May 24, 2022

We are Living in the Future with Brad Bentz, Partner and Co-Founder of ATX Partners

Our region not only builds futuristic technologies, but they are deployed and tested here as well. More and more when you hear autonomous vehicles, rockets, drones, and personal flying vehicles you think Austin. Today we are speaking with Brad Bentz, Co-Founder and Partner at ATX Partners a local venture firm that recently raised $150M for their 3rd fund, and now has over $300M under management. ATX’s tagline is “investing in people pioneering the future,” so we thought who better to talk about how this superpower drives What's Next Austin.

The future is now and What's next Austin?

Podcast Production Services by EveryWord Media

Our music is “Tech Talk” by Kevin MacLeod. Licensed under Creative Commons 4.0 License


 

Episode Highlights

  • ATX Ventures is focused on B2B seed (late seed/generally no pre-revenue) to Series A with a preference for legacy industries undergoing a digital transformation
  • Austin is maturing to the point that we see many more serial founders than we did 10 to 20 years ago
  • Capital in Austin is more widely available and that is being met with more Austin founders than ever before
  • Is Austin better positioned than other ecosystems for frontier/deep tech and how does business model disruption fit into our region
  • To be able to really maintain this super power we have to have a culture that has a willingness to take risks and be forgiving of failure
  • The quality of talent due to personal migration and company movement like Tesla and Oracle as at a higher level than Brad has ever seen
  • What’s next Austin?
    • “I don't see Austin slowing down, frankly. If anything, it seems like it's been accelerating…Another thing that I would like to see more of and expect that we will see more of is more robotics and hardware, which is, again, an area that, you know, Austin has been kind of weak on compared to some other markets. But I think it's an area that we'll see a lot more”
Transcript

Michael Scharf: Austin is the new innovation powerhouse, not the next Silicon valley, but the first Austin, we are adapting to the future in real time

Jason Scharf: . I'm Jason Scharf, a biotech executive, and early stage investor.

Michael Scharf: And I'm Michael Scharf advisor and board member for multiple private companies.

Jason Scharf: You can call us optimists abundance minded up wing, and even solutionists we see a bright future ahead that can be achieved through innovation and entrepreneurship.

Michael Scharf: In this podcast, we explore Austin superpowers, the people and companies driving our growth and the macro and micro trends that come together to create Austin today.

Jason Scharf: This is Austin Next!

The future is already here. It's just not evenly distributed. This famous William Gibson quote applies well to the Austin superpower of we're living in the future. Our region not only builds futuristic technologies where they're deployed and tested here. More and more, when you hear about autonomous cars, rockets, drones, personal flying vehicles.

You think Austin today, we're speaking with Brad Bentz co-founder and partner at ATX venture partners, a local VC firm that recently raised 150 million for their third fund. Now has over 300 million under management. ATX's tagline is investing in people pioneering in the future. So we thought who better to talk to you about how the superpowers that drive our region.

Brad graduated with honors from UC Berkeley, and earned an MBA with a focus in entrepreneurship from the Acton school of business in Austin. He spent 10 years as a field archeologist working on research projects and Pakistan, Syria, Bulgaria, and the U S before establishing a second career as a software developer and team lead after business school, Brad joined a boutique private equity firm and participated in over a dozen transactions involving more than 72 million dollars in equity.

More recently, he worked at IDC and Boston consultant group before founding ATX venture partners.

This is the Austin Next Newsflash, the Austin capital scene continues surging ahead. Since we recorded our interview with Brad ATX venture partners is hired Jeff Thompson as a new partner and president. And they've also announced they're raising $125 million seed to series a fund, and a $250 to half billion dollar growth equity fund.

We continue to level up and now enjoy the show.

Brad welcome to the Austin next podcast.

Brad Bentz: Thanks for having me.

Jason Scharf: So let's just start off. How did you get involved in startups and venture capital?

