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Episode 09 · 26 min · September 1, 2026

EP9: Mike Ma - Coach First, Capital Second

"Don’t tell me, show me. And I’m very interested in the action."
— Mike MA
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The essay

Coach First, Capital Second: How Sidecut Ventures De-risks Early-Stage Bets Before Writing the Check

When you’re making a low-information investment decision, the biggest mistake is assuming a polished deck tells you who a founder really is. The real question is not just what they’re building - it’s how they think, how they respond under pressure, and whether they can actually execute when the situation changes.That’s the approach Mike Ma has built at Sidecut Ventures: coach first, capital second. Instead of waiting until after the check clears to offer support, Sidecut works with founders for 30 days before investing. That gives both sides a chance to learn what’s actually true, not just what sounds good in a pitch.In this post, you’ll learn why that model works, what kinds of founder behaviors matter most, and how Mike uses action, self-awareness, and real-time coaching to make better early-stage decisions.
Why “Coach First, Capital Second” Changes the Investment Game
Most venture diligence starts with the same pattern: first meeting, second meeting, references, documents, then a decision. Sidecut flips that model.After the first two conversations, Mike and his team move from evaluation into collaboration. They work with founders for about 30 days on real problems - customer discovery, traction, funnel design, and product-led growth - before deciding whether to invest.This does two things at once:

