00:48:23 · Brian Neider
[00:48:23] S0: I think that that's exactly right. Next one I got for you, Clearwater Analytics. Clearwater actually is a software business, and I would say that in Clearwater's case, the reason why we got comfortable with it and get excited about it is more from like a compliance and regulatory angle. So they have a couple of different business lines, but their core business is really becoming the sole source of truth ownership on behalf of any type of institution, whether that's a corporate, a financial, whatever it might be. So you could imagine that if you're a corporate treasury department and you have a significant amount of money in the bank and you have all different bonds that you hold and fixed income instruments that are earning you interest, you wanna know exactly down to the penny on a very frequent basis, if not in real time, exactly what you own on that day at that time, what interest you're gonna earn from it, what that's gonna be from your free cash flow forecasting, all that type of stuff. If you're a asset manager and you have a bunch of client accounts, you wanna know exactly what you own, what your client's own, where it's held. And that is really important to get right. And you need that sole source of truth. And so Clearwater Analytics is kind of like the de facto standard for large financial institutions, large corporates to use to manage all of their securities exposure, and it's a very important tool. That one is one where, you know, could somebody theoretically vibe code something similar? Could they come in with some competitive offering? Yeah. I guess theoretically you could do that. But the distribution angle there, the way... The trust that they've built with their customers, the importance around the compliance and management, and, you know, being that sole source of truth, it's a very, very special business and a very unique business and one that we don't think is very easy to replicate.
00:50:16 · CJ Gustafson
[00:50:16] S1: Alright, this is fun. I got one more for you and this is a super fascinating company, Electric.
00:50:21 · Brian Neider
[00:50:21] S0: Electric is a cool business. So the short answer for Electric is, what they do is they are a specialty distributor of medium voltage parts, which are typically components that will go into a data center or into a large scale utility project that are essential and critical for for building the infrastructure. So there's a large number of what are called horizontal or broad line distributors that have hundreds of thousands, if not millions of SKUs for things that electrical contractors and builders can buy as components for their data centers or big projects. The problem is that a lot of that componentry, it's not readily available right now. It might be on back order. You need to know how different parts from different manufacturers might interoperate with one another to create a composite view and build the right package for an end customer. And you really need to have a tremendous amount of know how. So for a lot of these projects, the customers want the product yesterday. Things are moving at the speed of light. There's shortages and we believe will be shortages for meaningful amounts of time. And you need a specialized distributor who really understands the market and can offer alternatives, come up quickly to respond to your RFPs, and really be in a position to deliver an entire package rather than a single part here, single part there, but go talk to this other company to get the third part. You wanna be able to deliver everything. Electric just has unbelievable deep knowledge in that ecosystem, and that is the most important... Or one of the most important ecosystems in the construction industry today, and the company has been doing amazing. So Mario, who's the CEO, is a is a wonderful entrepreneur, an incredible guy, and he's built a business, and it it sort of took off. It was his idea. Him and his partner, Tim, really started it and did did an amazing job. And they said, look. Like, we've never built a company. We don't know exactly who we need to hire. We don't know exactly what to do to build this. We just know that we've got lightning in a bottle, and we came in as a as a partner investor, came into the company and have worked very closely with them to help continue to build it and hire out and shore up their team, and we are super excited to be on that that ride with them.
00:52:42 · CJ Gustafson
[00:52:42] S1: A fun one to end on here. I don't wanna be apocryphal here. I heard you showed up to a company with this like giant Happy Gilmore styled check after they specifically told you not to bring a term sheet.
00:52:54 · Brian Neider
[00:52:54] S0: So that is an entirely true story. In fact, I will send you the picture of it. It was a it was a funny one. We find companies oftentimes that we get excited about and we wanna make an investment. And sometimes we might already be shareholders in that company. We just wanna make a larger investment. Companies have a timetable on which they want to be fundraising. They will say, look. Like, we don't really want a term sheet. If we had a term sheet, we have to open up a conversation with our board. If we open up a conversation with our board, it's gonna lead to, like, some unintended consequences. We're really trying to finish q three, and once we finish q three, let's let's, like, have a discussion, stuff like that. Totally reasonable. But sometimes we have an inkling that maybe we need to move faster even though they're not telling us to move faster. So there's a particular situation where there was a business that we're invested in, and it was probably one of my favorite businesses I... That that we've ever invested in in all of my years at Lead Edge. They said, look, guys. Like, we totally understand you're excited and that you wanna invest more into the business. We're super flattered. It's gonna open up a bit of a can of worms if you if you send it a term sheet. And we had organized a meeting with them, and I was talking with my partner Mitchell, I'm saying, you know, gosh, like, what could we do to really shock them and wow them such that they'll never forget that we really want to invest in the business? And that when they do decide to raise capital, maybe, like, you know, we'll definitely be their first call. Came upon this idea to order one of these, like, Happy Gilmore style, like, giant checks. It was for a company called Duo Security. We showed up to their office, and actually, the company was based in Michigan, but we were meeting them in their California office. And I had ordered this big check to a friend's apartment. It was delivered there. I had to take, like, a Uber, like, double XL to fit the check into the trunk of the Uber. And we show up in the office with this giant box, and they're like, guys, what in the world are you doing? And we're like, we have something for you. It's our investment proposal. And they're like, what in the world are you talking about?
00:54:49 · Brian Neider, CJ Gustafson
So we pull out the check, and we hold it up, and we're like, you are our favorite company. We're giving you a check for $50,000,000. No questions asked. And they said, you're out of your minds. But I will tell you that a couple of months later, they decided to do a very large funding round, and when they did it, we were their first call, and we were the largest investor in that round. [00:55:08] S1: That's an amazing story. Small detail. Those checks, you can't actually cash them. Right? [00:55:13] S0: No. You cannot. Asking for a friend. [00:55:15] S1: I knew the answer to that. Brian, this has been an absolute blast. Thanks for [00:55:18] S0: joining me [00:55:19] S1: on the show. [00:55:19] S0: My pleasure. Really nice to spend time with you. [00:55:22] S1: Run the Numbers is a Mostly Media production. Yelling an intro by Fat Joe. Artwork by Meg D'Alessandro. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me, a guy who feeds his dog way too much ice cream and has a history of net operating losses. LOL. If you like this podcast, hit subscribe and give us five stars. It'll take like two seconds and our algorithm overlords love it. Drink water, call your mom, and have a great day. Peace.