Ham Lord & Christopher Mirable, "Winning Collaboration," Ep. 21

The collaboration of Ham Lord and Christopher Mirabile, two of Boston’s most consequential super angels, is widely admired. Its most visible fruit is the success of Launchpad Venture Group, which they manage together. In this revealing interview, they let us in on how this winning collaboration came to be and what keeps it productive as it approaches the end of its first decade.

Christopher Mirabile and Ham Lord are already familiar to our listeners.  Each has been interviewed individually on earlier episodes of the Angel Invest Boston Podcast. In the current episode, the two different personalities interact and give us a glimpse into what drives their working relationship.

Click here to read the full episode transcript.

Topics covered include:

  • Christopher & Ham’s Remarkable Collaboration
  • How They Connected
  • Division of Labor
  • Lucky to Have Jody Collier as Operations Manager
  • Complementary Skills & Creative Tension
  • What They Enjoy in Working Together
  • What Motivates Christopher and Ham
  • How Christopher & Ham Differ in their Investing
  • Gene Gregerson, an Engineer’s Engineer & Mobius Imaging – Astonishing Feat of Entrepreneurship
  • Blind Spots: How Having a Partner Helps Avoid Them
  • Integrity in the Founding Team is Essential – Due Diligence Screens Out Frauds
  • Geographic Focus Makes It Possible to Add Value
  • Dos & Don’ts for a Winning Collaboration
  • How Ham and Christopher Work Things Out When Problems Arise
  • Co-CEOs Raise a Red Flag but Can Work
  • Trends Christopher & Ham See
  • A Business Semyon Dukach Would Like!

 

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Transcript of Ham Lord & Christopher Mirable, "Winning Collaboration," Ep. 21

Super Angels Ham Lord & Christopher Mirabile

SAL DAHER: Welcome to Angel Invest Boston. Conversations with Boston's most interesting angels and founders. I'm Sal Daher and my goal for this podcast is to learn more about building successful new companies. The best way I can think of doing this is by talking to people who have done it. People such as my guests today, super angels Christopher Mirabile and Ham Lord. Ham and Christopher, welcome. I'm really happy the two of you could join us today for our 21st episode.

HAM LORD: Well, we're looking forward to it.

CHRISTOPHER MIRABILE: Thanks for having us.

Christopher & Ham’s Remarkable Collaboration

SAL DAHER: Awesome. As you may have noticed, our episodes are usually portraits of our guests' professional and investing lives. We have already covered that material for today's guests in two prior episodes in which I interviewed Christopher and Ham separately. Today, the subject of our interview is their remarkable collaboration. Ham and Christopher are co-managing directors of Launchpad Venture Group, an enormously consequential element of Boston’s startup ecosystem. Launchpad's approach to early stage investing is systematic and professional. Christopher and Ham must be doing something right because Launchpad is highly regarded as a collaborator by all the angel groups with whom I've worked as well as the investors and many of the startups that I work. You guys are highly regarded in the field and I personally, I really appreciate the work that you do.

My two guests are also founders of Seraf, a platform that simplifies the management for portfolios invested in startups. Seraf is proving a great resource to angel investors by relieving them of the drudgery of managing portfolios so they can spend more time working with startups. Through its newsletter, Seraf Compass, it provides valuable and reliable information on topics of interest to the startup community. For example, when I had a question about Section 1244, treatment of losses, the first place I looked at was Seraf Compass on Seraf-Investor.com. That's S-E-R-A-F-Investor.com. Great source.

Now, my guests come from really different backgrounds. Christopher got involved in startups as a lawyer, who eventually went to work for a fast growing startup that had been his client. Ham comes from a software engineering background and has founded or helped build companies in that space. So, how did the two of you meet up?

 

How They Connected

HAM LORD: Well, that's an interesting story.

SAL DAHER: First, this is Ham talking.

HAM LORD: Yeah, this is Ham. I first met Christopher ... I want to say it was probably 2009. Somehow someone connected the two of us and you came as a guest to Launchpad.

CHRISTOPHER MIRABILE: Might have been Don Bates.

HAM LORD: Could have been. You came as a guest to one of our meetings and you loved me so much, you said, "This is a group I want to join." Of course, Christopher loved everybody at the time. I think he was a member of like five angel groups or something and he loved it so much he started his own angel group. Anyway, he joined Launchpad in sort of the 2009, 2010 timeframe and we started interacting a lot together during and after the meetings. So, that's how things sort of kicked off initially.

CHRISTOPHER MIRABILE: It was definitely '09. I remember just because I was just a few weeks too late to get in on one of our better deals. I'll never forget that. Really felt comfortable with the environment that you'd built and Ham and I got along instantly and really quickly struck up a friendship and sort of a mentor relationship. Ham was a great source of advice for me in building what I was trying to build, which was sort of angel group 2.0. Long story short, we got that. With Ham's help we got that group up and running and quite successful in a short period of time and then just decided we wanted to throw in together and ended up merging that group back into Launchpad and have been running Launchpad together ever since.

HAM LORD: I remember actually it was a phone conversation we had. I remember pacing around in my office saying, "Christopher, we're doing the same thing running two separate groups. Both of us have our hair on fire, although we don't have a lot of hair, but both of us are running around like crazy. Does it really make sense for us to do this as two separate entities?" He took the bait. At that point I had been running Launchpad by myself for nine years and that's a long time. I don't care what you're doing, nine years is a long time to do anything. There were still aspects of running Launchpad that I enjoyed very much, but there were other aspects that I didn't really enjoy. I convinced Christopher to take those things over for me. What could be better.

