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Joe Hansen

Blake Modersitzki is the Managing Partner at Pelion Venture Partners, a venture capital firm based in Salt Lake City, Utah. The company has a very cool portfolio of tech companies including Cloudflare, Neighbor, Riverbed, and Owlet. Blake is a hardworking farm kid from Idaho who has been investing in early-stage tech startups since 1996. He joined Pelion in 2002 and has led investments in companies such as Redhat, Riverbed, Fusion.io, Integral Ad Science, DOMO, eCommerce, Soasta, and Metacloud.

Blake is an economist and a finance expert. He has a B.A. in Economics from Brigham Young University.

 

 

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Here’s a glimpse of what you’ll learn: 

  • The first steps Amazon selling tool firms should to in order to develop and introduce disruptive tech products
  • Blake Modersitzki’s views on real disruptive innovations and how people can get there
  • How Riverbed justified their marketing statement during their pitch
  • How companies can talk about and sell their tools VC firms
  • How companies can leverage analogies in building SaaS tools to get higher adoption rates for their products
  • The importance of people embracing their company story
  • Why Pelion Venture Partners decided to invest in Owlet, a product company
  • How to determine if the data being collected by smart home devices is actually useful
  • Blake talks about Amazon’s ecosystem and their ability to build great products
  • How to be part of Pelion Venture Partners’ business roster

In this episode…

Is your tech product disruptive enough to shake the tech industry? Many entrepreneurs go through the process of designing, creating, and innovating new products. However, not many will make it to a pitch, and few get it to actually launch. Those that actually break into the market are considered as gems: rare and utterly irresistible.

The key is to find a product niche that actually serves a purpose and finding a venture capital firm who not only sees your vision but has the desire to see it come to fruition. According to Blake Moderitzki of Pelion Venture Partners, the best way to entice a VC firm into an investment is by walking through the process, embracing the company’s story in the pitch, and making sure you have a product that can truly stand out in the crowd.

Join Eric Stopper as he interviews Blake Modersitzki on this episode of Buy Box Experts about the companies his firm has invested in and how innovators can create disruptive software products that can wow a VC firm. They will also be discussing how to use data in the creative process of your product, the Amazon ecosystem’s capacity to create disruptive products, and the value of being able to justify your pitch. Stay tuned.

Resources Mentioned in this episode

Sponsor for this episode

Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace. 

The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload. 

Buy Box prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management

Learn more about Buy Box Experts at BuyBoxExperts.com

Episode Transcript

Intro 0:09
Welcome to the Buy Box Experts podcast, where we bring to light the unique opportunities brands face in today’s eCommerce world.

Eric Stopper 0:18
Hey and welcome to the Buy Box Experts podcast. This is Eric Stopper. This episode is brought to you by Buy Box Experts which takes ambitious brands and makes them unbeatable. We’ve got a team of consultants, I am one of them, come and talk to us. And there are there are about I was counting them up the other day. There’s about 600 tools to service Amazon sellers in as of the date of this recording. A lot of them can be found in the App Store. There is no way you’re using all of them and the ones that you are using. It’s hard to tell if you are actually doing it right. So come and talk to us. We’ll help you understand what you need what technologies stack you need to run your business. Go to BuyBoxExperts.com click on the free analysis button, we’ll look at your top selling listings, give you some of our secret sauce, and then hopefully we can partner together. today. I am very pleased to be joined by Blake Modersitzki, managing partner at Pelion Ventures. They’re a venture capital firm based in Salt Lake City, Utah. I will let you look them up. They have a very cool portfolio of tech companies. Blake is a hardworking farm kid from Idaho, who has been investing in early stage tech startups since 1996. He’s an economist, a finance expert, and just generally an excellent person. Blake, welcome to the show.

Blake Modersitzki 1:39
Well, thank you for having me. I’m excited to be here.

Eric Stopper 1:43
So a big part of our listener base are our developers and people running SAS based companies that service specifically Amazon, and we had a few of them that specifically requested that I bring you on the show. And then some other ones had Some had some specific questions that they wanted me to ask a venture capital firm. So they want to get the edge. Right. There’s, there’s all these many software’s. There’s a lot of people in the ecosystem, there’s a lot of competition. And so I’ve boiled it down to two questions for you, which, which is where I want to start. So, number one, you are a tech investing expert. I feel like out of all the people, you have this crystal ball, or at least this crystal ball process, we’re able to see, you know, what, what really is disruptive and what’s going to be great. So if if you were consulting, one of these firms, one of these Amazon selling tool firms and and you wanted to help them introduce or or develop a disruptive technology? What are some of the first steps that you would encourage them to take?

