- Platform: meet
- Source: Read.ai 01JCGTSV8KW4KK2S9M1CSDHESA (via Ben Ornstein’s account, imported 2026-08-06)
Transcript
Andrew McKenzie: Hey, Andrew. UNKNOWN_SPEAKER: Hey, Ben. How are you? Pretty good. Andrew McKenzie: How are you doing? UNKNOWN_SPEAKER: Pretty good. Busy as usual. Andrew McKenzie: Oh, yes. Where are you based? UNKNOWN_SPEAKER: Dallas. Ben Ornstein: What about you? Nice. Andrew McKenzie: I’m in the random state of Delaware. Ben Ornstein: Oh, is that right? Yeah. Andrew McKenzie: Yeah, I’ve been there. I lived on the East Coast for a long time and spent a lot of time in Baltimore, so I sort of went through the corner of Delaware on 95. Ben Ornstein: Yeah, I lived in Baltimore for a couple of years as well. Andrew McKenzie: It’s a good spot. Yeah, Baltimore is pretty cool. If you’re in the right spot, it’s got some pretty nice, got some pretty nice places, got its own character. Ben Ornstein: That’s for sure. Andrew McKenzie: That’s for sure. Got its own accent, warder, and they have their own, going on in Baltimore. Ben Ornstein: Oh yes, oh yes. Well, I’m very excited to chat today, hear a little bit about you, your company, but how much context do you have for this call? Andrew McKenzie: I was going to ask you to give me a little more. Yeah, so I appreciate you asking that. Ben Ornstein: Of course, yes. So do you know Michael Houck or Houck’s newsletter? Andrew McKenzie: I don’t think so. Ben Ornstein: Okay, so Michael Hawk is a serial founder he raised 15 million dollars series a from a 16z for his last company launch house He left and kind of started an email newsletter that at peak was, you know, 100,000 subscribers. It was Founders VCS aspiring founders that’s really his audience and he’s built up a kind of a portfolio of businesses around that audience, one of the things that he wanted to release was a resource for founders specifically related to fundraising. And he figured what better way to do that than by actually speaking with founders themselves who have done it. And so that’s exactly what this conversation is about. We’ve done 80 plus of these. It’s been a ton of fun. I’ve been interviewing founders of all different stages, regions, industries and each one’s unique in their own way. And, uh, yeah, this will become part of that case study library, which is, um, you know, payment gated behind his, his, his premium subscriber paywall. Um, but you still get the exposure to his entire audience because each Saturday we send an email saying which new case studies were added to the case study library. So you still get that exposure to you know, all 60,000 plus. Andrew McKenzie: And what do you just publish the AI stenographer notes, basically? So yeah, we have that guy in here. Ben Ornstein: Because what I do is that is I turn this into a text based case study. And I use the the AI guy to help me do that. And my hair doesn’t look. Don’t worry about it. The video goes nowhere. And you get a chance to look at the draft before I I send it. I appreciate that. Andrew McKenzie: I’ll try not to go too off the rails. Ben Ornstein: It’s all good. It’s all good. Andrew McKenzie: I have my own very strong opinions about this topic, some of which I came to PLT with and some of which I’ve developed during this journey. Ben Ornstein: Well, that’s great. We appreciate strong opinions on this stuff. Cause this is, you know, it’s a resource for founders. They need to be able to know what’s really going on and all that kind of stuff. Yeah. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: Do we have any questions before we get going? Ben Ornstein: No, no, I’m good. Just let’s, let’s do it. All right, let’s do it. Andrew McKenzie: So yeah, Andrew, could you please briefly introduce yourself and your startup? Sure. I am Andrew McKenzie. I’m CEO and co-founder of Precision Livestock Technologies. We have a machine vision based AI enabled platform that is used by cattle feeders to optimize the feeding decision in their production facilities. Most of these facilities are relatively large insofar as they have anywhere from 10 to 80,000 head of cattle on the property at any given time. For some dollars and cents on that, a 50,000 head feedlot has about $100 million worth of cattle on the property. So these are not people like, oh, you work with farms. We work in production environments. These cattle are generally on grass for a year. They're in the feedlot for six months. Months before they go to slaughter. In the feedlot, they are housed in groups of 100 to 200, depends on the size of the pen, in pens. And so they are treated, fed essentially as a pen, not as individual animals. So we focus on that feeding decision at the pen level. And their cattle are ruminants. To digest, and so they're fed a pretty high-energy ration, you know, sort of a grain-based ration. That's what gives U.S. Meat its kind of mellow taste. If you've had full grass-fed beef, you'll understand how different it is. So this high-energy ration, you have to be very careful at how you feed the cattle because not only will it impact their but it impacts their health as well. You know, I think these confined feeding operations kind of get a bad name. Each of these cattle in these