 

Division of Labor

SAL DAHER: What does your collaboration entail right now?

CHRISTOPHER MIRABILE: What's ended up happening is when it comes to running networks of investors there is a little bit of a stair step function. Once you decide you're going to add professional management certain things become possible, but you max out at one, it becomes hard. Adding a second professional manager is almost like a one plus one equals three kind of a thing, a whole other level of professionalism becomes possible. That's really what happened when we started to get together.

HAM LORD: I'll give you a specific example of that. For a new angel investor getting up to speed can be a little bit difficult. Certainly, in the early days of angel groups there was no educational material etc. I had always wanted to be doing some teaching of new members, but the thought of sort of developing curriculum, teaching the classes etc., with all the other work I was doing with the angel group just, it was too much to take on, but with two of us it worked well. So, we split up the effort it took to develop the material and when we teach the classes we teach them jointly. That joint teaching allows us to have a much more dynamic class than we would have if it was just one of us up there lecturing.

CHRISTOPHER MIRABILE: There's a million other examples, the size of the membership you can manage, the amount of capital you could form, the amount of deals you can do, the amount of portfolio companies you can manage. We were very united in terms of ... Our North Star is professionalizing angel investing. We think it's an incredibly powerful economic force in terms of job creation, national competitiveness. We're deeply bought into the power of angel investing and our goal was sort of united in this vision of how do we professionalize this. In terms of how we run Launchpad it's very focused on sort of a professional approach to this, disciplined approach. As soon as you begin building out programs the next stair step you run into is just needing more hands on deck.

 

Lucky to Have Jody Collier as Operations Manager

We were incredibly fortunate to find Jodi Collier, who's our day-to-day operations person and so our collaboration now is ... Jodi and I working very closely together daily on sort of the day-to-day business of the group. Ham, Jodi and myself we each sort of have different focus areas in terms of what the group does. At this point, last time I checked, we're sort of producing 60 events a year of one sort or another, whether it's a membership meeting or a deep dive or a training session or a social event or some other kind of forum. There's never a quiet week, maybe one week in the summer that's a little quieter than the others, but it's a pretty busy pace.

SAL DAHER: This is for either one of you, what does each one brings to the table in this? What's the division of labor in terms of ... Not just in terms of work, but in terms of personality, in terms of likes and dislikes and so forth?

HAM LORD: I think one of the reasons why Christopher and I worked well together is that at the core of it we have the same fundamental beliefs. We believe in the respect for the individual. We have deep integrity and strong beliefs in that area, but our skill sets are almost one 180 degrees opposite. You mention in the beginning, in the intro, that Christopher started his career as an attorney and I started my career as a computer scientist. Those are two very different skill sets. We tend to handle very different parts of the operations.

In Christopher's case, if we're pulling a deal together I'm not the one who's going to be looking at the deal terms. I have a general sense of high level deal terms, but I can't read legal documents, just don't get them. On the other hand, running the finances of the organization, operating sort of the metrics of the business, that's an area that I have a lot of skills and strength. Then you throw in the fact there's a lot of judgment being made on whether to investor not invest in a company and the combination of our skills helps us make that judgment.

 

Complementary Skills & Creative Tension

SAL DAHER: There's a creative tension between the two of you, which results in the better decision making?

HAM LORD: Yeah. If Christopher thinks something in an area that I don't feel I've got a lot of skills in, I'm not going to question him. I'm going to accept what he says because he's bringing to the table all that learning experience and therefore I pass that off to him and vice versa.

CHRISTOPHER MIRABILE: It's been almost a decade now. We've worked so closely together that we sort of almost can finish each other's sentences and we have built up a lot of trust in each other's judgment and at this point sort of don't spend a lot of time on the meta issues around who owns what, we just get to doing what we do and it's very, very collaborative. It's one of the planks that is important in terms of the Launchpad ecosystem and the professionalization kind of goal is trying to find a better tool for managing Launchpad. Launchpad's got a portfolio now that's large in terms of companies and dollars. Ham will tell you what's the market, is it the 80, 85 million dollars market value?

HAM LORD: Yeah, it's something north of it. Something north of it.

CHRISTOPHER MIRABILE: It's a big portfolio and managing that has been hard over the years. In terms of building the Seraf tool, that's Ham's background. He's really been in the lead on ... He knows how to build a software product and he's been sort of chief strategist and the product manager of that.

SAL DAHER: When you say a portfolio's 80 million dollars, it's the value of the companies that your members have invested in via your-

HAM LORD: Yeah. That's the value of the holding, of our members holdings. The overall value of the companies is much larger than that.

CHRISTOPHER MIRABILE: I think at this point the group ... We're putting about eight million a year to work and we've harvested some of that back, but our cost basis is probably in the ...

HAM LORD: It's half of that. It's about 40.

CHRISTOPHER MIRABILE: Yeah. About 40 million in terms of just book value cost basis and the market value of the portfolios of our holdings is probably in the neighborhood of 80 to 85 million last time I checked.

SAL DAHER: You're saying about your collaboration here, you kind of get to the point where you're finishing each other's sentences. It reminds me of a collaboration I had with my partner in the emerging markets business for several decades, Robert Smith. He and I very much, as you two, I mean very complementary in personality, in a skill set and yet we sort of enjoy similar things and we have a kind of similar sense of humor. We enjoyed very much working with each other and yet, I mean, he's as different from me as anybody could be and we worked well together.

CHRISTOPHER MIRABILE: I can work well though. Ham can always be counted on to sort of step back and be more strategic and more thoughtful and look at the big picture.