Blake Modersitzki 2:51
Yeah, great question. So I probably asked them to look at a couple of different things. The first one is, you know, how big is the market opportunity. And what I mean by that is there’s a lot of wonderful businesses out there that play in a, you know, 50 hundred $200 million market size and and people can build a great business and lifestyle from a venture capitalist standpoint, we look at what companies is it a billion plus dollar sized market? So, you know, have some of that reflection around how big of an opportunity is it? If you conclude that as a huge opportunity, then I’d say look at yourself your team and say, Alright, are we the guys or individuals to take this thing forward? And a lot of times the answer is yes. But oftentimes, it’s where do we need to add expertise and sometimes that expertise is by finding a strong go to market person. Sometimes it’s it’s adding great mentors. You know, there’s a difference between my brother in law who’s a dentist versus a CEO. This been very successful. That is spending a lot of time mentoring entrepreneurs that are building big businesses, all things are not created equal. And then the last thing I would encourage you to think about and ask the question is, how disruptive is this technology? So many times we see something that’s disruptive. And is it a vitamin? Or is it a painkiller? in vitamins are optional. It’s disruptive. But not a lot of people want a painkiller that’s a must have when you break your arm or something like that. So if you ask the disruption question, and you can answer it that way, then you start to line up and you move forward.

Eric Stopper 4:42
So you’re you’re speaking my language here. A lot of the people that come to me, they, first of all, they want free consulting in perpetuity, which we’re not offering but they want to know like, how do you know I’ve got this new product and how do I how do I become the best seller on Amazon, and you actually put it really well in another podcast that you were on. It might have been a forum that you were speaking at. But you said, Have you have you really built a better mousetrap? Or have you just painted the mousetrap a different color? Yeah. To tell the listeners a little bit about that, about how you view this concept of real disruptive innovation, and how do we get there? You

Blake Modersitzki 5:23
know, I use one of our portfolio companies as an example. So we’re investors in this company called CloudFlare. And when we first invested into CloudFlare, they they were living and playing in a world around cloud computing. This is a decade ago and cloud computing was new. And but the the problems that existed so when you think about a firewall, so firewalls have been around checkpoint invented. They were one of the early pioneers in firewalls. But when you took it to the next level to the cloud, all of a sudden the existing technology didn’t work anymore. It As a complete re architect by a lot of security vendors CloudFlare started immediately providing a firewall in the cloud. Roll forward to today that company provides a lot of different services. But it was building upon this concept, an idea that Oh, by the way, got disrupted. In this case, by a new computing environment. It sometimes gets disrupted by complete innovation. And we’re investors in this company called riverbed. All riverbed did was speed up data. I remember the first presentation, the CEO said to me, we make data move faster than the speed of light. Now, yeah, exactly. That was my reaction. I was like, wait, that’s like, not a physicist, but that’s impossible. But when he explained the innovation associated with it, and you understood, moving data across the internet, it’s not a new thing. But the way they had innovated and basically tricked the internet, they could move data, you know, multiple times faster. There’s that’s disruption,

Eric Stopper 7:13
tricking, tricking the internet. That that almost seems far fetched, right? If I was sitting in that in that executive meeting, I would really want to see what it actually looks like. How, and I think this is this is a question if I if I were wanting to raise venture capital funding, I would want to make sure that I had this presentation really dialed in. How did they justify that to you? How did they quantify the speed of light in their tool? How did they present this to you to get you convinced?