pens has about 250 to 350 square feet of, you know, living space. So they're not crammed into these, you know, unhealthy environments. They're very well maintained, very professionally run operations that have Um, you know on site and yeah, it's been really eye-opening for me. I don't come out of the that industry. So, um Yeah, probably a little more background than you were bargaining for but people nobody knows about this industry Right, so I just want to give people You know a better sense of what these operations You know are and Ben Ornstein: kind of their scope and how they operate Yeah, no, that's really interesting certainly have not had anything like this before. So this will be this will be a new one. I'm excited to dive in. But yeah, I think you're a great place to start then would be to ask about the fundraising journey. So, you know, what, how many rounds of funding have you raised? How much have you raised in those rounds, if you're comfortable sharing, but of course, no pressure with the valuations. And you know, how long these rounds took to close and Yeah, sure. Andrew McKenzie: So we founded the company as its own entity in September of 2019. We raised our first outside capital into February, early March 2020, like literally right before COVID. Our initial fundraising was done through Princeton Alumni Angels. Myself and my co-founder are both alums. That was not a huge amount of money, but that was raised as a safe note at a $4 million cap. So pretty money in terms of conversion. And then we raised, and I don’t have the numbers in front of me, that year, that first year, we probably raised $250,000. Under that safe. We then raised $600,000 the next year from a ag-focused funding group called Hardest Returns. That was a convertible note. That was at a $6 million pre-money, so cap conversion, however you want to talk about it in the convertible note world. We then raised additional safe note funding at that $6 million valuation. Ultimately in 2020, we opened and, sorry, 2022, opened and had an initial closing on what ultimately became a $2 million series seed. And so that had a 8.5, pre. And so, yeah, that's been kind of the fundraising journey. We kept that open, gee, for the better part of the year, you know, had to have various closings on that. So that's where we stand today. UNKNOWN_SPEAKER: Amazing. Ben Ornstein: So you got up to a seed round in terms of funding, total funding was like 2.8, 2.9 maybe? Yeah, something. Of all of you, yeah. Andrew McKenzie: Yeah, on that range. So yeah, anyway, so that's what we've done. Awesome, sounds great. Ben Ornstein: And so when you were doing these funding rounds, what did you plan to use the funding ahead of time for? Andrew McKenzie: I mean, it's all pretty, but we're a pretty deep tech company insofar as we've developed all of our own machine vision algorithms. We've developed all of our own machine learning algorithms in terms of making recommendations. We've also developed our own hardware platform, image acquisition platform, which is solar powered. So it's a fair bit of engineering on that side. Side of on that side of things. And then there's all the AWS, engineering, image processing, you know, etc. So, you know, the vast majority of that has gone to R&D, tech, you know, development. The vast majority, I mean, maybe, you know, 20% has gone to you know S. UNKNOWN_SPEAKER: G. And a- yep. Ben Ornstein: Makes sense- specially if you're you know do making it all by yourself you're gonna. Andrew McKenzie: It's gonna cost it's gonna cost them and at the beginning. Yeah I mean. I would say that. We've been very. Careful about what we've decided to build to develop and how we've could have spent twice as much with half the result. And I think a lot of people do. Yeah. Ben Ornstein: Yeah, no, makes sense. And you know, when you were doing this fundraising, how did you decide which investors would be a good fit? Andrew McKenzie: I mean, we've really, you know, ultimately raised money from primarily high net worth, not super high, but high net worth and and customers, but The vast majority, 90 percent from qualified investors. Some institutions, but not in a traditional sense. We certainly have talked to plenty of those folks, and I'll tell you about those conversations in due course, but yeah. No, mostly it's been through, yeah, networking and just knowing the right people to ask. Yeah. Ben Ornstein: Well, that goes into the next question really well of how did you get in touch with those investors? Andrew McKenzie: Introductions through people we know. I mean, basically, we're not, You know I'm now 53s and my co-founders, you know about the same age and you know, we've done a lot of different things in our careers and um have met a lot of people and um Yeah, so we just sort of tapped our own Networks and the networks of our network You know that sort of that sort of idea Yeah, totally makes sense if you think about and it's less applicable this question because Ben Ornstein: it was mostly introductions. But you said you did still have conversations with other VCs and whatnot. So, you know, if there was a rough estimate of if you thought about your process as a funnel, how many people did