Leaders and Their Stories

Richard Lowe (00:02.594)
Hello, this is Richard Lowe and I'm here with the leaders in their stories podcast. I'm the writing king and ghost writing guru. And this is Michael O'Brien and he's got some interesting things to say about getting venture cap, some of the mistakes and challenges that people have and how they, how they work through those. So Michael, take it away.

Hey, thank you. Michael O'Brien. I'm the managing partner of Shield Venture Capital. I came to Venture Capital through a roundabout route. I came from advocacy and government relations. And for the last 15 years, I was running a government relations firm focused on startups and early stage tech. And so that was the

The interactions with founders at Mob Ventures or Mob Advocacy, our government relations firm, told me that early stage founders, as much as they needed our help on the government relations side, they needed help on the fundraising and founder advisor level even more. so at the beginning of 2024, I set out to raise a

A venture capital fund, we completed our first close at the end of 2024 and we'll be deploying capital throughout 2025 and most of 2026.

Awesome. Sounds like quite a journey. I remember the one time that I was involved in venture capital. was with the company, first major company. Well, minor company was a startup. I was the VP of consulting and we had a product, the very first disc defragmenter ever made by anyone. And we wanted to market it and sell it and finish the development. So they went off to get venture capital, the bosses did.

Richard Lowe (02:03.598)
They were going for, um, I think $500,000 in venture capital and the venture capitalists kept saying, don't go for $500,000. That's actually harder to get than say a couple million. And you're going to need a couple million for the marketing and stuff. And I said, no, no, no, no, no, we'll just get 500,000. That's all we need. Well, guess what? They needed probably more like 5 million and, they actually wound up going into bankruptcy and then they got bought by somebody else.

The products now, I think it's embedded or became Brack's Co's version, which I think I bought by Microsoft. I'm not sure, but, so one of the lessons that I learned was make sure you understand all the costs involved and then probably double them.

Yeah.

would say, yeah, I mean, the number one reason startups fail is collapse of your team. think that is first and foremost the biggest reason early stage startups fail. But the second biggest reason is they run out of money. you know, oftentimes it doesn't matter how much you raise. If you're not planning properly,

you can easily run out of money. And it's happened to good founders, it's happened to bad founders. It's a critical part of moving forward. I think some of that blame can also lie with your investors because they should also be following your financials. I had a VC friend of mine tell me that

Michael O'Brien (03:51.106)
they had a founder project them into bankruptcy. Their numbers just didn't add up and they knew they weren't going to add up. And as much as they told them, hey, this is problematic, it was definitely a self-fulfilling prophecy. that planning piece is definitely a critical exercise. Don't overlook your numbers.

Right. Right. And it's not that much harder to get a large sum of money than it is to get a small sum of money. In fact, I learned in ghost writing, it's the same amount of work to get to a $50,000 contract as it is to get a thousand dollar contract. It really is. It might take a little, it might have to close a little harder because it's a little more money, but you're putting in the same effort. So why on earth are you going for the small contracts? Yeah. think the same is true of venture capital.

It is to an extent. I definitely advise founders not to, definitely raise as much as you think you need and then probably a little more. But don't go out and over raise because it's gonna make it harder for your next raise. so you can, we invest at pre-seed and seed and so,

we ask, you know, how much do you think you need to get through the next 18 months? And then, you know, maybe not double it as you said, but definitely, you know, tack some on there, because you have no idea what fundraising and the market's gonna look like 18 months from now. But kind of set benchmarks, hey, this is what we want to have happen in these 18 months. So then when you're raising that next round, you can show, hey,

We raised this, we wanted to do A, B, and C. We got A, B, and C done and maybe even some of D. So now we're here. That shows that you're going to be good stewards with an investor's money. It shows that you understand how you go to market. It shows that you understand how to manage projects and that you're goal oriented and are going to hit goals.

Michael O'Brien (06:14.414)
when you're telling somebody with the next round of funding, we want to do D, E, and F, they have the confidence that you and your team are going to be able to do that.

Yeah, yeah. I'm changing subjects slightly. Of course, the big news now is tariffs and the stock market going wonky. And I think that overlooks the major issue that's happening in the capital world. And you tell me if I'm anywhere near the mark is that the baby boomers are retiring and they're taking their money with them. And their money, which used to go into the stock market is now going into T-bills and things that are a little more stable because senior people want stability.

I think that's going to have a huge effect on the capital markets already is over the years, much more than this little game that's being played with tariffs. What do you think?

Yeah, I mean, I, I, I forecasted that, you know, the stock market was going to drop with tariffs. But definitely, definitely agree that there's a lot more, a lot more impacting what's going on at the, at the stock, in the stock market than just tariffs. I think some of that is, is record valuations. Yeah. The, the stock market.

has been kind of growing in the top 90th percentile.

Michael O'Brien (07:44.778)
over the last 20 years. And it's due for some kind of correction. You certainly have the baby boomer issue, people pulling dollars out. You have significant institutional investors like Warren Buffett kind of telling people, hey, the stock market's overvalued and it's

you know, he's pulling money out. That's a signal to other investors. But, you know, I've always been a believer that, you know, within chaos, there's always opportunities and you've got to find them. I think that's true in the stock market. I think that's definitely true in the stock startup market where there might be a lot of chaos up at the kind of the macro level with tariffs and big tech and economy.

The startup world is in a great place. They had a correction a few years ago. The valuations are very reasonable. The things people are raising aren't obscene. Outside of AI, AI seems to be raising at rates that are incredible and far over and above any other kind of traditional startup.