HAM LORD: Christopher can be guaranteed to mess things up. So, it's perfect.

CHRISTOPHER MIRABILE: I tend to over book and be too busy and I like running the meetings and being in the moment and I'm a little bit more comfortable with confrontation.

SAL DAHER: You're more of an extrovert and kind of ...

CHRISTOPHER MIRABILE: I think I fall right in the middle of the spectrum on that. I have some definite introverted qualities and I have some extroverted qualities, but I love the people and running the meetings and I'm more comfortable with confrontation. I'm happy to sort of do the negotiations and be the torch bearer for the deals themselves, whereas neither Ham or I are super good ... I mean, Ham's far better, but neither of us are rock stars at people's deep biographical backgrounds. So, Jodi's [Jodi Collier’s] invaluable and helping us sort of manage this family of 150 investors. Everybody's complementary in terms of what they can and can't.

SAL DAHER: That's tremendous.

HAM LORD: I think one other area where we have similar interests, but again, different skills is we both are interested in sort of education and that's one of the reasons why we've put as much time and effort into our blog and the content that we've created there. An approach that we use for creating our content is one or the other of us will decide on a topic that we're going to cover, let's say due diligence and all the pieces that go in due diligence. The one who's sort of taking the lead on that will write the outline and write a whole series of questions and then pass that back to the other one and the other one will answer some of the questions and leave it to the person who wrote the initial one to answer some of the questions as well. That's how we're able to generate a tremendous amount of content in a relatively short period of time. We're basically just treating it as our way of educating our audience.

SAL DAHER: Optimizing your existing knowledge within the group and then the stuff that you don't have within the group, you can just do some research and bring it in and produce the content quickly. That's very effective. What do you enjoy about working together?

 

What They Enjoy in Working Together

HAM LORD: I don't think either of us takes the other one that seriously. We enjoy [crosstalk 00:14:24]

CHRISTOPHER MIRABILE: Neither of us sweats the small stuff and we enjoy each other's sense of humor. As Ham said, we have sort of common values and compatible personalities. We have a lot of laughs. When I was thinking about how do we resolve conflict, that question of how we were resolve conflict, there isn't really much conflict to resolve. If one of us feels really, really strongly about something, there's enough respect there that the other one is very likely to defer.

HAM LORD: I think it also ... Although we work together we do not share an office. We both work from home and our homes are separated by about 10 miles or so.

CHRISTOPHER MIRABILE: Thank God there's a river.

SAL DAHER: Distance makes the heart grow fonder.

HAM LORD: That said, we very much enjoy getting together. Yeah, we enjoy getting together, whether it be in a studio like this or yesterday we had a very interesting Launchpad session with the directors of our companies, where we meet on once a quarter and talk about topics that are sort of pertinent to being a director on an early stage company board and then afterwards the two of us have lunch. It gives us a chance to reconnect on a regular basis, but we're not in each other's space on a daily basis.

 

What Motivates Christopher and Ham

SAL DAHER: That is awesome. What motivates you as angels group operators, startup founders, authors. What keeps you ticking on this?

CHRISTOPHER MIRABILE: We really fundamentally do believe that angel investing matters a lot.

SAL DAHER: I second that wholeheartedly. I think it really is ...

CHRISTOPHER MIRABILE: I don't think either of us are like frivolous people who would pour a ton of time into something that just didn't matter, just retired to entertain ourselves. We do believe in angel investing and we think that it is a tremendously important social force in terms of creating opportunity for people, including this sort of a diverse group of people, jobs creation, national competitiveness. I mean, we really think this asset class is vitally, vitally important and we think it needs to be professionalized and that it can be made more accessible and it can be made more professional and it can be made more rewarding and some of the risks can be better managed. We are motivated both as angel participants to do the best we can as investors, but also as community participants to try to raise our community up and create and disseminate best practices.

HAM LORD: That's the serious answer. I'll give you the less serious version of it. Every once in a while if I think, "Hey, wouldn't it be great to retire to an island or something like that and just chill?" Then I think, "If I did that there are certain things I'd give up, which I wouldn't want to give up." To me, one of the most interesting aspects of what we do is meeting fascinating entrepreneurs who have great stories to tell.

SAL DAHER: That is so rewarding.

HAM LORD: That's not work. That's education. That's pleasure. I enjoy that and if I go to that island I guarantee you they're not going to be any entrepreneurs hanging out there. There might be a handful, but to me, what really keeps me going in this is that I'm constantly learning. I'm staying on top of what's new and exciting in technology and I get to talk with fascinating people, what can be better than that?

CHRISTOPHER MIRABILE: What's more fun, Sal, than helping optimists? It doesn't get better than that.

SAL DAHER: It can be painful on the wallet!

CHRISTOPHER MIRABILE: This is a good time. You get together with some smart people and you look at an interesting, challenging problem and you talk to an optimist about their view of how the future's going to unfold and there's just an opportunity to put in financial capital and lever the heck out of it with your human capital. To us, it's not work, it's a joy.

SAL DAHER: Christopher, what you said about competitiveness and so forth I think is really extremely important because I think angel investing really plays to the strengths of American culture. This idea of individuals voluntarily getting together and doing things on their own and things that maybe sound a little crazy and getting together and helping other ones do that. That's a really something that plays to very strong strain in American culture. I think you're right. It is enormously consequential and likely to become even more consequential as we go forward.

CHRISTOPHER MIRABILE: I mean, there's really been, in terms of class mobility, really education and entrepreneurship are the two mechanisms by which people improve the circumstances of their lives.