  1. It gives the investor better information.
  2. It gives the founder a preview of what the relationship will actually feel like.
    Mike put it simply: he wants to understand how a founder handles ambiguity, conflict, and indecision - things you won’t learn from a pitch deck or LinkedIn profile.That matters because early-stage investing is not about certainty. It’s about making a smart decision when the information is incomplete. And in that environment, the quality of the relationship can be just as important as the quality of the idea.[INTERNAL LINK: A post on how seed investors evaluate founder-market fit][IMAGE: Two-way diagram showing traditional VC diligence vs. Sidecut’s coach-first process] [ALT TEXT: Comparison of traditional venture capital diligence and Sidecut Ventures’ coach-first, capital-second process]
    What 30 Days Reveals That a Pitch Deck Never Will
    The biggest advantage of Sidecut’s process is that it creates asymmetric information in a useful way.Mike is not trying to learn everything about a founder’s past. He’s trying to learn whether the founder can do the work that matters next. That distinction is critical.A deck can show you prior wins. A reference call can tell you whether someone was liked. But neither one tells you how someone behaves when the answer is unclear, the pipeline is weak, or the strategy has to change.Mike compared it to a restaurant opening: a chef may have had a Michelin-starred past, but that doesn’t guarantee the next restaurant will be good. In the same way, a founder’s old wins don’t guarantee success in a new market, especially if the market has changed.That idea matters even more now. Mike pointed out that pre-AI muscle memory can actually become negative signal. A founder who built software the old way three years ago may need to rethink their entire operating model today.For investors, the lesson is straightforward: past success is relevant, but current behavior is more predictive.Sidecut uses the 30-day window to watch founders in action, not in theory. The team looks for:
  • How they respond to coaching
  • Whether they can absorb feedback without getting defensive
  • Whether they can move from talk to action
  • Whether they are honest about what’s working and what isn’t
    That’s a very different signal from “this person gave a great pitch.”[INTERNAL LINK: A guide to red flags in early-stage founder conversations][CHART/GRAPH: A simple funnel of signals - pitch deck, references, coaching behavior, execution under pressure]
    The Two Traits Mike Cares About Most: Action and Self-Awareness
    If you had to reduce Mike’s underwriting philosophy to one sentence, it would be this:**Founders need action-oriented self-awareness.**That phrase captures two separate but equally important traits.Self-awarenessA founder can be brilliant and still be wrong about the constraints around them. Mike gave the example of a tiny pre-seed startup trying to sell into a Fortune 500 enterprise. That’s not impossible, but it does require a very clear understanding of the buying process, internal politics, and timeline.If the founder lacks that awareness, they may believe a pilot is the same thing as a path to revenue. It isn’t.In one example, Mike worked with a deep tech climate company whose team wanted to pursue both small local customers and massive enterprise accounts at the same time. During the 30-day process, Sidecut helped train them on sales and pushed them to choose a direction.The issue wasn’t the technology. It was the commercial plan.When the founders still insisted on trying to do both, Mike passed. Why? Because for an early-stage team with limited capital, choosing “both” often means choosing neither well.The key point here is that self-awareness isn’t about humility for its own sake. It’s about making realistic decisions based on your actual stage, team, and constraints.Action orientationSelf-awareness alone isn’t enough. A founder also has to move.Mike repeatedly emphasized that he wants to see founders show him things, not just tell him things. During the 30-day process, he’ll ask for proof: go build the pipeline, run the meeting, test the sales motion, make the ask.That’s because behavior under pressure tells you more than a polished explanation.He shared a story about Elastic Energy, a company with a technical founder who said he needed to learn how to sell. Mike coached him through product-weighted pipeline design, sales conversations, and even the mechanics of how a founder should talk to another CEO over a beer.Then came the important part: the founder actually ran a sales loop and came back with a brutally honest update. He had cut his pipeline in half because so much of it was weak.That honesty could have sounded discouraging. Instead, it increased Mike’s confidence.Why? Because the founder was showing he could look at reality without flinching. He wasn’t selling a fantasy. He was learning.That combination - honesty plus action - is what Mike means by action-oriented self-awareness.[IMAGE: Founder behavior matrix with four quadrants - high/low self-awareness and high/low action] [ALT TEXT: Matrix showing why founders who combine self-awareness with decisive action are more investable]
    When Mike Says Yes - and When He Says No
    A lot of investors say they want “coachability,” but Mike’s process makes that term more concrete.He doesn’t just ask whether a founder takes feedback well. He asks whether the founder can change their behavior based on what they learn.That distinction showed up in one of his clearest pass decisions. He worked with a climate deep tech company that wanted to sell into a large enterprise through a corporate venture pilot. The founders believed the pilot would naturally lead to a major commercial contract.Mike saw a problem: the commercialization path was vague, the counterparty risk was unclear, and the founders had no prior enterprise sales experience. Even after working together for 30 days, they still seemed committed to a plan that he thought was underwritten on hope.So he passed.But the important part is that he didn’t just disappear. He wrote a thoughtful pass note explaining why he was passing and what they could improve. The response was positive. The founders appreciated the coaching and said the feedback improved their next meetings.That’s a big clue about the kind of relationship Sidecut wants to build. The goal is not to “win” the diligence process. The goal is to make founders better, whether or not the deal closes.That’s also why Mike says he looks for killers for good:
  • killers at go-to-market
  • killers at execution
  • killers at building something that matters
    The “good” part is the social impact mission. But the “killer” part is non-negotiable.If he can’t get conviction that a founder can execute, he’s out.[INTERNAL LINK: How to evaluate go-to-market execution in seed-stage startups][EXTERNAL LINK SUGGESTION: A credible article on enterprise sales cycles or startup commercialization risk]
    How Portfolio Theory Still Matters in Early-Stage Venture
    Mike isn’t looking for one type of founder. He’s looking for the right mix across a portfolio.Some bets are closer to the ground - less likely to become unicorns, but structured so they can still generate strong returns. Others are moonshots. Sidecut wants exposure to both.That’s an important reminder for anyone thinking about early-stage investing: your process should reflect your portfolio goals.If every deal assumes outsized, venture-scale growth, you may be taking unnecessary risk. If every deal is too safe, you may miss the upside that makes venture work. The right mix depends on entry price, stage, and the kind of return profile you’re actually trying to build.Mike’s approach is designed to protect against a common mistake: overpaying for narrative when you should be testing for operating capability.That doesn’t mean he avoids ambition. In fact, he gave a great example of a recent space-related investment where the founder had both of the things he values most.The founder, Mohammed, was 18 when they first met. He was building an alternative to aluminum for radiation shielding in space - a serious moonshot. But Mike didn’t invest just because the idea was bold.He first tested whether the founder was telling the truth about customer demand. The initial LOIs were weak and carried too much counterparty risk. Mike pushed back, and the founder went back out and improved them.That was the moment the thesis became real.Two years later, the company had real revenue, major partnerships, and a payload headed for the ISS.The lesson is not “invest in space.” The lesson is that bold ideas still need honest operating evidence.[IMAGE: Timeline graphic showing early LOIs, revised customer validation, and later commercial traction] [ALT TEXT: Timeline of how better customer validation helped de-risk a moonshot startup investment]
    What You Can Learn from Sidecut’s Process
    Even if you’re not a VC, Mike’s framework is useful.If you’re hiring, partnering, investing, or even choosing a cofounder, the question is similar: do you know how this person behaves when reality gets messy?Here are the biggest takeaways:
  • Look for current behavior, not just past credentials
    • Past wins matter, but they don’t guarantee future execution.
  • Test for action, not just intent
    • If someone says they can do the work, ask them to do it in front of you.
  • Reward honesty
    • A founder who accurately sees the limits of the business is often more trustworthy than one who paints everything green.
  • Use a period of collaboration to reduce uncertainty
    • You don’t need to wait until after the relationship starts to learn how it works.
  • Match ambition with realism
    • Big outcomes are fine, but they have to be grounded in a credible plan.
      This approach doesn’t eliminate risk. Nothing in early-stage investing does. But it can make the risk more visible - and that’s usually the difference between a good bet and a blind one.[INTERNAL LINK: A post on founder coachability and why it matters]
      Frequently Asked Questions
      What does “coach first, capital second” mean?It means Sidecut works with founders for about 30 days before investing, using that time to understand how they think, execute, and respond to feedback.Why does Mike Ma value self-awareness so much?Because self-awareness helps a founder recognize the real constraints of their market, stage, and sales motion instead of chasing an unrealistic plan.What kind of founder does Sidecut want to back?Founders who are both ambitious and honest - people who can execute, take feedback, and build something meaningful with real discipline.Why not just use references and a pitch deck?Those tools mostly tell you about the past. Sidecut wants to see how a founder behaves in the present, under real pressure and with real coaching.Is this approach only useful for venture capital?No. The same thinking applies to hiring, partnerships, and any high-stakes decision where you need to judge how someone performs when things get uncertain.