There's a lot of values in the startup world,

Yeah. The AI thing is going through what I believe is going through what's called the Gartner hype cycle. Yep. And if you know what that is, just to explain, that's where it starts off. They're doing research and things. So it's stock market stuff, stuff relatively stable, and then all investors jump on and it shoots way up. And then people start to realize, well, the promise really isn't there and it just collapses. It's sometimes in as quick as a day comes down to a low level and then comes back and adjust to a new normal. Yeah.

Richard Lowe (09:43.266)
The stock market's involved in that now. It's on the high end and it's going to crash just like every other one of them. And that's just the name of the game.

Yep, we're looking at a lot of AI startups, but we are looking more at how AI is impacting industries and not necessarily, we're not gonna go out and write a check for an AI company, but a company that leverages AI to do regulatory compliance or some other piece.

We're definitely looking at seriously. Looked at an interesting company the other day. They're using sensors and AI to do driving tests with no DMV official in the car. they're doing all of the scoring through sensors and AI. Really interesting stuff.

So they're combining AI with IoT, Internet of Things. That's fascinating to me. I wrote a book on the Internet of Things and I've written several books on AI. those two subjects are fascinating to me. And Internet of Things is frequently overlooked by the general public because it's just not talked about, but all the smart light bulbs and routers and smartphones and everything else is Internet of Things.

Smart, smart everything. went to a cyber conference once and there was one of the top security people for the CIA. And he said, you know, everything is so connected. You would, you you would unplug your toaster at night if you knew what I knew. All right.

Richard Lowe (11:36.174)
Well, my toaster is the $15 special from Walmart. don't think I got anywhere near that.

Mine too, but you know, that that statement really woke me up.

My smart TVs on the other hand, they are interesting. They've got interesting capabilities. And I've discovered recently that they've become an advertising platform. That's why those are cheap.

That's exactly what they are.

They're just, it's just all this ads and ads and ads and ads. It's just another way to get ads. Otherwise you couldn't buy a TV for the prices they're selling them for. You wonder why they're so cheap because they're advertising platforms.

Michael O'Brien (12:11.778)
Yeah, as people cut the cord, your advertising has to go somewhere and it's going directly into your TV and those platform providers.

Yep. So you got the choice of paying for your ad free or getting ad service ads and you know, ads drive me crazy, but I'm not going to pay for it. So I tend to build my own media center, get around that, but that's off the subject. Of course, these, these podcasts tend to wander a little bit sometimes.

Good ones should. Yeah, never know where they're going to go. Yeah.

Yep. So, yeah, venture capital is an interesting subject. Yeah. I've never, other than that one time and I was only involved, I was the VP. was not in charge of the venture cap. If I'd have been in charge of it, we would have gotten several million and probably wouldn't have gone bankrupt. Um, well, I don't know when our product ate somebody's disk drive, a big company that might've killed it too. It did. It just chomped it up. No recovery, no nothing. They were out of business backups a month old, you know, not good for a financial firm.

No, it is not.

Richard Lowe (13:19.672)
Yes. Thank you very much. that helped hit the reputation a little bit. but you know, I moved on and then there's companies like I used to work at trader Joe's who don't do any kind of debt. They have no debt at all, except for the leases on the stores. That is it. Yep. And that's an interesting model. And you think about it, no debt.

Yeah, we encourage, if people don't need to raise, if you can grow organically through sales, we encourage founders to go that route. I think it's a better route for them if they can accomplish their goals through that route. Now, not every company can scale with that hockey stick, you know, kind of

growth line without venture, but some people certainly can. And if you can, or if hockey stick growth isn't what you want out of your company, if you just want kind of steady growth and you're achieving that, it's not always a need for venture capital. we definitely, we try to counsel people as well. We try to be,

as founder friendly and counsel people in terms of, hey, is this the right move for you? You know, regardless of our interest in the company, you know, there might be companies we're really interested in, but still advise the company, you know, hey, maybe raising's not the right thing for you. You've got these contracts coming up. If one of them hits, you know, you're not going to need us. So.

Right, right. And of course, if you're going the acquisition model or you're acquiring company after company after company, then you're probably getting a lot of debt.

Michael O'Brien (15:20.94)
Then you're probably getting a lot of that, yes.

And that may be more leverage debt than venture capital debt. That's a different kind of debt, I think.

Yeah, it is a popular path to entrepreneurship though right now. Entrepreneurship through acquisition is a huge, huge market. think people are buying companies that are fairly successful, that really have that opportunity to be really successful, and they're getting gobbled up, which is good for people ready to retire and get out of that work.

You know, there's there's definitely an exit market for for those entrepreneurs now more than more than I've seen in the last 15, 20 years.

Yeah, it's interesting. Interesting. so if you were to sum up in a few, in a paragraph or two, venture cap in the whole world about it, what would you say?

Michael O'Brien (16:18.766)
I tell founders, we need them more than they need us. So make sure when you're bringing on venture capital, you're bringing on an investor that fits you and your team, are aligned strategically and with the same goals. Because that's a huge potential mistake that people make.

could be a three-year marriage, could be a 10-year marriage. you want people who are on your side from the time that they sign and write that check till the time that you grow and exit. And so being careful and selective about who you let on the cap tables is going to be a critical decision that you're going to make.

Very interesting. Thank you. Well, this has been a fascinating conversation. I know I can see you know your stuff, which is great. How could people get hold of you?

People can reach out to me through LinkedIn, LinkedIn slash Michael S. O'Brien. You can also email me mob at shieldsiol.vc.

Great, great. Well, I'm Richard Lowe. This has been the Leaders and Their Stories podcast and you can reach me at thewritingking.com or ghostwriting.guru. And thank you for coming on the podcast.

Michael O'Brien (17:50.286)
My pleasure.