Brad Bentz: Well I have probably an unconventional background. So I started out in a scientific career and then shifted into a career as a software developer in the nineties.

Did that for about five or six years. And then. Really tried to decide what I wanted to do next. I had been a coder for a period of time and realize that most people kind of graduate into management or they, you know, go into some, some sort of adjacent area. I liked product management. And so that seemed to me to be kind of a good way to, to leverage my existing technical skills.

While still being able to look at some of the interesting things that are going on in terms of, you know, what are the, the business stakeholders trying to accomplish and how can you design a product to meet that? Because I wasn't really privy to those conversations when I was coding. I was just told, Hey, this is the functionality that we need.

Let's, let's get it banged out. So decided to get my MBA. And like I said, I had the intention of going into, you know, early stage software companies after graduation as a product manager. That was my initial thesis in getting my MBA, but I ended up getting recruited into finance. That's kind of where I've made my career almost by happenstance, but you know, feel like what I'm doing now in, in venture is a really good fit because it, it also kind of leverages some of the technical background that I have.

Jason Scharf: So tell us about ATX ventures.

Brad Bentz: So we're an early stage venture firm based in Austin. We do make investments all over the country, but, you know, I would say the majority of our deals are here in Texas and quite a few of them are in the Austin area. You know, we're seed to series a focused and for us seed when we're typically talking mature seeds.

So we don't generally do pre-revenue companies. We like companies that have, you know, at least some level of revenue, so that they're, there are customers that we can contact as part of our diligence, kind of get their take on how real is this problem that, that the company is solving. How well does it address their problems?

We get our arms around the pricing and unit economics and all that. And it's very hard to do that when you're talking to pre-revenue companies. So we'll invest in the seed round and then we'll follow on strong into the A. And then typically, you know, when it gets to the B we'll do a baton pass to a later stage VC to.

Take it from there. Although we, we allow our LPs to invest through an SPV, we call a sidecar, allows them to continue the journey because we'll have often pro-rata and these rounds it's just not what the fund is set up to do in terms of the return profile that we're aiming for. So we're very heavily focused on B2B, SAS, and marketplaces.

So we do very little on the consumer tech side and, you know, that's not really what our ecosystem does best anyway, for the most part. At least on the technology side on, I mean, there's a lot of good CBG talent in Austin, for sure. But you know, relatively little in terms of consumer tech, as compared to say the bay area, So we try to, you know, run the races.

We think we can win. And so in our part of the country, you know, B2B is really where the main focus it seems of most of the founders lies. So that's where we spend most of our time. And then I would say we have a preference for technology that's pointed at legacy industries that are now undergoing digital transformation.

So, you know, supply chain is a great example of that. And for us, that means everything from digital manufacturing, through, you know, logistics, through inventory management at the retail level. So we have solutions kind of all along that path from the factory, all the way to where the consumer makes a purchase.

Jason Scharf: And how has Austin fit into this? Why, why here?

Brad Bentz: Yeah. So, I mean, Austin's just a great technology town. A lot of talented, it's only gotten stronger, you know, in the seven years that I've been involved in venture and having grown up here and seeing how the cities has evolved, you know, it has so much going forward.

It's a dynamic city. It's a young city. There's lots of technical talent here, kind of both emerging talent coming out of university programs, but also people who have, you know, worked for the Googles and Facebooks and Oracles of the world who are spinning out with their own ideas that they want to launch as a new company.

So it's, it's a great environment for founders that I've found it to be a very collaborative. As a city, you know, it seems like even though there's certainly competition among founders and also among investors, for the most part, I feel like people in this town really want everybody to win and they want to lean in and help each other out.

So people are not too sharp elbowed here, which is nice.

Michael Scharf: Yeah it Is. And I want to kind of open that box a little bit. So you've talked about. You're in B2B SaaS you're stages, a seed to a, how does Austin support that thesis?