One-Sentence Summary:
Mike Ma’s “coach first, capital second” model shows how early-stage investors can improve decisions by testing founder behavior, action, and self-awareness before writing the check.

Summary

In this episode of The First Bet podcast, Martin Tobias interviews Mike Ma, founder of Sidecut Ventures, who shares his unique approach to early-stage investing. Mike emphasizes the importance of understanding founders through engagement before making investment decisions, advocating for a 'coach first, capital second' philosophy. He discusses the significance of self-awareness in founders and provides insights into his decision-making process, including a case study where he chose not to invest after a thorough engagement. The conversation explores the balance between audacity and pragmatism in leadership and concludes with frameworks for making informed investment decisions.

Takeaways

Mike Ma emphasizes the importance of understanding founders before investing. The 'coach first, capital second' philosophy allows for deeper engagement with founders. Self-awareness in founders is crucial for successful partnerships. Investors should seek asymmetric information to make informed decisions. Engaging with founders for 30 days can reveal critical insights. Not all engagements lead to investments; a high bar is set for decision-making. Founders must demonstrate action-oriented self-awareness to gain investor confidence. Investing in both audacious and pragmatic founders can diversify risk. The importance of adapting to changing market conditions is highlighted. Building relationships with founders can lead to better investment outcomes.

Sound Bites

00:00 "I want to work with founders."

14:58 "I can't unwrite that."

15:02 "I want to coach them."

16:01 "I want to invest in killers."

19:20 "I want to see the actions."

19:29 "I want to see what you do."

24:21 "I want to invest in both."

Chapters

00:00 Introduction to the First Bet Podcast

01:29 Mike Ma's Unique Investment Approach

02:33 The Coach First, Capital Second Philosophy

05:40 Understanding Founders Through Engagement

10:40 Deciding Not to Invest: A Case Study

16:55 The Importance of Self-Awareness in Founders

23:51 Balancing Audacity and Pragmatism in Leadership

30:25 Frameworks for Early-Stage Investment Decisions

Highlights

  • 15:02 "I want to coach them."
  • 16:01 "I want to invest in killers."
  • 19:20 "I want to see the actions."
  • 19:29 "I want to see what you do."
  • 24:21 "I want to invest in both."

Transcript

Martin Tobias (00:00) Hi, this is the first bet. And every successful person is interviewed about how they won. Very few people drag them back to the moment before they knew it would work, when the information was thin, the money was real, and they pushed their chips in anyway. And that's what we talk about here at the first bet. I'm Martin Tobias and I've made money three ways as a CEO, as a VC, and a poker player.

And my guest today ran marketing at Bank of America. Then he ran brand at Vanguard, was CEO at Betterment, which some of you might have heard of. They're one of the first robo advisories at the time. It was kind of a weird idea. And then he walked away from all of it to start writing small checks into companies nobody had heard of yet. Out of a micro fund he built, and then he since has raised a a much larger fund. And the name is comes out of

you know, some snowboarding geometry thing, which maybe we'll talk about that. Mike Ma

Mike Ma | Sidecut Ventures (00:53) Sure.

Martin Tobias (00:53) is the founder and managing partner of Sidecut Ventures. I also enjoy his podcast. Mike, welcome.

Mike Ma | Sidecut Ventures (01:00) Thank you. Thank you for having me on. Thank you for that illustrious intro. It's a little too generous. I was I was CMO at Betterman's

Martin Tobias (01:06) Mm-hmm.

Mike Ma | Sidecut Ventures (01:07) jo John Stein, if you're listening, I didn't come for you for sure. But but no, I've done a lot

Martin Tobias (01:11) Okay.

Mike Ma | Sidecut Ventures (01:12) of different things. no, but thank you. Thank you so much. It's it's an honor to be on the pod. our episode and and and our podcast was is still one of my favorites. So that I can do you the honor and that you asked is is a huge honor. So so thank you so much for having

me for.

Martin Tobias (01:25) well thank you. You you kind of encouraged me to the that that being a doing a podcast was something that was possible to do. And I'm really enjoying it because I'm just meeting lots of other smart people and trying to get better at low information decisions myself. And maybe what I'd like to talk about is you have for your fund have a specific framework of the kind of CEOs you look at, and you've got this idea of coach first, capital second.

And I wanted you to explain that a little bit more, maybe give us some examples of companies that you did, but also maybe compare and contrast how you make decisions as an early stage investor that might be different from how you did it when you were at Bank of America or Vanguard or Betterment, where you've got a lot of public information and a lot more information. I'm sure decisions in public markets are very different than decisions in private markets. So maybe you could walk us through how you ended up.

with this primary framework for your fund and how it it applies to real capital allocation decisions.

Mike Ma | Sidecut Ventures (02:27) Yeah, sure. yeah, thank you for the question. So yeah, what we do at Sidecut is a little bit different. we work with all of our founders thirty days before we invest. and so said simply, like our first two meetings look very similar to other VCs. We do first meeting, you know, broad picture, second meeting, you know, a deep dive and product pipeline or something that came out of the first meeting.