SAL DAHER: As America has become less socially mobile over the last few decades, which is a heartbreak. Tremendous. Coming up next, I will ask Christopher Mirabile and Ham Lord, two of Boston's most consequential Angels, how they differ in their approach to investing in startups. First, I'd like to think Health Tech 617 for your kind review. Health Tech 167 wrote, "Interesting guests with great stories to share and insightful discussions. Great listen for anyone interested in diving into the startup scene in Boston. A lot of excellent talent in and around the city." Thanks Tech 617 for giving back by writing your review. You give a fine example.

The Angel Invest Boston podcast has outstanding guess such as Ham Lord and Christopher Mirabile. Comes to you professionally produced, has no commercials and is free. The only thing we ask in return is that you help get the word out about our podcast. Please tell an angel or potential angel or founder about us. Take a minute to review us on iTunes. Sign up at AngelInvestBoston.com to be told about future events that are coming up, that are free and in person. Also, if you have any suggestions or critiques, please send them to me at Sal@AngelInvestBoston.com.

 

How Christopher & Ham Differ in their Investing

Christopher, Ham, how do you differ in your approach to investing?

HAM LORD: I invest in good companies.

SAL DAHER: He invest in duds!

CHRISTOPHER MIRABILE: I'll tell you one thing. I owe him debt of gratitude because-

SAL DAHER: You, Christopher, owe Ham a debt of gratitude?

CHRISTOPHER MIRABILE: Yeah, I do, because-

HAM LORD: I'll wait for this one.

CHRISTOPHER MIRABILE: What I was going to say was I really came from an enterprise software background and that was really my focus. As I was learning the angel game and building my portfolio in the early years I didn't really want to venture out of my comfort zone and I was really focused on that. Ham was beating me over the head in those early years saying things like, "Think about where the wealth in Boston is going to be created in the next 30 years. Think about the laboratories and the universities and there's so much opportunity in health and life sciences. You gotta get in on some of these deals."

As investors, Ham had a wider aperture than I did. He's not a life sciences specialist either, but he figured out before I did the value of working with smart people who do know the space really well and adding a little bit of exposure to that space to your portfolio. That was certainly one way in which we started very different. We've grown a little bit more similar, but that's-

 

Gene Gregerson, an Engineer’s Engineer & Mobius Imaging – Astonishing Feat of Entrepreneurship

HAM LORD: You remember that company he mentioned in the beginning that he joined Launchpad a little bit too late to get into, it's a local company called Mobius Imaging, founded by an entrepreneur Gene Gregerson, who really is what I consider an engineer's engineer. He was taking on a big challenge, which was to build for not a lot of capital, in a short period of time, a mobile CT scanner and something that could be wheeled into an operating room and put the patient who's on the table into the CT scanner. With a relatively small amount of capital, less than 20 million dollars, in about four years he went from basically a PowerPoint presentation to a shipping product.

CHRISTOPHER MIRABILE: Of a device, which is a medical device, which is really hard, has all sorts of approvals.

HAM LORD: There was a hardware in that device that didn't exist before he started this process. He had to convince companies much larger, much more mature than his to take for example their X-Ray detector and shrink it down or their power supply and shrink it down for his device, which may or may never make it in the line.

CHRISTOPHER MIRABILE: An astonishing feat.

HAM LORD: Did it in a short time frame that the big players, the GE's, the Siemens of the world, which are dominant in this particular space, couldn't do. Here's an example of a life science company, which typically investors think are going to need a ton of capital, was able to do it on a relatively small amount of capital. There are lots of entrepreneurs like Gene Gregerson here in the Boston area. Now, are they all going to succeed? Of course not, but I do think if you think about where the wealth is going to be generated in the Boston/Cambridge area over the next one to two to three decades, a significant portion of it's going to be in the life sciences.

Now, that said, we don't invest in every kind of life science company. There's a certain segments that are much more difficult to invest in, therapeutics being one of them. It's in the news constantly about how expensive it is to get a drug to market. We probably don't do a lot of investing in that space, but in the medical device diagnostic and health care IT, digital health, those are all areas that we actively look at.

SAL DAHER: You might be surprised in the area of therapeutics. Today I sent out a check on a second round investment at PanTher Therapeutics. What those guys do ... I should say Laura Indolfi, the co-founder and her team is doing, is they're taking existing materials that have been FDA approved. They're taking drugs, cancer treating drugs that are already in existence and some of them are out of patents already and combining those two things and putting them on to pancreatic cancers that are particularly hard to address because they don't have [a lot of] blood vessels. So, you can't get the cancer medication through them via intravenously. The results so far, hugely, hugely encouraging and yet it seems like something that's fairly close to the ground because they're basically combining existing technology that's already FDA approved in a novel way, putting it in surgically. Of course, they haven't started human trials yet. I mean, that's what can be expensive. You'd be surprised that there are some-

 

Blindspots: How Having a Partner Helps Avoid Them

HAM LORD: There are a lot. Actually, I think the main reason why we are not necessarily looking at a ton of therapeutic companies is what you just said, there's that transition from animal trials to human trials and there's a transition in human trials from the early phase one safety trials to the next level of trials that really bump up how much capital is needed. If there's one area that I think we've learned as Angel investors over the last number of years is, if you don't know who the next investor's going to be, if you have no sense whether you're going to be able to raise that large amount of capital in a therapeutic, you're taking on a lot of financial risk.

SAL DAHER: That is absolutely true. That's absolutely true.

CHRISTOPHER MIRABILE: You can't spot the sucker at the poker table if you didn't-

SAL DAHER: That's going to write up the next check.