Brad Bentz: Yeah, I mean, it kind of goes back to some of the points that I mentioned about having, you know, a large young population, technically savvy, great universities that are creating new talent.

Lots of, you know, young, 20 and 30 somethings who are moving here. Who are working at some of the bigger companies and then spinning out. And I feel like the, you know, the investor community, the founder community, and the city are all supportive, mutually fostering an environment that helps build that.

And, you know, it helps to that Texas has, you know, low taxes business friendly environment, and that's certainly been helpful in, you know, getting a lot of. A lot of businesses to expand or even relocate here as well, or, you know, also Austin perpetually shines in terms of great places to start a business in terms of the, the business environment.

And since we're catering largely to kind of millennial and even older gen Z demographics in terms of founders and key early hires at these startups, it helps that Austin has a, a great quality of life. That I think is important for attracting and retaining tech workers. And you know, I think the challenge going forward is going to be, how do we not lose that as we scale the city?

Michael Scharf: Absolutely. Let me ask you a question because normally, and I use big air quotes around that. We think about people starting new ventures. As people that are spinning out from existing high-tech ventures. So for example, they're going to be one of the first 20 or 30 employees in X company. It goes through its liquidation event.

They become they're millionaires and they say, oh, I have this great idea. I want to do this. And then they have a track record. You talked about people who were leaving some of the big companies, the Googles, the Oracles, the Facebooks, the visas, and the like. Do we now have that kind of environment where really good people who chose large companies as their route to grow are in a position where they can take in, move into a venture?

Brad Bentz: It depends. I think, you know, in many cases, some of those people have considerable wealth tied to their options. Which gives them a nice war chest that they can go and kind of self-fund the company. And it's kind of first chapter to kind of get a proof of concept. The, the challenge though, is, you know, they were companies where very often they're getting paid 200,000 or more and can they afford their lifestyle to, you know, go to essentially zero income or de minimis income for, you know, six months to a year.

Now some of them have the, the savings to be able to do that, or they're willing to, you know, sell their house and move into, you know, a one bedroom apartment or something of that sort to be able to help fund and bootstrap that first chapter before they're ready to take external capital. So I do think that's, that can be a challenge for people who have been working with some of these bigger companies and are used to, you know, really large paychecks and have built a certain lifestyle around that.

That can be. An obstacle to their pursuing their entrepreneurial dreams. But at the same time, if they've got lots of options and maybe they can sell a little bit of their stock and that gives them some cash to be able to tie them over until they get, you know, some sort of pilot going where now investors can kind of come and see what the technology looks like, the tires, and then, you know, start providing some external capital to the Company.

Michael Scharf: We've seen so many changes here and just the, almost a year of the Austin next podcast, you've been here quite a bit longer. What are the two or three really key changes that you've seen in Austin in the last, let's say six or seven years.

Brad Bentz: You know, if you compare Austin today to Austin, 10 or 20 years ago, a lot more serial founder.

Here who I think a combination of two things. I think one is, we've been really good at attracting talent from outside of our region, often from the west coast, but not exclusively. And then also I think it's just time and gain, you know, the, the ecosystem is maturing. And so people who started their first company, you know, 5, 10, 15 years ago now they're on their second or third time.

So you just see a lot more of that in the ecosystem than you would have 10 years ago. For example, obviously a lot more growth stage talent, which I think is one of the interesting things that we are seeing with these corporate relocations and expansions is that you're getting people that have been part of organizations.

Further down the trail, they know what it's like to go from 50 to 150 million in revenue. And you know, if you look at the startups in Austin, 15 years ago, there were very few that made it over that threshold to get to that real kind of scale and growth stage expansion. And so you didn't have a lot of people in the ecosystem here that had the skillset to be able to take a company at that level.