But then after that, it precede and and I don't know, we can compare notes of how we do stuff. After the second meeting, usually you start like the diligence process and you start doing customer references and and documents, et cetera. We flip it. We we say, okay, great, what do you want to work on? Other than, you know, what do you want wanna work on together? So we work with all of our founders

Martin Tobias (03:07) Okay, but

Mike Ma | Sidecut Ventures (03:08) in in in the mud, kind of something around customer discovery, traction, funnel, product led growth.

and we do it on our own time. And that's how we get to know our our founders before we invest. At the end of 30 days, you like us, we like you. We'll write you a check. And and that

Martin Tobias (03:20) Interesting point like you're pushing.

Mike Ma | Sidecut Ventures (03:24) that's most VCs do the opposite, right? Like

Martin Tobias (03:26) What do you think?

Mike Ma | Sidecut Ventures (03:27) they do value add after, right? We write us the check, we'll give you recruiting or go to market help. we'll flip it. So we do all of our value add up front.

Martin Tobias (03:35) Yeah.

Mike Ma | Sidecut Ventures (03:36) And my my thesis on this is it's it's really a win win. I get information

Martin Tobias (03:39) Yeah.

Mike Ma | Sidecut Ventures (03:42) since we talk a lot about it.

A I get asymmetric information because I understand how this founder works. Things you can't find on a pitch deck or a spreadsheet.

Martin Tobias (03:49) Yeah.

Mike Ma | Sidecut Ventures (03:50) I know how they deal with ambiguity. I know how they deal with conflict. I know how they deal with indecision. and then the flip side is the founder

Martin Tobias (03:57) And also behind it.

Mike Ma | Sidecut Ventures (03:58) gets to see what it's like to work with me. And we get to have the relationship

Martin Tobias (04:00) Sure.

Mike Ma | Sidecut Ventures (04:01) that we we build. My my dad joke is the the average marriage in the US is 8.6 years.

The average time on your cap table is about that long. So why doesn't someone move their do you want to move your toothbrush in for a month or I'll move my toothbrush in for a month? And and that's my that's the type of founder I want to work with. and that's the broad arcs of of why we do what we do. But I'm happy to dig in more. dick.

Martin Tobias (04:22) That that is unique, and that's one reason I wanted to talk to you. And what you're talking about is when you're trying to make a low information capital allocation decision, writing a real check into somebody you just met, there's been a lot of other people that told me, you know, here's how I bridge that information gap. Some people use AI to go research stuff, they troll their LinkedIn portfolios and stuff like that. And your approach is to invest.

More and get them into situations where you understand their thinking. How did you come up with this approach to sort of diligence and and adding value versus the traditional VC approach, which is really just calling references and stuff like that? What what gave you conviction that this extra investment up front was worth it for you to?

bridge a little bit that information gap on how the founders work.

Mike Ma | Sidecut Ventures (05:14) Sure. I mean a a lot of it. So I'm I'm somewhat for being older, like I'm somewhat new to Venture. So I've been in Venture the last six years. And the first four was deploying for other people. I was not printing partner at Sway Ventures. I ran the HBCU Founders

Martin Tobias (05:25) Okay.

Mike Ma | Sidecut Ventures (05:26) Fund. and and I was I started an accelerator at NextCubed, which was a fintech accelerator. And just the overarching view was, man, like a couple things. Like I thought, if only I knew what I

When we were delivering value add and platform, which was sort of my my bread and butter, my remit being new to venture, but having a lot of fintech operating chops, I was doing a lot of the value add platform work. But I was like, man, if I if I knew that before, I'm not sure we we should have written these checks or we would have asked different questions. So my thought was and this may information is not wine, right? We we both play poker. Like it doesn't get better with age. So why wouldn't I just get this information

Martin Tobias (06:02) Right.

Mike Ma | Sidecut Ventures (06:04) up front before we invest?

And then that was kind of how I did it, right? And I started writing angel checks when I was there that were out of thesis at NextCubed and Sway. And I did a couple dozen of these small five, ten thousand dollar checks just to like see if people would A would even give me access because it's still I mean like I still respect founders. It is what we always it is a lot of work still to work with me. you're a founder, you got stuff to do, money to raise, customers they get.

So I was just interested in people would do it at first. And I did it a couple dozen times, put some money together of on my own, raised a couple SPVs out of my first couple dozen investments. And then I was like, okay, there's a there, there. and and and and not only is it good way to to deploy, but it was actually a good deal for founders. And and founders really appreciate it. Founders were like, you know, I've I've been a small founder, I I never made your success, but I've been a founder. I was like, this is the firm I would have wanted when I was a founder.

Which is I

Martin Tobias (06:58) Right.

Mike Ma | Sidecut Ventures (06:59) want someone to work with me. And not only did we get deal access, like people loved working with us. And my wife always doesn't why you're an enormous pain in the neck. But but but that's

Martin Tobias (07:09) Mm-hmm.

Mike Ma | Sidecut Ventures (07:09) what we you know, that's how we try and do stuff. So fast forward to today, I I really hold us to a really high information bar. So most people want to know more than the market to make money.