CHRISTOPHER MIRABILE: I don't know if you want to go back to this topic of ways in which we differ, but-

SAL DAHER: Oh, absolutely.

CHRISTOPHER MIRABILE: I don't know whether Ham would cop to any blind spots, but I think I have a couple that he doesn't have. It'd interesting to see what he thinks about this, but we agree much more than we disagree and we tend to weight the same things very heavily. We're very much focused on ... It's team is more important than anything. The market has to be there as a secondary factor, but the team's the most important and then we figure that the product can generally be fixed. So, we're really much more similar than different, but two areas where I sort of have a little bit of a blind spot are, I love technology and I am so fascinated by sort of the what's next and the what's new, metaphorically speaking. If it takes a battery and has a blinking light, you had me at hello.

SAL DAHER: I'm immensely grateful for your technology suggestions, Christopher.

CHRISTOPHER MIRABILE: I have to be careful about that, that affinity towards interesting. I find the intersection of cutting edge technology and society very interesting. For example, it's endlessly fascinating to me the way smartphones are taking over different functions and how they've impacted the way we live our lives and communicate with each other and empowered things that we do. I always have to check myself a little bit. The other area that I think that I have a little bit of a blind spot and that Ham's much more steely-eyed is-

SAL DAHER: He's the gimlet-eyed engineer. You're the starry-eyed lawyer.

CHRISTOPHER MIRABILE: Well, I don't know about that, but I certainly don't identify as a lawyer anymore. Those were long, long time ago, but chemistry with people is important to me and sometimes when I just like a founder a ton I'm softer on them than I should be. Ham's very people-centric and team-centric in his evaluation, but he's less influenced by whether the person is a nice guy or gal and much more focused on what are their skills relative to what skills are needed for the organization. I probably am a little more sentimental about the team and he's a little less sentimental. Those are a couple blind spots I'm willing to cop to.

HAM LORD: I think we're talking real shades of gray here because I'm sure there are people who would claim that I'm too easy on the younger entrepreneurs and the first-time entrepreneurs. I will say one thing that I wish they would do more and I think both Christopher and I need to reflect on this, is understanding how that entrepreneur will scale with the company. The CEO in particular, does he or she have what it takes to go from this early startup that has nothing to a company that's scaling. Can they hire great people to help that business scale along the way and can they make that transition from being a player, to a player coach, to a coach. That's really one of the things that we as early investors need to think about very seriously when we're making that initial investment in a company because we're investing in that team.

SAL DAHER: Absolutely. This kind of calls to mind Michael Mark on the topic, places great emphasis on the team and he's seen a lot of teams in his career as an investor, my mentor at Walnut Ventures, but the funny thing he says is, "I think I'm going to be around these guys for nine years, 10 years sometimes. If I don't like them, forget about them, no matter how good the idea is and so forth, but on the other hand, if I like the team and the space maybe is not the right one I figure maybe they will eventually rotate to the right team and find the right formula, if they really have their act together."

CHRISTOPHER MIRABILE: Yeah. Ham and I are fairly pragmatic about that. I mean, one of the beautiful things about what we do is we do get to pick who we work with and our members, our syndicate partners and the teams that we back. Neither of us has any patience for investing in people we don't respect and like. That said, we're pragmatists and we understand that successful startups have different personae involved. You don't have to be best friends with everybody on the team in order to invest in the company. You have to recognize different personality types and temperaments are important in a successful team.

SAL DAHER: But you at least have to enjoy interacting with them when you do interact with them.

CHRISTOPHER MIRABILE: And you really need to feel that sense of integrity and honesty.

 

Integrity in the Founding Team is Essential – Due Diligence Screens Out Frauds

SAL DAHER: That goes without saying. Integrity is ... Without that you can't even start a conversation. I have a case of a founder who was discovered to be lying. This is someone who came out of Tech Stars and just making up things and that was really heart-crushing for us.

CHRISTOPHER MIRABILE: It's worth pointing out how rare that is. One of the things about angel investing that's interesting and one of the one of the curious questions that's emerging as more passive investors get involved by remote control through platforms, there's a footnote I'll drop, is what does that mean, but fraud is so rare and-

SAL DAHER: It is extremely rare.

CHRISTOPHER MIRABILE: Because we do spend time with these teams and there's a fair amount of competition for dollars and there's a fair amount of thought and different perspectives that go in and you do invest in getting to know the teams. It's fairly rare. Someone has to be a pretty determined con artist.

SAL DAHER: In this case I don't think there was actual fraud but just saying things that turned out not to be true later on. Not telling the truth, which can lead to fraud, but it's not necessarily fraud, which is for me it was really disappointing because I've invested at this point in about 47 startups. All the other 46 are the people that I would trust with my life. I mean, they say something and absolutely the truth. I think your point is really very important to say that the process of getting to know people individually really is very, very good at screening out the-

HAM LORD: Christopher, you dropped a footnote there when you talked about these platforms and really sort of what you're talking about is some of these crowdfunding platforms that are coming out on the market with some of the new SEC regulations allowing not just accredited investors to invest, but others to invest and also these platforms making it so that I can invest in companies that are in other parts of the country or other parts of the world. What I would say as an angel investor. I want to know, I want to have met the team that I'm investing in. I don't want to do it just based on some materials that someone has written up and the company is in an area of the country where I don't have access to and where my human capital really doesn't necessarily add a lot of value.

 

Geographic Focus Makes It Possible to Add Value

SAL DAHER: Are you guys limited to the geographic area of Boston?