Blake Modersitzki 7:40
Well, first, you have to start with understanding. So when, when the internet was created back in the DARPA net era, you know, when there were three universities University, Utah was one of them. The way the internet worked was you sent data across from point A to point B once the data arrived at point b point Be would then send back to point a what they call acts or acknowledgement, saying I received the information, send the next back serve information. So it with this START STOP mentality. Well back then because packets got dropped so frequently. That’s the way it had to work because the internet was not as stable as it is today it was flaky. Well, in today’s world, the internet’s super stable. So what riverbed was the name of the company, what they did is they sent data from point A to point B, they just kept sending it. And then at point B, the acknowledgments before they received the data they started sending to point a acknowledgments, meaning you’re telling point A, I got the information before it shows up. Now all of a sudden, point A does not stop and wait for the acknowledgments. It just keeps sending data because they’re receiving the acknowledgments back here. So you go from San received Send to receive to send, send, send, because the on on the other side of the freeway is all of the acknowledgments coming back. So now all of a sudden, you don’t have this stop start mentality, you have this continuous stream. So when you think about it that way, they they invented something pretty novel and unique because they they bet on the stableness of the infrastructure, they were able to say, you know what, the internet’s not dropping packets like it did in the beginning. Let’s go ahead and tell it. So it just keeps sending information. Oh, by the way, they would do all of this reconciling on the other side, if by chance something did drop, well, they could they could reconcile that.

Eric Stopper 9:44
And they put contingencies in place to deal with any any problems that it ran into.

Blake Modersitzki 9:48
Right. So So when the when the CEO explain that to us, we’re like, okay, I now get your example of tricking the internet and faster than the speed of light. Oh, by the way, Two of them were statements, which Oh, by the way, not true. But they were statements to prove the point that what they had invented was super disruptive on point A and point B.

Eric Stopper 10:13
So they so they built in the pitch to you guys. It was almost like marketing statements that really drove the point home.

Blake Modersitzki 10:18
Yeah, because they could use examples that that were like, Hey, wait a minute, how does that work? And then it fostered this really interesting conversation like, I totally got what they were, why they use that as an example when they explained the way their their product work. And by the way, they weren’t trying to deceive or trick me. They were using it as a kind of an impact statement. Sure, because it was so core to their core fundamentals. That but by the way, this is a widely accepted practice today. You know, we funded this company 15 years ago, no standard. Yeah. So yeah, what they do today is better Like they it’s built into everything that exists. If you’re if you’re moving data, they use riverbeds

Eric Stopper 11:08
architect. So I take I take two main insights out of that. Right, like, number one is they had built something really great. And obviously like the internet’s massive I, I’m curious to understand some of the finer details of what exactly they were targeting. But let’s just assume, right, it was a big opportunity you guys invested in them. The other thing that I take from that is how they sold it to you. I think a lot of these companies that build a really great tool fail at at coming up with really great stories or analogies to I don’t know if it’s convinced or almost entice the funding that they’re trying to get on that. And so, is there a way to nail that? Is there a way to figure out how to talk about the product that you have, have come out with in order to get people to get it? Is there a framework that you apply?

Blake Modersitzki 11:54
You know, we actually it’s a it’s a great question. So We have people on our team that are you know, they’re they’re, they’re extraordinarily technical and bit hats. And with that they can go into the weeds pretty deeply with the tech conversation. And then there’s the question and I usually try to frame it this way. Explain to me so that I can go home tonight and explain to my at the time now they’re they’re grown adults, you know, my junior high and teenage children who Oh, by the way, are all tech savvy. And what they do.

You know, for example, we have this company called fusion IO.

It’s a solid state storage company. Right? And, you know, what was interesting is my kids would say, well, that I didn’t know what they do. And I said, I would say to them, all right, all the photos that you have, you know, an apple or Facebook, all of the information that you’re storing in social media. that sits on a fusion IO storage software box. Because, you know, they got where they got the concept around, okay, now I get it, you know, I’m storing it at the time when we invest in this company, Facebook was all the rage. Everything that I put on Facebook is stored in this, or all of my music for Apple, you know, for my iTunes account is stored someplace. That’s what fusion IO did, then they could make that connection between me as a user, the benefit that I get, oh, by the way, the customer would have been apple. So I make sure that I can explain to my kids and that’s, you know, less is always more. If you can’t explain to us on the back of your business card, what your company does go back and rethink what the company’s value proposition

Eric Stopper 13:50
is. Is it is it possible to get too simple with that, right, like, the way that I would describe some people’s business to my three year old is much different than I would describe it to a teenager. Right. And so does that does that factor into the way that somebody describes their business being too simple? And kind of speaking more generally? Or would you still encouraged to say like, yeah, like try to try to nail it in one sentence or even a fragment of a sentence?