I'll be perfectly selfish when I work with a founder. I want to know more than the rest of the cap table. And I think all the things you find: references, decks, things on LinkedIn, that's all past. That's past signal. Like

Martin Tobias (07:32) Right.

Mike Ma | Sidecut Ventures (07:33) I, you know, you've been to a restaurant and someone, a chef had like a Michelin star and then you

They open a new restaurant and it's garbage. Like i it's kind of the same thing, which is like I I'm interested what you did before that will get me into the restaurant, but that's no guarantee that this one right now on a heretofore forward basis is going to deliver. And so that that's the other aspect of it too, which is this idea of

Martin Tobias (07:59) Yeah.

Mike Ma | Sidecut Ventures (08:00) the shelf life or the half-life of that information. that that's the other

Martin Tobias (08:03) Right.

Mike Ma | Sidecut Ventures (08:03) Reason why I I came was like I I don't want to cook with frozen vegetables. I want to cook with fresh ones, right? I don't care about your last restaurant, I care about this one. And I don't know. Even think about today, right, Martin? Like founders who did stuff three years ago in a pre AI world, like I don't know that muscle memory is good. In fact, it may be negative signal for for a good outcome.

Martin Tobias (08:22) It yeah, it's

not. And and and I'm going through that in some of my portfolios now that I invested in three or four years ago. They're having to make this they started as sort of a SaaS company and now it's AI first and they're having to decide do I want to switch from building software like I did even four years ago to how it is today. I the the best ones are making that switch. I have one company that had fifteen employees last year and has two this year and did twenty percent more in revenue.

they were able to pivot their company. But I I think you might I might have gotten if I did what what you did to understand how the CEO thinks about obstacles in early, I might have been able to see that. I got kind of lucky with that one that he did make the pivot, but but but just you know understanding in detail how CEOs

handle obstacles, do they think that they are reasons to stop or do they find ways around them is is very valuable information before you write the check. Can you tell me about one engagement where you did the 30 days and then you decided to not invest after and what some of the flags were, what was some of the new information that you got that told you this was not the right fit.

Mike Ma | Sidecut Ventures (09:37) Yeah. I and believe it or not, we it's a high bar. we we actually say no to about forty percent after of our deals after the thirty day process.

Martin Tobias (09:46) After you spend thirty days.

Mike Ma | Sidecut Ventures (09:48) Yeah. It it's hard. Yeah. and it's not

Martin Tobias (09:50) Wow. That's higher than I thought.

Mike Ma | Sidecut Ventures (09:53) yeah, well and it's not like I have any bar or any metric or any like it it just comes in I'll I'll give an example and I'll I'll try and stay

company you know keeping up there's a company it's a d no it's okay I'll

Martin Tobias (10:05) You don't have to use a company name, no. Yeah.

Mike Ma | Sidecut Ventures (10:07) just talk about it in broad contour so you can give an idea like well the the the rubric we we we look at is and what's more and I I should add that we're a social impact fund and we're not a concessionary social impact fund like I'm a market based returns fund. I expect everyone on my portfolio investments to help the world and return the stupid fund. So with that with that background in mind there's a deep

deep tech company that was doing some really good stuff in climate. I'm just gonna leave it at that. for and they had built they had built some really great technology and they were at a crossroads of do we try and sell it in in these small local geographies and small customers where they could get a lot of quick rapid knowledge or go big enterprise, your Fortune five hundred, you know.

The people and try and and do this. And it's a it's our stage, right? Pre-seed seed company. And these four four

Martin Tobias (10:55) Okay, right. Uh-huh.

Mike Ma | Sidecut Ventures (10:57) guys, four people, brilliant PhDs out of a top world university building this tech have never sold before. So we worked with them for 30 days and

Martin Tobias (11:07) Yeah.

Mike Ma | Sidecut Ventures (11:09) we did all the training, gave them sales training, and and it was at the end of the day, they were like, We want to do both. And

Martin Tobias (11:15) Yeah, yeah.

Mike Ma | Sidecut Ventures (11:17) it was just like

I really don't think for the amount of money you raise you can. Like you you need to pick both and and then

Martin Tobias (11:22) Even

Mike Ma | Sidecut Ventures (11:22) understanding and they chose the large account path. Great. Choose large account path.

Holding them accountable to like and you've sold an enterprise, like you know how hard it is to understand the economic buyer, the technical buyer, the user buyer, and and really like having

Martin Tobias (11:36) Yeah.

Mike Ma | Sidecut Ventures (11:37) The stomach to try and be good at these political maneuvers. And like, why aren't you at campus? If you're gonna do this, you should be at campus HQ every week

Martin Tobias (11:41) Yeah, yeah, you can do this.

Mike Ma | Sidecut Ventures (11:46) having coffee, dinner, dessert with almost every single person. You should live at that cafeteria until they just

Martin Tobias (11:49) Yeah, yeah.

Mike Ma | Sidecut Ventures (11:54) think you work there, right? And and I was like, this is what it requires to do that type of deal, you know. finally, like, well, we have our VC entrant, our corporate VC entrant.