HAM LORD: Yeah. Launchpad only invest in sort of the New England region. Christopher and I have made a handful of investments personally outside of this region, but it's in cases where we've known the entrepreneur through other means. So, it's not a totally unknown person that we're talking with. It's somebody who either we know personally or a close colleague of ours has invested in that company and knows them personally.

SAL DAHER: From my observation, I think there's enormous value with geographic concentration because not only do you know the people going in ahead of time, but you get to interact with them after you make the investment. You're around them to help them. When you run into them you see they look a little down and you can tell, "Hey, we know it's a tough time, is there any way we can help? Do you need somebody to talk to?" That kind of interaction because it's possible if you're investing with a geographic concentration.

CHRISTOPHER MIRABILE: It's also important in terms of knowing your syndicate partners and other potential leads through deals. I mean, these deals need leads. This is a very, very labor intensive way to invest, there sort of finding great companies, screening them, presenting them, doing the diligence, creating the deal terms in the term sheet and then filling out the route and syndicating it. The way angels solve that challenge of sort of needing to be diversified on the one hand and in a very labor intensive asset class is they collaborate.

SAL DAHER: That's the logic of the angel groups. Angel investing on your own is very painful and unproductive.

CHRISTOPHER MIRABILE: Every good deal needs a competent lead who is going to be the conduit for the human capital coming in and focus investors and help and set market reasonable terms and come up with an architecture for staging capital into that company over time. I don't know how you evaluate the quality of the team or for that matter, the lead on a deal that's on a platform very geographically remote. It's conceivable that you could build a relationship with someone in an area and get comfortable with them, but for the most part, I think of the angel business a little bit like the cement business. You can only truck cement about 45 minutes before it starts to harden.

SAL DAHER: Exactly.

CHRISTOPHER MIRABILE: I think there is, to my way of thinking, the kind of investing I like to do is a hands-on contact sport. I think that if you're going to do it long distance without understanding the team or the deal lead, it starts to be a little bit more like buying lottery tickets.

SAL DAHER: The fun for me, of angel investing, is sitting down, as Ham was talking earlier, and talking about, as you mentioned, talking with these optimists and listening to their story and listening to their ideas and going back and talking with your colleagues as well, who are knowledgeable about this and what do you think, what do we do. That's the whole fun of it and if you're doing it on a platform it's just too abstract. I can see doing that if that's the only way you can invest, you can only write $1,000 checks or whatever as a way point to ultimately becoming an angel investor, which I think is the ultimate thing. Being a real live angel investor is just like with the most fun thing I can think of in my life certainly, in business, that I've ever done.

HAM LORD: Yeah, but you've got three people sitting around here, chatting about this and that's what we firmly believe in. We have the time and the energy to be able to go off and do angel investing as a major part of what we do with our lives, not everybody has that time.

SAL DAHER: No, they don't.

HAM LORD: But just because you want to get into it as another asset class. You've got your mutual funds and bonds and stocks etc. I wouldn't necessarily add this as part of your portfolio unless you're willing to commit the time. I just don't think it makes sense.

 

Dos & Don’ts for a Winning Collaboration

SAL DAHER: Yeah. Very good. Do you have do's and don'ts for collaboration such as yours?

HAM LORD: I think the first most important do is that you've got to have respect for each other. I don't think you necessarily find out whether you're on the same page or not.

SAL DAHER: This is Ham talking.

HAM LORD: Yeah, this is Ham talking. It takes some time. When Christopher and I joined forces I had been looking for a partner for probably two or three years and through Launchpad and through other parts of my network there were a lot of people I interacted with, but I wanted to make sure that this person who I was going to be working very closely with was in alignment with me, but I also wanted to make sure that they didn't have the same skills as me and we didn't think alike, because that really wouldn't be additive. We are quite different. You can't see us on the podcast right now. You see us in the studio. We're very different people.

SAL DAHER: Very different human beings. I can attest to the fact that they're very different human beings.

HAM LORD: It's a good thing that I'm as handsome as I am because otherwise [crosstalk 00:37:59]

CHRISTOPHER MIRABILE: Everybody has a mom, okay? Everybody has a mom to love them and think they're handsome.

HAM LORD: For me, the most important do is make sure you really understand this person before you step into a partnership. I say that whether you're doing something like we do, which is running an angel group or whether you're going to be co-founders in a company. I always cringe when I hear about two co-founders, they found each other because one of them was a B-School student, the other was a researcher at MIT and the other was in the Sloan School. The Sloany was looking for a company to start. So, he just found this great idea and they decide to-

CHRISTOPHER MIRABILE: And they don't have a single word of vocab in common. They can't even speak to each other. I'll take that baseline. I think the baseline of respect and complementary skills and I'll say that I think there's probably three other really important ingredients. One is investing in the relationship. So, we don't always talk about business. I mean, we hang out a little bit, we take time to catch up and have gotten to know each other. I think there's a real friendship built in to the relationship and taking that time and we even get to get off site and do stuff together.

We've had some sailing excursions and done some stuff together and there's also just a fair amount of down time. We often go to events together and travel and do things. So, there's that taking the time to build the relationship piece of it. I think another piece of it is boundaries. Ham mentioned we have separate offices and we're not together all the time and we both believe very strongly in having other things you do outside of work to recharge you and make sure you're as fresh and full of energy when it comes time to focus on work as you can.

SAL DAHER: What is that for you, Christopher?