So when a company did break out and were, was ready to scale, you often have to go somewhere else to try and lure the talent here, or potentially even consider moving your company to Austin. I mean, back in the early two thousands a lot of VCs who were doing deals in Austin from say the bay area would make moving to the bay area, preconditions.

of taking money from them which was a real brain drain for us. But as we've continued to evolve and mature, you know, that's no longer an issue. And in fact, once the bay area got so expensive, kind of. Around 2010, I think a lot of VCs there didn't really view it as the place you wanted to really grow your company, because it was so hard to attract talent.

It was so expensive to find office space and so forth. And so I think that really benefited Austin as well, that, you know, it was a lower cost of doing business. And so that made it easier for companies to try and scale here.

Michael Scharf: Clearly it was premium for being in the bay area. And now we have the almost opposite effect because bay area VC's and New York VCs are moving to Austin.

And not only that, but the VC's that started out here are now raising very large funds. How does this change the dynamic, especially in the early stage area that you play in for companies.

Brad Bentz: So you would think that early stage would be getting extremely competitive with all of this coastal capital flooding in you know, existing venture funds, raising ever bigger vehicles, as you mentioned.

And you know, so far I'm not seeing that so much. And I think one of the reasons, well, I think there are several reasons, but one of the reasons is that even though there's more capital available to Austin founders and ever before. There's also more Austin founders than ever before. There's more opportunity here because the ecosystem is growing.

The community is getting bigger. And so that helps to absorb some of the additional capital that's coming in. The other thing that strikes me is that where the competition really gets fierce is in those growth stage rounds, precisely because capital is so mobile. As you get later stage. You know, if you're trying to get into a competitive B or C round, it's, it's a real knife fight.

And, you know, we don't, we typically don't play at that level. You know, we get our ownership of the seed and series a and so we may be doing partial pro-rata in the series B, but you know, for the most part we're, we're not trying to deploy capital in those rounds. And so that helps, what I am saying is that.

More firms both locally and coastally are kind of dabbling in early stage, especially at the seed level where they're putting in exploratory checks, maybe one or 2 million, they're not necessarily trying to lead rounds and box out the other early stage venture funds. And, and at least as far as the coastal VCs are concerned, you know, they, they like having a local league.

They're really trying to put big money to work in those later rounds. And they see establishing a presence on the cap table, but the seed and series a level as a sure path to being able to deploy capital when they really want to, when they want to write a 25 or $50 million check, because they've already established a long relationship, they already have some pro-rata and so forth.

And so they're not some unknown You know, investor who comes in and tries to just throw a term sheet at a founder for, to lead a series B. I mean, they also know a lot about the company as well. They've been on the cap table for two or three years, perhaps. And so they may not may or may not have a board seat, but they certainly have information rights.

And so they have a much clearer picture of how the company is performing and it puts them in a position to preemptively offer a term sheet before the company actually goes out to try and raise capital on a road show.. So I think for any number of reasons is these bigger later stage funds are dabbling in early stage, but they're not necessarily trying to play hard and beat out the other earliest VC's,

it's more of a symbiotic relationship because they look to us as a friendly source of deal flow, where they know that we're going to tap out around the series B and we want to hand off. You know, our company to a new lead investor, who's really going to be able to take it to the promised land. And so they want us to be good stewards and help shepherd the company in those early years to get it through product market fit.

Michael Scharf: Sounds like it's almost a defensive action as opposed to a real aggressive kind of a stand there.

Brad Bentz: Yeah. I mean, that could change. I mean, the amount of capital coming in. You know, get to a point where early stage deals become, you know, almost as competitive as growth stage deals. I just haven't seen that a whole lot for the most part to date.

Michael Scharf: Well, the best thing to hear is that you're talking about not only more capital coming or coming in for early stage deals from folks like ATX as well as outside, but you're also talking about an increase in the quality of early stage deals and the number of early stage deals, which is great to hear.

Any other ways that this competition is really changing the marketplace for founders and early stage companies?

Brad Bentz: Well, that's an interesting question because you know, we're now starting to see softening valuations, you know, public companies. And I think that's bleeding over into late stage crossover rounds.