you reach out to? What subset of those became first, second, third meetings, ultimately ending in investment? You know, rough numbers. Andrew McKenzie: Yeah, I'd say on the high net worth side, through introductions, the conversion rate is very high. You know, on some level, right? I mean, it may be a $50,000 check, it may be a $200,000 check, all that's relative to that investor, to their own, you know, net worth or whatever they've allocated to, you know, these sort of high risk, which I always care to tell people exactly how high risk all this is. But I'd say, you know, from those direct conversations, that conversion rate is, you know, well over 70%. Well, you know, it's incredible, but it's also just, you know, maybe disciplined. Would be a way to think about it. Just long shots are long shots and there's only so many hours in the day. And yeah, you know, you may, I can't imagine, you know, having a 20% conversion rate, you know, we'd be out of business because I would have spent all my time having conversations with the wrong people. Yeah, no, that totally makes sense. Ben Ornstein: So it seems like you found the exact investor that you needed to reach out to and were very efficient there? Andrew McKenzie: I mean, it's a question of what's the what's the word? You know, for us on the one hand, in terms of how you've been introduced to them, and who has introduced you to them. And just credibility. I mean, we're not, and this gets into the VC side of things, you know, we're not pretending that the opportunity is bigger than it is, or that the problems we're solving are easier than they are, or that the customers are going to be easy to come by, or any of it, right? We're like, it's just very straight up. What we're doing is very simple to understand on its face. And the challenges that we have to overcome to build a business are relatively clear. A lot of detail in each sort of bucket, but yeah, we've always tried to just be very straightforward in what we're doing. So if you're introduced to somebody who has an interest in participating in these kinds of deals, having that level of, you know, credibility up front and just being very transparent and matter of fact about what you're doing and what the opportunity is, you know, that that's what with individuals, that's, that is what's going to get the funding, not some big story, not some slide deck, you know, not some powerpoint template none of that stuff none of that stuff matters smart people just want to hear stuff in black and white and they want to believe that you personally you are aware of exactly what it is you're trying to do and how hard it's going to be you know um yeah I don't think there's a magic you know, funding, certainly no funding that I want. Ben Ornstein: Right. That totally makes sense. And that goes well into the next question of, you know, what did you emphasize in the pitch when you're pitching to investors? Andrew McKenzie: I think it sort of just gets to we're trying to do something that is that is difficult that from from like an engineering challenge standpoint, point, it's difficult, but is also reasonably easy for the customers to understand how we're trying to create value for them. And what that looks like, We're not coming into this industry at a crazy angle. We're coming into the opportunity in a way you know, is sensible to the customers. So that's always been our, you know, I think main contention is that we're trying to do something straightforward, it's challenging, nobody else is, you know, in the space, you know, making any headway. And so, you know, we've established a leadership position and there's just a ton of room to grow. You know, I think that's, we've always emphasized the real things that we're doing that, you know, in production, not in the lab, not on the bench, out in the mud, out in the rain, you know, doing the real work, building credibility, in the industry. I mean, that's always just been our focus. I mean, just, because when you do those things, good things will happen. Ben Ornstein: Yeah. Andrew McKenzie: You gotta do the work, right? Yeah. I'm just not, I'm not a great marketer. I'm not a great storyteller. That is just not my strength. Sure. Right. So, you know, I've just sort of done it my way, I guess, right? Ben Ornstein: Yeah. Approach is being so transparent that it's like, all right, there's nothing I'm missing here. Andrew's telling me everything I need to know. Andrew McKenzie: I can fully trust him because he's not bullshitting me in any way. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: I mean, because that doesn't, it does not pay off in the long run. That makes a lot of people unhappy and you know, that's not a recipe for success. Ben Ornstein: Yeah. Um, were Or did you apply any urgency tactics for an investor to force them to close the round or anything of that sort? Andrew McKenzie: You mean like FOMO, kind of what you used an acronym that I'm... Ben Ornstein: I just said like urgency. Oh, urgency. Andrew McKenzie: I thought she said letter N, letter C. You know, within reason, you know, a little bit, I've never really, again, and maybe that's a weakness on my part, I'm not saying it's a strength, but, you know, people are gonna do what they're gonna do. And yeah, I, you know, I think that I've, you know, have done that that similar is just saying, you know, in terms of investment level, right, it, you know, if you're at this level, maybe that's 50 or $100,000, like, that’s not going to be available later. Right, that’s available now, because of where we are now. So So if that’s where you are, then now is the time for you to get into the round. And that has the benefit of also being true. We’re going to be raising $50,000 checks in a year. So this is what we're doing now. Yeah. Ben Ornstein: So, yeah, so maybe just not on purpose. It's just a matter of fact, it's like we're raising now, we're not gonna be raising in the future. Andrew McKenzie: So if you want in, you're gonna have to invest now. Right, I mean, if you're writing a $50,000 check, this is your round. Yeah. Because the next round is $500,000 checks. So, you know, that's up to you. But, you know, that I think, I think that's a tactic, if you will, that I would recommend. You know, to, to anyone. Ben Ornstein: I'm just kind of saying, look, we're raising this now. I'm like, you're, you're kind of applying FOMO without forcing it kind of, is that what you're saying? UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: I'm saying, yeah, well, I mean, it's sort of, it's sort of FOMO, but yeah, it's like, this is, you know, we're in now is a time for investors like you to invest in a company like mine. Right. You know, two years from now, this opportunity is just simply not going to be, you know, available and it's going to be a much, much higher valuation, right? So your multiples are going to be, you know, much lower. So, you know, if you're investing sort of in the angel stage, you know, you're looking for much, should be looking for much higher multiples. Ben Ornstein: Yeah. Andrew McKenzie: I guess. A much worse success rate. Right. You're taking way more risk. Ben Ornstein: So you might as well get high multiple on it. Yeah. And also like with those angels specifically, when you get to those later rounds, they're not going to be able to afford you. It's not about getting worse valuations when you're not raising 50, but you're raising 5 million. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: Yeah. It's completely out of their, you know, range. Right. Right. Ben Ornstein: Yeah, so that's interesting. What was the biggest challenge that came up during fundraising? Andrew McKenzie: I mean, I think for for us. It's been. That it's been. Really constant. You know, the hit rates have been high, but the rounds have been open. Longer. And it's been, you know, a little more nerve wracking that way in terms of runway. So, you know, that's always, that's the biggest, you know, I think that's the most stressful thing about doing it that way is that you're not getting a $1 million check from someone who’d be like, great, I don’t have to think about this for 12 months. Right. Yeah. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: Yeah. So that that’s very, that’s very, that’s very challenging. UNKNOWN_SPEAKER: Yeah, 100%. Ben Ornstein: I’ve worked for a couple startups now and not fun, not fun when the runway starts to deplete a little bit. But yeah, are there any unique or interesting fundraising stories that you haven’t brought up yet that might be interesting? Andrew McKenzie: I don’t think anything, you know, particularly of note. No, I mean, unless I’m forgetting something, it’s no, nothing. No worries. Regarding fundraising advice, you’ve already given a couple really good ones. Ben Ornstein: Is there any other pieces of fundraising advice you’d like to give other founders? Andrew McKenzie: Well, I mean, we have, spoken to traditional VCs and haven’t had any real, I think, well, we’ve not raised funding from traditional VCs and that’s a function of a few things. Things, some that are pretty obvious or known, which is, look, we’re in animal agriculture. There are very, very, very few VCs that have exposure to experience in agriculture, period. And those that do have been focused on carbon, sustainability, maybe row crop, robotics. We’re off over here in animal ag, and it is just a blind spot for these firms. On the one hand, it maybe just doesn’t fit a sustainability I mean, we’re in the business of making people who slaughter animals, making their operations more efficient, more productive. I think that’s a way to impact, you know, sustainability and preservation of resources and all these things, you know, directly. I also think in our industry, These people have been taking manure out of the pens and using it to make fertilizer and fertilizing the crops and taking what’s grown in the crops and feeding it to the cattle. They’ve been taking waste product from food facilities, bread waste, waste from breweries, waste from ethanol plants, and upcycling it through cattle for years. But before it was even a thing, they’d been doing this. And they get no credit for it, no credit. And so we’re just in this very kind of meat and potatoes part of the industry that doesn’t have the buzzwords that a lot of people have used to raise their funds. And God bless them, they’re trying to do something good