CHRISTOPHER MIRABILE: I do like to try to get to the seashore in the summer and reverse commute from the Cape and my family is a really big part of that. So, being really, really focused on my home life and my kids who are sort of middle school and high school age kids and trying to be the best dad I can be is probably the second, after work, the second most important chunk of time that I spend. That's a value, incidentally, that Ham shares as well.

SAL DAHER: For you, Ham, what is it that you do the recharges you outside of your professional work?

HAM LORD: For me, I love to cook and I hate shopping, but there's-

SAL DAHER: Your children are older, they are already in college.

HAM LORD: Yeah, they're in college, but the thing about liking to cook is they get some good food when they come home. So, that's definitely an incentive to bring them back. For me, sort of from a recreational standpoint, I love to sail. I spend a lot of the summer doing that down at the Cape.

SAL DAHER: What do you sail?

HAM LORD: A Morris 29, which is a beautiful sailboat. It can be handled by one person. My wife and I sail together a lot in the summer.

SAL DAHER: Before I started this podcasting project I had meant to buy a boat, but I spent all the boat money on the project.

HAM LORD: You probably have. Yeah. Then ultimately, all three of my daughters ended up racing in college, sailing in college.

SAL DAHER: I sailed dinghies-

HAM LORD: At MIT? Did you sail those-

SAL DAHER: Actually, not while at MIT, before going to MIT, as alumni brat. I love it. I would just want to get a-

HAM LORD: I was there just this past weekend watching a regatta one of my daughters was in, even though it was cold out ... Actually, MIT's boathouse is a great location. It got the sun beating down on you there, so even those cold it was warm sitting there watching sun.

SAL DAHER: Ah New England, you're a frostbiter on the ice boats.

CHRISTOPHER MIRABILE: Taking that time to recharge and make sure you're bringing ... The three things. The first was sort of getting to know and investing in relationship. The second was sort of having some boundaries and some time and downtime. I think the third is sort of maybe empathy or situational awareness. We spend a lot of time adapting to each other's working styles and respecting each other's working styles. The fact that we tend to do things at different times of the day and trying to remember what is on someone's plate or what their reality is.

Right now, just at this particular moment in time Ham tends to have some longer-term kinds of things on his plate. He's thinking about one sorts of thing and I've got a million little transactional details. So, we try to be empathetic about each other's reality as we're interacting and I think that avoids cross wires and that empathy is helpful for the relationship.

SAL DAHER: Tremendous. Tell us about a time when things weren't working out for you and how did you work it out.

 

How Ham and Christopher Work Things Out When Problems Arise

HAM LORD: God, that's a tough one, because as Christopher points out, I think that's been extremely rare and when I say that I mean, I'm really stretching, but if I had to sort of come up with something it might be when we disagreed about how we were dealing with a person. When you've got 150 members in your group, you're dealing with dozens of entrepreneurs, you're interacting with a lot of people, there are times when some of those people disappoint you. Not everybody can live up to what our expectations are all the time. There have been occasions where I think we may not have seen eye to eye on exactly how we should handle a difficult situation with somebody who we had to interact with.

CHRISTOPHER MIRABILE: How much slack to cut them and what to do. He's so quick to see the good in people and I'm quick, probably too quick to ... I guess it's my Sicilian blood, but to see it as pattern or a problem or a thing that needs to nipped in the bud and sort of I tend to be programmatic and systemic in the way I look at things. If I see behavior that I think isn't okay or isn't good enough I tend to immediately begin projecting it out in a straight line and thinking about it as something that needs to be dealt with forcefully, early, quickly. Ham tends to sort of look at the whole person and the whole context and just find the good in people. We're very much aligned in-

SAL DAHER: He likes to judge the person in the totality of his or her actions.

HAM LORD: That said, there has never been a case where ultimately, we disagreed on what the approach we were going to take.

SAL DAHER: The way you perceive it, but you were able to synthesize to a decision that ultimately was the same.

HAM LORD: Yeah.

CHRISTOPHER MIRABILE: Yeah. It's a question of degree. We're very aligned in terms of what's okay conduct and what isn't, but exactly when to cut somebody off at the knees is often something where we have to kind of collaborate to come to an agreement on a path forward.

 

Co-CEOs Raise a Red Flag But Can Work

SAL DAHER: Okay. Now, having a splendid collaboration, the two of you, how do you look at co-CEO's? It's just widely regarded as a no, no in the startup world.

HAM LORD: That's an interesting one, because I'm an observer on a board where it's not quite co-CEO's, but it looks a little bit like that. I think there's some situations where it can work and I think Christopher's and my partnership is an example of that. We're essentially operating multiple businesses. Christopher may take a bigger role in one of them and I may take a bigger role in the other, but ultimately we are jointly making decisions on those. I think that works up to a certain size in the company. There gets to be a point where the board really wants to be hearing it from one person, there's one neck to squeeze when there are problems, when there are challenges to [crosstalk 00:46:06]

CHRISTOPHER MIRABILE: I look at it this way. I think there's different kinds of leadership and I think that it's not per se a problem if there's clear ownership of different aspects and there's a governance function that works and there isn't a diffusion of responsibility. I will say that the need to both be called the CEO is a little bit of a yellow flag for me and it may be indicative of ego problems whereas doing the exact same things and having somebody called an executive chair, somebody called the CEO, somebody called a president, somebody called a COO. I view the co-CEO title as a little bit of a flag, but the underlying notion that people can collaborate together in a very, very senior leadership kind of position in a hierarchical organization, that doesn't give me ... I think I can imagine situations where it can work.

 

Trends Christopher & Ham See

SAL DAHER: Interesting. Are there any trends that you guys want to highlight?