Blake Modersitzki 14:17
Well, I’ll come back to earlier conversation with riverbed. I mean, the simple comment of we move faster than the speed of light, right? period. I’m like, Whoa, that’s impossible. Then the next conversation is this much deeper conversation. But that one statement that really got our attention, because we’re like, that’s a really bold state. We’re kind of right, here we go. Yeah, we’re gonna pour water all over this thing and end up walking away. You know, giving them a term sheet literally the next day.

Eric Stopper 14:48
Oh, man, so they so they nailed it with that. And I think one of the questions one of the specific questions that our software listeners were asking about is, is how to market their product right to Anybody, whether that’s a VC firm or to the the market that they’re that they’re trying to target. And so that’s, I mean, that’s one very, very excellent insight, just saying, like, break it down, make it simple and make it powerful. Right, and and make sure that a teenager or even someone younger could explain it. But are there any other? Are there any other secret sauces that you would that you would encourage people building these SAS tools to use in order to get higher adoption rates for their for their products?

Blake Modersitzki 15:29
Yeah, you know, maybe if you can draw some conclusion, you know, success begets success. And so,

you know, when you think about Okay, so I have this software tool, what are they are they’re like examples that I can look at, and try to measure. So I’ll give you one example. We’re investors in this little company here in Utah called neighbor.

Eric Stopper 15:52
I know the founders. Yeah, they’re great guys. Yeah.

Blake Modersitzki 15:55
You know, when they came in and presented to us, you know, it was we’re Airbnb for self storage. Well, I know Airbnb, I know self storage. super interesting. You know, they they found that interesting place between using technology versus, you know what Self Storage is all about. Everybody knew Airbnb, you know, you know, the business model that’s associated with that. So as these entrepreneurs that are, that are building these tools are the tools such where you can look at a success of something else. You know, I had one partner that used to tell me, you know, in the NBA, one year, Michael Jordan got the league MVP. So everybody goes out and tries to draft the next Michael Jordan join their team. Well, the next year, the MVP was Steve Nash. Two very different people. One played point guard. One one Was this an unbelievable, you know, could have played any position on the court. So it wasn’t necessarily that you No, you want to look just like Michael Jordan, you know, be who you are, but be really successful, but you learned a lot from, from the success that somebody else had. So that’s, I guess that would be some of the advice that I would try to give these young entrepreneurs.

Eric Stopper 17:15
And I mean even like the the branding behind each of these players to like the the thing that comes to mind for like Kobe Bryant right, recently recently passed away the Mamba, right, like he was able to draw an analogy or a metaphor that was that very quickly put a certain perception in people’s minds. And it sounds like that’s, I mean, at least the use of analogies right is going to help these people tremendously. Even if it’s just a business model. You’re saying where the blank of blank like for like, right, being able to make those comparisons? And is has there been a company that and I didn’t I didn’t prepare you for this question, but has there been a company that didn’t have that in any way shape? Perform and you still invested in them because you understood the business model thoroughly. They didn’t have that nice marketing secret sauce.

Blake Modersitzki 18:08
You know, I think the short answer there is no and why I tell you that is, you know, part of this part of this world is the story. What is the story behind it? And sometimes those stories are hard and difficult and the journey to get there is, is fraught with near bankruptcy, all sorts of stuff, you know, embrace that story and tell it because that helps to frame what it is. When an entrepreneur you know, when we can’t get our heads wrapped around a story just because it oftentimes when you don’t have a story, what comes across as you’re trying to boil the ocean. And what I mean by that is, if the opportunity is so massive that you’re building boiling the ocean. Oh, I see one great example big of a bite. Yeah, a company here in Utah, we’ve, you know, fantastic company. And when Brandon Rodman the founder came in, what he talked about is the solution they were providing to the dental industry. Now, his bigger vision was a much bigger opportunity at hand. Meaning, you know, he talked about the vision, but I love the fact that when Brandon talked about this company, he talked about the success in building his first beachhead. Sure, and there was a story associated with it. So that’s what I mean by storytelling,

Eric Stopper 19:39
right? And you talk about this, the one in one in a row concept, right? Not doing not doing too many things. half half heartedly, just doing one really awesome thing tabeling all the rest of this stuff and really just nailing the first the first vertical you You have been doing this since 1996. Right? At what point did you did you really start focusing on this on this one in a row concept? You know, is there a specific business that you invested? Like No, no. Scrap all this other stuff, just focus on building the this huge satellite or something?