for the planet. And I’m all behind that. Hasn’t benefited us directly. So, you know, that has led me to, you know, I have some very blunt conversations with these people because I get contacted by the associates. Oh, we’re really interested in your space. And then I said, you know, what’s probably going to happen is I’m going to give you this Presentation you’re gonna say wow, that’s really interesting. I’m gonna talk to my partners about it and you’re gonna come back to me and say One of two things One Wow, we really love what you’re doing. We just don’t know anything about the space Okay, fine to Come back to this when you have a million dollars in ARR. Mm-hmm, right and it’s like Okay Like when I have a million dollars in ARR, don’t expect your phone to ring. Ben Ornstein: I was about to say, I’m not talking to you guys. Andrew McKenzie: Right. It’s not happening. So, yeah. And so what is the advice out of that, you know, diatribe? The advice from that is you need to be talking to people. You need to be spending your time with people who, you know, understand your, industry intimately and whose investment mandate you match very closely. Very closely. Age, stage, size of investment, ARR, industry, all of those things have to line up. It is very rare and should be very rare, certainly according to the LPs who invested in the fund. A fund to go off-piste, you know, and wander into some area they don’t really know that much about. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: You know, so if you’re on a VC website and they don’t have anything that resembles what you do at all, they might take a meeting with you, right? Because they need to, next time they raise a fund, they need to say, we talked to this many, we talked to 8,000 companies and invested in 50 They got a funnel to talk about too, you know? And yeah, the further you are from talking to a equity partner in the firm, you know, the further you are from getting, you know, a check written. And it’s just, it’s like any sales activity. Are you talking to the decision maker or not? You know? So, yeah. That’s what, you know, we’ve learned. We still have the, I’ll still have the conversations from time to time. But it’s just not something we’ve really focused on. It’s just not a good use of my time. Ben Ornstein: You gotta preserve it, right, when you can. Andrew McKenzie: Yeah, it’s also, it’s annoying. Yeah. Let’s be honest. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: You know, talking to someone who doesn’t understand your industry, who like, you don’t get their mandate. I mean, you’re not gonna have an interesting conversation. Ben Ornstein: With an associate that’s two to three years out of their MBA, who doesn’t really get anything at all. Andrew McKenzie: Well, they’re in New York City and they’ve never, you know, got shit on their shoes. And look, I lived in New York City 20 years for God’s sake, I’ve worked in venture capital in New York City. Oh, cool. Okay. I mean, I’ve been an associate who never started a company, having these conversations, and I was never particularly comfortable. I was like, I can’t tell this person how to do some dumb stuff myself. So yeah, you know, that’s their job. They’re doing their job. Those firms do what they do. You know, they’re smart They’re trying to do what they set out to do. I have no issues with any of that or with the people in general. It just, is it going to result in something? Ben Ornstein: Probably not. Yeah. Makes sense. Regarding investors who you would recommend, are there any investors you would recommend other founders work with? Andrew McKenzie: I mean, again, How closely do you align with their investment mandate? I mean, the closer you align with their investment mandate, the better conversation you’re going to have, the more productive conversation you’re going to have. Because they’re going to have relationships with strategics and you’re going to be in their zone of influence, right? They may actually be able to help you. It’ll be easier for them to get something through their investment committee. Ben Ornstein: Definitely. For sure. Are there any resources you would recommend to other founders? Andrew McKenzie: Books, podcasts, newsletters, anything? I mean, I probably should use more of those types of resources. Myself but I haven’t and so I can’t really I can’t really recommend it I mean I listened to acquired sometime not not religiously but some of the episodes I think are interesting and have some good lessons in them um I read I love for economics I think that’s like super interesting um A great one. Yeah. And, you know, that’s that’s I’m just a bit sort of voracious for that kind of stuff. Otherwise, no, I mean, I. Because we never planned to go the traditional route, really. I haven’t really focused a lot on kind of what what would be a sort of typical, you know, set of reading that would unlock the secrets. Part of me thinks there really aren’t any. That’s interesting. Ben Ornstein: That actually goes and maybe that could be part of the answer to your next question, the next question, which is our last one, which is, do you have any hot takes regarding the fundraising process? Andrew McKenzie: I will