And so, you know, if, if the trend that we had been on since about 2010 had continued unabated. It, you know, it just means that you're getting more money thrown it at founders with, you know, few, few strings attached, minimal diligence. And, you know, frankly, I think some of it was out of whack in terms of, you know, the realistic, you know, evaluations.

And it can become a trap for founders, quite frankly, because there are some founders who really just try to optimize on valuation. And I get that. I mean, no, no founder likes to be diluted, but if you're getting a valuation that is two or three times what realistically your company is worth this moment is that setting you up for failure.

If you can't meet the kind of growth expectations that are baked into that, and because of the, anti-dilution provisions that most term sheets have. It's going to be the common, not the preferred that really takes it on the chin. When the company can't meet those unrealistic expectations, going into their next round of the round after that.

And then they end up having a down round which can really crush the common. So, you know, it can be a bit of a trap for founders to fall into if they are just you know, being dazzled by these, these valuations. So now that you know, a little bit of that pressure is coming off. You know, maybe we'll get back to the more realistic numbers.

And I think that will work its way down to early stages. I'm not seeing a whole lot of that yet, but I think it's, it's just formulaic that that's eventually going to work its way down to seed and series A rounds.

Jason Scharf: I want to step back up for a minute to Austin as a whole in the region. So one of the things that we've kind of started to do when through the podcast identifying the Austin superpowers.

You know, we, the key thing here is we kind of push that we're not the next Silicon valley where something new, we're the first Austin. And so really identifying kind of that secret sauce. And so one of the superpowers that we've kind of identified, we call it we're living in the Future. . And define that as we both build futuristic technology, but we also deploy and use it here.

The origin of this episode, right. Was, was as I was having some conversations and looking at the portfolio and saw you guys you're in space and personal flying vehicles, you know so first, like, you know, what is your assessment of this as an Austin superpower? And then talk about how your portfolio companies are really shaping this.

Brad Bentz: Yeah. So. You made an interesting observation that, you know, Austin doesn't want to be the next Silicon valley. Austin wants to be the next Austin. Which I think is, is great because, you know, we're, we're not going to do well, just trying to mimic what Silicon valley is already doing well. So that being said, I think what you're alluding to is what I would characterize as frontier technology and you know, what I see.

I mean, yes, we've made some frontier tech investments and I'm happy to tell you a little bit more about them and how I think that can kind of shape the future. But I do want to preface that by saying, you know, those are really the exception, not the rule in terms of what I see day to day in terms of pitch decks that cross my desk.

Most technology companies that I see are not necessarily technology innovators, they are business model innovators. And that's not saying there's anything wrong with that. I'm just saying that they, that probably eight or nine out of 10 companies that I look at at any given day, whether they're from Austin or anywhere else tend to be situations where they take existing technologies and combine them in novel ways to meet the needs of a particular industry.

And, you know, Uber is a great example of that. When you think about all the enabling technologies that make Uber possible, you know, GPS, smartphones, routing algorithm, They didn't actually create any of those. Like they were not necessarily pioneers and, and bringing all of those technologies to market, but they were able to leverage all of them and combine them in a unique way to create this new category for ride hailing services.

And so the question becomes, you know, is Austin uniquely positioned for frontier tech versus other technology hubs. And I don't really have the answer to that because. You know, I think you can find frontier tech in the bay area. You can find frontier tech in New York and Boston, and it, you know, it also varies by, by domain.

Like, you know, Austin historically has not done a lot in terms of biotech. You know, Boston's a much stronger market for biotech technology for biotech and life science startups. So, yes, there's frontier tech going on in Austin. I don't really have the statistics in front of me to tell you whether we are better positioned than a Nashville or a Miami or Chicago to really take advantage of that.

But I do think that the fact that we have. You know, strong research university is kind of one of the anchors or pillars of our startup ecosystem gives us a huge advantage for sure. And I think we'll only lean into that as we go forward, the challenges commercializing those technologies and bringing them to market those that are actually emerging out of the, the university itself.