And and what broke the back for me was like they built a pilot, small pilot, paid a small four to five digit pilot, but they wanted a multi-million dollar contract. I asked them,

Martin Tobias (12:11) Yeah.

Mike Ma | Sidecut Ventures (12:14) can the C V C describe for you what the commercialization path is? Right? Out of C V C

Martin Tobias (12:18) Mm-hmm.

Mike Ma | Sidecut Ventures (12:19) into mainline business. And this is a large corporation. They should have a documented policy and they should be able to tell you where it is.

And finally he said, Well, our our sponsor just said, just trust us, do this pilot, and we'll take care of you. And I just said, Guys, this is I'm in like you're adamant

Martin Tobias (12:33) Mm-hmm.

Mike Ma | Sidecut Ventures (12:34) that this is the way you want to go. Cause I will tell you, that's not that's not confidence inducing. I

Martin Tobias (12:39) I'll get it.

Mike Ma | Sidecut Ventures (12:40) mean, this is I like ahead of this. I was the business at Bank of America heading digital strategy and innovation, all the cool whiz bang commercial. I was that's not that's not how it goes, guys. They were convinced it was and

Martin Tobias (12:47) Yeah, it's not a great way

to

Mike Ma | Sidecut Ventures (12:52) I had was like, I I have to pull out. Like I, you know, this is in and you're you they're hoping, and I'm not a deep tech investor, they have such great faith that the actual commercial

and research impact out of the pilot is gonna blow the expectations out of the water based on their scientific

Martin Tobias (13:05) Which is

Mike Ma | Sidecut Ventures (13:09) knowledge of the status quo that they're gonna do it. I can't un I was like, you may be right.

Martin Tobias (13:12) Okay.

Mike Ma | Sidecut Ventures (13:14) I can't underwrite that. I I I I can't. And you you may be right. but for me I couldn't get in.

So that was one example where we passed. And and to be honest, I think they've not only

Martin Tobias (13:23) You can

Mike Ma | Sidecut Ventures (13:25) completed their round, but oversubscribed their round. And that's fine. And what's more is I I wrote them a very long pass about like it is not to

Martin Tobias (13:33) Yeah.

Mike Ma | Sidecut Ventures (13:33) admonish them, it but it's to coach them. It's like I I want your technology to exist in the world for my unborn grandchildren and their use of the climate. I want you to get better at sales. And you may be successful in spite of it. And and it was very much met with

really positive feedback. Thank you. We're gonna get better at this. And it's already helping. Meeting one, two, and three got better because of reasons A B and C you told me. So that that's an example. we I we did another one as well, but that's an example. Like

Martin Tobias (13:57) Yes, we have

Mike Ma | Sidecut Ventures (13:59) we call to to centerline on it, we we t we ask for and and me and my associates, we diligence, I want killers for good. And I mean go to market killers. And good is the impact.

Martin Tobias (14:10) Right. Right.

Mike Ma | Sidecut Ventures (14:12) And they have to be for me to invest,

they have to be killers.

Martin Tobias (14:16) Yeah.

Mike Ma | Sidecut Ventures (14:16) a and if I can't get conviction that they're killers, then I I'm out.

Martin Tobias (14:21) Yeah. So so let me summarize what you just said, and that is it is an important thing. You you you want to invest in in killers. and and you had a thesis. You said, I like the product, I like your background, but what you have to do in the future is something you haven't done in the past, which is to sell to large enterprises. I'm gonna see if you're any good at that, if you take the right advice, if you are doing the things that I think are gonna lead to success there. You gave them a chance, they they they

didn't perform, but you got a lot of information about that. And that was your key underwriting thing. So as you were making your capital allocation decision, you said, I ha I have a thesis. Maybe these guys can make it, but I'm gonna test that thesis before I write the check. Is that a a good summary?

Mike Ma | Sidecut Ventures (15:07) Yeah.

Yeah. And and and it is. And it relates to something you said earlier, which is like how do you assess the unknown, right? Like like when when when a founder gives you a deck, right? Like I always tell a founder's like, the only thing I know about this deck, this is precisely what will not happen. It's the only thing I know. Like at at pre C, maybe later stage you can invest off on spreadsheet.

So when things go sideways, I'm very interested in what happened.

Martin Tobias (15:29) Yeah. So what are

the so so so so having gone through this process a a couple of times, what are the two or three things that you have seen that that turn you to a yes when you go through this process? Do you almost always have a a a thesis of something you're trying to test and then you're you're testing that in the 30 days? Or what are the two or three things th

out of this additional information gathering thing that turn you to a yes.

Mike Ma | Sidecut Ventures (15:59) Yeah, I I think it's one we've we really worked on this and and it the thing that we look about we talk about is like action oriented self awareness. And and so w under the premise that you need to frickin' grow this thing. And and unpack what that means is a little bit is you know, action self awareness. I'm gonna start with self awareness. Like look for this other example like you're a small infinitesimal pre seed startup.

Trying to sell to this large Fortune 500 corporation that employs over a hundred thousand people in the world, right? Like, you need to have some self-awareness. What is going on? Like, there are 1,333 remits across the globe, and you need to be aware of the dynamics of this situation. For example, the action-oriented is like you have to do something, and this is the difference of doing.