say this. And I think founders do not adequately appreciate this. Venture capitalists are managing a portfolio. And so they have a different set of potential outcomes than you do. Your outcome is almost certainly Not so for the venture capitalist. They would rather bend you into some unnatural shape to achieve the goals of their portfolio management than for you to have a decent outcome. They are not interested in you having a decent outcome. They’re not fucking interested. And the more money you raise, the further away the goalposts get. And I think people think, ah, I raised $10 million. Like, OK, genius. Now you have to build a billion-dollar company. Ben Ornstein: Right, exactly. Andrew McKenzie: Like, you're clear, right, what $10 million means. You think it means you’re a genius. Could mean you’re a freaking idiot, and so are your investors. I mean, that is, the numbers bear that out. What percent of companies that raise $10 million go out of business? I have no idea. Ben Ornstein: Maybe you know, 80, 90? Andrew McKenzie: It's probably very, very high. Ben Ornstein: Very high. Andrew McKenzie: And we've always said, look, we're going to run the company in a way where we can get to cash flow positive without having to raise $10 million. If that appeals to an investor, great. If it doesn’t, Also great, because the second you hit cashflow positive, your options go up exponentially for what your outcomes, your personal, personally, what your outcomes can be for all your hard work. And it may not be Lakeside and Tahoe or whatever your big top of the mountain in Aspen or whatever your big dream is, but it may be a comfortable retirement. I don’t know. What are you after? It may be a decent return for your angel investors, God forbid, return of capital, whatever. I think people do not understand portfolio theory when it comes to how they sit, what their role is in a venture capital firm, and neither do they understand the things that they will need to do or be forced to do by their board to make all of that make sense. External to them, make sense for their investors, not for the company necessarily. There’s incentives are not perfectly aligned. In that world. And I think that people say, oh, well, the founder wasn’t the right person to take the company to that stage. True, some percent of the time. Also maybe true, that company shouldn’t be trying to. It’s not the founder, maybe it’s the company. Maybe that’s that business shouldn’t have that as its goal. Like maybe that’s not the right goal for the best the right goal for the investor because They got 20 other companies trying the same thing. They only need two of them to do it exactly right people do not entrepreneurs do entrepreneurs do not Understand that I don’t I don’t I don’t think they fully appreciate what they’re signing up to. You should write a book about this. Ben Ornstein: I think you have a really unique perspective on, because you are a VC and a founder, it sounds like you have, and because you have such a binary take on this, or I don’t know if it’s binary, but as you said from the very beginning, a strong opinion on this stuff. It might be a really interesting resource for for you to create, I think it could be really cool. It sounds like I can see different chapters in my head that you could cover. Andrew McKenzie: I don’t know, is that something you’ve ever thought about? I don’t think of much else besides Precision Livestock, but you know, and I can be a bit emphatic in some of these things, and there’s a lot of gray areas, and there’s a lot of companies that could not succeed at all. Ben Ornstein: That’s true too. Andrew McKenzie: You know, it’s, it’s absolutely, it’s, it’s absolutely true. Um, but look at Uber. UNKNOWN_SPEAKER: Yeah. Andrew McKenzie: I mean, some, you know, there’s a lot of anything consumer facing, I think has to raise a lot of capital, you know, and spend a lot to acquire customers and, you know, any marketplace super hard to build both the supply and the demand. Know over time it’s very expensive yeah- so. Definitely a place for four B. C. I just- I get a little. I get a little distressed by the We’ve seen this movie before right like crypto. I was in bc during the dot-com crash. Yeah, like It’s like oh this this seems familiar. Yeah, you know AI isn’t you know, I don’t know. Ben Ornstein: I guess we’ll see I guess we’ll see I’m gary you if you were to start your own vc firm today What would your thesis be? What would you what would you focus on? Andrew McKenzie: I would focus on a higher percentage of moderate success. And I would focus on early stage investing because I think the numbers, those are the firms that have the highest returns. I mean, You know, that that’s that’s been true for a very long time. I’d focus on smaller on smaller checks. Five hundred thousand. Seven fifty, there is a massive gap. Institutional investment investors who will write five hundred thousand dollar checks, they almost don’t exist. Ben Ornstein: Yeah. Why why do you think that is? Because. Andrew McKenzie: It’s a, it’s a financial structural, you know, act that at two and 20, you need a fund of X size. That’s going to be able to pay for Y partners who are going to be able to