it's. [27:08] climate or gun control or, you know, reproductive rights or anything like you can't get much [27:15] worse than we are right now in a lot of places. And that, you know, the meme that goes around, right, is like, when's the moment you were radicalized? And I think to some extent, that is [27:26] what will happen right now. And I think that is a good thing that people are going to look around and be like, absolutely not. Right. Like this is not okay. I will not, you know, [27:38] I will not tolerate this and I'm going to do something to change it. Whereas before, maybe things were just okay enough that you're sort of floating along. And so, you know, I don't have a lot of good news because I'm not going to sit here and lie. But the good news, I think, out of that is maybe that [27:58] You know, it is... [28:00] It is... [28:02] Sort of. [28:04] as my father likes to say, you know, I'm sick and tired of being sick and tired. Right. And you can get to a point where you say, like, I am truly just not going to do this anymore. And we are going to do something different. And I think that sort of frustration,

[28:20] And [28:21] anger and disillusionment can solidify into something really dark. You can decide to just lay on the floor and die, literally or metaphorically, or it can solidify into sort of the thing that makes you into the Phoenix that rise from the ashes. And so I hope... [28:39] that a lot of people are having or going to have their Phoenix moment where they got laid off or, you know, [28:47] They, they are just in these positions that they're like, I can't, [28:51] take this anymore and I'm going to change it. So Phoenix moment. It's a Phoenix moment for us as an industry. Um, well, Sarah, thank you so much for coming on. It was so nice to talk with you and really appreciate you taking the time. Awesome. Thanks so much guys. [29:13] Drop tweets. [29:14] Mm-hmm. [29:15] Thank you. [29:16] I had... [29:18] I have one that's in the draft and then I have one that I workshopped to a smaller group yesterday that I can talk about, which is a TikTok. [29:24] Oh, oh, nice. Okay. [29:27] Go ahead. You go first. Okay. My draft tweet... [29:31] is [29:32] The context is that we were just in South by Southwest. We were just in South by Southwest. We were just innocent. [29:37] really tempted to make quote unquote Texas my new personality I don't know I'm just like kind of into it I was like oh the cowboy hats strong agree [29:49] - Yeah. - Strong degree. [29:50] Yeah. The reasons you want to make Texas your full personality is totally different than why I want to make Texas my full personality.

[29:56] - What's your reasons? - You wanna like lean into [30:00] like a butch look, which you love to do. You want to go even harder in the paint around it. And I want to go the exact opposite. I'm like, I want to get a jacked man who drives a, [30:13] a G wagon and drives down South Congress. I don't know that that's Texas. I think that that's, it's a, it's a implant to Texas. Yeah. And I'm here for him. [30:24] So, um, we have different vibes, but we're coming at it from the different, different direction. Now we're moving. We're both in Austin, but we have very, very different realities. Um, [30:35] What was yours? I don't have any draft tweets because I have been tweeting more. [30:42] I've just been, I've been shipping it a little bit more. I mean, not like an extreme amount, but I got some really good feedback from the tweet that I drafted for last week. [30:53] And then I edited and did put it out into the world around the Mint. I'm looking. I can't remember. [30:57] Yeah, 69K minted, zero ETH. Oh, yeah, you did get some good action on that. Pretty good engagement. And then my favorite tweet that I think I've ever tweeted is, [31:08] is after that or before that, however you want to look at it, from our party, which was so much fun in South by. We haven't talked about that, but like, wow, what a great time. And it's all of these people in the club that we hosted this event, reading the zine, the waitress, the bottle girls, the girlies, everybody just opening up the zine and reading it. And I said, readers and leaders in the club. And I just laugh at it. I look at it and I laugh at it every time. It's really good.

[31:38] That's the tweets this week. [31:40] Cool. Cool.