But you also have people that are coming out of those programs that are going off to other companies and then doing great things. You know, you'll look at, for example, Slingshot, which is one of our companies that you mentioned in the space category. So they're really trying to do something novel, which is to create a real time database of everything in orbit, not just satellites or space stations, but actually keeping track of debris, even down to, you know, a few inches in diameter because you know, even pieces of debris that small can destroy a satellite.

And so by having that kind of real-time information, they're trying to create essentially a space air traffic control. So that satellite operators and people who are launching rockets into space can work together to avoid conflicting orbits, which is a real thing. Know, it turns out that a lot satellites have to reposition frequently because of the operators are concerned.

They might be, you know, and getting into conflicting orbit. And so what Slingshot's able to offer is some confidence that when we tell you, you need to move your satellite, you really do need to, but when we tell you you're okay, you don't have to. And the reason this matters is because satellites have a very limited amount of fuel to allow them to maneuver.

And so being able to make maneuvers only when really needed, it means you can extend the life span of these assets and have a lower risk that these assets will be damaged or destroyed because of, you know, debris or collisions with other objects.

Jason Scharf: I think it's an interesting point that you're making though is when I think of living in the future, I do think about it, not just you're right when thinking at first it was more on the frontier tech side, but I think there's also in how we do things.

So, you know, I'm in the life science space and you know, and invest in that space as well. The business model innovation tends to be, I think some of the more possibly strong disruptors and the least focused on, right? Especially in this space, you tend to focus on the two ends of the spectrum, either the better mouse trap, here's this, your new drug, new device kind of thing, or the very political who's paying.

Right. But it's when those kinds of things come together and here is a Uber. The Uber model right here is a new way of doing things, which then changes. You know, the business model. I think that can be even greater disruption. I think that we do live in the future from that perspective, you know, and especially when you bring together that futuristic technology, you think of like Argo, right?

You have self-driving cars being tested here. So we're getting used to the idea of seeing that around my kids. You know, we'll see that and know that that's a, you know, a car driving itself and that creates a different mentality. So part of, I think the living in the future is the mentality of, we are trying out different things, whether it be a gadget, a business model or some cutting edge frontier tech,

Brad Bentz: for sure. Yeah. And in fact, you know, what's most important in my mind is the appropriate use of technology to address a real business problem. And sometimes when you are talking just to technologists, they are in love with the technology itself and aren't necessarily concerned or aware of how appropriate this technology actually is to solving a real business problem,

and that can lead to a lot of failures. So, you know, really love the point that you made about how disruptive new business models can be. And there's certainly a lot of value that can be created by, you know, putting technologies together in novel ways to. Address a need. That's gone unmet in a certain industry and

Jason Scharf: bringing other industry thoughts or processes to another industry.

I mean, your, your point with Slingshot is it's air traffic control, right? That's okay. It's something we are, we know what that is. Right. But building that to space is not something that you know, is my sense, very strongly built out. That's why companies such as Slingshot exist. How do you think from a culture perspective, we need to be able to kind of keep moving and be willing to take those risks of models or technology to kind of maintain this as a superpower.

Brad Bentz: Yeah. I mean, I think you nailed it. The you know, the willingness to take risks, be ready to fail. Ideally fail fast, fail cheap. And, you know, get, get back up, dust yourself off and go back to it. So, you know, having a culture that embraces that kind of risk-taking and you know, is very forgiving of failure.

As long as you know, you, you tried, well, you, you took calculated risks, you were a good steward of capital along the way. Nobody will fault you for that. And I think that's true of most investors. I mean we don't blackball a founder because their previous startup didn't succeed. Now, if you showed me that you tried three or four different startups and none of them actually return capital to the investors, that would be okay.