CHRISTOPHER MIRABILE: Well, it's funny. I've been asked this recently a couple of times on panels, what's tired and what's wired these days. It's an interesting question. It depends a little bit on your perspective and also it depends on how wide your aperture is in terms of what's going on in tech in general versus what's going on in the kinds of deals angels are drawn to, that are a little bit ... Obviously, artificial intelligence and autonomous driving and those kinds of things, which are big capital plays, very interesting.

There's a lot of verticals underneath that are very accessible to angels and very interesting. So, there's interesting stuff going on in Ag Tech with drones. There's a lot of really interesting stuff that's going on with image processing and digital signal processing brought forth by the fact that there are now massively powerful and relatively inexpensive GPU clusters allowing sort of really, really compute, expensive kinds of tasks to be done much more cheaply. We're working with a company Ham’s on the board of a portfolio company that's doing some really, really interesting cutting edge stuff with image analysis.

SAL DAHER: Which company is that?

CHRISTOPHER MIRABILE: Company called Netra.

SAL DAHER: Oh, yes. We talked about Netra in the previous episode.

CHRISTOPHER MIRABILE: Those guys are doing super, super interesting stuff that probably wouldn't have been economically feasible just five years ago.

SAL DAHER: A company that I missed investing in by a matter of weeks and I sort of regret.

HAM LORD: Well, when they come up for another round we'll make sure to mark it up first!

CHRISTOPHER MIRABILE: I think some of the things ... Right now, if I see another plan calling statistics informed decision making, machine learning, I'm going to kill myself. It's just too much of that label right now, that's the hot label, everything's machine learning overnight.

HAM LORD: Data science is starting to take over as well. You're starting to finally see some universities put together data science programs and I thought what was very interesting is an article in The Harvard Crimson recently that statistics, which used to be a tiny department from an undergraduate standpoint, has now gotten too big. They don't have enough professors to teach statistics and what is that, why are there all these kids taking statistics? Because they want to graduate and get a job in data science. I think you're going to see, whether it's machine learning, data science, other things, that's going to become more and more prevalent in the tech companies that we're going to start to see as early-stage investors.

Think about it from the standpoint of what big problems can data science or machine learning solve and be looking for some of those. I was on a judging panel about two weeks ago at Harvard at the undergraduate level and of the 12 companies that presented I think at least four had some form of machine learning as part of the core technology that their applications were based on top of. These are very smart kids doing very interesting things.

CHRISTOPHER MIRABILE: It's actually starting to affect computer science in itself, in that ... Obviously, machines are extremely literal and traditionally we've programed them by giving them explicit instructions on what to do and try to come up with every exception and have a code to deal with the exceptions and was an extremely painstaking and literal and exacting science. Increasingly, we're starting to build programming methodologies that are as much about training the computer as they are about writing code. It's about learning.

There was a famous experiment several years ago where Google just told a computer to go figure out, scan the Internet and figure out what a cat looked like, without any real instructions at all, using contexts and images and it did incredibly good job. It came up with a composite cat image that look pretty catlike. I think it's a fascinating time in terms of how we're starting to use data and how it's transforming computer science itself.

HAM LORD: As two software guys, we should be hanging out at MIT, Northeastern Harvard etc. looking to see what interesting things are going to be coming out.

SAL DAHER: That brings to mind, two episodes ago I interviewed Wan Li Zhu, who is a venture capitalist and co-head of MIT Angels. One of the companies that he's invested in is PathAI and they're using artificial intelligence to read cancer cells in pathological slides. I think the accuracy rate of the algorithm is something like 98.5, whereas a human pathologist only gets about 80%. Right now, they have pharmaceutical companies that are using those for the research, but in the clinical side they still have to have a pathologist. They do their own examination, but the machine points out places they should look at. This is unbelievably consequential.

 

A Business Semyon Dukach Would Like!

HAM LORD: To give you an idea of how diverse some of this machine learning is being applied. One of the Harvard students had an idea for a business where using machine learning he has looked at all the results from professional tennis matches and based on betting patterns can produce winning results on a slightly better than you would expect basis. He affectively is able to make a nice profit. What he's looking to do is start a company that would just be a fund that would basically bet on tennis matches, professional tennis matches. Turns out that professional tennis, I think he said it was the third largest sport for internet betting. His algorithms only work when it's one versus another. He wouldn't work well in-

SAL DAHER: I have an investor for them, Semyon Dukach.

HAM LORD: Semyon would like that. I just talked to an interesting company. They're essentially building a very, very vertical specific Facebook in effect for an industry. It's FinTech and it's sort of in the alternative investing world private equity and so forth and they're trying to build a nervous system or network for everyone in the industry to keep track of the things they care about and what's going on in the deals and connect with each other all these kinds of things. One of the important backbones of this is content and then relevant deals and so forth. They're contracting with IBM's Watson to fill the content file, to figure out what content is relevant to whom. It's just amazing kinds of things. This isn't just theoretical These are areas where computer science is really being harnessed and really close to where the rubber meets the road. It's just really interesting times.

SAL DAHER: Absolutely, absolutely. Christopher Mirabile and Ham Lord. I'm immensely grateful to the two of you for your magnanimous assistance in helping make this really a successful podcast. I would like to invite our listeners, who enjoyed this podcast to give back a bit and review it on iTunes. Sign up at AngelInvestBoston.com to be notified of future events including in person events we plan to hold. Please address any suggestions or critiques to Sal@AngelInvestBoston.com. I'm Sal Daher. This is Angel Invest Boston, conversations with Boston's most interesting angels and founders.

I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John M. McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.