Blake Modersitzki 20:19
Yeah. You know, it was something that I learned very early in my career. I had the good fortune of working for Eric Schmidt. Prior to him going to Google, he was our CEO at Novell, a gentleman by the name of Carl led better who had been with Eric as an executive for a long time, I interacted with some of the very best VCs early in my career, some of the the, you know, the, the real icons in this industry, and that was one of the one of the real takeaways early in my career is just do one thing and do it really well. And then move on.

Eric Stopper 20:56
And so that was kind of where all of that foster so it came in very early. Part of my career but I learned it from some wonderful mentors in, in my interaction. Eric Schmidt Well, I mean, I I posted a a video on LinkedIn this morning about the recent Superbowl ad that Google that Google put out. I don’t know if you saw Loretta, but that that ad about it’s about Alzheimer’s right? It’s about their the the product that they’ve built around helping like your, your, your Google Home, remember the things that you forget, you know, ignore everything that you that that Google does with your data, but just that ad is a masterpiece, in my opinion. So hats off to Eric Schmidt. I’ll have to I had to invite him on. Yeah.

Unknown Speaker 21:43
Gave me a great big, great lesson.

Eric Stopper 21:45
So I kind of want to put on I want to put on the the innovators hat for a second and and just talk about and try to break down. Amazon as as you somebody kind of looking On the outside in, you typically invest in SAS companies, right? And data management companies security and infrastructure and stuff like that. I’ve only seen one product company in the portfolio there, there may be more and that was outlet. So I brought in Jordan Monroe on the podcast a couple of weeks ago, and he was great. So I want to touch on that. And then and then I want to jump to Amazon as kind of a bigger picture. Why? Why Allah, right? Like, the one kind of major product company out of all of these software companies, what made the difference for them? Why did pelion invest?

Blake Modersitzki 22:38
Yeah, you know, it’s a great story and one I can share. So my my business partner, Chad Packard, who’s just fantastic. And, gosh, I don’t know seven or eight years ago, Chad was a judge down at BYU for the business plan competition and Alan was part of that. Yep. As they came through and and tab, you know, gave them a thumbs up thumbs up, you know, Chad, his wife had had actually just gone through a process or an unfortunate, you know, sad situation where they actually had a baby die of sets. Right? And if you know what the product that Allah does, you know, it’s all about infant help infant, you know, well, How can parents embrace the idea of monitoring the their infants. And so at that time, it was still quite raw, but Chad embraced the notion and basically became a free product manager pro bono with Alec for like five years, he just would help those guys. He’d give him advice he’d meet with often, and they’ve got ready to raise around the financing and Chad came to me and he said, you know, here’s what I’ve learned about it. And, and I thought, well, first of all, we know more more about this company than any other company. We invest into we got five years of data. Second of all what they were building, it is a Products Company. But when you think about, you know, there’s things called a smart home. This one is the smart nursery. So the data that they collect what they analyze, so this the software underlying solution was really interesting. And, and then we met the team. And of course, we knew those guys. That was the story behind our investment analysis. And we have been, you know, extraordinary grateful. There’s a personal aspect that we’re all super enthusiastic about this company, because it comes from a place where we all experienced, you know, Chad and Anna’s loss, we understand at a higher level what all of that means. And then on top of that, Allah is just like they’re doing something super.

This whole social issue that’s coupled with this great so yeah, they’re building.

Eric Stopper 24:56
I had the fortune of attending those same business competitions and I actually I went through the same ring with them. And I was doing pregnancy. there’s a there’s a long story behind that. But I I definitely I definitely understand where they’re coming from and, and you have like these three criteria for investing in a business, right? It’s got to be disruptive. The, the business has to be big enough. We’re talking billions. And then third is there’s a passion and coachability to the founding team, or at least the executive team that’s running it. And I think that they certainly had had all three. Yeah, and so made a good bet. And you mentioned that that software underlying as well. I would say that a lot of the people that listen to this podcast who sell products that are smart home devices, maybe don’t realize that they have this this software component, all the all of this data, that they that could be an even bigger part of their business. How How do I know if the data that I am collecting with my smart home device Is is actually useful outside of, of my smart home device? Is there a way to vet that out?