You're not just unlucky, there's something else going on here. But the fact that somebody tried once and failed, isn't a black mark. And so I think you'll find that most VCs that I know, you know, don't hold that against a founder because we know that a lot of it can come down to timing luck, all sorts of things that are outside of the founder's control.

And you know, investors are willing to bear that risk. And you know, particularly if the founder says, okay, I tried this, it didn't work. I learned a lot from the experience. So now the investor says, okay, well, this person is going to come back to market better, stronger, faster. They have benefited from their failures, you know, perhaps as much or more so than their successes.

And they, they learned those lessons on somebody else's dime. So. Why not invest with them, if the new opportunity that they're pursuing, you know, it makes a lot of sense to you. So I think that's a big part of it is having, you know, the community that rallies around founders and you know, it doesn't, it doesn't punish them for failure.

Jason Scharf: What about the talent itself? So as we talked about, you know, especially on the frontier tech, deep tech, whatever term you wanna use and having to commercialize it, changing business models, it's not necessarily just a amazing technologist that you need. I mean, as I said, the, the, probably one of the worst pitches I ever saw, I walked away saying, this seemed to be an interesting scientific paper you presented. I don't know what the problem is. I don't know what the what the product is, you know? So what, what's the talent that we need to be able to drive that kind of, I'd say more novel, whatever, whether it's normal, novel tech, more novel business models.

Obviously, if you going into, you know, B2B, SaaS, there's lots of people that understand that, know that and find you can do that. But when you're building something, an entirely new approach, what do you look for in the talent or what what's the type of town that Austin needs to attract?

Brad Bentz: Yeah. I mean, you definitely want people from industry that understand the pain points of the potential customers.

And I find when I've looked at opportunities that are emerging directly out of a university lab, kind of to what you were pointing to is that they don't necessarily have that insight or in cases where they seem to be on the right track in terms of the insight, they don't necessarily have the skillset to actually build a company and scale it.

So you often need to augment the core technology team with the company builders, the business development people who are going to be able to go ahead and create the necessary partnerships, the marketing and sales talent, all that stuff is typically lacking. And, you know, it's, it's pretty rare to have a technologist who is emerging out of a lab who decides that they're going to create a billion dollar company and actually have the chops to go in and do it.

Not saying that will never happen, but you know, it would be the exception to prove their rules. So that's a big challenge when it comes to commercialization, since universities are sitting on a lot of IP and they're struggling with how to actually get some ROI out of it, but, you know, just, you know, having the people who pioneered the technology be the nucleus of a new company is often not the right approach, unless you've got the other talent to bolt on to be able to really drive the launch of the product in the market and then scale it from there. And so that's really kind of beyond the scope of what we typically provide as investors. There, I think there are investors who actually are ready to take on that challenge, but that's not something that we are. So we kind of start from the standpoint that you've you have the, the talent or can easily get the talent to be able to get the product into market. Now, you might not be able to take the company from 25 million to a hundred million, right. That might involve some, there's a different chapters in the company's life. And sometimes the people that took you from zero to 25 and the people that are not taking from 25 to a hundred, but nevertheless, you know, we're not prepared to kind of identify three or four key executives and then bring them into a company to really get it off the ground. We just, you know, we have to assume that the team is largely the one that's going to be driving it to product market fit, perhaps with a few additions. But, and so I think for technology commercialization projects, that's, that's a real challenge because most early stage investors like are like us don't really have the resources to, you know, round out the team to get them to product market fit and beyond.

So I think in many cases you're looking at more of a licensing type approach. Unless the investor really does have that core competency to, to really, you know, bring the right key talent to drive it into the market, build a company and then scale

Jason Scharf: Do you think we're hitting a bit of an inflection point though on that talent side, with that I don't have a stat, but it feels like the company's either putting regional headquarters or straight up moving, say like Tesla and or Oracle that round talent. And we talked about, okay, they're not ready to go. You know, they've got the options in the war chest, but just this almost greater level of either co-founders out there or, you know, early stage employees that can just are there for the, you know, the partnership there to be had because they all just keep moving here.