Pre seed investing before I did this is like I find a lot of founders will say a lot of things, and in fact, they're incredibly persuasive. They've been trained and they can say the right things and say over the 30 days, I continually say, Don't tell me, show me. And I'm very interested in the action. And like, are you? I need to build this pipeline, blah, blah, blah. Like, go.

Do it. I need to watch you do it with your hands and your feet. I don't because here's the thing after I after I wire the check.

Chances are I'm not around. I I I'm more around than most, but like I've been a founder. You've been a founder. Like you know that we have a aperture of like 1% of whatever, maybe even that's being generous about what they do. So

Martin Tobias (17:29) Yeah.

Mike Ma | Sidecut Ventures (17:31) like I want to see what you do. Like action, if actions speak louder than words, I want to see the actions because I think it has the best leverage.

in understanding. And it doesn't need to be a positive example. I'll give you an example of a deal we did very quickly that had a negative outcome, right? And we we wrote about this.

Martin Tobias (17:48) Okay, yeah, let's hear that.

Mike Ma | Sidecut Ventures (17:50) yeah, I we wrote a check in this company called Elastic Energy. They make distributed energy architecture, small boxes.

Martin Tobias (17:55) Yep, I've heard of it.

Mike Ma | Sidecut Ventures (17:57) So people can look it up. But the biggest thing for me was Ben said he's a technical founder. He's like, I need to learn how to sell. They're selling small medium business

at the time solar installers and battery OEMs and you know it's a it's a blood and guts ground game. They're very small. There's no lot and I was coaching them how to do the sales, everything from like how you set up product weighted pipeline, a probability weighted pipeline, down to like, hey, like I'm supposed to have a beer with another CEO

Martin Tobias (18:22) Okay.

Mike Ma | Sidecut Ventures (18:23) and how to sell. I don't know how to do it. And I was like, okay, cool. Like go to your fridge, get a beer, we're gonna do a zoom, two guys on a zoom bar like we're gonna

You we we did the whole undergirding of coaching.

Martin Tobias (18:31) You did it for them.

Mike Ma | Sidecut Ventures (18:32) Anyways, he finishes one sales loop during our call, during our time together. I sent him a slack and all of our founders are slack 'cause like, how was a sales loop end? And he's like, It was terrible. Blah blah blah. This is crap, like da da da like this thing. I just cut my pipeline by seventy percent, blah or thirty percent, blah blah blah. And then he's like cuts it again, he's like, No, actually fifty percent

Martin Tobias (18:49) What does that mean?

Mike Ma | Sidecut Ventures (18:52) and then he slacks back, is that

I can't believe I just told a a C a VC I'm trying to seek money from that I just cut my pipeline in half. And I said, Ben, that's actually why I'm going to invest in you. Because you actually like he came to me, he had some like you've seen this, right? Like, we have like a bajillion dollars in our pipeline, blah,

Martin Tobias (19:09) Yeah.

Mike Ma | Sidecut Ventures (19:12) blah, blah. And I was you know, if you have a bajillion dollars in your pipeline, why are you hitting me up for a quarter million? Go sell. Anyways.

You know, he cut his pipeline significantly and and he explained why every single thing. This is not a qualified deal. This is a this is a little bit less. There's an un undiscovered dependency. Blah blah blah. He's like, I can't believe I'm telling you all this. I was like, that's why I'm investing. Even though numerically you went down, you actually know and you showed me with your feet and the sales loop how hard it is. Now when you and I have a conversation.

I know it's less likely

Martin Tobias (19:45) Mm.

Mike Ma | Sidecut Ventures (19:45) you're full of crap. with me, 'cause

Martin Tobias (19:47) Right. Well

Mike Ma | Sidecut Ventures (19:49) now we understand each other. That that's an example of like where I can get positive conviction out of that action oriented self awareness.

Martin Tobias (19:55) Okay, so in in both those processes, in one process, the founder showed you through his self awareness and that that he didn't have a lot of it about what the corporation was going to do, and by his actions that he was a little too slow and that in led to a pass. In the other case, the founder showed you through his self awareness that he was r radically honest about the actual state of his business, which actually increased your confidence.

In the ability to write the check. So this goes back to a conversation I have a lot with a lot of VCs, which is, you know, how do you risk adjust or how do you discount what a founder says? Because a lot of people are like, you want to invest in the audacious founder like Elon Musk is going to go to fucking Mars or some crazy guy that has a sc you know, is is crazily optimistic. And I it but, you know, then there's the other side that's like I want

to invest in a guy who's pragmatic, who maybe you know, underpromises and overdelivers. Where do you fall in preference to a CEO? Do you want the guy who has a crazy audacious goal, or do you want the guy who underpromises and over delivers? Or or where are you on that spectrum?

Mike Ma | Sidecut Ventures (21:09) Yes. I want both. I mean, look, I'll be honest at the I'm

Martin Tobias (21:11) You want both. You want both. Yeah.