Unknown Speaker 26:07
Yeah, you know, the advice I would give is

Blake Modersitzki 26:12
if you get 10 customers, people that that start to validate that underlying data. There you go. Now you know that it’s useful, you know, you can only you know, three people is not not a big enough cohort. 10 people is probably just right on the smaller end of it. But once you can start to, like, validate that it’s that there is usability, and what what the usability is, you know, I think one of the things that like Allah discovered was not only for the parents, but then the whole medical industry, this data becomes important, not not at an individual level, but at a macro level. And then all of a sudden, you know, the consumer products industry. No, look, they’re always looking to sell new parents something right? But if they could take that data and build better products, you know, diapers that don’t you know give a rash or diaper Yeah, like that that’s super useful all the way along that supply chain. So you’ve with that data figure out where the value gets really manifested. Because I don’t think they really realized that the consumer products maybe they did consumer products industry would be able to take that data not to sell you an AI more stuff. Look as a grandpa. What I’m going to tell you is I’ll buy anything that does not cause my little grandson’s problems. So there you go. That’s who I am. But if you can build me better products,

Eric Stopper 27:48
I’m super grateful. Yeah, I think and you can definitely hear because all of their all of their competition videos were recorded, right? And they’re on YouTube and you can go see them the tone and the things that they talked about before. Very different ad evolves as they learn more and more. And I think probably by pitch number three, they figured it out. They really understood Wow, there is a data opportunity here. But they had no clue how to leverage it, which I mean, early on, I’m sure I’m sure you guys were able to help with that.

Blake Modersitzki 28:15
Well, that was that was part of why, why they wanted us to be an investor, as Chad had been working with them so much around the value of this data to make our lives better, that they’re like, Yeah, wow, can you guys be an investor? So I mean, it was a nice sort of, we wanted to be there. And they wanted us and it was, it was a good, good, good partnership.

Unknown Speaker 28:37
So so let’s hit this last point.

Eric Stopper 28:40
Amazon is huge. Right? we all we all are aware of how massive Amazon is. But by the way, are you an Amazon Prime member?

Unknown Speaker 28:48
I am right on.

Eric Stopper 28:50
Yeah, there’s there’s 150 million prime users as of the recording of this podcast, and there’s, you know, 370 million people in the United States and I would say Almost every single one of them probably uses one of the hundred and 50 million prime accounts. Right? So it’s, it’s just a massive opportunity. So Amazon struggled for a long time, right? They were in lawsuits, they targeted books first and then jewelry. And then they launched AWS. Right, this this cloud. They introduced this concept of primitives for developers, where a developer could take like, transactional software and check out and, you know, the ability to move around video on on a Python app and all this different stuff. They made it so that you could plug and play right, all these developers then swooped in, and they started building all this amazing stuff with AWS. So you guys are this is your space, right? This is your baby. You guys know, big data, you know, storage, you know, infrastructure. So, if you were to, if you were to find a blind spot in Amazon’s ecosystem of product offerings and the way that they do This computing, where would you look? Right? What would you what kind of questions would you ask the system? What kind of queries would you run? Like, where would you kind of play around in the weeds in order to build a really great Amazon product?

Blake Modersitzki 30:15
Yeah. You know, first of all, Amazon is a fabulous company. And I’m old enough to remember when Amazon was a bookseller. Mm hmm. You know, and we are like, well, Barnes and Noble has done and, and then you roll for today and look, the the Amazon Jeff Bezos, the whole crew, they’re unbelievable. They are the epitome of innovators. You know, today, it’s interesting, I’m sure for you. You view Amazon as what it is today. I was having this conversation with my kids. They don’t remember Amazon as a bookseller. Hmm. I mean, that’s just not, you know what? And so, as I think about that, oftentimes with these really big companies And, you know, I’ve used a couple examples around CloudFlare. And, and, and we’ve and what have you is, is these big companies oftentimes move slower. They’ve architected something where the introduction of machine learning artificial intelligence, oh, by the way, did you know that when artificial intelligence gets gets released into a network, which, which is wonderful and great, it also breaks a lot of things around security and optimization. And so, with that comes an opportunity because the existing platforms have to kind of re architect they have to continue to innovate, but as a new seller or as a new entrant into that, can you solve this problem? You know, we, we, we had this company called elastica. They provided artificial intelligence cybersecurity, there you go. cybersecurity, everybody does artificial intelligence. Everybody does. You’ve put them together. opportunity presents itself, they built this really interesting solution. So within the Amazon architecture You know, there’s there’s lots of things that new software coming in new protocols coming in. You can build really interesting products on top of the Amazon platform.