Brad Bentz: Absolutely. I mean, the, the quality of talent. That we're seeing an Austin is far greater than anything that I've seen during my tenure in venture. And I, like I said, I think it goes back to those two factors. One is that you have all of these expansions and relocations, which are bringing growth stage talent that we haven't historically had. And at the same time, you also have a mature ecosystem with people who've been here for 10 or 20 years building companies. But you know, now they're on their second, third or fourth company in some cases. Whereas if you went back to the early two thousands, you know, most founders that you would encounter would be first-timers.

Michael Scharf: Thank You! We try to end every one of our podcasts with the same question. So Brad Bentz the co-founder ATX partners what's next Austin.

Brad Bentz: So that's a great question. And I want to get some clarity from you on, do you mean, what do I think as a prognosticator or what do I wish would be what's next for Austin?

Michael Scharf: Let's start with both. As a prognosticator. What do you think is coming next?

Brad Bentz: Well, I don't see Austin slowing down, frankly. If anything, it seems like it's been accelerating. I am a little bit concerned about, you know, the, the transportation infrastructure in the city and the cost of real estate and what impact that will have on our growth over time.

It may push the growth back down to a more sustainable level simply because, you know, I don't know that we can build enough housing and enough transportation infrastructure, fast enough to prevent that from occurring. But you know, I'm still very bullish about Austin as a technology innovation hub. I don't think that's going to suddenly go away.

I also think that we are going to see more diversity, both in terms of the personal characteristics and the founders and early employees at these companies, but also in terms of the types of businesses that Austin is pursuing, because, you know, you've got the Dell medical school. And I know for a fact that they are trying to create a life sciences hub and that's going to be a long-term project.

I don't expect that we're going to have billion dollar companies. Emerging from that, you know, in the next couple of years, but I think it is a long-term investment in Austin's future. And I welcome that because that's always been kind of a weak spot in terms of what we do well as an ecosystem. We'd love to see more consumer tech over time.

You know, I think we need to cultivate the right talent. We're really good on the CPG side, don't get me wrong. I mean, you've got Yeti, you've got Kendra Scott. You've got, you know, Tito's vodka. I mean, there's a lot of good stuff happening on the CPG side of the market, but the consumer tech side is, you know, you can point to a few successes, but it's, it's much fewer than on the enterprise software side.

Another thing that I would like to see more of and expect that we will see more of is more robotics and hardware, which is, again, an area that, you know, Austin has been kind of weak on compared to some other markets. But I think it's an area that we'll see a lot more. And so we've made a number of investments that, you know, support that.

So we've got you know, lift, that's a basically a drone for personal transportation. We've got Pensa, that's using drones in a retail environment of all things. So we, we are seeing some, some activity on the hardware side, but I would like to see a lot more in terms of both drones and robotics, certainly on the chip making side, there's been a lot of activity, you know, Samsung has announced a major expansion.

Micron, I think is funding a $40 billion expansion into, I don't know if it was Lockhart or Luling somewhere, you know, not too far from Austin. But I want to see that being more full lifecycle on the hardware side, not just the, the chip side. And I think we will get there, but it's, it's going to be, you know, a longer-term process and Austin, you know, it's a 40 year success story.

It didn't happen overnight. And so I think, you know, we're still in the early chapters, we're going to see a lot more growth in the city and a lot more diversity outside of just the enterprise SaaS space that we've really done well in for the last 15 years.

Michael Scharf: Brad. Thank you so much. And thanks for being on the Austin next podcast.

Brad Bentz: Hey, it was a real pleasure. Thank you both.

Jason Scharf: So what's next Austin. We're glad you've joined us on this journey. Please subscribe on your favorite podcast catcher, leave us a review and let your colleagues know about us. This will help us grow the podcast. We continue bringing you unique interviews and insights.

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