Mike Ma | Sidecut Ventures (21:13) I'll be honest. Like probably and this this goes into portfolio theory, right? So like some bets are a little bit more close, you know, like there's a shorter horizon. It's not gonna be a unicorn bet, but at our entry price we can make you know, we can make more than enough without having to have that that type. Some are are those. And so one, and we could refer into that like there's a there's a portfolio

a portfolio theory of of of varying those bets for different payouts to make sure that our LPs get the type of return and exposure to both some slightly more de risk than the like really crazy like let's just go for it to the moon. I'll when you were on my pod, you were incredibly vulnerable and open. And I I I'll on yours like I'll I'll talk about a deal that I have it it's not public yet, but we've we've wired that that I think is an example of both, right?

yeah,

Martin Tobias (22:01) Okay, let's hear it.

Mike Ma | Sidecut Ventures (22:02) we we did so this isn't out yet anywhere other than my only people know is like my team and my LPs and the founder. So we just did a deal with a space company, which you may not think is really

Martin Tobias (22:11) Okay.

Mike Ma | Sidecut Ventures (22:12) in my remit, but it's called Melligan Labs. they make an alternative to aluminum for radiation shielding for both satellites and people in space. it's better, lighter, faster, cheaper than aluminum.

we can talk about all the whiz bang aspects of it.

I met the founder, Mohammed, two years ago. he was 18. He is

Martin Tobias (22:31) Wow.

Mike Ma | Sidecut Ventures (22:31) now the white, yeah. Yep. He's the ripe age of 20 now. And

Martin Tobias (22:35) Twenty.

Mike Ma | Sidecut Ventures (22:36) yeah. And I didn't, I don't know. You know me. I'm not a deep space investor. He's like, hey, he found me on a pitch show in New York and I did it and we met for coffee afterwards. He's How do you help me? I was like, look, I'm a go-to-market guy. I don't know that much. And he brought me, I was like, I'm like, so why don't we do this?

You have LOIs for your material. And I I'll I can look at those. And long story short, the LOIs weren't worth the paper they were printed on. You know, and I just said, look, there's no counterparty risk.

Martin Tobias (23:00) Good.

Mike Ma | Sidecut Ventures (23:01) I don't know these industries, but I do know these people aren't risking anything. You need to have go back. I mean, if these met my muster, they would have like some acceptance criteria, some theoretical commercial payment they would make, some timeline.

And he's 18. Okay, he's 18. I don't know what you were doing when you were 18. Well, I I actually do know what you were doing, eighteen. You were much more you were

Martin Tobias (23:19) I was now starting a company.

Mike Ma | Sidecut Ventures (23:21) but anyways, he and he came back to me like I don't know, like a month later. And he's like, You're right. Look. I and they showed me all these LOIs with these satellite makers. Like they all had counterparty risk, and I was like I'm like he's like, Yeah, they aren't these better. I like, Shit, yeah, they're better. Like crap, like, all right.

I'll write you a check. was like, I wrote him a small angel check, right? Like I I was like, I don't know anything about this, but I do know, like, for you to sit in the room. Like when I was 18, I worked at American Eagle Outfitters and I taught tennis. And I thought it was pretty darn productive. I can't imagine sitting with the VP of procurement at some satellite maker at 18 and like saying, I'm sorry, we need to renegotiate RLOI and put some counterparty risk in. And then come back with paper. I can't remember, it was a month or two later. And I was like, Okay, I'm gonna.

I'm just gonna action oriented self awareness. I'm just gonna write you a check. Fast forward two years later,

He's taken the same thing and just built it. So now the material is I mean we'll kinda talk about public. They have ample revenue, well in the seven figures of what they've paid, of what they've made. They are launching a payload to the ISS. they've already launched the they've distributed the payload, it's gonna go up for testing in December. They have several partnerships with a whole bunch of big tech people, some of the people you've you've mentioned.

to use their materials to radiate shields. But then on a go to

Martin Tobias (24:39) So that that that is a great example and let me just play back to you w w what I heard. you wanted in this case both a moonshot, literally, you know, space type type out outcome, but you also wanted

you know, somebody that listened to the coaching and that you learned over time. And the way one of the ways that you de-risked that or got more information is you wrote a small check very early and then you tracked him over time and and s saw that he was overperforming and responding to your coaching. And then you wrote a bigger check later with that additional information. so the to to to sort of close things out here

i for for people that are thinking about, you know, writing checks into or early companies, what would you say are the two or three frameworks that have been most helpful to you? It sounds like this one around coach first or get a little more information before you write the check, do more upfront work is the primary thing. Is is that it, or would you say there are other things that people should consider or in terms of frameworks?

Process, okay.

You need some asymmetric information.

Yes.

Exactly.

Space to yeah.

Is to look.

Yeah.

And with your process of working with them before, you can see how good they are at that before you write the check, which I think is an interesting advantage and an interesting approach that I haven't heard from other investors and I really appreciate it. Hey Mike, thanks for sharing your frameworks. I think they're unique and and different. Where can people find out more about you? Are you a LinkedIn person, your website, Twitter? What is that?

Okay. Well thanks for your time, Mike. I look forward to looking at some of your deals and maybe getting on cap tables together this year.

Absolutely.

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