manage Z portfolio companies. Right. You know, and so that’s how the industry is kind of structured. So I mean, I don’t think it’s for bad reason. But I also think it creates an incentive for everybody to come up with a reason for why this company needs $5 million. Right. And why it needs to be worth a billion dollars and why it needs to do all this crazy shit to go out of business after a has raised $50 million. Because it was never going to be a billion dollars. It was never. Never. Right? So there is something just structurally out of whack in the way we finance technology that just does not encourage someone to play in that space. Maybe the typical $10 million fund won, right? But then they're quickly 30, 100, 300, then they're out of that. UNKNOWN_SPEAKER: They're gone. Andrew McKenzie: Then it's mark to market, raise the next fund. Then they're on that insane, what I consider a very strange Incentive system to like raise and have your portfolio. I've got to raise another fund So they've got to raise another round at a higher valuation so I can mark the thing up. It's like wait a minute Are we building companies? What are we doing? Yeah, exactly I thought we were building companies that we're gonna like make life better on earth Are we just building a fundraising machine? What the fuck is going on? Ben Ornstein: Yeah, that's what it should be about right and that's the 2 in 20 model is wild to me when I when I I only felt like recently fully understood like what and I'm relatively young but you know figuring out that model it's It doesn't make sense like because the end goal is yeah, we should be making companies that are Fundamentally making the world a better place and I hate that term so much but at the end of the day that A lot of founders. Yes, they want money, but they also want to do that and that should be the end goal but Ever is these days. Well, it's just things. Andrew McKenzie: Funds have gotten too big. There's too many of them. And the incentives are right there. Like the incentives are always in the numbers. The incentives are there. Like you can predict what's going to where it's going to go. I mean, the incentives are very clear. And so, you know, I, I just, you know, I mean, rewind to the 80s, early 90s, you know, you know, you're talking the top firms are Matrix, Menrock. I mean, they're investing in Compaq and Apple and, you know, stuff that I don't know, had had sort of a different underpinning. I mean, maybe that's just me getting older, but the incentives seem pretty weird now. Yeah. It's all about the incentives. You're right. Ben Ornstein: I mean, that is the biggest issue. Yeah. Yeah. Andrew McKenzie: But take the 220 model applied to private equity, and you get a much better alignment incentives because it's cash on cash returns. It's not markup. Nobody gets a pat on the back in PE for a markup. Those guys aren't buying a house on Fisher's Island because they marked up the valuation of a portfolio company. Like, those people really know how to make money. Like it or not, they're making real money. They are. It's true. Right? So, you know, I don't know. Maybe there's some sort of a... I feel there's a... I know there's a big gap. Yeah. At the, you know, $500 to $1 million check. Ben Ornstein: Well, when you sell and Livestock for a billion dollars, and you need a principal on your team, I’ll be your principal for your fund. Andrew McKenzie: Oh man, if I make it out of this alive. I will say this, however hard it is, you think, to start a company, it’s much harder. Much harder. It is much more stressful. And I did not come into this, you know, with my eyes closed. I was like, holy moly. I don’t remember someone holding a gun to my head to do this, but Ben Ornstein: It feels like sometimes. Yeah, yeah. Andrew McKenzie: But it’s been, you know, it’s been, it’s been great. It feels like we’re doing something meaningful, you know, in the real world, so. That’s what gets me out of bed in the morning. Ben Ornstein: That’s all you can ask for, right? Andrew McKenzie: Yeah. Well, I hope this was a slightly different take than you’ve heard from other people. Yeah. No, I like it. It’s a different one. Ben Ornstein: I’m telling you, each founder talks about things differently and they never have the same answer for any of these questions. Some of them are similar, but every founder says something different. Which I have truly enjoyed. It’s been a lot of fun. And so, yeah, no, I very much appreciate your time, your details. That’s what makes these special. And yeah, it’ll take me about a week probably to turn this around, maybe sooner, depending on how busy we get. And yeah, I’ll send you the first draft. You’ll be able to check it out at Context. Remove etc. And when you give me the go ahead I’ll post it with the rest of them. Andrew McKenzie: Well, so I’ll appreciate the opportunity. It’s been Been fun. You’re a good enthusiastic Listener, so thanks for that I appreciate it. Ben Ornstein: Thank you. Well, um, it was great to meet you best of luck and Uh, we’ll be in touch very soon Yeah, you know keep in touch. Andrew McKenzie: You never know where these things come back around absolutely All right, man. See you. Have a good one.