Eric Stopper 32:21
Yeah, and I think we’ve we’ve found that in a lot of the partners that we work with, right, like eecom engine, they’re a partner with Amazon and they, they create all these really cool tools. And they’re, they’re coming out with some new here here in the next couple of days. There’s this, there’s this concept, and I’m struggling to remember the actual name of it, but it comes from it comes from this Roman architectural idea that if you add a a fourth or third supporting column to a the foundation of one of their, one of their buildings, that it actually makes it so that the building is more likely to topple over, you’ve added this additional support structure and it’s it’s redundant, it’s too much. And so it almost sounds like Amazon is is constantly trying to improve their processes bringing AI into the mix. And they’re adding these additional support columns, which makes it so that the opportunity for the the software’s and tools that are internal to Amazon, that they could fail very frequently. So it sounds like that’s that’s kind of the idea is, if Amazon launches something new, that’s a supporting column, and you should be you should be aware of everything that that specific tool impacts is that is that kind of what I’m gathering in the new and then you build products around that?

Blake Modersitzki 33:39
Yeah, absolutely. And, and the great thing about big companies like Amazon is they are big companies. And with that comes a lot of benefit. But, you know, 20 people, super nimble, continue to innovate architect, you know, they don’t have Have the overhead of pressure of being a public company. Sure, you can make mistakes along that journey, you can test you can re architect. And so with that become a lot more nimble in that process, as, as you’re leveraging the infrastructure of like an Amazon or anything else for that matter. And, you know, there’s, there’s Amazon and Microsoft and Google, you know, IBM, they’re, they’re these great big companies. And but, but they’re so large, that you as a as a young entrepreneur, you should be able to be a lot more nimble, and you can build, innovate, look, what every 18 months, things are obsolete in the tech world.

Eric Stopper 34:47
Six months.

Unknown Speaker 34:48
Yeah, six months. There you go.

Eric Stopper 34:51
So there, there are a lot of folks that I’m sure would love to get in touch with you. And I understand that about 1000 businesses come to Patreon each each year. You look at maybe 30% of them really closely, you have a pretty sophisticated vetting system. And then out of those, you maybe do three to five investments a year. Right? very selective. for the, for the people who could potentially be your clients, how do I send them to you? Where do they go? And then how, how do they get to be a part of that? 30%?

Blake Modersitzki 35:21
Yeah. So there is this is the, this is where I think networking comes into play. And I and I, and I do it somewhat on purpose. And that is either through LinkedIn, alumni systems, friends, family, you know, somebody who who knows me or somebody at our organization, leverage that to get a warm introduction, because a warm introduction just like anything else, if you’re in sales, a cold call results in a certain percentage of closer a warm introduction results in a much higher so so look at your net, here network, as As a entrepreneur, figure out how you know, somebody appellant now that does not eliminate the fact that you can ping me on LinkedIn, my email is Blake at polygon, VP comm you can always shoot something in there. But you know, fine, because we have so much coming in, find a way to get introduced into our process by somebody who will move you to the top of the list. So that’s, that’s the way because I think as an entrepreneur, you have to be scrappy. You have to be innovative. To me, that’s kind of one of the innovative ways is how are you connected to me? You know, what’s the what’s Six Degrees of Kevin Bacon? Right, right. There you go. What What is your degree of connection to me? So that’s Kevin Bacon.

Unknown Speaker 36:47
Claire.

Unknown Speaker 36:48
Yeah, cool.

Eric Stopper 36:50
If If you want to get in contact with with Blake, the Kevin Bacon principle absolutely applies, but go and reach out to them go and check out their portfolio companies. pelion pelion VPN comm Blake, thank you so much for coming on the show.

Blake Modersitzki 37:04
And thanks for having me a lot of fun.

Outro 37:07
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